Three things you need to know about Islam! Perhaps you already do?
http://www.youtube.com/watch?v=Ib9rofXQl6w&feature=player_embedded
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The Public Option is a threat that will not disappear. Progressives will lay across a train track to get it to become legislation. (See 1 below.)
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Is Soros the evil person that this report suggests? After reading about him in "More Money Than God" it is pretty evident Soros is a psychologically conflicted person and I would say, at the very least suspect and probably dangerous.
Kyle Anne is a friend but her characterization of Soros and his attack on the English Pound is disputed by Soros who maintains his trading position forced England to do sooner what eventually it would have to do,ie. devalue the pound.
I am not defending Soros but the fact that the article links large stock positions with his nefarious efforts to control, manipulate and bring his brand of change may be an over reach for a person who buys and sells for financial and market reasons also.
It has been rumored that Soros is behind J Street's funding in order to build a counterweight to AIPAC and to carry out Obama's desire to weaken America's relationship and support of Israel.
Whatever the truth regarding Soros, there is no question he has power, yields it to influence events in keeping with his philosophical views, which are quite radical and far from mainstream. There is plenty of evidence Soros uses philanthropy more for the purpose of manipulation than as pure charity.
Soros is a man to be watched and tracked for sure.(See 2 below.)
Meanwhile Soros in his own words.(See 2 a below.)
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Caddell and Schoen, two pollsters who worked for Democrats, see Obama as a divisive president and Frank Rich of how the messiah has fallen
They concur with what I have said, written and thought shortly after Obama burst upon the scene he defrauded America and continues to divide it for personal political gain. Obama is a human wrecking bar. (See 3 and 3a below.)
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A Frank analysis of Newt? (See 4 below.)
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Unaligned voters really understandably have no use for either party so they shift their support back and forth. Seems Republicans are likely to benefit this time around.
Meanwhile, Obama continues to tank - no not like the hapless Dukakis. (See 5 and 5a below.)
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Bob Herbert discusses the Rockefeller Foundation report that reveals the despair Americans feel and there seems no clear way out of the problems so many face. (See 6 below.)
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As Obama's economic advisor Romer seems not to be having much influence so why does she stay? (See 7 below.)
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Dick
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1)FLEMING HEALTH CARE REPEAL UPDATE
IT'S BAAAAAACK - The Public Option is Being Considered in Congress Again
“We're going to have a public option….It's just a question of when.”
Senate Majority Leader Harry Reid, July 2010.
If you thought the worst of the health care debate was behind us, think again. Earlier this week, 128 liberal Democrats joined California Democrat, Lynn Woolsey on a new bill, H.R. 5808, that would amend the new health care reform bill to create a public option in the new health insurance exchanges. While there are a few minor changes in this new bill, this public-option model is nearly identical to the original government health care plan we fought so hard against and defeated just 6 months ago.
WHAT YOU SHOULD KNOW: This new public option is being presented by Woolsey and her liberal colleagues under the ruse of reducing the deficit. That’s right—they want to grow the public welfare state and have you think it will reduce government spending. Can you say, ludicrous? This ploy of theirs won’t stop as long as Nancy Pelosi is Speaker.
THE DOCTOR'S DIAGNOSIS: America must continue to provide the best health care services while providing affordable access to that care. Although still in its infancy, we are already seeing some of the devastating impacts of the new health care reform law. Companies are already making plans to lay off employees and some businesses are closing as a direct result of that legislation. If the current Majority moves our country further toward a public option, we will end up with a health care system like the NHS, which we know subjects British citizens to long lines, rationing and preventable deaths.
Early in this debate, in response to the insistence by many in the majority that health reform contain a public option, I offered a resolution, H. Res. 615, to require Members of Congress to put their money where their mouth is, and urge colleagues who vote for legislation creating a government-run health care plan to lead by example and enroll themselves in the same public plan. Nearly 4 million Americans from all 50 states contacted my office to offer their support for H. Res 615.
As this process unfolds, I will continue to work to repeal what I firmly believe to be an onerous and unconstitutional health care reform law which passed last March and find market-based solutions to our health care needs.
Sincerely,
JOHN FLEMING, M.D.
Member of Congress
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2)Subj: Who Is George Soros?
Here is what (CBS') Mr. (Steve) Kroft's research has turned up. Bit of a read, but it took 4 months to put it together.
"The main obstacle to a stable and just world order is the United States .." George Soros
"George Soros is an evil man. He's anti-God, anti-family, anti-American, and anti-good." He killed and robbed his own Jewish people.
If George Soros isn't the world's preeminent "malignant messianic narcissist," he'll do until Hitler, Stalin, Mao, and Pol Pot are reincarnated.
What we have in Soros, is a multi-billionaire atheist, with skewed moral values, and a sociopath's lack of conscience. He considers himself to be an elitist world class philosopher, despises the American Way and just loves to do social engineering (change cultures).
György Schwartz, better known to the world as George Soros, was born August 12, 1930 in Hungary . Soros' father, Tivadar, was a fervent practitioner of the Esperanto a language invented in 1887, and designed to be the first global language, free of any national identity.
The Schwartz's, who were non-practicing Jews, changed the family name to Soros, in order to facilitate assimilation into the gentile population, as the Nazis spread into Hungary during the 1930s.
When Hitler's henchman Adolf Eichmann arrived in Hungary , to oversee the murder of that country's Jews, George Soros ended up with a man whose job was confiscating property from the Jewish population. Soros went with him on his rounds.
Soros has repeatedly called 1944 "the best year of his life."
"70% of Mr. Soros's fellow Jews in Hungary , nearly a half-million human beings, were annihilated in that year, yet he gives no sign that this put any damper on his elation, either at the time or indeed in retrospect."
During an interview with "Sixty Minute's" Steve Kroft, Soros was asked about his "best year:"
KROFT: My understanding is that you went out with this protector of yours who swore that you were his adopted godson.
SOROS: Yes. Yes.
KROFT: Went out, in fact, and helped in the confiscation of property from your fellow Jews, friends and neighbors.
SOROS: Yes. That's right. Yes.
KROFT: I mean, that sounds like an experience that would send lots of people to the psychiatric couch for many, many years. Was it difficult?
SOROS: Not, not at all. Not at all, I rather enjoyed it.
KROFT: No feeling of guilt?
SOROS: No, only feelings of absolute power.
In his article, Muravchik describes how Soros has admitted to having "carried some rather potent messianic fantasies with me from childhood, which I felt I had to control, otherwise they might get me in trouble."
Be that as it may. After WWII, Soros attended the London School of Economics, where he fell under the thrall of fellow atheist and Hungarian, Karl Popper, one of his professors. Popper was a mentor to Soros until Popper's death in 1994. Two of Popper's most influential teachings concerned "the open society," and Fallibilism.
Fallibilism is the philosophical doctrine that all claims of knowledge could, in principle, be mistaken. (Then again, I could be wrong about that.)
The "open society" basically refers to a "test and evaluate" approach to social engineering. Regarding "open society" Roy Childs writes, "Since the Second World War, most of the Western democracies have followed Popper's advice about piecemeal social engineering and democratic social reform, and it has gotten them into a grand mess."
In 1956 Soros moved to New York City , where he worked on Wall Street, and started amassing his fortune. He specialized in hedge funds and currency speculation.
Soros is absolutely ruthless, amoral, and clever in his business dealings, and quickly made his fortune. By the 1980s he was well on his way to becoming the global powerhouse that he is today.
In an article Kyle-Anne Shiver wrote for "The American Thinker" she says, "Soros made his first billion in 1992 by shorting the British pound with leveraged billions in financial bets, and became known as the man who broke the Bank of England . He broke it on the backs of hard-working British citizens who immediately saw their homes severely devalued and their life savings cut drastically, almost overnight."
In 1994 Soros crowed in "The New Republic " that "the former Soviet Empire is now called the Soros Empire." The Russia-gate scandal in 1999, which almost collapsed the Russian economy, was labeled by Rep. Jim Leach, then head of the House Banking Committee, to be "one of the greatest social robberies in human history." The "Soros Empire" indeed.
In 1997 Soros almost destroyed the economies of Thailand and Malaysia . At the time, Malaysia 's Prime Minister, Mahathir Mohamad, called Soros "a villain, and a moron." Thai activist Weng Tojirakarn said, "We regard George Soros as a kind of Dracula. He sucks the blood from the people."
The website "Greek National Pride" reports, "[Soros] was part of the full court press that dismantled Yugoslavia and caused trouble in Georgia , Ukraine and Myanmar [ Burma ]. Calling himself a philanthropist, Soros' role is to tighten the ideological stranglehold of globalization and the New World Order while promoting his own financial gain. He is without conscience; a capitalist who functions with absolute amorality."
France has upheld an earlier conviction against Soros, for felony insider trading. Soros was fined 2.9 million dollars.
Recently, his native Hungary fined Soros 2.2 million dollars for "illegal market manipulation." Elizabeth Crum writes that "The Hungarian economy has been in a state of transition as the country seeks to become more financially stable and westernized. [Soros'] deliberately driving down the share price of its largest bank put Hungary's economy into a wicked tailspin, one from which it is still trying to recover.
My point here is that Soros is a planetary parasite. His grasp, greed, and gluttony have a global reach.
But what about America ? Soros told Australia 's national newspaper "The Australian" " America , as the centre of the globalised financial markets, was sucking up the savings of the world. This is now over. The game is out," he said, adding that the time has come for "a very serious adjustment" in American's consumption habits. He implied that he was the one with the power to bring this about."
Soros: "World financial crisis is "stimulating" and "in a way, the culmination of my life's work."
Obama has recently promised 10 billion of our tax dollars to Brazil, in order to give them a leg-up in expanding their offshore oil fields. Obama's largesse towards Brazil, came shortly after his political financial backer, George Soros, invested heavily in Brazilian oil (Petrobras).
Tait Trussel writes, "The Petrobras loan may be a windfall for Soros and Brazil , but it is a bad deal for the U.S. The American Petroleum Institute estimates that oil exploration in the U.S. could create 160,000 new, well-paying jobs, as well as $1.7 trillion in revenues to federal, state, and local governments, all while fostering greater energy security and independance."
A blog you might want to keep an eye on is SorosWatch.com. Their mission: "This blog is dedicated to all who have suffered due to the ruthless financial pursuits of George Soros. Stories are many and varied, but the theme is the same: the destructive power of greed without conscience. We pledge to tirelessly watch Soros wherever he goes and to print the truth in the hope that he will one day be made to stop preying upon the world's poor, that justice will be served."
Back to America .. Soros has been actively working to destroy America from the inside out for some years now. People have been warning us. Two years ago news sources reported that "Soros [is] an extremist who wants open borders, a one-world foreign policy, legalized drugs, euthanasia, and on and on. This is off-the-chart dangerous."
In 1997 Rachel Ehrenfeld wrote, "Soros uses his philanthropy to change or more accurately deconstruct the moral values and attitudes of the Western world, and particularly of the American people. His "open society" is not about freedom; it is about license. His vision rejects the notion of ordered liberty, in favor of a PROGRESSIVE ideology of rights and entitlements."
Perhaps the most important of these "whistle blowers" are David Horowitz and Richard Poe. Their book "The Shadow Party" outlines in detail how Soros hijacked the Democratic Party, and now owns it lock, stock, and barrel.
Soros has been packing the Democratic Party with radicals, and ousting moderate Democrats for years.
The Shadow Party became the Shadow Government, which became the Obama Administration.
DiscoverTheNetworks.org (another good source) writes, "By his [Soros'] own admission, he helped engineer coups in Slovakia , Croatia , Georgia , and Yugoslavia . When Soros targets a country for "regime change," he begins by creating a shadow government , a fully formed government-in-exile, ready to assume power when the opportunity arises. The Shadow Party he has built in America greatly resembles those he has created in other countries prior to instigating a coup."
November 2008 edition of the German magazine "Der Spiegel," in which Soros gives his opinion on what the next POTUS (President of the U.S. ) should do after taking office. "I think we need a large stimulus package." Soros thought that around 600 billion would be about right.
Soros also said that "I think Obama presents us a great opportunity to finally deal with global warming and energy dependence. The U.S. needs a cap and trade system with auctioning of licenses for emissions rights."
Although Soros doesn't (yet) own the Republican Party, like he does the Democrats, make no mistake, his tentacles are spread throughout the Republican Party as well.
Soros is a partner in the Carlyle Group where he has invested more than 100 million dollars. According to an article by "The Baltimore Chronicle's" Alice Cherbonnier, the Carlye Group is run by "a veritable who's who of former Republican leaders," from CIA man Frank Carlucci, to CIA head [and ex-President] George Bush, Sr.
In late 2006, Soros bought about 2 million shares of Halliburton, Dick Cheney's old stomping grounds.
When the Democrats and Republicans held their conventions in 2000, Soros held Shadow Party conventions in the same cities, at the same time.
In 2008, Soros donated $5,000,000,000 to the Democratic National Committee, DNC, to insure Obama's win and wins for many other Alinsky trained Radical Rules Anti-American Socialist. George has been contributing a $ billion plus to the DNC since Clinton came on the scene.
Soros has dirtied both sides of the aisle, trust me. And if that weren't bad enough, he has long held connections with the CIA.
And I mustn't forget to mention Soros' involvement with the MSM (Main Stream Media), the entertainment industry (e.g. he owns 2.6 million shares of Time Warner), and the various political advertising organizations he funnels millions to. In short, George Soros controls or influence most of the MSM. Little wonder they ignore the TEA PARTY, Soro's NEMESIS.
As Matthew Vadum writes, "The liberal billionaire-turned-philanthropist has been buying up media properties for years in order to drive home his message to the American public that they are too materialistic, too wasteful, too selfish, and too stupid to decide for themselves how to run their own lives."
Richard Poe writes, "Soros' private philanthropy, totaling nearly $5 billion, continues undermining America 's traditional Western values. His giving has provided funding of abortion rights, atheism, drug legalization, sex education, euthanasia, feminism, gun control, globalization, mass immigration, gay marriage and other radical experiments in social engineering."
Some of the many NGOs (None Government Organizations) that Soros funds with his billions are: MoveOn.org, the Apollo Alliance , Media Matters for America , the Tides Foundation, the ACLU, ACORN, PDIA (Project on Death In America ), La Raza, and many more. For a more complete list, with brief descriptions of the NGOs, go to DiscoverTheNetworks.org.
Poe continues, "Through his global web of Open Society Institutes and Open Society Foundations, Soros has spent 25 years recruiting, training, indoctrinating and installing a network of loyal operatives in 50 countries, placing them in positions of influence and power in media, government, finance and academia."
Without Soro's money, would the Saul Alinsky's Chicago machine still be rolling? Would SEIU, ACORN, and La Raza still be pursuing their nefarious activities? Would Big Money and lobbyists still be corrupting government? Would our college campuses still be retirement homes for 1960s radicals?
America stands at the brink of an abyss, and that fact is directly attributable to Soros. Soros has vigorously, cleverly, and insidiously planned the ruination of America and his puppet, Barak Obama is leading the way.
2a).The Crisis & the Euro
By George Soros
I believe that misconceptions play a large role in shaping history, and the euro crisis is a case in point.
Let me start my analysis with the previous crisis, the bankruptcy of Lehman Brothers. In the week following September 15, 2008, global financial markets actually broke down and by the end of the week they had to be put on artificial life support. The life support consisted of substituting sovereign credit—backed by the financial resources of the state—for the credit of financial institutions that had ceased to be acceptable to counterparties.
As Mervyn King of the Bank of England explained, the authorities had to do in the short term the exact opposite of what was needed in the long term: they had to pump in a lot of credit, to replace the credit that had disappeared, and thereby reinforce the excess credit and leverage that had caused the crisis in the first place. Only in the longer term, when the crisis had subsided, could they drain the credit and reestablish macroeconomic balance.
This required a delicate two-phase maneuver—just as when a car is skidding, first you have to turn it in the direction of the skid and only when you have regained control can you correct course. The first phase of the maneuver was successfully accomplished—a collapse has been averted. But the underlying causes have not been removed and they surfaced again when the financial markets started questioning the creditworthiness of sovereign debt. That is when the euro took center stage because of a structural weakness in its constitution. But we are dealing with a worldwide phenomenon, so the current situation is a direct consequence of the crash of 2008. The second phase of the maneuver—getting the economy on a new, better course—is running into difficulties.
The situation is eerily reminiscent of the 1930s. Doubts about sovereign credit are forcing reductions in budget deficits at a time when the banking system and the economy may not be strong enough to do without fiscal and monetary stimulus. Keynes taught us that budget deficits are essential for countercyclical policies in times of deflation, yet governments everywhere feel compelled to reduce them under pressure from the financial markets. Coming at a time when the Chinese authorities have also put on the brakes, this is liable to push the global economy into a slowdown or possibly a double dip. Europe, which weathered the first phase of the financial crisis relatively well, is now in the forefront of causing the downward pressure because of the problems connected with the common currency.
The euro was an incomplete currency to start with. In 1992, the Maastricht Treaty established a monetary union without a political union. The euro boasts a common central bank but it lacks a common treasury. It is exactly that sovereign backing that financial markets are now questioning and that is missing from the design. That is why the euro has become the focal point of the current crisis.
Member countries share a common currency, but when it comes to sovereign credit they are on their own. This fact was obscured until recently by the willingness of the European Central Bank (ECB) to accept the sovereign debt of all member countries on equal terms at its discount window. This allowed the member countries to borrow at practically the same interest rate as Germany, and the banks were happy to earn a few extra pennies on supposedly risk-free assets by loading up their balance sheets with the government debt of the weaker countries. These positions now endanger the creditworthiness of the European banking system. For instance, European banks hold nearly a trillion euros of Spanish debt, of which half is held by German and French banks. It can be seen that the European sovereign debt crisis is intricately interconnected with a European bank crisis.
How did this connection arise?
The introduction of the euro in 1999 brought about a radical narrowing of interest rate differentials. This in turn generated real estate bubbles in countries like Spain, Greece, and Ireland. Instead of the convergence prescribed by the Maastricht Treaty, these countries grew faster and developed trade deficits within the eurozone, while Germany reigned in its labor costs, became more competitive, and developed a chronic trade surplus. To make matters worse, some of these countries, most notably Greece, ran budget deficits that exceeded the limits set by the Maastricht Treaty. But the discount facility of the European Central Bank allowed them to continue borrowing at practically the same rates as Germany, relieving them of any pressure to correct their excesses.
The first clear reminder that the euro does not have a common treasury came after the bankruptcy of Lehman. The finance ministers of the European Union promised that no other financial institution of systemic importance would be allowed to default. But Germany opposed a joint Europe-wide guarantee; each country had to take care of its own banks.
At first, the financial markets were so impressed by the promise of the EU finance ministers that they hardly noticed the difference. Capital fled from the countries that were not in a position to offer similar guarantees, but the differences in interest rates on government debt within the eurozone remained minimal. That was when the countries of Eastern Europe, notably Hungary and the Baltic States, got into difficulties and had to be rescued.
It is only this year that financial markets started to worry about the accumulation of sovereign debt within the eurozone. Greece became the center of attention when the newly elected government revealed that the previous government had lied and the deficit for 2009 was much larger than indicated.
Interest rate differentials started to widen but the European authorities were slow to react because the member countries held radically different views. Germany, which had been traumatized by two episodes of runaway inflation, was allergic to any buildup of inflationary pressures; France and other countries were more willing to show their solidarity. Since Germany was heading for elections, it was unwilling to act, but nothing could be done without Germany. So the Greek crisis festered and spread. When the authorities finally got their act together they had to offer a much larger rescue package than would have been necessary if they had acted earlier.
In the meantime, the crisis spread to the other deficit countries, and in order to reassure the markets the authorities felt obliged to put together a €750 billion European Financial Stabilization Fund, with €500 billion from the member states and €250 billion from the IMF.
But the markets are not reassured because the term sheet of the Fund, i.e., the conditions under which it operates, was dictated by Germany. The Fund is guaranteed not jointly but only severally, so that the weaker countries will in fact be guaranteeing a portion of their own debt. The Fund will be raised by selling bonds to the market and charging a fee on top. It is difficult to see how these bonds will merit an AAA-rating.
Even more troubling is the fact that Germany is not only insisting on strict fiscal discipline for weaker countries but is also reducing its own fiscal deficit. When all countries are reducing deficits at a time of high unemployment they set in motion a downward deflationary spiral. Reductions in employment, tax receipts, and exports reinforce each other, ensuring that the targets will not be met and further reductions will be required. And even if budgetary targets were met, it is difficult to see how the weaker countries could regain their competitiveness and start growing again because, in the absence of exchange rate depreciation, the adjustment process would require reductions in wages and prices, producing deflation.
To some extent a continued decline in the value of the euro may mitigate the deflation. But as long as there is no growth, the relative weight of the debt will continue to grow. This is true not only for the national debt but also for the commercial loans held by banks. This will make the banks even more reluctant to lend, compounding the downward pressures.
The euro is a patently flawed construct, which its architects knew at the time of its creation. They expected its defects to be corrected, if and when they became acute, by the same process that brought the European Union into existence.
The European Union was built by a process of piecemeal social engineering: indeed it is probably the most successful feat of social engineering in history. The architects recognized that perfection is unattainable. They set limited objectives and firm deadlines. They mobilized the political will for a small step forward, knowing full well that when it was accomplished its inadequacy would become apparent and require further steps. That is how the six-nation Coal and Steel Community was gradually developed into the European Union, step by step.
Germany used to be at the heart of the process. German statesmen used to assert that Germany has no independent foreign policy, only a European policy. After the fall of the Berlin Wall, Germany’s leaders realized that unification was possible only in the context of a united Europe and they were willing to make considerable sacrifices to secure European acceptance. When it came to bargaining they were willing to contribute a little more to the pot and take a little less than the others, thereby facilitating agreement. But those days are over. Germany doesn’t feel so rich anymore and doesn’t want to continue serving as the deep pocket for the rest of Europe. This change in attitudes is understandable but it did bring the process of integration to a screeching halt.
Germany now wants to treat the Maastricht Treaty as the scripture that has to be obeyed without any modifications. This is not understandable, because it is in conflict with the incremental method by which the European Union was built. Something has gone fundamentally wrong in Germany’s attitude toward the European Union.
Let me first analyze the defects of the euro and then examine Germany’s attitude. The biggest deficiency in the euro, the absence of a common fiscal policy, is well known. But there is another defect that has received less recognition: a false belief in the stability of financial markets. As I have tried to explain in my writings, the crash of 2008 conclusively demonstrated that financial markets do not necessarily tend toward equilibrium; they are just as likely to produce bubbles. I don’t want to repeat my arguments here because you can find them in my lectures, which have recently been published.*
All I need to do is remind you that the introduction of the euro created its own bubble in the countries whose borrowing costs were greatly reduced. Greece abused the privilege by cheating, but Spain didn’t. Spain followed sound macroeconomic policies, maintained its sovereign debt level below the European average, and exercised exemplary supervision over its banking system. Yet it enjoyed a tremendous real estate boom that has turned into a bust resulting in 20 percent unemployment. Now it has to rescue the savings banks, called cajas, and the municipalities. And the entire European banking system is weighed down by bad debts and needs to be recapitalized. The design of the euro did not take this possibility into account.
Another structural flaw in the euro is that it guards only against the danger of inflation and ignores the possibility of deflation. In this respect the task assigned to the European Central Bank is asymmetric. This is due to Germany’s fear of inflation. When Germany agreed to substitute the euro for the Deutschmark it insisted on strong safeguards to maintain the value of the currency. The Maastricht Treaty contained a clause that expressly prohibited bailouts and that ban has been reaffirmed by the German constitutional court. It is this clause that has made the current situation so difficult to deal with.
And this brings me to the gravest defect in the euro’s design: it does not allow for error. It expects member states to abide by the Maastricht criteria—which state that the budget deficit must not exceed 3 percent and total government debt 60 percent of GDP—without establishing an adequate enforcement mechanism. And now that several countries are far away from the Maastricht criteria, there is neither an adjustment mechanism nor an exit mechanism. Now these countries are expected to return to the Maastricht criteria even if such a move sets in motion a deflationary spiral. This is in direct conflict with the lessons learned from the Great Depression of the 1930s, and is liable to push Europe into a period of prolonged stagnation or worse. That will, in turn, generate discontent and social unrest. It is difficult to predict how the anger and frustration will express itself.
The wide range of possibilities will weigh heavily on the financial markets. They will have to discount the prospects of deflation and inflation, default and disintegration. Financial markets dislike uncertainty. Meanwhile, xenophobic and nationalistic extremism are already on the rise in countries such as Belgium, the Netherlands, and Italy. In a worst-case scenario, such political trends could undermine democracy and paralyze or even destroy the European Union.
If that were to happen, Germany would have to bear a major share of the responsibility because as the strongest and most creditworthy country it calls the shots. By insisting on pro-cyclical policies, Germany is endangering the European Union. I realize that this is a grave accusation but I am afraid it is justified.
To be sure, Germany cannot be blamed for wanting a strong currency and a balanced budget. But it can be blamed for imposing its predilection on other countries that have different needs and preferences—like Procrustes, who forced other people to lie in his bed and stretched them or cut off their legs to make them fit. The Procrustes bed being inflicted on the eurozone is called deflation.
Unfortunately Germany does not realize what it is doing. It has no desire to impose its will on Europe; all it wants to do is to maintain its competitiveness and avoid becoming the deep pocket for the rest of Europe. But as the strongest and most creditworthy country, it is in the driver’s seat. As a result Germany objectively determines the financial and macroeconomic policies of the eurozone without being subjectively aware of it. When all the member countries try to be like Germany they are bound to send the eurozone into a deflationary spiral. That is the effect of the policies pursued by Germany and—since Germany is in the driver’s seat—these are the policies imposed on the eurozone.
The German public does not understand why it should be blamed for the troubles of the eurozone. After all, it is the most successful economy in Europe, fully capable of competing in world markets. The troubles of the eurozone feel like a burden weighing Germany down. It is difficult to see what would change this perception because the troubles of the eurozone are depressing the euro and, being the most competitive of the countries in the eurozone, Germany benefits the most. As a result Germany is likely to feel the least pain of all the member states.
The error in the German attitude can best be brought home by engaging in a thought experiment. The most ardent instigators of that attitude would prefer that Germany leave the euro rather than modify its position. Let us consider where that would lead.
The Deutschmark would go through the roof and the euro would fall through the floor. This would indeed help the adjustment process of the other countries but Germany would find out how painful it can be to have an overvalued currency. Its trade balance would turn negative and there would be widespread unemployment. German banks would suffer severe exchange rate losses and require large injections of public funds. But the government would find it politically more acceptable to rescue German banks than Greece or Spain. And there would be other compensations: pensioners could retire to Spain and live like kings, helping Spanish real estate to recover.
Let me emphasize that this scenario is totally hypothetical because it is extremely unlikely that Germany would be allowed to leave the euro and to do so in a friendly manner. Germany’s exit would be destabilizing financially, economically, and above all politically. The collapse of the single market would be difficult to avoid. The purpose of this thought experiment is to convince Germany to change its ways without going through the actual experience that its current policies hold in store.
What would be the right policy for Germany to pursue? It cannot be expected to underwrite other countries’ deficits indefinitely. So some tightening of fiscal policies is inevitable. But some way has to be found to allow the countries in crisis to grow their way out of their difficulties. The countries concerned have to do most of the heavy lifting by introducing structural reforms but they do need some outside help to allow them to stimulate their economies. By cutting its budget deficit and resisting a rise in wages to compensate for the decline in the purchasing power of the euro, Germany is actually making it more difficult for the other countries to regain competitiveness.
So what should Germany do? It needs to recognize three guiding principles.
First, the current crisis is more a banking crisis than a fiscal one. The continental European banking system was never properly cleansed after the crash of 2008. Bad assets have not been marked-to-market—i.e., valued according to current market price— but are being held to maturity. When markets started to doubt the creditworthiness of sovereign debt, it was really the solvency of the banking system that was brought into question because the banks were loaded with the bonds of the weaker countries and these are now selling below par—the price at which they were issued. The banks have difficulties in obtaining short-term financing. The interbank market—i.e., for borrowing and lending between banks—and the commercial paper market have dried up and banks have turned to the ECB both for short-term financing and for depositing their excess cash. They are in no position to buy government bonds. That is the main reason why risk premiums on government bonds have widened, setting up a vicious circle.
The crisis has now forced the authorities to disclose the results of their stress tests of banks, which assess the extent to which their resources are sufficient to meet their obligations. We cannot judge how serious the situation is until the results are published, presumably before the end of July. It is clear however that the banks are greatly overleveraged and need to be recapitalized on a compulsory basis. That ought to be the first task of the European Financial Stabilization Fund, and it will go a long way to clear the air. It may be seen, for instance, that Spain does not have a fiscal crisis at all. Recent market moves point in that direction. Germany’s role may also be seen in a very different light if, in recapitalizing its -Landesbanken, it becomes a bigger user of the stabilization fund than contributor to it.
Second, a tightening of fiscal policy must be offset by a loosening of monetary policy. Specifically, the ECB could buy Spanish treasury bills, an action that would significantly reduce the punitive interest rates, set by the German-inspired European Financial Stabilization Fund, that Spain now must pay on its bonds. This would allow Spain to meet its budget reduction targets with less pain. But that is not possible without a change of heart by Germany.
Third, this is the time to put idle resources to work by investing in education and infrastructure. For instance, Europe needs a better gas pipeline system, and the connection between Spain and France is one of the bottlenecks. The European Investment Bank ought to be able to find other investment opportunities as well, such as expanding broadband coverage or creating a smart electricity grid.
It is impossible to be more concrete at the moment but there are grounds for optimism. When the solvency situation of the banks has been clarified and they have been properly recapitalized, it should be possible to devise a growth strategy for Europe. And when the European economy has regained its balance the time will be ripe to correct the structural deficiencies of the euro. Make no mistake about it: the fact that the Maastricht criteria were so flagrantly violated shows that the euro does have deficiencies that need to be corrected.
As I said at the beginning, what is needed is a delicate, two-phase maneuver, similar to the one the authorities undertook after the failure of Lehman Brothers. First help Europe to grow its way out of its difficulties and then revise and strengthen the structure of the euro. This cannot be done without German leadership. I hope Germany will once again live up to the responsibilities. After all, it has done so in the past.
Postscript
Germany went into the G-20 meeting in Toronto on June 26–27 largely isolated. Before the meeting, President Obama publicly pleaded with Angela Merkel to change her policies. At the meeting the tables were turned. Canada’s Stephen Harper as the host and David Cameron, the newly elected Conservative prime minister of the UK, lined up behind Merkel, leaving Obama isolated. Supporting Merkel’s approach, the G-20 endorsed a halving of budget deficits by 2013 as the target. This has extended the threat of a deflationary spiral to the global economy, making the experience of the 1930s even more relevant than it was when I gave much of the preceding text as a speech at Humboldt University.
The political leaders claim to take their cue from the financial markets but they are misreading the signals. Sovereign risk premiums have widened in Europe because of the situation of the banks; but yields on the government bonds of the US, Japan, and Germany are at or near all-time lows, yield curves are flattening, and commodity prices are declining—all foreshadowing deflation. Equity markets have also come under pressure but that is because of the lack of clear leadership. The range of uncertainties is unusually wide: markets need to discount inflation, default, and disintegration, all at the same time. No wonder that equity prices are falling.
The world’s leaders urgently need to learn that they have to lead markets and not seek to follow them. Of course, they also need to get their policies right and forge a consensus—a difficult trifecta. Right now the G-20 nations are converging around the wrong policy.
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3)Our Divisive President
Barack Obama promised a new era of post-partisanship. In office, he's played racial politics and further split the country along class and party lines
By PATRICK H. CADDELL AND DOUGLAS E. SCHOEN
During the election campaign, Barack Obama sought to appeal to the best instincts of the electorate, to a post-partisan sentiment that he said would reinvigorate our democracy. He ran on a platform of reconciliation—of getting beyond "old labels" of right and left, red and blue states, and forging compromises based on shared values.
President Obama's Inaugural was a hopeful day, with an estimated 1.8 million people on the National Mall celebrating the election of America's first African-American president. The level of enthusiasm, the anticipation and the promise of something better could not have been more palpable.
And yet, it has not been realized. Not at all.
Rather than being a unifier, Mr. Obama has divided America on the basis of race, class and partisanship. Moreover, his cynical approach to governance has encouraged his allies to pursue a similar strategy of racially divisive politics on his behalf.
We have seen the divisive approach under Republican presidents as well—particularly the administrations of Richard Nixon and George W. Bush. It was wrong then, and it is wrong now. By dividing America, Mr. Obama has brought our government to the brink of a crisis of legitimacy, compromising our ability to address our most important policy issues.
We say this with a heavy heart. Both of us share the president's stated vision of what America can and should be. The struggle for equal rights has animated both of our lives. Both of us were forged politically during the crucible of the civil rights movement. Having worked in the South during the civil rights movement, and on behalf of the ground-breaking elections of African-American mayors such as David Dinkins, Harold Washington and Emanuel Cleaver, we were deeply moved by Mr. Obama's election.
The first hint that as president Mr. Obama would be willing to interject race into the political dialogue came last July, when he jumped to conclusions about the confrontation between Harvard Prof. Henry Louis "Skip" Gates and the Cambridge police.
During a press conference, the president said that the "Cambridge police acted stupidly," and he went on to link the arrest with the "long history in this country of African-Americans and Latinos being stopped by law enforcement disproportionately."
In truth, the Gates incident appears to have had nothing to do with race—a Cambridge review committee that investigated the incident ruled on June 30 that there was fault on both sides.
Sen. Jon Kyl (R., Ariz.) has said the president told him in a closed-door meeting that he would not move to secure the border with Mexico unless and until Congress reached a breakthrough on comprehensive immigration reform. That's another indication Mr. Obama is willing to continue to play politics with hot-button issues.
Add in the lawsuit against the Arizona immigration law and it's clear the Obama administration is willing to run the risk of dividing the American people along racial and ethnic lines to mobilize its supporters—particularly Hispanic voters, whose backing it needs in the fall midterm elections and beyond.
As the Washington Post reported last week, two top White House strategists, speaking on condition of anonymity, have indicated that "the White House plans to use the immigration debate to punish the GOP and aggressively seek the Latino vote in 2012."
On an issue that has gotten much less attention, but is potentially just as divisive, the Justice Department has pointedly refused to prosecute three members of the New Black Panther Party for voter intimidation at the polls on Election Day 2008.
It is the job of the Department of Justice to protect all American voters from voter discrimination and voter intimidation—whether committed by the far right, the far left, or the New Black Panthers. It is unacceptable for the Department of Justice to continue to stonewall on this issue.
During the 2008 presidential campaign, Mr. Obama's campaign emphasized repeatedly that his minister, the Rev. Jeremiah Wright, was being unfairly stereotyped because of racially incendiary sound bites that allegedly did not reflect the totality of his views. In the Gates incident and others, Mr. Obama has resorted to similar forms of stereotyping.
Even the former head of the Civil Rights Commission, Mary Frances Berry, acknowledged that the Obama administration has taken to polarizing America around the issue of race as a means of diverting attention away from other issues, saying: "the charge of racism is proving to be an effective strategy for Democrats. . . . Having one's opponent rebut charges of racism is far better than discussing joblessness."
The president had a unique opportunity to focus on overarching issues of importance to whites and blacks. He has failed to address the critical challenges. He has not used his bully pulpit to emphasize the importance of racial unity and the common interest of poor whites and blacks who need training, job opportunities, and the possibility of realizing the American Dream. He hasn't done enough to address youth unemployment—which in the white community is 23.2% and in the black community is 39.9%.
Mr. Obama has also cynically divided the country on class lines. He has taken to playing the populist card time and time again. He bashes Wall Street and insurance companies whenever convenient to advance his programs, yet he has been eager to accept campaign contributions and negotiate with these very same banks and corporations behind closed doors in order to advance his political agenda.
Finally, President Obama also exacerbated partisan division, and he has made it clear that he intends to demonize the Republicans and former President George W. Bush in the fall campaign. In April, the Democratic National Committee released a video in which the president directly addressed his divide-and-conquer campaign strategy, with an appeal to: "young people, African-Americans, Latinos, and women who powered our victory in 2008 [to] stand together once again."
President Obama's divisive approach to governance has weakened us as a people and paralyzed our political culture. Meanwhile, the Republican leadership has failed to put forth an agenda that is more positive, unifying or inclusive. We are stronger when we debate issues and purpose, and we are all weaker when we divide by race and class. We will pay a price for this type of politics.
Mr. Caddell served as a pollster for President Jimmy Carter. Mr. Schoen, who served as a pollster for President Bill Clinton, is the author of "The Political Fix" (Henry Holt, 2010).
3a)‘Why Has He Fallen Short?’August 19, 2010
By Frank Rich
Of course Barack Obama was too hot not to cool down. He was the one so many were waiting for—not only the first African-American president but also the nation’s long-awaited liberator after eight years of Bush-Cheney, the golden-tongued evangelist who could at long last revive and sell the old liberal faith, the first American president in memory to speak to voters as if they might be thinking adults, the first national politician in years to electrify the young. He was even, of all implausible oddities, a contemporary politician- author who actually wrote his own books.
The Obama of Hope and Change was too tough an act for Obama, a mere chief executive, to follow. Only Hollywood might have the power to create a superhero who could fulfill the messianic dreams kindled by his presence and rhetoric, maintain the riveting drama of his unlikely ascent, and sustain the national mood of deliverance that greeted his victory. As soon as Inauguration Day turned to night, the real Obama was destined to depreciate like the shiny new luxury car that starts to lose its book value the moment it’s driven off the lot.
But still: How did we get to the nadir so fast? The BP oil spill, for weeks a constant fixture on the country’s television and computer screens, became a presidential quagmire even before Afghanistan could fulfill its manifest destiny to play that role. The 24/7 gushing crude was ready-made to serve as the Beltway’s bipartisan metaphorical indicator for a presidency that was verging on disaster to some of Obama’s natural supporters, let alone his many enemies. “I don’t see how the president’s position and popularity can survive the oil spill,” wrote Peggy Noonan in The Wall Street Journal on Memorial Day weekend without apparent fear of contradiction.
Pressed by critics to push back against BP with visible anger and kick-ass authority, Obama chose to devote the first Oval Office address of his presidency to the crisis in the gulf—on June 15, nearly sixty days after the Deep- water Horizon rig had exploded. His tardy prescriptions were panned even by the liberal Matthews-Olbermann-Maddow bloc at MSNBC. To many progressives, Obama’s too-cool handling of the disaster was a confirmation of a fatal character flaw—a professorial passivity that induced him to prematurely surrender the sacred “public option” in the health care debate and to keep too many of his predecessor’s constitutional abridgements in place at home and at Gitmo. When, a day after his prime-time address, he jawboned BP into setting up a $20 billion escrow fund for the spill’s victims, the Obama-hating tag team of Rupert Murdoch’s Fox News and its Tea Party auxiliaries attacked him for not being passive enough. To them, the President’s aggressive show of action was merely further confirmation that a rank incompetent and closet socialist (or is it National Socialist?) had illegitimately seized the White House to subvert America and the free-enterprise system.
Though the specifics may have differed from left to right, such was the political culture’s consensus on Obama’s presidency in June 2010: doomed. Even the near-universal praise that greeted his firing of the Afghanistan commander, General Stanley McChrystal, came with asterisks from both ends of the political spectrum. To many liberals, McChrystal’s demise accomplished little but to prolong the inevitable catastrophe of a futile policy in Afghanistan. To hawks, cashiering McChrystal did nothing to alter their conviction that Obama was a weak-kneed commander in chief whose vow to start withdrawing troops in July 2011 was a timeline for defeat. They gave the President a bye on the McChrystal firing only because of their long-time crush on his irreproachable successor, General David Petraeus.
There was, however, one contradictory footnote to the many provisional Obama obituaries of late spring and early summer 2010. For all the President’s travails, his approval rating, somewhere between 45 and 50 percent depending on the poll, still made him the most popular national politician in the country. By contrast, Congress’s popularity was in Bernie Madoff territory, with Republicans even more despised than Democrats. Perhaps some of the Obama faithful had a take on his still-young presidency that, in defiance of (and perhaps ignorance of) the Beltway consensus, paralleled a report card cited by Jonathan Alter in The Promise, his account of Obama’s first year in office:
PolitiFact.com, a database of the St. Petersburg Times that won a Pulitzer Prize for its fact-checking of the 2008 campaign, had catalogued 502 promises that Obama made during the campaign. At the one-year mark the totals showed that he had already kept 91 of them and made progress on another 285. The database’s “Obameter” rated 14 promises as “broken” and 87 as “stalled.” With promises ranging from “Remove more brush and vegetation that fuel wildfires” to “Establish a playoff system for college football,” PolitiFact selected 25 as Obama’s most significant. Of those, an impressive 20 were “kept” or “in the works.”
Alter goes on to cite some of Obama’s more substantive achievements. Despite continued violence and political stalemate in Iraq, he was on track to withdraw combat troops (however loosely defined) by his stated August 2010 deadline. He scrapped the F-22 fighter, ended Homeland Security pork in states where terrorist threats are minimal, attached strings to US military aid to Pakistan, and banned torture (if not “extraordinary rendition”). He pushed the Pentagon to abandon “don’t ask, don’t tell,” expanded AmeriCorps, increased funding for national parks and forests, and “overperformed on education” (at least for those who buy into the reforms of Obama and his education secretary, Arne Duncan). And then there’s the piece de resistance, the health care bill, which among other things will extend Medicaid to some 16 million relatively poor people. “He had won ugly—without a single Republican—but won all the same,” writes Alter in his book’s concluding paragraph. “Whatever happened next—however bad it got—Barack Obama was in the company of Franklin Roosevelt and Lyndon Johnson now in terms of domestic achievement, a figure of history for reasons far beyond the color of his skin.”
That achievement has since been joined by another legislative victory for Obama’s domestic agenda, the enactment of what he has called “the toughest financial reform since the ones we created in the aftermath of the Great Depression.” Never mind that the financial regulatory bill, like the health care bill, fell considerably short of many progressives’ ambitions. (Not for nothing did the stocks of JPMorgan Chase, Goldman Sachs, and Morgan Stanley rise more than 3 percent on June 25, once the bill emerged from the congressional reconciliation process.) A win is a win, and when you toss in the stimulus package at the inception of the Obama presidency, it is hard to deny the administration’s record of accomplishment, however irksome some of the small print.
Alter, a native Chicagoan, a columnist for Newsweek, and a fixture on MSNBC, is a sympathetic observer of this president. His previous book—The Defining Moment: FDR’s Hundred Days and the Triumph of Hope (2006)—was a celebration of the comparable passage in one of the three heroic presidencies (along with Lincoln’s and Kennedy’s) most frequently invoked by him and other Obama fans as the most pertinent historical antecedents. There has been some sniping from the left and right that The Promise is hagiography, as Alter’s sunny accounting of Obama’s achievements might suggest. But that’s not the case. One may quibble with some of Alter’s emphases, but his well-reported, judicious book is as mindful of Obama’s failings as his successes and seems to be carrying water for no one in the White House or outside it. It’s a credible guide to what’s gone right, but also to what’s gone wrong and what, we must hope, can be fixed.
Alter’s reporting feels trustworthy not just because it’s nuanced and persuasively sourced but also because it spares us any of those tinny slam-bam-pow recreated “scenes” that have become a plague in books of this genre in the Bob Woodward era. There are no huge revelations here, aside from an exceptionally complete and prescient account of Obama’s first confrontation with McChrystal after the general’s early acts of incipient subordination in the fall of 2009. But the many grace notes in The Promise are often telling, if not exactly scandalous. Lest anyone doubt that this president is a boy scout, Alter reports that the much clucked-over Reuters photo of him and Nicolas Sarkozy seemingly ogling the derriere of a seventeen-year-old Brazilian woman at the G-8 meeting in Italy was misleading (at least as far as Obama was concerned). “When the video came out,” Alter writes, “it was clear that the president was merely turning to help an older woman down the steps.”
Alter also provides some footnotes to the well-worn story of Obama’s path to the White House. We get—in an actual footnote, as it happens—a new and credible reason why Al Gore, for all his distaste for the Clintons, remained neutral during the primaries: “He depended on the largesse of Clinton Global Initiative donors for his own climate change activities.” We also learn that Obama’s praise of Ronald Reagan for having “changed the trajectory of American politics” in a Nevada newspaper interview was not some idle riff but a calculated stunt to shake things up after his loss to Hillary Clinton in the New Hampshire primary. He knew his reference to Reagan would be “like waving a red cape in front of the Clintons” and provoke an embarrassing overreaction—as indeed it did, in the form of over-the-top ads that were widely ridiculed. To the close Obama friend and confidant Marty Nesbitt, “this may have been the most brilliant move of the entire Obama campaign.”
There is nothing in these pages to contradict the idea that Obama is the smartest guy in every room, hard as he works to avoid advertising that fact. He is in on the joke of his own outlandish success and the almost absurd run of good luck that has helped fuel it. He never ceases to remark how unlikely it is that a man named Barack Hussein Obama, the black grandson of Kenyan goatherds, “could run against the most potent political machine in a generation and become president of the United States.” As Alter observes, FDR may have been a second-class intellect with a first-rate temperament, in the famous judgment of Oliver Wendell Holmes Jr., but Obama “came to office with both a first-class intellect and a first-class temperament.”
To which one might respond: If he’s so smart, and so sane, why has he fallen short of his spectacular potential so far? That shortfall is most conspicuously measured by his escalation of a war held hostage by the mercurial and corrupt Afghanistan president Hamid Karzai; a woefully inadequate record on job creation; and the widespread conviction that the White House tilts toward Wall Street over those who have suffered most in the Great Recession. Alter doesn’t soft-peddle these criticisms. “Even by late 2009, when every major bank except Citigroup had paid back its TARP money,” he writes, “the impression of a colossal injustice remained—that fabulously wealthy bankers would be made whole, but ordinary Americans would not.”
Among those critics who are fundamentally sympathetic to Obama, explanations for his disappointing performance abound. To many, he is not and never really was a progressive, only a cautious pragmatist who pandered to primary voters in 2008 by speaking in broad liberal bromides and reminding them incessantly that he had been to the left of Hillary on Iraq. Many see him as far too wedded to a naive and platonic ideal of bipartisanship that amounts to unilateral political disarmament when confronting an opposition party as nihilistic and cynical as the current GOP. He lacks a fierceness in battle that, as William Pfaff and Robert Reich have suggested, might have driven him to exercise federal authority over BP at the start of the oil spill, much as an angered Truman did when he seized the steel industry to end the crippling strike of 1952. (Truman’s executive action was ruled unconstitutional in the absence of a law authorizing it, but Reich has argued that present law, including the Oil Pollution Act of 1990, would allow BP to be placed in temporary receivership as AIG and General Motors were last year.) Obama is also faulted by disappointed fans for his surprisingly subpar political skills. The master orator who left millions of Americans fired up and ready to go during election season has often come off as aloof once in office, and has proven a surprisingly prolix and lackluster salesman for his own policies.
There is some validity to all these diagnoses. The falloff in messaging prowess is particularly perplexing. Alter attributes some of it to the success of Obama’s speech on race during the Jeremiah Wright firestorm of the campaign. Because that comprehensive and nuanced address was “a hit without sound bites,” Obama felt that his congenital distaste for glib verbal formulas had been vindicated. But as Alter notes, his “diffidence toward cogency was ahistorical.” Sound bites like “a house divided against itself cannot stand” or “Mr. Gorbachev, tear down this wall!” are hardly without their virtues. “Without them,” Alter writes, Obama’s speeches often amounted to “fast food that left you hungry again soon after the meal.”
The White House’s sporadic attempts to dress up its marketing with catchphrases—”New Foundation” as an umbrella description for Obama’s domestic programs, for instance—have been too bland and scattershot to gain traction. They are certainly no match for a focused, Fox-perfected Republican message that conjures up vivid bogeymen like “government takeovers,” “out-of-control spending,” and “death panels.” That the GOP, which perennially pushes for the castration of Medicare, could present itself as Medicare’s valiant defender during last year’s health care wars was a particularly telling feat. Obama had a lot of trouble formulating his own health care message in accessible language—”It was like he was trying to find the combination on a lock,” said his close friend and adviser Valerie Jarrett—and so the opposition could fill the White House’s vacuum with any outrageous bumper-sticker message it could whip up.
It’s also true that Obama has been victimized by his overconfidence in his ability to woo political adversaries. “We should have taken the hit for ending bipartisanship early because it was never going to be bipartisan,” a White House aide admitted to Alter in retrospect, after months had been wasted waiting for the administration’s health care point man in the Senate, Max Baucus, to strike a bargain with supposedly congenial moderate Republicans like Charles Grassley and Olympia Snowe. As detailed in The Promise, Snowe was particularly adept at stringing along the White House to burnish her public image as a paragon of Maine’s vintage brand of flinty Yankee Republicanism. When she finally announced that she would join the rest of her caucus in a filibuster after all, her excuse, that she hadn’t had time to read and absorb the bill, was patently false. “I’m an eternal optimist,” Obama had said months earlier, after his tussles with congressional Republicans over the stimulus. “That doesn’t mean I’m a sap.” But Snowe had played him for a sap.
Even so, Alter’s chronicle confirms that the biggest flaw in Obama’s leadership has to do with his own team, not his opponents, and it’s a flaw that’s been visible from the start. He is simply too infatuated with the virtues of the American meritocracy that helped facilitate his own rise. “Obama’s faith lay in cream rising to the top,” Alter writes. “Because he himself was a product of the great American postwar meritocracy, he could never fully escape seeing the world from the status ladder he had ascended.” This led Obama to hire “broad-gauged, integrative thinkers who could both absorb huge loads of complex material and apply it practically and lucidly without resorting to off-putting jargon”—and well, why not? Alter adds:
Almost all had advanced degrees from Ivy League schools, proof that they had aced standardized tests and knew the shortcuts to success exploited by American elites. A few were bombastic, but most had learned to cover their faith in their own powers of analysis with a thin veneer of humility; it made their arguments more effective. But their faith in the power of analysis remained unshaken.
This was a vast improvement over the ideologues and hacks favored by the Bush White House, but the potential for best-and-brightest arrogance was apparent as soon as Obama started assembling his team during the transition. The Promise leaves no doubt that his White House has not only fallen right into this trap but, for all its sophistication and smarts, was and apparently still is unaware that the trap exists. During the oil spill crisis, Obama and his surrogates kept reminding the public that the energy secretary, Steven Chu, was a Nobel laureate—as if that credential were so impressive in itself that it could override any debate about the administration’s performance in the gulf.
This misplaced faith in the best and the brightest has not coalesced around national security, as in the JFK-LBJ urtext, but around domestic policy—especially in the economic team, whose high-handed machinations Alter chronicles in vivid detail. Contrary to some understandable suspicions on the left, Obama’s faith in that team has nothing to do with any particular affection for captains of finance (his own campaign donors included), or their financial institutions, or wealth. “Over and over in his career, often to Michelle’s chagrin, he had turned down chances to make more money,” Alter writes. Obama is if anything annoyed by Wall Street’s hypocrisy and tone-deaf behavior. “Let me get this straight,” he said at one meeting about TARP and its discontents. “They’re now saying that they deserve big bonuses because they’re making money again. But they’re making money because they’ve got government guarantees.” Obama’s angriest moment in his first year of office came when he heard that Lloyd Blankfein had claimed that Goldman was never in danger of collapse during the fall 2008 financial meltdown—an assertion the President knew was flatly untrue.
But if Obama is not blinded by dollar signs, he suffers from a cultural class myopia. He’s a patsy for “glittering institutions that signified great achievement for a certain class of ambitious Americans.” In his books, he downplayed the more elite parts of his own resume—the prep school Punahou in Hawaii, Columbia, and Harvard—but he is nonetheless a true believer in “the idea that top-drawer professionals had gone through a fair sorting process” as he had. And so, Alter writes, he “surrounded himself with the best credentialed, most brilliant policy mandarins he could find, even if almost none of them knew anything about what it was like to work in small business, manufacturing, real estate, or other parts of the real economy.” Not only did the director of the Office of Management and Budget, Peter Orszag, have the quintessential best-and-brightest resume (Princeton summa, Marshall Scholar, Ph.D. from the London School of Economics) but even the OMB spokesman, Ken Baer, had a Ph.D. from Oxford.
Obama complains that he doesn’t get enough credit for stabilizing an economy that was teetering toward another Great Depression when he arrived in office. “It’s very hard to prove a counterfactual, where you say, ‘You know, things really could have been a lot worse here,’” as he puts it. He has a point. The stimulus package, actually five ambitious pieces of legislation packaged together for political expediency, was the largest economic recovery bill in American history, bigger in constant dollars than any program of FDR’s first hundred days. It gets no respect because it left no New Deal–style legacy of grand public works and did more to prevent jobs being lost—as more than 2.6 million were in 2008—than it did to add new ones.
Yet it’s hard not to wonder if much more would have been accomplished, both substantively and politically, had Obama’s economic principals, Timothy Geithner and Lawrence Summers, been more open to ideas not of their own authorship and more capable of playing with others, including a public that still hardly knows either of them. Obama “apparently never considered appointing a banker or Fed governor from outside the East Coast who knew finance but was less connected to the policies that caused the crisis,” Alter writes. The homogenous team he chose “all knew one another and all looked at the world through nearly identical eyes.” Once in place in Washington, they would all underestimate the threat of rising unemployment, be blindsided by the populist anger rising outside the capital, and even fail to predict the no-brainer popularity of the “cash for clunkers” program. Their paramount group-think lapse—their inability “to think more boldly about creating jobs fast”—still haunts the administration. A White House job summit didn’t materialize until December 2009, nearly a year too late.
The Promise depicts a carelessness and dysfunctionality in the economic team that at times matches that revealed by Rolling Stone in the military and civilian leadership of the team managing the Afghanistan war. Geithner’s inexplicable serial income tax delinquencies, as elucidated by Alter, should have disqualified him for Treasury secretary just as Stanley McChrystal’s role in the Pentagon’s political coverup of Pat Tillman’s friendly fire death should have barred him from the top military job in Afghanistan. Summers’s Machiavellian efforts to minimize or outright exclude the input of ostensible administration economic players like Paul Volcker, Austan Goolsbee, and Christina Romer seem to have engaged his energies as much as the policy issues at hand.
In April 2009, at Obama’s insistence, a group of economists that Summers had blocked from the Oval Office, including Volcker, Paul Krugman, Joseph Stiglitz, and Alan Blinder, was invited to a White House dinner. That colloquy has been cited ever since by White House aides in response to complaints that the administration’s economic circle is too insular. The dinner was a one-off, however, and the liberal economists’ ideas about tougher financial reform and a more ambitious stimulus package have languished.
Obama may have entered the White House with the intention of assembling a Lincolnesque “team of rivals,” but Summers subverted that notion by making himself chief packager and gatekeeper for any dissenting arguments about economic policy—all, he claimed, to spare the President from meeting with “long-winded people.” Lincoln’s “team of rivals” reported directly to Lincoln, but, as one source told Alter, Summers so skewed the process in this White House that it was like “a team of rivals reporting to Edwin Stanton, Lincoln’s prideful secretary of war.” Even Warren Buffett, a supporter who had spoken to Obama weekly during the fall of 2008, “found himself mysteriously out of touch with the new president” once he took office.
Obama was now imprisoned within the cozy Summers-Geithner group “and it would be increasingly difficult for him to see beyond its borders.” This “disconnection from the world,” Alter concludes, was not due to ideology or the clout of special interests but was instead “the malign consequence of the American love of expertise, which, with the help of citadels of the meritocracy, had moved from a mere culture to something approaching a cult.” For all Obama’s skepticism of cant, he was “in thrall to the idea that with enough analysis, there was a ‘right answer’ to everything. But a right answer for whom?”
Once he belatedly reached out to business leaders for other ideas, Obama began to overrule his own economists. Presumably he will continue to learn from his mistakes. The administration is still young, and so is the President. If he has any immutable ideological tenet, it’s that he is “a big believer in persistence.” He doesn’t like to lose. Health care had not been an Obama priority in the campaign, but he embraced it during the transition. Though Joe Biden, Rahm Emanuel, and David Axelrod were all skeptical of pursuing it as a Year One goal, he wouldn’t be deterred.
His achievements so far have been accomplished in spite of obstacles that would fell most mortals—the almost uncountable messes he inherited from Bush-Cheney, a cratered economy, a sclerotic Congress in thrall to lobbyists and special-interest money, and a rabid opposition underwritten by a media empire that owns both America’s most-watched cable news channel and its most highly circulated newspaper. Indeed it could be argued that the matrix of crises facing Obama would have outmatched any Bush successor, no matter how talented. (They certainly would have drowned John McCain, whose utter cluelessness about the economic crisis alarmed even his Republican allies in 2008.) But Obama knew what he was getting into when he ran for president, and the question that matters now is how he can do the job better.
The most challenging quandaries he has faced from the start, unemployment and Afghanistan, may be overcome only if he addresses his own internal obstacles. These include not just his misplaced faith in his own cultural cohort and his romantic illusions about bipartisan collaborations with a Mitch McConnell–John Boehner GOP that has no interest in governance. He might also reexamine his split-the- difference approach to decision-making. Compromise and pragmatism have their virtues, but they can also produce Rube Goldberg policies like an Afghanistan strategy that is at once intellectually clever and yet makes no discernible sense on the ground.
Can Obama self-correct? He remains the same driven, smart, psychologically balanced leader we saw in the campaign, and to these familiar attributes, Alter adds another quality that is less frequently displayed in public—an utter lack of sentimentality. He’s “the most unsentimental man I’ve ever met,” says one aide, summing up for many of his peers. That trait may be the most useful of all if Obama undertakes the ruthless course corrections that are essential to the realization of his promise.
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4)A Newt Gingrich Time Warp In his presidential manifesto, 1980s big ideas trump the reality of 2010.
By THOMAS FRANK
What has always set Newt Gingrich apart from other politicians was his respect for ideas. He is an intellectual in politics, a professor who chose to make history instead of teach it.
Compared to some of the hotter heads on the right, he has also managed to keep his cool over the last few years. And virtually alone among the "party of no," Mr. Gingrich has been ready with policy suggestions, actual steps the nation might take to translate the conservative sensibility into a ruling philosophy.
But the former House Speaker's latest effort, "To Save America," a best seller that he wrote with Joe DeSantis, is different from his usual round of historical novels and policy books. These days the media is speculating about Mr. Gingrich's presidential ambitions; if he decides to run in 2012, "To Save America" might be regarded as his campaign manifesto.
And yes, "To Save America" includes plenty of the policy ideas we have come to expect. But what this book will be remembered for is Mr. Gingrich's conversion to the devil theory of Barack Obama.
"America as we know it is now facing a mortal threat," Mr. Gingrich writes, by which he seems to mean that liberals might use the power of the state to reward their constituents and thus build a dynasty. But of course, "liberal" isn't imprecation enough for his outrage: the Democrats are "committed," rather, "to a secular-socialist ideology that is alien to America's history and traditions." Worse: "The secular-socialist machine represents as great a threat to America as Nazi Germany or the Soviet Union once did."
This infernal machine aims, Mr. Gingrich charges, to "change the people" and to overturn "historic American ideals." Among the components of this "alien ideology," however, he lists the utterly familiar estate tax, which was first enacted in 1916. He also cites the existence of "union work rules," although I suspect he knows that the first guild in America was chartered in 1648.
When Mr. Gingrich establishes the otherness of "the Left" by claiming that they believe "no longer . . . are we the Americans of the frontier," one feels that they might be excused for this oversight since the frontier was officially declared closed in 1890. When he goes on to accuse them of being out of touch with the America of "the sturdy, independent farmers," one can't help but recall that "get big or get out" has been the unofficial farm policy of the nation at least since the days of Earl Butz, the Republican agriculture secretary in the early 1970s. Mr. Gingrich might as well try to prove that we have lost the Founders' vision by pointing out that we don't wear powdered wigs anymore.
Mr. Gingrich often seems flatly oblivious to recent headlines, floating in an ideological haze where the big ideas of the 1980s trump the reality of 2010. At one point, he starts in to berate those who get paid more than they deserve, a sin that supposedly violates basic American precepts: "Because we are self-reliant and operate in markets where people won't pay us if we cheat," he writes, "Americans have created an environment where honesty pays."
The reader expects Mr. Gingrich to follow this up by denouncing Wall Street's bonuses—since they are, obviously, the gaudiest, most destructive, and best-known violation of his rule—but instead he chooses to scold unionized auto workers, unionized teachers, and unionized postal employees, all of whom receive benefits that are too generous in his estimation.
This is a book about political corruption—indeed, about "the greatest political corruption ever seen in modern America"—yet it neglects to mention the Jack Abramoff affair and even includes two chapters co-written with the Institute for Policy Innovation's Peter Ferrara. Mr. Ferrara, you might recall, was a minor personality in the Abramoff affair who admitted to Business Week in 2005 that he took undisclosed payments from the lobbyist while promoting the interests of Mr. Abramoff's clients in his writings. "I do that all the time," he was quoted as saying back then, adding that what he wrote was consistent with his personal views.
Other passages should embarrass Mr. Gingrich in a more lasting way. In his chapter about energy, the former congressman faults the Obama administration for being too harsh on offshore drilling, even suggesting that Congress defund the Interior Department until it loosens up on "offshore energy development." Maybe such a blunder can be explained by the long lead-time in book publishing, but a man with Mr. Gingrich's experience should have known long before the BP oil spill about the Interior Department's catastrophic coziness with offshore drillers; instead he apparently let ideology eclipse reality.
But if the presidency truly is on Mr. Gingrich's agenda, none of this will make any difference. When you're preparing yourself for a star turn in the greatest mass panic of many years, any historian can tell you it's not the facts that matter.
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5)Year of the Tea Party Voter
Republicans are winning over voters who are disgruntled with both parties.
By JOHN FUND
It seems every election finds political pundits trying to come up with a shorthand description for the latest bloc of voters to exercise undue influence in the current year's races.
In 2000, "soccer moms" were the group du jour, and enough of them were disgusted with the Clinton scandals that they cost Al Gore the White House. In 2004, it was "security moms," who in a post-9/11 world were concerned about terrorism and the safety of their children. In 2008, a video featuring "Obama Girl" captured the enthusiasm the Democratic candidate generated among young voters.
This year, the hands-down winner for the key voting bloc might be called "Tea Party Supporter." Public Policy Polling, a Democratic-leaning firm, reports a major reason Republicans are poised to make major gains this year is that they "are cleaning up with a voting bloc that accounts for 26% of the country and could end up being the most important group of people at the polls this fall: voters who hate both congressional Democrats and congressional Republicans."
While these voters, who are mostly white and mostly male, harbor no loyalty to either party, this year they are much more upset with the Democrats who hold power in the White House and Congress. "The GOP has a 57-19 generic lead with this group of voters that could perhaps be described as the angriest segment of the electorate," reports PPP. "Their support is fueling the GOP's success right now."
The party-affiliation breakdown of the "pox on all politicians" segment is fascinating. Only 44% are Republicans, while 34% are independents and 21% are Democrats. That breakdown roughly mirrors the profile of people who in other polls identify themselves as Tea Party supporters. Interestingly, however, PPP finds that only about 35% of the "angriest segment" actually call themselves Tea Partiers. That's compared to about 25% of voters in the electorate as a whole who identify themselves as Tea Party supporters.
5a)The salesman doesn't know the territory
By Wesley Pruden
Barack Obama is taking his teleprompter on the road again, this time with Detroit as the first stop on a magical mystery tour to prove that he is, too, still the messiah. He's trying to persuade everybody that he really isn't who he really is.
He's beset by polling numbers that continue to fall. Everything he does makes it worse. He's fleeing Washington's chattering class, and he'll run into the crying class on the road. The president has yet to get his mind around the fact that most Americans have decided that he betrayed their trust, that their only hope for change begins in November.
There's a forlorn desperation about everything the president and the frightened Democrats do. The soggy blanket of partisan haze and smothering humidity in Washington is enough to drive anyone out of town, and even Detroit looks good. The November congressional elections are now only three months away, and the news from flyover country is that if there's going to be a turnaround in Democratic fortunes, time's a-wasting.
John Kerry, trying to cheer up his Senate colleagues in misery, is talking of a rescue of his global-warming scam in a lame-duck session after the elections. He insists that his cap-and-trade scheme, which Majority Leader Harry Reid stripped out of the legislation and tossed into the garbage can last week, "is not dead." He told Bloomberg Television's Al Hunt that hope nevertheless springs infernal. "If it is after the election, it may well be that some members are free and liberated and feeling they can take a risk to do something." Maybe dead senators can do what live ones can't.
The president's visits to the government's auto plants in Michigan, bought by Mr. Obama with the bailout money, preceded visits to New Jersey, where the celebration is supposed to be about the $787 billion dollar "stimulus." He's got a lot of 'splainin' to do: A new poll by Pew Research finds that only a third of Democratic voters think the stimulus kept unemployment numbers from getting worse, and only 45 percent of the Democrats think the grandly named American Recovery and Reinvestment Act, meant to rebuild the nation's infrastructure, has done much more than put up billboards proclaiming how great highways and bridges will be. Someday, not today.
Mr. Obama can't fix what's wrong with him with a recitation of what he's done for America — the health care reform, the stimulus, the Wall Street regulatory bill — because most Americans don't like what he's done to America and have taken his measure and decided that he just can't get it. Race has nothing to do with it. Americans, mostly white Americans, who have soured on the messiah of Hyde Park are nevertheless proud that the votes that elected a black man demonstrated that the nation has moved past bigotry in the ballot box. (If white folks were as evil as Mr. Obama's favorite Chicago preacher says they are, Jim Crow wouldn't be in the graveyard sleeping the sleep of the unjust.)
Mr. Obama has the intellectual's habit, formed by the intellectualoids at elite universities, of trying to parse sentiment by mathematic formula. Americans respond to love of country like they respond to love of home and hearth, with an instinct of heart and gut. Mr. Obama famously told a group of wealthy donors in San Francisco that when Americans "get bitter, they cling to guns or religion," and didn't understand why he enraged the masses. When he apologizes to the nation's enemies, he wins the applause of Fidel Castro and Hugo Chavez, but jeers in Peoria. When he argues that "if we occasionally confess to having strayed from our values and our ideals, [we] strengthen our hand," he wins applause in the faculty lounges of Harvard and Yale, but confirms the verdict of Middle America that "he's not one of us."
Rahm Emanuel, the White House chief of staff, describes the president — emotionally distant, hostile to the cherished traditions of hard work and free enterprise, contemptuous of small-town America — as "reasoned, calm, looking like the adult in the room." We've come a long way to the time and place when we can elect a black president who, like the elites he represents, is indifferent to and contemptuous of the values Americans hold dearest. The president is an attractive, likable salesman, but he can tour from now until next Christmas and never move his merchandise. He never learned the drummer's first rule for success: "You gotta know the territory
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6)Long-Term Economic Pain
By BOB HERBERT
The pain coursing through American families is all too real and no one seems to know what to do about it. A rigorous new analysis for the Rockefeller Foundation shows that Americans are more economically insecure now than they have been in a quarter of a century, and the trend lines suggest that things will only get worse.
Rampant joblessness and skyrocketing medical costs are among the biggest factors tearing at the very fabric of American economic life so painstakingly put together in the early post-World War II decades.
The analysis was done by a team of researchers led by Professor Jacob Hacker of Yale University. They created an economic security index, which measures the percentage of Americans who experience a decrease in their household income of 25 percent or more in one year without having the financial resources to offset that loss. (Major medical expenses were counted as a decrease in available income.)
The team’s findings were grim. Simply stated, more and more families are facing utter economic devastation: completely out of money, with their jobs, savings and retirement funds gone, and nowhere to turn for the next dollar.
Economic insecurity has been increasing for at least a generation and perhaps longer, with very dangerous levels being reached in this latest recession. Professor Hacker discussed the ominous trend lines in an interview.
In 1985, at a time when the unemployment rate was 7.2 percent, the portion of American families that would be counted as economically insecure by the terms of this new index was 12 percent. Professor Hacker explained that the percentage would naturally tend to rise or fall with improvements or a deterioration in the economy.
But what has happened over the past few decades is that the percentage of insecure Americans relative to any given level of the economy has tended to steadily rise. So in 2002, coming out of a mild recession, there was a 5.8 percent unemployment rate, but the percentage of economically insecure families had jumped to 17 percent.
All of the data for 2009 are not yet in, but the research team projects, conservatively, that more than 20 percent of Americans experienced a 25 percent or greater loss of household income (without a financial cushion) over the prior year — the highest in at least a quarter of a century.
A decrease of this magnitude in available income is a heavy blow. As the study points out, “The typical individual who experiences a decline of at least 25 percent in household income requires between six and eight years for income to return to its previous level.”
“What we’re seeing, basically, is what we’re calling ‘the new normal,’ ” said Mr. Hacker. “We’re slowly ratcheting up this level of economic insecurity.”
Put another way, the bottom is falling out for increasing numbers of Americans, and with the national employment situation stuck in an extended horror zone there is little to stop the free fall. In addition to tracking the percentage of Americans suffering household income losses of 25 percent or more, the index also shows that families are suffering steeper income declines than in previous decades.
According to the study, “Between 1985 and 1995, the typical (median) drop among those experiencing a 25 percent or greater available income loss was about 38.2 percent; between 1997 and 2007, it was 41.4 percent.”
Only the very well-to-do are out of the range of this buzz saw. “The fact that Americans are facing a very real and growing risk of large-scale economic loss is true across the spectrum,” said Mr. Hacker. “It’s true of blacks more than whites, but it’s true of whites, as well. It’s true of less affluent people more than more affluent people, but it’s true of the more affluent as well.
“If anything, we’re understating how bad things are out there right now.”
Policy makers seem bewildered by the terrible economic state of ordinary working Americans, including those once considered solidly in the middle class. Despite warnings back in 2008 that we were on the verge of another great depression, the big financial institutions and corporate America seem to be doing just fine now. But average Americans are hurting with no end to the pain in sight.
More than 14 million people are out of work and many more are either underemployed or so discouraged they’ve just stopped looking. Big corporations, sitting on fat profits even as the economy continues to struggle, have made it clear that they are not interested in putting a lot more people back to work any time soon.
Policy makers have dropped the ball completely in terms of dealing with this devastating long-term trend of ever-increasing economic insecurity for American families. Long-term solutions that have to do with extensive job creation and a strengthening of the safety net are required. But that doesn’t seem to be on anyone’s agenda.
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7)Tax-Hike Hypocrites
By Rich Lowry
White House economic adviser Christina Romer is off-message. Her offense is nearly as grave as that of White House spokesman Robert Gibbs, who let slip that Democrats are in danger of losing the House. Romer's indiscretion is an academic paper arguing that tax increases kill growth . . . just as the White House prepares to raise taxes.
Published with her husband in the June issue of The American Economic Review, Romer's paper is complicated and nuanced, befitting the work of a serious academic economist. It surveys tax changes during the past few decades in widely varying circumstances. But here's a crude, two-sentence takeaway: "Our estimates suggest that a tax increase of 1 percent of GDP reduces output over the next three years by nearly 3 percent. The effect is highly significant."
If her paper spreads as quickly through the Obama administration as, say, the Rolling Stone article with former Gen. Stanley McChrystal's disparaging remarks about Joe Biden, it might do some good. But it surely will go the way of Romer's other work with pointed contemporary relevance.
In a 1994 paper, she concluded that monetary policy is generally more effective as economic stimulus than fiscal policy. The Obama administration nonetheless embraced a $1 trillion fiscal stimulus that -- predictably -- fell flat.
The touch-and-go recovery has Keynesian supporters of the Obama stimulus warning of a double-dip recession, or worse. This doesn't stop them from wanting to give the recovery a swift kick in the teeth by imposing a roughly $500 billion tax hike over the next 10 years. This is the expiration of the Bush tax cuts on high earners, another looming triumph of blinkered ideology over Romer's research.
In congressional testimony last week, Federal Reserve Chairman Ben Bernanke warned against spending cuts or tax increases in this "unusually uncertain" economy. Democratic Sens. Kent Conrad, Evan Bayh and Ben Nelson are opposed to letting the tax increases expire next year on similar Keynesian grounds. They are all guilty of thinking about what's best for the economy, when the rest of the Democrats are thinking about how best to punish the rich.
The rich don't "deserve" the current tax rates, they'll say, as if a top income-tax rate of 35 percent rather than 39.6 percent is something that has to be earned. Of course, that's impossible to do if being rich itself constitutes a status offense. There is no expiation from the stain of wealth, no matter how hard someone worked to get there, no matter how many people his business has hired, no matter how much he invests.
Never mind that higher marginal tax rates discourage work and investment. To see how taxes affect behavior, look no further than Massachusetts Sen. John Kerry's $7 million, 76-foot yacht, which he happens to dock in Rhode Island, where he saves $500,000 in taxes.
The Democrats figure they can tag Republicans who oppose the expiration of the tax cuts as deficit-hypocrites, even after running up $1.47 trillion in red ink this year. In the recent fight over extending unemployment benefits, the GOP wanted to pay for them, while Democrats insisted on adding another $35 billion to the deficit, and prevailed. Despite the scorn they heap on the "Bush tax cuts," Democrats want to extend the vast majority of them for the middle class, at a 10-year cost of $1.5 trillion.
Where to look for spending cuts to offset maintaining the Bush upper-end tax cuts? Unspent stimulus dollars and the other new spending that has hiked federal expenditures to 25 percent of GDP, the highest level since World War II.
Thanks to President Obama's exemplary profligacy, we have been reminded that government spending is not a durable basis of growth. Even Treasury Secretary Timothy Geithner said this weekend that "we need to make that transition now to a recovery led by private investment."
A tax increase is not the best way to start, as any reader of Christina Romer's work knows.
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