My Way Or The Highway! Another Clunker?

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As I mentioned in one of my previous memos it was only a matter of time before Ted's death would be called upon to provide the grease for passing a health care bill.

If it were up to Obama , Kennedy would be beatified and made into a saint and placed alongside Mother Teresa. (See 2 below.)

Obama has to walk a thin line in order to appease his far Left without making Blue Dogs bluer. (See 3 below.)

No interest in fixing just want to tranfer wealth through health care and expanded government is the conduit. (See 4 below.)

Now for the other side - fawning over Obama. (See 5, 5a and 5b below.)

Two editorials that bring reality into focus. (See 6 and 6a below.)

Still did not see Obama's health care speech but the snippets I did see would suggest to me that nothing has changed in terms of his approach. As I indicated in a previous memo he continues to seem to need enemies, he still seems to be incapable of understanding that by turning his legislative initiatives over to Pelosi and the Far Left he is now stuck with the consequences of loss of control over his own agenda. Thus, blaming others, when his party is in control, does not fly. Finally, his radical ways continue to place him outside main stream America.

He needs to look in the mirror but being somewhat narcissistic he only sees his 'enemies' - the wee people!

Iran and Obama seem to be parting ways before they ever got to sit down. Pressure mounts on Israel? (See 7 and 7a below.)



Dick



1) A Man on His Way to Bitterness
By Tucker Carlson

The president Wednesday night was battling enemies, real and imagined.

This didn’t look anything like the Barack Obama I remember from the campaign. Obama the candidate seemed almost unaware of his opponents. At his best, which was most of the time, he rose above them completely, utterly unwounded by the attacks.

He also seemed like an adult. Obama was forever reminding audiences of the hard choices America needed to make, choices that had been sugarcoated when they weren’t ignored completely by politicians too fearful to tell the whole truth. Once elected, Obama promised, that would change.

Never has a president been warped by Washington quicker. At times tonight, Obama sounded like an embattled second-termer with a 35 percent approval rating. What percentage of his speech was spent lashing out at his enemies, real and imagined? Radio and cable-television pundits, George W. Bush, former Congresses, unnamed ghouls employing “scare tactics,” whose “only agenda is to stop reform at any cost”—they’re all against him, Obama said. And they’re lying.

Never has a president been warped by Washington quicker. At times tonight, Obama sounded like an embattled second-termer with a 35 percent approval rating.

This isn’t how confident leaders speak. These are the complaints of a man on his way to bitterness. So soon?

And whatever happened to the hard choices? Obama spent the early part of the speech describing his plan as the reasonable middle ground between a single-payer Canadian-style system favored by the left wing, and the laissez-faire, Hobbesian chaos so beloved on the right. It’s a plan, he said, that will add “not one dime to the deficit, now or in the future.”

Fine. But when it came time to explain where the money would come from—that $900 billion over 10 years—he flinched. His answer: Why, by eliminating waste and fraud from the current private system, of course. Also, the insurance companies (maybe the most reviled industry in the world since the makers of DDT went under) may have to reduce some of their obscene profits.

And that was pretty much it. Nobody else—not seniors, not the middle class or the poor or anyone else you have ever met personally—was going to have to pay anything for this wonderful new system. In Obama’s telling, there are only upsides. Free ice cream for everybody.

This is deceptive. In fact, it’s a lie. Obama the candidate would have been ashamed to say it.

Tucker Carlson is a contributor to the Fox News Channel. He previously hosted The Situation with Tucker Carlson and Tucker on MSNBC after working for CNN.


2) Obama's Health Care Pitch:Now with more Ted Kennedy.
By Fred Barnes



President Obama's speech to Congress last night can be summed up rather easily. It was 40 minutes of boilerplate followed by a socko, emotional finish exploiting the death of Senator Teddy Kennedy. Which leads to this question: was Obama's finishing kick sufficient to achieve his goal of "reframing" the national debate on health care that hasn't been going his way? I don't think so.

Obama didn't come close to offering a persuasive explanation of how he'd pay for ObamaCare. And that remains his biggest problem. He promises much, much more in guaranteed health benefits and says it will cost less. Even Obama himself couldn't really believe that. No one else who can add and subtract does. Cut "waste, fraud, and abuse?" Not a chance.

There was one mild surprise. Instead of scaling back his plan to comply with public sentiment, Obama stuck to every promise and provision on which he's dwelled in more than two dozen speeches. There was nothing new, except the size of his audience.

From this, it's clear he's decided to push a partisan bill through Congress with Democratic votes alone. We could tell this from the pleased expression House Speaker Nancy Pelosi had on her face throughout the speech. She's belongs to the no-compromise school.

But unless Obama has suddenly transformed public opinion, Pelosi and Senate Majority Leader Harry Reid won't be able to find enough Democrats, even among the usually malleable Blue Dogs, willing to vote for ObamaCare. Defy the public to bail out a president in trouble? Only Democrats in safe seats are likely to do that.

I had five questions that I looked for Obama to answer in his address. I wanted to see if he was serious about achieving moderate, bipartisan health care. It turns out he's not. Here are the questions.

1) Did he advocate real tort reform to curb health care costs? Nope. He simply talked up a pilot project that he said was President Bush's idea. This was a trifle.

2) Did he offer anything of significance to Republicans? No.

3) Did he bring up his favorite straw man about those whose alternative to ObamaCare is to do nothing at all to reform the health care system? Yes, more than once.

4) Did he demonize the health care providers he's actually made deals with? Well, not all of them, but the health insurers took their usual beating.

5) Did he repeat the false claims he's made repeatedly in earlier speeches? Yes indeed. He brought up nearly all of them, including the ones on no abortion coverage, no loss of one's current health insurance, and the "savings" that would come from more preventive care.

As a matter of stagecraft, Obama made a big mistake. He spent precious minutes delivering his same old arguments that have left a majority of Americans cold. He should have started with the Kennedy riff.

Fred Barnes is executive editor of THE WEEKLY STANDARD



3)Obama's Big Political Gamble:Red-state Democrats are being asked to risk their seats.
By KARL ROVE
Millions of Americans watched President Barack Obama's speech last night to a joint session of Congress. Much of it was familiar, having been delivered in at least 111 speeches, town halls, radio addresses and other appearances on health care. But his most revealing remarks on the topic came on Monday, at a Labor Day union picnic in Cincinnati.

There Mr. Obama accused critics of his health reforms of spreading "lies" and said opponents want "to do nothing." These false charges do not reveal a spirit of bipartisanship nor do they create a foundation for dialogue. It is more like what you'd say if you are planning to jam through a bill without compromise. Which is exactly what Mr. Obama is about to attempt.

Team Obama is essentially asking congressional Democrats to take a huge gamble. The White House is arguing that ramming through a controversial bill is safer for Democrats than not passing anything. This is based on the false premise that the death of HillaryCare is what doomed Democrats in 1994. Mr. Obama told a reporter in July that the defeat of HillaryCare "Helped [Republicans] regain the House." Former President Bill Clinton echoed that thought recently by saying "doing nothing" today is "the worst thing we can do for the Democrats."

Actually, attempting to pass HillaryCare is what brought down the party. Voters rejected a massively complicated, hugely expensive government takeover of health care and the Democrats who pushed it.

In reality, it is riskier to be at odds with where Americans are than just standing by as an unpopular proposal goes down. The problem for Democrats is they are scaring voters by proposing a takeover of health care that spends too much money, creates too much debt, gives Washington too much power, and takes too much decision-making away from doctors and patients.

The political risk for Democrats is clearest among seniors. A late July Gallup poll showed they were the age group least likely to believe health-care reform would improve medical care. Seniors are coming out strongly against Mr. Obama's health-care plan even though they're already covered by government care. Perhaps it's because, as a White House fact sheet makes clear, he wants to pay for his plan's $948 billion cost over the next 10 years by cutting some $622 billion from Medicare and Medicaid.

The latest Pew poll (August 20-27) found that 30% of seniors supported health-care reform while 54% were opposed. In July, Pew showed 29% in favor and 48% opposed. The same August Pew poll shows Republicans gaining 12 points among seniors on the generic ballot, compared to where they stood in the 2006 congressional elections. The generic ballot among seniors then was at 50% Democrat, 39% Republican. Today, it's 51% Republican and 43% Democrat.

This matters because seniors make up a disproportionate share of the off-year vote. CNN exit polls showed that they were roughly 16% of eligible voters in 2008, but 29% of the turnout in 2006. The generic ballot among seniors in 1994 was 45% Republican and 43% Democrat.

These numbers should worry red-state Democratic senators and the 70 Democratic congressmen whose districts were carried by John McCain or George W. Bush. The people back home are likely to punish Democrats if they vote for ObamaCare.

Already, many of them are drawing fire for having toed the party line on a stimulus package that's likely to celebrate its first anniversary with unemployment near 10%. They're also likely to be blasted for supporting a budget that doubles the national debt in five years, a new energy tax in the form of cap and trade, and a host of other liberal policies that voters did not expect from a candidate who ran as a centrist.

Until Ted Kennedy's vacant Massachusetts Senate seat is filled and there is confidence West Virginia's Robert Byrd is well enough to show up for a vote, there simply aren't 60 Senate Democrats to invoke cloture. That means Republicans will have considerable procedural sway, even if the White House isn't interested in giving them a real role by taking out a clean sheet of paper and starting over.

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Given the Senate situation, do vulnerable House Democrats really want to go first in voting for ObamaCare? They've already done that by slamming through cap and trade, which is now stalled in the Senate. How much political capital will Speaker Nancy Pelosi have to spend to pass an increasingly unpopular health-care measure?

The danger for vulnerable Democrats is they have a president who is losing popularity while championing an unpopular proposal. The wise course would be to push for more time to figure out the best consensus policy and for more bipartisanship in crafting any solution.

Congressional Democrats will be under enormous pressure to stand with Mr. Obama. But the prospect of their own political future may yet concentrate many Democratic minds in Congress.

Mr. Rove is the former senior adviser and deputy chief of staff to President George W. Bush.

4) The Convenient Fantasies of President Obama
By Michael Barone

The resignation over the Labor Day weekend of White House "green jobs" czar Van Jones tells you some interesting things about the Obama administration.

One of them is that a man who proclaimed himself a "communist" in the 1990s and signed 9-11 "truther" petitions suggesting Bush administration complicitity in the Sept. 11 attacks was considered fit for a White House appointment.

Liberal columnists have been attacking Republicans because some of their voters are "birthers," believers in the absurd charge that Barack Obama was not born in Hawaii and thus is not a natural-born U.S. citizen. But they have failed to identify any "birther" that occupied a position in the Republican firmament comparable to that of "truther" Jones in the Obama administration.

Another interesting thing about Jones is that the administration seems enamored of his "green jobs" concept. There's an understandable political reason. Legislation to restrict carbon emissions that is supported by the administration would undoubtedly kill a large number of jobs by increasing the cost of energy, and so you can see why its advocates might want to argue that there will be a compensating number of "green jobs" created -- at least if the government spends a lot of money on them.

But this sounds like fantasy. If there were money to be made in green jobs, private investors would be creating them already. In fact, big corporations like General Electric are scrambling to position themselves as green companies, gaming legislation and regulations so they can make profits by doing so. Big business is ready to create green jobs -- if government subsidizes them. But the idea that green jobs will replace all the lost carbon-emitting jobs is magical thinking.

Obama's approach to health care legislation, unless he made a major course correction in his speech to the joint session of Congress, is of a piece with his hiring of Jones. By ceding the task of writing legislation to congressional Democratic leaders and committee chairmen, he has been following a "no enemies to the left" strategy.

By refusing to rule out the government option -- which its architects see as the road to a single-payer government insurance system -- Obama has prevented the emergence of a set of policies that have a chance of passing the Senate. The Senate Republicans in the "gang of six" who have been negotiating with Senate Finance Chairman Max Baucus are not going to agree on a bill without assurance from the White House that they won't get rolled by hard-left House Democrats in conference committee.

Yesterday, Baucus came out with his own plan, which includes a tax on high-value health insurance policies. But this is likely to be rejected by the left, by labor unions that have negotiated such benefits from employers and by members of Congress from states like New York where, because of state policies, almost all health insurance costs that much.

There is an element of convenient fantasy as well in Obama's health care statements to date. We are going to save money by spending money. We are going to solve our fiscal problems with a program that will increase the national debt by $1 trillion over a decade. We are going to guarantee you can keep your current insurance with a bill that encourages your employer to stop offering it.

The list goes on. We are going to improve health care for seniors by cutting $500 billion from Medicare. We aren't going to insure illegal aliens, except that we won't have any verification provisions to see that they can't apply and get benefits.

Most politicians like to promise voters all good things at once. Democrats got in the habit of doing this over the past 14 years when they could not pass legislation by themselves. Van Jones' moment in the White House is over. Exposure of his record in conservative media made him politically unacceptable, even though mainstream outlets like The New York Times ignored the issue entirely.

The Democrats' health insurance bills remain under consideration, and with large majorities in both houses passage of some bill cannot be ruled out. But August town hall meetings and national polls have put the Democrats on the defensive. No-enemies-to-the-left and convenient fantasies may work in Chicago. They don't work so well when your constituency is the whole United States.

5) Care Fixes Ignored?
By Scott W. Atlas

Obama and Pelosi reject introducing competition.


Our president and his allies in Congress have been advancing their plan to offer government as the answer to insurance reform. They claim a government plan for all is essential to promoting competition among private health insurers, but others point to evidence and experience that shows such subsidized "public options" mainly shift large numbers of individuals previously covered by private insurance to government coverage.

Ultimately, this shift rates a new and massive burden on American taxpayers, forces out private insurance choices, and finally creates government as the dominant insurance provider. Once government is the insurer, it will inevitably mean that government can determine access and availability of medical care itself--as is already the case in other countries where such centralized health care systems already exist.

President Barack Obama and Speaker Nancy Pelosi must not be hearing the American people, who seem to be speaking with clarity and passion at town halls and in the polls. Despite concerns about cost, a great number are specifically opposed to government gaining more control over their health care, including via a public insurance plan. Americans realize that government is not the way other goods and services have become subject to competition. In the U.S., competition has always stemmed from the private sector competing for the dollar of value-seeking consumers. And that private-sector competition has promoted innovation--innovation that has benefited Americans with better and cheaper products and services.

A number of health care proposals--ones that don't require the government takeover that the administration desires--have been put forward, yet our president keeps insisting there are no alternatives. On Monday, in his Labor Day speech to union workers, President Obama repeated his straw man argument and asked those who oppose his reforms, "what are your plans? What are you going to do? And the answer is they don't have one. Their answer is to do nothing!" And on Sept. 3, Speaker of the House Nancy Pelosi repeated her insistence on the public health insurance plan and adamantly declared, "If someone has a better idea for promoting competition and reducing health care costs, they should put it on the table."

Perhaps those interested in insurance reform should first understand why millions of Americans are uninsured in the first place, and to identify who of those cannot afford current health insurance plans. Of the 47 million uninsured, the U.S. Census Bureau notes that almost 10 million are not U.S. citizens, many of whom are illegally in the country. Another 15 million adults do not need significant insurance reform, because they are already fully eligible for Medicaid or Medicare but simply have not signed up, and will be enrolled as soon as they interface with the medical system. And nearly three quarters (74%) of the 8 million uninsured children are already eligible for Medicaid or SCHIP, according to the Urban Institute.

This leaves us with 13.9 million non-elderly adults (only 5% of the population, by the way) without health insurance who do not already qualify for Medicaid or Medicare. Of these, Blue Cross Blue Shield estimated that 8.2 million are without insurance for prolonged periods of time, mainly due to lack of affordability, while 5.7 million adults lack health insurance for short periods because they are either between jobs, are recent college graduates, are part-time seasonal workers or have no perceived need for insurance.

So let's focus on these roughly 14 million Americans who are uninsured, for prolonged periods or otherwise, because they either cannot afford it, or they opt to not purchase it, presumably because they do not view it as good value for their money. Even though 9 million of these live in families with incomes greater than three times poverty level, or over roughly $60,000 per year, it always has been up to American consumers to decide for themselves if something is "affordable" or not. The goal is to reform health insurance markets so that health insurance is made more affordable, so that it may be purchased because individuals themselves determine it is worth spending their money on.

Here are five concrete steps that can increase competition among health insurers without positioning government as the dominant insurer itself:

First, government can strip back the out-of-control mandates on health insurance coverage. State-based mandates alone now number more than 2,100, and are blamed for increasing insurance costs by between 20% and 50%. On what basis does the government force Americans to buy insurance covering services many or most would never want? Do all Americans want health insurance to cover massage therapy, in vitro fertilization, chiropractors, acupuncture and wigs, just to name a few items covered under state mandates? Why not encourage insurers to offer lower cost health plans and simply let patients themselves decide what sort of coverage and benefits they want for their families?

Second, our federal government can eliminate the counterproductive laws that restrict interstate purchasing of private health insurance by individuals and small businesses. A national market for health insurance would immediately create the competition for buyers that President Obama and Speaker Pelosi claim to desire. Existing anti-competitive barriers have resulted in dramatic price variations among states for equivalent health coverage. Since small-business employees make up the biggest proportion of uninsured workers, this one change would have a significant impact on freeing up the market for competition.

Third, government can create competition by lifting the veil of secrecy on the pricing of medical procedures and on the qualifications of doctors and hospitals. No other product or service is already purchased before anyone knows its price. In our current system, patients have no reason to ask--the existing third-party-payer structure makes patients believe that "someone else is paying." Requiring doctors and hospitals to post prices would generate the chance to compete for patients. Furthermore, backroom secret deals with specific insurers would be in full view. Let's leave the experts themselves, medical scientists in their peer-reviewed literature, to determine efficacy and clinical utility. But how about requiring hospitals and clinics to post qualifications of doctors and outcomes of procedures? Information is essential to competition, and consumers should be empowered to allow value-conscious decisions about health care.

Fourth, Health Savings Accounts increase choice for consumers, expand individual ownership and control over health spending, promote price visibility to allow value-based purchasing, and provide incentives for savings to prepare for future health care needs. By expanding the availability and simplifying the rules of lower-cost health plans with HSAs, insurance would become an attractive purchase for the millions of Americans who could afford it, but consider it a poor value in its present form.

Fifth, government can generate competition among insurers by revamping the tax treatment of health care expenses, so that millions of newly empowered Americans become consumers who will shop for their health insurance. Ideas like refundable health care tax credits--actual cash even for those who have no income tax liability--would shift purchasing power and control to a huge number of newly engaged consumers. And as a result, insurers would compete for their dollars, and Americans would ultimately own and control their health plans.

Reforming health insurance should focus on three main goals: 1) reducing the number of uninsured Americans; 2) reducing health insurance cost; and 3) creating portability of insurance during times of unemployment or job change. And government can play a helpful role in correcting current problems with our health system, restrictions that may have evolved out of good intention but have failed. One thing is very clear: Advocates for increasing competition in health care have plenty of other, concrete options besides expanding government control over the system. Americans are beginning to understand these options--even if our elected officials refuse those alternatives and even pretend they don't exist, in the name of big-government ideology.

Scott W. Atlas is a senior fellow at the Hoover Institution and a professor at Stanford University's


5) Obama Fires Back on Health Reform
By E.J. Dionne

After a listless summer during which his opponents dominated the health-care debate, President Obama used a dramatic appearance before Congress on Wednesday to seize control of the autumn, the season of decision for the initiative he has turned into the central test of his presidency.

Having avoided specifics in order to give the House and Senate room to legislate, he piled on the details, openly battling the "blizzard of charges and counter-charges," out of which, he said, "confusion has reigned."

It was a speech designed to clear the air by sweeping aside misconceptions about what he was for, reassuring senior citizens about the future of Medicare and insisting that the alternative to reform was a steady deterioration in the coverage Americans enjoy.

He also hit back hard against distortions and outright lies. "Instead of honest debate, we have seen scare tactics," Obama declared. "Too many have used this as an opportunity to score short-term political points, even if it robs the country of our opportunity to solve a long-term challenge."

By joining specifics, a powerful moral argument and an unapologetic defense of government's role in promoting social justice, the president sought to rescue the health-care debate from the mire of a congressional system that has encouraged delay and obstruction. By putting himself on the line, he sought to restore his reputation for political mastery and to rekindle some of the magic he had conjured during a presidential campaign built on the expansive themes of change and hope.

He offered a robust defense of a "public option," which would give the uninsured a government-backed alternative to private coverage. But he insisted that the public option had come to play too large a role in the health-care debate, suggesting he would accept alternatives such as a "trigger," which would bring the option into being only if private insurance companies failed to provide sufficiently affordable policies.

Obama's target audiences were diverse: liberal activists and members of Congress, moderate rank-and-file voters, and a few Republican senators -- above all Sen. Olympia Snowe of Maine, his most likely ally in a party that has broadly rejected his overtures.

In the past month or so, Obama has seen the first signs of rebellion on a left that believes its support has been taken for granted. The administration's failure to share the left's view of the public option as the centerpiece of reform turned a dry policy idea into a potent symbol and a rallying point for progressive disgruntlement.

So the president sought to revive the enthusiasm of his base by insisting that his principles, including his belief in the public plan, remained intact and that any compromises would be undertaken with an eye toward advancing his, and his base's, larger purposes.

Invoking the memory of Edward M. Kennedy's lifelong commitment to the quest for universal coverage, he sought to persuade progressives that it would be a catastrophic mistake to lose a chance to achieve a central liberal purpose first voiced by Theodore Roosevelt.

To moderate voters, he argued that the whole point of change was to respond to their criticisms of America's way of delivering health care. The summer assaults had led many Americans to worry about what they could lose from health-care reform and how much it might cost. Obama reminded them of what they had to gain.

Reform would end the "arbitrary cap" on lifetime coverage and limit out-of-pocket expenses. "It will be against the law for insurance companies to deny you coverage because of a pre-existing condition," he said. "As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it most."

As for Republicans, there was an invitation to share credit for a historic reform and a potpourri of ideas that had originated with GOP legislators, including his 2008 rival, Sen. John McCain.

But for all of the details, the most striking aspect of the address may have been its call to battle: The days of taking incoming fire without any return volleys are over.

"I will not waste time with those who have made the calculation that it's better politics to kill this plan than improve it," he declared. "If you misrepresent what's in the plan, we will call you out. And I will not accept the status quo as a solution. Not this time. Not now."

It seemed as if a politician who had been channeling the detached and cerebral Adlai Stevenson had discovered a new role model in the fighting Harry Truman. For the cause of health-care reform, it was about time.

5a) Obama Back in Top Campaign Form
By Noam Scheiber


This was the best speech I've heard Barack Obama give as president--possibly the best since January of 2008. Unlike his inaugural address, or even his convention speech, this one really soared and inspired by the end--a bit counterintuitively for a health care speech. I thought the invocation of Ted Kennedy was pitch perfect: not tacky or maudlin and certainly not partisan (hence the allusions to Kennedy's friends Orrin Hatch, John McCain and Chuck Grassley). Obama managed to depict Kennedy as a completely ecumenical figure ("Ted Kennedy’s passion was born not of some rigid ideology, but of ... the experience of having two children stricken with cancer."). And then, by segueing from Kennedy into a pragmatic defense of liberalism ("hard work and responsibility should be rewarded by some measure of security and fair play"), he managed to depict liberalism as a completely ecumenical worldview. That, too, was right out of Obama's greatest campaign hits. (See here, for example.)

This was also as animated a speech as I've heard Obama give as president. On the campaign trail, he was great at talking over applause to reach a rhetorical crescendo. He did that nicely a couple times tonight, including during one of his take-away lines: "Well the time for bickering is over. The time for games has passed. Now is the season for action."

A couple more quick thoughts:

1.) The distillation of the proposal itself was very solid: "It will provide more security and stability to those who have health insurance. It will provide insurance to those who don’t. And it will slow the growth of health care costs for our families, our businesses, and our government. " Not quite bumper-sticker length, but as close as a Democratic health plan is going to come, I think.

2.) The rhetorical case for expanding health coverage involved a very deft bait-and-switch. In a nutshell: If you don't have health care, we'll help you get it by creating a new insurance exchange. This is how employees of large companies and members of Congress get insurance, and ordinary Americans should have the same opportunity. Which is to say, Obama started off with a semi-controversial substantive goal (health care for those who lack it), then shifted to an uncontroversial procedural goal (you should be able to get your health care delivered the same way Congress people do). In the course of making this shift, he elided the original question of whether we should cover the uninsured. Kudos to the speechwriter who came up with it. (Really.)

3.) The line about the Medicare trust fund was also very savvy. It reminded me of Clinton's "Save Social Security first" mantra from his 1998 State of the Union address (which, for those who don't remember, prevented Republicans from spending the surplus on tax cuts for the wealthy):

More than four decades ago, this nation stood up for the principle that after a lifetime of hard work, our seniors should not be left to struggle with a pile of medical bills in their later years. That is how Medicare was born. And it remains a sacred trust that must be passed down from one generation to the next. That is why not a dollar of the Medicare trust fund will be used to pay for this plan [emphasis added].

Of course, unless I'm missing something, this promise is essentially meaningless--the trust fund begins running a deficit in 2017 according to the latest trustees' report. So the question isn't whether we'll raid the Medicare trust fund, but what else we're going to raid to shore up Medicare. But it's an evocative line--as if there's a big pile of cash locked in some vault with seniors' names on it--that sounded pretty damn reassuring. Another nice speechwriting touch.

5b) A Perfect Storm of Idiocy
By Joe Conason

The wild furor over President Obama's speech to the nation's schoolchildren raises many questions, but there is only one that really matters. How did America surrender its political discourse -- not to mention the news cycle -- to the most unreasonable and unstable elements of the far right?

Not so many years ago, nobody would have imagined that a bland presidential address to young students, urging them to remain in school, study hard and nurture their aspirations for success, could engender a raging national controversy. Nobody would have believed that such an ordinary event could excite suspicions among a significant part of the population that the chief executive is "indoctrinating" their children into a "socialist ideology," or that the fate of the republic depended on parents keeping their innocents away from the classrooms, lest they hear his words. And nobody would have believed that the resulting wave of paranoia, supercharged by talk radio and cable television, could actually grip the attention of the public when real issues demand action.

When the nation's first African-American president proposes to urge children, and in particular those children who regard him as a role model, to behave wisely and avoid self-destructive behavior, liberals and conservatives alike ought to be expected to applaud him. Indeed, conservatives especially should be clapping loudly, since they have so often bemoaned the cultural barriers to advancement faced by poor and minority students.

So why have the idols of the right, notably Glenn Beck of Fox News Channel, instead seized this moment to stir anger and fear among Republican parents by claiming that the president intends harm to their kids? Why did many Republican leaders, notably the party chairman of Florida, echo the craziness? (And why would any parent take advice from Beck, a college dropout and recovering alcoholic?)

While many Obama critics advertise themselves as "libertarians" who distrust any message from Big Brother in Washington, that healthy skepticism cannot be the reason for the current outcry -- because two of the past three Republican presidents spoke directly to the nation's schoolchildren without provoking any significant reaction at all.

In the fall of 1991, President George Herbert Walker Bush delivered a speech in a classroom that was broadcast live nationwide by the Pubic Broadcasting System, Mutual Broadcasting and NBC Radio Network. The blanket media coverage was arranged by the Education Department (which gave rise to a few grumpy remarks by Democrats in Congress that were duly noted but mostly ignored by the press).

"Thanks for allowing me to visit your classroom to talk to you and all these students," he said politely to the teacher who was hosting him, "and millions more in classrooms all across the country." He went on to tell his audience: "Make your teachers work hard. Tell them you want a first-class education. Tell them that you're here to learn. Block out the kids who think it's not cool to be smart. I can't understand for the life of me what's so great about being stupid."

His predecessor, Ronald Reagan, addressed students directly on at least two occasions -- once in a broadcast speech in 1988 and once in a session with high-school students at the White House in 1986. Both times, the Gipper seized the chance to promote his own policies, with particular attention to cutting taxes and his "vision of economic freedom." In fact, Reagan's remarks were entirely political, if not partisan. He did precisely what the right has wrongly attacked Obama for doing -- but that was a message that conservatives like to hear, so they didn't object to the "indoctrination" of students at the public's expense.

The irony of this tempest of idiocy is that the same blowhards who constantly slander and slur President Obama were telling us, not too long ago, that criticizing the commander in chief during wartime was tantamount to treason. But of course, they are patriots of political convenience -- with no allegiance to anything except their own power and their extreme ideology.


6) Union-Tribune Editorial: Missed opportunity


President ignores real fears on cost, coverage

- We welcome President Barack Obama's decision to take a more direct role in the debate over sweeping proposals to overhaul the U.S. health care system, starting with his speech last night to a joint session of Congress.
The president made several points with which we strongly agree. Health insurers' must end their odious practice of hunting for ways to justify canceling coverage for the seriously ill. The difficulties those with pre-existing medical conditions face in getting coverage must be reduced. It should be easier for people to carry their insurance from job to job. The cost of “defensive medicine” driven by doctors' fear of malpractice lawsuits needs to be addressed.
Nevertheless, Obama's depiction of rising public doubts about big health changes as the product of “scare tactics” and “tall tales” undercuts his assertion that he takes seriously critics' “legitimate concerns.” This editorial page has joined many others in criticizing falsehoods such as the allegation that the president wants to set up “death panels” to winnow out the ailing elderly. But it is not a “scare tactic” to doubt Obama's claim his proposal to vastly expand health coverage would save money. The Congressional Budget Office says it would carry a 10-year, $1 trillion price tag. It is not a “tall tale” to question his claim that his plan would not affect individuals satisfied with their present coverage. It would give employers a powerful incentive to meet their insurance requirements by opting for cheaper government coverage and dropping their private insurers.
We need to have a full and open debate about these concerns. But based on his speech last night, Obama would have us believe that he has a blueprint for a health care system that miraculously would be both much cheaper and much bigger — and the only thing that those who doubt him can offer is “misinformation.”
Sorry, Mr. President. That's just not true.

6a)EXAMINER HOT ZONE: Does Obama think Americans are so gullible?

President Obama’s address to Congress and the nation Wednesday evening was yet another illustration of his seemingly endless ability to soar to genuinely impressive rhetorical heights without ever landing back on truthful ground. Nothing better illustrates this than Obama’s medical malpractice “demonstration project” gambit. Here’s the essential fact about federal demonstration projects – they are nothing more than a dodge, a deceitful way for Washington politicians to appear as if they are doing something concrete when in reality they’re tucking the idea at hand safely out of sight over in a corner. Obama might as well have said Wednesday night that he will appoint a presidential commission or have challenged Congress to create an emergency national task force on medical malpractice. The Democratic majority sitting in the House chamber would have stomped and clapped and yelled with delight, knowing the chief executive had just consigned medical malpractice caps to irrelevance, along with any GOP senator or representative gullible enough to think Obama was thus doing anything other than playing them for suckers.

So it was throughout this 47- minute nationally televised monument to presidential flimflam. Sometimes the prevarications were so obvious that even the president’s most ardent supporters – like the news staff of The New York Times - had to concede that he was playing fast and loose with the facts. For instance, the Times quoted Obama’s repeating of his familiar claim that “if you are among the hundreds of millions of Americans who already have health insurance, nothing in our plan requires you to change what you have.” That is technically true,” the Times carefully admitted, “but there is a real possibility that existing policies could change as a result of the legislation. The government, for instance, would set new standards, and employers that already offer insurance would have to bring their plans into compliance.” In other words, when, as is inevitable, the cost of providing health insurance is more than the federal fine Obama seeks for not providing it, companies will drop their employee plans, forcing millions of people into the government-run health care system against their will.

Similarly, Obama claimed “most of this plan can be paid for by finding savings within the existing health care system, a system that is currently full of waste and abuse.” If $675 billion equals “most” of the $900 billion Obama says his proposal would cost, why wait to get those savings? Finally, there is abortion and illegal immigrants. Obama said “no federal dollars” will fund abortions under his proposal and “the reforms I am proposing would not apply to those who are here illegally.” If Obama truly believes that, then he will have no objection when Democrats in Congress reverse their previous votes barring such provisions from the legislation when they were proposed by Republicans. In short, did the president sleep through August?






7) Washington accuses Iran of attaining nuclear weapon capability


Timed to follow on the delivery of Tehran's response to the big powers' offer of nuclear talks, US intelligence agencies informed the New York Times Thursday, Sept. 10, that they have concluded in recent months that "Iran has created enough nuclear fuel to make a rapid, if risky, spring for a nuclear weapon."

The White House is quoted as saying that "Iran has deliberately stopped short of the critical last steps to make a bomb."

A few hours earlier, a US diplomat warned that Iran is close to producing its first nuclear bomb.

Military sources say these steps add up to a new US intelligence assessment that Iran is now in position for deciding at any moment to take that last, extremely short step, toward making a bomb - or even two.

Wednesday, Sept. 9, Iranian foreign minister Manouchehr Mottaki finally handed representatives of the six-nation group of nuclear negotiators (P5 + Germany) his government's long-promised reply to the package of incentives it offered for talks to resolve the dispute on Tehran's nuclear program.

Although the contents of the package were not published, Washington sources report extreme US frustration with the document which bars any discussion of its nuclear issues

According to our Iranian sources, it consists of a long-winded, sanctimonious treatise, with no proposals for solving the nuclear issue, but rather a sermon on the need for a new world order based on Iranian revolutionary Islamic tenets. Iran's rulers offer to discuss reforming the new world order with the big powers and "reaching a comprehensive agreement on issues beyond the nuclear file," including the crises in Iraq, Afghanistan, Lebanon and the Palestinian territories.

From the document's tone, Iran is putting itself forward as the seventh world power and demands a key role in all important international political, economic, social and cultural policy-making.

The document has only three things to say on the nuclear subject:

First, Iran is fully entitled by the Non-Proliferation Treaty to carry out uranium enrichment without interference or limitations.

Second, Iran is not ready to discuss its nuclear activities with any foreign power.

Third, It is willing to discuss the worldwide nuclear problem.

The package follows on Iranian president Mahmoud Ahmadinejad's public declaration that his country's "nuclear rights" are not open to negotiation; the UN nuclear watchdog's determination that its interaction with Iran is in stalemate; and the statement by US chief envoy to the IAEA, Glyn Davis, that ongoing enrichment activity is moving Iran "closer to a dangerous and destabilizing possible breakout capacity."

Iran's "package" takes the entire controversy into a fresh blind alley. President Barack Obama must now decide on his reaction to Iran's virtual slap in the face in response to his offer of direct nuclear dialogue.

7a) Iran crosses nuclear red line

The Obama administration might conceivably decide to live with a nuclear-armed Iran. Israel does not enjoy that luxury. Now that Iran has got all the components for making a nuclear device at extremely short notice, as affirmed by US intelligence. Israel can no longer delay a decision on pre-emptive action

Norman Podhoretz Responds to The Most Asked Question!

This was sent to me by a dear friend and fellow memo reader and is a letter a teaching professor at one of the nation's great Medical Schools is willing to sign. (See 1 below.)

This from one of the bright minds I have had the pleasure of knowing, working with and considering a trusted long term friend. (See 2 below.)

Back to the hypocrisy of the geese and gander thing. If Congress forces their version of a health care program on the American people, they too should have to accept the same level of health care for themselves and their families. (See 3 below.)

Last September, as Wall Street turned to rubble and panic threatened to come unleashed, Ken Lewis, the CEO of Bank of America, agreed to swallow one of the country’s most toxic investment houses. The deal was not altogether voluntary; as details have slowly emerged, the co-ercive role of the Fed and Treasury has loomed larger. What exactly happened in the weeks leading up to the merger? Did the deal save us all from economic apocalypse? And what does the government’s unprecedented role in it portend for the future of our economy? (See 4 below.)

Netanyahu visited Gewrmany recently and made some observations for a world which has seemingly turned a deaf ear. Will it fall to Israel to deal with Iran's nuclear ambitions? Seems so. Will Israel do so? Seems hard to believe they will not because the world has left them little choice.

Netanyahu was also given documents for Israel's historical museums pertaining to Germany's plans for extermination. Germans are so methodical. Consequently, their documentation mania revealed so much of what they did that it makes it difficult for even radical Islamists to live in denial - but they will because they are consumed with hate. (See 5 below.)

Our Whirling Dervish president is on fire like California. Deliciously clever. Have to pull up by copying and posting on Google and then clicking on it (See 6 below.)

I alerted readers to Norman Podhoretz's forthcoming book giving his version of why Jews are Liberal. This is a question I always get asked and I reply: it is mostly out of intellectual guilt, their love affair with FDR and European Socialist immigrant background. As the 'bubbies' die off this influence diminishes and more of today's youth are tending toward Conservatism. I have written this without reading, as yet, Norman's thoughts in Commentary Magazine which I just received and the review below. Interested to see if I am right or even near right.

A very incisive friend of mine says liberalism is a substitute for religion.(See 7 below.)



Dick


1)An Open Letter to the US Congress:

Dear Member of Congress:
We represent a broad constituency of academic, clinical and health administrative professionals who have dedicated our professional lives to the people who receive care in the American healthcare system. We have taken care of patients, managed large and small healthcare organizations, taught young students medicine and public health and conducted research on the quality of healthcare and ways to improve the healthcare system for all Americans. As healthcare experts and concerned citizens, we come together in this letter to reaffirm that the current healthcare system is in crisis and is not sustainable in the future. The bills under consideration contain provisions that will seriously address problems in healthcare and must be reconciled. We reaffirm the importance of meaningful policy change in this legislative session and call upon you to act.
The lack of insurance for 46 million citizens and the rising costs of care for everyone must be addressed. We believe there are a minimum of policy changes that must be included in any Health Reform legislation and urge you to adopt the following provisions:

Provide coverage to 35-40 million additional US citizens

Increase competition in the private insurance market and eliminate discrimination based on pre-existing conditions in the purchase of health insurance

Cover essential preventive care and improve access to primary care

Ensure affordability of health insurance for low- and moderate-income families through sufficient subsidies of families and small businesses.

Slow the rise in costs of healthcare and health insurance premiums for everyone

Adopt a shared responsibility for achieving savings and financing the added coverage through contributions from employers, insurance companies, hospitals, doctors, drug companies and patients

Support and disseminate the results of Comparative Effectiveness research to help practitioners and patients chose the best healthcare

Expand the Federal, State and private sector commitment to improving the quality of healthcare for all citizens
While this list may not meet all of the policy changes that any one of us supports, it does offer a core set of provisions that each of us can support.

2)I think the stock market represents acceptable but unexciting value if Obama’s attempt to shift the USA dramatically to the left is failing, which it probably is. Treasury and municipal bonds represent very poor value and high yield is no longer enticing. I think there will be a sluggish, anemic ‘recovery’ that won’t feel like real prosperity and that won’t justify expecting returns from stocks to exceed the normal 8-11%/year. I still want to have significant allocations to non-dollar assets because the biggest risk we face (until our government is less egregiously incompetent and less hostile to capital) is debt repudiation through inflation and/or flight from the dollar. To feel really good about the longer term, I’d have to witness the Democratic Party getting a mind and soul transplant: As long as this gang of crooks and crazies is either governing or awaiting the next rotation into power, the underpinnings of freedom and prosperity are unsound.

3) The Senate health committee recently voted 12-11 in favor of a two-page amendment, courtesy of Republican Tom Coburn, that would require all Members and their staffs to enroll in any new government-run health plan. Yet all Democrats with the exceptions of acting chairman Chris Dodd, Barbara Mikulski and Ted Kennedy (via proxy) voted nay.

It took me less than a minute to sign up to require our congressmen and senators to drink at the same trough! Three cheers for Congressman John Fleming of Louisiana !

Congressman John Fleming ( Louisiana physician) proposed an amendment that would require Congressmen and Senators to take the same healthcare plan they force on us (under proposed legislation they are curiously exempt).

Congressman Fleming is encouraging people to go to his Website and sign his petition (very simple - just first, last and email)at: http://fleming.house.gov/index.html.

4) The Final Days of Merrill Lynch
By William Cohan

It’s been almost a year since Bank of America agreed to buy Merrill Lynch, on September 15, for $50 billion in stock, in what now looks like one of the most fraught deals in the history of American business. The deal was announced on the same day that Lehman Brothers filed for bankruptcy protection and the day before Treasury and the Federal Reserve decided to throw an $85 billion lifeline to AIG, the global insurer that had foolishly underwritten the risks of the financial system. Although the end of Wall Street was imminent, Bank of America’s offer valued Merrill Lynch at $29 per share—a 70 percent premium over the stock’s closing price on the previous Friday, and nearly twice its book value.

Bank of America’s generosity allowed Merrill to dodge a bullet, as it was just days away from following Lehman into bankruptcy court. Merrill’s CEO, John Thain, had spent much of the previous weekend at the New York Federal Reserve Bank’s Italianate palazzo in downtown Manhattan, in strained discussions about the financial industry’s mounting distress, and he knew his firm’s future was imperiled. Like Lehman and Bear Stearns, which had failed six months earlier, Merrill had a balance sheet chock-full of problem assets that it had been using as collateral in the overnight-financing markets.

Thain knew the willingness of short-term lenders to keep funding Merrill would disappear rapidly if his firm lost the market’s confidence, as both Lehman and Bear Stearns had. Without short-term financing, Merrill would not be able to meet its obligations as they became due and the firm would fail. “I anticipated that the failure of Lehman would have caused very severe problems for Merrill Lynch,” Thain said afterward, “and the potential withdrawal of cash” would cause a severe liquidity crunch for the firm, with no easy solution.

By Sunday night of that infamous September weekend, Thain and Ken Lewis, the CEO of Bank of America, had cut their deal. “Acquiring one of the premier wealth-management, capital-markets, and advisory companies is a great opportunity for our shareholders,” Lewis said the next morning. “Together, our companies are more valuable because of the synergies in our businesses ... I look forward to a great partnership with Merrill Lynch.” Added Thain: “Merrill Lynch is a great global franchise, and I look forward to working with Ken Lewis and our senior management teams to create what will be the leading financial institution in the world, with the combination of these two firms.”

Even at the time, it looked to many like an odd union—a formerly high-flying Wall Street firm, founded in 1914, scooped up by the Wal-Mart of the banking industry, a Charlotte-based bank known for its brawn in commercial banking. Nonetheless, champagne toasts and all the usual corporate euphoria accompanied the announcement of the deal. For Bank of America, it was a move into the fast lane of high finance, and a validation of sorts: on October 19, a triumphant Lewis appeared on 60 Minutes, and to the question of whether he had conquered Wall Street, he responded, “We have, yes, we have won in that sense.” For Merrill, it was—if nothing else—a second lease on life.

Three months later—even before the deal closed—the engagement was on the rocks, the mood soured by staggering losses at Merrill, and Bank of America’s executives were looking for a way to break it off. What followed was an unprecedented series of steps, taken in December by Federal Reserve Board Chairman Ben Bernanke and Treasury Secretary Henry Paulson, to keep the two companies together.

Many of the most stunning details of the hidden negotiations between Paulson, Bernanke, and Lewis would have remained secret if not for the singular persistence of Andrew Cuomo, the New York attorney general, who in February took the depositions of both Lewis and Thain as part of his investigation into why Merrill, though reeling financially, had paid some $3.6 billion in bonuses to its employees before the deal closed. Cuomo has since released large portions of the depositions. The following account of the events that transpired during the waning days of the Bush administration comes from those transcripts, from the subsequent testimony of Lewis and Bernanke before Congress in June, and from interviews with insiders and knowledgeable observers. (Paulson, Bernanke, and Lewis all declined to be interviewed.) The narrative that emerges is troubling. It raises serious questions about the sanctity of legal contracts in post-crash America, and about the fast-evolving relationship between American government and industry.

At the time Lewis struck the deal with Thain, in September, he was plenty sanguine about Merrill’s financial prospects—and boasted about them publicly. In a February 2009 interview with Maria Bartiromo, on CNBC, Lewis said he and his team had seen “everything we needed to see” about Merrill. He pointed out that he had the benefit of the “very, very extensive” analysis done by Bank of America’s financial adviser, J. Christopher Flowers—the billionaire private-equity investor and former Goldman Sachs banker—who had first studied Merrill’s books in December 2007, when he was considering making an investment in the firm, and then again over the weekend the deal was struck. In a press conference on the morning of September 15, Lewis said that Flowers had told him Merrill’s balance sheet was becoming much more stable. “He was very complimentary of what [Thain] and his team had done,” Lewis said, “in many cases not only reducing the marks”—the value placed by Merrill on the securities on its balance sheet—“but getting rid of the assets, which is the best thing to do. So [Merrill had] a much lower risk profile than he’d seen earlier on.”

But in fact the firm’s finances were rapidly deteriorating. Lewis and his executive team began receiving weekly reports about Merrill’s condition immediately after he inked the deal in September. By the end of November, Merrill’s losses had ballooned to $9 billion, and some Bank of America officials had begun to doubt seriously the wisdom of the deal. Most of the losses were coming from wrong-way bets in the firm’s sales-and-trading department and from the continued write-down of squirrelly securities. But even Merrill’s crown jewel—its global network of stockbrokers—had suffered a severe decline in monthly revenue, from more than $1 billion in October to $797 million in December. Apparently, these losses were well beyond what Lewis or Flowers had thought possible.

With losses mounting, Lewis began to speak with his top managers and lawyers about the possibility of invoking the merger agreement’s material adverse-change clause—or MAC, as it is known on Wall Street—if Merrill’s condition continued to worsen. This legal escape hatch, built in one form or another into nearly every merger agreement, theoretically could have let Bank of America walk away at any point before the deal officially closed, on January 1, 2009. The MAC clause was nothing to trifle with; a slew of lawsuits by Merrill Lynch and its shareholders would almost certainly follow, and prevailing in court after invoking a MAC clause is exceedingly difficult. Still, if it came down to it, battling a lawsuit would be better than trying to inhabit a house aflame.

Another out was available, but it was only days from disappearing. On December 5, Bank of America’s shareholders would formally vote on the deal. If they voted no, the merger would be dissolved, with no legal obligations on either side.

The termination of the merger agreement with Bank of America would likely have meant the end of Merrill, since the firm was unlikely to be able to meet its debts as they became due. And presumably the termination would have been an embarrassment for Lewis, who had long coveted Merrill, and had championed the deal. With the shareholder vote nearing, and despite Merrill’s deteriorating finances, Bank of America’s executives and lawyers decided to move forward, with considerable “mixed emotions,” according to one of them, as reported in The Wall Street Journal in February: “Everyone wanted to see the deal go through.”

On December 5, the shareholders of Bank of America approved the deal, as did the shareholders of Merrill Lynch. No information about Merrill’s growing losses was provided to Bank of America’s shareholders before the vote, as several members of Congress noted at a June hearing to investigate the merger.

Lewis “had an easy out before the shareholder vote,” a senior Wall Street mergers-and-acquisitions banker, who was also trained as a Wall Street lawyer, told me. “He could easily have disclosed to his shareholders that ‘We have done two months of due diligence now, and look at the 600 things we’ve found.’ I’ve always wondered how could it be that they did not disclose to the world what they knew before December 5.”

Some observers say Lewis’s failure to disclose to his shareholders the extent of the problems at Merrill before the shareholder vote may have constituted securities fraud: a violation of the Securities and Exchange Commission’s rule 10b-5, which prohibits any act or omission resulting in fraud or deceit in connection with the purchase or sale of any security. “He committed classic securities fraud,” the senior Wall Street mergers banker says flatly. “He had a material knowledge of a material event in the middle of a shareholder vote.” A Bank of America spokesperson, in an e-mail response to my questions about the company’s disclosures, simply said, “We believe we made the required disclosures before the December 5 shareholders meeting.” At least eight shareholder lawsuits have been filed against Lewis, Bank of America, and Thain. CalPERS and CalSTRS, two California pension funds that together own 38.5 million Bank of America shares, are seeking to lead a consolidated class-action lawsuit against the bank for failing to disclose the facts about Merrill before the December 5 vote.

After the vote, Lewis was nearly euphoric. “It puts us in a completely different league,” he said. Meanwhile, Bank of America’s internal lawyers and its external counsel at Wachtell, Lipton, Rosen, & Katz continued to debate whether the Merrill losses would constitute a MAC or were, as some believed, comparable to what other Wall Street firms were experiencing. It was not an easy call, given the high stakes and the plenty ambiguous wording of the clause, which expressly excluded, as reasons to void the contract, changes in “general business, economic or market conditions.”

Based on recent case law, most litigators had concluded that nothing short of a metaphorical nuclear war would allow the MAC’s successful invocation. “In my mind, there were several minuses,” Lewis said in his February deposition, recapturing his earlier thinking as the days passed and the news of Merrill’s losses grew worse still. “We could have done the MAC and then have [Merrill] go bankrupt. Then you would lose your case, and you have a company that’s damaged pretty badly and you have to take it anyway.”

On December 9, Joe Price, Bank of America’s CFO, reported Merrill’s still-increasing losses to the bank’s board of directors. On December 14, Price called Lewis and told him that Merrill’s losses were now $12 billion. (By the end of December, they reached $15.3 billion.) Lewis later said that what he mainly remembered from the conversation with Price was just the “staggering amount of deterioration” in Merrill’s financial performance.

Shortly after the December 14 call from Price, Lewis began to worry that Merrill’s losses had simply become too great to bear. He consulted with counsel and again considered how he might abandon the deal. Ed Herlihy, the partner at Wachtell Lipton who had helped initiate the Merrill deal, and who had long acted as an adviser to Lewis, called Ken Wilson, a just-retired Goldman vice chairman and a friend and confidant of Hank Paulson, the Treasury secretary and former Goldman CEO. Wilson had joined the Treasury Department a few months earlier as an adviser to Paulson, and he listened in awe as Herlihy told him the magnitude of Merrill’s losses, and with dread as Herlihy told him that Bank of America was thinking about walking away from the deal. “The amount of devastation to the financial system if Merrill blew up would have been unfathomable,” Wilson told me in May. “It would have been Lehman squared. Just horrific.” He told Herlihy that Lewis should call Paulson directly.

On the morning of December 17, Lewis called the Treasury secretary from his office in Charlotte. “I told him that we were strongly considering the MAC and thought we actually had one,” Lewis recalled in his deposition.

“We probably should talk,” Paulson replied. “Could you be here by six o’clock?”

Lewis showed up at the Federal Reserve in Washington at the appointed hour, along with Joe Price and Brian Moynihan, Bank of America’s newly named general counsel (Moynihan would later succeed Thain atop the newly acquired Merrill Lynch). By then, Paulson had arranged for Bernanke to be there, too.

Lewis kicked off the discussion by talking about how Bank of America, in the fourth quarter of 2008, would likely suffer its first quarterly loss in 17 years—a loss entirely independent of the Merrill deal—and then Price walked Paulson, Bernanke, and their aides through the magnitude of the losses that Merrill had taken. “The main thing we were concerned about was the very large hole that would have been created” in Bank of America by Merrill’s losses, Lewis said in his deposition. The Bank of America executives then broached the idea of invoking the merger agreement’s MAC clause. But Paulson and Bernanke were unreceptive. They warned Lewis and Price against taking that step, and they urged caution. Lewis was told to “stand down” for the moment, he recalls, until Paulson and Bernanke had a chance to put their heads together. “And so we left,” Lewis said.

By December 20, Bernanke had come to the view that “the MAC threat is irrelevant because it is not credible,” according to an e-mail written that day by Jeffrey Lacker, the president of the Federal Reserve Bank of Richmond, who had just spoken to Bernanke. “Also,” he wrote, Bernanke “intends to make it even more clear that if they play that card and then need assistance, management is gone.”

On Sunday, December 21, Lewis tracked down Paulson to talk more about the possibility of invoking the MAC clause. Just that morning, at 8:17, Mac Alfriend, a senior official at the Richmond Fed, had sent an e-mail to his colleagues: “Merrill is really scary and ugly.” About two hours later, Bernanke had written to his Fed colleagues, saying he thought Lewis’s “threat to use the MAC is a bargaining chip, and we do not see it as a very likely scenario at all.” He urged them to come up with “some analysis” to convince Lewis why calling the MAC “would be a foolish move and why the regulators will not condone it.”

Lewis first tried to call Paulson at Treasury, and was given his cell-phone number. He eventually reached the Treasury secretary at a ski cabin in Colorado. Paulson—known as “The Hammer” since his days on the offensive line at Dartmouth—did not mince words with Lewis. “I’m going to be very blunt,” he said, according to Lewis’s deposition. “We’re very supportive of Bank of America and we want to be of help, but the government does not feel it’s in your best interest for you to call a MAC.” According to Lewis, Paulson told him the government felt “so strongly” about this that he said, “We would remove the board and management” if Lewis tried to invoke it. At that, a shaken Lewis stood down again. He later said he knew that Paulson wasn’t joking around, and “that he wouldn’t say something that strong if he didn’t feel like it was a systemic risk as well.”

“Hank, let’s de-escalate this for a while,” he told Paulson. “Let me talk to our board.” Paulson seemed happy with Lewis’s suggestion to ratchet things back. “Good,” he said. “I’ll call Ben and tell him that.”

The next day at 4 p.m., Lewis convened a special board meeting via conference call, to convey management’s recommendation that the merger with Merrill Lynch be completed on its original terms. He reiterated Paulson’s view that a failure to complete the merger would result in a “systemic risk” to the U.S. economy—and that invoking the MAC clause would cause the Fed and Treasury to remove Bank of America’s management and its board of directors.

Although the government’s threat was unprecedented—and would have been almost inconceivable before the collapse of Bear Stearns in March 2008—Lewis argued against challenging Paulson and Bernanke. He also chose not to inform his shareholders or the public about his conversations with Paulson and Bernanke. “We bank 99 percent of the Fortune 1,000, … a third of all commercial companies, [and] every other American,” he said in his deposition. “If it’s bad for America, then it’s bad for us.” In his interview with Maria Bartiromo in February, Lewis elaborated. The decision, he said, came down to “enlightened self-interest. Because we’re so inextricably tied in with the U.S. economy and have such large market shares, what’s good for America is good for Bank of America.”

Enlightened or not, Bank of America’s self-interest would only later be fully disclosed: in return for swallowing Merrill despite its worsening troubles, Paulson and Bernanke had verbally promised Lewis more money from the TARP—the $700 billion Troubled Asset Relief Program, which had become law in October 2008—to bolster the capital of the combined firm. In addition, they promised to take billions of dollars of toxic assets off the company’s balance sheet.

Although this new deal with Treasury and the Fed could not be completed by the time the merger was to close on January 1, Lewis told his board he had received an oral commitment that the capital infusion and toxic-waste removal would be in place by January 20, the day Bank of America was to release its 2008 earnings report. Lewis said Bernanke told him, “We view you as strong and having acted appropriately in difficult circumstances … We’ll make sure you continue that way … We want to do something that when the public hears about it [the new government financing], your stock goes up.” That must have sounded welcome to Lewis. Around the time of the conversation, Bank of America’s stock had fallen, from almost $34 a share before Lewis had decided to buy Merrill to about $13.50 a share.

The board urged Lewis to try to get Paulson and Bernanke to put the government’s offer of more capital into writing, and he dutifully picked up the phone and called Bernanke to ask. “Let me think about it,” Bernanke told him. In the end, Bernanke didn’t speak to Lewis about the promised new financing; Paulson did. He told Lewis he didn’t want to put anything on paper. “First, it would be so watered down,” Lewis remembered Paulson telling him, “it wouldn’t be as strong as what we were going to say to you verbally. And secondly, this would be a disclosable event, and we do not want a disclosable event.” (Some legal authorities, of course, believe the discussions and correspondence to that point should have been disclosed to shareholders, since they were material and might reasonably have been expected to affect the trading of the securities of the two firms.)

Just before 5 p.m. on December 22, Lewis sent his board an e-mail. “I just talked with Hank Paulson,” Lewis wrote. “He said that there was no way the Federal Reserve and the Treasury would send us a letter of any substance without public disclosure which, of course, we do not want.” “Thought so,” board member Thomas Ryan, the CEO of CVS Corporation, wrote back five hours later.

Still, no board revolt came to pass. The minutes of the board meeting that day reveal a splendid piece of legal ass-covering: the board states for the record that it “was not persuaded or influenced” by the government’s threats to remove it and the management, and that it would reach the decision that was in the “best interest of the Corporation and its shareholders” without regard to the “representation”—threat—by Paulson and Bernanke. That noted, and snarky e-mail aside, the directors seemed content to follow Lewis’s lead.

Lewis, of course, had a problem on his hands. Because he could not get the government’s offer in writing, by going through with the deal he would be putting his company and his shareholders at a huge financial risk if Paulson and Bernanke changed their minds. Still he went forward, with no disclosures to his shareholders. “I had verbal commitments from Ben Bernanke and Hank Paulson that they were going to see this through, to fill that hole, and have the market perceive this as a good deal,” Lewis said in his deposition in February. “I was going on the word of two very respected individuals high up in the American government.”

When asked about whether he would have disclosed the risk to which he was exposing his shareholders if it had been up to him, Lewis replied, “It wasn’t up to me.” The particulars of the deal, he noted, were not up for debate either: “It was said that, ‘We want this deal done on time and on these terms.’ There wasn’t an ability to renegotiate.” But every deal can be renegotiated, right? “Not when you’re told that you can’t,” Lewis said. Asked whether he was angry that he didn’t feel he had a choice in the matter, Lewis replied, “I think I was a little shocked. Everything got back to the fact that I was shocked at how strongly they felt about the consequences… I think they were doing it in good faith. They thought everything they said—about the danger that Merrill’s failure would pose to the financial system—“was true.” Lewis conceded he could have said no and resigned, but he never considered doing that.

But there is no question that Lewis was growing increasingly worried about potential shareholder litigation. On December 22, Bernanke confided in an e-mail to his Fed colleagues that Lewis “now fears lawsuits from shareholders for NOT invoking the MAC, given the deterioration at ML.” Bernanke said he told Lewis that he didn’t “think that’s very likely,” but Lewis “asked whether he could use as a defense that the gov[ernment] ordered him to proceed for systemic reasons. I said no.”

Lewis nonetheless wanted a letter from Bernanke that could be used in Bank of America’s defense. Bernanke asked Scott Alvarez, the Fed’s general counsel, if they could give Lewis a letter saying that he had been formally advised that “a MAC is not in the best interest of his company.” On December 23, Alvarez wrote back: “I don’t think it’s necessary or appropriate First, we didn’t order him to go forward—we simply explained our views on what the market reaction would be and left the decision to him. Second, making hard decisions is what he gets paid for and only he has the full information to make the decision—so we shouldn’t take him off the hook by appearing to take the decision out of his hands.” Bernanke still wondered, “What would be wrong with a letter, not in advance of litigation but if requested by the defense in litigation, to the effect that our analysis supported the safety and soundness case for proceeding with the merger and that we communicated that to Lewis?” In response, Alvarez advised Bernanke to “hold fast” on any such letter. “I want to avoid the Fed being the centerpiece of the litigation,” he wrote.

On December 30, at another Bank of America board meeting, convened two days before the Merrill deal was to close, Lewis reported that since the December 22 board meeting, he had told “federal regulators—primarily Kevin Warsh, a Federal Reserve Board member—that “were it not for the serious concerns regarding the status of the United States financial-services system” and the consequences that would have befallen the financial system as “articulated by the federal regulators,” Bank of America would have invoked the MAC clause and sought to renegotiate the terms of the deal. He explained to his board that he had also told regulators that it was “appropriate” for the federal government to make Bank of America “whole for the deterioration in Merrill Lynch’s operating results and financial condition.” In his conversations with Warsh, Lewis explained Bank of America’s “needs and expectations” regarding the financing that Paulson and Bernanke had informally promised.

Lewis also reminded his board that Treasury and the Fed would not put its commitment to him and Bank of America in writing, because such “assurances” would require the “formal action” of the Fed and Treasury, and thus “require public disclosure,” which might have caused another crisis. Still, Lewis told the board, management had documented the commitment as best it could through “e-mails and detailed notes” of the conversations with Warsh and others. Lewis and Price shared with the board the various ideas they had discussed with Warsh, Bernanke, and Paulson about how the government’s new capital injection might work, and concluded by saying they would “continue to work” with federal regulators to make it all happen by January 20. “Robust discussion ensued,” the meeting minutes deadpanned, “including the Corporation’s recourse should the federal regulators fail to comply with their assurances on which the Board and management have relied.”

On January 1, Bank of America closed its deal with Merrill Lynch, as had been agreed in September. No aspect of the original terms was renegotiated. “We created this new organization because we believe that wealth management and corporate and investment banking represent significant growth opportunities, especially when combined with our leading capabilities in consumer and commercial banking,” Lewis said, mouthing the pabulum that typically attends corporate-merger announcements. He didn’t mention any of the profound events of the previous weeks. “We are now uniquely positioned to win market share and expand our leadership position in markets around the world.”

Bank of America ended up releasing its 2008 financial results 15 days later. Tucked into the press release was the news that Merrill Lynch had lost a staggering $15.3 billion in the fourth quarter. In the same press release was the first public announcement of Bank of America’s secret deal with Paulson and Bernanke. The government would invest another $20 billion into Bank of America—bringing the total TARP funds at the bank to $45 billion—and would also “provide protection against further losses” on $118 billion in toxic assets, primarily taken from the Merrill Lynch balance sheet.

In a narrow sense, Lewis’s gamble had paid off. But the merger—even with the government’s largesse accounted for—has proved so far to be a lousy deal for Bank of America and its shareholders. On January16, the bank’s stock closed around $7 per share, as investors worried about both the size of the losses and the need for another government bailout. It reached its nadir of $3.14 per share six weeks later, a collapse of 90 percent since before Lewis decided to do the Merrill deal. (In June, after the bank raised $38 billion, $4.1 billion more than the $33.9 billion of new capital mandated by Treasury’s “stress tests,” the stock was trading at around $12 a share.) The backroom dealing and arm-twisting that kept the deal moving may have succeeded in saving Merrill from immediate collapse, but only at the expense of the health and stability of the nation’s largest bank—an institution far more important, systemically, than Merrill, and one that must now be propped up, indefinitely, no matter the cost.

On one level, the merger between Bank of America and Merrill Lynch is a simple story of executive hubris and cowardice. Leaving aside the question of whether Lewis’s failure to publicly disclose new information—about Merrill’s losses, about his deal with Paulson and Bernanke—was legal, his passivity throughout the process was, in the eyes of some financial-industry insiders, contemptible. One senior Wall Street executive, upon learning of Lewis’s actions, was incredulous. “There is no question what I would have done if I were in his shoes,” he told me. “I would have told [Bernanke and Paulson] I was calling the MAC, was releasing the decision publicly, and dared them to fire me and the board—and that never would have happened, trust me.” Even a former Merrill Lynch executive, who was involved in the sale of the company to Bank of America and was familiar with the MAC language in the contract, said Lewis should have used Merrill’s fourth-quarter losses and the threat of calling a MAC as leverage to renegotiate downward the absurd price of the Merrill deal. “He could have used the MAC clause as a pretext to renegotiate the deal,” he said. “That would have been a prudent thing to do.”

Mark Sunshine, the president of First Capital, an international commercial lender, is somewhat more charitable. He worries that Ken Lewis’s decisions have exposed Lewis to civil liability, and “could have criminal implications.” But he also told me he knows how difficult it would have been for Lewis to ignore the requests of the Treasury secretary and Federal Reserve chairman in a time of financial crisis. And he said he is not sure, under the circumstances, whether he would have acted all that differently. “In those circumstances, most people would do what they were asked to do,” he said.

A moment later, after some reflection, he added, “But it also sounds an awful lot like what happens in a banana republic or in Putin’s Russia, when the captains of industry did favors for the government in exchange for economic subsidies. How do you stop from going down the slippery slope and becoming like Putin’s Russia?”

The most important questions arising from the Bank of America–Merrill Lynch merger do not involve Ken Lewis. They involve Hank Paulson, Ben Bernanke, and the U.S. government.

In an interview with Andrew Cuomo, Paulson “largely corroborated” Lewis’s rendition of the events of December 2008, Cuomo wrote in an April 23 letter to federal officials. “Secretary Paulson indicated that he told Lewis that if Bank of America were to back out of the Merrill Lynch deal, the government either could or would remove the Board and management.” Paulson told Cuomo he “made the threat [to Lewis] at the request of Chairman Bernanke”; but Bernanke would not discuss the matter with Cuomo, invoking the Federal Reserve’s little-known “bank-examination privilege,” which was designed to preserve candor in communications between bankers and examiners. Bernanke did testify before Congress on June 25: “I did not tell Bank of America’s management that the Federal Reserve would take action against the board or management,” he said. A spokesman for Paulson later said Paulson’s admonitions to Lewis were “his own” and not made at the behest of Bernanke. Regardless, the pressure that both Bernanke and Paulson put on Lewis was extraordinary—and questions about the legality and propriety of these actions are serious enough to have spurred a congressional investigation, still ongoing at the time of this writing.

Some observers are convinced that government officials crossed a line—“There’s no question there was coercion and bribery here,” argues Sunshine. But based on available evidence, none of the legal experts with whom I spoke believed that the government clearly broke any laws. H. Rodgin Cohen— the senior partner at the law firm Sullivan & Cromwell and an ultimate Wall Street insider—does not fault public officials for doing what they believed at the time to be in the best interests of the financial system. “There are differences between persuading and helping people understand where their best interests lie, and actually abrogating a contract,” he told me. “People want a proactive administration, but there is a difference between being proactive and violating the Constitution. You can adhere to the rule of law and have a clear sense that the rule of law can be used proactively to accomplish what you are trying to accomplish.”

In any case, and for better or worse, the federal government has reached deep into the financial-services industry in its response to the crisis. Through the extension of TARP funds and other mechanisms, it has gained heavy leverage, and is likely to retain that leverage for at least the next several years. And as the long aftermath of 9/11 has shown us, novel exertions of federal power and the suppression of private rights, undertaken in moments of crisis and confusion, can become cancerous precedents.

The question many Wall Street executives are asking themselves—and the single most important question to come out of the whole affair—is whether last December’s undisclosed pas de deux between Lewis, on the one hand, and Paulson and Bernanke, on the other, represents a onetime event or whether, in the post-TARP world, both Wall Street and Main Street should expect to see the long arm of the government interfering with business deals and private contracts on a more regular basis.

“As a legal matter, the sanctity of contracts is fundamental,” said Cohen, who has been a legal adviser to many of the banks that faced recent crises. “And I don’t know how you go much beyond that, because once you destroy that foundation, then it starts to affect the underpinning of all business relationships—which assume that contracts are enforceable.”

As the crisis has receded this year, the government has remained aggressive, seeking business outcomes it finds desirable with some apparent indifference to contractual rights. In Chrysler’s bankruptcy negotiations in April, for example, Treasury’s plan offered the automaker’s senior-debt holders 29 cents on the dollar. Some debt holders, including the hedge fund Xerion Capital Partners, believed they were contractually entitled to a much better deal as senior creditors holding secured debt. But four TARP banks—JPMorgan Chase, Citigroup, Morgan Stanley, and Goldman Sachs—which owned about 70 percent of the Chrysler senior debt at par (100 cents on the dollar), had agreed to the 29-cent deal. By getting these banks and the other senior-debt holders to accept the 29-cent deal and give up their rights to push for the higher potential payout they were entitled to, the government could give Chrysler’s workers, whose contracts were general unsecured claims—and therefore junior to the banks’—a payout far more generous than would otherwise have been possible or likely. Essentially, the government was engineering a transfer of wealth from TARP bank shareholders to auto workers, and pressuring other creditors to go along.

On April 30, when President Obama announced the bankruptcy, he forcefully stated the White House position: “While many stakeholders made sacrifices and worked constructively,” he said, “I have to tell you, some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don’t stand with them. I stand with Chrysler’s employees and their families and communities.”

In the face of this kind of political pressure, Perella Weinberg, the owner of Xerion, backed down. “In considering the President’s words and exercising our best investment judgment,” the firm said in a statement, “we concluded that the risks of potentially severe capital loss that could arise from fighting this in bankruptcy court far outweighed any realistic potential upside.” Tom Lauria, an attorney who was representing the firm during the negotiations, said in a May 1 radio interview that his client had been told by the administration that the White House press corps would destroy Perella Weinberg’s reputation if it continued to fight the deal. He later told ABC News that Treasury adviser Steven Rattner had made the threat. (The White House denied making any threats, and Perella Weinberg denied Lauria’s account of events, without elaboration.) Lauria said, in his radio interview, “I think everybody in the country should be concerned about the fact that the president of the United States, the executive office, is using its power to try to abrogate that contractual right.”

A somewhat similar story played out during GM’s bankruptcy—the government again put together a deal that looked to many like a gift to the United Auto Workers at the expense of bondholders, who were pressed hard to quickly take a deal that would leave them with 10 percent of the equity of the reorganized company (plus some out-of-the-money warrants) when they likely would have been able to negotiate for more in a less well-orchestrated bankruptcy proceeding. The Obama administration also famously browbeat AIG employees, who had a contractual right to some $165 million in bonuses, to void that right. (In the face of the government’s pressure and the public outcry, some 15 of the top 20 recipients of the retention bonuses agreed to give back a total of more than $30 million in payments.) Curiously, the government has put no pressure on Merrill executives to return their $3.6 billion in bonuses that were paid out in December 2008, even though the company had suffered those huge losses.

“The rules as to how the government will act are not what we learned,” explained Gary Parr, the deputy chairman of Lazard and one of the leading mergers-and-acquisitions advisers to financial institutions. “In the last 12 months, new precedents have been set weekly. The old rules often don’t apply as much anymore.” He said the recent examples of the government’s aggression are “a really big deal,” but adds, “I am not sure it is going to last a long time. I sure hope not. I can’t imagine the markets will function properly if you are always wondering if the government is going to step in and change the game.” One former Treasury official in the Bush administration told me he believes that the Obama administration has been disturbingly heavy-handed with the automobile companies and those who have lent to them. “It’s very easy, when you’re holding all the cards, to impose your will,” he said. “And when you are the only source of financing, forget it.”

It can be hard to find sympathy for some of the people now decrying the government’s actions. And surely, the fat cats who always seem to find a way of bending the system to their advantage should be expected to make concessions as we seek to right the economy—especially where bankruptcy and taxpayer bailouts are concerned. Many observers have argued that if anything, the government has not been aggressive enough in reforming the financial system. But there’s a difference between reform—the development and application of new, clear standards for the system as a whole—and ad hoc interference.

The pattern of government intervention in the past year is at times bewildering. Why did Paulson and Bernanke decide to save AIG and Merrill, but not Lehman? Why did they let Merrill pay $3.6 billion in bonuses but make a federal case out of the $165 million paid out to AIG’s professionals? How should businesses and investors think about bond purchases, mergers, compensation, and a range of other activities that are essential to a smoothly functioning economy, but now carry the uncertainty of potential government intervention? Creeping uncertainty of this sort would inevitably slow and distort the economy. It would also lead to charges of crony capitalism and favoritism—indeed, it already has.

The legacy of the crash and our response to it has yet to be fully written. And we will never—can never—know if the actions taken by Bernanke and Paulson in December prevented a meltdown many times worse than the one we experienced last fall. Given the gravity and the time pressure of the situation, it is perhaps best to give them the benefit of the doubt.

Yet the very success that Bernanke and Paulson (and later, the Obama administration) seem to have had in ameliorating the crisis may, over time, carry unintended consequences. Pressure for aggressive reform of the financial system appears to have waned in recent months. Meanwhile, the pressure applied on Bank of America and other private institutions, as it has come to light, has for the most part been met with a collective shrug (although some members of Congress, particularly Democrats Dennis Kucinich and Elijah Cummings, seem determined to get to the bottom of who did what to whom and why). This raises the possibility that Treasury and the Fed will continue to simply manage the financial industry informally for some years to come, confident in their ability to pull the right levers and twist arms when necessary behind the scenes. That’s a scenario that seldom ends well; we should hope it doesn’t come to pass.

Last September, as Wall Street turned to rubble and panic threatened to come unleashed, Ken Lewis, the CEO of Bank of America, agreed to swallow Merrill Lynch, one of the country’s most toxic investment houses. The deal was not altogether voluntary; as details have slowly emerged, the coercive role of the Fed and Treasury has loomed larger. What exactly happened in the weeks leading up to the merger? Did the deal save us all from economic apocalypse? And what does the government’s unprecedented role in it portend for the future of our economy?



William D. Cohan is the author, most recently, of House of Cards: A Tale of Hubris and Wretched Excess on Wall Street

5)Netanyahu in Berlin: "Those Who Call for the Destruction of the Jewish People Cannot Go Unchallenged"


Prime Minister Benjamin Netanyahu said during a visit to Berlin Thursday: "There are two lessons [from the Holocaust]. The first lesson is that we cannot allow them to prepare the mass death of innocents and that the most important thing to do is to nip it at the bud. It was possible to stop it in time. It did not happen because the main civilized powers of the day did not act in time to stop the arming of barbarism, and armed barbarism knows no limits. It has to be disarmed in time for human lives to be saved and for civilization's future to be secured."


"This lesson joins another one and that is that it is important for the Jews to have the power to defend themselves; but it is also important for the leaders of other nations to recognize that their own fate is imperiled by those who threaten our fate, and therefore that they have to act in time."

"We cannot allow those who wish to perpetrate mass death, those who call for the destruction of the Jewish people or the Jewish state, to go unchallenged. This is the most important lesson that we draw from the Holocaust."

6) http://sendables.jibjab.com/originals/hes_barack_obama

7) Podhoretz asks: Why are Jews liberals?
By HILLEL ITALIE


NEW YORK – Norman Podhoretz, the neo-conservative and former Commentary editor, is a stocky, confident man whose book-filled Upper East Side apartment features a bronzed wall image of Teddy Roosevelt with a bold-faced statement from the most bullish of presidents:

"AGGRESSIVE FIGHTING FOR THE RIGHT IS THE NOBLEST SPORT THE WORLD AFFORDS."

Like Roosevelt, Podhoretz prefers periods to question marks, with declarative books such as "Making It," "World War IV" and "The Bloody Crossroads." Since leaving liberalism in the 1970s, he has not doubted his turn right or hesitated to confront former friends, especially in defense of Israel.

He is 79, proud and satisfied, even with Democrat Barack Obama in the White House. But one issue nags him past the point of thought, a disappointment he brands by punctuation. It provides the title for his new book, "Why Are Jews Liberals?"

"I've never been asked any question as often I've been asked that question — `Why are Jews liberals?' — mostly by gentiles, and especially conservative gentiles, who are extremely puzzled by this phenomenon," Podhoretz, wearing a knit shirt and slacks, says during a recent morning interview in his living room.

"The left, in general, ... has been getting colder and colder toward Israel, while the right, including the Republican Party, is getting friendlier. This doesn't seem to have affected Jewish voter patterns at all."

Podhoretz's book reads like an inverse of Thomas Frank's best-selling "What's the Matter With Kansas?" — in which the author considers why some of the poorest communities vote for Republicans. As Podhoretz writes, Jews for decades have been dependable Democrats, often supporting the party by margins of better than two-to-one, even in years of Republican landslides. They vote for Democrats far more than their wealthy peers of other faiths. They vote for Democrats even when, in his opinion, the Republican is a stronger defender of Israel.

Podhoretz has long wondered why.

He looks for answers in history. In the first half of his book, he notes how Jews were ostracized and persecuted from the Middle Ages into the 20th century. Until recently, it was sensible for Jews to be on the left since liberals were their greatest allies and conservatives their foes.

The narrative changes, he writes, after the 1967 Six-Day War, when Israel defeated the combined forces of Egypt, Jordan and Syria, capturing the Golan Heights, Sinai Peninsula, West Bank, Gaza Strip and East Jerusalem. David had become a Goliath, and, Podhoretz believes, the left preferred that Israel go back to being David.

"I saw it very early, and got myself in trouble for talking about it and I feel totally vindicated," he says.

He finds his allies on the right, believing liberals unduly sympathetic to Palestinians and unduly harsh toward Israel. He notes the backing for Israel by evangelicals such as Pat Robertson and Jerry Falwell. Mike Huckabee, an ordained Baptist minister and a GOP presidential candidate, recently said that "generally evangelicals are so much more supportive of Israel than the American Jewish community."

Podhoretz acknowledges "wrinkles" in his narrative. While he thinks "Huckabee is probably right," he also believes that most American Jews "continue to care deeply about the security and survival of Israel." And the Christians who praise Israel aren't necessarily inspired by fondness for Jews or the dream of a Jewish homeland. Some see Israel as the setting for the return of Christ or value it as a strategic partner of the United States.

"Whether in their hearts, if they like Jews or not, I don't care," Podhoretz says. "The critical matter is what they have done, rather than how they feel."

"Why Are Jews Liberals?" also praises President Richard Nixon, whose determination to send military supplies during the 1973 Yom Kippur War "saved Israel from a defeat that could have spelled the extinction of the state," Podhoretz writes. But Nixon also complained that "most Jews are disloyal" and even commissioned aides to draw up a list of Jews at the Bureau of Labor Statistics because he suspected a "cabal" was trying to undermine the administration.

"He was the kind of anti-Semite who thought that Jews were smarter than everybody else. That's why he had (Secretary of State Henry) Kissinger. That's why he had (Federal Reserve chairman) Arthur Burns, (economic adviser) Herb Stein," Podhoretz said.

"A lot of Nixon's anti-Semitism is talk. ... His anti-Semitism consisted of resentment of Jews for being liberals and hating him. It's not the traditional kind of anti-Semitism."

Besides Israel, Podhoretz cites affirmative action, a prime source of tension between Jews and ethnic minorities in the 1960s and '70s and a major reason Podhoretz shifted right. As Podhoretz has written, and stated during the interview, affirmative action was bad for the Jews because it presumably helped less qualified minority candidates get jobs Jews otherwise would have taken.

Presumably. Asked if affirmative action had hurt the Jews, Podhoretz said no and added, with a mischievous smile, that the demands of feminists, including Jewish women, had offset those of minorities. Asked if affirmative action had set back Jewish men, Podhoretz said no, but still thinks "it's a bad idea from the Jewish point of view.

"Jews are better off, demonstrably, when they're treated as individuals," he says.

Podhoretz considers various explanations for Jews remaining liberal — the right's long history of oppression and bigotry, the tradition of liberalism passed down through generations, the possibility (as some scientists have pondered) that Jews are genetically liberal and, of greatest interest to Podhoretz, whether Judaism itself is a liberal religion.

Disputing the idea that "Jewish values" are liberal values, Podhoretz writes that Jewish law forbids sex between men and "takes a conservative view of the role of women." He points out that Orthodox Jews, the most observant of Jews, tend to be the most conservative.

Rabbi Michael Lerner, editor of the liberal Tikkun magazine, believes that two strands run through Jewish writing, what he calls the left hand and right hand of God. Jews can see the world as a fearful place in which they must dominate or control others to protect themselves from possible oppression ("The right hand of God" world view), or, more hopefully, they can build a world based on "love, caring, kindness and generosity." (The left hand.)

"One has to say that Judaism has within it both the voice of fear and the voice of hope and which one we choose often depends on who we are," says Lerner, whose magazine advocates a "Global Marshall Plan" to fight poverty and support education and health care.

"The real reason Jews have always been liberal is that they have been marginal in every society and they have thrived when societies are free," says Eric Alterman, a liberal author and columnist for The Nation. "The fact is that most Jews, in addition to being liberal politically, don't judge their politics based on who is more or less critical of Israel."

Podhoretz calls Lerner's reading of Judaism "both wrong and politically tendentious," saying, "Nowhere in the Bible or in the classical Jewish texts is what we call the right equated with fear and the wish to control others, and nowhere is every virtue under the sun identified with the left."

He credits Alterman with having "a point" about the Jewish history of marginality, but says that "the socio-economic position of the Jews in America is no longer marginal by any of the usual standards."

"As for attitudes toward Israel, the issue is not whether a politician is more or less critical; it's whether or not he sides with Israel against its enemies and whether he grants Israel the right to defend itself against them," Podhoretz says.

Lerner and Podhoretz each worry about the future of Jewish liberalism, but for opposite reasons. Lerner can imagine Jews becoming less liberal as they drift from Jewish tradition, giving in to the "ethos of materialism and selfishness." Podhoretz thinks Jews will remain liberal because liberalism itself is now a religion.

"It will be impossible for most of my fellow Jews to discharge that obligation so long as they remain caught in the Tertullianlike grip of the Torah of liberalism," Podhoretz writes in his new book. "Nevertheless, I cannot for the life of me give up the hope that the Jews of America will eventually break free of their political delusions, and that they will begin to recognize where their interests and their ideals both as Jews and as Americans truly lie."
=

Driving America's Blue Highways & Can't Fix Stupid!

Just completed a 2000 mile trip by car to Detroit (Birmingham, Mi.) and return.

Always love seeing America by taking the backroads. From Chattanooga proceeded up 27to Lexington, Ky. Along the way saw signs of recesssion. Empty factories, shuttered stores and plenty of 'for sale' signs. Also a profusion of Mexican restuarants even in the smallest towns.

In Lexington, to visit daughter of dear friends who just had her first child - a boy. While there drove around Univ. of Ky. Kids just returning, fraternity rush week. School is massive and plenty of new buildings. Students looked pretty sane, unlike those we saw later at Univ. of Michigan who were a bit more far out in their dress. Lexington a thriving town with a mixed down downtown of old and new structures.

If you have never seen horse farms, Lexngton is the place to go because it abounds with some of the most beautiful farms, homes, white fenced areas in the nation. Ocala Florida's horse farms, though nice, do not compare and not anywhere as vast.

From there continued on 27 to Cincinnati. Great fading city. Magnificent Zoo and Botanical Gardens. Well kept, excellent care of animals and plenty of moms wheeling their children etc. A must see. Also drove around urban campus of Univ. of Cinn. Plenty of buildings devoted to health care and bio-medics.

Cincinnati's art museum is also wonderful and houses a fine collection. Saw Grant Wood's "Daughters of The Revolution." Fine display of art in a beautiful setting.
Below the museum is a town which FDR's WPA helped create. Unique row houses, beautifully maintained in a parklike setting.

Cincinnati itself is a mixture of past greatness and current decay. Very sad.

From there we continued on 68 through some of the most beautiful corn fields and farm area. Late in the season but corn stalks about 7 feet high and plenty of fields devoted to soy beans. Produce for sale along the way and we stopped in Toledo for dinner. Restaurant in a magnificent upscale mall and had a delicious Italian meal served by a kid from our own neck of the woods who moved there with his family. His father had just sold his business to ConAgra and he and his girl friend were off to Chicago - he to go for MBA at N'Western. Sam, our waiter, said he wanted to learn more about managing and had paid his way through Univ. of Toledo undergraduate working at the restaurant. With kids like Sam still hope for our nation.

Missed the turn to 275 so went into Detroit instead of going to Birmingham, Mi. We knew we were lost so we turned into a filling station and saw a man standing outside. Asked for directions which he gave us and in a very friendly and polite manner and then he panhandled us. Sad.

While in Michigan we did four main things:

Went to Ann Arbor to see Univ of Mi.'s new Art Museum addition - The Frankel Wing, named after a charitable family who made a fortune in local real estate and home construction. Magnificent addition and a fabulous display of just a sampling of their vast collection - African masks and artifacts were magnificent as was their wonderful collection of paintings and drawings from Picasso to Gottlieb, Frankenthaler, Benton, Albers, Kline etc. and sculpture by Giacometti, Arp, Moore etc. What was even more exciting was the way they artfully and cleverly displayed these various objects.

Ann Arbor is thriving as a bedroom community and college town. Home prices have remained fairly stable as well as their economy. Univ of Mi. is open to kids from all over unlike many state schools which cater to locals. Big Muslim student population.

On the way back we toured the JCC. Our daugher works at the Frankel School and gave us a tour with a co-worker. The headmaster had spoken for me here several weeks prior. The JCC Campus is beyond description and houses the school, the health and athletic facilities, various housing for the aged, additional structures for plays, meetings etc. The Jewish community has shrunk from 100M to about 80M and some of the wealthier families have suffered from the economy and the debacle in the auto industry but here again the Frankel Family's munificence is everywhere to be seen. - $20 million alone to start the school where our daughter works and what a fabulous school it is. The faciities are first class, the teachers dedicated and the student population is so very fortunate. Our granddaughter went there.

We also visited the new addition to the Detroit Museum and 'wow' what an addition it is. Absolutely first class and houses one of the nation's great art and artifact collections. No longer run by the city but a private entity and the donors have been magnificent. The Fords, Fishers, Manoogians and other wealthy families opened their hearts and checkbooks.

Detroit is a contrast - parts of downtown have been refurbished including the opera house, library, symphony hall and a host of new apartments and condos that seem to be thriving. An artsy community is making a go of the area which probably includes some 10 square blocks. After that, forget it. The rest of the city is comprised of vast areas that remind you a third world country interspersed with magnificent yesteryear homes that are in shambles and a few areas that remain elegant - but for how long?.

The third day we spent touring Birmingham. Mi's. main shopping area and what a beautiful community of magnificent homes, elegant shops, parks and varied home styles - Victorian makeovers, contemporary wood and glass and beautifully maintained residential areas surrounding lakes etc. Birmigham, Mi. is an oasis and the town fathers now insist any new commercial structure must devote the top two floors to residential to bring people back into town.

Detroit is symbolic of our nation - a town with a powerful past, dry rot and wealth that has not given up but seems to be fighting a losing battle. Detroit's city administration has been both corrupt and incompetent, unions have controlled everything and it is actually on the cusp of declaring bankruptcy.

On the way back we drove back through Toledo which has a magnificent art museum and art school. The town istelf is a mixture of outstanding churches surrounded by decline. Toldeo has the benefit of being a major port town so that keeps it afloat -no joke intended.

Outside of Toledo on 23, more wonderful farm areas and then Columbus. Being the state's capitol and with another large universitry sited there, Columbus stands in sharp/stark contrast to Detroit.

If a city has education and health as part of its economic base there is hope even though it may have lost some of its manufacturing plants. Michigan is an example of everything that has gone wrong when government and Capitalism fail.

From Huntington, West Va. to Kingsport, Tenn. 23, is named 'The Country Music H'way' and you pass through some of the most magnificent scenery. Mountains on the left, rivers, great roads, interesting cities, Johnson - Story telling Capital of The Nation and plenty of history harking back to some of the earliest settlements, Daniel Boone country etc.

That evening we stayed in a Marriott Conference Center complex with an adjoining golf course.

The next morning we continued on 23, which also had also become 26, into Ashville. We lunched with friends at Biltmore Village and walked around the shopping area and visited the new Bohemian Hotel - the 11th in the chain. Biltmore Village architecure is in the style of Vanderbilt's Biltmore Estate. Shops are elegant, tourism is the mainstay and Ashville, itself, is a thriving art and cultural center.

We lucked up and found a place offering massages for $29/hour and got some of the driving kinks rubbed out.

In no particular hurry we decided to go through the mountain resort area of Flat Rock, Brevard, Sapphire Valley, Lake Toxaway, The Highlands, Dillard etc. The weather turned cool, the curving/winding road was enshrouded with low lying clouds and it was very misty. We have been through this area many times before but it was interesting doing so at this time of the day (late afternoon and dusk) and observing the economic impact which was quite evident.

This tip of N Carolina and Ga. is studded with gated communities, golf courses, lakes and unique inn type restaurants. It is a second home escape for residents of Florida who want to avoid the summer heat and Atlantans who want a second mountain get away among others. Some of the most beautiful southern mountain residential areas you will ever see.

Brevard Music Center, was closed but it provides summer classes and concerts for gifted musical talent from the surrounding area.

We had dinner in a very good restaurant in Gainesville and then motored back to Atlanta. Gainesville is the chicken capital of Georgia but also benefits from Lake Lanier, which has now recovered from the long drought.

Throughout our 2000 mile drive we saw a profusion of 'ARA' signs, signifying that the particular project was attributable to "The American Recovery Act" the Obama equivalent of FDR's 'WPA.'

Most of the signs were there but not much activity had begun. Most related to fixing pavement, etc. Outside Chillocothe, Ohio, I believe, there was extensive equipment doing some road work and about 8 people were employed. In the past when state highway departments were doing roadwork they had signs indicating that the particular project was costing taxpayers X millions of dollars. The premise being it made you feel good that your tax dollars were going for improvements.

I suspect the 'ARA' signage was probably a pay off to some campaign contributor(s) and eventually these 'ready' projects will put some people to work but what I found interesting was the absence of anything describing the cost of the project.

Like all good government concepts and work projects no doubt millions have been spent on the signs so look for them because I am sure they will begin to dot the landscape.

My love affair with America continues but my concerns remain real. A trip through the backroads and away from the expressways and urban areas always facinates me because it affords me the opportunity to explore what I still consider to be the area where America's 'real heart' beats.

A few side comments.

I do virtually all the driving because my wife brings newspapers and magazines that are years out of date and catches up on calling everyone she has not spoken with for two days. So she reads and chats and I drive. I always tell her our Blue Highway Trips are like driving a hearse but that is just a sick joke. These wanderings over our landscape also affords me a chance to let my own cynical mind wander, to reflect and free associate. I usually come up with all kind of bizarre thoughts such as:

1) The Town Hall Meetings have caused great angst and debate. They caught liberals and Obama with their pants down.

Whether or not Obamascare actually encompasses life threatening edicts for the aging it caused me to speculate that perhaps we should also 'change' our sentencing terms for heinous crimes like murder. In other words, if there truly is a health premium attributed to the young then sentencing for murder might be the highest say between 1 - 20. Then sentencing starts declining until the government actually pays a bounty to those who kill citizens who are past 80.

That way we could cut down on the medical cost of treatment and have more to spend on the more productive element of society , ie the young.

1-20, Life

21-40, 30 years

41-60, 20 years

61 -80, 10 years

80 and above, government provides the murderer with a contribution to a 401K which reverts back to the government when the murderer turns 80 or is murdered.

Murdering the wealthy might present a special problem because that would abort the opportunity to transfer more of their wealth. Probably by the time the wealthy reach old age the government will have confiscated most of what they had in any event.

I haven't quite figured out what the 'change' policy should be about illegal immigrants. If they become the murdered perhaps we could give them a state funeral in a dedicate section of Arlington Cemetery and if they are the murderer then we might make them legal citizens, give them a stern warning and make them subject to our laws from that time forward. Pretty much like we seem to treat child predators.


2) Why all the flack over Scotland's release of the Lockerbee bomber? Palestinians and assorted Arabs have been killing Israelis and themselves for decades and no one seems as concerned. Maybe we just have it in for men who wear kilts.

3) Obama and Ted Kenndey shared nothing in common but politically speaking were two peas in a pod.

Obama benefitted from his own intellect and cunning, Affirmative Action and speaking attributes. Whereas, had it not been for Kennedy's family power and priveleges Ted's personal life was actually less than laudable.

Both, however, became joined at the hip politically. They shared the view that it was their mission to help the underdog, the downtrodden. To do so, they both sought to expand government believing that America 'The Land of Opportunity' should become 'The Land of Entitlement.' Obama's personal experience as a community organizer and his associations with those who had issues with our nation has given him a somewhat jaundiced view of Capitalism. Kennedy parlayed his efforts on behalf of the 'working stiff' and 'safe seat' into a long Senate career. Neither men ever actually worked in the true sense of holding down a 'real job.'

Kennedy has now passed on and Obama is left to complete their joint mission, ie elevate the bottom at the expense of the top and probably the entire nation.

The concept of providing a rigorous education is probably the best way to elevate the bottom but you can't 'entitle' someone to an education because they have to earn it and that entails work, being dilligent and wanting to improve yourself. As that comedian said: "you can't fix stupid!"

Besides, The Department of Education, unions and the politically correct crowd would not stand idly by if children were made to exert their minds because it might create self-esteem problems for those who cannot cut the mustard. To excel means to exceed and that means rising above someone else - bad for the Karma!

Speaking of education while driving through Yellow Springs, Ohio we took a detour to explore the famous and now boarded liberal arts college of Antioch which sought to engage young college students in a high cost curriculum of various course inanities and eventually had to close after 100 plus years.

4) Back on the subject of health care. When I was growing up dentists were looked down upon in the medical scheme of things and their earning power was far less than physicians etc.

Today dentists are big earners. They charge, you pay and the government does not have much to do with their profession.

But think about this. If you do not have good dental care it can harm your overall physical health and thus, it might only be a matter of time before the government begins to destroy the dental professsion.

Now carry this one step further to veterinarians. At one time they were looked upon, socially, as being below dentists and today most earn more than many physicians.

If the government does not intrude could this mean that before too long animals will continue receiving better care than humans?

5)I have come up with a new and very interesting economic index. It is called the "NO CHANGE INDEX."

Let me explain. I love to find money in the street. During the eight years of GW's term in office I found $12.86, mostly in pennies, some few dimes and even a few dollar bills. Pennies just don't make much noise and we have become so fat that most can't bend over even if we wanted.

During the 9 months of Obama's tenure, I have found only 48 cents. (This latest trip was only a 4 center.) If I extrapolate this into 8 years I will only find only $5.12 or decidedly less than $12.86, during GW's 8 years in office.

This suggests to me one of two things:

All this 'change' Obama is bringing about is causing consumers to hold onto their own change, or consumers don't have as much change as they used to.

However, what is puzzling is that the 'change' Obama is seeking is costing a great deal of money and the Treasury is printing more and more dollar bills so people should actually have more change.

I am going to discuss the implications with some of my economist friends so stay tuned.

Leaving for Orlando in two days to help our fourth daughter and her husband lay down sod and hang pictures. No way to get to Orlando on the Blue Highways so I Might just let my wife drive and I will read and work the phone.

Have a great and safe Labor Day.

Dick