Institutionalizing Fraud. Soon It Becomes Endemic !

George Friedman on Oct 18 meeting between GW and Sarkozy and its meaning. (See 1 below.)

Comments from a dear frustrated friend and fellow memo reader. One of the dearest people I know and not a mean or racist bone in her body but she tells it like she sees and feels. Another view from a dedicated reader. (See 2 and 2a below.)

Dr. Paul Rubin, is a friend of long standing and he just wrote an op ed piece in today's WSJ. I parallels what I have been writing for months. Liberals may not want to believe it now and may never but this is the reality we will all be facing in time. Paul writes why Obama will be more dangerous than FDR, because the institutions are in place, the ability to pass legislation is almost assured so, as I wrote recently, "Bend Over America" and get prepared for the Socialist Suppository. Alas,it has already begun with GW and the Republicans.(See 3 below.)

As I urged months ago, read Dough Feith's book, if you want to get a different view of Colin Powell. Now read Bret Stephens for confirmation. Powell has always seemed a get along go along person. That is how he rose in the ranks but there has always been a question of whether his veracity was something you could bank on and he certainly seems to have learned how to play the DC game. (See 4 below.)

Voting early signifies we have lost patience with the serious responsibility of voting. Get it over before the end. Don't wait for developments that could change history or our minds. Just get it over. And so it is with facts. We have witnessed an artful campaigner versus a dull campaigner. We have watched organized and slick versus disorganized, bumbling and boring. The change artist versus yesteryear and we are turned off and want it all to end so voting early is understandable.

We have treated facts the same way We would rather be surface about the entire affair because reasoning is an endeavor with which we are increasingly less capable or indifferent.

Voting early lends itself also to fraud which we have already institutionalized in Congress and Wall Street and now are instilling it into Main Street and it will soon become endemic in our society. (See McGurn's thoughts in 5 below.)

Obama's off to visit grandma. I thought when he was defending himself against his association with reverend Wright and making negative comments about Mid Westerners toting guns and thumping bibles he threw her under the bus.

Also, if you are white and have an aversion to voting for Obama because of his policies or lack of fleshing them out, you run the risk of being considered a racist but if you are black , seldom vote and when you do even less seldom would vote for a white candidate you are just being loyal to your people.

In both cases am I missing something?

VERY IMPORTANT READ!

Here we go again with another assessment regarding Iran's nuclear capability. Getting very close to home and as I have written repeatedly, whomever becomes president the test will begin shortly thereafter - now even Biden agrees! (See 6,6a,6b and 6c below.)

Change will not taste good for conservatives should Obama become president according to Michael Medved. More importantly, if Obama gets his way the changes will remain permanent if history is a guide. Government is amoebic - it just grows and grows and grows. It is a cow with endless udders until it can no longer walk without tripping over them. Then it all comes apart at the seams. We are getting a sour taste of government milk now. (See 7 below.)

Cal Thomas writes government can't do it all and I agree but that is not to say Obama and his liberal brethren will not try to do it all - expanding government is the vehicle by which change will occur. (See 8 below.)

A weakened America poses a threat but a weakened America is a fact and thus the threat this poses is now reality. Weakness will lead to a test and that will lead to new confrontations for which we are probably ill prepared. (See 9 below.)

Had dinner tonight with a very liberal friend tonight and we seldom discuss politics but he wanted to know my view of Palin. I told him it was a brilliant military move because it energized the troops but a poor overall choice because of how it has played out among the populace. I still find Palin refreshing, probably better than the press, media and far left attackers would have you believe but certainly she is not the most qualified but then neither is Biden if his past mistakes and flawed judgement are also examined microscopically. Palin will grow in office , should she get the chance which I find remote and were it not for McCain's health and age issue her relevance would be less a factor.

She could prove effective in hammering away at the prostitutes in Congress given the opportunity and she might be able to dig into excessive spending and initiate some useful ways to eliminate it but that too is a very long shot. Waste is the lifeblood of Congress and they will find ways to piss away our hard earned tax dollars no matter what - bank on it!

Dick


1) The United States, Europe and Bretton Woods II
By George Friedman and Peter Zeihan

French President Nicolas Sarkozy and U.S. President George W. Bush met Oct. 18 to discuss the possibility of a global financial summit. The meeting ended with an American offer to host a global summit in December modeled on the 1944 Bretton Woods system that founded the modern economic system.


The Bretton Woods framework is one of the more misunderstood developments in human history. The conventional wisdom is that Bretton Woods crafted the modern international economic architecture, lashing the trading and currency systems to the gold standard to achieve global stability. To a certain degree, that is true. But the form that Bretton Woods took in the public mind is only a veneer. The real implications and meaning of Bretton Woods are a different story altogether.
Conventional Wisdom: The Depression and Bretton Woods

The origin of Bretton Woods lies in the Great Depression. As economic output dropped in the 1930s, governments worldwide adopted a swath of protectionist, populist policies — import tariffs were particularly in vogue — that enervated international trade. In order to maintain employment, governments and firms alike encouraged ongoing production of goods even though mutual tariff walls prevented the sale of those goods abroad. As a result, prices for these goods dropped and deflation set in. Soon firms found that the prices they could reasonably charge for their goods had dropped below the costs of producing them.

The reduction in profitability led to layoffs, which reduced demand for products in general, further reducing prices. Firms went out of business enmasse, workers in the millions lost their jobs, demand withered, and prices followed suit. An effort designed originally to protect jobs (the tariffs) resulted in a deep, self-reinforcing deflationary spiral, and the variety of measures adopted to combat it — the New Deal included — could not seem to right the system.

Economically, World War II was a godsend. The military effort generated demand for goods and labor. The goods part is pretty straightforward, but the labor issue is what really allowed the global economy to turn the corner. Obviously, the war effort required more workers to craft goods, whether bars of soap or aircraft carriers, but “workers” were also called upon to serve as soldiers. The war removed tens of millions of men from the labor force, shipping them off to — economically speaking — nonproductive endeavors. Sustained demand for goods combined with labor shortages raised prices, and as expectations for inflation rather than deflation set in, consumers became more willing to spend their money for fear it would be worth less in the future. The deflationary spiral was broken; supply and demand came back into balance.

Policymakers of the time realized that the prosecution of the war had suspended the depression, but few were confident that the war had actually ended the conditions that made the depression possible. So in July 1944, 730 representatives from 44 different countries converged on a small ski village in New Hampshire to cobble together a system that would prevent additional depressions and — were one to occur — come up with a means of ending it shy of depending upon a world war.

When all was said and done, the delegates agreed to a system of exchangeable currencies and broadly open rules of trade. The system would be based on the gold standard to prevent currency fluctuations, and a pair of institutions — what would become known as the International Monetary Fund (IMF) and the World Bank — would serve as guardians of the system’s financial and fiduciary particulars.

The conventional wisdom is that Bretton Woods worked for a time, but that since the entire system was linked to gold, the limited availability of gold put an upper limit on what the new system could handle. As postwar economic activity expanded — but the supply of gold did not — that problem became so mammoth that the United States abandoned the gold standard in 1971. Most point to that period as the end of the Bretton Woods system. In fact, we are still using Bretton Woods, and while nothing that has been discussed to this point is wrong exactly, it is only part of the story.

A Deeper Understanding: World War II and Bretton Woods

Think back to July 1944. The Normandy invasion was in its first month. The United Kingdom served as the staging ground, but with London exhausted, its military commitment to the operation was modest. While the tide of the war had clearly turned, there was much slogging ahead. It had become apparent that launching the invasion of Europe — much less sustaining it — was impossible without large-scale U.S. involvement. Similarly, the balance of forces on the Eastern Front radically favored the Soviets. While the particulars were, of course, open to debate, no one was so idealistic to think that after suffering at Nazi hands, the Soviets were simply going to withdraw from territory captured on their way to Berlin.

The shape of the Cold War was already beginning to unfold. Between the United States and the Soviet Union, the rest of the modern world — namely, Europe — was going to either experience Soviet occupation or become a U.S. protectorate.

At the core of that realization were twin challenges. For the Europeans, any hope they had of rebuilding was totally dependent upon U.S. willingness to remain engaged. Issues of Soviet attack aside, the war had decimated Europe, and the damage was only becoming worse with each inch of Nazi territory the Americans or Soviets conquered. The Continental states — and even the United Kingdom — were not simply economically spent and indebted but were, to be perfectly blunt, destitute. This was not World War I, where most of the fighting had occurred along a single series of trenches. This was blitzkrieg and saturation bombings, which left the Continent in ruins, and there was almost nothing left from which to rebuild. Simply avoiding mass starvation would be a challenge, and any rebuilding effort would be utterly dependent upon U.S. financing. The Europeans were willing to accept nearly whatever was on offer.

For the United States, the issue was one of seizing a historic opportunity. Historically, the United States thought of the United Kingdom and France — with their maritime traditions — as more of a threat to U.S. interests than the largely land-based Soviet Union and Germany. Even World War I did not fully dispel this concern. (Japan, for its part, was always viewed as a hostile power.) The United States entered World War II late and the war did not occur on U.S. soil. So — uniquely among all the world’s major powers of the day — U.S. infrastructure and industrial capacity would emerge from the war larger (far, far larger) than when it entered. With its traditional rivals either already greatly weakened or well on their way to being so, the United States had the opportunity to set itself up as the core of the new order.

In this, the United States faced the challenges of defending against the Soviet Union. The United States could not occupy Western Europe as it expected the Soviets to occupy Eastern Europe; it lacked the troops and was on the wrong side of the ocean. The United States had to have not just the participation of the Western Europeans in holding back the Soviet tide, it needed the Europeans to defer to American political and military demands — and to do so willingly. Considering the desperation and destitution of the Europeans, and the unprecedented and unparalleled U.S. economic strength, economic carrots were the obvious way to go.

Put another way, Bretton Woods was part of a broader American effort to extend the wartime alliance — sans the Soviets — beyond Germany’s surrender. After all wars, there is the hope that alliances that have defeated a common enemy will continue to function to administer and maintain the peace. This happened at the Congress of Vienna and Versailles as well. Bretton Woods was more than an attempt to shape the global economic system, it was an effort to grow a military alliance into a broader U.S.-led and -dominated bloc to counter the Soviets.

At Bretton Woods, the United States made itself the core of the new system, agreeing to become the trading partner of first and last resort. The United States would allow Europe near tariff-free access to its markets, and turn a blind eye to Europe’s own tariffs so long as they did not become too egregious — something that at least in part flew in the face of the Great Depression’s lessons. The sale of European goods in the United States would help Europe develop economically, and, in exchange, the United States would receive deference on political and military matters: NATO — the ultimate hedge against Soviet invasion — was born.

The “free world” alliance would not consist of a series of equal states. Instead, it would consist of the United States and everyone else. The “everyone else” included shattered European economies, their impoverished colonies, independent successor states and so on. The truth was that Bretton Woods was less a compact of equals than a framework for economic relations within an unequal alliance against the Soviet Union. The foundation of Bretton Woods was American economic power — and the American interest in strengthening the economies of the rest of the world to immunize them from communism and build the containment of the Soviet Union.

Almost immediately after the war, the United States began acting in ways that indicated that Bretton Woods was not — for itself at least — an economic program. When loans to fund Western Europe’s redevelopment failed to stimulate growth, those loans became grants, aka the Marshall Plan. Shortly thereafter, the United States — certainly to its economic loss — almost absentmindedly extended the benefits of Bretton Woods to any state involved on the American side of the Cold War, with Japan, South Korea and Taiwan signing up as its most enthusiastic participants.

And fast-forwarding to when the world went off of the gold standard and Bretton Woods supposedly died, gold was actually replaced by the U.S. dollar. Far from dying, the political/military understanding that underpinned Bretton Woods had only become more entrenched. Whereas before, the greatest limiter was on the availability of gold, now it became — and remains — the whim of the U.S. government’s monetary authorities.

Toward Bretton Woods II

For many of the states that will be attending what is already being dubbed Bretton Woods II, having this American centrality as such a key pillar of the system is the core of the problem.

The fundamental principle of Bretton Woods was national sovereignty within a framework of relationships, ultimately guaranteed not just by American political power but by American economic power. Bretton Woods was not so much a system as a reality. American economic power dwarfed the rest of the non-communist world, and guaranteed the stability of the international financial system.

What the September financial crisis has shown is not that the basic financial system has changed, but what happens when the guarantor of the financial system itself undergoes a crisis. When the economic bubble in Japan — the world’s second-largest economy — burst in 1990-1991, it did not infect the rest of the world. Neither did the East Asian crisis in 1997, nor the ruble crisis of 1998. A crisis in France or the United Kingdom would similarly remain a local one. But a crisis in the U.S. economy becomes global. The fundamental reality of Bretton Woods remains unchanged: The U.S. economy remains the largest, and dysfunctions there affect the world. That is the reality of the international system, and that is ultimately what the French call for a new Bretton Woods is about.

There has been talk of a meeting at which the United States gives up its place as the world’s reserve currency and primacy of the economic system. That is not what this meeting will be about, and certainly not what the French are after. The use of the dollar as world reserve currency is not based on an aggrandizing fiat, but the reality that the dollar alone has a global presence and trust. The euro, after all, is only a decade old, and is not backed either by sovereign taxing powers or by a central bank with vast authority. The European Central Bank (ECB) certainly steadies the European financial system, but it is the sovereign countries that define economic policies. As we have seen in the recent crisis, the ECB actually lacks the authority to regulate Europe’s banks. Relying on a currency that is not in the hands of a sovereign taxing power, but dependent on the political will of (so far) 15 countries with very different interests, does not make for a reliable reserve currency.

The Europeans are not looking to challenge the reality of American power, they are looking to increase the degree to which the rest of the world can influence the dynamics of the American economy, with an eye toward limiting the ability of the Americans to accidentally destabilize the international financial system again. The French in particular look at the current crisis as the result of a failure in the U.S. regulatory system.

And the Europeans certainly have a point. If fault is to be pinned, it is on the United States for letting the problem grow and grow until it triggered a liquidity crisis. The Bretton Woods institutions — specifically the IMF, which is supposed to serve the role of financial lighthouse and crisis manager — proved irrelevant to the problems the world is currently passing through. Indeed, all multinational institutions failed or, more precisely, have little to do with the financial system that was operating in 2008. The 64-year-old Bretton Woods agreement simply didn’t have anything to do with the current reality.

Ultimately, the Europeans would like to see a shift in focus in the world of international economic interactions from strengthening the international trading system to controlling the international financial system. In practical terms, they want an oversight body that can guarantee that there won’t be a repeat of the current crisis. This would involve everything from regulations on accounting methods, to restrictions on what can and cannot be traded and by whom (offshore financial havens and hedge funds would definitely find their worlds circumscribed), to frameworks for global interventions. The net effect would be to create an international bureaucracy to oversee global financial markets.

Fundamentally, the Europeans are not simply hoping to modernize Bretton Woods, but instead to Europeanize the American financial markets. This is ultimately not a financial question, but a political one. The French are trying to flip Bretton Woods from a system where the United States is the buttress of the international system to a situation where the United States remains the buttress but is more constrained by the broader international system. The European view is that this will help everybody. The American position is not yet framed and won’t be until the new president is in office.

But it will be a very tough sell. For one, at its core the American problem is “simply” a liquidity freeze and one that is already thawing. Europe’s and East Asia’s recessions are bound to be deeper and longer lasting. So the United States is sure — no matter who takes over in January — to be less than keen about revamps of international processes in general. Far more important, any international system that oversees aspects of American finance would, by definition, not be under full American control, but under some sort of quasi-Brussels-like organization. And no American president is going to engage gleefully on that sort of topic.

Unless something else is on offer.

Bretton Woods was ultimately about the United States trading access to its economic might for political and military deference. The reality of American economic might remains. The question, then, is simple: What will the Europeans bring to the table with which to bargain?

2)This is pretty bad but it made me laugh. You gotta laugh to keep from crying at this election. I saw the best summation of the situation on the back window of a pick-up truck last Sunday.

MCCAIN - OBAMA:WE ARE SCREWED EITHER WAY.

Love it, people were honking horns and giving thumbs up all the way down
I-85. How sad, in a time when we need leadership, real statesman-type leadership,
that is willing to tell us sometimes what we don't want to hear, it seems we are
woefully lacking with this slate.

We will survive this, but I must say the painful results of the past 10
years of bad decisions on the part of Congress, Wall Street, the White House and the
average American has come to fruition. This fruit is bitter and I'm pissed,
because I didn't do a damn thing to plant it or nurture it. We paid our
bills, we are not in debt, paid for our kids to go to college, pay for our
own health care, didn't borrow money we can't pay back, voted for people who
promised to not get us into this type of mess and this is what we get.

I feel like Peter Finch in Network, I want to stick my head out the window
and scream 'I'm mad as hell and I'm not going to take it any more.' But you know what is sad? The average American just like us, is not going to go out and sign up
voters, real and imagined, attend rallies and faint over the good looks of a
candidate, hell, you would be surprised at the neighbors in our 'hood' that
are not even registered to vote. Just too busy, and besides, they don't want to serve on jury duty. We end up getting the government THEY deserve. Talk about unfair.

Don't know if you saw the Cynthia Tucker editorial about John Lewis' comment
on Oct. 15, but it makes me so mad I want to hurl. There have been several very thoughtful and intelligent responses to her racist rantings. You should look those up online at ajc.com I can't believe this city I live in anymore.

Your thoughts on blacks in the military and some higher levels of management
are pretty dead on. DeKalb County school system is crumbling due to the
unbelievable mismanagement, featherbedding, incompetence you cannot imagine.
Mid level managers have not one but two assistants, cars for everyone, and
hardly a white has been hired in the past 5 years or more. (per a very close
friend that is one of the few remaining in the IT department)
Blah blah blah.....same old crap.

It seems like the word or tag of Racist is the worse thing you can be called
in this country. Much like being a Commie in the 50s. What the hell does
Racist mean anymore? Every time you question anything surrounding a black
person or hold them to the content of their character or the content of
their actions, you are a Racist?

I'm beginning to believe I am one. What an awful thing to say.
To me that word used to mean you hate someone because of their race and
nothing they can do would change that. I am not one of those.
But if the definition of a Racist is explained according to Cynthia Tucker,
what am I? I do question Obama, I do want answers. What does that make me?
It just makes me mad/sad.

2a)Most "liberals" have a view of the world as they would like it to be and support candidates who promise to move toward that vision. "Conservatives" see the world as an imperfect place and seek to promote the best good for the most people within the constraints of reality. Thus, the old welfare system was designed to give poor women with children a decent life, but instead generated dependency and more suffering. Ending welfare, for the most part, was a real boon to those previously in terrible need. Social Security and Medicare were devised to meet specific human needs. Problem here is that these programs are not sustainable financially and will ultimately cause more severe problems than they allegedly solve.

As far as Obama goes, he seems to provide a most attractive vision for repair of the world and has many in his thrall. I am not convinced that he will win this election on that foundation, irrespective of poll numbers and newly registered voters. I would like to think that the American electorate is not so foolish. We will see in two weeks.

3) Get Ready for the New New Deal: Obama is much more dangerous to economic freedom than FDR.
By PAUL H. RUBIN

In 1932, Democrat Franklin Delano Roosevelt was elected president as the nation was heading into a severe recession. The stock market had crashed in 1929, the world's economy was slowing down, and all economic indicators in the U.S. showed signs of trouble.

The new president's response was to restructure the economy with the New Deal -- an expansion of the role of government once unimaginable in America. We now know that FDR's policies likely prolonged the Great Depression because the economy never fully recovered in the 1930s, and actually got worse in the latter half of the decade. And we know that FDR got away with it (winning election four times) by blaming his predecessor, Herbert Hoover, for crashing the economy in the first place.

Today, the U.S. is in better shape than in 1932. But it faces similar circumstances. The stock market has been in a tail spin, credit markets have locked up, and a surging Democratic presidential candidate is running on expanding the role of government, laying the blame for the economic turmoil on the current occupant of the White House and his party's economic policies.

Barack Obama is one of the most liberal members of the Senate. His reaction to the financial crisis is to blame deregulation. He even leverages fear of deregulation onto other issues. For example, Sen. John McCain wants to allow consumers to buy health insurance across state lines. Mr. Obama likens this to the financial deregulation that he alleges got us into the current mess.

But a President Obama would also enjoy large Democratic majorities in Congress. His party might even win a 60-seat, filibuster-proof majority in the Senate, giving him more power than any president has had in decades to push a liberal agenda. And given the opportunity, Mr. Obama will likely radically increase government interference in the economy.

Until now, this election has been fought on the margins, over marginal issues. But it is important to understand how much a presidential candidate wants to move the needle on taxes, trade and other issues. Usually there isn't a chance for wholesale change. Now, however, it appears that this election will make more than a marginal difference. It might fundamentally change America.

Unlike FDR, Mr. Obama will not have to create the mechanisms government uses to interfere with the economy before imposing his policies. FDR had to get the Supreme Court to overturn a century's worth of precedents limiting the power of government before he could use the Constitution's commerce clause, among other things, to increase government control of the economy. Mr. Obama will have no such problem.

FDR also had to create agencies to implement regulations. Today, the Securities and Exchange Commission and the National Labor Relations Board (both created in the 1930s) as well as the Environmental Protection Agency and others created later are in place. Increasing their power will be easier than creating them from scratch.

Even before the current crisis, there was a great demand for increased government regulation to limit global warming. That gives the next president a ready-made box in which to place more regulation, and a legion of supports eager for it.

But if the coming wave of new regulation from an Obama administration is harmful to the economy, Mr. Obama will take a page from FDR's playbook. He'll blame Republicans for having caused the market crash in the first place, and so escape blame for the consequences of his policies. It worked for FDR and, so far in this campaign, blaming Republicans and George W. Bush has worked for Mr. Obama.

Democrats draw their political power from trial lawyers, unions, government bureaucrats, environmentalists, and, perhaps, my liberal colleagues in academia. All of these voting blocs seem to favor a larger, more intrusive government. If things proceed as they now appear likely to, we can expect major changes in policies that benefit these groups.

If those of us who favor free markets for the freedom and prosperity they bring are right, the political system may soon put our economy on track for a catastrophe.

Mr. Rubin is a professor of economics and law at Emory University. He held several senior economic positions in the Reagan administration, and is an unpaid adviser to the McCain campaign.

4)Powell Catches the Beltway Breeze: An endorsement of Obama dictated by political winds.
By BRET STEPHENS


Cyrus Vance resigned as secretary of state after Jimmy Carter's attempt to rescue U.S. hostages in Tehran failed -- as Vance thought it would. Alexander Haig resigned the same office two years later when it became clear to him that he was out of step with the rest of the Reagan administration. These resignations were principled, honorable and personally painful decisions.
[Global View] AP

And then there is the Powell precedent.

"The new president is going to have to fix the reputation that we've left with the rest of the world," said the former secretary of state on Sunday's "Meet the Press," as he endorsed Barack Obama's bid for the presidency. "At this point in America's history, we need a president that will not just continue . . . basically, the policies that we have been following in recent years."

Say what you will about Mr. Powell's endorsement, then, it is also a spectacular repudiation of the Bush administration and of the Republican Party: a double-barreled letter of resignation, broadcast on national TV. But what are we to make of a resignation that arrives nearly four years after its author was let go by the president -- despite his widely reported desire to stay on in the second term?

Or, more bluntly: To what extent is Mr. Powell's endorsement of Mr. Obama a case of sour grapes?

That's one of the questions Tom Brokaw might have usefully asked Mr. Powell, rather than simply hand him a soapbox. Here's another: If America's reputation needs fixing, what part does the former secretary think he played in its malfunction? Consider the following examples:

- What responsibility does Mr. Powell assign himself for the four-year Beltway drama that involved the leak of CIA analyst Valerie Plame's name to columnist Robert Novak?

One result of that drama was that then-New York Times reporter Judy Miller spent 85 days in jail. Another was that Scooter Libby, Dick Cheney's chief of staff, was convicted of perjury and sentenced to 30 months in jail. A third was that the administration as a whole suffered a huge and needless political blow.

Yet Mr. Powell knew all along that the original leaker was his own deputy, Richard Armitage, a fact the two of them didn't publicly reveal for years. Why didn't he lay the matter immediately to rest instead of allowing others to twist in the wind?

- In a similar vein, it would be interesting to know how Mr. Powell assesses his role in the widely publicized internal spitball fights that served as feedstock to America's least scrupulous critics abroad. In 2004, for instance, he was quoted in the Washington Post as calling Undersecretary of Defense Douglas Feith's policy shop a "Gestapo office." That same year, Larry Wilkerson, Mr. Powell's chief of staff, compared deputy secretary of defense Paul Wolfowitz to Vladimir Lenin in an interview with Vanity Fair.

Mr. Powell never apologized publicly to Mr. Feith (though he did so privately) or reprimand Mr. Wilkerson. That's his call, but it squares oddly with his criticism of Mr. McCain's campaign for allegedly allowing nasty things to be said about Mr. Obama's religion.

- Also of interest: Exactly what advice did Mr. Powell give President Bush about the advisability of invading Iraq?

At a conference in Aspen in 2007, Mr. Powell reportedly claimed that he "spent 2½ hours vainly trying to persuade President George W. Bush not to invade Iraq and believes today's conflict cannot be resolved by U.S. forces."

When asked the same question by Mr. Brokaw, however, Mr. Powell offered this:

"I said to the president in 2002, we should try to solve this diplomatically and avoid war. The president accepted that recommendation, we took it to the U.N. But the president, by the end of 2002, believed the U.N. was not going to solve the problem, and he made a decision that we had to prepare for military action. I fully supported that. And I have never said anything to suggest I did not support going to war." (My emphasis.)

- Finally, Mr. Powell was among the first to call for the Guantanamo detainees to be given POW status and released whenever feasible. He was also among the first to call for more troops to be deployed to Iraq early on, before the insurgency got fully under way.

Mr. Powell is wrong about Gitmo: Released detainees have a nasty way of returning to their former line of work. Still, if the prison was such a running sore on America's global image, why didn't he offer a stiffer protest -- or resign?

As for more troops, Mr. Powell was plainly right. So why did he later oppose the surge, telling Tim Russert in June 2007 that "the only thing it can do is put a heavier lid on this boiling pot of civil war stew"?

The standard view of Mr. Powell's tenure at State is that he had a diplomat's brain but a soldier's heart, and soldiers ultimately do as ordered. Maybe. Another view is that he is a man with an unfailing sense of the political breeze, like a kite. His endorsement of Mr. Obama sends his reputation aloft again, floating high above a record that stands for nothing.

5)Obama Talks Nonsense on Tax Cuts: Revenues will inevitably be diverted from Social Security
By WILLIAM MCGURN



Now we know: 95% of Americans will get a "tax cut" under Barack Obama after all. Those on the receiving end of a check will include the estimated 44% of Americans who will owe no federal income taxes under his plan.
[Main Street] AP

In most parts of America, getting money back on taxes you haven't paid sounds a lot like welfare. Ah, say the Obama people, you forget: Even those who pay no income taxes pay payroll taxes for Social Security. Under the Obama plan, they say, these Americans would get an income tax credit up to $500 based on what they are paying into Social Security.

Just two little questions: If people are going to get a tax refund based on what they pay into Social Security, then we're not really talking about income tax relief, are we? And if what we're really talking about is payroll tax relief, doesn't that mean billions of dollars in lost revenue for a Social Security trust fund that is already badly underfinanced?

Austan Goolsbee, the University of Chicago economic professor who serves as one of Sen. Obama's top advisers, discussed these issues during a recent appearance on Fox News. There he stated that the answer to the first question is that these Americans are getting an income tax rebate. And the answer to the second is that the money would not actually come out of Social Security.

"You can't just cut the payroll tax because that's what funds Social Security," Mr. Goolsbee told Fox's Shepard Smith. "So if you tried to do that, you would undermine the Social Security Trust Fund."


Now, if you have been following this so far, you have learned that people who pay no income tax will get an income tax refund. You have also learned that this check will represent relief for the payroll taxes these people do pay. And you have been assured that this rebate check won't actually come out of payroll taxes, lest we harm Social Security.

You have to admire the audacity. With one touch of the Obama magic, what otherwise would be described as taking money from Peter to pay Paul is now transformed into Paul's tax relief. Where a tax cut for payroll taxes paid will not in fact come from payroll taxes. And where all these plans come together under the rhetorical umbrella of "Making Work Pay."

Not everyone is persuaded. Andrew Biggs is a scholar at the American Enterprise Institute and a former Social Security Administration official who has written a great deal about Mr. Obama's plans on his blog (AndrewGBiggs.blogspot.com). He notes that to understand the unintended consequences, it helps to remember that while people at the bottom pay a higher percentage of their income in payroll taxes, they are accruing benefits in excess of what they pay in.

"It's interesting that Mr. Obama calls his plan 'Making Work Pay,'" says Mr. Biggs, "because the incentives are just the opposite. By expanding benefits for people whose benefits exceed their taxes, you're increasing their disincentive for work. And you're doing the same at the top of the income scale, where you are raising their taxes so you can distribute the revenue to others."

Even more interesting is what Mr. Obama's "tax cuts" do to Social Security financing. As Mr. Biggs notes, had Mr. Obama proposed to pay for payroll tax relief out of, well, payroll taxes, his plan would never have a chance in Congress. Most members would look at a plan that defunded a trust fund that seniors are counting on for their retirement as political suicide.

And that leads us to the heart of this problem. If the government is going to give tax cuts to 44% of American based on their Social Security taxes -- without actually refunding to them the money they are paying into Social Security -- Mr. Obama will have to get the funds elsewhere. And this is where "general revenues" turns out to be a more agreeable way of saying "Other People's Money."

When asked about his priorities during the second presidential debate, Mr. Obama said that reform of programs like Social Security would have to go on the back burner for two years or so. "We're not going to solve Social Security and Medicare unless we understand the rest of our tax policies," he said.

The senator is right. But you have to read the fine print of his tax cuts to know why.

6)US intelligence: Iran will be able to build first nuclear bomb by February 2009

US intelligence’s amended estimate, that Iran will be ready to build its first bomb just one month after the next US president is sworn in, is disclosed by Washington sources as having been relayed as a guideline to the Middle East teams of both presidential candidates, Senators John McCain and Barack Obama.

The information prompted the assertion by Democratic vice presidential nominee Joseph Biden in Seattle Sunday, Oct. 19: “It will not be six months before the world tests Barack Obama like they did John Kennedy.”

McCain retorted Tuesday, Oct. 21: “America does not need a president that needs to be tested. I’ve been tested. I was aboard the Enterprise off the coast of Cuba. I’ve been there.”)

Military sources cite the new US timeline: By late January, 2009, Iran will have accumulated enough low-grade enriched uranium (up to 5%) for its “break-out” to weapons grade (90%) material within a short time. For this, the Iranians have achieved the necessary technology. In February, they can move on to start building their first nuclear bomb.

US intelligence believes Tehran has the personnel, plans and diagrams for a bomb and has been running experiments to this end for the past two years. The UN International Atomic Energy Agency in Vienna last week asked Tehran to clarify recent complex experiments they conducted in detonating nuclear materials for a weapon, but received no answer.

The same US evaluation adds that the Iranian leadership is holding off its go-ahead to start building the bomb until the last minute so as to ward off international pressure to stop at the red line.

This development together with the galloping global economic crisis will force the incoming US president to go straight into decision-making without pause on Day One in the Oval Office. He will have to determine which urgent measures can serve best for keeping a nuclear bomb out of the Islamic republic’s hands - diplomatic or military – and how to proceed if those measures fail.

His knowledge of the challenge colored Sen. Biden’s additional words in Seattle: “Remember I said it standing here if you don’t remember anything else I said. Watch, we’re gonna have an international crisis, a generated crisis, to test the mettle of this guy.”

Israel’s political and military leaders also face a tough dilemma that can no longer be put off of whether to strike Iran’s nuclear installations militarily in the next three months between US presidencies before the last window closes, or take a chance on coordination with the next president.

Waiting for the “international community” to do the job of stopping Iran, as urged by governments headed by Ariel Sharon and Ehud Olmert - and strongly advocated Tzipi Livni, foreign minister and would-be prime minister - has been a washout. Iran stands defiantly on the threshold of a nuclear weapon.

6a) Top Tehran officials recommend preemptive strike against Israel
By Barak Ravid

Senior Tehran officials are recommending a preemptive strike against Israel to prevent an Israeli attack on Iran's nuclear reactors, a senior Islamic Republic official told foreign diplomats two weeks ago in London.

The official, Dr. Seyed G. Safavi, said recent threats by Israeli authorities strengthened this position, but that as of yet, a preemptive strike has not been integrated into Iranian policy.

Safavi is head of the Research Institute of Strategic Studies in Tehran, and an adviser to Supreme Leader Ali Khamenei. The institute is directly affiliated with Khamenei's office and with the Revolutionary Guards, and advises both on foreign policy issues.

Safavi is also the brother of Yahya Rahim Safavi, who was the head of the Revolutionary Guards until a year ago and now is an adviser to Khamenei, and holds significant influence on security matters in the Iranian government.

An Israeli political official said senior Jerusalem officials were shown Safavi's remarks, which are considered highly sensitive. The source said the briefing in London dealt with a number of issues, primarily a potential Israeli attack on an Iranian reactor.

Safavi said a small, experienced group of officials is lobbying for a preemptive strike against Israel. "The recent Israeli declarations and harsh rhetoric on a strike against Iran put ammunition in these individuals' hands," he said.

Transportation Minister Shaul Mofaz said in June that Israel would be forced to strike the Iranian nuclear reactor if Tehran continues to pursue its uranium enrichment program.

Safavi said Tehran recently drafted a new policy for responding to an Israeli or American attack on its nuclear facilities. While the previous policy called for attacks against Israel and American interests in the Middle East and beyond, the new policy is to target Israel alone.

He added that many Revolutionary Guard leaders want to respond to a U.S. attack on Iranian soil by striking Israel, as they believe Israel would be partner to any U.S. action.

Safavi said that Iran's nuclear program is intended for peaceful purposes only, and that Khamenei recently released a fatwa against the use of weapons of mass destruction, though the contents of that religious ruling have not yet been publicized.

Regarding dialogue with the United States and the West, Safavi said Iran's decision would be influenced by the results of the U.S. presidential elections next month, as well as by the Iranian presidential elections in June and the economic situation in the Islamic Republic.

Safavi also said that a victory by U.S. Democratic presidential candidate Barack Obama would pave the way for dialogue with Washington, while a John McCain presidency would bolster Iran's extreme right, which opposes dialogue. If conditions are favorable following the U.S. election, he said, Iran could draw back from President Mahmoud Ahmadinejad's declaration that "the nuclear case is closed," and put it back on the agenda.

Safavi said he believed that U.S. sanctions on Iran have run their course, and that there would be no point in strengthening them. Tehran would therefore demand "firm and significant" U.S. measures in return for stopping uranium enrichment. He also said Ahmadinejad is not guaranteed victory in the June 2009 elections, particularly given the dire economic situation in Iran. Still, Iranian experts believe his only real competition is former president Mohammad Khatami, who has not yet joined the race.

Safavi said the inflation rate in Iran is similar to that before the 1979 Islamic Revolution, but that unrest among civilians today is not as strong. This is because the current government uses oil revenues to help the poor, he said.

6b) ANALYSIS / Iran's threats are not based on any proven capability
By Amos Harel


Even though the senior Iranian official was speaking to a closed forum, it would not be at all surprising if his words were actually intended for an Israeli audience. Alongside the public diplomatic struggle - and Israel's secret military preparations - against the Iranian nuclear projects, there is also a war of threats and oratory going on between the two nations.

The announcements of Ayatollah Seyed G. Safavi look to be another stage in the Iranian attempt to create a balance of fear and deterrence with Israel.

The past two years, whether because of Iranian progress toward acquiring nuclear capability, or because of the absence of Ariel Sharon from the political helm, have seen a gradual escalation in Israeli pronouncements about Iran. The end of the primary season in Kadima may have reined in slightly the enthusiasm for public declarations, but even responsible Israeli statesmen such as Defense Minister Ehud Barak, speaking most recently on the matter last Sunday, take care to emphasize that the military option, as a last resort, is still on the table.

Last week MK Isaac Ben-Israel (Kadima), a former major general and someone very close to prime minister-designate Tzipi Livni, said Israel will not allow Iran to have nuclear weapons, but that there was still time to prevent that eventuality. "It's not like we're going to bomb them in another three months," said Ben-Israel.

When Iranian experts dissect the Israeli declarations, the question is what do they emphasize, the threat ("We will not permit"), or the reservation ("Not now"). The reasonable assumption is that Safawi, similar to the Israeli and international media, does not really know what Israel is planning in the short term. But Teheran is interested in warning Jerusalem that as far as it is concerned, all options are open.

This was not the first such report: Two days ago the press in Teheran reported on a huge exercise of Iran's air force, including claims of a practice air attack on Israel. About 100 warplanes, it was claimed, flew 1,200 kilometers and demonstrated their capabilities - something that can be seen as a counter to the reports in June that the Israel Air Force had conducted a similar exercise, which included the simulated bombing of Iran.

The problem with Safawi's statements on a preemptive attack on Israel, and even more so with the reports of the Iranian air force exercise, is that they are not based on any proven capability.

A cautious estimate would be that the damage Iran could cause to Israel today is very limited. The Iranians would have to rely on their local representatives in the region, Hezbollah and Hamas, or to wait until they obtain nuclear weapons - two or three years down the road, even according to the most pessimistic estimates in the West.

Most Iranian warplanes are remnants from the days of the Shah, obsolete American planes. Prof. Anthony Cordesman, a senior U.S. strategic analyst, said in a lecture here last July that only a few of the 300 warplanes the Iranians have are capable of flying at all, and that they lack advanced aeronautical systems. It is highly unlikely that a significant number of such planes could penetrate Israeli defenses.

The second possibility for an Iranian attack is with long-range ground to ground missiles. But Cordesman, like other military experts, claims the Iranian missile program is less advanced than it may appear to be. He estimates the Iranians have a few dozen - and no more than a hundred - missiles with a range capable of reaching Israel. The launch capabilities of Iran's missiles have been tested only a few times and it is very hard to estimate their accuracy.

For now, without the ability to mount nuclear warheads on these missiles, an attack would consist of only conventional weapons. In other words, the damage they could cause would be similar to the destruction left by the Iraqi Scud missiles during the 1991 Gulf War.

It's hard to imagine what good such an attack would do for Iran in the near future. After all, this would be the best way to guarantee an Israeli counter-attack, as well as firm international intervention to halt the Iranian nuclear program, a program that constitutes such an important goal of the Iranian government.

6c) JOE BIDEN'S FEARS

Joe Biden wonders whether Barack Obama is qualified to be commander-in-chief.

"Mark my words," Biden warned Sunday at a Democratic fund-raiser. "It will not be six months [after the inauguration] before the world tests Barack Obama like they did John Kennedy."

Then he added, "Watch. We're going to have an international crisis, a generated crisis, to test the mettle of this guy."

Now, here's where it gets scary.

Obama's "gonna need your help to use your influence within the community to stand with him. Because it's not gonna be apparent initially, it's not gonna be apparent that we're right."

He's going to need help?

Terrific.

What's particularly disturbing is Biden's Kennedy analogy.

For those who don't recall, it was a scant five months after JFK became president that Soviet Premier Nikita Khrushchev took his measure.

Kennedy had just bungled the 1961 Bay of Pigs invasion in Cuba, then went off to a summit in Vienna - where Khruschev determined that the rookie chief executive could be had.

Two months later, construction began on the Berlin Wall, precipitating a crisis that nearly led to a US-Soviet shooting war in Europe.

And 14 months after that came the Cuban Missile Crisis - when nuclear Armageddon was only barely averted.

Is Biden saying that America's current enemies - sorely aware of Obama's inexperience - plan to test a President Obama with similar crises, to see what he's made of?

Sure seems like it.

But what if Obama is still on the wrong side of the learning curve when this major international crisis hits?

More important: What if he makes the wrong decision - as even Joe Biden suggests he might?

After all, Obama was wrong about the troop surge in Iraq.

And he was wrong in his initial response to Russia's invasion of Georgia - when he urged the victimized nation to "show restraint."

And he was wrong when he said he would gladly sit down unconditionally with people like Hugo Chavez and Mahmoud Ahmadinejad - the very people his own running-mate now says are planning to "test" him.

As John McCain said yesterday, "We don't want a president who invites testing from the world . . . The next president won't have time."

Little wonder, then, that Biden later admitted that he "probably shouldn't have said all this."

But why not, Joe?

It's doubtless all true.

And it's much better to get it all out now - rather than wait until it's too late to do anything about it.


7) For Conservatives, Obama's Changes Would Be Permanent and Devastating
By: Michael Medved

Some conservative activists, despairing (prematurely) about the chances for victory on November 4th, argue that an Obama win could be a blessing in disguise. According to this logic, The One would occupy the White House for only One term and whatever big government, liberal programs he managed to enact could be swiftly repealed by some future "true conservative" champion.

Yes, it’s true that some changes by liberal presidents can be erased by future conservatives – for instance, George W. Bush cut the top marginal tax rate to 35%, after it had risen to 39.6% under Clinton (it’s sure to go back up to the Clinton rate – or higher – under Obama). Yes, the President and Congress tinker endlessly with details of the tax system or the levels of appropriation or regulation so that the growth in government and spending under President Obama could be adjusted after his departure, if not reversed.

But conservatives need to face the fact that Barack Obama has promised profound systemic changes that will be irreversible—absolutely permanent alterations of our economy and government where there is no chance at all that Republican office-holders of the future could in any way repair the damage.

For instance, consider two sweeping new entitlements that Obama plans to offer for all Americans – universal (but, he insists, “voluntary”) federally-funded pre-school for all children starting at age three, and a low-cost, heavily subsidized federal health insurance plan for every low or middle income American who wants it.

A President Obama would no doubt promote such proposals in his first year in office and a compliant, heavily-Democratic Congress would approve them promptly—perhaps making the benefits even more generous. This means that before the next election, tens of millions (probably hundreds of millions) of American families will take advantage of “free” pre-kindergarten education (and day care), as well as cheap, subsidized (to the tune of at least $160 billion per year) health insurance. The chances of ever taking away such goodies are nil --- Presidents may come and go, but entitlements are forever. New government give-aways may accomplish nothing constructive but they’re all but impossible to eliminate once they’re up and running.

Consider Jimmy Carter’s horribly misguided establishment of two vast new cabinet level departments --- the Department of Education and the Department of Energy. When the indignant public swept out of office the worst president of modern times, Reagan took the White House with talk of eliminating one or both of these two wasteful bureaucracies. Even the Great Gipper failed in this endeavor, and the Departments of Energy and Education continue to soak up hundreds of billions of tax dollars and to employ tens of thousands, despite their abject failure at improving either public education or our energy supplies.

Obama’s new entitlements will similarly survive all attempts to eliminate them. If he becomes President we’ll be permanently stuck not just with federal pre-school and a subsidized health insurance guarantee (Obama described it as a “right” in the last debate), but with a $4,000 annual check (a so-called “refundable tax credit”) to all “non-wealthy” college students, a doubling of the Peace Corps, vast increases in AmeriCorps, new billions for “National Service,” a tripling of the foreign aid budget (a specific Obama promise) and much, much more. For those who believe it’s easy to reduce or erase such spending in future administrations, consider the example of Bill Clinton’s cherished “service program” AmeriCorps (which pays its “volunteers” close to $30,000 a year). Gingrich, George W. Bush and countless other conservatives recognize that this is a wasteful, crooked, outrageous effort to use taxpayer money to fund leftist activism, but even when the GOP controlled all levers of government they made no progress in slaughtering the monster.

Or think about Lyndon Johnson’s federal initiative for a “National Endowment for the Arts” in 1967. By now, this appalling program has wasted many billions of taxpayer dollars to fund the ugliest and most puerile sorts of artistic expression. No one can make a serious case that the NEA has accomplished anything worthwhile in uplifting or enriching our culture (in which more than 98% of all cultural spending comes from private sources--- donations, opera tickets, sales of paintings, museum admissions, or corporate grants, rather than government initiatives at the federal, state or local level). Despite the endlessly demonstrated uselessness and insipidity of the National Endowment, it continues to flourish – and even won increased appropriations in recent years.

Aside from the ongoing growth of government and the waste of public money, other changes brought about by President Obama will prove to be unalterable and devastating: in his first year, he will authorize gays serving openly in the military, and hasten the national imposition of homosexual marriage (he’s pledged to repeal the Defense of Marriage Act).

He will also get the chance to appoint at least two, and perhaps as many as four new justices to the Supreme Court of the United States. All legal observers expect Obama’s nominees to embrace an even more activist, leftist view of the Constitution and legal system than Clinton’s appointees, Breyer and Ginzburg. The damage from the remaking of the court could prove incalculable. There is also no chancesof impeaching any Supreme Court Justice (short of a credible murder or rape charge) even if Republicans re-take control in some future Congress. The GOP (led by Jerry Ford as House Minority Leader) tried to gain traction for impeachment efforts to counteract the wildly destructive excesses of the Warren Court but got absolutely nowhere and managed, mostly, to embarrass themselves.

Finally, and perhaps most fatally, a President Obama will radically revamp our already broken immigration system and permanently remake the country, politically and demographically.

Most conservatives passionately opposed the sweeping immigration reform promoted in 2007 by President Bush, Senator McCain (and, it must be noted, a majority of Republican members of the US Senate) because it granted a complicated path to legalization for some of the millions of illegal immigrants who are already here. Those concerned citizens who celebrated “victory” last year with the collapse of the immigration compromise should prepare themselves for a much more liberal, forgiving reform under Obama (and his supportive Congress) that will make legalization far easier, and will include far more of the illegals as future voters and citizens.

Of course the Democrats will push such changes, knowing that they can thereby claim sole “credit” for welcoming millions of new citizens to the voting roles, and with the expectation that such freshly minted Americans will vote Democratic for the rest of their lives. The Democrats will also cut back immediately on the workplace immigration raids and enhanced border security that has enabled the Bush administration to sharply cut back on illegal entries in the last year --- Obama has specifically condemned these efforts and might even halt or slow ongoing work on the border fence.

In any event, we’ve been down this road before: the Republicans claimed credit for the restrictive Immigration Act of 1924, all but eliminating the flow of humanity from Eastern and Southern Europe, and as a result vast numbers of ethnic voters (Italians, Poles, Jews, Greeks and more) became loyal Democrats for a generation or more.

This shift in immigrant voters played a huge role in the establishment of the New Deal Coalition that won five Presidential elections in a row (1932 through 1948) and totally dominated Congress for an appalling fifty years (1930-1980).

As Amity Shlaes shows in her necessary new book “The Forgotten Man,” FDR failed miserably at turning around the US economy (the Depression lingered until the beginning of World War II) but succeeded brilliantly in achieving long-term power for the Democratic Party. The innumerable government programs launched by the New Deal may have done nothing to advance the overall interests of the nation of the economic system, but they performed magnificently at creating dependent interest groups who voted reliably Democratic for decades. If the government hands out goodies to various constituencies, those segments of the population will continue to support the idea of enriching themselves with other people’s money.

That’s the biggest threat of an Obama presidency: the creation of vast new groups of dependent Americans who will comprise an unassailable new coalition that will enjoy iron control of our politics for a generation or more. If you start with newly legalized immigrant voters (with as many as 10 million new Democrats totally beholden to Obama and company) and then add the beneficiaries of government pre-school, the new nursery school teachers, the recipients and administrators of federal health insurance, federal college grants, the businesses who’ll enjoy the $150 billion in promised subsidies for “alternative energy,” the companies and employees of the vast increases in “infra-structure” spending (lots more bridges to nowhere), the non-tax payers who will suddenly receive a $1,000 per household check (under the guise of “refundable tax credit,” and many, many more.

In his first years in office, a President Obama could easily succeed in buying so many interest groups and constituencies with expensive new governmental favors, that conservative dreams of rebuilding a small government majority will go absolutely nowhere.

The conservative movement, and the survival of a viable small-government faction in American politics, depends upon a McCain victory in November. A triumph for Barack Obama, combined with Democratic gains in both House and Senate, could easily usher in a dark new era with decades of corrupt, welfare-state, bureaucratic leftist rule.

8) Government Can't Do It All (Or Even Most of It)
By Cal Thomas

People who put faith in government to solve national or even individual problems are headed for deep disappointment, if it hasn't already arrived. Still, that doesn't stop politicians from attempting to sell political snake oil to the gullible. No one ever lost money betting on the ignorance of the uninformed masses.

What should be required viewing before the election is "John Stossel's Politically Incorrect Guide to Politics," a "20/20" report critical of the U.S. government's ability to get things done (www.abcnews.com). The report looked at facts, not opinions, or "feelings" concerning government's inability to live up to the high expectations caused by over-promising politicians.

Stossel visited New Orleans to see how government reconstruction is progressing three years after Hurricane Katrina. What he found should not surprise anyone. Huge numbers of houses remain un-repaired thanks to a bureaucracy that could serve as a plot for a horror movie called "Nightmare on Bourbon Street." The forms necessary to apply for permits to conduct any repairs or construct new buildings take 10 minutes to explain. As for the houses themselves, "Of the 314 public projects (New Orleans Mayor Ray) Nagin promoted in his 'One New Orleans' rebuilding campaign announced in January 2006, only six are complete."

Contrast that with what the nonprofit Habitat for Humanity has done: "They built 70 homes quickly," noted Stossel. "Even Nagin admitted they did what government didn't." Private enterprise has succeeded, where government has failed. Actor Brad Pitt ("Brad Pitt has done more for this community than anyone," said Malik Rahim, one of the co-founders of Common Ground Collective, a group formed in New Orleans after Hurricane Katrina) and singer Harry Connick Jr. have been at the forefront of efforts to circumvent government stagnation.

Stossel asked the obvious question: If Pitt and Connick can help build dozens of new homes, why does it take government so long to follow through on its plans? Nagin explains he's made it easier for people to rebuild their homes, providing permits online at kiosks throughout the city.

Stossel visited city hall and guess what? Not one of the kiosks worked! Conclusion? Individual Americans do things better, with less bureaucracy and at less cost than the central planning collective known as government.

Another issue was campaign finance reform, which has come back to bite its chief promoter, Sen. John McCain. It is a maze of incomprehensible regulations. Stossel displayed the Federal Election Commission (FEC) regulation book, which contains nearly 500 pages of small print set in double columns. For effect, he taped the pages together and then stretched them out on the Giant's football field. The pages "spanned the whole field and halfway back."

He showed people who ran afoul of the law by placing signs in yards in opposition to an annexation ballot initiative. It's a head-shaker. Another example: Ada Fisher, a retired doctor, ran for Congress in North Carolina with an all-volunteer staff. The FEC imposed a $10,000 fine on her because she somehow violated their rules. She noted that even "reform" laws are designed to help incumbents stay in office. Stossel said the extremely high re-election rate of members of Congress remains the same as it was before "reform," which was promoted as a way to open up the system to more challengers.

Stossel used a visual metaphor to demonstrate why government regulations stifle individual initiative, leading to dysfunction. He visited a skating rink where people managed to go in the same direction and at about the same speed without instructions from anyone. Then he introduces Brian Boitano, a former Olympic skater, who begins telling some skaters they are going too fast and others too slow and shouting other commands. Chaos results. The moral? "Intuition leads us to think that complex problems require centrally planned solutions, but political decision-making is rarely the answer. Life works best when we govern ourselves."

Both John McCain and Barack Obama are asking us to trust them to "fix" what is wrong in Washington. One would make things worse, but neither would have the power to make things much better. That would take cooperation. Politicians promote faith in themselves, though such faith has proven to be misplaced. They want the power. The worst thing the public can do is to give one party unchecked power with no restraints.

If Obama wins and Democrats expand their congressional majorities, especially to a filibuster-proof advantage in the Senate, this will be to our collective detriment.

9) The Dangers of a Diminished America: In the 1930s, isolationism and protectionism spurred the rise of fascism.
By AARON FRIEDBERG and GABRIEL SCHOENFELD


With the global financial system in serious trouble, is America's geostrategic dominance likely to diminish? If so, what would that mean?

One immediate implication of the crisis that began on Wall Street and spread across the world is that the primary instruments of U.S. foreign policy will be crimped. The next president will face an entirely new and adverse fiscal position. Estimates of this year's federal budget deficit already show that it has jumped $237 billion from last year, to $407 billion. With families and businesses hurting, there will be calls for various and expensive domestic relief programs.

In the face of this onrushing river of red ink, both Barack Obama and John McCain have been reluctant to lay out what portions of their programmatic wish list they might defer or delete. Only Joe Biden has suggested a possible reduction -- foreign aid. This would be one of the few popular cuts, but in budgetary terms it is a mere grain of sand. Still, Sen. Biden's comment hints at where we may be headed: toward a major reduction in America's world role, and perhaps even a new era of financially-induced isolationism.

Pressures to cut defense spending, and to dodge the cost of waging two wars, already intense before this crisis, are likely to mount. Despite the success of the surge, the war in Iraq remains deeply unpopular. Precipitous withdrawal -- attractive to a sizable swath of the electorate before the financial implosion -- might well become even more popular with annual war bills running in the hundreds of billions.

Protectionist sentiments are sure to grow stronger as jobs disappear in the coming slowdown. Even before our current woes, calls to save jobs by restricting imports had begun to gather support among many Democrats and some Republicans. In a prolonged recession, gale-force winds of protectionism will blow.

Then there are the dolorous consequences of a potential collapse of the world's financial architecture. For decades now, Americans have enjoyed the advantages of being at the center of that system. The worldwide use of the dollar, and the stability of our economy, among other things, made it easier for us to run huge budget deficits, as we counted on foreigners to pick up the tab by buying dollar-denominated assets as a safe haven. Will this be possible in the future?

Meanwhile, traditional foreign-policy challenges are multiplying. The threat from al Qaeda and Islamic terrorist affiliates has not been extinguished. Iran and North Korea are continuing on their bellicose paths, while Pakistan and Afghanistan are progressing smartly down the road to chaos. Russia's new militancy and China's seemingly relentless rise also give cause for concern.

If America now tries to pull back from the world stage, it will leave a dangerous power vacuum. The stabilizing effects of our presence in Asia, our continuing commitment to Europe, and our position as defender of last resort for Middle East energy sources and supply lines could all be placed at risk.

In such a scenario there are shades of the 1930s, when global trade and finance ground nearly to a halt, the peaceful democracies failed to cooperate, and aggressive powers led by the remorseless fanatics who rose up on the crest of economic disaster exploited their divisions. Today we run the risk that rogue states may choose to become ever more reckless with their nuclear toys, just at our moment of maximum vulnerability.

The aftershocks of the financial crisis will almost certainly rock our principal strategic competitors even harder than they will rock us. The dramatic free fall of the Russian stock market has demonstrated the fragility of a state whose economic performance hinges on high oil prices, now driven down by the global slowdown. China is perhaps even more fragile, its economic growth depending heavily on foreign investment and access to foreign markets. Both will now be constricted, inflicting economic pain and perhaps even sparking unrest in a country where political legitimacy rests on progress in the long march to prosperity.

None of this is good news if the authoritarian leaders of these countries seek to divert attention from internal travails with external adventures.

As for our democratic friends, the present crisis comes when many European nations are struggling to deal with decades of anemic growth, sclerotic governance and an impending demographic crisis. Despite its past dynamism, Japan faces similar challenges. India is still in the early stages of its emergence as a world economic and geopolitical power.

What does this all mean? There is no substitute for America on the world stage. The choice we have before us is between the potentially disastrous effects of disengagement and the stiff price tag of continued American leadership.

Are we up for the task? The American economy has historically demonstrated remarkable resilience. Our market-oriented ideology, entrepreneurial culture, flexible institutions and favorable demographic profile should serve us well in whatever trials lie ahead.

The American people, too, have shown reserves of resolve when properly led. But experience after the Cold War era -- poorly articulated and executed policies, divisive domestic debates and rising anti-Americanism in at least some parts of the world -- appear to have left these reserves diminished.

A recent survey by the Chicago Council on World Affairs found that 36% of respondents agreed that the U.S. should "stay out of world affairs," the highest number recorded since this question was first asked in 1947. The economic crisis could be the straw that breaks the camel's back.

In the past, the American political process has managed to yield up remarkable leaders when they were most needed. As voters go to the polls in the shadow of an impending world crisis, they need to ask themselves which candidate -- based upon intellect, courage, past experience and personal testing -- is most likely to rise to an occasion as grave as the one we now face.