Wednesday, April 20, 2011

Getting Tomato Red In The Face Over Spending!

There seems to be a political parable here. We blame the politicians, the politicians blame us and neither have a leg to stand on.
From a friend who is getting tomato red in the face over all these demands on the wealthy who still cannot afford our president's spending: "I get very tired of liberals saying "in order for us to clear this financial mess up, the wealthy are going to have to step up to the plate and share the sacrifice.

Let us use Obama's definition of the rich (it used to be those making over$250,000 but is rapidly descending to anyone with a real [non-government]job who doesn't belong to a union).

In 2006, taxpayers making more than $108,704 comprised the top 10% of earners and paid 71% of the income tax revenue. Taxpayers falling below the median of all earners paid 2.9% of tax revenue.

How much more can you squeeze the tomato? Answer, not nearly far enough.

The entire income of the above-mentioned 'rich' group would not fund Obama's deficit for this year. And, besides that, the tomatoes are going to start getting irritated and hide their income from taxation.

Our financial mess is not revenue, it is spending. Out of control, off the wall, wasteful, un-necessary spending.In the past ten or so years, we have doubled our spending. Where is it going? How many separate, duplicative programs do we need to aid the basic comprehension of our students? We spend the second highest amount per pupil in the world to educate our young and watch in amazement as our SAT scores and our world ranking go down the sewer.

Whatever happened to "sunset" budgeting? At the end of the year, the department or program has a zero budget and must justify any expenditures for the next year. Instead, in our government, a reduction in the expected increase in spending for next year is identified as "cost cutting." Even as the bill rises. Rather than more and more auditing of a basically compliant citizenry,shouldn't we use our trained auditors to dig through government spending records? Why can't anyone answer the basic questions "where did the TARP funds go? How were they spent? Who benefited?

Why do liberals only look at the revenue side of an issue? Why has our government spending ceiling been raised three times since Obama gave us hope?

We need to start getting some meaningful and informative answers to these questions before we even consider raising the debt ceiling further.
If you are interested in how the cost of interest on our debt will eventually swamp our nation as the tsunami did Japan you might find this of interest :"
Avi and I are on the same page when it comes to a possible war between Israel and Hezballah. (See 1 below.)
I never found anything likable about Obama now Henninger warns Obama that his unlikability is spreading because Obama has been acting like himself and not the 'Messiah" he sold himself as when he ran for the presidency. (See 2 below.)
Can Cairo find a clone of Hayek? (See 3 below.)
Have a great Easter Weekend.

1)Israel and Hezbollah Prepare for War
By Avi Jorisch and Asaf Romirowsky

Hezbollah and Israel are once again facing the void, and both parties appear to be preparing for another confrontation. According to press reports, since its 2006 hostilities with Israel, Hezbollah has amassed more than forty thousand weapons, spread out over one thousand facilities across southern Lebanon. Once again, these strongholds are reportedly situated in civilian areas.

Hezbollah has done its homework and believes it is ready to face its southern neighbor, come what may. For its part, Israel has done a thorough review of the Second Lebanon War and made traditional and untraditional military preparations for conflict. Policymakers and analysts alike in Washington, Paris, London, Beirut, and Jerusalem are beginning to brace themselves for the spark that will light up the eastern Mediterranean.

Israel pulled out of Lebanon in May 2000 after an occupation of almost 20 years, not as a result of a peace agreement, cease-fire, or informal understanding on the status of forces on the border, but as a unilateral move. Hezbollah and its supporters interpreted the withdrawal as a milestone in the organization's development as a military and political force in Lebanon, and as a resounding victory in its struggle against the "Zionist entity." The withdrawal was depicted as a great defeat for Israel, a sentiment shared by many Israelis. As Hezbollah often claims (with some truth), this was the "first Arab victory in the history of the Arab-Israeli conflict."

The summer of 2006 paid off for Hezbollah—and other sub-state actors across the region. Palestinians have adopted Hezbollah's military tactics (believing they can get Israel to withdraw from Gaza and the West Bank), including the use of short-range missiles and hit-and-run operations designed to draw the IDF into combat in populated areas. This has gradually forced the IDF—and coalition forces that have troops engaged in places like Iraq, Afghanistan and Yemen—to change their way of dealing with terrorist organizations.

Palestinians continue to believe that Israel withdrew in 2000 because of Hezbollah's ongoing attacks and that they can achieve the same result in Gaza and the West Bank.

The bad news for groups like Hezbollah and Hamas is that while they can inflict a tremendous amount of political and economic pain on Israel, they cannot destroy the Little Satan. But the worst news of all is reserved for those living in places like Gaza and certain parts of Lebanon, where Hezbollah and Hamas have already implemented radical shari'a-compliant regimes.

Hezbollah still maintains (though in muted tones) that it wishes to implement a mullatocracy modeled on the Islamic Republic of Iran. Of course, Hezbollah's founding charter is crystal clear, calling for the creation of an "Islamic government which, alone, is capable of guaranteeing justice and liberty for all."

For its part, Hamas has established the Islamist Republic of Gaza and runs it based on its founding charter, which calls for "the reinstitution of the Muslim state … Allah is its goal, the Prophet its model, the Qur'an its Constitution, Jihad its path and death for the ca[u]se of Allah its most sublime belief."

Nasrallah has repeatedly used his group's willingness to die as a strategic bulwark: "The Jews love life, so that is what we shall take away from them. We are going to win, because they love life and we love death."

Politically, Hezbollah and Hamas essentially control their respective jurisdictions; Hezbollah has control over a third of the Lebanese parliament and veto power over the Lebanese cabinet, and Hamas has outright control of Gaza. Both are flush with cash from Iran, which funds them to the tune of close to a billion dollars per annum and provides arms galore.

Do people living in that part of the world wish to live under an Islamic regime, or would the vast majority prefer a liberal democracy? The answer can be found in the Western embassies throughout the Arab capitals that are packed with people trying to emigrate to places that offer a brighter future.

Many have come to the conclusion that, at the end of the day, organizations like Hezbollah and Hamas really care not about the people of the region, but about amassing power and implementing their world-vision. Ultimately, Hezbollah and Hamas are only paying lip service to destroying the State of Israel and fighting on behalf of the oppressed. Their raison d'ĂȘtre is to create radical republics, and their primary tactic of getting there is to divert people's attention to the "perfidy" of the Zionist entity.

Israel's borders with Lebanon and Gaza have effectively become the front lines of not only the Arab-Israeli conflict, but also the low-intensity conflict between liberal democracy and those who wish to install Islamist-compliant regimes. We should be prepared for the battle to continue as both Hezbollah and Israel gear up for more hostilities.
2)Obama's Likability Gap Obama today is different than the 2008 candidate.

If it is true, as Michelle Obama said in February, that her husband isn't smoking anymore, maybe he'd better start mellowing out with the cigs again before it costs him the presidency.

The Barack Obama we've been seeing lately is a different personality than the one that made a miracle run to the White House in 2008.

Obama.2008 was engaging, patient, open, optimistic and a self-identified conciliator.

Obama.2011 has been something else—testy, petulant, impatient, arrogant and increasingly a divider.

Never forget: That historic 2008 victory came with 52.9% of the total vote and 52% of independent voters. David Axelrod recently noted "how small the margin for error is."

Presidential personality is well inside the margin of error for 2012, but the one on display recently has not been attractive. And it's happening a lot.

This Monday, after wrapping up a White House interview with a Dallas TV reporter, the station reported that Mr. Obama said: "Let me finish my answers the next time we do an interview, alright?"

This self-referencing, snappish tone tracks with the president's "open mic" comments last week at a Chicago fund-raiser. Dismissing the GOP as "nickel and diming" him on budget negotiations, he asked, "You think we're stupid?" White House Press Secretary Jay Carney said the president wasn't embarrassed. But he should be. Not because his comments were caught, but because suddenly he's sounding more like Travis Bickle ("You talkin' to me?") than the president of the United States.

The Obama migration from the high road to the low road is evident even in nonpolitical settings. Here he is last weekend talking about the White House phone system: "You know the Oval Office always thought I was going to have like real cool phones and stuff. I'm like 'come on guys, I'm the president of the United States.' Where's the fancy buttons and stuff, and the big screen comes up? It doesn't happen."

I'm like? Real cool phones and stuff? Would Franklin Roosevelt or John F. Kennedy ever have affected whatever their generational equivalent was of "Where's the fancy buttons and stuff?"

Some will say that this is making a mountain out of a molehill, that polls show independent voters like his proposals to tax the rich and keep every entitlement intact. But if we have learned anything in the media age, it's that molehills can send anyone to a destructive fall, even presidents. Ask George W. Bush about just two defining words: mission accomplished.

In 2007-08, Obama's high-toned, consistent persona was everything. What else was there? Barack Obama took a blank slate and wrote a masterpiece of a presidential campaign across it. From nothing, this fresh Obama persona defeated the familiar, experienced Hillary Clinton in the primaries. In the general election, he ran famously on "hope and change," gave a stirring speech on race in America, and persuaded enough moderate and independent voters to turn 2008 into a "historic" American election.

Barack Obama had levitated himself above the usual, dispiriting muck of politics. This new person seemed to be precisely what a disgusted electorate wanted. Candidate Obama embedded that image in the American psyche. He built it. He fed it.

Now he's deconstructing himself into another Obama. The latest Obama, which seems genuine, routinely ridicules and mocks his opposition. He mocks pretty much anyone who disagrees with him about anything.

Last week, official Washington gathered at George Washington University to hear the president make his contribution to the fiscal-policy debate. What they got was something else (just as the members of the Supreme Court got something else at last year's State of the Union speech). The person who said memorably in 2008 that there were no red states or blue states gave a speech essentially reading the Republicans out of the American political system. "This is not a vision of the America I know."

The political left lapped it up. Finally, wrote the progressive punditariat, Barack Obama was acting like their guy, willing to get in the face of the American right. At last, an American president was calling out conservatism as nothing less than a violation of "the basic social compact in America."

Gallup just reported that the Obama approval rate among independent voters stands at 35%. The conventional reply to this is that the American people fundamentally "like" Barack Obama, or that the GOP candidate will make the election an unlikability Olympics.

What voters like is the memory of the historic Obama they voted into the office of the presidency. The person they voted for in 2008 is different than the person who kicked off his presidential campaign last week by personally stomping his opposition.

Somehow voters are apparently expected to "like" whichever version Mr. Obama chooses to give them. It is asking a lot. By definition, this is a gap, and it's looking like it could be a dangerous one for the incumbent.
3)Searching for Hayek in Cairo
To make democracy stick, the Arab Spring now needs an economic revolution.

The downsides of Mideast unrest are civil wars, Islamist takeovers and terrorism, and gasoline prices approaching $5 a gallon. Add to the list backlash against the open economy. If this persists, the grand upside of this tumultuous Arab spring—democracy—will be harder to achieve.

Egypt is the bellwether. Two months since the overthrow of the Mubarak regime, interim military rulers run the Arab world's largest state and promise a return to civilian rule following free elections later this year. Economic populism comes naturally to its suddenly rambunctious politics. On the streets, anger over low wages and corruption extends to capitalism and business elites who worked hand-in-glove with the hated regime.

If anything unites Egyptians in this bewildering period, it's the conviction that ousted President Hosni Mubarak, sons Gamal and Alaa, and their friends fleeced the country. Thousands have come back to Cairo's Tahrir Square in recent weeks to demand justice.

In response, prosecutors last week put the three Mubaraks in 15-day custody for questioning. Steel oligarch Ahmed Ezz and other confidants were already in jail. Corruption indictments came down Sunday against former Prime Minister Ahmed Nazif and his finance minister, Youssef Boutros-Ghali.

All these men claimed to champion economic reform. So, not surprisingly, people are now hostile to it. Every party, from the Muslim Brotherhood to self-described liberals, puts the need for "social justice" atop its list of economic priorities. Privatization and liberalization are dirty words. A series of strikes since the regime fell demanded not just better pay, but the nationalization of industry.

Any new elected government will likely be pushed to provide jobless benefits and boost fuel, food and other subsidies—what passes for welfare in a developing country. With privatization off the table probably for years, there's talk of building up "national champions," large, usually state-owned companies that demand monopolies, tariff protections and other perks. There's also talk of dropping the recently adopted 20% corporate and income flat tax and bringing back a progressive system.

Crony capitalists deserve to be rebuked, yet the backlash carries a price. It keeps investors and capital away. And it poisons the political atmosphere, pushing off already overdue changes necessary to meet the great expectations of better jobs and wages. What's too often overlooked is that the foundations of capitalism are those of democracy as well: rule of law and an independent judiciary, a private sector able to thrive free of state favor or caprice, competition and open borders for goods, people and capital.

Reform and its advocates were early victims of Egypt's revolution. Yet paradoxically, thanks to them, the economy was a lone not-so-dark spot of the late Mubarak years. Before 2005, Egypt was a stagnant and state-dominated economy. But after the opening that year—including the introduction of a flat tax that increased revenues four-fold—average annual growth above 6% beat similar Arab countries like Jordan or Syria. Economic activity started to come out of the shadows. The banking system was cleaned up. Red tape, while still notoriously bad, improved enough for Egypt to make a dramatic jump up to the 18th spot on the World Bank's rankings of easiest countries in which to do business.

Four days into the January protests, President Mubarak fired the government of Mr. Nazif, who now sits in prison. Aside from appeasing public anger, he hoped to secure the military's support. The brass didn't like reforms or Gamal Mubarak, a banker who had his eye on daddy's job. The privatization of state companies—often to benefit Mubarak cronies—and pledges of transparency and competition threatened the military's opaque hold on, it is said, up to a third of Egypt's economy. Two weeks later, after protests swelled, the generals pushed the Mubaraks out.

To the public at large, Gamal Mubarak symbolizes obscene wealth for the elites, while roughly half of Egypt lives on less than $2 a day and can't read or write. "Egypt did very well—just for 100 people," says protest organizer Abdullah Helmy. As Russia showed in the 1990s, privatization without proper domestic competition and rule of law enriches insiders, enrages the rest, and yields limited economic benefits.

But however flawed and limited, the reforms have helped Egypt stomach the economic blows of revolution. Tourism plummeted and Cairo's stock market stayed shut for over a month, until late March. Gross domestic product this year is expected to grow 2.5%, less than half the pre-revolutionary forecast. The interim government is looking for funding from the International Monetary Fund and others to cover a budget hole, but there's little sense of desperation or shortages of food or other staples. Egypt built up reserves to $36 billion; the central bank has used at least $6 billion of it to prop up the Egyptian pound since February.

"The economic developments that Egypt saw in the last five years did not filter to the masses," says Yasser El Mallawany, the chief executive of EFG Hermes, the biggest investment bank in the Middle East. "It was not people friendly. But if the growth [in 2005-10] had not been achieved, I don't know from where you'd feed 80 million people today."

Mr. El Mallawany, whose bank operates in 10 countries, made the right connections in the old days. He served on the policies committee of the once-ruling National Democratic Party, which was dissolved the other day in another notch for the demonstrators of Tahrir Square. Gamal Mubarak owns an 18% stake in a small subsidiary of EFG Hermes.

Mr. El Mallawany says he worries that arrests of allegedly dirty insiders will turn into a "witch hunt" against business and destroy the economy. You might say his fear is self-interested. But the line between justice and political retribution is thin in places with weak rule of law. Corruption charges can easily become tools of illiberal regimes. (See Putin's Russia, 2000-present.)

Egypt would be better served by focusing on modernization. The barrier isn't Islam, the tired excuse for Arab economic malaise, but political will. The Muslim Brotherhood, the powerful Islamist group, may send mixed messages about its commitment to liberal democracy, but it isn't averse to business. Though few in absolute numbers, the young liberals who made this revolution say they want Egypt to join the wider world economy. A new dose of state planning won't get it there.

The U.S. and other donors can help by providing incentives for Egypt's future rulers to liberalize—say, with preferential trade access or direct financial aid to cover the short-term pain of cutting subsidies. Elected politicians are reluctant to pursue such policies because their fruits take time to ripen.

There's a democratic imperative to market reform. The military, secular elites, the Islamists and now Peron-style populists are no friends of political pluralism. Growing economic opportunities and middle classes can help guard against reversal. South Africa and Turkey are good examples of imperfect democracies bucked up by strong, competitive economies. As scholar Valerie Bunce noted in the context of postcommunist Eastern Europe, liberalization helps to "disentangle political power from economic resources and thereby constrain the state, empower society and create competitive political and economic hierarchies."

Mr. El Mallawany's apartment along the Nile looks out onto shabby office towers and a sports stadium. "They've made this city so ugly," he says, shaking his salt-and-pepper head. He lights a cigar. "It should be beautiful," he continues. "With the right policies, Egypt in 10 years can be Malaysia."

Mr. Kaminski is a member of the Journal's editorial board.

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