Nuclear Bombs Make Sense /Laws of Unintended Consequences

Are fears emanating from South and Latin America that are relevant to ourselves? (See 1 below.)

Should we be enthralled now that the administration says they are going to spend stimulus money faster? Most of what it is earmarked is pork and wasteful but that never bothers Congress. They have a pattern of 'porkfligacy' that goes back eons. Fiscal restraint is an oxymoron. (See 2 below.)

John Hannah, not a totally unbiased source, writes GW deserves more credit regarding Iran. I would add, GW deserves more credit for Iraq, as well, but he will not get it in the current anti-Bush atmosphere. Time will soften attitudes and I expect objective historians will be kinder assuming that the seeds of democracy, GW helped plant in Iraq, are nurtured, watered and blossom. (See 3 below.)

A former Sec. of Defense explains why nuclear arms serve a purpose and the purpose is evident daily.

A more rational case than Obama's? You decide.(See 4 below.)

California Democrats may do something sensible not because common sense has invaded their brains but because necessity dictates.

I have argued for a "Flat Tax" for years because it establishes a broad tax base, captures income from the sub-teranean economy and is simple to compute. Like all taxes, it has good and bad features. The one that most concerns me is 'creep ability' for the rate to be raised but that is true for all taxes when politicians can't curb their appetite enough and bankrupt an entity as they have in California. (See 5 below.)

Red Skelton was a charming corny comedian, from my generation, who invented 'Freddie The Free Loader.' I have often written, somewhat in gest, that we should tell our creditors to take their U.S. government bonds and stick them because we incurred much of that debt in their own defense, to resurrect their economies and to pay for sacrifices they were unwilling to make. In a sentence :Europe has been Freeloading." (See 6 below.)

One of Congress' most corrupt and sleazy politicians has solved how to pay for the health care bill - send it to the wealthy.

Rangel cheats on his own taxes but tenure protects him coming from a district that loves the guy cause he's one of them!

He has lost some weight, is older but he is as slick and greasy as ever. (See 7 below.)

Gov. Romney gave Massachusetts what their Democrat legislature thought was needed - a broad health care plan. So they voted it in and its results could serve as a guide to Obamacare if patience was a virtue. But in D.C, there is nothing more virtuous than wasteful quick action so that Members of Congress does not have to read what they would not understand in any event- constant laws of unintended consequences. (See 8 below.)

Finally a thoughtful and acceptable expose and/or attack from within on Palin.

Noonan tells Republicans to get serious and Peggy is right about that. Palin was a breath of fresh air for a while. I was in Italy when McCain chose her and heard her acceptance speech. The breath became stale over time but she was fun, pretty and perhaps for a dying campaign grasping at anything Palin was a reasonable choice because politics is no longer serious it is loopy, silly and borders on fraudulent.

McGovern tried to be serious but fell flat. In order to rally the Republican base you have to go off the deep end just as Democrats must do. The presidential filet remains in the middle among independents but with ccommitted large voting blocs it does not take much to win the swing vote particulalrly if your opponents are capable of shooting themselves in their feet.

Republicans start with several distinct disadvantages:

a) They are the party whose colors faded because their principles were not Sanforized.

b) They are not likely to get the press and media support that naturally falls into the laps of Liberals - read Democrats.

c) They are too caught focusing on social/moral issues that may have merit but they make them larger than life and that forces them into a narrow corner.

d) Finally, as I have said time and again, if Conservatives are true to their colors they are, more than likely, going to be a minority party because they ask something of voters, demand discipline, should not be as prone to accomodating every whim and whine coming from narrow vested interest groups.

Conservatives should put country first and that, in itself, means balancing a lot of broad and conflicting issues and demands but fiscal resonsibility, above all else, should be their guiding principle.

I see nothing about Republicans that give me such comfort or encouragement.(See 9 below.)

The true test always comes down to the simple question would you want what you prescirbe for others. (See 10 below.)

Why government is a role model. (See 11 below.)

Dick



1. The Cult of the Caudillo: The strongman may be Latin America’s most important contribution to political science. The crisis in Honduras has many terrified that power-hungry leaders are making a comeback
By  DAVID LUHNOW, JOSé DE CóRDOBA AND NICHOLAS CASEY

In the tile-roofed presidential palace near downtown Tegucigalpa, a man sits behind a long wooden desk claiming to be the country’s president. But in the eyes of the international community, Roberto Micheletti took charge through an old-fashioned coup.

Associated Press Fidel Castro
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Nearly two weeks ago, on June 28, his predecessor, Manuel “Mel” Zelaya, was rousted from bed by soldiers and sent out of the country in his pajamas. Mr. Micheletti, next in line for the presidency as head of congress, was sworn in later that day.

Tied to wealthy business interests and brought to power by the military, the provisional government brings back memories of the coup in which Chilean Augusto Pinochet tore down the Socialist project of Salvador Allende in 1973. On the streets of Tegucigalpa nowadays, some protesters have scrawled graffiti that merges the names of Mr. Pinochet and their new, unelected leader: “Pinocheletti.”

In Mr. Micheletti’s take on events, it was his government who avoided another, slow-motion coup—by Mr. Zelaya himself. Mr. Micheletti’s supporters say Mr. Zelaya was a dictator in the making, a modern-day caudillo, or strongman, who wanted to rewrite Honduran law to stay in power, perhaps indefinitely.

To understand what is happening in Honduras today, it helps to know a bit more about Latin America’s long love affair with caudillos, how these larger-than-life but power-hungry men damaged their countries, and why so many people are terrified that they are making a comeback.

The Granger Collection Antonio Lopez de Santa Anna.
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Some argue that Latin America’s single most important—and colorful—contribution to political science is the caudillo. A Spanish word, caudillo is derived from the Latin capitellum or small head, and refers to a military or political leader. Spain’s Gen. Francisco Franco, adopted the title Caudillo de España por la Gracia de Dios (by the Grace of God) and ruled the nation from the end of the Spanish Civil War in 1939 until his death in 1975.

Caudillismo is so deeply rooted it has spawned its own literary genre. Discerning readers see Fidel Castro as the model for the aging, cow-obsessed strongman in Gabriel García Márquez’s “The Autumn of the Patriarch,” who wanders alone dragging his outsize testicles over the floors of his presidential palace. Peruvian writer Mario Vargas Llosa, in his novel “The Feast of the Goat,” portrayed the precariousness of life in the Dominican Republic under the rule of the predatory and brutal right-wing caudillo, Rafael Leonidas Trujillo.

The cast of caudillos in Latin American history includes such characters as Antonio López de Santa Anna, who was Mexico’s president on seven separate occasions in the mid-1800s. He signed away Texas’ independence from Mexico after being captured the day after the Battle of San Jacinto in 1836, and once buried a leg he lost in battle with full military honors.

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Bettmann/Corbis Rafael Leonidas Trujillo
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Caudillos come in all ideological stripes. Mr. Pinochet, whose famous photograph in sinister dark glasses was taken soon after his coup, became the iconic image of the right-wing Latin American military dictator. These days, most caudillos are leftist. Mr. Castro, el Comandante or el Caballo (the Horse), has the dubious distinction of being the longest-lived caudillo in Latin American history, owing his record-breaking stretch in power more to caudillismo than Marxismo. He’s passed on the torch to Hugo Chávez, the populist caudillo from Caracas, Venezuela.

Caudillos first arose in the difficult birth of Latin American republics from Spanish colonies. Most were landowners or military men who had their own private armies. Because the wars of independence in the early 19th century destroyed most institutions of Spanish colonial rule, the governments in these new states were too weak to resist takeover. In some cases, young states couldn’t raise enough money for a standing army.

Many of Latin America’s most famous caudillos became dictators. But as Latin American societies evolved and political arenas became more important than military battlegrounds in the mid- to late-1800s, caudillos became politicians. While a dictator usually relies on brute force to keep power, modern caudillos use a combination of personal magnetism, patronage—and sometimes, selective brute force.

AFP/Getty Images Augusto Pinochet
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In Latin America, the strength of the caudillo weakened the region’s institutions. Political parties centered on caudillos often collapsed after the caudillo’s death and never professionalized. As a result, Latin Americans seem perennially ready to trust their fate to a providential “man on horseback” who comes to their nation’s rescue, rather than on the ability of the nation’s institutions to provide security and prosperity.

Outsize personality—and outright megalomania—is a common characteristic of caudillos. In the 18th century, José Gaspar Rodriguez de Francia, who ruled Paraguay for a quarter-century, shut the country off from the outside world, appointing himself head of the country’s Catholic Church and taking the title of El Supremo, providing material for yet another great Latin American novel, Augusto Roa Bastos’s “Yo, el Supremo.”

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Associated Press Hugo Chávez
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In the 20th century, few had bigger egos than Rafael Trujillo, who ruled the Dominican Republic from 1930 to 1961. Known as El Jefe, Mr. Trujillo took power at age 38, wearing a sash with the motto Dios y Trujillo, or “God and Trujillo.” Even churches were forced to emblazon the motto. A few years later, the capital, Santo Domingo, was renamed Ciudad Trujillo. Fond of wearing comic-opera military uniforms with 18th-century-style plumed hats, Mr. Trujillo was as brutal as he was outlandish, murdering thousands of Haitian immigrants as well as torturing and killing political opponents; he fed some of them to the sharks.

While arms made the man in the 19th century, in the 20th, most caudillos have been careful to present themselves as champions of the people, wrapped either in the mantle of revolution—like Fidel Castro—or in that of democracy. Argentina’s Juan Domingo Perón used populism to endear himself to the nation’s poor, known as descamisados, or “shirtless ones.”

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The Granger Collection Juan Manuel de Rosas
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Even today, Perónismo, the movement created by Mr. Perón and his wife Eva—who combined glamour and handouts to the poor to become a secular saint venerated by Argentines—is still the dominant political current in Argentina. The legacy of Mr. Perón’s free-spending populist philosophy has led Argentina into periodic economic crises. When prices for Argentine exports like beef are high, for instance, Perónist governments have spent the windfall like a drunken sailor, leading to a cash crunch when prices eventually head south.

Mr. Perón, like many other caudillos, sought additional legitimacy by preserving the forms of democracy, if only on paper. He won presidential elections, but his regime was hardly democratic: Perónists controlled the legislature, the courts, the bureaucracy, labor unions and the media. Anyone who got too far out of line faced arbitrary arrest.

Even the Dominican Republic’s brutal Mr. Trujillo made a big show of not running for re-election in 1938 to observe democratic principles, although he continued to be the country’s de facto leader and later returned to win two more elections, in 1942 and 1947. In 1952, he stepped aside in favor of his brother and again continued to call the shots until his assassination in 1961.

The March of Strongmen EPA .Manuel ‘Mel’ Zelaya
On June 28, the Honduran president was forced out of the country in his pajamas, after he pushed for a referendum that would amend the constitution to
allow him to run for re-election.
Associated Press .Roberto Micheletti
The Honduran head of congress was sworn in as Mr. Zelaya’s replacement immediately after Mr. Zelaya’s ouster. He has vowed to hold already scheduled
elections in November and to hand over power in January.
Associated Press .Evo Morales
The Bolivian president, a former leader of a militant coca leaf growers’ union, won a referendum that
allowed him to rewrite the constitution, overturning
a ban on re-election.
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As far as the U.S. was concerned, the cause of democracy in Latin America often took a back seat to fighting Communism during the Cold War. For years, the U.S. either looked the other way or supported coups with the aim of preventing the spread of Communism in the hemisphere. Military coups became almost ritual. In the 1970s, Honduras endured so many coups that the capital was jokingly called Tegucigolpe, for the Spanish word golpe, or coup.

The end of the Cold War radically changed politics in Latin America. As civil wars and guerrilla insurrections in Central America ran out of steam, pampered military establishments suffered deep budget cuts. The U.S. and the rest of the world made it clear that coups would not be tolerated anymore. The Organization of American States, which represents 34 countries throughout the hemisphere, adopted a democracy clause in its charter in 2001. By that point, Cuba remained as the only non-democracy.

While democracy has spread throughout Latin America, caudillos never vanish, they just adapt to changing times. Gone is the old-fashioned military coup, replaced with a new strategy for power that could be called “coup by stealth,” or “coup by democratic means.”

The primary architect of this new blueprint is Mr. Chávez, a strongman with one foot grounded in the past and the other firmly placed in the future of caudillismo. In 1992, Mr. Chávez, then a lieutenant colonel with a mish-mash of leftist, nationalist and fascist ideas, led an old-fashioned coup in an attempt to overthrow the government of Carlos Andrés Pérez. It failed, and Mr. Chávez was jailed.

Timeline: View Interactive
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Upon release, he was persuaded to forgo the bullet for the ballot box. In 1998, he was elected president, riding a wave of popular disgust against the deep corruption of the country’s existing political parties and institutions. In a nation where institutions never developed because of caudillos, another “man on horseback” had come to save the country. Once in power, he moved to insure he would never leave.

Using the tools of democracy—referendums and elections—Mr. Chávez has subverted democracy and become a new, modern caudillo. He has won referendums over the years that have allowed him to rewrite the constitution, twice, to his specifications, including ending constitutional restrictions on term limits, thus allowing him to run for re-election indefinitely. He has gutted the courts, shut down and gagged the media and purged the army; he exercises total control over the congress. Venezuela still holds elections, but it is far from a full democracy.

Honduras Military Stands Alone in CoupView Slideshow
Getty Images ..
Mr. Chávez shares with old caudillos a military background, a populist bent and a cult of personality. He is a mixture of messianic preacher, traditional authoritarian Latin American military man and utopian dreamer with notions of “21st-Century Socialism.” Even after a decade in power marked by rampant spending, corruption and crime, Mr. Chávez maintains a strong, almost mystical bond with many of Venezuela’s poor, who see in him a reflection of themselves.

Mr. Chavez has publicly said he plans to stay in power until 2019, 2021 or 2030.

The Chávez blueprint for power is now being imitated by other caudillos in the making. Bolivian President Evo Morales, a former leader of a militant coca leaf growers’ union who led street riots that helped topple two Bolivian leaders, also won a referendum that allowed him to rewrite the constitution. One change: overturning a ban on re-election. Ecuador’s Rafael Correa has used a constitutional rewrite to get term limits lifted, too. Both men used populism and disappointment with existing political parties to cast themselves as their nation’s saviors.

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Sygma/Corbis Rafael Correa
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When democracy took root in Latin America in the 1980s and ’90s, nearly every country opted to bar re-election as a way to ensure caudillos would never return. These restrictions have been chipped away, by right-wing leaders, too. In Colombia, conservative president Álvaro Uribe has already changed the constitution once to get re-elected and is mulling a third term now.

Honduras, weary of a parade of generals who overstayed their welcome, was among the Latin nations that barred re-election when it ended military dictatorships and became a democracy in 1981. Since then, nearly every sitting president has toyed with the idea of re-election. None has pushed the idea more openly than Mr. Zelaya.

The son of a conservative rancher, Mr. Zelaya took power four years ago as a centrist. In the past two years, the Stetson-hat-wearing, ballad-singing president has hewn increasingly to the left, finding a soulmate in Mr. Chávez. The Venezuelan president began shipping Honduras cut-rate oil, and Honduras responded by joining Mr. Chávez’s regional trade and political pact, which also includes Venezuela, Bolivia, Cuba, Ecuador and Nicaragua.

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AFP/Getty Images Juan Domingo Perón
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He then took another page from the Chávez blueprint, pushing for a referendum and constitutional rewrite on re-election. The country’s courts, congress and other institutions lined up against Mr. Zelaya, but he vowed to challenge them all, with the people at his back. Shortly before his ouster, when the army refused to take part in the election, the president led a mob to a nearby base to seize the ballots.

Did all this make Mr. Zelaya a caudillo in the making? The world may never know because the Honduran power brokers decided not to take any chances. In booting out Mr. Zelaya at gunpoint, they showed what little faith they had in the country’s institutions to check Mr. Zelaya’s ambitions.

Some argue they acted rashly. “The Pinochets of the world supported the type of people who sent Zelaya out in his pajamas,” says Peter Kornbluh, an analyst at the National Security Archive, a Washington nonprofit, and author of books on dictators including Messrs. Pinochet and Castro. In ousting a democratically elected leader, the Honduran establishment strayed further from democracy than Mr. Zelaya did in attempting to stay, he says.

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AFP/Getty Images A supporter of ousted Honduran President Manuel Zelaya holds a national flag outside Toncontin international Airport in Tegucigalpa. Mr. Zelaya was forced out of the country on June 28.
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While the provisional president, Mr. Micheletti, has taken power in an undemocratic fashion, few Hondurans worry that he will want to stay on. Mr. Micheletti has vowed to hold already-scheduled elections in November, hand over power in January and limit his own presidential aspirations to six months in power.

Angel Nuñez, a 30-year-old Tegucigalpa taxi driver, thinks Mr. Micheletti did the right thing. “Zelaya wanted this place to be Cuba, he wanted absolute power in this country,” he says. Pushing the ex-president aside was the only way to stop “a man who got to thinking he was above the law.”

Domingo Díaz, a 63-year-old social worker, says he’s lived through so many Central American takeovers he’s lost both his count and his interest in them. “No one respected the law,” he said on a recent rainy day. “History will repeat itself,” he says, “but this time I don’t fear it.”


2) Stimulus Aid Is Said to Be Moving Faster
By LOUISE RADNOFSKY and CHRISTOPHER CONKEY

The Obama administration says it has been on a "learning curve" with the economic-stimulus package but has figured out how to spend some of the available billions more quickly.

Spending Stimulus Money Easier Said Than Done1:The White House would like federal departments to spend their stimulus funds more quickly but some departments are hamstrung by red-tape.
Louise Radnofsky explains.
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Many tax cuts, which account for about one-third of the $787 billion package, have already taken effect. But only $60.4 billion of the remaining $499 billion has been spent. Most of the money was always likely to be spent this summer at the earliest as departments wrestled with the increased workload and new requirements imposed by the bill.

The White House says it isn't changing its goal of spending 70% of the funds by September 2010. But amid worries about steep unemployment, the administration has been pressuring agencies to get some money out the door more quickly.

Speedy and SlowSee how much stimulus money each agency is responsible for, and more..
"It was a learning curve, and as we learned more, we were able to accelerate more," said Ed DeSeve, a senior White House adviser.

The Department of Education, for example, scrapped the idea of giving $8.8 billion of general aid to states in two phases and decided to send them all the money after their application was approved. The White House told agencies to find ways to cut red tape and work more closely with recipients of the money to help them spend it.

3) Bush Deserves More Credit on Iran
By JOHN P. HANNAH

Defying their regime once more, Iranians have renewed their protests in the streets of Tehran. Last month, when the protests began, the New York Times ran a story hinting that Iran's demonstrators may have been inspired by an "Obama factor." The article suggested that President Barack Obama's diplomatic outreach, unlike his predecessor's approach, emboldened Iranians to rise up against their regime, demanding it repair relations with America and the world.

The Times reporter drew a stark contrast between the presidency of George W. Bush and that of Mr. Obama. According to the article, "Iran's regime was able to coalesce support by uniting the country against a common enemy: President Bush, who called Iran a pillar of the 'axis of evil.'" Alarmed by Mr. Bush's hostility, Iranians "swallowed their criticism of [their] hard-line regime and united against the common enemy."

Setting aside the article's claims about an "Obama effect," its characterization of the Bush years is unfair and misleading. As someone who served in Mr. Bush's White House, I can attest that the administration's Iran policy was far from perfect. The Islamic Republic's ongoing nuclear program is proof enough of the policy's serious shortcomings. Yet, in light of recent events, it seems apparent that Mr. Bush got some important things concerning Iran right.

First, some facts. Mr. Bush delivered his infamous "axis of evil" speech in January 2002. On several occasions thereafter he followed up with statements harshly attacking the legitimacy of the Iranian regime. He repeatedly distinguished between the people of Iran and their "unelected rulers."

Did Mr. Bush's confrontational posture really lead Iranians to rally behind the regime? Hardly. In November 2002 and again in June 2003, student-led protests rocked Tehran and other Iranian cities, as the New York Times itself acknowledged at the time. In both cases, demonstrators' demands included sweeping democratic reforms. During the 2002 clashes (which dragged on for weeks), the Times reported that protesters had been "boldly critical of the government, including the supreme religious leader [Ali Khamenei], who is normally beyond criticism." The protestors called for the "secularization of the religious system" -- an end to clerical rule.

Similarly, in June 2003, protesters rapidly focused on the need for fundamental change. A manifesto signed by hundreds of intellectuals and clerics declared that Ayatollah Khamenei's claims to absolute power were "a clear heresy towards God and a clear affront to human dignity." The BBC reported that chants of "Death to Khamenei" were heard at the rallies. More than 4,000 people were arrested before the demonstrations were suppressed.

The reality is that large-scale anti-regime protests erupted on multiple occasions throughout Mr. Bush's first term -- the very moment when his Iran policy was most aggressive. The suggestion that Iranians "swallowed their criticism" of the Islamic regime in an anti-American response to Mr. Bush's tough stance is simply not borne out by the facts.

The current crisis in Iran undermines another conventional wisdom about Mr. Bush's Iran policy. Many believe that his policy was grounded in ideology rather than realism. But Mr. Bush's assessment of Iran has so far proven much more accurate than Mr. Obama's. In his eagerness to draw Iran's rulers into negotiations, Mr. Obama has gone to great lengths to signal his acceptance of the Islamic Republic's legitimacy and permanence. In stark contrast, Mr. Bush always understood that large swaths of Iranian society do not consider their regime to be legitimate. They detest it and yearn for freedom and democracy. Mr. Bush knew that regime change was not the crazed fantasy of a small cabal of American neoconservatives. It was the deepest desire of tens of millions of Iranians.

Iran's recent turmoil also sheds light on Mr. Bush's conviction about pressuring the Iranian regime. Critics warned that Mr. Bush's attempt to isolate Iran diplomatically, sanction it economically, and threaten it militarily would trigger a nationalist backlash against Washington. But Mr. Bush believed that such efforts were essential. They would alert the Iranian people, as well as Iran's elites, to the disastrous consequences of the Islamic Republic's policies.

Today, Iran's burgeoning opposition is clearly angered by the country's dismal economy, ashamed of its status as an international pariah, and alarmed by the growing danger of military conflict. Opposition members will not accept the regime's efforts to scapegoat the U.S. Instead, their fury has been directed inward at the brutality, economic mismanagement, and outrageous behavior of the Islamic regime.

As Mr. Obama reassesses his Iran policy in the wake of the Iranian protests, he could do worse than to incorporate at least a few pointers from Mr. Bush's playbook. That would mean an adjusted Iran strategy that sees the Iranian people as allies of the Free World, not the Islamic Republic. It would also mean spending less time trying to reassure Iran's despotic rulers of the U.S.'s benign intentions. Mr. Obama should instead spend more time on using his enormous international popularity to further mobilize the world against Iran's tyrants.

4) Why We Don't Want a Nuclear-Free World: The former defense secretary on the U.S. deterrent and the terrorist threat
By MELANIE KIRKPATRICk

'Nuclear weapons are used every day." So says former Defense Secretary James Schlesinger, speaking last month at his office in a wooded enclave of Maclean, Va. It's a serene setting for Doomsday talk, and Mr. Schlesinger's matter-of-fact tone belies the enormity of the concepts he's explaining -- concepts that were seemingly ignored in this week's Moscow summit between Presidents Barack Obama and Dmitry Medvedev.

Terry Shoffner .
We use nuclear weapons every day, Mr. Schlesinger goes on to explain, "to deter our potential foes and provide reassurance to the allies to whom we offer protection."

Mr. Obama likes to talk about his vision of a nuclear-free world, and in Moscow he and Mr. Medvedev signed an agreement setting targets for sweeping reductions in the world's largest nuclear arsenals. Reflecting on the hour I spent with Mr. Schlesinger, I can't help but think: Do we really want to do this?

For nuclear strategists, Mr. Schlesinger is Yoda, the master of their universe. In addition to being a former defense secretary (Nixon and Ford), he is a former energy secretary (Carter) and former director of central intelligence (Nixon). He has been studying the U.S. nuclear posture since the early 1960s, when he was at the RAND Corporation, a California think tank that often does research for the U.S. government. He's the expert whom Defense Secretary Robert Gates called on last year to lead an investigation into the Air Force's mishandling of nuclear weapons after nuclear-armed cruise missiles were mistakenly flown across the country on a B-52 and nuclear fuses were accidently shipped to Taiwan. Most recently, he's vice chairman of a bipartisan congressional commission that in May issued an urgent warning about the need to maintain a strong U.S. deterrent.

But above all, Mr. Schlesinger is a nuclear realist. Are we heading toward a nuclear-free world anytime soon? He shoots back a one-word answer: "No." I keep silent, hoping he will go on. "We will need a strong deterrent," he finally says, "and that is measured at least in decades -- in my judgment, in fact, more or less in perpetuity. The notion that we can abolish nuclear weapons reflects on a combination of American utopianism and American parochialism. . . . It's like the [1929] Kellogg-Briand Pact renouncing war as an instrument of national policy . . . . It's not based upon an understanding of reality."

In other words: Go ahead and wish for a nuclear-free world, but pray that you don't get what you wish for. A world without nukes would be even more dangerous than a world with them, Mr. Schlesinger argues.

"If, by some miracle, we were able to eliminate nuclear weapons," he says, "what we would have is a number of countries sitting around with breakout capabilities or rumors of breakout capabilities -- for intimidation purposes. . . . and finally, probably, a number of small clandestine stockpiles." This would make the U.S. more vulnerable.

Mr. Schlesinger makes the case for a strong U.S. deterrent. Yes, the Cold War has ended and, yes, while "we worry about Russia's nuclear posture to some degree, it is not just as prominent as it once was." The U.S. still needs to deter Russia, which has the largest nuclear capability of any potential adversary, and the Chinese, who have a modest (and growing) capability. The U.S. nuclear deterrent has no influence on North Korea or Iran, he says, or on nonstate actors. "They're not going to be deterred by the possibility of a nuclear response to actions that they might take," he says.

Mr. Schlesinger refers to the unanimous conclusion of the bipartisan Congressional Commission on the Strategic Posture of the United States, which he co-led with Chairman William Perry. The commission "strongly" recommended that further discussions with the Russians on arms control are "desirable," he says, and that "we should proceed with negotiations on an extension of the START Treaty." That's what Mr. Obama set in motion in Moscow this week. The pact -- whose full name is the Strategic Arms Reduction Treaty -- expires in December. But what's the hurry? Mr. Schlesinger warns about rushing to agree on cuts. "The treaty . . . can be extended for five years. And, if need be, I would extend it for five years."

There's another compelling reason for a strong U.S. deterrent: the U.S. nuclear umbrella, which protects more than 30 allies world-wide. "If we were only protecting the North American continent," he says, "we could do so with far fewer weapons than we have at present in the stockpile." But a principal aim of the U.S. nuclear deterrent is "to provide the necessary reassurance to our allies, both in Asia and in Europe." That includes "our new NATO allies such as Poland and the Baltic States," which, he notes dryly, continue to be concerned about their Russian neighbor. "Indeed, they inform us regularly that they understand the Russians far better than do we."

The congressional commission warned of a coming "tipping point" in proliferation, when more nations might decide to go nuclear if they were to lose confidence in the U.S. deterrent, or in Washington's will to use it. If U.S. allies lose confidence in Washington's ability to protect them, they'll kick off a new nuclear arms race.

That's a reason Mr. Schlesinger wants to bring Japan into the nuclear conversation. "One of the recommendations of the commission is that we start to have a dialogue with the Japanese about strategic capabilities in order both to help enlighten them and to provide reassurance that they will be protected by the U.S. nuclear umbrella. In the past, that has not been the case. Japan never was seriously threatened by Soviet capabilities and that the Soviets looked westward largely is a threat against Western Europe. But now that the Chinese forces have been growing into the many hundreds of weapons, we think that it's necessary to talk to the Japanese in the same way that we have talked to the Europeans over the years."

He reminds me of the comment of Japanese political leader Ichiro Ozawa, who said in 2002 that it would be "easy" for Japan to make nuclear warheads and that it had enough plutonium to make several thousand weapons. "When one contemplates a number like that," Mr. Schlesinger says, "one sees that a substantial role in nonproliferation has been the U.S. nuclear umbrella. Without that, some and perhaps a fair number of our allies would feel the necessity of having their own nuclear capabilities."

He worries about "contagion" in the Middle East, whereby countries will decide to go nuclear if Iran does. "We've long talked about Iran as a tipping point," he says, "in that it might induce Turkey, which has long been protected under NATO, Egypt [and] Saudi Arabia to respond in kind . . . There has been talk about extending the nuclear umbrella to the Middle East in the event that the Iranians are successful in developing that capacity."

Mr. Schlesinger expresses concerns, too, about the safety and reliability of U.S. nuclear weapons, all of which are more than 20 years old. "I am worried about the reliability of the weapons . . . as time passes. Not this year, not next year, but as time passes and the stockpile ages." There is a worry, too, about the "intellectual infrastructure," he says, as Americans who know how to make nuclear weapons either retire or die. And he notes that the "physical infrastructure" is now "well over 60 years" old. Some of it "comes out of the Manhattan Project."

The U.S. is the only major nuclear power that is not modernizing its weapons. "The Russians have a shelf life for their weapons of about 10 years so they are continually replacing" them. The British and the French "stay up to date." And the Chinese and the Indians "continue to add to their stockpiles." But in the U.S., Congress won't even so much as fund R&D for the Reliable Replacement Warhead. "The RRW has become a toxic term on Capitol Hill," Mr. Schlesinger says. Give it a new name, he seems to be suggesting, and try again to get Congress to fund it. "We need to be much more vigorous about life-extension programs" for the weapons.

Finally, we chat about Mr. Schlesinger's nearly half-century as a nuclear strategist. Are we living in a world where the use of nuclear weapons is more likely than it was back then? "The likelihood of a nuclear exchange has substantially gone away," he says. That's the good news. "However, the likelihood of a nuclear terrorist attack on the United States" is greater.

During his RAND years, in the 1960s, Mr. Schlesinger recalls that "we were working on mitigating the possible effects [of a nuclear attack] through civil defense, which, may I say parenthetically, we should be working on now with respect, certainly, to the possibility of a terrorist weapon used against the United States. . . . We should have a much more rapid response capability. . . . We're not as well organized as we should be to respond."

Mr. Schlesinger sees another difference between now and when he started in this business: "Public interest in our strategic posture has faded over the decades," he says. "In the Cold War, it was a most prominent subject. Now, much of the public is barely interested in it. And that has been true of the Congress as well," creating what he delicately refers to as "something of a stalemate in expenditures."

He's raising the alarm. Congress, the administration and Americans ignore it at their peril.

5)Democrats For a Flat Tax? Some California legislators realize revenue from the rich is too volatile
By JOE MATHEWS


Karen Bass is an unlikely tax cutter. She's the Democratic speaker of the California State Assembly, a fierce defender of the labor movement, and an advocate for repealing a constitutional provision that requires that tax increases pass the state legislature with a two-thirds majority.

But as California faces a budget crisis that defies efforts to resolve it, there is a woman-bites-dog story developing with Ms. Bass at its center. By the end of the month, a commission she pushed to create is expected to recommend that the state adopt a flat (or at least flatter) personal income tax and cut or repeal corporate and sales taxes.

Normally, such proposals would be dead on arrival in Sacramento. But now many Democrats, including the speaker, are realizing that what they need is a tax base that will provide steady funding for their programs. In other words, they need a tax base that doesn't count on a large slice of revenue from taxes on a relatively small number of wealthy residents who can flee the state or who are themselves vulnerable to losing a substantial portion of income in a recession.

No one understands the political dynamics of volatile state revenues better than Ms. Bass. She's a progressive who has made finding more money for foster care and children's services a top priority. And after negotiating three rounds of budget cuts in the past year she has grown weary of deficit politics. So, determined to modernize the tax system, Ms. Bass is pledging to put whatever recommendations the commission comes back with to an up or down vote.

If that happens, California's tired budget debate -- which usually pits Democrats against Republicans -- will take on a new twist. This time the debate to watch will be among Democrats as they hash out whether taxes are too progressive to accomplish progressive political goals.

In a public meeting last month, a majority of the commission's 14 members -- seven of whom were appointed by Ms. Bass and her Democratic counterpart in the state Senate, the other seven by California's nominally Republican governor -- seemed to favor replacing the state's six income-tax brackets with a single 6% rate. The plan they mentioned would also eliminate corporate and sales taxes and replace them with a business net receipt tax.

"You have to admit," commissioner member Fred Keeley, a Democrat who is the treasurer of Santa Cruz County, said after the meeting, "that the package is a game changer."

In recent days, Mr. Keeley and other Bass appointees, have countered liberal objections with other proposals. But each adopts the logic of simpler taxation. One would create three income-tax brackets (0%, 4% and 7%). Another would cut corporate taxes and the income-tax rate for top earners while imposing a new fuels tax.

It remains unclear how much Ms. Bass will fight for the commission's recommendations. Underscoring the political sensitivity of tax reform, she has been cautious in recent public comments, emphasizing that she is "open-minded" about supporting the recommendations herself. She told me she didn't like the idea of a "flat tax" if it meant raising the tax burden on poorer and middle-class Californians. But she also said she worried about the state's heavy reliance on about 144,000 wealthy people to pay half of all income taxes for a state with a population of 38 million. "It's a crazy statistic," she said.

Late last year, Ms. Bass convinced Gov. Arnold Schwarzenegger and the state senate's Democratic leader, Darrell Steinberg, to create the Commission on the 21st Century Economy with a mandate for tax reforms that would reduce volatility in state revenue. The Democratic appointees include state tax expert Richard Pomp and Berkeley law school dean Christopher Edley Jr. The governor's appointees include economists Michael Boskin and John Cogan, as well as businessman Gerald Parsky.

"One of the reasons why Californians go through the annual budget ritual in a way that is most years very, very frustrating is that our sources of revenue are far too volatile," Mr. Steinberg said at a December press event.

Other Democrats have made similar points. U.S. Sen. Dianne Feinstein recently explained her state's problems to the New York Times by saying that 55% of state tax revenues come from income tax and 45% of that comes from the top brackets.

Susan Kennedy, a Democrat who serves as Mr. Schwarzenegger's chief of staff and who is the most important unelected official in the Capitol, was recently asked at a business event what the state tax system needed. "Flatness," she replied. "Our revenue stream is way too progressive."

But as the commission gets close to making recommendations, opposition is forming on the left. Liberal-leaning groups that study the budget argue that all taxes are volatile and that the state should raise taxes, particularly on property, to balance its budget. Public employee unions are demanding in blunt terms that Democrats make the tax code more progressive. The American Federation of State, County and Municipal Employees recently asked legislators to sign statements supporting some $44 billion in new taxes, much of them on the wealthy and industry.

Robert Cruickshank, a contributing editor at the progressive blog Calitics, says of the commission's expected recommendations: "Most progressives are not going to support these kind of regressive solutions. You would see a fight if the Democratic legislature made a move to do this."

The commission poses a political quandary for Republicans. Joel Fox, a former president of the Howard Jarvis Taxpayers Association, predicts that libertarians could embrace the flatter taxation while conservative populists might oppose the commission out of fear its reforms would increase government revenues.

But supporters of the commission's proposals are likely to get a fair hearing. Frustration with the California status quo crosses all ideological lines. Even those who disagree with the commission's thrust are glad to have something new to discuss. "I'm really glad they're trying something," said Rick Jacobs, chairman of the Courage Campaign, a progressive Internet network with more than 700,000 members. He argues that the existing state tax system is too regressive. "It's important to push the discussion out."

Privately, some Democrats hope that the commission sparks a debate that will lead to a tax hike. These Democrats want to end the two-thirds vote requirement on tax hikes and lift limits on commercial property taxes put in place by Proposition 13 in 1978. But regardless of the aims of some heading into this debate, the result is that by starting a discussion on tax reform Democrats could create a flatter, simpler tax code for California. These are strange times in the Golden State.

Mr. Mathews, a senior fellow at the New America Foundation, is the author of "The People's Machine: Arnold Schwarzenegger and the Rise of Blockbuster Democracy" (Public Affairs, 2006).

6) Europe Should Hope Obama Fails:The continent has been free riding on the strength of U.S. capitalism
By JEFF DURSTEWITZ


It's clear by now that President Barack Obama wants to turn the United States into something more like Germany or Belgium -- a "social democracy" in which redistribution ("spread the wealth around," as Mr. Obama explained to Joe the Plumber during the campaign) is an expanding government's main concern.


Europe, for its part, has reciprocated our president's apparent love of their system by treating him like a messiah. He is the man, they sense, who will finally make good on George H.W. Bush's famous promise in 1988 to make America a "kinder and gentler nation."

Alas, this mutual love is self-defeating. That's because Mr. Obama will doom the low-growth, weak-defense European model to the extent he gets the U.S. to emulate it.

Consider some basic facts: Europe has been riding on our economic coattails and sheltering under our defense umbrella since the end of World War II nearly 65 years ago. Our markets have been open to European goods, and our strong currency and relative affluence -- the product of our much-maligned free-market economic model -- have provided Europe with a ready buyer. (Question: How worried were French wine-makers about Americans boycotting French wines in 2003? Answer: très worried.)

While providing a huge market for Europe's goods, we've also substantially relieved the European powers of the burden of defending themselves. Yes, France has an aircraft carrier and a nuclear force de frappe, but it's not really capable of projecting significant force around the world anymore. Germany, the world's third-largest economy, has a vestigial high-seas fleet and a modest air force. Even the Royal Navy is a shadow of its former self. "The U.S. last year spent about 44% more on defense than all other NATO members combined," Robert Wall recently noted in Aviation Week.

By assuming Europe's defense the U.S. has, in effect, allowed it the luxury of extremely expensive and ultimately unsustainable social-welfarism.

The great irony here is that the European model American leftists envy couldn't survive without its despised cowboy counterparty. If the U.S. economy weakens because of increased regulation, heavy-handed unionization, and higher taxes and debt to support an expensive social agenda -- all policies Mr. Obama and the Democrats in Congress are pushing hard -- it will hurt Europe.

The market for Europe's exports will shrink, and the U.S. will be less able to defend Europe. Europe is also facing a demographic cataclysm in the near future because of low birth rates (under 1.3 children per woman in the EU, well below the 2.1 necessary to maintain the population). Thus Europe will be increasingly unable to sustain its current welfare state, the very model that the left in the United States adores.

Mr. Durstewitz is co-author of "Younger Than That Now -- A Shared Passage From the Sixties" (Bantam, 2001).

7) Health Bill in House Relies on Wealth Tax
By GREG HITT and MARTIN VAUGHAN

House Democrats plan to pay for their health-care legislation with a big tax increase on wealthy households, aiming to raise $540 billion over the next decade with a package of surtaxes on families making $350,000 or more.

The tax increase is the financial cornerstone of legislation that seeks to make good on President Barack Obama's call to expand health-insurance coverage to tens of millions of uninsured Americans, while attempting to offset the cost and avoid expanding the federal budget deficit.

The House bill, expected to be formally unveiled as soon as Monday, is likely to cost $1 trillion overall. About half the cost of the bill will come from budget savings from ratcheting down payments that health-care providers receive through programs like Medicare, which covers the elderly. The balance will come from revenues generated by a graduated surtax that would begin in 2011, said New York Rep. Charles Rangel, chairman of the tax-writing House Ways and Means Committee.

Upper-income families currently face a top income-tax rate of 35%, though that is scheduled to rise to 39.6% in 2011. Under the Rangel plan, married couples making $350,000 would also be subject to a 1% surtax to cover the health plan. The levy would rise to 2% for those making above $500,000 and 3% for those with incomes of $1 million or more. Around 1% of U.S. households filing tax returns make more than $350,000, according to the Internal Revenue Service.

Congressional aides said the surtax rates would go higher as soon as 2013—to 2%, 3% and about 5% for each of the three levels. They added, though, that the higher rates might not kick in if other ways to pay for the health plan were found by then.

Mr. Rangel offered details of the financing plan Friday after emerging from a daylong caucus of Democrats on the Ways and Means panel. House Democrats aim to convene three key committees next week to formally consider the package. The legislation, which would create a public health-insurance plan that competes with private insurers, is expected to be brought before the full House by the end of the month.

But even as details are coming together, Democratic leaders are scrambling to win support from fiscal conservatives, rural Democrats and politically vulnerable freshmen who have all raised objections. Some worry the public plan will tilt the marketplace against private insurers. Others worry about the cost of the package, and fear having to vote on a bill that includes such substantial tax increases.

"I'm not persuaded any sort of tax increase is needed," said Rep. Gerald Connolly, a first-term Democrat from Virginia. He suggests Democrats should focus more on finding budget savings. "The jury is still out on what, if anything, we have to do for revenue enhancement."

The struggle for unity among Democrats dramatizes the larger challenge facing the majority party: whether rank-and-file Democrats are willing to stomach higher taxes in the pursuit of expanding access to health care.

Throughout 2008, Mr. Obama himself signaled a readiness to raise taxes on wealthy individuals as a way to pay for his priorities. In his budget unveiled in the spring, Mr. Obama assumed the Bush tax cuts for the wealthy would expire at the end of 2010. Those higher rates would fall on couples with incomes above $250,000. Mr. Obama also proposed to limit tax deductions taken by the wealthy to help pay for heath care.

A White House aide speaking on background said the majority of the funding for the health-care overhaul should come from budget savings, such as cuts in wasteful spending in Medicare and Medicaid, which provides care for the poor. The White House aide added that "Congress is making good progress" in looking for addition revenues beyond budget cuts. "There are several good ideas on the table," the aide said, pointing to the president's proposal to limit itemized deductions for the wealthy.

Democratic leaders argued Mr. Obama's efforts have made raising taxes on the wealthy an easier political gambit than such alternatives as taxing health benefits. Broadly, they hope to steer debate away from the cost of the bill and how to finance it. "The big debate is going to be between those who want to protect the status quo, and those who want to reform our health-care system," said Rep. Chris Van Hollen (D., Md.).

Curtis Dubay, a senior tax policy analyst at the Heritage Foundation, a conservative think tank, said the Democratic plans to raise taxes on the wealthy could backfire politically. "There certainly will be a steep price to pay," he said.

Michael Steel, a spokesman for House Minority Leader John Boehner (R., Ohio) criticized Mr. Rangel's proposal, underscoring the Republican line of attack. "In the middle of a serious recession, with unemployment nearing double digits nationwide, the last thing we need is a tax increase on small businesses, which will cost the American economy even more jobs," he said.

Even if the House does embrace the higher income taxes, that doesn't guarantee the levies would be part of a final health bill. Senators are separately deliberating on their own versions of a health plan, and higher taxes are likely to face more resistance in the Senate.

After discarding a proposed tax on health-care benefits as too politically risky, Senate Democrats are considering a range of alternatives, including possible levies on pharmaceutical companies and insurers, as well as a surtax on wealthy individuals. Details of the Senate bill are not expected to be nailed down until later this month.

Party leaders argue taxes on the wealthy are more easily defended than other levies, such as the proposed tax on health-care benefits. The issue of financing has produced a sharp debate among Democrats, in part because the issue is exposing the party to political attacks from Republicans.

GOP leaders have pounded the Democrats for proposing to raise taxes during a recession, which they argue would further stunt economic growth. The Republican National Committee swatted at Democrats again Friday, saying their plan to pay for health-care legislation "would hit small businesses hard," since small-business owners often pay their business taxes as part of their personal income taxes.

Under the emerging House bill, the second increase in surtax rates wouldn't kick in if budget savings exceed expectations and cover the cost of the bill. That was a nod toward House Majority Whip James Clyburn (D., S.C.), who suggested that putting a trigger on the surtax could mollify restive Democrats.

"What I'm talking about is not unprecedented," Mr. Clyburn said in an interview. He noted that other lawmakers are proposing a trigger for the public plan, in case other provisions in a health-care overhaul don't lower the number of uninsured Americans as rapidly as planned.
7)The Massachusetts Health Mess:Massachusetts shows how ObamaCare would really work

In a rational world, the prognosis for ObamaCare would wait on the evidence in Massachusetts, given that the commonwealth's 2006 program closely resembles what Democrats are trying to do in Washington. If the results were widely known, it might be dead on arrival.

The Massachusetts law, which was championed by former GOP Governor Mitt Romney, imposed an individual mandate, requiring nearly all residents to buy health insurance or else pay a penalty. (The exceptions are those who qualify for the state's public program.) This was supposed to cover everybody and save money too. We've written before about how costs have exploded, but it also turns out that consumers have other ideas.

For 15 years Massachusetts has also imposed mandates known as guaranteed issue and community rating -- meaning that insurers must cover anyone who applies, regardless of health or pre-existing conditions, and also charge everyone the same premium (or close to it). Yet these mandates allow people to wait until they're sick, or just before they're about to incur major medical expenses, to buy insurance. This drives up costs for everyone else, which helps explain why small-group coverage in Massachusetts is so much more expensive than in most of the country. Mr. Romney argued -- as Democrats are arguing now -- that the individual mandate would make that problem disappear, since everyone is always supposed to be covered.

Well, the returns are rolling in, and a useful case study comes from the community-based health plan Harvard-Pilgrim. CEO Charlie Baker reports that his company has seen an "astonishing" uptick in people buying coverage for a few months at a time, running up high medical bills, and then dumping the policy after treatment is completed and paid for. Harvard-Pilgrim estimates that between April 2008 and March 2009, about 40% of its new enrollees stayed with it for fewer than five months and on average incurred about $2,400 per person in monthly medical expenses. That's about 600% higher than Harvard-Pilgrim would have otherwise expected.

The individual mandate penalty for not having coverage is only about $900, so people seem to be gaming the Massachusetts system. "This is a problem," Mr. Baker writes on his blog, in the understatement of the year. "It is raising the prices paid by individuals and small businesses who are doing the right thing by purchasing twelve months of health insurance, and it's turning the whole notion of shared responsibility on its ear."

Mr. Baker is right, though he underestimates the extent to which it is rational for people to do this, considering the government-mandated incentives. To one degree or another all insurance pools require the younger and healthier to subsidize the older and sicker, though part of the risk-sharing bargain is the hedge against unanticipated or future health problems -- i.e., true insurance. The combination of guaranteed issue and community rating actively encourages parts of the healthier population to forgo coverage and thus blow up voluntary risk pools. No doubt our politicians will conclude that the solution is to raise the penalty for going uninsured, though it would be easier and more rational to let insurance markets function without mandates.

For many Democrats, none of this is really a surprise, or even important. Their Rube Goldberg rules are meant to transfer the costs of health care away from individuals and onto someone else -- private companies like Harvard-Pilgrim in the short term, and over time onto taxpayers. Why lobbyist Karen Ignagni is still putting the health-insurance industry's head on the Washington chopping block is a mystery for the ages.

10)FINALLY...THE $50,000 QUESTION WAS ASKED!!!!!.....YESTERDAY ON THE "ABC..OBAMA SPECIAL ON HEALTH CARE"......OBAMA WAS ASKED, "MR. PRESIDENT WILL YOU AND YOUR FAMILY GIVE UP YOUR CURRENT HEALTH CARE PROGRAM AND JOIN THE NEW "UNIVERSAL HEALTH CARE PROGRAM" THAT THE REST OF US WILL BE ON ????.....OBAMA IGNORED THE QUESTION AND DIDN'T ANSWER IT!!!.....A NUMBER OF SENATORS WERE ASKED THE SAME QUESTION AND THEIR RESPONSE WAS...WE WILL THINK ABOUT IT!!!!

IT WAS ALSO ANNOUNCED TODAY ON THE NEWS THAT THE "KENNEDY HEALTH CARE BILL"....HAS WRITTEN INTO IT THAT CONGRESS WILL BE (FROM THIS GREAT HEALTH CARE PLAN)….EXEMPT!!!!!

HOW ABOUT THOSE APPLES.....NOT GOOD ENOUGH FOR OBAMA OR CONGRESS.....BUT "OK" FOR THE REST OF US????????

11)In a recent editorial, Peter Schiff reminded me of what my late friend Harry Browne, the former Libertarian Party candidate for president, used to say: “The government is great at breaking your leg, handing you a crutch, and then saying, ‘You see, without me, you couldn’t walk.’” That maxim is clearly illustrated by the financial industry regulatory reforms proposed recently by the Obama administration. (“Would you like a broken arm, or would you prefer a broken leg?”)

Semper Fi - Ed! Interview of Arad - A Must Read!

Sent to me by one of my harshest Liberal critics, a friend, himself a decorated war hero and fellow memo reader. (See 1 below.)

Commentary regarding Obamaville and why many who voted with their feet are now beginning to reject the man they also voted for with their hearts and mind. (See 2 below.)

A college professor gives Obama credit for changing his posture and rhetoric vis a vis Iran but still has severe reservations about his principles, understanding of what being an America means and his willingness to measure up to former presidents who did. He looks at Obama and sees the ghost of Jimmy Carter. (See 3 below.)

We have another writer contrasting Obama's recent Moscow performance with that of Ronald Reagan's - both good communicators. The latter addressed the Russian people and students and spoke about religious freedom etc. Our current president took a different tack.(See 3a below.)

Then Jonah Goldberg writes that Obama's foreign policy is finally taking shape and what he concludes is Obama has an ideological problem understanding democracy.

Goldberg's conclusion is not difficult to understand if one dispassionately looks at Obama's family background, his formal education, his church affiliation, employment exprience and path, voting record ,such as it was, and even whom he chose to marry.

Obama has been exposed to the downsides of Democracy all the while benefitting from its blessings. He continues conflicted by the experiences of the two.(See 3b below.)

A fascinating and very revealing 'must read' interview with Dr. Uzi Arad, Netanyahu's closest confidant, right hand and national security advisor. Arad is a brilliant realist and mourns the fact that there are no Sadats and Mandellas among the Palestinians. (See 4 below.)

Iran's Foreign Minister is preparing a dossier of new issues for discussion with the West. (See 5 below.)

al Qaeda leadership frustrated by Predator and covert effectiveness. (See 6 below.)

From a dear English 'bloke' friend and fellow memo reader who I wish would come visit with his lovely wife. (See 7 below.)

Have a great week.

Dick


1)The New York Times was recently filled with page after page of accolades spewing forth about the greatness and complexity of Michael
Jackson.

The other day, they had a couple of paragraphs on Ed McMahon's Hollywood career and aptly noted he died a pauper.

Something wrong with American journalism? Same is wrong with America's ptiorities as we decend into the abyss of the National Inquirerization of N America!


COLONEL ED HAS DIED


He wanted to be a Marine fighter pilot. The US was building up their military force, but they were not at war yet and the Navy required all its potential Navy and Marine pilots to have two years of college. So Ed started classes at Boston College.


When Pearl Harbor was attacked the Army and the Navy both dropped the college requirement and Ed applied to the Marines. His primary flight training was in Dallas and then he went to Pensacola , Florida . He was carrier qualified, which means he knew how to perform a controlled crash of his single engine fighter, onto the rolling deck of a Navy floating runway.


It took Ed almost two years to get through all the Navy flight training. His problem was he was a very good pilot and the Marines needed flight instructors. He had a great command presence and public speaking ability, which landed him in the classroom, training new baby
Marine pilots.


His orders to the Pacific fleet and the chance to fly combat missions off a carrier came in the spring of 1945, on the same day the Atomic bomb was dropped on Hiroshima . Of course his orders where changed. He never went to sea and he was out of the Marines in 1946.


Ed stayed in the USMC as a reserve officer. He became a successful personality in the new TV medium, after the war. His Marine command presence helped. He was recalled to active duty during the Korean War. He never got to fly his fighter aircraft, but he saw his share of raw combat. He flew the Cessna O-1E Bird Dog, which is a single engine slow-moving unarmed plane. He functioned as an artillery spotter for the Marine batteries on the ground and as a forward controller for the Navy & Marine fighter/bombers who flew in on fast moving jet engines, bombed the area and were gone in seconds. Captain Ed was still circling
the enemy looking for more targets, all the time taking North Korean and Chinese ground fire.


He stayed with the Marines as a reserve officer and retired in 1966 as a
Colonel.


The world knows Ed as Ed McMahon of the Johnny Carson, Tonight Show. One night I was watching the show when the subject of Colonel McMahon earning a number of Navy Air Medals came up. Carson, a former Navy officer, understood the significance of these medals, but McMahon shrugged it off, saying that if you flew enough combat m issions they just sort of gave them to you. McMahon flew 85 combat missions over North Korea ; he earned every one of those Air Medals. The casualty rate, for flying forward air controllers in Korea sometimes exceeded 50% of a squadron's manpower. McMahon was lucky to have gotten home
from that war.


Once a Marine, always a Marine.


When the public was spitting (taking their personal safety into their own hands) at Marines on the streets of Southern California during Vietnam , Colonel McMahon was taking Marines off the streets and into his posh Beverley Hills home. I spoke to a retired Marine aircrew
member the day Colonel McMahon died and he personally remembered seeing McMahon at numerous Marine Air Bases in California in the 1960s. He was known for going to the Navy hospitals and visiting the wounded Marines and Sailors from this country's conflicts, even in the last
years of his life.


Colonel McMahon presented awards and decorations to fellow Marines and attended many a Marine ceremony and the annual Marine Corps Birthday Ball. He stayed true to his Corps as a board member of the Marine Corps Scholarship Fund and as the honorary chairman of the National Marine Corps Aviation Museum.. After retiring from the Marine Reserve, one
night on the Johnny Carson show, members of the California Air National Guard came on stage.


Colonel McMahon was commissioned a Brigadier General in the Air Guard in front of millions of Americans who watched it happen live. You will not see anything like that on TV anymore.


The three core values of a United States Marine are; honor, courage and commitment. This is what a Marine is taught from the first day of training and this is what that Marine believes. That was Colonel Edward P. McMahon Jr. USMCR Retired. Before he was a national figure he was a true combat hero and a patriot the nation needed then and this country
needs now.

Your war is over. Thank you Colonel McMahon.

Semper Fi Sir.


Major Van Harl USAF Ret.
23 June, 2009

2) Obamaville City Limits
By Rosslyn Smith

As I read founder of Creators Syndicates Rick Newcombe's explanation of why he is moving his business out of the increasingly corrupt confines of Los Angeles and the anti growth policies of California in general, I had to wonder. Business aren't the only one who relocate to get away from high taxes and arbitrary, out of control bureaucrats.


Americans have been voting with their feet for decades now. During the last half of the
20th century, all across America, married people with children voted with their feet rather than take on the dirty job of trying to reform the nation's corrupt urban political systems and the seemingly impossible task of fixing urban school systems.

It was do that, or shell out a small fortune in local taxes and then pay private school tuition for your children's education on top of it.


Mayor Daley, a consummate political survivor, now rules Chicago from a much different power base than the largely white blue collar machine he inherited from his father. First he helped minority factions get their own share of the patronage spoils. Then he co-opted the white progressives faction that so actively opposed his father, and courted professional singles and empty nesters who wanted a clean, orderly and crime free Lakefront full of sidewalk cafes, median planters and wrought iron fences.


In the process, he encouraged real estate development that priced the working class families that were the backbone of his father's coalition out of many parts of the city. I suspect a great many of the children of the people who actively supported him in the 1983 election now live in the burgeoning exurb of Oswego. One sign of this change was when Daley himself in the mid 90s moved his official residence from a Bridgeport bungalow to a Lakefront townhouse. (A lot of detractors say both Mayors Daley may have spent more time in a family compound in the lovely little vacation hamlet of Grand Beach, Michigan than at their official residences.)


Whole states can seem to empty out when things get too bad. A headline in the Detroit News earlier this year noted: "Eight-year population exodus staggers state."


"Migration is good for the migrants but bad for the state they're leaving," said Mark Partridge, an economics professor at Ohio State University who specializes in the study of migration patterns. "It's a vicious downward cycle; the best and brightest leave; entrepreneurs don't come to the state because the best and brightest are elsewhere; as more people leave, that leaves fewer people to pay for services. Neither one will make Michigan a very appealing place."


This tendency to vote with one's feet can lull the politicians and bureaucrats who helped create the mess into a false sense of security, as those with the greatest stake in vigorously pursuing a different policy course can often be the first to leave for greener pastures. Our urban political machines have survived counterproductive policies of over-regulation and over spending largely because most people who don't like their methods find it easier to move to a community where like-minded people are clearly in the majority than to stand and fight. This includes politicians. For every Rudy Guiliani who has a genuine love for the city, there are many other Republican politicians who moved to the suburbs to begin their political careers in earnest after living in Americas cities for a while after college.


In Obama we have a President who is bringing the methods of the Daley political machine to national government. It is there in the transfer of power to "czars" to consolidate power in the White House. It is there in the move against the Inspectors General. It is there in the spending pattern of the so called stimulus bill, which benefits counties who elect Democrats two dollars to every one spent elsewhere.


Unfortunately for Obama, the nation's political base is largely in the suburbs. I recall reading an analysis many years ago that George H.W. Bush would have won in 1988 without a single vote from inside any of the nation's major cities. In 1992, it was the suburban voters, betrayed by Bush 41 on taxes and unsure of Clinton's Arkansas reputation for corrupt government and personal sleaze, that rallied to Ross Perot. Over the years, the Democrat Party had begun to make inroads among these voters, often because the Republicans had not lived up to their own rhetoric on smaller and more honest government. One reason John McCain selected Sarah Palin as a running mate is because she is the classic "go-gooer", the derisive term corrupt politicians and jaded reporters use for those who run on the platform of good government and then actually do try to reform the system.


Many suburbanites voted for Obama out of a mixture of white guilt and the hope that he meant what he said about a post racial world, honest transparent government and no tax increases. Such voters do not see themselves as racists for fleeing the cities in the first place. They see themselves as realists who were not willing to risk their own children's future on the social experiment of court ordered integration. They voted for what Obama promised, not what he is delivering. It's not just the rising unemployment and exploding deficit that bothers these people. They don't like what they are seeing in stimulus dollars going to prop up government employee unions. The support for a Supreme Court candidate who is definitely not color blind has plummeted among political independents.


In Barack Obama's world, married people with children regularly do pay $5,000 and $10,000 a year in property taxes, then shell out private school tuition at Francis Parker, the Latin School and the Lab School, all the while looking down their noses at the philistines who live in the suburbs. In unguarded moments on the campaign trail, you could see some of Hyde Park's disdain for suburban living.


Obama is starting to find out that suburban voters are going to balk at his proposals. It began with the Tea Parties, a small city and suburban movement. It is continuing with protests on health care reform. Protest marches are unusual activities for middle class people with private sector jobs, who as a rule do not like messy politics. But they will fight because unlike the situation Obama knew in Chicago, there is no alternative. No Henderson, Nevada, Oswego, Illinois or Derry, New Hampshire lies beckoning just across the city limits from Obamaville.

3) James Earl Obama?
By Paul Kengor

In one of numerous infamous moments during a disastrous presidency, President Jimmy Carter, in December 1978, was asked by reporters if he thought the Shah of Iran would survive the crisis that threatened to give birth to history's worst theocratic-terrorist-Islamist state.


"I don't know," offered Carter. "I hope so. This is something that is in the hands of the people of Iran. We have never had any intention and don't have any intention of trying to intercede in the internal political affairs of Iran. We personally prefer that the Shah maintain a major role in the government, but that's a decision for the Iranian people to make."


This statement of stunning passivity and ambiguity set off an earthquake. It was a fatal vote of no confidence in the Shah from the most important country in the world, from Iran's top ally, and from the Shah's longtime protector and benefactor. Iranians placed enormous stock in Uncle Sam's statements, and the American president had made it clear that the Shah's fate was no longer in America's hands. The situation was an Iranian "internal affair." America should not meddle.


It would be only weeks after that Carter statement that the Shah was finished, and Iran became a global nightmare.


I've thought of that moment often since Iran erupted a few weeks ago, and still continues to reverberate, even as America's news media has turned to higher priorities, like Michael Jackson. I registered my own vote of no confidence: in President Obama's initial responses to the historic opportunity in Iran, which were eerily reminiscent of President Carter.


After first saying nothing, Obama did worse when he issued a jaw-dropping, Carter-like appraisal on June 15:


"[W]e respect Iranian sovereignty and want to avoid the United States being the issue inside of Iran."


The leader of the free world didn't want to meddle in Iran's internal affairs.


In this publication, I blasted President Obama for this inexcusable response to the Iranian freedom fighters, which was precisely the wrong approach.


To be fair, Obama, since then, has responded with much stronger rhetoric. This was clearly the result of sharp criticism from all sides, including some liberals. It was telling when even CNN, on the morning of June 22, led with a spot-on swipe at Obama by Congressman Mike Pence (R-IN), who trenchantly observed that when President Reagan stood in front of the Brandenburg Gate, he didn't say, "Mr. Gorbachev, this wall is none of our business."


CNN followed the Pence clip with an interview with a Democratic Party activist who wrote a critical piece on Obama for the Huffington Post.


Amid that negative reaction, there were two new polls (Gallup and Rasmussen), conducted during the Iran crisis, that showed notable declines in Obama's approval rating. The House of Representatives manned up in a way that Obama refused, passing a resolution supporting the Iranian freedom fighters by a margin of 405 to 1, and only after Democratic leaders had worked with the Obama White House to tone down the resolution. The pressure on the American president -- with the entire world begging him to stand for American principles -- mounted dramatically as footage rolled from Iran of beatings and shootings in the capital, including the cold-blooded execution of the woman known as "Neda."


Suddenly, in a blatant political turnabout suggestive of the soulless Bill Clinton more than the principled George W. Bush, Barack Obama turned on a dime and progressively ratcheted up his response to Iran's theocrat-terrorists.


The man who had first stood silent, and then stood aside Italy's leader on June 15 and muttered, "we respect Iranian sovereignty and want to avoid the United States being the issue inside of Iran," or who had stood beside South Korea's leader on June 16 and expressed his fears of American "meddling" in Iran, had transformed into a critic.


By June 26, a stoic Obama suddenly stood aside Germany's leader and condemned the "outrageous" "brutality" and "ruthlessness" and "violence" of the mullahs, against the "extraordinary bravery and extraordinary courage" of the "Iranian people."


Obama had made quite a change, from what Ralph Peters aptly described as "silent complicity" (June 18) to, alas, openly stating that he was "appalled and outraged" at the Iranian leadership (June 23).


So, kudos to President Obama for reevaluating mid-course, for whatever reason or motivation, and adopting a truly American approach to this cry for liberty. We must give credit where credit is due.


That said, Obama's handling of this crisis reveals some serious problems and questions going forward:


First and foremost, Obama hasn't cloaked his rhetoric in any sort of understanding of the American ideal or the inspiring Reagan concept of a March of Freedom that was invoked by George W. Bush. Rather than anchoring his worldview in the vision of the American Founders, Obama echoes a bland U.N.-speak about the "desires of the international community" and "universal norms" (June 26). That's not necessarily bad, on the face of it, but it reveals him as more the modern globalist -- an empty cupboard -- than the inheritor of the torch of freedom carried from Thomas Paine and Thomas Jefferson to the presidents who won the 20th century. It is America, not the United Nations and European Union, that has been the force for good -- for freedom.


In short, I fear that Obama still doesn't get it.


Second, as noted, Obama undoubtedly reacted primarily to criticism of his depressingly weak support of the Iranian people; he reacted to politics, and opinion polls, and popular sentiment, more than principle. While that's better than nothing, it is merely short-term improvement, even window-dressing, and does nothing for the crucial long haul. Indeed, tapping freedom's potential in Iran is a long-term prospect, as Reagan did with Poland, or as Bush has hopefully achieved in Iraq.


Think about this: In Poland, martial law was declared in December 1981, and Reagan reacted very strongly, very swiftly right away. Equally significant, however, he followed up with a sustained effort that lasted eight years, until finally freedom was unleashed the year Reagan left the presidency, with free and fair elections taking place in Poland in June 1989 -- the precursor to the fall of the Berlin Wall only months later.


Likewise, the increasing stability in Iraq in 2009 comes only after George W. Bush's obviously intense undertaking beginning in 2002.


If Obama really cares about advancing liberty in Iran, about carrying the March of Freedom throughout the Middle East, then he will follow his improved rhetoric with a concerted commitment -- overt and covert -- to help produce the fruits of liberty.


Judging by what I've seen thus far, I'm skeptical. We need a president who gets this in the gut, who doesn't need to learn these things on the job, when it's usually too late, and who doesn't -- like Jimmy Carter -- make embarrassing mistake after mistake. We need someone who understands what it means to lead the free world.


Paul Kengor is professor of political science at Grove City College. His recent books include The Judge: William P. Clark, Ronald Reagan's Top Hand and The Crusader: Ronald Reagan and the Fall of Communism.

3a) From Russia -- Without Love
By Ken Blackwell

President Obama's recent trip to Russia contrasts sharply with Ronald Reagan's 1988 visit to Moscow. President Reagan reached out to the Russian people, too. He gave the first nationally televised speech ever delivered-uncensored-to the peoples of Russia.


Reagan made a point of speaking of religious freedom and invoking God's blessing on the Russian people.


Like Obama, Reagan also spoke to elite students. But unlike Obama, Reagan made a point of telling students at Moscow State University in the most civil terms why despotism was wrong. The Information Age then in its dawn was physically based, he told the sons and daughters of the Communist Party's nomenklatura, on the silicon dioxide chip. This chip is the same material substance as sand. But, Reagan emphasized, in order for the computer revolution to succeed, there must be freedom.


His bright listeners could read between the lines. He was telling them Marxism was wrong, that Communism was a failure. He was saying you cannot compete in the computer revolution if you have to station a KGB agent at every computer terminal.


Watching President Reagan delivering these liberating truths-under a scowling statue of Vladimir Lenin-you half expected the old Bolshevik's bald bust to fall off its pedestal. In a few months, Lenin statues would be toppling all over the Soviet empire.


Obama's approach was completely different. Most unwisely, Obama showed disrespect for Vladimir Putin while showing elaborate courtesy to Dmitri Medvedev. Obama spoke about "setting the reset button" in U.S.-Russian relations. (I don't know how to spell "reset" in Russian, but apparently Hillary Clinton's State Department can't spell it, either.)


Anyone who has followed post-Cold War Russia knows that it is Putin and not Medvedev who is calling the shots. Obama's failed attempt to jolly up Medvedev while giving the cold shoulder to Putin is like hugging the monkey while dissing the organ grinder.


Imagine if FDR had insisted on meeting with President Kalinin instead of Joe Stalin during World War II. Everyone then knew that if you wanted to deal with Russia, you had to deal with Russia's real boss.


President Reagan set the bar for dealing with Russians. There is no more Soviet Union, largely because Reagan helped bring down an evil empire-without war. He never got a Nobel Peace Prize, of course. Those are reserved for the likes of Yasser Arafat, the inventor of air piracy. But Obama could learn a lot from Ronald Reagan. What part of his success would we want to "reset?"


Ken Blackwell is a former US Ambassador to the United Nations Human Rights Commission and a senior fellow at the Family Research Council.

3b) Obama's Democracy Problem
By Jonah Goldberg

The Obama Doctrine is finally coming into focus.

It's been hard to glean its form because for so long it seemed the president's most obvious guiding principle was "not Bush," particularly when it came to the Iraq War. Indeed, his anti-Bush stance has led him to stubbornly refuse to say the war has been won or to admit that he was wrong to oppose the surge. In the past, this unthinking reflex has caused Obama to take some truly repugnant positions. In July 2007, Obama said that he would order U.S. forces out of Iraq as quickly as possible, even if he knew it would lead to an Iraqi genocide. This makes Obama the first president in modern memory to have suggested that causing a genocide would be in America's national interest.

Obama himself insists that he's guided by nothing other than a cool-headed pragmatism. Indeed, Obama has a grating habit of describing any position not his own as "ideological," as if his is the only sober, practical understanding of the problems we face. Just days before he was inaugurated, he gave a speech in Baltimore in which he proclaimed, "What is required is a new declaration of independence, not just in our nation, but in our own lives - from ideology and small thinking, prejudice and bigotry - an appeal not to our easy instincts but to our better angels."

So ideologues - i.e. millions of Americans who disagree with his policies on principle - belong in a list along with bigots and dim bulbs. At home, this attitude has allowed him to dismiss opponents of socialized medicine and the government takeover of various industries as "ideologues," and critics of trillions in debt-fueled spending as small-minded cranks.

Joshua Muravchik, a scholar at Johns Hopkins University and a leading advocate of democracy promotion around the globe, demonstrates in the current issue of Commentary that Obama has a similar attitude toward those who say America should advance the cause of liberty and democracy worldwide. Again and again, the administration has made it clear that spreading freedom is so much ideological foolishness. Before the inauguration, he told the Washington Post that he was concerned with "actually delivering a better life for people on the ground and less obsessed with form, more concerned with substance." There's merit to this view in principle, though Obama seems to be thinking about "economic justice" more than a free society. But in practice, when American presidents say they don't care about democracy, tyrants rejoice.

In April, at a news conference following a meeting of the Organization of American States, Obama proclaimed, "What we showed here is that we can make progress when we're willing to break free from some of the stale debates and old ideologies that have dominated and distorted the debate in this hemisphere for far too long." Hillary Clinton was more pithy: "Let's put ideology aside," the secretary of state said. "That is so yesterday." It's worth recalling that those old ideological debates often involved America championing democracy against those who pushed for socialism. One wonders which ideological stance Obama thinks is stale.

Obama supporter and Washington Post columnist E. J. Dionne writes that the Obama Doctrine involves restoring America's alliances and working with the international community so we can all do great things together. That's why Obama and Hillary Clinton have been so eager to apologize for America around the globe. One problem with such an approach is that it - so far at least - buys us nothing save the appearance of weakness. Another problem is that quite often, the international community is wrong.

Hence, according to the Obama administration, it's foolishly ideological to resist the U.N.'s accommodation of tyrants and fanatics, while it is "pragmatic" to placate human-rights abusers. It is ideological to show disdain for Venezuela's would-be dictator Hugo Chávez; it is "pragmatic" to stamp as "democratic" his effort to overthrow term limits. It is ideological to sustain sanctions against Burma and Sudan; it's pragmatic to revisit them, even if it disheartens human-rights activists across the ideological spectrum. American exceptionalism is ideological, while seeing America as just another nation is realistic.

The past four weeks show how ideological Obama's un-ideological view really is. In response to the revolutionary protests in Iran, Obama initially favored stability and preserving the fantasy of negotiations with the Iranian clerical junta. Not "meddling" was his top priority. Over time, the rhetoric improved, but the policy remained just as cynical.

Then, events in Honduras revealed that Obama really has no problem with meddling when a left-wing agenda is advanced. Manuel Zelaya, the president of Honduras and a Hugo Chávez wannabe, illegally defied the Honduran Congress, the Supreme Court, and the Constitution in an attempt to repeal term limits (which help sustain democracy in Central America by preventing presidents-for-life). The Supreme Court ordered the military to remove Zelaya from office and expel him from the country. A member of Zelaya's own party replaced him, and elections were announced. But suddenly, Obama - taking much the same position as Fidel Castro and Hugo Chávez - thought America should join the coalition of the meddlers demanding Zelaya's return to power. In Iran, Obama was terrified to do anything that might lead to a coup to bring about democracy. In Honduras, Obama was unwilling to let stand a coup that preserved democracy.

It sure seems like Obama has an ideological problem with democracy.



4) There is no Palestinian Sadat, no Palestinian Mandela'
By Ari Shavit



I began with the personal questions. You are short-tempered, I hurled at him; you have fits of rage. It's true that I am short-tempered, Uzi Arad replied, but I lose patience because of the importance I attach to things. Because I am not cynical. It is important for me to have a high level of professionalism in the Prime Minister's Office and for high standards to be the criterion. I am not a born elitist, but it is important to me that we have a government that sets criteria of superb achievement.

You are an advocate of brute force, I threw at him. Me? Brute force? He smiled. I thought I was actually sensitive. In national and international issues, force is also a language. But I do not like wars between Jews. I prefer to direct the brute-force energies within me at enemies of Israel.

You are a technocrat, I lashed out. This time I hit the mark. The national security adviser was offended. Maybe so, he replied candidly, reflectively. But there are technocrats and there are technocrats. The political party I supported as a youth was Rafi [a party formed by David Ben-Gurion in 1965 after he broke with Mapai, the precursor of Labor; its members included Moshe Dayan and Shimon Peres]. The Rafi ethos was security activism: to get results. On a number of matters I also did things that were innovative and constituted breakthroughs. In any event, I am a proud technocrat. I always strive to do the best for my country.


Arad was born in 1947 in Kibbutz Zikim, just north of the Gaza Strip, and attended the Tichon Hadash high school in Tel Aviv. An outstanding student, he went to Princeton and the most important American research institutes. He served in the Mossad espionage agency for more than 20 years. Afterward he was the national security adviser to Benjamin Netanyahu during the latter's first stint as prime minister (1996-99). He initiated and managed the annual Herzliya Conference on national policy. He specialized in nuclear strategy, a subject he also taught. He was a pioneer in the realm of risk-management policy. In varied and diverse ways, he has been a player in the Israeli security and intelligence drama. A hundred days ago, Dr. Uzi Arad returned to the center of power, as national security adviser.

Arad holds tremendous power. He holds the Iranian portfolio, he conducts the sensitive dialogue with the United States and he is the closest person to the prime minister. Some observers say that Arad has become the strongman of current Israeli policy.

Arad does not say so explicitly, but he believes that his whole professional life has prepared him for this post. As a control freak, he does not rely on others. As a perfectionist, he is highly critical of the work of others. But, being very loyal to the boss, he finds no flaws in him. According to Arad, Netanyahu is a talented, efficient person; no one is better suited to be prime minister. Imbued with a deep sense of mission, Netanyahu and Arad feel they are the right people in the right place at a tough time. It is incumbent on them to be the salvation of the State of Israel.

Do you see any prospect that the conflict will come to an end in the coming years?

Regrettably, we have not so far been successful in bringing about Arab internalization of our right of existence. The Arab and Muslim refusal to recognize Israel's legitimacy is sometimes suppressed and amorphous, at other times sharp and violent, but it is all-embracing. I have not yet encountered an Arab personage who is capable of saying quietly and clearly that he or she accepts Israel's right of existence in the deep historical and conscious sense. Accordingly, it will be difficult to reach a true Israeli-Palestinian agreement that does away with the bulk of the conflict. I don't see that in the coming years it will be possible to forge that different reality which so many Israelis want.

Will a Palestinian state be established on the watch manned by you and Netanyahu?

That is a different story. I don't see among the Palestinians a process of truly drawing closer to acceptance of Israel and peace with Israel. I also do not see a Palestinian leadership or a Palestinian regime but a disorderly constellation of forces and factions. But possibly someone might come along and say I am an engineer of events; the depth doesn't interest me - I am going to produce an event. And within three years - presto - four Annapolises, two disengagements, global pyrotechnics. And then suddenly, in 2015, there is a Palestinian state. Stamps, parades, carnival. That could happen. A fragile structure, yes; an arrangement resting wholly on wobbly foundations. But it could happen. There could be a Palestinian state.

What you are saying is that there will not be true peace, but there might be an American peace event with Hollywood trappings.

Everyone with eyes to see, sees that there is a failure of Palestinian leadership. There is no Palestinian Sadat. There is no Palestinian Mandela. Abu Mazen is not vulgar like Arafat and not militant and extreme like Hamas. There could be worse than him. But even in him I do not discern the interest or the will to arrive at the end of the conflict with Israel. On the contrary, he is preserving eternal grievances against us and intensifying them.

After Olmert offers him almost everything, he says wide gaps remain. And then you reach the conclusion that there really is a receding horizon here; The more Israel moves toward the Palestinians, the more they move away. And they do that because even the moderates among them do not really want a settlement. At most, they are striving toward a settlement in order to renew the confrontation from a better position.

What you are saying is that there is no Palestinian partner for a true peace.

At the moment, there is no one on the map. There are no true peace leaders among the Palestinians. But I am not deterministic. I do not think this is part of the Palestinians' genetic makeup. I want to believe that in the future a different type of leadership will arise. I hope that a Palestinian - woman or man - will emerge who is able to recognize that there is some justice on the Israeli side, too. Because, you know, in Israel there are so many who see the justice of the Palestinians' cause and write about it and make a living from it. Read the paper you work for, for example. But true peace will come when Palestinians emerge who recognize there is also Israeli justice - that there is also a little Israeli justice. At the moment there are none.

Can peace with Syria be achieved during the Netanyahu government?

Here we have a different problem. The majority of Israel's governments insisted that Israel would stay on the Golan Heights. That is also the position of the majority of the public and most MKs. The position is that, if there is a territorial compromise, it is one that still leaves Israel on the Golan Heights and deep into the Golan Heights.

From your point of view, is that the right position to take? That this must be the essence of a settlement - a compromise deep into the Golan Heights? That even in peace we must ensure that a large part of the Golan Heights remain in our hands?

Yes

Why?

For strategic, military and land-settlement reasons. Needs of water, wine and view.

So you say unequivocally: Peace yes, Golan no?

Correct.

What about the "deposit" of Yitzhak Rabin, in which he undertook to leave the Golan Heights?

There is no such thing. In 1996, Netanyahu asked [Secretary of State] Warren Christopher to have the deposit returned to Israel, and so it was. In his letter, Christopher pledged that the deposit was not valid.

What about the concessions made by Netanyahu himself in the negotiations he held with the first President Assad at the end of the 1990s?

Netanyahu's position was that Israel should remain on the Golan Heights at a depth of a few miles. A few miles translates into a lot more kilometers. If you draw a line from Mount Hermon to Al Hama at a depth of a few miles, you will see this leaves a great deal of the Golan Heights, from the south to the north.

Is this still the position of the government today?

The government's position is readiness to resume the negotiations with no prior conditions and with each side aware of the other's position. The Syrians are certainly aware that the Netanyahu government and the majority of the public will not leave the Golan Heights.

Will the Americans accept that? Won't they try to impose a different approach?

The impression is that there are deep differences between Israel and the United States. Israel is saying, first Iran, then Palestine, whereas the United States is saying, first Palestine, then Iran.

Both cases need treatment. We cannot bury our heads in the sand and freeze one issue in order to deal with the other. From the Americans' viewpoint, the achievement that is required in the Israeli-Arab dimension is the establishment of a Palestinian state alongside Israel. The achievement required in the Iranian dimension is not to allow Iran nuclear capability that will enable it to produce nuclear weapons. When Israel says that it feels a more acute need to deal with the Iranian problem, it is right on three counts. First, because the urgency there is overriding; second, because if we succeed there, it will be easier here; and third, because if we do not succeed there, we will not succeed here. If Iran goes nuclear, everything that might be achieved with the Palestinians will be swept away in a tidal wave and go down the tubes overnight.

You have not been able to persuade the Americans of this. On the Palestinian question they have appointed a high-profile senior envoy who is engaging in intensive activity. But in regard to Iran, nothing is happening. As Washington sees it, Ramallah is more urgent than Tehran; the settlements are more dangerous than the centrifuges.

Dov Weisglass [former adviser to Prime Minister Ariel Sharon] built the first stage of the Road Map well, but created catastrophes in the second and third stages. He did so because he was certain that the first stage was a dam in the face of the coming stages. But then came the disengagement which undermined the Road Map on the ground. And then Annapolis undermined the Road Map politically. Olmert and Livni acted contrary to Weisglass's logic and jumped straight to the third stage. So what we had was a series of typical Israeli makeshift exercises. Every two years they came up with a move that completely contradicted the previous move. The result, of course, was the policy debacle that Netanyahu and I had warned against. The Netanyahu government inherited scorched earth from its predecessors.

Do you feel that as a result of Israeli mistakes, the international attitude toward Israel today is extremely unfair?

Completely unfair. I say this in English openly: "extremely unfair." If you want to enforce the clauses of the Road Map, you have to enforce all of them. And security violations are more serious than building violations: Qassam rockets kill people, settlements do not. But I am a formalist. I am in favor of formalism. The thing is, that if they come to us and count every settlement, they have to apply the same indices and the same principles to the Palestinians. Anyone who does not do this is behaving unfairly, but he is also behaving unwisely. He is not advancing the Israeli-Palestinian peace that he would like to see.

Maybe the real problem is the settlements have made Washington fed up with us. Maybe the problem is that Obama and Clinton have lingering issues concerning Netanyahu, hence their chilly behavior toward him.

Isn't the alliance between Rome and Jerusalem wobbly? Don't you have the feeling that just as de Gaulle terminated a 15-year French alliance with Israel after the war in Algeria, Obama will terminate a 40-year American alliance with Israel after the war in Iraq?

Each of them has an interesting potential from our point of view. We must also strive to join NATO and to conclude a defense alliance with the United States. If there is an Israeli-Palestinian settlement that will lead to the establishment of a Palestinian state, membership in NATO and a defense alliance with the United States should be part of the quid pro quo that Israel will receive.

There are some in Israel who fear such developments.

They fear the loss of Israeli freedom of action and that essential elements of [Israel] will be put at risk. But I think that just as France and Britain possess capabilities even within the NATO framework, the same can be true in regard to Israel. Membership in NATO is a logical step and can provide us with a guarantee of mutual security and even add a layer to our deterrence if the Middle East goes nuclear. It is possible that membership in NATO or a defense alliance with the United States will be a condition of a regional settlement.

Point of no return

Your main front as national security adviser will be the danger of a nuclear Iran and a nuclear Middle East. But as far as we know, Iran has already crossed the point of nuclear no-return and has enough fissionable material to assemble a first nuclear bomb.

The point of nuclear no-return was defined as the point at which Iran has the ability to complete the cycle of nuclear fuel production on its own; the point at which it has all the elements to produce fissionable material without depending on outsiders. Iran is now there. I don't know if it has mastered all the technologies, but it is more or less there. However, the term "no-return" is misleading. Even if Iran has fissionable material for one bomb, it is still at a low grade of enrichment. And if it wants to conduct a test, it will not have even one bomb. It follows that Iran is not yet nuclear and not yet operational. Serious obstacles still lie in the way. The international community still has enough time to make it stop of its own volition.

Still, looking back, we see a dramatic failure here. A red line was defined and Iran crossed it.

I told you that the Netanyahu government inherited scorched earth. That is true in any number of spheres. The tragic and heartbreaking story of Gilad Shalit is one example. It was not resolved in any way, shape or form. The same holds true for the Second Lebanon War and for Operation Cast Lead [in Gaza], which caused a great decline in our political status, particularly in Europe. Annapolis got us nowhere, nor did the disengagement. But most serious of all, by far most serious, is Iran's progress toward nuclear capability. I am not saying that nothing was done. Things were done. But if at the end of the day it turns out that Iran is drawing closer to its goal, obviously not enough was done. And what was done was too late, too little and too feeble.

What you are actually saying is that the national leadership in Israel over the past six or seven years understood about Iran and talked about Iran but did not address the Iranian issue with the prioritization, intensiveness and concentration of forces needed?

That is exactly what I am saying. In one case, because the leadership scattered its efforts and resources instead of concentrating them. It preoccupied itself with other issues, such as the disengagement and Annapolis. In a second case, because it did not home in on the main issue - Iran. I will give you an example. Look at how many speeches were delivered here about a democratic Jewish state, democratic and Jewish. The subject was discussed until it was coming out of people's ears. In contrast, look at how many moves were made to curb nuclear Iran by political and diplomatic means. There is no comparison between what the previous government devoted to the two issues. I want to tell you that Javier Solana [the European Union official in charge of foreign policy] racked up more kilometers traveling around the world to address the Iranian issue than the Israeli foreign minister did. Western statesmen did more to prevent Iran from going nuclear than their Israeli counterparts.

Are you contending that there was a monumental political failure here?

A gross failure. Between 2003 and 2007, it was far easier to contain Iran. The Iranian program was lagging behind. American power was more blatant. Various big powers were inclined to cooperate. Iran was more cautious and more vulnerable. But what preoccupied us in 2005? The disengagement. And what preoccupied us in 2007? Annapolis. We mobilized our national resources for empty moves. We wasted political assets on nothing. We talked about the red line of the point of nuclear no-return in Iran, but in practice we were committed only to the artificial red line that stipulated arbitrarily that there would be no more Jews in Gaza by the end of 2005. I tell you that if those mental resources and the determination and tenacity that were displayed in regard to the disengagement had been devoted to preventing Iran from reaching the point of nuclear no-return, Iran would not have got there.

And now that point is behind us?

Yes - in the technological sense, it has been crossed. I believe that in practice we will be able to block Iran. But the line that was termed a "red line" has been crossed.

Was there a policy eclipse here?

Certainly. The Winograd Committee exposed the functional eclipses in the Second Lebanon War. But even though it was a painful and costly event, the limited war of 2006 bore no historic significance. In regard to Iran, if history develops badly, the failure is liable to turn out to be of historic proportions.

I am confident that Netanyahu will know how to cope with the harsh reality he inherited. He is the first Israeli leader to identify and understand in depth the Iranian threat. He is the first who did not talk about a publicity campaign or about military action but about applying levers of economic pressure. Contrary to others, he did not talk about moves involving force and did not issue threats. Netanyahu understands that Iran is the great challenge of this period. He is dealing with the challenge intelligently, responsibly and with the state's interests uppermost.

Isn't it too late? Isn't it time to accept that Iran will be a nuclear power?

I am not at liberty to say what the government of Israel thinks. Nor will I tell you what the U.S. administration thinks. But I will tell you the opinion of professionals from serious research institutes in the United States and Europe. The major fear among professional circles is that a nuclear Iran will burst the dams and cause nuclear proliferation in the region. According to these experts, Saudi Arabia, Egypt and Turkey have certain capabilities. Syria, Libya and Algeria have already tried. Therefore, if Iran goes nuclear, those countries will consider following suit. There is already evidence of this. Those who understand are aware how baseless is the argument that one can extrapolate from the reality of the Cold War to the reality in the Middle East. It is wrong to say that just as we lived with a nuclear Soviet Union and with a nuclear China, we will also be able to live with a nuclear Iran. The subject is not just a nuclear Iran; the subject is a multi-nuclear Middle East. A Middle East in which there are quite a few countries that resemble Pakistan.

Serious experts who are not Israelis look at the Middle East and say that if Iran is nuclear in 2015, the Middle East will be nuclear in 2020. And a multi-nuclear Middle East is a nightmare. Five or six nuclear states in a jumpy and unstable region where the world's energy resources are located will not create nuclear quiet but nuclear disquiet. A nuclear Middle East will be exactly like a pyramid that stands upside down.

It's unlikely that the Iranians will stop after the dialogue that the Americans will perhaps hold with them in the months ahead. The probability of containment without pressure is low.

Unquestionably.

If so, three possibilities remain: them with the bomb, them getting bombed or a maritime blockade.

I hear about a maritime blockade from unofficial American analysts - no one enters or leaves. Iran is very much dependent on the importation of oil distillates and on the export of unrefined oil. So an effective blockade could threaten Iran with bankruptcy within months. In that case, Iran might yield. But it might also decide to challenge those who are cutting it off. From there the road to escalation is short.

So this scenario says that the only way to prevent Iran from getting the bomb is to impose a closure on the country.

Again I want to introduce a cautionary note: what I am saying here does not reflect official Israeli policy or American policy. But there are those in the West who believe that this is the way. The prospect is to confront the Iranian government with a dilemma: Going nuclear or flourishing, going nuclear or survival of the regime. If that will be the dilemma, Tehran might conclude that regime survival is more important than the nuclear project.

What will the West do if there is no maritime blockade or if there is one that fails? In that case, will there be any choice but to prevent the bomb by bombing Iran?

Balance of terror

I was fascinated by Robert Oppenheimer, the Jew who created the first atomic bomb at Los Alamos. Another figure who riveted me was Henry Kissinger, one of the first nuclear strategists. But above all I was drawn to Herman Kahn, with whom I worked at the Hudson Institute.

Kahn is the original Dr. Strangelove. He was a Jewish-American genius who was a salient nuclear hawk and dealt with the planning and feasibility of nuclear wars. Kahn was a towering figure. He was a beacon of intelligence, knowledge and pioneering thought. He combined conceptual productivity, humor and informality. He attracted a group of devotees of whom I was one in the 1970s. But he also had bitter rivals who criticized him for even conceiving of the idea of a nuclear war. In the Cold War it was precisely those who talked about defense and survival who were considered nuclear hawks. The doves talked about "mutual assured destruction," which blocks any possibility of thinking about nuclear weapons. Like Kahn, I was one of the hawks. One of my projects was a paper for the Pentagon on planning a limited nuclear war in Central Europe.

On the face of it, what is the point of this? Why execute the enemy after deterrence has failed? But according to Dror, it is important to ascertain that the deterrence will work, even if you yourself have been destroyed. He sees this as a contribution to the repair of the world [tikkun olam]. When we say "never again," this entails three imperatives: never again will we be felled in mass numbers, never again will we be defenseless and never again will there be a situation in which those who harm us go unpunished.

Is the Holocaust relevant to our strategic thought in an era of a nuclear Middle East?

Look at the way memory guides people like Netanyahu, who refers time and again to the 1930s. Bernard Lewis also said a few years ago that he feels like he is in the late 1930s. What did he mean? On the one hand, an imminent threat, rapidly approaching, and on the other, complacency and conciliation and a cowering coveting of peace. When I visited Yad Vashem [the Holocaust memorial in Jerusalem] not long ago, I could not bear the psychological overload and left halfway through. I don't think there is an Israeli or a Jew who can be insensitive to the Holocaust. It is a painful black hole in our consciousness.

When you look around today, what is your feeling? Are we alone?

We are always alone. Sometimes we have partners and lovers and donors of money, but no one is in our shoes.

I still remember Roosevelt and all the wise and enlightened types of the American security hierarchy in the period of Auschwitz, and I have retained the lesson. In Jewish history and fate there is a dimension of unfairness toward us. We have already been alone once, and even the good and the enlightened did not protect us. Accordingly, we must not be militant, but we must entrench our defense and security prowess and act with wisdom and restraint and caution and sangfroid. Never again.

5) 'Iran preparing new package of issues to present to West'


Iran's Foreign Minister Manouchehr Mottaki on Saturday announced that Teheran is preparing a new package of "political, security and international" issues to put to the West, and downplayed the criticism of Iran by world leaders at the G8 summit.

"The package can be a good basis for talks with the West. The package will contain Iran's stances on political, security and international issues," Reuters quoted Mottaki as telling a news conference.

In Iran's first reaction to warnings from world leaders at the G8 summit on Friday that the Islamic Republic could face tougher sanctions over its nuclear ambitions in September, Mottaki said Teheran had not received "any new message" from the summit.

"We have not received any new message from the G8. But based on the news we have received, they had different views on different issues which did not lead to a unanimous agreement in some areas," the minister reportedly said.

on Friday, US President Barack Obama said the world would not allow Iran to develop nuclear weapons, a day after a senior Iranian official vowed his country would not back down "even one step" over its nuclear work.

"We're not going to just wait indefinitely and allow for the development of a nuclear weapon... and wake up one day and find ourselves in a much worse situation and unable to act," Obama said at the close of the G8 summit.

Obama however stressed that he and others were not looking for their summit partners to embrace sanctions at this week's meeting.

Instead, he said, "What we wanted was exactly what we got - a statement of condemnation about Iran's actions in the wake of its disputed presidential election."

In comments published Thursday, Ali Akbar Velayati, Supreme Leader Ayatollah Ali Khamenei's top adviser on international affairs, said Western countries did not want the Islamic state to have peaceful nuclear activities.

Obama said Friday that G8 leaders voiced their concern about what he called the appalling events surrounding the recent elections and the violence that followed.

"The leaders assembled at L'Aquila also addressed the threat of nuclear proliferation in Iran," he said, "with a strong statement calling on Iran to
fulfill its responsibilities without delay."

"This notion that we were trying to get sanctions or that this was a forum where we could get sanctions was not accurate," the president said.

"I think the real story here was consensus in that [G8] statement, including Russia, which doesn't make statements like that lightly," he said. "Now the other story there was the agreement that we will reevaluate Iran's posture towards negotiating the cessation of a nuclear weapons policy."

"We'll evaluate that at the G20 meeting in September," Obama said. "I think that what that does is, it provides a time frame. The international community has said, 'Here's a door you can walk through that allows you to lessen tensions and more fully join the international community.'"

He added: "If Iran chooses not to walk through that door, then you have on record the G8 to begin with and, I think, potentially a lot of other countries."

Obama said his hope is that the Iranian leadership will recognize that world opinion is clear.

6) New Al-Qaeda Book Betrays Panic Over Predator Strikes, Covert Operations



On June 29, 2009, jihadist websites posted a new 150-page book by senior Al-Qaeda commander Abu Yahya Al-Libi titled Guide to the Laws Regarding Muslim Spies. The book's two introductions, one by Ayman Al-Zawahiri and one by Abu Yahya himself, make it clear that it was written in an attempt to find a means of dealing with the recent campaign of Predator strikes and other covert operations against Al-Qaeda and Taliban targets in Waziristan. The two Al-Qaeda commanders, and Abu Yahya in particular, betray deep distress at the devastating effectiveness of the shadow war against Al-Qaeda, as well as paranoia regarding the ubiquity of hidden enemies.


To view the full report, visit http://www.memrijttm.org/content/en/report.htm?report=3403¶m=GJN.

7) Logging it all in!

1. Teaching Maths In 1970
A logger sells a truckload of timber for £100.
His cost of production is 4/5 of the price.
What is his profit?

2. Teaching Maths In 1980
A logger sells a truckload of timber for £100.
His cost of production is 80% of the price.
What is his profit?

3. Teaching Maths In 1990
A logger sells a truckload of timber for £100.
His cost of production is £80.
How much was his profit?

4. Teaching Maths In 2000
A logger sells a truckload of timber for £100.
His cost of production is £80 and his profit is £20.
Your assignment: Underline the number 20.

5. Teaching Maths In 2005
A logger cuts down a beautiful forest because he is selfish and
inconsiderate and cares nothing for the habit of animals or the
preservation of our woodlands.
Your assignment: Discuss how might the birds and squirrels feel as the
logger cut down their homes just for a measly profit of £20.


6. Teaching Maths In 2009
A logger is arrested for trying to cut down a tree in case it may be
offensive to Muslims or other religious groups not consulted in the
felling licence. He is also fined a £100 as his chainsaw is in breach of Health &
Safety legislation as it deemed too dangerous and could cut something. He
has used the chainsaw for over 20 years without incident however he does
not have the correct certificate of competence and is therefore considered
to be a recividest and habitual criminal. His DNA is sampled and his
details circulated throughout all government agencies. He protests and is
taken to court and fined another £100 because he is such an easy target.
When he is released20he returns to find Gypsies have cut down half his wood
to build a camp on his land. He tries to throw them off but is arrested,
prosecuted for harassing an ethnic minority, imprisoned and fined a
further £100. While he is in jail the Gypsies cut down the rest of his wood and
sell it on the black market for £100 cash. They also have a leaving BBQ
of squirrel and pheasant and depart leaving behind several tonnes of rubbish
and asbestos sheeting. The forester on release is warned that failure to
clear the fly tipped rubbish immediately at his own cost is an offence. He
complains and is arrested for environmental pollution, breach of the peace
and invoiced £12000 plus VAT for safe disposal costs by a regulated
government contractor.


Your assignment: How many times is the logger going to hav e to be
arrested and fined before he realises that he is never going to make £20 profit by hard work, give up, sign onto the dole and live off the state for the rest of his life?


7. Teaching Maths In 2010
A logger doesn’t sell a lorry load of timber because he can’t get a loan
to buy a new lorry because his bank has spent all his and their money on a
derivative of securitised debt related to sub- prime mortgages in Alabama
and lost the lot with only some government money left to pay a few million
pound bonuses to their senior directors and the traders who made the
biggest losses.

The logger struggles to pay the £1200 road tax on his old lorry however,
as it was built in the 1970s it no longer meets the emissions regulations
and he is forced to scrap it.

Some Bulgarian loggers buy the lorry from the scrap merchant and put it
back on the road. They undercut everyone on price for haulage and send
their cash back home, while claiming unemployment for themselves and their
relatives. If questioned they speak no English and it is easier to deport
them at the governments expense. Following their holiday back home they
return to the UK with different names and fresh girls and start again. The
&nbs p; logger protests, is accused of being a bigoted racist and as his name is
on the side of his old lorry he is forced to pay £1500 registration fees as a gang master.

The Government borrows more money to pay more to the bankers as bonus's
are not cheap. The parliamentarians feel they are missing out and claim the
difference on expenses and allowances.

You do the maths.


8. Teaching Maths 2017
أ المسجل تبيع حموله شاحنة من< /font> الخشب من اجل 100 دولار. صاحب تكلفة الانتاج من
الثمن. ما هو الربح له؟

Spend It - No , We Would Rather Save! Byrd-Bird!

There is nothing the world would love to see more than the end of nuclear proliferation. Sam Nunn, as I have written previously, discussed this as one of his prime concerns when he spoke for me in Richmond to a group I assembled as far back as 1976. (I believe that was the year.)

The second best hope is that nations already possessing these weapons will impose self-refraint and not use them.

Though I believe Iran's attainment of nuclear weaponry is a threat to regional and world peace and their demoniacally orthodox leadership is of equally serious concern, I also believe even the insane have lucid moments and thus one can assume that talk of a nuclear attack on Israel by Iran is not totally bankable. Not because the Ayatollahs would not love to eradicate Israel but because Israel has the capability of responding and perhaps with the eventual perfection of the Arrow Missile System, Israel will have an ability to intercept any attack with overwhelming probability.

Obama's desire to eliminate or vastly reduce nuclear weaponry is understandable and admirable but doing so in the face of doing nothing about N. Korea, Iran and the increasing possibility of such weaponry falling into the hands of radical terrorists etc. is equally threatening. This is why a Chamberlain stance is a constant concern of mine.

Obama's may be correct in believing he has found the righteous path but he is woefully naive and dangerously uninformed if he believes others embrace his views and/or can be persuaded by mere words and playing the morality card. MLK, Ghandi, The Dalai Lama etc. have made their impact but tyrannical leaders remain ever present and must be dealt with forcefully and by a collective world capable of and committed to implementing a consistent and coherent deterrent strategy. Lamentably, the latter is where it all falls apart because, within the world community, there are powerful nations and leaders whose vested interests do not necessarily align with ours. They believe being a roadblock is the route best suited for achieving their own long term goals of supplanting our dominant presence, ie. Russia, China etc.

How this all plays out is the "big question" and my confidence in Obama's ability remains quite low in this regard. Why? Because what he seeks is constantly being rebuffed by those he approaches. Where is his leverage? If he has any it seems not to be working and probably won't without strong and effective action. The U.N. has probably become the greatest impediment to achieving a semblance of world peace because of the ability of a handful of nations to thwart such efforts and because of the U.N.'s own radicalization by Arab/Muslim nations.

If the U.N. were to disappear (and I know it will not in my lifetime) what would replace it? Would nations find or create other more effective avenues to dissipate the heat caused by their differences? (see 1 below.)

Not a new item of news but nevertheless interesting. Arafat and the KGB as documented by the highest ranking defector to the West. (See 1a below.)

Jeffrey Miron is not a politician he is an academic. Neither am I a politician. Therefore, it is easy for us to conclude government should have instituted nothing new but that is not realistic. However, Obama and the Democrats could have responded more appropriately. Since they did not, I believe we are going to pay enormous consequences.

In the final analysis, the current 'depression' provided Democrats the opportuity to rush through legislation that has been on their shelf for years. Having waited for the opportune time they are now in the perfect position to intrude government, expand government, control lives through larger government. It is all about more government and wealth distribution to their chosen constituents and always has been when Democrats and even Republicans obtain power and influence.



[A long time smoker is brought to the emergency room in an ambulance. All signs point to a heart attack. The presiding doctor cannot be blamed for the fact the patient was an inveterate smoker. He can be blamed for the diagnosis and treatment once the patient arrives. Obama cannot be blamed for past fiscal profligacy. He can and should be held accountable for what he does once he assumes the responsibilities of being president.]

The world plays Nero's violin while Iran hums along! But according to Obama the clock for Iran has also been re-set. Iran has been told he ball is in their court and if they do not relent the G-8 will issue more warnings and maybe enact some new sanctions. That should make the Ayatollahs cower. (See 3, 3a and 3b below.)

William Pesek writes about an expensive divorce in the making because Americas's crediors are getting nervous about all the dollar denominated debt they hold. (See 4 below.)

If the rich stand still for it - tax them. If they move -tax them anyway. Taxes are going up, so the only realistic question is which class of oxen get gored? The rich are most likely to become the sacrificed. (See 5 and 5a below.)

Strassel writes health care CEO's are being taken for a ride both by Congress and their own Democrat lobbyists's in ambulances which they are being asked to pay for.

Kim is a digger and what she describes should make your blood boil. Why? Because Obama railed against lobbyists during the campaign. Now this president, his staff and Congressional Democrats have told the health care industry if they want to be heard they must hire lobbyists sympathetic to their cause, ie Democrat Lobbyists. What goes on in the back rooms of Congress is why I repeat - bend over America. (See 5b below.)

Israel orders stealth squadron. Will it be delivered? (See 6 below.)

Caroline Glick writes, the West could bring Ahamdinejad down if it had a co-ordinated desire and guts. (See 7 below.)

Obama is developing a czarist driven government. It so concerned octogenarian Sen. Byrd that, from his wheelchair, he proposed legislation to make these super potentate White House technocrats come under Congressional scrutiny since. Why? Because they were appointed without Congressional authority or approval and generally refuse to testify before Congress claiming executive privelege. All recent presidents appoint czars. Obama has 25 and their pay is quite good - somewhere over $150M.
AC
Will Obama shoot the esteemed and august Sen. Byrd a bird? (See 8 below.)

Robert Reich asks when will the new economy begin to recover? He emphasizes the word 'new' because he does not see how we can return to the old economy. Why? Because it was a consumer based unsustainable one. Since the consumer is dead in the water and should remain so for quite some time. Reich envisions not a 'V' or 'saucer recovery' but one, for the moment, he dubs "X Type." The problem is, Reich does not know when the recovery will begin or what it will look like so he asks readers to stay tuned.

I agree the consumer is dead in the water for a variety of reasons, as enumerated by Reich, as follows:

a) Psychologically, those people employed, remain fearful they could soon be unemployed so they are saving, not spending.

b) If employed and not fearful of losing their job they still musto come to grips with a depleted asset base, ie home values and investments have declined thus reducing borrowing power and the desire to spend.

c) Most consumers know interest rates are likely to rise and inflation is likely to reappear. They also should know that, as our debt mounts, creditors will extract a higher return and/or begin not to lend. Thus, another reason why consumption is not likely to grow.

d) Then,with unemployment rising income flows to the government are reduced resulting in higher deficits and we are back to borrowing and all that entails. Again not an comforting atmosphere for encouraging spending.

e) Household debt remains high and bank ability and/or willingness to make loans remains low so no reason to expect a significant bump in consumption.

f) As Reich points out, foreclosures are likely to continue rising thus weakening bank balance sheets, negating bank desire to lend and all of this ultimately impacts consumerism.

g) The fact that the administration encourages consumers to spend creates a boomerang effect. Why? Because intuitively most consumers are not totally stupid and realize spending is more to bail out government than is the appropriate course of action in view of the myriad problems we face and the rockiness of the road ahead.

Conclusion: If no acceleration in consumption, as Reich points out, then why should corporate America expend to expand.

May not have dawned on Obama and his Administration yet, but the consumer is light years ahead when it comes to acting on intuition. From all indications the Administration remains clueless and Congress remains frustrated over their collective ability to siphon off money to pay for the many golden calves they seek to purchase.(See 9 below.)

Dick

1) Our Foreign Policy Neophyte
By Charles Krauthammer

WASHINGTON -- The signing ceremony in Moscow was a grand affair. For Barack Obama, foreign policy neophyte and "reset" man, the arms reduction agreement had a Kissingerian air. A fine feather in his cap. And our president likes his plumage.

Unfortunately for the United States, the country Obama represents, the prospective treaty is useless at best, detrimental at worst.

Useless because the level of offensive nuclear weaponry, the subject of the U.S.-Russia "Joint Understanding," is an irrelevance. We could today terminate all such negotiations, invite the Russians to build as many warheads as they want, and profitably watch them spend themselves into penury, as did their Soviet predecessors, stockpiling weapons that do nothing more than, as Churchill put it, make the rubble bounce.

Obama says that his START will be a great boon, setting an example to enable us to better pressure North Korea and Iran to give up their nuclear programs. That a man of Obama's intelligence can believe such nonsense is beyond comprehension. There is not a shred of evidence that cuts by the great powers -- the INF treaty, START I, the Treaty of Moscow (2002) -- induced the curtailment of anyone's programs. Moammar Gaddafi gave up his nukes the week we pulled Saddam Hussein out of his spider hole. No treaty involved. The very notion that Kim Jong Il or Mahmoud Ahmadinejad will suddenly abjure nukes because of yet another U.S.-Russian treaty is comical.

The pursuit of such an offensive weapons treaty could nonetheless be detrimental to us. Why? Because Obama's hunger for a diplomatic success, such as it is, allowed the Russians to exact a price: linkage between offensive and defensive nuclear weapons.

This is important for Russia because of the huge American technological advantage in defensive weaponry. We can reliably shoot down an intercontinental ballistic missile. They cannot. And since defensive weaponry will be the decisive strategic factor of the 21st century, Russia has striven mightily for a quarter-century to halt its development. Gorbachev tried to swindle Reagan out of the Strategic Defense Initiative at Reykjavik in 1986. Reagan refused. As did his successors -- Bush I, Clinton, Bush II.

Obama, who seeks to banish nuclear weapons entirely, has little use for such prosaic contrivances. First, the Obama budget actually cuts spending on missile defense, at a time when federal spending is a riot of extravagance and trillion-dollar deficits. Then comes the "pause" (as Russia's president appreciatively noted) in the planned establishment of a missile shield in Eastern Europe. And now the "Joint Understanding" commits us to a new treaty that includes "a provision on the interrelationship of strategic offensive and strategic defensive arms." Obama further said that the East European missile shield "will be the subject of extensive negotiations" between the United States and Russia.

Obama doesn't even seem to understand the ramifications of this concession. Poland and the Czech Republic thought they were regaining their independence when they joined NATO under the protection of the United States. They now see that the shield negotiated with us and subsequently ratified by all of NATO is in limbo. Russia and America will first have to "come to terms" on the issue, explained President Dmitry Medvedev. This is precisely the kind of compromised sovereignty that Russia wants to impose on its ex-Soviet colonies -- and that U.S. presidents of both parties for the last 20 years have resisted.

Resistance, however, is not part of Obama's repertoire. Hence his eagerness for arcane negotiations over MIRV'd missiles, the perfect distraction from the major issue between the two countries: Vladimir Putin's unapologetic and relentless drive to restore Moscow's hegemony over the sovereign states that used to be Soviet satrapies.

That -- not nukes -- is the chief cause of the friction between the U.S. and Russia. You wouldn't know it to hear Obama in Moscow pledging to halt the "drift" in U.S.-Russian relations. Drift? The decline in relations came from Putin's desire to undo what he considers "the greatest geopolitical catastrophe" of the 20th century -- the collapse of the Soviet empire. Hence his squeezing Ukraine's energy supplies. His overt threats against Poland and the Czech Republic for daring to make sovereign agreements with the United States. And finally, less than a year ago, his invading a small neighbor, detaching and then effectively annexing two of Georgia's provinces to Mother Russia.

That's the cause of the collapse of our relations. Not drift, but aggression. Or, as the reset man referred to it with such delicacy in his Kremlin news conference: "our disagreements on Georgia's borders."


1a)Arafat and the KGB - An article writen by Ion Mihai Pacepa (among the highest inteligence officer ever to defect to the West)


Romanian intelligence chief Ion Mihai Pacepa in The Wall Street Journal Online back in 2003 clarified Arafat’s Russian connections. Mr. Pacepa was the highest ranking intelligence officer ever to have defected from the former Soviet bloc. The author of "Red Horizons" (Regnery, 1987), he is finishing a book on the origins of current anti-Americanism.

As Romania’s former spy chief, Pacepa has read Arafat’s KGB file. He says that Arafat was a KGB agent. According to Pacepa, Arafat “is a career terrorist, trained, armed and bankrolled by the Soviet Union and its satellites for decades.”

In his Wall Street Journal column, Pacepa described Moscow’s plan to make Arafat the national leader of the Palestinians. And this was what Arafat has become and went on to conduct the greatest terror offensive of them all -- against Israel.

Former Romanian intelligence chief Ion Mihai Pacepa describes Arafat as

“an Egyptian bourgeois turned into a devoted Marxist by KGB foreign intelligence.” Arafat was trained at the Balashikha special-ops school in Russia. Pacepa also relates how “the KGB destroyed the official records of Arafat’s birth in Cairo, replacing them with fictitious documents saying that he had been born in Jerusalem and was therefore a Palestinian by birth.”

The Israeli government has vowed to expel Yasser Arafat, calling him an "obstacle" to peace. But the 72-year-old Palestinian leader is much more than that; he is a career terrorist, trained, armed and bankrolled by the Soviet Union and its satellites for decades.

Before I defected to America from Romania, leaving my post as chief of Romanian intelligence, I was responsible for giving Arafat about $200,000 in laundered cash every month throughout the 1970s. I also sent two cargo planes to Beirut a week, stuffed with uniforms and supplies. Other Soviet bloc states did much the same. Terrorism has been extremely profitable for Arafat. According to Forbes magazine, he is today the sixth wealthiest among the world's "kings, queens & despots," with more than $300 million stashed in Swiss bank accounts.


"I invented the hijackings [of passenger planes]," Arafat bragged when I first met him at his PLO headquarters in Beirut in the early 1970s. He gestured toward the little red flags pinned on a wall map of the world that labeled Israel as "Palestine." "There they all are!" he told me, proudly. The dubious honor of inventing hijacking actually goes to the KGB, which first hijacked a U.S. passenger plane in 1960 to Communist Cuba. Arafat's innovation was the suicide bomber, a terror concept that would come to full flower on 9/11.

In 1972, the Kremlin put Arafat and his terror networks high on all Soviet bloc intelligence services' priority list, including mine. Bucharest's role was to ingratiate him with the White House. We were the bloc experts at this. We'd already had great success in making Washington -- as well as most of the fashionable left-leaning American academics of the day -- believe that Nicolae Ceausescu was, like Josip Broz Tito, an "independent" Communist with a "moderate" streak.

KGB chairman Yuri Andropov in February 1972 laughed to me about the Yankee gullibility for celebrities. We'd outgrown Stalinist cults of personality, but those crazy Americans were still naïve enough to revere national leaders. We would make Arafat into just such a figurehead and gradually move the PLO closer to power and statehood. Andropov thought that Vietnam-weary Americans would snatch at the smallest sign of conciliation to promote Arafat from terrorist to statesman in their hopes for peace.

Right after that meeting, I was given the KGB's "personal file" on Arafat. He was an Egyptian bourgeois turned into a devoted Marxist by KGB foreign intelligence. The KGB had trained him at its Balashikha special-ops school east of Moscow and in the mid-1960s decided to groom him as the future PLO leader.

The KGB's disinformation department went to work on Arafat's four-page tract called "Falastinuna" (Our Palestine), turning it into a 48-page monthly magazine for the Palestinian terrorist organization al-Fatah. Arafat had headed al-Fatah since 1957. The KGB distributed it throughout the Arab world and in
West Germany, which in those days played host to many Palestinian students. The KGB was adept at magazine publication and distribution; it had many similar periodicals in various languages for its front organizations in Western Europe,
like the World Peace Council and the World Federation of Trade Unions.

Next, the KGB gave Arafat an ideology and an image, just as it did for loyal Communists in our international front organizations. High-minded idealism held no mass-appeal in the Arab world, so the KGB remolded Arafat as a rabid anti-Zionist. They also selected a "personal hero" for him -- the Grand Mufti Haj Amin al-Husseini, the man who visited Auschwitz in the late 1930s and reproached the Germans for not having killed even more Jews. In 1985 Arafat paid homage to the mufti, saying he was "proud no end" to be walking in his footsteps.

Arafat was an important undercover operative for the KGB. Right after the 1967 Six Day Arab-Israeli war, Moscow got him appointed to chairman of the PLO. Egyptian ruler Gamal Abdel Nasser, a Soviet puppet, proposed the appointment. In 1969 the KGB asked Arafat to declare war on American "imperial-Zionism" during the first summit of the Black Terrorist International, a neo-Fascist pro-Palestine organization financed by the KGB and Libya's Moammar Gadhafi. It appealed to him so much, Arafat later claimed to have invented the imperial-Zionist battle cry. But in fact, "imperial-Zionism" was a Moscow invention, a modern adaptation of the "Protocols of the Elders of Zion," and long a favorite tool of Russian intelligence to foment ethnic hatred. The KGB always regarded anti-Semitism plus anti-imperialism as a rich source of anti-Americanism.

The KGB file on Arafat also said that in the Arab world only people who were truly good at deception could achieve high status. We Romanians were directed to help Arafat improve "his extraordinary talent for deceiving." The KGB chief of foreign intelligence, General Aleksandr Sakharovsky, ordered us to provide cover for Arafat's terror operations, while at the same time building up his international image. "Arafat is a brilliant stage manager," his letter concluded, "and we should put him to good use." In March 1978 I secretly brought Arafat to Bucharest for final instructions on how to behave in Washington. "You
simply have to keep on pretending that you'll break with terrorism and that you'll recognize Israel -- over, and over, and over," Ceausescu told him for the umpteenth time. Ceausescu was euphoric over the prospect that both Arafat and he might be able to snag a Nobel Peace Prize with their fake displays of the olive branch.

In April 1978 I accompanied Ceausescu to Washington, where he charmed President Carter. Arafat, he urged, would transform his brutal PLO into a law-abiding government-in-exile if only the U.S. would establish official relations. The meeting was a great success for us. Carter hailed Ceausescu, dictator of the most repressive police state in Eastern Europe, as a "great national and international leader" who had "taken on a role of leadership in the entire international community." Triumphant, Ceausescu brought home a joint communiqué in which the American president stated that his friendly relations with
Ceausescu served "the cause of the world."

Three months later I was granted political asylum by the U.S. Ceausescu failed to get his Nobel Peace Prize. But in 1994 Arafat got his -- all because he continued to play the role we had given him to perfection. He had transformed his terrorist PLO into a government-in-exile (the Palestinian Authority), always pretending to call a halt to Palestinian terrorism while letting it continue unabated. Two years after signing the Oslo Accords, the number of Israelis killed by Palestinian terrorists had risen by 73%.

On Oct. 23, 1998, President Clinton concluded his public remarks to Arafat by thanking him for "decades and decades and decades of tireless representation of the longing of the Palestinian people to be free, self-sufficient, and at home."

The current administration sees through Arafat's charade but will not publicly support his expulsion. Meanwhile, the aging terrorist has consolidated his control over the Palestinian Authority and marshaled his young followers for more suicide attacks.

Mr. Pacepa was the highest ranking intelligence officer ever to have defected from the former Soviet bloc. The author of "Red Horizons" (Regnery, 1987), he is finishing a book on the origins of current anti-Americanism.

Putin was/is KGB to the bone.

2) The Case for Doing Nothing
By Jeffrey Miron

The first thing to note about the financial crisis is that the federal government never had any business intervening in the personal decision of whether you want to own a home. There is no rational economic argument, or any argument I know of, that says the market of buying and selling homes is imperfect in some way, requiring government action. Construction firms have plenty of incentive to build homes and sell them. People who have the wherewithal have plenty of incentive to buy homes if they so choose. For the government to intrude into home ownership was an off-budget, non-transparent, back door attempt at re-distributing income. And when the policy became a way of transferring income to people who couldn't afford those homes, it was doomed to failure.

This provision of risky debt to low-income homeowners was exacerbated by a second misguided federal policy: the longstanding practice of bailing out private risk taking. Although this has gone on for decades in the U.S. and other countries, the Federal Reserve played a special role during the tenure of former chief Alan Greenspan. The Fed's implicit and almost explicit policy before the housing crash was to say to the financial markets: "Don't worry about the fact that there's a bubble. We'll lower interest rates and keep them low enough to prevent a collapse in asset prices." This logic, broadly applied, was commonly called the Greenspan Put. The Federal Reserve was basically selling the market an option for getting out comparatively unscathed when things turned bad. The result has been a widely held assumption that market actors would not have to bear the full losses from their own risky behavior.

When people try to pin the blame for the financial crisis on the introduction of derivatives, or the increase in securitization, or the failure of ratings agencies, it's important to remember that the magnitude of both boom and bust was increased exponentially because of the notion in the back of everyone's mind that if things went badly, the government would bail us out. And in fact, that is what the federal government has done. But before critiquing this series of interventions, perhaps we should ask what the alternative was. Lots of people talk as if there was no option other than bailing out financial institutions. But you always have a choice. You may not like the other choices, but you always have a choice. We could have, for example, done nothing.

Unfair in the Short Term, Inappropriate in the Long Term

By doing nothing, I mean we could have done nothing new. Existing policies were available, which means bankruptcy or, in the case of banks, Federal Deposit Insurance Corporation receivership. Some sort of orderly, temporary control of a failing institution for the purpose of either selling off the assets and liquidating them, or, preferably, zeroing out the equity holders, giving the creditors a haircut and making them the new equity holders. Similarly, a bankruptcy or receivership proceeding might sell the institution to some player in the private sector willing to own it for some price.

With that method, taxpayer funds are generally unneeded, or at least needed to a much smaller extent than with the bailout approach. In weighing bankruptcy vs. bailouts, it's useful to look at the problem from three perspectives: in terms of income distribution, long-run efficiency, and short-term efficiency.

From the distributional perspective, the choice is a no-brainer. Bailouts took money from the taxpayers and gave it to banks that willingly, knowingly, and repeatedly took huge amounts of risk, hoping they'd get bailed out by everyone else. It clearly was an unfair transfer of funds. Under bankruptcy, on the other hand, the people who take most or even all of the loss are the equity holders and creditors of these institutions. This is appropriate, because these are the stakeholders who win on the upside when there's money to be made. Distributionally, we clearly did the wrong thing.

From the perspective of long-run efficiency, the question is also relatively straightforward. By the end of 2005, it should have been apparent that the U.S. economy was fundamentally misaligned. We had significantly overinvested in housing and significantly underinvested in factories, plants, and equipment. In effect, we needed a recession: a period to readjust the balance between the different types of capital.

More broadly, failure is an essential aspect of free markets. Failure shows capitalism is working, because it means resources are moving from bad uses to good uses.

There are other long-term problems with the bailout approach. Bailouts create moral hazards going forward, meaning market players will be more inclined to take excessive risks. Bailouts encourage inappropriate goals, such as propping up insolvent banks. Bailouts give the government ownership stakes in these institutions, which means that politics, not economics, is going to decide where these firms invest in the future. And bailouts set the wrong precedent for other industries.

The Only Plausible Argument

There is therefore only one reasonable argument for choosing bailouts over bankruptcy. Bailouts might make sense if bankruptcy imposed an externality - an unwelcome spillover effect. The argument for that goes as follows: When a given bank fails, it loses intermediation capital, or the ability to make loans. Any given bank knows a particular sector of the economy, a particular region of the country, or a particular kind of loan market. So if that bank fails, that specialized knowledge gets destroyed; therefore, at least in the short term, no one can easily make that kind of loan.

If that happened to one bank, you'd say it was no big deal; there are plenty of banks that have lots of knowledge. But if one large bank fails and defaults on obligations to lots of other banks, forcing some of them to fail, you might worry that contagion could lead to a lot of intermediation capital disappearing in a short period of time.

That story sounds somewhat plausible. But it has two key weaknesses, one theoretical and one empirical.

The theoretical weakness is that if a bank fails but its assets and its employees are bought by another bank, there is no reason for the intermediation capital to disappear. It just gets transferred to someone else. If you think that the good ideas for making productive loans are in the brains of the people of the failed bank, those people are probably going to go work at some other financial institution - a hedge fund, an insurance company, another bank. So you're not necessarily going to lose all the intermediation capital as a result of the failure. Indeed, the failed bank's employees may be put to work in more productive ways.

The empirical problem with the claim that bank failures destroy intermediation capital is that there isn't strong evidence to support it. Some evidence does show a correlation between bank failures and declines in output. But since declines in output should lead to bank failures, we don't know which is causing which. Thus, there isn't much quantitative data showing that bank failures lead to a large excess loss, over and above what you would expect when a negative shock hits the economy.

Because housing prices have declined, some people and institutions are worse off. Maybe it's the first bank in the chain that takes most of the hit. Or maybe the first bank passes some of the hit along because of its counter-party claims to some other bank. But that hit has to be taken. And in the U.S., it was a big hit indeed - plausibly several trillion dollars in housing wealth. The size of that loss doesn't demonstrate a spillover effect; it just shows that somebody has to experience the loss that the economy has already taken.

Twisted Incentives

The problem isn't only that the bailout wasn't necessary in the first place. The bailout may have made the credit situation worse. When banks hear that the Treasury Department is dangling hundreds of billions of dollars out there to purchase their toxic assets, what are they going to do? Sell their assets for 20 cents on the dollar, or hold onto them in the hope that the government will eventually buy them for 80 cents on the dollar?

The moment Treasury Secretary Henry Paulson got in front of the cameras last fall and announced that we were on the brink of catastrophe, Wall Street was bound to freeze, because bankers wanted to figure out how much money was available and how they could get some. Let's not realize any losses we don't have to realize, they figured, because Treasury's going to bail us out.

Of course, the bankruptcy approach is itself messy, and there are some legal issues concerning whether existing procedures apply to bank holding companies or just banks. But what the administration should do now is stop giving banks money and start being open to the bankruptcy approach when existing law allows it. Further, the administration could push Congress harder to expand and clarify the FDIC's receivership authority. As long as regulators keep giving banks money, nothing is going to clean the mess in the financial sector.

The latest government program, the Public-Private Investment Program, is just another handout to the banks. It sets up a system where a small amount of private money is combined with a small amount of government money and a big loan guaranteed by the government to buy the toxic assets from the bank.

So what are the incentives to private-sector actors? Well, they're putting hardly any money in. If it turns out that the toxic assets they bought aren't worth anything, they haven't lost much. If the assets are worth a lot, they make some money. Either way, the Treasury Department is guaranteeing everything. Reasonable estimates indicate that these toxic assets are not worth very much, so this is just another way of transferring resources to the banks by buying their toxic assets at inflated prices.

That's not the only area where the Obama administration has twisted incentives. President Obama's mortgage plan uses $275 billion in tax funds to help homeowners refinance and lower rates, to subsidize payments from borrowers to lenders, to get lenders to modify loans, and so on. It gives another $200 billion to the government-created home mortgage companies Fannie Mae and Freddie Mac. This is exactly the wrong approach.

The aim is to reduce foreclosures, so the delinquent or nearly delinquent borrowers can stay in their homes. That sounds like a laudable goal, but it ignores a fundamental reality: This money is coming from somebody else. So what the plan is doing is penalizing relatively responsible homeowners or renters - everybody who pays taxes - and rewarding those people who should have known, or at least should have had some inkling, that the loans they were being offered were too good to be true. This program creates exactly the wrong incentives for people deciding whether to borrow and whether to be homeowners.

More generally, it continues the policy of promoting homeownership. We got in this situation because the government wanted to promote homeownership. Until we create a situation where people make decisions based on their own resources and have to think about bearing the consequences of the decisions they make, the root cause of the financial crisis will only get worse.

Shrinking the Pie

Add in Obama's $787 billion stimulus and his $3.6 trillion budget, and a picture emerges of an administration totally unapologetic about its designs to expand the size and scope of government. There is no question that the people advocating this spending want much more government intervention with respect to unions, energy, health care, infrastructure, and other areas. The crisis has given them the opportunity to ram through a bunch of things they've been pursuing for a long time.

As a matter of accounting, they are almost certainly understating the budgetary implications of their programs. Their assumptions about economic growth are optimistic relative to those of private forecasters. Furthermore, many of the items in the stimulus package that were supposed to be temporary are not going to be temporary. Thus, my guess is that deficits will be much bigger than the administration predicts.

The stunning thing about Obama's spending proposals is that there's almost nothing you could defend from the perspective of efficiency. It's all about redistribution - not redistribution to the poor but redistribution to Democratic interest groups: to unions, to the green lobby, to the health care industry, and so on. At some point these everescalating government interventions will affect the size of the economic pie. If we start looking more like France, with more than 20 percent of GDP controlled by the federal government, output growth and economic freedom will all suffer.

The fundamental problem underlying the financial crisis was government policy. Instead of undertaking enormous new policies, we should try to fix or eliminate bad policies and focus on efficiency rather than redistribution. Doing nothing new and simply working with pre-existing procedures would have been much better than anything we've done so far.

Jeffrey Miron (miron@fas.harvard.edu) is senior lecturer and director of undergraduate studies at the Harvard University Department of Economics and a senior fellow at the Cato Institute.

3) Iran nuke program hums as world stews
BY STEVE HUNTLEY

The G-8 nations are turning up the heat on Iran. While two weeks ago the Group of 8 industrial nations said they were "concerned" about Tehran's nuclear program, they declared Wednesday at their summit in Italy that now they are "seriously concerned" about Iran's atomic weapon ambitions.

Not "seriously concerned" enough to lay down tough sanctions. But "seriously concerned" enough to agree "to take stock of the situation" in Iran at a United Nations meeting in September.

OK, I'm too sarcastic. Diplomacy by its nature moves slowly and cautiously. No doubt the G-8 leaders want to halt Iran's weapons drive. That program, say several sources, now alarms even Russia, but, by all accounts, Moscow remains cool to tough measures against Tehran.

However sarcastic I may sound, think how the G-8 pronouncement plays in Tehran. It can only encourage the theocratic and military bosses to think they can string out any negotiations long enough to acquire a nuclear warhead for the increasingly longer range missiles they're testing.

A regime that doesn't hesitate to shoot its citizens protesting for democratic reforms will be no less ruthless as it pursues its political ambitions. Remember, the cause pushed by supreme leader Ayatollah Khamenei, President Mahmoud Ahmadinejad and their cohorts is not just Iran, but the "Islamic revolution."

Spreading the Islamic revolution and undermining the West and its liberal values underlie Tehran's opening of offices in two dozen African nations and doubling to eight the number of its embassies in Latin America. Gen. Douglas Fraser, the new chief of the U.S. Southern Command, says he worries about "the connection Iran has with extremist organizations like Hamas and Hezbollah and the potential risk that that could bring" to Latin America.

Ahmadinejad has gone out of his way to curry warm relations with U.S.-bashing Venezuelan President Hugo Chavez. Last December, Turkey intercepted an Iranian shipment to Venezuela of "tractor parts" that turned out to be materials for making explosives. Chavez now mouths anti-Israel venom, encouraging what the State Department calls "a rise in anti-Semitic vandalism, caricatures, intimidations, and physical attacks on Jewish institutions."

Meanwhile, Iran's 7,000 centrifuges are spinning. Already Tehran has more than 1,300 kilograms of low-enriched uranium that atomic inspectors know of and is rapidly closing in on the 1,500-1,700 kilograms needed to produce a much smaller amount of weapons-grade uranium. Once that threshold is reached, a bomb can follow fairly quickly.

Iran's brutal repression has, to say the least, complicated President Obama's intention to engage Tehran. Obama previously said he wanted an Iranian response to his outreach by year's end, but it's not clear if the September U.N. meeting sets a new timeline.

Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, says the "window is closing" to stop Iran and restated that the military option is still on the table. But a military strike would seem out of character for Obama. A more realistic option would be one by Israel, which previously destroyed Iraqi and Syrian nuclear programs. But the Washington Times reports Israeli Prime Minister Benjamin Netanyahu is so worried Obama would reject a military strike that he has not formally asked for U.S. aid or permission for one.

Vice President Joe Biden seemed to suggest a tougher stand last weekend when he said Israel has a "sovereign right" to defend itself against an existential threat. Why say that if not intending to signal Washington would back an attack? But Obama quickly declared he wasn't giving a "green light" to Israel. Too bad. If he had said Biden was only expressing Israel's right of self-defense and left it there while pushing diplomacy, Tehran might have seen Obama as talking softly while outsourcing the big stick to Israel. Then the mullahs would have been the ones "seriously concerned."

3a) Al Qaeda plot against Suez Canal foiled by 26 arrests

Twenty-five Egyptians and one Palestinian suspects detained in Egypt have confessed to planning attacks on Suez Canal shipping and oil pipelines on behalf of al Qaeda.


Military sources report this week an Israeli nuclear-capable Dolphin submarine escorted by a missile vessel transited the Suez Canal on the way back to its Mediterranean base from a Red Sea drill that took place off Eilat last month. Marine transport insurance sources remarked that if al Qaeda terrorists had succeeded in its purpose of sinking ships and blocking the canal, through which one-tenth of global seaborne traffic passes, oil prices, insurance fees and cargo rates would have hit the roof.

The leader of the al Qaeda cell was an Egyptian, Mohammed Fahim Hussein. The Egyptian interior ministry reported Friday, July 10, that the equipment seized in their homes showed they were able to make their own remote-controlled bombs.


3b) Obama: World won't allow Iran to develop nukes

U.S. President Barack Obama said Friday the world would not allow Iran to develop nuclear weapons, a day after a senior Iranian official vowed his country would not back down "even one step" over its nuclear work.

"We're not going to just wait indefinitely and allow for the development of a nuclear weapon... and wake up one day and find ourselves in a much worse situation and unable to act," Obama said at the close of the G8 summit concluded in Italy.

The president stressed that he and others were not looking for their summit partners to embrace sanctions at this week's meeting.

Instead, he said, "What we wanted was exactly what we got - a statement of condemnation about Iran's actions in the wake of its disputed presidential election."

In comments published Thursday, Ali Akbar Velayati, Supreme Leader Ayatollah Ali Khamenei's top adviser on international affairs, said Western countries did not want the Islamic state to have peaceful nuclear activities.

Obama said Friday that G8 leaders voiced their concern about what he called the appalling events surrounding the recent elections and the violence that followed.

"The leaders assembled at L'Aquila also addressed the threat of nuclear proliferation in Iran," he said, "with a strong statement calling on Iran to fulfill its responsibilities without delay."

"This notion that we were trying to get sanctions or that this was a forum where we could get sanctions was not accurate," the president said.

"I think the real story here was consensus in that [G8] statement, including Russia, which doesn't make statements like that lightly," he said. "Now the other story there was the agreement that we will reevaluate Iran's posture towards negotiating the cessation of a nuclear weapons policy."

"We'll evaluate that at the G20 meeting in September," Obama said. "I think that what that does is, it provides a time frame. The international community has said, 'Here'a door you can walk thorugh that allows you to lessen tensions and more fully join the international community.'"

He added: "If Iran chooses not to walk through that door, then you have on record the G8 to begin with and, I think, potentially a lot of other countries."

Obama said his hope is that the Iranian leadership will recognize that world opinion is clear.


4) This $17 Trillion Divorce Won’t Be a Pretty One: William Pesek
By William Pesek

Returning from China last month, U.S. Congressman Mark Kirk had a bearish take on a high-level visit by American officials.

Treasury Secretary Timothy Geithner claimed the U.S.’s biggest creditor voiced great confidence in its debt. Kirk, an Illinois Republican, came back with the opposite impression.

“China is beginning to cancel Congress’s credit card,” he told Fox News on June 10. It “doesn’t want to lend much more money to the United States and especially is worried about the Fed’s policy of printing money to buy new debt.”

A month later, there’s no doubt about whose assessment was more accurate. Chinese leaders are clearly very concerned about the dollar. How they will react is a key question hanging over markets, and it’s time to take the discussion to the next level.

Everyone knows China wants to reduce its dollar holdings. Little is known about how that process may unfold and how much work and preparation needs to go into it. Lots, in fact.

Think of China and the U.S. in history’s most expensive divorce. The two economies total $17 trillion of output, and polls in China show little support for adding to almost $800 billion of U.S. Treasuries.

This argument can be broadened to the rest of Asia. The idea that China or Japan -- with $686billion of Treasuries -- can just start selling massive blocks of dollars is ridiculous. It would devastate markets the world over and the fallout would boomerang back on Asia. If you think markets are shaky now, just wait until word of a central-bank fire sale gets around.

Copycat Selling

Sure, Singapore (with $40 billion of Treasuries), India ($39 billion) or South Korea ($35 billion) could try to dump dollars on the stealth. Good luck in this highly connected, around-the-clock world. News that a key economy seeks a first- mover advantage over peers would inspire copycat selling. Expect investors and traders to respond with massive sell orders.

Warren Buffett can discreetly trim Berkshire Hathaway Inc.’s interest in a company or a currency. How a central bank divests itself of tens or hundreds of billions of dollars on the sly is another matter.

Governments that may be concerned about getting stuck with their dollars for good have a point. And by curtailing investments in dollars today, Asia is ensuring that the U.S. currency will be worth less a year from now. Bernard Madoff can tell you a thing or two about how this process works.

Dollar Accord

What may be necessary is a global framework or pact to end the dollar’s dominance. A “Plaza Accord” of sorts may be needed to dismantle the so-called Bretton Woods II system of tying currencies to the dollar that emerged after the global crises of 1997 and 1998. A Dollar Accord, anyone?

Just as stocks take a hit when additional shares are issued, Asia faces a debt-dilution dynamic for which it never bargained. The Federal Reserve’s zero-interest-rate policies don’t help. And Asia can’t do a lot on its own here.

This process will require considerable cooperation, be it through the International Monetary Fund, the Group of 20, the Asia-Pacific Economic Cooperation forum, the Association of Southeast Asian Nations or a yet-to-be-created entity. Goals must be set, mechanics discussed and timing negotiated. If ever there were a time for a currency summit, it’s now.

Politics will be a stumbling block. It’s hard to envision the U.S. signing on to scrap the dollar as the reserve currency. Neither the euro nor the yen is ready to replace it. And China’s designs on currency domination are a decade away -- or longer.

IMF Solution

The amount of scrutiny the dollar’s successor would face makes you wonder who would want to print the reserve currency. That explains why the most credible argument making the rounds involves the IMF’s so-called Special Drawing Rights, or SDRs.

They are really an account of exchange, rather than legal tender, and are calculated according to a basket of currencies consisting of the dollar, euro, yen and pound. Chinese central bank Governor Zhou Xiaochuan wants the IMF to move toward creating a “super-sovereign reserve currency.”

Or, here’s another suggestion: Brady bonds for less- troubled economies. The idea behind bonds created in the 1980s as part of Latin America’s debt restructuring was to let investors swap their claims on nations in turmoil for tradable instruments. A similar process may work with the dollar.

Rumors of the dollar’s demise are no longer exaggerated. What is being exaggerated, though, is how easy it will be for Asia to get out of the quandary it’s in. Cutting off the U.S. government’s credit card, for example, means American consumers can’t buy your goods. And any sudden divorce between the world’s two main economic powers won’t be pretty. Far from it.

It’s time to figure out what the next step is, and policy makers need to get serious. Complaining about our dollar-based system won’t get us there. Some brainstorming about where to go from here would be far more constructive.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

5) Tax The Rich?
By Bruce Bartlett


For many years, I have urged conservatives to think about ways of raising new net revenue for the government. My fear has always been that sooner or later, pressure to raise taxes will become overwhelming. If there wasn't a conservative option available, then the default policy would be to sharply raise tax rates on the wealthy. Now it looks as if that day has arrived.

The reason is that Democrats are having a hard time figuring out how to finance health care reform. Unlike Republicans, who simply ran up deficits to pay for tax cuts and a massive expansion of Medicare in 2003, Democrats have to at least pay lip service to financing health reform because they have publicly committed themselves to PAYGO--paying for permanent new government programs with tax increases or cuts in entitlements. Moreover, the "Blue Dog" wing of the party is quite insistent that health reforms not add to the deficit, and it probably can't pass the House of Representatives without their votes.

I think proper financing of health reform is essential because failure to do so will magnify all the unpleasant features of a government-dominated health system. The worst is that if there is a financing gap down the road then the government will resort to price controls--arbitrarily reducing what it will pay for drugs and medical services while preventing doctors and hospitals from opting out of the government system. We already have this problem with Medicare. The result will be a steady deterioration in the quality of health care.

So far, Democrats have been trying to avoid the problem of financing by making extravagant claims for savings from having a public option that would force down costs through quasi-monopsony power. (A monopsony is the opposite of a monopoly; in the latter there is one seller, in the former there is one buyer.) I am very doubtful that such savings will actually occur given the experience with Medicare.

The sensible thing would be to create a dedicated funding source for the new health care system. This is the way Social Security and Medicare are paid for. But Democrats are loath to propose a rise in the payroll tax rate or any other tax that would impose even the tiniest additional burden on anyone not considered "rich."

Consequently, Democrats are coming around more and more to some kind of surtax on the wealthy to pay for health reform. The plan under discussion is said to be similar to one floated by House Ways and Means Committee Chairman Charlie Rangel two years ago to finance repeal of the Alternative Minimum Tax that would have raised the top rate by 4.3%. It will probably gain support now that Senate Majority Leader Harry Reid, D-Nev., has categorically ruled off the table any limitation on the exclusion for health insurance to pay for health reform.

Republicans vow to fight the surtax to their last breathe. But their hand is weak for several reasons. First, they virtually guaranteed a rise in the top income tax rate by refusing to expend any political capital on making the 2001 tax rate reduction permanent. At the end of next year, the top rate will automatically rise from 35% to 39.6% as a consequence.

Second, Republicans were responsible for a large expansion in the number of Americans who pay no federal income taxes. According to the Joint Committee on Taxation, only 35% of federal tax returns had no tax liability in 2000; by 2008 that percentage had risen to 43%. According to the latest calculation from the Tax Policy Center, 47% of tax filers will owe no federal income taxes this year.

Finally, Republicans are suffering from an undeniable fact: The rich have gotten a lot richer in recent years. According to University of California, Berkeley, economist Emmanuel Saez, between 1993 and 2006 the average real income of those in the top 1% of the income distribution rose 5.7% per year while that of the bottom 99% rose just 1.1% per year.

This widening of income inequality has generated significant support for soak-the-rich tax policies according to a number of recent polls:

A February poll by Rasmussen found 51% of Americans supporting higher taxes on those making more than $250,000; only 31% opposed the idea.

A March poll by Fox News and Opinion Dynamics reported that 66% of Americans support raising taxes on those making more than $250,000.

An April poll by CBS News and The New York Times found that 74% of Americans thought it was a good idea to raise federal income taxes on those making more than $250,000 to pay for health reform.

Of course, raising tax rates is never a good idea. Most economists would say that it is preferable to expand the tax base if additional revenue is needed. One way of doing so would be to restrict "tax expenditures," which have grown sharply. These are special tax provisions--exclusions, deductions, exemptions and credits--that reduce one's tax liability based on factors such as family status, home ownership, the nature of income and other factors.

Most economists are not keen on tax expenditures because they violate the concept of horizontal equity--the idea that people with roughly the same income should pay roughly the same taxes. This principle is violated, for example, by the tax treatment of housing. Two people with the same income living in equivalent homes will pay much different taxes if one is a renter and the other a homeowner owing to the deductibility of mortgage interest and property taxes.

According to a recent analysis by the Tax Policy Center, tax expenditures just for individuals reduced federal revenues by $760.5 billion in 2007. Those for businesses would add at least $105 billion to this total. The wealthy necessarily benefit more from tax expenditures because they are in higher tax brackets, more likely to be homeowners, and more likely to have capital gains income.

The analysis estimates that tax expenditures raise the after-tax income of those in the bottom four quintiles (20%) of income by about 7%. But those in the top quintile saw their disposable income increased by 11.4%. Those in the top 1% of the income distribution had an increase in their after-tax income of 13.5% due to tax expenditures.

Alternatively, the tax base could be expanded by adding a new revenue source that would tax something that is not now taxed. One such option would be a value-added tax that would broadly tax consumption. Presently, the federal government only selectively taxes the consumption of gasoline, alcohol, tobacco and a few other things. Every other major country in the world has a VAT.

Economist Len Burman, who was deputy assistant secretary of the Treasury for tax analysis during the Clinton administration, thinks financing health reform with a VAT makes a lot of sense because it would give people an incentive to hold down health costs in order to keep the VAT from rising.

Even many liberals think that it is a bad idea to use soak-the-rich taxes to pay for health reform. "Financing a mass program with a class tax is not a good idea," says Joseph Thorndike of Tax Analysts. "It obscures the connection between taxes paid and benefits received--a connection that's necessarily tenuous for many government programs, but not for health care. It also undermines the notion that taxes are the price we all pay for civilized society, not just the price that some other (rich) guy has to pay."

In the end, higher tax rates on the rich are inevitable if only because of expiration of the Bush tax cuts next year. Since that would just return rates to where they were in the 1990s when growth was robust, any claim that this will destroy the economy should be taken with many grains of salt.

Still, it would be better to pay for health reform some other way. But if Republicans refuse to propose any alternative, insisting instead that taxes should never be raised for any reason, they pretty much guarantee that Democrats will raise the top rate. If that happens, Republicans will bear some responsibility as well.

Bruce Bartlett is a former Treasury Department economist and the author of Reaganomics: Supply-Side Economics in Action and Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy. His new book is available for pre-order: The New American Economy: The Failure of Reaganomics and a New Way Forward. He writes a weekly column for Forbes.com.

5b) Why Waste $1.5 Trillion Only to Get Worse Health Care?
By Rick Scott

Yesterday the Congressional Budget Office scored the House version of a health overhaul bill at $1.5 trillion, that is, if you believe those rather optimistic estimates. Congress, after all, has a history of underestimating the costs of the programs they fund. In fact, the independent HSI Network scored the House's initial draft at a heart-stopping $3.5 trillion. But let's give Congress the benefit of the doubt, for just a moment, as we try to comprehend just how much of our money they want to spend on government-run health care.

Let's start by imagining a professional football stadium, with a fence around the field itself from sideline to sideline, goal line to goal line. If you poured out $1.5 trillion dollars worth of $100 bills, it would cover the entire field and create a pile of Benjamin Franklins over 12 feet high - taller than the cross bar on the goal posts. That is how much taxpayer money - yours and mine - Congress has to confiscate in order to pay for a government-run health care plan that few, if any, really need.

That's a massive pile of cash. And here's just a sample list of other government programs or projects and what they have or would cost:

* The entire Space Shuttle program, from the 1970's development and testing all the way up until now - including nearly 120 launched missions, cost $150 billion.

* The inflation-adjusted cost of the entire Apollo Lunar Program that put 12 astronauts on the moon was cheaper - only $140 billion.

* The cost to build 20 brand-new Nimitz-class aircraft carriers, and the cost of operating all of them for 10 years each, would only set us back $150 billion.

* One tank of gas, per week, for every car in America, for an entire year, would cost $510 billion.

That much spending, all together, totals $950 billion. But we would still have another $550 billion left inside the football stadium. If we were standing on the field, the pile of confiscated tax dollars would still up to our necks.

That's pretty much where America will be, too, if Congress takes over the health care system - up to our necks in debt. Everyone will be stuck with a much higher tax bill, whether it's in the form of paying taxes on our existing employer-paid health benefits, or all of us paying higher prices for "sugary drinks" and other things as Congress has proposed. And what will we have to show for this embarrassing orgy of spending by our government? We'll be stuck with a government-run health plan that rations care, forces us onto unacceptable waiting lists, and denies us lifesaving drugs we desperately need. In short, Congress wants to spend all that cash on a plan nobody wants.

Even more frightening is that Congress is proposing this health care boondoggle after already flushing $787 billion down the drain on a stimulus package that, we are just now learning, "wasn't enough." At this very moment, the leading proposal on Capitol Hill is the "public option," which is a nice way of saying "government-run health care." The plan would create a government-managed health insurance coverage option that would compete with existing insurance coverage, and likely even force insurance providers out of business. That, in turn, would force more Americans to turn to the government for coverage, costing taxpayers even more, and ultimately driving the country further and further into an ever-growing cascade of debt that we'll never recover from.

At some point, we have to ask ourselves, do we really need this? Do we really want to gamble not only our health care system but our financial future on a scheme that almost certainly will cost more and accomplish far less than Congress predicts?

The White House and Congress both know Americans are terrified of that possibility - so they have given their assurances that a government-run plan won't compete and won't exploit any competitive advantages over private insurance companies. Few believe it. After all, what would be the point of adding one more insurance option to the 1,500 or so that are already available in America, if it's not going to make a difference? And why raise taxes by hundreds of billions and spend a trillion-and-a-half dollars just to start what amounts to a government-run insurance company?

There are several ways Congress could reform health care right now, without spending a dime. Unlike President Obama's suggestion that we just "take a painkiller," instead of getting the treatment we need, there are many ideas that would make a real difference for patients.

We could easily lower the cost of individual insurance by giving the same tax breaks that employers get to those who buy their own insurance. Or Congress could require insurance providers to accept a standard insurance claim form, which would lower administrative costs for doctors and reduce paperwork problems for patients. And why not require health care providers to post their prices and outcomes so patients can best decide how and where to spend their health care dollars?

The time for double-talk and accounting gimmicks is long gone. Both the White House and Congress have talked out of both sides of their collective mouths, saying they will not only cover the uninsured, but they will also lower health care costs for all Americans in the process.

If that's true, perhaps we can drop all the rhetoric and just answer this one question:

"How will spending what amounts to a football field filled with our tax dollars actually lower our health care costs?"

Rick Scott is chairman of Conservatives for Patients’ Rights, a group dedicated to free market health care reforms that put patients first.



5b) Democrats Hoodwink the Health Lobby: America's health-care CEOs are being taken for a ride by Congress and their own lobbyists.
By KIMBERLEY A. STRASSEL

When Democrats recall their HillaryCare defeat, they like to decry those Harry & Louise ads. What they choose not to recall so publicly is the help they got -- and are getting again -- from folks like Karen Ignagni.

The left today gets mileage out of claiming it was a unified private health sector that killed the 1993-94 Clinton health plan. It's a clever historical rewrite, offering not only an excuse for their prior defeat, but a bogeyman for today's health-care battle.

It's also allowed them to obscure the real lesson they took away from HillaryCare. Namely that, handled properly, industry groups can be played like banjos. Democrats are employing the same tactic this time -- only more deftly and with more muscle -- and the titans of the private sector are rambling straight into the ambush.

Associated Press Karen Ignagni, president and CEO of America's Health Insurance Plans
.
The old hands of the Clinton health fight know there never was uniform opposition to the government plan. Plenty of bigger players figured they could craft the regulations for bigger profits. In 1993 a number of insurance giants cut ties with their trade group, the Health Insurance Association of America (HIAA). Prudential, Cigna and others were salivating over Clinton proposals to pay for insurance for millions of uninsureds. The giants were in line to suck up these customers. They didn't appreciate the grousing of smaller association members who opposed regulations that would crowd them out.

Representing many HMO biggies was a one-time AFL-CIO employee named Karen Ignagni. While the rump HIAA was running its Harry & Louise ads, others like Ms. Ignagni were running with the Clintons to craft a regulation to the big insurers' liking.

The insurers have today reunited under a group called America's Health Insurance Plans. Its CEO? Ms. Ignagni. She, along with Billy Tauzin, head of the Pharmaceutical Research and Manufacturers of America, the American Hospital Association's Rick Umbdenstock, and others are back in Washington convinced they can outsmart, or at least outrun, the politicians. Democrats are happy to let them think so.

The industry's calculation is that by cutting deals, it can set the terms of its contributions to "reform" and even wangle upsides. The insurers came first, promising to squeeze $2 trillion in costs out of the system. Democrats are letting Ms. Ignagni believe that in return she'll get a mandate to require all Americans to carry insurance (which her members will supply), and be spared a public option (which would decimate her industry).

Mr. Tauzin came along, pledging that drug makers would cough up $80 billion to narrow a gap in Medicare drug coverage. He's been led to think Washington will forgo its plans to allow drug reimportation or give him a hand on generics. The hospital groups this week agreed to $150 billion in future Medicare and Medicaid cuts, in return for assurances it wouldn't be worse. The doctors are next, also seeking guarantees on Medicare payments.

Democrats have complemented their smiling encouragements with behind-the-scenes threats. After retaking the House in 2006, the party made clear that companies that did not hire Democratic lobbyists would not get a hearing in Washington. The ruling party is now seeing the fruits of its bullying. These days, a meeting of health-care lobbyists is better described as a reunion of Senate Finance Chairman Max Baucus's former aides. Health-care lobbying has been turned on its head: The new cabal of Democratic lobbyists does not exist to protect the industry from Congress. It exists to present Democratic ultimatums to business.

When Senate Republicans last month hosted a meeting to discuss reform ideas, Mr. Baucus's office called in a block of these Democratic lobbyists to deliver a message. "They said, 'Republicans are having this meeting and you need to let all of your clients know if they have someone there, that will be viewed as a hostile act,'" reported one attendee to the Baucus caucus. Message to companies that don't agree with their Beltway lobbyist: Pull a Rick Scott (the former hospital executive running ads critical of ObamaCare), and you'll be sorry.

All these actions -- the White House meetings, the strung-out negotiations, the muzzling -- have been taken with one aim: To buy silence. President Barack Obama is committed to a public option. Liberal Democrats intend to make the private sector fund their plans. They figure by the time they drop a bill that contains odious elements, it'll be too late for any industry player -- big or small -- to cut a Harry & Louise ad.

Industry players this week got a glimpse of how they will be treated. House Energy and Commerce Chairman Henry Waxman dismissed the $80 billion drug deal, claiming it did not have House support, and moreover that the White House "told us they're not bound to that agreement."

Mr. Waxman detailed his own demands, which, needless to say, made $80 billion look piddling. The Obama administration is already backing off the pharma and hospital deals. An anonymous White House official claimed this week that neither were set in stone, and, for the record, had been inked solely with Mr. Baucus. That's the same Mr. Baucus who has been losing clout with each day this process goes on.

The question is just how long it is going to take for America's health-care CEOs to realize they are being taken for a ride, both by Congress and their own lobbyists. Americans are wary enough about ObamaCare to maybe appreciate some straight talk from corporate America. If only corporate America can find the smarts to give it.

6) Israel orders 1st stealth F-35 squadron
B Yaakov Katz


Israel moved a step closer to receiving its first stealth fighter jets this
week after the Israel Air Force submitted an official Letter of Request
(LOR) to the Pentagon to purchase its first squadron of 25 F-35 stealth
fighter jets.

Also known as the Joint Strike Fighter (JSF), the F-35 will be one of the
most-advanced fighter jets in the world and will enable Israel to phase out
some of its older F-15 and F-16 models. The JSF is manufactured by Lockheed
Martin.

Defense officials said that while the LOR was submitted this week,
negotiations regarding the final price of the plane - estimated at around
$100 million - as well as the integration of Israeli systems would continue.

The LOR will be followed by the signing of a contract in the beginning of
2010. The first aircraft are scheduled to arrive in Israel in 2014.

The first stage of the deal will be the purchase of 25 aircraft, which will
compromise the first Israeli F-35 squadron. In a later stage, the IAF plans
to purchase an additional 50 aircraft, some of them with vertical take-off
and landing capabilities.

According to senior IDF officers, the Defense Ministry and the Pentagon have
reached understandings on most of the major issues that have been at the
core of disagreement between the sides.

Israeli demands have focused on three issues - the integration of
Israeli-made electronic warfare systems into the plane, the integration of
Israeli communication systems and the ability to independently maintain the
plane in the event of a technical or structural problem.

7) Column One: Numbering the days of dictators
By Caroline Glick

Iranian President Mahmoud Ahmadinejad had reason to feel good about himself
this week. Less than a month after he secured his hold on power for another
four years by rigging the presidential elections, Ahmadinejad felt
comfortable addressing his subjugated nation as its rightful dictator. So in
a chilling televised performance on Tuesday, he triumphantly declared the
stolen June 12 poll the "freest" and the "healthiest" elections in the world
and promised they would act as a harbinger for Islamic revolution worldwide.

Ahmadinejad's accomplishments these past few weeks have been vast and
unmistakable. By securing the unconditional support of Ayatollah Ali
Khamenei for his power grab, Ahmadinejad killed three birds with one stone.
He ensured that the clerical hierarchy in Qom - which is dependent on
Khamenei for its financial stability - acquiesced to his authority. He
expanded the Revolutionary Guards Corps' control over the country by making
it the indispensable guardian of the revolution. And he effectively
transformed Khamenei from the "supreme leader" into a creature of
Ahmadinejad's will. The moment that Khamenei gave Ahmadinejad his full
support and gave a green light to the Revolutionary Guards to repress the
protesters, Khamenei tied his own fate to that of his president.

This means that today Ahmadinejad is completely free to maintain and
escalate his policy of international brinksmanship on all levels. From
Iran's race toward nuclear capabilities, to its efforts to destabilize Iraq
and Afghanistan, to its support for Hizbullah and Hamas, to its support for
anti-American regimes in Latin America and its cultivation of terror
networks in the Western hemisphere, to its strategic proliferation alliance
with North Korea, Ahmadinejad's continued reign means that the world can
expect expanded Iranian activity on all these fronts.

In the meantime, the rest of the world's response to events in Iran has been
discouraging. The G-8's decision Wednesday to wait until late September to
even consider stronger sanctions against Iran means that at a minimum
Ahmadinejad has another three months to enrich uranium without worry. And
given that US President Barack Obama is on record supporting pursuing
negotiations with Iran until at least January 2010, it is hard to imagine
that the international community will take any concerted action against Iran
in the foreseeable future.

As he moves forward, no doubt Ahmadinejad takes heart from the supine US
response to North Korea's July 4 missile launches. On Tuesday, Yediot
Aharonot reported that Israeli analysts who reviewed videotapes of North
Korea's missile tests concluded that alongside the various short range Scuds
it sent over the Sea of Japan, Pyongyang also launched a Taeopodong-2
multi-stage long range missile capable of reaching Alaska. Tal Inbar, head
of the Space Research Center, said, "The three seconds seen [of the
Taeopodong-2] on the video prove how much North Korea's long range missile
program has advanced."

At the same time, both South Korean intelligence and US Defense Department
sources have accused North Korea of responsibility for launching massive
cyber-attacks against US and South Korean computer systems over the past
week. The attacks temporarily crippled multiple systems including those of
the National Security Agency, Homeland Security Department, the South Korean
Foreign Ministry, the Nasdaq and the New York Stock Exchange, and The
Washington Post.

In the face of all of this, the Obama administration has been disturbingly
timid. The White House's most consistent response to North Korea's
belligerent moves has been to ignore them and hope North Korea decides to
behave itself.

Matching their meekness toward Iran, the G-8 leaders responded to
Pyongyang's most recent provocations with an announcement that they would
like to become friends with Kim Jong Il. As Obama put it, "It's very
important for the world community to speak to countries like Iran and North
Korea and encourage them to take a path that does not result in a nuclear
arms race in places like the Middle East."

OVER THE past several weeks, as the regimes in Pyongyang and Teheran have
become ever more brazen in demonstrating their belligerent contempt for the
West, the prevailing wisdom has argued that the West has no good options for
containing or defeating them.

The traditional take on North Korea is that the world's leading missile and
nuclear proliferator poses less of a burden to global stability than a
post-regime North Korea filled with millions of starving people who have
been cut off from the world for 60 years. By this thinking, the world is
better off living with a psycho-state capable of fomenting a global nuclear
war than caring for its victims.

As for Iran, as Gabriel Schoenfeld wrote last month in The Wall Street
Journal, due to the gutting of the CIA's capacity to conduct covert
political warfare during the 1970s, today the US lacks the capability to
assist Iranian regime opponents in their efforts to overthrow the
mullocracy. As Schoenfeld put it, "the US appears utterly powerless to
influence the course of events."

Schoenfeld urged the US to move swiftly to rebuild its covert political
operations capacity. While this certainly makes sense, in truth, the US
doesn't need to build up much of a capacity to topple either the regime in
Pyongyang or the regime in Teheran.

Despite Ahmadinejad's success in maintaining his grip on power, it is an
indisputable fact that regime opponents succeeded these past few weeks as
never before in destabilizing the regime and in demonstrating its hollow
core. Even as Ahmadinejad was glorying in his victory, his opponents -
defeated presidential candidates Mir Hossein Mousavi and Mehdi Karroubi and
former president Muhammad Khatami - were calling for a three-day national
strike.

On Thursday, thousands of Iranians risked life and limb to heed the call to
commemorate the 10-year anniversary of the regime crackdown on university
students. That the 1999 crackdown occurred on Khatami's orders shows that
regime opponents are looking for fundamental, revolutionary change in the
regime - not cosmetic reforms.

It is worth noting that Iran's current revolutionary ferment arose from the
unlikeliest of sources. The June 12 elections were not supposed to pose a
challenge to the regime. All they were supposed to do was pit one regime
loyalist against three other regime loyalists.

The fact that the public could view Ahmadinejad's decision to steal the
election from former prime minister and regime loyalist Mousavi as an
opportunity to bring down the regime demonstrates clearly the magnitude of
the public's rejection of the Islamic Revolution. Quite simply, if the
Iranian people can take these elections as an excuse to call for the
overthrow of the regime, any spark can light that fire.

WHILE A refurbished CIA would no doubt be helpful in this regard, it is not
necessary. The international community already has the necessary tools to do
the job. All it needs - indeed all any one country needs - is the will to
actively assist Iran's disparate dissident groups who separately and
together wish to see the end of the mullocracy.

Iran's borders are porous. Whether through international defense contractors
or covert operatives working for any country, arms can be easily smuggled to
various disaffected minorities from the Azeris to the Kurds, the Baluchis
the Ahwaz Arabs, and the Baha'is. Iraq's ratlines run two ways. So do
Afghanistan's.

As to the Persians, they are already taking the lead in calling for national
strikes. They should be supported through Internet, radio and satellite
broadcasts. Whether through the Voice of America, the Voice of Israel, Radio
Free Europe, or Radio Free Iran, foreign agents can pump in truthful and
relevant information about the regime and enable coordinated, countrywide
unrest that could potentially topple the regime in a matter of days or
weeks.

Then there is North Korea. As ailing dictator Kim Jong Il uses his
brinksmanship to secure a smooth transfer of control over his malnourished
slave state to his son ahead of his death, it seems as though no one in the
West has a clue what to do about North Korea. The US, we have been told, is
too overextended with its deployments in Afghanistan and Iraq to
successfully deter or prevent North Korea from carrying out further
provocations and proliferation activities. And anyway, for years we have
been told that North Korea isn't really serious about its threats. As far as
the "experts" are concerned, North Korea's leaders don't really mean anyone
any harm. They just want to scare us all a little to make sure we don't get
any ideas about bringing them down.

But the fact is that between its own provocations and its massive
proliferation of missiles and nuclear technology, North Korea is an enormous
threat to global security. And it is also a fact that overthrowing the
regime in North Korea is the easiest, safest, fastest, and most humane way
to prevent the likes of Kim Jong Il from provoking and proliferating the
world into a nuclear conflagration.

All it would take to put an end to this monstrous regime is for South Korea
to open up its borders. How long would it take for the last North Korean to
turn off the lights when Seoul beckoned over the horizon?

THE MODELS for overthrowing the regimes in Teheran and Pyongyang are not
new. Modified versions were successfully implemented just 20-odd years ago.
The model for Iran is Poland circa 1981. The model for North Korea is East
Germany in 1989.

Unfortunately, whereas in the 1980s the leaders of the Free World were
committed to winning the Cold War against the Soviet Union by securing the
freedom of those who lived under Communism's jackboot, today, led by Obama,
the Free World behaves as though the Berlin Wall fell of its own devices.
The will of free men and women risking everything to oppose tyranny had
nothing to do with it, we are told. If we care about peace, we should
appease the likes of Ahmadinejad and Kim, not bring them down.

On Tuesday, an insect wrecked Ahmadinejad's victory speech. As he bragged
that Iranian democracy is a role model for the world, a large moth zoomed
around him, breaking his train of thought. Ahmadinejad was brought low
before his people by a moth he couldn't swat.

If a bug could humiliate Ahmadinejad in what was supposed to be his moment
of triumph, surely the willing nations of the world - or even just Israel -
together with the brave Iranian people can bring him down. It would
certainly be more cost effective than trying to negotiate a deal with a
nuclear-armed mullocracy.

And certainly the South Koreans and the Japanese can feed the starving North
Koreans and free them from the bondage of their monstrous regime. Doing so
would be vastly less expensive than living under the shadow of Pyongyang's
nuclear-armed psycho-regime.

Just because the US is currently on vacation from its role as leader of the
Free World doesn't mean that other free people cannot do the right thing.

8) Obama's House of Czars
By Mike Memoli

While President Obama was in Russia this week, a new czar was born.

Five thousand miles from Moscow in a conference room in the Eisenhower Executive Office Building, Health and Human Services Secretary Kathleen Sebelius announced the creation of a new position in the Food and Drug Administration dedicated to monitoring food safety. The Deputy Commissioner for Foods "will be responsible for restructuring and revitalizing the FDA's work to protect our food supply," Sebelius said, one of several "critical steps" the administration was taking to prevent future outbreaks.

In Depth: Meet 13 Obama Administration Czars
This annoucement was the latest example of the Obama administration's attempt to address one of its priorities with new personnel. Such point people are often referred to as "czars," and while the term is at times applied somewhat broadly, six months into Obama's first term White House watchers have identified as many as two dozen of these officials working in the Executive Branch - leading John McCain to joke recently: "Obama has more czars than the Romanovs."

Some of these positions are not new to Obama, however. The Bush administration had intelligence and homeland security czars, informal positions that eventually grew to full administration posts. One of the first references to a drug czar actually was attributed to then-Sen. Joe Biden in 1982, referring to the official who now leads the Office of National Drug Control Policy.

It's also not uncommon for a new president to begin his administration by appointing individuals to head up major initiatives. Obama has appointed individuals to oversee everything from the closure of Guantanamo Bay to the cleanup of the Great Lakes. In the campaign, he promised to create an Autism Czar - a position that remains unfulfilled as of today - though he has already hired a "green jobs" czar and a "climate" czar.

"It's a product of basically two things, number one - the campaign promises to change policy. And number two, you strike when the iron is hot," said Stephen Wayne, professor of government at Georgetown University.

Others have been a result of new policy rather than assigned to produce it. Ed Montgomery was assigned to be the "Car Czar" once the federal government assumed majority ownership in GM; Earl Devaney is tasked with overseeing the implementation of the stimulus.

The administration itself rarely refers to these officials as "czars." "No, I think the title is special master," press secretary Robert Gibbs corrected a reporter last month when asked about the new "Pay Czar," Kenneth Feinberg.

Nevertheless, the appointment by Obama of czars in the highest level of government to oversee his most significant legislative initiatives has attracted scrutiny. Carol Browner, assistant to the president for energy and climate change, is one of 22 West Wing officials earning the maximum salary of $172,200. Nancy-Ann DeParle, counselor to the president and Director of the Office of Health Care Reform, is working outside of the Department of Health and Human Services to oversee the administration's most coveted achievement.

The trend in appointing high-level czars like Browner and DeParle has changed the traditional role of Cabinet secretaries and agency chiefs.

"They want more coordination from the office of the President, and less from the departments," Wayne said. "Clearly, the heads of the agencies are going to be primarily responsible for administration [rather than policy]. They certainly won't have the dominant voice in it."

Despite the outsized role of some of these czars, as executive staff appointees, most are not confirmed by Congress, prompting some to raise constitutional questions.

"As presidential assistants and advisers, these White House staffers are not accountable for their actions to the Congress, to cabinet officials, or to virtually anyone but the president," Sen. Robert Byrd (D-W.V.) wrote in a letter to Obama in February. "They rarely testify before congressional committees, and often shield the information and decision-making process behind the assertion of executive privilege."

Byrd requested language be included in the fiscal 2010 Financial Services and General Government Appropriations Bill calling for these White House policy coordinators "to keep Congress fully and currently informed of such activities." That language was approved by the committee Thursday. "Our office is also waiting for additional information from the White House about these positions," Byrd spokesperson Jesse Jacobs said. "This is an ongoing, long-term process that will require the Congress to keep asking questions to ensure that executive officers and staff remain accountable to the elected representatives of the people."

Notwithstanding questions raised by Byrd and others, the constitutional right of the executive to craft his own administration has faced no significant challenge.

"The constitutional issue is probably not the key issue,"said Gary Schmitt, a scholar at the American Enterprise Institute. "The key issue is whether they've created kind of a gerry-rigged system that makes policy-making difficult." Schmitt predicts that the administration "is heading toward a reality check" when it may need to reorganize the bureaucracy it's created.

Case in point: when the Office of Health Care Reform was created in the West Wing, a companion office with additional staff was created in the Department of Health and Human Services.

"You can imagine where you would think that having a czar in one or two cases would makes sense because it allows you to consolidate policymaking in a focused way," Scmitt said. "The problem is that if you multiply these czars or equivalent of czars in a variety of different areas, then what you've created is a chaos. The result is the policy making process gets very cluttered, because you don't know whose responsible for what."

9) When Will The Recovery Begin? Never.
By Robert Reich

The so-called "green shoots" of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed. On one side are the V-shapers who look back at prior recessions and conclude that the faster an economy drops, the faster it gets back on track. And because this economy fell off a cliff late last fall, they expect it to roar to life early next year. Hence the V shape.
Unfortunately, V-shapers are looking back at the wrong recessions. Focus on those that started with the bursting of a giant speculative bubble and you see slow recoveries. The reason is asset values at bottom are so low that investor confidence returns only gradually.


That's where the more sober U-shapers come in. They predict a more gradual recovery, as investors slowly tiptoe back into the market.


Personally, I don't buy into either camp. In a recession this deep, recovery doesn't depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, V or U shaped.

Problem is, consumers won't start spending until they have money in their pockets and feel reasonably secure. But they don't have the money, and it's hard to see where it will come from. They can't borrow. Their homes are worth a fraction of what they were before, so say goodbye to home equity loans and refinancings. One out of ten home owners is under water -- owing more on their homes than their homes are worth. Unemployment continues to rise, and number of hours at work continues to drop. Those who can are saving. Those who can't are hunkering down, as they must.


Eventually consumers will replace cars and appliances and other stuff that wears out, but a recovery can't be built on replacements. Don't expect businesses to invest much more without lots of consumers hankering after lots of new stuff. And don't rely on exports. The global economy is contracting.

My prediction, then? Not a V, not a U. But an X. This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere --simply cannot be sustained.

The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't "recover" because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin. More on this to come.

Another Potpourri Memo - Broad Topic Discussions!

Bill Cosby gets my vote. However, while Bill says a lot of things I agree with, this one is unfortunately a hoax: (See 1 below.)

Finland also gets my vote. (See 2 below.)

While everyone is being sent propaganda regarding health care here is some more to confuse you. (See 3 below.)

John Bolton comments on Obama's re-set relationship with Russia. (See 4 below.)

Jay Rooney would like Obama to pop his bubble but can he? Doubtful! (See 5 below.)

Have not given enough thought to Bruce Walker's article about his, perhaps tongue in cheek, suggestion the press be legally required to ask Obama one tough question but he presents an interesting article and food for thought. Certainly Walker touches on what I have been writing about personal liberty and the media's obligations - moral and legal. (See 6 below.)

Sarkozy - 'An attack by Israel on Iran would be catastrophic.' What about one by Iran on Israel? Has Sarkozy become Obama's lap male poodle?(See 7 below.)

American TV shows violence and sex. Arab TV shows a mother preparing to blow herself up. Not sure which is worse. (See 8 below.)

Assessing Netanyahu's 100 days by Gil Hoffman! Hoffman lays out Netanyahu's claim, Kadima's rebuttal and what Hoffman considers reality. Interesting analysis. (See 9 below.)

In an interesting chat with my son, who just returned from Israel as part of the culmination of his fellowship program, he said he was finishing writing up the last few days of his trip and would be e mailing same shortly. He is far more articulate than I am and has given me permission to post his long and what should prove an extremely interesting analyis. He met with some of the key military and Israeli shakers and movers.

Dick


1)I HAVE DECIDED TO BECOME A WRITE-IN CANDIDATE. HERE IS MY PLATFORM:

(1) 'Press 1 for English' is immediately banned. English is the official language. Speak it or wait at the border until you can.

(2) We will immediately go into a two year isolationist posture to straighten out the country's attitude. NO imports, no exports. We will use the Wal-Mart policy, 'If we ain't got it, you don't need it.'

(3) When imports are allowed, there will be a 100% import tax on it.

(4) All retired military personnel will be required to man one of our many observation towers on the southern border (six month tour). They will be under strict orders not to fire on SOUTHBOUND aliens..

(5) Social security will immediately return to its original state. If you didn't put nuttin in, you ain't gettin nuttin out. Neither the president nor any other politician will be able to touch it.


(6) Welfare - Checks will be handed out on Fridays at the end of the 40 hour school week and the successful completion of urinalysis and a passing grade.

(7) Professional Athletes--Steroids. The FIRST time you check positive you're banned for life.

(8) Crime - We will adopt the Turkish method, the first time you steal, you lose your right hand. There are no more life sentences. If convicted of murder, you will be put to death by the same method you chose for your victim; gun, knife, strangulation, etc.

(9) One export will be allowed, Wheat. The world needs to eat. A bushel of wheat will be the exact price of a barrel of oil.

(10) All foreign aid using American taxpayer money will immediately cease, and the saved money will pay off the national debt and ultimately lower taxes. When disasters occur around the world, we'll ask the American people if they want to donate to a disaster fund, and each citizen can make the decision whether it's a worthy cause.

(11) The Pledge of Allegiance will be said every day at school and every day in Congress.

(12) The National Anthem will be played at all appropriate ceremonies, sporting events, outings, etc.

Sorry if I stepped on anyone's toes


GOD BLESS AMERICA


Bill Cosby

2) Fundamentally Freund: A place where Israel is loved
By Michael Freund


Tucked away in a far corner of northern Europe, the tranquil and resourceful nation of Finland often gets unjustly overlooked. Flanked by a swaggering and increasingly quarrelsome Russia to the east and its larger and blonder Swedish neighbor to the west, the Finns seem to receive neither the attention nor the consideration that they rightly deserve.

Indeed, despite being beset by harsh winters and a dearth of arable land, as well as enjoying the dubious distinction of being the European Union's most sparsely populated country, Finland has nonetheless built one of the most pleasant and peaceful societies on the entire continent.

There is little crime and virtually no political corruption, and public places are spotlessly clean, bordering on the pristine. It is akin in many ways to Switzerland, except that the Finns are nice.

But there is something else that distinguishes Finland, setting it apart from much of the rest of contemporary Europe, and that is the deep-seated love and admiration for Israel that exists among large sectors of the public.

On a recent trip to the country, which included a lecture tour in six towns and cities, I found what can only be described as a remarkable level of support for the Jewish state, one that cuts across religious and regional boundaries. From the capital of Helsinki to Tampere, Finland's third largest city, to the small town of Ikaalinen in the western part of the country, hundreds of non-Jews in each locale came out to demonstrate their solidarity.

There are churches where the Israeli flag is proudly displayed side-by-side with the Finnish national colors, and where entire Christian congregations recite "Hatikva" first in Hebrew and then in Finnish.

Literally dozens of Finns approached me to recount how proud they were to have spent periods of time volunteering in Israel at schools and in hospitals or on kibbutzim. They voiced great concern over Iran and its nuclear ambitions, and many pray for Israel and its welfare daily.

In Helsinki, Pastor Seppo Seppala approached me and, much to my surprise, engaged me in conversation in fluent Hebrew. He has been to Israel dozens of times, and continues to bring groups of Finnish tourists. And he is not alone. Without exception, after every speech I gave, there were always several non-Jews who came up to me and addressed me in Hebrew. Many take part in weekly private Hebrew classes, taught by fellow non-Jews, simply out of a love for the language and the people of Israel.

PARTICULARLY NOTEWORTHY is the fact that Finnish Christian support for the Jewish state is not the province of any one particular denomination, but rather it includes such diverse groups as Baptists, Pentecostals and Lutherans. However much they might disagree over theological or doctrinal issues, when it comes to Israel they stand united.

This was most evident at a day-long meeting I attended on June 14 in Heinola, a town in the south-central part of the country. Organized by the dynamic Finnish branch of the International Christian Embassy-Jerusalem (ICEJ) under the leadership of Juha Ketola, it brought together dozens of pro-Israel community leaders from across the country to discuss efforts to promote and support aliya.

For the past two decades, the Finns have been actively involved in helping Jews from the former Soviet Union to move to Israel, and Helsinki served as a gateway to Zion after the fall of communism.

On March 10, 1990, the indefatigable Kaarlo and Ulla Jarvilehto, a former member of the Finnish parliament who headed the ICEJ Finland branch at the time, teamed up with the Jewish Agency to help the first Soviet Jewish family go through Helsinki on its way to Tel Aviv. Since then, the Finns have sponsored the aliya of well over 17,000 Russian Jews.

As I sat and listened to the proceedings with the aid of a translator, an extraordinary exchange unfolded. The representatives discussed contingency plans in case there was a crisis and large numbers of Jews had to leave for Israel via Finland at a moment's notice. They then began to argue with one another - politely, of course - over which Finnish towns or cities would welcome the Jews, with each one wanting to make sure that his or her community was not left out.

I couldn't help but marvel at the fact that after centuries in which Europeans often vied with one another to get rid of Jews, here were Finns competing for the right to host them.

What accounts for this phenomenon? To some extent, it is based on certain parallels between Finland and Israel, both of which are small countries which had to fight for independence and whose historically ravenous neighbors have occasionally coveted their land. But in many instances, it is because Finnish Christians feel a profound religious and spiritual obligation to champion Israel due to God's promise to Abraham that "I will bless those who bless you" (Genesis 12:3).

OF COURSE, not all is rosy in Finland. In January, for example, the Finnish Green League's paper Vihrea Lanka published a cartoon strip in which the Star of David was compared to a swastika. The paper's editor offered a peculiar justification for the caricature, asserting that "it is quite clearly the flag of Israel featured in the strip and not just any Star of David," as if that somehow makes it OK.

And the general Finnish media, like much of the mainstream press throughout Western Europe, is often biased and slanted in its coverage of the Middle East.

Nonetheless, it is refreshing to see that there is a place in Europe where Israel is truly loved. So much of our focus is on our foes and those who hate us, that we often don't pay enough attention to our friends.

This needs to change, and Israel and world Jewry must do more to cultivate relations with Helsinki, where the ground is fertile for deepening the bonds of friendship between the two countries. For at a time when anti-Semitism and anti-Israel sentiment are on the rise, it is comforting to know that in at least one corner of Europe, there are countless thousands of good and decent people with a warm place in their hearts for the Jewish state.

3) Rationing Wolves in Public Servants’ Clothing
By Colin Hanna


Congress may soon move to thwart America’s medical ingenuity. Health care “reform” may keep doctors from treating certain patients — especially seniors — with the most effective treatments.

It’s known as comparative effectiveness research. Doesn’t that sound positive? If CER merely compared similar medicines, devices and procedures, then disseminated the findings on what works best, no one would object. But this isn’t some benign exercise.

Rather, CER has been euphemistically inserted into the health reform legislation moving on Capitol Hill. It could mandate that some life-or-death decisions be based primarily on cost and likely longevity. CER will quash innovation and drastically slow medical progress.

The full scope of comparative effectiveness research is taking shape. And its shape looks like a monster.

The “economic stimulus” bill passed earlier this year put $1.1 billion toward CER by creating the Federal Coordinating Council for Comparative Effectiveness Research. A new grant program will dole out taxpayer money.

The National Institutes of Health has now called for CER grant applications for stimulus funds. One area is titled “Integrating Cost-Effectiveness Analysis into Clinical Research.” It intends to “guide future policies that support the allocation of health resources for the treatment of acute and chronic diseases across the lifespan.”

“Allocation of health resources” translates into English as making spending decisions. The House committee report accompanying the stimulus bill indicated where policymakers driving CER are heading. Medicines, therapies and medical devices "that are found to be less effective and in some cases, more expensive, will no longer be prescribed."

The way it’s going, CER will ultimately dress health care rationing in political and bureaucratic clothing.

The Democrat Senators on the Health, Education, Labor and Pensions Committee have defeated Republican amendments that would have ensured that CER does not allow rationing. Despite the assurances of Democrat Senators that CER findings would not be the basis for clinical judgments, the HELP Committee legislation should trouble anyone who values the doctor-patient relationship and the virtual monopoly U.S. health care holds over medical progress. America leads the world in medical innovation, and access to the latest innovations is more egalitarian in this country than elsewhere.

The practice of medicine can’t be boxed in without serious consequences. For example, the bureaucracy that runs Medicare recently refused to pay for a less invasive, cheaper diagnostic procedure, the “virtual colonoscopy.”

Virtual colonoscopies could be used to screen many more people at risk of the second leading cancer killer than traditional invasive and expensive colonoscopies. Colon cancer is cured in 93 percent of cases caught early. Thus, Medicare’s coverage decision represents a death sentence.

CER could well end up empowering government bureaucrats with the power to pick one medical size to fit all. But in health care, similar therapies may not work the same for all patients. And doctors practice an art, not just a science.

I know this firsthand. When our son was 7, he had a seizure. The doctor followed the treatment protocol of anti-seizure medicine. That stopped the seizures and, after five years, our son stopped taking the medicine.

At 16, the seizures returned. Our pediatrician insisted on an MRI. The MRI revealed a tumor that was cancerous but caught early. Our son underwent surgery, radiation and chemotherapy, and he was cured. Now, 12 years later, he is completely cancer-free, happily married and living a full, normal life.

Had the doctor been constrained by a comparative effectiveness rule and forced to prescribe anti-seizure medicine again, instead of ordering a revealing MRI, the cancer would have grown undetected for months or years, and our son likely would have died.

If CER becomes more than identifying generally best practices and therapies and disseminating them for doctors’ consideration only, then it will reduce doctors to mere body mechanics and plumbers. Medicine will become a check-list trade, no longer a profession centered on individualized treatment and judgment.

The British experience appears more and more to be the goal of liberal American lawmakers and the Obama administration. The misnamed National Institute for Health and Clinical Excellence, or NICE, rations British medical care based on cost.

NICE has refused to make breakthrough medicines and therapies available through the British health service, even though they are clinically effective. For instance, NICE has rejected colon cancer, rheumatoid arthritis and Alzheimer’s medications that are routinely available to American patients.

The not-so-nice agency is all stick, no carrot. Brits who go around the system and buy such medicines with their own money may lose coverage of health services through the government-run health system.

Health reform legislation should not institutionalize U.S. health care rationing. Sadly, that is exactly what the majority leadership in the House and the Senate proposes, under the Orwellian name of comparative effectiveness.

Colin Hanna is president of Let Freedom Ring.

4)Is Russia pushing Obama's buttons? The ‘reset' directions are essentially reversals of recent U.S. policy
By John Bolton


As Barack Obama departed for Moscow, Russian President Dmitry Medvedev showed he was well pleased with his counterpart's famous “reset button.” Commenting on Iran, Mr. Medvedev said: “If I understand correctly, the United States would like to establish more open and more direct relations with Iran. We support this choice. It would be counterproductive to resort to other sanctions.”

Mr. Medvedev's path was at least consistent with his quick endorsement of Iran's June 12“election” results. Inconveniently for Mr. Obama, however, widespread vote fraud, suppression of dissent, brutality and bloodshed got in the way of his moving rapidly to open bilateral talks with Tehran's military theocracy.

But Mr. Medvedev was entirely right to assess that Iran's “election” and its aftermath were not ultimately distasteful enough to dissuade Mr. Obama from seeking direct negotiations with Iran on its nuclear program. Despite rhetorical flourishes about free elections, Mr. Obama and Joe Biden both reaffirmed after Mr. Medvedev's remarks that they will try what six years of European Union negotiations with Iran have failed to do - namely, divert it from its decades-long quest for deliverable nuclear weapons.

Iran's nuclear program is far from the only issue where Mr. Medvedev and Mr. Obama likely found themselves agreeing. Major new restrictions on strategic nuclear weapons, postponing construction on U.S. missile-defence installations in Poland and the Czech Republic and, indeed, downsizing America's entire missile-defence program, sidelining Georgia's and Ukraine's NATO membership applications, and leaning hard on Israel to stop all West Bank settlement construction and accept a Palestinian state - these are all potential points of agreement.

Russia's strategic interests in these outcomes are clear. Limiting the U.S. missile-defence program, particularly its presence in former Soviet satellites and territories, reduces America's global umbrella, as would dramatic cuts in strategic nuclear warheads (which Russia's creaking economy would require whether or not it agreed with Washington). Keeping Georgia and Ukraine from NATO membership is a clear warning to other former Soviet republics not to get too cozy with the West. NATO's reluctance to do much in response only underlines the warning.

Pressing Israel and covering for Iran (and North Korea) also help Moscow's long-standing campaign to reduce U.S. influence in the Middle East. Russia has major commercial interests in Iran, including constructing the Bushehr reactor and selling Tehran pricey, high-end conventional weapons, such as new anti-aircraft defences.

Russia's positions are not surprising, but U.S. acquiescence in them, undercutting not only Israel but NATO ally Turkey and pro-Western Arab states, certainly is. These governments may have little sympathy for Israel, but they are legitimately concerned about Iran, which poses an immediate, existential threat through its nuclear program and through continuing support for terrorists, Sunni (Hamas and Taliban) and Shia alike.

If all this comes to pass, we may conclude that the “reset button” has, indeed, been pushed. Russian-American relations, after an initial uptick, undoubtedly went downhill during the Bush administration, especially after one of Russia's important trading partners, Saddam Hussein, was removed in Iraq. But the deterioration in relations came almost entirely from more belligerent and provocative Russian behaviour, not from a desire in Washington for confrontation. Thus, all the “new” directions emanating from the Moscow summit are all essentially reversals of recent U.S. policy. The Russians should be happy; most people are when they get their way.

Supporters of Mr. Obama's “reset button” point to new U.S. overflight rights through Russian airspace for resupplying NATO forces in Afghanistan as a benefit of his new policy. That is only slight comfort, since most supplies for Afghanistan flow through European and Middle Eastern bases, requiring no Russian overflights. And it is hard to think of anything less costly to Russia, or easier to revoke than the airspace transit permission.

Some European countries are actually becoming a bit queasy over Mr. Obama's new policies, despite warmly welcoming his arrival on Jan. 20. On Iran, European G8 members may be favouring a tougher line on sanctions this week than Moscow or Washington. Europe may well worry about a Russia now free to throw its weight around in the near abroad, and in Central and Eastern Europe, while continuing to threaten cutoffs in the oil and natural gas supplies Europe depends on. And Europe should begin asking itself how strong NATO will be in the future, as Europe continues not to pull its share of the load in an actual conflict such as Afghanistan.

Obamamania, whether in the U.S. or Europe, has likely reached its limit. Americans may have voted for a lower profile in Iraq, but they did not vote for a weaker United States globally. This week's Moscow meetings may well convince many Americans that their President's “reset button” was a dangerous toy indeed.

John Bolton, a senior fellow at the Washington-based American Enterprise Institute for Public Policy Research, is the author of Surrender Is Not an Option: Defending America at the United Nations and Abroad. He is former U.S. ambassador to the United Nations.

5) The Obama Show
By Jay Rooney

Life sometimes imitates art, even in the Obama presidency. The old movie, The Truman Show, starring Jim Carrey as the earnest and clueless Truman Burbank, a man literally raised in a bubble since he was born, and the star of a popular television show, is a decent analogy for Obama's first half year in office.


Let's start with the bubble itself in the film. The enormously costly stage for the show is a sealed environment where everyone is scripted, except Truman himself, and all actions are tightly controlled. The drama for the TV audience is in how Truman will react to the latest life-changing material from the show's writers. He has some inkling that not all is as it seems, but doesn't know how to act on that feeling. Obama's trajectory is similar. Absorbing almost nothing except Far Left ideas from adolescence, and then choosing to live entirely in that echo chamber as an adult, he has only a vague notion of fairness in the place of any strongly held convictions. That has allowed others to write the script, and as if on cue, Obama acts and reacts in unexpected ways.


On domestic legislation, the wildly unpopular Democratic Congress (current approval rating 35%) wrote the script on the stimulus. Pelosi and Reid assembled a pork-loaded and ineffective boondoggle resulting in record deficits and crippling debt. True believers expected Obama to denounce the pork, veto the legislation, and send it back to Congress for another try. But they were shocked -- shocked! -- to see him endorse and sign it. After all, hadn't he promised a change in the way Washington does business?


Ah, but that was the script from an episode in The Campaign season, and obviously not Obama's words or ideas. And in this season, His Rookie Year, Congress continues to churn out even more unpopular new scripts: bailouts for dying auto companies, regulating carbon based on crackpot climate change theories, and now nationalizing health care. Viewers can hardly wait for the California Goes Bankrupt and the Here Comes Inflation Again episodes. Like Truman in the film, Obama can only react.


These episodes don't come close to matching the drama from the foreign affairs scripts. The first overseas episode came in The Campaign season, when Russia invaded Georgia, eliciting a surprisingly weak Rodney King-like can't-we-all-just-get-along response from Obama. The most recent Russia episode in His Rookie Year shows Obama making meaningless missile reduction commitments and vague statements about Georgia's territorial integrity, essentially giving Russia a green light for the second invasion they're almost certainly already planning. The media script called the meeting a summit, validating Russia's pretense toward world power and conferring on the nation a respect undeserved by an economically moribund backwater in severe demographic decline.


The Iran script about an obviously rigged election found Obama publicly expressing hands-off for the ruling mullahs! This was then followed by the broadcast deaths of opposition protestors at the hands of Iran's ruling party thugs. The North Korea script has the darkly comic, and probably psychotic, leader lobbing missiles every which way, including seven on July 4 alone! The Honduras script was written in such a way as to give Obama an easy win but, alas, he condemned their democratic traditions and the peaceful transition of power under the rule of law to endorse instead the illegal Chavez-like attempted constitution rewrite and takeover of the government. Viewers are looking forward to the Israel Bombs Iran and Al Qaeda Strikes Again episodes.


In The Truman Show, the hero was surrounded by friends, neighbors, and a spouse who were all utterly untrustworthy. Those who tried to tell him the truth about his life and his fictional town of Seahaven were hustled off the soundstage and banished. His alleged best friend, Marlon, was important to preserving the illusion, quelling any doubts Truman expressed as soon as they arose.


In the film, Truman misses the guidance of his father after his presumed drowning in a tragic boating accident. The closest Obama parallel would be his father figure, the Reverend Jeremiah Wright. He apparently sought Wright's advice many times but he would have heard only more radical views than his own. If he misses Wright now, it's because his radical views became so politically toxic that Obama had to publicly reject his Church.


Rashid Khalidi and Bill Ayers were friends of Obama, despite media protests to the contrary, and both are substantially more radical. Arne Duncan of Chicago is more a political acquaintance than a friend and his strong ideas about improving public education through charter schools (the Los Angeles model) have mostly been shelved in favor of the status quo favored by the teachers unions. David Axelrod clearly supports and encourages a leftward tilt on every issue. The antics of the profane Rahm Emanuel can be tiresome, but he has a reputation for being savvy and realistic, and his influence is a mystery. Hillary Clinton is clearly not a friend but does share Obama's simplistic talk-talk view of foreign policy.


It's apparent that those who surround Obama are committed mostly to an aggressive left-liberal agenda rather than to Obama personally. They see Obama as a means to their ends. Ideas that might work that don't fit the agenda are actively discouraged. Something similar happened at the outset of the Clinton presidency, with Hillary's attempted takeover of the health care system and other Cabinet-level debacles, before Clinton himself reasserted control more than two years after being elected.


Will Obama let those around him drive the agenda to his detriment or will he reassert control? Truman actively challenged his own assumptions and his environment in the climax of The Truman Show, breaking free of those who refused to let him see the way things really are, even risking his life to do so. He refused to accept the world as he saw it, and started anew.


It's hard to be optimistic about Obama, though. Based on past interviews, statements, and speeches, it's not clear he's even open to other ideas. The Far Left indoctrination is so complete that the record shows no evidence that Obama has ever entertained other ideas, despite the Teleprompter rhetoric to the contrary.


Obama clearly doesn't have the political instincts of Bill Clinton. Some have called Clinton the best Republican president of the last twenty years, not because he was conservative but because he recognized the policies favored by the majority of Americans and didn't care much about their political provenance. In spite of the epic battles with Republicans, he was able to work in a bipartisan fashion to pass important legislation.


Can Obama depart from the Far Left playbook and risk his political life to accomplish something important for America? In the face of looming double-digit unemployment, he needs a Truman Burbank-like breakthrough, and soon.

6) The Slave Press
By Bruce Walker

Why do we have Freedom of the Press? Although this is usually combined with freedom of speech, the two are not the same at all. Freedom of speech is the right of the individual. Because oral communication is the most natural of human interactions, this freedom exists quite easily without any special government protection. Spoken words, in most cases, are spontaneous and responsive. Each healthy human has the power to speak and also to hear. Even in the dreariest totalitarian regimes, a significant degree of freedom of speech exists.


Freedom of the Press is something else completely. It is the right to use economic power to reach an audience as wide as the world. When we talk of the right of radio and television broadcasters to say what they please, we are really describing freedom of the press -- the right of publication of opinions, information, entertainment, and news to the world. It is not a matter of personal liberty so much as it is a matter of private property that is at stake.


Government began decades ago to erode this right. Artificial lines in constitutional rights were drawn by the Supreme Court. So, while CBS News could say, pretty much, whatever it wanted, General Foods could not (it's right to publicize information was called "commercial speech.") Judges, not the Constitution, would determine what variety of published expression was "protected" and what variety of published expression was at the mercy of bureaucrats. The false and misleading statements of the Leftist media might lead to millions of people falling under the control of totalitarian murders -- and that was just fine -- but the absence of expression by tobacco companies was a dangerous crime.


Freedom of Press went through more bizarre contortions. The New York Times, in 1964, acquired for those priestly corporations who kept us informed the right to libel with impunity in The New York Times v. Sullivan. Only actual malice sufficed to make a network or a newspaper guilty of libel when it makes false and destructive statements about a "public figure." Anyone who has read that opinion could see that The New York Times did just that to Sullivan, but the Supreme Court winked and implied that the standard of proving actual malice was very, very high (i.e. impossible.)


Publications which had been considered pornographic since colonial times suddenly acquired more constitutional protection than, say, Kraft Foods or Kleenex. The Federal Trade Commission could regulate those producers of wholesome products to death, but ghastly periodicals like Hustler might have "redeeming social value." Freedom of the Press became more and more just whatever pleased the Left.


Reporters -- employees of corporations with favored constitutional rights -- might hide their sources, but pity the employee of another type of corporation who tried to hide something from the government! Freedom of the press became a special right, allowed to only a few, and extending far beyond what the Founding Fathers ever intended. Ordinary businesses do not have Freedom of the Press. Favored types of businesses, those who market news, entertainment, and opinions, have extraordinary rights, like the right to intentionally mislead. That is not what the First Amendment was intended to protect, but that is what we have now.


So why not demand that those favored elite corporations at least have a duty that goes with all their privileges? Surely there is a moral duty, if not a constitutional duty, for these aristocrats to ask Barack Obama at least one tough question. Surely there is an ethical responsibility, if not a legal one, to cover the enormous popular uprising in the Fourth of July Tea Parties around our nation? Surely there is an obligation by those who championed the blatantly unconstitutional restrictions on political speech (the one type of speech which the Supreme Court has routinely held sacrosanct) in "Campaign Finance Reform" to at a minimum create some impartial system to insure that the only means of exercising Freedom of the Press in America (through some organ of the Leftist media) treat political parties and candidates fairly. Surely those who yelp and scream for the re-imposition of the "Fairness Doctrine" in talk radio have a duty to demand that massive Leftist corporations begin to be fair first.


Freedom of the Press, like almost all our constitutional protections, has been murdered by the courts and the Left. Those who view slave masters like Castro as "liberators" have no notion of what freedom really means. The Left does not want the responsibility of freedom, especially in the arena of facts, ideas, and opinions. What we have today in America are willing serfs of The Slave Press. It exists solely to expand the power of the Left, and the Left exists only to grasp power and to choke liberty.


Bruce Walker is the author of two books: Sinisterism: Secular Religion of the Lie, and his recently published book, The Swastika against the Cross: The Nazi War on Christianity.

7) Sarkozy: Israel strike on Iran would be catastrophe

A unilateral attack by Israel against Iran to thwart the Islamic republic's
nuclear ambitions would be an "absolute catastrophe," AFP quoted French
President Nicolas Sarkozy as warning on Thursday.

Sarkozy was speaking after a summit of the Group of Eight and other leaders
in Italy at which they agreed on the need to pursue a negotiated deal with
Tehran to halt its nuclear program.

Earlier this week, U.S. President Barack Obama rebuffed suggestions that
Washington had given Israel a green light to attack Iran's nuclear
facilities. Israel believes that a nuclear Iran would pose an existential
threat.

The French president said Wednesday that major powers in the G8 would give
negotiations with Iran a chance until September.

After Sarkozy's statement Wednesday, a senior adviser to Iran's top
authority said in remarks published on Thursday that the Islamic Republic
would not back down "even one step" over its nuclear work, making clear
Tehran's continued defiance toward the West.

Ali Akbar Velayati, Supreme Leader Ayatollah Ali Khamenei's top adviser on
international affairs, said Western countries did not want the Islamic state
to have peaceful nuclear activities, state broadcaster IRIB said on its
website.

Speaking after talks with fellow G8 leaders, Sarkozy said they would review
the situation at a G20 meeting of developed and developing countries in
Pittsburgh on Sept. 24 and 25.

"If there is no progress by then we will have to take decisions," said
Sarkozy, indicating that tougher sanctions might be imposed if Tehran
continued to resist negotiations.

Western countries believe Iran is trying to build an atomic bomb. Tehran
insists it wants to master nuclear technology to generate electricity, and
has rejected all overtures for talks.

U.S. and Canadian officials, meanwhile, said the world's main industrialized
nations were growing increasingly impatient.

"All G8 nations are united. There is a strong consensus at the table that
unless things change soon, there will be further action," said Canadian
spokesman Dimitri Soudas.

White House official: G8 talks reflect 'collective impatience' with Iran

A White House deputy national security adviser, Mike Froman, told reporters
the G8 discussions had reflected "a collective impatience with Iran."

However, Sarkozy made clear Wednesday Russia was still dragging its feet
over the issue and had pushed for more time before considering a fresh round
of sanctions.

"We made an effort to agree not to strengthen sanctions straightaway in
order to bring everyone on board. The more reserved amongst us agreed that
Pittsburgh was the time for decisions," said Sarkozy.

In a separate statement, the G8 said it was committed to finding a
diplomatic solution to Iran's nuclear program.

"We sincerely hope that Iran will seize this opportunity to give diplomacy a
chance," the statement said.

The G8 statement came after Prime Minister Benjamin Netanyahu's top national
security adviser said Wednesday that the United States was distancing itself
from Israel's position on Iran.

The statement also deplored the violence in Iran following last month's
disputed presidential election and said arrests of journalists and
foreigners there were "unacceptable".

Moreover, it repeated criticism of Iranian President Mahmoud Ahmadinejad for
denying the Holocaust.

Turning to the Middle East, the G8 reiterated calls for a swift resumption
of negotiations between Israel and the Palestinians over the creation of two
separate states.

"We also call for the immediate opening of crossings for the flow of
humanitarian aid, commercial goods and persons to and from Gaza, in a manner
that respects Israel's security," the statement said.

8) Hamas-style education: Suicide bomber's children watch live reenactment of their mother's death on Hamas TV

Educating the children: A children show on Hamas' TV network aired a special episode last week dedicated to female suicide bomber Reem Salah al-Riyashi.


The Palestinian woman blew herself up at the Erez Crossing in 2004, killing four Israelis.

Reenactment of suicide attack (video courtesy of Palestinian Media Watch)

Producers invited al-Riyashi's children to the show, so they can see a live reenactment of their mother's death in the terror attack. The shows host, a bear called Nasour, invited "martyr Riyashi's children" to enter the studio, before they proceeded to watch a video accompanied by music.


The video features a woman building a bomb as her daughter watches. The child then asks: "Mom, what are you carrying in your arms instead of carrying me? Is it a toy or a gift for me?" The mother does not respond and is seen leaving the house, as her daughter sings to her: "Come back soon, mom."


Later, the child in the video is seen watching a report about the bombing on television. "Instead of carrying me, you carried a bomb in your arms," the child says. "Only now I know what was more important than us."


The video proceeds to show the suicide bomber standing at an IDF roadblock near soldiers; a few moments later, the figures disappear in thick smoke as an explosion ensues. As the clip was playing, the camera focused on the two young children, stunned in the face of a video depicting their mother's death.

9) Politics: Netanyahu's first 100 days
By Gil Hoffman

Prime Minister Binyamin Netanyahu and his political opponents in Kadima spent much of the past week trying to influence public opinion on the question of whether his first 100 days in office were successful.

The obsession with grading a leader's first 100 days is something picked up from the United States, where the starts of presidencies have been assessed since Franklin Delano Roosevelt introduced the revolutionary changes of his New Deal over the first 100 days of his first term.

From there developed a theory, proven incorrect by history, that most leaders' accomplishments come in their first 100 days and that heads of state who don't start achieving their goals immediately are doomed to failure. Netanyahu encouraged the preoccupation with analyzing the beginning of his tenure by forming a task force to plan for his first 100 days in office, just like US President Barack Obama.

Netanyahu's predecessor, Ehud Olmert, never recovered from the Second Lebanon War that broke out during his first 100 days. But because there has not been such a monumental event at the start of Netanyahu's term, his success or failure remains in the eye of the beholder.

Kadima took Netanyahu's milestone very seriously, unveiling a sticker campaign under the slogan "Bibi 100 days, 0 accomplishments" and compiling a folder full of the prime minister's failures and broken promises.

Netanyahu himself listed his accomplishments at the start of Sunday's cabinet meeting, but made the mistake of not calling a press conference to deliver the message until a hastily-organized Knesset briefing from his aides on Wednesday for which political reporters were given 15 minutes notice on their beepers.

The press bought a story from Kadima that the press conference came about because the spokesman of the party showed the sticker to Netanyahu's political adviser and the prime minister panicked.

Netanyahu's version of the events was a lot more innocent. He made an unexpected visit to the Knesset cafeteria, and the press congregated around him as they have with previous prime ministers who entered their hangout. When he asked reporters why he was receiving bad press, they told him that they were not being told his side of the story. He immediately called his advisers and organized the press conference.

As usual, there are two sides to every story and the truth lies somewhere in between. Here is the political spin from Netanyahu, Kadima and an educated guess as to where the truth lies on the key issues of the prime minister's first 100 days.

Diplomatic

Netanyahu's spin: In his speech at Bar-Ilan University, he succeeded in expressing the views of a consensus of Israelis, which put him in a position of strength in the eyes of world leaders. By accepting a demilitarized Palestinian state and focusing on the conditions the Palestinians must fulfill to achieve a state, he put the onus on them and not on Israel. Netanyahu is facing an Obama administration that broke its predecessor's promises and yet is insisting that he completely abide by its interpretation of his predecessor's pledges. Talks are ongoing to settle the dispute.

Kadima's spin: Much of the tension between Jerusalem and Washington could have been avoided had Netanyahu said the words "Palestinian state" when he met with Obama. Instead, he waited for the Bar-Ilan speech while relations with the US deteriorated. When he did say the magic words, he only did so to get America off Israel's back and he never believed the Palestinians would accept his conditions. Due to Netanyahu's mishandling, the Palestinians look like pursuers of peace and Israelis as rejectionists, when in reality the opposite is true, and the dialogue with America has been focused on settlements and not Iran.

Reality: They are both absolutely right, even though they contradict each other. With an administration in Washington determined to reach out to Arabs and Muslims and no longer give Israel the benefit of the doubt, there will inevitably be tension with the US no matter what Netanyahu does or says. The Palestinian leadership has rejected any talks, introduced new preconditions and stymied cooperation on projects intended to help its own people. Netanyahu must succeed better at persuading the world of these realities if he hopes to have a better next 100 days.

Economic

Netanyahu: Accomplishments include the expected passage of a two-year budget, reaching an economic package deal with the Histadrut and the Manufacturers Association, reforming the Israel Lands Administration and passing the Bank of Israel Law. Most of these were included in the booklet drafted by the 100-day task force led by Yuval Steinitz, who Netanyahu already knew then would be his finance minister. Netanyahu succeeded in forging cooperation on economic issues between parties in his coalition that have very different worldviews.

Kadima: The prime minister flip-flopped on several key elements of the 2009-10 state budget, due to pressure from Shas and Labor. The final version of the budget looks nothing like it did at the start and breaks promises he made during the campaign. Appointing Steinitz as finance minister was a mistake comparable to making Amir Peretz minister of defense. Steinitz should have quit when Netanyahu undermined him the first time.

Reality: Kadima is correct about the zigzagging. Netanyahu has not properly explained why he changed his mind. But having a two-year budget will inevitably make the economy and the political system more stable, because there will not be an annual threat to not pass a budget that could bring down the government.

Politics

Netanyahu: Forming a stable national-unity government was his top achievement. As cabinet secretary Zvi Hauser said at Wednesday's press conference: "Prime minister of Israel is undoubtedly the hardest job in the world. One of our goals was to unite the parties in the coalition. Some of this coordination was interpreted as not standing up [to threats] or changing opinions, but the fact is that we are moving together at a time of economic crisis, security threats and diplomatic challenges, and that is a great accomplishment."

Kadima: Netanyahu formed the largest cabinet in history and among the largest governments currently in the world. Each minister's office costs the public NIS 9 million a year, which could purchase 750,000 meals for a homeless shelter or 2,250 computers for school children.

Netanyahu paid too much to each coalition partner and should not have let Israel Beiteinu leader Avigdor Lieberman become foreign minister or control law enforcement posts in the cabinet.

Reality: If Netanyahu succeeds in passing legislation that makes it harder to topple the prime minister, he will be in power for a lot longer than people expect. He learned from his predecessors that it is worth paying a price for stability. The gaps between Labor and Lieberman on diplomatic issues have proven negligible. But if he continues to cave into Obama, the Right that has been relatively silent so far will eventually rise up and threaten to topple him as it did in his first term as prime minister.

Unemployment, Health Care, Afghanistan,Iran! WOW!

Government continues on its merry way,
Now it will determine who and what to pay.

Politicians will remain an excluded bunch,
As long as voters remain out to lunch. (See 1 below.)

Unemployment is not something politicians can ignore but Obama should not be blamed for the fact that it is rising. It is a reflection of the fact that our profligate ways have caught up with themselves. However, he can be blamed for making unrealistic campaign predictions as to how high it would go when, in fact, he could not know and he and his party can be blamed for a stimulus bill which was mostly pork.

Most importantly, there is really very little he can do about employment now because his policies were misdirected and he is too much of a committed ideologue to reverse course. Obama has wasted a lot of money, is piling on a lot of debt and his flying around the world making apologetic speeches has been dispiriting. The nation's mood of discontent and angst is a reflection of the fact that we have a president who is inexperienced, confused and too smart and arrogant to see the error of his ways. (See 1a below.)

Liberals obsessed over GW's 'supposed' restraints on our liberty and now they remain mute. The author below refers to "The Road To Serfdom" by F. Hayek - a book I urge all, who care about the stifling effect of amoebic government, read. Liberty, once lost, is hard to retrieve. Debt once incurred is difficult to pay off and one relates to the other. (See 2 below.)

I have been writing for months the health care bill is a Trojan Horse plan to get government's nose under the tent and eventually the rest of the horse will follow.

Keeping the private sector honest with a government plan that is intellectually dishonest is the height of "chutzpah." (See 3 below.)

Democrats want bi-partisan support on the health care bill because they fear a backlash if they go it alone. Republicans will never get a decent bill passed so they should just let the Democrats run with the ball. That is not a cop out, it is just plain common sense. Common sense is not something Republicans have demonstrated they possess. (See 3a below.)

Investor Daily is confused regarding Obama's plan regarding Iran's nuclear capability. Not surprising, Obama seems not to have one beyond negotiating after the fact. (See 4 below.)


A self acclaimed 'liberal intervenionist' begins to question whether our strategy in Afghanistan is likely to produce positive results since we seem not to know what we are doing. He writes: " We need to ask whether the Government has the will, strategy or tactics to do the job properly." He comes up with no convincing answer.(See 5 below.)

Nouriel Roubini has been crowned the 'Dr. Doom' of this recesssion but his forecasts have been accurate. After reviewing the latest unemployment and foreclosure figures he remains gloomy. I could not agree with him more.

It is no fun to be somber when everyone seeks a silver lining but objectively speaking the only positive thing that can be said is that the current decline is decelerating but could pick up speed if it continues much longer, as I expect it will. Connected statistics and their impact on psychology have a way of producing loop feedback results. (See 6 below.)

Edmund Conway writes that even when the recovery appears it will be a long and painful process and initially may go unnoticed. Again, I could not agree more. (See 7 below.)

A power hungry, corrupt and immoral attorney general wanted to become governor so he set about to use his awesome powers. He was on a roll and rolled AIG's Greenberg. The man who built AIG was forced out and a clueless government entered the picture. Some $187 billion later the picture remains bleak. (See 8 below.)

Democrats are not likely to pass another stimulus bill to save the one they already passed and which is failing but speculation about doing so will not go away. (See 9 below.)

Not standing up for 'Western Values' bothers Dan Henninger.

The problem is that you have to first understand what they are, then you have to believe in them, you have to accept the fact that they have worth and finally, you have to have a plan to save them. Obama , more or less, strikes out on all four. (See 10 below.)

Finally health care cost projections continue to be illusive. Probably because they are unpredictable. Therefore, Congress will eventually come up with a figure, base their program on it, sell it and be wrong. Now that is not change! (See 12 below.)

Judge Sotomayor will shortly undergo grueling nomination hearings. Our air waves and print media will overwhelm us with coverage and drown us in reportage. From Michael Jackson to Sotomayor -quite an exhausting experience.

The judge will assuredly be nominated. What will resurface is what we mostly already know - she does not necessarily believe facts should wholly determine legal outcomes and a mixture of touchy feely subjectivity is appropriate to right past wrongs.

Her appointment to the nation's highest court could set the stage for similar nominations that could render legal decisioning less predictable. Now that is change!

Have a great weekend.

Dick

1) White House Rethinks How Best to Pay the Pros
By DAVID WESSEL

President Barack Obama believes you get what you pay for -- in business, in health care and in teaching. And in each of those spheres, he doesn't think the way the U.S. pays professionals is designed to get what the nation really wants and needs.

In executive suites, he says, we rewarded reckless risk-taking and got the worst recession in half a century. In doctors' offices and hospitals, we pay for more care instead of better care and get a wastefully expensive health-care system. In K-12 classrooms, we pay teachers, good and bad, for showing up instead of successful teaching and perpetuate schools that fail.

So Mr. Obama wants to pay professionals more only if they deliver more of what he thinks America needs, a bold bet on the economic principle that incentives do matter. If he succeeds, the changes to business, health care and education could last far beyond his presidency. But this is hard to do well. The risks of unintended consequences are large, and there's a chance we'll get more of what can be measured -- not what we truly want or need.

Paying doctors, teachers and executives incentives -- not big, fixed sums -- is at the core of President Barack Obama administration's economic reform plans. As WSJ's David Wessel reports, the idea is a contentious one.

In business, Mr. Obama and Treasury Secretary Timothy Geithner are trying to redirect calls for imposing salary caps to mandating "pay for performance." This isn't foreign to companies: They have long said they intend to peg compensation to numerical results and aren't insulted by the notion that professionals are motivated by money.

In health care, Mr. Obama and his budget director, Peter Orszag, insist that the only way the nation can afford to cover the uninsured and keep health costs from devouring the federal budget is to find better ways to define and measure quality in medical care -- and then pay doctors and hospitals for providing it. "We need to move toward a system in which doctors face stronger incentives for providing high-quality care rather than simply more care," Mr. Orszag says.

With similar logic, Secretary of Education Arne Duncan insists that improving American schools requires evaluating and paying teachers, at least in part, on how much their students learn -- as measured by gains in standardized-test scores. "Test scores alone should never drive evaluation, compensation or tenure decisions," he told a skeptical National Education Association convention last week. "That would never make sense. But to remove student achievement entirely from evaluation is illogical and indefensible." He rails against "firewall" laws in California that prohibit use of test scores in paying, promoting or evaluating teachers, as well as similar statutes in New York and Indiana.

Mr. Duncan adds that not linking student achievement to teacher effectiveness is like judging a sports team "without looking at the box score." That may not be the best metaphor. Major League Baseball forbids contracts that provide bonuses for "playing, pitching or batting skill." Highlighting the delicacy of defining objectives when pay is tied to performance, baseball sees paying a player for hitting more home runs, for instance, as counterproductive; it can lead a hitter to swing for the fences when the team needs a bunt or a base hit. Some contracts do reward playing time, though. Mets pitcher Francisco Rodriguez gets $150,000 if he finishes 50 games this season, another $150,000 for finishing 55 and $200,000 more if he gets to 60.

In health care and education, measuring and paying for quality is still novel. Being a teacher or a doctor once was seen, by practitioners and the public, as a calling, not a job. Doctors and teachers were said not to be motivated by money. For some, that's still true. But for many, the world has changed: Their jobs more closely resemble those the rest of us have. The argument that there is something wrong in principle with paying them for quality is losing force.

Say on Pay"This financial crisis had many significant causes, but executive compensation practices were a contributing factor. Incentives for short-term gains overwhelmed the checks and balances meant to mitigate against the risk of excess leverage."

"We need to move toward a system in which doctors face stronger incentives for providing high-quality care rather than simply more care."

"Test scores alone should never drive evaluation, compensation or tenure decisions. That would never make sense. But to remove student achievement entirely from evaluation is illogical and indefensible."

In health, evidence abounds that doctors do more of what insurance covers. The issue isn't whether incentives matter, but which incentives are offered. In education, the status quo is clearly broken, and existing pay schemes and union contracts too often protect the worst teachers and discourage the best.

The stronger argument is that quality measures remain crude and pay-for-performance schemes don't work as intended, despite advances in information technology that make collecting and analyzing data far easier. Also, recent history illustrates the potential for unintended consequences. In the business realm, chief executives during the 1980s and '90s were seen as so eager to hold on to their empires that they resisted takeovers that would benefit shareholders. So companies were pushed to pay CEOs with stock options, instead of cash. That gave the executives reason to do whatever they could (including fudging the books) to run up stock prices in the short term, cash in their options and walk away before stock prices plunged.

"In health care, it's very difficult to get a measure that adequately takes account of all the different dimensions of quality," says Princeton University sociologist Paul Starr. The same goes for education. As a result, often the only quality that gets rewarded is the sort that gets measured -- teaching to the test instead of inspiring students. "And however you structure the system," he adds, "there is almost certainly a way to game it."

Scott Miller, who teaches English to middle-school students whose first language is Urdu, Bengali, Arabic or Spanish, told Mr. Duncan last week: "They don't perform well on standardized tests in their second or third language. How can anyone possibly suggest that my family's paycheck or my performance evaluation be based on their test scores?"

After the cheers from Mr. Miller's peers died down, Mr. Duncan acknowledged the need for better ways to measure progress of special-education children and English learners. But elsewhere he has argued: "Saying [that] since standardized tests are not perfect, eliminate testing until they are, I think that's simply ridiculous. We need to monitor progress. We need to know what is and is not working and why."

Maybe Mr. Obama will turn next to measuring the performance of Washington officials so they, too, can be paid for quality.


1a) The Unemployed Will Roar
By Marie Cocco

When a virulent disease is ravaging you like a cancer, you don't want a cacophony of voices promoting different or contradictory cures. Yet that is what we're starting to hear about the economic crisis, not only from a politically divided -- and pretty scared -- capital, but from within the Obama administration itself.

In just the past few days, Vice President Joe Biden has said the young administration misread the depth of the recession -- an honest account, since most private economists did as well. Laura Tyson, an outside economic adviser to the White House, said it's wise to start preparing another stimulus package.

Then President Barack Obama made everything perfectly muddy when he said in an ABC News interview that the seriousness of the downturn and how to attack it is "something we wrestle with constantly." Yet in the next breath, he expressed concern about the burgeoning deficit.

But if anyone's looking for some clear voices, there are 650,000 of them just waiting to be heard. That is roughly the number of long-term unemployed who will begin losing their jobless benefits in September, according to the National Employment Law Project.

Remember, the recession didn't start last fall when the government bailed out AIG and the financial system froze. It began in December 2007 -- and 6.5 million jobs have been lost since then. Depending on which state and the sort of triggers that apply to benefits, hundreds of thousands of workers laid off early in the downturn are soon to be left without the basic sustenance of an unemployment check.

Meanwhile, the Labor Department says, the number of unemployed people out of work for 27 weeks or longer continues to grow, reaching 4.4 million last month. In June, three out of 10 jobless workers had been out of work for at least six months, according to the department's data.

The stimulus package the president signed soon after taking office did provide extended benefits, and boosted weekly payments. But even that extension runs out on Dec. 26, and would not apply to all the unemployed. Does anyone really believe that a significant portion of the unemployed will have found new work by then? Hardly. Both private and government economists now predict that unemployment will continue to rise at least through the end of this year.

"We can't ignore this moment when all these folks are running out (of benefits)," says Maurice Emsellem of the National Employment Law Project. "That needs to be a top priority, to help these workers."

Let's stop kidding ourselves. In no contemporary economic crisis -- not even those that unfolded on the Republicans' watch -- has Congress left the unemployed completely in the lurch. So some sort of spending package -- call it stimulus, call it stopgap emergency aid, whatever works -- is going to have to be passed.

The unemployment emergency helps feed another crisis Congress is going to be forced to address: the state budget disasters unfolding around the country. So far, 42 states have cut budgets that already had been enacted for fiscal 2009, according to the National Governors Association. More and deeper cuts are expected next year.

Already states have laid off and furloughed workers -- including, in some states, the very workers who process unemployment claims. Generally speaking, states are required to balance their budgets each year, a mandate that forces them to pull money out of the economy through spending reductions and tax hikes, counteracting the federal government's efforts to juice things up. "That is what happened during the Great Depression, we had states working against what the federal government was doing," says Heidi Shierholz, an economist with the Economic Policy Institute.

With red states and blue, Republican governors and Democrats, all struggling against the same relentless, recession-driven drops in tax revenue, an almost irresistible political coalition for more aid to states eventually will take shape. And with the fast-approaching September deadline for extending some unemployment benefits, there will likely emerge one of those must-pass measures that may or may not be called another stimulus bill.

Any hot air expended trying to stop it serves no purpose but to fuel political fires. Remember, that is the whole point of those now huffing and puffing most heartily. They don't want to figure a way out of this morass; they just want to figure out a way to unseat those now in office.


2) Saving Liberty
By R. Emmett Tyrrell, Jr.

A few weeks back, at the dawn of the Obama Administration, I was at dinner with a very bright woman of middle years who called herself an independent. She found the new president very engaging, but she was alarmed by the music in the air: a government takeover of Detroit, a $700 billion government bailout of the banks, a $787 billion stimulus bill, a cap and trade bill that will add perhaps $800-$2,000 to every family's tax bill, a massive healthcare reform now estimated to cost $1 trillion over the next decade. For the past thirty years, most of them good economic years, the federal bite into our GDP has been just under 20%. Calculating the cost of Obama's spending it will be 28.1% this fiscal year, a peacetime record!

My dinner companion was alarmed. She was not simply alarmed by the bills our president and his Democratic colleagues were ringing up on the Hill. My friend, the independent, was alarmed by something much more important, the cost to our freedoms. As I believe she put it, "the question here is our liberty." Increasingly, thoughtful Americans understand the Obama era in these terms. With the government suddenly looming so large in the life of every American, it is time for us to consider what is a singularly American possession, individual liberty. The Founding Fathers created a government that was uniquely solicitous about individual liberty. With the federal government so deeply involved in our healthcare, our banking, our manufacturing, and the many targets of its $787 billion stimulus program, it is time to think about your liberty vis-a-vis the government bureaucrats who are about to minister to you.

Ronald Reagan's modern conservative movement began thinking about the loss of individual liberty to government encroachment half a century ago thanks in part to the wake up call from Friedrich Hayek, delivered in his indispensable book The Road to Serfdom. Hayek believed government was a threat to freedom, enterprise, and the rule of law. Later another vigilant advocate of personal liberty, Frank Meyer, came along and became a major figure for American conservatives, propounding the exhilarating argument that freedom is essential to mankind. Freedom, he wrote, is the "essence of [man's] being," for without it a citizen cannot be moral, by which he meant cannot choose good over evil. Meyer believed freedom was at our essence because God put it there. God gave us freedom to choose, good over evil, art over schlock, a knee replacement over a Botox treatment.

Personal liberty makes each American citizen a creature of dignity. Obama overlooks this. Though in presenting Congress a $3.9 trillion budget on February 24 he insisted that "I'm not" for big government, he is. Consider the vastness of the budget, its far-reaching domestic policies, and much of his background as a community organizer. Clearly he is a big government guy. No other American president has been so committed to big government.

Historically most of our experiences with big government have been unhappy. Big government is expensive, inefficient, and once corrupted very difficult to clean up. Moreover, once a government bureaucracy has made its judgment on you, whom do you appeal to? With Obamacare, government will decide when and if you can get that knee replacement. From the clear utterances of the president's healthcare advisers, namely, Drs. Ezekiel Emanuel and David Blumenthal, that knee replacement will depend on such factors as your age and your overall health. If you are too old or decrepit, government will have a more economical place to spend its money. In other words, your health will not be decided by what you want to pay for it but by government policy. That test you wanted for colon cancer might be denied. You might just be too old. Such decisions are made by the nationalized British system all the time.

Almost any service the government provides can be more efficiently and effectively provided by private enterprise. The most striking example is the inefficiency of the money-losing U.S. Postal Service that has been swept aside by the internet and by such private carriers as UPS and FedEx. Government is not even very effective in its efforts at regulation. Consider the recent failures of Fannie Mae and Freddie Mac and at the Securities and Exchange Commission.

There is another unappreciated failing of government. It politicizes everything that it touches, including the simplest human relations. Agreements that ought to be arrived at voluntarily or through the rule of law are arrived at by lobbyists or thanks to the political power of your group -- ethnic, economic, or otherwise.

One of the little noted projects of the government healthcare reforms being considered on Capitol Hill today is the channeling of healthcare money away from the elderly and toward community services and drug or alcohol rehabilitation. Equal rights before the law is all well and good, but it is political favor and political power that matter when big government is making your decisions for you.

That is why so many Americans have opted for freedom from government. We recognize that the free society is the most humane…and the most productive.


3) The Public Option Two-Step: Why Obama won't acknowledge the 'Trojan Horse' in the room


Americans unschooled in liberal health-care politics may have trouble deciphering the White House's conflicting proclamations this week about a new government insurance program for the middle class. Allow us to translate: President Obama loves this so-called public option, but he needs to sell it in a shroud of euphemism and the appearance of "compromise."

On Monday, chief of staff Rahm Emanuel told the Journal's Laura Meckler that the Administration would accept a health bill without a public option, as long as there is "a mechanism to keep the private insurers honest . . . The goal is non-negotiable; the path is." Progressives went bonkers, so on Tuesday Mr. Obama took a break from his Moscow trip to come out strongly in favor (again) of the new trillion-dollar entitlement. Meanwhile, New York's Chuck Schumer has been loudly suggesting that compromise is unnecessary given 60 Senate Democrats -- even as the likes of Ben Nelson, Evan Bayh, Joe Lieberman and Mary Landrieu back away.

The reason left-flank Democrats are so adamant about a public option is because they know it is an opening wedge for the government to dominate U.S. health care. That's also why the health-care industry, business groups, some moderates and most Republicans are opposed. Team Obama likes the policies of the first group but wants the political support of the second. And they're trying to solve this Newtonian problem -- irresistible forces, immovable objects -- by becoming less and less candid about the changes they really favor.

Mr. Emanuel echoes his boss and says a government health plan is needed to keep the private sector "honest," but then why don't we also need a state-run oil company, or nationalized grocery store chain? (Or auto maker? Never mind.) The real goal is to create a program backstopped by taxpayers that can exert political leverage over the market.

In its strongest version, the federal plan would receive direct cash subsidies, allowing it to undercut private insurers on consumer prices. This would quickly lead to "crowd out," the tendency of supposedly "free" public programs to displace private insurance. As a general rule, Congress has to spend $2 of taxpayer money to provide $1 in new benefits. More precise academic studies of expansions in Medicaid and the children's insurance program put the crowd-out effect somewhere between 25% and 60%.

Because this is so expensive, the public version Mr. Schumer favors would supposedly receive no special advantages. But this is meaningless when Democrats are planning to mandate the benefits that private insurers must provide, the patients they must accept, and how much they can charge. Oh, and a government plan would still have an implicit taxpayer guarantee a la Fannie Mae, giving it an inherent cost-of-capital advantage.

A few swing votes such as Maine's Olympia Snowe might accept a "trigger," in which a government-run plan would only come on line if certain targets aren't met, such as reducing costs. But that only delays the day of reckoning. Another pseudocompromise is North Dakota Democrat Kent Conrad's idea to give the states seed money to set up health insurance co-ops. These plans would still be run under a federal charter and managed by a federal board, so they merely split the public option into 50 pieces.

The other goal of a new public plan is to force doctors and hospitals to accept below-cost fees. This is how Medicare tries to control costs today, but it's like squeezing a balloon: Lower reimbursements mean that providers -- especially hospitals -- must recoup their costs elsewhere, either by shifting costs onto private payers or with more billable tests and procedures. The only way costs can conceivably be managed via price controls is if government is running the whole show, which naturally leads to severe restrictions on care while medical innovation withers.

A rhetorical gong Mr. Obama has been banging a lot lately is the idea that the people pointing all this out are liars. "When you hear the naysayers claim that I'm trying to bring about government-run health care," he said in one speech, "know this: They're not telling the truth." He adds that opposition to a public option isn't "based on any evidence" and that it is "illegitimate" to argue that his program is "is somehow a Trojan horse for a single-payer system."

So much for changing the political tone. Perhaps the President should check in with his more honest liberal allies. Jacob Hacker, now a professor of political science at Berkeley, came up with the intellectual architecture for the public option when he was a graduate student in the 1990s. "Someone once said to me, 'This is a Trojan horse for single payer,' and I said, 'Well, it's not a Trojan horse, right? It's just right there,'" Mr. Hacker explained in a speech last year. "I'm telling you, we're going to get there, over time, slowly."

The real question the political class is debating now is how slowly, or quickly, it takes to get there. And how they're best able to disguise this goal -- ideally as a "compromise."

3a) Health care overhaul bill suffers another setback
By DAVID ESPO and ERICA WERNER

The drive to remake the nation's health care system suffered yet another setback in Congress on Thursday when a pivotal group of House Democrats demanded numerous changes in legislation the leadership was drafting on a fast track.

The emerging bill "lacks a number of elements essential to preserving what works and fixing what is broken," 40 members of the Blue Dog Coalition of moderate to conservative Democrats wrote in a letter to party leaders. To win their support, they said, any legislation would need to be much more aggressive in reining in the growth of health care.

The letter addressed to House Speaker Nancy Pelosi and Majority Leader Steny Hoyer also called for greater protections for small businesses and rural health care providers. It did not specify how much additional time the group wanted, but Rep. Mike Ross, D-Ark., said he believes no vote should take place until September.

That is well past a midsummer informal deadline set by Pelosi, D-Calif. "I promised the president that we would have legislation out of the House before we went on an August break," Pelosi said earlier in the day. "That is still my goal."

The group issued its letter as Democrats on the House Ways and Means Committee were laboring to put the final pieces in place on a bill that the White House has praised. The party's leadership had hoped to unveil it Friday and push it through committee next week, a timetable now thrown into doubt.

The developments came as a similar timetable appeared in danger of slipping away in the Senate.

There, the Democratic leadership is intent on scuttling a proposed tax on health care benefits that has long been key to attempts at a bipartisan compromise. At the same time, Senate Majority Leader Harry Reid and others went out of their way to emphasize their interest in gaining Republican support for legislation.

As an alternative, Democrats are considering raising taxes on wealthy investors to help pay for health care legislation, along with numerous other options, according to officials who spoke on condition of anonymity. The proposal to extend the current 1.45 percent Medicare payroll tax to capital gains earned by high-income taxpayers would bring in an estimated $100 billion over 10 years.

Obama has made health care legislation his top domestic priority, and Democrats in Congress vowed to make it their own, as well, when they returned from their July 4 vacation.

Despite some success — the nation's hospitals agreed to a cut of $155 billion in projected Medicare and Medicaid payments — progress has been scant and internal differences magnified.

In general, any bill that emerges from Congress is expected to follow Obama's blueprint for reining in health care costs overall while extending coverage to 50 million who lack it.

Another objective is to make sure that insurance companies can no longer deny coverage or raise premiums to unaffordable levels to individuals with pre-existing medical conditions.

But literally hundreds of details are involved in drafting legislation, and gaining a consensus even among Democrats is proving to be remarkably — if predictably — difficult, despite their large majorities in both houses.

As an example, some Democrats are demanding legislation that permits the government to sell insurance in competition with private companies. Republicans overwhelmingly oppose such a plan, deeming it a stalking horse for universal government-run insurance, and many Democrats have concerns, as well.

Some Democrats prefer a plan for a nonprofit cooperative to take the place of government in competing with private companies. Others favor a government role only in cases in which consumers lack a choice in coverage.

Similarly, Democrats are divided on paying for the bill, some preferring more tax increases than others, some favoring more cuts in Medicare and Medicaid.

"We've just got a lot of question and the top of the list would be how to pay for it," said Rep. Marion Berry, D-Ark., one of the Blue Dogs.

"I don't think we have significant cost-containment mechanisms in the proposal yet," said Rep. Adam Schiff, D-Calif. He said he favors provisions aimed at preventing overtreatment of patients and overpayments to doctors, hospitals and other providers.

A dispute over tax increases was at the core of upheaval in the Senate earlier in the week.

Sen. Max Baucus, D-Mont., and chairman of the Finance Committee, has been working for months with Republicans in hopes of gaining support for a bipartisan bill that can command 60 votes.

Efforts to raise money to pay for subsidizing the cost of insurance had focused on a tax on health care benefits for workers with high-cost coverage provided by their employers.

Baucus and Republican supporters argued it would also have tended to reduce the cost of health care overall, as well as offset the cost of the bill. But the Democratic leadership stepped in forcefully, citing poor public polling, opposition of organized labor and concerns about taxing middle-income workers.

As a result, Baucus and other members of the Finance Committee have broadened their search for alternative taxes to replace the $320 billion the benefits tax would have raised over a decade.

In addition to the tax on capital gains, officials said other options include a fee on insurance companies or drug manufacturers, a plan to allow states to issue health care bonds, and possibly a tax on sugary drinks.

An income tax surcharge on the wealthy was also on a list in circulation, as was Obama's proposal from last winter to limit the value of itemized deductions for those with the highest income.

Neither seemed likely to gain Republican support.




4) Mixed-Up On Iran
By INVESTOR'S BUSINESS DAILY

Mideast: As Iran continues to work on a nuclear weapon that will forever shift the world's balance of power, the U.S. position gets muddier by the day. What, exactly, is our policy?


Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, says the "clock has continued to tick" on Iran, which so far has ignored the International Atomic Energy Agency, the U.S., NATO and the European Union to proceed with its prohibited nuclear program. But what's it ticking down to?

The U.S. has officially decided to give Iran until the end of this year to halt its nuclear program and show its good faith as a member of the global community.

All well and good. Let diplomacy work. But what about when time expires, and Iran's still building a nuke? What then? The signals the White House is sending are mixed, to put it mildly.

Last Sunday, Vice President Joe Biden seemed to suggest the U.S. has given Israel a green light to attack Iran. As he said on ABC's "This Week": "We cannot dictate to another sovereign nation what they can and cannot do when they make a determination, if they make a determination, that they're existentially threatened."

Within hours, the State Department corrected Biden, saying there's "no green light" for an Israeli attack. This, it emphasized, is a matter for Mideast governments to work on, and the U.S. would seek "even stricter" sanctions on Iran if talks fail.

And on Tuesday, President Obama reversed Biden's remarks, saying the U.S. had "absolutely not" approved an attack by Israel. "We have said directly to the Israelis that it is important to try and resolve this in an international setting in a way that does not create major conflict in the Middle East," Obama said.

Problem is, Saudi Arabia — the Mideast's major Arabic power broker — has already made it clear it would not stop Israel from flying over its territory to attack archenemy Iran.

Is all this an exercise in constructive ambiguity, keeping the opponent off guard by not letting him know your true intent? Are we winking at Israel and Saudi Arabia? Or is it simply confusion?

According to several news reports, Israeli Prime Minister Benjamin Netanyahu has decided not to ask the U.S. for permission to attack Iran. He fears the new administration would say no.

Given Iranian President Mahmoud Ahmadinejad's repeated calls for Israel to be wiped off the map, Israel lives with a very real threat — one that will become deadly if Iran gets a nuke.

A nuke in the hands of Iran would be a game changer — one that would endanger not just Israel, but also Iraq, India, Saudi Arabia, Egypt, Turkey and Southern Europe. The world's balance of power would shift, and many of our allies would be in danger.

With so much at stake, is ambiguity the best policy? Not as far as we're concerned. In both word and deed, the U.S. needs to make it clear to Tehran that a nuclear weapon will not be tolerated.

Intelligence estimates say the Iranians may be as little as one year away from having a workable nuclear weapon. If they think we won't do anything about it, they'll keep working on it.

"I'm hopeful," Mullen says, "that . . . dialogue is productive. I worry about it a great deal if it's not." So do we.

5) Afghanistan: We're asking our troops to do the impossible It is time for a new strategy and fresh commitment to Afghanistan.
By Nick Clegg


When I visited British troops in Afghanistan last year I was, like everyone else, hugely impressed by their professionalism and courage. That admiration only deepens when news comes, all too regularly, of the death of someone serving there. Lt Col Rupert Thorneloe, who helped organise my visit, was killed last week alongside Trooper Joshua Hammond, in a vehicle unable to withstand a roadside bomb. We owe it to them to ensure their sacrifice is not in vain.

As leader of the Liberal Democrats, I have been keen to maintain the cross-party consensus on Afghanistan that formed after September 11, and has not faltered since. But recent events have led me to question, for the first time, whether we're going about things in the right way. I am concerned that we are simply not giving our troops the means to do their difficult job. We must not will the ends without being prepared to will the means.


I am a Liberal interventionist, who believes military action is justified when supported by reason and the law. I support the aim of our mission wholeheartedly: to stop Afghanistan reverting to a haven for terrorism, with its people oppressed and impoverished. To achieve that, military forces need to create enough space for stability and good governance to take root.

But we need to ask whether the Government has the will, strategy or tactics to do the job properly.

First: equipment and troop numbers. If you send people to war, you must supply the resources they need, or you should not send them at all. Otherwise you are betraying the fundamental covenant between a nation and its armed forces. I am appalled that so many of our soldiers have been killed because of inadequate equipment, and disturbed to hear from experts that we don't have enough forces to hold and rebuild territory once it has been won.

The US seems to have come to the same conclusion, and has deployed its own forces in Helmand, relegating us to the background, as in Basra. I can only imagine how demoralising it must be for our troops to feel they have to be bailed out by Uncle Sam.

But as Paddy Ashdown has been arguing, military action will never be enough. We need a co‑ordinated political strategy. For too long, governments, international agencies and NGOs have been incapable of speaking with one voice. Britain's lukewarm support for European co-operation in defence and security planning has contributed to the fragmented nature of operations. Our soldiers' lives are being thrown away because our politicians won't get their act together. To help them, we need a single individual or institution with a strong mandate, co-ordinating the actions of all international players.

Finally, there is the issue of corruption. If the Taliban are to be defeated, the Afghan people need to learn to trust state institutions – a huge challenge in a country that's never had effective central government. Yet progress is made impossible by corruption. We all hope to see free and fair presidential elections next month, but there are growing concerns that the candidates could be too compromised by their pasts. Rooting out corruption at all levels must be given a higher priority. Afghanistan will never prosper until peasant and president alike are subject to the rule of law.

The future of Afghanistan is of huge importance, but it will never be secured with troop and equipment shortages, an un‑coordinated political strategy and a blind eye turned to corruption. We must think again – not about pulling out, but about doing things differently. There are many options: the only one I would rule out is following the current course. It is a halfway house that lets our troops down by asking them to do the impossible. It is time to put real political will behind a new strategy, and a new commitment to Afghanistan. It is our last chance before it is too late.

6) Doctor Doom: Brown Manure, Not Green Shoots
By Nouriel Roubini


The June employment report suggests that the alleged green shoots are mostly yellow weeds that may eventually turn into brown manure. The employment report shows that conditions in the labor market continue to be extremely weak, with job losses in June of over 460,000. With the current rate of job losses, it is very clear that the unemployment rate could reach 10% by later this summer--around August or September--and will be closer to 10.5%, if not 11%, by year-end. I expect the unemployment rate is going to peak at around 11% at some point in 2010, well above historical standards for even severe recessions.

It's clear that even if the recession were to be over anytime soon--and it's not going to be over before the end of the year--job losses are going to continue for at least another year and a half. Historically, during the last two recessions, job losses continued for at least a year and a half after the recession was over. During the 2001 recession, the recession was over in November 2001, and job losses continued through August 2003 for a cumulative loss of jobs of over 5 million; this time we are already seeing more than 6 million job losses and the recession is not over.

The details of the unemployment report are even worse than the headline. Not only are there large job losses right now, but as a way of sharing the pain, firms are inducing workers to reduce hours and hourly wages. Therefore, when we're looking at the effect of the labor market on labor income, we should consider that the total value of labor income is the product of jobs, hours and average hourly wages--and that all three elements are falling right now. So the effect on labor income is much more significant than job losses alone.

The details also suggest that other aspects of the labor markets are worsening. If you include discouraged workers and partially employed workers, the unemployment rate is already above 16%. If you consider also that temporary jobs are falling now quite sharply, labor market conditions are becoming worse and the average duration of unemployment now is at an all-time high. So people not only are losing jobs, but they're finding it harder to find new jobs. So every element of the labor market is worsening.

The unemployment rate rose only marginally from 9.4% to 9.5%, but that's because so many people are discouraged that they exited the labor force voluntarily and therefore are not counted in the official unemployment rate.

The other element of the report that must be considered is that, for the summer, the Bureau of Labor Statistics (BLS) is still adding between 150,000 and 200,000 jobs based on the birth/death model. We know the distortions of the birth/death model--that in a recession jobs created within firms are much smaller than those created by firms that are dying. So that's distorting downward the number of job losses. Based on the initial claims for unemployment benefits, it's more likely that the job losses are closer to 600,000 per month rather than the figures officially reported.

These job losses are going to have a significant effect on consumer confidence and consumption in the months ahead. We've also seen extreme weakness in consumption. There was a boost in retail sales and real personal consumption-spending in January and February, sparked by sales following the holiday season, but the numbers from April, May and now June are extremely weak in real terms. In April and May you saw a significant increase in real personal income only because of tax rebates and unemployment benefits. In April, there was a sharp fall in real personal spending, and in May the increase was only marginal in real terms.

This suggests that most of the tax rebates are being saved rather than consumed. The same thing happened last year: With a $100 billion tax rebate, only thirty cents on the dollar were spent while seventy cents were saved. Last year, people expected the tax rebate to stimulate consumption through September. Instead, there was an increase in April, May and June, with the increase fizzling out by July.

This year it's even worse. We have another $100 billion in tax rebates in the pipeline. But the numbers suggest that in April, real consumption fell. And in May it was practically flat. So this year households are even more worried than they were last year about jobs, income, credit cards and mortgages. Most likely only around 20 cents on the dollar--rather than 30 cents last year--of that increase in income is going to be spent. In any case, that increase in income is just temporary and is going to fizzle out by the summer. So you can expect a significant further reduction in consumption in the fall after the effects of the tax rebates fade.

The other important aspect of the labor market is that if the unemployment rate is going to peak around 11% next year, the expected losses for banks on their loans and securities are going to be much higher than the ones estimated in the recent stress tests. You plug an unemployment rate of 11% in any model of loan losses and recovery rates and you get very ugly losses for subprime, near-prime, prime, home equity loan lines, credit cards, auto loans, student loans, leverage loans and commercial loans--much bigger numbers than what the stress tests projected.

In the stress tests, the average unemployment rate next year was assumed to be 10.3% in the most adverse scenario. We'll be already at 10.3% by the fall or the winter of this year, and certainly well above that and close to 11% at some point next year.

So these very weak conditions in the labor market suggest problems for the U.S. consumer, but also increasing problems for the banking system as these sharp increases in job losses lead to further delinquencies on loans and securities and lower than expected recovery rates.

The latest figures on mortgage delinquencies and foreclosures suggest a spike not only in subprime and near-prime delinquencies, but now also on prime mortgages. So the problems of the economy are significantly affecting the banking system. Even if for a couple of other quarters banks are going to use the new Financial Accounting Standards Board (FASB) rules and under-provisioning for loan losses to report better-than-expected results, by Q4, with unemployment rates above 10%, that short-term accounting fudge will have a significant impact on reported earnings. And this will show the underlying weakness in the economy. So banks may fudge it for a couple of other quarters, but eventually the effects of very sharp unemployment rates and still sharply falling home prices are going to drag down earnings and have a sharp effect on losses and capital needs of the banks and the entire financial system.

Essentially, the results today suggested that there are not as many green shoots. These green shoots, as I've argued, are mostly yellow weeds that may even turn into brown manure if a double-dip, W-shaped recession occurs in 2010-11. And it's not just the employment situation. Real consumption and retail sales remain weak. Industrial production remains weak. The housing market, in terms of price adjustment, remains weak, even if the quantities--demand and supply--may be closer to bottoming out. Indeed, the inventory of unsold new homes is so large that you could stop producing new homes for almost a year to get rid of that inventory. Moreover, about 50% of existing home sales are distressed sales (short sales and foreclosed homes).

The labor market conditions may have a significant effect on how long it takes for the housing market to bottom out. It's already estimated that by the end of this year, there will be about 8.4 million people with a mortgage who have lost jobs, and therefore have little income. Therefore, the number of people who will have difficulties servicing their mortgages is going to rise very sharply.

Home prices have already fallen from their peak by about 30%. Based on my analysis, they are going to fall by at least 40% from their peak, and more likely 45%, before they bottom out. They are still falling at an annualized rate of over 18%. That fall of at least 40%-45% percent of home prices from their peak is going to imply that about half of all households that have a mortgage--about 25 million of the 51 million that have mortgages--are going to be underwater with negative equity and will have a significant incentive to walk away from their homes.

The job market report is essentially the tip of the iceberg. It's a significant signal of the weaknesses in the economy. It affects consumer confidence. It affects labor income. It affects consumption. It affects the willingness of firms to start increasing production. It has significant consequences of the housing market. And it has significant consequences, of course, on the banking system.

Overall, it's an extremely weak report and suggests that weakness in the labor markets is going to continue, and that the recession is more likely to continue through the end of the year and the beginning of next year. It also suggests that recovery will be anemic, subpar, below trend. We are still estimating that U.S. growth next year is going to be 1% above the 2009 level, well below a potential growth rate of 3%. This is because there is little deleveraging of households, corporate firms and financial institutions while there is a massive re-leveraging of the public sector with sharply rising deficits and debts as many of the private losses have been socialized.

There are also signs that there may be forces leading to a double-dip recession sometime toward the second half of next year or toward 2011. If oil prices rise too much, too fast, too soon, that's going to have a negative effect on trade and real disposable income in oil-importing countries (U.S., Europe, Japan, China, etc.).

Also, concerns about unsustainable budget deficits are high and are going to remain high, with growth anemic and unemployment rising. These deficits are already pushing long-term interest rates higher as investors worry about medium- to long-term stability. If these budget deficits are going to continue to be monetized, eventually, toward the end of next year, you are going to have a sharp increase in expected inflation--after three years of deflationary pressures--that's going to push interest rates even higher.

For the time being, of course, there are massive deflationary pressures in the economy: the slack in the goods markets, with demand falling relative to supply-and-excess capacity. The rising slack in labor markets, which are controlling wages and labor costs and pushing them down, implies that deflationary pressures are going to be dominant this year and next year.

But eventually, large budget deficits and their monetization are going to lead--toward the end of next year and in 2011--to an increase in expected inflation that may lead to a further increase in 10-year treasuries and other long-term government bond yields, and thus mortgage and private-market rates. Together with higher oil prices driven up by this wall of liquidity rather than fundamentals alone, this could be the double whammy that could push the economy into a double-dip or W-shaped recession by late 2010 or 2011.

So the outlook for the U.S. and global economy remains extremely weak ahead. The recent rally in global equities, commodities and credit may soon fizzle out as an onslaught of worse-than-expected macro, earnings and financial news take a toll on this rally, which has gotten way ahead of improvement in actual macro data.

Nouriel Roubini, a professor at the Stern Business School at New York University and chairman of Roubini Global Economics (RGE), is a weekly columnist for Forbes. Read more of his columns here.

7) When recovery comes, it won't feel like one: The end of the recession will merely be the start of a long, painful journey.
By Edmund Conway

It's a game of far more than two halves: more tactical than cricket, more stomach-churning than boxing and more complex than bridge. Throughout a magnificent summer of sport, one competition has lasted longer than any other, and generated the most heated debate. Its goal? To guess when the recession will end.

Every week, it seems, has brought new economic indicators, good or bad. Indeed, the whole thing has recently descended into farce: first, economists were tripping over themselves to declare that we were heading for a "V-shaped" recovery, in which we soared out of the downturn at speed. Then they realised that the economy had contracted in the first three months of the year at the fastest rate since, most probably, the 1930s (the quarterly figures don't go back that far), and started talking about "double dips".

In fact, from a technical point of view, we are close to the end of the recession, in that economic growth is probably stagnating rather than shrinking. But this misses the fundamental issue: this recession was unlike any we've experienced since the Second World War. All the old yardsticks – those that measure economic expansion or contraction, for instance – are of limited use.

What we must fear this time is not the recession, but what follows. In 1931, in a lecture in Chicago, John Maynard Keynes spelt out the lesson we need to remember. The spring of that year had, much like this summer, been dominated by the search for green shoots. Markets had bounced back after the Wall Street Crash; industrial production had started to level out; confidence was returning. But, the great economist warned, "it is a possibility that the duration of the slump may be much more prolonged than most people are expecting and that much will be changed, both in our ideas and in our methods, before we emerge. Not, of course, the duration of the acute phase of the slump, but that of the long, dragging conditions of semi-slump, or at least sub-normal prosperity, which may be expected to succeed the acute phase."

In other words, it is not the recession itself that will change the way we view our economy, but what follows it. It might feel like an eternity since the banking system collapsed, but as we impatient humans frequently forget, economics is a slow-motion affair. Having undergone a life-saving emergency operation, we are (in structural terms) still barely out of the emergency room, and still under the heavy anaesthetic of lower interest rates and fiscal stimulus.

This, perhaps, explains the strange feeling that many people have, which is that it doesn't really feel like a recession at all. Most of us still have our jobs; even those whose companies are under threat of collapse are able to stave off unemployment by cutting back their hours and taking breaks from work. Consumer consumption has hardly come to a standstill: many restaurants are still doing good business; mocha frappucinos are being downed; life goes on.

Yet recessions are, by their very nature, events that affect only a minority of the population. Throughout the next few years, most of us will keep our jobs and be broadly unaffected by the ordeal. But there will be no return to the boom years: the recovery will instead take the form of a long convalescence, one that has barely even begun.

Neither is the gloom about to lift any time soon. At some point in the not-too-distant future, the anaesthetic will have to be cut off – interest rates must rise, the Government must start cutting its deficit and either reducing spending or raising taxes. Indeed, the International Monetary Fund spelled it out yesterday: while every other major country has budgeted to spend at least something on measures to lighten the downturn next year, Britain's parlous position means we will not been able to put a bean towards another stimulus.

Meanwhile, unemployment is already on the rise: the number of people in work has fallen by 400,000 in the past year – the biggest drop since comparable records began in 1971. Many of the jobless are City workers with a bit of money to support them, or university graduates unable to find work (the case for one in five young men between 18 and 24). Redundancy hurts, as does failing to get an internship after college; but neither is as bruising as facing years of repeatedly trying and failing to find a job.

In terms of house prices, the worst of the price falls are over, but the prospect of buying has become no easier for the majority, because borrowing money is so difficult. The Bank of England's interest rates are at near zero, yet banks are offering three-year fixed-rate mortgages at more than 6 per cent. And although the banks are making profits again, and financiers may award themselves even bigger bonuses, it is likely to be just as ephemeral, especially when the Government's grand pledges to clamp down on City excess actually become law. Even if yesterday's White Paper doesn't do for the bankers, there will still be intense recrimination from the masses of the unemployed in the months and years to come.

In other words, we might well be coming out of recession. But for almost every section of society, the recovery will feel anything but.

8) In AIG They Don't Trust: The company should ask Spitzer for reimbursement

The AIG follies took another turn Tuesday, as former CEO Hank Greenberg won a federal jury verdict against his old employer over some $4.3 billion in a company Mr. Greenberg now runs, Starr International, and a related foundation. This is a victory for contract law over legal invention, but it's also a reminder of a catastrophe that didn't need to happen.

The litigation began after AIG was pressured by New York Attorney General Eliot Spitzer to fire Mr. Greenberg in March 2005. After making false public claims about Mr. Greenberg, Mr. Spitzer never filed criminal charges and his civil case has been falling apart over time, with the key charges dropped years ago. But Mr. Spitzer's impact on AIG endures. Decapitated by the prosecutor in 2005, the business suffered under politically approved leadership, made huge bets on derivatives related to the housing market, and then was essentially nationalized without a shareholder vote in September 2008.

Several botched federal interventions and $173 billion in taxpayer assistance later, we now have the spectacle of AIG executives scrambling in court for money that's not theirs. Perhaps AIG would be better off seeking contributions from Mr. Spitzer, who after resigning as Governor over a fling with a prostitution ring is back in the family real-estate business when not using a column in Slate to begin his political comeback.

As a legal matter, the lesson of the case appears straightforward: If corporate executives wish to claim that a trust was created for their benefit, but they can't present documents demonstrating the creation of a trust, they will probably lose. Starr International, created in 1943, owned overseas insurers that were rolled into AIG in 1970, with Starr maintaining a large chunk of AIG stock. While running AIG, Mr. Greenberg used Starr as a vehicle to reward AIG executives with stock without diluting AIG shareholders.

Though unconventional, the arrangement attracted talented managers, who in turn delivered outstanding results for AIG shareholders for decades. Then came the Spitzer prosecution, a resulting flurry of lawsuits between the man who built AIG and the company ordered to fire him, and the claim that jurors finally had the chance to reject this week. The AIG claim was that Mr. Greenberg's method of rewarding AIG superstars was actually an entitlement created by a trust. Just one problem -- the jury decided there was no trust.

Once they get past the sting of defeat, AIG executives might see virtues in this loss. For starters, the jury may have saved them from creating the next bonus scandal. While the company's PR machine claimed the company wanted to claw cash from Starr to repay taxpayers, AIG's legal filings said AIG executives were the intended recipients.

Mr. Greenberg's victory might also help AIG's leadership focus on the insurance business. The jury verdict didn't help the company's stock price, but the lack of a coherent plan to repay the government and uncertainty over who will succeed departing CEO Ed Liddy are big reasons its shares are down roughly 40% since last week's reverse stock split. It's not easy to see how anyone could make AIG a winner for taxpayers, but a business strategy is sure to attract more investment than a litigation strategy. If federal judge Jed Rakoff affirms the jury's decision next month, AIG could at least benefit from one less distraction.


9)Do We Need a Second Stimulus? A more troubling question is why so little is being spent from the first
By EDWARD P. LAZEAR

In "Brewster's Millions," a comedy starring Richard Pryor, a man is told he can keep $300 million if he manages to spend $30 million in one month. The movie documents -- with a great deal of humor -- his difficulties getting the money spent. The Obama administration is currently facing a similar problem with its "stimulus" spending, only without the humor.

With the economy weak and the labor market continuing to decline, there is now talk of a second stimulus (which is actually the third, counting President Bush's 2008 tax rebates). This would be a mistake. The truth is there hasn't been any stimulus to speak of so far this year. Moreover, what's being called stimulus is just a smoke screen for a permanent expansion of government. Let's start with some facts.

By June 26, about $56 billion was spent on the stimulus from the American Recovery and Reinvestment Act of 2009, passed Feb. 17. A large proportion of that actually reflects mere transfers from the federal government to state governments, so the amount that has gotten into the economy is significantly lower.

But even if we call all of the $56 billion spending, it's still not enough to make a meaningful impact. By this point of the year in 2008, the Bush administration's tax-rebates got out about $80 billion. Most economists believe the rebates had a positive but hardly dramatic effect on the economy.

The Obama stimulus, being significantly smaller, cannot possibly be expected to turn the economy around. The economy will improve. But it will do so because the financial sector is recovering, largely due to the Fed policies to enhance liquidity and the success of the Bush administration's Troubled Asset Relief Program, continued by the Obama team, in helping to recapitalize the banks.

Congress and the Obama administration have used the economic downturn as an excuse to expand the size of government. Calling it a stimulus, they have instead put in place a spending agenda that will unfold over the next two years. Although a little over one-third of the American Recovery and Reinvestment Act of 2009 goes to tax relief, the rest is in the form of spending programs that will be difficult to stop once they are up and running.

Only a small share of the spending will occur in 2009, even though Keynesians would argue that stimulus spending should be frontloaded to kick-start growth. The Congressional Budget Office estimates that the largest share of the spending will occur in 2010, with the amount in 2011 being slightly larger than in 2009. Again, the timing exacerbates the problem: It will be tough to cut back on spending written into budgets as far out as 2011.

Additional evidence that the Obama administration wants to expand government rather than stimulate the economy comes from the president's own statements about deficit reduction. When the budget came out, he announced a goal of reducing the deficit to around 4% of GDP by 2013, at which point the administration believes the economy will be fully recovered. Yet to keep the ratio of public debt to GDP constant, the deficit must actually stay below about 2.7%.

For perspective, recall that the Bush deficit, which has been criticized for being too large, reached a peak of 3.6% of GDP in 2004. But it fell steadily to 1.2% of GDP by 2007 before rising again to about 3% after TARP.

Some argue that a tax cut is a weaker stimulus than direct government spending. This point is debated among economists. But it is clearly much easier for Treasury to write checks to the public than it is to get agencies to rev up spending programs and do so in a way that does not simply throw away money.

It's a bit odd that the reaction by the Obama administration and some congressional leaders to a policy that has not worked is to consider putting a similar policy in place. One interpretation is that this is yet another opportunity to spend more on programs that Democrats have wanted for years.

It may be the case that the country wants more government, that Americans now believe the European model of big government is best. That is a decision that society must make. But it should do so with no illusions: The current stimulus and calls for a future one are primarily government growth policies, not strategies to shorten the current recession.

Mr. Lazear, chairman of the President's Council of Economic Advisers from 2006-09, is a professor at Stanford University's Graduate School of Business and a Hoover Institution fellow.

10) The Dumbing Down of Democracy:Obama's reluctance to stand up for Western political values is dangerous.
By DANIEL HENNINGER

The pivotal foreign policy event so far in the Obama presidency was not this week's summit with Russia. It was instead that rarest of all events: Barack Obama's silence.

When the people of Iran filled the streets of their country demanding a fair election, the U.S. clutched for a week. Uncertain of whether U.S. interests lay with the nuke-building ayatollahs or the democracy-seeking population, the Obama team essentially mumbled sweet nothings through the first days of the most extraordinary world event in this young president's term. That moment of hesitation, when a genuine and strategically useful democratic moment needed support, could prove costly.

When the Group of Eight nations tried to shape a response to the Iranian government's repression, its newest member, Russia, knew what to say about Iran.

"No one is willing to condemn the election process," said Russian Foreign Minister Sergei Lavrov, "because it's an exercise in democracy."

Behold the official dumbing down of democracy.

Our purpose here is not to ridicule Foreign Minister Lavrov's absurd description of the Iranian elections. It is instead to show his statement the respect that anything dangerous deserves.

Two years ago in June, Vladimir Putin's main press spokesman, Dmitry Peskov, visited the offices of the Journal editorial page. It was a remarkable meeting. The editors asked about the widely discussed criticisms of the Putin government's actions against opposition political parties and individuals and its control of the media. With a calm and confident smile, Mr. Peskov replied: "Ours is a different system of democracy." That was it. He stopped talking but kept smiling, letting the message sink in.

Dmitry Peskov was defining democracy in a way that could hardly be more different than the system of political pluralism developed the past 300 years in the West. His message was clear: We are changing the rules. Get over it.

In this light, President Obama's performance this week in Moscow was disconcerting, to put it mildly. In Mr. Obama's worldview, political systems apparently don't compete. They simply . . . are. "America cannot and should not seek to impose any system of government on any other country," he said, "nor would we presume to choose which party or individual should run a country."

Mr. Obama's political equivalence, conventional wisdom now among many Western sophisticates, is wrong and dangerous. Unless the West, led by the U.S. under this president offers active push-back against the Russian definition of democracy, their version inexorably will back out ours.

The design of Iran's election was a perfect mirror of Russia's. Foreign Minister Lavrov wasn't ratifying it for our benefit. Like Dmitry Peskov, he couldn't care less what the Americans or Europeans think of his astonishing statement. His audience is the world's other leaders and parties.

Where is it written that American-style democracy will last forever, much less spread to new nations? If the members of the U.N. General Assembly could choose between the democracy of the U.S., Britain and France or that of Russia, Venezuela and Bolivia, likely it would be the latter. Genuine democracy is hard work. Why should the likes of Pakistan, Iraq, Turkey, Taiwan or Brazil endure that stress if Potemkin Village democracy is okay?

What Putin, Khamenei, Chavez, Morales and Mubarak want is fait-accompli legitimacy. When resistance to their dumbed down democracy stops, they'll have it. Vocal criticism, even as eloquent as Mr. Obama's in Moscow this week or in Cairo, is not resistance. Real resistance requires acts of political push back that all the world's people can see and recognize.

A study released last month by Freedom House, "Democracy's Dark Year," reported democratic erosion in most of the new European Union member states and in the then-inspiring "color revolution" nations -- Georgia's Rose Revolution, Ukraine's Orange Revolution and Kyrgyzstan's Tulip Revolution.

Latin America is also tipping toward dissolved democracies. The 34 nations of the Organization of American States just voted to readmit the Cuban dictatorship. After the vote, the OAS foreign ministers broke into applause, and the summit's host joyously announced, "The cold war has ended." Those words of congratulations for unrepentant anti-democrat Fidel Castro came from Manuel Zelaya, then president of Honduras.

Elected in 2005, Mr. Zelaya has been using his muscle to import the Russian-Venezuelan-Iranian political model to Honduras. That means rigged future elections and the constitution changed by fiat to validate the rigging. After meeting with Mr. Zelaya in Washington Tuesday, Secretary of State Hillary Clinton off-loaded Honduras's fate to former Costa Rican president Oscar Arias.

Letting genuine democratic aspirants in places like Iran and Honduras lose in front of a watching world will exact a price. The United States and the other John Locke democracies are in an active, long-term competition with fake democrats over whose politics governs the next century. And they will presume to choose which parties should run other counties.

There is the clear sense that anything the Bushies did, the Obama sophisticates will not do. Does the fact that the Bushies pushed democracy mean it would be bad form to support even our own political system?

11) Health-Care Overhaul Goals Prove Challenging
By JANET ADAMY

Lawmakers are trying to keep the price of a health overhaul near $1 trillion over a decade. They also want the plan to result in near-universal coverage, so that more than 95% of Americans have health insurance.

Reaching both of those numbers at the same time is turning into one of hardest tasks for Congress and the White House. The nonpartisan Congressional Budget Office has found that several initial efforts either sailed beyond the targeted price tag or left many people without insurance.

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The CBO said this week that one Senate proposal, when combined with certain expansions to the Medicaid program, would cost about $1.1 trillion over a decade and still leave 15 million to 20 million Americans uninsured in 2019. Currently, about 46 million U.S. residents lack insurance, according to the Census Bureau.

The Senate Health, Education, Labor and Pensions Committee at first developed a plan that offered generous subsidies to lower-income Americans to help them buy health insurance. The proposal would require most people to carry insurance or pay a penalty.

When the price tag came in too high, lawmakers whittled the subsidies, which helped the cost problem but made it difficult for people to buy insurance. "The more you're going to make people pay, the harder it is to say to them, 'You must buy it,'" said David Cutler, a professor of economics at Harvard University.

Keeping the federal cost to around $1 trillion or less is critical because the White House is emphasizing that the plan won't increase the deficit -- meaning savings must be found for every dollar spent.

."Rising costs are crushing us," Vice President Joe Biden said Wednesday. "They're crushing families, crushing businesses, crushing state budgets -- and they are crushing the health-care industry itself." Mr. Biden trumpeted a deal with the hospital industry to cut government payments through Medicare and Medicaid by $155 billion over a decade, savings that could be used to fund an overhaul.

According to a CBO estimate last week, the Senate health committee's proposal would cost $611 billion over 10 years. That estimate didn't include the cost of expanding Medicaid, the federal-state insurance program for the poor, because that's outside the committee's jurisdiction. The CBO said Tuesday that expanding Medicaid to a new batch of Americans with incomes as high as $33,000 a year for a family of four would add $500 billion to the cost of the proposal.

The high cost estimates and prospect that millions would remain uninsured has left negotiators scrambling for ways to make the numbers work. The Senate Finance Committee, which is working on a parallel health bill, has discussed delaying the Medicaid expansion until 2013. That would reduce the 10-year cost of the bill. The committee is considering a narrower expansion of the program than the one calculated by the CBO, so the measure may result in a smaller reduction in the uninsured number by the end of the 10-year period.

Republicans say the expansion of public programs would undercut the current employer-based health-insurance system. Sen. Mike Enzi of Wyoming, the ranking Republican on the health committee, said Wednesday that the committee's bill "breaks the Democrats' promise that if you like the care you have, you can keep it." Sen. Enzi said the plan "will force millions of Americans to lose their current health insurance."

Another way to bring down the number of uninsured while keeping down the cost is to enact stricter mandates on businesses to offer health insurance and individuals to have it. However, those mandates are politically sensitive and carry costs of their own -- albeit not directly paid by the government.

Checking Your Vital Signs! Laughable Estimates!

Iran is vulnerable if sanctions are the right ones. (See 1 and 1a below.)

It is becoming evident, as anyone with just one eye open could have predicted, every estimate this administration has made with respect to the effect of its stimulus program, unemployment and estimates pertaining to any proposed program are so wide of their mark as to be laughable. (See 2 and 2a below.)

That said, we will get a health care bill because Obama needs to be able to say he accomplished a promised campaign goal. Of course it will not resemble what he wants because Obama cannot, politically speaking, get what he wants, nor find the money to pay for whatever he gets. So bend over America! Your friendly government bureaucrat will soon want to check your vital signs.

Once passed the 'anything we get is acceptable' health care program will grow and grow and grow or, stated another way, will expand, expand expand or, from the lips of politicians, will be improved, improved, improved. This too is the promised change that many voted for without realizing it and why Obama is now our president.

Let's take another moment and look at the Navy we have versus the one we had in the '80's and then relate all of this to a growing Chinese Navy and their growing economic presence world wide and which, assuredly, the Chinese will eventually feel compelled to defend. Then ask yourself what will be Japan's response.

For an interesting read, I refer you to the summer Issue of: "The Naval War College Review"
article by Toshi Yoshihara and James R. Holmes: "Thinking About The Unthinkable: Tokyo's Nuclear Option." pp 59-78

In the '80's we maintained a naval fleet of nearly 600 ships. We are now down to 283 ships versus the Navy's desire to have 313 ships - which is fanciful. Current Pentagon estimates/projections have the Navy moving to a 150 ship fleet.

A rundown in our military capability is the fastest way to invite military conflicts and I suspect that is where Obama intends to head because he apparently believes his words are our greatest shield and he needs to get money from somewhere to pay for his various programs. Clinton also balanced the budget partly on the Pentagon's back.

The next article in the same issue pertains to China's expansionary efforts in Africa by Commander Todd A. Hofstedt, U.S. Navy pp 79 -100.

In a previous memo dated 6/30, I posted economist Howe's thoughts about a twenty year bear market and the impact the new generation, which he called the millennials, would have on our culture. The more I thought about Howe's rationale the more it made me think about my own previous comments.

I am not disputing Howe or challenging his conclusions. I am simply adding several of my own to buttress what he wrote.

I have written, as more citizens are taken off tax roles, as a method of building and paying homage to loyal voting blocs, their interest in what is good for the nation becomes secondary. What is beneficial for their own more narrow self- interests becomes of primary concern. If not for yourself then who will be is understandable but for our nation's culture to survive and thrive we must remain united. Whatever tears at the fabric of unity, therefore, is not healthy and could be counterproductive.

A second concern pertains to demographics. As I previously noted, a culture, to sustain itself, must reproduce at the rate of 2.1. Unlike many other nations, America is re-producing at that rate but laregly due to immigration. Therefore, if immigrants, legal or otherwise, do not enter with the intent of becoming "Americanized" but simply come to earn a living etc. their addition to our population is not necessarily one that will sustain our culture and perpetuate those unique attributes we call "what it is to be an American."

Our nation prides itself as being a 'melting-pot.' We have a gifted statute at the entrance to New York which welcomes and embraces those who come seeking a better life as Americans. I too favor immigration. However, I also believe it is important we ask ourselves toward what end. If our nation is to remain competititve, if we are to maintain our relatively high standard of living then it is crucial we remain united, at the very least speak a common language, become informed and participating citizens and our politicians enact policies that further these worthy goals and place our nation's interest uppermost.

I believe we are not on that course and, in fact, are moving rapidly in a disconcerting and opposite direction. Perhaps "the millennials, as Howe dubs the new generation, will right the course. It is crucial that they do so or otherwise our future will, in fact, be radically altered, our prospects less enticing.

Please let me know when America wakes up from its torpor and demands our leaders return to placing the long term interests of our nation before their own narrow desires to be re-elected. (See 3, 3a and 3b below.)

Heat or hate - you decide. The overboard degree to which those rise in opposition often signals their fear what they would destroy is, in fact, a potentially successful threat. (See 4 below.)

Obama did not melt Russian attitudes towards Iran nor did the G8 meeting clear the skies. What it did accomplish is the usual consumption of scrumptious food and drink and the drafting of banal documents and provided a platform for feel good self-lauditory statements allowing the participants to go home thumping their chests. (See 5 and 5a below.)

The E.U. recants but probably not for long. (See 6 below.)

Revisiting the Lebanese War. (See 7 below.)

Has Obama's political meltdown begun?

If that be the case, Obama has himself to blame not GW. True, Obama inherited a serious financial crisis, in some measure because of actions taken by members of his own party - Frank, Dodd, etc. - but Obama chose to become a Whirling Dervish President. He sought change through radicalization, policies outside the mainstream. In a word he seems to have mis-interpreted his own election and now he could be falling on his own sword. (See 8 below.)

Dick



1) Iran is Vulnerable to Sanctions

In the lead-up to the Iranian presidential elections, one issue trumped all others: the country’s struggling economy. Iran is one of the world’s top oil exporters, but for three decades, the theocratic regime in Tehran has used the country’s vast oil wealth as a means to maintain its grip on power rather than to improve the lives of its citizens.
In order to defuse domestic unrest, the regime has spent vast amounts of money in order to keep commodity prices artificially low, providing subsidies on everything from rice to water to gasoline.

These subsidies have drained the country’s treasury. In 2007, for instance, Iran spent more than a quarter of its entire gross domestic product on various subsidies, the largest portion dedicated to keeping gasoline prices hovering around 40 cents per gallon.
At that price, the Iranian people’s demand for gasoline has skyrocketed. But with an inadequate domestic refining capacity, Iran is dependent on other countries for its gasoline supply, importing as much as 40 percent of its refined petroleum.

Previous government attempts at rationing or reducing subsidies on gasoline have sparked widespread protests and the burning of gas stations across the country. Stringent international sanctions could force the government to abandon its expensive nuclear program.

Congress Wants More Pressure on Iran

Many members of Congress would like to do just that. Leading members of the House and the Senate have introduced the Iran Refined Petroleum Sanctions Act (IRPSA), which, if passed, would require President Obama to impose sanctions on companies helping Iran import and produce refined petroleum products.

IRPSA was introduced in the House by Foreign Affairs Committee Chairman Howard Berman (D-CA) and Ranking Member Ileana Ros-Lehtinen (R-FL) and in the Senate by a bipartisan slate of more than two dozen senators.

These Congressional supporters of IRPSA believe that the Obama administration’s diplomatic overtures to Iran must be backed by the threat of tough sanctions, especially since Tehran has shown no sign that it intends to end its illicit atomic work.

What can IRPSA do?

The sanctions outlined in IRPSA target important links in Iran’s refined petroleum supply chain, including the companies selling gasoline to Iran, the ships transporting the gasoline, the banks financing the sales and the companies insuring gasoline shipments to Iran.

“Any cut-off in supply would do immediate damage to the fragile Iranian economy and could bring about social unrest, as happened in 2007 after the regime imposed gasoline rations,” said a recent Wall Street Journal editorial. “Here’s another fact: Iran is supplied with gasoline by a mere handful of foreign companies, all of which do substantial business in the United States.”

IRPSA will send a message to those companies: You can do business with the United States, or you can do business with Iran, but you cannot continue to do business with both.
Continued: Iran is Vulnerable to Sanctions
Due to the Iranian regime’s economic mismanagement, ordinary Iranians must stand in line for rationed gasoline.

Some firms are already getting the message. France’s Total put a major investment in Iran on hold last year, citing the possibility of U.S. sanctions. And according to reports last month, India’s Reliance, a major player in the shipping of refined petroleum to Iran, has stopped gasoline exports to Iran over fears of U.S. sanctions.
These developments are important, but many of the world’s biggest energy companies, including the two cited above, are still involved in Iran’s energy sector.
Which Companies Help Iran?

According to numerous shipping industry sources, three companies dominate shipments of refined petroleum to Iran—Swiss-based Vitol and Trafigura and France’s Total. The remaining shipments come from a handful of companies, including Royal Dutch Shell and Swiss trader Glencore.

A number of companies are involved in upgrading Iran’s domestic refining capacity, including Universal Oil Products (UK subsidiary of American corporation Honeywell), France’s Axens and Technip, China’s Sinopec Engineering Inc., South Korea’s Hyundai Engineering Co. and Norway’s Aker Kvaerner Powergas.

Meanwhile, Lloyd’s of London, Munich Re, Steamship Mutual Underwriting Association and the North of England P & I Association all provide insurance services on shipments of refined petroleum to Iran.

All of the services provided by the companies listed above are crucial to keeping Iran’s oil industry afloat. Tehran would find it very difficult to compensate for the loss of major Western oil companies as few, if any, other companies have the technology, resources and expertise to operate in Iran.

Do Sanctions Work?

Existing sanctions have slowed Iran’s quest for a nuclear weapons capability and have kept open the possibility that Iran will decide its nuclear program is not worth the cost.
U.S. and U.N. sanctions have decreased the transfer of sensitive nuclear and missile technology to Iran. Sanctions have also reduced Iran’s ability to conduct international trade and financial transactions that it has used to mask illicit transactions to purchase sensitive materials.

Iran is Vulnerable to Sanctions

Further, sanctions have greatly increased the cost to international businesses operating in Iran. The threat of U.S. sanctions on firms doing business in Iran’s energy sector has limited Iran’s ability to attract much-needed foreign investment.

During the past 16 years, only $3.5 billion out of a pledged $34.1 billion in foreign investment—just over 10 percent—has actually been invested in Iran. Tahmasseb Mazaheri, a former governor of Iran’s central bank, said last year that “despite all plans and preparations, the fact is sanctions will harm all involved parties. Sanctions are costly for us...”

1a Editorial: Courage in Tehran


“Our future society will be a free society and all the elements of oppression, cruelty and force will be destroyed.”

Can you guess who said that? Was it Thomas Jefferson? George Orwell? A character in an Ayn Rand novel?

The answer is Ayatollah Ruhollah Khomeini, the leader of Iran’s 1979 Islamic Revolution—the man who established the “Islamic Republic” that has, for 30 years, existed through the very means he said would be destroyed.

So if there was one good thing to emerge from the Iranian regime’s violent crackdown on protesters in the streets in the past month, it was compelling evidence that the Islamic Republic is today really nothing more than a crude military dictatorship.

No government censor could stop, and no Western apologist could deny, the deluge of heart-searing images of Iranians standing in the streets, facing down armed government militias and chanting “Where is my vote?” Facebook updates, Twitter posts, YouTube videos—all of these new technologies helped Iranians communicate with each other and the outside world.

Their struggle did not go unnoticed. But as the people in the streets of Tehran knew well, the regime’s brutality in the past month was nothing new. It was, in fact, what one would expect from a theocratic regime that routinely tortures political dissidents, represses women and hangs accused homosexuals in front of jeering crowds—all while Iran’s smirking president denies that such people even exist in his country.

Today, finally, more people are seeing the Iranian regime for what it is and always has been.

At a White House news conference, President Obama said he was “appalled and outraged by the threats, beatings and imprisonments” of the Iranian people. He praised what he called the “courage and dignity” of the demonstrators, especially the women who have been risking their lives in order to march in the streets. The president noted that he had watched the “heartbreaking” video of a 26-year-old Iranian woman who died after being shot on a Tehran street.

The dramatic events of the past month have been the strongest challenge to the regime since 1979, but nobody can be sure what Iran will look like when the post-election dust settles. The influence of Supreme Leader Ali Khamenei, the sway of the clerical establishment, the fate of defeated candidate Mir-Hossein Mousavi—all of these things will become clearer in the weeks ahead.

The Revolutionary Guard, in the meantime, is violently asserting itself, warning that there is no middle ground in the post-election dispute between Ahmadinejad and Mousavi.

As this internal politicking goes on, Iran’s nuclear program is accelerating. Just last month, an alarming new International Atomic Energy Agency report said that Iran has installed more than 7,000 centrifuges at its Natanz enrichment facility—a 30 percent increase since February of this year. That amount of centrifuges is enough to make the required fuel for two nuclear bombs per year.

The United States and its allies are assessing what to do next in order to prevent Iran from acquiring a nuclear weapon. “There is no doubt that any direct dialogue or diplomacy with Iran is going to be affected by the events of the last several weeks,” President Obama said, when asked about his Iran strategy. “I think we’re going to have to see how that plays itself out in the days and weeks ahead.”

Secretary of State Hillary Clinton said that stopping Iran’s “pursuit of nuclear weapons” remained a top policy priority in Washington. “We would ask the world to join us in imposing even stricter sanctions on Iran to try to change the behavior of the regime,” Clinton said.

It remains to be seen whether Russia and China will join the United States in anything but cosmetic efforts to change the behavior of the Iranian regime. The Group of 8 is meeting this week in Italy, but the host country’s prime minister, Silvio Berlusconi, has already said that there is no common ground on Iran policy among countries participating in the summit.

2) PROMISES, PROMISES: Obama tax pledge unrealistic
By STEPHEN OHLEMACHER,

– President Barack Obama promised to fix health care and trim the federal budget deficit, all without raising taxes on anyone but the wealthiest Americans. It's a promise he's already broken and will likely have to break again. Obama and the Democratic-controlled Congress have already increased tobacco taxes — which disproportionately hit the poor — to pay for extending health coverage to 4 million children in working low-income families.

Now, lawmakers are looking for more revenues to help pay for providing medical insurance to millions more who lack it at a projected cost of $1 trillion over the next decade.

The floated proposals include increasing taxes on alcohol, which could raise $62 billion over the next decade, and a new tax on sugary drinks such as soda, which could raise $52 billion.

Senate Democrats this week pretty much rejected a proposal by Finance Committee Chairman Max Baucus, D-Mont., to tax health benefits, an idea that Obama repeatedly criticized during the presidential election campaign but has refused to take off the table.

Sen. Chuck Schumer, D-N.Y., said negotiators are still looking for revenue alternatives. Asked during an interview with The Associated Press if they included tax increases on families with incomes less than $250,000 a year, Schumer said, "There are lots of things on the table now."

The health care bill is a long way from Obama's desk, but tax experts say the debate illustrates a stark reality: It is simply implausible for the vast majority of Americans to get a free ride while the nation tackles such an incredibly difficult — and expensive — issue.

"We're all going to have to contribute," said Eugene Steuerle, a former treasury official in the Reagan administration and now vice president of the Peter G. Peterson Foundation.

Paying for Obama's agenda might be easier, Steuerle said, if the nation wasn't already facing massive federal budget deficits for the foreseeable future.

"The dilemma is trying to do the new while the old is still unpaid for," Steuerle said.

The federal budget deficit is projected to hit an unprecedented $1.8 trillion this year — on top of a national debt that has already topped $11 trillion. Obama insists that any bill on health care or climate change not add to the debt.

Obama says much of the $1 trillion needed for his health care overhaul will come from cutting costs. So far, drug companies and hospitals have agreed to provide 10-year savings of $235 billion.

Health care experts say cost cutting alone won't produce enough money to insure the nearly 50 million Americans who lack coverage. Moreover, Congress is obligated to follow budget rules that might not recognize many of the promised savings.

"The administration has an extremely difficult educational problem on its hands," said Henry J. Aaron, a health care expert at the Brookings Institution. "They understand that at some point tax increase are going to be necessary across the board.

"Yes, for the middle class, too," he added.

Obama made a firm tax pledge during the presidential campaign, repeating it numerous times in the weeks and months leading up to Election Day: no tax increases for individuals making less than $200,000 a year or couples making less than $250,000.

"Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes," Obama told a crowd in Dover, N.H., last year.

But less than a month after taking office, Obama signed an expansion of child health care financed by 62-cent tax increase on each pack of cigarettes.

Obama also signed an anti-smoking bill in June that grants authority to the Food and Drug Administration to regulate tobacco. To pay for the new program, a fee is being imposed on the industry — and presumably passed on to consumers — estimated to generate more than $5 billion over the next decade.

While not directly increasing taxes, a House-passed version of Obama's plan to reduce greenhouse gases blamed for causing global warming would similarly increase American families' home energy bills by $175 a year on average, according to the Congressional Budget Office.

Obama hasn't offered a detailed plan to fix health care, though his aides are working with lawmakers as they craft proposals. Obama included only a down payment for health care reform in the budget proposal he unveiled this spring.

He proposed limiting itemized tax deductions for individuals making more than $200,000 and couples making more than $250,000. The plan, which faces stiff opposition in Congress, would limit deductions for mortgage insurance, state and local taxes and charitable contributions, raising about $270 billion over the next decade.

Obama also proposed a series of business tax increases and accounting changes that would raise an additional $30 billion.

Kenneth Baer, a spokesman for the OMB, said Obama's cost reductions and tax increases add up to "a plan which gets you really close to what you need."

"Congress has other ideas," Baer said. "We'll work with them."

The appeal of Baucus's proposed tax on health benefits was the amount of money it could raise. Currently, employer-provided health benefits are not taxed, regardless of how generous they are.

One version of it would tax health benefits that exceed the value of the basic insurance plan offered to federal workers, raising about $420 billion over the next decade, according to the nonpartisan Joint Committee on Taxation. But limiting it to individuals making more than $100,000 a year and couples making more than $200,000 would raise only $162 billion.

The math illustrates how difficult it is to raise enough money to pay for expensive programs, when tax increases are limited to the wealthy.

"We're living in an era, over a period of 20 years or more, in which the idea that tax rates would actually be boosted is unutterable," said Aaron, the health care expert. "That has to stop."

2a) Obama Can't Be Trusted With Numbers: So why should we trust him with health care?.By By KARL ROVE

In February, President Barack Obama signed a $787 billion stimulus bill while making lavish promises about the results. He pledged that "a new wave of innovation, activity and construction will be unleashed all across America." He also said the stimulus would "save or create up to four million jobs." Vice President Joe Biden said the massive federal spending plan would "drop-kick" the economy out of the recession.

But the unemployment rate today is 9.5% -- nearly 20% higher than the Obama White House said it would be with the stimulus in place. Keith Hennessey, who worked at the Bush White House on economic policy, has noted that unemployment is now higher than the administration said it would be if nothing was done to revive the economy. There are 2.6 million fewer Americans working than Mr. Obama promised.

The economy takes unexpected turns on every president. But what is striking about this president is how quickly he turns away from his promises. He rushed the stimulus through Congress saying we couldn't afford to wait. Now his administration is waiting to spend the money. Of the $279 billion allocated to federal agencies, only $56 billion has been paid out.

Mr. Biden has admitted that the administration "misread" the economy. But he explained that away on ABC's "This Week with George Stephanopoulos" on Sunday by saying the administration had used "the consensus figures and most of the blue chip indexes out there" to draw up its stimulus plan. That's not true.

The Blue Chip consensus is an average of some four dozen economic forecasts. In January, the consensus estimated that GDP for 2009 would shrink by 1.6% and that unemployment would top out at 8.3%. Team Obama assumed both higher GDP growth (it counted on a contraction of 1.2%) and lower peak unemployment (8.1%) than the consensus.

Instead of relying on the Blue Chip consensus, Mr. Obama outsourced writing the stimulus to House appropriators who stuffed it with every bad spending idea they weren't previously able to push through Congress. Little of it aimed to quickly revive the economy. More stimulus money will be spent in fiscal years 2011 through 2019 than will be spent this fiscal year, which ends in September.

On Sunday, Mr. Biden, backpedaling from his drop-kick comments, said that "no one anticipated, no one expected that the recovery package would in fact be in a position at this point of having to distribute the bulk of the money."

This fits a pattern. The administration consistently pledges unrealistic results that it later distances itself from. It has gotten away with it because the media haven't asked many pointed questions. That may not last as the debate shifts to health care.

The Obama administration wants a government takeover of health care. To get it, it is promising to wring massive savings out of the health-care industry. And it has already started to make cost-savings promises.

For example, the administration strong-armed health-care providers into promising $2 trillion in health savings. It got pharmaceutical companies to promise to lower drug prices for seniors by $80 billion over 10 years. The administration also trotted out hospital executives to say that they would voluntarily save the government $150 billion over 10 years.

None of this comes near to being true. On the promised $2 trillion, everyone admits that the number isn't built on anything specific -- it's an aspirational goal. On drug prices, a White House spokesman admitted that "These savings have not been identified at the moment." It is speculative that these cuts will actually be made, when they would begin, or whether they would reduce government health-care spending.

None of this will stop the administration from arguing that its "savings" will pay for Mr. Obama's $1.5 trillion health-care plans. By the time the real price tag emerges, it will be too late to do much more than raise taxes and curtail spending on urgent priorities, such as the military.

The stimulus package is a clear example of how Mr. Obama operates. He is attempting to employ the same tactics of bait-and-switch when it comes to health care, only on a much larger scale.

Mr. Obama has already created a river of red ink. His health-care plans will only force that river over its banks. We are at the cusp of a crucial political debate, and Mr. Obama's words on fiscal matters are untrustworthy. His promised savings are a mirage. His proposals to reshape the economy are alarming. And his unwillingness to be forthright with his numbers reveals that he knows his plans would terrify many Americans.

Mr. Rove is the former senior adviser and deputy chief of staff to President George W. Bush.

3) Top Obama aide invites head of terrorist-linked org to join administration task force
By Steven Emerson


Group's ‘mainstream’ Islamist convention last weekend featured hate speech and Hezbollah Defense

A top aide to President Barack Obama provided a keynote address at last weekend's 46th Islamic Society of North America (ISNA) national convention, a gathering that attracted thousands of people and also featured anti-Semitic, homophobic rhetoric and defense of the terrorist group Hezbollah.

In her remarks, Senior Advisor for Public Engagement and International Affairs Valerie Jarrett noted she was the first White House official to address ISNA. She spoke in general terms about interfaith dialogue and cooperation. She praised her hosts for "the diversity of American organizations, and ideas that are represented and will be debated" at the convention.

And she openly invited ISNA President Ingrid Mattson to work on the White House Council on Women and Girls that Jarrett leads.

ISNA is an unindicted co-conspirator in a Hamas-support conspiracy and maintains significant leadership ties to its foundation 28 years ago by members of the Muslim Brotherhood in America. A more pointed statement by Jarret would have stood as a powerful retort to extremist sentiments offered in other segments of the conference.

While many panels at the convention featured criticism of U.S. policy and law enforcement, one stood out for its hate-filled rhetoric, and ISNA officials should have seen it coming a mile away. During a "meet the authors" session, Imam Warith Deen Umar, former head of the New York state prison chaplain program managed to:

Argue that key Obama aides are "Israeli," proving Jews "have control of the world."
Malign the motives of Jews active in the Civil Rights movement.
Portray the Holocaust as punishment of Jews for being "serially disobedient to Allah."
Insinuate that Hurricane Katrina was a result of tolerance for homosexuality.
Umar's radicalism is no secret. He previously hailed the 9/11 hijackers as martyrs who were secretly admired by Muslims. He has called for violent jihad. In a January 2004 speech, he urged people:

"Rise up and fight. And fight them until turmoil is no more and strike terror into their hearts." You think there is no terror in Quran? It's called [word unclear] read it in the 56th Surah of the Quran. There's no lack of translation, there's no mistranslation There's not one Sheikh says one thing, no, it's very clear. 'When you fight, you strike terror into the heart of the disbeliever.'"

He has a website promoting a past book, Judaiology, which features an excerpt describing "the inordinacy of Jewish power." Jews, he wrote, are "an amazing people who can steal you blind as you watch. If you discover the theft, they can put you to sleep. If you wake up to them, they can put you back to sleep with mind games, tricks of fancy, smoke screens, and magic. Henry Ford almost uncovered them."

Umar's ISNA appearance Sunday afternoon promoted his latest book, Jews for Salaam: The Straight Path to Global Peace. In discussing it, Umar first thanked ISNA for inviting him to speak.

He then described a distinction between "holy Jews," who are devout, apolitical and poor, and "unholy Jews" who are greedy, conniving and all powerful. He looked to the White House for an example:

"You need to know that Obama, the first man that Obama picked when we were so happy that he was the President, he picked an Israeli - Rahm Emanuel - his number one man. His number two man - [David] Axelrod - another Israeli person. Why do this small number of people have control of the world? You need to go back into your history and find out about France and Germany and England and America got together and offered the Israelites, who became the Israelites, they offered them Ghana, the plains of Ghana. Why don't you take Ghana since we beat you down so badly? That's what the Holocaust was all about. You need to read my chapter on the Holocaust and the anti-Holocaust movement. There's some people in the world says no Holocaust even happened. Some of their leaders say no Holocaust even happened. Well it did happen. These people were punished. They were punished for a reason because they were serially disobedient to Allah." [Emphasis added]

ISNA described the author's panel as "an interactive session which provides a wonderful platform to learn, share ideas, and provide literary contributions to society." Remarkably, ISNA included Umar in that platform despite a very public record of anti-Semitism, advocacy for jihad, and praise for the 9/11 hijackers.

Umar shared the microphone with another author who did not spew out bigotry, but who did cast Hezbollah as an innocent player subject to incessant Israeli onslaught. Cathy Sultan described her book, Tragedy in South Lebanon: The Israeli/Hezbollah War of 2006, as a history of "the tragedy of the repeated incursions and wars in South Lebanon, the complexities of the Lebanese politics."

She made no mention of Iranian funding for Hezbollah or Syrian meddling in Lebanese politics or its suspected involvement in the assassination of former Prime Minister Rafik Hariri. Instead, she lumps Hariri among a list of "docile Arab rulers willing to acquiesce to the West and to Israelis' demands … provided they eliminate or at least contain and disarm Hamas and Hezbollah."

Nor did Sultan describe indiscriminate Hezbollah rocket fire toward Israeli civilian communities, or the cross-border attack on an Israeli army base by Hezbollah that left three soldiers dead and two others kidnapped.

In response to a question, Sultan said "Hezbollah still serves a role. I think that Lebanon is still under constant threat from its southern neighbor. And I see nothing wrong, as long as Hezbollah abides by certain rules and regulations; I see no reason why Hezbollah should not remained armed."

The United States considers Hezbollah to be a terrorist group, and some experts consider it a bigger potential threat to the United States than Al-Qaeda.

The panel did not feature anyone with contrasting viewpoints to challenge Sultan or Umar. The program drew about 50 people, who sat passively during most of the remarks.

Umar's books were available for purchase at the convention. Government agencies were represented with booths of their own, including the departments of Justice, State, Homeland Security, Commerce, the U.S. Navy and the U.S. Agency for International Development (USAID).

Before the convention started, ISNA posted a statement for vendors which said "Any literature (fundraising or otherwise) is restricted to the assigned booth and must be pre-approved in writing by ISNA, in ISNA's sole and absolute discretion. Book selling vendors must complete enclosed form providing inventory of the literature to be sold at ISNA."

Judaiology devotes a chapter to "The Protocols of the Elders of Zion," allegedly the minutes of a meeting of Jewish leaders at the first Zionist Congress in Basel, Switzerland, in 1897, in which they plotted to take over the world. Researchers have definitively proved that the Protocols were in fact forged in Paris sometime between 1895 and 1899 by an agent of the Russian secret police. This has not kept anti-Semitic groups from believing the validity of this forgery. For example, the Charter of Hamas states:

"For Zionist scheming has no end, and after Palestine they will covet expansion from the Nile to the Euphrates. Only when they have completed digesting the area on which they will have laid their hand, they will look forward to more expansion, etc. Their scheme has been laid out in the Protocols of the Elders of Zion, and their present [conduct] is the best proof of what is said there."

To Umar, however, the Protocols "remain a mystery:"

"Jewish leaders have denied [the Protocols] and called them a forgery, a pact [sic] of lies, absurd and counterintuitive. No Jew, they say, would ever resort to writing down such self-defeating words and plans. However their denials appear ineffective because the Protocols actually explain and reveal what others observe about the real activities and results of Jewish diplomatic, industrial, business, and political involvement among the peoples of the world… What is revealed and clarified is so shocking and stunningly in accord with the behavior and results of world events that involve Jews that it gives credence and importance, relevance and standing to what otherwise would simply be a biased and discredited documents."

A woman in the audience reminded Umar that Jews marched with Black people during the Civil Rights movement. But, Umar said, that was not motivated by a genuine desire for justice:

"The Jews in America used the black community to advance the Jewish community. In many instances in history, they gained much of what they gained by putting the African Americans out front to get things that were necessary to get through the politics of this country and of the social setting of this country."

Umar also managed to stray into a reference about same-sex marriage, which he said would prompt G-d's wrath:

"It's against the laws of Allah and against the laws of the Bible for homosexuality. And if you think the Quran talks about harsh punishment from Allah, you should read what the Bible says. I don't have the time to go into it, but it's in my book. The Bible is very hard on, he says, Allah says that the land itself is doomed. You wonder why things are happening in America are going to happen? You think that Katrina was just a blow of wind?"

This is the man responsible for the Muslim chaplain program in New York prisons for 20 years. He was forced out of that job after his praise for the 9/11 hijackers became known. This is who ISNA chose to showcase in a "meet the authors" panel and provide an unchallenged platform.

"My conclusion is that there should be more jihad," he said. "But people don't want to hear that. They're scared."

In Cairo, the President said:

"Threatening Israel with destruction — or repeating vile stereotypes about Jews — is deeply wrong" and a hindrance to peace. [Emphasis added]

But somehow, partnering with a group that invites the same thing is okay?

Steven Emerson is an internationally recognized expert on terrorism and national security and considered one of the leading world authorities on Islamic extremist networks, financing and operations. He now serves as the Executive Director of The Investigative Project on Terrorism, one of the world's largest archival data and intelligence institutes on Islamic and Middle Eastern terrorist groups.



3a) What Constitutes Discrimination?
By Thomas Sowell

Much of the backlog of cases in our over-burdened courts has been created by the courts themselves, with adventurous judicial "interpretations" of laws that leave a large gray area of uncertainty around even the most plainly written legislation. Lawyers of course fish in these troubled waters, creating much needless litigation, but it is judges who have troubled the waters in the first place.

Nowhere is this more true than in civil rights cases. Since the Constitution of the United States and the Civil Rights Act of 1964 both decree equal treatment for all, there should not be nearly as much basis for litigation in civil rights cases as there is-- at least not in cases where the facts are well known and undisputed, as in the recent New Haven firefighters' case that made it all the way up to the Supreme Court.

What was it that required three different levels of federal courts to try to figure out whether what actually happened was or was not racial discrimination-- with a decision finally being reached by the narrowest possible margin of 5 to 4 in the Supreme Court?

At the heart of much of this legal complexity and moral angst is a judge-made theory that a "disparate impact" of any job requirement on different groups is evidence of discrimination.

With two very different theories of what constitutes job discrimination-- either different treatment or different outcomes-- it is no wonder that courts have tied themselves into knots trying to figure out whether a particular case shows racial discrimination, even when the facts are known and plain.

The same notion-- and the same confusion-- applies in many other situations. If a higher proportion of blacks than whites get turned down for mortgage loans, then that too has been taken as evidence of racial discrimination.

It doesn't matter if blacks and whites are different on innumerable factors that go into mortgage loan decisions, as are Hispanics or Asian Americans as well.

All these groups have different credit scores, different incomes and many other differences. Why is it surprising that they have different loan approval rates? While the issue is often posed in terms of whites versus non-whites, whites also get turned down for mortgage loans more often than Asian Americans, who usually have higher credit scores than whites.

Only the underlying dogma that different outcomes for different groups are evidence of discrimination makes this an issue-- and a source of unending controversy and polarization.

It is not that judges are incapable of seeing through the intellectual flaw in the "disparate impact" dogma. But that dogma is too central to efforts at social engineering to be given up for the sake of mere logic or facts.

That is why courts split along ideological fault lines in cases like the New Haven firefighters' case, where the crucial facts are not even in dispute. The only real dispute is over whether a test is automatically biased if different groups pass it at different rates. Apparently the groups themselves cannot possibly be different, according to "disparate impact" theory.

Facts play a very small role in such issues-- including the facts as to whether social engineering-- especially a lowering of standards for blacks-- actually helps blacks on net balance. But empirical studies indicate that black students do better at colleges and universities where their qualifications are similar to those of the other students at those institutions and worse where they are admitted with wide disparities in qualifications.

Where in fact have blacks been most successful? Sports and entertainment come to mind immediately. These are areas where blacks have to meet the same standards as anybody else.

If Derek Jeter swings at three pitches and misses, he is out, just like any white ballplayer. If people stop watching Oprah Winfrey's program, it will get cancelled, just like anybody else's.

The biggest beneficiaries from the "disparate impact" dogma are those who claim to be helping minorities. They benefit by feeling noble, winning votes or attracting money. The actual consequences for blacks-- or for the polarization of American society-- seems to be of little concern.

3b) Public Not Sold on Big Government Policies
By Michael Barone

The financial system collapsed. Housing prices cratered. Unemployment is at a record high for the last quarter-century. The Democratic president has a solidly positive job rating.

And yet we Americans have not suddenly become collectivists. The economic distress of the 1930s led Americans to favor less reliance on markets and more on government. The economic distress of the 1970s led Americans to favor less reliance on government and more on markets. It doesn't seem unreasonable to expect, as many political liberals have been predicting, that the economic distress of the late 2000s will produce a shift in the 1930s direction. But it doesn't seem to have happened yet.

Or so the polling evidence tells us. Last month's Washington Post-ABC poll reported that Americans favor smaller government with fewer services to larger government with more services by a 54 percent to 41 percent margin -- a slight uptick since 2004. The percentage of independents favoring small government rose to 61 percent from 52 percent in 2008. The June NBC-Wall Street Journal poll reported that, even amid recession, 58 percent worry more about keeping the budget deficit down versus 35 percent worried more about boosting the economy. A similar question in the June CBS-New York Times poll showed a 52 percent to 41 percent split.

Other polls show a resistance to specific Democratic proposals. Pollster Whit Ayres reports that 58 percent of voters agree that reforming health care, while important, should be done without raising taxes or increasing the deficit. Pollster Scott Rasmussen reports that 56 percent of Americans are unwilling to pay more in taxes or utility rates to generate cleaner energy and fight global warming.

It's interesting that on these issues and many others independents are responding more like Republicans than Democrats. That's the opposite of what we saw up through 2008, when independents were almost as critical of the Bush administration and Republican policies as Democrats.

This apparent recoil against big-government policies has not gone unnoticed by Americans. Gallup reported earlier this week that 39 percent of Americans say their views on political issues have grown more conservative, while only 18 say they have grown more liberal. Moderates agreed by a 33 percent to 18 percent margin.

Voters continue to think pretty highly of Barack Obama. But these numbers suggest that they are responding more negatively to Democratic proposals that have a chance at passage than they did to Democratic platform planks that were, until the 2008 election, only political rhetoric. The $787 billion stimulus package, the cap-and-trade bill's utility-rate increases, the public health insurance package -- all these seem to generate more apprehension than enthusiasm.

So does the prospect of doubling the national debt, as the Congressional Budget Office estimates, from about 40 percent of gross domestic product to about 80 percent. That's about where it ended up after World War II. Americans evidently regard our current economic situation, though negative, as not enough to justify the magnitude of deficit spending that was appropriate in an all-out world war.

I have been pleasantly (and others have been unpleasantly) surprised by our fellow citizens' unwillingness to embrace bigger government in a time of economic distress. American history -- the New Deal -- has disposed us to consider such a shift natural. But it was not universal even in the 1930s. In that decade, voters in Britain, Canada and Australia preferred parties opposed to bigger government, even as voters in the United States, France and New Zealand went the other way. And polling suggested that Americans by the late 1930s had become wary of the New Deal.

I think the shift in reliance from markets to government in the 1930s or the other way around in the 1970s was not fully completed until the next decades, when Americans saw the success of big government policies during World War II and the unexpected economic boom that resulted from low taxes in the 1980s. Those successes were also successes of American policy in the world -- the defeat of Nazism in 1945 and the fall of communism in 1989.

It's still possible for American attitudes to shift, if the Democrats' economic policies are passed and are seen to revive the economy.

But it hasn't happened yet. Instead, Americans seem to be recoiling against big government when it threatens to become a reality rather than a campaign promise.




4) Hating Palin
By Ben Voth

As a communication professional I have largely been at a loss to explain the judgments being drawn about Governor Palin by allegedly expert pundits. The general meme from pundits is that Palin is a quitter who cannot take the heat.


It seems like the 'heat' has been more like hate -- maybe we are dealing with a simple spelling error? Journalism has gotten rather weak of late.


A public figure openly called for Palin to be raped during the campaign. Months after the losing campaign was over, a major comedian joked about the fictitious rape of one of her daughters. Immediately after the election, her church was burned. It's fairly difficult to reconcile this 'heat' as something conventional in politics. In fact, there might be some good reason to collectively indict Palin critics for their silent complicity.


This would go a long way to explain why many in the public seem more drawn to Palin after the resignation and the absurd media reactions to it. Keep in mind that these incidents remain unrepented public attacks. The media refused to offer much comment on the burning of Palin's church -- a silence which conveyed an implied endorsement of that attack. Imagine if Obama had lost the election and Jeremiah Wright's church had been burned. Where would the punditry be?


Given the peculiar failure of pundits to "understand" her July 3 statement, it is useful to return to the actual text of her statement. With such attention we can discover some of the possible confusion of pundits and reveal the largely ignored messages contained in Governor Palin's statement. Most interesting is the discussion about her children:


"In fact, this decision comes after much consideration, and finally polling the most important people in my life -- my children (where the count was unanimous... well, in response to asking: ‘Want me to make a positive difference and fight for ALL our children's future from OUTSIDE the Governor's office?' It was four "yes's" and one "hell yeah!" The "hell yeah" sealed it - and someday I'll talk about the details of that... I think much of it had to do with the kids seeing their baby brother Trig mocked by some pretty mean-spirited adults recently.) Um, by the way, sure wish folks could ever, ever understand that we ALL could learn so much from someone like Trig -- I know he needs me, but I need him even more... what a child can offer to set priorities RIGHT -- that time is precious... the world needs more ‘Trigs', not fewer."


The mocking of a disabled child, Trig Palin, must stand out as one of the most uniquely cruel and despicable contemporary trends of American politics. Could this be what Bill Clinton envisioned when he asked the nation to bring to an end the politics of personal destruction in the 1990s? It is clear that the entire Palin family would like to broaden their advocacy beyond the borders of Alaska. What is also clear is that pulsing at the center of Media contempt toward Palin is not simply stated positions on abortion but real life actions that are so striking and meaningful that they enrage a pretentious political community feigning interest in "women's rights."


Palin was one of the rare political figures recently courageous enough to defend Carrie Prejean -- another conservative woman who "needed" to lose her job for speaking her mind on gay marriage. While Republicans stood around and stared at their political feet, and Democrats cheered from the sideline, Prejean was treated to a vicious rhetorical stoning in the national media. Palin stepped into the fray and in defense of another strong conservative woman. It is rather easy to see how Palin envisions trading her provincial limits of Alaska for a national pedestal on such transparent political problems confounding our culture.


Palin's conclusion utilized a quotation from Douglas MacArthur -- an American general famously dismissed by Democrat President Harry Truman. Truman's dismissal of MacArthur and the ensuing public controversy did great damage to Truman's public credibility. Despite his rogue disposition, MacArthur continued through his rebuttals to secure a place in history as a tough fighter on the military battlefield as well as the political battlefield. Here again pundits seem to miss the rhetorical boat about the larger fight Palin will bring in the next campaign after an apparent "defeat in the Philippines" of 2008.


Consider further the unique context of current events. Michael Jackson is revered at his funeral as someone who really knew how to love children -- unlike Sarah Palin who the Huffington Post reported would be running on the "more retardation platform" in 2012. Governor Sanford gets a slap on the wrist from his Republican colleagues and pundits agree --he should not expect to resign. Could life be more absurd?


Punditry confusion over Palin's decision and statement is a strategy to absolve critics of their low moral stature in observing the despicable cultural conduct toward Governor Palin and her family. After all, America's political punditry does have an informal role as referee. Some partisans were not unafraid to suggest that Palin had crossed the line when she accused Obama of "palling around with terrorists." It was in their view inappropriate and excessive. The failure to fairly call the playing field of American politics has rightly left the American public observing an obscene scene of political mayhem. The scene clearly disgusts and offends the public across the political spectrum. According to the current commentators, all of the events since August 2008 are some sort of confused nightmare from which we in the electorate can now awaken and come to our senses. Nothing really happened since there was not a "real" candidate in Governor Palin. For some in the politically elite class, such absurd rationalizations will work, but for a sizable component of the public who saw in Palin their own cultural and political fortunes, these comments will serve as further fuel for their partisan fires.


I suspect that many journalists watching their market shares evaporate and their shareholders sell, are aware that the American public is not sad to witness their collective demise. The stony silence among the media class about the hateful vitriol dispensed upon Governor Palin and her family has not gone unnoticed in the public. Whatever the future of Governor Palin, it's a safe bet that her political career will last longer than a great many pundits who make themselves complicit in this disgraceful conduct of American politics and culture.


Ben Voth is Associate professor of Communication, Southern Methodist University


5) Russia blocks concrete measures at G8 on Iran's nuclear drive


Sarkozy tries to give Iran a deadline

Leaders of the industrialized nations failed to agree on tough measures, including sanctions, against Iran's drive for nuclear weapons in the first day of their three-day deliberations at the Italian town of l'Aquila, Wednesday, July 8. Russian opposition to condemning Iran left only an endorsement of the diplomatic track, which may have been directed more against an Israeli military option than Iran. government-backed violence in the aftermath of Iran's dispute election last month was "deplored."

In any case, the next day, Tehran topped up its refusal to discuss its nuclear program with a sharp response to the mild G8 statement: "We shall not halt our nuclear program or retreat by a single step."

The Iranian nuclear issue did not even rate a statement separate from the other security issues.

Nevertheless, US undersecretary of state William Burns, playing the setback down, praised the statement as a victory for unity, representing "a real sense of urgency."

French president Nicolas Sarkozy said that fellow G8 members had agreed to give Iran a chance for negotiations until September, when the next G8 conference in Pittsburg would take stock of progress towards freezing its nuclear activities and "make decisions." He did not explain how they proposed to bring an unwilling Iran to the negotiating table or persuade Russia and China to endorse the new sanctions he hinted at.

On other issues, consensus on real steps was just as elusive. The G8 leaders agreed to "try to limit global warming to just 2C (3.6F) above pre-industrial levels by 2050, after lowering their target of halving greenhouse gas emissions by the target year.

It was decided to invite 14 developing countries to take part in the next G8 summit so ending the group's standing as a club for rich nations.

5a) Iran refuses to back down 'one step' in nuclear row

Iran will not back down "even one step" over its nuclear work, a senior adviser to the country's top authority said in remarks published on Thursday, making clear Tehran's continued defiance in a row with the West.

French President Nicolas Sarkozy said Wednesday that major powers in the Group of Eight would give negotiations with Iran a chance until September, upping the stakes in a dispute over the Islamic Republic's nuclear ambitions.

Ali Akbar Velayati, Supreme Leader Ayatollah Ali Khamenei's top adviser on international affairs, said Western countries did not want the Islamic state to have peaceful nuclear activities, state broadcaster IRIB said on its website.


Speaking after talks with fellow G8 leaders in Italy, Sarkozy said they would review the situation at a G20 meeting of developed and developing countries in Pittsburgh on Sept. 24 and 25.

"If there is no progress by then we will have to take decisions," said Sarkozy, indicating that tougher sanctions might be imposed if Tehran continued to resist negotiations.


Western countries believe Iran is trying to build an atomic bomb. Tehran insists it wants to master nuclear technology to generate electricity, and has rejected all overtures for talks.

U.S. and Canadian officials, meanwhile, said the world's main industrialized nations were growing increasingly impatient.

"All G8 nations are united. There is a strong consensus at the table that unless things change soon, there will be further action," said Canadian spokesman Dimitri Soudas.

A White House deputy national security adviser, Mike Froman, told reporters the G8 discussions had reflected "a collective impatience with Iran."

However, Sarkozy made clear Russia was still dragging its feet over the issue and had pushed for more time before considering a fresh round of sanctions.

"We made an effort to agree not to strengthen sanctions straightaway in order to bring everyone on board. The more reserved amongst us agreed that Pittsburgh was the time for decisions," said Sarkozy.

In a separate statement, the G8 said it was committed to finding a diplomatic solution to Iran's nuclear program.

"We sincerely hope that Iran will seize this opportunity to give diplomacy a chance," the statement said.

The G8 statement came after Prime Minister Benjamin Netanyahu's top national security adviser said Wednesday that the United States was distancing itself from Israel's position on Iran.

The statement also deplored the violence in Iran following last month's disputed presidential election and said arrests of journalists and foreigners there were "unacceptable".

Moreover, it repeated criticism of Iranian President Mahmoud Ahmadinejad for denying the Holocaust.

Turning to the Middle East, the G8 reiterated calls for a swift resumption of negotiations between Israel and the Palestinians over the creation of two separate states.

"We also call for the immediate opening of crossings for the flow of humanitarian aid, commercial goods and persons to and from Gaza, in a manner that respects Israel's security," the statement said.

6) EU retracts criticism of Israeli settlements
By Akiva Eldar

The European Commission on Thursday backtracked on its unusually harsh criticism of Israeli settlements, declaring that a statement released earlier this week did not reflect the commission's position.

The contentious statement accused Israel's settlement policy of strangling the Palestinian economy and making the Palestinian government more dependent on foreign aid.

The Foreign Ministry called in the EU ambassador to protest the report, accusing the commission of stepping beyond its authority in issuing such criticism and not taking into account Israel's security concerns in the West Bank.
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"The press release unfortunately uses wording which does not reflect statements by the EU Commission," European Union spokesman David Kriss said Thursday.

The commission is concerned about the negative effect settlement policy has on the economic life of Palestinians, Kriss said, but added that "the reality is more complex than the statement depicts."

Meanwhile, a senior European Union official has ruled out any compromise with Israel over the issue of settlements, unless reached in the framework of a final-status agreement with the Palestinians.

Robert Rydberg, head of the Middle East desk in the Swedish Foreign Ministry, stressed on Monday it was inconceivable for the international community to legitimize natural growth of the settler population, since all settlements beyond the Green Line were illegal.

Rydberg, whose country holds the EU presidency, said the only conceivable compromise would come with Israeli and Palestinian agreement on borders in an all-encompassing final-status agreement between the two parties.

Speaking at a conference in Munich, Rydberg slammed the settlements as creating a new reality on the ground in the occupied territories and spawning obstacles, and he said that roadblocks were intended mainly to protect the settlements rather than Israel proper within the Green Line.

Rydberg said Israel's settlement policy did not build credibility among the Palestinian leadership and that Palestinian Authority President Mahmoud Abbas wanted to reach an agreement with Israel. He said the ideology that guides most settlers is based on utter denial of the rights of Palestinians in the occupied territories.

Rydberg, who also serves as deputy director general of the Swedish Foreign Ministry and is a former ambassador to Israel, noted that the United States was interested in the EU's playing an active role in the peace process, and that the U.S. meticulously coordinates its positions with the EU and other members of the Quartet.

He noted with satisfaction the latest statements by Hamas on Israel. He said that although Hamas was approaching the Quartet's demands, it still must live up to all of the Quartet's conditions before the latter would engage with the Islamic group.

He also said the EU was trying to "close gaps" with Arab countries like Syria and Libya, in a bid to engage them in the efforts to make progress in resolving the Middle East conflict.

Rydberg said the situation in Iran was likely to influence the Israeli-Arab conflict, but also that progress in the peace process was as likely to influence players affiliated with Iran in the region, such as Syria, as well as the positions of organization like Hamas and Hezbollah.

He said the Middle East will be given much attention during the Swedish presidency of the EU, as his government, like others in Europe, has political, security and economic interests in the region.

7) Analysis: Three years later, the core issues remain unresolved
By Jonathan Spyer

Three years have passed since the outbreak of the Second Lebanon War.

UN Secretary-General Ban Ki-moon pointed out this week that the cease-fire which ended the war on August 14, 2006, remains fragile. The core issues which triggered the fighting remain unresolved. Since the guns fell silent, both sides have been busy seeking to learn the lessons of their successes and failures, on the assumption that another round is at some stage inevitable.

For Israel, the war served as a wake-up call that a new chapter in the Arab-Israeli conflict had begun.

In the two decades prior to 2006, the main focus of the IDF ground forces had been on counter-insurgency in the West Bank and Gaza. The result was that the IDF's war-fighting capabilities grew rusty.

The reports of the committee headed by Judge Eliyahu Winograd were harshly critical of the performance of both the political and military leaderships during the war. Winograd noted a failure to understand and internalize the requirements of war, as opposed to those of low-intensity operations. His reports were critical of the setting of unrealistic goals by the political leadership, the pursuit of goals in an unsuitable way (for example through excessive reliance on air power and illogical and half-hearted use of ground forces), and the lack of readiness of some IDF units.

The result, he concluded, was that the war represented a "great and grave missed opportunity" for Israel. The decay in some parts of Israel's defense structures that the 2006 war revealed derived from a misapplication of resources. This, in turn, was the result of a conceptual failure.

The faulty pre-war conception held that Israel was unlikely to be called upon to engage in conventional warfare in the foreseeable future. There was an accompanying belief that future wars would involve mainly air power and small groups of highly trained specialists on the ground. The 2006 war, however, ended the notion that the Arab-Israeli conflict was engaged in a long process of gradually winding down. It lifted the veil on a new mutation of the conflict, in which Islamist forces, armed, trained and aided by Iran, are engaged in a long war strategy of seeking to inflict a "death by a thousand cuts" on Israel.

But despite the failures of the Israeli military and political systems in the 2006 war, the results were hardly a ringing success for Hizbullah and its Iranian masters. The movement sustained very heavy casualties (over 500 men killed), and the loss of a large amount of sophisticated and costly Iranian equipment - most importantly, the Zelzal and Fajr missile systems destroyed by the IAF at an early stage of the war. The south of Lebanon was decimated, and efforts by Iran and Hizbullah to rebuild the damaged areas have proved sluggish and inefficient. The terms of Security Council Resolution 1701 significantly complicated the movement's deployment south of the Litani River.

Hizbullah went on to significantly overplay its political hand as a result of the war. The movement imagined it could translate its self-proclaimed "divine victory" into increased political power, and engaged in a series of adventures which saw it turning its guns on fellow Lebanese, and attempting to bring down the government in Beirut. The results of last month's elections showed the discontent of many Lebanese at Hizbullah's desire to turn the country into a front line in an Islamist war to the death with Israel.

Since the Second Lebanon War, both sides have been preparing for the next round. The performance of the IDF in Operation Cast Lead showed that Israel has internalized some of the lessons outlined by Winograd.

The Gaza operation saw a better integration of political and military objectives, and a far more logical and effective use of ground forces. Hamas's leaders believed that they would be able to maintain a level of attrition that would force Israel back. They were wrong.

Hizbullah, meanwhile, is rearming. The movement is now thought to possess 40,000 missiles north of the Litani. It has tripled the number of C-802 ground-to-sea missiles in its possession, is attempting (reportedly with some difficulty) to recruit and train new fighters, and has created an anti-aircraft unit.

The northern border, three years after the war, is pastoral and quiet. The quiet is deceptive.

Hizbullah leader Hassan Nasrallah admitted that had he known the Israeli response to the kidnappings that began the war, he would never have carried them out. The result of this miscalculation, we are told, has been stronger Iranian supervision of their Lebanese proxy.

Hizbullah's creators and most enthusiastic backers - The Iranian Revolutionary Guards Corps - is emerging as the victor in the power struggle under way in Iran. Hizbullah is a key asset for Iran in its ongoing bid for regional hegemony. The larger struggle of which the 2006 war was an episode is still under way.

The reactivation of the northern front at some time in some future turn of events thus remains likely. The most meaningful form of remembrance of the dead of 2006 is in ensuring that when that time comes, the systems tasked with defending Israel are properly prepared and properly led.

Jonathan Spyer is a senior researcher at the Global Research in International Affairs Center, IDC, Herzliya, and is a veteran of the 2006 Lebanon War.

8) Independents edge away from Obama
By Ben Smith


In a potentially alarming trend for the White House, independent voters are deserting President Barack Obama nationally and especially in key swing states, recent polls suggest.

Obama’s job approval rating hit a — still healthy — low of 56 percent in the Gallup Poll on Wednesday. And pollsters are debating whether Obama’s expansive and expensive policy proposals or the ground-level realities of a still-faltering economy are driving the falling numbers.

But a source of the shift appears to be independent voters, who seem to be responding to Republican complaints of excessive spending and government control.

“This is a huge sea change that is playing itself out in American politics,” said Democratic pollster Doug Schoen. “Independents who had become effectively operational Democrats in 2006 and 2008 are now up for grabs and are trending Republican.

“They’re saying, ‘Costing too much, no results, see the downside, not sure of the upside,’” he said.

The White House denies there’s been any real shift.

“The independent numbers I have seen, public and private, have been relatively steady,” Obama’s senior political adviser, David Axelrod, said in an e-mail.

Another political adviser dismissed small state polls as statistically questionable and pointed out that Obama’s own numbers remain strong, by historical standards— with an average 59 percent approval rating among independents in June, according to Gallup.

Pollsters from both parties debate the numbers’ meaning, but averages of public polls have shown a gentle downward trend.

Obama retains extremely strong support from Democrats, and earlier this year lost much of the Republican support that followed a giddy Inauguration. It is the independents who appear to be currently on the move: Obama dropped 6 percentage points last week from the week before in Gallup’s tracking poll, and Quinnipiac University found a 5-percentage-point drop in approval from independents between early June and early July. Recent state polling shows drops over longer periods.

A Quinnipiac University poll of voters in economically troubled Ohio, released Tuesday, showed Obama’s approval rating slipping 8 points, to below 50 percent, from a poll two months earlier, with a plurality of 48 percent of independent voters disapproving of his job performance. A Public Policy Polling survey in Virginia found Obama’s approval and disapproval numbers effectively tied, with independents disapproving of the president’s job performance, 52 percent to 38 percent.

“That is fairly consistent with all our polling around the country — Obama tends to be really well-liked personally, but he’s starting to lose a majority of the independents,” said Public Policy’s Dean Debnam. Democrats have “had long enough in some voters’ minds that they’re getting blame for nothing happening, and Republicans are scaring them around health care and tax increases.”

Pollsters differ on the degree to which the independents’ migration is driven by Obama’s policies, rather than the broader economic downturn. “Local politics is local politics, and I don’t see an awful lot of spillover from D.C. into the state races,” said Debnam.

And Obama, of course, isn’t up for reelection anytime soon, and even nervous Democratic congressmen can keep their fingers crossed for economic recovery over the next year.

“It’s been more or less inevitable that we’re going to see some decline in numbers for Democrats,” said Mark Mellman, another Democratic pollster. “For most folks, there’s not an election until 2010, and most economists suggest that by the time we get to 2010, we’re going to see the beginnings of an uptick in the economy.”


Republicans, however, see a longer-term opportunity, and congressional leaders like Rep. Eric Cantor (R-Va.) have for months been laying the groundwork for an argument that Obama’s policies are both expensive and ineffectual — an argument that will have powerful sway as long as voters don’t feel a recovery.

The canaries in the Democratic coal mine, however, may be this year’s top candidates: Gov. Jon Corzine of New Jersey, who trails Republican Chris Christie in polls, and Virginia Democrat Creigh Deeds, who trailed Republican Bob McDonnell overall in this week’s Public Policy survey, and by a whopping 21 percentage points among independents.

In both races, local and national issues will be hard to disentangle — but McDonnell, particularly, is trying to turn the tables on Democratic candidates who in recent years tried to make every race a referendum on George W. Bush’s presidency.

“A lot of issues, such as cap and trade and card check, are really resonating with Virginia voters, and what they see is Bob McDonnell clearly articulating his opposition to them, and Creigh Deeds is silent, which is basically supporting them,” said McDonnell spokesman Tucker Martin.

McDonnell’s campaign sees particular potential in the coal-rich western part of the state, whose industry could suffer from policies aimed at shifting the country away from fossil fuels.

A Deeds spokesman, Jared Leopold, stressed his candidate’s commitment to state issues and said Deeds doesn’t have a position on the cap-and-trade bill.

“As things are being worked out in the House and Senate, he’s not going to deal with which version of a 1,200-page bill is up,” Leopold said.

Furthermore, he noted, despite some signs of Democratic weak spots, the opposition is even less popular on key issues.

“The national Republican brand is not in good shape,” Leopold said.

Still, Republican analysts said they see the beginnings of an opportunity to use White House policies — if not Obama himself — against Democratic candidates this year and next.

“What’s happening now is that as these issues get debated more and more and as their fiscal implications become more and more clear, independents are starting to side more with Republicans than Democrats,” said pollster Whit Ayres.

Another Republican pollster, John McLaughlin, pointed to his own surveys in January and May asking whether voters would prefer their members of Congress to “help Barack Obama pass his agenda” or to be a “check and balance to Barack Obama.”

The May survey found a majority favoring the check and balance, marking a 17-point shift from January, a shift the pollster said was driven in large part by independents.

For Democratic candidates in New Jersey and, in particular, Virginia, the affections of independents may be linked to those voters’ perceptions of the White House.

“We are seeing it in Virginia and New Jersey and around the country — independents are behaving like Republicans again on certain issues, and it’s because Democrats’ policy seems to be at odds with where people are — and if they don’t work, they’re really going to be at odds,” McLaughlin said.

Independent voters, it appears, now need to feel tangible evidence that Obama’s policies work. Rhetoric is no longer enough.

“If you see unemployment keep rising or doesn’t go down, you’re going to see those independents continuing to shift,” McLaughlin said.
)

The Fourth Estate's Abdication of Its Civic Responsibility!

A spoof? Maybe not! (See 1 below.)

Can Obama's soothing words overcome Iran's brutal ways. (See 2 and 2a below.)

I have not checked the authenticity but it would be a very interesting twist should this prove even remotely factual. (See 3 below.)

Another type crash on the way? (See 4 below.)

I have railed against the press and media's abdication of their social/civic responsibility to our society til you are tired of reading about it. Today's Op Ed, in the WSJ, reveals that The Washington Post is now seeking revenue by selling its own influence.

My father was a lawyer's lawyer but never practiced criminal law. He told me that, though criminals were entitled to a vigorous defense, he personally concluded, early on, that association with them would soon rub off and he did not want to subject himself to the potential taint.

It is the responsibility of the press to aggressively uncover and report on misdeeds of public officials, yet, be objective and truthful in doing so. In the case of The Washngton Post the desire to seek revenue has led them astray.

Our 'Fourth Estate' is becoming increasingly bankrupt - financially and morally.(See 5 below.)

British Col. verifies what we all know but what the pess, media, U.N and most European nations refuse to admit.

We kill civilians in Pakistan attacking Taliban and it is reported as an every day event. War is hell and particularly when the enemy seeks to hide behind civilians and locate among civilian structures and commerce. (See 6 below.)

Constant biased attacks on Israel is simply a subtle method of de-legitimizing the nation.

We live in a two faced world and though we should not become indifferent it will not change.(See 6a and 6b below.)

Economic afterthoughts and defending being stuck in the muck and mire of bad policy. More stimulus? Why choke twice? (See 7 below.)

George Will on McNamara -" Two of behavioralism's reinforcing assumptions were: Things that can be quantified can be controlled. And everything can be quantified. So, pick a problem, any problem. Military insurgency in Indochina? The answer is counterinsurgency. What can be, and hence must be, quantified? Body counts, surely. Bingo: A metric of success."

McNamara was embued with reading his own press, drank his own bathwater and was very brainy.
Has McNamara been resurrected in the guise of our youthful speechifying president? There are parallels.

Truman would never have hired McNamara, in fact he fired one for insubordination. (See 8 below.)

Conservatism is growing but not under a Republican Banner. I can relate because I have no real party allegiance since I believe both parties are a disaster. (See 9 below.)

A Russian attack on Georgia would be both embarassing and a bad move on Putin's part but he lives in his own bubble and could mis-calculate. (See 10 below.)

Should China conclude N Korea is a burden watch out!

It would be ironic indeed if China's actions revealed us sitting on or thumbs vis a vis Iran. (See 11 below.)

Rob Peter to pay Paul - do anything to get health care plan passed even though it will lead to bureaucratic rationing.

When all else fails lower your standards, quit thinking outside the box and let government control it.

The goal is to construct a bill that attracts enough votes. Whether it satisfies voters is of little importance because government solutions exist to be changed and changed and changed. That is what change is all about.(See 12 below.)

Innovative Israel. (See 13 below.)

Dick


1)The Postal Services created a stamp with a picture of President Obama. The stamp was not sticking to envelopes. This enraged the President, who demanded a full investigation.

After a month of testing and $1.73 million in congressional spending, a special Presidential commission presented the following findings: The stamp is in perfect order. There is nothing wrong with the adhesive. People are spitting on the wrong side.

2)iran1.pps (2034KB)

2a)Jihadist Magazine: 'The Spread of Democracy – A Victory for the U.S. and Israel'

In an anti-democracy article titled "The Spread of Democracy - A Victory for the U.S. and Israel," Abu Taha 'Abdallah Al-Miqdad enumerates democracy's crimes against humanity, and particularly against the Muslims, and warns that support for democracy is apostasy from Islam.

Following are excerpts from the article, which appeared in the Global Islamic Media Front magazine Sada Al-Jihad:

"Human History Has Never Known Villainous Massacres Such As Those of the Era in Which Democrats Emerged"

"…Human history has never known villainous massacres such as those of the era in which democrats emerged. World Wars I and II are evidence of the extent of the democrats' moral deterioration and their failure to take into account the simplest of [moral] principles of life customary among people in past eras. The war being waged today in the Muslim lands adds innumerably more crimes, attesting to the filthiness of their souls and the hardness of their hearts...

"The former U.S. president, George W. Bush the Crusader, said in statements to the press on April 30, 2005: 'In the long run, terrorism will be defeated by the spread of freedom and democracy. This is actually the only way [to defeat it].' In his speech at the Sharm Al-Sheikh summit on February 8, 2005, the former Israeli prime minister, Ariel Sharon the Zionist, addressed [Palestinian Authority President] Mahmoud 'Abbas, saying: "My congratulations on your wonderful victory in the elections for the presidency of the Palestinian Authority, [because] this victory and the way that you want to lead your people has the potential for bringing about a true change of direction and for affecting the entire area. Likewise, I hope that you will succeed in leading your people on the path of democracy and preservation of law and order, to the establishment of an independent democratic state.'"


"Our Clerics [i.e. Salafi Jihadi Clerics] Have Spoken of Democracy and Clarified That It Is an Infidel Regime"

"With regard to [U.S. President Barack] Obama, he [too] is trying to spread democracy, but his view is different in the details, since he has stressed in various places that he will in no way relinquish the spread of democracy in the world during his presidency, and that he intends to [spread it] extensively - but with general diplomatic plans and by greatly increasing U.S. aid to the world in spheres such as fighting poverty, spreading education, and health care, and by encouraging trade and economic partnership with the U.S. [Obama] is likewise calling to link U.S. aid to progress in efforts to [institute] reform and democracy in the countries interested in receiving this aid...

"Democracy is a great tribulation and a huge catastrophe, but it is a proven indicator in winnowing out the ranks of the righteous believers, keeping the good [among them] and ejecting the miscreants whose hearts are sick. [On the one hand] are piled up all the democrats - Christians, Jews, atheists, Hindus, Shi'ites, Zoroastrians, apostates, hypocrites, Murji'ites, and Ash'arites - and [on the other hand are] the ranks of the Muslims clinging to the path of Allah straighten out... and they stand against the entire world, certain of Allah's victory and aid...

"Though our clerics [i.e. salafi jihadi clerics] have spoken of democracy and clarified that it is an infidel regime, I will cite for you Wagdi Ghneim, who is known for his affiliation with the Muslim Brotherhood movement, who are the greatest proponents of democracy in our time. He stated in his book Divine Shura and Manmade Democracy (Rabaniyyat Al-Shura wa-Wadh'iat Al-Dimuqratiyya): 'Democracy is erroneous from its foundation. Allah's religion [i.e. Islam] considers it wrong, and anyone who believes in it, promotes it, confirms it, accepts it, or acts according to it... is an apostate, even if he has a Muslim name and falsely claims that he is a believing Muslim - because in Allah's religion, Islam and democracy are absolutely incompatible.'


"Democracy Directly Impairs Tawhid"

"The dangers of democracy are clear for all to see, since it directly impairs tawhid [the belief in Allah's unity]. If we consider the opinions of Westerners, in whose lands this ugly germ sprouted and grew, we will find that it is [also] loathsome to some of their researchers, since as one American researcher described it, democracy means preferring the opinion of 11 asses over the opinion of 10 scholars." [1]

The article was accompanied by photos of elections in Israel, Iran, and the U.S.:

[1] Sada Al-Jihad, No. 33, Rabi'I 1430 (February-March 2009), pp. 16-18.

3)AP- WASHINGTON D.C. - In a move certain to fuel the debate over Obama’s qualifications for the presidency, the group Americans for Freedom of Information has Released copies of President Obama’s college transcripts from Occidental College.

Released today, the transcript indicates that Obama, under the name Barry Soetoro, received financial aid as a foreign student from Indonesia as an undergraduate at the school. The transcript was released by Occidental College in compliance with a court order in a suit brought by the group in the Superior Court of California. The transcript shows that Obama (Soetoro) applied for financial aid and was awarded a fellowship for foreign students from the Fulbright Foundation Scholarship program. To qualify, for the scholarship, a student must claim foreign citizenship. This document would seem to provide the smoking gun that many of Obama’s detractors have been seeking.

Along with the evidence that he was first born in Kenya and there is no record of him ever applying for US citizenship, this is looking pretty grim. The news has created a firestorm at the White House as the release casts increasing doubt about Obama’s legitimacy and qualification to serve as president. When reached for comment in London , where he has been in meetings with British Prime Minister Gordon Brown, Obama smiled but refused comment on the issue.

Britain 's Daily Mail has also carried the story in a front-page article titled, Obama Eligibility Questioned leading some to speculate that the story may overshadow economic issues on Obama’s first official visit to the U.K.

In a related matter, under growing pressure from several groups, Justice Antonin Scalia announced that the Supreme Court agreed on Tuesday to hear arguments concerning Obama’s legal eligibility to serve as President in a case brought by Leo Donofrio of New Jersey. This lawsuit claims Obama's dual citizenship disqualified him from serving as president. Donofrio’s case is just one of 18 suits brought by citizens demanding proof of Obama’s citizenship or qualification to serve as president.

Gary Kreep of the United States Justice Foundation has released the results of their investigation of Obama’s campaign spending. This study estimates that Obama has spent upwards of $950,000 in campaign funds in the past year with eleven law firms in 12 states for legal resources to block disclosure of any of his personal records. Mr. Kreep indicated that the investigation is still ongoing but that the final report will be provided to the U.S. Attorney General, Eric Holder. M r. Holder has refused to comment on the matter.


4)Does Obama Want to Own the Airlines? Welcome to government for the benefit of government officials and their hangers-on.
By HOLMAN W. JENKINS, JR

Only luck and falling oil prices saved Washington from having to face mass bankruptcy of the airline industry last year. Now the specter is rising again. Fuel prices are up. Traffic continues to plummet amid a global recession. United Airlines last week mortgaged its spare-parts inventory to raise cash at a usurious 17% interest rate.

Yet the Obama Justice Department has come out of the blocks trying to scuttle a promising experiment to stabilize the chronically unprofitable U.S. airline sector. The new administration seemingly won't let companies fail, and won't let them succeed either.

The airline industry's self-help solution has been an evolving trio of international alliances, partly blessed with "antitrust immunity" by the U.S. Department of Transportation. One, the Star Alliance led by United and Lufthansa, is currently poaching Continental from a rival alliance, SkyTeam. DOT was set to approve their application last week when Justice belatedly intervened with a 58-page complaint about why the pact should be restructured.

To anyone drilled in the antitrust mindset, Justice's argument won't seem outlandish. It frets about reduced competition on this or that international route, and sees little chance of competitive entry by new carriers despite fat profits that presumably would be on offer. It argues, in a fashion typical of antitrust these days, that nonstop flights are a market unto themselves, so connecting flights on the same routes don't count.

But the real fulcrum is Justice's insistence, or plea, that DOT should set a high bar for antitrust immunity, because antitrust enforcement has been such a gosh-darn boon to consumers.

Justice offers no supporting evidence for this proposition, which has resisted academic verification. And in dismissing the "putative" benefits of immunized airline alliances, Justice fails even to acknowledge the one benefit that Obama Transportation Secretary Ray LaHood has emphasized: "These alliances are life savers for airlines. That is the premise from which we start. We believe it. The airlines believe it."

In part, such alliances are substitutes for international airline mergers (which are prohibited under U.S. law), but are more interesting than mergers, thanks to the flexibility with which carriers can enter and exit cooperative agreements with each other.

The antitrust mindset naturally sees such cooperation as always harmful, inflating prices and gouging consumers. But then why does organized labor oppose the deals? Shouldn't workers favor alliances if they reduce competitive pressure on wages? Yet Justice's intervention came after United's pilots ran a full-page ad in Roll Call attacking the company's own deal.

And why do carriers lobby against each other's pacts? Shouldn't they favor anything that leads to oligopoly pricing? And what to make of Continental's decision to jilt SkyTeam and jump to Star, shifting the competitive balance on the North Atlantic?

Obama antitrust chief Christine Varney doesn't have much good to say about her Bush predecessors. But she praises their record of cartel-busting. She might examine that record for what it actually says about the incentive to collude.

It shows, for one thing, that companies are inclined to snuggle up mainly to share losses and preserve capacity in a downturn or to curb the free-riding of powerful customers. When profits are available, on the other hand, they quickly go back to competing to maximize their respective shares rather than colluding to limit their individual upsides.

These incentives would very likely prevail in the highly flexible airline alliances. Such alliances are no miracle cure for what ails the domestic carriers, but they would open a window to let us see beyond antitrust's indiscriminate prejudice against cooperative acts by competitors.

Of course, this would fly in the face of Ms. Varney's agenda, which is to expand the bailiwick of the Washington antitrust bar. Even now, she has turned her attention from airlines to the mobile-phone business on the theory that any industry that hasn't collapsed into government receivership must be doing something wrong.

Mr. Obama blabs about the evils of lobbying, but his administration is fast becoming the greatest fillip to lobbying ever seen. Ms. Varney has now horned in on the DOT's action, forcing the airline business and all its camp followers to come and pay tribute. Her choice of targets is obviously designed for political effect. Airlines and mobile-phone operators both touch the public in ways that leave the public frequently annoyed.

What we're seeing here and elsewhere from the new administration is not some rebirth of thoughtful liberalism, but a spastic descent into machine liberalism -- government for the benefit of government officials and their hangers-on. Mr. Obama, however, may not be so pleased with the result if it means he must soon add the airlines to the collection of failed industries being run out of the White House.

5) When Newspapers Peddle Influence: A revealing scandal at the Washington Post.
By THOMAS FRANK

Some time last week the Washington Post issued a flier advertising a "salon" on the health-care issue. Over dinner at the home of the paper's publisher, Katharine Weymouth, participants were promised "a collegial evening, with Obama administration officials, Congress members, business leaders, advocacy leaders and other select minds."

The paper's executive editor and its "health-care reporters" would be there too, but not in a "confrontational" capacity, you could rest assured. Everything would be safely "off-the-record." And you could "bring your organization's CEO or executive director literally to the table" for a mere $25,000.

Even in Washington, it's unusual to see an actual price tag placed on a chance to "alter the debate," as the Post's flier tastefully put it. Stranger still is it to see the city's scourge of public corruption -- the Post broke the Watergate story and the Walter Reed scandal, among others -- seemingly offering its own good offices for hire.

It was a moment of rare, piquant hypocrisy. Let us take it slow and savor every drop.

To begin with, just think of the functions of righteousness that the Post effectively put up on the block. Here was journalism's zealous guardian of professional rectitude with its hand apparently out for a little bit of baksheesh. Here was the definer of the capital's consensus, the policer of its ideological boundaries, seemingly offering to adjust its vast reserves of Washington wisdom for you if the price was right.

In such a ham-handed manner, too. When the leading newspaper of the capital city of the world's most powerful country decides to turn influence-peddler, is this the best it can do? An advertisement that reads as though it were promoting expensive scotch? ("Bringing together those powerful few.") Not even favorite Post targets like Jack Abramoff stooped to that.

Even worse were the lame excuses offered by the paper's brass, who blamed one another after the embarrassing story broke and immediately cancelled the get-together. The flier hadn't been properly "vetted," they said. Ms. Weymouth had been out of town. Plus assorted other feeble explanations.

If this was a slip it was a Freudian one, the kind that tells us something true and revealing about what is going on inside.

We are living, after all, in a sort of conflict-of-interest golden age. Professionalism is for sale almost wherever you choose to look. Among the forces that most conspicuously drove the late real-estate bubble, for example, were appraisers and bond rating agencies that apparently decided to put themselves on the market.

The city of Washington is an extreme case of this marketized world. The capital swarms with hired guns, payola pundits, and think tanks on a mission. Every bad idea that has ever appealed to the funding class is well-represented here. And with the coming of the health-care debate, as the Post itself has noted, the entire apparatus has swung into well-compensated action.

Then there is the city's cult of power, in which the Post sometimes serves as high priest. Despite its many famous takedowns of the corrupt, the newspaper often seems fascinated with the lives of the rich and the well-connected: their struggles for access, the clever things they say, the trappings of their wealth, the techniques by which they have monetized their power.

In April, for example, one Post columnist described a dinner salon series run by the Atlantic magazine whose guests "are as A-list as they come." Superstar names were dropped. The benefits to journalism were vigorously asserted. Rahm Emanuel himself was quoted hailing the suspension of "the adversarial."

The Post's own confused relationship with power is also often summarized by reference to dinner parties, in this case the ones given by Ms. Weymouth's grandmother, Katharine Graham. "The great men of Washington, up until the Nixon administration, came regularly to Mrs. Graham's dinner parties, the best ticket in town, and as they socialized over good food and wine, the adversarial role diminished," wrote David Halberstam in his 1979 book, "The Powers That Be." "They were close, they were friends, these were not just men of power, they were men of good will, events were seen as they wanted them seen."

All that was missing, apparently, was a price tag.

Today, of course, the newspaper industry is in crisis. And public service, along with all such intangible ideals, is quickly disappearing into the cash nexus. The only possible reason to revive Ms. Graham's legendary dinners today is as a revenue stream.

Instead, of course, what the Post's proprietors did was hasten the day of reckoning. If I had $25,000 to spare, I'd advise them to forget about befriending the A-list. Stick to the public -- what you might call the Z-list.

6) Pakistani officials: Suspected US strikes kill 45
By CHRIS BRUMMITT

Suspected U.S. unmanned aircraft launched two attacks against militants loyal to the head of the Pakistani Taliban on Wednesday, killing at least 45 in the latest in a barrage of strikes against a group also being targeted by the Pakistani military, intelligence officials said.

The convergence of U.S. and Pakistani interests in the South Waziristan tribal region suggests the two uneasy allies were cooperating in the strikes, making it harder for Islamabad to protest them publicly as it has in the past.

The army denied signing off on the attacks and insisted they were hurting its campaign against Pakistani Taliban chief Baitullah Mehsud by alienating local tribes it is trying to enlist in the fight.

Meanwhile, an army spokesman said a Pakistani jet attack wounded the local Taliban commander in the scenic Swat Valley elsewhere in the northwest. Troops have been battling militants in Swat for more than two months, an offensive that has so far failed to net any top insurgent leaders.

The mountainous border region is home to al-Qaida and Taliban leaders who plot attacks in Pakistan and neighboring Afghanistan, which is witnessing an unprecedented level of violence against U.S. and NATO troops.

South Waziristan is the stronghold of Mehsud and his followers, whom the government blames for more than 90 percent of the suicide bombings in Pakistan in recent years. The U.S. State Department says Mehsud is a key al-Qaida facilitator in the region.

Suspected American drones have carried out more than 45 attacks in the region since last August. Although most have targeted foreign al-Qaida militants and those accused of violence in Afghanistan, increasingly they are aimed at the Mehsud network.

The first strike Wednesday took place before dawn. Six missiles were fired at a mountaintop training camp in the Karwan Manza area of South Waziristan, killing 10 militants, Pakistani intelligence officials said on condition of anonymity because they were not authorized to speak to media.

Hours later, 12 miles to the east, missiles hit four vehicles carrying Taliban militants, killing at least 35, including a key Taliban commander, one intelligence official said. Another said 50 were killed.

Independent verification of the targets and casualties was not possible because the region is remote, dangerous and largely inaccessible to journalists. U.S. and Pakistani officials do not publicly comment on such strikes.

On Tuesday, a suspected U.S. missile attack killed 12 militants in South Waziristan, including five foreigners, according to intelligence officials. Another recent strike killed up to 80 insurgents attending a funeral.

The timing is significant because Pakistan's military is also carrying out bombing runs and firing mortar rounds at militant targets in the region as part of efforts to kill or capture Mehsud and his followers. It says it plans to launch a large offensive there soon.

The government routinely protests suspected U.S. missile strikes as violations of Pakistani sovereignty and has publicly asked the U.S. to give it technology to launch its own attacks. But many analysts suspect the government — which has received billions of dollars a year from the U.S. since 2001 — supports the strikes, especially those against Mehsud and his Tehrik-e-Taliban Pakistan.

"They are decrying them on one hand and aiding and abetting them on the other," said Shuja Nawaz, director of the U.S.-based Atlantic Council. "It is helpful for the Pakistanis when the TTP is being targeted. There is obviously much better coordination now."

Speaking after Tuesday's attack, Maj. Gen. Athar Abbas insisted the U.S. help was unwelcome and alienated local tribes it wanted to enlist in the fight against Mehsud.

The United States has been trying to get Pakistan's military to crack down on militants in the border area since the Sept. 11, 2001 attacks, but the country's past nurturing of militants to use as proxies in Afghanistan and Pakistan has complicated those efforts.

The Swat offensive began after militants there violated a peace deal with the government and moved into regions close to the capital, Islamabad. The army claims to have nearly cleared the valley of insurgents, killing more than 1,500.

Abbas told a news conference Wednesday that according to "credible information," the leader of the Swat Taliban, Maulana Fazlullah, was wounded in a recent airstrike. Fazlullah's capture or killing would be a major symbolic victory for the army and could ease the fears of some 2 million residents who fled the valley and surrounding districts and have yet to return.


6a) British Colonel Declares: The IDF Did More to Safeguard Civilians Than Any Other Army
International Law and Military Operations in Practice
By Col. Richard Kemp -

[Watch the Video]
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[Read the Full Transcript]
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Former commander of British forces in Afghanistan Col. Richard Kemp told a
conference in Jerusalem on June 18, 2009:

Jerusalem Center for Public Affairs

The battlefield - in any kind of war - is a place of confusion and chaos, of
fast-moving action. In the type of conflict that the Israeli Defense Forces
recently fought in Gaza and in Lebanon, and Britain and America are still
fighting in Iraq and Afghanistan, these age-old confusions and complexities
are made one hundred times worse by the fighting policies and techniques of
the enemy.

Islamist fighting groups study the international laws of armed conflict
carefully and they understand it well. They know that a British or Israeli
commander and his men are bound by international law and the rules of
engagement that flow from it. They then do their utmost to exploit what they
view as one of their enemy's main weaknesses. Their very modus operandi is
built on the correct assumption that Western armies will normally abide by
the rules, while these insurgents employ a deliberate policy of operating
consistently outside international law.

Civilians and their property are routinely exploited by these groups, in
deliberate and flagrant violation of international laws or reasonable norms
of civilized behavior. Protected buildings, mosques, schools, and hospitals
are used as strongholds. Legal and proportional responses by a Western army
will be deliberately exploited and manipulated in order to produce
international outcry and condemnation.

Hamas' military capability was deliberately positioned behind the human
shield of the civilian population. They also ordered, forced when necessary,
men, women and children from their own population to stay put in places they
knew were about to be attacked by the IDF. Israel was fighting an enemy that
is deliberately trying to sacrifice their own people, deliberately trying to
lure you into killing their own innocent civilians.

And Hamas, like Hizbullah, is also highly expert at driving the media
agenda. They will always have people ready to give interviews condemning
Israeli forces for war crimes. They are adept at staging and distorting
incidents.

When possible the IDF gave at least four hours' notice to civilians to leave
areas targeted for attack. The IDF dropped over 900,000 leaflets warning the
population of impending attacks to allow them to leave designated areas. The
IDF phoned over 30,000 Palestinian households in Gaza, urging them in Arabic
to leave homes where Hamas might have stashed weapons or be preparing to
fight.

Many attack helicopter missions that could have taken out Hamas military
capability were cancelled if there was too great a risk of civilian
casualties in the area. During the conflict, the IDF allowed huge amounts of
humanitarian aid into Gaza, even though delivering aid virtually into your
enemy's hands is to the military tactician normally quite unthinkable.

By taking these actions the IDF did more to safeguard the rights of
civilians in a combat zone than any other army in the history of warfare.

6b) Israel on Trial:The U.N. begins its kangaroo "investigation" of Israeli “war crimes.”
By Alan M. Dershowitz


Just as Spain’s National Court decided to shelve a phony war crime investigation of a 2002 Israeli air strike in Gaza, a group of lawyers and military experts assigned by the United Nations Human Rights Council continued its phony investigation of “the grave violations of human rights in the occupied Palestinian Territory, particularly due to the recent Israeli military attacks against the occupied Gaza Strip.”

Top of Form

The UN Human Rights Council is a scandal. It’s a successor to the defunct UN Human Rights Commission. Both organizations have a long history of singling out Israel for condemnation and of ignoring real human rights abusers by the world’s worst offenders, several of which dominate the Human Rights Council and it predecessor.

As Hudson Institute scholar Anne Bayefsky recently noted: “The Council has adopted more resolutions and decisions condemning Israel than all the other 191 U.N. member states combined…. The more time the Council spends demonizing Israel , the less likely it becomes that it will ever get around to condemning genocide in Sudan , female slavery in Saudi Arabia , or torture in Egypt .”

The very mandate that authorized the Gaza investigation reveals its bias against Israel . The council has already concluded, without any pretense an investigation, that Israel is guilty of “grave violations of human rights…due to its…military attacks.”

It has also concluded that the Gaza Strip “remains occupied,” despite Israel having ended its occupation and having removed every single soldier and settler in 2005. Moreover, the Council’s current president has limited the scope of the investigation to “violations committed in the context of the conflict that took place between 27 December 2008 and 18 January 2009.” Those are the dates of the Israeli response to more than seven years of rocket attacks by terrorists operating behind human shields in Gaza . During the period prior to 27 December 2008, Hamas and its terrorist allies fired thousands of rockets and mortar shells into civilian areas of Israel , killing, maiming and traumatizing Israeli women, men and children. But these attacks that provoked Israel ’s self-defense military actions, are excluded from the investigation, according to the mandate and its interpretation by the president of the council. It would be as if they UN convened an investigation of the United States and terrorism but limited the investigation only to actions taken after September 12, 2001.

The very idea of the UN Council conducting an “independent” or objective investigation Israel is preposterous. It would be as if an all white Mississippi court were investigating a black man’s self-defense in response to years of lynchings by whites and limiting its investigation to the event following the lynchings. There is simply no way of an investigation conducted under the auspices of the UN Human Rights Council and be fair. Its history of bias and bigotry should not be legitimated by men and women of decency who care about real human rights.

That is why it was so surprising and disturbing to see a good man like Richard Goldstone agree to head the investigation team appointed by the UN Human Rights Council. Goldstone is a South African who fought against Apartheid and led an important investigation into the causes of violence there, ultimately blaming the government itself for instigating violence through a “third force.” Would he have succeeded if his commission had been limited to white members only, and if its mandate of his investigation was limited to the black violence and excluded the white violence that provoked it? Would he have been willing to lend his good name to legitimate the bad history of all white Apartheid courts? What if he were a black lawyer, deliberately selected by the all white court to be an “Uncle Tom” precisely because he was black?

Goldstone was selected to head this investigation precisely because he is Jewish. Let there be no mistake about that cynical reality. I don’t blame the UN Council for selecting a Jew to legitimiate its kangaroo investigation of the Jewish state, but I wonder why a man like Goldstone would allow himself to be used in this manner. Does he not realize how he is being played? How his distinguished reputation is being exploited in the interest of bigotry? Oh yes, Goldstone will be “even-handed”. That is precisely what the Council wants: equivalent condemnation of Israel and Hamas for unequivalent actions.

Hamas admits—indeed boasts—that it has committed multiple war crimes: first it boasts about firing rockets at Israeli school children; it fires its rockets primarily at times when Israeli children are on their way to and from school; it has hit several kindergartens, elementary schools and playgrounds (fortunately, the children had been sent home); it celebrates every civilian death and injury it causes. Targeting civilians is a war crime.

Second, Hamas boasts of hiding behind human shields, which is also a war crime. A prominent Hamas legislator has boasted of the fact that Hamas:

“…[has] formed human shields of the women, the children, the elderly, and the mujahideen, in order to challenge the Zionist bombing machine. It is as if they were saying to the Zionist enemy: ‘We desire death like you desire life.’”

Third, since Hamas is the elected government of Gaza , every rocket attack from Gaza is a violation of Article 51 of the UN Charter, which authorizes member nations to defend itself against “armed attack.”

Fourth, these attacks are part of a long term strategy to destroy a member nation of the United Nations, as the Hamas charter clearly proclaims.

No “investigation” is needed to conclude that Hamas engaged in war crimes.

Israel , on the other hand, is engaged in legitimate self defense: as a leading British expert, Richard Kemp put it on the BBC during the Gaza War:

"I don't think there has ever been a time in the history of warfare when an army has made more efforts to reduce the civilian casualties and deaths of innocent people than the IDF is doing today in Gaza .”

To be even-handed in the face of such uneven conduct, or to find moral equivalence where there is none, would be the worst sort of immoral bigotry. Yet moral and legal equivalence is precisely what this investigatory commission will “find,” following its “independent fact-finding mission,” unless it finds that Israel ’s conduct was worse than Hamas’s because more people died from Israeli fire than from Hamas rockets. The investigators will ignore the law that holds murderers who hide behind human shields responsible for the deaths of these human shields, even when the bullets that killed them came from the weapons of those who engaged in legitimate self-defense. Consider the analogous situation of the Navy SEALs who killed the Somali pirates that had kidnapped American merchant captain Richard Phillips. Similar rescue attempts have sometimes resulted in the tragic deaths of the hostages. Would it be fair to try the SEALs for murder, instead of the pirates? That is exactly what the Gaza commission aims to do to Israel . It will also ignore the fact that Hamas always exaggerates the number of civilians killed by including in that category armed police (who double as terrorists), “civilians” who willing serve as human shields or who willingly allow their homes to be used to manufacture, store or fire rockets, “children” and “women” who have become terrorists, and even “collaborators” killed by Hamas.

Goldstone will try his best to be even-handed. But he knows that unless his report condemns Israel , at least as forcefully as it condemns Hamas, it will never be accepted by the UN Human Rights Council and his work will come to naught. He is an experienced international diplomat. He knows who appointed him. He understands his mandate. He will try to expand it to include Hamas war crimes, so as to be “even-handed,” even though Hamas already boasts of its crimes.

Israel too knows this. They know Goldstone. They know that his appointment was calculated to make it difficult for Israel to refuse to cooperate with a Jewish investigator who has had close ties with the Jewish state. Their refusal to cooperate with this distinguished group of investigators, they will be seen by some as afraid of the “truth.” Had they cooperated, they know that “the truth” produced by this investigation will be a lie. They are in a no-win situation, precisely because Richard Goldstone accepted an appointment he should never have agreed to accept.

Israel should conduct its own thorough investigation and let the chips fall where they may.

Richard Goldstone should resign in protest if the Human Rights Council finds moral or legal equivalence between the multiple war crimes deliberately committed by a terrorist and the inadvertent deaths caused by the use of human shields to protect terrorists from legitimate self-defense actions taken by a democracy to protect its citizens.

Alan M. Dershowitz is a professor of law at Harvard. He is the author of many books, including, most recently, “The Case Against Israel’s Enemies.”




7) Democrats stuck in stimulus jam
By Victoria McGrane


President Barack Obama says there’s “nothing” he “would have done differently” about his economic stimulus plan, but one of his top outside economic advisers says the plan was “a bit too small.”

Democratic Sen. Claire McCaskill of Missouri says the idea of a second stimulus is a “non-starter,” but Democratic Sen. Sheldon Whitehouse of Rhode Island says it “should be on the table.”

Senate Majority Leader Harry Reid (D-Nev.) says there’s “no showing that a second stimulus is needed,” but House Majority Leader Steny Hoyer (D-Md.) says Congress needs to be “open to whether we need additional action.”

Democrats are all over the map on the stimulus and the possibility of a sequel, and it’s not hard to see why: When it comes to a second stimulus, they may be damned if they do and damned if they don’t.

“Right now, every headline across the board is the stimulus isn’t enough, states are in bankruptcy, states aren’t paying their bills,” says Wendy Schiller, a Brown University political scientist. “This is really deadly for the Democratic Party, because what it suggests is the Democratic Party cannot run the country.”

At the same time, however, polls show that voters have little appetite for a second stimulus, and Democrats fear that any attempt to pass one will provide Republicans too much ammunition to argue that Democrats are profligate spenders who can’t reverse the job-loss trend.

McCaskill says there’s no way to go back to the well.

“If we are trying to move anything on health care and we’re trying to move anything on climate change, then putting another stimulus on top of that is a backbreaker,” she told POLITICO. “It is a political backbreaker — for people from states like mine anyway.”

Sen. Dianne Feinstein (D-Calif.) says that Congress has already pumped “trillions” into the economy and that she’s “not sure there’s any magic thing” it can do now “other than what we’ve done before.”

But other Democrats say the economy may need another jolt, regardless of the political risks.

“The thing we have to consider is the risk to not doing it,” said Rep. Melissa Bean (D-Ill.).

With unemployment in his home state of Rhode Island at 12 percent, Whitehouse told POLITICO that it’s too soon to “rule out” another stimulus — a point his Democratic colleague, Sen. Jack Reed, echoed on MSNBC on Tuesday.

Whitehouse rejected the argument already being made by Republicans that passing a second stimulus — or a third, if you count the package signed by President George W. Bush — would be tantamount to admitting the first $700-plus billion package just plain didn’t work.

“It’s like putting out the first half of the fire in the house. If it flares back up again, the firemen ... go back and put more water on it,” he said.

The White House is working to get the money that’s already been approved out the door and into the economy faster. For instance, Vice President Joe Biden’s office launched several weeks ago a 10-part “Roadmap to Recovery” initiative designed to create four times as many jobs in the second 100 days of the stimulus than in the first.

Some economists, including Nobel Prize laureate and New York Times columnist Paul Krugman, say the need for additional stimulus measures is already clear.


“To my mind it’s pretty obvious we need another stimulus package, probably a lot bigger than the last one,” said Dean Baker, co-director of the left-leaning Center for Economic and Policy Research. “It’s horrible that you have all of these people suffering because you have people in Washington with rocks in their head.”

Still others agree with those Democrats who prefer a wait-and-see approach.

“I think it’s premature to conclude that a third stimulus would be needed. The maximum benefit from the current stimulus will occur this summer and fall, and in terms of jobs, not until very late this year,” said Mark Zandi, chief economist with Moody’s Economy.com.

“Now if we get into late this year and the economy is not continuing to improve — and it is improving, it’s still in recession but it’s improving — and if we don’t make further progress through the end of the year, then I think it would be reasonable to consider another stimulus.”

But Republicans aren’t waiting to go on the attack.

They’re slamming the White House for predicting that unemployment wouldn’t go above 8 percent if Congress passed the stimulus, pointing out that it has now hit a 26-year high of 9.5 percent.

They’re seizing on Democrats’ own statements — such as Biden’s acknowledgment over the weekend that the administration “misread” how bad the economy would get — to make their point.

And they’re already mocking Democrats for even considering a second stimulus, previewing the arguments they’re sure to fire up should Democrats choose that path.

“Down home, we used to say there’s no education in the second kick of a mule,” Senate Minority Leader Mitch McConnell (R-Ky.) said Tuesday. “Now, why in the world there would be any conclusion reached after looking at the results of the first stimulus that the way to deal with that is to pass yet another one — [it] is mind-boggling.”

The office of House Minority Leader John Boehner (R-Ohio) has called talk of a second stimulus “a collective acknowledgement that Washington Democrats’ spending binge — which was supposed to create jobs “immediately” — isn’t working.”

Some observers suggest that Congress can take stimulus-esque steps without actually having to pass a politically painful stimulus package. Zandi suggested providing aid to cash-strapped states, delaying tax increases set for 2011 and expanding the housing tax credit.

But Democrats may find themselves limited even on stimulus-lite approaches as Republicans argue that government spending hasn’t worked and won’t do anything but drive up the federal deficit.

“This offers us an opportunity to realign ourselves with middle-class economic anxieties,” said Kevin Madden, who led Mitt Romney’s communication operation for the 2008 presidential campaign. “We have to make a very clear and convincing case to everyday Americans that we’ve tried it the Democrats’ way by pumping money into the public sector, and it hasn’t worked.”

8) The McNamara Mentality
By George Will

The death of Robert McNamara at 93 was less a faint reverberation of a receding era than a reminder that mentalities are the defining attributes of eras, and certain American mentalities recur with, it sometimes seems, metronomic regularity. McNamara came to Washington from a robust Detroit -- he headed Ford when America's swaggering automobile manufacturers enjoyed 90 percent market share -- to be President John Kennedy's secretary of defense. Seemingly confident that managing the competition of nations could be as orderly as managing competition among the three participants in Detroit's oligopoly, McNamara entered government seven months before the birth of the current president, who is the owner and, he is serenely sure, fixer of General Motors.

Today, something unsettlingly similar to McNamara's eerie assuredness pervades the Washington in which he died. The spirit is: Have confidence, everybody, because we have, or soon will have, everything -- really everything -- under control.

The apogee of McNamara's professional life, in the first half of the 1960s, coincided, not coincidentally, with the apogee of the belief that behavioralism had finally made possible a science of politics. Behavioralism held -- holds; it is a hardy perennial -- that the social and natural sciences are not so different, both being devoted to the discovery of law-like regularities that govern the behavior of atoms, hamsters, humans, whatever.

Two of behavioralism's reinforcing assumptions were: Things that can be quantified can be controlled. And everything can be quantified. So, pick a problem, any problem. Military insurgency in Indochina? The answer is counterinsurgency. What can be, and hence must be, quantified? Body counts, surely. Bingo: A metric of success.

Not exactly. The behavior of the North Vietnamese and Viet Cong did not respond as expected to America's finely calibrated stimuli, such as bombing this but not that, and bombing pauses. Behavioralists were disappointed, but not discouraged. They would give nation-building another try.

It was in reaction to the mentality that McNamara represented that "The Public Interest" quarterly was born. Its founders were intellectuals, many of whom were called "neoconservatives" when that designation was more relevant to domestic than foreign policy. The journal's mission was to insist that (as Daniel Patrick Moynihan, then a Harvard social scientist, said) the function of social science is not to tell us what to do but to tell us what does not work. What did not work in the 1960s, at home and abroad, was quite a lot.

McNamara died on a day when there was interesting news from Asia, the region of his torments: There was lethal ethnic rioting in China. That development refutes, redundantly, the prophecy of a 19th-century social scientist, Karl Marx. Believing that he had discerned the laws of social physics, he said that the coming of modernity -- the rise of science and the retreat of religion under the rationality of market societies -- would mean that preindustrial factors such as religion and ethnicity would lose their history-shaping saliency.

So far, the 21st century is vexed by nothing so much as those supposed residues of humanity's infancy. Nevertheless, Marx's anticipation morphed into what Moynihan called "the liberal expectancy." It is the hope -- liberals tend to treat hopes as probabilities -- that the fading of those atavisms and superstitions has put the world on a path to perpetual tranquility.

The world McNamara has departed could soon be convulsed by attempts to modify Iran's behavior. Since a variety of incentives have been unavailing, more muscular measures -- perhaps "surgical strikes," a phrase redolent of the McNamara mentality -- are contemplated.

Some persons fault the president for not having more ambitious plans to somehow prompt and guide Iranians toward regime change. That outcome is sometimes advocated, and its consequences confidently anticipated, by neoconservatives whose certitude about feasibility resembles that which, decades ago, neoconservatism was born to counter.

Well. Every four years we saturate New Hampshire -- that small, English-speaking, culturally homogenous, ethnically temperate sliver of tranquil New England -- with politicians, consultants, journalists and political scientists. And often we are surprised -- even dumbfounded -- by how unpredictably that state's people, with their native perversity, choose to behave in their presidential primary.

McNamara, like many who leave high office, never left the capital of this nation that believes people learn from history, and that therefore history is linear and progressive. But the capital, gripped once again by the audacious hope of mastering everything, would be wise to entertain a shadow of a doubt about that.

9) Are Americans Becoming More Conservative? They Think So, But...
By Marc Ambinder

Are Americans Becoming More Conservative? They Think So, But...
Conservatives trumpet, and liberals pooh-pooh, this latest Gallup survey of American ideological self-assessment. It includes that although Americans say they're becoming more conservative, they're not voting that way, and they're not acting that way. I think George Will's classic saying is relevant here: Americans tend to be temperamental conservatives and operational liberals.

Since the 1970s, there has always been a conservative tilt to voters' self portraits, especially since liberalism is still a discredited word to non-liberals. Perhaps this will change soon, as liberals are reclaiming liberalism (and the word, too), and as the Republican brand implosion over the last five years will trickle over to the word "conservative," too. The survey's results may reflect a difference between aspiration and identity; voters wish they could be more conservative than they are. Or it could reflect the month the poll was taken it: we've been debating the deficit, Obama's approval ratings are slipping, the economy is a mess, etc -- the excitement of the first few months of the new administration have waned a bit. If Gallup had taken the same poll a few months ago, they might have found some differences, which may or may not be significant;I wonder whether these marginal changes in political identity shift from week to week...or, rather, that there are enough Americans who use their reaction to events to determine their ideological identity so as to make it appear as if, when a snapshot is taken, a trend is seen. How can the country be conservative trending if it endorsed Barack Obama's liberal policies? This poll suggests that the answer is: it just... can. Americans seem capable of separating ideology and operation, of judging how one is doing something, rather than what one is actually doing.



The poll also makes clear that the links between conservatism and the Republican Party are fraying. There is no contradiction in noting that the Republican party is weak and yet independents are growing more conservative. Indeed, this argues for a relative stasis in our politics: conservative independents used to identify as Republicans.

10) The Smell of War at Breakfast
By Yulia Latynina

Will Russia launch a war against Georgia? That is the most important question that should have been decided during U.S. President Barack Obama’s visit to Moscow — or, to be more precise, during Obama’s breakfast meeting on Tuesday with Prime Minister Vladimir Putin.

Everything else was of secondary importance. Compared with the Russia-Georgia conflict, what difference does it make what kind of agreement they reach to reduce strategic nuclear arms? After all, Russia and the United States will never use these weapons against each other anyway.

The pleasantries shared between President Dmitry Medvedev and Obama during their news conference and photo ops were just as meaningless. In the end, Medvedev and Putin will always support regimes that are antagonistic to Washington for one simple reason: to increase international tensions, drive up oil prices and give the Kremlin another chance to bask in its inflated self-image as a global energy superpower.

It was very important that Obama’s visit coincided with Russia’s large-scale military exercises “Caucasus 2009,” which were most likely held in preparation for a new war in the region. And whether or not Russia’s troops will be given the green light does not depend on military considerations, but on whether Putin, after meeting with Obama, believes that he can start a war without incurring repercussions from the West.

“Caucasus 2009” is strikingly similar to the Russian exercises that preceded the August 2008 war with Georgia. The smell of war is once again in the air. Counterterrorism operations have been instituted in the Prielbrusiye region on the Russian-Georgian border, many people have been evacuated from the region and Russia has beefed up its forces in Abkhazia and South Ossetia. Like deja vu, the Kremlin is again accusing Georgia of aggression, and yet it is Moscow that has insisted that all observers from the United Nations and Europe leave the region to remove unnecessary witnesses to Russia’s planned aggression. It would be difficult to label these moves as simply blackmail. Russia is mobilizing for war.

The Kremlin’s foreign policy is driven by one basic principle: It will pursue an aggressive, hostile policy as long as it believes it can get away with it.

The Russian-Georgian war last year was a perfect example. When Georgian forces occupied Tskhinvali, Putin, who always operated on the assumption that Georgian President Mikheil Saakashvili was a puppet of former U.S. President George W. Bush, met with Bush in Beijing while they were attending the Olympic Games there. Bush, who apparently knew nothing about the events in Georgia, muttered something to the effect of “Nobody wants a war.” Putin interpreted these words to mean that Bush was rescinding U.S. support for Georgia. But after French President Nicolas Sarkozy flew to Georgia, this was enough to convince Putin to stop the army’s advance, even though Russian troops had already reached the outskirts of Tbilisi.

The Kremlin’s behavior is driven by both rational and irrational motives. An irrational motive is Putin’s stated desire to hang Saakashvili by the balls. A rational motive is the desire to convince the world that Saakashvili has already hanged himself by the balls.

The outcome of the last Russian-Georgian war was determined when Putin met one-on-one with Bush in Beijing. Similarly, whether or not there will be another Caucasus war will depend on what Putin reads in Obama’s eyes during this summit.

Yulia Latynina hosts a political talk show on Ekho Moskvy radio.

11) Why China might turn on North Korea: As Beijing strives to become a responsible great power, the costs of staying allied with North Korea may come to surpass the costs of abandoning it.
By Leif-Eric Easley

North Korea's provocations are testing more than weapons and diplomacy. Recent actions by the United Nations, South Korea, Japan, and United States, while well developed and coordinated, are insufficient. An effective international response hinges on how national identity changes in China reshape Beijing's strategic interests toward Pyongyang.

Owing to North Korea's historical relations with and economic dependence on China, analysts argue that Chinese leaders hold the key to solving the "North Korea problem." But the Obama administration understands, as did the Bush administration, that maximizing pressure on Beijing would be counterproductive.

China has long seen its national interests served by the status quo on the Korean Peninsula. According to a cold-war perspective about strategic balance and a post-cold-war emphasis on internal development, Beijing prioritized maintaining a buffer state and preventing North Korea's problems from spilling over China's border. While Beijing retains these priorities, the chances of it getting tough with Pyongyang are low.

However, the China of today is not the China that came to Pyongyang's aid during the Korean War – its national identity has evolved over decades of rapid development and international integration. The ideas of communist solidarity and laying low to focus on modernization are becoming obsolete.

Instead, China covets its traditional role at the center of Asia, entailing not only power, but also respect and responsibility. Such ambition is possible thanks to the success of an economic model that has brought China closer to the US, Japan, and South Korea.

China's growing identity gap with North Korea may be changing the way China views its own interests. Chinese now ask whether Beijing underestimates the costs of a nuclear-armed North Korea and being the largest backer of the Kim regime. There are also questions about whether China overestimates the usefulness of a buffer against US and South Korean forces, the challenge of North Korean refugees, and the probability of international military conflict on the peninsula.

Given the responsible great power China wants to become, the costs of staying allied with North Korea may come to surpass the costs of abandoning it.

The priority for Washington, Seoul, and Tokyo should be to stay on the same page, especially through North Korea's leadership transition. Pyongyang's belligerence provides an opportunity to fundamentally attract Beijing to the allies' position. Nuclear proliferation, illegal arms tests and trade, and holding foreign journalists for ransom are becoming anathemas to Chinese identity.

Zero-sum thinking about political and economic influence on the strategic Korean Peninsula won't suddenly disappear. However, the long-term interests that China shares with Japan, South Korea, and the US will become increasingly apparent.

Pyongyang's provocations are testing how China's changing national identity shapes its strategic interests and ultimately foreign policy. The extent to which Beijing cooperates with Washington, Tokyo, and Seoul hangs in the balance.


• Leif-Eric Easley is a PhD candidate at Harvard University in Cambridge, Mass., and a visiting scholar at the University of Southern California Korean Studies Institute.

12) White House, hospitals reach deal on health care
By RICARDO ALONSO-ZALDIVAR

The nation's hospitals will give up $155 billion in future Medicare and Medicaid payments to help defray the cost of President Barack Obama's health care plan, a concession the White House hopes will boost an overhaul effort that's hit a roadblock in Congress.

Vice President Joe Biden announced the deal at the White House on Wednesday, with administration officials and hospital administrators at his side.

"Reform is coming. It is on track; it is coming. We have tried for decades to fix a broken system, and we have never, in my entire tenure in public life, been this close," Biden said. And in a firm message to lawmakers, Biden added, "We must — and we will — enact reform by the end of August."

Obama has set an ambitious timetable for legislation, with the hope of signing a comprehensive bill in October. But lawmakers returned Tuesday from their July 4 break with lots of questions about the complex legislation and deep misgivings about key elements under discussion.

Democratic senators in particular are having second thoughts about a proposed new tax on generous health insurance benefits provided by some employers. Without the tax — Republicans favor it as a brake on cost increases — the prospects for a bipartisan deal in the Senate appear to be in jeopardy.

Timing is critical because lawmakers might be reluctant to vote on such a charged issue as health care next year, when all House members and one-third of senators face elections.

"We're not there yet," said Sen. Max Baucus, D-Mont., who, as chairman of the Senate Finance Committee, has spent countless hours seeking a compromise with Republican colleagues. "I'm trying the best I can to get there soon."

Another senator deeply involved in the bipartisan negotiations said the proposed new tax on the costliest employer-paid insurance benefits is quickly losing favor with Democrats.

"It's clearly a very difficult issue," said Sen. Kent Conrad, D-N.D., citing recent polls. "You go to the public to ask them what they think and they don't like it."

A compilation of surveys reviewed by senators showed at least 59 percent of the public opposed to taxing health care benefits to "pay for reform."

As a result, Conrad said, "we're looking at other options" to help finance a bill whose price tag is expected to reach $1 trillion or slightly more. Those other options may be hard to sell to Republicans whose support Baucus has been cultivating.

Baucus has long championed a tax on health benefits as the best way to pay for health care while simultaneously restraining the growth of the cost of coverage in the future. But the idea has drawn strong opposition from organized labor, a core Democratic constituency. House Democrats have been highly resistant, too, and Obama campaigned hard against it in last year's run for the White House.

The deal with the hospitals — the one bright spot right now for Obama — may also be on shaky ground. Officials said it's pegged to the Senate Finance Committee legislation that Baucus is negotiating, and whose prospects are uncertain. It would follow concessions from drug companies, and an announcement by Wal-Mart last week that it would support an employer requirement to help pay for health care.

Of the $155 billion in projected savings from hospitals, about $40 billion to $50 billion would come from reducing federal payments hospitals receive for providing care to uninsured and low-income patients, according to lobbyists. Those payments are now made through the Medicare and Medicaid programs. The Medicaid cuts would be apportioned by state, as 10 percent annual reductions beginning around 2015.

Officials of public hospitals say they have concerns such reductions could also squeeze funding for trauma centers and burn units, which receive Medicare and Medicaid money. But they wanted to see the fine print.

Other savings of about $100 billion would come from slowing increases in planned Medicare payments to hospitals. A small amount of savings would come from trimming the money hospitals get for preventing patients from being readmitted for additional care.

Hospitals would also get something out of the deal. They won an agreement that if the Finance Committee's legislation includes a public health insurance plan, it would reimburse hospitals at above the rates Medicare and Medicaid pay, which hospitals have long complained are insufficient.

The issue of a government insurance plan to compete against private companies continued to inflame sentiments on both sides of the political aisle. Republicans remain solidly opposed. Democrats, citing polls that show the public is open to the idea, are talking about a showdown on the issue.

Biden was joined at the White House by Rich Umbdenstock, president of the American Hospital Association, Richard Bracken, president of Hospital Corporation of America, Wayne Smith, president of Community Health Systems, and Sister Carol Keehan, president of Catholic Health Association of the United States.

"We know how urgently reform is needed, both for moral and economic purposes," said Keehan, who represents Catholic hospitals.

House Republican Leader John Boehner of Ohio criticized the hospital deal, saying it was negotiated out of public view. "The administration and congressional Democrats are literally bullying health care groups into cutting backroom deals to fund a government takeover of health care," Boehner said in a statement.

13) The Near East Report editors pulled together a few of the many news items that caught their attention—stories about Israeli innovation in medicine, agriculture, environmentalism, computer technology, space exploration and much more. Click the links in each summary to view the full story. Here is a brief round-up:

An Israeli Muslim woman, Dr. Suheir Assady, was recently appointed as the new head of the Nephrology Department at Rambam Health Care Campus in Haifa. To date, Dr. Assady is the first Israeli Muslim woman direct