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While Obama is busy signing a nuclear weapons treaty is Chavez in bed with Iran and thus, neutralizing any future Obama sanction effort?
I wonder whether Obama ever learned to play chess. Russians are masters at it and Putin seems several moves ahead. (See 2 and 2a below.)
Since Obama does not have the heart to stop Iran and/or Chavez he attacks Israeli scientists. (See 2b and 2c below.)
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Stupak falls on his sword and 'aborts' his return to Congress. (See 3 below.)
Is Romney hung on his own petard? He can't complain about Obama's health care plan when the one he signed into law parallels and is proving a financial disaster.
It's the price 'Republican Lights' pay when they embrace Democrat philosophy.
The public eventually sees through a politician who fails to be a purist.
I voted for Romney in the last nomination process but would be reluctant to vote for him again. But, against Obama I would probably vote for the devil himself.(See 3a below.)
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Now time for the rich and famous to share the ignominy of foreclosure. (See 4 below.)
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Words as well as labels have meanings. (See 5 below.)
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Two novel articles. One suggests government is the biggest law breaker and the other stretches a legal theorem. (See 5 and 5a below.)
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Netanyahu's decision not to participate in the upcoming nuclear meeting may not play well in the press but why keep going to meetings where you are likely to be bashed? So Netanyahu is sending a representative. (See 6 below.)
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Caroline Glick puts a different spin on Abdullah's recent comments. I believe a weak Israel is a threat to several Arab nations in the region including the Saudis and they understand this as well.
When Obama weakens Israel he actually weakens 'moderate' Arab /Muslim nations which backed themselves into a corner by elevating the Palestinian issue and stating it is the basis for all the region's ills. (Note: I put quotes around the word moderate.) (See 7 below.)
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Paul Ryan is bright, presentable, articulate and worth listening to and if Republicans were smart they would follow his lead. Ryan is a fresh face with solid rebuttals to stale Democrat thinking. (See 8 below.)
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Dick
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1)Afghanistan and the Decline of American Power:President Karzai's anti-American shift is a statement about the standing of the Obama administration in the region.
By FOUAD AJAMI
President Obama's "war of necessity" in Afghanistan increasingly has to it the mark of a military campaign disconnected from a bigger political strategy.
Yes, it is true, he "inherited" this war. But in his fashion he embraced it and held it up as a rebuke to the Iraq war. The spectacle of Afghan President Hamid Karzai going rogue on the American and NATO allies who prop up his regime is of a piece with other runaway clients in far-off lands learning that great, distant powers can be defied and manipulated with impunity. After all, Mr. Karzai has been told again and again that his country, the safe harbor from which al Qaeda planned and carried out 9/11, is essential to winning the war on terror.
Some months ago, our envoy to Kabul, Ambassador Karl Eikenberry, saw into the heart of the matter in a memo to his superiors. Mr. Eikenberry was without illusions about President Karzai. He dismissed him as a leader who continues to shun "responsibility for any sovereign burden, whether defense, governance or development. He and his circle don't want the U.S. to leave and are only too happy to see us invest further. They assume we covet their territory for a never-ending war on terror and for military bases to use against surrounding powers."
The Eikenberry memorandum lays to rest once and for all the legend of Afghanistan as a "graveyard of empires." Rather than seeking an end to the foreign military presence, the Afghans and their leader seek to perpetuate it. It spares them the hard choice of building a nation-state, knitting together feuding ethnicities and provinces, and it brings them enormous foreign treasure.
Mr. Karzai may be unusually brazen and vainglorious in his self-regard. He may have been acting out of a need to conciliate the Pashtun community from which he hails and which continues to see him as the front man for a regime that gives the Tajiks disproportionate power and influence. But his conduct is at one with the ways of Afghan warlords and chieftains.
Still, this recent dust-up with Mr. Karzai—his outburst against the West, his melodramatic statement that he, too, could yet join the Taliban in a campaign of "national resistance," his indecent warning that those American and NATO forces soldiering to give his country a chance are on the verge of becoming foreign occupiers—is a statement about the authority of the Obama administration and its standing in Afghanistan and the region.
Forgive Mr. Karzai as he tilts with the wind and courts the Iranian theocrats next door. We can't chastise him for seeking an accommodation with Iranian power when Washington itself gives every indication that it would like nothing more than a grand bargain with Iran's rulers.
In Afghanistan, and throughout the Middle East, populations long in the path, and in the shadow, of great foreign powers have a good feel for the will and staying power of those who venture into their world. If Iran's bid for nuclear weapons and a larger role in the region goes unchecked, and if Iran is now a power of the Mediterranean (through Hamas in Gaza and Hezbollah in Beirut), the leaders in Kabul, whoever they are, are sure to do their best to secure for themselves an Iranian insurance policy.
From the very beginning of Mr. Obama's stewardship of the Afghan war, there was an odd, unsettling disjunction between the centrality given this war and the reluctance to own it in full, to stay and fight until victory (a word this administration shuns) is ours.
Consider the very announcement of the Obama war strategy last November in Mr. Obama's West Point address. The speech was at once the declaration of a "surge" and the announcement of an exit strategy. Additional troops would be sent, but their withdrawal would begin in the summer of 2011.
The Afghans, and their interested neighbors, were invited to do their own calculations. Some could arrive at a judgment that the war and its frustrations would mock such plans, that military campaigns such as the one in Afghanistan are far easier to launch than to bring to a decent conclusion, that American pride and credibility are destined to leave America entangled in Afghan troubles for many years to come. (By all indications, Mr. Karzai seems to subscribe to this view.)
Others could bet on our war weariness, for Americans have never shown an appetite for the tribal and ethnic wars of South Asia and the Middle East. The shadow of our power lies across that big region, it is true. But we blow in and out of these engagements, generally not staying long enough to assure our friends and frighten our enemies.
Zia ul-Haq, the military dictator who recast Pakistani politics away from that country's secular beginnings and plunged into the jihad and its exertions, once memorably observed that being an ally of the United States was like sitting on the bank of a great river where the ground is lush and fertile, but that every four to eight years the river changes course and the unsuspecting friend of American power finds himself in a barren desert. Mr. Obama has not given the protagonists in the Afghan war the certainty that he is in it for the long haul.
In word and deed, Mr. Obama has given a sense of his priorities. The passion with which he pursued health-care reform could be seen at home and abroad as the drive of a man determined to remake the American social contract. He aims to tilt the balance away from liberty toward equality. The very ambition of his domestic agenda in health care and state intervention in the economy conveys the causes that stir him.
Granted, Mullah Omar and his men in the Quetta Shura may not be seasoned observers of Washington's ways. But they (and Mr. Karzai) can discern if America is marking time, giving it one last try before casting Afghanistan adrift. It is an inescapable fact that Mr. Obama hasn't succeeded in selling this Afghan venture—or even the bigger war on terror itself—to his supporters on the left. He fights the war with Republican support, but his constituency remains isolationist at heart.
The president has in his command a great fighting force and gifted commanders. He clearly hopes they will succeed. But there is always the hint that this Afghan campaign became the good, worthwhile war by default, a cause with which to bludgeon his predecessor's foray into Iraq.
All this plays out under the gaze of an Islamic world that is coming to a consensus that a discernible American retreat in the region is in the works. America's enemies are increasingly brazen, its friends unnerved. Witness the hapless Lebanese, once wards of U.S. power, now making pilgrimages, one leader at a time, to Damascus. They, too, can read the wind: If Washington is out to "engage" that terrible lot in Syria, they better scurry there to secure reasonable terms of surrender.
The shadow of American power is receding; the rogues are emboldened. The world has a way of calling the bluff of leaders and nations summoned to difficult endeavors. Would that our biggest source of worry in that arc of trouble was the intemperate outburst of our ally in Kabul.
Mr. Ajami, a professor at Johns Hopkins School of Advanced International Studies and a senior fellow at Stanford University's Hoover Institution, is the author of "The Foreigner's Gift" (Free Press, 2007).
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2)Time to Confront the Tehran-Caracas Axis: U.S. sanctions can't work as long as trade between Iran and Venezuela remains robust..ArticleCommentsmore in Opinion ».EmailPrintSave This ↓ More.
By ROGER NORIEGA
As Washington policy makers scramble to craft effective sanctions against Iran, they seem to have completely ignored Mahmoud Ahmadinejad's blossoming relationship with Venezuela's Hugo Chávez. This strategic alliance provides the Iranian regime with a clandestine source of uranium, helps it evade restrictions on trade and financing, and gives Middle Eastern terrorists access to weapons from Mr. Chávez's growing arsenal. So even if the West is able to implement a sanctions plan with bite, Tehran's partnership with Caracas might cancel it out.
Mr. Chávez is a self-declared enemy of the United States who has aided terrorist groups and radical regimes for more than a decade. Though his support of Iran should come as no surprise, it is not clear that the U.S. is prepared to respond to the Caracas-Tehran axis.
In September 2005, Mr. Chávez signaled his sympathies when Venezuela was the only member of the International Atomic Energy Agency (IAEA) board to vote against sanctioning Iran for its illegal uranium enrichment program. Four years later, during Mr. Chávez's eighth visit to Iran, he called that country a "strategic ally." On Sept. 11, 2009, in an interview in the French newspaper Le Figaro, he thanked Iran for helping Venezuela develop its own nuclear program. Indeed, the two governments formalized their collaboration "in the field of nuclear technology" in an accord signed in Caracas in November 2008. And, in the midst of a crushing fiscal crisis, last December Mr. Chávez ordered his treasury to channel another $50 million toward a secret nuclear program, according to a document provided to me by a source in Venezuela.
Although Mr. Chávez has denounced reports of uranium mining as "lies" and part of an "imperialist plan," the Canadian uranium exploration company U308 Corp has recorded a substantial source of uranium in the Roraima Basin, which straddles the border between Guyana and the Venezuelan province of Bolívar.
Iranian or other Middle Eastern individuals operate a tractor factory, cement plant and gold mine in this region. Two of these facilities have private ports on the Orinoco River, affording unimpeded access to the Atlantic. One of these operations—the VenIran tractor factory—was the intended recipient of 22 containers intercepted by Turkish customs authorities at the port of Mersin in December 2008. They were carrying an "explosives lab" and nitrate and sulfite chemicals that are used to manufacture explosives.
These industrial operations are only the tip of the iceberg. Joint ventures and other projects totaling at least $30 billion between Iranian and Venezuelan front companies can be used to conceal multimillion dollar transactions. In addition, Iran has created several major financial institutions in Venezuela that work through local banks to gain access to the global banking system.
Because Venezuela can barely meet its domestic demand for refined petroleum products, some have doubted that Mr. Chávez can make good on his September 2009 pledge to supply Mahmoud Ahmadinejad's regime with 20,000 barrels of gasoline a day to soften the blow of expected sanctions. If the U.S. intelligence community is paying attention, however, it will know what Mr. Chávez told his Iranian counterpart in Caracas last November: Venezuela is already purchasing fuel on the international market for planned shipment to Iran, according to a secret account of the meeting provided to me by Venezuelan sources.
The Iranian relationship has also helped boost Venezuelan support of Middle Eastern radicals. Last November, Israeli navy commandos seized the German cargo vessel Francop, which was carrying 36 shipping containers holding 500 tons of Katyusha rockets, mortars, grenades and a half-million rounds of small-arms ammunition en route to Syria, but ultimately bound for Hezbollah in Lebanon. The lethal shipment had left the Venezuelan port of Guanta around the time that Venezuelan Foreign Minister Nicolas Maduro was visiting Damascus to deliver a message from Mr. Chávez to Bashar al-Assad.
Because the U.S. is determined to ignore what it dismisses as petty provocations, Washington has refused to take any effective action against Mr. Chávez's support for Colombian terrorists and his complicity in drug trafficking. Perhaps his ties with Iran will be a game-changer.
Any serious sanctions program must plug the gaps opened up by the substantial business and banking relationships between Iran and Venezuela. Tehran's support for Mr. Chávez's nuclear ambitions must be brought under the strict scrutiny of the IAEA. Venezuelan officials, the state oil company, and other financial institutions should be investigated and sanctioned for abetting illegal financial transactions. Mr. Chávez's support for terrorist groups in the Americas and beyond should be challenged as a threat to peace and an act of aggression under Chapter 7 of the United Nations Charter.
Mr. Noriega was U.S. ambassador to the Organization of American States from 2001 to 2003 and assistant secretary of state from 2003 to 2005. He is a visiting fellow at the American Enterprise Institute and managing director of the advocacy firm, Vision Americas LLC.
2b)Report that Obama administrationis denying visas to Israeli scientists
is deeply troubling
Serious concern is expressed after a report in one of Israel's leading newspapers, Maariv, indicates the Obama administration is denying visas to Israeli nuclear scientists working at the nuclear research center in Dimona.
In the past, scientists and researchers from Dimona have routinely come to the United States to study chemistry, physics, and nuclear engineering at American universities and to attend professional seminars.
According to the report, the Obama administration has stopped issuing visas to Dimona scientists solely because of their affiliation with the Israeli nuclear center.
Reactor employees reportedly have also complained that the Obama administration has stopped selling them reactor components that the U.S. routinely sold to them in the past. Professor Zeev Alfasi, the head of Nuclear Engineering at Ben-Gurion University in the Negev, told Maariv that the U.S. has never sold nuclear material to Israel, but now the Israeli nuclear center must buy other items, such as radiation detectors, from France, because the U.S. is no longer selling anything to Dimona.
This would seem to be another example of the unprecedented, harsh, and hostile posture the Obama administration has adopted toward Israel. President Obama continues to extend a friendly hand to Mideast dictatorships like Iran and Syria, while slapping our most important strategic ally there - and fellow democracy - in the face.
This is apparently yet another breach in the bipartisan tradition of U.S. support for and friendship with Israel that built the U.S.-Israel alliance over many years. We call on the Obama administration to cancel any policy of discrimination against Israeli nuclear scientists and to restore the traditional friendship and cooperation that have characterized the U.S.-Israel relationship.
2c)U.S. Shouldn't Play Nice on Nukes
By Charles Krauthammer
Nuclear doctrine consists of thinking the unthinkable. It involves making threats and promising retaliation that is cruel and destructive beyond imagining. But it has its purpose: to prevent war in the first place.
During the Cold War, we let the Russians know that if they dared use their huge conventional military advantage and invaded Western Europe, they risked massive U.S. nuclear retaliation. Goodbye Moscow.
Was this credible? Would we have done it? Who knows? No one's ever been there. A nuclear posture is just that -- a declaratory policy designed to make the other guy think twice.
Our policies did. The result was called deterrence. For half a century, it held. The Soviets never invaded. We never used nukes. That's why nuclear doctrine is important.
The Obama administration has just issued a new one that "includes significant changes to the U.S. nuclear posture," said Defense Secretary Bob Gates. First among these involves the U.S. response to being attacked with biological or chemical weapons.
Under the old doctrine, supported by every president of both parties for decades, any aggressor ran the risk of a cataclysmic U.S. nuclear response that would leave the attacking nation a cinder and a memory.
Again: Credible? Doable? No one knows. But the threat was very effective.
Under President Obama's new policy, however, if the state that has just attacked us with biological or chemical weapons is "in compliance with the Non-Proliferation Treaty (NPT)," explained Gates, then "the U.S. pledges not to use or threaten to use nuclear weapons against it."
Imagine the scenario: Hundreds of thousands are lying dead in the streets of Boston after a massive anthrax or nerve gas attack. The president immediately calls in the lawyers to determine whether the attacking state is in compliance with the NPT. If it turns out that the attacker is up-to-date with its latest IAEA inspections, well, it gets immunity from nuclear retaliation. (Our response is then restricted to bullets, bombs and other conventional munitions.)
However, if the lawyers tell the president that the attacking state is NPT noncompliant, we are free to blow the bastards to nuclear kingdom come.
This is quite insane. It's like saying that if a terrorist deliberately uses his car to mow down a hundred people waiting at a bus stop, the decision as to whether he gets (a) hanged or (b) 100 hours of community service hinges entirely on whether his car had passed emissions inspections.
Apart from being morally bizarre, the Obama policy is strategically loopy. Does anyone believe that
Track all members of the 111th Congress who have left or announced they are leaving.
He was involved in several moments of high drama. The original House bill was held up at the last moment as Mr. Stupak and his allies insisted on requiring women who would buy policies on new insurance marketplaces, to be set up under the law, to obtain a separate policy covering abortion. That enraged women's advocates, including many of Mr. Stupak's colleagues, who argued that few if any women would do so, since no one plans to have an abortion.
Last month, when the House took its final vote on the Senate bill, Mr. Stupak went along with slightly less restrictive language requiring that women write a separate check to their insurer for abortion coverage. He did so with the promise that Mr. Obama would sign his executive order, which he subsequently did. When Mr. Stupak's agreement became known early on the day of the vote, opponents of the health bill knew they'd lost.
3a)Romney Dogged by a Tale of Two Health Plans .ArticleComments By PETER WALLSTEN
MANCHESTER, N.H.—Mitt Romney, along with some other Republicans likely to run for president in 2012, is raising money this year for congressional candidates who want to repeal President Barack Obama's sweeping health-care law.
But as Mr. Romney tours to promote his new book, some people have been posing an uncomfortable question: If he opposes Mr. Obama's health-care policy, why did Mr. Romney shepherd a near-universal health-insurance system into law as governor of Massachusetts?
"People have been coming to me and saying, 'Well, why are you against this health-care policy in the federal government when your man, Mitt Romney, has done the same thing in Massachusetts?' " said Bob Letourneau, a Republican state senator from Derry, N.H., addressing Mr. Romney Wednesday night during a question-and-answer session at Saint Anselm College.
On Thursday morning in Bedford, N.H., Mr. Romney heard from Charles Arlinghaus, who opposes the federal law's requirement that nearly all Americans buy health-insurance coverage. Mr. Arlinghaus, a Republican who leads a local think tank, told Mr. Romney at a breakfast that drew 150 people that many conservatives opposed the Obama plan because they viewed the Massachusetts precursor as a failure.
The exchanges highlighted the unique political problem facing Mr. Romney as he tries to capitalize on conservative anger over the new health-care law. Like Mr. Obama, Mr. Romney's signature policy achievement was enacting a plan that covers nearly everyone and gives subsidies to some people to help them afford insurance.
In three appearances this week in New Hampshire, Mr. Romney attacked the Obama law as a "government takeover" of the health-care system that raises taxes and cuts funding for the Medicare Advantage programs that insure many seniors.
By contrast, he said, the Massachusetts plan was a state-level solution, not a federal "intrusion" on the constitutional guarantees of states' rights.
But Mr. Romney, who was governor from 2003 until 2007 and sought the GOP presidential nomination in 2008, acknowledged parallels between the two laws. He said those include assurances that people who lose their jobs or have preexisting conditions will have access to insurance coverage.
"I like the things that are similar. I don't like the things that are different," he said. "And that's why I vehemently oppose" the Democrat-backed federal initiative.
Mr. Romney also took pains to defend another element common to both plans—the mandate requiring nearly all people to buy coverage—that many conservative activists consider one of the most objectionable elements of the federal law. But he did so by adopting a more GOP-friendly vocabulary, declaring it a matter of "personal responsibility" for all people to buy into insurance pools so that "free riders" without insurance can't stick taxpayers with their hospital bills.
"We are a party and a movement of personal responsibility," he said at a book signing in Manchester. He invoked the same idea at the college, calling it a "conservative bedrock principle."
Mr. Romney told audiences here that his plan contained some flaws, such as not allowing people who can pay their own medical bills a way to opt out of the requirement that they buy insurance. But he declared his Massachusetts plan a success that had achieved 98% coverage, and he said he wouldn't back away from his legacy.
"By and large, it's an advance," he said.
Some of Mr. Romney's potential rivals for the 2012 GOP nomination, Minnesota Gov. Tim Pawlenty and former Alaska Gov. Sarah Palin, are also raising money for repeal supporters.
Democrats and some Republicans, taking shots at Mr. Romney, have cited similarities between the Massachusetts and federal laws. Mr. Obama credited Mr. Romney for crafting a model program, telling NBC last week that "a lot of commentators have said, you know, this is this is similar to the bill that Mitt Romney, the Republican governor and now presidential candidate, passed in Massachusetts."
Mr. Pawlenty told the Nashua Telegraph in New Hampshire last month that the "Massachusetts experience…would not be one I would want for the country to follow any further."
Mr. Romney's criticism of the federal law has surprised one of his former advisers, Jonathan Gruber, a Massachusetts Institute of Technology economist who helped draw up the state plan.
Mr. Gruber, a Democrat who worked in the Clinton administration, said Mr. Romney "knocked my socks off" in 2005 when the governor explained his commitment to universal health-insurance coverage. "He was arguing for it when his [political] advisers were saying he shouldn't do it," Mr. Gruber recalled.
Washington WireLiz Cheney Calls for Health Care Repeal .
"If any one person in the world deserves credit for where we are now [with the passage of the new federal law], it's Mitt Romney," he said. "He designed the structure of the federal bill."
Mr. Romney is on a tour to promote his best-selling book, "No Apology: The Case for American Greatness." The book, a withering critique of Mr. Obama's foreign policy and domestic agenda, has reintroduced him to voters and taken him on tour to politically important states.
Mr. Romney is also keeping an eye on the campaign machinery—attending a private dinner here Wednesday night, for instance, with New Hampshire activists who backed his rivals John McCain and Rudy Giuliani in the 2008 GOP primaries. The former governor said he will decide after the November mid-term elections whether to seek the White House.
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4)Foreclosures Hit Rich and Famous .
By CRAIG KARMIN And JAMES R. HAGERTY
The rich and famous now have something in common with hundreds of thousands of middle and lower-class Americans: The bank is about to take their homes.
Houses with loans of $5 million or more will likely see a sharp rise in foreclosures this year, according to a RealtyTrac study for The Wall Street Journal.
Gabe Palacio for The Wall Street Journal Banks had scheduled a foreclosure auction of Richard Fuscone's Westchester County, N.Y., mansion this week. But the former top Wall Street executive declared personal bankruptcy, delaying the auction.
Just this week, a Tudor mansion in Bel-Air belonging to film star Nicolas Cage was in foreclosure auction and reverted to the lender. On Wednesday, Richard Fuscone, a former top Wall Street executive, declared personal bankruptcy, forestalling a foreclosure auction that had been scheduled this week on his 14-acre Westchester mansion. Last month a Manhattan condominium owned by Italian film producer Vittorio Cecchi Gori was sold in a foreclosure auction for $33.2 million.
In February alone, 352 homes nationwide in this category were scheduled for foreclosure auction, the final step before a bank acquisition. That is the largest monthly number of these so-called notices of sale since the financial crisis began. By comparison, in all of 2009, there were 1,312 such notices.
Economists say the super-wealthy are among the last to lose their homes in a mortgage crisis because they usually have high savings, better access to credit and other means for staving off foreclosure. But many of them work in financial services and other industries hit especially hard by the crisis, and have seen their wealth shrink in the market crash.
While the numbers are modest compared with foreclosures at other income levels, they suggest the possibility of a sudden spike in bank takeovers of the wealthiest Americans' property. Typically half the notices of sale result in homes being turned over to creditors, though the figure could be slightly lower for the richest Americans who have more financial options, according to Daren Blomquist at RealtyTrac.
Big borrowers are more likely to default than ordinary people, according to data from First American CoreLogic. Its loan database, reflecting more than 80% of the overall home-loan market, includes 1,700 loans with balances of $4 million or more. About 14.8% of those loans were 90 days or more overdue at the end of January, compared with 8.7% for all home loans tracked by First American. Sam Khater, a senior economist at First American, said the bigger borrowers may be more prone to stop making payments when they have lost all their home equity.
Mr. Fuscone, Merrill Lynch's one-time head of Latin America, put his mansion up for sale in November, asking $13.9 million. But he couldn't find a buyer.
The court had scheduled a foreclosure auction for Thursday for the 18,471-square-foot mansion—with two swimming pools, two elevators, six fireplaces, 11 bathrooms and a seven-car garage. The personal bankruptcy filed in U.S. Bankruptcy Court Wednesday temporarily freezes the foreclosure process.
Reached by phone, Mr. Fuscone declined to comment. Brokers and real estate tracking companies say that his home is one of the most expensive properties to face foreclosure proceedings yet.
The phenomenon is not limited to the New York area. Banks have taken over homes with loans of $5 million or more in Georgia, North Carolina and Colorado, RealtyTrac says.
Mr. Cage had tried to sell his 11,817-square-foot Bel-Air property for $35 million but failed to get any offers, said James Chalke, a real-estate agent who had the listing. At a foreclosure sale Wednesday, the property attracted no bids from investors and so was acquired by the foreclosing lender. Annett Wolf, a spokeswoman for Mr. Cage, said he had no comment.
A representative of Mr. Cecchi Gori, producer of more than 200 films including "Il Postino" and "Life is Beautiful," said his financial situation is improving.
In Florida's Miami-Dade County, the three largest foreclosure filings initiated against homes in the past six months involved a 4,655-square-foot home in Sunset Islands; a 8,443-square-foot house in Coral Gables; and a condo in Miami Beach, according to Peter Zalewski, a principal of Condo Vultures. All three had mortgages of $3.5 million to $4 million.
Mortgage defaults began to surge in late 2006, mostly among borrowers with subprime mortgages, those for people with weak credit records or high ratios of debt to income.
Over the next few years defaults spread rapidly to better-heeled borrowers, especially those who got loans without documenting their income. At the end of 2009, nearly eight million households, or 15% of those with mortgages, were behind on mortgage payments or in the foreclosure process.
Wealthy people have the means to stretch out the distress process, sometimes for years.
"It's very, very difficult for these people to believe they've had such a severe reversal of fortune," says Maggie Navarro, a real-estate agent in Pasadena, Calif.
Marc Carpenter, a San Diego-based foreclosure specialist, adds that while it's much harder for potential buyers to get loans, there are also fewer buyers who can pay for top-dollar properties. "The upper end is definitely a lagging indicator," he says.
In his bankruptcy filing, Mr. Fuscone provided a list of his debts, including ones to the Greenwich Country Day School, American Express, Mercedes-Benz, a local hardware store, a pet store, and Richards of Greenwich, a fine-clothing store.
"My background is in the financial-services industry and I have been personally devastated by the financial crisis which came to a head in March 2008," Mr. Fuscone said in his bankruptcy declaration. "I have been sued by Patriot National Bank" as part of a foreclosure action. "I currently have no income for the 30-day period" following his bankruptcy petition.
C.W. Kelsey, owner of Greenwich Hardware, was among the local merchants owed money by Mr. Fuscone, though he wouldn't say how much.
"Traditionally, the majority of our credit problems were contractors," he said. "Now there are people you'd never expect two or three years ago to have problems, who live in multimillion dollar homes."
—Nick Timiraos and Josh Barbanel contributed to this article.
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5)The Naked Left
By Bruce Walker
The left loves to hide. This is why leftists reject the label "liberal" in favor of "progressive" or some other meaningless term. This is also why leftists must describe their opponents as the "hard right" or "right-wing extremists," rather than simply respond to the serious policy issues their opponents raise.
The establishment media, which has been obviously tilted to the left for fifty years, petulantly denies any leftist bias. This utter denial continues more than forty years after Agnew's speech against the television elites in 1969 and in spite of polling data, such as a Gallup poll which shows a huge plurality considering the media more liberal than conservative and a Zogby Poll which shows 64% of Americans seeing a liberal bias in the media.
Why do these elites lie about what they believe? Newspapers used to proudly proclaim their advocacy of partisan positions. There is absolutely nothing wrong with taking an editorial stand. The problems of the establishment left media are these: (1) They do not compete against each other by exposing the stories which are being ignored or tilted, so these clusters of corporations act like constituent parts of a monopoly or a trust, and (2) they lie about their biases, perversely pretending to be the noble, neutral mediators of public discourse.
The establishment media was once decked out in royal robes. Now it is part of the Naked Left. The nimble, principled, bright media of conservative talent founded on talk radio, cyberspace news and social websites, Fox News, and the rising conservative book industry finds out and reports within hours stories that the leftist monopolist of news used to spike for months.
Colleges used to be places of learning, debate, and free thought -- long ago. Academia is no longer like that. The soft disciplines like political science, history, and philosophy have become pretentious tools in the hands of aging Marxists and their craven pals. Politically correct speech, which sounds like it comes right out of Orwell's 1984, was the serious and severe creation of the once-respectable college administrations.
One of the biggest stories in the last fifty years is how deeply Soviet agents had penetrated not just our government, but the motion picture industry, journalism, and other choke points in our society. The end of the Soviet Union allowed scholars to prove beyond any doubt not only the guilt of men like Alger Hiss, but also of men and women whom we never dreamed were traitors. Has academia revised at all its estimations of the Red Scare? No. It prefers, instead, to proclaim Marxism and socialism as still "untested ideals" and the unmarked graves of its hundred million or so victims as meaningless statistics.
But those historians and political scientists have lost whatever fig leaf allowed them to once hail Stalin as a great man. The archives of the KGB, the GRU, the Stasi in East Germany, the inner sanctum of the Kremlin -- all denude these wrinkly old slaves of the left, who run their petty empires in colleges as a dying class of aristocrats, addled adherents of the Old Regime of "Uncle Joe" Stalin leftism. Plenty of diligent conservative scholars have exposed the Naked Left in academia through books, lectures, and articles. These free minds cannot be shackled with the narcotic of tenure and the other debilitating enticements of cushy college sinecures.
Seldom has the Naked Left been more exposed that in the myth of man-made global warming. As Marc Sheppard observes, the so-called science of man-made global warming has been hopelessly manipulated to reach preordained conclusions. Hiding something as huge as the Medieval Warming Period through the scientific equivalent of three card Monte shows that the emperors of bureaucratic "science" have no clothes. Ben Stein has done estimable work in his film Expelled: No Intelligence Allowed in showing how politically correct science is the only science treated as legitimate -- no matter how lame its analysis or weak its predictive power. The Naked Left of state-allowed science is simply intellectual slop. Nimble, clever, honest minds have done what dull, regimented, bent minds cannot.
Soon Democrats will face directly an electorate that sees right through them. All the procedural tricks and side deals slavered onto a legislative sandwich with thousands of slices fool only the hopelessly prostituted minions of the left. Ordinary people grasp the awfulness of vast legislation pushed through Congress without a single Republican vote and before members of Congress could feel the full dragon's breath of constituent fury. The left was never more naked than in the crass spectacle last month.
Truth, courage, and honor have led conservatives through long campaigns against the dying leftist establishment. Much of this work simply involved exposing the left for what it is, and now it is the Naked Left -- having nothing worth wanting, as everyone can now see.
Bruce Walker is the author of two books: Sinisterism: Secular Religion of the Lie and the recently published The Swastika against the Cross: The Nazi War on Christianity.
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6)Government Is the Biggest Lawbreaker
By Mark J. Fitzgibbons
Measured just by the number of victims, there is no close second place to government as the biggest lawbreaker. Measured in terms of impact, government lawbreaking is disabling our entire society.
When an individual or collection of individuals (such as a business) violates the law, there are victims who are harmed directly, and the law provides remedies. The law also recognizes that lawbreakers create harm to society as a whole, since the costs of lawbreaking are borne by society as well as by the direct victims. The law therefore exacts civil or criminal punishments on lawbreakers.
When government breaks the law, not just individuals, but entire industries are often the direct victims. Government lawbreakers, however, are not subject to the same standards as are individuals. Government lawbreakers have become arrogant, and government lawbreaking has therefore proliferated. If government were held to the same standards of legal sanctions for individuals, the weight of those punishments would actually crush government.
The question is: What can we do about government lawbreaking?
Philosopher John Locke wrote that the punishment should fit the crime, but that the purpose of criminal laws should be reparation and restraint. Those standards generally apply to non-criminal lawbreaking. That is, the punishment should require the injured to be made whole, if possible, and should be strong enough to discourage lawbreaking in the first place.
When individuals or collections of individuals violate the law, the number of direct victims is limited. When government violates the law, the number of direct victims is unlimited. Government has in place police forces, prosecutors, and a legal system to bring individual lawbreakers to justice. That same system does not protect society well when government breaks the law.
Government has established rules to protect itself against the calamities that would befall it if it were subject to the same levels of reparations and penalties for lawbreaking as apply to individuals. For example, governments have passed sovereign immunity laws making reparations for lawbreaking by government nearly impossible to achieve in many cases.
The system shields government from reparations for individuals. That makes restraints on government even more important. The Constitution was established with restraints in mind by expressly delegating only certain powers to the federal government. When constitutional restraints on government are ignored, the floodgates to government lawbreaking are opened wide.
That's the philosophical view. As a lawyer who regularly battles government lawbreaking, I can tell you that as a practical matter, it's much uglier and more mischievous. It's a problem embedded in the political establishment and the unelected regulatory bureaucracy. It's a disease of unparalleled magnitude, yet it is too rarely addressed even in print.
Just looking at some examples shows how disproportionate the system is against private lawbreaking versus government or public lawbreaking.
Bernie Madoff is in prison for defrauding many investors using a Ponzi scheme. The Social Security system has been pillaged. It is actually the world's biggest Ponzi scheme, but nobody has been punished.
Toyota is facing an auto industry record $16.4-million fine for failing to notify the government about defects. Would automakers Chrysler or Chevrolet, whose owners include the United States government, face fines of similar magnitude if they had engaged in the same conduct? The answer to that, of course, requires speculation.
But what if the Environmental Protection Agency is found to have violated the law by regulating greenhouse gas emissions of automobiles? The EPA was recently sued by Virginia Attorney General Ken Cuccinelli for that reason. Not a single automobile maker could violate the law for every car owner, but one government agency could, and probably did.
If a health insurance company were to violate the law, its victims would be limited to its policy holders. The individual mandate under ObamaCare is being challenged as unconstitutional and therefore unlawful as affecting every American.
After passage of ObamaCare, several companies announced their assessments that the new law would cost them hundreds of millions of dollars. Those announcements were made in compliance with the law, yet some Democratic members of Congress have demanded the company executives and their records for a hearing. That is the stuff of totalitarianism: punishing private compliance with the law when government is violating the law with impunity.
People often feel powerless to challenge government when it violates our paramount law, the Constitution -- and never mind the everyday, less visible violations of statutory and regulatory law by government. How do you fight Leviathan?
In the case of the executives called to testify before Congress, they and their lawyers could easily become heroes by going on offense at the hearing. Instead of testifying on their heels, they should identify the abominations in ObamaCare, expose the contributions received by the Democrats who called them to testify, and generally use the microphones to expose the hearing for what it is -- a circus. This is their Howard Hughes moment. Hughes, testifying before Congress, exposed his interrogators for the corrupt, incompetent politicians they were.
We're also starting to see more citizens organizing and challenging government. The legitimate application and enforcement of the Constitution is a main thrust of these new activists. Recently, Tea Party groups even formed a National Tea Party Federation to have a rapid response to the liberal media, which have aided and abetted government lawbreaking.
As people come to realize the government is the biggest lawbreaker, we may see the rise of a new breed of politicians and law enforcement officials who see their jobs as not merely tackling private sector lawbreakers, but tackling government lawbreakers as well. That may even be the big, innovative campaign promise that will sweep many new officials into office and sweep out incumbents who have tolerated, fostered, or engaged in government lawbreaking.
It's important to start, however, just with the recognition that government is by far the biggest lawbreaker in society. Solutions will continue to evolve from that.
5a)Can the Government Force You to Buy a Condom?
By Bruce Hanson
Vice President Joe Biden may have exposed an unconstitutional flaw in the health care bill when he said under his breath to President Obama, "This is a big fu%*#g deal." Biden's naughty comment provided late-night TV hosts with an unlimited number of comic implications pertaining to the public "getting screwed." Nonetheless, an argument can be made that the Supreme Court has already decided that the health care bill is unconstitutional. Please let me explain.
First some background on the Ninth Amendment of the United States Constitution.
The Ninth Amendment provides that "[t]he enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."
Thus, a right is worthy of judicial protection even if it is not listed in the Constitution. To fail to protect these "other" unenumerated rights "retained by the people" in the same manner that we protect enumerated rights would surely be to "disparage" them, if not to "deny" their existence altogether.
We must remember that the framers believed in natural rights -- the idea that people by their nature have certain basic rights that precede the establishment of any government.
Representative Roger Sherman wrote in his proposed draft of a bill of rights that "[t]he people have certain natural rights which are retained by them when they enter into society."
According to John Locke, the English natural rights theorist who greatly influenced the founders' generation, the principal justification for founding a government is to make these rights more secure than they would be in a state of nature -- that is, in a society without any government.
In this view, natural rights define a bounded domain of liberty for each person, wherein one may do as one pleases. Exactly how this liberty may be exercised is limited only by one's imagination, so it is impossible to enumerate specifically all of one's natural rights.
This is the reason for the Ninth Amendment. The framers felt it impossible to enumerate all the rights of men. Consequently, they enumerated only what they felt was most important, that being the other nine amendments in the Bill of Rights.
Would the Supreme Court allow Congress to establish a law that says it's against the law to stand in the rain without an umbrella? Or ride a fast horse? Or climb a steep mountain?
How about participate in sex with or without a condom?
To repeat, "Natural rights define a bounded domain of liberty for each person wherein one may do as one pleases."
On occasion, laws have been enacted that limit natural rights. The U.S. Supreme Court protected the right to use birth control in Griswold v. Connecticut. The court ruled on a dispute dealing with an 1879 Connecticut statute that made it a crime for any person to use any drug, article, or instrument to prevent conception. Griswold exemplifies an unenumerated right. The court concluded that as such activities are within the sphere of bounded liberty retained by the people, they are beyond the rightful power of government. An analysis of retained rights could also constrain the "means" by which governmental ends can be achieved.
Can Congress "deny" the existence of an unenumerated right altogether?
In 1986, the Supreme Court ruled in the sodomy case Bowers v. Hardwick that an unenumerated liberty was to be deemed fundamental only if shown to be deeply rooted in the tradition or history of the nation or implicit in the concept of ordered liberty. Americans have been exercising their liberty to choose to buy health insurance or not since virtually the signing of the Constitution.
To interpret the Ninth Amendment, the Supreme Court looks to see if the federal government has the power it claims. An argument can be made that a condom is protection -- an insurance policy, if you will. Can our government force you to buy or not buy a condom? No, the Supreme Court concluded that such activities are within the sphere of bounded liberty retained by the people. Similarly, can our government force you to buy or not buy an insurance policy? Can our government force Americans to buy condoms, every year, for the rest of their lives, whether they use them or not? Up until March 21, 2010, they could not.
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6)Jones denies new US ME plan after Netanyahu shuns nuclear summit
US National Security Adviser James Jones denied the US had a new Middle East plan. He was replying to reporters' questions aboard Air Force One on their way back from Prague. His denial followed Israeli Prime Minister Binyamin Netanyahu's withdrawal from the US-sponsored summit on nuclear terror opening in Washington April 11. Washington saw this as a protest against a US policy Israel considered detrimental to its security interests, such as ignoring its need for secure borders and trying to impose peace.
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7)Israel the strong horse
By Caroline B. Glick
Harsh rhetoric aside, Jordan's King Abdullah is actually rooting for the Jewish State
What does Jordan's King Abdullah want from Israel? This week Abdullah gave a long and much cited interview to the Wall Street Journal. There he appeared to be begging US President Barack Obama to turn up the heat still further on Prime Minister Binyamin Netanyahu. As he has on a number of occasions, Abdullah argued that the Palestinian conflict with Israel is the cause or the justification of all the violence and emerging threats in the region. By his telling, all of these threats, including Iran's nuclear threat, will all but disappear if Israel accepts all of the Palestinian, (and Syrian), demands for land.
Abdullah's criticism of Netanyahu dominated the news in Israel for much of the week. Commentators and reporters piled on, attacking Netanyahu for destroying whatever remains of Israel's good name. In their rush to attack the premier, none of them stopped to consider that perhaps they were missing something fundamental about Abdullah's interview.
But they were missing something. For there is another way to interpret Abdullah's complaints. To understand it however, it is necessary to consider the strategic constraints under which Abdullah operates. And the Israeli media, like the Western media as a whole, are incapable of recognizing that Abdullah has constraints that make it impossible for him to say what he means directly.
Abdullah is a Hashemite who leads a predominantly Palestinian country. His country was carved out by the British as a consolation prize for his great-grandfather after the Hashemites lost Syria to the French. As a demographic minority and ethnic transplant, the Hashemites have never been in a position to defend themselves or their kingdom against either their domestic or foreign foes. Consequently they have always been dependent out outside powers — first Britain, and then Israel, and to a lesser degree the US — for their survival.
When Abdullah's strategic predicament is borne in mind, his statements to the Journal begin to sound less like a diatribe against Israel and more like a plea to Israel to be strong. For instance, his statement, "In a way, I think North Korea has better international relations than Israel," can be interpreted as a lament.
Abdullah fears war and he recognizes that the Iranian axis — which includes Syria, Lebanon, and elements of the Palestinian Authority and elements of Iraq — is the biggest threat to his regime. Syria, which dispatched the al Qaida bombers that blew up the hotels in Amman in 2005, threatens Jordan today almost as menacingly as it did in 1970, when it supported the PLO in its bid to overthrow Abdullah's father. Back then, Israel stepped in and saved the Hashemites.
Abdullah's preoccupation with Iran was clear throughout the interview. Indeed, much of his criticism of Israel needs to be viewed through the prism of his obvious fear that Iran's race to regional dominance will not be thwarted.
The reason that Israel's media — like the American and European media — failed to consider what was motivating Abdullah to speak as he did is because both Israelis and Westerners suffer from an acute narcissism that prevents them from noticing anything but themselves. So rather than view events from Abdullah's perspective and consider what might be motivating him to speak, they interpret his statements to serve their own ideological purposes. In the case of the leftist dominated media, Abdullah's statements were pounced upon as further proof that Israel, and particularly Netanyahu, are to blame for all the pathologies of the Arabs and all the threats in the Middle East. If Israel could only be coerced into giving up land, everything would be fine.
Much of what the West misses about the Arab world is spelled out for us in a new and masterful book. The Strong Horse: Power, Politics, and the Clash of Arab Civilizations by Lee Smith, is a unique and vital addition to the current debate on the Middle East because rather than interpret the Arabs through the ideological lenses of the West, Smith describes them, their cultural and political motivations as the Arabs — in all their ethnic, religious, ideological, national and tribal variations — themselves perceive these things.
Smith, a native New Yorker, was the literary editor of The Village Voice when Arab hijackers brought down the World Trade Center on September 11, 2001. Propelled by the attacks, he headed to the Middle East to try to understand what had just hit his city. Smith moved to Cairo where he studied Arabic and drank in the cultural and political forces surrounding him. After a year, he moved to Beirut where he remained for another three years.
The Strong Horse speaks to two Western audiences, the Left, or the self-proclaimed "realists," who ascribe to the belief that the Arabs have no particular interests but are rather all motivated to act by external forces and specifically by the US and Israel; and the neo-conservatives who believe that at heart, the Arabs all yearn for Western-style liberal democracy.
Smith rejects both these notions out of hand. Instead, by recounting the stories of men and women he met during his sojourn in the region, and weaving them into the tales of Arab cultural, religious and political leaders that have risen and fallen since the dawn of Islam 1,400 years ago Smith presents a few basic understandings of the Arab world that place the actions of everyone from Osama bin Laden to Jordan's King Abdullah in regional and local contexts. The localization of these understandings in turn opens up a whole new set of options for Westerners and particularly for Israelis in seeking ways to contend with the region's pathologies that involve policies less sweeping than grand, yet futile designs of peace making, or fundamental restructuring of the social compacts of Arab societies.
Smith develops six central insights in his book.
Arab political history is a history of the powerful ruling the weak through violence.
Islamic terror and governmental tyranny are the two sides of the coin of Arab political pathology.
Liberal democratic principles are unattractive to the vast majority of Arabs who believe that politics is and by rights ought to remain a violent enterprise and prefer the narrative of resistance to the narrative of liberty.
Liberal Arab reformers are unwilling to fight for their principles.
The 1,400 year period of Sunni dominance over non-Sunni minorities is now threatened seriously for the first time by the Iranian-controlled Shiite alliance which includes Syria, Lebanon, and Hamas.
And finally, that it is intra-Arab rivalries and the desire to rule and be recognized as the strong horse that motivates jihadists to wage continuous wars against Israel and the West and against regimes in Jordan, Egypt and Saudi Arabia alike.
As Smith explains, today, Arab leaders view Israel as a possible strong horse that could defeat the rising Shiite axis that threatens them. And now, as the US under Obama abdicates its leadership role in world affairs by turning on its allies and attempting to appease its foes while scaling back America's own military strength, Israel is the Sunnis' only hope for beating back the Shiite alliance. If Israel does not prevent Iran from becoming a nuclear power, then the likes of Kings Abdullah of Jordan and Saudi Arabia and Egypt's Hosni Mubarak are going to be forced to accept Iran as the regional hegemon.
When seen against the backdrop of Smith's analysis, it is clear that as his father did when he supported Saddam Hussein against Saudi Arabia in the lead-up to the 1991 Gulf War, Abdullah was hedging his bets in his interview with the Journal. If Israel fails to act, he wants to be on record expressing his animosity towards the Jewish state and blaming it for all the region's problems. On the other hand, he used the interview as an opportunity to again send a message to anyone willing to listen that he wants Israel to assert itself and continue to protect his kingdom.
The recognition that a strong Israel is the most stabilizing force in the region is perhaps the main casualty of the Left's land for peace narrative and the two-state solution paradigm which wrongly promote the weakness of Israel as the foremost potential contributor to stability in the region. Because Israel is everyone's convenient bogeyman, it cannot form permanent alliances with any of its neighbors and as a consequence, it cannot gang up against another state. Because it will always be the first target of the most radical actors in the region, Israel has a permanent interest in defeating them or, at a minimum denying those actors the means to cause catastrophic harm. Finally, although no one will admit it, everyone knows that Israel has neither the ability nor desire to acquire and rule over Arab lands and therefore there is no reason for anyone to fear its strength. For the past 62 years, Israel has only used force to protect itself when it was convinced it had no other option and it holds only territories designated for the Jewish homeland by the League of Nations 90 years ago and lands vital for its self-defense.
Smith was living in Beirut when Hizbullah launched its war against Israel in July 2006. As he tells the story, "When the government of Ehud Olmert decided to make war against Hizbullah in the summer of 2006, all of Washington's Arab allies…were overjoyed. With the Americans having taken down a Sunni security pillar — Saddam — and then getting tied down in Iraq, Riyadh, Cairo and the rest sensed the Iranians were gaining ground and that they were vulnerable. Even though they were incapable of doing anything about it themselves, the Sunni powers…wanted to see the [Iranian] bloc rolled back."
Unfortunately for them, Olmert and his government were incompetent to lead Israel in war and within weeks showed that they had no idea how to accomplish their stated aim of crushing Hizbullah. When this reality sunk in, and the Arab masses rallied behind Iran, Hizbullah and Syria against their own governments, "the Sunni regimes could abide no longer and demanded the United States move to a ceasefire immediately."
No doubt, in part as a consequence of their disappointment with Israel's military performance in Lebanon and subsequently in Gaza, today leaders like Abdullah of Jordan are pessimistic about the future. But there is also no doubt who they are rooting for. And this has profound significance for Israel, not only as it prepares its plans to contend with Iran but also as it considers it national priorities.
For too long, Israel's leaders have believed that to thrive regionally, it needs to convince the West to support it politically. But the fact is that Israel is in Asia, not in Europe or North America. To survive and thrive, Israel needs to rebuild the faith of the likes of Jordan's Abdullah that it is the strong horse in the region. And once it does that, with or without formal peace treaties, and with or without democracies flourishing region-wide, Israel will facilitate regional peace and stability for the benefit of all.
JWR contributor Caroline B. Glick is the senior Middle East Fellow at the Center for Security Policy in Washington, DC and the deputy managing editor of The Jerusalem Post.
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8)The Man With the Plan
By Philip Klein from the April 2010 issue
In late January, President Obama dazzled political reporters when he addressed a gathering of House Republicans in Baltimore. The press marveled at Obama's intelligence, command of the facts, and ability to swat down GOP arguments effortlessly during the 90-minute exchange. But at one point, Obama took a question from Wisconsin Rep. Paul Ryan, the Republicans' resident policy whiz, and clearly met his match.
In his State of the Union address just two days earlier, Obama had vowed to "freeze" non-security-related discretionary spending as part of a new White House campaign to create the appearance that the administration was doing something to address ballooning deficits. Unlike mandatory spending on entitlement programs, such as Medicare and Social Security, that grow without any explicit action by Congress, new discretionary spending must be passed by Congress and signed into law by the president.
"I serve as a ranking member of the budget committee, so I'm going to talk a little budget if you don't mind," Ryan said to Obama. "The spending bills that you've signed into law, the domestic discretionary spending has been increased by 84 percent. You now want to freeze spending at this elevated level beginning next year. This means that total spending in your budget would grow at 3/100ths of 1 percent less than otherwise. I would simply submit that we could do more and start now."
In his response, Obama said he wanted to "just push back a little bit on the underlying premise about us increasing spending by 84 percent." He insisted, "The fact of the matter is, is that most of the increases in this year's budget, this past year's budget, were not as a consequence of policies that we initiated but instead were built in as a consequence of the automatic stabilizers that kick in because of this enormous recession." (The term "automatic stabilizers" refers to government payments such as welfare and unemployment benefits that tend to increase during an economic downturn.)
But Ryan shot back by noting a basic flaw in Obama's analysis. "I would simply say that automatic stabilizer spending is mandatory spending," he explained. "The discretionary spending, the bills that Congress signs that you sign into law, that has increased 84 percent."
In a tacit acknowledgement that he had been bested, Obama replied, "We'll have a longer debate on the budget numbers, all right?" and then proceeded to the next question.
A BIT LATER IN THE SESSION, however, Obama moved back to Ryan on a different topic. After a year of arguing that Republicans had presented no ideas on how to address the nation's fiscal crisis, Obama mentioned that Ryan had produced a "serious proposal" to do just that -- before offering his critique.
The proposal in question was Ryan's "Roadmap for America's Future," a sweeping plan to stave off the nation's looming economic and fiscal collapse by changing the tax code, overhauling the health care system, and reforming the nation's major entitlement programs. Its debt-reducing claims aren't based on mere fantasy -- the Congressional Budget Office has determined that the plan would boost economic growth while making Medicare and Social Security solvent. And it accomplishes these aims without raising taxes or affecting the benefits of current retirees.
If the Baltimore event accomplished anything beyond giving the media a new reason to swoon over Obama, it drew attention to the "Roadmap," which had largely been confined to the conservative policy ghetto since an earlier version was introduced in 2008. In the days and weeks following the summit, Ryan won praise from pundits on the right and left for at least having the courage to present serious solutions to the nation's fiscal crisis. But at the same time, it became clear why most other politicians were unwilling to do the same.
"The entire Democratic political machine, right through the DNC, launched into a very organized attack mode," Ryan recalled in a phone interview with TAS.
The praise Obama offered for the plan soon looked like a trap intended to elevate the plan just so Democrats would have something to knock down. It became a way for their party to go on offense after being clobbered for a year on the economic stimulus package, as well as the cap and trade and health care bills.
Peter Orszag, director of the Office of Management and Budget, tore into the Ryan plan. Democrats distributed "fact sheets" and held a media conference call to rip into the proposal further. "[I]t's a roadmap right into the economic ditch that we got ourselves to begin with," Rep. Chris Van Hollen, who serves as chairman of the Democratic Congressional Campaign Committee, told the influential liberal website Talking Points Memo. "Put it this way. For seniors on Medicare, it's a dead end."
In the wake of the uproar, Republican leaders tried to distance themselves from the proposal, emphasizing that while it contained good ideas, Ryan's plan wasn't the official Republican budget. In an election year during which the GOP is poised to make big gains, Republicans don't want to give Democrats an easy opportunity to paint them as the party keen on destroying Social Security and Medicare. But if Republicans are to regain any credibility as a party that wants actually to limit government (as opposed to just talk about it when in the minority), then they can't shy away from this debate. The looming fiscal crisis is too severe, it's approaching too soon, and it's far too big of a threat to the American way of life.
LAST OCTOBER, a new government took power in Greece and revealed that the nation's annual budget deficit would be more than twice what had previously been forecast. In the ensuing months, the country's creditors fled, its debt was downgraded, and its cost of borrowing surged -- just when the country desperately needed money. In response, the government scrambled to roll out proposals to get its deficits under control by slashing social spending, dramatically hiking taxes, and freezing public sector wages-- triggering nationwide strikes. Before long, Greece was pleading with other reluctant European Union member states for a bailout.
One of the major obstacles to addressing the looming entitlement crisis in the United States is that it's very difficult to communicate the urgency and magnitude of the problem. Screeds about the long-term Medicare deficit of $38 trillion, or America's combined unfunded liabilities of $107 trillion in current dollars, often fall on deaf ears because the numbers involved are inconceivable. And even when people accept the vague idea that we're on an unsustainable fiscal path, hearing projections about where we'll be decades from now makes them think that we have plenty of time to figure things out, somehow, at some point, down the road. While there are always caveats involved in drawing economic parallels among countries, the Greek collapse demonstrates what a fiscal crisis means in human terms. It also serves as a warning that the day of reckoning could come a lot sooner than we imagine.
Investors look at the ratio between debt and gross domestic product as a key indicator of a nation's solvency, because it gives them an idea of how much tax revenue a country could conceivably raise to pay off its debt. In 2009, Greece's debt-to-GDP ratio stood at 113.4 percent. According to CBO projections, the U.S. is on a trajectory to eclipse that mark in 2026, just 16 years from now. In the decades that follow, that ratio is expected to rocket to 223 percent by 2040, 433 percent by 2060, and 716 percent by 2080. But just as a reckless spender with a $40,000 salary would max out his credit cards long before running up $300,000 in credit card bills, the U.S. financial crisis would occur a lot sooner.
"You don't get there," explains John Cochrane, a professor of finance at the University of Chicago's Booth School of Business. "Long before you reach debt that's hundreds of percent of GDP...bond markets say, ‘No, we're not doing that, we're not lending you anymore,' and then you have a huge crisis on your hands. Witness Greece."
As Cochrane describes it, "You should really think of 30-year debt as stock in the U.S. government." Investors who buy Treasury bonds are making a judgment about the government's ability to pay them back over a 30-year time frame. For now, the U.S. still enjoys low borrowing costs because investors still believe that American leaders will eventually figure out a way to deal with the fiscal crisis. But all it would take would be for a major investor, such as China, to lose faith in the American government, and the crisis can ensue quite suddenly. There's no "magic number" of debt-to-GDP ratio at which point investors lose confidence, Cochrane emphasizes. In 1945, for instance, the U.S. government's ratio peaked at 121.7 percent.
"The U.S. can raise enormous amounts of money if people are convinced that there's a plan for paying it off," Cochrane says. "At the end of World War II, we had huge debt. Why was that okay? Well, people understood the war was temporary. They understood when the war was over we would stop spending money like crazy and there was a sense that there was a way for the U.S. to pay off that debt."
A key difference between the U.S. and Greece, Cochrane notes, is that the U.S. can print dollars and Greece can't print euros. What this means is that America would likely attempt to inflate its way out of a debt crisis by manufacturing money and using it to pay off the outstanding bonds. The problem is that this would produce a massive inflation that could occur on top of a stagnant economy. Furthermore, paying off lenders with devalued currency would effectively be the same as default.
"Really bad inflation actually happens when the economy is not booming, and that certainly happened in the late 1970s," Cochrane says. "And the kind of inflation to worry about is the inflation that springs up seemingly on its own while the economy is still in trouble because people are running away from U.S. government debt."
The only way to avert such awful alternatives is to act preemptively to reassure investors. "The important thing is convincing the markets that you have a plan, and you're going to figure this out sooner or later," Cochrane says.
A NATIVE OF JANESVILLE, Wisconsin, Paul Ryan developed his political philosophy reading the works of free market authors including Milton Friedman, F. A. Hayek, and Ayn Rand. After graduating with a degree in economics and political science from Miami University in Ohio, Ryan worked as a speechwriter for Jack Kemp and William Bennett at the think tank Empower America (a predecessor to FreedomWorks) and served as a legislative aide to Sen. Sam Brownback. Since winning his congressional seat in 1998, Ryan has pushed for tax reform and garnered attention as one of the leaders of the fight for Social Security personal accounts, which he tirelessly campaigned for during President Bush's failed reform effort in 2005.
On several occasions, Ryan has drawn fire from limited-government advocates, most notably when he voted for President Bush's Medicare prescription drug plan and for the $700 billion financial bailout. In both cases, he helped provide cover for other Republicans to vote for massive expansions of government, and opened himself up to charges of hypocrisy. But Ryan insists that viewed in context of the alternatives with which he was presented, his "reasoning at the time was sound."
"You don't get to take the vote you want in Congress," Ryan laments. "Sometimes you have to take votes that you don't want to take, but they're the best of the two choices."
In the case of the Medicare expansion, which by some measures added $15.6 trillion to the long-term entitlement deficit, Ryan recalled that "President (Bush) was really clear to me at the time, and I talked to his chief of staff and others as well, that he was either going to sign the House-passed bill, which had my health savings accounts amendment and real free market choice and competition like Medicare Advantage in it, or the Senate bill, which was just a big government-run program." In the end, he voted for the bill with some free market elements. "That was the choice he gave us," he says. "It was not a choice I liked."
As for the Wall Street bailout, Ryan said he was convinced that it was necessary to avert a complete economic collapse, and argues that if a full-fledged depression ensued, it would have made it a lot easier for Democrats to pass their agenda and thus more devastating to the free market in the long run. "I think, more people, if we were in a depression, would be susceptible to their worldview just like much of the New Deal programs came in," he said.
After Republicans lost control of Congress in 2006, Ryan emerged as the ranking minority member of the House Budget Committee, a position that gave him more staff to work with and the ability to ask the CBO to evaluate his proposals on a higher-priority basis.
"I had all along in my career in Congress been watching our fiscal and economic situation steadily deteriorate, and I noticed that nobody was proposing solutions for fear of political demagoguery," Ryan says. "If that continues, it's very clear to me that we are sleepwalking toward a fiscal crisis in which the alternatives would be ugly and we would become more of a social welfare state."
Taking advantage of his new position, Ryan set out to find a comprehensive approach to the looming fiscal crisis. After a year of writing and running the numbers, he introduced his first version of the "Roadmap" in May of 2008, which formed the basis for his updated proposal released this year. In the intervening time period, the task became even more daunting.
"In 2008, when I introduced this thing, I thought we'd have 10 years before it was too late to turn back, and maintain what I call the American idea-limited government premised on freedom and liberty, free enterprise, and entrepreneurial society," he said. "Now, I think we have about half that time, because of the economic crisis that we had, and because of the agenda that's moving through Washington right now."
THE "ROADMAP" is a rare type of congressional proposal that delves into political philosophy (with references to the likes of Thomas Jefferson, John Locke, and Émile Durkheim) and also makes a moral case that the expansion of the welfare state leads to the erosion of the "American character" of freedom and personal responsibility. Yet at the same time, it presents a pragmatic policy vision for averting fiscal disaster while causing the least possible disruption in everybody's lives. The plan is premised on the idea that the problems facing America are interrelated. You can't get a handle on our national debt without reining in Medicare; you can't restrain the growth of Medicare without reforming the health care system; you can't change the health care system without touching the tax code; and fundamental tax reform is necessary to spur economic growth, which in turn will make it easier to pay off our debt.
Taken together, the plan earned an impressive grade from Congress's official scorekeeper. By 2080, according to CBO's "alternative fiscal scenario" that assumes the continuation of current policies, the U.S. would be dedicating a staggering 34.4 percent of its GDP to government spending, running an annual deficit of 42.8 percent, and carrying debt at 716 percent of GDP -- which as discussed above, is a point that we'd never actually reach. By contrast, under the "Roadmap," the CBO estimates that in the same year, government spending would be just 13.8 percent of the GDP, the government would be running a massive surplus of 5 percent, and it wouldn't be holding any debt.
Yet these numbers are conservative estimates, because they don't even take into account how much better off the economy would be under the "Roadmap" as a result of getting our debt under control. According to the CBO, the nation's economic output per person would be 70 percent higher in 2058 under the Ryan plan than it would be if current trends continue. After that year, the CBO's model of current trends actually breaks down "because deficits become so large and unsustainable that the model cannot calculate their effects." But as a result of putting the nation's finances on a sustainable path, the Ryan plan is projected to foster strong economic growth in the ensuing decades. And again, while these dates seem way off into the future, if the nation were put on the right course, it would provide a lot of reassurance to credit markets, and keep our borrowing costs lower in the near term.
Ryan's proposal for health care, which was developed along with Rep. Devin Nunes and Sens. Tom Coburn and Richard Burr, is aimed at moving the U.S. toward a system in which consumers have more control over their health care dollars. The idea is to take the same principles that have driven down costs and improved quality in every other sector of the economy, and apply them to health care, which is currently immune from market signals because of a lack of price transparency as well as the fact that most people get their insurance through government or their employers.
"I got Lasik surgery 10 years ago, it cost me $4,000, and the laser they use to do it since then has been revolutionized three times," Ryan said. "It's much better, much safer, and it costs $1,600 now. That's 800 bucks an eye instead of two grand an eye. So this sector has proven that it can both bring down cost and improve quality just like the computer sector, just like many other high-tech sectors throughout the country. "
To help create a consumer market for health care, Ryan would start by ending the discrimination in the tax code that subsidizes the purchase of insurance through one's employer, and use the savings to provide an optional refundable tax credit of $2,300 for individuals and $5,700 for families toward the purchase of health coverage. Any individuals who choose to purchase cheaper, catastrophic health care plans could keep any leftover money and put it in health savings accounts. The proposal would allow people to purchase insurance across state lines and it would create a Healthcare Services Commission that would make price and quality data available to consumers so that they could shop around for the best doctors and hospitals. It would also cap non-economic damages in medical malpractice cases.
FROM A FREE MARKET PERSPECTIVE, there are some potentially worrisome aspects of the proposal. Like the Senate Democrats' health care bill, the Ryan approach would have the federal government partner with states to create insurance exchanges. Ryan's exchanges wouldn't impose the onerous mandates and regulations envisioned by Democrats. But however well intentioned, as long as the government-run exchange architecture is created, there's a danger that future lawmakers would simply add regulations and expand the exchanges beyond their original purpose, as often happens with government programs. Why not just change the tax treatment, allow interstate purchasing, improve price transparency, and let the free market work the rest out?
Ryan argues that if we find a way to cover those with preexisting conditions by removing them from the risk pool, it creates a cheaper and better functioning market for the remaining 96 percent of Americans who do not have such conditions, according to estimates.
"There's a role for government to play to help this market work," Ryan insists. "If you're going to address the issue of the uninsurable, you've got to find some kind of method, or a mechanism, to target those subsidies to people with preexisting conditions....Pull the uninsurable people out of the pools effectively, and you allow the market to work much, much better for health insurance." Ryan said he is confident that there were enough "stopgaps" in the proposal -- including allowing for the purchase of insurance across state lines and permitting people to move in and out of exchanges at will -- to ensure a functioning free market.
His proposal also calls for adding a consumer-based element to existing government programs Medicare and Medicaid. For Medicare, Ryan would maintain the existing program as is for those over 55 who have already built their lives around traditional Medicare. But for those under 55, the program would transition into one where individuals would be given a voucher toward the purchase of private health insurance. The voucher would be worth $11,000 per beneficiary on average, but it would vary based on income and health status, so that the wealthiest and healthiest enrollees would receive the lowest-value vouchers and the poorest and sickest would receive the highest-value ones. In addition, the lowest-income beneficiaries would be given money to put in a medical savings accounts to help pay for out-of-pocket expenses. Ryan does something similar with Medicaid, whose beneficiaries would receive $11,000 on top of the refundable tax credit for health insurance.
During the past year's health care debate, Republicans attacked the Medicare cuts in the Democratic bills, often employing liberal rhetoric that reinforced the untouchable status of the program. While it provided short-term political benefits, it also made the environment a lot harder for Republicans, such as Ryan, who propose reforming the system. In fact, in his critique of the Ryan plan, Obama noted that Republicans had lambasted the Democratic bills for "slashing Medicare" and said their attacks "scared the dickens out of a lot of seniors."
Ryan acknowledges that "we have to be careful about how we use our rhetoric so we don't dig ourselves into an unsustainable fiscal path." But he says that there was a legitimate criticism that the Democratic health care plans cut Medicare benefits to finance a new entitlement and that they gut Medicare Advantage, the one free market element of the program. Ryan says that as his plan shows, it isn't necessary to change Medicare for current retirees.
The White House charged that Ryan's plan would significantly reduce Medicare benefits over time because the vouchers wouldn't grow at the same level as medical inflation (they would be set to grow at a rate that blends health care inflation with overall inflation). This is backed up by the CBO, which estimated that although the "Roadmap" would bring down health care spending, because of the lower spending, "it is likely that fewer services would be provided and treatments would be less technologically advanced..."
Ryan counters that once the changes are made to the overall health care market to make it more consumer-oriented, that in turn will drive down prices and improve quality, such as the case with his Lasik surgery.
"What I'm trying to do is bring free market principles into the health care sector to go at the root cause of inflation itself, so that that voucher, that health care dollar, goes a lot farther, because it's going through the individual and not coming from government," he says.
When it comes to retirement planning, there's wide agreement on the fact that if we do nothing, Social Security will not be available for future generations. Just keeping this one program afloat by 2037 would require either slashing benefits by 24 percent, hiking payroll taxes by 31 percent, or some combination of the two. Under the Ryan proposal, the program would stay the same for those older than 55, but would allow younger individuals the choice of shifting a portion of their payroll taxes into personal investment accounts. At the same time, it would add an element of means testing by making benefits outside of the accounts grow slower for wealthier individuals. The plan would also slowly increase the retirement age.
TO PROVIDE A SENSE of the severity of the nation's coming fiscal crunch, the CBO estimated the marginal tax rates that would be necessary to balance the long-term budget strictly through higher income taxes. It found that the rate for the lowest bracket would have to rise from 10 percent to 25 percent; those in the 25-percent bracket would have to pay 63 percent; and the top rate would need to be increased from 35 percent to a staggering 88 percent. But these numbers are only theoretical. In reality, the CBO tells us, "Such tax rates would significantly reduce economic activity and would create serious problems with tax avoidance and tax evasion. Revenues would probably fall significantly short of the amount needed to finance the growth of spending; therefore, tax rates at such levels would not be feasible."
The problem with raising taxes to pay down the debt is that the kinds of taxes that would be raised -- on marginal income, savings, investment, and capital gains -- would cripple the economy, which in turn would make it harder to pay off the debt.
"The crucial thing about long-term budgets is not really the tax rate, it's the growth rate of the economy, and we can pay off the debt even with low taxes, if we had enough economic growth," Cochrane says. "When the growth stops, at that point your ability to pay off the debt in the long run is really in danger."
Cochrane considers the current tax system "chaotic" and "a fiesta for lawyers, lobbyists, and accountants."
Ryan's proposal is intended to change the tax code in a direction that would promote more economic growth, by creating an optional, flatter tax system with just two rates (10 percent and 25 percent) and without any deductions other than the tax credit for health insurance. The plan gets rid of double taxation on interest, capital gains, and dividends. He also would eliminate the corporate income tax to make American businesses more competitive, and replace it with an 8.5 per-cent "business consumption tax." The consumption tax could be "border adjustable" so that it's paid when imports enter the country, but not on exports.
"I fundamentally believe this is the part of the plan that is the pro-growth part of the plan," Ryan says. "This is the growth engine that reignites an entrepreneurial, risk taking economy, which finishes the job of fixing our fiscal problems."
He notes that the CBO estimates about his plan's budget balancing potential are conservative because they assume a standard rate of growth. "Imagine what this would look like with respect to jobs and prosperity and reaching a balanced budget and paying off the debt, if we actually in-jected the growth assumptions that I think would realistically come from this kind of tax reform," he says.
Chris Edwards, the director of tax policy studies at the Cato Institute, says that Ryan's re-forms of the individual tax code are "generally excellent" but fears that the business consumption tax could lead to bigger government.
"The base of such a tax is about five times wider the base of a corporate income tax, so while economists may say that's more efficient, if you have an extremely broad-based tax, it's very easy for politicians to raise money in the future just by raising the rate," Edwards says.
Instead, Edwards suggests just slashing the current rate. "If you had a 15 percent rate, nobody would care if it's border adjustable or not," he says.
RYAN HIMSELF EMPHASIZES that the plan is designed to be flexible, and that he welcomes alternative ideas. "This isn't a take it or leave it plan," he says. "It isn't meant to be. It's a vision, which in my opinion reclaims the American idea while keeping promises to current generations who built their lives around these programs." His primary intention, he says, was to trigger "an adult conversation" about the nation's fiscal crisis.
The politics of passing a plan as sweeping as the "Roadmap" are challenging, even if Republicans manage to retake control of Washington and prove serious about reining in government. The Founders intentionally designed a system of government that makes it difficult to enact major changes. While that has been to the benefit of limited-government advocates when it comes to preventing the creation of new programs (witness the difficulty Democrats have encountered trying to pass a health care bill despite huge majorities in Congress), it also makes it hard to reform those programs once they do get passed. Ronald Reagan did not undo Medicare or Social Security, and George W. Bush only succeeded in passing the largest expansion of entitlements since the Great Society.
Many of the ideas promoted by Ryan have surfaced before and failed to gain traction. President Bush couldn't even get a vote on Social Security personal accounts when Republicans controlled both the House and Senate. Though Bush created a commission on tax reform, its recommendations, which were much less ambitious than Ryan's proposals, fizzled upon introduction. And when John McCain proposed ending the tax code's discrimination against individuals who purchase health insurance on their own during the 2008 presidential campaign, Obama successfully portrayed him as a tax hiker.
Furthermore, the most impressive aspect of the Ryan plan is how it elegantly weaves together policies that interact with one another to solve multiple problems. For instance, one of the ways his plan is able to make Social Security solvent, according to the CBO, is that by removing the tax subsidy for employer-based insurance, the government is able to capture additional pay-roll tax revenue. Yet during the past year's health care debate, Republicans argued for incrementalism.
"Rep. Ryan's plan is the mirror image of Obama's agenda," Ramesh Ponnuru wrote on National Review's blog. "It attempts to move America in a freemarket rather than social-democratic direction, and I support that goal; but it is just as transformational, just as ambitious, just as immodest. I don't think that the public, or the political system, can bear this type of comprehensive change."
Asked whether he thought that Congress had the ability to pass something as ambitious as his proposal, Ryan responded, "I think the answer is yes, if you win the debate. But you've got to get on with the debate in order to win it." If necessary, he says, the plan could be broken into parts, but that would require more short-term borrowing.
The key challenge to reforming entitlements is that those who are currently benefiting from the status quo are older and more politically active than younger Americans who have the most to lose. While Medicare and Social Security are of primary importance to older voters, younger voters aren't thinking about their retirement. Ryan says he tries his best to engage younger audiences through the use of social media such as Facebook and Twitter. "I'm one guy from Wisconsin with a plan to try and get this conversation rolling and I'm doing everything I know how," he says.
IN HER GROUNDBREAKING HISTORY of the Great Depression, The Forgotten Man, Amity Shlaes argues that not only did Franklin D. Roosevelt's policies prolong the economic downturn, but in the name of helping some Americans, he imposed hardships on others. She sees a parallel to today, when politicians in both parties perpetuate the third-rail status of entitlement programs with reckless disregard for future generations.
"The Forgotten Man in the 1930s wasn't only FDR's poor man, it was also the man who would shoulder the burden of the progressive experiment," she says. "Today, the man who shoulders the burden of the progressive experiment most seriously is not older Americans from 40 up, but rather those under 40 who will have to pay higher taxes and get fewer benefits. No generation has been more forgotten than that generation that is now children."
Without changes, Ryan says, younger Americans are guaranteed to grow up in a nation in which "the best century will be the last and not the current one." He says, "That's the path we're on right now. The sooner we can help Americans see that, the sooner we can get the kind of changes we need to prevent it."
There are arguments in favor of gradualism, and those on the right certainly shouldn't live in a fantasy world detached from what is politically feasible. But the looming fiscal crisis is so severe and approaching so rapidly that conservatives can't afford to postpone making the case for something on the scale of what Ryan is proposing, if not his specific plan. During this year's congressional races and the next presidential primaries, any candidate who attacks Obama's reckless spending should be put to the Ryan test. That is, anybody who expects to be taken seriously as a limited government conservative should endorse specific solutions to tackle the debt. To avoid discussing these issues during an election year means preemptively surrendering to the reality of a leviathan state. To walk away from this fight guarantees that future generations will be forced to live in the wreckage of a collapsed United States. If the conservative movement was built for any reason and exists for any purpose, it is to fight this battle.
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