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

Saturday, April 11, 2009

Points To Charles Johnson

At least someone on the conservative side is willing to reveal the soft underbelly of this corporate lobbyist-organized "tea party" movement and show to whom it appeals:

Woman: [Shouts] “Burn the books!” [applause]

Man: “I don’t think you were serious about that, were you?”

Woman: “I am too.”

Man: “Burn all the books?!”

Woman: “The ones in college, those, those brainwashing books.”

Man: “[laughs] Brainwashing books?”

Woman: “Yes.”

Man: “Which ones are those?”

Woman: “Like, the evolution crap, and, yeah...”

I'll be at the New Way Forward demonstration today (actually right about now, as I've post-timed this), and so obviously I have no problem with getting out in the streets and expressing my opinion. In fact, I support the teabaggers to go out and let everyone in the country see the radical nature of their agenda and their general insanity. It will be a teachable moment, and all on tape.

Labels: , ,


By Land, Not By Sea

As we wait another day for the resolution of this hostage situation by the Horn of Africa, it's worth understanding the nature of the piracy problem off the Somali coast, which has exploded over the past several years. Matt Yglesias, who unlike most people in the media has actually written a fair bit about Somalia, has a great short piece on this, and at the risk of just reiterating it let me just summarize his two basic points.

First, it's a big ocean, and no amount of sophisticated monitoring systems or military patrols will be able to proactively stop pirating. If the areas near the coasts become secure, the pirates just move out further into open water. You're not going to secure the entire 70-odd percent of the planet covered by the oceans. And accompanying every shipping container with a military protector vessel is impractical.

Second, the way to end piracy is to provide opportunity for the pirates on land. Somalia has essentially had no government for close to 20 years, and the money that can be made from piracy significantly dwarfs the money that can be made on land.

To make a long story short, to curb the Somali pirate problem you need to fight them on land. This was recognized by everyone back in December but it hasn’t materialized since nobody really wants to try to mount a serious operation to bring Somali territory under control. And far be it from me to question that decision. I don’t want to either. But given that reality, while we can try to mitigate the pirate problem at sea, we’re never going to resolve it and suggestions that the Obama administration should snap its fingers and make this problem go away are absurd. What we need to do is wait until such time as someone or other establishes some kind of coherent control over Somali territory and then deal with piracy issues as part of our relationship with that person / group / organization or whatever it may be.

Unfortunately, the last time it appeared that a coherent de facto government was emerging in Somalia—the Islamic Courts Movement—we helped sponsor an Ethiopian invasion that plunged the country back into chaos. We need to stop doing that!

Ian Welsh concurs. Peace can only be had with the groups that can secure it. The Ethiopians couldn't hand off Somalia to a transitional government that had no legitimacy. The new "unity government" in Somalia actually includes some more moderate ICU members, and they've vowed to deal with the piracy problem, if they get some funding help. But the hardliners in the al-Shabab movement continue to fight. The Obama Administration apparently is watching al-Shabab closely, but hasn't come to a decision. I don't think we know if the unity government has the legitimacy inside the country among the people yet, but I think striking the al-Shabab camps at this point wouldn't help matters. Whatever the case, there needs to be a larger effort to understand the problems on land in Somalia as a means of stopping the problems at sea, as Russ Feingold has been saying for years.

“With more than a thousand miles of coastline along the Gulf of Aden and the Indian Ocean, however, increased maritime patrolling can only do so much. Until stability, the rule of law and effective governance are established, Somalia will remain a safe haven for these pirates. Moreover, until a functioning economy can be established, piracy will remain the most lucrative business in the region.

Labels: , , ,


Friday, April 10, 2009

Friday Random Ten

Should be a nice weekend in LA, apparently. Maybe I won't chain myself to the laptop! Enjoy.

Sunday Pt. I - Cibo Matto
What Happened... - Grandaddy
Demon Seed - Nine Inch Nails
Fire - Jimi Hendrix
Is Chicago, Is Not Chicago - Soul Coughing
Mutron Angel - Andre 3000 feat. Whild Peach
Joe Rey - Fountains Of Wayne
Fine - The Cardigans
Prevenge - They Might Be Giants
Nausea - Beck

Labels: ,


No, The Economic Crisis Is Not Over

I guess all it took was one decent earnings forecast, and the collapse of the global financial system has been called off. Nothing to see here, everyone go home.

But, the great banking crisis of 2008 is over. It began last September 15 when Lehman Brothers filed for bankruptcy and bottomed when Citigroup (C) traded below $1 last month. Most analysts believe that mortgage-backed securities which included packages of subprime home loans failed when mortgage default rates went up and housing prices raced down. That is only partially true. Banks made a tremendous series of ill-advised loans to private equity firms, hedge funds, commercial real estate holders, and the average man with a credit card balance which he cannot pay.

When people look back on the near-collapse of the banking system they may say that the Congress and Henry Paulson threw enough money into the path of the oncoming failure of the credit system to slow it down so that the government could properly go through the process of guaranteeing parts of the balance sheets of firms including Citigroup (C) and Bank of America (BAC). The initial TARP may also have provided time for the new Administration to put together its widely hailed bank "stress test" program meant to determine which of the big financial institutions have dysentery and which do not. Finally, the hundreds of billions of dollars that went into the largest banks late last year allowed Secretary Geithner to produce his public/private partnership to buy toxic assets off of bank balance sheets.

The writer of this piece's tongue is halfway in cheek, and at the end he acknowledges the major changes bringing us to this so-called "resolution." But the cheery tone can be seen in other big panorama articles today, suggesting that the traditional media has as much of an attention-deficit disorder as a daytrader, and all the depth of an evening with the cast of Hee Haw. The wild swings in mood mirror the volatility in the markets, which actually doesn't portend well. Some context can be provided by Dean Baker:

In the case of bank profits, much of the profit was driven by a surge in mortgage refinancing which produces large fees for banks. This surge will continue for the near term, but before long most of the people who are able to refinance their mortgages will have done so. Banks have also opted not to declare large write-downs of bad loans in the current quarter. They have apparently decided, possibly for political reasons, to defer write-downs of bad debts for future quarters.

It is important to put reports on chain store retail sales in some context. First, the same store sales are higher relative to overall chain sales because the chains have opened fewer new stores over the last year and in some cases actually have fewer stores in March of 2009 than in March of 2008. More importantly, there will be some upward bias in the chain store sales overall since there are fewer alternatives stores in 2009 than in March 2008.

Many stores that might have provided competition for the chains in March of 2008 no longer exist in March of 2009. Therefore, we should expect to see an increase in chain store sales even if there had been no change whatsoever in overall retail sales.

The President was more circumspect today, announcing that he sees "glimmers of hope" but that "the economy is still under severe stress" and talk of the crisis lifting is easily mocked given the spectre of double-digit unemployment before the year is out. I'm sure that people who don't fear job loss can have no problem announcing an end to the crisis, but others are not so lucky.

I think Simon Johnson made an excellent point discussing this at the New York Times' website:

Some stock market rallies are reassuring. Others provide at least temporary respite. And a third kind, more commonly seen in emerging markets, actually expose deeper underlying problems and contribute to a further downturn.

We seem to be experiencing this third kind of rally in the U.S. right now. Equity prices are up sharply, but the debt market continues to indicate a high probability of default. In particular, the level and recent trajectory of credit default swap spreads suggest that, as the financial system as a whole stabilizes, market participants expect increasing odds of failure (and failed bailout attempts) for the very largest banks.

The fact that the Federal Reserve won't let the banks release the stress test results just doesn't augur well. And even if we escape without more bank failures and a period of stagnation until the economy kicks back in, the biggest potential problem would be to see the establishment wipe their brow, thank their lucky stars for the bailouts and go back to the same exact practices that got us into this mess. I don't think the White House will lack assertiveness and take their eye off of the problem, but I do think they will decline to fundamentally restructure the economy in such a way that the finance sector shrinks to a level that cannot harm the greater economy in a systemic way. Paul Krugman gets to the heart of this need for restructuring today, the idea that banking must become boring.

Much of the seeming success of the financial industry has now been revealed as an illusion. (Citigroup stock has lost more than 90 percent of its value since Mr. Weill congratulated himself.) Worse yet, the collapse of the financial house of cards has wreaked havoc with the rest of the economy, with world trade and industrial output actually falling faster than they did in the Great Depression. And the catastrophe has led to calls for much more regulation of the financial industry.

But my sense is that policy makers are still thinking mainly about rearranging the boxes on the bank supervisory organization chart. They’re not at all ready to do what needs to be done — which is to make banking boring again.

Part of the problem is that boring banking would mean poorer bankers, and the financial industry still has a lot of friends in high places. But it’s also a matter of ideology: Despite everything that has happened, most people in positions of power still associate fancy finance with economic progress.

Can they be persuaded otherwise? Will we find the will to pursue serious financial reform? If not, the current crisis won’t be a one-time event; it will be the shape of things to come.

Krugman charts how we followed the exact same course in the period from 1920-1970; the bankers got rich, speculated madly, caused the Depression, and the tight regulations on the industry that followed reduced both the excitement of banking and the lucrative nature of it. "Strange to say, this era of boring banking was also an era of spectacular economic progress for most Americans," he concludes.

We're in that Second Gilded Age right now, and the return of banking to the staid reallocation of capital that is its core function must follow the hash that's been made of the economy. The banks had too much money to play with and ended up nearly gambling away the whole system. They bought the political process and it came relatively cheap compared to the largesse it allowed them to reap. The incentives created were perverse. The risks taken were unconscionable. And they cannot be repeated.

But by calling an early end to the crisis and not wrestling with the fundamental shift that is needed, we only set ourselves up for future failure. And the Bush-era retreads manning the TARP desk are not likely to recognize this or work toward such a solution. In fact, nobody in the political class is, unless we make them.

Tomorrow, A New Way Forward demonstrations will be held in over 70 cities across the country. I'm not sure a set of protests is necessarily the right thing to do to mass political pressure, but I do know that this is a genuine grassroots effort - unlike the Fox News-promoted, lobbyist-driven tea parties - and the message of structural change, not an exhale and relief that the crisis has lifted, is the exact message that our representatives need to hear right now.

Our plan: Real structural change of Wall Street

Any bank that's "too big to fail" means that it's too big for a free market to function. The financial corporations that caused this mess must be broken up and sold back to the private market with strong, new regulatory and antitrust rules in place -- new banks, managed by new people. An independent regulatory body must protect consumers from predatory practices.

As Wall St. corporations grew bigger and bigger until they were “too big to fail,” they also became so politically powerful that they led to distorted and unfair policies that served companies, not citizens.

Its not enough to try to patch up the current system. We demand serious reform that fixes the root problems in our political and economic system: excessive influence of banks, dangerous compensation systems, and massive consolidation. And we demand that the reform happen in an open and transparent manner.

I've been banging this drum quite a bit, but I urge you to join these protests or at least get connected with what this group is trying to do. I really hope for it to be a beginning point and not an end point. Because until the financial sector has been fully decentralized, re-regulated and restructured, we're just going to go through this again and again.

Labels: , , , , , ,


Forward, Not Backward

Leon Panetta will close those secret prisons, but let's not fight about who tortured who, right fellas?

The CIA is decommissioning the secret overseas prisons where top al Qaida suspects were subjected to interrogation methods, including simulated drowning, that Attorney General Eric Holder, allied governments, the Red Cross and numerous other experts consider torture, the agency said Thursday.

In an e-mail to the agency's work force outlining current interrogation and detention policies, CIA Director Leon Panetta also announced that agreements with the private security firms guarding the so-called black sites will be "promptly terminated," and contractors no longer will be used to conduct interrogations.

Panetta, however, said that CIA officers who were involved in interrogations using "enhanced" methods authorized by the Justice Department during the Bush administration "should not be investigated, let alone punished."

I actually thought these sites were already shuttered. And I don't want private mercenaries involved in the interrogations process, so all to the good. But we have a cancer in this country caused by failing to face up to our actions. I don't think the low-level interrogators who carried out the policies are necessarily responsible - but they can certainly tell us who gave the order, and who was next on the rung in the chain of command. That's how you build a case and seek the truth. Blanket amnesty at any level impedes the eventual reckoning, and it's wrong.

And one of the Gitmo lawyers says Obama's people are stonewalling him, too. Man, they really want to make sure nobody goes down for this? What a corrupt bargain. And it's only fitting that the highest of High Broderists doesn't see a problem at all:

David Broder today, on whether there should be an investigation of the Bush years:

“I understand the reluctance to open a wide-ranging probe of past practices. It seems to me we are better off focusing on cleaning up the policies and practices for the future than trying to settle scores for past actions.”

David Broder, famously, as Clinton’s administration wound down:

“He came in here and he trashed the place, and it’s not his place.”

Sargent, and his former colleagues at TPM, call Washington "wired for conservatism." I prefer to think of it as wired for self-protection. Getting a hummer was all Clinton's problem. But they led the cheers while their golden boy Mr. Bush was authorizing the torture of human beings. They don't want to see their friends hurt, but really they don't want to sully their beautiful minds.

Labels: , , , , , , ,


The New PVI Ratings Are Out! The New PVI Ratings Are Out!

Charlie Cook's PVI (Partisan Voting Index) ratings have become an indispensable tool for quickly identifying the partisan lean of any particular Congressional district in the country. Cook basically takes the Presidential results of the past two election cycles in a particular district and matches them against the results of the entire country to come up with the PVI number. If a district is R+3, for example, that basically means it is 3 points more Republican than the country as a whole. I like the Cook PVI because it isn't based on raw registration numbers, but actual electoral performance that is somewhat uniform across the country.

Thanks to the release of full election data by Congressional district throughout the country, Cook can now calculate the new PVI ratings for every seat. The California numbers are worth considering (You can find them all at this link). As Cook notes, there are 8 districts in the state with "Obama Republicans"; that is, Republican Congressmen in districts that Obama carried (There are no "McCain Democrats"). Those districts are:

CA-03 (Lungren), CA-24 (Gallegly), CA-25 (McKeon), CA-26 (Dreier), CA-44 (Calvert), CA-45 (Bono Mack), CA-48 (Campbell), CA-50 (Bilbray)

Of those seats, the three with the closest PVI ratings are CA-26, CA-45 and CA-50, all which have R+3. CA-24 is an R+4. And the rest in this group are R+6. Keep in mind that 2004 Bush-Kerry stats are factored into this, so there may be a bit of lag from the actual nature of the district.

Of these seats, the only Republican-held seat to get noticeably more Democratic from the 2004 set of ratings was CA-48, which went from an R+8 to an R+6. Several Democratic-held seats shifted in that fashion as well, as the largest partisan shifts in the country were "disproportionately western and suburban," says Cook.

The most Republican district in the state is CA-22 (McCarthy), which is the 44th most Republican in the country at R+16. The most Democratic is CA-09 (Lee), the 5th most Democratic in the country at D+37. A couple other notes:

• Jerry McNerney still holds an R+1 seat. However, this is not surprising, since Democrats hold 34 of the 50 seats between R+2 and D+2.

• CA-10 grew slightly more Democratic this time, at D+11, further destroying the myth that it's a moderate seat. Actual somewhat close (though not in danger) Democratic seats include CA-18 (Cardoza, D+4), CA-20 (Costa, D+5) and CA-47 (Loretta Sanchez, D+4).

• Turning to races from last year, CA-46 remains moderately competitive at R+6, while CA-04 (McClintock) is R+10, a testament to how strong Charlie Brown was to even compete.

Now, this just measures the partisan lean of a district, not the partisanship of a particular member of Congress. A better judge for that would be the Progressive Punch score weighted for district tilt, an excellent measure of whether or not a member is out of step with their district. In California, the strongest Dems are Barbara Lee, Linda Sanchez and Lynn Woolsey, while the weakest Dems are Jim Costa, Jerry McNerney and Jane Harman (and remember, that's district-weighted).

A lot to digest here, but much of it is familiar - we have multiple potential Congressional targets, and have for a number of cycles, but just need to use resources and ground talent better.

Labels: , , , ,


AP: Still Wankin'

Markos Moulitsas has been writing a series of articles about the Associated Press' desperate attempt to squeeze out a new revenue stream through intimidation and threats. He links to this fantastic takedown:

Let's go on up to Rupert Murdoch, who says Google's stealing his copyright in a recent Forbes article:

"Should we be allowing Google to steal all our copyrights?" asked the News Corp. chief at a cable industry confab in Washington, D.C., Thursday. The answer, said Murdoch, should be, " 'Thanks, but no thanks.' "

Let me help you with that, Rupert. I'm going to save you all those potential legal fees plus needing to even speak further about the evil of the Big G with two simple lines. Get your tech person to change your robots.txt file to say this:

User-agent: *
Disallow: /

Done. Do that, you're outta Google. All your pages will be removed, and you needn't worry about Google listing the Wall St. Journal at all.

Oh, but you won't do that. You want the traffic, but you also want to be like the AP and hope you can scare Google into paying you. Maybe that will work. Or maybe you'll be like all those Belgian papers that tried the same thing and watched their traffic sadly dry up.

Perhaps all the papers should get together like Anthony Moor of the Dallas Morning News suggests in the same article:

"I wish newspapers could act together to negotiate better terms with companies like Google. Better yet, what would happen if we all turned our sites off to search engines for a week? By creating scarcity, we might finally get fair value for the work we do."

Please do this, Anthony. Please get all your newspaper colleagues to agree to a national "Just say no to Google" week. I beg you, please do it. Then I can see if these things I think will happen do happen:

• Papers go "oh shit," we really get a lot of traffic from Google for free, and we actually do earn something off those page views

• Papers go "oh shit," turns out people can find news from other sources

• Papers go "oh shit," being out of Google didn't magically solve all our other problems overnight, but now we have no one else to blame.

In a similar fasion, the AP got all pissy yesterday because people were embedding video from their YouTube channel, apparently unaware (or deliberately unaware) that they could turn off the embed function themselves.

The AP wants to feel victimized by Google and other aggregators while conveniently overlooking the value they bring to their business. Their real anger should be directed at themselves. Here's Markos:

Newspapers like to see themselves as "essential to democracy" or some other such bullshit, but they've long been part of a much broader media landscape, in which broadcast and the internet have become the most efficient delivery mechanisms. And pretty soon, with convergence, they'll be one and the same. Newspapers have refused to adapt, or they've pissed away money buying baseball teams, or they've squeezed the value out of their product by demanding 30 percent profit margins, or they've expanded at unsustainable rates, or all of the above.

But they aren't the only player in town, and there are plenty of other media operations that are already mimicking the content they product, or can quickly rush in to fill the void if a true market need exists. And while we may miss having all that disparate information packaged into one convenient portable (and disposable) product, fact is that we can get just about everything newspapers provided elsewhere, and no trees have to die in the process.

This is a challenging business environment for all publishers, and the downturn accelerated newspapers' decline. But they seem to have this ridiculous sense of entitlement instead of a recognition that their business model has to change. And just up and deciding that they'll have to raise online ad rates is, um, not a plan.

Ha ha ha ha ha ha. First of all, let them all decide this in collusion. Doesn't matter. It'll be equally stupid and unworkable. First of all, people won't pay for what they can get elsewhere for free, and most of what papers offer can be gotten for free elsewhere. Furthermore, the reason that online advertising is cheaper than offline advertising is that 1) offline advertising was overpriced, and 2) there's more than enough inventory online that advertisers can reach their intended audience for very little. That reality sucks, and it's one that this (advertiser supported) site has to deal with on a regular basis, but it is what it is. Advertisers have realized that they no longer need to be gouged by newspapers, and there are plenty of deals to be had online.

I mean, did this genius consultant think that newspapers weren't already trying to charge the same for online and offline advertising? That they were all waiting for his genius suggestion to slap themselves on the forehead and say, "Egads! Why didn't we think of that???" Online ad CPMs are plummeting, and in a bad economy, with desperate publishers everywhere willing to undercut the competition's rates, things are going from bad to worse. These things happen in recessions/depressions.

Throw in the fact that this stupid plan would require hundreds of newspapers to band together to shut off their content, it's clearly unworkable. Many (if not most) would balk, mindful that the local TV sites and other local and national news outlets would soak up that readership rendering them instantaneously irrelevant. Not every newspaper exec is arrogant enough to think their product is irreplaceable or so unique that people couldn't live without.

So the solution isn't to simply say, "we're going to charge more -- both advertisers and our readers." Well, it's a solution, it just won't be the winning one.

Rosa Brooks, a columnist who herself is leaving the business to work in the Defense Department, had further thoughts, mainly focusing on the idea that the government needs to "bail out" journalism. And yet the desire for information is at a record high. So the answer lies in a more creative modeling of how to get readers to pay for a physical product and/or increase traffic, not some monopolistic practice where the line between welfare and scraps is whether you get to wear the hallowed crown of journalism. I don't want to see journalism go. But the executives need to get a lot smarter.

Labels: , , , ,


Why Increasing The Pentagon Budget Isn't Real Change

For what it's worth, I thought Joe Sestak did an admirable job explaining why we need to change funding of the military based on the wars we fight and the threats we face, not based on the threat of a USSR that doesn't exist.

Which is fine, but he dances around the larger point that, for example, we don't NEED 187 F-22 fighters, which is the level AFTER this shift in emphasis in the Pentagon budget. I would go further and hint that we don't need troops based in 130 countries either, unless we are planning a major imperial expansion anytime soon. Similarly, Robert Gates explained, to his credit, that we don't need each armed service to have duplicative machinery and personnel when fighting jointly in a theater, but he nonetheless has increased the Pentagon budget even when accounting for this duplication, or at least being mindful of it for the upcoming Quadrennial Defense Review.

Now, Matthew Yglesias makes a moderately compelling argument that you have to crawl before you can walk and walk before you can run, on this issue.

I would urge progressives who are having trouble getting themselves excited about this fight to recognize two points. One is that it really is nice to reorient a given quantity of military spending in more useful directions even if it doesn’t lead to cuts in the headline number. But the other is that if you ever do want to see further-reaching reform, we need to pass something like this budget first. It’s a key political test of whether it’s even possible to defy what the defense contractors and the joint chiefs want. If that does prove possible, then in years to come many things are possible, including a long-term trajectory that has defense declining as a percent of GDP. If it’s not possible then nothing is possible, and no future president will tackle it.

I recognize the first point and strongly disagree with the second, especially in light of the initial reaction. Conservatives and those who want to protect their parochial interests were ALWAYS going to characterize this as a cut. They know they can score political points off of it, and furthermore they have sufficiently brainwashed the media into believing that military spending is magic and doesn't affect the budget. In this way, Republicans can very easily call spending on giant weapons programs stimulus after arguing for months that federal spending isn't stimulative. They have wired the political establishment to orient themselves this way. Heck, they have media embeds who extoll the virtues of various weapons systems in the media without having to disclose how they profit off of them.

That being the case, why would anyone want to have this fight TWICE? If you're going to provoke the reaction that your Administration is cutting military spending, why not actually cut military spending in the process? This is a familiar Democratic technocrat argument, where they argue for a half-measure and a go-slow approach because we'll have the upper hand on talking points. "See, it's really an INCREASE!" And thus progress gets delayed and eventually denied.

It may hold that the Obama Administration doesn't actually want to cut military spending, which is my view, based on the fact that as a candidate, the President consistently said that he would increase the budget. While I appreciate the logic behind transformation and the need for more efficiently orienting our military toward actual things that could happen, I don't appreciate so-called progressives assuring me that this is some step toward a less insane balance in the military budget as a percentage of GDP. There's no evidence for that whatsoever, and it strikes me as the typical Democratic skittishness to actually embrace real change.

Labels: , , , , ,


Special Election Fight Becoming Establishment v. Grassroots

The establishment in both parties continue to close ranks around the May 19 special election, even as the grassroots continues to reject it. Today Antonio Villaraigosa endorsed all six ballot measures, asserting that they will "bring stability back to California's budget system," like any artificial spending cap that forces spending $16-$20 billion dollars below initial baseline estimates during an economic crisis where state spending is needed urgently tends to do. Without question, Villaraigosa, a potential candidate for Governor, sees that giant pot of CTA money being tossed around in support of the measures and figures one of the candidates could draft off of that nicely in the primaries.

At the local level, more and more Democratic clubs are opposing the ballot measures, because unlike the establishment, they have read them and calculated that they would put the state in an objectively worse situation, and they are unmoved by the idle threats of Armageddon casually tossed out by the Governor and his minions. The dichotomy is both interesting and revealing.

Meanwhile, in maybe the lamest online initiative effort since the invention of Compuserve, Abel Maldonado's tears have created "Reform For Change," a site dedicated to the petty, self-righteous, useless Prop. 1F measure that would eliminate raises for lawmakers and staff during an economic downturn. In the silly video accompanying the site, Maldonado's tears tell us that "we can fundamentally reform California and change it forever," through apparently passing a .0001% change in funding for state lawmakers that is dealt with through an independent commission and not "the legislators themselves" (one of many lies on this site).


Labels: , , , , , ,


Who Wrote This?

In the past, the Congress has moved expeditiously to approve funding for our Armed Forces. I urge the Congress to do so once more. I also urge the Congress to focus on the needs of our troops and our national security, and not to use the supplemental to pursue unnecessary spending. I want the Congress to send me a focused bill, and to do so quickly. When this request returns to me as legislation ready to be signed, it should remain focused on our security.


If you guessed former anti-war activist Barack Obama, ding ding ding you get a cookie!

Elsewhere in this letter, Obama addresses why this supplemental request is needed at all, considering his intention to put the wars on budget.

As I noted when first I introduced my budget in February, this is the last planned war supplemental. Since September 2001, the Congress has passed 17 separate emergency funding bills totaling $822.1 billion for the wars in Iraq and Afghanistan. After 7 years of war, the American people deserve an honest accounting of the cost of our involvement in our ongoing military operations.

We must break that recent tradition and include future military costs in the regular budget so that we have an honest, more accurate, and fiscally responsible estimate of Federal spending. And we should not label military costs as emergency funds so as to avoid our responsibility to abide by the spending limitations set forth by the Congress. After years of budget gimmicks and wasteful spending, it is time to end the era of irresponsibility in Washington. In this request, we are honest about the costs we will bear as a Nation, and we will use our resources wisely and responsibly to meet the threats of our time and keep our Nation safe and secure.

Fair enough, and I suppose this couldn't have been readied for the omnibus spending bill because the Afghanistan policy review was not completed in time.

However, there is a belligerent tone in this letter that is completely reminiscent of George Bush's snotty rhetoric about "clean bills" and how the Congress has a responsibility to give him exactly what he asks for. And at least a few progressives aren't buying it:

President Barack Obama plans to request new funding from Congress for the conflicts in Iraq and Afghanistan, but he risks a backlash from antiwar lawmakers.

Mr. Obama is expected to seek congressional approval of $75.5 billion for the wars, perhaps as soon as Thursday. The issue is already raising tensions on Capitol Hill, especially among liberals who are sympathetic to the president's broader agenda but voice concerns about his timeline for withdrawal of troops from Iraq and his plans to beef up forces in Afghanistan.

"I can't imagine any way I'd vote for it," said Rep. Lynn Woolsey, a California Democrat and leader in the 77-member congressional Progressive Caucus. It would be her first major break with this White House.

Ms. Woolsey fears the president's plan for Iraq would leave behind a big occupation force. She is also concerned about the planned escalation in Afghanistan. "I don't think we should be going there," she said.

Similar sentiments echo across the House. Rep. Jim McGovern (D., Mass.) said he fears Afghanistan could become a quagmire. "I just have this sinking feeling that we're getting deeper and deeper into a war that has no end," he said.

Rep. John Conyers (D., Mich.) dismissed Mr. Obama's plans as "embarrassingly naive," and suggested that the president is being led astray by those around him. "He's the smartest man in American politics today," Rep. Conyers said. "But he occasionally gets bad advice and makes mistakes. This is one of those instances."

Hopefully these urgent questions and concerns get addressed instead of just rubber-stamping this funding. Congress has a role to play. Shouldn't they inquire about the endemic corruption in the Afghan government and police force, and how we can possibly trust the same people to bring economic development to the nation? Can they ask about the impact of Predator drone strikes on recruitment of the Pakistani Taliban and stability of the Pakistani government? Can they request an exit strategy?

Or will there be more my-way-or-the-highway talk?

Labels: , , , , , , , , ,


Test Of Mettle

As part of the federal stimulus package, President Obama will green the federal fleet of vehicles, which makes economic and environmental sense. He's leading by example in that arena, and it's a good thing. Ultimately, however, while 17,600 fuel-efficient vehicle purchases for American-made cars will help in the short-term, the Administration can truly get the backs of the Big Three by cramming down the bondholders, many of whom are big banks who took TARP money.

General Motors is working on a new debt-exchange plan for its bondholders, one that would most likely offer only equity instead of cash or new debt, a person briefed on the proposal said on Thursday.

The new exchange offer, which is being drafted in consultation with the Obama administration’s auto task force, may be announced next week. To succeed, G.M. must reach an agreement with bondholders by June 1, when some of its bonds are due [...]

The task force, led by Steven Rattner, has demanded that G.M. bondholders take a steep discount to the value of their debt holdings. The presidential team has signaled that it would not allow taxpayer money to be used as interest payments for G.M.’s bonds.

Advisers to an unofficial bondholders committee have argued that they are being forced to accept a bigger sacrifice than other creditors. They have also complained that they have met with the presidential auto task force only once, on March 5.

This is where Obama will truly reveal whether he has the interests of manufacturing or the financial behemoth at heart. The bondholders want to force GM and Chrysler into bankruptcy because they figure they can get a better deal in front of a judge. It will take a supreme effort for Obama's Administration to force them to accept a debt-for-equity swap. For all that the US taxpayer has done for the banks, and given all the leverage that Obama actually has but is not using, there is no reason to accept the bondholder demands. We will know where the President stands soon enough.

Labels: , , , , , ,


Obama's State Secrets Controversy Grows

The outcry over the President's expansive use of the state secrets privilege to shut down lawsuits against illegal wiretapping has escalated. TPM Muckraker finds a series of experts willing to acknowledge that this is no different from Bush's policy to get these lawsuits tossed out.

Ken Gude, an expert in national security law at the Center for American Progress, supported the administration's invocation of the state secrets claim when it was made earlier this year in an extraordinary rendition case. But its position in Jewel is "disappointing," Gude told TPMmuckraker, calling himself "frustrated."

Gude confirmed that the Obama-ites were taking the same position as the Bushies on state secrets questions. "They've taken the maximalist view that the judge has hardly any role in determining whether national security" would be compromised by the release of classified information," he said. "There's going to be people who are very unhappy, and justifiably so."

He added: "I'm very uncomfortable with the notion that the people who get to decide [whether national security would be jeopardized] is the government."

Gude's general view was echoed by Amanda Frost, an associate professor at Washington College of Law who has written extensively about issues of government transparency. Frost made clear that she hadn't followed the Jewel case, but called the Obama administration's assertion of the state secrets privilege in a similar high-profile wiretapping case involving an Oregon-based Arabic charity "indefensible." The NSA, she said, has already acknowledged the existence of the wiretapping program, and some of its details are publicly known, so the claim that national security would be jeopardized merely by allowing the trial to proceed doesn't hold water. The government is making that argument in both the Oregon case and Jewel.

There are more at the link. Even the traditional media are starting to openly question Obama officials on these points - and the officials are maintaining that the President fully supports the invocation of the state secrets privilege on expansive national security grounds to dismiss lawsuits. Dan Froomkin calls it utterly un-American. And this find by Greg Sargent makes clear the official hypocrisy at work:

Obama attacked Bush’s use of (the state secrets privilege on the grounds of national security) during the campaign. Indeed, Obama’s campaign Web site still identifies Bush’s use of the tactic as a “problem” that created undo “secrecy” and needs to be changed.

Congress can actually act here. Russ Feingold has carried legislation that would sharply limit the ability of the executive to use the state secrets privilege. Far from being the work of "America-haters" or based on a knee-jerk antipathy to George Bush, civil liberties advocates were always adamant that the standard of the rule of law be equally applied in all cases. No executive, Republican or Democratic, should have the untrammeled power to essentially supersede the courts and act above the law. Here's Feingold's statement, reflective of this belief:

I am troubled that once again the Obama administration has decided to invoke the state secrets privilege in a case challenging the previous administration’s alleged misconduct. The Obama administration’s action, on top of Congress’s mistaken decision last year to give immunity to the telecommunications companies that allegedly participated in the warrantless wiretapping program, will make it even harder for courts to rule on the legality of that program. In February, I asked for a classified briefing so that I can understand the reasons for the Department’s decision to invoke the privilege in another case, and I intend to seek information on this new case as well. I also encourage the greatest possible public accounting of the use of the state secrets privilege and welcome the Attorney General’s statement that he hopes to share his review with the American people.

Beyond the particular case at issue here, it is clear that there is an urgent need for legislation to give better guidance to the courts on how to handle assertions of the state secrets privilege. The American people must be able to have confidence that the privilege is not being used to shield government misconduct. That is why I am working with Senators Leahy, Specter, and others to pass the State Secrets Protection Act as soon as possible.

This is truly ugly stuff, and the worst aspects of the Obama Administration thus far, in fact almost all of them, have been when they have sought to participate in what amounts to a cover-up. They should not have the tools to do so, at least in this case.

Labels: , , , , ,


I See Socialist People

Spencer Bachus (R-AL) gets in touch with his inner Joe McCarthy and outs the "17 known Socialists" in Congress.

From The Hill's Briefing Room:

Rep. Spencer Bachus (R-Ala.) puts the number of socialists in the House at 17.

"Some of the men and women I work with in Congress are socialists," Bachus told local government leaders on Thursday, according to the Birmingham News.

Bachus gave the specific number of House socialists when pressed later by a reporter.

Actually, there is one avowed socialist, his name is Sen. Bernie Sanders and he has been elected multiple times by the state of Vermont. Unfortunately for Bachus, however, this talk of "socialism" has less bite than it used to.

Only 53% of American adults believe capitalism is better than socialism.

The latest Rasmussen Reports national telephone survey found that 20% disagree and say socialism is better. Twenty-seven percent (27%) are not sure which is better.

Adults under 30 are essentially evenly divided: 37% prefer capitalism, 33% socialism, and 30% are undecided. Thirty-somethings are a bit more supportive of the free-enterprise approach with 49% for capitalism and 26% for socialism. Adults over 40 strongly favor capitalism, and just 13% of those older Americans believe socialism is better.

Many have remarked on this, but it's worth repeating - the conservative idiots outsmarted themselves. They demonized Barack Obama as a socialist for wanting to raise the top-end marginal tax rate by three points, and invest in universal health care and education and green energy, and all they did was to MAKE SOCIALISM MORE POPULAR, particularly among young people who have no memory of the Berlin Wall falling or the Cold War generally. They've equated socialism with Obama's moderate technocratic agenda, which is disarming that epithet almost as much as they've disarmed "liberal" through constant use. This is all backfiring because the nation has seen the opposite of the Obama agenda in action, and it broke the world.

Labels: , , , , ,


Total Victory

It shows you how decisively the NRA has won the debate over gun control, that a rampage of gun violence throughout the United States over the past couple weeks can happen, that mass deaths in Mexico can be attributed to the sale of guns smuggled across the border, and the White House still can't bring itself to advocating for banning assault weapons, for which there is no legitimate hunting or personal protection use.

THOMAS: Is the president concerned about the epidemic of killings by guns and is he willing to move towards reinstating the ban on assault weapons?

GIBBS: Obviously, we, while we were overseas last week, were surprised and shocked at the news at what had happened in New York. … That’s one of the reasons that increased money to hire more police officers as in the Recovery Act. I was asked specifically about assault weapons. I think the president would — the president believes there are other strategies we can take to enforce the laws that are already on our books.

I fully recognize that Obama's in a tough spot - the far right has basically claimed he would ban all guns, which he never advocated. But this is of course the Overton Window in action. Obama has to respond to those charges by taking even sensible gun control off the table. The NRA has been one or two steps ahead of this game for a long time.

Labels: , , ,


Only Astroturf Front Groups Deserve Handouts

Mark Sanford's getting a lot of heat in his home state. People have set up a tent city in front of the Capitol and called it "Sanfordville," bearing an eerie resemblance to the Bonus Marcher's tent city that bedeviled Herbert Hoover. Maybe Sanford will call in the National Guard to shoot them, too.

For now, he's put up a TV ad explaining himself.

A nonprofit group with close ties to Gov. Mark Sanford will spend $230,000 on television ads defending Sanford’s opposition to some federal stimulus money.

Sanford will appear in the ads, sponsored by Carolinians for Reform. The group was founded by a handful of Sanford campaign donors and aims to educate the public about the governor’s positions. Sanford frequently has appeared in ads by similar groups that support his agenda.

Sanford said the ads, which begin airing today, are meant to clear up “confusion” about his position. Opponents, including lawmakers and the Democratic National Committee, have tried “to frighten a lot of teachers and law enforcement,” Sanford said.

How has this group, Carolinians for Reform, raised the money to put up ads in the past?

The group that is paying for the ads has been the subject of controversy.

Sanford directed more than $100,000 left over from a 2006 national governor’s conference, held in Charleston, to Carolinians for Reform. The convention had received a $150,000 state grant.

After state Sen. Jake Knotts, R-Lexington, discovered the transfer, Carolinians for Reform returned the money to the state. Sanford said there was nothing illegal or wrong about sending the money to the group though it did create an image problem.

In other words, Sanford has vowed for months not to give state money to help build schools or increase unemployment insurance, but he has no problem giving state money to a wingnut welfare front group that glorifies him in TV ads. Unbelievable.

Labels: , , ,


We Are All Georgian Protesters Now

Well, well, well.

Remember last summer, when Russia and Georgia waged war over two breakaway republics? Pretty much every five minutes on cable news you'd see Georgian President Mikheil Saakashvili, the US-educated darling of the neocons, who played the perfect martyr for his people. He was seen as the benevolent leader gallantly facing down the Russian Bear. John McCain almost immediately picked up his struggle and termed it "the most severe international crisis since the Cold War," and pledged American solidarity with the Georgian people.

Does McCain still agree, now that the people want Saakashvili removed from office?

They crammed into the streets by the tens of thousands Thursday, students and pensioners and merchants. They stood on the same scrap of ground, in front of the Stalinist stone hulk of the Georgian parliament building, demanding democracy and screaming the same slogan: Tzadi! (Go!)

This time, adoring crowds were not gathered to sweep the young, flamboyant Mikheil Saakashvili to power. Little more than five years after they cheered the U.S.-backed politician into the presidency, people returned with an air of disgust, in the hope of shaming him into a resignation.

Saakashvili is besieged by protest in his own capital, with a broad consortium of opposition figures -- including some former members of his government and onetime political allies -- vowing to keep the crowds in the street until he steps down. Opposition leaders insulted and reviled the president Thursday, calling him a coward and a womanizer and mocking his moments of public fear [...]

Against a backdrop of growing popular disaffection, Saakashvili's presidency has been punctuated by moments of scandal. His government has shut down critical news media, beaten and tear-gassed peaceful demonstrators, and, most disastrously, charged into an ill-advised war with Russia that in effect left Georgia's two breakaway republics under Russian occupation.

The Bush Administration basically propped up this guy when he swept into power, and he immediately became dictatorial in the name of democracy. And while the protests are partially a function of the economic crises gripping Eastern Europe, they also betray a personal enmity for this guy made the symbol of the people here in the US during that conflict with Russia.

The people beg to differ.

Labels: , , ,


Thursday, April 09, 2009

Yes, We're Really Leaving Iraq

The estimable Marc Lynch thinks President Obama is on course in Iraq:

Obama's surprise stop-over in Baghdad, following his impressive performance in Turkey, again hit the right notes. He demonstrated his continuing commitment to the American effort in Iraq, while strongly affirming his intention of carrying out the withdrawal of troops by the end of 2011. He pushed hard on Maliki, by all accounts, to move on reconciliation and to take advantage of the closing window of the American troop presence to secure a workable political accomodation. The message he's sending is the right one: American troops can not be the answer to Iraq's problems, they really are leaving, and it's now up to the Iraqis -- whether things go well or they go badly.

I really wish I would have bet money with the conservative I debated back in October who swore there was no way we'd ever leave Iraq for decades. Not only will we honor the SOFA, it's the right thing to do. I am deeply pessimistic that Iraq will become stable in the near-term - the spate of bombings and jockeying for power among Sunnis and Shiites suggests the opposite - but I do know that the US forces will have very little say over that. Today in Baghdad thousands gathered in the streets to protest the continued US presence. We have 140,000 troops in country now and cannot stop the violence. Internal dynamics have accounted for the ebb and flow of this war. Our presence has not. Lynch continues, taking to task commentators like Tom Ricks who can write entire books about Iraq without the perspective of one Iraqi:

Do I think that the war is over and that Iraq's problems have been solved? No, no, no. For years I've been pointing out the fragility of the political situation, and I've seen little to change my mind [...] But that's not the same thing as saying that America's war in Iraq will continue for a long, long time. I take Obama's commitment to drawing down seriously, and so --- increasingly -- do many Iraqis and those in the region. It isn't that the war is "over"... it's that the American role is fundamentally going to change. As American troops withdraw and Iraqi sovereignty cystallizes, something else I've been arguing for years will become ever more central: a solution which depends on American troops to enforce it is not a solution. Americans, as much as Iraqis, need to adapt to this credible commitment to the drawdown of U.S. troops.

Contrary to Afghanistan and Pakistan, where the President has clearly decided that the United States needs to be involved in the solution, in Iraq he has committed to a regional solution that involves the Iraqis instead of our men and women. In THIS - not in the surge - Obama could learn from the experience and apply it to the other Asian land war.

Labels: , , , , ,


CA-10: Anthony Woods

We've been hearing rumors about this for some time, but Lisa Vordebrueggen went public, so now we can begin to tell this story. Anthony Woods, an African-American, openly gay Iraq War veteran with two tours of service who publicly came out to challenge the Don't Ask Don't Tell policy, may enter the race to replace Ellen Tauscher in CA-10.

Harvard Magazine’s January-February edition features a very interesting story about Woods’ decision to leave the Army. Woods has a masters degree from Harvard’s John F. Kennedy School of Government.

Woods was born on Travis Air Force Base and attended high school in Fairfield, according to a spokesman. He is now considering moving back home and running for Congress.

Woods was traveling and unavailable for comment today but as soon as I have an opportunity to speak with him at length, I will file an updated post about him.

I was able to speak with someone knowledgeable about Woods and his decision-making process today, and he told me that he would figure out whether or not to run "in the coming weeks." With no timetable for Tauscher's confirmation, certainly Woods, who also staffed for New York Gov. David Paterson, has some time.

Everyone who I've talked to about this characterizes Woods as a deeply impressive individual. He fought in Anbar Province and elsewhere in Iraq for two tours before deciding to take a stand on their discriminatory policy with respect to gays and lesbians. Here's a bit from that Harvard Magazine article Vordebrueggen cited:

In early November, Woods learned he would be “eliminated” from the army on the grounds of “moral and professional dereliction” and required to repay $35,000—the amount of his scholarship to attend the Kennedy School.

A military career may seem a curious choice for a young man who is gay or even questioning his orientation. But for the son of a single mother, growing up in an Air Force town in northern California, acceptance to West Point was an honor—and an opportunity—beyond compare. Woods focused on the professional to the exclusion of the personal; with the country at war, that wasn’t hard. But two years at Harvard gave him space to think—and to face his dismal prospects for upward mobility in an organization with an explicit homosexuality ban and a strong culture of marriage and children. Even if he had stayed closeted, he says, “It wasn’t going to be possible for me to fit the mold, and I knew that because of that, there was going to be a glass ceiling.”

Even after the invasive court-martial process—the military conducts interviews with friends and family to verify homosexuality, presumably to prevent fraud, for instance by soldiers who wish to avoid an additional tour in Iraq—Woods is reluctant to malign the officers who carried out his investigation. He says they are simply implementing a policy. Change might come from Congress, but Woods believes the Supreme Court is a more likely venue: “I think it’s going to take a landmark court case, like Brown v. Board of Education.”

That we would bar talented people who want to serve their country from that option makes absolutely no sense at all. But perhaps this is a blessing. Perhaps Woods can return to his hometown and find another way to serve - as part of a fresh group of lawmakers who have a new insight to these time-worn challenges we face and maybe some new strategies to tackle them. I hope to interview Woods very shortly should he decide to enter the race. Stay tuned.

Labels: , , , ,


It Comes Back To Housing

This was a really lucid article from Steven Gjerstad and Vernon L. Smith explaining the role of housing in the financial crisis, in case you're having trouble explaining this to your friends and family:

The 2001 recession might have ended the bubble, but the Federal Reserve decided to pursue an unusually expansionary monetary policy in order to counteract the downturn. When the Fed increased liquidity, money naturally flowed to the fastest expanding sector. Both the Clinton and Bush administrations aggressively pursued the goal of expanding homeownership, so credit standards eroded. Lenders and the investment banks that securitized mortgages used rising home prices to justify loans to buyers with limited assets and income. Rating agencies accepted the hypothesis of ever rising home values, gave large portions of each security issue an investment-grade rating, and investors gobbled them up.

But housing expenditures in the U.S. and most of the developed world have historically taken about 30% of household income. If housing prices more than double in a seven-year period without a commensurate increase in income, eventually something has to give. When subprime lending, the interest-only adjustable-rate mortgage (ARM), and the negative-equity option ARM were no longer able to sustain the flow of new buyers, the inevitable crash could no longer be delayed.

And that's where we are. The resets from all those ARMs could be foreseen pretty easily, but with rising prices, analysts who erred on the side of irrational exuberance thought people could just refi their way out of them and be saved by the price increase. It never was sustainable. And the securitization of the loans turned would could have been just a nasty problem confined to the specific sector into a global meltdown. When small towns in Tennessee and Alabama are swapping credit defaults and derivatives, you can see the problem clearly.

There's been a lot of talk about how we're saving the banks, but somewhat less on what we are doing at the root of the problem. There's a compelling argument to let this run its course and allow housing prices to revert back to the mean. That may be so, but rising foreclosures STILL destroy value in the market, because no buyers become willing to accept a property at anything but fire sale prices, constraining the ability of people who want to sell their home for other reasons and really upending the market. Today the President held a housing refinance roundtable and seemed to suggest that part of the solution lay in more refinancing:

What you've seen now is rates are as low as they've been since 1971. Three-quarters of the American people get their mortgages through a Fannie Mae-Freddie Mac qualified loan. And as a consequence of us being able to reduce the interest rates that are available, we have now seen some extraordinary jumps in the rate of mortgage refinancings.

And everybody here represents families who have saved hundreds of dollars a month, thousands of dollars a year in some cases, and that's money directly in their pocket. More importantly, what it's allowed them to do is to consolidate their loans in some cases, reduce the length of their mortgages in other cases. It has given them the kind of security and stability in their mortgage payments that a lot more people can take advantage of.

So the main message that we want to send today is, there are 7 to 9 million people across the country who right now could be taking advantage of lower mortgage rates. That is money in their pocket. And we estimate that the average family can get anywhere from $1,600 to $2,000 a year in savings by taking advantage of these various mortgage programs that have been put in place.

This makes sense in terms of economic stimulus but does absolutely nothing to restore the housing market, IMO. One can view pushing down mortgage interest rates and encouraging refinancing as a way to put money in the pockets of homeowners, money that they may be willing to spend. But the universe of people who just need a reduction in their interest rate to save their home is sadly pretty small. The loan modifications that have been interest-only frequently resulted in foreclosure down the road. Obviously this is not the only element of the Obama plan - and I see the point in highlighting it, because it could mean millions of dollars circulated into the economy, as well as a make-work plan for loan servicers - but it reflects a willingness to just tinker around the edges of housing policy instead of really attacking the problem.

Barney Frank's proposals to crack down on the types of loans servicers can offer by stopping 100% securitization and lots of subprime lending makes a lot of sense, but that's a second-order problem. The first-order problem is how to stop all these foreclosures. I'd like to see more attention paid to that.

Labels: , , , , , , ,


Low Stress

Like Kevin Drum, I'm really trying to figure out what the hell this NYT article means.

For the last eight weeks, nearly 200 federal examiners have labored inside some of the nation’s biggest banks to determine how those institutions would hold up if the recession deepened.

What they are discovering may come as a relief to both the financial industry and the public: the banking industry, broadly speaking, seems to be in better shape than many people think, officials involved in the examinations say.

That is the good news. The bad news is that many of the largest American lenders, despite all those bailouts, probably need to be bailed out again, either by private investors or, more likely, the federal government. After receiving many millions, and in some cases, many billions of taxpayer dollars, banks still need more capital, these officials say.

....Regulators say all 19 banks undergoing the exams will pass them. Indeed, they say this is a test that a bank simply will not fail: if the examiners determine that a bank needs “exceptional assistance,” the government, that is, taxpayers, will provide it.

....Regulators recognize that for the tests to be credible, not all of the banks can be winners. And it is becoming increasingly clear, industry insiders say, that the government will use its findings to press certain banks to sell troubled assets. The hope is that by cleansing their balance sheets, banks will be able to lure private capital, stabilizing the entire industry.

If a bank needs "exceptional assistance," they either haven't passed the stress test, or the test isn't stringent enough to account for that possibility. If the banks need to be bailed out again, then they too have not passed the stress test, designed to see, as far as I can tell, that banks can survive on their own. In other words, the stress test isn't a stress test at all but a check of how much more money will need to be plowed into the system.

Here's Kevin:

So what have we learned here? First: all 19 banks will pass. Second: not all the banks can be winners. Third: the ones that pass — but aren't winners! — will be propped up by taxpayers. Fourth: no, they won't be propped up by taxpayers, they'll be forced to sell assets and raise private capital.

Huh? Which is it? If by "pass," regulators merely mean that a bank won't be instantly seized and its management defenestrated, then I guess this makes sense. Awards for all! On the other hand, the prospect of a bank getting a "needs improvement" grade and then successfully selling a big stock issue to raise private capital is just fanciful. Even banks that pass with flying colors will have trouble doing that.

So what's going on here? Why are Treasury officials privately telling reporters that everyone is going to pass but that some banks will receive a pass-minus and may be required to do things that are almost certainly impossible? Are they just trying to lay the groundwork for failure and temporary nationalization later on? Or what?

Any leak at this stage would of course give the impression that everything is fine. Wouldn't want to roust the "animal spirits" and get everyone panicking again. But just that very fact points to the outsized influence of the financial industry in driving US policy. The financial sector is simply too big relative to the rest of the economy, and the consequences are immense.

But what caused the fall and rise of inequality? A lot of very high incomes, both in the pre-1930 world and now, have been in the finance sector. A recent paper by Phillipon and Reshef (cited today by Gillian Tett in the FT) traces the path of relative compensation in finance, and ties it to regulation and deregulation. Here’s the key figure:

OK, correlation does not imply causation yada yada. The move to regulate in the 1930s was part of a broader crackdown on rampant capitalism, and the deregulation since 1980s was similarly part of a broader phenomenon. But it’s a good bet that finance is a key part of the story of how we got to where we are.

Over the past couple weeks, as this argument has become more prominent, the pushback from the banks is that the "level-headed" people must rein in the impulses of the "pitchfork" crowd, because economic recovery depends on a healthy banking sector. In other words, the same economic terrorism argument ("Keep us fat and happy or we'll blow this economy to bits!"). Simon Johnson deconstructs this nonsense.

You might think the “anti-pitchfork” strategy might work, particularly as it has in the past (e.g., in the early Clinton years). The problem for this strategy now is not just the fragile state of banks - by itself this can be ignored for a long while through forbearance, behind a smokescreen of complicated schemes with confusing acronyms - but the ways in which the markets they created now operate [...]

The technocratic options are simple, (1) assume a better regulator, of a kind that has never existed on this face of this earth, (2) make banks smaller, less powerful, and much more boring.

In other words, a dash of new regulation and a solemn promise from the banksters never to break the economy again won't cut it anymore, as the system has grown too big and too destructive. What we need is a different conception of the system of providing capital, one balanced against the size of the industries they can support, which actually produce goods and create jobs.

I know that the teabaggers have their own TV network and have sucked up all the political oxygen with their series of demonstrations, but the New Way Forward events happening this weekend are important. Not because street actions are necessarily valuable in the 21st century, but because the organizers behind this effort have a clear message that pushes against the simple left-right lens and really seeks a reinvention of our economic realities. Here's how honorary co-chair Mike Lux describes the effort:

I agreed this week to become an honorary co-chair of A New Way Forward, a spontaneous grassroots movement that is reminding me of the early days of This impressive group of passionate organizers got involved because they were listening to progressive economists and business leaders talk about alternatives to the Geithner plan on re-building the banking system, and they decided to get involved. Some of these organizers are old hands like Joe Trippi (who truly is an old hand -- I met Trippi when he was helping Walter Mondale in Iowa in 1983, and he already seemed like an old hand then) and Zephyr Teachout of Dean campaign fame, and some are relative youngsters like Tiffiniy Cheng.

I agreed to become a co-chair in part (of course) because I strongly support the principles for banking policy that they have laid out -- the same ones supported by all of the economists and economic policy thinkers I respect the most, people like Paul Krugman, Dean Baker, Joe Stiglitz, William Greider, Simon Johnson, Jamie Galbraith, Leo Hindery, and Rob Johnson. But I also agreed to help because the spontaneous passion and obvious organizing skill, completely unsupported with money or institutional DC help, reminded me of the early days of Before there was ever the online organizational giant of, it was a simple internet petition written and put online in the living room of Wes Boyd and Joan Blades and forwarded to a few of their friends. Wes and Joan didn't know anything about how Washington D.C. works, or how a PAC operated, or how a poll was conducted. They didn't have any money or institutional support when they started, although a few of us in DC recognized their potential and lent a helping hand. All they had was their passion about an issue (in that case, the impeachment fight), and great instincts about online organizing.

Somehow I got listed among their supporters, and it's a pleasure to be put in the company with the others on the list. Ultimately what will be important is not this series of rallies but what they spark. However, it would be nice to see a good counterpoint to next week's nonsense, so please join the demonstration in your area.

Labels: , , , , , ,


We're Going Off Budget Again?

I thought that the Obama Administration was boldly putting the full cost of war back on budget so we can understand the costs and wouldn't play political games with votes. Someone wanna help me with this?

President Barack Obama is seeking $83.4 billion for U.S. military operations in Iraq and Afghanistan, pressing for a war supplemental spending bill like the ones he sometimes opposed when he was senator and George W. Bush was president.

Obama's request, including money to increase U.S. troops in Afghanistan, would push the costs of the two wars to almost $1 trillion since the Sept. 11, 2001, terrorist attacks, according to the Congressional Research Service. The additional money would cover operations into the fall.

I fail to understand the reason why this is being sought off budget. It violates campaign promises and the initial budget proposal. I guess the foreign aid, including aid to Pakistan for economic development, is included in the bill, and perhaps that was imperiled without being combined with war funding. But it's all very curious. And depressing.

See also Stephen Walt on this, wondering whether the threat of safe havens - or even terrorism itself - even justifies escalating a war in South Asia. A welcome antidote to the pieces I've seen on the "progressive" side of the ledger. Excerpting:

In short, my concern is that we are allowing an exaggerated fear of al Qaeda to distort our foreign policy priorities. Having underestimated the danger from al Qaeda before 9/11, have we now swung too far the other way? I am not arguing for a Pollyanna-like complacency or suggesting that we simply ignore the threat that groups like al Qaeda still pose. Rather, I'm arguing that the threat is not as great as the administration -- and most Americans, truth be told -- seem to think, and that the actual danger does not warrant escalating U.S. involvement in Central Asia.

Labels: , , , ,


Your Modern GOP: Endangering People Daily

I guess Michael Steele sent out an RNC fundraising letter accusing ACORN of conspiring to rig the Census. They forgot Americans for Democratic Action, NBC News, the Teamsters and most of the cast of the Broadway production of "Rent". It's a division of labor.

But I have to agree with this letter about the implications of demonizing the Census, an activity resulting in people coming to your home to count the population.

Michael Steele is playing a dangerous game with that fund-raising letter, and people are going to die because of it.

Nine years ago, my wife worked for the Census, knocking on people's doors and gathering information. There's no way she'll do it again next year. Steele is making it too dangerous.

Census takers put themselves in vulnerable positions. They don't know who or what is on the other side of the door. The door might be opened by a sexual predator, or someone who's not in control of a vicious dog. Or the door could be opened by someone with a gun in one hand and Steele's letter in the other, seething with hatred for liberals and ACORN.

I was a teenager in Southeast Pennsylvania in 1990, and Census enumeration (following up at homes that had no form returned) paid relatively well, wasn't too taxing and got me a sticker for my car that said "Official Government Business" that allowed me to park wherever I wanted. And one day, I walked to a house on my list, went around the back to knock on the fence to see if I could find anyone in the residence, and a man with a rifle yelled "Get off my property" and pointed the barrel in my direction. Somehow I got him to give up the number of people living in the house and I took off.

One letter politicizing the Census won't cause an "kill your enumerator" uprising of anti-government cranks. In fact, if conservatives want to sit out the Census and depress their own apportionment numbers, more power to them. But I don't think we can ignore the steady drumbeat of demonization of normal government functions, hard-wired into the modern conservative movement, and where that anger can export itself. In fact, it has to go somewhere.

Labels: , , ,


Outlook Still Grim Until Structural Reforms Are Made

Greg Lucas took a look at tax receipts for the first week of April, and the news is gloomy.

In 2008, not exactly a boom year either, $703,166 in personal income taxes was paid in the first eight days of the month.

During the first eight days of April 2009, $456,227 came over the transom.

By April 30 2008, nearly $12.9 billion in personal income tax revenue was collected.

This year, Governor’s Schwarzenegger’s Department of Finance predicts a monthly total of only $8.9 billion in personal income tax receipts.

If the first week is any indicator, revenues may not even meet that lowered expectation.

Lucas surmises that the $8 billion revenue gap for 2010 announced by the Legislative Analyst a few weeks back could potentially double, based on these returns and the possibility of losing particular ballot measures in the May 19 special election. I don't think there's any question that the legislature will return in June to something over a $10 billion gap to deal with. And as we know, Zed Hollingsworth and the even Yachtier Yacht Party will want to fill that with cuts to already emaciated state services.

(as a side note, I love that there are almost 200 entries in a Google search for "Zed Hollingsworth." Memewatch!)

But in fact, there are ways to deal with these problems, even in a down economy, that make the most sense for the vast majority of Californians. The Commission on the 21st Century Economy released their latest set of reports today, and what jumped out at me was their report on the potential of a split roll property tax, which would keep residential rates at current levels while modifying those for commercial and industrial properties, and as a result, California could see a $7.5 billion dollar annual boost to their budget bottom line. Obviously, the typical doomsayers like the Chamber of Commerce will come out and call this a "job-killer" and cite the negative impacts on the economy, but considering that even in these rough economic times, corporate businesses just got a $1.5 billion dollar tax CUT, I don't take their concerns seriously. They have cried poor for decades, and as a result the state has suffered deeply. While carve-outs for local small businesses may be part of a solution, having commercial property taxes frozen in amber has led to municipalities literally passing the cup to fund services.

The City of Orinda wants your help, and your donation is tax deductible.

There are no bake sales in the works, but Mayor Sue Severson plans to solicit donations for extras the City Council does not want to pay for out of the general fund.

Donations could pay for events such as Orinda in Action Day, or they could pay for public art such as the popular frog sculpture in the downtown fountain without draining the city's general fund, Severson said.

"Our budget is so minimal and we have very little flexibility in what we're able to do," she said.

The city's roads and drains need more than $100 million in repairs the city can't afford.

And Orinda's average income in 2000 was $132,531. Imagine the needs of the cities at or below the poverty line.

We cannot survive as a state with this kind of inequity. The state must be freed from these artificial bonds and allowed to address needs properly in the way every other state in the union can.

Labels: , , , , , ,


The Revolt At The Washington Post

This slow but growing rollout of frustration from inside the Washington Post at George Will's pig-ignorance on climate change has become very compelling to watch. I still think the problem resides with Editorial Board chief Fred Hiatt for printing not only the false op-ed, but the continued lies and distortions from Will, in the first place. He is not entitled by virtue of his editorial position to lie. The editors fail in their responsibility to inform the public in that scenario. And Eugene Robinson basically called them on it.

ROBINSON: What George Will did was cherry-pick a sentence in a report, you know, be very persnickety in the way he parsed his sentences, and end up making it sound as if the report had said the exact opposite of what it actually said. He was persnickety enough that his editors, who also happen to be my editors, felt he didn’t quite cross the line. I thought he did. And the ombudsman agreed with me, actually, and wrote about it in last Sunday’s paper.

In a related note, Tom Toles rocks.

The blame does indeed lie with the editors who allowed the lies to appear in print. And it taints not just the editorial page but the entire newspaper. And clearly the reporters there know that, which is why they're speaking out. Ultimately, the editors hold the cards, they can stop providing a platform for misinformation, and the passive-aggressive way they're going about "addressing" the issue speaks very low of them.

Labels: , , , , , ,


The Cover-Up Is Worse Than The Crime

I think I mentioned it in passing once, but the Obama Administration's reliance on the state secrets privilege to try and throw out warrantless wiretapping lawsuits ought to concern every American. The President and the Justice Department have now implicated themselves in the illegal activity by using these means to cover it up. As Glenn Greenwald says, progressives have almost unanimously condemned Obama for this conduct - including some of his most fervent supporters.

The fact that Keith Olbermann, an intense Obama supporter, spent the first ten minutes of his show attacking Obama for replicating (and, in this instance, actually surpassing) some of the worst Bush/Cheney abuses of executive power and secrecy claims reflects just how extreme is the conduct of the Obama DOJ here. Just as revealingly, the top recommended Kos diary today (voted by the compulsively pro-Obama Kos readership) is one devoted to attacking Obama for his embrace of Bush/Cheney secrecy and immunity doctrines. Also, a front page Daily Kos post yesterday by McJoan vehemently criticizing Obama (and quoting my criticisms at length) sparked near universal condemnation of Obama in the hundreds of comments that followed. Additionally, my post on Monday spawned vehement objections to what Obama is doing in this area from the largest tech/privacy sites, such as Boing Boing and Slashdot.

This is quite encouraging but should not be surprising. As much as anything else, what fueled the extreme hostility towards the Bush/Cheney administration were their imperious and radical efforts to place themselves behind an impenetrable wall of secrecy and above and beyond the rule of law. It would require a virtually pathological level of tribal loyalty and monumental intellectual dishonesty not to object just as vehemently as we watch the Obama DOJ repeatedly invoke these very same theories and, in this instance, actually invent a new one that not even the Bush administration espoused.

Obama has done much to commend him, and yet in several key areas - the banks, Af-Pak policy, and a portion of these civil liberties issues - he has not fulfilled his own rhetoric or offered any substantive change from the Bush Administration. And it's important for a healthy ideological movement to acknowledge that, and I think progressives are passing that test.

As for this specific case, Obama's DoJ is acting in a lawless fashion, to be blunt. They are using the state secrets claim in ways more expansive than Bush's lawyers ever did, to cover for the previous Administration and, in the process, assert executive power to essentially shut down the judicial branch and claims under the law. It is indefensible. What's more, it's not likely to work, as all the relevant case law in this area shows, making it an even more baffling position to take.

Labels: , , , , ,


Another Round On Immigration

The temperature on the immigration debate has cooled somewhat since it became a Dobbsian nightmare a couple years back. I think the President has the strength to push something through at this time, but of course there's so much else to be done. No matter - he's apparently ready to tackle it again.

hile acknowledging that the recession makes the political battle more difficult, President Obama plans to begin addressing the country’s immigration system this year, including looking for a path for illegal immigrants to become legal, a senior administration official said on Wednesday.

Mr. Obama will frame the new effort — likely to rouse passions on all sides of the highly divisive issue — as “policy reform that controls immigration and makes it an orderly system,” said the official, Cecilia Muñoz, deputy assistant to the president and director of intergovernmental affairs in the White House.

Mr. Obama plans to speak publicly about the issue in May, administration officials said, and over the summer he will convene working groups, including lawmakers from both parties and a range of immigration groups, to begin discussing possible legislation for as early as this fall.

One thing that argues in favor of addressing this is that immigration comes up as a familiar talking point on the right associated with any donestic policy. On health care, they talk about "free medical treatment for illegal immigrants." On education, "we're letting illegals into the schools." On infrastructure, "the only people who get those construction jobs are illegal immigrants." None of this is really all that true, but addressing the system and bringing people out of the shadows would defuse the talking point to an extent, though of course passing anything would be a major battle.

Ultimately, it's worth it, both to end the underground economy and to restore families. I wonder if the John McCains of the world, who in an earlier time had no problem backing some form of comprehensive immigration reform, would dare cross the lines of their increasingly nativist party. Demographically speaking, the Republican Party is dead unless they attract a bigger share of the Latino vote, and it always made sense to them to press for reform in this area. Just ask Karl Rove.

...Hopefully, Obama will seek advice from this Texas lawmaker and mandate changing Asian names to something “easier for Americans to deal with.” It's a melting pot!

Labels: , , , ,


Ma Nishtanah

Tonight: White House Seder.

On Thursday, President Obama will participate in an event at the White House where he will discuss the need to enhance the quality of healthcare afforded to members of our Armed Forces and our Veterans. The Press Secretary will brief in the afternoon. President Obama and his family will mark the beginning of Passover with a Seder at the White House with friends and staff.

I believe this means Malia, being the youngest at the table, will deliver the Four Questions. Hopefully she throws in one about the banking crisis.

That is a nice recognition, particularly of the Jewish members (Emanuel, Axelrod) of his senior staff. In other news, I will be making matzo ball soup tonight.

Labels: , , ,


Wednesday, April 08, 2009

Ignoring The Obvious

Over the weekend, the New York Times had an article with the thesis statement that the legislative machinery is rusty and unused to the kind of ambitious policy agenda that Barack Obama has proposed.

Lawmakers, senior staff members and other experts agree that a combination of divided government, thin majorities, the running battle for Congressional control and an emphasis on national security caused a decline in the old-school legislative give-and-take that will be required to deliver major health, energy and education measures to President Obama.

“We have been miniaturized,” said Senator Olympia J. Snowe, a moderate Republican from Maine and a veteran of health care negotiations. “You have three talking points on a card. We are going to have to be taught and relearn the process, crack the notebooks.”

Congress has not even managed to produce its basic spending bills on time in recent years and has exhausted considerable energy dealing with recurring tax and Medicare snags. Big bills have been few and far between — the 2003 Medicare drug plan and a 2007 energy law are examples — as lawmakers nibbled around the edges of problems [...]

As members of Congress and analysts look at the daunting demands for legislation emanating from the White House, some wonder if Congress is up to the task.

“Do we have a Lyndon Johnson in the Senate at the moment, someone who can push through legislation?” asked Stanley E. Collender, a former top aide on Capitol Hill and a longtime observer of Congressional budget fights. “We haven’t seen it in a while.”

There's no doubt that some of this is true. The "Masters of the Senate" have come and gone, and the reasons cited do tell part of the story. Furthermore, the internal dynamics of the Republican opposition tend them in the direction of unthinking opposition, behaving like perpetual candidates in a contested primary (Similarly, the glory-seeking Evan Bayhs of the world see value in obstructionism and shining attention on themselves). But this article never gets around to mentioning the special interests who frustrate progress on a daily basis. And we see them lining up, one by one, particularly with respect to the domestic agenda, to throw sand in the gears of the legislative machinery. As campaigns grow more expensive, and as inequality increases with the biggest firms getting bigger, these impediments have simply metastasized.

For example, lobbyists for practically every corporation want to halt the move to tax overseas profits from offshore tax havens, something the entire world came to an agreement on at the G-20. Corporate farming interests succeeded in removing cuts to farm subsidies from the budget resolution. And despite the rhetoric that action on the climate and on the economy are inextricably linked, oil companies have flat out given up on renewable sources of energy, and appear to have convinced the Administration to cave on the 100% auction element of their cap and trade proposal.

The Obama administration might agree to postpone auctioning off 100 percent of emissions allowances under a cap-and-trade system to limit greenhouse gas pollution, White House science adviser John P. Holdren said today, a move that would please electricity providers and manufacturers but could anger environmentalists [...]

During the presidential campaign, Obama called for auctioning off all greenhouse gas emissions permits at the outset, rather than just a portion of them. Many industry leaders say a phase-in will be essential to easing the transition to a low-carbon economy.

"The idea, obviously, is to end up with a bill that reflects both the thinking of Congress and the administration, a bill that the president can sign," Holdren said, adding that when it comes to a 100 percent auction, "Whether you get to start with that or get there over a period of time is something that's being discussed."

We have a model for "getting there over a period of time," in Europe, where they wasted a decade making almost no progress on reducing carbon until they just went ahead and moved to a full auction. The whole point of cap and trade is to price carbon, not give it away for free, because the pricing element encourages the innovation needed to make the needed reductions.

Some, like Chris Bowers, are optimistic that public investment will continue to grow. The question remains whether that will manifest in government spending that improves lives, or the kind of corporate welfare and Treasury raids we have seen over the last decade. Call me skeptical. And I think the reason is simple - a political class too intertwined with a corporate elite, too attentive to their concerns over the concerns of their constituents. Perhaps full public financing of all campaigns is the answer, and what we should be fighting for. Or maybe we just need A New Way Forward to sever that symbiotic relationship and restructure the economy.

Lost in the talk of tea parties by anti-tax zealots are the A New Way Forward demonstrations this weekend. It is crucial that we send a message that real structural change is not optional but necessary. I urge you to find the demonstration in your area and attend.

Labels: , , , , , , , , ,