LFTC - Letter From The Capitol

Index 2/27/09

4 posts: (1) Economic El Dorado?--The Home Front; (2) Guantanamo: 21st Century "Life of Reilly"--The Home Front; (3) Barack's Budget Blowout--The Home Front; (4) Health Care: Ten Myths--The Home Front.

Economic El Dorado?

Two items to offer a chuckle or two in these unfunny times, one from me, and one from a wag that was forwarded by a friend. 

First, from me: Edgar Allan Poe's poem"El Dorado" (the City of Gold of Colombian legend) may prove to be an augury for Team 44's response to the economic mess:

Gaily benight
An errant knight
JFK's callow shadow
Led us along
His Siren's Song
Promised us El Dorado,

In winter cold
He promised bold
But Great Depression's shadow
Fell on the Land
No growth at hand
'Twas hardly El Dorado.

Congress spent swift
No time for thrift
Will work? Who knows? "The Shadow"!
Oh Shade, asked he
If lost 'twill be
Election El Dorado?

Capitol Hill's
Fat pork-filled bill
Cast its thousand-page shadow
Slide, sadly slide
Promise belied
Thus lost was El Dorado.

Copyright John C. Wohlstetter 2009

Second, from the online wag:

Three contractors were bidding to fix a broken fence at the White House.  One is from Chicago, another is from Tennessee, and the third is from Minnesota.

All three go with a White House official to examine the fence. The Minnesota contractor took out a tape measure and did some measuring, then worked some figures with a pencil. "Well," he says, "I figure the job will run about $900:   $400 for materials, $400 for my crew and $100 profit for me."

The Tennessee contractor also did some measuring and figuring, then says, "I can do this job for $700:   $300 for materials, $300 for my crew and $100 profit for me."

The Chicago contractor didn't measure or figure, but leaned over to the White House official and whispers, "$2,700."

The White House official, incredulous, said, "You didn't even measure like the other guys! How did you come up with such a high figure?"

The Chicago contractor whispered back, "$1000 for me, $1000 for you, and we hire the guy from Tennessee to fix the fence."

"Done!" replied the government official.

And that, my friends, is how the new stimulus plan will work.

Well, Blago would approve, wouldn't he?

Barack's Budget Blowout

For the budget numbers--check these Summary Tables (22 pages) from the OFFICE OF MANAGEMENT & BUDGET--to work out on federal revenue projections, economic growth would have to be 3.5 percent in 2010, 5 percent in 2011 and 6 percent in 2012.  Historically, 3 percent has been viewed as a respectable number.  I spent a year (1982) as an assistant to the chief staff economist of the Senate Budget Committee, where I learned how all--yes, all--budget numbers are easily altered by the zillions.  Simply make convenient assumptions about economic growth, interest rates, unemployment and inflation.  Small changes have vast budgetary impact--up to hundreds of billions.  During the 25-year Long Boom (1983 - 2008), with only two brief recessions, with a Global Goldilocks Economy for most of a decade (1996 - 2006), the economy rarely grew above 4 percent annually, never topped 5 percent; most good growth years were in the 3 percent range.  Assume an absurdly high economic growth number, and Sha-Zam!--your budget woes are over.  The economic growth numbers are simply off the charts.  The WSJ editors detail more budget fantasies (with different growth numbers), and note that government spending as a share of GDP will rise to the highest level, by far, since 1945, when World War II ended.

What explains this?  I think it is that for 44 economic recovery is subordinate as a goal to transforming America--health care, education, renewable energy substitution for fossil fuels.  If 44 can get his program voted in by even a narrow partisan margin, he can create constituencies for the new programs that will be hard to dislodge, even if the GOP retakes Congress in 2010.  44 can veto GOP votes to overturn his program.  If 44 loses come 2012, without 60 solid GOP senators to override a Democratic filibuster, 44's program would still survive.  Maybe 44 prefers a one-term transformational presidency to a two-term rock-star turn.

Oh, 44 is continuing one custom of his predecessors: earmarks, of which there are 8,570 in his budget.  Eliminating earmarks, it seems, is too transformational, even for 44.

Guantanamo: 21st Century "Life of Reilly"

New York GOP Congressman Peter King visits Gitmo and reports on life there.  Such torture as sitting in the sun, TV, Arab newspapers, soccer, art classes, language training, consultation not only with lawyers but other inmates on litigation strategy, and menu choices at mealtime.  Sounds like the 1950s TV series "Life of Reilly" relaxation.  Great.

Health Care: Ten Myths

Sally C. Pipes, President & CEO of the Pacific Research Institute, has written a superb book, The Top Ten Myths of American Health Care (2008).  Her analysis bears a close look.

Myth One: Government Health Care is More Efficient.  Figures used to justify this claim ignore costs government mandates impose upon private insurers; all 50 states impose cost-increasing mandates, with the average state imposing 38 mandates.  Medicare routinely underpays, passing on costs to be picked up privately.  Medicare does not count as costs such things as salaries & marketing expenses under Part D--the drug benefit part of Medicare.  Studies show Medicare wastes up to 1/3 of money it spends.  Medicaid, which is bankrupting New York State, is riven with fraud--one study found 40 percent of NYS Medicaid expenses to be based upon fraudulent claims.  The past decades hugely popular SCHIP--State Children's Health Insurance Plan--covers 6 million children.  But SCHIP also covers 600,000 adults in 14 states; in 6 states there are more adults than children using SCHIP.  SCHIP goes to families earning up to 300 percent of the poverty level.  Processing claims takes an average of 127 to 177 days in the public sector, versus 89.5 days in the private sector.

Myth Two: We're Spending Too Much on Health Care.  In 1950 the average American spent $500 annually on health care, which accounted then for 5 percent of GDP; in 2006 the average individual cost was $,7026, and health care consumed 16 percent of GDP.  (Adjusted for the more than 8-fold inflation since then, the 1950 average figure would be $4,147 in today's dollars--thus the true rise on HC costs is 1.7 times, not 14-fold.)  Other factors driving up costs are benign: rising life expectancy, fewer premature deaths due to things like heart disease, leaving more people to die of old age.  Also, HC is nowhere near the 5.4 percent of total household expenditures, close to the 4.5 percent spent on clothing, but far less than the 40.8 percent spent on housing, 18.3 percent on transportation and 18.2 percent on food.

Myth Three: Forty-Six Million Americans Can't Get Health Care.  in 2007 there were 46 million Americans--6 million of them children--classified by the Census Bureau as uninsured, then 15.3 percent of the population.  But those uninsured for a brief period are counted equally as those without insurance for the entire year.  Some 38 percent of the uninsured have incomes of at least $50,000 per year.  Over 10 million uninsured are not US citizens.  Many young people self-insure (which makes sense for everyday problems but is risky for catastrophes).  As many as 14 million Americans--including 5 million of the estimated 8 million children without insurance--are eligible for insurance but have not enrolled.  Some 8 million "working poor" Americans are without insurance and need it, but can (and often do) get care at hospital emergency rooms (enormously inefficient, though).

Myth Four: High Drug Prices Drive Up Health Care Costs.  In 2007 drug costs were $2,600 per household.  They are key for managing chronic diseases, which make up 85 percent of total health care costs.  About 6 in 10 Americans have at least one chronic disease, and such problems account for 79 percent of physician visits and 82 percent of hospital admissions at Johns Hopkins.  Drugs, however, are far cheaper than surgery, and have replaced surgery in many chronic disease management protocols.  For every 5,000 to 10,000 compounds under development, 5 make it to clinical trials and one to market.  RD costs are covered by only two in ten drugs, with an average per drug of $1.3B.  The costs of unsuccessful drugs must be absorbed by the successful ones.  But 65 percent of drugs purchased in the US in 2007 were generic brands.

Myth Five: Importing Drugs Would Reduce Health Care Costs.  Drug importation from Canada is popular in the US.  But the US spends four times as much on drug R&D as the UK and 17 times as much as Canada.  Generics are often cheaper in the US.  Canada allows patent theft, so US drug companies make deals to sell drugs in Canada at lower prices, leaving American consumers to pick up R&D costs.  American firms account for 90 percent of new drugs worldwide, and thus venture capitalists invest 15 times as much in US firms as overseas.  The Congressional Budget Office estimates that allowing drug importation will reduce total HC costs only one percent, hardly worth the damage to drug R&D in the US.

Myth Six: Universal Coverage Can Be Achieved by Forcing Everyone to Buy Insurance.  A better way is to allow more closely tailored policies.  Young people might purchase a catastrophic-only policy, but pass on a one-size fits all policy, often required by state HC mandates.  Employer costs are raised by forcing companies above a threshold size to either provide health insurance and partly pick up the tab (the employee portion is tax-deductible), or else pay a specified percentage into state HC funds--so-called "pay or play" mandates.  Some 60 percent of Americans thus purchase insurance through their employer, and thus don't see their HC cost bill in full.  (The employer, of course, extracts his HC contribution by paying lower wages than otherwise would be offered; this is a hidden cost of the third-party payer system of HC.)  Two other HC mandates drive up HC costs: "guaranteed issue" - forces insurers to issue policies to all who ask; "community rating" - forces insurers to issue policies without regard to pre-existing conditions, on a on-discriminatory basis.

Myth Seven: Government Prevention Programs Reduce Health Care Costs.  Up to 75 percent of HC costs result from lifestyle choices, with 10 percent attributed to obesity alone.  But "obesity" is defined by government statisticians by Body Mass Index, under which many celebrities and athletes are deemed "obese"--think New England Patriots QB Tom Brady, Brad Pitt & California's Governator!  Worse, those who live healthy lifestyles wind up costing society the most, as they die of old age, and wither away while HC costs in the final phase of life skyrocket.

Myth Eight: We Need More Government to Insure Poor Americans.  Roughly 37M Americans, 12 percent of the total, live under the officially-defined poverty line (the 12 percent figure has changed little over the decades).  Why in 2003 did only 69.5 percent of primary physicians accept Medicare patients?  Well, how about because for a one-hour consultation, Medicare pays the princely sum of $20!  As for Medicaid (government-funded HC for the poor), the federal government pays an average (varies widely by state) of 57 percent of Medicaid expenses ($338B in 2007); yet Medicaid still consumes an average of 22 percent of state government budgets--more than education--and is estimated to consume 60 percent of Florida's 2015 state budget.  Medicaid passes off immense administrative costs, in the form of regulatory compliance, to the private sector (as the IRS does).  Medicare & Medicaid administrative costs are much higher.

Myth Nine: Health Information Technology is a Silver Bullet for Reducing Costs.  With 90 percent of doctors and over 2/3 of hospitals still keeping paper records, computerizing HC records--HIT, or Health Information technology--is a favorite cause of reformers.  A 2005 study by the RAND Corporation found potential savings of $77B annually if HIT is well implemented.  But that is only 3.3 percent of the $2.3TR Americans spend on HC every year.  and since when does government efficiently implement such programs?  Private doctors are ahead of the public sector in implementing HIT.

Myth Ten: Government-Run Health Care Systems in Other Countries are Better and Cheaper Than America's.  Much is made of how Americans spend more per capita and as a share of GDP than Europeans.  America also lags in certain HC areas, such as infant mortality.  Part of that is lifestyle issues--obesity, for instance.  Part of that is urban pathologies that lead to high rates of infant mortality, which reduces overall US life expectancy.  Yet Americans who do not die from car accidents or homicides outlive their European counterparts.  But socialist countries ration HC by queuing--standing in line.  Waiting lists are far longer.  In Canada the average wait time between seeing a primary care physician and a specialist is 18 weeks.  Doctor shortages are common.  In Nova Scotia officials use a lottery to ration access.  US doctors are better paid, and put far more advanced technology in their offices.  Even the US public sector is better: It funds roughly five times as much R&D as Europe does.  Finally, queuing never stops senior officials from jumping line--if need be, going outside their country to find specialized care, often in (naturally) America.

Health care maven Regina Hertzlinger sees market reforms as a better way to change HC.  American Enterprise Institute HC scholar Robert Helm cites three roadblocks to HC reform: employer-subsidized HC, Medicare & Medicaid.  The three 800-pound gorillas of HC will likely stymie constructive reform.

Index 2/26/09

2 posts: (1) Detachment, Winging It and the Presidency--The Home Front; (2) A-G Holder: America "A Nation of Cowards" on Race?--The Home Front.

Detachment, Winging It and the Presidency

Former Newt Gingrich aide Tony Blankley examines key Obama decisions (vetting nominees, Guantanamo policy, stimulus bill & commitment to bipartisanship) and finds a strangely detached President.  TB offers four possible explanations: big-picture style, tactics, lack of managerial skill or a personality trait.  Which it is for now is anyone's guess.  TB's article is well-written and merits a read.  Karl Rove asks if the Team 44 is "winging it" with its policy moves and personnel choices; his article is also worth reading.   One "winging it"example: subsidizing Green energy at far higher rates than traditional sources, a very expensive policy at a time when we can hardly afford the luxury.

WSJ pundit Bret Stephens sees Team Obama turning away from foreign policy crises much as happened to the allied powers between World War I & World War II.  Wednesday Iran ran a test at its Bushehr nuclear power plant; built with Russian aid, the plant is expected to go online by year-end.  Mideast ace Barry Rubin sees Team 44 ignoring adverse events in the Mideast that could shift power to the Islamists in 2009: adverse electoral outcomes likely in Iran, Turkey & Lebanon, while we offer to placate, conciliate, mediate. etc.  Whilst we once again play in the sandbox with the Palestinians--including Hamas, despite its starting the Gaza War and uncompromising rejection of Israel's right to exist--the Mideast is becoming progressively more combustible.  Ralph Peters sees Team 44 falling over Vladimir Putin  as Putin trades a supply route to Afghanistan for control over Georgia.

Nor was 44 helped by the disclosure this week that few members of his auto advisory team own American cars.  "Do as I say, not as I do!" has never been a popular refrain with voters.  Such things are not much standing alone, but if they form part of a larger pattern--not paying taxes, hiring lobbyists after playing Mr. Clean, etc.--avoidable damage can be done to the credibility of the President. 

Give David Brooks the last word.  He frames Obama's program perfectly as a test between liberal optimism about what government can do, and conservative skepticism about same; like me, he hopes 44 is right, because we live in dangerous times.  Bush 43 speechwriter William McGurn sees 44 having boundless self-confidence and adding to that equal confidence in policies he adopts.

I thought Obama sobered by reality during the transition; he seems now to me to have become intoxicated by his ascension to Presidential power.  Said the President on February 21:

“We cannot successfully address any of our problems without addressing all of them.”

Put simply, President 44 seems to have settled upon a nuclear brinkmanship approach to governance: Bet all your chips or we are doomed.  Brilliant insight or epic hubris?  I fear the latter, but stay tuned.

A-G Holder: America "A Nation of Cowards" on Race?

Attorney-General Eric Holder, an African-American, applies "cowards" to his country re matters of race, by refusing to discuss racial issues:

"Though this nation has proudly thought of itself as an ethnic melting pot, in things racial we have always been and continue to be, in too many ways, essentially a nation of cowards.  Though race-related issues continue to occupy a significant portion of our political discussion, and though there remain many unresolved racial issues in this nation, we, average Americans, simply do not talk enough with each other about race."

Holder added:

"Through its work and through its example this Department of Justice, as long as I am here, must - and will - lead the nation to the 'new birth of freedom' so long ago promised by our greatest president.. "This is our duty and our solemn obligation."

Holder dismissed his selection and President 44's election as "extremely significant but it is not an indication that all of the problems that we have confronted as a nation over the years are now resolved.":

"On Saturdays and Sundays, America in the year 2009 does not, in some ways, differ significantly from the country that existed some 50 years ago. This is truly sad. Given all that we as a nation went through during the civil rights struggle it is hard for me to accept that the result of those efforts was to create an America that is more prosperous, more positively race conscious and yet is voluntarily socially segregated."

Let's see.  Start with talking.  Has it ever occurred to Holder that one reason there is little racial dialogue is because whites know that if they say anything that trips the exquisitely amplified racial sensitivities of minorities that they will instantly be branded racist?  For that matter, many blacks consider all Republicans and conservatives racist, period.  Anyone who opposes affirmative action, in their view, is racist.  When Roland Burris was appointed by Blago to take President 44's Senate seat, didn't Congressman Bobby Rush (ex-Black Panther) label racist those opposing Burris's selection?

As for weekend racial separation, has Holder ever gone to a suburban shopping mall and seen scads of minority shoppers?  Or attended sports and entertainment events?  And what of decisions by blacks to separate themselves?  First Lady Michelle Obama wrote in a Princeton college paper that she thought a period of racial separation might have to precede ultimate integration, citing radical racialist Stokely Carmichael as an inspiration.  (To be fair, Michelle, now at 1600 Pennsylvania, may have  changed her mind, but her paper illustrates certain attitudes found within the black community.)

It ought be noted of President 44 that he got more votes than did John Kerry or Bill Clinton among whites.  This came to pass despite 44's poison pastor's racist diatribes.  That 44's middle name (Hussein) is a prominent Arabic name, and that 44 attended Islamic religious instruction in his youth did not dissuade such voters either.

Perhaps the next step in improving race relations and dialogue in America is to get an Attorney-General who understands the kind of country America is better than does Mr. Holder.

Index 2/25/09

3 posts: (1) State of Obama & of Union: Declining--The Home Front; (2) Pakistan: Nuclear Nightmare Coming?--Wobble Watch; (3) Afghanistan: Up the Ante or Fold?; Pakistan & Britain Fold--Wobble Watch.

State of Obama & of Union: Declining

Gallup released its latest Presidential approval poll results.  They show ominous results for President 44 on the eve of his State of the Union message.  President 44's approve - disapprove margin was 69 - 18 favorable after his inauguration.  Since Jan. 21, in but a month, a Feb. 21 - 23 poll shows his favorable margin down to 59 - 25.  Thus his margin of approval has fallen by 1/3, from 51 points to 34 points. 

Here is the State of the Union prepared text (I did not see the speech).  He stuck to his script of the first month, with no memorable lines I could find, and one can only hope it will work out.  Louisiana Governor Bobby Jindal used his Republican reply speech to stress independence from federal bureaucracy, relying on local people for solutions:

Today in Washington, some are promising that government will rescue us from the economic storms raging all around us.

Those of us who lived through Hurricane Katrina, we have our doubts.

Let me tell you a story.

During Katrina, I visited Sheriff Harry Lee, a Democrat and a good friend of mine. When I walked into his makeshift office I'd never seen him so angry. He was yelling into the phone: 'Well, I'm the Sheriff and if you don't like it you can come and arrest me!' I asked him: 'Sheriff, what's got you so mad?' He told me that he had put out a call for volunteers to come with their boats to rescue people who were trapped on their rooftops by the floodwaters. The boats were all lined up ready to go - when some bureaucrat showed up and told them they couldn't go out on the water unless they had proof of insurance and registration. I told him, 'Sheriff, that's ridiculous.' And before I knew it, he was yelling into the phone: 'Congressman Jindal is here, and he says you can come and arrest him too!' Harry just told the boaters to ignore the bureaucrats and start rescuing people.

Jindal's response was crisp and fresh, as befits a governor who protected his city from Hurricane Gustav's wrath last fall.  Read both texts and make your own call.

Pakistan: Nuclear Nightmare Coming?

A recent New York Times Magazine article spins out a nightmare scenario of Pakistan's nuclear arsenal falling into the wrong hands.  One estimate is that 70,000 people work in Pakistan's nuclear industry, of which 7,000 - 8,000 are scientists, of whom some 2,000 have "critical knowledge" about matters nuclear.  Pakistan may have as many as 100 nuclear warheads.  Feel better?

Afghanistan: Up the Ante or Fold?; Pakistan & Britain Fold

The Wall Street Journal editors say "stay the course" in Afghanistan.  But soldier-author Ralph Peters, no softie he, argues (sorry, I forgot to paste in the link and cannot find it) against putting another 30,000 troops into Afghanistan, and instead pulling out, being prepared to go in later if need be:

After taking apart al Qaeda's base network and punishing the Taliban, we should have left the smoking ruins. This should have been a classic punitive expedition: We're not obliged to rehabilitate foreign murderers.

As for those who exclaim that "We would have had to go back!" - well, so what? Had we needed to hammer Afghanistan again in 2007 or 2008, that still would've been cheaper in blood (ours and the Afghans') and treasure than trying to build a "rule of law" state where no real state ever existed.

He sees America trapped by mission creep:

Our botched deployment to Afghanistan as warriors who morphed into squatters defies military logic, history and common sense. The Brits learned - finally - that you deal with Afghan problems by occasionally hammering Afghans, then leaving them to sort out their own mess. You kill the guilty and leave.

Not us. We're going to build Disneyworld on the Kabul River.

Ominously, the New York Times reports on Taliban threats in the Swat Valley that intimidate expatriates living in New York City and repatriating money to relatives back home.  Extortion, even murder, are common.

Alas, 44 is committed by abundant campaign rhetoric to press on, and now is sending 17,000 additional troops.  With NATO allies mostly faking it the best we can hope for is to secure friendly provinces.  Sashaying about the mountains seems unrealistic, especially with Pakistan & Russia squeezing us on supply routes.

We face an atavistic enemy with increasing access to modern technology, and an apparent will to fight to the end, no matter how much destruction results.  Our humane values handcuff us.  The script called for the Taliban to collapse for good in 2001.  Unfortunately, the Taliban did not read the script.

Mark Steyn notes a dual surrender to militant Islamists by Pakistan and Britain: the Pakistani government cut a deal in Swat with the Taliban (which will facilitate more intimidation of refugees in the Big Apple), while the UK throttles free speech to avoid the threat of street violence from insular Islamic communities inside Britain (57 percent of Pakistanis in Britain marry cousins).  We and our allies had better read the handwriting on the wall before it is too late.

Index 2/24/09

3 posts: (1) Nuclear Posture: Safety & Deterrence--The Home Front; (2) Iran: Bombs Soon--Us v. Them; (3) North Korea: No to HillaryCare Diplomacy--Us v. Them.

Nuclear Posture: Safety & Deterrence

A former senior defense official explains why America will be trapped if Team 44 succeeds in getting the Senate to ratify the Comprehensive Test Ban Treaty that would absolutely prohibit testing of nuclear weapons.  As the material below shows, the US may well need to test as its existing arsenal degrades.  Technically, the CTBT legally binds us only after 44 designated nations--including Pakistan, North Korea & Iran--also sign it.  But in practice we will be bound to unilateral compliance, lest we undermine chances for securing ultimate ratification by all 44.  That our "signal" in signing it will be ignored by rogue nations is a given.  Read the full article for its crisp explanation of this latest foolish exercise in diplomatic and legalist idealism.  And pray that 34 senators will vote against ratification.

A Wall Street Journal editorial sees "Atomic Bombshells" affecting the state of America's nuclear deterrence, citing a report on laxity in safeguarding nuclear materials but also, perhaps more disturbingly, in addressing issues of nuclear deterrence.  The Washington Post reports that 69 computers are missing from the Los Alamos nuclear lab (part of America's nuclear program since the Manhattan Project) but that no classified material was lost.  Makes you feel better, doesn't it?  A December 2008 report on Defense Department nuclear weapons management (108 pages) is critical of DoD.  The panel of heavyweights was chaired by former Defense Secretary (and former Nuclear Regulatory Commission chief as well) James Schlesinger.  Much of it is abstruse organization jargon, but two parts merit comment for lay readers.

First, nuclear force modernization is set to replace B-52 bombers, F-15 & F-16 fighter-bombers and Ohio-class fleet ballistic missile submarines (which carry the Trident long-range missile).  Second, the second chapter discusses the history of nuclear deterrence strategy in 14 pages.  The document presents a solid tutorial in deterrence issues.  Notable especially is that during the Cold War, contrary to widespread public perception, nuclear doctrine did not call for automatic all-out use of nuclear weapons, even in response to an attack.  The option of launching selective, limited strikes was retained as a scenario by all administrations, in recognition that the threat of all-out mutual annihilation--so-called "Mutual Assured Destruction" (MAD)--might in many cases not be regarded by an adversary as credible, and thus ineffective as a deterrent.  MAD was public declaratory doctrine, because the finer points of nuclear theology could hardly be parsed in public without easily being distorted to scare voters.

Nuclear deterrent strategists of sound mind grasped that if the only options left decision-makers are apocalyptic--genocide, suicide or surrender--then the game is lost already.  Preserving non-apocalyptic options was--and remains--the centerpiece of serious nuclear and other WMD policy.

Iran: Bombs Soon

The UN acknowledges that Iran has produced enough low-enriched uranium (LEU) to make an atom bomb.  The LEU must be enriched from 3.5 percent purity to 93 percent purity for a bomb that will explode at maximum yield, but less purity will do for a naasty kiloton-range explosion that would cause widespread damage.  Wonderful.  The Jerusalem Post reports that Iran hid 209 kilograms of enriched uranium that UN inspectors now have found.  The former director of Israel's missile defense organization assesses Iran's latest successful satellite launch and shows why it is further evidence that Iran is mastering multiple ballistic missile technologies prohibited by the Missile Technology Control Regime (an international arms control consortium) rules.  Lovely.

North Korea: No to HillaryCare Diplomacy

Ace diplomat John Bolton warns our Secretary of State in an LA Times op-ed that naive diplomacy is letting North Korea off the hook, and repeating Bush 43's errors.  Phillip Zelikow, a former senior national security official who was a top staffer for the 9-11 Commission panel, argues that the US must be ready to strike North Korea if it tries to test an ICBM--the strike would be to destroy the missile and thus deny the North the knowledge it needs to gain in order to prepare a full missile strike capability.  Claudia Rosett suggests Hillary try linking human rights to diplomatic progress but this runs counter to the administration's super-soft public line.

Index 2/23/09

3 posts: (1) Intelligence & Security for 44--Us v. Them; (2) Venezuela: Chavez Wins Crooked Deal--Us v. Them; (3) Saudi Arabia: Stirrings of Reform--Wobble Watch.

Intelligence & Security for 44

In what can be a useful tutorial for President 44, NRO's Peter Robinson interviewed former CIA Director R. James Woolsey recently.  Its five parts are well worth a viewing: Part I (6:28) covers the Iraq intelligence failure; Part II (6:50); covers Obama's picking Leon Panetta as his CIA Director Part III (8:23) covers the war against Islamist terrorists and their state sponsors; Part IV (6:39) covers energy; Part V (8:37) sums up Woolsey's stellar national security career.

Woolsey's main point re Iraq was that focusing on stockpiles set up Bush 43 for a fall.  The entire known anthrax stockpile of Saddam's could have been put in powdered form into four suitcases, tossed in the back of a car and driven into Syria.  Biological weapons can be produced by the equivalent of a restaurant & a micro-brewery; chemical weapons can be produced at any chemical factory producing civilian products.

Re Panetta, Woolsey cited the excellent tenure of investment banker John McCone in the 1960s, and his instrumental role re the Cuban Missile Crisis, in getting the CIA bureaucracy to move on it, as evidence that an able outsider can run the CIA.  RE overall intelligence and fighting terrorists, Woolsey counsels that the West must take seriously the fanaticism of its adversaries, and study closely--in effect, the old proverb, "Know thine enemy better than you know thyself."

Re oil, Woolsey focuses on the money we send to petro-states whose national interests are opposed to ours.  He says we should destroy oil as a "strategic commodity" as was done a century ago to salt, when electric power enabled freezing meats rather than preserving them with salt; salt exporters were reduced rapidly to strategic irrelevance.  Oil cannot corrupt democracies like Norway, but empowers thugs like Vladimir Putin & Hugo Chavez, and Islamists like the Saudis & Iranian mullahs.  The 22-nation Arab world contains the population of the US + Canada, yet exclusive of oil exports only as much as Finland, a country of 5 million.  Re climate change, Woolsey stresses carbon emissions reduction as a prudent step.

So what does 44 do?  Charles Krauthammer sees "kick me" diplomacy in the first month of Team  4--Russia, Iran and Pakistan, for starters.  Not good news.  44 should invite Woolsey to the Oval Office and take a tutorial.  One area where 44 seems to have taken due note is the growing cyberwar threat to America and its allies posed by hackers, private and those working for hostile governments.  Russia & China are the prime miscreants.  Team 44 has designated America's cyber-networks a "strategic asset."

Venezuela: Chavez Wins Crooked Deal

Hudson Institute scholar Jaime Darenblum shows how Hugo Chavez stacked the card for Sunday's term-limits vote by manipulating media, breaking up student protests, etc.  Ugly, but low oil prices may yet bring him down.  John Thomson astutely assesses Chavez's win and adds detail on how Chavez cheated his way to victory.  Naturally, our State Department was idiot enough to offer congratulations to Hurricane Hugo.

Saudi Arabia: Sitrrings of Reform

Islam scholar Stephen Schwartz offers signs of Saudi reform pushing back at religious extremism.  Karen Elliott House adds detail in her WSJ piece.  Good news.

Index 2/20/09

6 posts: (1) 44's Mortgage Plan: Making Vice a Virtue?--The Home Front; (2) Global Economy: Time to Head for Mars?--"It's the Earth Stupid!"; (3) Treasury's Plan: Perspectives--The Home Front; (4) Burris Calculus: Stimulus Song of Roland--The Home Front; (5) Tales from the Stimulus Crypt--The Home Front; (6) California Crashing--"It's the Earth Stupid!"

44's Mortgage Plan: Making Virtue a Vice?

Economist Alan Reynolds assess President Obama's mortgage plan and finds a mixed bag:

In sum, allowing conforming loans to be refinanced without a big equity position seems promising. Trying to bribe lenders to trim monthly mortgage bills to 31% of income would help those lucky enough to get in on the deal before the money runs out. But all of this potential good could be undone by the systemic risks to mortgage-backed securities caused by the unpredictable legal risks of a judicial cramdown.

In his excellent article, Reynolds focuses on incentives that may encourage borrowers to act irresponsibly in search of government subsidy from other taxpayers, and might undermine lender incentives to lend further by preventing foreclosure or judges in bankruptcy voiding loan agreements.  At minimum, there is moral hazard--providing incentives for more bad behavior in the future--relieving borrowers of mortgage responsibility.  Those who scrimped and saved to meet burdensome mortgage obligations will justly resent their being forced to finance relief for those who behaved less responsibly.  A WSJ "Dukes of Moral Hazard" editorial explains why 44's plan will fall into just this trap.  Pundit David Brooks writes that "money for idiots" was Bush 43's and now is 44's policy, but argues that this is a regrettable necessity.  Larry Kudlow sees the 92 percent subsidizing the 8 percent loser mortgages as rewarding bad behavior.

WSJ pundit Dan Henninger sees a "Paradox of Virtue" turning values upside down in 44's programs, which discourage saving and encourage spending:

"Still, it looks to me as if there is a Paradox of Virtue in the middle of the Obama stimulus.

George Bush tried stimulus last year by mailing out checks up to about $1,200, and human nature "defeated" that stimulus by saving too much of the check. The U.S. savings rate rose in 2008 to nearly 4%. That was bad. The smarter Obama team wants the savings rate this year and next to return toward zero. They want their billions spent, not saved.

Thus, frugality and prudence are suppressed and the compulsion to spend that got us into this mess is promoted as a necessity. This year and next, Thorstein Veblen's conspicuous consumption will be a virtue, and Max Weber's Protestant ethic may be regarded a vice. The world is upside down.

The Obama hair-of-the-dog strategy, however, may be running into a values-altering headwind. The people have been watching, and what they've seen are the wretched excesses of the subprime lending fiasco, the humiliation of Wall Street's clueless plutocrats, and the self-destructive ambition of Bernie Madoff's investors. This may force a change."

The Economist, in a solid article, notes the balancing dilemma confronting 44:

Previous, less ambitious, efforts have flopped. George Bush’s first plan aimed to help up to 240,000 delinquent subprime borrowers refinance their debts into government-backed fixed-rate mortgages. Only 4,000 did so. A Democrat-inspired $300 billion plan to guarantee up to 400,000 mortgages attracted just 517 applications, as lenders balked at the requirement that they first write down the principal. Private-sector programmes have achieved higher numbers, but their success is mixed. Of 73,000 loans modified in the first quarter of last year, 43% were again delinquent eight months later (see chart).

Mr Obama’s chances of being any more successful depend on whether his team has correctly diagnosed what is driving the wave of foreclosures. Is it that homeowners cannot afford to pay; or is it that they are declining to do so, because their homes are now worth less than their mortgages, the phenomenon known as negative equity?

Both factors play a part, but economists are divided on their relative importance. One school thinks that, even in cases of negative equity, most homeowners will not default if they can afford the payments—not least because defaulting will wreck their credit records. A second school believes that once the home is worth less than the mortgage, homeowners have a significant incentive to walk away even if they can make the payment, since in many states lenders cannot then pursue them for the shortfall.

Mortgage relief should be limited to those who are still making payments plus those who were making payments until being laid off from their jobs.  Expect these limits to be breached by a wide margin.  The initial $75B price tag will come cheap if that is all this costs.

Global Economy: Time to Head for Mars?

The Daily Telegraph says that European banks are sitting on $24 trillion of toxic assets.  Eastern Europe is unraveling too.  The Guardian reports that Celtic Tiger Ireland faces default on its national debt.  Japan's worst recession in 50--yes, 50--years makes the world's second most powerful economic engine unlikely to do much to push global recovery; industrial production looks to be was down 30 percent--yes, 30 percent--in 2009; also for 2009 Japan projects a 12 percent--yes, 12 percent--decline in GDP.  Even the United Nations wants a bailout from American taxpayers!  Of a piece is some political (mad) scientist who wants the entire world to vote in US elections (and you think counting votes in Minnesota is hard?)

The UN?  Time to head for Mars at light-speed.

Treasury's Plan: Perspectives

Last fall the Minneapolis Federal Reserve Bank issued "Facts and Myths about the Financial Crisis of 2008" (41 pages), an analysis of the meltdown.  Ace economist Alan Reynolds flagged the report in a recent NY Post op-ed and explained its implications.  A WSJ editorial notes that Members of Congress seem unaware that bank loans are but 20 percent of total lending and that such loans increased in the fourth quarter.  A New York Times front-pager reports estimates on bank under-capitalization and finds a range from $500B to over $1TR.  Economist Brian Wesbury reviews & updates mark-to-market accounting rules and sees some signs that lawmakers may suspend their operation in certain circumstances.  BW notes that in 1938, after the ghastly year of 1937 tested Great Depression lows, FDR suspended M-T-M rules.

Yet finance maven Nouriel Roubini, who predicted much of what has transpired, calls for bank nationalization as a paradoxical way to save capitalism.  The Financial Times reports that Alan Greenspan agrees that temporary nationalization may be required to rescue the banks.  Bush 43 economic adviser Lawrence Lindsey finds the Geeithner Plan wanting and President 44's process making matters worse.

"EMac," Forbes business pundit Elizabeth MacDonald, details serial and parallel idiocies in what she calls Wall Street's "Subprime Bond Factory" (I would have preferred "Financial Fudge Factory") and makes a case for a passel of hangings at Trinity Church (near the NY Stock Exchange).  Banking maven Bert Ely cautions against forcing banks to make bad loans to borrowers who are not creditworthy.  Three economists say "Grin and bear it" and expect choices between bad and worse.  Economist Paul Romer says create "bad banks" to absorb toxic assets.  Goldman Sachs former partner and finance professor Roy Smith says "Greed is Good." not in the Gordon Gekko sense (Oliver Stone's 1986 "Wall Street"), but in the sense of letting Wall Street types practice their trade and get performance-based bonuses.  Monetary maven Judy Shelton proposes a "sound money foundation" to support capitalism's rebuilding.  Stanford professor Ronald McKinnon notes China's role in possible American recovery.  The Economist profiles economist Irving Fisher (1861 - 1947), a contemporary of Keynes best known for his 1929 statement that stocks had reached a permanently high plateau.  But Fisher was second only to Keynes in his analysis of debt and deflation, so his ideas, too, are worth reviewing today.

Financial Times pundit Martin Wolf predicts failure for Team Obama's latest financial plan.  Pundit David Brooks sees psychology as key in resolving the financial crisis, as Americans adjust to the unwinding of a four-fold jump in mortgage debt--from $2.5TR to $10.7TR--between 1990 and 2007.  If Team 44's stimulus and monetary/credit policies fail, confidence may totally collapse, with dire consequences for the country--and for politicians in power.  A financial maven traces 15 years of bad US monetary policy that fueled the global bubble (also energized by Asia's growing economies), and suggests a pure market remedy.  His diagnosis is good, but I think his remedy wishful thinking.  Worth a read, though.

The WSJ editors spotlight recent House financial crisis hearings that featured idiotic ideas from our elected Solons, who do not grasp that banks account for about 20 percent of all lending, and that punishing lenders to bail out improvident borrowers will not set things right, but only set the stage for worse later.  The New York Times reports on a new trillion-dollar guaranty program for investment banks and hedge funds, to encourage market lending.

Burris Calculus: Stimulus Song of Roland

James Taranto of Best of the Web yesterday explained the Democratic calculus that may be applied to whether to unseat Roland Burris, after revelations that his testimony prior to being seated in the Senate was not truthful.  Put simply, for reasons Taranto details, with Burris in and 99 senators seated (Minnesota vacant), Democrats need 60 votes to cut off debate by invoking "cloture."  With Burris out, seated senators drop to 98, and cloture requires only 59 votes.  Thus Burris is simply not needed for cloture votes, let alone to pass legislation.  One exception: His vote was needed for the stimulus bill, due to the absence of Teddy Kennedy, as Taranto explains the nuances of cloture.  Fascinating inside baseball, but highly consequential indeed, enabling nearly a trillion dollars to be pushed out the door.

Tales from the Stimulus Crypt

George Will aptly uses "Bailout Baloney" to describe some of the incredibly silly and plain dumb things said by our legislative Solons re bailouts and stimulus, plus one absurd CEO's comments.  Read, then laugh, then weep.  Oh, BTW, it seems, according to a Silicon Valley Insider report yesterday, that one of the beneficiaries of the stimulus bill will be....Microsoft billionaire Paul Allen.

California Crashing

Policy maven William Tucker sees California crashing anew by repeating the mistakes it made a decade ago, with electric utility regulation.  This time an orgy of excess with "renewable" energy--geothermal, wind & solar (think: Earth, wind & fire)--will drive another economic stake into the heart of the Golden State, which the WSJ editors note faces as $42B deficit hole in its budget--despite a rise from $104B in 2003 to $145B in 2998.  The GS has 9.3 percent unemployment (4th highest in the US), the second highest foreclosure rate and a lower credit rating than Louisiana.

Index 2/19/09

5 posts: (1) America's Israeli Election--Wobble Watch; (2) Economy Rhetoric: Confident 44 Should Cool It--The Home Front; (3) Enviro-Rhetoric: Climate Change Hawks Should Cool It--"It's the Earth Stupid!"; (4) Israel: Education of a President--Wobble Watch; (5) Drumming Great Passes On--Class & Crass.

America's Israeli Election

Yesterday Townhall.com published my  "America's Israeli Election" article, explaining the insanity of Israel's election system, and how it would have worked if America's 2008 Presidential election had been run the same way.   Our system, for all its many defects, is surely better.

Economy Rhetoric: Confident 44 Should Cool It

Economics professor Bradley Schiller documents how much worse the Great Depression was than today's economic misery and calls on President 44 to cool it.  We have numbers now much closer to 1982--perhaps 1973--than 1933.  Author Anne Applebaum notes world trade figures for the Great Depression and notes that world trade declined 66 percent between 1929 & 1934.  Nonpareil business historian John Steele Gordon places America's national debt figure in perspective.

Essayist Joseph Epstein sees reality making a rendezvous with Team 44 in short order:

Promises, promises, as the Burt Bachrach song had it; unkept, they come back to bite a man. Obama's promise of a new bipartisanship hit heavy water as soon as his stimulus-package debate was set adrift. For one thing, only the idea for a stimulus package—but not the package itself—ever felt as if it were really his. From the outset it was instead the work of that fun couple, maestros Nancy Pelosi and Harry Reid, the Frick and Frack of heavy federal spending. And those two are as interested in bipartisan participation as Lord Byron was in marriage counseling. When the going on the package got rough, Obama said, in effect: "Well, I won the damned election, so we'll do things my way, though of course I still invite bipartisan participation."

Epstein sums up Team 44's failings and the impact upon the public:

Victims of the general ineptitude that the Obama administration has so quickly shown are transparency in government and the new (we hardly knew ye) bipartisanship. The stimulus package itself is felt to be suspect.

Which brings us back to disappointment and politics. It is in the nature of politicians to make promises; it is what they do. Some do so without the least intention of delivering on their promises. Some fully intend to deliver, but find the world obdurate, unwilling to go along with their fine intentions. Barack Obama now finds himself among the latter. With loony jihadists threatening from without, a crumbling economy terrorizing its citizens from within, Obama knew he needed straightaway to demonstrate utmost competence to stem fear and instill confidence. The reason for his wanting to assemble an able cabinet more quickly than any other administration in recent history was to show that, though the nation had major problems, they were under study and would soon be attacked by the most capable minds of our time. He needed to calm the country down, and show, in a measured but forceful way, that a strong hand was at the wheel.

Things could get a lot worse, however, and talking things down to avoid future political blame could cause more economic misery than we need suffer.  Last fall, amidst a global financial panic, talking disaster was essential to spur immediate action.  Now, with no global panic, merely global gloom, rushing a stimulus bill through by stampeding public opinion was a bad idea.

Robert Samuelson examines Japan's "Lost Decade" and finds that after the housing & stock market bubbles collapsed, Japan experienced not depression, but sub-par growth, with only two years in recession.  Japan failed to generate new sources of growth to re-ignite its economic engine.  America's task is to find new sources of growth to replace its failed model.  More lessons from Japan are found in a New York Times piece filed from Tokyo.  A prominent liberal, Richard Florida, sees the 2008 Crash re-shaping America in a way that favors major urban centers within key regional areas, to the disadvantage of suburbs and rural areas.

Much of this is conjecture.  What is clear is that the world economy is undergoing a massive asset re-pricing and de-leveraging.  Until this process plays out, a big-time recovery is simply not in the cards.  But 44 must try to avoid making things worse.  Yes, he must speak candidly.  But warning of catastrophe if his bills are not passed is appealing to the fears he derided during the campaign.  Frank talk need not be fearful talk.  Firm resolve in the face of adverse circumstances is more like what we need to hear from 44.

Enviro-Rhetoric: Climate Hawks Should Cool It

George Will collects alarmist Ice Age preidictions from the 1970s and suggests that Climate Hawks cool their Global Warming Upon Us talk.  Enjoy another fine Will column.

Israel: Education of a President

The Jerusalem Post reports that Israeli President Shimon Peres (who championed the Oslo peace process that ended in disaster) now says it was a mistake for Israel to have pulled out from Gaza, and that he has learned from what followed.  (In full disclosure, LFTC supported the pullout, because while recognizing that the Palestinians would likely be emboldened to pursue terror on seeing Israel unilaterally retreat, Gaza imposed a vast financial & logistical burden on Israel.)  Gaza's aftermath has undermined Hamas in its efforts to get diplomatic support.  So the exercise was not a complete loss.

Drumming Great Passes On

The LA Times eulogizes drummer Louie Bellson by quoting Duke Ellington, from who Bellson worked (as well as with Count Basie, Tommy Dorsey, Harry James, Benny Goodman and others) as the best drummer of all.  Fans of Buddy Rich & Max Roach and other top drummers might argue, but there is no arguing Bellson's greatness.  Those who, like myself, saw him on Johnny Carson were treated to superlative jazz percussion.  Legendary jazz pianist Oscar Peterson called Bellson "the epitome of musical talent. . . . I consider him one of the musical giants of our age."  Another link to Jazz's Golden age has left us.

Index 2/18/09

4 posts: (1) Israel & the Palestinians: Bibi Was Right; Carter, Bush 41, Clinton, Bush 43 Wrong--Wobble Watch; (2) England to Militant Islam: Sad Surrender--Wobble Watch; (3) Iraq: Winning Election--Us v. Them; (4) Anti-Terror Policy: Will Barack 44 Become Bush 44?--9/11, 3/11 & N/11.

Israel & Palestinians: Bibi Was Right; Carter, Bush 41, Clinton, Bush 43 Wrong

NROs Mario Loyola details how for the past 15 years since the 1993 Oslo Accords Bibi Netanyahu waas vindicated in his belief that the Palestinians were not serious partners for peace.  Several American presidents doubted him, and were proven wrong.  President 44--and Mideast envoy George Mitchell--should take note, and adjust their Mideast "peace process" sights accordingly.  This Hamas rabbit kid-video ():25) shows Palestinian reality, such as it is, that American peace processors cannot fathom.

Meanwhile, historian Arthur Herman tells the true story behind the 1978 Camp David peace accords between Israel and Egypt, for which Jimmy Carter got the public credit that was in fact due to Egyptian President Anwar Sadat (who paid for this with his like, in 1981).

Reagan & Bush 43 top official Elliott Abrams reveals much about Bush 43 policy and about the Mideast in a wide-ranging Jerusalem Post interview.  UN maven Anne Bayevsky sees Team Obama's decision to participate in preparatory meetings for the April "Durban II" conference against Israel's request, as evidence that 44 will cave on Israel issues.  The Durban I hate-fest, just before 9/11, produced so much neo-Nazi sewage that our State Department walked.  Durban II is singling Israel out for human rights condemnation, and thus promises to be a repeat exercise of the 2001 anti-Semitic cesspool orgy.

Writing in The Australian, Gregg Sheridan offers a portrait of Bibi and finds a maturing politician, whose skepticism of the Palestinians is justified, but who now realizes that Jordan & Egypt will never regain control over them.  Contrasting Bibi with Tzipi Livni, GS writes:

Although he has never espoused a Palestinian state, as Livni does, he has made it clear that he is willing to accept one if it means an end to Palestinian terrorism against Israel and an end of Palestinian territorial claims. His position, therefore, is not the polar opposite of Livni's. Rather, she emphasises the positive goal in an attempt to encourage Palestinian opinion; Netanyahu emphasises Israel's willingness to put up with a hard, difficult security situation indefinitely rather than make concessions that do not end terrorism.

The difference is almost this simple: Livni says stop terrorism and you get a state, Netanyahu says stop terrorism or you don't get a state.

Similarly, Netanyahu's position on Jewish settlements in the West Bank is really not so controversial. He says settlements can expand within their existing boundaries but not take any new Palestinian land. It is a common position among all Israeli politicians that some Jewish settlements -- the close Jewish suburbs of Jerusalem, for example -- will be retained by Israel in any final settlement (in exchange for other land given up from Israel proper). Therefore if these settlements expand, upwards as it were, more people within the same area, it doesn't affect peace prospects. The government of which Livni was a minister allowed this.

If he becomes PM, Bibi will have to help President 44 mature on the job, having done so himself when in 1996 he became Israel's youngest-ever Prime Minster.  Perhaps his own education on the job will enable Bibi to educate 44.  He can start with how Hamas inflated civilian casualty figures in the Gaza War by doubling the share from 1/3 to 2/3 of collateral casualties.  (As for Mitchell, he probably cannot be educated, but if 44 changes position, Mitchell will have to follow suit or depart.)

The Jerusalem Post reports Market Watch voter survey results since the election showing 65 percent wanting a unity government with Kadima (Livni) and Likud (Bibi), with 39 percent wanting Livni PM, 47 percent Bibi; 55 percent wish Labor leader Ehud Barak (a former PM) to continue as Defense Minister (Barak is Israel's most decorated soldier).  A full 90 percent would stick to their vote if a new election is held, and most of the 10 percent are left of Kadima; 59 percent want a direct voting system that allows separate votes for PM and for party list, with Livni likely the main beneficiary, and 66 percent believe that Israel's 18th Knesset will fail to complete its full four-year term.  Thus Livni is the most personally popular Israeli leader, but the right is more trusted on security, the top issue in the campaign.  More precise numbers between left and right are these figures: the two top rightist parties + religious parties won 50.9 percent of the popular vote & 65 Knesset seats; the four top leftist parties won 39.6 percent & 48 seats.

A Jerusalem Post editorial argues that the rise of rightist leader Avigdor Lieberman helps Israel because it signals the West that Israelis no longer support the endless peace processing approach to dealing with the Palestinians.  Another report re Israel's Iran policy says that the Mossad is targeting key operatives and equipment re Iran's nuclear program, seeking to delay it.  Columnist Caroline Glick tallies progress in missile technology provided Israel's terror group adversaries and sees longer ranges, greater accuracy thus vulnerability for Israel; yet Israel's defense bureaucracy is scaling down missile defennse on cost grounds!

Stay tuned.

Iraq: Winning Election

Charles Krauthammer appraises the Iraq elections and notes that parties with "Islam" and "Arab" lost to parties with "Iraq" and of secular stripe.  We are indeed, finally, winning.  Bad things can happen, but we have actually begun to successfully build, from virtual scratch and less than a decade, a new nation, risen like an Iraqi Phoenix out of the ash-heap of nearly thirty years of  Stalinist tyranny.  Now, if we can figure out how to stage an honest senatorial election in Minnesota....

England to Militant Islam: Sad Surrender

Legal ace Andy McCarthy notes the cowardly refusal of the Brown government to allow Dutch Member of Parliament Geert Wilders to visit Britain due to his having sponsored an anti-Islam film ("Fitta"--means "strife").  At the same time, militant Islamists are welcome in the House of Commons gallery, and Gitmo detainees repatriated to the UK have been released, with this incredible statement, as recounted by McCarthy:

Of course, extremism, hatred, and violent messages have found a comfortable home in the birthplace of Western civil rights, where “community harmony” means that jihadists talk and you listen. In 2005, Lord Ahmed hosted a book launch for Joran Jermas, one of Sweden’s most rabid anti-Semites, who predictably ranted about the “Jewish supremacy drive,” the Jews as the “one reason for wars, terror and trouble” in the Middle East, and Zionist “control” of Western mass media. The following year, his guest at Westminster, a building that happens to be one of al-Qaeda’s most coveted targets, was Mahmoud Suliman Ahmed Abu Rideh, who attended a session of the House of Commons. Before his release in 2005, Abu Rideh, a Palestinian, had been detained under Britain’s Terrorism Act of 2001 (an enactment later voided by the law lords as a violation of human rights) due to al-Qaeda connections and threats to carry out a bombing plot. Not to worry: Abu Rideh explained that he didn’t leave his family to go to Afghanistan for jihad, but to set up a charitable school for children. Next case.

Suspected al-Qaeda members are welcome in Parliament, but not a member of the Dutch parliament. Britain has a revolving door for Islamic radicals but a closed door for their democratic critics. In 2004, British authorities insisted that the Bush administration return to the U.K. all Britons who, having been captured fighting with the enemy in Afghanistan and elsewhere, were held at Guantanamo Bay. After President Bush acceded, the former detainees were promptly released.

Not content with that, the Brits proceeded to demand that non-British detainees be shipped to England from Gitmo if they had any basis to claim legal U.K. residence. Despite the Pentagon’s protestations that these detainees were extremely dangerous, the Bush administration again relented. As night follows day, in late 2007, British authorities set the suspected terrorists free. And when this move aroused grave public concern, Lord Peter Henry Goldsmith, a former attorney general, gave voice to the Labour government’s dismissive party line: It did not matter whether the men were dangerous, because at stake was a “principle . . . which is more important.” “The principle,” Lord Goldsmith piously proclaimed, “is fundamental civil liberties.”

Indeed. Fundamental civil liberties for those committed to destroying the ever-diminishing British way of life. Cassandra has been shown the door.

Now, check out this untimed video of a January 2009 pro-Hamas rally in London (about 5 minutes) and see the stench of surrender in the air.  (America is not without its culture war problems: an NY State Muslim--founder of a Muslim TV network, no less--was charged with beheading his wife in Buffalo, shortly after she had filed for divorce, prompting the local D.A. to say, in a masterpiece of understatement, "Obviously, this is the worst form of domestic violence possible."  Meanwhile, President 44 has sent packing a bust of Sir Winston Churchill lent to Bush 43 for the Oval office as a sign of support after 9/11; seems Winnie was PM when Brits suppressed Mau-Mau uprising, and one rebel allegedly tortured was 44's grandfather--you can't make this stuff up, eh?)

John O'Sullivan, former senior adviser to Lady Thatcher and ever astute, sees more than political calculation in Brown's move:

The government, however, surely considered instead the different likely responses of British Muslims and other Brits.

When the average Londoner reads in The Sun about how Abu Hamza turned the Finsbury Park mosque into a terrorist recruiting office, he doesn't join a mob outside the mosque threatening to burn it down. He mutters that the world is going to the dogs and turns the page.

But mobs of extremist Muslims have marched through London in recent years inciting murder. And Labor peer Lord Ahmed's alleged threat of disorder in this case - to lead 10,000 Muslims to prevent Wilders from showing his film in Parliament - was very plausible. So Wilders was kept out.

O'Sullivan notes that the "hapless" (an apt term indeed) British foreign secretary has not even troubled to see the 15-minute film whose release is at the center of militant Muslim rage.  O'Sullivan sees the roots of that rage in Britain--failure to defend the civilization whose values are now under barbarian siege:

The Muslim extremists who ended up planting bombs in the London subway or fighting British troops in Afghanistan began life as ordinary British kids who drank beer, played cricket and soccer and chased girls in short skirts.

But modern Britain gave them a vacuum in those parts of the soul where national identity, patriotism and allegiance take root and usually flourish.

Nature especially abhors this particular vacuum - and in places like the Finsbury Park mosque Islamo-fascism filled it.

Will the last free English citizen, as he (or she) departs, please turn out the lights?

Anti-Terror Policy: Will Barack Become Bush 44?

The Wall Street Journal editors note recent stances taken by President 44 and see more continuity than change we can believe in" as to anti-terror policy.  They note this astonishing exchange in a federal court case on "extraordinary rendition" that began under Bush 43:

In this closely watched case, the American Civil Liberties Union sued the flight-logistics outfit Jeppesen DataPlan in 2007 on behalf of Binyam Mohamed and four other Guantanamo detainees. The argument was that the Boeing subsidiary was complicit in arranging flights for rendition, a policy that transfers certain terror prisoners seized abroad to other countries for interrogation. Mohamed and his compatriots claim they are the victims of torture overseas.

The Bush Administration argued the case should be dismissed because open proceedings could damage national security by disclosing state secrets. A lower court agreed. Most everyone expected the Obama Justice Department to dump the secrecy line when the case came up for review before the left-leaning Ninth Circuit Court of Appeals on Monday, apparently including the Ninth Circuit.

Judge Mary Schroeder asked leadingly, "Is there anything that might have happened" to cause Justice to shift its views? "No, your honor," the Justice attorney, Douglas Letter, replied. A startled Judge Schroeder tried again. "The change in Administration has no bearing?" Mr. Letter reiterated that his positions had been "authorized" and "thoroughly vetted with the appropriate officials within the new Administration."

Ignore the unseemly, palpable eagerness of a liberal judge to see policy change, and praise President 44 for, in some respects, acting like Bush 44.  A Washington Post front-pager surveys pending Gitmo terror cases and notes numerous practical real-world problems 44 faces.  In a nutshell, the minefield of our legal system makes it hard to convict, and perhaps will make it impossible to hold, some very dangerous people who if released will return to the fight.  Such are the wages of manic legalism in a war against terrorists who use our system's rights as a weapon against us.

Index 2/17/09

4 posts: (1) Our President's Presidents' Weekend Stimulus Powder--The Home Front; (2) Harry's MagLev Magic Ride: Fantasyland to "The Mirage"--The Home Front; (3) Fannie & Freddie: What Barney & Co. Did--The Home Front; (4) America 2009: Tale of Two "Sullys"--The Home Front.

Our President's Presidents' Weekend Stimulus Powder

The New York Post reports that the First Couple skipped town as Congress rushed passage Friday of the massive stimulus bill--titled "The American Recovery and Reinvestment Act."  The bill that the Solar System awaited with baited breath, lest the Cosmic Order be disturbed forever, could have been passed Sunday after the promised 48 hours and signed Tuesday.  But then Speaker Nancy would have missed her Rome junket, and the Republicans would have had time to read the bill and find all the last-second goodies dropped in during the final conference.  "Change we can believe in?  Try "Plus ca change...."

Harry's MagLev Magic Ride: Fantasyland to "The Mirage"

The $8B magnetic levitation rail line Harry Reid got out of last week's stimulus mess will run from Disneyland to Las Vegas.  No word yet on where the station stops will be.  How about starting in Fantasyland and ending at "The Mirage" Las Vegas (no kidding--it's a four-star hotel)?

Fannie & Freddie: What Barney & Co. Did

AEI financial regulation maven Peter Wallison reviews the sad subprime story and shows how government played a central role in creating the financial crisis.  Well worth a read.

America 2009: Tale of Two "Sullys"

Peggy Noonan appends to her acccount of the signs of depressed economic activity in New York City her disturbing juxtaposition of two recent people stories that suggest America is more on the wrong track then the right one: that of hero-pilot Chesley Sullenberger and octuplet welfare mom (with six kids already) Nadya Suleman:

And there's something else, not only in Manhattan but throughout the country. A major reason people are blue about the future is not the stores, not the Treasury secretary, not everyone digging in. It is those things, but it's more than that, and deeper.

It's Sully and Suleman, the pilot and "Octomom," the two great stories that are twinned with the era. Sully, the airline captain who saved 155 lives by landing that plane just right—level wings, nose up, tail down, plant that baby, get everyone out, get them counted, and then, at night, wonder what you could have done better. You know the reaction of the people of our country to Chesley B. Sullenberger III: They shake their heads, and tears come to their eyes. He is cool, modest, competent, tough in the good way. He's the only one who doesn't applaud Sully. He was just doing his job.

This is why people are so moved: We're still making Sullys. We're still making those mythic Americans, those steely-eyed rocket men. Like Alan Shepard in the Mercury rocket: "Come on and light this candle."

But Sully, 58, Air Force Academy '73, was shaped and formed by the old America, and educated in an ethos in which a certain style of manhood—of personhood—was held high.

What we fear we're making more of these days is Nadya Suleman. The dizzy, selfish, self-dramatizing 33-year-old mother who had six small children and then a week ago eight more because, well, she always wanted a big family. "Suley" doubletalks with the best of them, she doubletalks with profound ease. She is like Blago without the charm. She had needs and took proactive steps to meet them, and those who don't approve are limited, which must be sad for them. She leaves anchorwomen slack-jawed: How do you rough up a woman who's still lactating? She seems aware of their predicament.

Any great nation would worry at closed-up shops and a professional governing class that doesn't have a clue what to do. But a great nation that fears, deep down, that it may be becoming more Suley than Sully—that nation will enter a true depression.

Index 2/16/09

3 posts: (1) Stimulus Shadow: Nancy Reid Bismarck's Sneaky Legislative Sausage--The Home Front; (2) Stimulus Godzilla: Welfare Redux & Health Care Big Brother in 1,073 Pages--The Home Front; (3) Forgotten Man, Reclaimed President--Classics.

Stimulus Shadow: Nancy Reid Bismarck's Sneaky Legislative Sausage

"Laws are like sausages, it is better not to see them being made."  -- Otto von Bismarck, German Chancellor, 1871 - 1890

Other Bismarck quotations shed additional light.  Here's one:

"Politics ruins the character."

BEGIN--YES, IN CAPS--WITH THIS: YOU CAN "TAKE IT TO THE (BAD) BANK" THAT NO ONE VOTING ON THE $787.2B STIMULUS PACKAGE WILL HAVE HAD TIME TO READ COVER TO COVER THE 1,073-PAGE MONSTROSITY--as House Minority Leader John Boehner bluntly said (0:36) on Friday--MUCH OF IT WRITTEN IN CRYPTIC AMENDMENT LANGUAGE KEYED TO SPECIFIC SECTIONS OF THE UNITED STATES CODE--see examples below.

In stark contrast ,the original 100-plus page September TARP bill (before the Senate added hundreds of pages of extras) was readable and understandable.  Further, TARP was enacted in the midst of a full-blown global financial panic, when instant action was needed.  Still, Congress took four days to pass TARP.  There is no panic now, and the world was not waiting breathless for instant passage of a stimulus bill.  A week's delay, to allow fair consideration, would still have enabled passage before President Obama gives his Feb. 24 State of the Union speech.

The WSJ editors noted that last Tuesday Democrats promised 48 hours between bill and roll call and then reneged all of 72 hours later!  As the Los Angeles Times notes in a front-pager the result was to make hash of 44's commitment to "open government."  Here is President Obama's statement upon passage.  Bill Kristol reveals one last-minute change that chicanery facilitates: Of $8B for magnetic levitation rail in the conference version, only $2B was in the Senate bill and none in the House bill.  Except more such news as those not in the room examine the final version that no one even engaged in the pretense of having read before voting on it.

Here is one actual section:

COMMODITY ASSISTANCE PROGRAM
6 For an additional amount for the emergency food as-
7 sistance program as authorized by section 27(a) of the
8 Food and Nutrition Act of 2008 (7 U.S.C. 2036(a)) and
9 section 204(a)(1) of the Emergency Food Assistance Act
10 of 1983 (7 U.S.C. 7508(a)(1)), $150,000,000: Provided,
11 That of the funds made available, the Secretary may use
12 up to $50,000,000 for costs associated with the distribu-
13 tion of commodities, of which up to $25,000,000 shall be
14 made available in fiscal year 2009.

Here is a second example (format errors in this and other examples are left in, as illustrations of how the official version was not properly loaded to enable clean online viewing):

Provided Further, That the limitation con-
3 cerning total project costs in section 902 of the 'Vater &-
4 sources Development Act of 1986, as amended (33 U.S.C.
5 2280), shall not apply during fiscal year 2009 to any
6 project that received funds prmrided in this title: Provided
7 Further, That funds appropriated under this heading may
8 be used by the Secretary of the Army, acting through the
9 Chief of Engineers, to undertake ,vork authorized to be
10 carried out in accordance "rith section 14 of the Flood
11 Gontrol Act of 1946 (33 U.S.C. 7011'); section 205 of the
12 Flood Control Act ·of 1948 (33 U.S.C. 701s); section 206
13 of the Water Resources Development Act of 1996 (33
14 U.S.C. 2330); or section 1135 of the Water Resources De-
-15-velopll1ent-.Act .of .19.8.6 .
.(33. U.S.C.2309a), notwith-
16 standing the program cost limitations set forth in those
17 sections:

Here is a "technical amendment" section:

SEC. 404. TECHNICAL CORRECTIONS TO THE EN-
23 ERGY INDEPENDENCE AND SECURITY ACT OF 2007. (a)
24 Section 543(a) of the Energy Independence and Security
25 Act of 2007 (42 U.S.C. 17153(a)) is amended-

1) by redesignating paragraphs (2) through
2 (4) as paragraphs (3) through (5), respectively; and
3 (2) by striking paragTaph (1) and inserting the
4 follo"wing:
5 "(1) 34 percent to eligible units of local govern-
6 ment-alternative 1, in accordance with subsection
7 (b);
8 "(2) 34 percent to eligible units of local govern-
9 ment-alternative. 2, in accordance with subsection
1
0 (b);".
11 (b) Section 543(b) of the Energy Independence and
12 Security Act of 2007 (42 U.S.C. 17153(b» is amended
13 by striking "subsection (a)(l)" and inserting "subsection
14 (a)(l) or (2)".
15 (c) Section 548 (a)( 1) Qf the Energy Independence .
16 and Security Act of 2007 (42 U.S.C. 17158(a)(1» is
17 amending by striking "; provided" and all that fol]ows·
18 through "541(3)(B)".

Here is a section in Health Information Technology that references not only the United States Code (federal statutes) but also the Code of Federal Regulation (administrative agency rules adopted pursuant to federal statutes):

e) ACCESS TO CERTAIN INFORMATION IN ELEC-
6 TRO:NIC FORMAT .-In applying section 164.524 of title
7 45, Code of Federal Regulations, in the case that a cov-
8 ered entity uses or maintains an electronic health record
9 ,vith respect to protected health information of an indi-
10 vidual-
11 (1) the individual shall have a right to obtain
12 from such covered entity a copy of such information
13 . in an electronic format and, if the individual choos-
14 es, to direct the covered entity to transmit such copy
15 directly-to-an--ent-ity-or-person-designated--bythe-in-
16 dividual, provided that any such choice is clear, con-
17 spicuous, and specific; and
18(2) notwithstanding paragraph (c)( 4) of such
19 section, any fee that the covered entity may impose
20 for providing such individual with a copy of such in-
21 formation (or a summary or explanation of such in-
22 formation) if such copy (or summary or explanation)
23 is in an electronic form shall not be greater than the
24 entity's labor costs in responding to the request for
25 the copy (or summary or explanation).

One of my favorite sections is part of the Prevention & Wellness program for the Department of Health & Human services, where encircled language is Xed through, with a penciled margin note "insert 21a" (in place of the encircled language).  Under the State Department's diplomatic & consular affairs program the penciled words "up to" are inserted with a caret before the $38M dollar appropriation.  In another section covering periodic reports for the Department of transportation there are four lines penciled in the right margin, going vertically.

Here's a tax provision:

3) WATER HEATERS.—Subparagraph (D) of
section 25C(d)(3) is amended to read as follows:
12
‘‘(D) a natural gas, propane, or oil water
13
heater which has either an energy factor of at
14
least 0.82 or a thermal efficiency of at least 90
15
percent.’’.
16
(4) WOODSTOVES.—Subparagraph (E) of sec-
17
tion 25C(d)(3) is amended by inserting ‘‘, as meas-
18
ured using a lower heating value’’ after ‘‘75 per-
19
cent’’.
20 

SEC. 4103. TREATMENT OF PAYMENTS AND SAVINGS; IM-

PLEMENTATION FUNDING.
10
(a) PREMIUMHOLDHARMLESS.—
11
(1) IN GENERAL.—Section 1839(a)(1) of the
12
Social Security Act (42 U.S.C. 1395r(a)(1)) is
13
amended by adding at the end the following: ‘‘In ap-
14
plying this paragraph there shall not be taken into
15
account additional payments under section 1848(o)
16
and section 1853(l)(3) and the Government con-
17
tribution under section 1844(a)(3).’’. 18

ALL CLEAR?

OK, there is some good stuff--like this section re the "smart grid" electric infrastructure upgrade, the single most important infrastructure project for the coming decade (I tried to paste in the language, but it came through garbled, possibly due to handwriting characters superimposed upon the online document).  Executive compensation limits apply to the top salaried person for TARP (Troubled Assets Relief Program) recipient corporations who got less than $25M, the top 5 such persons for firms receiving between $25M & $250M, the top 10 for firms receiving between $250M & $500M and the top 20 for firms receiving more than $500M.  Plug-in hybrid eligibility for stimulus funding cannot weigh more than 7 tons (go figure on your own).

The Joint Statement that explains how to understand and interpret the 570 pages of tax-related provisions in the actual bill runs 224 pages of single space type--this is in addition to the bill itself!

THE LEGAL CONCEPT PROTECTING THIS MEGA-MESS IS CALLED "LEGISLATIVE JUDGMENT" TO WHICH REVIEWING COURTS MUST SHOW DUE DEFERENCE.  TAXPAYERS, HOWEVER, NEED NOT DO SO.  BILLS LIKE THIS ARE WRITTEN ON THE FLY BY DOZENS OF STAFFERS, PIECE BY PIECE, WITH NO ONE KNOWING THE WHOLE; LEGISLATORS MAY--BUT MAY NOT--EVEN READ STAFF MEMOS SUMMARIZING WHAT WAS DONE.

THE HOUSE VOTE CAME SOME 15 HOURS AFTER THE BILL CAME OFF THE PRESSES; MOST OF THE SENATE VOTED ALL OF 4 HOURS LATER--THE VOTE THEN HELD OPEN SEVERAL HOURS SO THAT THREE REMAINING SENATORS COULD CAST THEIR VOTE.

HOUSE SPEAKER PELOSI'S 48-HOUR SUNSHINE PROMISE BETWEEN PRINTING AND VOTING WAS TOSSED ON THE ASH-HEAP OF HISTORY, AS SHE JETTED OFF TO ROME TO MEET WITH THE POPE AND OTHER LUMINARIES.  THIS IS YOUR CONGRESS AT WORK.

Come to think of it, where were the tree-huggers, seeing that 1,073 pages times 535 members of Congress = 574,055 pages; add at least one staff copy per member and you get 1,148,110 pages of wood pulp.  Most of the spending impact will come after 2009, hardly the quick stimulus advertised.

The vote was partisan: All GOP House Members against, 38 of 41 GOP Senators against; All but 7 Democrats for in the House, all Democrats for in the Senate.  President 44 owns the bill, win or lose.  The bill was written behind closed doors, GOP excluded, save for 3 Senate defectors.  The draft was provided in paper form, without computer search capability that would enable rapid search of specific items.

Oh, and did I mention that K Street lobbyists--those folks President 44 promised to marginalize in a new era of ethics--were checking their favorite sections before GOP members had a copy?

End with one more Bismarck pearl, which if it stays true may yet save us from the worst that this legislative Godzilla might produce:

"There is a Providence that protects idiots, drunkards, children and the United States of America."

Stimulus Godzilla: Welfare Redux & Health Care Big Brother in 1,073 Pages

Begin with the Summary Overview (4 pages) and Detailed Summary ( pages) of the 1,073 pages of actual legislative language that comprises the Stimulus bill (numbered H.R. 1) passed Friday.  Both summaries were written by the Democratic majority, without apparent input from the minority, but these are the only official sources we have.  Unlike the bill text, these are at least comprehensible.

A Congressional Budget Office analysis (5 pages--CBO is the shop set up by Congress in 1975 to analyze the budgetary impact of various governmental actions taken by Congress or the Executive Branch) prepared in the form of a Feb. 11, 2009 letter to Senator Judd Gregg (R-NH) suggests modest economic effects from the package.  Notable is that the economic effects can vary widely with the quality of infrastructure projects--put simply, bridges to somewhere pay off, while bridges to nowhere do not.  The letter observes tartly (on p. 2):

Moreover, although some carefully chosen government investments might be as productive as private investment, other government projects would probably fall well short of that benchmark, particularly in an environment in which rapid spending is a significant goal.  (Emphasis added.)

As an example of the risk of bridges to nowhere in stimulus implementation, Manhattan Institute urban finance scholar Nicole Gelinas highlights ways New York is likely to waste federal funds (while the federal borrowing to send these funds to the states crowds the states out of credit markets).  Economist Irwin Stelzer adds another fudge factor lost to stimulus cheerleaders: real-world delays always crop up.  Two examples: (a) the Department of Energy still has not disbursed $40B--yes, $40B, not a mere $4B--that Congress authorized in 2005 for Green projects; (b) Nancy & Harry neglected to slip in H.R. 1 any rule limiting challenges by militant Green groups on environmental grounds to the "smart grid."  Thus the best single idea in the whole package faces tie-up in litigation for years.

Slipped stealthily into the stimulus Godzilla are two nasty surprises flagged by Ann Coulter (with her customary acerbic wit): (1) a sneak-attack staffer-drafted end to the 1996 welfare reform work rules--ably detailed by moderate liberal blogger Mickey Kaus at Slate and as NRO editors note, certain to skyrocket spending as Medicaid "reforms" did before; (2) health care information imperialism by the federal government, with bureaucrats able to deny doctors financial recovery for unapproved treatments.  What happened to civil libertarian concern about personal privacy?  Aren't health matters sufficiently intimate to engage their concern?

As Wesley Pruden explains in a column (also laced with acerbic wit), the health care--actually, stealth HillaryCare camel's nose under the proverbial tent--is that federal bureaucrats will "guide" doctor decisions by denying them insurance coverage for procedures the non-doc bureaucrats deem, in their inexpert view or by mechanically applying arbitrary regulatory standards, unworthy of coverage.  Doctors will then turn to patients and ask them to pay full cost, which many will not be able to afford to do.  Does anyone think federal "gummint" types care about whether individual patients get the best care possible?

It is one thing for Senators Specter, Olympia & Susan (Senators SOS) to cave on a stimulus package, and quite another to cave on these issues.  Worse, the final staff negotiations were cut by Democrats alone without any GOP staffers in the room.  That Senators SOS could sign off is sufficient to document their betrayal of party and principle.  If they are going to collaborate with this kind of partisan power play they may as well switch parties.

Here is key language I extracted from the Health Information Technology Section:

"SEC~3001. OFFICE OF THE NATIONAL COORDINATOR FOR
16 HEALTH INFORMATION TECHNOLOGY.
17 "(a) ESTABLISHMENT.-There is established within
18 the Department of Health and Human Services an Office
19 of the National Coordinator for Health Information Tech-
20 nology (referred to in this section as the 'Office'). The Of-
21 fice shall be headed by a National Coordinator who shall
22 be appointed by the Secretary and shall report directly to
23 the Secretary.
24 "(b) PURPoSE.-The National Coordinator shall per-
25 form the duties under subsection (c) in a manner con-

sistent with the ·development of a·nationwide health infor-
2 mation technology infrastructure that allows for the elec-
3 tronic use and exchange of information and that-
4 "( 1) ensures that each patient's health informa-
5 tion is secure and protected, in accordance with ap-
6 plicable law;
7 "(2) improves health care quality, reduces med-
8 ical errors, reduces health disparities, and advances
9 the delivery of patient~centered medical care;
10 "( 3) reduces health care costs resulting from
11 inefficiency, medical errors, inappropriate care, du-
12 plicative care, and incomplete information;
13 "( 4) provides appropriate information to help
14 guide medical decisions at the time and place of
15care;-
16 "( 5) ensures the inclusion of meaningful public
17 input in such development of such infrastructure;

"(6) improves the coordination of care and in-
19 formation among hospitals, laboratories, physician
20 offices, and other entities through an effective infra-
21 structure for the secure and authorized exchange of
22 health care information;

One potentially huge change in health care: Taking from the language above, Section 3001 creates an Office of National Coordinator for Health Information Technology, who (among other duties) "provides appropriate information to help guide medical decisions at the time and place of care."   This language is what critics were referring to, as it is broad enough to empower the Coordinator's staff to deny health insurance coverage for procedures that the federal government deems not reasonable.  Patients unable to afford to pay will be forced to accept government guidelines in place of criteria set by doctors they choose.  Doctors could (likely will) even face pressure to decline to allow patients to pay in such cases.

George Will applies his keen historical lens and marvels at Democratic certitude:

The president, convinced that the only thing America has to fear is an insufficiency of fear, has warned that "disaster" and "catastrophe" are the certain alternatives to swift passage of the stimulus legislation. One marvels at his certitude more than one envies his custody of this adventure.

He notes a 1965 instance of Democratic certitude (and hubris):

In December 1965, John Maynard Keynes, although 19 years dead, was, as today, enjoying one of his recurring resurrections as vindicator of government management of the economy by manipulating "aggregate demand." Keynes's visage was on Time magazine's cover, and the accompanying story said that happy days were here again and here to stay.

President Lyndon Johnson was embarked on building the Great Society, assisted by policymakers who, wrote Time, "have used Keynesian principles" to smooth the moderate business cycles and achieve price stability: "Washington's economic managers scaled these heights by their adherence to Keynes' central theme" that a modern economy can operate at "top efficiency" only with government "intervention and influence." So, "economists have descended in force from their ivory towers and now sit confidently at the elbow of almost every important leader in government and business, where they are increasingly called upon to forecast, plan and decide." Ten years later, the "misery index" -- the unemployment rate plus the inflation rate -- was 19.9, heading for 22 percent in 1980.

Will concludes by reminding us of the provenance of the "100 days" phrase: It was not FDR in 1933, but Napoleon in 1815, ending at...Waterloo.

Peter Wehner writes in Commentary online that the stimulus mess is emblematic of how 44 has faltered in his first weeks:

What is also surprising is the degree to which Obama has ceded authority to Nancy Pelosi and Harry Reid. One gets the sense that they are more in control than he is. And why Obama would grant the authority to write his economic recovery plan to Pelosi and House Democrats, who after all comprise the most liberal Congress in memory, is hard to fathom. The obvious explanation is Obama and his Administration were not ready to do it. In any event, he got exactly what you would expect: a massive spending bill, laden with wasteful and unnecessary programs which have almost nothing to do with stimulating the economy. In hitching his wagon to Pelosi and Reid, Obama has succeeded in reenergizing the GOP beyond what anyone could have anticipated.

Right now President Obama and his team look at times amateurish and somewhat overmatched by events.

A WSJ editorial documents the deficit deep-end Team Obama is jumping off, the sole benefit of which will be, one hopes, to consign deficit-hawk anti-tax cut frugality to the ash-heap of history.  Karl Rove praises the (non-SOS) GOP for standing firm against a spending spree but cautions that as some economic recovery is likely the GOP should not publicly predict disaster.  Either way, Democrats own this bill, and thus own its results.

It may once again be said of the Democrats that as was said of the 19th century Bourbon kings, "They have learned nothing and forgotten nothing."

Forgotten Man, Reclaimed President

Author Amity Shlaes, long a writer at the Wall Street Journal, published in 2007 a masterful book on the years 1929 - 1940 in America, covering the disastrous term of Herbert Hoover, FDR's first two terms and the 1940 election that vaulted FDR into uncharted territory with an unprecedented third term (which led to adoption, after the Second World War, of the 22nd Amendment limiting Presidents to two consecutive terms).  AS's book, The Forgotten Man: A New History of the Great Depression, centers on the seminal events of America's worst and most protracted economic crisis, which did not fully end until we engaged Japan & Germany in a titanic struggle that unleashed FDR's Arsenal of Democracy.  AS could not have known when she published her work that within a matter of months the August 2007 sub-prime mortgage collapse burst the housing bubble, and set in motion the train of events that led to a near-total global financial meltdown in late 2008, elected Barack Obama President and led to a revival of the Depression-era economist John Maynard Keynes and a turn to FDR as the model for rescuing America from economic depression via massive government stimulus and regulatory intervention.

The fact that the book was published before everything hit the fan makes it more persuasive, because no one can plausibly allege that it was written to help one side or another take a policy stand in the midst of the policy debate in 2009.  The basic thesis AS offers is this: That while the GD had many causes, the biggest mistake policymakers made, which turned a market crash and recession into a protracted deflationary depression, was lack of faith in private markets.  Government spending did some good in some places--bridges to somewhere, in today's parlance; but many bridges to nowhere were built, too.

Herbert Hoover emerges as a personally decent but terminally clueless President, one who simply failed to grasp the fundamental nature of the unfolding crisis, and whose anti-market nostrums--raising taxes, promoting tighter monetary policy and signing the protectionist Smoot-Hawley tariff that ignited an international trade war--destroyed public faith in free market economics.  FDR did not grasp much in the way of basic economics, but his policy advisers, endlessly energetic, turned out good and bad ideas in profusion; FDR took nearly all of them.  Some were good--the Civilian Conservation Corps that beautified America's public parks--while others were a flop--the National Labor Relations Act, which inflated wages and ignited industrial class warfare.  But unlike Hoover, who, behind his crusty reserve, seems a nice person, FDR was, on the author's evidence, a man whose vast personal charm masked a self-righteous, imperious, vindictive, deceptive, manipulative personality.  FDR was, in all, a nasty piece of work.

The classic case of FDR's nastiness was when top FDR aide Rexford Tugwell met with President Hoover between the 1932 election and FDR's March 4 inauguration.  Hoover asked for FDR's cooperation in staving off an imminent back collapse.  Tugwell, speaking for FDR, replied that FDR knew of this, but preferred to let it happen, so that Hoover would get the blame.  Hoover assessed the exchange thus:

"When I consider this statement of Professor Tugwell's in connection with the recommendations we have made to the incoming administration, I can say emphatically that he breathes with infamous politics devoid of every atom of patriotism.  Mr. Tugwell would project millions of people into hideous losses for a Roman Holiday."

Tugwell was, of course, speaking for FDR.

Enter Wendell Willkie, a top-drawer utility company executive who waged a losing battle against the Tennessee Valley Authority.  WW was a lifelong Democrat who switched parties in 1939, and lost not because the New Deal was so popular then, but because with winds of war blowing FDR's experienced hand at the helm was what most voters wanted.

FDR's back and forth experiments with policy created uncertainty that paralyzed markets; his denunciations of big business led to a capital strike by businessmen afraid to invest in a hostile climate.  His caprice included, in setting the daily dollar price of gold--the US having in 1933 gone off the gold standard of $20 per ounce, to return in 1934 at $35 per ounce--picking a 21 cent rise one morning because, as FDR told his astonished Treasury Secretary Henry Morgenthau, it was 3 times his lucky number of 7.  John Maynard Keynes told FDR that his gold price moves looked like "gold standard on the booze."  JMK also said: "It is a mistake to think businessmen any more immoral than politicians."

Of FDR's agricultural wage & price fixing per the National Recovery Act, the poet Odgen Nash penned these lines:

Mumbledy, pumbledy, my red cow,

She's cooperating now.

At first she didn't understand

That milk production must be planned...

...But now the government reports

She's giving pints instead of quarts.

AS contrasts two visions of who exemplifies the "Forgotten Man":

William Graham Sumner of Yale, in 1883, a classical liberal view:

As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X.  Their law always proposes to determine what C shall do for X, or in the better case, what A, B, And C shall do for X....What I want to do is look up C.  I want to show you what manner of man he is.  I call him the Forgotten Man.  Perhaps the appellation is not strictly correct.  He is the man who never is thought of....

He works, he votes, generally he prays--but he always pays....

The FM was re-invented in 1931 by FDR, then in his second term as Governor of New York:

These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the indispensable units of economic power, for plans like those of 1917 that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid.

Thus, writes AS, did FDR re-identify the FM has not C, but X.  C is a taxpaying working man, asked to support X.  X is a recipient of public--taxpayer--largesse.  Thus did Sumner exalt producers, while FDR exalted recipients--to be fair, some former producing workers who lost jobs, but also some who never did produce in the marketplace.  Thus was born the Big Government Welfare State.  Government spent two percent of GDP in 1933.  By 1936 it had doubled, to 4 percent, and for the first time in American history exceeded the share of expenditure provided by states and localities.  It doubled again before World War II, to 9 percent.  In 2007 the federal government budget was about 20 percent of total Gross Domestic Product.  In 2009 it will be more like 35 to 40 percent of GDP, a level typical in Europe.

Amity Shlaes has written a must-read, riveting account of the Great Depression Years, told with acuity of historical perspective, keen analysis, wit, and fairness to all sides.  It is, simply, a must-read.

BTW, among those who has not forgotten FDR is...Hugo Chavez.  Yes, THAT Hugo Chavez.  He told Venezuelan voters who yesterday were voting on a referendum to abolish term limits and let President Chavez run for life, that FDR has served four terms as President.  (Apparently, Chavez omitted saying that the 22nd Amendment imposed term limits because of FDR's precedent-breaking terms.  Hmmm....)

Index 2/13/09

6 posts: (1) Judd's Commerce Thud--The Home Front; (2) Obama Inters the Iran NIE--Us  v. Them; (3) Israeli Election Final Results--Wobble Watch; (4) Decennial Census: Sampling (Democratic) Sheep--The Home Front; (5) Feinstein Fumbles, Will Predators Crumble?--Wobble Watch; (6) Traffic Jam Over Siberia--Cyber-Serendip.

Judd's Commerce Thud

New Hampshire GOP Senator Judd Gregg's decision to withdraw from the Senate was, he said yesterday, driven by policy differences with the administration over, among other things, the massive $789B stimulus bill.  Such policy divergences were, said Gregg, wider than he had believed when he agreed to take the job.  Gregg stated that he could not be "a blocking back who pulls out on every second or third play."  He said that the President is entitled to someone who is 100 percent on his team.  And he added that he can be more effective in getting things done for the President in the Senate than as Commerce Secretary.  Human Events quotes Gregg on the Census factor, i.e., the administration's stated intent to put the conduct of the 2010 Decennial Census under White House, rather than Commerce, supervision.  (The Census issue is discussed below in another LFTC posting today.):

“It has become apparent during this process that this will not work for me as I have found that on issues such as the stimulus package and the Census there are irresolvable conflicts for me.”

All of which raises the question, as to Gregg's decision to accept the Commerce nomination: What was he thinking?  Did he discover President 44 agrees with him on little after the Inauguration?  Gregg once won $850,000 playing Powerball.  Perhaps he can transfer his good luck to the economy.  Your move.

Obama Inters the Iran NIE

The Los Angeles Times reported yesterday that President 44 declared the November 2007 National Intelligence Estimate on Iran's nuclear program a dead letter.  About time.