Interrogation tactics used on captured terrorists are hardly a suitable matter to be decided by millions of members of the general public in a partisan debate, but the left is never inhibited by either national security or common sense, and how US authorities dealt with 3 major Al Qaeda prisoners was turned into a weapon used to blacken the reputation of the Bush Administration and to undermine the legitimacy of American counter-terrorism operations long ago.

Barack Obama is not content with having gained an underhanded election victory in significant part based upon demagoguery on that issue, he is still trying to score political points by attacking the previous administration for mildly coercive interrogation tactics applied only in three cases of major terrorist figures believed to possess particularly vital information.

Dick Cheney is rightly calling Obama’s bluff. If the democrats want to keep debating coercive interrogation of terrorists, let’s have a full debate. Put the rest of the story on the table. We’ve heard all about how unjustified and ineffective coercion is for several years now. Let’s look at exactly what was learned and what Al Qaeda attacks were prevented.

The Politico:

Researching his memoirs, former Vice President Dick Cheney is pushing the CIA to declassify files that he claims would vindicate the CIA’s use of coercive interrogation techniques that President Barack Obama has banned.

The request, which the CIA has not yet answered, sets up a showdown between the past and current administrations. Cheney can be expected to argue that the Obama administration’s publication of other files last week is a precedent for release of the reports he wants. Cheney contends that the information he seeks does not pose a threat to anyone, nor to intelligence sources and methods.

Cheney originally requested the reports in late March as he worked on his book, but now thinks the documents should be made public immediately as evidence that waterboarding and other controversial practices deterred terrorist attacks and therefore saved American lives.

The New York Post reacts editorially to the terrible revelations contained in those memos the way any normal American would.

If nothing else, President Obama’s decision to overrule his own intelligence officials and release Bush-era legal memos justifying what The New York Times sanctimoniously described as the CIA’s “brutal” interrogation techniques proves what a bunch of pushovers we Americans are.

Al Qaeda kidnaps Americans, tortures them, then decapitates them on TV.

We deprive captives of sleep, push them into walls and put harmless caterpillars that we say are poisonous in their cells.

Then we’re the ones who are condemned as the worst human-rights violators on the planet.

Lee Cary thinks it was about domestic politics.

Political opponents say releasing the documents threatens national security. Any enemy now knows the protocol and self-imposed limits of our most aggressive interrogation methods and can train against them. The documents offer a ready-made outline for an Interrogation Resistance Class.

But it’s been over seven years since 9/11. Each day since without a homeland attack brings us closer to complacent. The national defense argument won’t get the traction it deserves.

Self-described neutral pundits (e.g., FOX’s Bill O’Reilly) say Obama is playing to the Leftwing of his base. But Obama has no need to do that now. Grumble as they might, they’re firmly entrenched in his camp and aren’t likely to shift their support to, say, Ron Paul. ...

It’s about controlling the news cycle, putting opponents on the defensive, and diverting attention away from other, more-timely battles underway. ...

Today, inside the Beltway, there are serious debates involving trillions of dollars and federal programs that will effect America for generations. Oxygen that might fuel coverage of those debates is being diverted to topics like the use of dietary manipulation in interrogating al-Qaida operatives, years ago.

It’s all about misdirection of public attention, and all sides of the media are conscious, or unconscious, facilitators of the ploy choreographed from inside the Obama administration. (Including me herein.)

Most Americans won’t take the time to download the CIA material and wade through it. If they did, many would say, “So this is what all the commotion is about?”

Barack Obama’s Justice Department yesterday grudgingly announced that it was going to refrain from prosecuting US Intelligence Officer and military contractors for war crimes consisting of interrogating terrorists involved in conspiracies to commit acts of mass murder on US civilians.

Obama did, however, refer to the the Bush Administration’s successful efforts to prevent major attacks on US population centers post-9/11 as “a dark and painful chapter in our history” conflicting with the US functioning as “a nation of laws” and with American “core values.”

Chicago Tribune

Obama’s statement

David Axelrod says that Barack Obama searched his soul for a whole month before deciding that continuing partisan games by releasing for finger-pointing purposes memos from the previous administration on interrogation policy was worth the costs to National Security.

DOJ Memo 8/1/2002

DOJ Memo 5/10/2005 – 46 pages

DOJ Memo 5/10/2005 – 20 pages

DOJ Memo 5/30/05

One former Bush Administration official commented on the president’s decision.

Politico:

A former top official in the administration of President George W. Bush called the publication of the memos “unbelievable.”

“It’s damaging because these are techniques that work, and by Obama’s action today, we are telling the terrorists what they are,” the official said. “We have laid it all out for our enemies. This is totally unnecessary. … Publicizing the techniques does grave damage to our national security by ensuring they can never be used again — even in a ticking-time- bomb scenario where thousands or even millions of American lives are at stake.”

“I don’t believe Obama would intentionally endanger the nation, so it must be that he thinks either 1. the previous administration, including the CIA professionals who have defended this program, is lying about its importance and effectiveness, or 2. he believes we are no longer really at war and no longer face the kind of grave threat to our national security this program has protected against.”

Dick Cheney commented in an interview earlier this year:

I can tell you what the policy was; I can tell you that we had all the legal authorization we needed to do it, including the sign-off of the Justice Department. I can tell you it produced phenomenal results for us, and that a great many Americans are alive today because we did all that. And I think those are the important considerations

This time it’s reenactors battling over turf.

LA Times:

[T]hree years ago, a stranger rode in and vowed to shake up what he considered a moribund tourist trap. A showdown ensued between Tombstone residents who wanted to keep the streets as calm as possible and thespians with higher aspirations.

Stephen Keith, a onetime regular at Renaissance fairs who can hold forth on the similarities between the 1993 movie “Tombstone” and Wagner’s “Ring” cycle of operas, founded the Tombstone Huckleberry Players. They were not content to simply re-create the shootout under a tented space inside the O.K. Corral. Instead, hoping to build a crowd for a new late afternoon show, the actors would walk down Allen Street, performing skits in character and leading tourists to the performance space.

Keith acknowledged there was resistance. Locals, he said, with no theater experience didn’t like seasoned actors taking their favorite roles.

“Every old guy who retires and ties his white ponytail back and puts his name on his pickup truck comes here to be Wyatt Earp,” said Keith, 49, who plays Doc Holliday. “I know how to work a crowd. I’ve been in theater for 32 years. This is what I do.”

For more than a year, this town of 1,500 allowed the Huckleberry Players to do their act. But in November, a new mayor was elected, and he appointed Talvy to enforce the letter of the law.

Mayor Dusty Escapule said complaints were coming in from merchants at one end of Allen Street whose customers were being swept up by Keith’s troupe, and from rival gunfighter groups, who said the Huckleberry actors were pulling customers away from their shows.

So the City Council invoked a 1973 law that required a permit for streetperformances, and promptly turned down Keith’s application. In January, Talvy issued his first citation. Four of the players faced misdemeanor charges that could lead to a maximum $600 fine and two years in jail. ...

“You know, small-town politics,” one local woman finally said apologetically before reverting to character as a 19th century showgirl. Many cite the curse an Indian is said to have placed on the settlement more than 100 years ago—that there will never be two white men who live together here in peace. “It looks,” Escapule said, “like the curse is still in effect.”

George Will makes an excellent argument. Let’s hope the Supreme Court intervenes.

[T]he Emergency Economic Stabilization Act of 2008 (EESA) is unconstitutional.

By enacting it, Congress did not in any meaningful sense make a law. Rather, it made executive branch officials into legislators. Congress said to the executive branch, in effect: “Here is $700 billion. You say you will use some of it to buy up banks’ ‘troubled assets.’ But if you prefer to do anything else with the money—even, say, subsidize automobile companies—well, whatever.”

FreedomWorks, a Washington-based libertarian advocacy organization, argues that EESA violates “the nondelegation doctrine.” Although the text does not spell it out, the Constitution’s logic and structure—particularly the separation of powers—imply limits on the size and kind of discretion that Congress may confer on the executive branch.

The Vesting Clause of Article I says, “All legislative powers herein granted shall be vested in” Congress. All. Therefore, none shall be vested elsewhere. Gary Lawson of Boston University’s School of Law suggests a thought experiment:

Suppose Congress passes the Goodness and Niceness Act. Section 1 outlaws all transactions involving, no matter how tangentially, interstate commerce that do not promote goodness and niceness. Section 2 says the president shall define the statute’s meaning with regulations that define and promote goodness and niceness and specify penalties for violations.

Surely this would be incompatible with the Vesting Clause. Where would the Goodness and Niceness Act really be written? In Congress? No, in the executive branch. Lawson says that nothing in the Constitution’s enumeration of powers authorizes Congress to enact such a statute. The only power conferred on Congress by the Commerce Clause is to regulate. The Goodness and Niceness Act does not itself regulate, it just identifies a regulator.

The Constitution empowers Congress to make laws “necessary and proper” for carrying into execution federal purposes. But if gargantuan grants of discretion are necessary, are the purposes proper? Indeed, such designs should be considered presumptively improper. What, then, about the Goodness and Niceness Act, which, as Lawson says, delegates all practical decision-making power to the president? What about EESA? ...

As government grows, legislative power, and with it accountability, must shrink. The nation has had 535 national legislators for almost half a century. During that time the federal government’s business—or, more precisely, its busy-ness—has probably grown at least twenty-fold. Vast grants of discretion to the executive branch by Congress, such as EESA, may be necessary—if America is going to have constant governmental hyperkinesis. If Washington is going to do the sort of things that EESA enables—erasing the distinction between public and private sectors; licensing uncircumscribed executive branch conscription of, and experimentation with, the nation’s resources.

Since the New Deal era, few laws have been invalidated on the ground that they improperly delegated legislative powers. And Chief Justice John Marshall did say that the “precise boundary” of the power to “make” or the power to “execute” the law “is a subject of delicate and difficult inquiry.” Still, surely sometimes the judiciary must adjudicate such boundary disputes.

The Supreme Court has said: “That Congress cannot delegate legislative power to the president is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the Constitution.” And the court has said that properly delegated discretion must come with “an intelligible principle” and must “clearly delineate” a policy that limits the discretion. EESA flunks that test.

Human Events reports that the British Labour Party had managed to identify and serve the ultimate left constituency: the invertebrates.

But all this goes beyond jokes, liberal politicians in America, too, are working hand-in-glove with Animal Rights extremists to introduce covertly in the guise of animal welfare protection a range of artful provisions subjecting pet owners to warrant-free supervision by self-appointed animal guardians and erecting a regime of expensive and impractical care requirements that would eliminate private dog breeding and the keeping of packs of hounds.

Yes, it really is now a criminal offense in Britain to abuse an ant, a worm, a slug, cockroach, a scorpion, a stick insect or whatever creature you care to name. The moment you decide to keep it as a pet you are obliged by our Animal Welfare Act to take full account of its welfare needs—or face a $30,000 fine or a twelve-month prison sentence.

And if you think cockroach rights sound crazy, wait till you hear how the law applies to the way you keep your dog or your cat. The Department for Environment, Food and Rural Affairs (DEFRA)—one of the numerous, busybody branches of our socialist New Labour administration—recently issued guidelines to pet owners clarifying the law.

You risk prosecution if:
—You fail to groom your long-haired dog or cat once a day.
—You feed your dog from the table.
—You use your hands or feet when playing with your cat (as this may encourage aggressive behavior).
—You fail to provide every cat in your household with its own litter tray (even if the cat has access to a garden).
—You try to make your cat vegetarian by denying it meat.

None of these provisions is in itself a criminal offense, a DEFRA spokesman has explained helpfully. But failure to comply with several of them “may be used in evidence to support a prosecution for animal cruelty.”

Hat tip to the News Junkie.

A lot of Americans were delighted to hear that, once Barack Obama was elected, absolutely everyone would be getting exactly the same kind of health care enjoyed by US senators. If you believed that, you need to talk to me about this bridge I have for sale.

Today’s Daily Mail has a story illustrating how government-provided health services really work: by rationing.

Thousands of patients with terminal cancer were dealt a blow last night after a decision was made to deny them life prolonging drugs.

The Government’s rationing body said two drugs for advanced breast cancer and a rare form of stomach cancer were too expensive for the NHS.

The National Institute for Health and Clinical Excellence is expected to confirm guidance in the next few weeks that will effectively ban their use.

The move comes despite a pledge by Nice to be more flexible in giving life-extending drugs to terminally-ill cancer patients after a public outcry last year over ‘death sentence’ decisions. Leading campaigners last night said Nice had failed the ‘acid test’ of whether it really intended to give new priority to people with just a few months to live.

One drug, Lapatinib, can halve the speed of growth of breast cancer in one in five women with an aggressive form of the disease.

Dr Gillian Leng, Nice deputy chief executive, said ‘The committee concluded that Lapatinib is not a cost-effective use of NHS resources when compared with current treatment.’

Up to 1,500 stomach cancer patients also face a ban on Sutent – the only drug that can extend their lives.

Sent to my class list this morning in response to the contention that “government had to step in” because capitalism failed, because businessmen “made such a mess.”

Government created a credit crisis by arm-twisting lenders to make uncreditworthy loans while supplying securitization of the same. Government (at more than one level) additionally laid the groundwork for a housing bubble by forcing prices upward by making 30 year financing of home loans universal and easy to obtain and by creating regulatory environments that made building extremely expensive and nearly impossible in some of the housing markets featuring the greatest demand. Government lent people money to fuel bidding wars, while doing everything it could to keep new housing in short supply.

George W. Bush’s administration pursued simple-minded conventional policies attempting to placate the economy with characteristic timidity and inconsistency. Obama has taken the housing-bust induced recession as an excuse to throw funding at every democrat party special interest and constituency and to justify a power grab socializing large segments of the economy. Bush did not succeed in calming economic turmoil largely because he could not persuade the markets that he had not already lost the next election to a democrat party radical. Obama has, in a very short time in office, demonstrated that he isn’t simply a bloviating and benign big city machine crook, but is rather an extreme radical leftwing ideologue philosophically committed to every form of economic destruction. The economy is cratering as a result.

Obama’s election was a self-fueling political-cum-economic catastrophe. Markets began plummeting in early Fall from fear of an Obama victory, and that market decline made investors’ fears an inevitable reality. But, as Dick Morris explain, even after the election, economic turmoil and public panic is still an essential factor in promoting Obama’s radical agenda.

Why does Obama preach gloom and doom? Because he is so anxious to cram through every last spending bill, tax increase on the so-called rich, new government regulation, and expansion of healthcare entitlement that he must preserve the atmosphere of crisis as a political necessity. Only by keeping us in a state of panic can he induce us to vote for trillion-dollar deficits and spending packages that send our national debt soaring.

And then there is the matter of blame. The deeper the mess goes — and the further down his rhetoric drives it — the more imperative it becomes to lay off the blame on Bush. He must perpetually “discover” — to his shock — how deep the crisis that he inherited runs, stoking global fears in the process.

So, having inherited a recession, his words are creating a depression. He entered office amid a disaster and he is transforming it into a catastrophe, all to pass every last bit of government spending and move us a bit further to the left before his political capital dwindles.

But the jig will be up soon. The crash of the stock market in the days since he took power (indeed, from the moment he won the election) can increasingly be attributed to his own failure to lead us in the right direction, his failed policies in addressing the recession and his own spreading of panic and fear. The market collapse makes it evident that it is Obama who is the problem, where he should, instead, be the solution.

Hat tip to the News Junkie.

George W. Bush confronting the bureaucracies

In the National Interest, Richard Perle describes the fatal disconnect between George W. Bush’s professed policies and the entrenched State Department and National Security bureaucracies’ failure to implement them. Not only were Bush’s policies not faithfully pursued, in many cases, they were openly attacked and covertly undermined by leaks and disinformation operations.

Perle additionally debunks the left’s favorite bogey: the sinister imperialist “neocon” conpiracy. In recent years, neocon came to be used as a leftwing pejorative for someone supposedly guilty of responsibility for a new, more virulent and objectionable form of conservatism, inclined to unilateral militarism overseas and supportive of hypersecurity measures at homes. The left entirely managed to forget that a neocon is really a (typically Jewish intellectual) former liberal who has been “mugged by reality” and become a foreign policy and law enforcement hawk in response to the excesses of the radical left post the late 1960s. Dick Cheney, who has always been a conservative, for instance, cannot possibly be classified as a neocon.

For eight years George W. Bush pulled the levers of government—sometimes frantically—never realizing that they were disconnected from the machinery and the exertion was largely futile. As a result, the foreign and security policies declared by the president in speeches, in public and private meetings, in backgrounders and memoranda often had little or no effect on the activities of the sprawling bureaucracies charged with carrying out the president’s policies. They didn’t need his directives: they had their own. ...

The responsibility for an ill-advised occupation and an inadequate regional strategy ultimately lies with President Bush himself. He failed to oversee the post-Saddam strategy, intervening only sporadically when things had deteriorated to the point where confidence in cabinet-level management could no longer be sustained. He did finally assert presidential authority when he rejected the defeatist advice of the Baker-Hamilton commission and Condi Rice’s State Department, ordering instead the “surge,” a decision that he surely hopes will eclipse the dismal period from 2004 to January 2007. But that is but one victory for the White House among many failures at Langley, at the Pentagon and in Foggy Bottom. ...

Understanding Bush’s foreign and defense policy requires clarity about its origins and the thinking behind the administration’s key decisions. That means rejecting the false claim that the decision to remove Saddam, and Bush policies generally, were made or significantly influenced by a few neoconservative “ideologues” who are most often described as having hidden their agenda of imperial ambition or the imposition of democracy by force or the promotion of Israeli interests at the expense of American ones or the reshaping of the Middle East for oil—or all of the above. Despite its seemingly endless repetition by politicians, academics, journalists and bloggers, that is not a serious argument. ...

I believe that Bush went to war for the reasons—and only the reasons—he gave at the time: because he believed Saddam Hussein posed a threat to the United States that was far greater than the likely cost of removing him from power. ...

[T]he salient issue was not whether Saddam had stockpiles of WMD but whether he could produce them and place them in the hands of terrorists. The administration’s appalling inability to explain that this is what it was thinking and doing allowed the unearthing of stockpiles to become the test of whether it had correctly assessed the risk that Saddam might provide WMD to terrorists. When none were found, the administration appeared to have failed the test even though considerable evidence of Saddam’s capability to produce WMD was found in postwar inspections by the Iraq Survey Group chaired by Charles Duelfer.

I am not alone in having been asked, “If you knew that Saddam did not have WMD, would you still have supported invading Iraq?” But what appears to some to be a “gotcha” question actually misses the point. The decision to remove Saddam stands or falls on one’s judgment at the time the decision was made, and with the information then available, about how to manage the risk that he would facilitate a catastrophic attack on the United States. To say the decision to remove him was mistaken because stockpiles of WMD were never found is akin to saying that it was a mistake to buy fire insurance last year because your house didn’t burn down or health insurance because you didn’t become ill. ...

I believe the cost of removing Saddam and achieving a stable future for Iraq has turned out to be very much higher than it should have been, and certainly higher than it was reasonable to expect.

But about the many mistakes made in Iraq, one thing is certain: they had nothing to do with ideology. They did not draw inspiration from or reflect neoconservative ideas and they were not the product of philosophical or ideological influences outside the government. ...

If ever there were a security policy that lacked philosophical underpinnings, it was that of the Bush administration. Whenever the president attempted to lay out a philosophy, as in his argument for encouraging the freedom of expression and dissent that might advance democratic institutions abroad, it was throttled in its infancy by opponents within and outside the administration.

I believe Bush ultimately failed to grasp the demands of the American presidency. He saw himself (MBA that he was) as a chief executive whose job was to give broad direction that would then be automatically translated into specific policies and faithfully implemented by the departments of the executive branch. I doubt that such an approach could be made to work. But without a team that shared his ideas and a determination to see them realized, there was no chance he could succeed. His carefully drafted, often eloquent speeches, intended as marching orders, were seldom developed into concrete policies. And when his ideas ran counter to the conventional wisdom of the executive departments, as they often did, debilitating compromise was the result: the president spoke the words and the departments pronounced the policies.

Read the whole thing.

First you throw away $787 billion dollars on democrat party special interests, then you raise taxes on “the rich,” i.e., you, me, and Joe the Plumber, and finally you cut the Defense Budget.

After all, in 2008, with two wars underway, we spent the staggering sum of $667 billion (base budget of $480 billion and $187 billion in supplemental spending) on national defense. Why, we wasted almost as much money last year on defending the country as Obama spent in his first month in office on “community development” (i.e., ACORN), the National Endowment for the Arts, more welfare, green boondoggles, and fattening the wallets of politically connected construction companies.

President Obama is putting the finishing touches on an ambitious first budget that seeks to cut the federal deficit in half over the next four years, primarily by raising taxes on businesses and the wealthy and by slashing spending on the wars in Iraq and Afghanistan, administration officials said.

In addition to tackling a deficit swollen by the $787 billion stimulus package and other efforts to ease the nation’s economic crisis, the budget blueprint will press aggressively for progress on the domestic agenda Obama outlined during the presidential campaign. This would include key changes to environmental policies and a major expansion of health coverage that he hopes to enact later this year.

A summary of Obama’s budget request for the fiscal year that begins in October will be delivered to Congress on Thursday, with the complete, multi-hundred-page document to follow in April. But Obama plans to unveil his goals for scaling back record deficits and rebuilding the nation’s costly and inefficient health care system tomorrow, when he addresses lawmakers and budget experts at a White House summit on restoring “fiscal responsibility” to Washington. ...

Even before Congress approved the stimulus package this month, congressional budget analysts forecast that this year’s deficit would approach $1.2 trillion—8.3 percent of the overall economy, the highest since World War II. With the stimulus and other expenses, some analysts say, the annual gap between federal spending and income could reach $2 trillion when the fiscal year ends in September.

Obama proposes to dramatically reduce those numbers, said White House budget director Peter Orszag: “We will cut the deficit in half by the end of the president’s first term.” The plan would keep the deficit hovering near $1 trillion in 2010 and 2011, but shows it dropping to $533 billion by 2013, he said—still high but a more manageable 3 percent of the economy.

To get there, Obama proposes to cut spending and raise taxes. The savings would come primarily from “winding down the war” in Iraq, a senior administration official said. The budget assumes continued spending on “overseas military contingency operations” throughout Obama’s presidency, the official said, but that number is lower than the nearly $190 billion budgeted for Iraq and Afghanistan last year.

Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3.5 million would be maintained at the current rate of 45 percent.

Obama also proposes “a fairly aggressive effort on tax enforcement” that would target corporate loopholes, the official said. And Obama’s budget seeks to tax the earnings of hedge fund managers as normal income rather than at the lower 15 percent capital gains rate.

Overall, tax collections under the plan would rise from about 16 percent of the economy this year to 19 percent in 2013, while federal spending would drop from about 26 percent of the economy, another post-World War II high, to 22 percent.

Former Senator Phil Gramm dispels with clarity and precision the liberal malarkey about deregulation being responsible for the credit crisis, and puts the blame where it belongs.

I believe that a strong case can be made that the financial crisis stemmed from a confluence of two factors. The first was the unintended consequences of a monetary policy, developed to combat inventory cycle recessions in the last half of the 20th century, that was not well suited to the speculative bubble recession of 2001. The second was the politicization of mortgage lending. ...

In the inventory-cycle recessions experienced in the last half of the 20th century, involuntary build up of inventories produced retrenchment in the production chain. Workers were laid off and investment and consumption, including the housing sector, slumped.

In the 2001 recession, however, consumption and home building remained strong as investment collapsed. The Fed’s sharp, prolonged reduction in interest rates stimulated a housing market that was already booming—triggering six years of double-digit increases in housing prices during a period when the general inflation rate was low.

Buyers bought houses they couldn’t afford, believing they could refinance in the future and benefit from the ongoing appreciation. Lenders assumed that even if everything else went wrong, properties could still be sold for more than they cost and the loan could be repaid. This mentality permeated the market from the originator to the holder of securitized mortgages, from the rating agency to the financial regulator.

Meanwhile, mortgage lending was becoming increasingly politicized. Community Reinvestment Act (CRA) requirements led regulators to foster looser underwriting and encouraged the making of more and more marginal loans. Looser underwriting standards spread beyond subprime to the whole housing market. ...

The 1992 Housing Bill set quotas or “targets” that Fannie and Freddie were to achieve in meeting the housing needs of low- and moderate-income Americans. In 1995 HUD raised the primary quota for low- and moderate-income housing loans from the 30% set by Congress in 1992 to 40% in 1996 and to 42% in 1997.

By the time the housing market collapsed, Fannie and Freddie faced three quotas. The first was for mortgages to individuals with below-average income, set at 56% of their overall mortgage holdings. The second targeted families with incomes at or below 60% of area median income, set at 27% of their holdings. The third targeted geographic areas deemed to be underserved, set at 35%.

The results? In 1994, 4.5% of the mortgage market was subprime and 31% of those subprime loans were securitized. By 2006, 20.1% of the entire mortgage market was subprime and 81% of those loans were securitized. The Congressional Budget Office now estimates that GSE losses will cost $240 billion in fiscal year 2009. If this crisis proves nothing else, it proves you cannot help people by lending them more money than they can pay back.

Blinded by the experience of the postwar period, where aggregate housing prices had never declined on an annual basis, and using the last 20 years as a measure of the norm, rating agencies and regulators viewed securitized mortgages, even subprime and undocumented Alt-A mortgages, as embodying little risk. It was not that regulators were not empowered; it was that they were not alarmed.

With near universal approval of regulators world-wide, these securities were injected into the arteries of the world’s financial system. When the bubble burst, the financial system lost the indispensable ingredients of confidence and trust. We all know the rest of the story.

The principal alternative to the politicization of mortgage lending and bad monetary policy as causes of the financial crisis is deregulation. How deregulation caused the crisis has never been specifically explained. Nevertheless, two laws are most often blamed: the Gramm-Leach-Bliley (GLB) Act of 1999 and the Commodity Futures Modernization Act of 2000.

GLB repealed part of the Great Depression era Glass-Steagall Act, and allowed banks, securities companies and insurance companies to affiliate under a Financial Services Holding Company. It seems clear that if GLB was the problem, the crisis would have been expected to have originated in Europe where they never had Glass-Steagall requirements to begin with. Also, the financial firms that failed in this crisis, like Lehman, were the least diversified and the ones that survived, like J.P. Morgan, were the most diversified.

Moreover, GLB didn’t deregulate anything. It established the Federal Reserve as a superregulator, overseeing all Financial Services Holding Companies. All activities of financial institutions continued to be regulated on a functional basis by the regulators that had regulated those activities prior to GLB.

When no evidence was ever presented to link GLB to the financial crisis—and when former President Bill Clinton gave a spirited defense of this law, which he signed—proponents of the deregulation thesis turned to the Commodity Futures Modernization Act (CFMA), and specifically to credit default swaps.

Yet it is amazing how well the market for credit default swaps has functioned during the financial crisis. That market has never lost liquidity and the default rate has been low, given the general state of the underlying assets. In any case, the CFMA did not deregulate credit default swaps. All swaps were given legal certainty by clarifying that swaps were not futures, but remained subject to regulation just as before based on who issued the swap and the nature of the underlying contracts.

In reality the financial “deregulation” of the last two decades has been greatly exaggerated. As the housing crisis mounted, financial regulators had more power, larger budgets and more personnel than ever. And yet, with the notable exception of Mr. Greenspan’s warning about the risk posed by the massive mortgage holdings of Fannie and Freddie, regulators seemed unalarmed as the crisis grew. There is absolutely no evidence that if financial regulators had had more resources or more authority that anything would have been different.

A must read analysis.

CQ Politics reports the latest lobbying scandal, centered on the infamous John Murtha, but featuring the kind of bipartsanship otherwise missing from the current Congress.

More than 100 House members (42 Republicans and 62 Democrats – JDZ) secured earmarks in a major spending bill for clients of a single lobbying firm — The PMA Group — known for its close ties to John P. Murtha, the congressman in charge of Pentagon appropriations.

“It shows you how good they were,” said Keith Ashdown, chief investigator at the watchdog group Taxpayers for Common Sense. “The sheer coordination of that would take an army to finish.”

PMA’s offices have been raided, and the firm closed its political action committee last week amid reports that the FBI is investigating possibly illegal campaign contributions to Murtha and other lawmakers. ...

In the spending bill managed by Murtha, the fiscal 2008 Defense appropriation, 104 House members got earmarks for projects sought by PMA clients, according to Congressional Quarterly’s analysis of a database constructed by Ashdown’s group.

Those House members, plus a handful of senators, combined to route nearly $300 million in public money to clients of PMA through that one law (PL 110-116). ...

PMA’s founder, Paul Magliocchetti, is a former House Appropriations Committee aide who has a long-running relationship with Murtha, D-Pa., the chairman of the Defense Appropriations Subcommittee.

Murtha, who used to boast that his middle initial stands for “power,” carved out $38.1 million for PMA clients in the fiscal 2008 defense spending law, according to Taxpayers for Common Sense.

Indiana Rep. Peter J. Visclosky , who serves on Murtha’s subcommittee and additionally is chairman of the subcommittee that allocates money for the Pentagon’s nuclear programs, earmarked $23.8 million for PMA clients in the fiscal 2008 defense spending bill.

His former chief of staff, Richard Kaelin, lobbies for PMA, as does Melissa Koloszar, a former top aide to defense appropriator James P. Moran , D-Va.

Moran sponsored $10.8 million for PMA clients, and Rep. Norm Dicks , D-Wash., another member of the subcommittee, sponsored $12.1 million. ...

Of the 104 lawmakers who lent their names to earmark requests for PMA clients in the fiscal 2008 Pentagon spending law, 91 have, since 2001, received campaign money linked to PMA, either from its political action committee or its employees.

Tony Blankley looks at Barack Obama’s approach to governing, and finds it astonishingly passive and uninvolved. So far, Obama has seemed happy to preside as a sort of non-participant host to the orgy of looting and misrule by his party.

President Obama’s performance at the Gitmo executive order, provided brief but revealing insight into the president’s personal involvement in vital decision making. He had campaigned hard on closing Gitmo. His first public signing as president was that executive order to close it down. The central issue of Gitmo’s closing was and is: What do we do with the dangerous inmates? President Bush kept it open primarily because his administration couldn’t figure out an answer to that question.

Thus, it was breathtaking that at the signing ceremony, President Obama didn’t know how—or even whether—his executive order was dealing with this central quandary.

President Obama: “And we then provide, uh, the process whereby Guantanamo will be closed, uh, no later than one year from now. We will be, uh. ... Is there a separate, uh, executive order, Greg, with respect to how we’re going to dispose of the detainees? Is that, uh, written?”

White House counsel Greg Craig: “We’ll set up a process.”

To be at the signing ceremony and not know what he was ordering done with the terrorist inmates is a level of ignorance about equivalent to being a groom at the altar in a wedding ceremony and asking who it is you are marrying.

Daniel Hannan, blogging at the Telegraph:

Here’s an eye-popping figure: the cost of EU rules in Britain over the past decade is £106.6 billion – accounting for 72 per cent of the cost of all regulation in Britain. Despite repeated noises in Brussels about making life easier for businesses, each year is more expensive than the last. The burden falls most heavily, not on financial institutions or big corporations, but on small and medium firms.

Open Europe, a business group campaigning to turn the European Union into a looser trading area, says official figures show the cost of regulation has risen from £16.5bn ($23.7bn) a year in 2005 to £28.7bn last year.

The report, based on a study of more than 2,000 impact assessments published by Whitehall departments, found that EU legislation was responsible for almost 72 per cent of the annual cost of regulation.

It claimed that the Department for Business, Enterprise and Regulatory Reform – which is responsible for fighting red tape – imposed more regulatory costs than any other government department, describing the department as the UK’s “regulation factory”. ...

The study found that the cost of EU legislation had risen every year over the past decade, imposing costs on the UK of £18.5bn in 2008, compared with £12.2bn in 2005. ...

The proportion of regulatory costs coming from Brussels is more than 90 per cent for the FSA, environment department and Health & Safety agency, it found. New EU rules for food and feed hygiene more than doubled the FSA’s regulatory burden in 2006, making it impossible to hit its deregulation targets.

“The government effectively has control of less than 30 per cent of the annual cost of regulation,” the report says.

Tom Daschle, Barack Obama’s nominee for Secretary of Health and Human Services, who is also intended to become Czar in Charge of Nationalizing America’s Health Care, has decided it would be prudent to pay some overdue back taxes.

Former Senate Democratic Leader Tom Daschle paid $140,000 in back taxes and interest in recent weeks – much of it due to a car and driver loaned to him for free by a friend and Democratic fundraiser.

That back-tax bill on Friday threw a stumbling block in front of his nomination as Barack Obama’s health and human services secretary.

Daschle used the Cadillac and driver around Washington while working as a consultant to a New York City private equity firm, InterMedia Advisors. He used the limo 80 percent for personal use – resulting in unreported income of more than $255,000 for the three years, Senate Finance Committee documents show.

InterMedia paid Daschle consulting fees at a rate of $1 million a year – or $83,333 a month. Daschle’s financial disclosure forms put his income from InterMedia at more than $2 million since 2005.

Tom Daschle, under fire for not paying taxes, made nearly $5.3 million in the last two years, records released Friday show.

Daschle, the former Senate Democratic leader who President Obama has tapped to overhaul the nation’s healthcare system, was paid $220,000 to give speeches to outfits that have a vested interest in the result the work he would do once confirmed as Secretary of Health and Human Services.

Among the companies and groups paying thousands of dollars a pop to book Daschle were some that stand to gain or lose the most depending on the results of Obama’s efforts to enact universal health.

Phillip K. Howard, in an excellent essay in the Wall Street Journal, describes the impact of limitless litigation and regulation on American life and the American character.

Here we stand, facing the worst economy since the Great Depression, and Americans no longer feel free to do anything about it. We have lost the idea, at every level of social life, that people can grab hold of a problem and fix it. Defensiveness has swept across the country like a cold wave. We have become a culture of rule followers, trained to frame every solution in terms of existing law or possible legal risk. The person of responsibility is replaced by the person of caution. When in doubt, don’t.

All this law, we’re told, is just the price of making sure society is in working order. But society is not working. Disorder disrupts learning all day long in many public schools—the result in part, studies by NYU Professor Richard Arum found, of the rise of student rights. Health care is like a nervous breakdown in slow motion. Costs are out of control, yet the incentive for doctors is to order whatever tests the insurance will pay for. Taking risks is no longer the badge of courage, but reason enough to get sued. There’s an epidemic of child obesity, but kids aren’t allowed to take the normal risks of childhood. Broward County, Fla., has even banned running at recess.

The flaw, and the cure, lie in our conception of freedom. We think of freedom as political freedom. We’re certainly free to live and work where we want, and to pull the lever in the ballot box. But freedom should also include the power of personal conviction and the authority to use your common sense. Analyzing the American character, Alexis de Tocqueville, considered “freedom less necessary in great things than in little ones. . . . Subjection in minor affairs does not drive men to resistance, but it crosses them at every turn, till they are led to sacrifice their own will. Thus their spirit is gradually broken and their character enervated.”

Read the whole thing.

Barack Hussein Obama opened his administration by addressing America’s first priority: the protection of terrorists and illegal combatants.

The Guantanamo Detention Center is to be closed “within a year.”

The CIA is to close its network of covert overseas detention facilities.

Interrogation methods used by US Intelligence agencies will be limited to those approved by the US Army Field Manual

New York Times story
————————————————
Spook86 predicts that the worst of the lot will go to the Federal Maximum Security Prison in Florence, Colorado, and that the new load on the federal court system will provoke the creation of a new Federal Security Court system.

MacRanger predicts that the impact of the Obama reforms will assure a lot fewer illegal combatants are taken alive.

Is it an epidemic? an earthquake? a fire? a flood? No, it’s Barack Obama’s inauguration.

Mark Steyn observes:

The proposition that a new federal administration is itself a federal emergency is almost too perfect an emblem of American government in the 21st century.

Mencius Moldbug, most prolix of bloggers, goes on at great length, but is still often worth a read.

The mysterious Moldbug, it has been learned, is a 1992 Brown graduate who majored in Computer Science. Further details here.

In this alleged introduction to his blog, Moldbug accurately identifies the enemy (complete with whimsical H.P. Lovecraft allusions).

[I]n post-1945 America, the source of all new ideas is the university. Ideas check out of the university, but they hardly ever check in. Thence, they flow outward to the other arms of the educational system as a whole: the mainstream media and the public schools. Eventually they become our old friend, “public opinion.” This process is slow, happening on a generational scale, and thus the 45-year lag.

Thus whatever coordinates the university system coordinates the state, through the transmission device of “public opinion.” Naturally, since this is 100% effective, the state does not have to wait for the transmission to complete. It can act in advance of a complete response, as in this case the Supreme Court did in 1967, and synchronize directly with the universities.

This relationship, whose widespread practice in the United States dates to 1933, is known as public policy. Essentially, for everything your government does, there is a university department full of professors who can, and do, tell it what to do. Civil servants and Congressional staffers follow the technical lead of the universities. The residual democratic branch of Washington, the White House, can sometimes push back feebly, but only with great difficulty. ...

There are a few brief periods of true reaction in American history – the post-Reconstruction era or Redemption, the Return to Normalcy of Harding, and a couple of others. But they are unusual and feeble compared to the great leftward shift. Nor, most important for our hypothesis, did they come from the universities; in the 20th century, periods of reaction are always periods of anti-university activity. (McCarthyism is especially noticeable as such. And you’ll note that McCarthy didn’t exactly win.)

The principle applies even in wars. In each of the following conflicts in Anglo-American history, you see a victory of left over right: the English Civil War, the so-called “Glorious Revolution,” the American Revolution, the American Civil War, World War I, and World War II. Clearly, if you want to be on the winning team, you want to start on the left side of the field.

And we are starting to piece the puzzle together. The leftward direction is, itself, the principle of organization. In a two-party democratic system, with Whigs and Tories, Democrats and Republicans, etc, the intelligentsia is always Whig. Their party is simply the party of those who want to get ahead. It is the party of celebrities, the ultra-rich, the great and good, the flexible of conscience. Tories are always misfits, losers, or just plain stupid – sometimes all three.

And the left is the party of the educational organs, at whose head is the press and universities. This is our 20th-century version of the established church. Here at UR, we sometimes call it the Cathedral – although it is essential to note that, unlike an ordinary organization, it has no central administrator. No, this will not make it easier to deal with. ...

Whatever you make of the left-right axis, you have to admit that there exists some force which has been pulling the Anglo-American political system leftward for at least the last three centuries. Whatever this unfathomable stellar emanation may be, it has gotten us from the Stuarts to Barack Obama. Personally, I would like a refund. But that’s just me. ...

intellectuals cluster to the left, generally adopting as a social norm the principle of pas d’ennemis a gauche, pas d’amis a droit, because like everyone else they are drawn to power. The left is chaos and anarchy, and the more anarchy you have, the more power there is to go around. The more orderly a system is, the fewer people get to issue orders. The same asymmetry is why corporations and the military, whose system of hierarchical executive authority is inherently orderly, cluster to the right.

Once the cluster exists, however, it works by any means necessary. The reverence of anarchy is a mindset in which an essentially Machiavellian, tribal model of power flourishes. To the bishops of the Cathedral, anything that strengthens their influence is a good thing, and vice versa. The analysis is completely reflexive, far below the conscious level. Consider this comparison of the coverage between the regime of Pinochet and that of Castro. Despite atrocities that are comparable at most – not to mention a much better record in providing responsible and effective government – Pinochet receives the full-out two-minute hate, whereas the treatment of Castro tends to have, at most, a gentle and wistful disapproval. ...

[T]he problem is not just that our present system of government – which might be described succinctly as an atheistic theocracy – is accidentally similar to Puritan Massachusetts. As anatomists put it, these structures are not just analogous. They are homologous. This architecture of government – theocracy secured through democratic means – is a single continuous thread in American history.

Business Week’s Steve Hamm says the problem is greedy investors’ short term thinking and aversion to risk, and those stingy VCs should start funding “bold new directions” while waiting for Uncle Obama to open up the federal tap.

Hamm’s article lit the fuse of Michael S. Malone at Live from Silicon Valley.

Since Steve Hamm and Business Week aren’t willing to give you anything but their own big government/big business solutions to the perceived crisis, let me give you the real story – and real solutions – from somebody who has been on the ground here in Silicon Valley for 45 years:

Yes, Silicon Valley – and by extension, the U.S. high technology industry, is in something of a crisis right now. Part of it is the fact that, as the largest manufacturing sector in the US economy, electronics is not immune to the larger financial crisis currently impacting the world.

But there a lot of other problems as well. For one thing, the venture capital industry is in real trouble – not because of a lack of courage, but because government interference – most notably, Sarbanes-Oxley – has proven almost fatal to the new company creation process. With almost no potential for a big pay-out on the back end (because companies don’t ‘go public’ any more), VC’s are having to be much tighter on the front end. That’s good business, not gutlessness.

As for the entrepreneurs themselves, to charge them with a lack of courage or character is truly insulting. Instead of hob-nobbing with senior executives, Steve should have called me. I would have taken him to the little Peet’s Coffee shop in nearby Cupertino where I get my lattes twice per day. There, I would have shown him that on any given day you can see at least two entrepreneurial teams – a half-dozen guys huddled over a single laptop editing spreadsheets – almost always different, and all dreaming of starting the Next Big Company. There are hundreds of these start-up teams all over the Valley right now – indeed, I think there is more entrepreneurial fervor going on right now than just about any other time in Valley history.

Are these folks thinking small? Are they short on courage? No, what they are is pragmatic. That’s the essence of being an entrepreneur. They know what the business landscape is out there, and they are adjusting their plans to succeed in that new reality.

No, the problem is not that entrepreneurs and investors in Silicon Valley and the rest of high tech aren’t thinking big, it’s that they aren’t being allowed to. If Business Week would just take off its ideological blinders, it would realize that if Washington really wanted to help a sick Silicon Valley, it would get out of the way, and strip away all of those worthless regulations that are inhibiting the imagination and the creativity of this town.

The Wall Street Journal comments with astonishment on Obama’s choice of Dawn Johnsen, leading opponent of the Bush Administration’s defense of executive branch authority, as head of the Justice Department’s Office of Legal Counsel, which interprets the law for his entire administration.

One of the OLC’s main duties is to defend the Presidency against the inevitable encroachment of the judiciary and Congress on Constitutional authority, executive privilege, war powers, and so forth. Ms. Johnsen knows this, or should, having served as acting OLC head in the Clinton Administration between 1997 and 1998. The office has since become all the more central in a war on terror that has been “strangled by law,” to quote Jack Goldsmith, a former Bush OLC chief.

Yet Ms. Johnsen seems to think her job isn’t to defend the Presidency but to tie it down with even more legal ropes. She has written that “an essential source of constraint is often underappreciated and underestimated: legal advisors within the executive branch.” And in touting her qualifications, the Obama transition cited her recent law review articles “What’s a President to Do?: Interpreting the Constitution in the Wake of the Bush Administration’s Abuses”; and “Faithfully Executing the Laws: Internal Legal Constraints on Executive Power.”

In other words, Mr. Obama has nominated as his main executive branch lawyer someone who believes in diminishing the powers of the executive branch. This is akin to naming a conscientious objector as the head of the armed forces, or hiring your wife’s divorce lawyer to handle your side of the settlement too.

Most blogs produced by retired Intelligence Community professionals are either moderately or severely negative.

Jeff Stein quotes a retired operations officer:

A retired senior CIA operations officer who quit last summer after 20 years tracking terrorists says the rank-and-file reaction to President-elect Obama’s choice of Leon E.Panetta to run the spy agency has been “overwhelmingly negative.”

Charles “Sam” Faddis, who led a CIA team into northern Iraq before the 2003 invasion, says he had “already heard from a large number of rank and file within CIA on this choice, and the reaction has been overwhelmingly negative.”

Faddis added:

“These are people who are sweating blood everyday to make things happen and living for the day that somebody is going to come in, institute real reform and turn the CIA into the vital, effective organization it should be. To them this choice just says that no such changes are impending and that all they can look forward to is business as usual.”

A number of field operatives have voiced similar sentiments to me since word spread Monday that Obama had chosen Panetta, a former chief of staff to President Bill Clinton known for his budget expertise, to run the CIA. Panetta was also a Democratic congressman from the Monterey area of California from 1977 to 1993.

“His credentials do not warrant the appointment, especially in a wartime footing,” said one CIA operative who has been pursuing al Qaeda in Afghanistan, in a typical remark.

Faddis, who was working on nuclear nonproliferation issues when he left the agency in May after 20 years as a covert operator, called Panetta “a disappointing choice.”

“I am a big supporter of President-Elect Obama,” Faddis added, “but Panetta is not the guy we need to run CIA right now. He may be a very good man. (But) he knows nothing about intelligence, particularly human intelligence”—recruiting and managing spies

“The central problem at CIA is that it is not doing a very good job of collecting the information it was created to collect,” Faddis said.

“To fix that you need to get down in the weeds and really address the nuts and bolts of how CIA is performing its mission. You cannot do that unless you understand the business, and, frankly, you probably can’t do it unless you have been out on the street doing the work yourself.”...

Voices from below decks insist that’s not enough to get a grip on what they call a self-serving, insular corps of middle managers in the clandestine service, which, they say, has become hidebound and risk adverse.

“When Panetta ends up sitting in a room with the senior ‘spooks’ from the agency, and they start with the smoke and mirrors and obfuscation, how is he going to cut through that?” Faddis asked, echoing a common view. “He’s not.”

“No matter how well intentioned he is or how intelligent, he does not have the background. He does not even speak their language. He will end up like Porter Goss did, sitting in an office, talking on the phone, and, at ground level, nothing will change,” Faddis maintained.

——————————————————————————

Spook 86 (20 year veteran of military intelligence):

Mr. Obama is entitled to the CIA Director of his choice. But the selection of Leon Panetta is a reflection of the next commander-in-chief and his own, limited intelligence experience. A few weeks ago, the president-elect named retired Navy Admiral Dennis Blair as the new Director of National Intelligence. Like Mr. Panetta, Admiral Blair has a long resume as a leader and administrator. But in terms of intel, his only experience is as a consumer.

The big-picture view is even more disturbing. President-elect Obama, a man who is decidedly short on national security experience, has appointed a pair of neophytes to fill our most important intelligence positions. Those men, in turn, are supposed to advise him on the most critical (and sensitive) intel and national security issues. That planned “arrangement” doesn’t exactly inspire confidence. ...

Panetta may be a sop to liberal bloggers and activists who torpedoed John Brennan, the CIA veteran said to be Mr. Obama’s first choice to run the agency. Brennan was unacceptable to those elements of the Obama coalition because of his support for the “forceful” interrogation of suspected terrorists.

Given the complexity of intelligence issues and the many real or perceived intelligence failures in the history of that agency, a thorough professional understanding of the intelligence profession is indispensable for effective leadership of the CIA. It is precisely because this agency needs reforms to produce more timely and actionable intelligence for U.S. national security decision-making, that its director must understand the capabilities and limitations of the intelligence business, and not be fooled by insiders’ ability to “wait out one more director.”

Some of the very qualifications touted by Panetta’s fans are not desired or needed by a director: he does not need “the ear of the president” since that is the function of the DNI. Nor does this position require political savvy, since that is not a function of any intelligence agency director. In fact, it would be downright counterproductive, given repeated criticism of the “politicization of intelligence” in recent years. ...

Mr. Panetta: with all due respect to your fine public policy credentials, decline this appointment for the good of the intelligence community and the decision makers it serves. You would make an effective governor of California!

Well for that matter why not pick Al Franken, or James Carvell, or even Chris Matthews? Too bad he’ll fly through the surrender-crat senate for confirmation. Hopefully though he get’s ZERO cooperation from the field and he get’s “set up for failure”, so that his term is short. This should tell you all you want to know about how serious Obama takes our national security. But then again he did say that his goal was to disarm us didn’t he? ...

His only qualification seems to be his stance against interrogation techniques that have saved thousands of lives.

I am a tad amused by the insistence that we need a CIA director with “intelligence” experience. Really? Then why in the hell is the CIA Headquarters named for a guy who was, by this criteria, one of the least experienced CIA Director’s ever named. I refer of course to George H. W. Bush. ...

In terms of temperament Leon Panetta reminds me a lot of Bush 41. Both are politicians but neither seemed to relish the partisan blood feuds that have become the norm in Washington over the last twenty years.

But Panetta has some decided advantages over George Bush Sr. Unlike Bush senior, he served as White House Chief of Staff and headed up the Office of Management and Budget. So he actually goes into the job with more management experience the Bush 41 ever had. ...

Do we want someone who has been to a CIA training center and completed the Field Officer’s Training Course? Sorry, I do not think any of the CIA Directors in the last fifty years have done that. Richard Helms and William Colby had OSS experience. I don’t think they ever did FOTC.

Do we want someone who understands the difference between intelligence collection and intelligence analysis? Absolutely. And I think Panetta meets that bill. Do we want someone who understands how certain decisions based on imprecise or inadequate information can damage irreparably a Presidency? Yes! ...

Does Leon Panetta have the personal strength to tell a President keen on pursuing a foreign fiasco to steer clear? I do not know the answer to that.

If the answer is ‘no” then the legacy of Panetta at the CIA is already foretold. He will be another war story about a bad Director. If the answer is “yes” then we may be on the threshold of an era of enlightened leadership at the CIA. I hope for the sake of our country that it is the latter and not the former. I am certain of this–Leon Panetta has enough experience in Washington to know what will destroy you and what is truly lasting. I believe he is smart enough to seek the latter.

They leaked all over George W. Bush, and now spooks disgruntled by Obama’s choice of an outsider to head the Agency have run right over to tell their troubles to the Washington Post, which dutifully obliges with a helpful headline: Obama Is Under Fire Over Panetta Selection .

Meanwhile, in a press interview reported by the New York Times, Obama seemed to be backing carefully away from the Panetta appointment.

Question: Some are – some are questioning Leon Panetta’s lack of intelligence – lack of experience on intelligence matters. Sorry about that. I know this is tricky for you since you haven’t announced it yet, but what does he bring to the table for you?

Obama: Well, as you noted, I haven’t made – haven’t made a formal announcement about my intelligence team.

(cell phone rings)

Obama: That may be him calling now… finding out where it’s at.

Obama: I have the utmost respect for Leon Panetta. I think that he is one of the finest public servants that we have. He brings extraordinary management skills, great political savvy, an impeccable record of integrity.

As chief of staff, he is somebody who – to the president – he’s somebody who obviously was fully versed in international affairs, crisis management, and had to evaluate intelligence consistently on a day-to-day basis.

Having said all that, I have not made an announcement.

It looks like Leon Panetta had better start reading the job ads all over again.

Michael S. Malone explains in the Wall Street Journal why the 1990s boom in the creation of new technology corporations never came back. The news is not all bad, of course. The Accounting business has been booming like never before.

From the beginning of this decade, the process of new company creation has been under assault by legislators and regulators. They treat it as if it is a natural phenomenon that can be manipulated and exploited, rather than the fragile creation of several generations of hard work, risk-taking and inventiveness. In the name of “fairness,” preventing future Enrons, and increased oversight, Congress, the SEC and the Financial Accounting Standards Board (FASB) have piled burdens onto the economy that put entrepreneurship at risk.

The new laws and regulations have neither prevented frauds nor instituted fairness. But they have managed to kill the creation of new public companies in the U.S., cripple the venture capital business, and damage entrepreneurship. According to the National Venture Capital Association, in all of 2008 there have been just six companies that have gone public. Compare that with 269 IPOs in 1999, 272 in 1996, and 365 in 1986.

Faced with crushing reporting costs if they go public, new companies are instead selling themselves to big, existing corporations. For the last four years it has seemed that every new business plan in Silicon Valley has ended with the statement “And then we sell to Google.” The venture capital industry is now underwater, paying out less than it is taking in. Small potential shareholders are denied access to future gains. Power is being ever more centralized in big, established companies.

For all of this, we can first thank Sarbanes-Oxley. Cooked up in the wake of accounting scandals earlier this decade, it has essentially killed the creation of new public companies in America, hamstrung the NYSE and Nasdaq (while making the London Stock Exchange rich), and cost U.S. industry more than $200 billion by some estimates.

Meanwhile, FASB has fiddled with the accounting rules so much that, as one of America’s most dynamic business executives, T.J. Rodgers of Cypress Semiconductor, recently blogged: “My financial statements are a mystery, even to me.” FASB’s “mark-to-market” accounting rules helped drive AIG and Bear Stearns into bankruptcy, even though they were cash-positive.

But FASB’s biggest crime against the economy and the American people came when it decided to measure the impossible: options expensing. Given that most stock options in new start-up companies are never worth anything, this would seem a fool’s errand. But FASB went ahead—thereby drying up options as an incentive for people to take the risk of joining a young company and guaranteeing that the legendary millionaire secretaries would never be seen again.

Not to be outdone, the SEC has, through the minefield of “full disclosure” requirements and other regulations, made sure that corporate directors would never again have financial privacy and would be personally culpable for malfeasance anywhere in the company. This has led to a mass exodus of talented people from boards of directors in places like Silicon Valley. Full disclosure was supposed to make boards more responsible. Instead, it has made them less competent.

Read the whole thing.

James Grant, in the Wall Street Journal, points out that the Bernanke Federal Reserve policies of inflating our way out of recession are practically certain to produce worse than a recession.

It was on Oct. 6, 1979, that then-Fed Chairman Paul A. Volcker vowed to print less money to bring down inflation. So doing, he closed one monetary era and opened another. With Tuesday’s promise to print much more money, the Federal Reserve of Ben S. Bernanke has opened its own new era. Whether Mr. Bernanke’s policy of debasement will lead to as happy an outcome as that which crowned the Volcker anti-inflation initiative is, however, doubtful. Whatever the road to riches might be paved with, it isn’t little green pieces of paper stamped “legal tender. ...

The seasons of finance are unpredictable. Prescience is rare enough in the private sector. It is almost unheard of in Washington. The credit troubles took the Fed unawares. So, likely, will the outbreak of the next inflation. Already the stars are aligned for a doozy. Not only the Fed, but also the other leading central banks are frantically ramping up money production. Simultaneously, miners and oil producers are ramping down commodity production—as is, for instance, is Rio Tinto, the heavily encumbered mining giant, which the other day disclosed 14,000 layoffs and a $5 billion cutback in capital expenditure. Come the economic recovery, resource producers will certainly increase output. But it is far less certain that, once the cycle turns, the central banks will punctually tighten.

The public has been slow to anger in this costliest and scariest of post World War II financial crises. Wall Street and the debt ratings agencies have come in for well-deserved castigation. But pointing fingers rarely find the Federal Reserve, whose low, low interest rates helped to set house prices levitating in the first place.

After Mr. Bernanke gets a good night’s sleep, he should be called to account for once again cutting interest rates at the expense of the long-suffering (and possibly hungry) savers. He should be asked to explain how the central-banking methods of the paper-dollar era represent any improvement, either in practice or theory, over the rigor, elegance, simplicity and predictability of the gold standard. He should be directed to read aloud the text of critique by Elihu Root and explain where, if at all, the old gentleman went wrong. Finally, he should be directed to put himself into the shoes of a foreign holder of U.S. dollars. “Tell us, Mr. Bernanke,” a congressman might consider asking him, “if you had the choice, would you hold dollars? And may I remind you, Mr. Chairman, that you are under oath?”

Thank goodness, we lost the election! If the government is going to screw up the economy royally by pursuing short-sighted liberal economic policies, let’s have democrats doing that.

Holman W. Jenkins Jr. swats away the predictable outcry for more regulation, and observes that when one finds oneself with a problem involving lemons, one should simply make lemonade.

Where was the SEC? Such is the plaint lofted in the wake of the Bernie Madoff scandal.

Huh?

When has the Securities and Exchange Commission ever found a fraud except by reading about it in the newspapers? ...

What makes the Madoff story interesting, though not evidence of systematic failure of the regulatory or legal system, is that Mr. Madoff and some of his clients had dealt on a basis of trust for more than a generation. True Ponzi schemes, in which early investors are paid a “return” out of funds deposited by later investors, tend to falter at the first market downturn. Waning investor enthusiasm dries up new funds required to pay off earlier investors. The scheme collapses.

In all likelihood, Mr. Madoff was not running a pure Ponzi scheme, but had real assets. He was operating a blind pool, in which investors had no real idea what they owned or how it was performing, relying on Mr. Madoff who reported metronomic returns, brooked no nosiness into his methods, and seemed always willing to pay off investors who wanted to withdraw their money.

He may have been casual from the start about what money he used to pay withdrawals. It is almost inconceivable, though, that he could have built a true Ponzi scheme to a height of $50 billion, in which there were never any real assets, just his superhuman 40-year juggling act to ensure new investors were recruited as needed to provide funds to meet withdrawal requests from earlier investors.

If so, he is a genius who should immediately be put in charge of the Social Security and Medicare trust funds.

Former CIA officer Reuel Marc Gerecht predicts that Barack Obama, faced with the same threats, will wind up making the same choices as George W. Bush for the same reasons.

President-elect Barack Obama has promised to ban waterboarding and other pain-inflicting soliciting techniques, as well as rendition. He has also promised to close the Guantánamo Bay prison.

More broadly, liberal Democrats in Congress intend to deploy a more moral counterterrorism, where the ends — stopping the slaughter of civilians by Islamic holy warriors — no longer justifies reprehensible means. Winning the hearts and minds of foreigners by remaining true to our nobler virtues is now seen as the way to defeat our enemies while preserving our essential goodness.

Sounds uplifting. Don’t bet on it happening.

Mr. Obama will soon face the same awful choices that confronted George W. Bush and Bill Clinton, and he could well be forced to accept a central feature of their anti-terrorist methods: extraordinary rendition. If the choice is between non-deniable aggressive questioning conducted by Americans and deniable torturous interrogations by foreigners acting on behalf of the United States, it is almost certain that as president Mr. Obama will choose the latter. ...

Rendition… is what Americans do when they realize that active counterterrorism against jihadists prepared to use mass-casualty weapons is an ethical, juridical and operational tar pit. It isn’t an ideal solution — American intelligence officers have no control of the questioning, and Washington can become beholden to foreign security services — but it’s a satisfactory compromise. Just ask Samuel R. Berger, the national-security adviser for President Bill Clinton, who no doubt worked through all the pitfalls when he first approved extrajudicial rendition.

In addition, the C.I.A. is able to guard the secrecy of foreign-liaison operations more effectively, especially from Congressional prying, than it can its own activities. It has also certainly paid close attention to how the press tracked some of its clandestine international flights carrying terrorism suspects after 9/11, and will in the future undoubtedly make it much harder to sleuth out who is going where.

A dense bipartisan moral fog surrounds rendition. Former senior Clinton officials can still deny that they sent anyone away in order that he be tortured. Few are as honest and frank as Walt Slocombe, a Clinton undersecretary of defense who once remarked that the difference between Democratic and Republican rendition was that Democrats “drilled air holes in the boxes.”

Washington Times:

On the same day the Supreme Court declined to hear one appeal challenging Barack Obama’s right to become president because of questions about his citizenship, Justice Antonin Scalia distributed another appeal on the same issue for the court to consider.

The new case, Cort Wrotnowski v. Susan Bysiewicz, Connecticut Secretary of State, is scheduled to be discussed by the justices at their Dec. 12 private conference. They plan to decide whether to give the case a hearing – again on whether the British citizenship of Mr. Obama’s father makes the president-elect ineligible to assume the office. ...

The Supreme Court on Monday turned down the previous appeal filed by New Jersey attorney Leo C. Donofrio.

Unlike Mr. Donofrio’s appeal, Mr. Wrotnowski’s case “includes a more solid brief and a less treacherous lower court procedural history.”

Law blog

A number of prominent conservatives have recently been labeling anyone who thinks there is any possible legitimate issue here as a “kook.”

Well, personally, I think it costs real money to fight lawsuits in eight states, and multiple appeals for Supreme Court certiorari. Why would anyone bother when he could simply release the long form of his Hawaiian birth certificate?

Chicago Tribune:

The U.S. Supreme Court will consider Friday whether to take up a lawsuit challenging President-elect Barack Obama’s U.S. citizenship, a continuation of a New Jersey case embraced by some opponents of Obama’s election.

The meeting of justices will coincide with a vigil by the filer’s supporters in Washington on the steps of the nation’s highest court.

The suit originally sought to stay the election, and was filed on behalf of Leo Donofrio against New Jersey Secretary of State Nina Mitchell Wells.

Legal experts say the appeal has little chance of succeeding, despite appearing on the court’s schedule. Legal records show it is only the tip of an iceberg of nationwide efforts seeking to derail Obama’s election over accusations that he either wasn’t born a U.S. citizen or that he later renounced his citizenship in Indonesia.

The Obama campaign has maintained that he was born in Hawaii, has an authentic birth certificate, and is a “natural-born” U.S. citizen. Hawaiian officials agree.

If Obama really was born in Hawaii, and actually has that legitimate birth certificate, why does he have a problem with producing and displaying it?

This 1:02 video has an inflammatory and partisan tone, but does summarize the questions about Obama’s citizenship succinctly.

The New York Times reports that Barack Obama’s leftwing position during the campaign are now running into conflicts with reality as decisions on CIA appointments and policy need to be made.

Obama can’t appoint the best choice for CIA Director for fear of offending the leftwing base.

Last week, John O. Brennan, a C.I.A. veteran who was widely seen as Mr. Obama’s likeliest choice to head the intelligence agency, withdrew his name from consideration after liberal critics attacked his alleged role in the agency’s detention and interrogation program. Mr. Brennan protested that he had been a “strong opponent” within the agency of harsh interrogation tactics, yet Mr. Obama evidently decided that nominating Mr. Brennan was not worth a battle with some of his most ardent supporters on the left.

Mr. Obama’s search for someone else and his future relationship with the agency are complicated by the tension between his apparent desire to make a clean break with Bush administration policies he has condemned and concern about alienating an agency with a central role in the campaign against Al Qaeda.

Mark M. Lowenthal, an intelligence veteran who left a senior post at the C.I.A. in 2005, said Mr. Obama’s decision to exclude Mr. Brennan from contention for the top job had sent a message that “if you worked in the C.I.A. during the war on terror, you are now tainted,” and had created anxiety in the ranks of the agency’s clandestine service. ...

The flap over Mr. Brennan, who served as a chief of staff to George J. Tenet when he ran the C.I.A., was the biggest glitch so far in what has been an otherwise smooth transition for Mr. Obama. Some C.I.A. veterans suggest that the president-elect may have difficulty finding a candidate who can be embraced by both veteran officials at the agency and the left flank of the Democratic Party.

Now that the decision-making power, and the responsibility, are theirs, democrats have to square the circle of contradiction between liberal pieties and effectively preventing terrorist attacks. Will “human and non-coercive” methods really get the villain to tell where the ticking time bomb is located, or will Jack Bauer just have to shoot him in the knee?

On Wednesday, a dozen retired generals and admirals are to meet with senior Obama advisers to urge him to stand firm against any deviation from the military’s noncoercive interrogation rules.

But even some senior Democratic lawmakers who are vehement critics of the Bush administration’s interrogation policies seemed reluctant in recent interviews to commit the new administration to following the Army Field Manual in all cases.

Senator Dianne Feinstein, the California Democrat who will take over as chairman of the Senate Intelligence Committee in January, led the fight this year to force the C.I.A. to follow military interrogation rules. Her bill was passed by Congress but vetoed by President Bush.

But in an interview on Tuesday, Mrs. Feinstein indicated that extreme cases might call for flexibility. “I think that you have to use the noncoercive standard to the greatest extent possible,” she said, raising the possibility that an imminent terrorist threat might require special measures.

Afterward, however, Mrs. Feinstein issued a statement saying: “The law must reflect a single clear standard across the government, and right now, the best choice appears to be the Army Field Manual. I recognize that there are other views, and I am willing to work with the new administration to consider them.”

Senator Ron Wyden of Oregon, another top Democrat on the Intelligence Committee, said he would consult with the C.I.A. and approve interrogation techniques that went beyond the Army Field Manual as long as they were “legal, humane and noncoercive.” But Mr. Wyden declined to say whether C.I.A. techniques ought to be made public.

C.I.A. officials have long argued that publishing a list of interrogation techniques only allows Al Qaeda to train its operatives to resist them. But they say the secrecy has led to exaggeration and myth about the agency’s detention program.

Beef and dairy cattle and hogs are part of the cycle of life. They breathe in oxygen and breathe out CO2, and their digestion of food produces methane as well. Living animals, at least domestic ones, from the perspective of environmentalists, thus constitute a major source of greenhouse gas air pollution, and consequently need to be taxed in order to discourage bovine respiration and porcine flatulence.

The EPA’s proposed addition of “greenhouse gases” under the Clean Air Act would amount to the imposition of major new taxes on domestic agriculture and on American consumers.

The American Farm Bureau offers some figures and notes that taxing US beef and pork production will only move that production outside US borders.

Most livestock and dairy farmers would not be able to pass along the costs incurred under this plan,” said Mark Maslyn, AFBF executive director of public policy. “Steep fees associated with this action would force many producers out of business. The net result would likely be higher consumer costs for milk, beef and pork,” said Maslyn, in comments submitted to EPA.

According to Agriculture Department figures, any farm or ranch with more than 25 dairy cows, 50 beef cattle or 200 hogs emits more than 100 tons of carbon equivalent per year, and thus would need to obtain a permit under the proposed rules. More than 90 percent of U.S. dairy, beef and pork production would be affected by the proposal, Maslyn noted.

Permit fees vary from state to state but EPA sets a “presumptive minimum rate” for fees. For 2008-2009, the rate is $43.75 per ton of emitted greenhouse gases. According to Maslyn, the proposed fee would mean annual assessments of $175 for each dairy cow, $87.50 for each head of beef cattle and $20 for each hog.

In addition, Maslyn said the proposed rules would be ineffective because of the global nature of greenhouse gases. “Reduction of a ton of greenhouse gases anywhere will make a difference, but if a ton is removed in Iowa and replaced by a ton in China, then no net effect occurred,” he said. “A livestock tax and regulation of greenhouse gases under the Clean Air Act will impose restrictions and added costs on the U.S. economy without reducing greenhouse gases in the atmosphere.

Socialized medicine is just like heroin: it creates a dependency that’s very difficult to give up. James Pethokoukis explains that Tom Daschle and the democrat party want to be your connection.

As Norman Markowitz in Political Affairs, a journal of “Marxist thought,” puts it: “After the Labor Party established the National Health Service after World War II, supposedly conservative workers and low-income people under religious and other influences who tended to support the Conservatives were much more likely to vote for the Labor Party when health care, social welfare, education and pro-working class policies were enacted by labor-supported governments.”

Passing Obamacare would be like performing exactly the opposite function of turning people into investors. Whereas the Investor Class is more conservative than the rest of America, creating the Obamacare Class would pull America to the left. Michael Cannon of the Cato Institute, who first found that wonderful Markowitz quote, puts it succinctly in a recent blog post: “Blocking Obama’s health plan is key to the GOP’s survival.”

The Onion’s bipartisan panel of political pundits discuss government’s response to the current financial crisis.

1:56 video

————————————————————
Hat tip to Scott Drum.

Duck!

If I were to follow the examples of Joseph Smith, L. Ron Hubbard, or Barack Obama, and invent my own religion, could I demand that the nearest municipality boasting a Ten Commandments monument allow me to erect another monument listing my own teachings on the courthouse lawn? Should the city fathers fail to oblige would a federal circuit court of appeals (that isn’t the 9th Circuit) rule in my favor? Is it possible to imagine that the United States Supreme Court could wind up ruling on my petition?

The Wall Street Journal reports that it has all worked out just that way for Corky Ra.

A couple of decades after a visit from “beings Extraterrestrial” inspired him to found the Church of Summum in 1975, Summum Bonum Amen Ra, born Claude Nowell and known as Corky, had another epochal encounter. He saw a monolith depicting the Ten Commandments on the courthouse grounds in Salt Lake City, says Su Menu, the Summum religion’s current leader, and “felt it would be nice to have the Seven Aphorisms next to them.” The monument would be inscribed with the principles that, according to Summum doctrine, Moses initially intended to deliver to the Hebrews before deciding they weren’t ready to understand them.

Several Utah municipalities Mr. Ra approached declined the opportunity to display the Seven Aphorisms, provoking a legal battle that arrived at the Supreme Court Wednesday.

Daniel Henniger editorializes:

In 2007, the federal appeals court for the Tenth Circuit ruled in favor of Summum, giving the religion permission to put up its Seven Aphorisms monument in Pioneer Park. The Supreme Court will decide whether the Summums of America deserve their own patch of the public green.

Laughable though it looks, Pleasant Grove City v. Summum is a textbook example of tensions that have pulled our courts between noble readings of the Constitution—in this case, the First Amendment’s speech protections—and what the average person might call the common-sense requirements of running a civil society.

Henniger is perfectly correct. Modern liberalism’s abject inability to resist any appeal couched in idealistic rhetoric gives it a terminable case of philosophic round heels.

The Politico blog describes government in action enforcing honesty and fairness in campaign finance. John McCain should be proud of his own contributions to the present system.

The Federal Election Commission is unlikely to conduct a potentially embarrassing audit of how Barack Obama raised and spent his presidential campaign’s record-shattering windfall, despite allegations of questionable donations and accounting that had the McCain campaign crying foul.

Adding insult to injury for Republicans: The FEC is obligated to complete a rigorous audit of McCain’s campaign coffers, which will take months, if not years, and cost McCain millions of dollars to defend.

Obama is expected to escape that level of scrutiny mostly because he declined an $84 million public grant for his campaign that automatically triggers an audit and because the sheer volume of cash he raised and spent minimizes the significance of his errors. Another factor: The FEC, which would have to vote to launch an audit, is prone to deadlocking on issues that inordinately impact one party or the other – like approving a messy and high-profile probe of a sitting president.

McCain, on the other hand, accepted the $84 million in taxpayer money, which not only barred him from raising or spending more – allowing Obama to fund many times more ads and ground operations – but also will keep his lawyers busy for a couple years explaining how every penny was spent.

Through the end of September, McCain had socked away $9.4 million in a special fund to pay for the audit.

The Obama campaign does not expect to be audited, but spokesman Ben LaBolt said it would be ready in the event it is.

Mark Steyn finds that democrats have been revising those figures of just who is “rich” and therefore eligible for Obama’s tax increases.

Just wait until after the inauguration.

The Obama middle-class limbo dance descends further. First, it was $250,000. Then $200,000. Just a couple of days ago, Joe Biden reduced it to $150,000. And now...

For the second time in a week, a prominent Democrat has downgraded Barack Obama’s definition of the middle class — leading Republicans to question whether he’ll stick to his promise not to raise taxes on anyone making under $250,000.

The latest hiccup in the campaign message came Friday morning on KOA-AM, when New Mexico Gov. Bill Richardson pegged the middle class as those making $120,000 and under.

“What Obama wants to do is he is basically looking at $120,000 and under among those that are in the middle class, and there is a tax cut for those,” Richardson said in the interview…

$120,000? I’m confident Senator Biden can cut that in half by Tuesday morning. Bottom line: If you make over 30 grand, you might want to restructure yourself as an offshore corporation in the Turks & Caicos.

Arthur Laffer, in the Wall Street Journal, observes that free markets go up and free markets go down, but if you want enduring economic pain, there’s nothing like a panicky government trying to save the market from itself.

When markets are free, asset values are supposed to go up and down, and competition opens up opportunities for profits and losses. Profits and stock appreciation are not rights, but rewards for insight mixed with a willingness to take risk. People who buy homes and the banks who give them mortgages are no different, in principle, than investors in the stock market, commodity speculators or shop owners. Good decisions should be rewarded and bad decisions should be punished. The market does just that with its profits and losses.

No one likes to see people lose their homes when housing prices fall and they can’t afford to pay their mortgages; nor does any one of us enjoy watching banks go belly-up for making subprime loans without enough equity. But the taxpayers had nothing to do with either side of the mortgage transaction. If the house’s value had appreciated, believe you me the overleveraged homeowner and the overly aggressive bank would never have shared their gain with taxpayers. Housing price declines and their consequences are signals to the market to stop building so many houses, pure and simple.

But here’s the rub. Now enter the government and the prospects of a kinder and gentler economy. To alleviate the obvious hardships to both homeowners and banks, the government commits to buy mortgages and inject capital into banks, which on the face of it seems like a very nice thing to do. But unfortunately in this world there is no tooth fairy. And the government doesn’t create anything; it just redistributes. Whenever the government bails someone out of trouble, they always put someone into trouble, plus of course a toll for the troll. Every $100 billion in bailout requires at least $130 billion in taxes, where the $30 billion extra is the cost of getting government involved.

If you don’t believe me, just watch how Congress and Barney Frank run the banks. If you thought they did a bad job running the post office, Amtrak, Fannie Mae, Freddie Mac and the military, just wait till you see what they’ll do with Wall Street. ...

Some 14 months ago, the projected deficit for the 2008 fiscal year was about 0.6% of GDP. With the $170 billion stimulus package last March, the add-ons to housing and agriculture bills, and the slowdown in tax receipts, the deficit for 2008 actually came in at 3.2% of GDP, with the 2009 deficit projected at 3.8% of GDP. And this is just the beginning.

But the government isn’t finished. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid—and yes, even Fed Chairman Ben Bernanke—are preparing for a new $300 billion stimulus package in the next Congress. Each of these actions separately increases the tax burden on the economy and does nothing to encourage economic growth. Giving more money to people when they fail and taking more money away from people when they work doesn’t increase work. And the stock market knows it.

William Voegeli, in the Fall edition of the Claremont Review of Books, argues that Americans ought to think rationally about the American Welfare State.

Voegeli contends that, though conservatives will never succeed in repealing the New Deal, the public is fundamentally unwilling to pay for significantly greater expansions, the problem of persistent poverty really stems from causes federal money cannot effectively address, and meanwhile ideology and illusions prevent sensible allocation of limited resources.

In a society that is remarkably prosperous by global and historical standards, shouldn’t “most vulnerable members” be construed as referring to the most vulnerable 5, 10, or 25% of the population—not just the abjectly miserable, let us concede, but people confronting serious threats or problems? Yet when it turns out, time and again, that the effective meaning of liberal welfare and social insurance programs is to elicit compassion and government subventions for the most “vulnerable” 75, 80, or 95% of the population, it’s hard not to feel scammed. ...

.. Paul Starr of Princeton University and the American Prospect, says the welfare state is about the poor. Its “objective should be, above all, to eliminate poverty and maintain a minimum floor of decency to enable individuals to carry out their own life plans.” But giving benefits to everyone, not just the most vulnerable, serves social and political purposes. Socially, “the long-term tasks of nation-building and of fostering a common culture and a sense of shared citizenship also strongly argue for public and universal schooling, old-age pensions, and other services that serve an integrative as well as egalitarian purpose,” according to Starr. Politically, the imperative to construct democratic majorities that support programs for the poor “will often mean support for programs that provide universal benefits.” We may say that such programs “target” the most vulnerable 100% of the population.

Read the whole thing.

Henry G. Manne predicts a long period of the expansion of statism, economic stagnation, and freedom’s retreat.

The political direction of the country is now determined for a long time to come, and it is inevitably leftward. Politicians would never resist a popular but massive demand for more government regulation (even the few with enough brainpower to recognize what is going on). The business community has never been a strong supporter of free market capitalism, and it certainly cannot be counted on to change its stance this time around. The media, the various leftist trend-setting elites and university faculties have been waiting a long time for an opportunity just like this, and we can be sure that they won’t squander it. The shrillness of their attacks on free markets will reach new heights of righteous indignation and assumed moral and intellectual superiority.

No policy issue based on private property, low taxes, small government or free trade will escape the charge that any unregulated free market will lead to disastrous excesses just as happened with the great financial crisis of 2008. This will be true for such soon to be rebuffed ideas as tuition vouchers for private schools, private health care, lower estate taxes, deregulation in its many forms, reduced use of eminent domain, tort liability restraint and free trade.

We can anticipate a new reign of mercantilism, as the protectionists among us wield this strong new weapon against globalization and open markets. And all of this is true in large degree regardless of who wins the forthcoming election.

If Sarbanes-Oxley was any indication of the kind of legislation that results from crisis, then we can be sure that even more ham-handed regulation of all kinds will be the main product of the next Congress. Henry Waxman’s grandstanding this past week about bankers’ greed has been merely the warm-up for what is to follow.

Bankers eager for federal help now will find themselves regulated not far short of total federal control of their business behavior. Banks won’t be permanently nationalized, but what we will get will differ from that result semantically more than factually. Derivatives, for all their promise of alleviating panics and distributing risk, will not now be allowed to evolve into the brave new system once predicted for them. Accounting rules will become even more convoluted as we continue to ask for more information out of double-entry bookkeeping than it can ever deliver.

Still, there is a glimmer of hope left to those who detest this seemingly inexorable slide into socialism or its first cousin, the super-regulatory state. That glimmer comes from the ghosts of Adam Smith, Milton Friedman and Friedrich Hayek, who still haunt the halls of the left. And in spite of all the claims made that this debacle marks the demise of free market philosophy, it won’t go away so easily.

Read the whole thing.

Eugéne Delacroix (1798-1863), (detail) Atilla suivi de ses hordes, foule aux pieds l’Italie et les arts (Attila followed by his Horde, Trampling under Foot Italy and the Arts), Bibliothèque, Palais Bourbon, Paris, 1843-47

Bruce Bartlett, at the Cato Journal, describes how the same policies pursued by today’s democrat party produced the downfall of Rome.

In the end, there was no money left to pay the army, build forts or ships, or protect the frontier. The barbarian invasions, which were the final blow to the Roman state in the fifth century, were simply the culmination of three centuries of deterioration in the fiscal capacity of the state to defend itself. Indeed, many Romans welcomed the barbarians as saviors from the onerous tax burden. [15]

Although the fall of Rome appears as a cataclysmic event in history, for the bulk of Roman citizens it had little impact on their way of life. As Henri Pirenne (1939: 33-62) has pointed out, once the invaders effectively had displaced the Roman government they settled into governing themselves. At this point, they no longer had any incentive to pillage, but rather sought to provide peace and stability in the areas they controlled. After all, the wealthier their subjects the greater their taxpaying capacity.

In conclusion, the fall of Rome was fundamentally due to economic deterioration resulting from excessive taxation, inflation, and over-regulation. Higher and higher taxes failed to raise additional revenues because wealthier taxpayers could evade such taxes while the middle class—and its taxpaying capacity—were exterminated. Although the final demise of the Roman Empire in the West (its Eastern half continued on as the Byzantine Empire) was an event of great historical importance, for most Romans it was a relief.

Read the whole thing.

Biden: “I don’t have any Joe the Plumbers in my neighborhood that make $250,000 a year and are worried.”

1:12 video

Of course he doesn’t. How many plumbers (even those grossing $250K per annum) could possibly afford to live in Delaware’s Chateau Country like Joe Biden?

Delaware Online:

First elected to the Senate 36 years ago, (Biden) lives off Barley Mill Road in Greenville—northern Delaware’s priciest area—on a four-acre lakefront estate in a 7,000-square-foot custom home. Biden also owns a smaller carriage house on his property, where his widowed mother lives.

Local real estate agents said the Biden property is worth at least $2.5 million.

Spengler, writing in Asia Times, explains that America will inevitably continue to attract Asian investment and that people like Sarah Palin are the reason.

On my desk is a draft paper by a prominent Asian politician, sent to me privately for comment. It calls on Asians to take charge of their own financial destiny and invest their money in Asian markets rather than into the maelstrom of American markets. Privately, I advised the leader in question not to publish it. It will do no good. Asian capital markets cannot absorb Asia’s savings.

What does America have that Asia doesn’t have? The answer is, Sarah Palin – not Sarah Palin the vice presidential candidate, but Sarah Palin the “hockey mom” turned small-town mayor and reforming Alaska governor. All the PhDs and MBAs in the world can’t make a capital market work, but ordinary people like Sarah Palin can. Laws depend on the will of the people to enforce them. It is the initiative of ordinary people that makes America’s political system the world’s most reliable.

America is the heir to a long tradition of Anglo-Saxon law that began with jury trial and the Magna Carta and continued through the English Revolution of the 17th century and the American Revolution of the 18th. Ordinary people like Palin are the bearers of this tradition. ...

It is true that Asian economies depend on American consumers and an American recession is bad for Asian currencies. But why don’t Asians consume what they produce at home? The trouble is that rich Asians don’t lend to poor Asians in their own countries. Capital markets don’t work in the developing world because it is too easy to steal money. Subprime mortgages in the US have suffered from poor documentation. What kind of documentation does one encounter in countries where everyone from the clerk at the records office to the secretary who hands you a form requires a small bribe? America is litigious to a fault, but its courts are fair and hard to corrupt.

Asians are reluctant to lend money to each other under the circumstances; they would rather lend money in places where a hockey mom can get involved in local politics and, on encountering graft and corruption, run a successful campaign to turn the scoundrels out. You do not need PhDs and MBAs for that. You need ordinary people who care sufficiently about the places in which they live to take control of their own towns and states when required. And, yes, it doesn’t hurt if they own guns.

Michael S. Malone hears the bell toll, but not for market capitalism.

The United States government has embarked on two pieces of social engineering in the last few years. One was to make oil expensive as expensive as possible to drive people to greater use of alternative energy sources – because anything less would be irresponsible and destructive to the environment. The other was to enshrine home ownership (i.e., easy-to-obtain mortgages) as a new American right – because anything less would be unequal and racist.

None of us voted on these decisions – indeed, neither was even spoken about directly, much less debated. But nevertheless, both became national policy… and both have sparked national, now international, crises. Then, once they became crises, both were blamed on ‘greedy capitalism’, instead of what they really were: legislative interference into market forces. ...

But what makes this particular economic crisis so appalling, at least from this vantage point, is the sheer scumminess, corruption, short-sightedness and general incompetence of everyone involved. At least in the business world, especially in the take-no-prisoners world of high-tech that kind of venality and ineptitude either gets you fired or kills the company; by comparison, in Washington, it puts you in charge of the recovery effort. ...

To my mind, what makes this economic crisis different from ones in even the recent past is that it has exposed the fact that there are, apparently, no real leaders left in Washington – that the intellectual capital in the National Capitol has fallen to a new low – if that’s possible. Most of all, it shows that we can no longer look to D.C. for leadership into the rest of the 21st century.

Marxists and statists of all stripes are, as one might expect, rubbing their hands in glee and declaring this the final death crisis of Capitalism. But I think just the opposite is occurring. What we are in fact seeing are the final death throes of governmental social engineering. As I noted two weeks ago, we are in a kind of Mentos-in-coke world right now – where, thanks to tech, the sheer speed of transactions and the enormous breadth of response, almost any outside influence can quickly turn the whole economy or culture) into an explosive brew.

Read the whole thing.

Stratfor’s George Friedman turns his non-ideological strategic lens on the mortgage crisis, and argues for following the model used in the Savings & Loan crisis of 1989.

Financial meltdowns based on shifts in real estate prices are not new. In the 1970s, regulations on savings and loans (S&Ls) had changed. Previously, S&Ls had been limited to lending in the consumer market, primarily in mortgages for homes. But the regulations shifted, and they became allowed to invest more broadly. The assets of these small banks, of which there were thousands, were attractive in that they were a pool of cash available for investment. The S&Ls subsequently went into commercial real estate, sometimes with their old management, sometimes with new management who had bought them, as their depositors no longer held them.

The infusion of money from the S&Ls drove up the price of commercial real estate, which the institutions regarded as stable and conservative investments, not unlike private homes. They did not take into account that their presence in the market was driving up the price of commercial real estate irrationally, however, or that commercial real estate prices fluctuate dramatically. As commercial real estate values started to fall, the assets of the S&Ls contracted until most failed. An entire sector of the financial system simply imploded, crushing shareholders and threatening a massive liquidity crisis. By the late 1980s, the entire sector had melted down, and in 1989 the federal government intervened.

The federal government intervened in that crisis as it had in several crises large and small since 1929. Using the resources at its disposal, the federal government took over failed S&Ls and their real estate investments, creating the Resolution Trust Corp. (RTC). The amount of assets acquired was about $394 billion dollars in 1989 — or 6.7 percent of gross domestic product (GDP) — making it larger than the $700 billion dollars — or 5 percent of GDP — being discussed now. Rather than flooding the markets with foreclosed commercial property, creating havoc in the market and further destroying assets, the RTC held the commercial properties off the market, maintaining their price artificially. They then sold off the foreclosed properties in a multiyear sequence that recovered much of what had been spent acquiring the properties. More important, it prevented the decline in commercial real estate from accelerating and creating liquidity crises throughout the entire economy.

Investors Business Daily observes that, although the left is ready to blame the subprime fiasco on an insufficiency of regulation, as lenders eliminated credit standards, government was right there encouraging their actions.

Commercial banks threw lending standards out the window in their rush to get new business. Like S&Ls of the 1980s, they would have gone wild without Gramm-Leach-Bliley. Washington, if anything, egged them on, but not because of free-market dogma. Banks and mortgage brokers were pumping up the homeownership numbers in America, and politicians were eager to take credit for that.

Wall Street, meanwhile, became a victim of its own innovation. It created new classes of derivative investments that spread — and, through leverage, amplified — the risk from the subprime mortgages produced by the banks. A new multitrillion-dollar market emerged almost overnight, lacking in transparency and reliable price signals. With their asset values in doubt, investment banks lurched toward insolvency.

If regulators failed here, it wasn’t because of policies adopted years before. It was more of the same story that has played itself out over and over in modern finance: Innovation races ahead of the rules. Crises tend to take almost everyone by surprise — including the major players as well as the regulators.

Read the whole thing.

Carel Brest van Kempen and friend

An August 25 WSJ article blamed a management plan by outside environmentalists which prevented feeding of komodo dragons (Varanus komodoensis) by residents of Kampang Komodo for the large monitor lizard’s increased opportunism and aggression, and for occasional incidents of human predation.

We don’t want the Komodo dragon to be domesticated. It’s against natural balance,” says Widodo Ramono, policy director of the Nature Conservancy’s Indonesian branch and a former director of the country’s national park service. “We have to keep this conservation area for the purpose of wildlife. It is not for human beings.”

This sounded like a good story to me and I blogged it here.

On the other hand, I have since found via Steve Bodio, that Carel Brest van Kempen, a Nature artist who knows his Oras as well as the local area, has a very different perspective, and makes a persuasive case contradicting the WSJ.

Mr. van Kempen says the village traces its origin to a penal colony, was settled by piratical Bugis fisherman from Sulawesi (whose ancestors were so naughty, he alleges, they inspired the English term “bogeymen”). The village has grown to 1600 residents, and Mr. van Kempen disapproves. “An unchecked human explosion will doom the dragons, ” he believes. Drastic measures were imposed by a 25-year plan drafted by outside experts. Mr. van Kempen endorses that plan, considering it “a thoughtful and practical attempt at a rather Sisyphean task.”

That Sisyphean task is obviously keeping the ora habitat free of local settlements.

The Management Plan bans a number of destructive and effective fishing methods, including explosives and poisons, reef gleaning, long lines, gill nets and demersal (bottom) traps, effectively restricting fishermen to using hook and line and traditional light nets. It also imposes catch limits and denies access to grouper and Napoleon Wrasse spawning grounds. A long list of fish species is proscribed, as are all marine invertebrates except squid. Some rather Draconian measures have been taken on land. All immigration has been disallowed; not even marriage confers a right to residency in the Park. Dogs and cats have been banned, as have most other domestic animals save goats and chickens, and restrictions have been put on use of fresh water. The gathering of firewood is no longer allowed and the laws prohibiting hunting of deer, pigs and buffalo are being strictly enforced. It’s the fishing restrictions, though, that have impacted the already struggling villagers the hardest, and they’ve caused considerable anger. There have been shootouts between rangers and fishermen, resulting in several deaths. Balancing the needs of the burgeoning villagers and those of the finite ecosystem is difficult, and the fact that it’s being imposed from outside causes real resentments.

If one actually reads the plan, one is obliged to conclude that the poor ignorant villagers, persons of low education who thoughtlessly reproduce themselves and get in the way of ecological progress are being first prevented from fishing by the most effective techniques and for the most marketable catch. Meanwhile, a totalitarian regime regulating intimate details of daily life (Don’t spray pesticides! How much water are you using? No dogs or cats, or wives from off-island, either!) must make things unpleasant indeed for residents, who are clearly being not all that subtly nudged to pack up and go away.

Once they’re gone, in comes the multi-million-dollar beach resort for eco-tourism, offering reef snorkling and dragon watching for beaucoup dollars per diem.

Steve Bodio and Matt Mullinex were dazzled by the details that van Kempen throws around, and by his obvious personal acquaintance with the neighborhood. I’m not persuaded. I remain permanently suspicious of Sarastro and all his expert planners, and on the basis of habitual preference for underdogs, I remain on the side of those local fishermen who are clearly getting pushed around.

The oras will clearly make out. The Indonesian government can make a good buck selling glimpses of this kind of unique wildlife to tourists, so they’ll be well protected.

No retraction from me.

Stephen Moore, in the Wall Street Journal, describes how the environmental movement has come to claim the right to regulate, tax, and control every aspect of every American’s life.

Earlier this month, while visiting a friend in San Francisco, I almost spilled my latte in my lap when I read this on the front page of the Chronicle: “S.F. Mayor Proposes Fines for Unsorted Trash.”

The story began: “Garbage collectors would inspect San Francisco residents’ trash to make sure pizza crusts aren’t mixed in with chip bags or wine bottles under a proposal by Mayor Gavin Newsom.” Isn’t that what homeless people do—rooting around in other people’s garbage? If Bay Area residents are caught failing to separate the plastic bottles from the newspapers, according to the newspaper story, they could face fines of up to $1,000.

“We don’t want to fine people,” the mayor is quoted saying reassuringly. “We want to change behavior.” Translation: Do exactly as we say and no one gets hurt. And San Francisco considers itself one of the most progressive cities in America!

When I was a kid, the environmentalists promoted their clean skies and antilittering agenda mostly through moral suasion—with pictures of an Indian under a smoggy sky with a tear rolling down his cheek or the owl who chanted on TV: “Give a hoot, don’t pollute.” Such messages made you feel guilty about callously throwing a candy bar wrapper on the ground or feeling indifferent toward car fumes. Back then I was a devoted recycler, but not for sentimental reasons. It was the financial incentive: You got up to a nickel for every bottle you brought back to the grocery store. So I would scavenge the landscape to find unredeemed bottles to buy baseball cards and candy.

But now the the environmental movement has morphed into the most authoritarian philosophy in America.

Read the whole thing.

Let’s all go out and pollute something.

Lord knows, I don’t often agree with ultra-left blogger Glenn Greenwald about anything, but what do you know? Even the most unlikely of occurrences are possible in this best of all possible worlds.

Here’s Glenn responding to the recent Rasmussen Poll finding national approval of Congress to have fallen to an all-time low of 9% by concluding the democrat House majority is safe in perpetuity and it’s time for moonbats to turn on the democrat party leadership and start defeating any democrat congressmen discernibly to the right of Leon Trotsky.

That’ll learn ‘em. And those democrat leaders will then start obediently toeing the Party Line (and I don’t mean the democrat party line).

Many progressives and other Democratic supporters are reflexively opposed to any conduct that might result in the defeat of even a single, relatively inconsequential Democratic member of Congress or the transfer of even a single district to GOP control. No matter how dissatisfied such individuals might be with the Democratic Congress, they are unwilling to do anything different to change what they claim to find so unsatisfactory. Even though uncritically cheering on any and every candidate with a “D” after his or her name has resulted in virtually nothing positive—and much that is negative—many progressives continue, rather bafflingly and stubbornly, to insist that if they just keep doing the same thing (cheering for the election of more and more Democrats), then somehow, someday, something different might occur. But, as the cliché teaches, repeatedly engaging in the same conduct and expecting different results is the very definition of foolishness.

As foolish as it is, this intense aversion to jeopardizing any Democratic incumbents might be considered rational if doing so carried the risk of restoring Republican control of Congress. But there is no such risk, and there will be none for the foreseeable future. No matter what happens, the Democrats, by all accounts, are going to control both houses of Congress after the 2008 election. Their margin in the House, which is currently 31 seats, will, by even the most conservative estimates, increase to at least 50 seats. No advertising campaign or activist group could possibly swing control of Congress to the Republicans this year, and—given the Brezhnev-era-like reelection rates for incumbents in America—it is extremely unlikely that the House will be controlled by anyone other than Steny Hoyer, Rahm Emanuel and Nancy Pelosi for years to come.

The critical question, then, is not who will control Congress. The Democrats will. That is a given. The vital question is what they will do with that control—specifically, will they continue to maintain and increase their own power by accommodating the right, or will they be more responsive, accountable and attentive to the political values of their base?

As long as they know that progressives will blindly support their candidates no matter what they do, then it will only be rational for congressional Democrats to ignore progressives and move as far to the right as they can. With the blind, unconditional support of Democrats securely in their back pocket, Democratic leaders will quite rationally conclude that the optimal way to increase their own power, to transform more Republican districts into Blue Dog Democratic seats, and thereby make themselves more secure in their leadership positions, is to move their caucus to the right. Because the principal concern of Democratic leaders is to maintain and increase their own power, they will always do what they perceive is most effective in achieving that goal, which right now means moving their caucus to the right to protect their Blue Dogs and elect new ones.

That is precisely what has happened over the past two years. It is why a functional right-wing majority has dominated the House notwithstanding the change of party control—and the change in direction—that American voters thought they were mandating in 2006. As progressive activist Matt Stoller put it, “Blue Dogs are the swing voting block in the House, they are self-described conservatives, and they are perfectly willing to use their status on every action considered by the House.” The more the Democratic leadership accommodates the Blue Dog caucus—the more their power relies upon expanding their numbers through the increase of Blue Dog seats—the less relevant will be the question of which party controls Congress.

The linchpin for that destructive strategy is uncritical progressive support for congressional Democrats. That is what ensures that Democratic leaders will continue to pursue a rightward-moving strategy as the key to consolidating their own power. Right now, when it comes time to decide whether to capitulate to the demands of the right, Beltway Democrats think: “If we capitulate, that is one less issue the GOP can use to harm our Blue Dogs.” And they have no countervailing consideration to weigh against that, because they perceive—accurately—that there is no cost to capitulating, only benefits from doing so, because progressives will blindly support their candidates no matter what they do. That is the strategic calculus that must change if the behavior of Democrats in Congress is to change.

Democratic leaders must learn that they cannot increase their majority in Congress by trampling on the political values of their own base.

Let’s hope the entire nutroots base, responds to Glenn in the manner of Molly Bloom:

I was a Flower of the mountains yes when I put the rose in my hair like the Andalusian girls used or shall I wear a red yes and how he kissed me under the Moorish wall and I thought well as well him as another and then I asked him with my eyes to ask again yes and then he asked me would I yes to say yes my mountain flower and first I put my arms around him and yes and drew him down to me so he could feel my breasts all perfume yes and his heart was going like mad and yes I said yes I will yes.

The Washington Post tells us that liberals are suffering from SCOTUS envy.

It could be seen as the sincerest form of flattery: Ask some activists on the left the kind of Supreme Court justice they would like to see a President Obama appoint, and the name you hear most is the same justice they most often denounce.

They want their own Antonin Scalia. Or rather, an anti-Scalia, an individual who can easily articulate a liberal interpretation of the Constitution, offer a quick sound bite and be prepared to mix it up with conservative activists beyond the marble and red velvet of the Supreme Court. ...

as the Supreme Court takes its traditional spot in the background of the presidential campaign, there is a longing on the left for a justice who would energize not only the court’s liberal wing, but also the debate over interpreting the Constitution.

“Someone with vision,” said Doug Kendall, who recently helped found a new liberal think tank called the Constitutional Accountability Center. “Someone who looks hard at the text and history of the Constitution, as Justice Scalia does, and articulates a very clear idea of how that text points to liberal and progressive outcomes.”

“It is a court with no true liberal on it, the most conservative court in 75 years,” said Geoffrey Stone, a law professor at the University of Chicago, where Obama once taught constitutional law. “What we call liberals on this court are moderates, or moderate liberals, if you want to get refined about it.”

Stephen Breyer, Ruth Bader Ginsburg, and David Souter aren’t liberals?

Heck, liberals don’t even need to win presidential elections to get liberal Supreme Court Justices appointed. Conservative Republican presidents will appoint some for them.

Speaking more seriously, though, I think our friends on the left are missing the point. They are on the defensive on the Court, not really because of a paucity of kindred spirits, but because they have, for decades, been losing the battle of ideas in jurisprudence and Constitutional Law at the law schools and in the law journals.

Face it, what liberals really want is a return to an uncritical era of legal intuitions, emanations, and emotional sloganeering. They want the William O. Douglas and Earl Warren kind of “no brainer” liberal court decisions which merely use a few orotund generalities to raise the consensus of the liberal elite to the status of law of the land.