[digg-reddit-me]And Mr. Dow 36,000. And Wall Street bankers. And Rush Limbaugh.
The media freak show now presents another person-Americans-love-to-hate-who-wants-to-take-on-Obama…
Tonya Harding!
(H/t Andrew Sullivan.)
Buzzfeed comments:
[P]rops to the ice princess for not changing her hair since 1992. Once a legend, always a legend.
[digg-reddit-me]Opponents of Obama’s response to the financial crisis have taken a number of approaches their disagreement. As with all political opposition, these approaches begin with a seemingly common-sense question or objection – and use it as a lever to attack their opponents. Governor Bobby Jindal for example used a bit of each of the following approaches to go after Obama – though not quite committing to any of them fully. I’ve paired many of these approaches with the most prominent individuals who have become associated with them – and tried to respond to them. What is common among them all is a desire to tap into the inchoate rage that this crisis is engendering among all Americans – and to try to focus that rage on Barack Obama. What is lacking among these approaches is a compelling or plausible alternative.
I. Do we need to do anything at all? (James K. Glassman)
George Will memorably attacked this point as a strawman on This Week. But it’s not, even if it is unfair to attribute this view to most Republicans. James K. Glassman (hereinafter called “Dow 36,000” after the book he coauthored) wrote a much-talked about piece for Commentary making the argument that nothing need to be done. The article was cited by House Minority Leader John Boehner among others – and was perhaps the first anti-Obama argument to gain traction in the stimulus debate. Mr. Dow 36,000 made the argument that the Austrian business cycle best explained our current mess – and that our best option would be to do nothing and hope things got better, that we trust the market to provide if only we have enough faith in it’s benevolence and restrain our sinful (government) interference.
What Mr. Dow 36,000 failed to account for was that the stability of societies around the world is dependent on economic growth and the opportunity this brings. The opiate of the masses unhappy with their governments is no longer religion – it is the hope that results from economic growth, the miracle and curse of rising expectations.
Mr. Dow 36,000 believes that if our economic heart seems to have stopped beating, the answer is to have faith that our blood will continue to flow. “We don’t need stimulus – we need to calm down,” he says. But the only rational response is to shock the heart back into action, to stimulate it.
II. But do we need to spend all this money?
Yes, if not more. The basic theory of Keynesian stimulus is that when the aggregate market demand for goods and services enters into a decreasing spiral.
Less demand = Lower prices = Less supply = Less jobs = Less demand = Lower Prices = etcetera
When an economy enters this cycle, Keynes believed, the government must step in and increase demand by spending more than it receives in taxes. (If it taxed to make up for it’s increased spending, it would not be adding demand but merely redistributing it.) Projections indicate that the US gross domestic product will fall by $2.1 trillion in the next two years. Which is why some Nobel-prize winning economists were frustrated that Obama’s plan was so small that it will not be able to make up for the drop in demand.
Joe Scarborough pointed out on Meet the Press last Sunday that, as all deficit spending is stimululative, the last eight years of the Bush presidency have been Keynesian stimulus too:
Scarborough uses this point to make out Obama’s stimulus to be more of the same, except with the stimulus directed towards the bottom 95% of Americans instead of the top 2%. He’s not entirely wrong, but to continue the metaphor above – if someone’s lifestyle choices have put enormous pressure on their heart, as they snort cocaine or take speed or otherwise constantly overcharge their heart, the first step to getting them healthy is usually to get them to stop putting so much pressure on their heart. But if their heart beat is dropping rapidly, or their heart has stopped, then the first step is no longer to remove the cocaine from their system but to inject them with someone that will energize their heart. This is a stimulus. And this is the reason Obama’s economic team is increasing our deficit in the short term.
III. What about tax cuts? (Eric Cantor)
The Republicans proposed a $3.1 trillion dollar permanent tax cut as their alternative to Obama’s $780 billion dollar spending/tax cut stimulus. That they continued to criticize Obama for fiscal irresponsibility and accused him of “generational theft” while supporting this bill aptly demonstrates that this was a pure political play. But if nothing else, the sheer size of the Republican alternative stimulus suggests what the reports of the nonpartisan Congressional Research Office concluded: tax cuts work slower and have less stimulative effect than almost any kind of spending measures. This is why more than half of Obama’s bill is spending.
IV. Fine. But even if this works, the deficit will be out of control! (John McCain)
Damn right it will. Hell – after eight years of rapidly decreasing taxes coupled with the largest increase in domestic spending since the War on Poverty and two large and seemingly unending wars, the deficit was already out of control. Even before that, as Bush failed to respect the “lockbox” that Al Gore promised to protect with the extra funds raised by Social Security taxes, we were in trouble. But even if we had saved all of this money paid into the Social Security program which is owed to me and you in a few dozen years (or less) the rapidly escalating cost of health care would leave our government with a deficit of over $60 trillion dollars over the next few decades.
Which is why Obama has been talking about dealing with America’s long-term fiscal problems since he was on the campaign trail – and especially since he was elected. In the weeks before his election, Washington was taken with his idea of a “Grand Bargain.”
But none of this will matter if the economy doesn’t begin growing again. If the first step to recovery is deficit spending to get the economy going again – continuing the above metaphor, using paddles, injections, whatever to get our economic heart functioning again – the next step is to clean up our act and take a fiscally responsible approach to governing and entitlement spending – in other to stop the irresponsible behaviors that helped create the crisis. If our economy is still stagnant, we will need to dismantle a good portion of our federal and state governments. But if the stimulus works, and the economy begins to grow again, adjustments can be made. Another point that Obama and his Director of the Office of Management and Budget Peter Orzag have made clear is that the first step to solving America’s long-term fiscal problems is tackling the problem of our rapidly escalating health care costs – which thanks to their rapid growth make up an ungodly percentage of our unmet future commitments. This is why Obama sees health care reform as one of the first steps that needs to be taken – to stop the rapidly escalating costs of health care.
V. Do we really need to help all these losers? (Rick Santelli)
Yes, we do. Obama has described his economic team as a bunch of mechanics who are trying to fix the machine that is our economy. When a mechanic sees that a spring or a lever or a cog isn’t functioning properly – and this piece is preventing the machine from working – the mechanic knows the problem will not be fixed by lecturing the piece or letting it fail for not properly doing it’s job. The correct thing to do is to replace it or glue it or do whatever is necessary to make the piece function as it must. Yes, the bankers whose job it was to properly calculate risk and make money instead spectacularly failed to understand the risks they were taking and lost money; and yes, the liars and idiots who took our mortgages they couldn’t afford should be punished too. But while one bank failing is just, a failure of our banking system could paralyze the economy. And while an idiot who took out a loan he couldn’t afford should get his house foreclosed upon, too many foreclosures will take down a neighborhood. Both of these are part of systemic problems which has resulted in downward spirals.
Obama, in taking this approach, seems to be combining some elements of Hayek’s warnings about the limits of the discipline of economics and the failure of the best-laid plans with Keynes’s fierce urgency of now – a kind of trial-and-error, scientific approach to financial crisis management as opposed to a more ideological, morality-driven approach associated with partisans of the left and right.
VI. Obama’s plan sucks. It isn’t working yet!
The stimulus money hasn’t begun to be spent. And the banking and mortgage fixes have yet to be fully implemented – so of course it’s not working yet. Obama recently explained that the ups and downs of the stock market are a flawed indicator – just as the ups and downs of campaign polling is often flawed. Obama bet his campaign on a strategy of ignoring the day to day and conceding the daily media wars and never trying to boost his daily poll numbers. Instead, he focused on the fundamentals. And he won. His economic team’s approach to the financial crisis is similar. The falling stock market is merely a symptom of the crisis. It is a waste of time to treat a symptom when the root cause is not being addressed – but if one is able to treat the root cause, the symptom will be cured as well.
Obama has elected to do what needs to be done to fix the economy as a whole – and this means helping people whose decisions were poor, people who were greedy, people who were stupid, and yes, losers too. No matter how distasteful, the situation bankers and mortgagees must be helped in order to fix the economy.
To reiterate, the Obama plan has several steps:
VII. I hope he fails! Socialist! Communist! Marxist! Terrorist! Black Hitler! The Antichrist! Nobama! (Rush Limbaugh)
In fairness to Rush, he’s only publicly expressed a few of these sentiments. I’m not sure that he’s called Obama a black Hitler yet – but I’m sure he’s joked about it. This approach presumes that Obama has a quasi-secret agenda he is trying to impose on America – and that this agenda is so awful, it would be better to suffer another Great Depression or worse than to capitulate. Rush has described Obama as acting in bad faith, as being deranged, as having a mental illness (which Rush diagnoses as liberalism), and as all manner of awful and un-conservative things. Rush is a true propagandist and ideologue – and he has become the rallying point for movement conservatives.
His critiques now have power as the anticipatory fear of what Obama might do overwhelms the sense of what Obama is doing – and if Obama fails, Rush will be hailed as a visionary and a leader. But if Obama continues to display the conservative temperament and pragmatism that won him the election, then he will be as little remembered as Father Coughlin with his anti-Roosevelt screeds.
Rush – like proponents of failed ideologies everyone – continues to maintain that the conservative movement did not fail, but rather that it never truly had the power to achieve it’s agenda.
[digg-reddit-me]We’re supplying the weapons and funding to both sides in the civil war between the Mexican drug cartels and the central government.
Republican state senator from Arizona, John Paton, is quoted by Randal C. Archibold in The New York Times summarizing our relationship with Mexico:
They send us drugs and people, and we send them guns and cash.
Though he probably didn’t intend it so, this remark works on several levels, illustrating how some of our current policies are the largest factors contributing to the destabilization of Mexico.
On the one hand, as Rick Perry, Republican governor of Texas, recently acknowledged:
Many of the guns aimed at Mexican law enforcement passed through our state, as did so many of the dollars funding those violent gangs.
It is estimated that $12 – $15 billion dollars is funneled to Mexico through the illegal drug trade and as James C. McKinley, Jr. in the New York Times reported:
A.T.F. officials estimate 90 percent of the weapons recovered in Mexico come from dealers north of the border.
In addition to weapons from legitimate dealers, some significant number of weapons have apparently been stolen from U.S. military bases and gotten into the hands of the Mexican cartels, which are now more heavily armed than the local police and in some cases, the military. Many members – and indeed, some entire police forces – have been coopted by the cartels through a combination of bribery and violence. Mexico’s former drug czar was arrested for taking bribes from the cartels; the Juarez police chief resigned after the cartels began systematically killing police officers until he resigned; just last week, a top investigative police officer was killed along with 10 members of his family. More than 6,000 people were killed last year in Mexico’s war. Even allowing for politically expedient exaggeration, the fact that a top Mexican cabinet official would claim that the power of the drug cartels has grown to such a level that “the next president of the republic [could] be a narco-trafficker” demonstrates how serious a force the drug cartels are.
At the same time as American dollars and American guns have been powering the cartels, the America government has been funding the Mexican government’s war against the cartels. Most recently, with the Mérida Initiative, American has begun to funnel almost half a billion dollars a year to the Mexican government – most of it in the form of weaponry. A local television station described it as:
a plan to give 1 point four billion dollars in weapons and training to Mexico called the Merida Initiative is still under fire. Critics say arming Mexico could backfire…like it has in the past with other countries. But Kilburn says this plan seems well thought out.
“You are talking about buying heavy equipment, machinery, surveillance helicopters, airplanes and these things are less likely to get in the wrong hands.”
The cartels have taken to smuggling drugs in submarines; they have stolen U.S. army equipement; they often outgun the Mexican police; former Drug Czar General Barry McCaffrey described the situation:
The outgunned Mexican law enforcement authorities face armed criminal attacks from platoon-sized units employing night vision goggles, electronic intercept collection, encrypted communications, fairly sophisticated information operations, sea-going submersibles, helicopters and modern transport aviation, automatic weapons, RPG’s, Anti-Tank 66 mm rockets, mines and booby traps, heavy machine guns, 50 [caliber] sniper rifles, massive use of military hand grenades, and the most modern models of 40mm grenade machine guns.
But these items we are giving now are “less likely to get in the wrong hands.” I’m relieved.
The violence in Mexico is escalating. The San Francisco Chronicle recently called Mexico:
the latest and most sweeping test of the “too big to fail” imperative as White House policymakers try to steady a shaky world…
Given our current situation – funding and supplying weapons to both sides of this war on our border – it’s hard to see how can prevent Mexico from failing. The gun laws – and enforcement of laws preventing gun smuggling across the border – can be tweaked and made more effective. But this is not enough. We are contributing $400 odd million to combat the cartels and supplying the cartels with tens of billions of dollars at the same time. Yet, we cannot allow these violent gangs to take over Mexico – and we should not countenance their undermining of the rule of law in Mexico. Our prohibitionist approach is failing; our war is failing; what we must do is take a step back and evaluate our Drug War policies from a strategic perspective and see what changes we can make that might help stabilize our neighbor.
Arizona’s attorney general, Terry Goddard, is careful not to suggest he supports the decriminalization of marijuana, but the facts he offers do suggest a course of action:
Right now, the item that’s fueling the violent cartels, the murders in Mexico, the cartel wars that are going on right now that have resulted in over 1,000 deaths this year, I think we need to take a very aggressive stand on that and marijuana is the number one producer for the cartels. Sixty to 70 percent of their gross profits comes from marijuana. So, I think we need to look very hard at something we haven’t looked at for years.
As the report recently issued by the former presidents of Mexico, Brazil, and Columbia stated:
Current drug repression policies are firmly rooted in prejudices, fears and ideological visions.
The report went on to suggest what is beginning to look like the consensus, common-sense approach: if we can’t win while funding both sides of this war, we should try to dry up the source of funding and decriminalize, perhaps even legalize, marijuana.
Roger Cohen continues to make the case for clear-eyed engagement with Iran:
Let’s be clear: Iran’s Islamic Republic is no Third Reich redux. Nor is it a totalitarian state.
He suggests that Iran may prove to be what George W. Bush and the neoconservatives tried to make Iraq into: a model for the Middle East of what a country that has come out the other side of extremism looks like, quoting a friend:
“Iran — the supposed enemy — is the one society that has gone through its extremist fervor and is coming out the other end. It is relatively stable and socially dynamic.”
Fareed Zakaria in a Newsweek article seemingly designed to provoke the ire of the right-wing argues that:
We can better pursue our values if we recognize the local and cultural context, and appreciate that people want to find their own balance between freedom and order, liberty and license. In the end, time is on our side. Bin Ladenism has already lost ground in almost every Muslim country. Radical Islam will follow the same path. Wherever it is tried—in Afghanistan, in Iraq, in parts of Nigeria and Pakistan—people weary of its charms very quickly. The truth is that all Islamists, violent or not, lack answers to the problems of the modern world. They do not have a world view that can satisfy the aspirations of modern men and women. We do. That’s the most powerful weapon of all.
Andrew Ross Sorkin and Mary Williams Walsh in the New York Times:
The loss that A.I.G. is preparing to report on Monday would be the largest ever by any company in a single quarter.
Tom Friedman quoting Ian Bremmer:
“As we look at 2009, on every issue, with the single exception of Iraq, everything is worse…Pakistan is worse. Afghanistan is worse. Russia is worse. Emerging markets are worse. Everything big out there is worse, and some will be made even worse by the economic crisis.”
There is a geopolitical storm coming, concluded Bremmer, “and it is not priced into the market yet.”
Tim Bowler of the BBC reports:
The biggest challenge facing China is not slowing growth but unemployment, which could trigger social unrest, a Chinese government minister has said.
David Cole in the New York Times:
As a legal matter, we are compelled to investigate by the Convention Against Torture, a binding treaty, that requires its signatories to investigate and refer for possible prosecution credible evidence of torture under their jurisdiction.
That obligation has been triggered by, among other things, the admissions that C.I.A. interrogators used waterboarding on at least three suspects with the express approval of Vice President Dick Cheney and other Cabinet officials, and by the finding of Susan Crawford, head of military prosecutions at Guantanamo, that interrogators there, acting under orders of then Defense Secretary Donald Rumsfeld, tortured Mohammed al-Qahtani. If we do not investigate such evidence, foreign courts have the right to pursue torture prosecutions of U.S. officials under the principle of “universal jurisdiction.”
In other words, as per our treaty obligations, we must investigate any credible allegations of torture. If we do not, many top Bush administration officials will not be able to leave the country for fear of arrest and the worst of America’s abuses over the past years will be revealed by foreign nations.
We must take responsibility. We cannot pass the buck.
Eli Saslow in the Washington Post quotes White House scheduler Alyssa Mastromonaco who was perhaps unintentionally revealing in her formulation of people not to be kept waiting:
“Since we’ve gotten to the White House, the president has told us that there’s too much padding and things can be back to back because he needs to fit a lot into the day,” Mastromonaco said. “I still err with caution, because you don’t want someone like Secretary Clinton or a foreign leader waiting for 40 minutes. But he feels like ‘I’m here.’ And he wants to get things done.”
“Someone like Secretary Clinton or a foreign leader” – as opposed to a Cabinet Secretary or a foreign leader; or Tony Blair or Hillary Clinton. It makes it seem as if Obama’s staff is treating Hillary Clinton with a kind of distant respect rather than camraderie.
The article later goes on to describe the steps which Obama takes to remain in contact with a somewhat normal life:
Younger staff members said Obama likes to be kept up on their gossip about weekend nights and new girlfriends and feels left out anytime he’s the last to know what’s going on in their lives. On Super Bowl Sunday, he invited a few dozen people to the White House for a party and implemented two rules: no talking about politics and no posed pictures. Instead, Obama instructed a personal photographer to follow him during the party and take candid shots of him chatting with his guests, which would be mailed to them later. Obama explained to a few congressmen in attendance that he wanted to feel like a part of the group, not apart from it.
Still, whenever Obama hosts, his guests must first submit their Social Security numbers, birth dates, addresses and cities of birth to the Secret Service – a screening process for which Obama has sometimes felt compelled to apologize.
Barton Gellman on page 229 of his book, The Angler:
By his own declared measurements of danger, Iraq should not have been the center of the spiderweb for Cheney. The nexus, if it was anywhere, was in Pakistan – a nuclear state whose national hero sold parts to the highest bidder, whose intelligence service backed the Taliban, and whose North-West Frontier Province became a refugre for al Qaeda. Saudi Arabia, too, had a lot more links to bin Laden than Iraq did. As Cheney saw it, there was nothing decisive to be done about those countries. Washington needed whatever help the Saudis and Pakistanis were willing to provide, and if either government fell, the successor was almost sure to be worse.
The Bush administration’s failure to deal with Pakistan may be it’s most profound misstep. Of course, the lack of appropriate information and pressure on the part of the CIA and the Clinton administration also contributed to the problem. Regardless, it is clear that when we refer to the fight against terrorism, the nexus of our concerns and our war is Pakistan. Christoper Hitchens wrote a column entitled, “Pakistan is the problem” back in September in which he discusses the role the ISI, Pakistan’s security service, plays in sponsoring terrorism against India and Afghanistan – about how the Taliban and al Qaeda were both financed, supported, and to some extent created by Pakistan to encourage their strategic depth – and how A. Q. Khan created a global bazaar in nuclear weaponry, seemingly with the consent and support of the Pakistani military:
[W]e were too incurious to take note of the fact that Pakistan’s chief nuclear operative, A.Q. Khan, had opened a private-enterprise “Nukes ‘R’ Us” market and was selling his apocalyptic wares to regimes as disparate as Libya and North Korea, sometimes using Pakistani air force planes to make the deliveries.
At the same time, Pakistan is – whether intentionally or not – furthering the chaos in Afghanistan. American national security types have expressed their frustration about this in various ways:
It’s tough to fight a war in Afghanistan when the opposing team decides to fight the war in Pakistan.
Alternately, David Sanger explains the boozy hypothetical question asked by one of his friends involved with Pakistan and national security:
How can you invade an ally?
The situation, as complicated and fraught as it already is, is growing more unstable. The New York Times editorial board sums it up:
Almost no one wants to say it out loud. But…Pakistan is edging ever closer to the abyss.
[digg-reddit-me]
This excerpt is of David Sanger speaking at the Council on Foreign Relations, discussing “Obama’s Foreign Policy Inbox.”
The nexus of all of our fears and worries about terrorism and Islamic extremism is in Pakistan today – as Barton Gellman explained in The Angler:
The nexus, if it was anywhere, was in Pakistan – a nuclear state whose national hero sold parts to the highest bidder, whose intelligence service backed the Taliban, and whose North-West Frontier Province became a refugre for al Qaeda.
WMD proliferation, al Qaeda, assorted other religious extremists – all these combine in the unstable nation of Pakistan which the New York Times explained is “edging ever closer to the abyss.” Pakistan’s military and intelligence services are not clearly on America’s side – perhaps hoping to outlast our interest in the region. Niall Ferguson reports that Pakistan’s stabilizing middle class has been hit hard by this financial crisis; the religious extremists have fought the central government almost to a standstill in the frontier regions of Pakistan – and a truce is now being negotiated. Pakistan’s civil society movement which drove General Musharaff from power is now rising up against the civilian government thanks to political shenanigans to marginalize opposition parties. Corruption seems endemic. The military and intelligence services seem to be implicated in some way in the recent Mumbai attacks – as well as numerous other terrorist incidents and A. Q. Khan’s nuclear black market.
All of this helps explain why America likely has special ops troops stationed over the border in Afghanistan ready to secure it’s nuclear sites in the event the nation suffers “a rapid and sudden collapse” – which the Pentagon’s Joint Operating Environment determined was a not insignificant possibility.
This is one of those posts where I should start with the caveat, “I’m no expert.”
But it seems to me that progressives and liberals should embrace the idea of a flat tax. Much of the tax debate we have in America today revolves around the charge that liberals and progressives are “redistributing wealth,” targeting the rich, engaging in class warfare, and otherwise penalizing success. Americans tend to look at the tax issue aspirationally. Joe the Plumber, perhaps, is the most famous example. He criticized Obama for wanting to penalize his success, but he actually would do far better under the Obama plan than under the McCain plan. If his business had thrived, he was able to buy another company to double the size of his, and he was able to maintain enough ownership of the total business, then he might have done slightly better under McCain than Obama. But he saw Obama as taxing the guy he wanted to be – and he was incensed. Part of the reason Joe the Plumber was able to attract such a following with his passionate denunciations of “socialism” and the “redistributionist in chief” was the confusing and complicated nature of our tax code which allowed him and many like him to think they were or might soon be penalized for their successes. With an understandable tax code, it’s unlikely Joe’s cause would have resonated.
The bottom line is: our national debate on taxes is distorted by our complicated and confusing tax code. These distortions mainly work in favor of special interests who want their tax benefits preserved and right-wingers who use these confusions to sow doubt about the efficacy of government and who exactly is being taxed.
Which is why liberals should embrace the flat tax.
I’m not saying we should get rid of any progressive tax structure. Rather, we can design a progressive flat tax.
What would this look like?
The simple structure would be this: a flat 40% tax on everyone. Then give fixed dollar amount deductions. In other words, a deduction for a child credit would be $2,000 whether you make $25,000 or $250,000. The guy making $25,000 would pay $8,000 in taxes instead of $10,000 making his effective rate 32%. A woman making $250,000 would pay $98,000 instead of $100,000, making her effective tax rate 39.2%. The system could start out approximating our current tax system in terms of who is paying what, but when the math is clearer, it makes for a more fair system and a more honest debate.