Jumbo Squid!

If it was the summer of 2001, this would have pushed all those shark attacks right off the front page. The aquamarine menace!

Reyes Goes After Intelligence Oversight

House Intelligence Committee chair Silvestre Reyes will seek an investigation into the CIA's hiding of operations from the Congress:

After careful consideration and consultation with the Ranking Minority Member and other members of the Committee, I am announcing an official Committee investigation into possible violations of federal law, including the National Security Act of 1974.

“This investigation will focus on the core issues of how the congressional intelligence committees and Congress are kept fully and currently informed. To this end, the investigation will examine several issues, including the program discussed during [CIA] Director [Leon] Panetta’s June 24th notification and whether there was any official decision or direction to withold information from the Committee.

Note "including the program discussed." The alleged assassination squad should be seen as the latest example of the CIA acting without oversight, not the only one. The National Security Act is pretty clear about oversight responsibilities of intelligence operations, and it's been abused time and again. The Obama Administration doesn't want to change the "Gang of Eight" style of briefing, but Democrats are seeking more transparency for their members. Marcy Wheeler notes this as well:

First, Reyes says he consulted with Crazy Pete Hoekstra. I look forward to seeing how Crazy Pete spins this.

That'll be particularly interesting given the scope here. The investigation will include the reported assassination squad. But the core issue is more general--how CIA informs Congress. Which means that, in fact, this should also include whether or not CIA fullly briefed Pelosi and Goss on torture back in 2002.

Finally, the investigation will examine whether there was any "direction" to withhold information from Congress. I do hope they look at the question generally, as well as in the context of the reported assassination squad, because I suspect we'd see a pattern of Cheney instructing the Counterterrorism folks to lie to or withhold information from Congress.

The big question here is how far up the ladder they'll reach. But it's time to end the broken system of intelligence oversight and start again, and this investigation can be a catalyst.

Friday Random Ten

The death of Cronkite puts a damper on this rock medley. I'll be at this event tonight about a proposed California Constitutional Convention, if you're heading down.

OK...

Love Is A Losing Game - Amy Winehouse
Candy - Morphine
Trouble On The Line - Loretta Lynn
Can't Tell Me Nothing - Kanye West
My Four Leaf Clover - Nicole Willis & The Soul Investigators
Watch Your Step - Elvis Costello & The Attractions
Vive Le Week-end - Stereo Total
Together - The Raconteurs
Lose It Punk - The Illuminoids
The Hotel Majestic - Fountains Of Wayne

And That's The Way It Is

Walter Cronkite, dead at the age of 92. RIP.

He ended anchoring the CBS Evening News when I was 8, but I know enough to know that he was a real newsman.

...NYT obit.

Angelides On Pecora II

Tim Fernholz talks with Phil Angelides, the new chairman of the Financial Crisis Inquiry Commission, a modern-day analogue to the Pecora Commission of the 1930s, charged with finding out the origins of the financial crisis, who we should hold responsible, and how we can ensure it never happens again. There are some interesting tidbits in the interview. First, we can be sure that Angelides has an understanding of the problem.

Why is this commission important?

The magnitude of what's happened in this country is astounding. Millions of people have lost their homes, millions of people have lost their life savings, millions of Americans have seen their pensions disappear. We have seen over a trillion dollars in taxpayer money go to prop up a dying financial system. This is a cataclysm. My view is that there is a real hunger in this country to have a pursuit of the truth, to find out what happened and why it happened, so hopefully, instead of sweeping it under the rug, it will not happen again in our lifetimes. This is an important commission with a critical role of serving the nation's best interests because we are called on to look into something that has been fundamentally important to this country: The very foundations of our financial system have been shaken [...]

Do you believe we already have a broad understanding of what led to this crisis, or do you feel there are a lot of questions still unanswered?

All of us come with our personal views. I'll start by saying that in the early part of this decade, as early as 2002, I was concerned about what was happening the marketplace. I was deeply concerned about executive compensation so I mobilize shareholders across the country to push back on executive compensation. I was concerned about lax enforcement at the SEC. ... I was part of a movement of activist shareholders in an effort to bring some common sense to the market place. In the wake of the Enron and Worldcom, we had some momentum, but the economy recovered and the regulators took their foot off the brakes. We all come in with our own viewpoints, but our job is to look at this fresh.

Next, he's willing to give his Republican colleagues on the committee some input, but he's setting ground rules and he thinks he can get the others on the commission to play ball:

The commission has the ability to subpoena information, but only if at least one of the Republican appointees supports the decision. Are you at all concerned about disagreement within the committee hurting its ability to gather information?

When the Speaker and the Majority Leader asked me to serve as chair, [I knew] this would be a hard and difficult road. I'm starting on the assumption that other commissioners, like myself, are interested in getting to the facts and the root causes. If we have to issue subpoenas, I hope we can do that. Hopefully people [with information] will cooperate, but if not, we were given the tools to get the facts. I would want to start on the basis that no commissioner would want to deprive us of information to make a good judgment on behalf of the American people. The commission is interesting because it really focuses on the inquiry, rather than the policy and political implications. I think that gives us a better chance of coming up with a nonpartisan, bipartisan findings of facts.

And finally, he seems to recognize something that a lot of people don't - the regulators probably had the capacity to stop at least the most egregious criminality happening in the markets, but they didn't use the authority they had. What the Financial Crisis Inquiry Commission can offer is, in Angelides' words, "a road map" and "a guidebook" to the next generation of regulators, so they know what to look for and where to go.

Now, Zachary Roth has a long piece about Bill Thomas and the other Republicans on the FCIC, or Pecora II, and how they are partisan enough to resist a real inquiry. The provision that one Republican must vote with Democrats in order to issue subpoenas could allow anyone Republicans don't want testifying to be able to do so; and all of the Republicans appear, to Roth, to be candidates to hang together:

None of the three rank-and-file Republican appointees seem like good candidates to break ranks. Peter Wallison is a fellow at the American Enterprise Institute, who has been a prominent advocate of the favored conservative notion that Fannie Mae and Freddie Mac are the true culprits in the crisis, and who argued this week in the Washington Post against creating a consumer protection commission for financial products -- an idea seen by many as a cornerstone of any effort to reform the financial regulatory system. Doug Holtz-Eakin, for his part, was John McCain's top economic adviser at the time when the GOP presidential nominee declared the fundamentals of the economy strong. And Keith Hennessey is a former economic adviser to President Bush and a former aide to Sen. Trent Lott.

But it's the identity of the Republican-appointed vice chair -- whose support is required by law for the commission to perform several other key functions, like hiring staff -- that's the really ominous sign. That's Bill Thomas, the Republican former congressman from California, who earlier this decade chaired the House Ways and Means committee.

During his years in Congress, Thomas, who now works for a major DC lobbying firm, acquired a reputation as a smart, highly-skilled and acutely partisan supporter of big business, who once tried to have Democrats forcibly ousted from a capitol meeting room, and was accused of being literally in bed with a corporate lobbyist.

I'd agree that Wallison and probably Hennessey and Thomas are useless, but Holtz-Eakin, a former head of the CBO, has at least displayed flashes of intellectual honesty when he wasn't in charge of a Presidential campaign's economic policies. He has acknowledged the need for higher taxes. He has called for the Bush tax cuts to expire. He's definitely conservative and he sometimes says some boneheaded things, but I don't see him as a hardcore partisan, actually. And if Angelides structures this as a just the facts inquiry, there's at least the promise of a legitimate investigation.

The Fiscal Conservative Twins

Funny how these right-wing governors have trouble holding to their principles.

Mark Sanford and Rick Perry held a "Tea Party II" a couple months ago, where they came out against stimulus spending and for fiscal responsibility. That was then, and this...

In March, Texas Gov. Rick Perry rejected $555 million in federal stimulus money that would have expanded unemployment benefits for Texans. Perry argued at the time that accepting the stimulus dollars would force the state to expand eligibility to include thousands of low-wage workers — including part-time employees like single mothers, college students and senior citizens — which Perry bemoaned would burden tax payers with “higher taxes and expanded obligations.” When explaining the decision, Perry told Fox News, “this was pretty simple for us.” But now Perry is reversing his decision. Texas has asked the federal government for a $170 million loan to ensure the state is able to continue paying out unemployment benefits.

...is now:

South Carolina Gov. Mark Sanford shed his fiscal conservatism on several taxpayer-funded international trips, including a South American jaunt that included time with his mistress, choosing expensive first-class or business-class seats while his aides sat in coach.

Sanford, who once criticized other state officials for costly travel, charged the state more than $37,600 for one first-class and four business-class flights overseas since November 2005, expense records show. Other state employees flew in the back of the plane at a fraction of the price, according to the documents.

The Republican governor, who balked at taking federal stimulus money after arguing it was an unwise use of taxpayer funds, charged the state $8,687 for a Delta Airlines trip to Brazil last year that included a leg in business class, state expense records show.

I really can't listen any more to these privileged men talking about being good stewards of taxpayer money and then treating themselves to perks, or talking about rejecting a handout from Washington and then asking for a bigger handout.

CA-10: An Interview With Adriel Hampton

We have less than 50 days until the special election in the 10th Congressional District to replace Ellen Tauscher, who resigned to take a job at the State Department. The candidates include local members of the legislature, the state's Lieutenant Governor, and several candidates with interesting resumes. There's even word that New Age guru and Oprah pal Marianne Williamson may get into the race, although she doesn't have much time to make her decision. The 2nd quarter fundraising totals revealed some interesting outcomes, and the campaign staffs have debated who has the most local support and the most endorsements. There's even a burgeoning controversy about Ellen Tauscher's presence on Sen. Mark DeSaulnier's mailers, which may violate the Hatch Act now that she works in the State Department.

We've heard a lot about strategies, funding and endorsements, but a little less so about where the candidates stand on the issues. So I'm making an effort to interview all the Democratic candidates in the race, to discuss their views on the type of vexing problems that the country faces which they would be expected to deal with in Congress. The first candidate to respond was Adriel Hampton, the former Political Editor at the San Francisco Examiner and an investigator in the SF City Attorney's Office. What follows is a paraphrased transcript of the interview I conducted last week.

DD: Thanks for taking some time to talk with me.

Adriel Hampton: Thank you for contacting me, this is great.

DD: How are things going with the campaign?

AH: Things are good. I kind of feel on the razor's edge here, where I could either do really well or crash out. Obviously, (Anthony) Woods and I are the underdogs, while the elected officials are duking it out. Woods focused on fundraising and did a pretty good job, while I focused on building a volunteer organization. I'm working on voter ID in a distributed way using volunteers, and I've dropped 8,000 pieces of literature, half of it myself. I have two little kids, and I've been canvassing basically every night after they go to sleep since April. I got a designer in Los Angeles to deliver sharper literature, with a better printer, and I'm starting some targeted PAC fundraising among peace groups and progressive organizations. I think Anthony and I are running a bit to the left of the field. And then you have the possibility of Marianne Williamson getting in, and she has a major public profile as well as having worked with Kucinich in the past. I think she takes votes from everybody a bit, but certainly (Assemblywoman Joan) Buchanan.

I've just been trying to build a consistent presence on the ground, through appearances and volunteer events. The other campaigns have big staffs, especially (Lt. Gov. John) Garamendi. (Sen. Mark) DeSaulnier has the Democratic club circuit down, and Garamendi is kind of running an air war. But the poll he put out showed an 80% name ID and only 24% of the vote. I've been campaigning everywhere, all over the district, and we'll see how it goes.

DD: Let's get into the issues. I've been looking at your 12 ideas to change the nation, and right at the top is economic reform. Could you talk about that a bit?

AH: Absolutely. I got into this race to discuss economic issues and taking on Wall Street. In fact, I was strongly considering running a primary against Ellen Tauscher, I have been critical of her since her vote to authorize the Iraq war. Then I learned about how she was one of Wall Street's biggest friends. I'm running as an economic progressive. A big problem with the Democratic Party is that they consistently fail everyday citizens on economic issues. In many ways, they're just as corporate as the other party. I was active in the grassroots against the Bush bailout. Obama brought in some of the same people responsible for taking us down that road with Wall Street. I supported the stimulus, and the opportunity for New Deal-type spending, but I think we need to go further and break up the political power of Wall Street.

DD: You mention supporting credit unions. How exactly would Congress be able to do that?

AH: I think we can favor them with an FDIC guarantee, promoting them as an alternative to the global banks. During the financial crisis, the banks outside the big national firms tended to do better. And so I think we should encourage that more local approach.

DD: There's been a lot of talk recently about bankslaughter, this idea that we could add a new crime to hold bank managers personally responsible for behaving recklessly or in a negligent way. Do you support bankslaughter?

AH: I would tone down the name to enact popular support! But you know, when you see someone like Angelo Mozilo, he certainly engaged in what I would call a dereliction of duty. I don't have a problem with holding bankers personally responsible for failing to hold to certain consumer protections. What I've seen is that the grassroots folks who are not necessarily active in politics are very receptive to this. They want to see some accountability. And I don't want to harp on Obama entirely about these issues, he needs a progressive Congress as well to push this through, it's not all on him.

DD: OK. Another one of your 12 issues I read kind of surprised me, it was about conscience clauses. As it turns out, there was a federal ruling recently saying that pharmacies must dispense the Plan B pill and cannot use their religious beliefs to deny women legal medical aid that they seek. How you do respond to that?

AH: I am not for restricting access to the morning after pill or abortion information. All I'm saying is that there has been a robust system of jurisprudence around reasonable exemptions. You cannot fire disabled people because they cannot perform one task in a job, you have to make an exemption. If a pharmacist doesn't want to provide those pills, some other pharmacist can in their place.

DD: But some people live in rural areas where they have no other choice but one pharmacist for possibly hundreds of miles. If that person doesn't want to provide legal services, shouldn't he find another job?

AH: Well, I'm for reasonable accommodation, not blocking access to health care. I believe in allowing people to exercise their individual liberties as long as they don't infringe on others. I'm willing to talk about the nuance of issues like this, to see if we can come to an understanding.

DD: The biggest issue in Congress right now is health care. Where do you stand?

AH: Well, I'm for single payer. Pete Stark, up here in the Bay Area, decided to vote against that cap and trade bill because it was too weak, and conservatives now love him for it. But I don't think that should come into account, and I don't think the grassroots should give up. Some of my opponents say we should get what we can get, but we might lose the momentum for reform if we do that. But I understand that we have to treat those millions of people who are suffering right now without health insurance.

DD: Let me ask you this, would you agree to refuse to sign any bill without a robust public option that is available immediately and can use Medicare bargaining rates to drive down costs?

AH: You know what, I would. I would not vote for anything that didn't severely change the insurance system. I'm not a violent person, but the system is so violent right now that I feel the need to do violence to it. And the same with war funding efforts without drawdowns and timelines, I couldn't vote for that. I know that the ads would kill me, defying the President. But I think it's important to talk about the issues, meeting as many people as I can, going right to them and explaining myself. There have to be lines in the sand. We have a radical right-wing party in this country that is almost insane. And the Democrats are playing down the center. We need some organizing from the left. Just imagine someone like me, a regular guy, expressing the beliefs of Lynn Woolsey and Barbara Lee. I'm not afraid of the word socialist in certain respects. I think there's a role for government in equalization, to provide an economic bulwark against death, disease, and poverty. And I get that regular people in the insurance industry may suffer, but are they worth the struggle of 47 million uninsured? At least we can start these debates on the left, I think it would result in a better outcome.

DD: Obviously at Calitics we're focused on the budget issues. What help do you think the federal government could provide to help get some systemic reform here?

AH: Well, I voted all No on May 19, because I didn't see any serious reform efforts in there. One benefit of the problems now in California, which are tragic, is that I hope people are waking up. There's such a right-wing influence in the media and the popular consciousness. As it turns out, California's taxes are not progressive. I just think there's a rage on the populist level that can be tapped by progressives. Everyone in this race is a strong liberal, but I think I'm the only progressive, fighting for progressive taxation and labor rights.

DD: So what reforms can we get out of Congress? Some want the Feds to provide loan guarantees to the states, or they can condition a second stimulus to real budget reform, or even take Medicaid out of a state/federal partnership and into the realm of a purely federal program to smooth out outcomes throughout the country. Where do you fall?

AH: Probably along the lines of more extreme reforms. I appreciate Calitics' reporting on this. The loan guarantees sound like a good idea. I could live with centralized funding of Medicaid with local administration. And I'm for carrots and sticks in any stimulus funding, the idea that if you bail out a state, they have to have additional guarantees. Overall, I'm for structural reform. One of my opponents, Sen. DeSaulnier, is pushing a Constitutional convention. But we all need to stay on top of that.

DD: One final question, with respect to Iran. You wrote in your 12 points to change the nation that "I will oppose, by any means necessary, Iran’s acquisition of a nuclear weapon." Obviously, a lot has happened since you wrote that. Are you revisiting this, and how can we engage with Iran now given the scenes of repression?

AH: Iran is one of the most difficult issues we have right now. We shouldn't forget the amazing turnout in their election, almost 85%. What did we have for the special election, 25%? We shouldn't really be in the position of telling Iran what to do. And you cannot give a state democracy, the people have to want it for themselves, things have to happen. Military intervention in Iran right now would be terrible. And we have to be careful, because the students over there are already being scapegoated as US puppets. It's also an open question whether Mousavi has clean hands, or if he's just an outlet valve for the current system. But I still believe we have to have negotiations. I think Woods and I are the only two who said that at our last forum. Garamendi was talking about banning the import of refined oil. That would only hurt everyday people in Iran. So I think we need diplomatic relations and a strategic dialogue. I'm not happy about dealing with Ahmadienjad, but you have to play the hand you're dealt.

DD: OK, thanks-

AH: Can I add one final issue? I am the only candidate in the race who supports the full legalization of marijuana, I think Woods supports decriminalization. We're seeing a modern prohibition movement, and that leads to inefficient and dangerous outcomes. We have a highly regulated alcohol industry, and I think we could do the same thing with marijuana. I don't smoke, but people like me, squares, need to say, "what is the policy benefit of continuing the drug war?"

DD: All right. Thanks for your time.

AH: Great, thanks.

Up With Chuck

Earlier this week, Chuck Todd made a tiresome argument about how investigations into lawbreaking in the Bush Administration would be politicized and therefore shouldn't be done because it would distract the nation from the important business of whittling health care down to nothing. Todd decided to respond to Glenn Greenwald's criticism of his opinions on this matter, and the result was a fairly remarkable conversation that offers a window into the mind of the typical Villager, unable to divorce anything from political day-to-day combat, unable to view anything through something other than a partisan lens, unable to determine right from wrong. The one question that Todd fails to answer throughout the interview is why believers in the rule of law are supposed to care about how investigations and/or prosecutions of members of the Bush Administration make certain people inside the Beltway feel. Here's just a sample, but the whole thing goes like this, so give it a read:

GG: Let me ask you this question: The United States is a party to a treaty - I don't know if you ever read it or not, it's called the Convention Against Torture - and one of the things it does is it obligates all signatories to the treaty to prosecute any acts of torture. And it was signed by Ronald Reagan in 1988, and when he transmitted that treaty to the Senate, explaining what that treaty does, he wrote, quote, "Each state party is required either to prosecute torturers who are found in its territory, or to extradite them to other countries for prosecution."

Do you think the U.S. should be bound, is bound by that treaty? And, I want to ask you: with regard to the question of whether or not we follow that treaty, why do you describe that as nothing more than, quote "cable catnip".

CT: Alright. The "cable catnip" comment was this. This issue, whenever you see the words Cheney and intelligence pop up, and when I use the phrase 'cable catnip', it is when something becomes, whether the two polarized parts of our political society, are very entrenched in their views on this, and believe the other side is completely irrational on it. And so, that's, whenever you have an issue like that, that's what I describe as 'cable catnip'. Because it becomes something that is easy to put on television, because you can find a left versus right, which is something that cable embraces to a fault, and I'm in this business but I'm, I work my butt off trying to stay out of the left versus right fights and try to stay analytical and stay on the reporting end of things.

And so, that's when I describe an issue as cable catnip. I am not sitting here and saying - and I respect the passion on this, and I don't want to somehow sit here saying that on the right I've been accused of somehow just assuming that our national security is nothing more than cable catnip, or that torture of detainees is somehow relegated to cable catnip. That is not what I'm describing when I say cable catnip, but I want to put that aside.

To go back to your question, of course, any treaty we sign, the United States government is obligated to stand by it. Now, the controversy has been, and what we're trying to figure out - and what I think where the Justice Department is trying to figure out, and where this whole debate has been about - is whether they found a legal way to somehow abide by this treaty or not.

GG: And isn't that--

CT: ...abiding by the treaty--

GG: And isn't the best thing to do to immunize that question from political considerations is to say to a prosecutor, the way that we do with every other accusation of crime: take a look at the pure legal issues here, ask: "were crimes committed; is this the kind of case that indictments are appropriate for, where people should be put on trial," and then just have this be treated like every other accusation of crime, which is the prosecutor taking a look?

CT: I agree, in a perfect world - Glenn, in a perfect world, yes. And if you could also guarantee me, that this wouldn't become a show trial, and wouldn't be put, and created so that we had nightly debates about it, that is the ideal way to handle this.

GG: Why not? What's wrong with nightly debate about whether our government committed crimes?

CT: Because then it becomes, then you do politicize the issue, to the point of where you won't - the fact is, public opinion was on the opposite side of the argument as you. That doesn't mean public opinion should...

Mr. Todd "respects the passion" but cannot divorce the plain fact of law, in the Convention Against Torture, from the media back and forth. Then there's the idea that the Bush Administration "found a legal way" to somehow abide by the treaty. In other words, as long as they find a functionary - every Administration has their own John Yoo - to bless their actions, they can break the law in virtually any way they want. A permission slip from the Office of Legal Counsel, no matter how flawed the reasoning, can enable violations of the spirit, color and the plain fact of the law.

Todd talks about a perfect world as if those who demand accountability and justice are just wild-eyed idealists who don't understand the hard-bitten truth of how the world works. On the contrary, we know how it works, and we find it to be a problem. We understand that the Administration would be reluctant to wade into the actions of their predecessor. We get that the media will try to block holding top officials accountable by bemoaning the partisanship that they put on display every night. We get that the right would have a screaming hissy fit against whoever dared to investigate or prosecute one of their own. We understand that the entire dynamic in Washington is wired to prevent holding any member of any Administration to the same standard as someone in Poughkeepsie who committed a crime.

We just have a problem with it.

If Todd has his way, we will hear more stories - like the tale of a CIA Supervisor bragging about using fire ants on a detainee - of perfidy, that scar us around the world, and we will just move along.

Digby has more thoughts

Wingnut Welfare Up For The Highest Bidder

Mike Allen has really advanced the cause of exposing pay-to-play media scandals over the past week. Fresh off the Washington Post salons, Allen catches a pillar in the conservative movement, David Keene of the American Conservative Union, trying to sell his own opinions:

The American Conservative Union asked FedEx for a check for $2 million to $3 million in return for the group’s support in a bitter legislative dispute, then the group’s chairman flipped and sided with UPS after FedEx refused to pay.

For the $2 million plus, ACU offered a range of services that included: “Producing op-eds and articles written by ACU’s Chairman David Keene and/or other members of the ACU’s board of directors. (Note that Mr. Keene writes a weekly column that appears in The Hill.)”

The conservative group’s remarkable demand — black-and-white proof of the longtime Washington practice known as “pay for play” — was contained in a private letter to FedEx , which was provided to POLITICO.

Politico is usually just link-bait, but if they want to expose the media and burn down all the knotty work being done in official Washington, I'll link away!

Note how the weekly column in The Hill is proffered right off the bat. It's also worth noting that FedEx rejected this offer, and right afterwards Keene backed UPS in the dispute. Whether UPS bought off Keene or Keene just got pissy is unclear.

The point is that you simply cannot believe the word of these conservative activists. Or really anyone - the moral here is to always check your sources. But we've seen too many of these kinds of scandals on the conservative side - Armstrong Williams, Maggie Gallagher, Jeff Gannon, etc. - to give them the benefit of the doubt at all.

Liveblogging Obama's Speech On Health Care

They scheduled this at the last minute. Obviously negotiations are hitting a rough stretch, particularly over who will pay for health care. Let's see if the President draws any lines in the sand.

..."I realize that Washington is often focused on the 24-hour news cycle instead of the long view." He's going to put it in context, and try to discuss the progress made.

...talking about provider deals to reduce the cost of health care growth. The $80 billion dollars from drug companies, the hospitals deal. Endorsements from AARP, the American Nurses Association and the AMA.

..."consensus around specific reforms," need to invest in preventive medicine, streamline forms, reform insurance system so you can get affordable coverage if you're out of work, guaranteed issue, insurance exchange.

"Lower costs, more choices, and coverage you can count on." Not a bad bumper sticker.

This consensus has brought us closer to the goal than ever. Now we have to get over the finish line. Main stumbling block is how to pay for it (as I've said). Must be deficit-neutral. Cutting unnecessary spending and giveaways could make up 2/3 of the total costs. We have to find a way to pay for the remaining 1/3.

The bill will also include my commitment to slow the growth of health care costs in the long run. "bend the cost curve" Lot of debate and disagreement. Our proposal would change incentives to get the best care and not the most expensive care. Talking about the MedPAC reform. Independent group of doctors and experts to oversee best practices. They're calling it IMAC. "Force Congress" to act on recommendations to bend the cost curve each and every year. Independent group empowered to make these changes.

"The last miles of any race are the hardest to run." But now is not the time to slow down. If we don't reform, we cannot control costs and our long-term deficits. No one's insurance will be secure if we do nothing. "Not a future I accept for the United States of America." We are going to get this done. It will happen this year.

This is basically an overview, a full stop, saying "look where we've come, here's what we have left to go." Using the bully pulpit to lay this out.

Charles Schwab Makes The Mistake Of Telling The Truth

Maybe it's because their headquarters are on Montgomery Street in San Francisco instead of Wall Street in New York, but Charles Schwab Co. is telling investors that California is not about to go out of business.

In a rhetorical question-and-answer missive to investors, Schwab income planning director Rob Williams, says "California has severe financial problems, but we think it's unlikely that the state will default on its general obligation (GO) bonds."

Then he lists five reasons for reaching that conclusion, including constitutional guarantees; the fact the state can't file for bankruptcy, and the fact that "states can't just disappear."

So does the firm see the state's current travails as "a buying opportunity?" "No one can say for certain," says Williams.

Here's the document. As Williams says, general obligation bonds are guaranteed by the state constitution, and only education is ahead of paying off these bonds. Here's a sample:

Many analysts point out that the state’s revenues are collapsing, its spending is out of control, and the structure of government prevents the state from ever being fiscally stable. Are these concerns valid?

All of these statements may be true, depending on your political view. But these troubles don’t inevitably translate into default on California GO bonds, for all of the reasons cited above.

However, they do translate into serious concerns for other parties interested in the state’s solvency—of which there are many. The politics of the situation can also be noisy, leading to steady reporting of the budget drama and ebbs and flows in market sentiment, likely adding to uncertainty and reducing confidence among investors. As confidence drops, the prices of outstanding bonds drop, and yields rise.

The situation has also resulted in changes to the state’s bond rating, including a downgrade by Fitch Ratings to BBB on July 6 and Moody’s to Baa1 on July 15. These ratings are two and three notches, respectively, from "junk" bond status. The rating is also on negative "Rating Watch," meaning that the rating will remain on review for additional downgrades "if institutional gridlock" persists.

While ratings alone should not drive an individual investment decision, comments in Fitch’s rating report are worth quoting: "The BBB rating indicates that expectations of default risk remain low, although the rating is well below that of most other tax-supported issuers. GO debt in California has a constitutional prior claim on revenues, although after education."

In other words, diving into Fitch's rating report, they essentially admit that their rating is bullshit. They are dropping the ratings because of perceptions of crisis that don't match constitutional obligations. This is gouging. It's almost the textbook definition of it.

And if you don't think that goes on, check out this investigative report from last November:

Goldman, Sachs & Co. urged some of its big clients to place investment bets against California bonds this year despite having collected millions of dollars in fees to help the state sell some of those same bonds.

The giant investment firm did not inform the office of California Treasurer Bill Lockyer that it was proposing a way for investment clients to profit from California's deepening financial misery. In Sacramento, officials said they were concerned that Goldman's strategy could raise the interest rate the state would have to pay to borrow money, thus harming taxpayers.

"It could exaggerate people's worries about our credit," said Paul Rosenstiel, head of the public finance division of the treasurer's office.

That's exactly what's happening. The big banks are sparking irrational worry over California's ability to repay bonds to increase their yields. The federal government needs to step in with a backstop, not just to save the state money, but to prevent the commission of a crime.

Still Masters Of The Universe

What we're seeing from the big bank earnings reports is that the government reacted to a situation where the financial industry titans were too big to fail, and facilitated theconsolidation of them so that they grew even bigger. Goldman Sachs and JP Morgan Chase are the biggest of the lot, having seen their competition either eliminated or weakened.

“One theme here is that Goldman Sachs and JPMorgan really have emerged as the winners, as the last of the survivors,” said Robert Reich, a professor at the University of California, Berkeley, who was secretary of labor in the Clinton administration.

Both banks now stand astride post-bailout Wall Street, having benefited from billions of dollars in taxpayer support and cheap government financing to climb over banks that continue to struggle. They are capitalizing on the turmoil in financial markets and their rivals’ weakness to pull in billions in trading profits.

Even Bank of America and Citigroup posted big profits in the last quarter, although the elimination of mark-to-market accounting plays a major role in hiding the true weakness of a lot of these banks. The imminent failure of more community banks and larger firms like CIT present opportunities for JP Morgan and Goldman Sachs as well.

Paul Krugman gets shrill on Goldman Sachs today, and he makes the larger point that we have only made Wall Street more dangerous to the overall economy through no-strings bailouts and failing to rein in the excess.

Over the past generation — ever since the banking deregulation of the Reagan years — the U.S. economy has been “financialized.” The business of moving money around, of slicing, dicing and repackaging financial claims, has soared in importance compared with the actual production of useful stuff. The sector officially labeled “securities, commodity contracts and investments” has grown especially fast, from only 0.3 percent of G.D.P. in the late 1970s to 1.7 percent of G.D.P. in 2007.

Such growth would be fine if financialization really delivered on its promises — if financial firms made money by directing capital to its most productive uses, by developing innovative ways to spread and reduce risk. But can anyone, at this point, make those claims with a straight face? Financial firms, we now know, directed vast quantities of capital into the construction of unsellable houses and empty shopping malls. They increased risk rather than reducing it, and concentrated risk rather than spreading it. In effect, the industry was selling dangerous patent medicine to gullible consumers [...]

The huge bonuses Goldman will soon hand out show that financial-industry highfliers are still operating under a system of heads they win, tails other people lose. If you’re a banker, and you generate big short-term profits, you get lavishly rewarded — and you don’t have to give the money back if and when those profits turn out to have been a mirage. You have every reason, then, to steer investors into taking risks they don’t understand.

And the events of the past year have skewed those incentives even more, by putting taxpayers as well as investors on the hook if things go wrong.

Basically, Krugman hinges the success of the bailout on meaningful financial regulation to keep Wall Street from making the same gambles. I'm not hopeful about that. But what I am hopeful about is the recognition, from across the political spectrum, that the bailout has produced perverse incentives that need to be reversed in whatever way possible.

The (Wall Street) Journal's take -- "We like profits as much as the next capitalist. But when those profits are supported by government guarantees or insured deposits, taxpayers have a special interest in how the companies conduct their business" -- is actually more in keeping with that of Robert Reich, who says that "Goldman's resurgence should send shivers down the backs of every hardworking American who has lost a large chunk of retirement savings in this economic debacle, as well as the millions who have lost their jobs.... Goldman's high-risk business model hasn't changed one bit from what it was before the implosion of Wall Street." [...]

There is much in the Wall Street Journal that I don't agree with but, when it comes to the failure of the administration to address and fundamentally reform what Kessler calls "the structural problems that got us into trouble in the first place," we are of the same mind. There is no daylight between a progressive position focused on the paramount need to get the real economy going and one based purely on what makes free markets work.

The editorial goes so far as to suggest imposing a tax (yes, the Wall Street Journal is proposing a tax!), an FDIC-style bailout tax to be precise, "for those in the too-big-to-fail camp."

Even Reagan-era economist Bruce Bartlett is arguing for higher taxes, albeit regressive ones. I actually think the proper context is in terms of the health care debate. Goldman Sachs and other Wall Street firms took advantage of a financial crisis to redistribute wealth upwards. To pay for health care for the indigent, we should unwind that redistribution, perhaps with Charlie Rangel's surtax that adds brackets at the high end. It is impossible for conservatives to argue against redistribution of wealth with a straight face, given the example of Goldman Sachs.

...Simon Johnson:

We are looking at a concentration of political power in the US banking system that we haven’t seen since the 1830s: Shades of Andrew Jackson vs. the Second Bank of the United States. We put up with a lot from our banking elite in this country, but historically we draw the line at financial power so concentrated it can confront the power of the President.

The logic for reform and for breaking up the big banks begins to build. Bank of America’s fall was, in some senses, a fortunate accident for Goldman and JP Morgan. But it has also given them an excessive and unsustainable degree of political power.

Of course, you also have to ask: Who can break that power, when, and how?

...This is a dangerous time, politically. 80% of the public believe that Wall Street benefited from the bailouts, and not taxpayers. That's an unsurprising result. The question is how the public reacts. We could see a right-wing populism take shape if the teabaggers ever get their act together, or a New Deal coalition reformed. I talked to a writer last night who said he felt like he was living through history, as the Depression-era battle lines are being drawn. We don't know who will win yet, but it doesn't look good from where I sit.

The Silent Riot At Bagram

From the did you know file, did you know that the United States continues to operate, and assert the legality of operating, a detention facility that indefinitely locks up suspects without charging them? No, not Guantanamo, which the President has vowed to close. I'm talking about Bagram Air Force Base in Afghanistan, which is not merely a POW facility but which ships in terror suspects from all over the world and confines them in a legal black hole. There is little knowledge of this or outcry about it in the United States, but the prisoners themselves have begun acts of civil disobedience.

The prisoners at the largest U.S. detention facility in Afghanistan have refused to leave their cells for at least the past two weeks to protest their indefinite imprisonment, according to lawyers and the families of detainees.

The prison-wide protest, which has been going on since at least July 1, offers a rare glimpse inside a facility that is even more closed off to the public than the U.S. detention facility at Guantanamo Bay, Cuba. Information about the protest came to light when the International Committee of the Red Cross informed the families of several detainees that scheduled video teleconferences and family visits were being canceled.

Representatives of the ICRC, which monitors the treatment of detainees and arranges the calls, last visited the Bagram prison on July 5, but inmates were unwilling to meet with them.

"We have suspended our video telephone conference and family visit programs because the detainees have informed us they do not wish to participate in the programs for the time being," said Bernard Barrett, a spokesman for the organization.

The 620 prisoners at Bagram, more than twice that of Guantanamo, have no access to attorneys. The facility is being rebuilt to hold even more prisoners, up to 1,000. And at least over three dozen of them have been captured around the world and transferred to Bagram, with no connection whatsoever to the war in Afghanistan.

This is a blight on our country, we must deal with the human rights and legal abuses at all of our detention facilities, including Bagram. What's disgusting is that the prisoners are more actively engaged in this than almost anyone in this country.

...and then you have people like Lindsey Graham, who thinks we should hold detainees without charges "until they die."

Chris Kelly: Tough On Crime FAIL

Far be it from me to agree so aggressively with my friend Steve Maviglio, but he's absolutely right that Chris Kelly is making a fool out of himself by holding to outdated and dangerous Tough on Crime rhetoric in his campaign for Attorney General. Kelly, the former Facebook chief privacy officer, has created a Cause called "Protect Our Communities." As Maviglio says, George Runner couldn't have done it better himself:

Do you think the early release of 20,000 convicted felons will solve California's budget crisis? I don't.

Please stand with me: Click here to join my new "Protect California Communities" cause on Facebook and help me build grassroots opposition to this phony budget plan!

Our state is already more than $26 billion in debt and issuing hundreds of millions more in IOUs every week.

We need innovative solutions to get out of this mess. But a plan by Governor Schwarzenegger and some in the Legislature to early release nearly 20,000 felons from state prison is not one of them.

I'm all for prison reform -- but this is surrender, not reform. Even if it would save us money -- which it won't -- putting thousands of dangerous criminals back on the streets is a risk that California should never take.

Please stand with me: Click here to join my new "Protect California Communities" cause on Facebook and help me build grassroots opposition to this phony budget plan!

"Dangerous criminals" back on the streets include the terminally ill, nonviolent drug offenders and people returned to prison for the crime of technical parole violations, which eats up about 2/3 of total incarcerations in California in any given year. This is the kind of absurd rhetoric that has our prisons full to bursting, that has created 1,000 sentencing laws passed by the Legislature in the past 30 years, ALL OF THEM increasing sentences, that has turned our parole policy and prison health care systems into a national joke and a federal crime, that has cost the state billions in overtime for prison guards and overall system costs, that has scared the public into passing really dangerous, pernicious laws like three strikes, that has nearly busted our Treasury, destroyed our corrections system and eliminated any possibility for rehabilitation.

The Attorney General position can be one of leadership in producing alternatives to our prison crisis. Kelly has forfeited any ability to call himself a leader by playing to the least common denominator. He can go back now to devising schemes to strip privacy on social networking sites.

Not Enough To Argue For The Public Option

The House Ways and Means Committee as well as the Education and Labor Committee have passed health care reform bills this week, which have largely the same form as the Tri-Committee bill released earlier. Both of the committee votes lost Democrats, but their numerical advantages allowed them to still pass the legislation. In the Energy and Commerce Committee, Blue Dogs hold higher numbers, and so some compromises may be needed to pass the bill. That markup will end sometime next week.

The focus now, thanks to the CBO head Doug Elmendorf's testimony in the Senate Budget Committee, is on cost control. Elmendorf claims that the current legislation would not bend the cost curve on health care to a sufficient degree to protect the federal budget. The White House has distributed language on strengthening MedPAC, the board that recommends how Medicare pays for certain services. If Medicare gets used as a way to make medical delivery more efficient, that could ripple through the rest of the system, and the White House proposal would allow those recommendations to go into law immediately, though Congress would have the power to vote down any recommendation. It's similar to Tom Daschle's old proposal of a Federal Reserve for health care. Elmendorf himself wants to revisit the employer deduction for health benefits, but as long as advocacy groups paid by unions continue to protect union interests, there will be no momentum for it in Democratic circles. I'm fairly upset with union opposition on this score.

But there is one legitimate reform that could lower costs for both individuals and the government, increase competition in the marketplace, and provide the best coverage at the best cost for everyone. That would be Ron Wyden's Free Choice Act, and it's what I think progressives ought to really push at this point.

There are two major problems with the proposals being considered in Congress. The first is that they do not do enough to cut costs, because they do not do enough to change the fundamental nature of the employer-based health-care system [...] The second is that the bill does not offer obvious benefits to an insured worker. You can argue that it changes the system around them: There are subsidies if they lose their job and regulations to protect them from the excesses of private insurers. But though the health-care system might be different, it will not, for most people, feel different. And that has made it hard to explain to people why this is something they should pay for. You can tell the insured worker what he gets if his circumstances change. You cannot tell him what he gets if his circumstances do not change.

Enter Wyden. The Free Choice Act is not a health-care-reform bill. It is best understood as a reform of the health-care-reform bill. In particular, it reforms the nature of the Health Insurance Exchange. Under the bills being considered right now, the exchange will be limited to the uninsured, the self-employed and small businesses. Maybe it will be expanded over time. Maybe not. In addition, it is barricaded by what's called a "firewall." The firewall essentially bars individuals from entering the exchange so long as their employers offer them a basic level of health-care coverage.

The Free Choice Act starts by setting the rules for the exchange: Within five years the exchange is open to all employers. More importantly, it's open to all people. The firewall is extinguished. But as the late, great, Billy Mays would say, that's not all!

The key component of the Free Choice Act is called "cash-out." Under the Free Choice Act, if I decide that I don't like any of the health-care coverage options being offered by my employer and would prefer to choose from the many options being offered on the Health Insurance Exchange, my employer has to give me a voucher that covers 65 to 70 percent of the cost of the lowest level of exchange plan. (That is the average portion that an employer pays of his employee's health insurance premiums.) I can take that voucher and, along with whatever money I want to throw in, choose a plan on the exchange.

We keep hearing the mantra of "if you like what you have, you can keep it." Wyden's reform preserves that. But it also opens up the health insurance exchange to everyone, and forces both insurers and the public option into real competition. The public option would not be walled off simply to those who don't have insurance from their employer or certain small businesses. It would have the opportunity to get market share to compete with private insurers. And for the first time, insurers across regions would compete with one another, as the companies inside the exchange would be able to entice workers who get insurance through their employers. All of this could actually change the dynamic in the insurance market and force competition on price and quality, rather than the current competition among insurers, which is "who can pay for the least amount of health care." It gives individuals the freedom to choose without stripping them of their bargaining power - in fact, it empowers them more. And it strengthens the public option, by opening the market to potentially tens of millions more consumers.

The employer-based system is nice for some, but it really delivers health care inefficiently, and Wyden's Free Choice Act would allow over time for an alternative to emerge that maintains the economies of scale to allow that alternative to compete. And this would save money, as it encourages cost effectiveness since everyone is competing on price.

Wyden talks about his idea here:

What we tried to do in this proposal is show the sweet spot between blowing the employer-based system to pieces and, on the other hand, simply saying that we will not try to improve it. The president's promise that we will be sensitive to not changing what people have is not incompatible with being able to choose some better.

When you tell people they can have access to a full menu of choices like members of Congress have, that's out of the park in terms of positive reaction. But if you're a congressperson and you're with Blue Cross one year and then all of a sudden you decide you want to go with Aetna, your transition is seamless. Someone in the private sector wouldn't even get that choice. We're trying to give it to them.

The biggest problem with health care reform right now is that we're grafting onto a system that doesn't work. Wyden actually finds a way to do that while also transforming the system. It's not enough to just argue for a public option that is as highly regulated and firewalled as what exists in the current House and Senate options. If you want actual health care reform, I think you need to echo Wyden's call for free choice.

...Dennis Kucinich also passed an amendment in the Education and Labor Committee permitting states to move forward with single-payer programs if they so choose. Which I think is fine, but given the economic predicament in which states find themselves right now, I can't see any one of them being able to do it for a while.

...From the Department of Bad Timing, just as I praise Wyden, he signs on to President Nelson and Collins' letter to delay health care reform. I have no idea why Wyden is in that coalition, but maybe this Free Choice Act has something to do with it.

As for delay itself, I'll associate myself with the remarks of The President of the United States.

Gates on the F-22

Remember, this is Robert Gates, who served under a Republican President both at the CIA and the Defense Department, arguing in the most explicit language I've seen from a public official against the dictates of the military-industrial complex:

Defense Secretary Robert M. Gates made an impassioned case Thursday for terminating the F-22 program after production of 187 planes, as the Obama administration sought to blunt a bipartisan push to add money to the defense budget for the fighter jet.

"If we can't bring ourselves to make this tough but straightforward decision -- reflecting the judgment of two very different presidents, two different secretaries of defense, two chairmen of the Joint Chiefs of Staff, and the current Air Force secretary and chief of staff -- where do we draw the line?" he said in a speech at the Economic Club of Chicago. "If we can't get this right, what on earth can we get right?" [...]

The normally staid Gates became especially animated Thursday describing his frustration with lawmakers' efforts to keep building F-22s. "The more they buy of stuff we don't need, the less we have available for the stuff we do need," he told reporters, his voice rising. "It is just as simple as that. It ain't a complicated problem."

Even if Congress acquiesces on the F-22, Gates warned, the Pentagon has to do a better job of setting realistic goals for its weapons programs.

"We must break the old habit of adding layer upon layer of cost, complexity and delay to systems that are so expensive and so elaborate that only a small number can be built and are usable in only a narrow range of low-probability scenarios," he said.

Jack Murtha seems to think there won't be a veto. I actually hope that the White House doesn't compromise on this. If they do, there will be no political will to go up against the MIC again, at least for a while. However, now that the defense bill has become a legislative vehicle for the bill expanding hate crimes legislation to sexual orientation, which passed the Senate with 63 votes yesterday, it does need to go through. But the President has the upper hand here - the defense bill is must-pass, and Congress doesn't exactly inspire fear in anyone.

Hopefully the Senate can vote this out of the bill next week. It'll be close.

Card Check Vanishes

Conservative Democrats pulled out the card check provisions from the Employee Free Choice Act, leaving in place a weakened bill that is still being negotiated.

The so-called card-check provision — which senators decided to scrap to help secure a filibuster-proof 60 votes — would have required employers to recognize a union as soon as a majority of workers signed cards saying they wanted a union. Currently, employers can insist on a secret-ballot election, a higher hurdle for unions.

In its place, several Senate and labor officials said, the revised bill would require shorter unionization campaigns and faster elections.

While disappointed with the failure of card check, union leaders argued this would still be an important victory because it would give companies less time to press workers to vote against unionizing [...]

Though some details remain to be worked out, under the expected revisions, union elections would have to be held within five or 10 days after 30 percent of workers signed cards favoring having a union. Currently, the campaigns often run two months.

To further address labor’s concerns that the election process is tilted in favor of employers, key senators are considering several measures. One would require employers to give union organizers access to company property. Another would bar employers from requiring workers to attend anti-union sessions that labor supporters deride as “captive audience meetings.”

These provisions will only work if there are stiff, measurable penalties for breaking the law. Right now those penalties are weak and unenforced, and even if they're hit with fines employers consider it the cost of doing business. If those fines are high enough to discourage intimidation and harrassment, on both sides by the way, then we might be able to have a level playing field with snap elections and binding arbitration if the election is successful, so that the employer can just refuse to sign a contract forever. I'm upset about the loss of card check, but without the anti-intimidation provisions it really won't matter. Right now the union election system is broken - the "secret ballot" language might have beaten card check, so "right to vote" language needs to ensure a level playing field. If that happens, this bill would expand union membership in America and protect worker's right to unionize.

...Andy Stern responds by vowing that there will be a vote on majority signup, whether in the bill or by amendment. And there should be. Labor needs to know who their friends are in Congress before they spend a kajillion dollars on them getting them elected.

Another Wave In Iran

Akbar Hashemi Rafsanjani delivered the Friday prayers in Tehran today, Nico Pitney has all the details. Here are some of Rafsanjani's words:

I hope this sermon will pave a way out of this current situation. A situation that can be considered a crisis.

'Unfortunately the opportunity given by the Supreme Leader (5 extra days to submit election fraud evidence) wasn't used properly, but that's over now. People shouldn't be in prison. Let them get back to their families. Our enemies are laughing at us (b/c we have put our people in prison). Don't limit the media if they operate within the law.'

'We are now past the stage where the Guardian Council could have restored the peoples trust. We must be able to tolerate one another. We must compensate the families that have been harmed. We must let the press be free, we should refrain from intimidation. We are all one family. We (he must be referring to the opposition) have been involved in government for 30 years.'

'Which ever of those elements of our governance (Islamic or Republic) is not respected, then we have failed our revolution. Towards the end of the election campaign, some people were abusing the system, using the national television and radio... [speech in interrupted by jeers]... The majority of the people are suspicious of the election. Today is a bitter day. It is a bitter time. Everyone is losing. We need unity. We need unity more than ever today, given the numerous threats facing our nation.'

'You all know me, i do not and never do take sides. But my opinion is that we must find a path of unity. My solution: the assembly of experts has been consulted and we conclude that the trust of the people must be restored. This must be our priority. Everyone is within the framework of the law. We must proceed within the framework of the law. We should follow the legal paths. Restoring the peoples trust will not happen over night. Everyone should be able to say their words. IRIB and radio should give everyone a chance.'

So he admitted the doubt in the election and called for an end to repression, the release of political prisoners, etc. Basiji militia responded by dispersing the thousands in the crowd with batons and tear gas. There are reports that the Basiji had knives and stabbed several people around Tehran University.

Take a look at this crowd and tell me if you think this will end anytime soon. The regime has lost the trust of too many people. They can only hold out for so long.

Rafsanjani's key line? "The Imam [Khomeini] would always quote the Prophet [Muhammad] who would say to Ali [Muhammad's successor]: leave the people if they do not want you."

Shock: Another Victory For Corporate Interests!

Judy Chu was sworn into office today as the first Chinese-American woman to serve in Congress. Her departure opens a whole at the Board of Equalization, a little-known four-member board that collects taxes and determines a lot of corporate tax policy. The four districts are gerrymandered to produce two Democrats and two Republicans, with the state Controller making up the swing vote. Today the Governor announced his choice to replace Chu, and boy are the richest companies doing business in California happy:

Gov. Arnold Schwarzenegger today will appoint Jerome Horton, a business-friendly former Democratic lawmaker, to the state’s tax board, an administration official said.

The pick probably will shift the balance of power on the tax panel, which, despite its low public profile, holds broad influence over corporate taxes [...]

Reliably liberal Democrats have formed a solid three-person majority on the five-member tax panel in recent years. But the moderate Horton, who was known during his tenure in Sacramento for abstaining from votes to keep himself in the political center, is expected to change that dynamic.

Well, good for the business lobby, right? It's not like they have had multiple victories in the past year, what with getting all sorts of permanent corporate tax breaks in the past two budget agreements and pushing the Parsky Commission in an effort to eliminate corporate taxes altogether. They needed a leg up.

Horton needs both houses of the Legislature to sign off on the appointment, but much like with Supreme Court appointments, I fail to see how rejecting him would somehow yield a better result.

The Bigot In The Room

I saw Pat Buchanan today refer to Frank Ricci as "an American hero" on Hardball. His opponent in the debate, an NAACP lawyer, was measured and calm. But he never brought up what Buchanan wrote just a couple days ago in talking about the GOP's strategy for victory in the future.

In 2008, Hispanics, according to the latest figures, were 7.4 percent of the total vote. White folks were 74 percent, 10 times as large. Adding just 1 percent to the white vote is thus the same as adding 10 percent to the candidate's Hispanic vote.

If John McCain, instead of getting 55 percent of the white vote, got the 58 percent George W. Bush got in 2004, that would have had the same impact as lifting his share of the Hispanic vote from 32 percent to 62 percent. [...]

Had McCain been willing to drape Jeremiah Wright around the neck of Barack Obama, as Lee Atwater draped Willie Horton around the neck of Michael Dukakis, the mainstream media might have howled. And McCain might be president.

If only John McCain race-baited more, if only Republicans, who have practically nobody but Southern white men left in their party, made MORE overt moves toward Southern white men, then they would receive electoral glory. As Ta-Nehisi Coates says:

There are a couple problems here, I'd submit. One is that Sotomayor isn't black (except in Baltimore.) She's a Latina. Amping up the race-baiting isn't just going to turn off black people (most of whom are already turned-off) it turns off Latinos also.

The second problem is that it likely turns a significant portion of white people also. The GOP's problem isn't that it needs to shore up Alabama--at least not yet. It's problem is, well, basically everywhere else that isn't Alabama. I don't know how bashing Sotomayor makes you more competitive in, say, Colorado or Oregon. I'd assume the opposite.

Altogether, I think this is awful political advice. But it's about what you'd expect from the guy who, as one of Matt's commenters note, told us that Sarah Palin would steal women from Obama. You don't have to be right to do Buchanan's job. Or even sincere. You just have to be very loud.

Pat Buchanan is a bigot. He provides a bigoted viewpoint for hours per day on a supposedly liberal network called MSNBC. Why is that tolerated, like ol' Pat is just a crazy uncle?

...Rachel Maddow is laying into Buchanan right now, it's pretty lively.

Not Buying It

Jeremy Scahill raises objections to the Democrats' anger over a secret CIA program to allegedly assassinate Al Qaeda leaders.

Partisan politics often require selective amnesia. Over the past decade, we have seen this amnesia take hold when it comes to many of President Bush's most vile policies. And we are now seeing a pretty severe case overtake several leading Democrats. It makes for good speechifying to act as though all criminality began with Bush and -- particularly these days -- Cheney, but that is extreme intellectual dishonesty. The fact is that many of Bush's worst policies (now being highlighted by leading Democrats) were based in some form or another in a Clinton-initiated policy or were supported by the Democrats in Congress with their votes. To name a few: the USA PATRIOT Act, the invasion of Iraq, the attack against Afghanistan, the CIA's extraordinary rendition program, the widespread use of mercenaries and other private contractors in US war zones and warrant-less wire-tapping.

Regarding the Bush-era assassination program, there is great reason to be skeptical that the program CIA Director Leon Panetta alleges was concealed from Congress is actually the program the public is currently being led to believe it is. Why would the CIA need to conceal a program that never was implemented and, if it never was implemented, why did Panetta need to shut it down? Moreover, who was running this inactive program from the minute Obama was sworn in until June 24 when Panetta supposedly announced its cancellation? This program -- as it is currently being described -- should hardly be a major scandal to members of the House and Senate Intelligence Committees, as some are now treating it. As they well know, President Obama has continued the Bush targeted assassination program using weaponized drones and special forces teams hunting "high value targets." As former CIA Counter-terrorism chief Vincent Cannistraro and others have pointed out, "The CIA runs drones and targets al Qaeda safe houses all the time." Cannistraro told Talking Points Memo that there is no important difference between those kinds of attacks and "assassinations" with a gun or a knife.

Except no Democrat has actually talked about the nature of the program. They have raised anger at having the secret program concealed from Congress, apparently at the behest of Dick Cheney. But no Democrat has ratified the print media's take that the program in question concerned targeted assassination squads. And these stories just keep on coming. The AP writes that George Tenet cancelled the hit squads, because he found the details problematic. The American Conservative discussed the program and how it ran into trouble in Kenya. The Washington Post fingers the hit squad policy as the one Cheney ordered kept from Congress, saying that it never reached more than an aspirational stage. Then they contradicted themselves on that point today, claiming that CIA officials were about to activate the plan when Leon Panetta found out about it and ordered it terminated. In the same article, Dennis Blair, the Director of National Intelligence, said that the CIA didn't break the law in concealing an aspirational program from Congress, which Jan Schakowsky rebuked, but only on the technical grounds of withholding classified information.

There is no reason to believe, in my view, that this particular program is the same as the one that has raised Congress' ire. There may have been an assassination squad program; it's apparently been reported as far back as 2001. But nobody really knows what program Panetta closed with a flourish and reported to Congress, and those who think they do are either speculating or getting information from unreliable sources. It defies belief that Dick Cheney, on the ropes for ordering the CIA to hide information from Congress, would hide this particular information, in continuity with what past Administrations have done. And it defies belief to think that dozens of sources would come out of the woodwork on Cheney to describe a program of "killing bad guys," which is very favorable to the former Vice President. Nope, this was something bigger. Much bigger.

Movement

Regardless of the Blue Dog pushback and all the other slings and arrows lodged at health care, some potentially big news has come down in the past 24 hours.

First, the Congressional Progressive Caucus has produced the names of 50 members who will not vote for health care without what they call a "robust public option." Robust is in the eye of the beholder, of course, and the one the House proposed would only cover 9 million or so people, which may not be enough to reverse incentives in the industry, but they drill down pretty far into the meaning of robust:

Enact concurrently with other significant expansions of coverage and must not be conditioned on private industry actions.

Consist of one entity, operated by the federal government, which sets policies and bears the risk for paying medical claims to keep administrative costs low and provide a higher standard of care.

Be available to all individuals and employers across the nation without limitation

Allow patients to have access to their choice of doctors and other providers that meet defined participation standards, similar to the traditional Medicare model, promote the medical home model, and eliminate lifetime caps on benefits.

Have the ability to structure the provider rates to promote quality care, primary care, prevention, chronic care management, and good public health.

Utilize the existing infrastructure of successful public programs like Medicare in order to maintain transparency and consumer protections for administering processes including payment systems, claims and appeals.

Establish or negotiate rates with pharmaceutical companies, durable medical equipment providers, and other providers to achieve the lowest prices for consumers.

Receive a level of subsidy and support that is no less than that received by private plans.

Ensure premiums must be priced at the lowest levels possible, not tied to the rates of private insurance plans.

In conclusion, the public plan, like all other qualified plans, must redress historical disparities in underrepresented communities. It must provide a standard package of comprehensive benefits including dental, vision, mental health and prescription drug coverage with no pre-existing condition exclusions. It must limit cost-sharing so that there are no barriers to care, and incorporate up-to-date best practice models to improve quality and lower costs. All plans, including the public plan, must include coverage for evidence-based preventive health services at minimal or no co-pay. All plans, including the public plan, should be at least as transparent as traditional Medicare.

I now think that the public option will be a feature of whatever gets signed by the President. The House is providing a progressive firewall, and most of the objections of the Blue Dogs and others are over other aspects of the bill. What's more, the American Medical Association, scourge of universal health care for decades, has blessed the House bill, which is remarkable.

And that makes it a pretty big deal. No, the AMA is not as powerful, nor as representative of the medical community, as it once was. But an unqualified endorsement for the most liberal plan out there has large symbolic value, given the role AMA played in killing health care reform for most of the 20th Century.

So what's in it for the docs? The medical community came into this debate with two big concerns. One is the financial and emotional burden of malpractice lawsuits. The other is the annually scheduled reduction in Medicare payments, known as the Sustainable Growth Rate (SGR) formula, that the AMA and other physicians lobbies end up fighting every summer when it's about to take effect [...]

Changing the SGR is expensive, probaby $200 to $300 billion over the course of ten years, depending on the details. And that's on top of the cost of expanding insurance coverage. But, to be clear, the SGR adjustments were becoming a farce. If they are part of a package that includes payment reforms designed to improve quality and reduce health care costs over the long run, it'd be money well spent.

Nobody in Washington supports legislation without getting something for themselves, but I agree with Cohn that this looks like a decent enough deal.

And now, the Senate Finance Committee thinks his committee will have a deal on his bill by the end of the day.

Senate Finance Committee Chairman Max Baucus (D-Mont.) said Thursday that he hopes to have a bipartisan deal on a health care reform bill by the end of the day.

He made the remarks after huddling for about two hours with five Finance Committee members most closely involved in the negotiations. It was the first time Baucus acknowledged a time frame for reaching an agreement.

“We are meeting very aggressively today,” Baucus said of the bipartisan group, which plans to meet again at 1:30 p.m. “We will keep meeting all day long. I hope we can reach some kind of agreement by the end of the day, but having said that, it depends on what kind it is.”

If the Finance Committee can get a bill reported out, suddenly the chances of a bill become much greater. What form that bill will take, of course, is open for debate.

AP Has "The Math"

You may have heard about the Associated Press citing an unnamed Democratic source to price the House Tri-Committee health care bill at $1.5 trillion dollars over 10 years, rather than the $1 trillion dollar number used by the Congressional Budget Office. This has seeped into the conservative mainstream and even other news outlets. Where is it coming from? Brian Beutler reports:

The Congressional Budget Office score of $1.04 trillion that the Democrats cite is the figure for the new health insurance "exchange."

However, that is a net figure, including about $237 billion in revenue raised from employer and individual mandates -- fees paid by those who don't provide or purchase care. Therefore, if you look at costs, the score on that is about $1.27 trillion.

There is also a separate piece of the bill covering Medicare. It includes about $350 billion in new spending (the biggest single piece is for the so-called "doc fix," which involves the payment rate to doctors under Medicare).

This looks to me like the AP worked up some analysis after the fact, once that unnamed Democratic source whispered in their ear. I'm not sure if I agree totally with it, but the Congressional Budget Office is generally seen as the arbiter on costs of legislation. If they have not completed its score, you call their bill a partial score. You don't throw out your own analysis and parcel out parts of the legislation and just put together your own numbers. Or that is, you can, but you might want to say they're your own numbers instead of the numbers. Really irresponsible journalism.

Question: when a CBO score is incomplete and favored toward conservatives, does the AP go rogue then and put its bean-counters to work reducing the cost?

CalPERS Goes After The Rating Agencies

People are justifiably worried that credit ratings agencies like Moody's, Fitch and S&P have lowered California's credit ratings to near-junk bond status. The nature of the way we pay our bills means that we will eventually have to access bond markets to borrow, and these low ratings will dramatically increase the cost of that borrowing. I've said often that the risk of default on any bond issue, as a Constitutional matter, is infinitesimal, yet in this case, the rating agencies are being overly conservative and reflecting the fears of Wall Street.

And yet the rating agencies are not independent actors. They are owned by banks who issue the securities they rate, and throughout the financial meltdown, they continued - almost until the end - to rate mortgage-backed securities filled with subprime loans at the highest quality, facilitating the buying frenzy. In fact, the rating agencies structured many of the deals in order to ensure high ratings, intervening in the market for those securities instead of dispassionately assessing them. Now CalPERS, the largest public pension fund in the country, which has been hammered by losses in the stock market, is suing those rating agencies for their gross negligence.

The lawsuit blames the three big Wall Street credit rating agencies – Moody's Investors Service, Standard & Poor's and Fitch Ratings – for effectively luring CalPERS into a series of disastrous 2006 deals by giving the investments "wildly inaccurate and unreasonably high" grades.

The investments have gone bust at a cost of "perhaps more than $1 billion," said the California Public Employees' Retirement System in the suit, filed last Thursday in San Francisco Superior Court.

The losses represent a small portion of the roughly $60 billion CalPERS has lost in the past year due to declines in its stocks, real estate and other holdings. The losses are so steep that CalPERS has served notice that it will demand higher contributions from the state and the local governments that rely on the fund for pensions.

As a large industry actor, CalPERS has some ability to move policy in the financial world. And they are hitting one of the biggest targets here. Barry Ritholtz explains further:

Now, here comes the fun part: Calpers doesn’t give a rat’s ass about the money. Sure, the financial instruments at hand (Cheyne Finance, Stanfield Victoria Funding and Sigma Finance) have defaulted on their payment obligations. The losses to Calpers are ~!$1 billion.

But that’s not what’s going on here: These Left Coasters want their pound of flesh. They don’t care for the Ratings Agency folks, and consider them a blight on the investment landscape.

The goal of the litigation (as I see it) isn’t to make the rating agencies pay a financial penalty; rather, it is to publicly try them just as the regulatory rules are being rewritten. I also predict that CALPERS is going to attempt to not just win, but humiliate these agencies, call them out in the most embarrassing way possible, trash the senior executives, and make things very uncomfortable in general for these firms.

They don’t want them to merely suffer — they want to destroy their unique position as an Oligopoly, to remove them from having a special status under the SEC rules.

The credit rating agencies are a FRAUD, and I would argue that this downgrading of California bonds regardless of Constitutional dictates represents a furthering of that fraud. CalPERS is fighting back on principle, because the relationship between the rating agencies and the financial industry they are supposed to serve is among the sleaziest on Wall Street.

Under Phil Angelides, CalPERS used its considerable clout to move toward progressive reforms in the financial industry. Bill Lockyer has done less of this. But I'm glad to see the fund standing up on behalf of not only its clients, but every investor, against the near-criminal structure of these rating agencies.

Peter Bergen On Afghanistan

Stanley McChrystal, the COINdinista commander of forces in Afghanistan, still wants to push for more troops despite Obama Administration demurrals. He has jurisdiction over Afghanistan and not the big picture, so it's to be expected that he would argue for more troops to wage his personal war. The President needs to see the full extent of military policy, and must weigh costs and benefits. I personally believe we can do a lot more by reducing the corruption and lawlessness in the current Afghan government (including removing warlords who kill prisoners with impunity) and working toward economic development instead of playing Whack-a-Mole with insurgents that can be brought into the political process and an Al Qaeda faction that can be contained through local law enforcement and intelligence sharing.

That said, I am interested by Peter Bergen's assessment of the war.

But the growing skepticism about Obama’s chances for success in Afghanistan is largely based on deep misreadings of both the country’s history and the views of its people, which are often compounded by facile comparisons to the United States’s misadventures of past decades in Southeast Asia and the Middle East. Afghanistan will not be Obama’s Vietnam, nor will it be his Iraq. Rather, the renewed and better resourced American effort in Afghanistan will, in time, produce a relatively stable and prosperous Central Asian state [...]

The similarities between the Taliban and the Vietcong end with their mutual hostility toward the U.S. military. The some 20,000 Taliban fighters are too few to hold even small Afghan towns, let alone mount a Tet-style offensive on Kabul. As a military force, they are armed lightly enough to constitute a tactical problem, not a strategic threat. By contrast, the Vietcong and the North Vietnamese Army at the height of the Vietnam War numbered more than half a million men who were equipped with artillery and tanks, and were well supplied by both the Soviet Union and Mao’s China. And the number of casualties is orders of magnitude smaller: in Afghanistan last year, 154 American soldiers died, the largest number since the fall of the Taliban; in 1968, the deadliest year of the Vietnam conflict, the same number of U.S. servicemen were dying every four days. Estimates of the total civilian death toll in Vietnam are in the low millions, while estimates of the total number of Afghan civilian casualties since the fall of the Taliban are in the thousands.

Nor has the U.S. intervention in Afghanistan been anywhere near as expensive as Vietnam was—in fact, that’s in part why American efforts have not met with as much success as they could have. During the Vietnam War, the United States spent almost 10 percent of its GDP on military spending. Today’s military expenditures are somewhere between 4 and 5 percent of GDP, and of that, Afghanistan last year consumed only 6 percent of the total expenditure, while Iraq sucked up some five times that amount.

I think a lot of Bergen's points are stuck in the world of a few years ago in Afghanistan than in today. He says Karzai is still relatively popular - that has waned. He says that Afghans still welcome US troops - that is less clear now. He says we have not made a major troop commitment - but it's growing, and McChrystal wants it to grow even further. He says that more troops will reduce airstrikes and civilian casualties - but precisely the opposite has happened so far. He says the Taliban don't have the manpower to take over the country - and on this point he's right, but that's not necessarily an argument for staying. Rather, the Taliban have their Pashtun strongholds which will be hard to defeat, and the rest of the country's ethnic factions will be hard for the Taliban to co-opt. That's a stalemate - or in other words, a quagmire.

Bergen does criticize policy toward Pakistan, which is of course the elephant in the room as it relates to Afghanistan policy, but thinks that militants there have made fatal mistakes and are seeing the citizenry turn on them. I actually kind of agree with this, but whether the Pakistani military, a powerful force in the country, is fighting the homegrown Taliban while aiding and abetting the Afghan version is of concern.

I think Bergen's article is worth reading to test assumptions and challenge biases, but I was left unconvinced. If Obama holds firm to a policy against future escalation, I may be persuaded.

Cost Control Is A Political Problem

Doug Elmendorf, who runs the Congressional Budget Office, testified today that the health care bills under suggestion in Congress would increase public health care spending and continue to threaten the long-term budget outlook.

Under questioning by members of the Senate Budget Committee, CBO director Douglas Elmendorf said bills crafted by House leaders and the Senate health committee do not propose "the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount."

"On the contrary," Elmendorf said, "the legislation significantly expands the federal responsibility for health-care costs."

Though President Obama and Democratic leaders have said repeatedly that reining in the skyrocketing growth in spending on government health programs such as Medicaid and Medicare is their top priority, the reform measures put forth so far would not fulfill their pledge to "bend the cost curve" downward, Elmendorf said. Instead, he said, "The curve is being raised."

To which I respond, of course. This is the fundamental problem with health care reform that I've mentioned earlier. Nobody wants to do the trade-offs. There are plenty of cost-control options on the table. One would be capping or eliminating the employer deduction on health benefits, which Elmendorf cites as "a federal "subsidy" that encourages spending on ever more expensive health packages." Another would be putting public health reimbursement rates into the hands of MedPAC and away from the parochial concerns of Congress members, which leads to overpaying for providers in many cases (though lots of Medicaid and Medicare reimbursement rates are low). There are comparative effectiveness reviews that would sweep away ineffective treatments that are too expensive relative to their benefit. There are proposals to change the long-term pay structure of Medicare for providers, away from fee-for-service and toward primary care emphasis and bundled payments. There's the option to make insurers pay the negative externality of denying care by slapping an operating fee on them. And there's a public option that can use Medicare bargaining rates, which would lower costs by 20-30% per individual.

But the unions don't want to break up the inefficient employer-based system and put their gold-plated insurance policies at risk. Congresscritters don't want to lose the power to set Medicare reimbursement rates for their localities. Device makers and their allies want to ensure that their devices aren't rendered useless through research and study. Doctors and hospitals and insurers all want to preserve their profits. And nobody is intellectually honest enough to call for cost controls and a public option that would legitmately drive costs down. Harry Reid's rejoinder is instructive:

Senate Majority Leader Harry M. Reid (Nev.) dismissed Elmendorf's push for the benefits tax. "What he should do is maybe run for Congress," Reid said.

The truth is that we have too shitty a political system right now to get real reform. We might get it incrementally, and can build on it. But the CBO isn't saying anything people don't know. It's just that politicians are afraid to lead.