A “long-view” assessment of 2009

As we approach the end of 2009, I find myself trying to assess how America as a nation is doing. In the short term, of course, there are lots of things to complain about, but in another ten or twenty years most of these issues will have been forgotten – indeed, many may be forgotten by next year. What really interests me is how we are doing in the long view – how historians will assess us in fifty or a hundred years with the benefit of 20-20 hindsight.

Two things make such an assessment difficult today. In the first place, we are still immersed in many of the key events. We don’t have either the disinterested perspective nor all the information that later historians will have. Later historians, for example, will know how Afghanistan and Iraq “turned out” in the end, and that will shape their assessment of how well we did. Second, it is hard to compare across decades, because the world is growing ever more complex. Harry Truman’s world, for all its difficulties, was significantly less complex that the world Barak Obama faces. Today’s world scene has more significant players, and more complex interactions (largely because of faster and better communications).

Still, looking back over the last half century, America’s government handled World War II pretty well, and the aftermath brilliantly with the Marshall Plan. And America handled the Cold War reasonably well, with the possible exception of our muddled policies in Vietnam. Throughout that period, America’s economy and productivity flourished, and we made significant social advances in areas such as civil rights and women’s issues, among others.

It does seem to me however that we have not handled things nearly as well over the past few decades:

• Iraq and Afghanistan, it is now clear, were handled poorly by the Bush administration, and there is no clear evidence yet that the current administration is doing any better. And it is remarkable how Pakistan has managed to milk our government for over $10 billion in aid to fight terrorists over the past decade, while elements within the ISI (Pakistan’s own security service) continue to support the Taliban and its al-Qaida allies – probably with our own aid money.

• Attempts to limit nuclear proliferation, by both Republican and Democratic administrations, have largely failed in India, Pakistan, and North Korea and are even now failing in Iran. It is remarkable how North Korea and Iran, two relatively minor powers, have managed to stall, deceive, outsmart and outplay our government at every turn for decades now. North Korea, in particular, has managed to blackmail the West repeatedly into supplying it with food and oil, without giving away anything of value itself.

• We clearly missed an opportunity, after Communism fell in the Soviet Union, to entice Russia join the Western World as a full and proud democratic member, and are now faced with a resentful and increasingly authoritarian Russia intent on reclaiming its pride and sphere of influence.

• We have been led by well-meaning but unrealistic government policy (subprime mortgages to encourage homeownership among those who can’t really afford it) into a painful recession from which we are just now beginning to emerge, and we have accumulated a truly terrifying national debt which will have to be reduced someday either by higher taxes or soaring inflation, or (more likely) both.

• We have two entitlement programs in place (Social Security and Medicare), which are on a track to bankrupt the nation within a few decades. As of the end of 2009, the unfunded liabilities of these two entitlement programs totals about $107 trillion dollars – about seven times the size of our entire economy.

• We have lost credibility on all sorts of issues among both our allies and our foes, by making promises we don’t keep and threats we don’t follow up, by not matching our deeds to our rhetoric, and by lecturing others about high ideals we don’t follow ourselves.

Now of course human nature hasn’t changed over that period – there is no doubt just about as much greed, hubris, ego, and stupidity now as there was fifty years ago. Our culture may have changed a bit, but I don’t see convincing evidence that we as a nation are that much less materialistic or selfish, or that much wiser, than we were fifty or a hundred years ago. People still subscribe unthinkingly to all sorts of political and social ideologies, just as they always have, and these ideologies still cloud people’s thinking, just as they always have. So what has changed?

I’m inclined to attribute what I see as America’s poorer performance over the past few decades primarily to five factors:

1) A political system that increasingly rewards fund raising at the expense of demonstrated governing skill. These days to win a national political office requires a great deal of media exposure, and that costs lots of money, and so candidates who can raise lots of money have an almost overwhelming advantage. Not surprisingly, those corporations, industries, unions and political action groups that supply the candidate’s money expect favors in return, and get them. Money has always influenced politics, but perhaps never more so, or more directly, than it does now.

2) A political system staffed largely by people who apparently don’t have a good liberal education. There has been a notable lack, in recent decades, of administrations that appeared to be acquainted with the lessons of history, or the realities of basic economics, or that appeared to have any grasp of the cultures of either their allies or their foes. Too often our national policies have been shaped by the ideology or mythology of the administration in power, rather than by realistic and pragmatic considerations.

3) A political system largely staffed and advised at the upper levels by an incestuous insider elite based largely in East and West Coast academia, Wall Street, and corporate executive offices. Of course nations are always led by ruling elites – indeed our founding fathers were just such an elite of wealthy landowners – and the ruling elites quite naturally always look out for their own interests first. Nonetheless, there is always a danger that the ruling elite, talking almost exclusively to themselves, will increasingly drift out of touch with the nation they rule.

4) A government grown too big and unwieldy to function well. Every new agency or department or program that is created creates yet another turf to be fought over and another budget to be battled for and another constituency bent on self-perpetuation at any cost. The stories of agencies which refuse to share data or resources with their “competitors”, or which actively subvert the work of “competing” agencies are legion. By now the government is so large that Congress hasn’t the faintest idea what is happening to all the money they appropriate every year for the various agencies – with the result that billions or perhaps hundreds of billions are wasted for lack of oversight.

5) A voting population that can be too easily bought with favors paid for by taxpayer money. In the end, we the voters elect the key figures in each administration, and if our votes can be so easily bought with promises of government handouts without stopping to ask who will pay for this in the end, we will inevitably suffer the consequences.

Is any of this reversible? Not easily, but there are a few things I can think of that might help:

1) The imposition, by a constitutional amendment, of a balanced budget requirement on the federal government – a requirement that the government, over a rolling span of years (say 5 years, to give the Federal Reserve some flexibility) can’t spend more than it takes in. 39 states and Puerto Rico already have such requirements. The Federal government ought to also have such a requirement.

2) A constitutional amendment imposing term limits in Congress – perhaps a lifetime maximum of four terms for a House member and two terms for a Senator (not necessarily consecutive). This would force more turnover and bring in more new blood, and new thinking.

3) An absolute prohibition on any Congressman, President, or government official in the senior executive levels from ever lobbying for any organization, union, or corporation after they leave government service. This does not prevent them from joining a lobbying agency or corporation and advising on lobbying – but it would prohibit them from participating directly in the lobbying.

4) A constitutional amendment that limits the national debt in such a way that Congress can’t bypass the limit. There is a legal debt ceiling in place now, of course, but Congress routinely votes to increase it (five times in the past two years), so in fact there really isn’t an enforceable debt ceiling in place.

The absolute maximum Federal debt ought to be stated as a proportion of the annual GDP (say 40%), and contain language that forces the government to reduce the debt each year by some minimum amount (say 1%) if it exceeds a trigger level (say 30%) until it is again below the trigger level. (The Federal debt is currently at about 80% of annual GDP, and is expected to climb to about 150% of GDP over the next decade.)

Constitutional amendments can be proposed in several ways (See article five of the U.S. Constitution). The simplest way is by a two-thirds vote of both Houses of Congress, after which the proposed amendment must be ratified by three-fourths of the states. But of course Congress will never propose an amendment that limits its own power or prerogatives, so the amendments proposed above will have to be initiated by the legislatures of two-thirds of the states requesting a constitutional convention to consider these amendments. That means the battle will have to be fought at the state levels first.

Steps such as these would at least dilute the influence of the in-group elite by forcing more turnover and putting limits on the money they can appropriate without finding balancing sources of revenue. I don’t know what would ensure that we get wiser, more liberally-educated people into our senior government positions, nor what might make voters less gullible about political promises and handouts.

What we have all suspected....

That Umar Farouk Abdulmutallab could get aboard a US-bound airplane with an explosive device last week is hardly a surprise. Most of us who travel have long since come to the conclusion that airport security is an expensive exercise in bolstering public confidence, not an effective deterrent to serious terrorists.

But perhaps it was a bit of a surprise that some nine years after 9/11, the various government intelligence agencies, supposedly welded together under the "Homeland Security" department into a single efficient system, are still obviously dysfunctional, inefficient, and highly error-prone. The revelation that the British had him on a no-visa list, and even his father had alerted American authorities in Nigeria last month about his son's strange behavior, but still the American intelligence system couldn't respond to the warnings, is a worrying sign.

It seems to me yet one more symptom of a government more concerned with appearances than with substance (just as with the health bill, for example).

Recommended: Power Rules

Despite being the sole global superpower, American administrations in recent decades have been repeatedly thwarted, frustrated, and out-maneuvered by minor powers like North Korea and Iran. Leslie Gelb, a past president of the Council of Foreign Relations and a sometime senior official in the State and Defense departments, argues that “Power rules, still, and there still are rules on how best to exercise it”. I strongly recommend his new book “Power Rules”.

Recent presidents of both parties have all too often issued empty threats and followed policies which have sharply reduced our credibility among both our friends and our foes. Recent presidents of both parties have often subscribed to unrealistic ideological views, from President Carter’s naïve trust in the essential “goodness” of other nations (painfully corrected by events in Iran) to President Bush’s naïve belief that he could change the cultures of the Middle East in a few years (painfully corrected by the insurgency in Iraq). Thus far, President Obama’s “open hand” approach has produced highly favorable press, but few visible tangible results from Russia, China, North Korea, or Iran.

Gelb argues for a realistic use of power, both “hard” power and “soft” power, and points out that neither is effective without the other – that is, there is no “soft” power unless there is at least the looming threat of “hard” power in the background, while on the other hand the use of “hard” power can often be avoided if we don’t force foes into a corner where they have nothing to lose by resisting our demands.

Gelb also explores the increasing importance in today's world of "economic power", as opposed to the more traditional military power. Economic power can also reshape the actions and policies of other nations, but it operates much more slowly than military power and has to be allowed the time to have its affect.

This is a very good book, and a good counter to all the various unrealistic “ideologies” on the political left and right which have lead us to follow so many counterproductive foreign policies in recent decades.

International relations is at best a highly complex game, in which even experts often make mistakes. But it would certainly improve our odds if our senior government officials understood some of the lessons of history.

Recommended: The Hardest Call

As usual, David Brooks has about as even-handed and dispassionate an assessment of the current health care debate as anyone I can find. His piece The Hardest Call in today's New York Times is an excellent summary of the fundamental pros and cons of passing the current health care bill.

Of course, the bill currently being debated in the Senate is not the real bill. The real bill that will be voted upon will be the "manager's amendment" which Harry Reid and a few others have been working on privately and will present today or tomorrow, and which most of the Senate has not even seen. So in fact all the contentions public debate has been largely a sham, since it hasn't been about the bill that will come up for vote. Moreover, if Reid holds to his schedule of getting a vote next week before Christmas, most of the Senators voting will not have had time to read through the thousand or so pages of the final bill, and will in essence be voting blind.

So much for bipartsionship

So the only truly bipartisan amendment offered to the health care plan being debated in the Senate was an amendment to allow importation of drugs from Canada and a few other countries where drug makers often sell the same drugs they sell in the US at cheaper prices. This was an issue President Obama strongly supported in his campaign. It would have provided a powerful incentive for drug companies to level out their prices between nations. It would have cut the cost of health care for all of us.

So what did the Senate do? It defeated the amendment under pressure from the pharmaceutical industry. So much for campaign promises. So much for bipartisanship. So much for promises that the health care bill will reduce our health care costs. So much for claims that the Republicans are the party owned by big business and the Democrats are the champions of the little guy.

I was so fed up with the Republicans when Bush left office that the Democrats might have enlisted me as a staunch Democrat for the rest of my life. But the performance of this administration over the past ten months, and especially of the Democratically-controlled Congress, has been so abysmal that they have lost me for good. I would rather have the narrow-minded, priggish, right-wing Republicans in power than this group - and that is saying a lot! Bad as the Republicans were -- and they were bad -- they weren't as dangerous to the nation as this group of free-spending liberal ideologues are. No nation in history has survived the debt burden as a proportion of GDP that they are placing on us, and I doubt we will survive it either.

Another dissent to the health care legislation

Richard Foster, the chief actuary at the Centers for Medicare and Medicaid Services (part of the government's Health and Human Services Agency), has issued a report on the probable effect of the health care legislation currently being debated in the Senate. You can read the full report here.

Like the recent Congressional Budget Office report, it finds the current legislation, far from reducing health care costs, will almost certainly increase them. The new report estimates that national health expenditures would grow about $234 billion from 2010-2019 under the bill, 0.7 percent more than if nothing were done.

Insanity???

The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today's dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt. Of these, Medicare's future liabilities total more than $89 trillion..

In the face of this, the Senate is debating expanding Medicare to cover people as young as 55, which will make the funding problem even worse! This is unbelievable! Have the Democrats taken leave of their senses?? Are they determined to have a one-term president? Have they lost all sight of fiscal reality??

Recommended: Ghost: Confessions of a Counterterrorism Agent

I recommend Ghost: Confessions of a Counterterrorism Agent, by Fred Burton. (see the booklist on the sidebar for details) This book reads in parts like a James Bond novel, but acquaintances who should know tell me it is a pretty accurate depiction of what goes on in the shadowy world of counter-terrorism. It is well worth reading, not only because it is a gripping yarn, but because it shows that our enemies - those fanatics who would like to really harm our nation - should not be underestimated. Some of their foot soldiers may just be dumb thugs, but the masterminds are intelligent, dedicated, and persistent. There are a lot of them, and we underestimate them at our peril.

The CBO report on the Senate health care legislation

Considering the amount of "spin" (lies?) Senate Democrats have been putting on the Congressional Budget Office's scoring of the current Senate health bill, you may want to read the CBO paper for yourself. It can be found online at the CBO website at http://www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf.

I call your attention to the "Summary of Findings" beginning on page 4. Basically it says this legislation will raise almost everyone's health costs one way or another. If your insurance costs don't go up, you tax bill probably will -- or (more likely) both will go up. Hardly a surprise.

Recommended: No one at the wheel in Afghanistan

President Obama's Afghan strategy, outlined in his speech at West Point last night, depends heavily on growing participation by the Afghan government. As Juan Cole points out in his December 2 piece No one at the wheel in Afghanistan, this is a highly questionable assumption.

To be fair, President Obama doesn't have any good options in Afghanistan, only bad options and worse options. And his troop surge may be the best of the bad options. But to the extent that his strategy involves "nation building", it is unlikely to succeed in the Afghan culture. True, the White House has learned not to use the term "nation building", but what they propose - massive investment in civilian infrastructure while training up a competent army and police force - certainly is "nation building" by another name.

And you may recall from a post a few months ago the reports from observers in Afghanistan that many of the army and police recruits take the basic training for the pay, and then vanish back to their villages, perhaps to reappear a few months later under another name and take the training and pay again. Hardly a promising start for a new army or police force.

Recommended: ObamaCare at Any Cost

I recommend The Wall Street Journal's editorial ObamaCare At Any Cost, in today's issue. It's not an article that will please liberals, but I think it is fairly accurate. The health care bill has now become a "must pass" for the Democrats, however imperfect it may be. They have staked their reputation on passing something they can claim was health care reform, and can't back out now.

The "savings" in this bill have always been suspect. Now that all the accounting tricks used have been exposed, it is clear this bill will in fact add billions (or perhaps trillions) to our national debt over the next couple of decades. Congress is trying to tell us that they can insure 39 million more people, many of them with federal subsidies, and yet it will cost us less. That claim is ludicrous, and one wonders how dumb they think America taxpayers really are.

Recommended: Strong Enough for a "Reset" with Russia?

I recommend Ivan Krastev's commentary Strong Enough for a "Reset" with Russia? in today's Washington Post. We Americans have our (probably not entirely accurate) view of Russia, but of course Russians have their own (probably not entirely accurate) view of America. Each of us sees the other through our own experiences and expectations, which is probably the source of a good deal of misunderstanding.

So Krastev's comments are helpful, since Russian reactions to our political moves and offers will be driven not by who we really are, but by who the Russians think we are.

Recommended: An Empire at Risk

Niall Ferguson is a professor of history at Harvard and most recently the author of The Ascent of Money, which is quite a good book. He also wrote The Pity of War: Explaining World War One (1998), and the two-volume set The House of Rothschild (also 1998). His article An Empire at Risk in the upcoming issue of Newsweek is long and detailed, but well worth reading. There is little question that the government's profligate spending over the past few decades, culminating in the heart-stopping $1.4 TRILLION deficit this year, is unsustainable. And it appears that this Congress, believing (correctly or incorrectly) that the last election gave it a mandate to implement all the liberal programs that the Democratic Party has hoped for for years, is ideologically incapable of cutting government spending and raising taxes to begin to pay off the national debt, or even to reduce the annual deficit.

In the end it is economic power that is at the base of all international power. Without economic power, nations can't afford the military power needed to defend their national interests. Without economic power, nations can't afford the investments in education and innovation that make their citizens highly productive. Without economic power, nations can't afford to build and maintain the complex infrastructure that a modern society needs. Without economic power, nations can't afford the continuing capital investment needed to maintain their economic power.

Ferguson argues that we in America are in danger of losing our economic dominance in the world because of our unwise government policies - most particularly our inability to be realistic about our finances. The government for decades, under both parties, has spent far more than it takes in, yet has been unable to summon the political will to raise taxes and/or cut government spending. Yet these are the only two options available to reverse our increasing indebtedness.

A sobering argument.

Recommended: Afghan Mythologies

I tend to look for articles and books that give me a different perspective, that make me questions some of my own assumptions and beliefs, or that shed new light on issues. After finding yesterday's Victor David Hanson article (see preceding post) I read through some of his other recent articles. His November 5 article Afghan Mythologies made me sit up and take notice. I have believed some of his Afghan mythologies, but this article made me reexamine them.

Recommended: We Ain't Seen Nothing Yet

Thanksgiving Day ought to be a time to be thankful for what we have, and we in America have a great deal for which to be thankful. So it may seem ungenerous on this day to recommend a pessimistic piece like Victor David Hanson's We Ain't Seen Nothing Yet. But in fact, lucky as we are to live in America today, we as a society are squandering our blessings at an irresponsible rate, as Hanson points out.

It is easy to gripe about this administration, or about the last one. It is easy to grumble about how clueless this Democratic Congress is, or how equally clueless the last Republican Congress was. But in fact we are a democracy, so the buck really stops with us - with we the voters who were unwise enough to put these people into power in the first place, and are now unwise enough to keep them there. We voters, who can be so easily lead by party labels, so easily bought by a few unrealistic promises, so easily seduced by clever campaign rhetoric, so easily distracted by emotional issues, so easily conned by professional spin doctors and image makers, so easily shaped by the network's talking heads.

Like some sports figures who have it all yet end up penniless, we in America have it all, and yet we are well on the way to letting our political leaders in both parties squander it all and leave us penniless and ruined.

Sorry for the pessimism on this day of thanksgiving, but I really would like my grandchildren to still have something to be thankful for when they grow up -- and for that to happen we the voters need to grow up, FAST, and begin to get real!

Recommended: Amateur Hour at the White House,

Leslie Gelb is a former correspondent for The New York Times and is currently President Emeritus of the Council on Foreign Relations. He served as an Assistant Secretary of State in the Carter Administration from 1977 to 1979. He is author of the recent New York Times best-seller Power Rules: How Common Sense can Rescue American Foreign Policy (about which more in a later post). He knows what he is talking about.

I recommend his recent article Amateur Hour at the White House, in which he points out that for all of President Obamas traveling the globe and glad-handing world leaders, not much of substance is resulting, and for good reason. As his book Power Rules points out, nations don't respond to high-minded appeals or charismatic personalities -- they never did. They respond to national self-interest, and deals come about when carrots and/or sticks change their perception of their national interests.

Recommended: Dealing with America's fiscal hole

I recommend the article Dealing with America's fiscal hole in the Nov 19 issue of The Economist. Clearly we are on an unsustainable path with the growing federal debt. Just as clearly, neither the administration nor Congress is paying nearly enough attention to this issue yet. Indeed, both are still on a path to substantially increase the debt with politically-appealing but fiscally-questionable legislation like the current health care bill.

I agree with The Economist. While now is not the time to raise taxes or sharply cut government spending - not until the recovery is somewhat less fragile - the administration has to field a credible long-term plan soon to bring the deficit down. The health care debate, in which political ideology and posturing in both parties has completely overcome practical economics, does not suggest that this Congress is capable of crafting a credible long-term debt-reduction plan.

Recommended: The Future of War

I have continued to read George Friedman’s earlier works, and have just finished the 1996 book The Future of War, by George and his wife Meredith Friedman (see book list in the side bar for details). It is well worth reading.

The Friedmans make the point that every weapon begins from its invention a progress toward senility, in which the defensive costs of protecting the weapon against evolving countermeasures escalate while the ability of the weapon to project power remain more or less static. At some point the defensive burden becomes so great that the weapon is essentially useless.

Thus the tank was invincible at first, but as opposing tanks mounted heavier guns and anti-tank rockets improved tanks had to carry more and more armor, until now a tank weights 50 tons or more, and yet can be destroyed by a relatively inexpensive anti-tank missile from a single infantryman or a helicopter miles away.

Similarly, the aircraft carrier was a brilliant new weapon in World War II, but now must be surrounded by a fleet of destroyers, cruisers and submarines whose only purpose is defense, and even so a couple of inexpensive sea-skimming cruise missiles could destroy it or at least put it out of action in an instant.

Anti-aircraft defenses have improved steadily over the past half century, so than now a $2.2 billion dollar B-2 stealth aircraft is needed to penetrate a good air defense system, yet it’s bomb load of 50,000 pounds is not significantly different than that of an old B-52 bomber. All those extra billions in cost are needed just to defend the plane long enough for it to perform it’s mission.

Of course cultures are slow to adapt, so the military services are loath to give up their manned aircraft, their aircraft carriers, and their tanks, just as earlier generations of military and political leaders were slow to give up walled castles, armored knights, horse cavalry, and massed infantry charges. Nonetheless, the Friedman’s argue, the advent of increasingly intelligent precision munitions, space-based surveillance, GPS guidance systems, and the like will profoundly change the nature of warfare.

Indeed, it already has. Al Qaeda leaders in Pakistan are killed by rockets fired from Predator unmanned aircraft controlled by pilots sitting comfortably in bases in the U.S. As we saw in the Gulf War, current precision munitions can be directed through one particular pane of a window of a building. Cruise missiles can fly thousands of miles to their targets, navigating by GPS and by comparing the ground topography under them to their own maps, and deliver munitions within an accuracy of a few feet. Anti-ship missiles can be fired in the general direction of a distant enemy fleet and can find and recognize the ships, decide which is the most valuable, and attack it all on their own with no further human guidance. Small anti-tank munitions can be dispersed a thousand or so feet above an armored column, can recognize their targets (even using millimeter-range radar to distinguish real tanks from dummys), and can select, attack, and destroy a particular tank or armored vehicle in the column all on their own.

Clearly there is a revolution in military affairs in progress, significantly different than the buzz-word bureaucratic efforts of the same name in the Pentagon. And clearly it will change the nature of warfare. The only question is: how fast can the military and political cultures catch up to the changes.

America's weakness

I found the following passage from pp. 338-339 of George Freidman's America's Secret War of particular relevance:

"Our own virtues are substantial,. Our warriors are well armed and well trained. The can endure hardship. Americans have always been underestimated by their enemies, from Valley Forge to Corregidor and Khe Sanh. American soldiers fight well - and, we will assert, as humanely as war permits. The notion that Americans cannot withstand hardship, practice patience, or face death is a myth without historical basis. The American people elected Richard Nixon and defeated George McGovern, the peace candidate. It is not the American people who cannot endure war, but the America elite.

The weakness of the U.S. is not our soldiers, nor their numbers, but the vast distance that separates American leaders from those who fight. From government officials to media moguls to finance power brokers, few members of the leadership class have children who are at war. To them, the soldiers are alien, people they have never met and don't understand. When the children of the leaders stay home, the leaders think about war in unfortunate ways. As the most powerful nation in the world, we will be fighting many wars. A ruling class that sends the children of others to fight, but not their own, cannot sustain its power very long."

How much is a trillion dollars?

As of mid-October the Federal deficit stood at $1.4 TRILLION, more than three times last year’s deficit under the Bush administration. Current CBO projections are that as government plans stand now the deficit will top $9.1 TRILLION over the next decade, not counting any additional spending from Congress (such as the $1 trillion+ health care plan, or a larger deployment of troops in Afghanistan).

Of course this is just the annual Federal deficit – the amount of NEW debt we are assuming every year. The more important number is the national debt – the amount we already owe back to someone. At the moment our national debt stands at just about $12 trillion dollars. If the Congressional Budget Office estimate of future Federal deficits is accurate, the national debt will stand at around $20 trillion ten years from now.

Senator Everett Dirksen (R-Illinois, 1950-1969) was reputed once to have said “a billion here, a billion there – after a while it all adds up to real money”. These days we would have to change the “billion” to “trillion”.

Few of us have a good sense of what a million dollars amounts to, let alone a billion or a trillion. Remember, a billion is 1000 million. And a trillion is 1000 billion, or a million million, or $1 with twelve zeros behind it . Does that help? Probably not. Let’s put it into more concrete terms:

The US population today stands at about 308 million, so a $12 trillion Federal debt means every man, woman and child in the US owes about $75,000 today, and 10 years from now may owe about $125,000.

If you could make $1 every second ($86,400 a day, $31,5 million a year), it would take you 31,000 years to earn $1 trillion dollars, and 620,000 years to earn $20 trillion.

The government spent $383 BILLION in the last fiscal year just on interest payments on the national debt (by comparison, it spent only $53 billion on education). It our debt reaches $20 trillion, we will pay more than half a trillion dollars in interest EVERY YEAR.

With $1 trillion we could hire about 1.9 million more teachers. With $20 trillion we could hire 19 million new teachers at twice the current pay (and perhaps get twice as good teachers).

With $1 trillion we could build about 16.6 million Habitat for Humanity houses.

A major new hospital in the US costs about $50 million to build and outfit. $1 trillion would buy 20,000 major new hospitals. $20 trillion would build enough major new hospitals for the entire world.

$1 trillion is a lot of money. $20 trillion is an unimaginable amount of money. For a nation – even a wealthy nation like ours - to owe $12 trillion is a pretty heavy debt. To owe $20 trillion would be a crushing debt. This is why a lot of independents like myself are deeply worried about the profligate spending of this administration, and especially this Congress.

Recommended: Afghanistan: Heads You Lose, Tails You Lose

Immanuel Wallenstein has one of his usual pungent, not very encouraging but probably accurate assessments in his recent article Afghanistan: Heads You Lose, Tails You Lose.

Worth reading and thinking about.

Recommended: Call White House, Ask for Barack

Thomas Freidman has an interesting Op Ed in today's New York Times, entitled Call White House, Ask for Barack. Friedman basically argues that we ought to walk away from the Israeli-Palestinian peace process, because it isn't going anywhere and isn't likely to go anywhere until and unless the two sides feel the need to change the status quo. He quotes James Baker’s line: “When you’re serious, give us a call. Ask for Barack. Otherwise, stay out of our lives. We have our own country to fix.”

An interesting proposal, and one we might consider in Iraq and Afghanistan as well.

Thoughts on Afghanistan

As President Obama and his team ponder what to do next in Afghanistan, it occurs to me that there are some facts that ought to carry some weight in the decisions:

1. Unlike Iraq, Afghanistan is thinly populated, with few even moderate-size cities. Securing the cities does nothing effective – the Soviets secured the cities, and it made little or no difference to their problems. The power in Afghanistan resides in the countryside, not the cities.

2. Securing the countryside is almost impossible. The population is thinly spread, much of it in rugged mountainous terrain. It would require deployment of our whole army to secure the countryside, and to what end? We certainly can’t afford to stay there forever.

3. If our objective is to hunt down Al-Qaeda, Afghanistan is the wrong place – such concentrations of Al-Qaeda as exist are in other places, like Pakistan.

4. In general, our presence in Afghanistan is the reason for our current insurgency. The urban elite would like us there, but they are a tiny minority. The vast rural majority would like everyone else out of their territory – they just want to be left alone. And when strangers enter their territory – be they Soviet troops, American troops, or even troops from the central government in Kabul, they fight them. It’s like red ants – they want to be left alone and bite when disturbed.

5. The central government is corrupt, and will remain corrupt for the foreseeable future. It’s the way things are done in that culture. Asking them to suddenly become a different culture is naïve. We can pour all the money we like into the system; most of it will disappear without visible result, just as it has been doing for the last eight years.

Given these facts, it seems to me we ought to sharply limit our involvement in Afghanistan. The costs (which are enormous, in both lives and money) simply don’t justify the possible results. It might make sense to propose the following pact to the Afghan tribes: keep Al-Qaeda out of your territory and we will leave you alone. Allow Al-Qaeda to operate in your territory and you will invite unpleasant intrusion by us. That would give them the incentive to be inhospitable to Al-Qaeda operatives, whom they don’t much like anyway.

Recommended: America's Secret War

Some weeks ago I recommended George Freidman's new book The Next 100 Years. That book was so good that I went back a got a copy of his 2004 book America's Secret War: Inside the Hidden Worldwide Struggle Between America and its Enemies. (details listed in my book list on the sidebar)

In his 2004 book, Friedman discusses at length the roots of the current Islamic militant movement, and the unwitting part that American policies in the 1960-1990 era played in helping them form. He also discusses in detail the deficiencies in our intelligence system that have made it miss most of the big events in that period, from the North Korean invasion of South Korea, through the fall of the Soviet Union to the 9/11 attack. And by the way, he doesn't fault the people, whom he sees as bright and hard-working; he faults the system. He also talks in detail about our involvement in Iraq, Iran, Afghanistan, and Pakistan.

This book is well worth reading if you want a better understanding, not only of the tactical games being played by Middle Eastern nations, but about the thinking and assumptions - right and wrong - of Washington policy makers.

On the inevitability of war

A perennial myth among well-educated, well-off, mostly-liberal Americans is that we can end war if only we work hard enough at it. It certainly would be nice if we could end war as an instrument of policy, but it simply isn’t possible, however much some people would like to believe that it is.

This is one of those areas where the poor have a much better grasp of reality than the well-off. The poor often live in neighborhoods ruled by gangs or drug lords, so they understand the fundamental laws of the jungle that have prevailed in most of the world throughout all of history. The strong take what they will and the weak suffer. The only way not to be exploited by the strong and dangerous is to be stronger and more dangerous yourself, or at least allied with stronger and more dangerous forces. I understand why young men join gangs in tough neighborhoods – they do it out of self-preservation. Alone they are prey – as a member of a gang they have alliances that make them safer.

The well-off can believe in their myths of a peaceful world only because strong police and strong armies maintain a peaceful world around them. Were the police and armies to disappear some night, it wouldn’t be too long before less pleasant people would appear to divest the well-off of all their material wealth and destroy their peaceful world.

The same is true of the world stage. There is never a lack of ruthless, ambitious people willing to use force to get what they want or advance their particular theological or political view. Genghis Khan, Alexander the Great, a number of Roman emperors, Napoleon, more than a few of the early and medieval Popes, a succession of English, French, Spanish, Chinese, Persian, and Turkish monarchs, Mohammad and a number of his successors, Hitler, Stalin, Papa Doc Duvalier, Slobodan Milosevic, Saddam Hussein, and innumerable petty tyrants and local warlords – the list is endless, and more than a few of these kind of people are alive and in power today around the world. None of these people would have been swayed in the least by “appeals to common humanity”, any more than today’s ruthless drug lords or Islamic militants would respond to such appeals.

Among nations, as among people, the way – the only way – to be safe from attack, exploitation and despoliation by greedy, ambitious neighbors is to be sufficiently strong to deter attack. The Roman writer Publius Flavius Vegetius Renatus summed it up succinctly almost 2000 years ago: "Igitur qui desiderat pacem, praeparet bellum." (if you want peace, prepare for war).

The world survived the Cold War confrontation with the Soviet Union primarily because it armed itself sufficiently to make it unattractive for Stalin to attack. If we had not armed ourselves, there is little question that Stalin would have taken as much of Western Europe as he could, just as Hitler tried to do before him.

Hitler did as much damage as he did primarily because European nations, still affected by the terrible losses of World War I, couldn’t bring themselves to arm and face him down early when he invaded the Rhineland in 1936. Since no one opposed him there, he pressed on with an invasion of Poland in 1939, and then of France, and World War II was the result.

America is safe today because of our military power. That is not to say that America has always used its military power wisely. There are times when military action is the appropriate response, and there are times when other measures are more appropriate. Our political system, driven by some of the more unrealistic ideologies and emotions that periodically sweep through the American public, doesn’t always respond pragmatically to events.

Nonetheless, the reason we Americans can sleep soundly in our beds is because we are a mighty nation with a powerful military, so we aren’t living in fear each night. If we lived in Somalia, for example, a weak failed state at the mercy of its neighbors and the local thugs, we certainly wouldn’t sleep as peacefully at night.

This is another example of the problem of the “bubble of illusion” I have written about before. The anti-war people assume that everyone thinks the way they do, since certainly most of the people they know think the same way – we tend to pick our friends among those who agree with us. But in fact, most of the world doesn’t think the way they do, or see the world the way they do, so their fundamental assumption is wrong.

A symptom of the illness

Social Security benefits are tied to the consumer price index. When inflation pushes the consumer price index up, Social Security benefits are automatically increased the next year to adjust for the cost-of-living increase. This year, with the economic problems, the consumer price index has actually gone down, so in effect all of us who are seniors are already getting an increase in our Social Security benefits, even thought the dollar amount of our Social Security benefits will not go up January 1 (but they won’t go down either).

Nonetheless, President Obama has proposed giving all of us another $250 Social Security bonus next year, at a cost of between $13 and $14 billion more added to the skyrocketing Federal deficit, now at about $1.4 trilllion, or about three times larger than the already frightening debt that President Bush’s administration left us with last year.

Nice as the extra money would be, it makes no economic sense. We seniors do not lose buying power by not getting a Social Security raise next year, since the cost-of-living has actually declined slightly. It is, frankly, nothing more than a political sop to try to keep all of us seniors happy while Congress tries to ram through a health care package of dubious value and enormous cost.

So one again this administration is printing money like mad (which is in effect what happens when the government goes into debt) with no plans whatever to control costs or figure out how to pay back what we already own. I wasn’t happy with the Bush administration’s profligate spending, but President Obama’s administration, and especially this Democratically-controlled Congress, have in less than a year made Bush’s fiscal transgressions seem small-time.

I had hoped that the old Republican charge that Democrats were the party of fiscal irresponsibility and of “tax and spend” politics was no longer true. Apparently that charge is still valid.

This fiscal irresponsibility is now becoming a serious problem. It may, in fact, be the nation’s most serious national security issue at the moment, far greater even than the terrorist threats. As I have pointed out before, fiscal mismanagement and assumption of crushing debt preceded, and instigated, the downfall of a number of recent empires, including the British, French and Dutch empires.

Recommended: Magic Numbers in Politics

Thomas Sowell is a well-known economist who has always seemed to me level-headed and non-ideological. His piece today, Magic Numbers in Politics, on the RealClearPolitics site seems to me instructive in the context of the current arguments over health care and stimulus packages.

Politicians love numbers, because they are simple and make good sound bites. Those who understand where the numbers come from are less sanguine about the arguments because they understand all the questionable underlying assumptions. Politicians either don't understand this, or (more likely) don't care, so long as the numbers seem to support their policies and their re-elections.

We are assured, for example, that the Senate health bill will "only" cost $829 billion over the next ten years, well below President Obama's $1 trillion cap. In fact, the politicians all know, and we all know, it will end up costing more. The deep Medicare cuts that are included in the calculations probably won't occur, or certainly won't be as deep as assumed. The "savings" imputed from various actions won't save as much as assumed, if they save anything. And so on. If one plays with the equations long enough, and tinkers with the assumption enough, one can generate any prediction one wants.

The claim that the government can provide health care coverage to tens of millions more people, many of them poor and requiring Federal subsidies, and not cost the nation any more money is ludicrous, but politicians expect us to believe it anyway. Expanding coverage may be worth doing even if it does cost us more, but then we ought to be up front about it, instead of playing this fake numbers game.

So what has been accomplished thus far….?

It seems a little unfair to judge the accomplishments of President Obama’s administration after only 9 months in office, though that logic apparently didn’t deter the Nobel Prize committee. But since the issue has now been raised, let’s consider it.

There is no question that President Obama is one of the most personable and eloquent presidents we have had in recent decades. And there is no question that he is fighting for noble causes – financial recovery, nuclear disarmament, global warming, health care, closing Guantanamo prison, better relations with our international partners, and some resolution of the wars in Iraq and Afghanistan.

So what has been accomplished on these fronts thus far?

On the financial front, although the stock market has had a recent partial recovery, there is little beyond speculator hope to support the rise in share prices. Unemployment continues to rise, though that is to be expected since employment recovery generally lags economic recovery by 6-12 months. Credit is still tight, since banks are hording cash for their own safety rather than lending it. Many major banks are still in precarious condition, still carrying billions in “toxic assets” on their books. Despite the Treasury Department’s concern that this recession was exacerbated by having institution “too big to fail”, the Treasury’s own actions have a made a few of the “too big to fail” banks even bigger – especially JP Morgan Chase, Bank of America and Well Fargo Bank. Since the beginning of 2008 some 84 banks nationwide have failed, and there are predictions of up to 1000 more local bank failures. The Federal bailout certainly helped some of the major Wall Street players to survive, or find shelter in other institutions, but it has done little for local banks without such political connections. And multi-million dollar bonuses are still being paid on Wall Street, even in banks that were “saved” by taxpayer money.

The administration and Congress would like to take credit for the apparent “improvement” in the economy, arguing that the trillion dollar stimulus plan worked. But in fact only some 15% of the stimulus money has been spent thus far, so the recovery thus far isn’t likely to have been driven much by the stimulus money. It might have been, if President Obama had been willing and able to strong-arm Congress into passing a more effective, less pork-laden stimulus package, but he was largely absent in those negotiations. And along with this, the Federal deficit has skyrocketed with no plan in place to throttle the red ink or pay any of it back.

On nuclear disarmament, the goal that apparently most impressed the Nobel Committee, nothing substantial has really happened yet. President Medvedev of Russia has discussed reducing (but certainly not eliminating) its nuclear arsenal. Prime Minister Putin (who is probably the real power in the government) has made no such suggestion. No other nuclear nation has said a word yet about reducing their nuclear arsenals. Certainly the Chinese, Israelis, Indians, Pakistanis and North Koreans have no intention of giving up their nuclear arms. And the Iranians are still hell-bent on becoming a nuclear power. So despite the Nobel prize, nothing really has happened yet on this front beyond the same sound bites that have been spoken by leaders for decades now.

On global warming, little effective has happened yet. The carbon cap-and-trade proposal is mired in Congress, held up by coal-state members of Congress. We are still subsidizing corn-based biofuel, even though it actually takes more petrochemical energy to produce it than we get out of it (but it buys votes in the corn-belt). President Obama chaired an extraordinary one-day session at the UN, but nothing came out of it but vague generalities. Given the difficult Congressional battles to come on the cap-and-trade issue, he may well go to the Copenhagen Climate Meeting in December with nothing tangible from the U.S. to offer.

The health-care debate has dominated Congress for months now, and although the Senate bill now being discussed does eliminate some of the more radical and unworkable ultra-liberal proposals in the three House bills, it still doesn’t attack the core problems in our health care system. And it does add almost a trillion more dollars to the Federal budget over the next decade. Although the CBO has finally been browbeaten into scoring the current bill as essentially revenue-neutral in the long run, this is true only if a number of unlikely assumptions prove to be true – such as that Congress (and physicians) will go along with cutting physician Medicare payments by 20% starting next January and growing to 40% by 2016.

No doubt there will eventually be a health care bill of some sort, and it may even include some useful things, like forbidding insurance companies from refusing or dropping people because of health problems or preexisting conditions or age. Of course the law of unintended consequences is always in action – if insurance companies have to accept everyone, that substantially changes the statistics in their risk pool, and inevitably will require that they raise everyone’s rates. But thus far, nothing really has happened except a lot of talk and debate.

Closing Guantanamo prison, as the administration has now discovered, is easier to promise on the campaign trail than to deliver in actuality. It turns out everyone wants it closed, but no one wants the prisoners in their own back yards. The only action Congress has thus far taken on this issue is to delete all money for moving prisoners to American soil. Not a promising start.

In terms of better relations with our international partners, there is no question that the Asians, the Europeans and the Muslim world like President Obama better than they liked President Bush. But thus far that has not translated into any noticeable tangible gains for American interests. Russia thus far has been no more accommodating on Iran sanctions than before. China thus far has been no more accommodating on pressuring the North Koreans than before. The Muslim world thus far has been no more accommodating on fighting Islamic terrorism than before, or on helping to resolve the Israeli-Palestinian issue. Israel has not stopped building and expanding settlements. Everyone likes us more, but no one has actually done any more than before to help our interests.

The military and security problems in Iraq and Afghanistan remain difficult. The only noticeable improvement in the past year was driven by President Bush’s “surge” in Iraq. To be sure, the problems in both places are largely intractable, rooted deeply in the respective cultures and in centuries of conflict, so it isn’t fair to fault President Obama for not having solved them yet. But neither has he any tangible accomplishments to point to yet.

So on balance I have to say that I think the Nobel Committee was premature in their judgment. Promises are nice, but only accomplishments really change things. President Obama has certainly said the right things, and has said them eloquently. But he hasn’t yet shown that he can take on international opponents, a dysfunctional Congress, or even his own party, and make things happen.

Recommended: Obama's real Afghanistan options

Along the same lines as the last post, let me recommend Ralph Peters' article today in the New York Post, Obama's real Afghanistan options. Ralph Peters, as I have noted before, is a well-known and well-respected military writer, with a pretty non-partisan approach to things. He lays out President Obama's three options - surge with more troops (General McChrystal's plan), narrow the scope to destroying al Qaeda in Afghanistan and Pakistan (vice-President Biden's plan), or waffle with a split-the-difference troop increase that may be the most politically palatable, but doesn't accomplish either objective.

In fact, there is very, very little chance that we can successfully "nation build" a stable democracy in Afghanistan, a territory ruled for thousands of years by tribal leaders and warlords, and in no way culturally prepared for anything like a strong central government - democratic or otherwise. Those who still believe we can make a democratic nation in Afghanistan are, I think, naive in the extreme, whether they are Republicans or Democrats. There is also a vanishingly small chance that we can "buy" an effective Afghan national army or police force with our billions -- effective in the sense that they can take over from our military.

Those realities ought to be central to any decisions the administration makes about Afghanistan. The Bush administration was unable to see or accept those realities, and it looks to me like the Obama administration may be just as naive in this area.

Recommended: Afghanistan could decide this presidency

Amidst all the instant punditry about Afghanistan on the cable channels and in the print media, one of the few voices that seems to me to make sense is Robert Shrum's article Afghanistan could decide this presidency. As I noted many months ago, American voters have very short memories, and by now Afghanistan is no longer Bush's war but Obama's war. So what strategy he picks matters a great deal to his presidency and to the fortunes of the Democratic Party, and as Schrum points out, he doesn't have any good options, only bad options and worse options.

More on Afghanastan

On the same lines as the previous post, recommending Immanuel Wallerstein's piece, I also recommend reading the blog Tomgram: Ann Jones, Us or Them in Afghanistan?. Ann Jones , who has written a book about her experiences in Afghanistan, suggests that the Afghan "Army" that America has been paying billions to assemble is in fact largely a figment of our imagination, and always will be.

Recommended: The Firestorm Ahead

As always, Immanuel Wallerstein's views differ from Washington's "conventional wisdom". His September article The Firestorm Ahead is worth reading, though it won't be very comforting. He argues that American efforts in the Middle East are about to come to pieces, and that the cascading consequences from Iraq to Afghanistan to Pakistan will cause a political firestorm in American politics in the next two to three years.

His core facts are correct - (a) the American military is finding it hard to work under the existing Status of Forces Agreement (SOFA) with Iraq. Not much of this makes the evening news, but it certainly is clear if one reads the military journals and soldier's blogs from Iraq. (b) the Afghans and the Pakistanis both would like to see America out of their affairs, despite the public statements of their leaders to the contrary. Whether the conclusions he draws from these core facts are accurate we will know soon enough.

Recommended: Job One

John Judis, a senior editor at The New Republic, has written an interesting piece entitled Job One: The only way Obama can pull his presidency back from the brink. He argues that despite the furor over health care, and more recently over whether to send more troops to Afghanistan, the real driver for the fortunes of President Obama and the Democratic majority is the economy, and specifically the unemployment rate.

Judis looks at the popularity of Roosevelt and Reagan as they both handled economic difficulties. Here is a fascinating graph from his article that makes the point that disapproval ratings track pretty close to unemployment trends -- when unemployment increases, so does the proportion of the nation disapproving of the president and his party. When unemployment improves, disapproval ratings drop:
It has seemed to me that this administration has had its priorities wrong. Certainly health care reform is important, but repairing the economy is far more important. While all this fuss over health care has been going on, Congress has done little to attack the underlying problems that led to this recession. Banks are still in dire straits, there is still a mass of toxic assets on their books, credit default swaps are still unregulated, the federal deficit is ballooning at an alarming rate, and unemployment continues to rise. Job one (and two and three) should have been to focus on these issues first and leave health care and carbon caps and other issues until this first probelm was truly under control.

Recommended: Afghan Agony - More Toops Won't Help

Ralph Peters is one of the nation's leading military strategic thinkers. A retired Army Lieutenant Colonel, he has authored a number of excellent books on military strategy (some are listed in my book list – see sidebar), as well as a few pretty good military novels. So when he speaks out on our military policy in Afghanistan, it is worth listening.

His article Afghan agony: More troops won't help in today's New York Post is excellent. In essence, he argues that the Obama administration, like the Bush administration before it, has set an impossible goal in Afghanistan - to turn a poor, fragmented, tribally-oriented collection of people into a modern democratic nation in a matter of a few years. As more than one historian has noted, Afghanistan has been the graveyard of empires throughout history, from Alexander the Great and the Persians in ancient times to the British and the Soviet Union in modern times. The degree of hubris inherent in Washington's belief that it can succeed were so many other have failed is astounding - or perhaps politicians just don't know history.

Peters argues that we should redefine the mission to the simple, narrow goal of tracking down and eliminated or at least seriously crippling al Qaeda and its allies, and forget about nation-building in Afghanistan. Sounds like a valid argument to me.

Recommended: Dmitry Medvedev’s Article, Go Russia!

Fareed Zakaria interviewed Russia's president, Dmitry Medvedev, on his GPS program this past Sunday. It was a fascinating interview, very cordial in tone. But Fareed, as usual, asked all the hard questions. Medvedev is clearly a bright and engaging guy, but just as clearly, he is Russian first and foremost, with a Russian view of the world.

Just a few days before this interview was taped, Medvedev wrote an article that has been widely reprinted. You can read a translation of the article here. It is an extraordinary piece to come from a Russian leader. It speaks quite frankly and intelligently about Russia's domestic problems, and it give some insight into how Russian's current leadership sees the world and Russia's place in this world.

I strongly recommend reading it. Russia is not the global superpower it once was, or at least aspired to be. But it is nevertheless a major player on the world scene, and we in the Western world have got to learn how to live with Russia, and how to be sensitive to its concerns, if we want Russia to help us with issues like Iran's nuclear program.

Recommended: Belatedly, Egypt Spots Flaws in Wiping Out Pigs

The Law of Unintended Consequences is always in operation. Along those lines I recommend the piece Belatedly, Egypt Spots Flaws in Wiping Out Pigs by Michael Slackman in the Sept 20, 2009 New York Times. The Egyptians acted with the best of intentions, though with a flawed understanding of the problem, and got a worse problem as a consequence.

Is there a lesson in this for our current administration as it deals with financial problems, Iraq, Afghanistan, and health care reform? Certainly previous administrations have seen the same effect -- we helped the Afghan mujahideen defeat the Russians, and inherited Osama bin Laden and a core of experienced terrorists as a consequence. Congress (largely liberals, by the way) encouraged home ownership among those who really couldn't afford it and created subprime mortgages for that purpose, and as a consequence we inherited the current fiscal crisis, kicked off by growing defaults in subprime mortgages. We entered Iraq to remove a tyrant, and ended up stuck in the brier patch.

One might want to keep this in mind as Congress tinkers with major issues like carbon caps and health care reform. Whatever they do, and however pure their motives, the Law of Unintended Consequences WILL be in operation.

Recommended: The Truth About Bureaucracy

I recommend Matt Bai's piece today in The New York Times entitled The Truth About Bureaucracy. Government does some wonderful things for us, but it is not an unmixed blessing. Anyone who has had to deal with the IRS or argue with some distant and anonymous Medicare bureaucrat about coverage has had a taste of the problems with government agencies that have little or no accountability to the public.

I agree with him - this legacy of distrust is certainly a factor in the public concern about the administration's health care overhaul.

A really dumb move…

President Obama promised at the last G20 meeting to “refrain from raising new barriers to investment or to trade in goods and services”. Then a week ago he slapped a 35% tariff on imported low-end tires from China. Why? The American tire makers didn’t complain about Chinese tire imports, and they don’t support the new tariffs. American tire makers don’t even make low-end tires – if they offer them at all it is through joint ventures with (wait for it) Chinese manufacturers.

So who lodged the complaint that set this off? The United Steelworkers, who don’t even represent most of the workers in American tire manufacturing. Apparently, despite campaign promises and public pledges to other nations not to raise trade barriers during this worldwide fiscal crisis, and despite wonderful campaign promises not to let special interests rule government policy, when the United Steelworkers speak, the president kowtows.

President Obama argued that he was just doing what the law required, but in fact that was a weak excuse, since the previous administration opted not to act on a number of such complaints (and Obama chastised the Bush administration for that during his campaign). The administration is not required to act on every complaint, and would be wise to be a lot more selective on the ones it does pursue.

This will be a big mess. China has filed a complaint with the World Trade Organization (WTO), and they will almost certainly rule against America on this issue. More than that, we need the Chinese on our side because they own a very large amount of our public debt, and if they stop rolling over our Federal bonds when they come due we would be in a world of hurt.

And all for what? To appease the United Steelworker’s Union. This is a no-win situation, and the administration was really, really dumb to get sucked into it.

Health care gaps

So here are some of the gaping holes or senseless proposals in the current health care bill:

1) Under pressure from Republicans, the bill has language to exclude illegal immigrants from coverage. It sounds nice, but it is meaningless. Studies estimate that some 60% of illegal immigrants have forged social security cards (easy to buy on the black market), or legal social security numbers obtained with false birth certificates (easy to buy on the black market), so how are health providers to sort the illegal from the legal applicants? Anyway, a filter doesn’t help the cost problem at all, because uninsured illegal immigrants typically go to emergency rooms for help, where they are treated for free if they can’t pay – meaning the rest of us end up paying for their care anyway.

2) The bill expands coverage by covering more lower-income people with Medicaid. But Medicaid costs are shared with the states, and in this recession many of the states are already facing bankruptcy, and don’t have more funds to put into Medicaid – in fact many can’t pay their current Medicaid shares. So all we have is yet another “unfunded mandate” from Congress that tries to solve a federal budget problem by simply moving it to the states.

3) The bill encourages the formation of insurance “cooperatives” – a sop to the Democrats who want a government-run insurance option. There is no evidence that insurance cooperatives will be successful, or that they will draw many customers. A few successful ones exist, but it is not a model that has been so successful that it has spread throughout the nation, and there is probably a reason why that its so.

Of course, if they put the government-run insurance option back into the bill, we simply have another problem – yet another new government agency with more bureaucracy and more cost. There is nothing in history to suggest that the government is any good at running such things.

4) The bill does nothing effective about capping the outrageous malpractice scams. It allocates a little seed money to states who want to “try” new approaches, but that will do almost nothing to solve the problem. Well, Congress is full of lawyers, and lawyers are some of the biggest donors to the Democratic Party, so why would Congress interfere with their well-paying work?

5) The bill includes nothing that would significantly cap or even slow the rising cost of health care. It doesn’t tinker with the incentive structure at all. Medicare and Medicaid are still the doctor’s and hospital’s “customers”, not patients. There is still little or no incentive for patients to control, or even ask for, the costs of the services they are being provided.

The liberal's problem - the conservative tide

Liberal Democrats, led by the likes of House Speaker Nancy Pelosi, have been having a field day in Congress now that they hold a majority on both houses and have a liberal president. And of course the Republicans have been happily self-destructing under the leadership of their talk-show demagogues. But I predict that the liberal party will be short-lived, despite the Republican incompetence. A recent Gallup poll looked at how many people in this nation label themselves "conservative". Here is the map:


The whole story of the poll can be found here. Conservatives and moderates are overwhelmingly the largest groups in the country, and the fiscal excesses of this liberal Congress are beginning to worry them a lot.

Perhaps the Republican strategy of just saying "no" and refusing to play will work after all. If Republicans just sit on their hands, the liberal wing of the Democratic party, free to spend as much as it likes, may self-destruct all on its own.

Hypocrisy is alive and well in Congress

Rep. Joe Wilson was chastised by the Democratic majority in a House "resolution of disapproval" for his short outburst during President Obama's health care speech. Wilson's outburst was certainly rude, but I find it interesting that all those Democrats who were so offended by it didn't find the boos that accompanied some of President Bush's speeches to Congress at all offensive -- indeed the boos came from Democrats. Apparently outbursts you agree with aren't rude, but those you disagree with are. Hypocrisy is alive and well in Congress.

PS. I have acquaintances who claim Democrats never booed President Bush. For those with conveniently short memories, President Bush was booed loudly and repeatedly by a number of people from the Democratic side of the House during his February 2, 2005 State of the Union speech.

The Senate Health care proposal

The Senate Finance Committee health care bill is now out. (The text can be found here). This is the bill which will probably be the framework around which the House and Senate try to build a bill they can both pass. The language of the bill has certainly moved to the center relative to the very left-wing bills the three House committees reported out. And it does include a number of concessions to Republican and moderate Democrat concerns.

But it still has two very, very big problems:

1) It contains no provisions that seem likely to really reduce health care costs. The promise that "more efficiencies" will reduce costs is no more likely to be real here than the perennial campaign claim that "reducing government waste" will reduce government costs. There is no persuasive evidence in government that such measures have ever reduced costs.

2) It will add a huge additional debt to a government budget already tottering under a skyrocketing debt. The Congressional Budget Office cost estimate for this bill is about $850 BILLION over the next ten years, and much more after that. History suggests that the real cost of a new government program will be in the range of 2-3 times the initial Congressional estimate, so the real cost is almost certainly somewhere in the TRILLIONS.

President Obama's promise that this bill will not add a dime to the national debt is good political rhetoric, but it is a promise that will be almost impossible to keep. Logically there is simply no way to simultaneously extend coverage to millions more people, provide everyone else with at least their current level of health care at their current cost, and not spend any more government money. It might just be possible to achieve any two of the three, but it's simply not possible to achieve all three simultaneously.

Recommended: Misreading the Iranian Situation

I recommend another thoughtful STRATFOR article, Misreading the Iranian Situation. This is not a comforting piece, but it does paint an interesting picture of the international chess match over Iran.

Recommended: Fact-Checking the President on Health Insurance

There is no question that President Obama's health care speech was a masterful piece of political showmanship. But despite the brilliant oratory, apparently some of his facts just don't stand up to scrutiny. I recommend Scott Harrington's piece Fact-Checking the President on Health Insurance in the Sept 14 issue of The Wall Street Journal. The two cases of insurance company abuse he mentioned were certainly heart-wrenching. Too bad that apparently they weren't accurate.

Recommended: Kill the Rhinos!

I just found a wonderful David Brooks piece on health care reform. It was published as an Op Ed in the New York Times on July 24th, entitled Kill the Rhinos! It seems to me he is right on target - our health care system is a bunch of stampeding rhinos, and Congress is attacking it with popguns!

Silly Season?

One of the hallmarks of an authoritarian society is the suppression of all opposing views. We all see it clearly enough in other nations, from the Middle East to some of the former Communist nations to some of the South America nations. The militant suppression of those we don’t agree with is the beginning of dysfunctional authoritarian rule.

So now here in America we have a duly-elected president, graduate of Columbia University and Harvard Law School, onetime editor of the Harvard Law Review, for 12 years a professor of Constitutional Law at the University of Chicago, who wants to give a simple address to the nation’s school children about staying in school and taking responsibility for their lives, and people all across the nation are deluging teachers and school officials with rabid objections and demands that their children be removed from the classroom during the speech.

Why? There certainly haven’t been any such objections when previous presidents addressed the nation’s school children (Roosevelt, Reagan, and the senior Bush all gave such addresses). Is it because they object to the message of personal responsibility and staying in school? Is it because President Obama is a liberal, and conservative parents live in dread that their children might be “infected” by hearing a liberal speak for a few minutes, even if it isn’t on politics? Is it because he is black and we are all still closet racists? Or is it because a significant fraction of the nation is in thrall to the conservative talk-show demagogues?

Whatever the reason, it is worrying that in a nation supposedly founded on the right of free expression, this sort of silliness can take hold.

Health Insurance vs Health Coverage

There seems to be a lot of confusion in Congress and among the public between health care insurance and health care coverage. Politicians often seem to consider these two terms interchangeable, but they are not.

Think about it. We don’t expect our auto insurance to pay for gasoline or tires or routine maintenance. We expect it to pay for rare and expensive events like accidents. We don’t expect our home insurance to pay for window cleaning or painting the siding. We expect it to pay for rare and expensive events like fire or a tree falling on the roof.

So why do we expect health insurance to pay for routine medical services, like annual physicals or an office visit for a minor cold? Medical insurance should cover rare and expensive events like hospitalizations, non-elective surgery, accidents, and major or chronic illnesses. We should expect to pay for routine medical services out of our own pocket. If we did (a) insurance costs would be a lot lower, and (b) since we were paying for it ourselves, we would ask a lot more questions about whether treatments were really needed and whether the most expensive treatment or drug was really what we needed.

Of course employers could offer full medical coverage as part of an employee’s wages, and there is something to be said for encouraging people to participate in screenings and to get annual physicals, so perhaps there is economic justification in covering those as well. But in general, universal insurance coverage ought to seek to protect everyone from catastrophic medical bills, NOT ordinary everyday medical expenses. If Congress took that approach, it might cost a lot less than the $1 trillion+ that the current proposals appear to cost.

The overall objective ought not to be to pay every medical bill for everyone – it ought to be to protect everyone from catastrophic medical costs.

Recommended - 10 Things I Hate About Health Care Reform

I strongly recommend Dr. Arthur M. Feldman's article 10 Things I Hate About Health-Care Reform in today's Washington Post. He really lays it on the line about what really is needed to reform health care, and how the current Congressional proposals address none of the real issues.

Recommended: The Western View of Russia

Another insightful and thoughtful piece from STRATFOR, The Western View of Russia, which I recommend to readers interested in the delicate political balancing act we have with Russia. The author argues that our Western view of what Russia views as its national interests and how it thinks about Western political and economic actions is badly flawed.

Recommended: The Right Strikes Back

In all the fuss and coverage about domestic health care reform, some other important foreign issues have been temporarily forgotten. One of these is the recent coup in Honduras. Immanuel Wallerstein has a thoughtful analysis of what is really happening there in his July 15 article The Right Strikes Back!

Recommended: Tax Reform’s Lesson for Health Care Reform

Amid all the hysterical polemics and deliberate misinformation from both liberals and conservatives about health care reform, an occasional piece of good sense emerges. I recommend Bill Bradley's Op Ed in today's New York Times, entitled Tax Reform’s Lesson for Health Care Reform as one of those rare pieces of good common sense.

Recommended: In Kennedy, the Last Roar of the New Deal Liberal

Sam Tanenhaus makes much the same argument about Ted Kennedy as the writer recommended in the previous post, in a balanced, well-written piece in today's New York Times entitled In Kennedy, the Last Roar of the New Deal Liberal

Recommended: Barack Obama must abandon the Kennedy way, or he will fail

As Senator Ted Kennedy is buried today, there is the predictable adulation from the liberal press and from fellow politicians, though one is reminded that even the Mafia bosses showed deep public respect when one of their own died -- even if they were the cause of that death. But certainly Kennedy did help enact some significant socially-liberal legislation in his time, for which his memory deserves respect.

But as one foreign observer notes in The Weekly Standard (UK) Barack Obama must abandon the Kennedy way, or he will fail, Kennedy's form of big-government, big-spending liberalism is out of date in today's America, and President Obama's attempt to revive it is going to face hard sledding. Despite the Democratic Congressional majorities in the last election, America is predominantly center-right. The religious far right makes a lot of noise, and the far left is certainly popular among the chattering classes, but neither of these groups is anywhere near a majority -- the real political power in the nation is held by people who are moderately conservative or centrist. President Obama loses their support at his peril. One hopes he realizes this pretty soon.

Not good news.....

This ought to get people's attention:

WASHINGTON, August 25, 2009, Associated Press – In a chilling forecast, the White House is predicting a 10-year federal deficit of $9 trillion — more than the sum of all previous deficits since America's founding. And it says by the next decade's end the national debt will equal three-quarters of the entire U.S. economy.

Recommended - How American Health Care Killed My Father

For anyone seriously interested in the health care debate, I strongly recommend the article How American Health Care Killed My Father in the September 2009 issue of The Atlantic Monthly. This is a long and complex article, but it points out many of the real problems in the American health care system, most of them a result of the market distortions from previous government actions and legislation, and it makes a convincing case that the approaches now being considered by Congress and the administration will do little to solve these problems and much to make them worse.

Good for President Jimmy Carter

Former President Jimmy Carter resigned from the Southern Baptist Convention recently because of its discriminatory stand on women. His resignation letter is an eloquent argument for gender equality. I have reproduced it below:

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Women and girls have been discriminated against for too long in a twisted interpretation of the word of God. I have been a practicing Christian all my life and a deacon and Bible teacher for many years. My faith is a source of strength and comfort to me, as religious beliefs are to hundreds of millions of people around the world. So my decision to sever my ties with the Southern Baptist Convention, after six decades, was painful and difficult. It was, however, an unavoidable decision when the convention's leaders, quoting a few carefully selected Bible verses and claiming that Eve was created second to Adam and was responsible for original sin, ordained that women must be "subservient" to their husbands and prohibited from serving as deacons, pastors or chaplains in the military service.

This view that women are somehow inferior to men is not restricted to one religion or belief. Women are prevented from playing a full and equal role in many faiths. Nor, tragically, does its influence stop at the walls of the church, mosque, synagogue or temple. This discrimination, unjustifiably attributed to a Higher Authority, has provided a reason or excuse for the deprivation of women's equal rights across the world for centuries.

At its most repugnant, the belief that women must be subjugated to the wishes of men excuses slavery, violence, forced prostitution, genital mutilation and national laws that omit rape as a crime. But it also costs many millions of girls and women control over their own bodies and lives, and continues to deny them fair access to education, health, employment and influence within their own communities.

The impact of these religious beliefs touches every aspect of our lives. They help explain why in many countries boys are educated before girls; why girls are told when and whom they must marry; and why many face enormous and unacceptable risks in pregnancy and childbirth because their basic health needs are not met.

In some Islamic nations, women are restricted in their movements, punished for permitting the exposure of an arm or ankle, deprived of education, prohibited from driving a car or competing with men for a job. If a woman is raped, she is often most severely punished as the guilty party in the crime.

The same discriminatory thinking lies behind the continuing gender gap in pay and why there are still so few women in office in the West. The root of this prejudice lies deep in our histories, but its impact is felt every day. It is not women and girls alone who suffer. It damages all of us. The evidence shows that investing in women and girls delivers major benefits for society. An educated woman has healthier children. She is more likely to send them to school. She earns more and invests what she earns in her family.

It is simply self-defeating for any community to discriminate against half its population. We need to challenge these self-serving and outdated attitudes and practices - as we are seeing in Iran where women are at the forefront of the battle for democracy and freedom.

I understand, however, why many political leaders can be reluctant about stepping into this minefield. Religion, and tradition, are powerful and sensitive areas to challenge. But my fellow Elders and I, who come from many faiths and backgrounds, no longer need to worry about winning votes or avoiding controversy - and we are deeply committed to challenging injustice wherever we see it.

The Elders are an independent group of eminent global leaders, brought together by former South African president Nelson Mandela, who offer their influence and experience to support peace building, help address major causes of human suffering and promote the shared interests of humanity. We have decided to draw particular attention to the responsibility of religious and traditional leaders in ensuring equality and human rights and have recently published a statement that declares: "The justification of discrimination against women and girls on grounds of religion or tradition, as if it were prescribed by a Higher Authority, is unacceptable."

We are calling on all leaders to challenge and change the harmful teachings and practices, no matter how ingrained, which justify discrimination against women. We ask, in particular, that leaders of all religions have the courage to acknowledge and emphasize the positive messages of dignity and equality that all the world's major faiths share.

The carefully selected verses found in the Holy Scriptures to justify the superiority of men owe more to time and place - and the determination of male leaders to hold onto their influence - than eternal truths. Similar biblical excerpts could be found to support the approval of slavery and the timid acquiescence to oppressive rulers.

I am also familiar with vivid descriptions in the same Scriptures in which women are revered as pre-eminent leaders. During the years of the early Christian church women served as deacons, priests, bishops, apostles, teachers and prophets. It wasn't until the fourth century that dominant Christian leaders, all men, twisted and distorted Holy Scriptures to perpetuate their ascendant positions within the religious hierarchy.

The truth is that male religious leaders have had - and still have - an option to interpret holy teachings either to exalt or subjugate women. They have, for their own selfish ends, overwhelmingly chosen the latter. Their continuing choice provides the foundation or justification for much of the pervasive persecution and abuse of women throughout the world. This is in clear violation not just of the Universal Declaration of Human Rights but also the teachings of Jesus Christ, the Apostle Paul, Moses and the prophets, Muhammad, and founders of other great religions - all of whom have called for proper and equitable treatment of all the children of God. It is time we had the courage to challenge these views.

What is the anger really about?

Legislators have been facing angry, hostile audiences across the nation the past two weeks as they try to explain and defend the (so far nonexistent) health care bills. Democrats have been trying to downplay this, arguing that it is the result of organized conservative groups. Even if true, that of course overlooks the obvious point that conservative groups have had little difficulty finding lots of angry people to organize.

But is the anger really just about the health care bills? This is just speculation, but I wonder if the anger isn't really more about the soaring deficit and the perception that Wall Street has gotten a big bailout at the expense of the rest of us. No one asked us about the bailout. No one held town meetings about the fiscal stimulus plan. No one asked voters to weigh in on whether AIG and Bank of America ought to continue to pay huge bonuses even as they took government money to survive. So in fact these town meetings about health care are the first real chance voters have had to express their views on the whole sorry mess -- and they are angry.

Polls do indeed suggest that a large portion of the nation is getting increasingly skittish about the amount of money this administration and this Congress is spending, and the rate at which they are increasing the national debt. Democrats ignore this at their peril, and I suspect much of the anger at these town hall meetings is really rooted in those fears.

The Health Care Debate

No one should have expected an overhaul of the American health care system to be easy, and it isn’t. During this August Congressional recess, all sides in this debate are playing hardball, and it’s pretty hard to see what is really happening for all the misinformation being circulated. Conservatives are claiming (falsely) that this is a move to a nationalized health care system. Liberal are claiming (falsely) that it won’t cost much and that in any case insurance companies are making out like bandits (they actually rank about 35th in profitability – a pretty poor showing).

And of course it doesn’t help that in fact there isn’t any actual proposed legislation to debate yet – just a bunch of wildly different draft bills from various House and Senate committees.

But a few things are clear:

a) The administration is certainly right that America needs to overhaul its health care system. We currently spend about 17% of the nation’s gross domestic product on health care, almost 4 ½ times as much as we spend on national defense, and the costs are rising at about twice the rate of inflation. We spend more per capita on health care than any other nation on earth, yet the World Health Organization ranks America's health care as 37th in the world, down with Costa Rica and Slovenia, with worse life expectancy and higher infant mortality than many nations that spend substantially less per capita.

b) It certainly seems that a nation that can afford to offer multi-million dollar salaries and bonuses on Wall Street to people who actually produce nothing of concrete value in the world ought to be able to offer at least the most basic health care insurance and coverage to all of its citizens.

c) Most of the plans currently being considered by the various Congressional committees are going to cost a lot, despite the continued promises of “revenue neutral” solutions. Unfortunately, liberal legislators can’t seem to see any solutions that don’t involve the government spending more, and as the Congressional Budget Office keeps pointing out, this doesn’t do anything to lower the actual costs. Unfortunately, conservative legislators can’t seem to find anything practical to offer as an alternative, so they are reduced to just “being against” anything proposed.

d) And all of this against a backdrop of an absolutely astounding increase in the national debt. The Bush administration added almost $5 trillion to the national debt over its eight years in office, which was appalling enough. According to the Congressional Budget Office, the Obama administration’s current budget plans appear to be on track to add about $10 trillion more to the national debt over two terms, and that is without adding any new expensive programs like a national health care plan.

It should be an interesting August.

Recommended - The Ayatollah Begs to Differ

Another book I have just finished and which I highly recommend is Hooman Majd's The Ayatollah Begs to Differ: The Paradox of Modern Iran. Majd, now an American, was born in Iran, the son of an Iranian diplomat (under the Shah) and grandson of a prominent Iranian Ayatollah. As the witty title suggests, this is an easy book to read, but very insightful about the Iranian character and culture. I found his discussion of President Ahmadinejad's style, background, and political image (within Iran) especially enlightening.

His book makes it clear that we (the American press and political system) often misread or misunderstand the subtle messages from the Iranian leaders, because we don't understand the cultural background from which they emerge. And, no doubt, they misread us just as often, which is surely a recipe for eventual disaster.

Recommended - Our Angry Aristocracy

I recommend Victor Davis Hanson's August 3 article Our Angry Aristocracy. So-called 'limousine liberals" (multi-millionaire liberals who prescribe all sorts of expensive remedies for the poor, but who are themselves exempt from any of the consequences or costs) have always been a problem. But the hypocrisy is more evident now, as Congress debates health care changes (that won't affect their own very, very generous health plans) and executive pay restrictions (that won't affect their own very, very generous pay or pensions).