Gee Gordon

I guess my only reaction when I heard this was - G. Gordon Liddy still has a radio show? How? Are there Arbitron ratings? Who is listening to him?

I mean, he offered to kill Jack Anderson, and worse, appeared on Miami Vice. Doesn't that disqualify you completely?

The Media Treatment Of Sotomayor

I didn't address the New York Times' Sotomayor temperament story yesterday. I think you could probably talk your way into believing that this was a perfectly legitimate area of concern, as Adam Liptak did. And I generally like Liptak as a reporter. But I also sympathize with Christy Hardin Smith's take.

You want to know why those opposing Sotomayor keep raising this issue of "she's a bitch on the bench?" (And how often have you seen this tack with a man. Honestly.)

It's because they know that a Heathers campaign is media catnip.

The titillating nature of junior high anonymous gossip mongering is so much more amusing and more easily understood by political reporters who don't bother trying to comprehend legal intricacies.

I think Liptak can get away with saying that Sotomayor's demeanor and style of questioning might be of legitimate interest if he didn't allow a bunch of anonymous sources to characterize it as "difficult" and "nasty" off the top. He did give voice to perhaps the best rebuttal of this line of argument, however:

Judge Guido Calabresi, a former dean of Yale Law School who taught Ms. Sotomayor there and now sits with her on the Second Circuit, said complaints that she had been unduly caustic had no basis. For a time, Judge Calabresi said, he kept track of the questions posed by Judge Sotomayor and other members of the 12-member court. “Her behavior was identical,” he said.

“Some lawyers just don’t like to be questioned by a woman,” Judge Calabresi added. “It was sexist, plain and simple.”

He said Judge Sotomayor’s forceful and lucid arguments had persuaded him to reconsider his position in a number of instances. “And I’m a tough act,” he said.

Actually, I think Sharon Theimer's AP article, accusing Sotomayor of hypocrisy because she grew up in poverty but now accepts her salary as a federal judge instead of living in a Bronx tenement, would warrant much more criticism.

There's no doubt that the media is treating this pick differently because Sotomayor is a woman, so driven are they by conservative frames and narratives.

Not As Much Harm, Not As Much Foul

I definitely agree with Digby on the point of the optics of President Obama seeming to concede the point about Sonia Sotomayor's "wise Latina" comment look bad, and the media pounced yesterday. However, I think the media needs to be faulted for seeing what they wanted to see. Here's the whole context:

Obama: I'm sure she would have restated it, but if you look in the entire sweep of the essay that she wrote, what's clear is that she was simply saying that her life experiences will give her information about the struggles and hardships that people are going through that will make her a good judge.

That's about 1/5 hedging and 4/5 putting it in context, which is what pretty much every other Dem talking head has done. I think it goes too far to say, as David Shuster did yesterday, that this represents a concession and the White House "caving the point". Cable news lives to play things up like this, but even for them this is kind of ridiculous.

In my LA Times today, this "concession" was buried inside a larger process story about moderate GOP folks telling the hard right to STFU about the "racism" and "Latino KKK" claims. And by the way, they're not. So I think it's a blip, not a major thing. Sotomayor was always going to restate that particular statement in confirmation hearings, but I don't get the sense that she'll grovel about it.

If this is a prelude to the President conceding points for no good reason, I'd agree that it's a problem. But I don't see much of a concession here.

Most Dangerous Trouble Spot In The World Update

It's concerning enough that the Pakistani Taliban has responded to the offensive against them in the Swat Valley with bombings in Lahore and Peshawar. Clearly they are embedded enough in local populations to carry out attacks without a base of operations in Swat, even in cities like Peshawar which are not Taliban strongholds. Juan Cole makes the argument that this could all turn public opinion against the Taliban, which is possible.

While is is possible that the public will blame the government for stirring up so much trouble with the Swat campaign, it is also possible that the public will turn decisively on the Taliban. There are precedents for such loss of popularity. After the 1997 attack on innocent tourists in Luxor, Egypt, the Egyptian public turned against the Egyptian Islamic Jihad and the Islamic Grouping (al-Gama'a al-Islamiya), the two small terrorist groups that had committed many acts of violence in the 1970s and 1980s and had assassinated President Anwar el Sadat in 1981. EIJ declined into irrelevance in Egypt, and al-Gama'a al-Islamiya's leadership has renounced violence.

But what REALLY bothers me is the series of attacks over the border, in Iran. A Shiite mosque in Zahedan was struck earlier in the week, and yesterday, gunmen fired on a campaign office for President Mahmoud Ahmadinejad.

Preelection tensions rose Friday in Iran's religiously and ethnically mixed southeast after gunmen opened fire on the president's campaign office and a radical group claimed responsibility for the bombing of a mosque the day before that killed up to 23 people and injured scores.

Iranian authorities blamed the United States for the violence in Zahedan, on the border with Pakistan.

"The hands of America and Israel were undoubtedly involved in this incident," prayer leader Ayatollah Ahmad Khatami told supporters in Tehran, referring to Thursday's bombing of a Shiite mosque. "Although Wahhabis and the infidel and evil Salafis were an accomplice to the crime, they were being led from somewhere else."

Wahhabi and Salafi are puritanical schools of Sunni Islam rooted in Saudi Arabia. They have inspired Osama bin Laden and his Al Qaeda terrorist network, as well as the Taliban and other groups that denounce Shiite Islam, the majority sect in Iran [...]

Hours earlier, the Sunni militant group Jundallah, which is linked to Al Qaeda and draws support from Iran's ethnic Baluch minority, claimed responsibility for the mosque bombing on a Shiite holiday. It made the claim in a phone call to the United Arab Emirates-based Al Arabiya satellite news channel.

The caller claimed that the victims were hard-line pro-government militiamen discussing the June 12 election.

Now, this province is basically lawless anyway, so I don't want to make too much of it. But I fear that this widens the larger Shiite-Sunni struggle inside Islam, but that hardliner cleric trying to push blame onto the Americans is a ploy to increase tensions and move away from any reconciliation and negotiation. You can clearly see the tensions between Shiite Iran and their Sunni competitors here. You can also see it in Iraqi Prime Minister Maliki throwing up his hands at any further gestures to the Saudis, accusing them of allowing Sunni insurgents to flow through their borders. This is something that many of us worried about at the start of the Iraq conflict, the spread of sectarian violence throughout the region. I really hope this is not the beginning.

Friday Random Ten

Have a fine weekend! I have a busy sked - birthdays, meetups - so it may be a stretch to say there will be a lot of content here over the next couple days.

Herculean - The Good, The Bad & The Queen
Collapse - Soul Coughing
Water Your Garden - Luscious Jackson
Else - Built To Spill
Within You Without You - The Beatles
Length Of Love - Interpol
Serious Bird Woman (You Turn Me On) - Robert Pollard
Perfect Way - Sebadoh
Brandy Alexander - Feist
The Bleeding Heart Show - The New Pornographers

A Peek Into The Machine

I just came across an astonishing interview on The Ed Show with Pennsylvania Governor Ed Rendell about the potential Specter-Sestak primary. It's a combination of a threat, Newspeak, muddled and often contradictory logic, and a depiction of how the spoils system works in government, particularly a machine state like Pennsylvania. It's really something, and it looks almost staged, like an infomercial designed to bash Sestak's chances in public. Here's a transcript.

Schultz: Do you think Joe's got a shot?

Rendell: I'm an admirer of Joe Sestak. I'm going to work hard to get him re-elected when he runs for Congress next year, not for the Senate. Joe should not run for the Senate in the Democratic primary, he'd get killed. And let me tell you why he'd get killed. Number one, Arlen Specter's been going around PA for three decades, as the Senator. He goes into every one of the 67 counties each and every year, and he holds town meetings, and he does constituent service, and he's never asked whether people are Republican or Democrat. Last three weeks or so, we've been having regional conferences with elected Democratic Party chairs, and elected Democratic officials, in every region of the state. It's unbelievable how many of them know Arlen personally, and admired him and supported him, even though he was a Republican in the past. You can't buy that, and you can't overcome that in one campaign. It's been thirty years. Number two, Arlen Specter will raise two, three, four times as much money as Joe Sestak. Number three, Arlen Specter has the support of the President and the Vice President, a President who's got a 90% approval rating among registered Democrats in Pennsylvania. Joe Sestak does not want to be one of the candidates who ran against Bob Casey in the Democratic primary, when the whole governmental establishment was for Bob Casey. He doesn't want to be marginalized, he doesn't want to get 15, 18%. Joe should run for Congress again, establish some seniority, his time will come. He's a terrific guy, his time will come, but it's not this year.

Schultz: Governor, you're very strong with that answer tonight. It almost sounds as if Joe Sestak would be making a fool of himself if he were to try this. Would you go that far?

Rendell: Well, I wouldn't say making a fool of himself, of course, Joe's a terrific guy, and he's got great credentials. But he's being talked into it by people on the extreme of the party, and they're good people, and they care about the right issues, but they don't represent the broad slice... this is a conservative state. I know people shake their heads when I say that, but the Democratic Party in Pennsylvania is more Bob Casey's party than it is Ed Rendell's party. I won because I was a great regional candidate, Ed, and I won re-election because I think I did a good job. But this, our Democrats are middle-of-the-road Democrats, with the exception of the Southeast. And Arlen Specter appeals very much to them. And it's not so much who I support, or who Bob Casey supports, it's all these party chairmen and all these elected officials that Arlen's been taking care of for years. And most people think that Arlen's supported our constituencies, and he has, over the years.

Schultz: So the infrastructure of the party in PA, would, no matter what side it is, is going to be with Arlen Specter. So the question begs, is anybody willing to step up and tell Joe Sestak, don't do this? That we've got a good enough guy, that he's gonna be good on the issues? Because Mr. Sestak was on this program, and the point that he made, he didn't like the idea that there was someone in the party, including yourself, including the President and the Vice President, that were willing to anoint Arlen Specter because he'd been around for a long time.

Rendell: Well, we anointed Bob Casey because he was a good candidate and he had been around for a long time, even though he was a young age, he started very young. Ed, it's not a question of anointing. In the end, people decide, not me, not even the President. People decide. But when they hear from the President that we need Arlen Specter. When people understand that Arlen Specter single-handedly saved the stimulus program for this country and put his political rear end on the line, when they understand that ten billion dollars more for NIH, to help us do research on every incredible disease that we're facing as a human race. People understand, and they like Arlen Specter and they understand that he's who the President wants. Look, I'm the last person to tell Joe not to run, because people told me not to run when I decided to run for Governor, because no one from Philadelphia had been elected since 1914 as Governor. So I'm not about to say to someone don't run. But I think Joe should think about what Arlen has done, the things that, the alliances that he's made over the years, the constituent services operation that has that's second to none, and the fact that he does have the support of Democrats, particularly the President.

Schultz: Well, labor has told me that they're not going to sit this thing out. Now, would this competition make Arlen Specter a better Democrat when it comes to voting on Employee Free Choice Act, free trade issues, and also health care reform? What about those three?

Rendell: Well, it's interesting. Both Joe Sestak and Arlen Specter are trying to broker a compromise on the Employee Free Choice Act, because they know they're aren't enough votes right now. There are at least, and you know this better than I do, Ed, how many Democratic Senators will not vote for the Employee Free Choice Act as is?

Schultz: Well, they're a little nervous about it, there's no question about that. But I think-

Rendell: Arlen and Joe are both trying to make some changes in the Act so that everyone can support it so they can have a broad base of support. So I think Arlen Specter has been for our constituents for the longest time. You know he's been called a RINO, a Republican in name only, and in fact there's a lot of truth to that. He's always been there for poor people, for working people. And he's been there for labor! He ran against a good Democratic Congressman, Joe Hoeffel in the 2004 election, and organized labor was for Specter. Arlen is going to do the right thing on the Employee Free Choice Act, just like he did on the stimulus. He's going to try and broker a compromise. Ironically, Joe's doing the same thing in the House. So, look, these guys are very much the same. Joe Sestak's not a liberal Democrat either.

Schultz: No, he's not. But he is better to labor, and he is, wants a public option on health care, and he is not the free trader that Arlen Specter has been. I think your analysis and your take is great, you know, I don't want to go against you on anything. I always want you on my team. You've got Pennsylvania down, there's no question. But from my instincts, I think Americans are tired of the good old boy network. And I love competition, and I think competition makes people better, that was my Op-Ed last night...

Rendell: And you're right about that, except, we will lose a terrific Congressman. Joe Sestak runs against Arlen Specter, he's out of the Congress, after just two short terms. We will lose a terrific Congressman, and when he loses to Arlen, he fades into political obscurity. He's a guy who should be there for us. We don't have a deep bench among Democrats in Pennsylvania, we need Joe to stay in the Congress and do the work he's been doing.

So, Sestak would get killed because Arlen backslaps all the party chairs and everybody loves him, and he'll raise a lot more money (a veiled threat alluding to what Rendell will tell local donors) and the President wants him in. Then he says that the dirty hippies are pushing Sestak, but Pennsylvania Democrats are conservatives and Arlen Specter, a 30-year Republican, suits them fine, and Rendell (the noted hardcore lib) only snuck in on a technicality, but Arlen's a good guy because he invented the stimulus package himself and he's supported everything Democrats have supported forever, because he's the Dennis Kucinich of the Keystone State. And then Schultz asks why are you choosing for the voters, and Rendell disavows doing that at all - no telling somebody not to run from him - and proceeds to say that Specter's "who the President wants," even though it doesn't matter who the President wants because people decide.

Then Schultz asks whether the pressure is good or bad, and Rendell says that Sestak and Specter are exactly the same on Employee Free Choice, "same" being defined as the fact that one supported it and one said he wouldn't support it in the curent form. But it's all fine because a lot of Democrats don't want to pass the bill - including Specter - and Arlen will "do the right thing" on that because he loves poor people. Anyway, Joe Sestak and Specter are exactly the same - never mind the hippie morons - and when Schultz talks precisely about the areas where they differ and says that competition is healthy, Rendell makes the most open threat of the interview, warning that we'd lose Sestak's Congressional seat (a district Obama won 56-43), and Sestak will fade into oblivion (with a not-so-gentle push from Rendell, of course).

This pretty much is how things are run in Pennsylvania, as I understand it. Rendell recounts with pride how he cleared the field for Bob Casey in 2006. If Rick Santorum, sensing a loss, switched parties then, Eddie probably would have cleared the field for him, too.

Me, I support democracy. And if Ed Rendell wants Arlen Specter to beat Joe Sestak and stay in the Senate, he has a means to do that. He has a vote. We'll see how it turns out next year.

...C&L has the vid:

1989, Another Summer, Sound Of The Funky Drummer

Aside from asking why anyone would do a rap parody 30 years after Grandmaster Flash hit the turntables, I'm actually going to have to give mad credit to the Young Conservative Rappers in this bit for managing to wedge in every talking point from the past 30 years into a 4-minute song.



I don't speak lies, I just spit out da facts
28% the new capital gains tax

Actually, considering that white male conservatives are the real oppressed, persecuted minority these days, it makes perfect sense to hit the streets (of a university library), put on their representin' clothes (suits without ties) and get in the struggle. Fight the power, my brothers.

Bush's Turn

I guess Cheney and Bush switched undisclosed locations for a week, and now the former pResident delivered the talking points about the torture regime.

In his largest domestic speech since leaving the White House in January, Bush told an audience in southwestern Michigan that after the September 11 attacks, "I vowed to take whatever steps that were necessary to protect you."

Although he did not specifically allude to the high-profile debate over President Obama's decision to halt the use harsh interrogation techniques, and without referencing Cheney by name, Bush spoke in broad strokes about how he proceeded after the capture of Khalid Sheikh Mohammed in March 2003.

"The first thing you do is ask, what's legal?" he said. "What do the lawyers say is possible? I made the decision, within the law, to get information so I can say to myself, 'I've done what it takes to do my duty to protect the American people.' I can tell you that the information we got saved lives."

Well, those are two different things, aren't they? "What's legal" does not necessarily equal "What do the lawyers say is possible." Especially depending on the sequencing of those events. If "what do the lawyers say is possible" comes first, and it's more "what can we get the lawyers to say is possible," then "what's legal" becomes fairly irrelevant, right? Especially when combined with "I vowed to take whatever steps that were necessary to protect you." That sounds like a vow irrespective of the law.

Then there's this unprovable "the information we got saved lives" statement, and considering that George Bush himself signed the executive order barring public disclosure of specific information gained through torture, and furthermore, he could have released them himself at the time if he wanted to be vindicated. For his part, Carl Levin has called B.S.

Regarding Cheney's claim that classified documents will prove his case -- documents that Levin himself is also privy to -- Levin said: "But those classified documents say nothing about the numbers of lives saved, nor do the documents connect acquisition of valuable intelligence to the use of abusive techniques. I hope that the documents are declassified, so that people can judge for themselves what is fact, and what is fiction."

Pretty unequivocal. But the last thing that Bush and Cheney want would be declassification. Because their tough-guy stance that torture saves lives works out better for them than chalking intelligence up to sugar free cookies.

This got to me:

The former president earned a noisy standing ovation when asked what he wants his legacy to be.

"Well, I hope it is this: The man showed up with a set of principles, and he was unwilling to compromise his soul for the sake of popularity," he said.

By the way, I'm willing to believe that Bush didn't compromise his soul. He probably didn't know about the worst stuff, and anyway you can't compromise a soul that would say this:

In the week before [Karla Faye Tucker's] execution, Bush says, Bianca Jagger and a number of other protesters came to Austin to demand clemency for Tucker. "Did you meet with any of them?" I ask.

Bush whips around and stares at me. "No, I didn't meet with any of them," he snaps, as though I've just asked the dumbest, most offensive question ever posed. "I didn't meet with Larry King either when he came down for it. I watched his interview with [Tucker], though. He asked her real difficult questions, like 'What would you say to Governor Bush?' "

"What was her answer?" I wonder.

"Please," Bush whimpers, his lips pursed in mock desperation, "don't kill me."

...wonder if George would listen to the advice of his commanders on this one:

MacCallum: (Ticking time bomb scenario)

Gen. Petraeus: ....T here might be an exception and that would require extraordinary but very rapid approval to deal with, but for the vast majority of the cases, our experience downrange if you will, is that the techniques that are in the Army Field Manual that lays out how we treat detainees, how we interrogate them -- those techniques work, that's our experience in this business.

MacCallum: So is sending this signal that we're not going to use these kind of techniques anymore, what kind of impact does this have on people who do us harm in the field that you operate in?

Gen. Petraeus: Well, actually what I would ask is, does that not take away from our enemies a tool which again have beaten us around the head and shoulders in the court of public opinion? When we have taken steps that have violated the Geneva Conventions, we rightly have been criticized, so as we move forward I think it's important to again live our values, to live the agreements that we have made in the international justice arena and to practice those.

If Petraeus admits that we violated the Geneva Conventions, isn't he calling indirectly for prosecutions of those who ordered such violations?

HELP's Health Care Bill

Ted Kennedy's committee will try and influence the debate on health care with the release of their comprehensive legislation, which includes some pretty solid proposals.

Sen. Edward M. Kennedy (D-Mass.) is circulating the outlines of sweeping health-care legislation that would require every American to have insurance and would mandate that employers contribute to workers' coverage.

The plan in the summary document, provided by two Democrats who do not work for Kennedy, closely resembles extensive changes enacted in the senator's home state three years ago.

In many respects it adopts the most liberal approaches to health reform being discussed in Washington. Kennedy, for example, embraces a proposal to create a government-sponsored insurance program to compete directly with existing private insurance plans, according to one senior adviser who was not authorized to talk to reporters.

The draft summary also calls for opening Medicaid to those whose incomes are 500 percent of the federal poverty level, or $110,250 a year for a family of four.

If you're looking for the left-most counterpart to whatever happens in Max Baucus' Senate Finance Committee, this is it. MassCare is doing decently, but not getting the job done on its subsidies because a small state has no chance to drive down costs in any meaningful way. The cost controls - and how to pay for the subsidies - are the two keys here.

But it's notable that Kennedy includes a robust public option. Howard Dean today painted Chuck Schumer's compromise public option as the limits of where he would allow the conversation to go.

As a sticking point, he's insistent that any reform effort include a public plan. The public entity would provide insurance that, by avoiding the demands of the private market, could help control cost and expand coverage. Cognizant that such a proposal will engender stiff -- if not universal -- opposition from Republicans in the Senate, Dean said he had no objection to Schumer's modified version.

"If we can get Schumer's proposal out of the Senate, I think that would be a very good thing," he told the Huffington Post. "It can't be any weaker than that though. We don't want what would be a fake public option."

As one of the leading progressive voices on health care reform, Dean's endorsement of the Schumer proposal is no small thing. The New York Democrat has envisioned a plan for insurance coverage that, while run on public funds, is self-sustaining and subject to private market rules. Money would come from the payments and premiums of consumers. The same officials who ran the plan would be forbidden from regulating it. And a reserve fund would be set up to handle a potential influx of claims.

The stipulations, Dean said, would assuage critics without actually diminishing the public option itself.

"[Schumer's proposal] is still run by the public," he added. "But it is subjected to insurance rules that are there in order to protect the public from for-profit institutions, which is obviously not necessary if you are running your plan on the public side. Because the consumer needs the protection because of the profit-motive, but they don't need protections from a non-profit or the government. So Chuck has those things in there to level the playing field. I understand that. And I don't think we need to be doctrinaire about this. But I think, the bottom line is a public option is run by the public and financed by the public, it is not administered by the private sector."

I'm not quite as sanguine as Dean about Schumer's public option because it would act much like a nonprofit, without getting the Medicare bargaining rates needed to drive down costs. It would represent an improvement, but only a slight one. However, framing the conversation as a choice between Schumer's version or Kennedy's, not Schumer's version or nothing, is crucial. That's the importance of the Kennedy bill.

Arnold, You're Like School In The Summertime - No Class

Apologies to Russell from Fat Albert, but in this case I mean that literally.

The Los Angeles Unified School District announced Thursday it is canceling the bulk of its summer school programs, the latest in a statewide wave of cutbacks expected to leave hundreds of thousands of students struggling for classes.

The reductions, which will force many parents to scramble for child care, are the most tangible effect of the multibillion-dollar state financial cuts to education. Community colleges also have announced summer program cancellations.

Bridge learning has a direct throughline to academic achievement, and in the long run, the value of getting an at-risk youth a high school diploma far outweighs short-term spending. But of course, summer-school programs extend beyond make-up classes for students behind the curve, but also playground and pool programs which keep kids out of trouble and off the streets. In other words, the very kind of after-school programs that the Governor championed before he took office.

Of course, this is in line with Arnold 3.0's Hooverist approach to education - cutting grants, raising fees.

Gov. Arnold Schwarzenegger's plan to dismantle the Cal Grant program would make California the first state in the recession-battered nation to eliminate student financial aid while raising college tuition, experts said this week.

"Other states are cutting back, but not a complete phase-out," said Haley Chitty, communications director for the National Assn. of Student Financial Aid Administrators.

The governor's proposal would end all new Cal Grants, eventually eliminating the state's main financial aid program for college students, and prevent existing awards from increasing. Grants awarded to 118,000 freshmen starting college in the fall would be canceled, as well as hikes in 82,255 continuing awards promised when the University of California and California State University raised fees this month by 10% and 9.3%, respectively.

Cal Grants awards focus on the lower-income population. That's on whom this budget is being balanced.

Arnold will deliver a joint address to the legislature this week. I'd rather that be a joint address to all public school students. Explain this to them.

QED

A lot of people have got to this, but yes, empathy is not some alien notion but a common way of thinking about the role of life experience and how it relates, even to the law, and conservative judges like Sam Alito and Sandra Day O'Connor have invoked life experience and empathy in their judging, including race and gender, and white male conservatives consider themselves perfectly objective automatons uncorrupted by any perspective whatsoever, except when they don't like the law they have to apply under that standard, and then they go on and on about how unfair it all is to white people. This is because they view "the law" as anything reaching their desired outcome, intellectual honesty be damned. It's stupid. You can even play the home game on this.

Not much more to say than that.

Bill Clinton And Derivatives

Bill Clinton, whose Administration set the ball rolling on a lot of the structures that ultimately led to ruin in the financial markets, gives a pretty honest take of where he feels he went right and wrong:

Mr. CLINTON: Now, there basically have been three charges, if you will, laid at our doorstep, because everybody recognizes that I vetoed the securities reform bill and that we had a very different economic philosophy. But they — the three charges are one, because I enforced the Community Reinvestment Act for the first time and over 90 percent of all lending done under that law was done when I was president, $300 billion, that part of that was a lot of little banks made loans to people they had no business making loans to to buy houses so they could check the box for the Community Reinvestment Act. That’s the right-wing argument.

Then there’s the argument from the left that I shouldn’t have signed the bill that got rid of the Glass-Steagall law because that enabled banks and investment banks in effect to merge their functions.

And then there’s the argument that I make, which is that I should have raised more hell about derivatives being unregulated. I believe the last one is by far the most valid, although I don’t think that the Congress would have permitted anything to be done because Alan Greenspan was against it [...]

But I do believe on the derivatives they made the argument, the people who were against regulating it, that people like you weren’t buying derivatives. It wasn’t like you were investing your 401(k) in derivatives. You were investing your 401(k) in mutual funds, which were subject at least under normal times to the jurisdiction of the S.E.C., which was supposed to be minding the store. And so because we had a hostile Republican Congress which threatened not to fund — I don’t know if you remember this but we had a huge knock-down fight when they threatened not to fund the S.E.C. because of what Arthur Levitt was doing to try to protect the American economy from meltdowns. They said, “Oh, he’s interfering with a free market” and all that. This is what he’s supposed to do.

They argued that nobody’s going to buy these derivatives, we’ll do it without transparency, they’ll get the information they need. And it turned out to be just wrong; it just wasn’t true. And once you got that massive amount of money invested in derivatives that people thought — it’s like these credit default swaps, where people thought, the Lehman people talk about it, they thought, or the A.I.G. people, they thought it was 100 percent safe investment, they thought there would never be defaults on these mortgage securities. So of course you wanted insurance there because you got the insurance premium, you make the profit and you couldn’t possibly lose money, right? Well, it turned out to be all wrong. That rested on a lot of assumptions, including the fact that the ratings agencies would do a good job, which didn’t happen, in evaluating risk. So I very much wish now that I had demanded that we put derivatives under the jurisdiction of the Securities and Exchange Commission and that transparency rules had been observed and that we had done that. That I think is a legitimate criticism of what we didn’t do.

Clinton doesn't buy the arguments about Glass-Steagall or the Community Reinvestment Act. And much of his argument rests on the fact that the Bush Administration just gutted the regulatory apparatus, particularly the SEC, and so he was operating under a different environment. And David Leonhardt makes another very good point - the Clinton Administration allowed the run-up of the dot-com stock bubble, so thinking they would have charged in and stopped the housing bubble doesn't really hold water. They were lucky to get out of office when they did.

But this is pretty honest, and points to Clinton's instincts on this, which were always more finely attuned than his advisors. The derivatives market took off after Clinton left office, when the stock bubble popped and the relationship between housing and mortgage-backed securities started to realize itself. At the same time, Long-Term Capital Management, which invested heavily in derivatives, failed during Clinton's tenure (he couldn't come up with the name in the interview), and apparently this led Clinton to approach Alan Greenspan on the subject, who predictably said that derivatives were a niche market. In other words, Clinton deferred to Greenspan. So how would he have stopped the bubble from inflating, then? I can't see Clinton having bungled the issue as much as Bush, but while his instincts were solid, the follow-through, not so much.

Meanwhile, we have the benefit of hindsight now, and certainly a desire to regulate derivatives. Which makes the banksters unhappy:

For credit-default swaps, information about intraday trades and prices has long been controlled by a handful of large banks that handle most trades and earn bigger profits from every transaction they facilitate if prices aren't easily accessible.

For example, credit-default swaps tied to bonds of companies such as General Electric Capital and Goldman Sachs typically have a pricing gap of 0.1 percentage point between the bid and offer price. That translates into a $40,000 margin for every $10 million in debt insured for five years. Greater price transparency could narrow that gap, lowering costs for buyers and sellers but reducing fees for banks.

Just so you know who's looking out for you. Now, if the banksters still run the place, as Dick Durbin said, then everyone can be right about the dangers of the financial markets and it wouldn't amoung to a hill of beans.

The Settlements Issue Goes Public

If the President can be criticized in the first several months of his Administration, it would be for his reticence to step out on controversial issues. In fact, perhaps the first example of his White House being bold and forthright on something bound to win him enemies as well as friends is his very public stand against Israeli settlement building.

WASHINGTON — President Barack Obama Thursday ratcheted up what might be America's toughest bargaining position with Israel in a generation, demanding anew that Israel stop expanding its settlements in the disputed West Bank as a key step toward making peace with its Arab neighbors.

Obama made the demand after a White House meeting with Palestinian President Mahmoud Abbas, building on unusually blunt language the day before from Secretary of State Hillary Clinton.

"Each party has obligations," Obama said of the so-called Road Map to Peace, to which Israel is a party. "On the Israeli side, those obligations include stopping settlements."

He said he made that point to Israeli Prime Minister Benjamin Netanyahu when they met earlier this month, noting that the conversation "only took place last week" and that Netanyahu must work through domestic politics, but added: "We don't have a moment to lose."

You can read Obama's statement after meeting with Abbas here. It's astounding to see an American President pick a public fight with Israel. But ultimately, stopping the settlement expansion is in the best interest of the Israelis and eventual peace.

Isn't likely to happen so fast, however:

Mr. Netanyahu's spokesman Mark Regev said Thursday that the prime minister won't change his long-held position that building should be allowed to continue in existing settlements as part of "natural growth."

Mr. Regev said any complete freeze in settlement activity could be discussed only in final-status peace negotiations with the Palestinians. But Palestinian leaders have refused to resume negotiations until Mr. Netanyahu acknowledges the commitments of past Israeli governments to a Palestinian state.

Laura Rozen has more from Netanyahu's perspective. He appears to have been really blindsided by an Administration who refuses to bend their principles to fit the dictates of the Israel lobby.

"This is a sea change for Netanyahu," a former senior Clinton administration official who worked on Middle East issues said. The official said that the basis of the Obama White House's resolve is the conviction that it is in the United States' as well as Israel's interest to end the Israeli-Palestinian conflict. "We have significant, existential threats that Israel faces from Iran and that the U.S. faces from this region. It is in our mutual interest to end this conflict, and to begin to build new regional alliances."

Netanyahu needed to engage Obama directly, the former official said. "Now that he has done so, and also sent a team of advisors to meet [special envoy to the Middle East George] Mitchell, he has very clearly received a message: ‘I meant what I said on settlements. No natural growth. No elasticity. There will be a clear settlement freeze.'" (Netanyahu sent a team of advisors including minister for intelligence Dan Meridor for meetings with Mitchell in London Monday.)

"Over the past 15 years, settlements have gone from being seen in Washington as an irritant, to the dominant issue," says Georgetown Univeristy Middle East expert Daniel Byman. He pointed out that key figures in the Obama administration -- Mitchell, who headed the Mitchell Commission, which recommended a halt to settlements; national security advisor Gen. Jim Jones -- see the Jewish settlements in the West Bank, home to some 290,000 people, as a key obstacle to getting a peace settlement. "I don't think the logic is hidden," Byman said.

It's really fascinating, and I honestly don't know how it'll play out. The wingnuts are preoccupied with calling a circuit court judge a racist right now, but I wouldn't be surprised to see the Wurlitzer ramp up on this before too long. Expect some stories about the Black Muslim in the White House siding with the Palestinians, when in actuality, Obama is siding with the Israelis by insisting on the only avenue for progress. Bully for him.

They Get Our News

I seem to remember a common complaint during the Bush era that Al Qaeda was watching our TV shows and paying attention to what Democrats have to say, and when they criticized the President, Osama bin Laden rejoiced and threw a party, so everyone had better shut up. That was a go-to argument for the right for a while.

I never much worried about Al Qaeda getting out their rabbit ears and watching C-SPAN. However, unquestionably leaders in Europe read our newspapers and consume our media. And when political leaders run a steady diet of pants-pissing missives about the big bad Guantanamo super-villains and how they can never set foot on US soil, small wonder that Europe, a key player in the White House's efforts to find settlements for detainees scheduled for release, wants no part of them either.

The Obama administration's push to resettle at least 50 Guantanamo Bay prisoners in Europe is meeting fresh resistance as European officials demand that the United States first give asylum to some inmates before they will do the same.

Rising opposition in the U.S. Congress to allowing Guantanamo prisoners on American soil has not gone over well in Europe. Officials from countries that previously indicated they were willing to accept inmates now say it may be politically impossible for them to do so if the United States does not reciprocate.

"If the U.S. refuses to take these people, why should we?" said Thomas Silberhorn, a member of the German Parliament from Bavaria, where the White House wants to relocate nine Chinese Uighur prisoners. "If all 50 states in America say, 'Sorry, we can't take them,' this is not very convincing."

The scaremongering has legs, you see, and politicians everywhere being of a spineless nature, they don't want to face their constituents and explain why released Gitmo prisoners are terrorist masterminds to every portion of America but just fine for their country.

Funny how the same people who shrieked that Democrats were "making us less safe" with their words are now causing an international incident through deliberate lying and severely damaging an American President's efforts to improve foreign relations, huh? I guess politics doesn't end at the water's edge anymore.

Harry Reid has composed himself and acknowledged that some prisoners would be resettled in US prisons. Hopefully this constant agreement with the latest bedwetting scenario on the right has ended, and we can actually face our allies again.

White Man's Burden

The old crazy uncles that the GOP would rather keep in the basement have all burst to the surface, and the craziest of the crazy if Tom Tancredo. His assertion that the National Council of La Raza is "the Latino KKK" not only offends that organization and all Hispanics, but members of the GOP who have appeared at NCLR events and accepted their awards. We truly are seeing the crackup of the white male conservatives.

African-American and Hispanic conservatives who have questioned her judicial philosophy also note the historic nature of the appointment and praise her triumph over economic hardship. White conservatives, on the other hand, have been far more personal and aggressive in their attacks on Sotomayor's record, repeatedly accusing her of "reverse racism" and questioning her intelligence.

White male conservatives, despite polling showing both the public and GOP insiders disagree, are maintaining that Sotomayor is an unqualified bigot.

Pat Buchanan described Sotomayor in a column Friday as an "anti-white liberal judicial activist" as well as a "lightweight" who "covers up her intellectual inadequacy by bullying from the bench."

John Derbyshire, at National Review Online, took admiration for Sotomayor's life story as an intentional insult to him and all other white people:

I get mighty annoyed by the unspoken implication in a lot of commentary that anyone not a member of a Protected Minority must have grown up in a twelve-bedroom lakeside mansion and been chauffered off to prep school with a silver spoon in his mouth. Judge Sotomayor was raised in public housing? So was I. Her mother was a nurse working late shifts? So was mine. When did white working poor people disappear off the face of the earth? Where are the eager listeners to their "compelling stories"?

There's lots more at the link, including Billo chiming in with how "the left sees the white man as a problem." As a white man, I can say pretty directly that I don't. No, but what does seem to be the case is that the right, in particular the white male conservative right, can't stand that their coded attacks aren't working anymore. They have used this playbook for decades, mostly with success, and now the country has changed, gotten more diverse, more interconnected, more tolerant, and they don't know what the hell to do.

Some people, mainly the ones in charge of electing Republicans, have recognized this. But the loudest members of the party, the media hounds, haven't, and they still think they can call Sotomayor a "reverse racist" or a "twofer" and reap the rewards. And when it falls flat, now that the worm has turned, they figure, this all must be because everyone hates whitey.

Funny, several years ago the Democrats rejecting Miguel Estrada as a circuit court judge was supposed to ruin their relationship with Hispanic voters. But there's a difference between rejecting a conservative judge who happens to be Hispanic and rejecting a Hispanic woman who happens to be a judge. They've foregrounded the race and gender attacks, and this side of the GOP is simply ugly to watch.

Prison Health Care Deal Finally Reached

Prior to yesterday, the buzz around the federal prison health care receiver was that he spent half a billion more than budgeted in 2008-2009. As Clark Kelso explained, these were overcharges for out-of-prison hospital care. Because the facilities are so lax and because the proposed money Kelso has consistently sought hasn't arrived, prisoners with medical issues often must be sent offsite. "There's a lot [of inmate care] that does have to be sent out [...] because we don't maintain that level of care within the prison."

That was a message statement. He was essentially saying "and I'll keep going over budget if you don't build the facilities needed." Interestingly enough, the very next day both sides floated a deal that would cut back the amount of prison hospitals to be built, but finally, actually build them.

State corrections officials and the prison system's medical care receiver said Thursday they have reached the outlines of an agreement to build two new long-term health care facilities for inmates at a cost of $1.9 billion.

If the two sides can craft the memorandum of understanding that they say is imminent, it would represent a significant step toward ending the federal oversight of prison medical care in California that has created a constitutional crisis over the past year.

"That's certainly something I believe we can finalize with this deal," federal receiver J. Clark Kelso said in a joint telephone press conference with the California Department of Corrections and Rehabilitation Secretary Matt Cate [...]

The facilities would house 3,400 inmates and be bond financed – possibly without having to be approved by the Legislature, according to Cate.

Originally, Kelso had sought a 10,000-bed set of facilities costing $8 billion, so this is significantly cut back. However, it makes some sense if it is accompanied by a reduction in the overall prison population, thus requiring less health care infrastructure. The point that Kelso finally got across is that we can keep delaying and delaying and go massively over budget every year to meet Constitutional responsibilities, or we can build the damn facilities. This looks like a loss for Kelso, but it's a win.

Bonds for infrastructure are at least somewhat inoffensive, but they need to be issued. AB 900 bonds to build more prisons never got issued two years after being approved.

The Piercing Problem Of Funding Health Care

The Administration has largely stayed out of the details of the health care debate, preferring to forward a list of "priorities" and let Congress sort out the details. Max Baucus has set to work at the Senate Finance Committee, trying to build his legacy by creating a fundamental change in policy, building a system that "doesn't exist, really" to bend the cost curve, increase access and improve quality. And Ted Kennedy's Health, Education, Labor and Pensions (HELP) Committee will release a bipartisan bill on Friday. While the fate of the public option is unclear, advocacy groups have attached themselves to that element of the policy like Rottweilers and have actually made some progress. So things are moving along.

Except that nobody really has a clear picture of how to pay for this reform, the single biggest issue lawmakers face. People can announce support for reform, but without the dollars, it will wither on the vine. Cost projections of up to $150 billion per year need to be met with revenue, and the troubles with maintaining costs in Massachusetts' universal health care reform, which is an analogue to the national program, show how hard it is to even get the numbers down to that level. The supposed vows of the health care industry to do away with $2 trillion in costs is hopeful, but may run into legal antitrust issues involving collusion to hold down those costs, and anyway the industry has softened their tone in recent weeks, claiming that they were just "suggesting" the cost comedown.

Why does health care cost so much in America? Atul Gawande has an amazing piece in the New Yorker looking at this very problem. Often similar cities in the same state have wild variances in costs. Gawande looks at McAllen, Texas, with some of the highest costs for health care in the country, despite similar cities like El Paso having the same vital statistics and much less of a cost burden. Why? Here's a great excerpt:

One night, I went to dinner with six McAllen doctors. All were what you would call bread-and-butter physicians: busy, full-time, private-practice doctors who work from seven in the morning to seven at night and sometimes later, their waiting rooms teeming and their desks stacked with medical charts to review.

Some were dubious when I told them that McAllen was the country’s most expensive place for health care. I gave them the spending data from Medicare. In 1992, in the McAllen market, the average cost per Medicare enrollee was $4,891, almost exactly the national average. But since then, year after year, McAllen’s health costs have grown faster than any other market in the country, ultimately soaring by more than ten thousand dollars per person.

“Maybe the service is better here,” the cardiologist suggested. People can be seen faster and get their tests more readily, he said.

Others were skeptical. “I don’t think that explains the costs he’s talking about,” the general surgeon said.

“It’s malpractice,” a family physician who had practiced here for thirty-three years said.

“McAllen is legal hell,” the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he said. Everyone thought the lawyers here were worse than elsewhere.

That explanation puzzled me. Several years ago, Texas passed a tough malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars. Didn’t lawsuits go down?

“Practically to zero,” the cardiologist admitted.

“Come on,” the general surgeon finally said. “We all know these arguments are bullshit. There is overutilization here, pure and simple.” Doctors, he said, were racking up charges with extra tests, services, and procedures.

The surgeon came to McAllen in the mid-nineties, and since then, he said, “the way to practice medicine has changed completely. Before, it was about how to do a good job. Now it is about ‘How much will you benefit?’"

Essentially, doctors can cut corners by offering up batches of tests and spending way over what they need to provide care. Of course, many patients would decry having a test being held from them. It's a real conundrum, and having some comparative effectiveness research, so we know which treatments work better and why, would help, but still you would see a lot of these outcries. And doctors have a financial interest in more care. We have an overtreated society, but in many ways we want it that way. And more does not equal better.

Americans like to believe that, with most things, more is better. But research suggests that where medicine is concerned it may actually be worse. For example, Rochester, Minnesota, where the Mayo Clinic dominates the scene, has fantastically high levels of technological capability and quality, but its Medicare spending is in the lowest fifteen per cent of the country—$6,688 per enrollee in 2006, which is eight thousand dollars less than the figure for McAllen. Two economists working at Dartmouth, Katherine Baicker and Amitabh Chandra, found that the more money Medicare spent per person in a given state the lower that state’s quality ranking tended to be. In fact, the four states with the highest levels of spending—Louisiana, Texas, California, and Florida—were near the bottom of the national rankings on the quality of patient care.

In a 2003 study, another Dartmouth team, led by the internist Elliott Fisher, examined the treatment received by a million elderly Americans diagnosed with colon or rectal cancer, a hip fracture, or a heart attack. They found that patients in higher-spending regions received sixty per cent more care than elsewhere. They got more frequent tests and procedures, more visits with specialists, and more frequent admission to hospitals. Yet they did no better than other patients, whether this was measured in terms of survival, their ability to function, or satisfaction with the care they received. If anything, they seemed to do worse.

That’s because nothing in medicine is without risks. Complications can arise from hospital stays, medications, procedures, and tests, and when these things are of marginal value the harm can be greater than the benefits. In recent years, we doctors have markedly increased the number of operations we do, for instance. In 2006, doctors performed at least sixty million surgical procedures, one for every five Americans. No other country does anything like as many operations on its citizens. Are we better off for it? No one knows for sure, but it seems highly unlikely. After all, some hundred thousand people die each year from complications of surgery—far more than die in car crashes.

You can find a similar conundrum in how to actually pay for care. Employer-based insurance is an historical accident from the 1940s aimed at avoiding wage controls. And the deduction to employers for health care costs a tremendous amount of money for the government. Yet try to touch it, and public employee unions and I assume workers with health care from their employers will attack. Ezra makes an important point:

Wyden, after all, is a liberal Democrat. AFSCME is a left-leaning union. Both are desperate for health reform. But AFSCME is spending its time attacking Wyden. Why? Because Wyden wants to replace the employer tax exclusion (I told you that thing was important!) with a progressive tax deduction that all Americans, not just those with good employer benefits, would get. That means the poorest among us would get slightly more and AFSCME's members might get slightly less.

But AFSCME isn't really attacking Wyden. The bill Wyden co-sponsored -- the Wyden-Bennett Healthy Americans Act -- has fallen out of the conversation. The energy right now is in Sen. Max Baucus's (D-Mont.) process, and maybe Sen. Ted Kennedy's (D-Mass.) coming proposal. Everyone expects the final legislation out of the Senate to include a cap of some kind on the employer tax exclusion. And that's really what AFSCME is going after here. They're hitting Wyden to demonstrate their willingness to attack anyone who touches their tax benefit. This is less an assault on Wyden than a warning to Wyden's colleagues.

Reasonable people can disagree on whether capping or eliminating the employer tax deduction is a good idea. I tend to go for capping. But reasonable people can disagree on ALL funding streams for health care. And at the end of the day, when everyone disagrees, nothing happens and health care reform dies.

Hopefully, this is just the normal course of sausage-making. But I'm concerned that meaningful reform and the protective interests of advocacy groups - or the protective interests of people who want to keep what they have - work at cross purposes.

Single Regulators And The Fed

I think a single agency to regulate all banks makes a lot of sense. For all their carping about how every financial firm is different, the banks have certainly taken advantage of multiple regulators to pick and choose which one they want regulating them, leading to lenient rules and a lot of looking the other way as the regulators compete for their business.

The question, of course, is what form that single regulator would take. And vesting the Federal Reserve with some of these powers (though their role would be separate from the single bank regulator) gives me the willies:

They favor vesting the Federal Reserve with new powers as a systemic risk regulator, with broad responsibility for detecting threats to the financial system. The powers would include oversight of previously unregulated markets, such as the derivatives trade, and of market participants such as hedge funds.

Officials also favor the creation of a new agency to enforce laws protecting consumers of financial products such as mortgages and credit cards.

And they want to merge the Securities and Exchange Commission and the Commodity Futures Trading Commission, which share responsibility for protecting investors from fraud.

I like the Financial Products Safety Commission idea to protect consumers from mortgage flim-flammery and other banking products. But the Federal Reserve has acquired enormous power throughout this crisis. The Public-Private Investment Plan, which was supposed to buy up those toxic assets from the banks, looks almost dead, as the banks raised enough money and averted enough disaster to fashion themselves healthy and secure. It looks like there will be some modified buy-up of the assets (which the banks might be able to swap for one another's and game the system using taxpayer dollars), but no major clean-up. And that's because the Federal Reserve has become the 800 lb. gorilla in this crisis.

Recently, I asked an administration official which government program we'd remember as making the most difference in averting catastrophe. Where will the history books place the credit?

"It'll be the Federal Reserve," he replied. "It'll be their decision to increase the size of their balance sheet from whatever it was before the crisis to whatever it is now." The Fed's decisions, of course, have attracted relatively less press coverage, both because the Federal Reserve doesn't speak to the press as often as the Treasury Department and because new Federal Reserve policies don't spark tiffs with the Congress, or the Republican Party, or outside economists. As such, the Fed is a bit harder for reporters to write about. But there's some evidence that it will be Ben Bernanke, rather than Tim Geithner, who our children -- at least our nerdier children, the ones who study the recession of 2009 -- will read about.

But what will they read? The Fed releases no public information, just prints money in the trillions, making deals with absolutely no transparency, and basically keeping the financial world on life support. What we may all read is the difficulties of the Fed reeling back all these lifelines they handed out to the financial industry.

Lately, a steady stream of economic data has suggested that while the economy is still shrinking, the pace of the decline is slowing. That, in turn, has stoked fears that the Fed's efforts to steer the economy away from a 1930s-era depression would push the country toward '70s-style inflation.

Those fears center on the Fed's unprecedented efforts to revive the economy by creating more than $1 trillion in new money. Determining the best time to withdraw that money is a classic quandary for central bankers. The challenge of timing is even more daunting than usual this time because the Fed has become so integral to shoring up the financial system. As Fed leaders ponder their next move, analysts say they may have to choose between propping up credit markets today and fighting inflation tomorrow.

Yet this absolutely crucial policy decision has been literally vested in the hands of one man, Ben Bernanke, and an organization that has an unusually cozy relationship with the biggest banks who, after all, own them. The government ought to at least have some input and some transparency when it comes to these matters. Alan Grayson has put together a bill, H.R. 1207, that would allow the GAO to audit the Federal Reserve. This is overdue. We have no idea how many trillions the Fed has spent propping up the banks, and considering the importance and the thorny issues to come, we ought to know. This measure has attracted 181 sponsors from members of both parties. You can sponsor it here.

No viable political system can vest so much power in a closed loop and hope to survive. We need more information from the Fed.

The Bondholders Crack

Looks like GM's bondholders jumped aboard at the last minute:

The revised offer to the holders of $27 billion in unsecured GM bonds amounted to a take-it-or-leave-it ultimatum: Go along with what the government auto task force's proposal or be left holding the assets a new GM doesn't want — ones with presumably little value at all.

In addition to the 10 percent of the stock in a newly formed GM that was originally rejected by bondholders, the new offer would give them warrants to acquire an additional 15 percent stake at a deep discount. That would come only if they agree to support selling the company's assets to a new company under bankruptcy court protection.

Basically, the government made them an offer they could not refuse. I think they got a worse deal than Chrysler's bondholders.

As long as I view this as basically an extension of the stimulus package, I think I can live with it. But I still worry about the autoworker pensions coming out of these bankruptcies. That hasn't been well-defined just yet. And this isn't pleasing:

"We will come out of this rid of some of the historic legacy costs that have been dragging us down for the last 20 years or so," GM Vice Chairman Bob Lutz said Thursday at an Automotive Press Association luncheon in Detroit. "We will come out of it with an all new focus on product development."

I guess the retiree health fund gets a piece of the company in this deal, so maybe they can save something for the workers. But really this is just a bad scenario, especially if it fails to save GM or Chrysler. It's hard to feel good about these deals.

Drip Drip Drip You're Underwater

The reckoning of the next wave of the foreclosure crisis has started to reach critical mass. Bloomberg reports on the record first-quarter numbers.

Mortgage delinquencies and foreclosures rose to records in the first quarter and home-loan rates jumped to the highest since March this week as the government’s effort to fix the housing slump lost momentum.

The U.S. delinquency rate jumped to a seasonally adjusted 9.12 percent from 7.88 percent, the biggest-ever increase, and the share of loans entering foreclosure rose to 1.37 percent, the Mortgage Bankers Association said today. Both figures are the highest in records going back to 1972. Fixed rates rose to 4.91 percent, Freddie Mac said, and an increase in bond yields earlier this week shows rates may continue rising.

AP adds that 12% of all homeowners are either behind in their bills or in foreclosure. 1 in 8, with most of the foreclosures coming from the bubble states of California, Nevada, Florida and Arizona. And top economists see this trend continuing through the end of next year.

David Sokol, chairman of Berkshire Hathaway Inc's (BRKa.N) MidAmerican Energy Holdings and a contender to succeed Warren Buffett, warned that the U.S. housing market still has a ways to go before bottoming out [...]

"As we look at the economy, I have to be honest: we're not seeing the green shoots," Sokol said at the annual Ira Sohn Investment Research conference, which drew some 1,200 hedge fund executives to hear top investors share trade ideas.

"That's not surprising to us. It took us 11 years to get into this mess where it is. We went into the emergency room last fall and by January the banking system and economy generally were in intensive care, and we'd expect it to stay there for some time," Sokol said.

If anything, the glut of housing supply could grow larger as a new wave of foreclosures and pending sales breaks on the market.

"We think the official statistics of 10 to 12 months' backlog is actually nearly twice that amount," he told the gathering, which raises funds for the treatment and cure of pediatric cancer.

Other economists agree.

The banks may feel safe and warm right now, but another foreclosure wave will increase the toxicity of their assets exponentially. Unemployment-driven foreclosures and more rate recasts will feed on themselves.

I just don't see a great policy response to this. Maybe that housing bill will help. It'd help a lot more with cramdown.

Strong Words

I'm very gratified that the Obama Administration, and the Democratic leadership generally, are going to the mats with Israel over settlement construction.

Rebuffing Israel on a key Mideast negotiating issue, Secretary of State Hillary Rodham Clinton said Wednesday that the Obama administration wants a complete halt in the growth of Jewish settlements in Palestinian territory, with no exceptions.

President Obama "wants to see a stop to settlements -- not some settlements, not outposts, not natural-growth exceptions," Clinton said.

Growth in settlements built in the West Bank has become a key point of disagreement between the United States and Israel as the administration assembles its plan to revive Israeli-Palestinian peace negotiations.

U.S. officials believe that a complete Israeli halt to settlement growth could lead to early concessions from moderate Arab nations and put new momentum behind the peace effort.

That's an extremely strong statement, and much further that I would guess anyone would have suspected that Democrats were willing to go. And not only that, but Martin Indyk, of all people, is telling the truth:

On Netanyahu: "Bibi suffers from the fact that many people in the administration know him too well."

On Israel's taking risks to achieve peace: "All these years, the US has been strengthening you precisely for this purpose -- so that you can take the risk of making peace. How exactly can the Palestinians destroy you? The real existential danger is that you will not succeed in parting from them."

The settlements violate international law. A fanatical far-right minority uses them to stand in the way of peace. And Bibi Netanyahu has simply been caught out. He can pretend that his survival isn't dependent on a strong ally in the United States, or he can lose his Prime Minister position. Period.

Governor Hoover's Plan To Weed Out The Sick

I just appeared on KPFA with Eric Klein to talk about the Governor's proposed budget cuts, along with several experts and stakeholders, including friend of Calitics Anthony Wright of Health Access California. I agree with him that it's almost hard to fathom the amount and severity of the cuts proposed for health care, especially at a time with the federal government is moving forward with a "do or die" plan to reform the health care market, increase access and lower costs. The proposed Governor Hoover cuts would have the exact opposite effect, and the people gravely impacted by this will not have the luxury of waiting around for the Feds to catch up and fill in the gaps.

Two recent CBP fact sheets help break down the Governor’s proposed cuts to Medi-Cal and Healthy Families, in numbers that are easier to grasp. These fact sheets show:

More than 940,000 California children would lose health coverage if the Healthy Families Program is eliminated as the Governor proposes. More than 240,000 children in Los Angeles county alone would be affected. Want to know how many children would be impacted in your county? Check out the fact sheet to see.

In total, more than 1.9 million Californians could lose access to health coverage within three years through proposed reductions to the Medi-Cal Program and elimination of Healthy Families.

As the Governor said himself today, “behind every one of those dollars that we cut there are real faces.”

Kudos to the LA Times, by the way, for allowing the great unmentionable to get printed on their pages - the decisions made in Sacramento will truly be the difference between life and death for many Californians.

Schwarzenegger argues that the state's declining economy and plummeting tax revenues have boxed California into a corner, forcing deep and historic cuts in the health and welfare programs that form the state's social safety net. Without those tough measures, he says, California will cartwheel toward insolvency.

But a 10-person legislative budget panel, which is reviewing the governor's proposals, listened during a long day in a crowded hearing room to scores of people who said their survival depends on programs set to be hit by the budget ax.

They heard from mothers of children with autism, representatives of people on dialysis, poor parents whose children see dentists on the government's dime, former drug abusers set straight by a state rehab program.

And they heard from a woman named Lynnea Garbutt who has lived with AIDS all of her 24 years.

She has survived with the help of a state program that provides the expensive antiviral drugs she takes. Now, with that program facing elimination, she pleaded with lawmakers to save it -- and her life.

"If these cuts take place, you're not just cutting money from the program -- you're cutting my life," she told the panel, her voice shaking and tears falling. "I choose to live. Please don't make me die. My choice is life."

This is how Yacht Partier Chuck DeVore responded - move out of the state. Love it or leave it!

The cuts made to programs like Healthy Families (California's SCHIP) would eliminate federal matching funds and double or triple the scope of the cuts. And it would be one thing, by the way, if the Yacht Party simply held the line and said "we can't afford it." But no, they want to spend billions of dollars, only on their own projects instead of saving human lives.

In this article in the San Diego Union Tribune, the same Republicans (and Republican governor) who would eliminate children's health care and basic services for the neediest Californians, actually want the state to pony up the money for a water bond.

Schwarzenegger, says the article, is still fixated on a whopping $10 billion bond. And Senate Republicans are right there with him:

"Sen. Dave Cogdill of Modesto, the lead Republican on water issues, agreed. “It's obviously a tough time to bring it forward, but we can't wait,” the article notes.

We can't wait? According to my calculator, If the entire $10 billion was sold together, the interest payment could be in the neighborhood of $660 million annually. That's $660 million more that would have to come out of schools, health care, and other items on the chopping block.

Similarly, the Yacht Party cried poor about programs that help people, but made room in the February budget for a huge corporate tax cut.

Everyone who has spent 10 seconds on this recognizes that there's no good way to use current revenues to provide the basic level of services Californians deserve. To the extent that I have hope that we will overcome the selfishness of the cruel and the impossibility of navigating a broken system, it comes from people, who are fed up and starving for leadership and change from a government that no longer serves their interests. To turn the figurative starvation literal, Los Angeles teachers are going on a hunger strike to protest budget cuts. We're all hungry, and we'll be a lot hungrier if Governor Hoover has his way.

Rape At Abu Ghraib

We were told by the President that the photos he chose not to release were nothing particularly sensational and would do nothing to shed more light on the debate. British papers tend toward the lurid and dramatic, but they have an on-the-record source who is fairly unassailable.

Photographs of alleged prisoner abuse which Barack Obama is attempting to censor include images of apparent rape and sexual abuse, it has emerged.

At least one picture shows an American soldier apparently raping a female prisoner while another is said to show a male translator raping a male detainee.

Further photographs are said to depict sexual assaults on prisoners with objects including a truncheon, wire and a phosphorescent tube.

Another apparently shows a female prisoner having her clothing forcibly removed to expose her breasts.

Detail of the content emerged from Major General Antonio Taguba, the former army officer who conducted an inquiry into the Abu Ghraib jail in Iraq.

Allegations of rape and abuse were included in his 2004 report but the fact there were photographs was never revealed. He has now confirmed their existence in an interview with the Daily Telegraph.

The Pentagon denied these allegations, as did Press Secretary Robert Gibbs. They dismissed the Telegraph report and essentially called them untruthful. But of course, they're not attacking the source, and that is Major General Taguba, who knows more about the Abu Ghraib scandal than anybody.

“These pictures show torture, abuse, rape and every indecency.

“I am not sure what purpose their release would serve other than a legal one and the consequence would be to imperil our troops, the only protectors of our foreign policy, when we most need them, and British troops who are trying to build security in Afghanistan.

“The mere description of these pictures is horrendous enough, take my word for it.” [...]

Maj Gen Taguba’s internal inquiry into the abuse at Abu Ghraib, included sworn statements by 13 detainees, which, he said in the report, he found “credible based on the clarity of their statements and supporting evidence provided by other witnesses.”
Among the graphic statements, which were later released under US freedom of information laws, is that of Kasim Mehaddi Hilas in which he says: “I saw [name of a translator] ******* a kid, his age would be about 15 to 18 years. The kid was hurting very bad and they covered all the doors with sheets. Then when I heard screaming I climbed the door because on top it wasn’t covered and I saw [name] who was wearing the military uniform, putting his **** in the little kid’s ***…. and the female soldier was taking pictures.”

The translator was an American Egyptian who is now the subject of a civil court case in the US.

Three detainees, including the alleged victim, refer to the use of a phosphorescent tube in the sexual abuse and another to the use of wire, while the victim also refers to part of a policeman’s “stick” all of which were apparently photographed.

These aren't really even new allegations - Seymour Hersh made them several years ago, and has continued to make the charge. Not to mention that, aside from the decision to release the photos, there are legal issues at play here.

Gen. Taguba says he supports President Obama's decision to withold the photos, arguing that "The mere description of these pictures is horrendous enough, take my word for it." Fine—the debate over whether to release the photos is legitimate. I have a more immediate question. If the government is in possession of photographic evidence of an American soldier raping someone, has that soldier been prosecuted? The relevant section of the Uniform Code of Military Justice is here:

(a) Any person subject to this chapter who commits an act of sexual intercourse with a female not his wife, by force and without consent, is guilty of rape and shall be punished by death or such other punishment as a court-martial may direct.

It would take a pretty incompetent prosecution to fail to convict someone of a rape for which there is clear photographic evidence. But I can't find any public reference to such a court martial, let alone a conviction.

Maybe that would be "looking backward" and not forward.

This is outrageous and the Administration risks a major credibility gap when they continue to stand mute instead of addressing it. They lose authority at home and around the world by the day.

Conservatives Now So Crazy They Think Obama Is Closing Chrysler Dealerships for Political Advantage

I'm a little late to this, but let me agree that the idea of Barack Obama having nothing better to do than to punish conservative car dealers for their donations to Republicans was always going to end up as a massive FAIL. Car dealers are a conservative lot - older, more male, more suburban, more business-friendly and more wealthy than the general population. Nate Silver does with graphs and statistics what should be immediately clear.

Overall, 88 percent of the contributions from car dealers went to Republican candidates and just 12 percent to Democratic candidates. By comparison, the list of dealers on Doug Ross's list (which I haven't vetted, but I assume is fine) gave 92 percent of their money to Republicans -- not really a significant difference.

There's no conspiracy here, folks -- just some bad math.

One of the insaneosphere denizens explains why they'll keep pushing this despite the lack of evidence.

Of course I want this looked into, of course. It's my guess it's a non-story, not my expert opinion.

But the MSM is so ridiculously biased that they make honesty a dangerous and politically counterproductive business.

The only way to even get the MSM to do their jobs and take a look is to pressure them by claiming Worst Scandal Eveh, even if we don't all necessarily buy that. But we have to claim that in order to spur any sort of media interest whatsoever. (That interest, of course, coming in the form of stories like Conservatives Now So Crazy They Think Obama Is Closing Chrysler Dealerships for Political Advantage, which isn't exactly the headline we seek, but that's the best we can hope for from the MSM.)

I obliged Ace with the suggested headline.

I understand the persecution complex; it's been conservative bread-and-butter for years. But that's quite an interesting admission, that the right will literally run with anything, no matter the truth, just to start up the Wurlitzer and make the media dance. That this ends up making them look relentlessly stupid in the end apparently doesn't matter.

Assaults On The Status Quo

If we're going to get meaningful health care reform in this country, it will be because people talked to their neighbors, rebutted the smears and advocated so loudly that they became impossible to ignore. There are some small stories that can make us hopeful but much work to be done. When Blue Cross of North Carolina started readying Harry and Louise-style attack ads to scaremonger Americans on a public option, the outcry was sufficiently loud that the White House forced the insurer to back down and scrap their plans. When compromisers tried to create a trigger mechanism that would introduce a public option only if insurance companies don't voluntarily reduce costs and expand coverage, health care advocates widely disparaged the idea, arguing that the trigger has already been met, and the talk cooled.

But the forces protecting the status quo won't stop. A brand-new conservative group with links to none other than the teabaggers will launch an ad campaign comparing the US system to (horrors!) Canada's. According to their ad, government bureaucrats in Canada make decisions on coverage and treatment. Good thing we live here in America, where only private insurance bureaucrats get to make those decisions!

And Rick Scott, the corrupt former hospital CEO who paid the largest fine in American history for defrauding the US Government for billions, is planning to run a 30-minute infomercial after "Meet The Press" in Washington, DC designed to influence elite opinion with slanders and lies about health care reform.

Rick Scott will likely continue to mislead viewers about the Federal Coordinating Council for Comparative Effectiveness Research, a newly-created entity by the economic recovery package signed into law by President Obama in February. Mr. Scott will likely make a specific claim: "not only could a government board deny your choice in doctors, but it can control life and death for some patients." This statement is demonstrably false. In reality, the powers of this so-called "government board" are clearly defined and cannot do what Mr. Scott claims. The statutory authority of the Council specifically excludes the power "to mandate coverage, reimbursement, or other policies for any public or private payer." It is worth noting that even under President Bush, the National Institutes of Health already had an annual budget of $355 million to conduct precisely this type of research. Plainly, this has not led to the sort of catastrophic consequences in America that Mr. Scott warns against.

The advertisement will likely deceive viewers by blatantly misrepresenting the positions of two physicians. While the advertisement paints both as opponents of any role for government in health care reform, in reality, just the opposite is true. Both physicians are in fact supporters of universal health care. What they are opposed to is the U.S. ‘two-tiered' system that already rations health care based on the ability to pay. In fact, Mr. Scott misrepresented Dr. Day's comments, and Dr. Day openly mocked the ineffectiveness of the U.S. health care system. What Dr. Day is opposed to is Canada's outdated funding model, not Canada's healthcare system. Dr. Day actually advocates reform of the funding structure to preserve Canada's healthcare system, not dismantle it [...]

If Scott's 30-minute "documentary" contains any falsehoods, NBC will be liable for an FCC violation. Furthermore, Meet the Press needs to know that they're being used by Rick Scott, and will be tarnished by his swiftboating.

Sign the petition, blah blah.

In addition, groups are going after the real source of where any downfall in health care reform will lie, President Nelson and the ConservaDems, who will try their best to please their contributors and friends (Ben Nelson ran an insurance company, incidentally) by stopping anything meaningful.

Centrist Democratic Sen. Ben Nelson (Neb.) is under attack from an advertising campaign that criticizes his opposition to President Obama’s healthcare plan.

The Web and direct-mail ads specifically take on Nelson for opposing Obama’s proposal to create a public health insurance program consumers could choose instead of private plans. The $10,000 ad campaign is paid for by Change Congress, an advocacy group that is calling for publicly financed elections.

The Change Congress ads charge that Nelson’s opposition to a public health insurance plan is linked to campaign funds he has received from health insurance groups. Citing data from the Center for Responsive Politics, the ads say Nelson has accepted $2 million from health insurance companies over three Senate campaigns.

Taken alone, a $10,000 ad buy, even in Nebraska, won't do much. In combination, only a sustained assault on the status quo from all advocacy groups will get reform of this type done. That's just an historical fact. And while it's welcome that the President will deploy the Organizing for America email list for health care, it's going to take progressives concerned about the policy details to drive the discussion.

...Keep pushing...

Earlier this month, Sen. Ben Nelson (D-NE) declared that he was against including a public option in health care reform, calling it a “deal breaker.” But Huffington Post’s Ryan Grim reports that in a meeting with health care advocates in Nebraska yesterday, Nelson said that he was open to including a public plan:

Nelson, according to two people in the room, told the group that he was open to a public option, the primary Democratic goal of reform and anathema to conservatives.

“The good news for all sides involved is that he’s open mined,” said Barry Rubin, the former Executive Director for the Nebraska Democratic Party, who was in the meeting. “He’s not closed minded about a public option.”

Nelson's afraid of his constituents. Good place for progressives to have him.