As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Saturday, March 28, 2009

Where Is The End In Afghanistan?

The New York Times has a tick-tock on the internal debate leading to the final Afghanistan strategy, and the story presumes a schism between Joe Biden and James Steinberg, arguing for a more limited role for US forces, and Richard Holbrooke and Hillary Clinton, arguing for a more expansive one.

All of the president’s advisers agreed that the primary goal in the region should be narrow — taking aim at Al Qaeda, as opposed to the vast attempt at nation-building the Bush administration had sought in Iraq. The question was how to get there.

The commanders in the field wanted a firmer and long-term commitment of more combat troops beyond the 17,000 that Mr. Obama had already promised to send, and a pledge that billions of dollars would be found to significantly expand the number of Afghan security forces.

Defense Secretary Robert M. Gates and Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, pressed for an additional 4,000 troops to be sent to Afghanistan — but only to serve as trainers. They tempered the commanders’ request and agreed to put off any decision to order more combat troops to Afghanistan until the end of this year, when the strategy’s progress could be assessed.

During these discussions, Mr. Biden was the voice of caution, reminding the group members that they would have to sell their plans to a skeptical Congress.

I think this depends on your meaning of the word "limited." Everyone in the room agreed with Biden about narrowing the focus to defeating Al Qaeda and dismantling their safe havens. But surely that is not a limited goal. And the lack of a defined exit strategy doesn't exactly presume some limited commitment. Under the terms of this plan, we will be in Afghanistan and Pakistan for a long time, and we will find it harder to extricate ourselves, as such an exit is based on a very shaky Afghan security force and a buy-in from a Pakistani government that apparently cannot be trusted.

Some in the administration are skeptical that the Pakistanis will meet their commitments under the new strategy. “You have people there who just lie to our face, like Zardari, who just lies to us,” said one official who requested anonymity, referring to the Pakistani president. “Honestly, I don’t believe there’s a war going on in the tribal areas. The Pakistanis tell us that, but they’re just baldfaced lies.” The official believes that U.S. diplomats in Pakistan accept Pakistani claims of maximal warfighting efforts at face value: “They don’t speak Urdu, they don’t speak Pashto, and they eat it all up.”


For what it's worth, both Zardari and Afghan President Hamid Karzai praised the new plan, in particular the emphasis on increased foreign aid and economic development and the inclusion of a regional diplomatic component, with the notable addition of Iran at the negotiating table. Those actually are the positive signs of this plan, in my view. But I agree with Publius that a lot of this makes me a little queasy.

You're all familiar with the phrase "canary in the coal mine." The idea was that miners would bring canaries down into the mines as warning signals. When the air became toxic, the canaries would be affected first -- thus warning the miners of imminent danger.

With respect to the Afghanistan policy, the problem isn't that the "signaling" canaries are dropping dead. The problem is that they're too happy -- they're chirping with excessive mirth. Specifically, when Max Boot, Robert Kagan, Bill Kristol, and the Post editorial board are all excited about the policy.... well, it might be time to get out of the mine [...]

This strategy seems extremely susceptible to morphing into an open-ended, long-term commitment without clear objectives. Frankly, I didn't see any exit strategy yesterday. I saw no verifiable metrics for determining whether we're achieving our objectives (and on that -- is the objective to disrupt al Qaeda, or to stabilize the government?). I've heard promises of benchmarks -- but nothing yet. And even assuming concrete benchmarks emerge, it's hard to believe we'll really pack up and leave if they're not met.

Let's be clear -- this is an escalation. It's a reasonable one, for now. But these things tend to snowball. To echo Robert Frost, way leads on to way. And if things deteriorate, or if our allies depart, it's easier to imagine that additional escalation (rather than minimalism) will follow. It's not that I don't believe in the goal -- I'm just skeptical that increased military efforts are capable of achieving these goals.

While I disagree with Publius that the objective is unclear, I can certainly see Obama getting boxed in if the mission fails - his newfound neocon friends will push him to commit more troops and treasure, operating on the sunk-cost principle, and wanting to be seen as a strong President, he'll do so. They have a word for leaders like that: Lyndon Johnson.

Obama enters into this with a public fairly wary of an escalating commitment to Afghanistan and Pakistan. They support the President personally, and as he explained it on Friday they will support his mission in the short term. But as the days drag on, and the end appears further and further from view, war fatigue and the concern over the economy will make it very difficult to sustain that support at home. Ultimately, some will start talking about "containment" and when we can bring the troops home and turn this into a law enforcement and intelligence mission. And I don't know what Obama's answer would be.

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Krugman Opens The Overton Window

The upcoming cover of Newsweek, the Village weekly reader, will feature Paul Krugman, or at least 60%-65% of his face, with the headline "OBAMA IS WRONG: The Loyal Opposition of Paul Krugman.”

Krugman, who won the Nobel Prize in economics last fall, has been arguing that Obama is doing too little to respond to threats to the nation’s banking and economic system, and he has contended that the $787 billion stimulus bill should have been bigger [...]

Newsweek Editor Jon Meacham explains the choice in a letter to readers: “Every once a while, … a critic emerges who is more than a chatterer—a critic with credibility whose views seem more than a little plausible and who manages to rankle those in power in more than passing ways. As the debate over the rescue of the financial system—the crucial step toward stabilizing the economy and returning the country to prosperity—unfolds, the man on our cover this week, Paul Krugman of The New York Times, has emerged as the kind of critic who, as Evan Thomas writes, appears disturbingly close to the mark when he expresses his ‘despair’ over the administration’s bailout plan. …

“There is little doubt that Krugman—Nobel laureate and Princeton professor—has be come the voice of the loyal opposition. What is striking about this development is that Obama’s most thoughtful critic is taking on the president from the left at a time when, as Jonathan Alter notes, so many others are reflexively arguing that the administration is trying too much too soon.

"A devoted liberal, Krugman hungers for what he calls ‘a new New Deal,’ and he prides himself on his status as an outsider. (He is as much of an outsider as a Nobel laureate from Princeton with a column in the Times can be.) Is Krugman right? Is the Obama administration too beholden to Wall Street and to the status quo, trying to save a system that is beyond salvation? Does Obama have—despite the brayings of the right—too much faith in the markets at a time when prudence suggests that they cannot rescue themselves? We do not know yet, and will not for a while to come. But as Evan—hardly a rabble-rousing lefty—writes, a lot of people have a ‘creeping feeling’ that the Cassandra from Princeton may just be right. After all, the original Cassandra was.”

Now, some supporters of the President might see this rise of Krugman as a negative development. I see it differently. Krugman has been remarkably consistent to his principles, praising Obama where warranted, even on economic issues. He appreciated Obama's budget and his very legitimate move toward health care reform. His is not a knee-jerk reaction in opposition. Rather, Krugman has taken a critical look at each Obama proposal and made his judgments on the merits based on his own expertise. He has consistently argued that we are in a crisis where the normal rules no longer apply, and we need to look to the past to use the principles of Keynesian economics to dig us out of this rut. And with respect to the banks, he has argued the increasingly consensus view that insolvent banks must be taken over temporarily, their management and bad assets cleared out, and their institutions sold off after the debts are resolved, rather than what he sees as the half-measure of the Geithner plan. In addition, he has the opinion that banks that are "too big to fail" are too big to exist, and we need to fundamentally restructure the financial sector instead of making the sector whole and just turning back the clock to a couple years ago.

Now, you don't have to agree with everything Krugman says - I've seen some very good critiques of things he's said recently. But he is a serious thinker and this is his area of expertise, and he performs an important function. It's an odd quirk of fate that Krugman has as big a megaphone as he does, and so using it to put pressure on the Obama Administration from the left does several things: 1) provides a counter-weight to the conservative critiques of the President, which are usually so nutty that they pale in comparison to reasoned dissent, 2) forces Obama to at least debate the merits of his proposals rather than dismiss all critics, and most important, 3) gives Obama space on the left to put out an more progressive agenda than otherwise. Bill Clinton sums up the dynamic:

I recently heard an interesting anecdote about the 1993 budget fight. While it is probably the most progressive piece of sizable legislation to pass into law in two decades, it was a grueling fight--passing both branches of Congress by a single vote--and it still could have been better. At the signing ceremony, President Clinton found then Representative Bernie Sanders, and told Sanders that he, Sanders, should have made a much bigger public display of how he, Clinton, wasn't giving enough to liberals in the new budget. Such a public display would have provided Clinton more room to maneuver on the left.

The moral of the story is that if no one is criticizing a Democratic administration from the left, then there is no rationale or political space for that Democratic administration to operate on the left. Such criticism is thus even useful to, and desired by, a Democratic administration. If the left stays quiet, it will not be relevant.

Krugman is fulfilling that role, opening what many have called the Overton window, moving the conversation away from the failed conservative ideas of the past.

I also appreciate Krugman's modesty in reacting to the cover story:

I’ve long been a believer in the magazine cover indicator: when you see a corporate chieftain on the cover of a glossy magazine, short the stock [...] Presumably the same effect applies to, say, economists.

You have been warned.

The full article is here.

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Spanish Court Opens Torture Inquiry Against Gonzales, Addington, Yoo, Others

Just off the press from the New York Times:

A high-level Spanish court has taken the first steps toward opening a criminal investigation against six former Bush administration officials, including former Attorney General Alberto R. Gonzales, on whether they violated international law by providing a legalistic framework to justify the use of torture of American prisoners at Guantanamo Bay, Cuba, an official close to the case said.

The case was sent to the prosecutor’s office for review by Baltasar Garzon, the crusading investigative judge who indicted the former Chilean dictator Augusto Pinochet. The official said that it was “highly probable” that the case would go forward and could lead to arrest warrants.

I would call this a big deal. As the report notes, Garzon indicted Augusto Pinochet, which led to his arrest and extradition. This would not immediately lead to arrest and trial, but it would certainly confine the six officials to the United States and increase the pressure for stateside investigations. Spanish courts have "universal jurisdiction" over human rights abuses, under a 1985 law, particularly if they can be linked to Spain.

In the case against the former Bush administration officials, last week Judge Garzon linked it to an earlier case in which he indicted five former Guantánamo Bay prisoners who were citizens or residents of Spain. The Spanish Supreme Court had overturned a conviction of one of them, saying that Guantánamo was “a legal limbo” and no evidence obtained under torture could be valid in any of the country’s courts.

The complaint was filed by a Spanish human rights group, the Association for the Dignity of Prisoners, to the National Court, which assigned the case to Judge Garzon. After the complaint is reviewed by the prosecutor, a criminal investigation would be likely to begin, the official said. If the case proceeds, arrest warrants could still be months away.
The 98-page complaint, a copy of which was obtained by The New York Times, was prepared by Spanish lawyers who have also relied on legal experts in the United States and Europe. It bases its case on the 1984 Convention Against Torture, which is binding on 145 countries including the United States.

The six officials in the inquiry are:

• former Attorney General Alberto Gonzales
• John Yoo, the Justice Department attorney who authored the infamous "torture memo"
• Jay Bybee, Yoo's superior at the Office of Legal Counsel, also involved in the creation of torture memos
• David Addington, Dick Cheney's chief of staff and legal adviser
• Douglas Feith, the former undersecretary of defense for policy
• William Haynes, the legal counsel at the DoD

The amount of material connecting these six to the creation, authorization and direction of state-sanctioned illegal torture, based on perverse and discredited reasoning, is voluminous, and given the record of Garzón, I would imagine this will lead to arrest warrants.

This story shows once again the growing global unease with the implicit policy of the United States to conveniently forget the torture and other abuses of the Bush regime. In England, police are investigating whether British intelligence officers knew about and prolonged the torture of Binyam Mohamed, the recently released Guantanamo detainee. As Glenn Greenwald notes, other countries have not abandoned their commitment to the rule of law.

As The Guardian reported, the British Government was, in essence, forced into the criminal investigation once government lawyers "referred evidence of possible criminal conduct by MI5 officers to home secretary Jacqui Smith, and she passed it on to the attorney general." In a country that lives under what is called the "rule of law," credible evidence of serious criminality makes such an investigation, as The Guardian put it, "inevitable." British Prime Minister Gordon Brown has clearly tried desperately to avoid any such investigation, yet as The Washington Post reported this morning, even he was forced to say in response: "I have always made clear that when serious allegations are made they have got to be investigated."

Wouldn't it be nice if our government leaders could make a similar, extremely uncontroversial statement -- credible allegations of lawbreaking by our highest political leaders must be investigated and, if warranted, prosecuted? In a country with a minimally healthy political culture, that ought to be about as uncontroversial as it gets. Instead, what we have are political leaders and media stars virtually across the board spouting lawless Orwellian phrases about being "more interested in looking forward than in looking backwards" and not wanting to "criminalize public service." These apologist manuevers continue despite the fact that, as even conservative Washington Post columnist Anne Applebaum recently acknowledged in light of newly disclosed detailed ICRC Reports, "that crimes were committed is no longer in doubt."

The end of the NY Times article shows why the US can hardly claim that Spain is acting irresponsibly beyond its own borders and violating the soveriegnty of other nations, because in one recent case we did almost exactly the same thing:

The United States for the first time this year used a law that allows for the prosecution in the United States of torture in other countries. On Jan. 10, a Miami court sentenced Charles Taylor, the former Liberian leader, to 97 years in a federal prison for torture, even though the crimes were committed in Liberia.

Last October, when the Miami court handed down the conviction, Attorney General Michael B. Mukasey applauded the ruling and said: “This is the first case in the United States to charge an individual with criminal torture. I hope this case will serve as a model to future prosecutions of this type.”

So do I.

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Red River Flooding And National Service

A spate of winter storms in the Fargo, ND/Moorhead, MN area have threatened homes and businesses as the Red River rises and increases the potential for a catastrophic flood. Thousands of volunteers reinforced dikes and levees, raising the floodwall level to roughly 43 feet, and many communities already submerged have been evacuated. On Friday the water level in the river rose to a level approaching 41 feet, with cresting expected in the next 48 hours. But this morning, freezing temperatures have slowed the rise of the river, as snow has not melted, and the National Weather Service cautiously announced that the river crested at a lower level than predicted. This is positive news suggesting that the levees will hold, but the situation remains dangerous, with more storms in the forecast for next week and the water level still at a record high.

In his weekly radio address, President Obama expressed his support for those affected by the flooding, citing his disaster declarations for North Dakota and Minnesota, the FEMA response and the US Army Corps of Engineers support in coordinating the building of makeshift levees. It's good to see this kind of coordination and attention in the midst of the emergency, not after it.

In addition, the President also connected the situation to the theme of national service that Steve discussed yesterday.

For at moments like these, we are reminded of the power of nature to disrupt lives and endanger communities. But we are also reminded of the power of individuals to make a difference.

In the Fargodome, thousands of people gathered not to watch a football game or a rodeo, but to fill sandbags. Volunteers filled 2.5 million of them in just five days, working against the clock, day and night, with tired arms and aching backs. Others braved freezing temperatures, gusting winds, and falling snow to build levees along the river's banks to help protect against waters that have exceeded record levels.

College students have traveled by the busload from nearby campuses to lend a hand during their spring breaks. Students from local high schools asked if they could take time to participate. Young people have turned social networks into community networks, coordinating with one another online to figure out how best to help.

In the face of an incredible challenge, the people of these communities have rallied in support of one another. And their service isn't just inspirational – it's integral to our response.

It's also a reminder of what we can achieve when Americans come together to serve their communities. All across the nation, there are men, women and young people who have answered that call, and millions of other who would like to. Whether it's helping to reduce the energy we use, cleaning up a neighborhood park, tutoring in a local school, or volunteering in countless other ways, individual citizens can make a big difference.

This is the tradition of national service that conservative commentators have likened to Hitler Youth. This is the call to sacrifice that Chuck Todd doesn't seem to understand because it doesn't involve cutting Social Security or Medicare benefits. Obama's support of national service represents a continuum throughout his campaign and his public life, that we have a responsibility to one another, that we can do our part for change as neighbors and fellow citizens. I would ask those naysayers on the right if they asked the residents of these communities in North Dakota and Minnesota their opinion.

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The Beavis And Butt-head Party Strikes Again

Today is the second annual Earth Hour, a worldwide campaign to raise awareness on the issue of climate change. At 8:30pm local time, major businesses, local and national points of interest, and individual homes will dim their lights for one hour. Already today, sites ranging from the Sydney Opera House to the Egyptian Pyramids have lowered their lights in recognition, and 4,000 cities in 88 countries will participate in the event. Sponsored by the World Wildlife Fund, Earth Hour will provide, in the words of UN Secretary General Ban Ki-moon, "a way for the citizens of the world to send a clear message: They want action on climate change."

It will also provide a new way for conservatives to show what hardcore rebels they are.

Tomorrow is something called Earth Hour. Take the official RedState Pledge:

I do solemnly swear that I will honor Earth Hour by turning on every light in my residence at 8:30 p.m. on March 28, 2009, for one hour. God said, "Let there be light." Who are we to argue?

Yeah, they want you to turn your lights off, but everybody knows darkness leads to crime.

It's amusing to see Erick Erickson so terrified of possible boogeymen infiltrating his house from 8:30 to 9:30, as well as the wingnut tendency to go after all the most important targets, like symbolic light-dimming actions. But this has now become a cliche. My local wingnut radio hosts were making the same "jokes" last night: "I'll turn on every light in the house!... I'll keep my car running for an hour!" And of course, Glenn Beck devoted an entire show to running his car in the parking lot a couple months ago.

Conservatives are allowed to show their ignorance of sound science any way they want, but they ought to at least liven it up a bit. The "I'm going to turn on every light in the house" bit is getting about as hackneyed as jokes about airline food and Gilligan's Island ("all those clothes for a three-hour tour?"). Let me introduce you to a Republican with innovative and novel thinking about climate change. It's embarrassingly wrong, but at least it's new:

We've repeatedly documented Rep. John Shimkus' ridiculous positions on climate change. During a House Subcommittee on Energy and Environment hearing earlier this week, the downstate Republican was in rare form. Speaking to British global warming denier Lord Christopher Monckton, Shimkus made a novel argument that because plants need carbon dioxide for photosynthesis, limiting our man-made carbon dioxide emissions would actually kill the world's plants. Watch the exchange here:

SHIMKUS: It's plant food ... So if we decrease the use of carbon dioxide, are we not taking away plant food from the atmosphere? ... So all our good intentions could be for naught. In fact, we could be doing just the opposite of what the people who want to save the world are saying.

I've always wanted to use this line on Steve's site, and now it's appropriate: Shimkus did not appear to be kidding.

Shimkus basically maps out a world where, prior to the Industrial Revolution, no plant life existed, because we hadn't yet set into motion mass production of their "food." In this scenario, plants actually sprung to life shortly after the invention of the Watt steam engine in the 18th century.

Now THAT'S a new one! Relentlessly stupid, sure, but new.

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When The Press Corps Attacks

The White House Press Corps has had it. They're tired of the games, the evasions, the disrespect. They will boldly stand up for their profession and not hold back any more. Now the truth can be told. They will ask the penetrating, uncomfortable questions that no Press Secretary wants to hear.

They are going to finally call out the Administration for their lies in the run-up to Iraq!

No, scratch that, they're going to be pissy about Robert Gibbs walking in 20 minutes late to a briefing.

As the daily press briefing began this afternoon at 2:07pmET, several members of the White House press corps spoke up to press secretary Robert Gibbs about his tardiness.

FishbowlDC reports that the briefing began about 20 minutes after the two minute warning was given and that ABC's Jake Tapper "had taken charge with two visits to the Lower Press office to complain during the long wait."

By the time Gibbs arrived, members of the press corps could be heard complaining saying things like, "it irritates everybody here."

We hear the late briefings are a pattern, and that it was not an issue during the Bush administration.

On one level, reporters have deadlines, and this particular breed of reporters needs Gibbs to do their job. So fine. On another level, Gibbs was apparently late this time because he was talking to the President about an issue sure to come up in the briefing. Also, of all the things to finally blow their stack about, the press corps reaches their limit on punctuality? Lie to them, fine, just don't make them sit in an air-conditioned room for an extra five minutes. Show some respect for the office like George W. Bush did.

By the way, if Gibbs were prompt, maybe the press would have more time for scintillating, piercing questions like this.

MS. ROMANO: The teleprompter changed last night.

MR. GIBBS: Mm-hmm.

MS. ROMANO: What was that about that? It's a big jumbotron now.

MR. GIBBS: You know can I tell you this?


MR. GIBBS: I am absolutely amazed that anybody in America cares about who the President picks at a news conference or the mechanism by which he reads his prepared remarks. You know, I guess America is a wonderful country.

MS. ROMANO: You're saying this is all Washington Beltway stuff?

MR. GIBBS: I don't even know if it's that. I don't think I should implicate the many people that live in Washington.

MR. GIBBS: No, I you know, I don't think the President let me just say this: My historical research has demonstrated that the President is not the first to use prepared remarks nor the first to use a teleprompter.

I'm all for a vigorous press fighting for their rights to access, but when they continually take their cues from Matt Drudge headlines, isn't Gibbs' tardiness a virtue and not a vice?

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NY-20: Tedisco, Duck

It has been notable to see the President and the Vice President get fairly involved in the special election in NY-20 over the last week or two, despite the dynamics of the district presumably favoring a Republican. Obviously something flipped and they feel like Scott Murphy can take the seat (incidentally, liberal netrooters, Murphy has announced his intention to join the Blue Dogs, so caveat emptor). And if you want to know why, just check out what Eric Sundwall, the Libertarian candidate who was kicked off the ballot at the last minute after having his signatures challenged, had to say about Republican Jim Tedisco:

Mr. Tedisco denies any involvement with the concerted effort by his supporters to knock me off the ballot. I don't believe him. The ruthless effort by his supporters to knock me off the ballot without a word of protest by him proves his unfitness for any office let alone Congress in these critical times.

I will be voting for Scott Murphy on Tuesday. While we disagree on some important issues, I find him to be a man of honor, a good family man and successful businessman. Unlike Tedisco, he actually lives in the District. And, unlike Mr. Tedisco, I view Scott's business success as a virtue, not a vice.

I urge my supporters and all those who believe in open and free elections to show their disgust at the tactics of the Republican political machine to win at all costs. Please join me in voting for Scott Murphy on Tuesday.

Obviously, the Libertarian candidate dropping from the ballot and throwing his support to the Democrat means little on a practical level. But the fact that Tedisco's tactics so angered him that he decided to blast him clearly shows how Tedisco is making friends and influencing people in the district. And the slow-motion winnowing of the GOP into a small regional party in the South continues apace.

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Admitting They're Too Big To Exist

President Obama met with the nation's top bankers yesterday, and I think "jovial" would best describe the atmosphere, at least from press reports. The White House has calmed their rhetoric toward Wall Street of late, and after the meeting the bank CEOs were all smiles. They even might do us all the favor of keeping taxpayer money, which is awful nice of them.

Obama apparently did impress upon them the need to curb their excesses, at least in public.

Sitting at the center of a round table in the state dining room, Mr. Obama spoke firmly about how there had been a “cultural shift” regarding executive bonuses and Wall Street pay. He said that Americans had a right to be angry. “The anger is real,” the president said, according to people who attended the meeting. “The industry needs to show that they get it on the compensation issue.”

“Excess is out of fashion,” Mr. Obama added, noting that pay must be linked to performance.

The bankers nodded, but made no firm commitments.

As to any real change in compensation rules, I'm not from Missouri but they'll have to show me.

But I agree with Moe Tkacik that JP Morgan CEO Jamie Dimon might have offered a bit too much truth in the post-meeting press scrum:

"One of the main root causes [of the crisis], and this has been going on for a long time, was the huge trade and global financing imbalances which fueled very low rates and excess consumption, and over a long period of time I do not believe you can run those kind of trade deficits..."

Dimon was getting at one of the root structural causes of the current crisis -- America takes, the world (China especially) makes, an unsustainable situation sustained above all by an increasingly usurous financial services industry. As the CEO of PNC Financial Services just pointed out, banking is the biggest sector of the American economy -- and it's been to the detriment of everything else. was precisely Wall Street and corporate America that relentlessly lobbied the government over that very long period of time to enable those gaping imbalances to gape ever wider. What both Barack Obama and Jamie Dimon implicitly understand is that publicly traded corporations are not engineered to look out for their long-term interests. By allowing the financial sector to bloat "too big to fail", the country lost the kind of industries that are too vital to fail -- which is to say, manufacturing.

This is the point that my father, he of the 40 years in the textile industry, has made repeatedly to me since he lobbied Congress to save his industry - in 1979, mind you. A society that loses its industrial base at the expense of, in this case, the financial services sector, puts itself in great peril. The size and the increasingly lucrative nature of an overgrown financial sector combined with the desire for perpetual growth creates just the kind of bubble-based economy, and dangerous aftermath, that we see today.

I don't think Dimon was actually calling for the shrinking of his own industry, but that was the effect, at least on me.

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Friday, March 27, 2009

Friday Random Ten

A housekeeping update: I'll be filling in for the incomparable Steve Benen at The Washington Monthly starting tomorrow and through Monday. I'll probably cross-post everything over here, but please stop by and show your support in the comments if you can. Should be fun, though I'm already biting my fingernails wondering how I'll keep up with Steve's normally prodigious output.

Some music while I mull this over.

M'Lady - Sly & The Family Stone
Desiree - Neil Diamond
Maybe Sparrow - Neko Case
Snail Shell - They Might Be Giants
And It Rained All Night - Thom Yorke
Moon Sammy - Soul Coughing
Lake Of Fire - Nirvana
CMYK - Ladytron
Stronger - Kanye West
All I Need - Radiohead

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The Week In Health Care

This has been a very interesting week in the fight for health care reform. Let's take a look at some of the major developments.

Single-payer: Sen. Bernie Sanders introduced S.703, a single-payer health care bill (called the American Health Security Act of 2009), in the Senate. While this would be a companion bill to HR676 on the House side, it's the first time I can remember, and apparently the first time since the death of Paul Wellstone, that anyone in the Senate has carried a single-payer bill. Sanders in the release calls the bill "the most fiscally conservative option for reform" because private insurance overhead would be eliminated, saving over $400 billion dollars annually. Now that such a bill has been introduced in both Houses, there should be a demand from single-payer advocates to get the CBO to score the bill. Without numbers that Washington trusts, and sadly the CBO is the only number-crunching body with that authority, single payer will not be taken seriously. But a true accounting of the cost savings could spur reform. You can find the bill here.

The Public Option: Howard Dean has jumped squarely into the health care debate from his perch at DFA, advocating strongly for a public insurance option to compete with the private market. Dean has gone so far as to say that without a public option, health care reform essentially doesn't exist.

Obviously, the insurance industry wants no part of a public option, that would force them to compete on price and quality of coverage, instead of the current system of competing to deny care to their customers to maximize profits. They say such a system would put them out of business. To which I say, YAY! What's important to understand is that there are public options and there are public options. Ezra Klein explains the structure of the three most common proposals:

• Single-Payer Lite. This was the rationale you heard during the primary campaign. A public insurance plan able to use Medicare's bargaining power to secure deep discounts for its customers and ensure the maximum possible network would be cheaper and more efficient than private insurers. Over time, this increased efficiency would make the plan more attractive because it could offer more coverage for less money. As consumers recognized this fact, they would increasingly migrate towards the plan, and the public insurer would become, if not a de facto single payer system, something close to it. The public insurer, in this scenario, is a game changer. But it's a game-changer because it's a form of single payer using a mild version of monopsony buying power.

• The Level Playing Field Plan. Insurers, predictably, howled that a public insurer with access to Medicare's market power would put them out of business. (Generally speaking, liberals agreed with that.) The messaging they settled on was conceptually odd but has proven pretty effective. A public insurer, they argued, would not be competing on a "level playing field." This might have caused someone to wonder when, exactly, the market had ever cared about "fair." But instead, this frame has been widely adopted, with Obama telling Chuck Grassley, "I recognize that there's that concern. I think it's a serious one and a real one. And we'll make sure that it gets addressed." In answer to this, Len Nichols proposed a public insurance plan that doesn't have access to Medicare's bargaining power, and this is the policy that CAP's paper advocates. This is not single-payer lite. It's just an insurer without shareholders or highly-paid executives. (I should note that some, like Harold Pollack, believe you could begin with this plan and end with the single-payer lite plan. I'm not convinced, but its possible.)

• The Catch-All. I've heard that the insurance industry and some advocates are interested in a compromise that looks a lot like Medicaid choice. Here, you'd have a public insurance option, but only for people making under a certain income level. It's a way of folding Medicaid into the new system.

If the single-payer lite plan is jettisoned, with the "level playing field" plan offered, such a public option would not achieve the kind of bargaining power to make it cost-effective. You reduce a bit of overhead and eliminate the profit motive to a certain extent, but you will not have done much to force private industry to heel. So if Dr. Dean wants to advocate for a public option, it had better be the right kind. For his part, Max Baucus, who has as much power over health care reform as anyone in Congress, characterized the public option as more of a bargaining chip than an actual policy point:

"Essentially, it's to keep it on the table to encourage the private health insurance industry to move in the direction it knows it should move toward—namely, health insurance reform, which means eliminating pre-existing conditions, guaranteed issue, modified community ratings. [TRANSLATION: Measures that would force the insurers to cover the sick as well as the healthy, at a cost that everyone could afford.] It's all those actions that insurance companies must take in order to provide affordable coverage. And the public option helps encourage the private companies to move in that direction, because they're worried. We might have to modify the public option to get enough votes. I hear some concerns among Republicans about the public option. The main purpose is to keep the health insurance feet to the fire."

Which leads us to...

Industry Concessions: The insurance industry has offered what I imagine they consider their grand bargain: they will agree to both guaranteed issue (no more denial for pre-existing conditions) AND community rating (charging a flat rate for a community regardless of medical history) in exchange for an individual mandate that forces everyone to buy health care. This would be significant, but the devil is in the details:

The companies left themselves several outs, however. The letter said they would still charge different premiums based on such factors as age, place of residence, family size and benefits package.

"If the goal is to make health care affordable, this concession does not go far enough," said Richard Kirsch, campaign manager for Health Care for America Now. "It still allows insurers to charge much more if you are old." His group, backed by unions and liberals, is trying to build support for sweeping health care changes.

Importantly, insurers did not extend to small businesses their offer to stop charging the sick higher premiums. Small employers who offer coverage can see their premiums zoom up from one year to the next, even if just one worker or family member gets seriously ill.

Ignagni said the industry is working on separate proposals for that problem.

"We are in the process of talking with small-business folks across the country," she said. "We are well on the way to proposing a series of strategies that could be implemented for them."

Lots of outs for themselves, particularly age, which is intimately tied to increased need for care. It's good in the abstract because the industry clearly feels the need to move in the direction of reform. But they sang a lot of this tune in 1993 as well. Kevin Drum has more.

Massachusetts Debate. One of the more interesting arguments among health care reformers concerns Massachusetts' "universal health care" policy adopted in 2006. It included an individual mandate and shared responsibility for stakeholders to provide subsidies to ensure everyone signed up for insurance. Monica Sanchez took a look at the MassCare plan relative to Barack Obama's principles for health care reform and found it lacking. A sample:

1. Does it protect families' financial health?

NO - Of those surveyed in a fall 2008 survey of Massachusetts residents on healthcare conducted by the Boston Globe and the Blue Cross Blue Shield of Massachusetts Foundation: in a recent survey 13% of insured said they were unable to pay for a health service; 13% said they were unable to afford to fill a prescription; and 33% ranked the cost of care their biggest health concern.

2. Does it make health coverage affordable?

NO - not for the middle class and not even for some people with low incomes. According to the report released last month, "Massachusetts' Plan: A Failed Model for Health Care Reform," by Drs. Nardin, Himmelstein, and Woolhandler, in fiscal year 2009, to bring cost increases down from more than 15.4% to 9.4% for CommCare, the state cut benefits and increased copays.

Read the whole thing. Jon Gruber argues that cost control was not entirely a part of the Massachusetts reform, as it focused more on universality. Thus it created what amounts to an entitlement in the hopes that the political dynamic could be changed to focus on bringing down costs once the plan was in place. In other words, there is, as Ezra Klein put it, an embedded political logic to doing coverage first.

States don't really have the bargaining power to bring down costs, nor can they deficit spend, so I don't know how building the political advantage for cost control really helps them, actually. And while this would possibly make sense on the national level, the Obama plan seeks to do everything at once, so it's not really germane.

Budget Reconciliation. Harry Reid says he is completely open to using the budget process for health care reform, meaning that such legislation would only need 50 votes. Others violently disagree, not just Republicans but people like Budget Committee Chair Kent Conrad and Ben Nelson. In steps Steny Hoyer, of all people, as a mediator.

As House Speaker Nancy Pelosi (D-Calif.) did earlier Thursday, Hoyer defended the House’s decision to include budget reconciliation in its budget.

“Reconciliation on healthcare is a fallback position. It is not the preferred option. The preferred option is creating a bipartisan consensus,” Hoyer said [...]

Republicans argue that Democrats, by having reconciliation in their hip pocket, can pull out of any negotiations, whenever they want, making those talks potentially pointless for the GOP.

Hoyer said that if Democrats acted in that way, the Republicans would have a right to complain.

“If they are negotiating in good faith and then we pull the rug out from under them, I think that would be harmful to our objective of passage with a degree of bipartisan support and therefore credibility in the public,” he said.

Without reconciliation as a fallback, Republicans wouldn't even come to the table. So I do think it's a vital tool and shouldn't be set aside just yet. Hoyer had some interesting things to say about single payer and the public option, as well.

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Yay, My Friend Is A Pawn In An Intercontinental Ballistic Missile Game

I'm beginning to understand why my friend Euna Lee and her colleague were taken into custody by the North Koreans last week. Obviously they are being used as bargaining chips, but apparently that leverage will be put to immediate use:

North Korea has placed a long-range missile on a launch pad before a test that the United States, Japan and South Korea said would violate a United Nations Security Council resolution, a news report said Thursday.

Spy satellites detected what looked to be a Taepodong-2 missile in place Tuesday at the Musudan-ri launch site near North Korea’s northeastern coast, said Chosun Ilbo, South Korea’s leading daily, quoting an unidentified diplomatic source.
Once the rocket is installed on the pad, missile experts said, the North Koreans can technically launch it within three or four days — the time needed for the fueling of a three-stage rocket.

North Korea has said it would launch a rocket over Japan and the Pacific between April 4 and 8 to deliver an experimental communications satellite into orbit. But Washington, Tokyo and Seoul have said the launch is a cover for testing its Taepodong-2 ballistic missile. Both missions — the satellite and the ballistic missile — use the same rocket technology.

Obviously the American reaction to this is bound to be tempered by the fact that Pyongyang has two American journalists in their custody. While the Secretary of State has called for sanctions if the missile launch goes forward, and Japan has put interceptor missiles on alert and dispatched warships toward the peninsula, with Lee and Ling captured, the opposition is bound to be toothless.

This just makes me feel great on a Friday!

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Feinstein's Dishonest Spin on Employee Free Choice

At The Plum Line, Greg Sargent takes a look at Dianne Feinstein's lack of support for the Employee Free Choice Act. She remains the only Congressional Democrat from California not to co-sponsor the bill, and according to her spokesman, she's looking for the mythical bipartisanship pony.

“I have thought for some time that the way to approach this issue is by trying to see if there can’t be a compromise between the business community, the agriculture community and labor. This is an extraordinarily difficult economy and feelings are very strong on both sides of the issue. I would hope there is some way to find common ground that would be agreeable to both business and labor.”

This is complete nonsense. Employers are firing workers who try to organize. They intimidate workers into voting against their better interests. One out of every four unions elections were marred by illegal firings in 2007. I don't know how you can possibly reconcile the two sides given that scenario.

Furthermore, the invocation of the "difficult economy" is another red herring. Sen. Tom Harkin has already done away with this nonsense by pulling out his history book.

The bill's supporters are pointing to the downturn as the ultimate proof of their arguments that labor's decline has helped put the economy out of balance and that only by restoring workers' purchasing power can the nation return to broadly shared prosperity.

"In 1935, we passed the Wagner Act that promoted unionization and allowed unions to flourish, and at the time we were at around 20 percent unemployment. So tell me again why we can't do this in a recession?" said Sen. Tom Harkin (D-Iowa), invoking the pro-labor changes of the New Deal. "This is the time to do it. This is exactly the time we should be insisting on a fairer playing field for people to organize themselves."

Because of Sen. Specter's announced opposition, the Employee Free Choice Act faces an uphill battle. But at the very least, Californians should expect that all of their representatives in Washington would understand the need to strengthen unions as a means to strengthening the overall middle class, increasing wages and BOOSTING, not hurting the economy. Feinstein has a choice to make, and you can sign this letter from the Courage Campaign to let her know you're watching her.

Dear Senator Dianne Feinstein,

In this time of economic crisis, we are distressed to hear that you have not yet endorsed the Employee Free Choice Act, especially as conservatives launch a massive campaign to discredit and oppose the bill.

The Employee Free Choice Act, which you co-sponsored and voted for in 2007, is a centerpiece of progressive efforts to help working Americans recover from this economic crisis. As in the Great Depression, the best way to rebuild the middle class is to allow workers to form unions. Workers covered by a union contract have better wages and benefits. Non-union workers benefit from these higher standards when unions are strong in their areas.

We, the undersigned, call upon you to endorse and to co-sponsor the Employee Free Choice Act. We ask that you join President Barack Obama, Senator Barbara Boxer, the entire California Democratic delegation in the House of Representatives, members of labor unions and progressives across America in ensuring that this act becomes law in 2009.

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Back Off So I Have Room To Stick The Knife In

Harry Reid wants all these liberal groups with their ideas and principles to just take it down a notch.

Senate Majority Leader Harry Reid said Friday that liberal groups targeting moderate Democrats with ads should back off, saying pressure from the left wing of his party won't be helpful to enacting legislation.

"I think it's very unwise and not helpful," Reid said Friday morning. "These groups should leave them alone. It’s not helpful to me. It’s not helpful to the Democratic Caucus.”

Reid, who said he hadn’t seen or heard the ads, added that "most of [the groups] run very few ads — they only to do it to get a little press on it."

In one respect, Reid is fulfilling his traditional role. The left pushes on the ConservaDems, and the Majority Leader comes to the rescue of the members of his caucus, and the ConservaDems thank him. Thusly bonds are made. Reid won't stop the calls to Senate offices, especially when the likes of Ben Nelson are vowing to vote asking the budget if it includes reconciliation.

In another respect, I have to agree with David Waldman.

But the thing is, you really need to add your two points together to get to something meaningful about how things are going in the Senate. There really are people who only join these groups so that they can say they're moderate. That's true. There's a lot of gaming of the system going on. And at the same time, you really don't like being told it's "my way or no way." No one does.

But just as there are people in those "moderate" groups who aren't really all that "moderate," it's also true that some of the people who say they're "moderate" really are people on the extremes, who are saying to you "it's only my way or no way."

That's the reason -- the only reason, really -- that voting blocs like Evan Bayh's exist. They're formed precisely so that they can use their numbers to say to you, ultimately, that "it's only my way or no way." The power of a voting bloc lies in its ability to deliver or withhold its votes. And as you know, there are only two ways to vote in the Senate. Further, because there's no way to set up a vote in the Senate such that you get to vote all at once for one or the other of two competing proposals, every single vote is really essentially a choice between "only my way or no way." Yes, the very next vote can be on whether or not to adopt some other, compromise way. But each vote, taken by itself, is "this way or nothing," and a no vote is a vote for nothing. Sometimes that's a good thing, sometimes a bad thing. But a no is a no.

That being the case, it's worth noting -- as I'm sure you do in your own internal dialogue -- that Evan Bayh's gang is all about "my way or no way." And that reveals them for what they are. (When and if they ever decide to actually hang together as a group, that is.) "Moderate" may be the label they're hoping people will allow them to cling to, but by your definition, they're people on the extremes.

In other words, Reid spends a lot of time and effort here calling out those on the left for making his life difficult, but precious little for those Democrats on the right who are... um, making his life difficult. Maybe that happens internally, but given this latest outrage, I think we can conclude that the Majority Leader believes exactly as the Evan Bayhs of the world believe.

Senate Majority Leader Reid said today he would drop a cram-down provision from a House-passed banking bill if the language threatened to keep the Senate from passing the overall bill. The provision would allow a bankruptcy judge to reduce a homeowner's mortgage principal. "If we can't get the votes for that, and I am hopeful we can -- I am semiconfident we can -- then what I'll do is take that off [the bill] and do the other banking provisions," Reid said at a Christian Science Monitor breakfast.

Harry Reid doesn't want liberals to back off so he can manage his caucus without intrusion - he wants them to back off so, you know, they back off, without criticizing the decisions for which he is ultimately responsible. Deep-sixing cramdown is just the beginning, if progressives fail to hold their leaders accountable. Reid just made the entire argument for why these calls and advertisements have to go forward - because he will do nothing worthwhile without pressure.

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The Looming Budget Fights

The Obama Administration budget has a number of elements that would restore fairness and progressivity to the tax code, end the creeping privatization of government functions, cut down on waste, fraud and abuse in contracting, and invest in some of the most important elements, notably education, health care and clean energy, that will drive our economic future. It is a telling quirk of the entrenched nature of Washington, however, that the most promising parts of this budget, the parts that do the most to shake up the status quo, are precisely the parts that will be fought so strenuously by those who wish to maintain that status quo.

For instance, there's the perfectly sensible alteration of the financial aid system for higher education, which would eliminate the middleman in the student loan market, reducing rates for college students while saving the government money through increasing efficiency and cutting subsidies to loan officers.

Among other changes, the Obama budget eliminates the Federal Family Education Loan Program, which excessively subsidizes banks, and moves to the U.S. Department of Education’s Direct Loan program. The Congressional Budget office projects this move to save $94 billion over nine years. The Obama budget then redirects the savings to students. The Congressional Budget Office estimates that in 2010-2011, $5 billion would be cut from subsidies to banks and lenders, and invested in students instead.

Redirecting the bank subsidies toward Pell grants would solidify the grant program as the premier source of assistance for low-income students. The Pell grant maximum would increase from $5,350 to $5,550; the estimated national average Pell grant award would increase by $121, from $3,299 to $3,423. Increasing the award will also enable an additional 130,000 more students to attend college per $100 increase in the maximum award.

However, because this system would take aim at the student loan industry that has built up in particular Democratic areas, top Democrats want to scuttle the deal.

Senate Budget Committee Chairman Kent Conrad (D-N.D.) and House Appropriations Chairman David Obey (D-Wis.) are opposed to provisions in Obama’s budget plan that would remove private banks from the federal student loan program and transfer the expected savings — $94 billion over a decade, according to the CBO— to a new program that would instead guarantee Pell Grant funding for eligible students [...]

Conrad is under some pressure from his home state to preserve a role for banks in the federally backed student loan program.

“If the president’s proposal goes through, that will deeply affect the Bank of North Dakota,” according to Julie Kubisiak, the director of student loans at the state-owned bank. She said the bank’s entire advisory board, consisting of the governor, attorney general and other officials, have written to the state’s Congressional delegation opposing the change.

That's ALL this is about. There's some lip-flap about not wanting to create a new entitlement by guaranteeing Pell Grant funding, but it's B.S. The banks want to keep their subsidies. I mean, it's not like they've created any hardship for the country lately, is it?

Then there's the battle over ending subsidies to the oil industry:

The Obama administration's push to raise taxes on the oil industry is reigniting a battle the industry fought and won last year.

Under pressure to narrow projected deficits, President Barack Obama's 2010 budget proposal calls for raising more than $31 billion over the next decade by eliminating the oil and gas industry's eligibility for various tax breaks.

The plan would slap companies with a new excise tax on production in the Gulf of Mexico worth $5.3 billion between 2010 and 2019, and repeal the industry's eligibility for a manufacturing tax credit worth $13.3 billion in that period. The industry says the final cost of Mr. Obama's proposals on petroleum production could top $400 billion, once his plan to put a price on greenhouse-gas emissions is factored in [...]

The oil industry, which in its campaign donations has long favored Republicans, is taking its case to voters. A new ad campaign by the American Petroleum Institute in about a dozen states says new taxes would "hobble our ailing economy" and "cost thousands of American jobs."

"I think we should pay our fair share of taxes, but I don't think we should look at this industry as the source of all money to pay for the renewable energy industry," said Peter Robertson, vice chairman of Chevron Corp. Mr. Robertson said Mr. Obama's tax proposals will discourage domestic oil and natural-gas production and undermine his goal of reducing U.S. dependence on foreign oil.

I know that President Obama vowed to fight the special interest he takes on in his budget. And It's good to see the grassroots advocacy groups rallying behind this, particularly against conservative Democrats who want to hide their views from their constituents. But the power is very entrenched. So this will be a very big struggle.

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They're Baaaack...

You didn't think Bill Kristol and the PNAC crowd would just go away, did you?

What do you do if your previous organization — and the ideology behind it — has become inextricably bound in the public’s imagination to one of the worst foreign policy blunders in American history? Obviously, shut it down, and start a new organization with a new name.

The Foreign Policy Initiative lists Robert Kagan, Bill Kristol, and Dan Senor on its board of directors, so no prizes for guessing what they’re about (more power, less appeasement, stronger wills.) Kagan and Kristol need no introduction, they’re the Tick and Arthur of disastrously counterproductive military adventurism. Given the staggering costs in American blood, treasure, security, and reputation incurred by their boundless enthusiasm for blowing stuff up, you might think they’d have had the decency to retreat to a Tibetan monastery by now, but sadly no. The way it works in Washington is, if you’re willing to argue for more defense spending, you’ll always find someone willing to fund your think tank.

Dan Senor is less known to the general public, but familiar to those who’ve followed the Iraq debacle closely. From 2003 to 2004, Senor served as a Coalition Provisional Authority spokesman under Paul Bremer. After that smashing success, Senor returned to Washington, where, among other things, in September 2004 he helped write speeches for Iraqi interim prime minister Ayad Allawi’s U.S. visit, and then apparently went on television to praise those speeches as evidence of Bush’s accomplishments in Iraq.

Senor is also Campbell Brown's husband, so I'm sure this will be covered extensively on her show, which as you know is both no bias and no bull.

Spencer Ackerman and Ari Rabin-Havt have more. Interestingly, this little group's first public event is a half-day conference on how to succeed in Afghanistan, featuring some of the same cheerleaders who blundered us into war in Iraq.

FPI, whose founders and principals include Robert Kagan, Bill Kristol, and Dan Senor, will host a summit next Tuesday titled "Afghanistan: Planning for Success." Billed as a "half-day conference" to "discuss how the United States and our allies can succeed in Afghanistan," the event will feature appearances and discussion from Sen. John McCain (R-Ariz.), Rep. John M. McHugh (R-N.Y.) -- ranking member of the House Armed Services Committee -- and Rep. Jane Harman (D-Calif.), who chairs of the House Homeland Security Intelligence Subcommittee.

"I know these people and recognize where they're coming from," the Congresswoman said of her appearance at the event. "I'm coming from a different place and want to be sure that point of view is heard. My point of view will be extremely sympathetic to the Obama Administration position on Af/Pak."

Maybe Harman could go ahead and not show up to give a point of view that none of the magical thinkers and armchair generals who make up this outfit would possibly care about. But I am intrigued by the focus on Afghanistan. As Matt Duss notes, the better title for the conference would be "Afghanistan: Dealing With The Huge Problems Created By Many Of The People On This Very Stage." The relentless focus on Iraq drew attention and resources from Afghanistan and helped to put us in this predicament. But the current dynamic shows Republicans both praising Obama's Afghanistan/Pakistan plan and calling it "the new surge." Here's John Cornyn.

I commend President Obama on his plan for a surge in Afghanistan, which is our front line in the Global War On Terror. Victory there is imperative, and President Obama and our troops on the ground in Afghanistan have my full support. I will do everything in my power to ensure that Congress provides any and all resources required to accomplish the mission [...]

It is my hope that President Obama's surge in Afghanistan achieves results similar to the surge in Iraq, enabling victory and bringing our fighting men and women home as soon as possible.

You can see an outline of the foreign policy critique here. First of all, the neocons are trying to redeem the Bush strategy in Iraq by casting it as a success (I have hundreds of thousands of reasons why this is not the case). Then there is the support of Afghanistan, which will quickly turn into "there needs to be a greater commitment" as it falters. Neoconservatism cannot fail, of course, it can only be failed. And so the argument will be that Green Lantern's will just needs to be stronger and we can exterminate the brutes and claim victory. Which is actually not Obama's Af/Pak plan (a plan I don't fully support), so the space on the right can be easily carved.

It would be easy to say "Forget about these idiots who wrecked the world, they have been totally discredited," but the country's politics have never worked that way. The same discredited group one year returns to power the next. And so it's crucial to keep tabs on these knaves and see what most excellent adventure they have planned for the country when they claw their way back.

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Robert Cruickshank brings the news that Sacramento leaders decided not to pull the trigger that could have been met by federal stimulus funds flowing into the state, which means that really painful cuts to health care and IHSS (in-home state services), as well as certain tax increases, will be retained. Karen Bass doesn't sound happy:

I am disappointed with the narrow reading of the trigger and the decision made today by the Director and the Treasurer. But it was the last minute changes to the budget demanded by Republican Senators that put the trigger level out of reach and all but guaranteed the higher taxes and cuts to critical programs. We agree with the Treasurer that a portion of the cuts should be restored, and we will work through the budget process to find alternative solutions to a portion of these cuts.

It's completely clear to me that, with another looming budget deficit, the Governor wanted no part of leaving any cuts or tax increases on the table, which would potentially make the deficit bigger. So they read the trigger precisely to ensure that it wouldn't be met. Never mind the very real consequences for the sick, the elderly, the blind, the disabled. A link to all the cuts here.

Robert writes:

It didn't have to be this way. Even putting aside the "narrow reading" issue, this is a failure of both the state and the federal government. Democrats agreed to a bad deal, and the Yacht Party did their best to make the Great Recession worse by destroying the very governmental services that we need to stop the downward spiral and start a recovery. And the US Senate has blame to share, for stripping out $40 billion of the state stabilization funds and generally not being aggressive enough in dealing with the crisis facing all levels government.

California keeps cutting spending, and the recession keeps getting worse. We at Calitics understand that's no coincidence. When will Sacramento?


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Europe's Dangerous Lag

You may have heard about the Czech Prime Minister making a bizarre rant against President Obama's spending policies, calling them "a road to hell." It turns out that the Prime Minister already faced a no confidence vote in the Czech Republic, where their right wing is far closer idelogically to US Republicans. So that's not really a big issue. The far bigger issue is Europe's persistent resistance of any stimulus measures for its countries, which could be partially due to their generous social welfare states, meaning that the people are less dramatically impacted (so far) by the crisis.

The Europeans say they have no need for further stimulus right now because their social safety nets, derided in good times by free market disciples as sclerotic impediments to growth, are automatically providing the spending programs that the United States Congress has to legislate.

Europe’s extensive job protections and unemployment benefits are “bad in the upswing, because firms don’t dare to hire people, because then they are glued to them,” said Hans-Werner Sinn, president of the Ifo Institute for Economic Research in Munich. “In the downswing, it’s good if the people are glued to the companies. They keep their jobs. They keep their income. They keep consuming.”

The Wall Street Journal has more. Certainly Europe's citizens have to be thankful for these "automatic stabilizers" that kick in to protect them, keeping them solvent and able to spend. At the same time, Paul Krugman argues that the automatic stabilizers have been exaggerated from a macroeconomic perspective, and the European response still comes up short. According to James Surowiecki, Europeans are simply more concerned with hyperinflation than they are with increasing economic growth, and the social safety net is being used as more of a cover story.

European economic policy seems to reflect the conviction that inflation, not stagnation, is the greatest threat to an economy. If the episode that haunts the U.S. is the Great Depression, in Europe, where the Germans have been dominant in shaping economic policy, the defining historical moment is the hyperinflation of Weimar Germany, when prices rose more than seventy-five billion per cent in just one year, 1923, and, in the words of Walter Benjamin, “trust, calm, and health” vanished. The legacy of that episode lives on not just in German policymakers’ inflation phobia but also in their sense that there is something fundamentally distasteful about debt. For Germany, fiscal rectitude even in the face of a crisis is not just economically sensible but morally correct.

There’s a price to be paid for hostility toward fiscal stimulus and easy money: Europe and, arguably, the world will take longer to recover. But European policymakers seem willing to weather this outcome in exchange for stability. They’re also probably counting on the fact that, even as they sit tight, their economies will get a boost from the American and Chinese stimulus packages. The thing about government spending is that it “leaks”: a good chunk of our stimulus package will buy other countries’ goods. So Europeans can avoid getting too deeply into debt and still reap some of the benefits of our borrowing. This is unfair: in effect, Europe is refusing to carry its share of the global economic burden and is piggybacking on us. But it’s hard to see how things could have turned out otherwise. The U.S. economy, much more than Europe’s, is like the proverbial shark: if it doesn’t keep moving forward, it dies (or at least creates a lot of misery). In some sense, we need economic growth more than Europe does. It’s not surprising that we’re going to be the ones who end up paying for it.

I don't think European policymakers are wrong at all - it just reflects a different philosophy. But at a time when coordinated global action may be needed, hopefully they won't be so resistant to meeting the moment. Ezra Klein reports that they won't, quoting Martin Wolf about Germany: "They will act, but only on the doorstep of Armageddon. Not a second before."

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Judge Invalidates Part of Prop. 9 - Victory For Prison Reformers

Once again, a judge has invalidated parts of a "tough on crime" ballot initiative. Earlier it was Jessica's Law, Prop. 83, which was ruled partially unconstitutional. Now Prop. 9, passed last year, has been found to have illegal provisions.

A key part of a victims' rights measure voters approved in November was blocked Thursday by a federal judge, who ruled that the state cannot restrict parole violators' right to state-provided legal counsel when considering whether to send them back to prison.

Senior Judge Lawrence K. Karlton of the U.S. District Court in Sacramento ruled against Gov. Arnold Schwarzenegger and the state in issuing an injunction against part of Proposition 9, the measure known as the Victims' Bill of Rights Act of 2008: Marsy's Law.

The initiative dictates that the state provide legal counsel to parole violators only under certain circumstances, including when the case is unusually complex or when the parolee is indigent or has issues of mental competency.

The SacBee has more. I don't know how this could ever have even reached the ballot in the first place. And this is part of our insane parole policy, which even before this law was failing the state. 67% of all inmates sent to prison in 2007 were parole violators, often for technical violations. As I wrote then:

It is a financial and moral disaster that we are throwing men and women back in jail for parole violations at such an accelerated rate, far beyond any other state in the country. This is clearly a factor of the state's parole policy, which is too constrictive and too quick to return people to prison. It surely leads to the high recidivism rate for those who commit crimes multiple times - if they feel they can't escape the system once they're in it, they simply have no incentive to rehabilitate themselves [...]

We are diseased by the prison-industrial complex. Prison construction is good for the CCPOA and supposedly good for the economy but it's based on a flawed notion that all construction spending is valuable. In fact, prison construction, especially of the type so needless that bringing parole policy in line with the other 49 states in the union would practically eliminate the overcrowding crisis and rendering the need for more beds moot, crowds out other, more valuable building projects that have a tangible value to people's lives. We are violating the human rights of inmates and the Constitutional provision against cruel and unusual punishment, as well as stifling innovative public investment, because the parole officers have a powerful lobby and the Tough on Crime dementia has infested the minds of practically every legislator in the state for 30 years.

At the national level, we are finally seeing the seeds of a robust prison reform movement. Jim Webb and Arlen Specter have submitted a bill to completely overhaul the criminal justice system. The bill would commission a panel to review incarceration rates, sentencing policies, gang violence, prison administration and reintegration of offenders. This sounds like a small step, but considering that absolutely nothing has been done to stop the train of "tough on crime" insanity from rolling down the track in decades, it's significant. A copy of the legislation is here. Sen. Webb remarked:

"America's criminal justice system has deteriorated to the point that it is a national disgrace," said Senator Webb. "With five percent of the world's population, our country houses twenty-five percent of the world's prison population. Incarcerated drug offenders have soared 1200% since 1980. And four times as many mentally ill people are in prisons than in mental health hospitals. We should be devoting precious law enforcement capabilities toward making our communities safer. Our neighborhoods are at risk from gang violence, including transnational gang violence [...]

"We are not protecting our citizens from the increasing danger of criminals who perpetrate violence and intimidation as a way of life, and we are locking up too many people who do not belong in jail," concluded Webb. "I believe that American ingenuity can discover better ways to deal with the problems of drugs and nonviolent criminal behavior while still minimizing violent crime and large-scale gang activity.

The bill has 14 co-sponsors, neither or whom are named Boxer or Feinstein. Tell them they should know better, with the prison crisis consuming more and more of the state budget and destroying the lives of nonviolent offenders.

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Car Market Competition

Nearly lost in everything else this busy week, the President has hinted at more aid for the auto industry, albeit with major conditions.

The aid package for the companies will be unveiled in the next several days, he said, and will be contingent upon the companies adopting business plans that reflect the fact that they have a smaller share of the auto market.

"We will provide them some help," Obama said during an online "town hall" event.

"I know that it is not popular to provide help to autoworkers -- or to auto companies -- but my job is to measure the costs of allowing these auto companies just to collapse," he said [...]

"If they're not willing to make the changes and the restructurings that are necessary, then I'm not willing to have taxpayer money chase after bad money," Obama said. "And so a lot of it's going to depend on their willingness to make some pretty drastic changes. And some of those are still going to be painful, because I think you're not going to see a situation where the U.S. automakers are gaining the kind of share that they had back in the 1950s."

I think that's essentially right. The auto market has fractured and we can no longer expect the US industry to be sustained by the government at the same level. By the way, the creditors, specifically the bondholders, have to understand that as well. Everyone's going to have to take a haircut, and then we'll have some good old-fashioned competititon.

Just this week, India's Tata Motors released the world's cheapest car, but that will be confined to the local market unless it includes safety measures to allow it to be sold in the US. The electric market in this country is starting to heat up, from the 200 mpg Aptera, a futuristic three-wheeled vehicle which is trying to change its status as a "motorcycle" (which disqualifies it for certain tax breaks for consumers), to Tesla's just-released $50,000 sedan, the cheapest all-electric vehicle currently on the market. The prices will continue to drop through increased competition, spurring innovation. It feels a little like the 1920s, with a proliferation of smaller car companies competing for market share. That's probably better for consumers, and since the competition is playing out on fuel economy, better for the environment as well.

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The New Af-Pak Strategy

OK, so I just listened to President Obama's statement about Af-Pak policy. Essentially, Obama will deploy 4,000 additional trainers to build up the Afghan security forces to the peak number of around 200,000 (army and police) by 2011 instead of 2013. In addition, thousands of civilians will be added to aid in development and reconstruction efforts. There is an expected commitment from NATO along those lines as well, but I'll believe it when I see it. And the President will properly fund the war effort, characterizing it by saying that no longer will Afghanistan and Pakistan resources come up short due to the war in Iraq. Of course, a recent GAO report says that withdrawal in Iraq will be massively expensive in its own right, so the idea that savings in Iraq can be transferred to Af-Pak doesn't make a lot of sense, at least not in the short term. We'll still be bleeding treasure, as well as additional lives, through the near future.

President Obama's new Afghanistan-Pakistan strategy will require significantly higher levels of U.S. funding for both countries, with U.S. military expenses in Afghanistan alone, currently about $2 billion a month, increasing by about 60 percent this year [...]

Obama plans to announce a "simple, clear, concise goal -- to disrupt, dismantle and eventually destroy al-Qaeda in Pakistan," said the official, one of three authorized to anonymously discuss the strategy. The president will describe his plan in a White House speech to a group of selected military, diplomatic and development officials and nongovernmental aid groups.

The officials declined to put dollar figures on aspects of the strategy other than the cost of U.S. combat forces in Afghanistan. Initial funding requests for hundreds of additional U.S. civilian officials to be sent there, as well as increased economic and development assistance to both Afghanistan and Pakistan, will come in a 2009 supplemental appropriation that the administration has not yet outlined.

The goal is certainly more focused, a counter-terrorism effort to deny a safe haven, but it's tied up with a lot of counter-insurgency efforts, aiding locals on the ground, strengthening the corrupt government (and hopefully weeding out corruption), and trying to siphon off reconcilable Taliban. He will seek basic benchmarks for progress instead of throwing in more troops and hoping for the best.

In imposing conditions on the Afghans and Pakistanis, Mr. Obama is replicating a strategy used in Iraq two years ago both to justify a deeper American commitment and prod governments in the region to take more responsibility for quelling the insurgency and building lasting political institutions.

“The era of the blank check is over,” Mr. Obama told Congressional leaders at the White House, according to an account of the meeting provided on the condition of anonymity because it was a private session [...]

Although the administration is still developing the specific benchmarks for Afghanistan and Pakistan, officials said they would be the most explicit demands ever presented to the governments in Kabul and Islamabad. In effect, Mr. Obama would be insisting that two fractured countries plagued by ancient tribal rivalries and modern geopolitical hostility find ways to work together and transform their societies.

American officials have repeatedly said that Afghanistan has to make more progress in fighting corruption, curbing the drug trade and sharing power with the regions, while they have insisted that Pakistan do more to cut ties between parts of its government and the Taliban. Mr. Obama telephoned President Hamid Karzai of Afghanistan and President Asif Ali Zardari of Pakistan on Thursday to share the main elements of the strategic review.

There's a substantial civilian component as well as a regional diplomatic component. In fact, Iran will attend a conference on Af-Pak next week at The Hague. Clearly the United States seeks support for this effort, and Obama played up the need for all nations to be concerned about Al Qaeda safe havens in the region.

I guess my reaction is one of pessimism that this can work. That's not a reason to try, but particularly with respect to Pakistan, I think we have limited reach. Just today, the day of the announcement of a new way forward, a suicide bomber killed 48 during prayers at a Pakistan mosque. And this week has yielded reports that the Pakistani intelligence service still helps the Afghan insurgency. The intelligence service characterizes this as a counter-weight to Indian influence in the region and a hedge against American withdrawal, and now that this commitment has been made, perhaps it will subside. But perhaps not. Getting the whole region, including India, to work together against a common enemy will be a monumental task. And relying on a larger NATO commitment doesn't seem realistic.

Russ Feingold responds:

“I am pleased that the administration is focused on al Qaeda, which is our top national security threat. I particularly appreciated the President's remarks, which addressed the role of Pakistan in these problems first. A new Afghanistan-Pakistan strategy has been sorely lacking for years. I am pleased that the plan includes specific benchmarks for progress in Afghanistan, with a strong emphasis on fighting corruption in the Afghan government, and an increase in civilian assistance. I am also pleased with the beginnings of the necessary emphasis on the even greater problems in Pakistan.
“However, I am concerned that the new strategy may still be overly Afghan-centric when it needs to be even more regional. As the bombing near the Khyber pass this morning highlights, we need to fully address the inextricable links between the crisis in Afghanistan and the instability and terrorist threats in Pakistan.

“Unfortunately, the legacy of the Bush administration in this region can best be compared to a comment the Chairman of the Joint Chiefs of Staff made in 2007: 'In Iraq, we do what we must and in Afghanistan, we do what we can.' This new administration must ensure that we do what we must not only in Afghanistan, but also in Pakistan."

"In other words, the proposed military escalation in Afghanistan, without an adequate strategy in Pakistan, could make the situation worse, not better."

There was an op-ed this week (I can't find it right now) that essentially said we can't fix Afghanistan without fixing Pakistan, and we can't fix Pakistan.

So what then?

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Thursday, March 26, 2009

If You Read One Article About The Economic Crisis....

Make it this one.

Increasingly over the past several weeks, my favorite blog has become Baseline Scenario, written by Simon Johnson and James Kwak. Johnson was the chief economist at the IMF and now teaches at MIT, while Kwak is a student at the Yale Law School. And throughout this crisis, the two have consistently offered the best explanation of the financial crisis, how we got here and what we must do to get out. Many writers of this stripe argue on the basis of policy and which resolution is most likely to be the most cost-effective and successful. What sets Johnson and Kwak apart has been their ability to properly contextualize the crisis as a failure of elites, who grew too rich and too powerful and must be made to take losses, as a necessary component, indeed the only component, to revitalizing the American economy. Johnson has now put those thoughts into The Atlantic, in something of a long summary of the work of Baseline Scenario over the past few months, a description of how the financial industry took over the government, much like in most banana republics, and how the only way to properly wind this down is to shrink the power and influence of the industry, as would be done in any other emerging country when the bankers grow too big and the elites start stealing everything. This is must reading.

Kwak sets it up on his site.

From 1945 until around 1980, the financial sector was one industry among many in the United States. Then something happened.

People in finance started making more money, jobs in finance became more desirable, financial institutions became more influential, and the linkages between the financial sector and the political establishment became stronger. At the same time that our financial sector became more leveraged and more risky, it also became more powerful. The result was a confluence of interests between Wall Street and Washington - one more normally found behind the scenes of emerging market crises, the kind the IMF is called on to resolve.

The chart shows that pay in the financial sector has risen to 181% of the average for all domestic private industries. They didn't just get too big to fail, they got way too big.

This is a familiar story to those who have been paying attention, but I've never seen it captured better. As the elite financiers grew richer and concentrated their wealth, they became more embedded with the government, not just with campaign contributions but through a shared belief system which made an unlimited virtue out of the unfettered free market. Certainly there has been a revolving door between Washington and Wall Street (and also at the top levels of academia, with econ professors shuttling in and out of financial institutions), but concurrent with that has been this image of Wall Street as a bunch of virtuous benefactors of their will, of the Masters of the Universe who can do no wrong.

Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world [...]

Wall Street is a very seductive place, imbued with an air of power. Its executives truly believe that they control the levers that make the world go round. A civil servant from Washington invited into their conference rooms, even if just for a meeting, could be forgiven for falling under their sway. Throughout my time at the IMF, I was struck by the easy access of leading financiers to the highest U.S. government officials, and the interweaving of the two career tracks. I vividly remember a meeting in early 2008—attended by top policy makers from a handful of rich countries—at which the chair casually proclaimed, to the room’s general approval, that the best preparation for becoming a central-bank governor was to work first as an investment banker.

A whole generation of policy makers has been mesmerized by Wall Street, always and utterly convinced that whatever the banks said was true. Alan Greenspan’s pronouncements in favor of unregulated financial markets are well known. Yet Greenspan was hardly alone. This is what Ben Bernanke, the man who succeeded him, said in 2006: “The management of market risk and credit risk has become increasingly sophisticated. … Banking organizations of all sizes have made substantial strides over the past two decades in their ability to measure and manage risks.”

Over the past several decades and thanks to this shared ideology, finance has been massively deregulated, what regulations remained in place were never followed, institutions were allowed to grow in an almost unlimited fashion, leverage themselves tremendously, and "innovate" with exotic instruments that nobody truly understood. Every policy, seemingly, benefited the financial sector to an outsized degree. And every policy that would have limited the sector was quietly set aside.

Of course, what's best for the financial titans has never been what's best for the country, and this is true for any nation on Earth, many with which Johnson has real-world experience. The key to every financial crisis lies in that moment when the need for solutions runs up against a politics that practically exists to protect and defend elites.

Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Russia grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise [....]

Squeezing the oligarchs, though, is seldom the strategy of choice among emerging-market governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Kremlin bailout technique—the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large [...]

From long years of experience, the IMF staff knows its program will succeed—stabilizing the economy and enabling growth—only if at least some of the powerful oligarchs who did so much to create the underlying problems take a hit. This is the problem of all emerging markets.

We have a far more developed country than those the IMF typically counsels, in some respects. Yet with the rise of an unaccountable and impenetrable oligarchy of elites, with a political class unwilling to do anything that would upset them, America resembles very closely the developing nations in banana republics. This continued fealty to the banks represent the leading threat to economic recovery. Whether through stoking fear of their failure or outright intimidation of the policymakers or something in between, the banksters own the country.

Johnson has his own prescriptions for the way forward: nationalizing the insolvent banks (which won't be cheap, but neither will any alternative), resolving the assets and returning them to private hands, increased regulation, etc. But none of that will work without the total and utter breakup of the oligarchy at the heart of the crisis.

Oversize institutions disproportionately influence public policy; the major banks we have today draw much of their power from being too big to fail. Nationalization and re-privatization would not change that; while the replacement of the bank executives who got us into this crisis would be just and sensible, ultimately, the swapping-out of one set of powerful managers for another would change only the names of the oligarchs.

Ideally, big banks should be sold in medium-size pieces, divided regionally or by type of business. Where this proves impractical—since we’ll want to sell the banks quickly—they could be sold whole, but with the requirement of being broken up within a short time. Banks that remain in private hands should also be subject to size limitations.

This may seem like a crude and arbitrary step, but it is the best way to limit the power of individual institutions in a sector that is essential to the economy as a whole. Of course, some people will complain about the “efficiency costs” of a more fragmented banking system, and these costs are real. But so are the costs when a bank that is too big to fail—a financial weapon of mass self-destruction—explodes. Anything that is too big to fail is too big to exist.

Johnson argues, compellingly, that President Obama is taking after the wrong Roosevelt, and what we need right now are the trust-busting policies of Teddy in addition to the New Deal policies of Franklin. But he ends on a downbeat note, mindful that the American oligarchy is much stronger, and the nation much less desperate, to expect the breaking of their money train to happen quickly or easily. It may take the threat of a real global collapse to shake us into action and away from this continued death-dance with the elites.

Anyway, read this and commit it to memory. To the extent that our political leaders listen at all anymore, they must understand how essentially untenable this economic power structure has become. I leave you with this quote from Mr. Johnson:

To paraphrase Joseph Schumpeter, the early-20th-century economist, everyone has elites; the important thing is to change them from time to time.

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