Tuesday, November 25, 2003
Corporate Responsibility
Nice move by Boeing:
Michael Sears, executive vice president and chief financial officer of Boeing Co., had the required pedigree and background to become the next chairman and chief executive of the Chicago-based company.
But on Monday, Sears, 56, a resident of Lake Forest, was fired from his $1.2 million-per-year job. His wife said he was unavailable for comment.
[snip]
Sears' undoing came in the wake of a scandal over an Air Force lease/purchase contract for 100 refueling tankers based on the Boeing 767 airliner.
The company said Sears, a member of Boeing's three-member Office of the Chairman and the second-ranking officer of Boeing, was fired for violating company policies by communicating with Darleen Druyun, then an Air Force purchasing official, about future employment, when she hadn't disqualified herself in matters involving Boeing.
The firing came shortly after Boeing said it learned of Sears' discussions with Druyun. Druyun also was fired.
AB
Era of Big Government, Continued
While the energy bill is down, Pork remains at an all time high. Via Calpundit, see the "Grand Old Porkers: Special Favor 'Earmarks' contained in Annual Labor-HHS-Education Appropriation Bills" report by the minority staff of the House Appropriations Committee. (Needless to say, Pork is up since Republicans took over. Way Up.)
AB
Nice Job
Except for you, Tom Ethanol Daschle:
Washington -- The White House and Republican leaders Monday abandoned a vigorous effort to try to revive a sweeping energy bill this year after a liability waiver for the makers of a gasoline additive stalled the measure last week.AB
Monday, November 24, 2003
Why does Kurtz Have a Job?
Here's Kurtz on Gephardt's criticism of Dean's willingness as governor to cut spending, including spending on social services, to balance Vermont's budget:
Does Gephardt really want to argue that balancing the budget (which states, by the way, are constitutionally required to do) is bad?
In case it's unclear, the parenthetic is Kurtz speaking. However, the parenthetic is false.(*) Many, in fact the majority of, state constitutions prohibit deficit spending (even those states use tricks to circumvent their constitution), but there is no constitutional requirement that all states balance their budgets. Admittedly, Kurtz claims to be a media critic, but when he wanders into politics, which is most of the time, he should make a small effort to know what he's talking about. On the other hand, his job security appears to be unrelated to the quality of his work, so why bother?
AB
(*) The U.S. Constitution, Article I, Section 10 says
No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.
The prohibition on "bills of credit" may make it appear that Kurtz is right (notwithstanding the factual counter-evidence: States do run deficits), but this is really a prohibition on states issuing currency. Tom DeLay helpfully defines the term for us: "bills of credit: A paper medium of exchange, intended to circulate between individuals and between government and individuals, whether or not the quality of legal tender is imparted to such paper."
The Era of Big Government, Continued
Yes, it was on hiatus for a bit in the 1990s, but it's back with a vengance. First, the energy bill. Now the Republicans are using the same pork belly tactics on all of their bills (DeLay to recalcitrant Republican Congressperson: "how many millions of taxpayer money would it take to get your vote?"):
As Congress rushes to conclude its 2003 session, Republican leaders are trying to garner votes for controversial legislation by loading the bills with billions of dollars in added costs that analysts said would expand the budget deficit for years to come. The year-end binge has alarmed analysts in Washington and on Wall Street, coming as it does after three years of presidential and congressional initiatives that have both substantially boosted government spending and shrunk its tax base."The U.S. budget is out of control," the Wall Street investment firm Goldman Sachs & Co. warned Friday in its weekly newsletter to clients.
As the post story recounts, massive amounts of pork are flowing into bills covering Energy, Medicare, Veterans Affairs, Forest-thinning projects, funding for Iraq, and I'm sure everywhere else.
I'll have to second Warren Rudman's take, which is tantamount to my earlier take, "It's your children's money. Quick! Take it!":
"The only thing I can tell you is evidently the word 'tomorrow' no longer exists in the vocabulary of otherwise responsible members of Congress," said Warren Rudman, a former New Hampshire Republican senator and long-standing budget hawk. "They are acting as if there is no tomorrow."And,
"It is puzzling, unless you take the most cynical political view of 'I've got to do what I've got to do, and whatever bad that's going to happen is not going to happen on my watch,' " he said, trying to explain lawmakers' motivations. "If that is what's happening, we are facing the Titanic of fiscal crises in eight to 10 years."
There's a lot more in the full story -- all disgusting. Democrats aren't blameless in this (witness Daschle's selling out for ethanol subsidies), but as the party in control of the House, Senate, and White House, this spending is certified 94% Republican (96% if you count Zell Miller as a Republican).
AB
Sunday, November 23, 2003
At Least we’re Popular in Northern Iraq…?
I thought that anti-American feelings in Iraq are confined to the Sunni triangle, as Bush and Co. tell us? Mosul is in northern Iraq, on the edge of Kurdistan… where the US is supposed to be popular.
MOSUL, Iraq - Gunmen killed two American soldiers driving through this northern Iraqi city Sunday, and then a crowd swarmed the scene, looting the soldiers' vehicle and pummeling their bodies, witnesses said. Another soldier was killed in a roadside bombing north of Baghdad.If one or two gunmen kill an American soldier, it doesn’t necessarily represent Iraqi opinion. But when a crowd of randomly selected individuals (i.e. those that were passing by at the time of the attack) decide to loot and mutilate the American soldiers, that says something very worrying about US popularity in a city that is supposed to be one of the most pro-American in Iraq.
Bahaa Jassim, a teenager, said the soldiers' vehicle crashed into a wall after the shooting. Several dozen passers-by then descended on the wreckage, looting the car of weapons and the soldiers' backpacks.
After the soldiers' bodies fell into the street, the crowd pummeled them with concrete blocks, Jassim said.
Kash
Friday, November 21, 2003
The FTAA is Dead
Two developments this week lead me to that conclusion. First, as this story describes, the framework agreed to in Miami this week was a shadow of the original intent, since it allows individual countries to pick and choose which parts of the FTAA they want to sign on to. So, for example, Brazil can choose to adopt the portion of the FTAA that requires it to lower tariffs while opting out of the portion of the FTAA that would require it to harmonize its intellectual property rights or government procurement policies. And the US can opt out of the portion that it doesn't like, which would require it to reduce agricultural subsidies.
In principle, I like the idea of flexibility, but it raises the question of what value is added by the FTAA agreement. If countries opt only for the portions of the agreement that they like, with no assurances that anyone else will opt for the same portions, then couldn’t they have just done those things (such as lowering tariffs) without all of the hassle of an FTAA in the first place?
The second development was the surprise announcement by the US Trade Representative, Robert Zoellick, that the US would pursue bilateral trade deals with six individual Latin American countries (Colombia, Peru, Ecuador, Bolivia, Panama, and the Dominican Republic). Some news reports have suggested that the US is doing this to apply pressure to the other Latin American countries to hurry up and agree to the FTAA.
But I have a different reading. I think that the Bush administration has decided that it is easier to do bilateral deals (which it is), and realized that in one-on-one negotiations with weak Latin American countries, the US pretty much gets to dictate the agreement. On a practical level, a web of individual bilateral deals will make any future FTAA negotiations that much more complicated (in addition to making it more complicated to do business in Latin America), since all of those individual agreements will have to be taken into account. So I think that this move signals an unspoken abandonment of the multilateral FTAA in favor of less ambitious, easier deals. That’s why I’ll be very surprised if any substantive FTAA agreement is reached in the next few years.
Is that a bad thing? Personally, I have mixed feelings about the FTAA. While I do believe that trade generally makes both trading partners better off (see numerous posts from this week), I’m not convinced that an FTAA is the way to get there. So I’m not going to lose any sleep about this effective end of the FTAA initiative. I do wonder, however, what this says about this administration’s general level of engagement with Latin America as a region. Of course, neglecting relations with Latin America has been a consistent theme of the Bush administration since it entered office, so why should they change now?
Kash
Borrowing and the Business Cycle
Since I’m in a data groove today, I thought I’d put up a picture showing why I worry about whether the current economic recovery is sustainable. You can read about some of the details of my concerns in this earlier post, but here’s a graph to go with it.
The point is simple: borrowing should typically fall during recessions, and rise during booms. The shaded areas in the graph represent recessions (approximately), and the two lines represent two important types of borrowing: borrowing by the US as a whole from foreign countries (that’s the current account deficit, the blue line), and the total debt service that consumers in the US have to pay as a percent of their disposable income. As you can see, in every recession in the past, the US as whole, and consumers in particular reduce their borrowing and debt burdens. And then during every economic expansion, both measures of borrowing rise. That’s how the business cycle normally works. But this time, that hasn’t happened.
If the US economy were to enter a period of strong growth now, we would expect both series to rise sharply, as they have during every previous recovery. But it seems impossible that consumer debt could boom at this point, and that the US current account deficit could grow much larger. Hence my feeling that somehow, these two measures have to fall first before they can rise again – and hence my fears that the other shoe has yet to drop on the US economy.
Kash
Trade and Income Growth: some data
I'd like to finish up our discussion about international trade by presenting some data. There have been lots of comments in our discussion that have involved assertions regarding trade, income, and employment. I thought I’d provide a couple of graphs to help give some meat to your arguments.
The first graph shows the quantity of imports (adjusted for inflation) as the black line, rising throughout the 70s and 80s, but much more rapidly in the 1990s. The red line shows employment, which grew strongly during the 1990s (despite the rapid growth in imports). The green line shows that total compensation rose, but slowly. Between 1978 and 1995 real hourly compensation rose slowly, but from 1995 to 2002 real compensation grew quite rapidly. Total compensation, by the way, includes both wages and benefits (health insurance benefits taking up the majority of those).
The graph shows that while imports boomed, so did employment in the US. When imports stagnated during the period 2000-02, so did employment.
However, hourly compensation did indeed grow slowly during most of this period. Maybe the increased imports are to blame?
I will argue that imports are not the culprit. You may first notice that the fastest growth in real compensation since the 1970s occurred in the last half of the 1990s, when imports were growing faster than ever. If more imports caused wages to fall, that shouldn’t happen.
But the real evidence is this: higher wages are the direct result of, and are impossible without, higher productivity. Productivity drives wages. That is the conclusion of a mountain of theoretical and empirical evidence. The chart below provides one example of that.
The chart shows that real compensation almost exactly follows real productivity. Compensation grew much more slowly during the period 1973-1994, because productivity did. Compensation grew faster in the 50s, 60s, and late 1990s because productivity did. Trade is not the culprit.
Kash
In Case You Weren't Sure ...
... what Campaign 2004 will look like, the RNC is starting it's first ads:
With somber strings playing in the background, the commercial flashes the words "Strong and Principled Leadership" before cutting to Mr. Bush standing before members of Congress. Intended to call out the Democrats for their opposition to Mr. Bush's military strategy of pre-emptively striking those who pose threats to the nation, the screen flashes "Some call for us to retreat, putting our national security in the hands of others," then urges viewers to tell Congress "to support the president's policy of pre-emptive self defense."
I'm not sure which candidate with a prayer of winning is calling for a retreat (hint: none of them), nor whose "other hands" that refers to. Still, at this stage, the war could go either way for Bush. I'm not sure how it would play in the swing states, but a commercial using the "Bring it On" and Lincoln flight suit/"Mission Accomplished" episodes with a "make-believe is easy, we need leadership" tagline might be worth a shot.
AB
Thursday, November 20, 2003
Hooverism in the Modern Era
Bush is getting closer and closer to the Hoover Trifecta:
1. Presiding over a net loss of jobs? Check.
2. Stock market crash? Check.
3. Global trade war leading to a Great Depression? (Instigated, or at least exacerbated by Hoover's signing of the Smoot-Hawley Tariff Act of 1930) Based on Kash's last two posts, on the way.
Here's Robert Samuelson describing the Great Depression:
It is hard for those who did not live through it to grasp the full force of the worldwide depression. Between 1930 and 1939 U.S. unemployment averaged 18.2 percent. The economy's output of goods and services (gross national product) declined 30 percent between 1929 and 1933 and recovered to the 1929 level only in 1939. Prices of almost everything (farm products, raw materials, industrial goods, stocks) fell dramatically. Farm prices, for instance, dropped 51 percent from 1929 to 1933. World trade shriveled: between 1929 and 1933 it shrank 65 percent in dollar value and 25 percent in unit volume. Most nations suffered. In 1932 Britain's unemployment was 17.6 percent. Germany's depression hastened the rise of Hitler and, thereby, contributed to World War II.
Now, do I really expect Bush's anti-trade policies, or even a full-blown trade war, to spark a second Great Depression? No. We have many counter-cyclical measures now that did not exist last time. But it's still a step -- and a big one at that -- in the wrong direction.
AB
...But Pro-Trade Forces are Mustering Against Bush
From the NYTimes:
Greenspan Warns Against 'Creeping Protectionism' in TradeAnd from The Economist:
In an apparent criticism of the Bush administration, Alan Greenspan, the Federal Reserve's chairman, said today that it was "imperative" that the "creeping protectionism" in the nation's trade policy be reversed.
Mr. Greenspan "is getting right in the middle of this debate," said Robert Hormats, vice chairman of Goldman Sachs International, "and he is not mincing words. It's not normal Greenspan-speak. That was as close as you get to a shot across the administration's bow."
George Bush's free-trade rhetoric looks increasingly hollowKash
A GENERATION ago, bra-burning was a symbol of the womens' movement. This week, bras found a new political significance—as a symbol of the Bush administration's retreat from free trade. On November 18th, the Commerce Department announced that safeguard quotas would be imposed on imports of bras, dressing gowns and knitted fabrics from China. Future import growth in these products will be limited to 7.5%.
Until this week, the White House had restricted itself to bellicose rhetoric, usually to do with the value of the Chinese currency. Now it has crossed the Rubicon. “This is only the beginning,” bragged one textile lobby group this week. More anti-Chinese safeguards will hardly induce the Chinese to open their own markets. Indeed, on November 20th China's commerce ministry announced it would raise tariffs “on some commodities imported from the United States.”
George Bush, Anti-Trade Protectionist...
This week, Bush has:
- suggested that he will not lift the steel tariffs that were declared illegal by the WTO
- undermined efforts for a substantive FTAA deal, by moving toward bilateral trade negotiations
- applied new tariffs to imports of textiles from China, at the risk of starting a trade war
The anti-trade protectionist forces in the US apparently have an staunch ally in this Republican president.
Kash
Free Trade, Jobs, and Choosing
Reading the comments to Kash's last post, and reading articles like this one in the Houston Chronicle, it's clear that concern over lost jobs is the major reason for most anti-trade sentiment. However, free trade opponents need to understand that protecting jobs by restricting trade also costs jobs. The recent steel tariffs, under which we saved jobs in Pennsylvania and lost jobs in the auto industry in Michigan, highlight this point:
"The duties have cost steel users, such as Troy-based Delphi Corp., the world's biggest auto parts maker, and Caterpillar, the largest earth-moving equipment maker, about $680 million, the Washington-based International Trade Commission said in September."
"... If you keep those tariffs in place until 2005," said Lopes, "perhaps (the steel industry) is in a better economic situation than before, but now your customers, if they're small and medium size business, have shut down, and your bigger customers ... have been forced to shift production overseas."
"The tariffs have been especially destructive to small auto suppliers that use specialty steels only available from foreign steel makers, said Neil de Koker, who heads the Original Equipment Suppliers Association in Troy."
"They can't pass that price increase onto their customers because they refuse to accept it," said de Koker. 'If they can't pass it on, they're dead."
In the face of either losing jobs in Michigan or losing jobs in Pennsylvania, how do we choose?(*) With steel tariffs, we save jobs in Pennsylvania at the expense of jobs in Michigan; along the way, all Americans get to pay more for anything made out of steel or made using machinery that's made out of steel (in other words, just about everything). If we instead choose free trade, then we preserve jobs in Michigan at the expense of jobs in Pennsylvania. However, in the process, all American get to pay less for things made out of steel and things made using equipment made out of steel.
Viewed in this light, the choice is obvious: free trade, which creates wealth, is better than restricting free trade, which destroys wealth. (Note that by "wealth", I mean national wealth, as in GDP, not wealth as in more money for rich people.) Jobs are going to be lost either way, but with free trade, a portion of the benefits can be allocated to job retraining, adult education, and unemployment insurance to help soften the losses in the affected industry. With restricted trade, there is less wealth to go around so there is less money, not more, available to spend on easing the burden of unemployed workers.
Finally, how are the benefits of free trade distributed? With the sole exception of workers in industries that lose jobs (and remember that jobs will be lost either way), the benefits go to people who sell, make, or buy stuff--meaning just about everyone. And, unlike most things in life, the benefits of free trade accrue in a progressive fashion. Free trade lowers the price of food, clothing, consumer electronics, and cars. Poor and middle class families spend the large majority of their income on just these goods; as family income rises, a smaller portion is spent on these goods. For example, one study estimates the savings due to expanded free trade under the proposed Free Trade Area of the Americas (FTAA) at $814 for a family of four. That estimate is from FTAA advocates and may be high but whatever the true number is, the savings are about the same regardless of where a family lies in the income distribution. In percentage terms, this makes the benefits very progressive. For a family near the poverty line (about $16,000), saving $814 is a 5% reduction in the cost of living. For a family making $100,000, the same benefit amounts to a $.08% savings. (**)
It has always struck me as odd that people who oppose free trade are generally in favor of progressive policies. On the other hand, this gives me a new theory of why the Bush administration has been surprisingly anti-trade.
AB
(*) With the current administration, the choice is easy: which state is closer to voting for Bush in 2004? Pennsylvania! Oh, then go with steel tariffs and screw the auto industry workers. That's opportunism, not policy.
(**) The benefits are spread fairly evenly across the population even though the wealthy spend more on food, clothes, and cars than the poor, because as you move up the luxury scale a smaller amount of the total price of the good is attributable to the costs of inputs. A Corvette and an entry model Saturn use about the same amount of steel, so each car would be a few hundred dollars cheaper without steel tariffs. In percentage terms, this is a noticeable benefit to Saturn buyers and a trivial benefit to Corvette purchasers. The same is true for high-end clothing and expensive meals.
Wednesday, November 19, 2003
Trade with China as Technological Revolution
There have been some thought provoking comments recently about the US’s trade with China, and we haven’t had a good trade debate on here in a few months, so I thought I’d open up a thread to discuss it more fully. Let me first stick out my pro-trade neck as a target, though.
Some people suggest that while trade with a country like China helps consumers, it hurts workers, and therefore can’t be good. For some context, here’s a chart that shows the US’s trade with China over the past decade.
So how can economists so consistently assert that trade is good, if our imports from China continually grow and US workers lose their jobs as a result? Workers and consumers are the same people, after all. Naturally, economists recognize that it doesn't do people any good to be able to get goods cheaper if their incomes have fallen by even more.
But typically that's not what happens: instead, trade causes overall incomes to rise in real terms. There is a mountain of theoretical and empirical evidence to support that assertion. True, incomes have been rising very little for the past 3 years (and may have fallen) – but that is due to the recession, and not to our imports from China.
HOWEVER, there is an important qualification. While trade increases overall incomes, there are definitely winners and losers. Some individuals are unambiguously hurt by trade – namely those that lose their jobs to foreign competition. Others are helped by trade – namely those that keep their jobs and just get to enjoy lower prices, and those that get jobs that wouldn't have otherwise existed in the export sector if it weren’t for increased world trade. But there's no getting around the basic reality that trade helps some people while it hurts others.
Does that mean that trade with China (or any other country) should be limited by government intervention? No.
The reason is that international trade functions exactly like technological progress. Essentially, by moving production to China, the US has discovered a new way to produce a lot of consumer goods more cheaply than before. An invention that magically reduced the labor requirement for manufacturing consumer goods would have the exact same effect on the US economy – it would cost thousands of US manufacturing workers their jobs. Increasing trade with China is no different from a technological revolution.
But, one might still ask, what about the winners and losers from trade? Shouldn’t we still limit trade to help the losers? Let me turn the question around. What makes international trade any different from any other type of economic change – almost all of which create winners and losers? When any new technology is invented there are winners and losers. When the railroad was invented, thousands of people who worked on the canals and on ships lost their jobs to competition from the railroads – and many couldn’t find jobs in the railroads, since they required very different skills. When the tractor was invented, one farmer could do what it used to take ten to do by hand, so millions of farmers who couldn’t compete against the tractor lost their jobs, and had to move to new industries. Yet somehow the US economy still grew and propsered.
You get the idea. My point is this: international trade causes the pattern of economic activity to shift, transform, and evolve in a different way from before – just as technological progress does. If your goal is to try to prevent anyone from ‘losing’ as the economy evolves, banning technological progress would probably work much better than banning international trade. But we don’t, because we know that technological progress makes us all better off in the long run. So instead, we try to help the losers from economic change in other ways, such as by providing a secure social safety net.
So why do things seem worse right now? That’s because the US economy is currently suffering from a prolonged (though relatively mild) economic downturn. That makes it seem like there are more ‘losers’ than usual. And there are. The thing is, most of those additional ‘losers’ right now are losing from the recession, not from trade. Even if we imported nothing from China, there would be more ‘losers’ right now.
One last point. I’ve addressed why I think that imports from China simply make the US economy evolve faster, but what about the trade imbalance? Does it matter that we buy a lot more from China than China does from the US? The answer is yes, it matters in the long run, because the trade deficit means that the US must essentially give China (and other countries) our assets to pay for what we’re importing. But, as I’ve discussed in posts here and here, the cause of our trade imbalance is our low savings and high consumption, so limiting our trade with China wouldn’t help with that problem. All it would do would be to limit the technological revolution that is currently transforming US manufacturing, one which will inevitably make the US more prosperous.
Kash
Tuesday, November 18, 2003
The Resumption of The Big Dollar Slide?
The US dollar hit a record low against the euro today, of about .83 €/$. It’s been trending down for the last year and a half, so that’s not that surprising. But listen to what currency traders were saying today:
Traders cited two factors behind the dollar's fall.Okay, that’s not surprising either – neither the Bush administration contradiction of its own economic team, nor the protectionism. However, this definitely caught my attention:
First, Commerce Undersecretary Grant Aldonas told reporters that the Bush administration has decided to set new quotas on textile imports from China... The timing of the measure seemed odd, given that the World Trade Organization just ruled that the United States' steel tariffs are illegal and given that Treasury Secretary John Snow said yesterday that the United States wasn't headed into a "protectionist mode."
[Second], the Treasury Department released figures showing that foreign investment in U.S. stocks and Treasurys slowed sharply in September -- which pressures the dollar since there's less apparent demand for U.S. assets.So, which foreign country could plausibly have sold $35 billion in US Treasury bonds in one month? Only one candidate immediately leaps to mind: China. Given the gigantic stocks of US Treasurys that China owns, this news reminds me of some of my long-standing concerns and makes me wonder if there isn’t worse to come in the months ahead for the dollar.
Breaking down the numbers, foreign investors sold $6.3 billion worth of U.S. equities compared with $11.5 billion worth of equity purchases in August. They bought just $5.6 billion worth of Treasurys -- down sharply from the $25.1 billion they bought the month before.
The drop off in Treasury buying was especially notable since the Japanese government reported that it bought $40 billion of the U.S. currency in September in its efforts to stem the yen's strength. Much of that money would have gone into Treasurys. The suggestion is that some other country or countries were big sellers.
Kash
Have We Passed the Cyclical Bottom?
The CPI report for October was just released this morning. The core rate (which is the important rate to check if you want to understand the underlying trend in inflation) of consumer price inflation was up .2% last month. That means that the 12-month core CPI inflation rate edged up from 1.25% to 1.30%. With the exception of last May, that's the first time we've seen the 12-month inflation rate rise in nearly 1 ½ years. (See this earlier post for a chart and a bit of context.) Is it time to say that we've passed the bottom of the cycle? The PPI report from last week also showed a slight uptick in core prices last month... So put that together with all of the good news on output lately, and one could start making the case that we’ve reached the bottom of the business cycle -- at least for now.
Kash
Monday, November 17, 2003
Bush to Comply with the WTO?
Well, it looks like Bush may indeed lift the steel tariffs. Many (most?) of the relevant parties in the administration have wanted to lift them for some time, but now it may happen. To emphasize the point, Senator Charles Grassley (an unusually sensible Republican from Iowa who chairs the Senate Finance Committee) apparently wrote Bush a letter suggesting that he remove the tariffs, according to CBS Marketwatch:
"The purpose of the steel safeguard tariffs has therefore been met, but this has come at a heavy cost," Senate Finance Committee Chairman Charles Grassley, R-Iowa, wrote in a letter to Bush dated Friday.US Trade Representative Bob Zoellick has begun laying the groundwork by saying things like "the polictical climate has changed since the tariffs were imposed" and "the tariffs have already done their job." So why will Bush now remove the tariffs, after all of this time? A news item from Yahoo suggested one reason:
The quasi-judicial U.S. International Trade Commission "estimates that the steel safeguard tariffs have already cost U.S. businesses and workers over $680 million since their imposition," Grassley added.
Bush is widely expected to lift the tariffs, according to administration sources speaking on condition of anonymity. But the president, who likes to make surprise announcements, has been guarded in the last few days about his intentions.
Grassley's letter gives the White House more ammunition for arguing it is lifting the tariffs for domestic reasons, rather than "buckling under" to the threat of EU retaliation.But I don’t buy this line of reasoning. If the White House was looking for domestic reasons to remove the tariffs, they had plenty with the ITC report back in September. Plus, why remove the tariffs now, right after the WTO ruling, if you want to make it look like your decision has nothing to do with possible EU retaliation?
No, it doesn’t make sense. Instead, as I suggested earlier, I think Bush will use the WTO ruling as political cover that allows him to remove the tariffs while not admitting what the administration already knows – that the tariffs were a mistake. In the process, he might actually help the US manufacturing sector – something that would admittedly be an untested policy first for this administration. Even better, he gets to go to steel country in Ohio and Pennsylvania and blame the EU for the tariffs being lifted. After all, from Bush's perspective, what better scapegoat for this administration’s terrible economic policy-making than the EU? Unless you can somehow blame Saddam Hussein.
Kash
Blogroll Down
It looks like someone hacked Blogrolling.com to make it replace all links with a link to someone's blog. To avoid promoting the hacker's blog, links are now down until blogrolling fixes the problem.
AB
Bush in the UK
There's surely lots of interesting stuff for bloggers of all stripes in Salon's transcript of Bush's interview with the BBC's David Frost. But the following juxtaposition struck me as peculiar:
On Iraq's nonexistent biological weapons (page 2):
"And David Kay found evidence of weapons programs. He found some biological weapons - evidence of biological weapons."
On North Korea's nuclear weapons (page 3):
"And I would refer people to North Korea where we've got a multilateral attempt to convince Kim Jong Il to get rid of his nuclear ambitions ... But what I've done is I've convinced China and South Korea, and Japan, and Russia to speak with one voice to the North Koreans and say, 'Get rid of your nuclear ambitions.'"
Iraq has no WMD? Then they have WMD programs, or we have evidence of WMD, or perhaps evidence of WMD programs, though of course no actual WMD. North Korea announces that they have a nuclear deterrent ready to go, and the CIA believes the only thing stopping them from detonating a test bomb is the international backlash? That's merely ambitions.
AB
P.S. The Sun's interview is up now too (while visiting the illustrious Sun, reading the words of the leader of the free world, be sure to check out the latest Page 3 girl, "Sarina, 20, from London" (link on lower left sidebar) and learn about "Kylie's Flashy Show: Crowds roar at her fishnets."
Clark 1, Russert 0
Appearing on Meet the Press with Tim Russert is basically mandatory for presidential candidates these days (though I think Bush will only do so again if he's forced to do so by very close polls). Dean tried and didn't do so well, though the attacks on his performance were largely unfair. Clark, on the other hand, didn't really seem to give much meat to his critics, and came across appearing much more knowledgeable on the issues than Russert (transcript here). Russert would throw out a quote and Clark responded ably. A quick check of the conservative National Review's blog, The Corner, and Instapundit support this take -- neither has posts criticizing Clark's appearance (though perhaps they are still waiting for the faxes from the RNC).
In any case, the following exchange was amusing and it illustrates the general give and take (and who was doing most of the taking) of the interview:
MR. RUSSERT: After the war was commenced in April, you did write an article for The London Times and you said, “Can anything be more moving than the joyous throngs swarming the streets of Baghdad? Memories of the fall of the Berlin Wall, and the defeat of Milosevic in Belgrade flood back. Statues and images of Saddam are smashed and defiled. ... President Bush, Tony Blair should be proud of their resolve in the face of so much doubt.”
GEN. CLARK: But, Tim, do you have the rest of the article with you?
MR. RUSSERT: I’ve read...
GEN. CLARK: The rest of the article you should show because what it says is: “You can have your victory parade. You can have the soldiers parade up and down. You can be proud of the fact that you commanded these troops and they crushed this Army, but you must recognize that the job isn’t done. It may be only beginning. You haven’t found the weapons of mass destruction. And you’ve got a long way to go to put anything in place in the postwar.”
I’m writing as a commentator. I’m fair, and I respect the men and women in the armed forces. I love them, I’ve spent my life there, and I’m proud of them. And they did, in their military duties, a fabulous job in following the orders of the commander in chief. I simply wouldn’t have given those orders at that time. Those weren’t the right orders. Diplomacy hadn’t been exhausted, we hadn’t brought our allies on board, and we didn’t have an adequate plan for what would happen next. You cannot go to war in those circumstances and be successful. In Kosovo, we had exhausted diplomacy. We had our allies on board and we had a plan for what we would do when the fighting stopped. It was exactly the opposite situation.
AB
Saturday, November 15, 2003
The Era of Big Government
It's been back since around early 2001, but here's some more:
Authors of the bill agreed to double the use of corn-based ethanol as a gasoline additive, a provision viewed as essential to building political support among farm state legislators. As part of that deal, producers of the additive MTBE, which has been blamed for groundwater pollution in many parts of the country, would gain immunity from product liability lawsuits and the substance would be banned nationwide as of 2015. The MTBE provision was a priority of Representative Tom DeLay, the House majority leader, and other lawmakers from Louisiana and Texas, where MTBE is produced.... Lobbyists and lawmakers said the key to passage might be the Democratic leader, Senator Tom Daschle, who has pushed the ethanol plan to benefit corn growers in his home state, South Dakota, and across the Midwest.
... Republican tax writers were still working out some final details Friday, and no price tag for the tax incentives was available. But the bill was expected to provide $18 billion or more in tax breaks to promote greater use of coal in power plants, to renew interest in nuclear power, to encourage oil companies to drill in deep waters in the Gulf of Mexico and to expand the generation of power through wind, among other things.
AB
UPDATE: I can't disagree with Matt Y. 's assessment of Daschle:
I'm going to have to do more reporting on this Monday, but my understanding is that Tom Daschle is prepared to sell the country out on a really awful bill for the sake of ethanol subsidies.
Leader of The Free World
Nice. In advance of his trip to London, the President found a publication worthy of an interview:
Press secretary Scott McClellan broke the news yesterday with nonchalance. "Good morning," he told reporters. "The president had his usual briefings this morning and just recently completed an interview with the Sun, for a discussion of his upcoming visit to the United Kingdom."
I went to the Sun's website and tried to find the interview, but I couldn't because I got distracted by the Sun's topless Page 3 Girls (no adult verification required), this story on "Heidi, Adriana and Tyra wing in as undie-clad angels," the "Be cheeky! Touch my bum... " story that had something to do with some sort of video game but was actually about pictures of "Transylvanian twins Monica and Gabriella" in short-shorts. Then I re-resolved to find the Bush article, but got distracted by "Victoria Newton's Bizarre Exposed," and then wandered over to "Dear Diedre" to read about some poor young woman's group-sex travails.
What could possibly possess Bush to grant an interview to this Newspaper tabloid and not the respectable but conservative Telegraph or the slightly less conservative but even more respectable London Times? Click here to learn the answer (Hint: the same person owns Fox News and The Sun).
AB
UPDATE: Via Nitpicker, I see that "[Bush lined] up interviews with the BBC's David Frost and the new Daily Telegraph editor Martin Newland."
Ketch-ing Up
Or, Pouring Ketchup On An Over-cooked Campaign, or Ketchup Money to Help Campaign Catch Up, or some sort of bad pun involving Ketchup, money and catch up (bonus points if you can also work "kvetch" into the pun*):
Unlike Dean and Bush, Kerry said he will put his own money into the campaign, becoming the first Democrat in at least 20 years to do so. Kerry's wife, Teresa Heinz Kerry, is worth an estimated $500 million, but Kerry can contribute only money under his control and half of what he and his wife jointly hold.
Kerry could get about $18.6 m in federal matching grants if he agreed to both abide an overall $45m cap and to abide by state caps. Kerry's sitting on $8m and raised just $4m last quarter, so it would take a lot for him exceed the $45m primary limit.
One of two things must be true (or both): (1) He's willing and able to spend a lot of his wife's money (meaning a lot of it is held jointly) or (2) New Hampshire's spending limit of $729,000 is too low for what is a make-or-break state for Kerry. Personally, I think he's done already; but even Kerry must know that he's really done if he loses New Hampshire by more than a small margin. Iowa is going to Gephardt or Dean so if Kerry loses NH, the next feasible wins for him are on 2/3/04 in Delaware, New Mexico, Missouri, and North Dakota, and those only seem likely if he wins NH, or at least finishes a strong second. Even still, those wins will be offset by near-certain Kerry losses in Arizona, Oklahoma, and South Carolina on the same day.
Then things get better for Kerry, with Michigan, Washington, and Maine in the following week. The point: Kerry has to make it to Michigan on 2/7 with some appearance of viability. To do that he's got to eat into Dean's 10-12 point New Hampshire lead, and $729,000 isn't going to do the trick. So upon reflection, this may actually not be a sign of an impendingg injection of catch-up money from Teresa Heinz's fortune--Kerry may plan to empty his coffers in NH and then hope a win will accelerate fundraising. If so, things could turn ugly, fast.
AB
(*) How's this: Kvetching Campaigner Counts on Ketchup for Catch-Up.
Friday, November 14, 2003
Those Partisan Relatives
Relatives of people who perished in the Sept. 11, 2001, terrorist attacks say a federal commission accepted too many conditions in striking a deal with the White House over access to secret intelligence documents. The Family Steering Committee, a group of victims' relatives monitoring the commission's work, criticized the agreement announced late Wednesday.
AB
Explanations for The Jobless Recovery
Two of the world's leading economists publicly discussed possible reasons for the jobless recovery in the past week. In a speech on November 6, Ben Bernanke, Governor of the Federal Reserve Board, articulated the argument that the main culprit is high productivity growth in the US. On the other hand, Alan Krueger, one of the world’s leading labor economists and a professor at Princeton University, threw cold water on this explanation in a NYTimes column on November 13. Who’s right? They both make great arguments (you should read them in full), but if you keep reading, I’ll suggest a new possibility that neither of them addressed.
Let’s consider a few alternative explanations for the jobless recovery:
1. Maybe global political and economic uncertainty is keeping firms from hiring. The problem with this explanation? As Bernanke said:
The observations that workweeks have not risen and temporary employment have risen only modestly... is a bit of evidence against the uncertainty explanation. If firms needed more labor services but were reluctant to commit to new hiring, one would expect to see them lengthening workweeks and hiring temporary workers in large numbers, measures that increase labor input but are also easier to reverse.2. Maybe high productivity growth in the US is allowing output to rise without increasing employment. This is Bernanke’s preferred explanation:
In real terms manufacturing production in the United States has risen rapidly over the past fifty years. The recent recession has affected that trend only modestly. For example, although as of September 2003 U.S. manufacturing output was about 6 percent below its mid-2000 peak, it was also about equal to the level reached in 1999.However, Krueger disagrees with this explanation:
If manufacturing output has not declined in the United States, then what explains the sharp reductions in U.S. manufacturing employment? The answer is a stellar record of productivity growth. Over the years, new technologies, processes, and products have permitted manufacturing firms to produce ever-increasing output with ever fewer workers.
This observation brings me to my fifth and final possible explanation of the jobless recovery, which is the remarkable increase in labor productivity we have seen in recent years, not only in manufacturing but in the economy as a whole... Although other explanations for the jobless recovery – overstaffing in the boom, benefits costs, uncertainty, and structural change--have played a role, in my view the productivity explanation is, quantitatively, probably the most important.
On examination, rapid productivity growth is unlikely to account for the dismal job picture in the United States over the last two and a half years.I have to admit that I find Krueger’s counterargument persuasive. I agree that there has to be more to the story than just the high rate of productivity growth. Such as? Citing Larry Katz, Krueger proposes numbers 3 and 4 on our list:
Implicitly, this view argues that for some reason there are limits to how fast the gross domestic product (that is, output of goods and services) can grow, so, by definition, faster labor productivity growth results in slower job growth... There is no reason the gross domestic product could not have grown faster once productivity accelerated. Monetary and fiscal policy have not restrained growth.
Second, in the United States greater job growth tends to accompany faster productivity growth, over either a quarter or a year, as well as over longer periods. [It is normal for] productivity growth to surge at the beginning of a recovery – [only] the job losses are unusual this time. Furthermore, during the second-longest jobless recovery on record, which occurred during the previous Bush administration, productivity growth was lower than it is now, so accelerating productivity is not the only potential cause of a jobless recovery.
3. “Maybe recoveries that follow longer booms have weaker job growth initially because companies postponed restructuring during the boom. Therefore, more time is needed for companies to reorganize work, which spills over into the recovery phase.” Krueger goes on to cast doubt on this explanation, as well, however:
Indeed, the recessions in 1991 and 2001, notable for extended jobless recoveries afterward, both followed long booms. But in the eight earlier postwar recessions, longer booms were typically followed by shorter jobless recoveries, not longer ones. For example, after the recession following the 1960's boom - the second longest, after the Clinton boom - job growth resumed immediately.Again, I agree with Krueger. I don’t think it has anything to do with the length of the boom that preceded the recession. Krueger’s next proposed explanation is:
4. Maybe jobs haven’t been created because the tax cuts were directed more at savings and consumption, rather than job creation. The problem with this idea? Even if they weren’t explicitly directed at job creation, the tax cuts still stimulated the economy, and caused GDP to grow rapidly. So we're still left wondering why a growing GDP isn’t accompanied by growing employment. Whether you subsidize the firm or the consumer through a tax cut shouldn’t matter – either way more economic activity is generated. Also, counterexamples abound. For example, the tax cuts of the early 1980s were also primarily in the form of reduced income taxes, yet led to a massive boom in employment.
So what’s my own theory? I think that there’s a crucial clue contained in #3, which I will use to propose my own explanation...
5. Maybe recoveries from milder recessions take longer to generate jobs. The two mildest recessions in postwar US history have been the two Bush recessions. And those are the two that took the longest to start generating new jobs. Why? I think it’s a variant on what Krueger said in #3: in a mild recession, there’s relatively little restructuring, and relatively little firing, so the economy doesn’t have as deep a hole to climb out of. Sharper recessions necessitate drastic actions by firms to stay alive – and those that survive are therefore strong and healthy from the very beginning of the recovery. But a mild recession doesn’t do as much to weed out the weaker firms, so you have more firms at the beginning of the recovery that still can’t afford to hire more workers.
Note that I’m not at all advocating sharp recessions over mild ones – mild recessions are still definitely preferable, in my book. But we may have to recognize that if the pain isn’t as severe, the bliss of job creation won’t be as great, either.
Kash
Thursday, November 13, 2003
Winning More Hearts and Minds in Iraq
The Guardian has these quotes about the CIA’s assessment of the Iraqi resistance:
One military intelligence assessment now estimates the insurgents' strength at 50,000. Analysts cautioned that such a figure was speculative, but it does indicate a deep-rooted revolt on a far greater scale than the Pentagon had led the administration to believe.As an example of why the resistance is growing, look to stories like this one:
An intelligence source in Washington familiar with the CIA report described it as a "bleak assessment that the resistance is broad, strong and getting stronger".
FALLUJAH, Iraq (AP)--U.S. troops opened fire on a truck carrying live chickens near the tense town of Fallujah, killing five civilians aboard the vehicle, including a father and his two sons, relatives said Wednesday.Add a few more to that 50,000. Sigh.
"They went to bring chickens ... and they came back at 9 or 10 at night and we were waiting for them,'' said Khalid Khalifa al-Jumaily, whose two nephews were killed on the truck. "The Americans fired on them.''
Kash
Warren Buffett's Interesting Solution for the Trade Deficit
Note that I call it an ‘interesting’ solution, rather than ‘sensible’ or ‘good’. I like Buffett – he seems like a decent guy (for a billionaire) and his priorities are basically in the right place, in my opinion. But this idea has some serious problems.
In an article in Fortune magazine (subscription required), Buffett says that he is extremely worried about the US trade deficit. In particular, he is worried about the fact that by running trade deficits, and thus effectively trading US assets for foreign goods and services, the US is becoming too deeply indebted to the rest of the world. Here’s his solution:
The time to halt this trading of assets for consumables is now, and I have a plan to suggest for getting it done. My remedy may sound gimmicky, and in truth it is a tariff called by another name. But this is a tariff that retains most free-market virtues, neither protecting specific industries nor punishing specific countries nor encouraging trade wars. This plan would increase our exports and might well lead to increased overall world trade. And it would balance our books without there being a significant decline in the value of the dollar, which I believe is otherwise almost certain to occur.To his substantial credit, by the way, Buffett began his piece with a disclaimer, acknowledging that he is not an economist and does not have a good record of macroeconomic forecasting.
We would achieve this balance by issuing what I will call Import Certificates (ICs) to all U.S. exporters in an amount equal to the dollar value of their exports. Each exporter would, in turn, sell the ICs to parties—either exporters abroad or importers here—wanting to get goods into the U.S. To import $1 million of goods, for example, an importer would need ICs that were the byproduct of $1 million of exports. The inevitable result: trade balance.
But what about the substance of his suggestion? I find it fascinating to consider.
He’s basically completely right in everything he says. The US is indeed becoming more indebted to the rest of the world with every passing day. He’s also right that his plan would very quickly eliminate the US’s trade deficit. And he’s right when he says that his proposed solution functions essentially like an across-the-board tariff, though he doesn’t mention that it’s a peculiar type of tariff with the revenues being transferred directly into across-the-board export subsidies. It’s actually an extremely elegant way to simultaneously and uniformly tax imports and subsidize exports.
Now what about the question of whether it’s a good idea? Put aside the fact that it would be grossly illegal under WTO rules, and would therefore probably require the US to exit the WTO altogether. The problem is while he’s right that the trade gap is problematic in the long run, in the short run its a good thing. In this, it’s very much like the paradox of thrift.
In other words, there are substantial benefits to the US trade deficit in the short run. In particular, the trade deficit allows the US to have higher business investment (in addition to consumption) than it would otherwise. Without it, therefore, US firms would be investing in less productive capacity, making the US economy grow more slowly, be less productive, and therefore have lower wages over time.
Another problem is that without a trade deficit, the US would (by definition) no longer be attracting net capital flows. All of the money that is currently flowing into the US to purchase US assets would go elsewhere. This would probably lead to a substantial drop in asset prices. The stock market would fall, interest rates would have to rise sharply, and real estate prices would tumble.
His plan would also probably create all sorts of temporarily perverse incentives during its implementation, would wreak havoc on international financial markets, would lead to a sharp bout of inflation for the US, and probably cause a few other problems as well.
And yet, I completely agree with Buffett’s worries about the long-run implications of the US trade deficit. So while I can’t endorse Buffett’s solution, I’m sympathetic to his goals. As an alternative, I can repeat the tired old prescription of “higher savings, lower consumption” in the US – but that’s not really something that a policy-maker can do much about. So I have to admit that I don’t have a good solution of my own to offer. I wish I did.
Kash
Bush Takes Advice from France
From today’s NYTimes:
WASHINGTON, Nov. 12 — The Bush administration, moving up its timetable for self-government in Iraq and yielding to its own handpicked leadership there, has decided to try to hold elections in the first half of next year and turn civilian authority over to a temporary government before a new constitution is written, administration officials said Wednesday.Isn’t this exactly what the French have been advocating for the past several months? Let’s look back in time and see. From The Economist, September 19, 2003:
France wants the UN to play a bigger role in rebuilding Iraq. France is also agitating for self-government for Iraqis as quickly as possible. Mr Chirac has urged America to allow a provisional Iraqi government—more powerful than the American-backed all-Iraqi Governing Council—to take over [within months], with elections to follow next spring. America thinks this is ridiculous—it would, Washington argues, mean handing power to Iraqis before they are ready, and thus consigning the country to more chaos.Of course, this doesn’t mean that the Bush administration has changed its mind. It always intended things to be this way, right? Because Team Bush never makes mistakes.
Kash
Wednesday, November 12, 2003
The Republicans’ Senate Sleepover
Senate Republicans are holding a big PR event in the Senate tonight, with a 30-hour marathon session of sleeping on cots, hot chocolate, late-night gossip and camaraderie, and speeches about the treatment of Bush’s judicial nominations. They want to draw attention to the fact that Senate Democrats, through the use of filibusters, have blocked the nomination of 4 of Bush’s judicial nominees.
I feel no sympathy for them. This is why:
I'm not sure which phrase leaps to my mind first: something about dishing it out but not being able to take it, or the single word "hypocrisy." Click here for more specifics.
Kash
Recession in 2004?
Okay, I don’t really think that we’re going to have a full-blown recession next year in the US. However, as I’ve alluded several times, I do think that economic growth in the US will slow considerably over the next 6-12 months. And in just the last week, I’ve encountered a raft of people who agree with me. Here are some examples that echo my fears about the US economy for 2004:
Stephen Roach, chief economist of Morgan Stanley:
In today’s US economy, there’s a veritable lack of pent-up demand in the two sectors that normally spark cyclical upturns; consumer durables currently stand at a record 11.4% of GDP versus a sub-7% reading in the early 1990s, and residential construction has moved up to a cycle high 4.3% of GDP versus a 3.3% reading a decade ago. Lacking in classic sources of pent-up demand, America is more than ever in need of new sources of growth.Justin Lahart, commentator for CNN/Money:
Structurally the economy doesn't look the way it has at the beginning of past recessions. The current account deficit -- the gap in the United States' trade in goods and services with the rest of the world -- has risen to about 5 percent of the total economy. That's as high as it's ever been. In contrast, at the beginning of past economic expansions the current account has tended to be in surplus.And finally, from The Economist:
Housing prices usually get hurt during recessions. In this one, they did not. Consumer spending usually sees some sort of slowing. Again, didn't happen this time.
For some economists, these things represent structural flaws in the economy which will make the expansion less potent and less long than the ones that preceded it.
The main reason for doubting that America is back on a path of strong, sustainable growth is that it has failed to purge the excesses of its previous boom. It is, to say the least, odd that at the beginning of an economic recovery many indicators—low saving, rampant household borrowing, record house-building and uncomfortably high stockmarket p/e ratios to name but a few—have more the look of a cycle that is drawing to a close.I think the US economy is going to do fine in the short-run. But I do worry that these long-term imbalances are going to make it impossible for the US to enjoy a sustained boom over the next several years, as we would normally expect at this stage in the business cycle. And judging by some of the financial press recently, I am apparently not alone.
Kash
At Least 14 Italian Soldiers Die in Iraq
As you’ve probably heard by now, a car bomb went off in the Italian base in Nasiryiah today, killing numerous Italian soldiers and Iraqis. As you may know, I like to understand what’s happening in the domestic politics of other countries. So here are some quotes of reaction from various Italian politicians, compiled from the BBC and The Guardian.
Pietro Folena of the main opposition party, the Democrats of the Left, said:
"They were sent to an Iraq in flames because the government wanted to do a favour for the Bush administration without taking risks into consideration. Now the Italian soldiers must come home. It is the only right thing to do at this moment."Green Party leader Alfonso Pecoraro Scanio said troops should be pulled out of Iraq:
"It is immoral to put the lives of thousands of young Italians at risk for Bush's pre-emptive war.”Prime Minister Silvio Berlusconi, after consulting with Interior Minister Giuseppe Pisanu, voiced his grief over the losses, but insisted the operation should go on:
"No intimidation should distract us from our will to help that country rise up again and build up self-government, security and freedom.”The European Commission president, Italy's Romano Prodi, has called for peacekeeping operations in Iraq to be taken over by the UN:
"We must move on to a phase where the UN has a greater involvement in achieving peace, a phase in which greater weight and power must be given to the Iraqi people within the Iraqi Government.I'll be curious to see the sort of pressure that Berlusconi faces over the coming days. This is the sort of thing that can bring down governments, if not handled carefully.
"I had always thanked God because the Italians had been spared, but our fears were justified: this time it was our turn."
Note that Nasiriyah was the site of the heaviest losses for US troops during the invasion or Iraq. A story from yesterday’s BBC provides one of the first comprehensive accountings of that day, in which 29 US soldiers were killed. It's a rather chilling story, not least because of the estimate that in addition to the US dead, over 1,000 Iraqis died during the fight for Nasiriyah.
Kash
Tuesday, November 11, 2003
Well Said!
Don't forget about the schools -- that's what this war has always been about, the centers of mass instruction. And the Good News is that the schools are open. Mission Accomplished, schools-wise.
AB
It's Been Awhile
But I can, in good conscience, link to and endorse this Instapundit post. (Click here for the context).
AB
Soros and Large Political Donations
Today’s Washington Post has a great piece about the recent donations that George Soros has begun making to liberal advocacy groups.
NEW YORK -- George Soros, one of the world's richest men, has given away nearly $5 billion to promote democracy in the former Soviet bloc, Africa and Asia. Now he has a new project: defeating President Bush.My favorite quote comes at the end of the piece, however:
"It is the central focus of my life," Soros said, his blue eyes settled on an unseen target. The 2004 presidential race, he said in an interview, is "a matter of life and death."
Soros, who has financed efforts to promote open societies in more than 50 countries around the world, is bringing the fight home, he said. On Monday, he and a partner committed up to $5 million to MoveOn.org, a liberal activist group, bringing to $15.5 million the total of his personal contributions to oust Bush.
Asked whether he would trade his $7 billion fortune to unseat Bush, Soros opened his mouth. Then he closed it. The proposal hung in the air: Would he become poor to beat Bush?It’s gratifying to see what happens when the anger that many of us feel toward the Bush administration is shared by one of the richest men in the world: it gets translated into massive political donations. The only catch is that those donations can’t go directly to the Democratic Party, thanks to the McCain-Feingold campaign finance act of 2002 (M-F). His big donations have to go to unaffiliated groups that aren’t governed by M-F.
He said, "If someone guaranteed it."
This is also a good illustration of why M-F has hurt Democrats more than Republicans. Perhaps counter intuitively, Dems have recently (i.e. the last 10 years or so) gotten more of their money from a few giant donations than Repubs.
This matters, because the Supreme Court is due to issue its ruling about M-F within the next month or so. If the campaign finance law is found illegal, expect a huge surge in soft money donations to Democrats (and a large, but somewhat smaller surge for Republicans), one that could substantially level the financial playing field between the two parties. Of course, I also believe strongly in campaign finance in principle. So I’m left very torn about what to wish for from the Supreme Court – a dilemma faced by many others on both sides of the aisle, I’m sure...
Kash
Monday, November 10, 2003
Leave California. Now.
Ok, it's not that bad. But I see via Digby that Gov. Schwarzenegger hired Stephen Moore (see this post for background on Moore) as an advisor. Apparently, the US Newswire lets people write the headlines for articles that mention them:
Gov. Schwarzenegger Names Stephen Moore to Calif. Audit Committee; Noted Economist and Activist to Help Solve Golden State Fiscal Crisis
Moore's Club for Growth is the last bastion -- other than a few people at the AEI and in the current administration -- of the theory that tax cuts will increase general revenue.(*)
AB
(*) Yes, tax cuts will increase general revenue when rates are near 100% (because if taxes are 100%, then revenue will be near zero as almost nobody will work), but given modern tax rates, that's a non sequitur.
UPDATE: Upon closer inspection, the US Newswire piece is a press release, so Moore or one of his agents is responsible for referring to Moore as a "noted economist." The last line, which says "For more information or to schedule an interview with Stephen Moore, please contact Kevin McVicker at 703-739-5920," gave it away.
Bush’s Steely Dilemma: The tariffs are illegal
So says the WTO. Actually, it was back in July that the WTO initially said that the steel tariffs, imposed in early 2002, contravene WTO rules. But the US appealed that decision. According to WTO rules, any country has one chance for an appeal, and the ruling of the appeal is final. The AP is now reporting that the WTO appellate panel is going to issue a verdict later today affirming the initial WTO ruling – that is, ruling against the US.
What does this mean? It means that the EU countries (along with a few other) are legally allowed to impose tariffs on a number of US products. Being politically savvy, the products that they intend to target come from a few key swing states, like Ohio and North Carolina. Actually, the EU already won permission to impose some tariffs on US goods for an unrelated WTO decision that went against the US (that one was about US tax laws that unfairly subsidize exports), but they haven’t imposed the tariffs yet. I wouldn’t be surprised if this time they fire away, however.
The steel tariffs are pretty widely acknowledged as an economic blunder, done for purely political purposes, but which is providing less political benefit than Rove had hoped for. As I discussed several weeks ago, the Commerce Department’s International Trade Commission finds that the steel tariffs are costing US jobs in other manufacturing industries. And now, if the steel tariffs are maintained, the new tariffs that the EU imposes will cost more US jobs.
So the question is this: what does the Bush administration do? There’s a faction in the administration that has wanted to get rid of the tariffs for months, for the reasons mentioned above (plus, Bush is supposed to be a free-trader on principle, isn't he?). But they were overruled, presumably by Rove and others who are still hoping for some political benefit of maintaining them. Actually, I think that this is a classic case (as with a lot of Bush’s policies) where the administration can’t admit they’ve made a mistake and change policies, even when it’s clear to everyone that they should.
So, will Bush's fear of admitting a mistake beat economic common sense? Another possibility is that the administration will see the WTO ruling as some convenient political cover for dropping the tariffs. It certainly will strengthen the hand of the anti-tariff faction within the administration. On the other hand, taking orders from a multinational institution that the US doesn’t have complete control over will certainly rankle a lot of people in the administration (particularly over in the Vice President's office, I would imagine). So who will win? Stay tuned.
Kash
Sunday, November 09, 2003
More Freeway Blogging
The latest from Scarlet Pimpernel:
Brought to you by http://www.freewayblogger.com/ (where you can find an array of pictures taken from the highways of Southern California).
AB
Saturday, November 08, 2003
It Must Be True What They Say About Absolute Power
From the Washington Post:
Angry about a leaked Democratic memo, the Republican leadership of the Senate yesterday took the unusual step of canceling all business of the committee investigating prewar intelligence on Iraq.
Majority Leader Bill Frist (R-Tenn.) called on the author of the memo -- which laid out a possible Democratic strategy to extend the investigation to include the White House and executive branch -- to "identify himself or herself . . . disavow this partisan attack in its entirety" and deliver "a personal apology" to Sen. Pat Roberts (R-Kan.), chairman of the Select Committee on Intelligence.
Only if those steps are taken, Frist said, "will it be possible for the committee to resume its work in an effective and bipartisan manner -- a manner deserving of the confidence of other members of the Senate and the executive branch."
Get it? Democrats write a memo outlining concerns that Republicans will stonewall the investigation and describing possible responses. The Republican response? Halt the investigations. I guess the memo was a pure flight of fancy.
AB
UPDATE: CalPundit parses the text of the memo and concludes, "There's nothing wrong with this, and it wouldn't have happened if Republicans had been willing to conduct a fair and thorough investigation in the first place. So let's save the mock outrage, OK?" Note: Sincere outrage over Republicans' mock outrage is fine.
UPDATE 2: Marshall has the right analogy on this one:
Two guys walk into a ring for a fight. One knows he’s about to get creamed. But he can’t bear the shame and humiliation of walking away from a fight. So at the very last moment he whips out some phony claim that the other guy’s cheating.
Greens
[Nader friend Robert McChesney speaking] "I don't think Ralph should run. It would be bad for him personally; I doubt he would get half the number of votes he got in 2000. And it would be bad for the Greens ... Core elements of progressive constituencies, exactly the groups that the Greens need to build upon, will revolt with open contempt -- far worse than 2000 -- to anything that helps keep Bush in office ... Running a presidential candidate in 2004 for the Greens is probably a quantum leap off a cliff. It is the Greens' Jonestown."
I made a commitment in my now-vanished comments to be nice to Greens, to avoid the "see what the differences between the parties are now?" lines of reasoning and instead focus on "here's why Democrats want your vote." And I'll stick to that commitment. Nevertheless, this will sound more disparaging than it is: a Nader run in 2004 will set the Green Party back, substantially. He will get a much smaller amount of the vote in what is shaping up to be another close race. So the only two options are to again be the spoiler (goodbye Clean Air and Water Acts, hello Halliburton contracts), or to run and fail to stop the Democrat anyway, thereby ensuring that Democrats are hostile to Greens.
AB
Friday, November 07, 2003
God Dammit, this Pisses Me Off
Where are my libertarians at on this one? I can't really even blame Bush, because it was just about as bad under Clinton. That is, things are in fact worse now than under Clinton, but it seems like the result of following a linear trend that started in the early 1980s. In any case, watch the video available here the next time you've got a broadband connection.
Via, like most things that piss me off like this, Atrios.
AB
And Reagan Became President of the United States in 1981, and It Was Good. The End.
The first indicator of what a Saddam-free education will look like is arriving this month, as millions of newly revised textbooks roll off the printing presses to be distributed to Iraq's 5.5 million schoolchildren in 16,000 schools. All 563 texts were heavily edited and revised over the summer by a team of US-appointed Iraqi educators. Every image of Saddam and the Baath Party has been removed.
But so has much more - including most of modern history. Pressured for time, and hoping to avoid political controversy, the Ministry of Education under the US-led coalition government removed any content considered "controversial," including the 1991 Gulf War; the Iran-Iraq war; and all references to Israelis, Americans, or Kurds.
"Entire swaths of 20th-century history have been deleted," says Bill Evers, a US Defense Department employee, and one of three American advisers to the Ministry of Education.
Via Atrios.
AB
Imminent Threat Winner
Josh Marshall's been running a contest in which he asked his readers to submit the best quotes showing that the Administration did in fact state that the threat from Iraq was "imminent." The competition was fierce, as exemplified by the various quotes in Marshall's post. I won't give away the winner, but here's the runner-up:
Facing clear evidence of peril, we cannot wait for the final proof -- the smoking gun -- that could come in the form of a mushroom cloud.
AB
Bishop Takes Reverend
... members of the church's executive committee were told Thursday night that Bishop Douglas Thuener had removed the Rev. Don Wilson. Wilson opposed the consecration last weekend of Bishop V. Gene Robinson, as do many of the church's roughly 60 members.
AB
Good Job News, at least
Assuming it's not revised downward, it's a vindication of massive Keynesian spending (demand side stimulus), not supply side economics. From Forbes:
Just a day after Fed Chairman Alan Greenspan expressed hope the labor market would start to improve, the October payrolls report showed a 126,000 gain, more than double analysts' forecasts. Dramatic revisions to previous data showed three consecutive months of gains.
Jobs growth had been the missing element in an otherwise robust recovery but economists are gaining conviction that all the pieces of the puzzle are now falling into place.
Some now wonder how much longer the Fed will consider its benchmark rate, at a 45-year low of 1.0 percent, appropriate, even with low inflation.
Barring actual, not potential, inflation, my guess is that the Fed isn't too likely to raise rates in the next, say, 11.5 months.
AB
6 Soldiers Die in Helicopter Crash in Iraq
2 Others Killed in Separate Attacks in Mosul.
Blog Highlights
I've been too busy to blog much for the last few days, but now I have a little time to catch up on my blog reading. Here are some highlights:
- Via The 18½ Minute Gap, I see that Howard Dean "secured a critical endorsement from the most diverse labor group in the country, the 1.6-million-member Service Employees International Union," which is clearly good news for him.
The 18½ Minute Gap also reports that anti-evolutionaries lost the latest battle over Texas textbooks (Thank God!).
- CalPundit endorsed Gen. Clark earlier this week; he gives a bit more detail here. Though, he hastens to add, "So how about the rest of the field? I want to make it clear that I have nothing against any of the major candidates and would support any of them against George Bush. In other words, I'm not trying to smack any of them down." The highly sought Angry Bear endorsement remains up for grabs.
- Via just about every blog, CBS and the Senate are both full of cowards. CBS for caving on the sure-to-be-crappy-anyway Reagan miniseries and the Senate for not recording the votes on the President's $87.5 billion for Iraq (six Senators showed up voted; five yes and one, Robert Byrd, no).
- Speaking of CBS and Reagan, last week while visiting a blog that I can't remember right now, I commented that "conservatives won't be happy until CBS yanks the movie and names something after Reagan," or something very similar. Digby gives some background on the Reagan Legacy project, which spearheads efforts to name stuff after Reagan ("The Ronald Reagan Legacy Project's mission is to honor and memorialize the historic achievements of President Ronald Reagan. It aims to do so by naming at least one notable public landmark in each state and all 3067 counties after the 40th president." Question: could they name something after Reagan in all 3067 counties while not having each state covered?)
- Charles Kuffner spots Tom DeLay "sticking in an amendment about trademark infringement into a defense bill ... And that if he's thwarted this time, he'll be back again, like mold on a shower curtain, right? That says all you need to know about Tom DeLay."
- Slacktivist excerpts some words of wisdom from Tony Kushner in the current issue of the very liberal Mother Jones:
Anyone that the Democrats run against Bush, even the appalling Joe Lieberman, should be a candidate around whom every progressive person in the United States who cares about the country's future and the future of the world rallies. Money should be thrown at that candidate. And if Ralph Nader runs -- if the Green Party makes the terrible mistake of running a presidential candidate -- don't give him your vote.
Listen, here's the thing about politics: It's not an expression of your moral purity and your ethics and your probity and your fond dreams of some utopian future. Progressive people constantly fail to get this.
- I was going to read the U.S. News cover story on Katrina Leung to see how much emphasis was placed on her work as a Republican fundraiser. But Nick Confessore saves me the time:
Did U.S. News manage to publish an entire cover story on alleged Chinese spy Katrina Leung that only mentioned her work as a Republican fundraiser once, in passing, and did not mention the names of any of the politicians for whom she raised money? Yes. Yes, it did.
- TBogg read the "Partial-Birth Abortion Ban Act of 2002", and finds that "the husband or the woman's parents (if she is not eighteen) can sue her for having an abortion." Health exceptions? Out. Husband suing? In.
AB
Wednesday, November 05, 2003
Voter Turnout
Everyone knows that voter turnout is down, and that it's due to increased apathy. As often as not, when "everybody knows" something, it's actually not true. I just heard a commentator on NPR claiming that voter turnout, when computed in the usual fashion (as a percentage of the voting-age population) is in fact down. However, the decline is not caused by fewer eligible voters choosing to vote.
Instead, it's the result of the decline in the number of people eliible to vote. In fact, the percentage of voting-eligible people who do vote has been steadily at about 55% since 1968. But the portion of the voting-age population that is not eligible to vote has increased from 2% in 1970 to 10% now, causing the decline in measured turnout. It's partly the result of increased immigration and partly the result of the increase in the prison population and the number of felons ineligible to vote.
I can't say for sure that this is true but it seems plausible. If true, the 10% number is disturbing.
AB
Where's the Filter?
The media should be bringing us the happy news from Iraq. Instead, we get this:
Last weekend, Penisten, 28, had just begun his long journey home from Iraq for a two-week furlough. He was going to marry Loia, 25, this Friday in Pueblo, Colo., her hometown. Then the couple would travel to Penisten's hometown of Fort Wayne, Ind., to surprise his parents.
But on Sunday, an Iraqi guerrilla missile shot down the Chinook helicopter carrying Penisten, a mechanic. He and 14 other soldiers were killed. Twenty-five others on board were wounded.
This war is not an abstraction. Schools opening and deposing dictators are both great things, truly so. But the essential question for Bush and the NeoCon's legacy is whether the war was undertaken at minimum cost or maximum hubris.
AB
Dean Update
I'm on Dean's side on this one now:
Dr. Dean, the former governor of Vermont, turned to Mr. Sharpton and responded: "We're not going to win in this country anymore as Democrats if we don't have a big tent. And I'm going to tell you right now, Reverend, you're right, I am not a bigot."
Mr. Edwards, who was born in South Carolina, then bounded across the stage wagging a finger. "Unless I missed something, Governor Dean still has not said he was wrong," he shouted. "Were you wrong, Howard? Were you wrong to say that?"
Dr. Dean responded: "No I wasn't, John Edwards. Because people who fly the Confederate flag — I think they are wrong, because I think the Confederate flag is a racist symbol. But I think there are a lot of poor people who fly that flag because the Republicans have been dividing us by race since 1968."
It seems legitimate to appeal to those with Confederate flags on their trucks, as long as you aver that they're misguided racists and that you would like to bring them to the side of goodness -- racially and politically. But good luck.
AB
Tuesday, November 04, 2003
Comment News
Good news and bad. Haloscan is accepting new users, so I've switched comment providers to Haloscan--that's the good news. More good news is that comments can now exceed 1000 characters. The bad news is that all the old comments are gone. I restore them by switching back when my old comment provider's server (blogextra) is back up, but I don't think I can export them to the new comment provider. If anyone knows a way around this, please let me know.
AB
Political Compass
While of questionable relevance, the politicalcompass.org survey is quick fun and it wasn't way off the mark on where I'd place myself (my results are here).
But I bet you've been wondering where all your favorite (and most-hated) bloggers lie on this spectrum. Tim Lambert has taken some time off from "stalking" the fraudulent John Lott/Mary Rosh to show where all the bloggers he can find who've taken the test lie on the political compass. Who knew till now that Unlearned Hand, who scored a full unit to my Left, was a raving communist?
If you're a blogger and you scroll down a bit, you can add your own scores to the table.
AB
No Comment
Comments are down for a while. The problem was making the entire page load slowly so I took the comments out. I'll check periodically until they're back up.
AB
Belated Congratulations
To Mr. and Mrs. Kos on the birth of their son, Aristotle.
AB
P.S. Sorry about the extra $33,000 in "birth tax" debt young Ari will have to bear. I voted for the other guy.
Monday, November 03, 2003
Why Jamal Can't Get a Job
That's the title of a story in the current issue of the Chicago Graduate School of Business magazine. The article summarizes the results of a novel study by the auspiciously named Prof. Marianne Bertrand of U Chicago and Senhil Mullainathan of MIT's Economics department. Here's their experiment:
Between June 2001 and May 2002, they sent out about 5,000 resumes in response to 1,300 help-wanted ads in Boston and Chicago. They found that resumes with white-sounding names received 50 percent more calls than those with African American-sounding names, despite identical qualifications.
A few methodological details: the resumes were taken from resumes careerbuilder.com and americasjobbank.com, but the names were changed to represent either white or black names. To determine which names went with which races, they culled names from birth records between 1974 and 1979 to find the most common names for each race, and followed that up with "man on the street" interviews to verify that perceptions matched the data.
In practice, some high schools are better than others, so identical numerical GPAs might not necessarily mean the same thing on two resumes. In other words, it's possible that the call-backs were skewed white not due to racial discrimination per se but rather because whites disproportionately come from good high schools. To control for this, they used addresses from mixed-race neighborhoods and high schools in Boston and Chicago. In a nutshell, the applicants truly are identical on paper, except for their names. The result: black names get 1/3 less call backs.
In the second phase of the study, they also boosted the resumes (adding experience, honors, ...) of matched pairs of resumes and found that a better resume increased the odds of a call back for a white name, but not for a black name.
But at least there's some bad news for everyone who's poor:
"Whoever you are, whatever your resume is, we find people who live in 'worse' neighborhoods -- meaning low income, black, low education – those people had lower response rates ... Living on the South Side of Chicago hurts you whether you're white or black.
Speaks for itself. The full paper is available here.
AB
P.S. Speaking of race, see Dwight Meredith's deft dissection of Jane Galt's silly allegation that "Democrats are pretty clearly trying to keep conservative minorities off the appellate bench."
UPDATE: Reader Bo emails an alternative hypothesis, that's definitely not without merit:
It could be that people discriminate not against black names but against unusual names. They should have sent out resumes with typical black names as well as unusual Jewish, Indian, etc. names to get a better idea of whether they were seeing true racial discrimination or wierd-name bias.
Here's my response:
That's a decent point, and the authors mentioned that they'd like to replicate it with other races. So it was probably a matter of time and money and there's likely more to come.
Interestingly, to my mind, the "black last names" are actually not particularly unusual. They are: "Jackson, Jones, Robinson, Washington, and Williams". So any non-black minority is bound to have even more unusual last names.
I suppose that to confirm the racism hypothesis, they'd need to find little effect from, say, clearly Jewish names. So if Shlomo and Ehud get the same number of callbacks, while Jamal and Tyrone can't, then you have an issue. Stay tuned.
In the interim, I'll apply Occam's Razor and accept the simplest explanation.
Digby on Dean
Digby at Hullabaloo gives his take on the issue, which is similar to mine, but a bit more irate:
I'm more pragmatic than I've ever been about presidential politics, and I know that he wasn't actually endorsing the confederate flag, but antipathy to this symbol is embedded in the DNA of African Americans since the civil war (and liberals everywhere at least since the civil rights movement) so I can't quite figure out why he would think it was ok to use it. Appealing to racist sympathy, which is what the confederate flag symbol is really all about, cannot coexist with the Democratic party of 2004. It's not the same as supporting the NRA or being for free trade or once voting Republican. The issue of civil rights is the moral center of our party. It's not negotiable.
Sure, we must try to boost our appeal in the South, but we must be very, very careful never to do it that way. It's not only wrong, it wouldn't work anyway. For every yahoo who wudda, cudda, shudda voted Democratic if we accept the symbol of their (racist) "heritage," there will be 5 southern African Americans who will just stay home[emphasis mine].
There's a lot more, read the whole thing (Digby also got a lot of action in the comments, on both sides of the issue but on balance tilting critical of Dean).
Digby also points to this CNN story containing Dean's clarification:
"I want people with Confederate flags on their trucks to put down those flags and vote Democratic."
Let's hope that that's the end of it. Dean essentially repudiated the appeal to the Confederate flag and should now return to appealing to both minorities and rural whites -- and everyone else -- on policy issues: progressive taxes, education, health care, and jobs. Coming soon: evidence that race still matters in American life.
AB
I’m 30% Poorer!
Tomorrow I leave for a short trip to Europe for a conference. I just checked the latest exchange rates, and am now cursing Bush’s incompetently executed weak dollar policy. Take a look at the graph below of the euro/dollar exchange rate:
The dollar has lost nearly 30% of its value against the euro over the past 18 months. That means that a lunch at a café that used to cost me about $15 will now cost me about $20. A night in a hotel that used to be $90 will now be about $120. In other words, compared to the last time I was there, in the spring of 2002, I will be 30% poorer!
This highlights a significant downside of a weak dollar policy. Yes, it does help to make exports more competitive. It also makes imports more expensive, presumably shifting some consumption away from imports and toward domestically produced goods. So if your goal is tilt your trade balance toward a surplus, the weak dollar helps. And if your goal is to shift domestic resources toward the manufacture of import-competing goods, the weak dollar also helps. (Whether or not those goals are sensible ones is another subject.)
But these benefits come with a cost: in real, tangible terms, Americans are unambiguously poorer with a weak dollar. Our real incomes fall every time the dollar falls. Mind you, one could argue that this may not be a bad thing, for various reasons. However, I've always thought that one could make an argument that Americans feel more confident and optimistic about the future when the dollar is stronger (e.g. mid 1980s and late 1990s) -- primarily because when the dollar is stronger Americans are simply richer. I'm not sure how well this hypothesis would stand up to serious empirical scrutiny, but it has always seemed plausible to me.
Regardless, it's worth keeping this in mind: if you’re someone that has been applauding a weak dollar in the hope that it will help US manufacturing, you are also cheering for Americans to be poorer.
Kash
p.s.: To AB and everyone else, have a good week. I’ll be back in about 7 days.
Explaining Hussein’s Thinking
This morning’s Washington Post has a fascinating report on the results of a set of interviews with, among others, Tariq Aziz. The overarching theme of the interviews is: “What the heck was Hussein thinking???”
Specifically:
- Why didn't Hussein didn’t fight back against the initial US invasion in March?
Hussein concluded after private talks with French and Russian contacts that the United States would probably wage a long air war first, as it had done in previous conflicts. By hunkering down and putting up a stiff defense, he might buy enough time to win a cease-fire brokered by Paris and Moscow.- If Hussein had no WMDs, why didn’t he simply reveal that to the US to avert war?
Hussein was afraid to lose face with his Arab neighbors. Hussein concluded, these prisoners explained, that Saudi Arabia, Kuwait, the United Arab Emirates and other countries paid him deference because they feared he had weapons of mass destruction. Hussein was unwilling to reveal that his cupboard was essentially bare, these detainees said, according to accounts from officials.Such explanations may go a long way toward explaining some of the outstanding mysteries of the Iraq war. The article is worth reading.
Kash
What did they know that we didn't?
Last year the monkeys made their presence felt by hanging from window ledges and screeching at reporters arriving for a news conference with visiting U.S. Defense Secretary Donald Rumsfeld.
AB
Sunday, November 02, 2003
Dean's Southern Strategy?
This statement by Dean is clearly not as bad as his rivals are making it out to be:
"I still want to be the candidate for guys with Confederate flags in their pickup trucks," the former Vermont governor said in an interview published Saturday in the Des Moines Register. "We can't beat George Bush unless we appeal to a broad cross-section of Democrats."
I suspect Dean was just looking for a way to say "poor, rural, white voters" and this is what came out. His earlier invocation of the Confederate flag shows this more clearly:
"White folks in the South who drive pickup trucks with Confederate flag decals on the back ought to be voting with us, and not [Republicans], because their kids don't have health insurance either, and their kids need better schools too."
Even though I don't think this is some nefarious Dean version of Atwater's "Southern Strategy," he should stop for two reasons. First, it's wrong. The Confederate flag is a symbol of racism. Second, let's face facts: if he wins the primary, Dean's not going to win any Southern states in the general election, with the possible exception of Florida, where the Confederate flag is not nearly as much of an issue. So he stands little to gain by mentioning it again.
Incidentally, this is precisely the reason I see no ill intent in Dean's misguided Confederate flag references. He has nothing to gain in the national election, and actually stands to lose in the primaries (gains in, say South Carolina primaries -- where Clark now leads -- would be offset in other states). He does, however, need to find another way of referring to low-income rural white voters. I don't have a recommended replacement phrase, but I strongly urge the Dean campaign to avoid any phrases involving the words "red", "neck", "hillbilly", and "hick", or gratuitous references to Deliverance.
AB
UPDATE: Matt Yglesias initially agrees with my assessment of Dean's chances in the South, but then points out that "On the other hand, the important thing to keep in mind about the Dean campaign is that it's beaten expectations at every turn so far so even though he obviously can't win in the South, maybe he can."
Friday, October 31, 2003
Lou Dobbs Smackdown
Julian Sanchez administers a nice one, along with a solid argument for free trade, here. My favorite part comes at the end:
When it comes to trade, Dobbs' one-sidedness gets things even more dramatically backwards. I had always been under the naive impression that we have jobs in order to be able to buy the stuff that we want. Whether I consider my salary "low" or "high" then depends on how expensive that stuff is. Dobbs, apparently, is inspired by a more Puritan work ethic. On his account, we want jobs for their own sake; if other people are willing to offer us goods more cheaply than we can make them ourselves, this cruelly robs us of the opportunity to work longer and harder.
Dobbs, of course, is an educated fellow, and presumably familiar with these arguments. But providing a voice for those eager to blame a Dark Other for the world's ills can only be good for ratings. And that, at least, ensures that Lou gets to keep his job.
Sanchez is a noted Libertarian. As I argued before, Libertarians stand to get a lot more of what they want -- or at least a lot less of what they don't like -- by supporting the Democratic candidate in 2004. This is probably more important than it sounds at first glance. First, Libertarian votes for the Democratic candidate will likely come mostly from votes that would otherwise go Republican, as opposed to coming from non-voters, so their impact is doubled (see this earler Sanchez editorial on this point). Second, Libertarian support might help convince moderate center-right Republicans who are distrustful of the current administration's fundamentalist base and growth of government policies to vote for a centrist Democrat, which the primary winner will surely be (yes, I include Dean in this category).
AB
Krugman on The Summer Boom
Kash goes a long way towards explaining the summer boom in the previous post, and he makes a good case that it's likely to be revised down toward a still-meaty 6%. Here's Krugman's take from today's NYT:
AB...This time around growth has a much better foundation: final demand — demand excluding changes in inventories — actually grew even faster than G.D.P. So it's unlikely that growth will drop off as sharply as it did back then.
But — you knew there would be a but — there are still some reasons to wonder whether the economy has really turned the corner.
First, while there was a significant pickup in business investment, the bulk of last quarter's growth came from a huge surge in consumer spending, with a further boost from housing. These components of spending stayed strong even when the economy was weak, so there shouldn't have been any pent-up demand. Yet housing grew at a 20 percent rate, while spending on consumer durables (that's stuff like cars and TV sets) — which last year grew three times as fast as the economy — rose at an incredible 27 percent rate last quarter.
This can't go on — in the long run, consumer spending can't outpace the growth in consumer income. Stephen Roach of Morgan Stanley has suggested, plausibly, that much of last quarter's consumer splurge was "borrowed" from the future: consumers took advantage of low-interest financing, cash from home refinancing and tax rebate checks to accelerate purchases they would otherwise have made later. If he's right, we'll see below-normal purchases and slower growth in the months ahead.
[snip]
Still, it's possible that we really have reached a turning point. If so, does it validate the Bush economic program? Well, no.
Stimulating the economy in the short run is supposed to be easy, as long as you don't worry about how much debt you run up in the process. As William Gale of the Brookings Institution puts it, "Almost any tax cut or spending increase would succeed in boosting a sluggish economy if the Federal Reserve Board follows an accommodative monetary policy. . . . The key question is, therefore, not whether the proposals provide any short-term stimulus, but whether they are the most effective way to provide stimulus." Mr. Gale doesn't think the Bush tax cuts meet that criterion, and neither do I.
To put it more bluntly: it would be quite a trick to run the biggest budget deficit in the history of the planet, and still end a presidential term with fewer jobs than when you started. And despite yesterday's good news, that's a trick President Bush still seems likely to pull off.
Explaining the GDP Boom
Further insight into yesterday’s big GDP numbers was provided by the release this morning of the September personal income and spending data by the BEA. Both income and spending were sharply lower in September compared to August. The reason? Overwhelmingly, it was because of the end of the one-time tax rebates sent out over the summer. In the graph below, you can see the big bump in both disposable income and consumer spending in July and August, which was almost entirely due to the tax rebates.
What does this mean? Three things.
First: this provides strong evidence that the huge increase in GDP last quarter, which was powered largely by consumer spending, was largely due to the tax cut. Good old fashioned Keynesianism, as AB pointed out. The mortgage refinancing boom helped some, too, but the lion’s share of the credit goes to the tax cuts.
Second: this suggests that last quarter’s GDP figures were an aberration. The fourth quarter will most likely not be nearly as good, since the tax rebates have now been spent and their impact on the economy is pretty much gone. So expect GDP growth to slow.
Third: we can also expect the third quarter GDP growth figure of 7.2% to be revised downward when the updated estimate is released on November 25. The advance figures, which we got yesterday, are mostly based on July and August economic activity. The revisions will take September more into account, and thus will be lower. When all is said and done, we may well find that 3Q GDP growth was around 6%.
One last point about yesterday’s GDP report. Don’t spend too much time looking for a downside to it. Even if it's only 6%, it's a genuinely good report. The economy is indeed slowly improving (though there are reasons why I think the economy will slow down again in another 6-12 months). Those are real gains, which we can’t ignore, as much as we want to see W. crash and burn. The important question to ask about the economy’s growth is whether it's sustainable. As this post indicates, I tend to think that it’s not.
Regardless, I think that AB is right that the Democrats shouldn’t be putting all of their hopes on a poor economy giving them the election next year. The economy won’t be great, but it won’t be terrible, either. With each passing week, it becomes more clear to me that the way to beat Bush is with his disastrous foreign policy, his secrecy, and his lies.
Kash
300% More Libertarian!
Wasting time, I took this political views quiz, which reveals that I am precisely as liberal as Matt Yglesias (we're both two units left of center, placing us in the neigborhood of Jean Chretien), but two units more Libertarian (scoring a 3 vs. a 1). Hey Matt, why do you want government in our bedrooms?
AB
It's not my fault, unless the issue is GDP growth, in which case I get all the credit
As evidenced by this week's flap over the Navy forcing the White House to put up the Mission Accomplished sign, this administration is great at buck-passing (Tresy at corrente has an excellent summary). But that only applies to bad news.
Today, CNN has a story headlined, "Bush claims credit for third-quarter boom":
"That's [the 7.2%] the fastest growth we've had in nearly 20 years," Bush said in a speech before workers at Central Aluminum Co., in Columbus. "Exports are expanding, investment is rising, housing construction is growing. The tax relief we passed is working."
Now Bush is right that that's a big number (even Kash agrees). But at least since the time of Keynes, we've known that a massive expansion in net government expenditures (i.e., spending increases and tax cuts) will lead to a short run boom. So it's a bit of a surprise that jobs haven't improved yet, and it's possible that they still will (Democrats be warned: focusing all your criticism on the jobs picture may be risky). Still, this surge is pure-Keynesianism demand-side stimulus, which can be good in the short run, but carries long-run risks (inflation, mostly) that a macroeconomist (Kash? Brad?) can speak to better than I can.
AB
Kudos to Republican Senators
I'll give Sen. Pat Roberts, who until now has seemed basically like a White House shill, a little credit for this:
To Tenet, the senators wrote, "You must expedite our access to the current list of outstanding documents and interview requests."
"This information was to have been provided to the committee five months ago," they wrote.
The senators' letter also complained about the failure of the agency to provide the committee "with an explanation of the various disconnects and inconsistencies in the assessments concerning the Niger uranium issue."
In the letter to Rice the senators wrote, "We have made numerous requests for documents which we have not yet been provided and we have sought to interview a member of your staff without success. Some of these requests have gone unanswered since July. You must expedite our access to the outstanding documents and immediately make available the individual identified. You must also lift your objection to the Central Intelligence Agency providing the committee with certain documents and allowing us to interview individuals involved in briefing senior administration officials."
To Rumsfeld and Powell, the two senators wrote, "The credibility of the government with its people and the nation with the world is at stake. Incomplete answers and lingering doubts will haunt us for many years."
The story also says that "Officials said Tenet is willing -- indeed eager -- to appear before the committee and explain why, before the war, U.S. intelligence said Iraq had weapons of mass destruction." Now that would be interesting to see.
While I'm giving out credit to Republicans, John Warner deserves some for urging Gen. Boykin to step down (as undersecretary of defense for intelligence, not his rank). Still though, it's a bit annoying that most stories on Boykin's remarks, including the one just cited, don't contain his actual statement, much less this disconcerting detail:
Martin reports Boykin has shown church groups photos he took of Mogadishu with black slashes in the sky which he says did not come from any defect in the camera or film.
"Whether you understand it or not, it is a demonic spirit over the city of Mogadishu. Ladies and gentlemen, that's not a fake, that's not a farce," Boykin said.
In college, we used to maintain a "Satan Watch", which was basically a collection of photos from The Enquirer and other tabloids purporting to show the face of Satan in the clouds, or the smoke enveloping a burning building. Little did we suspect that that qualified us to be an Defense undersectretary.
AB
Thursday, October 30, 2003
Best Take Yet on the Stalker
I'm sure most of you have seen that self-proclaimed poor, stupid, and Krugman-stalking Don Luskin had his lawyer send a letter to Atrios demanding that Atrios remove a post that (accurately) mocked Luskin, and that the accompanying comments also be removed. I don't have much to add on this; Luskin is both clearly an idiot and clearly wrong.
The Poor Man, however, has the best take yet on this. Go read it.
AB
Up is Down
Here at Angry Bear, when we make reference to "up is down" or "down is up," we're usually referring to some new Orwellian step by the administration (seriously, Karl, 1984 was a warning, not an instruction manual).
This morning, Kash showed how "... the BLS has magically discovered a way for jobless claims to drop week after week, without the number of jobless claims ever actually falling." When I first read that, I thought to myself, "hey, that defies logic." But my confusion was due to a lack of vision, as demonstrated by this illustration that reader Jason G. sent me today:
AB
The Daily Show
Thursday night:
ABJOHN: Isn't a mistake for the President to blame the Navy for hanging the "mission accomplished" sign up there.
ROB:Absolutely not, John. The President didn't even want it up there at all. But, as you know, he's got no control over the Navy.
JOHN: Rob, he's the Commander in Chief, he's got complete control of the Navy.
ROB: Yeah, the regular Navy. Yes. But not the elite Sign Hanging Units. Those guys are cold-blooded sign-hangers, John. Put a sign out there and they'll hang it whether you like it or not.
Treasury's Nonsense about China’s Exchange Rate
The Treasury Department issued their annual report this morning examining whether any countries are using their exchange rates to unfairly take advantage of the US. Unsurprisingly, the report discusses the politically important issue of China’s exchange rate vis-Ã -vis the US in some detail. (If you want some background on the China exchange rate issue, go to earlier posts here and here.) The report contains some rather disingenuous tidbits.
China has pegged its currency since 1994 at 8.28 to the dollar. This policy is not appropriate for a major economy like China and should be changed.I’m slightly puzzled as to why a fixed exchange rate is no longer “appropriate” for a major economy. Depending on the situation, there can be perfectly good reasons to have a fixed exchange rate, just as there are sometimes perfectly good reasons to have a flexible exchange rate. It’s interesting to note that the US had a fixed exchange rate with its largest trading partner through most of the 19th century, and again during the period of remarkable economic growth from 1945-1970. Here’s a helpful graph:
The bits on the graph that are essentially flat represent periods when the US had a fixed exchange rate. Judging by how long the fixed exchange rate was maintained and how much the US economy grew during those periods, a reasonable conclusion is that fixed exchange rates worked pretty well for the US during its development.
Another bit of misdirection contained in the report is this:
Greater exchange rate flexibility would also allow China greater scope to maintain a low-inflation, pro-growth monetary policy.I’d be very curious to know why they think that China needs a flexible exchange rate in order to achieve low inflation and high growth. Over the last 3 years China’s GDP growth has averaged about 7% per year. It’s inflation rate has averaged about 0%. Does China really need help achieving high growth with low inflation?
There may well be some valid reasons that China should change its peg, but let’s be honest here. The reasons contained in this Treasury report are nonsense.
Kash
The Perpetual Declining Unemployment Machine
This week’s initial unemployment claims, in another report released this morning, were 386,000. Since the revised figure for last week is 391,000, headlines can justly read “Jobless Claims Drop,” even though last week’s initial estimate was 386,000.
Interestingly, “Jobless Claims Drop” is exactly what the headlines also read last week, when the number of unemployment claims was... 386,000. The week before, the headlines also read “Jobless Claims Drop,” since initial unemployment claims were 384,000. The week before that? You guessed it, “Jobless Claims Dropped” down to a level of 382,000. We’ve now had 4 weeks in a row with headlines stating that “Jobless claims drop,” though the initial estimate of claims has gone from 382,000 to 386,000 over that period.
The reason? Every week the number from the week before is revised up to a number higher than the current week’s initial estimate. So the BLS has magically discovered a way for jobless claims to drop week after week, without the number of jobless claims ever actually falling.
By the way, I wonder if it’s worth mentioning to the BLS that they should probably revise their methods for reaching a preliminary estimate. Over the past 4 weeks, the estimate has been revised up by 6 thousand, 6 thousand, 6 thousand, and 6 thousand. Anyone detect a pattern?
Kash
GDP Shocker
The GDP numbers were really impressive this morning. The preliminary estimate of overall level of GDP growth during the period July-September was 7.2%, which is the fastest rate of GDP growth since 1984.
It’s worth checking out the original report for some details. What caused such rapid GDP growth? Surprisingly, it was pretty broad based. Here’s the breakdown:
Change due to:
- Increased consumer spending: +4.66%
- Increased housing construction: +0.92%
- Increased business spending: +1.12%
- Decreased inventories: - 0.67%
- Increased net exports: +0.84%
- Increased government spending: +0.27%
TOTAL: +7.2%
A lot of this GDP growth seems to be due to the tax cut, since the biggest increase by far was due to higher purchases by consumers. But business spending was also growing robustly, so some of it is probably also due to improved business expectations. The big question is whether consumers and businesses will keep spending at these extremely high rates for more than a quarter or two...
I would definitely not want to be in the bond market today.
Kash
Wednesday, October 29, 2003
Deeply Conflicted 4th Circuit Nominee
Under questioning from Democrats yesterday, Claude Allen said he did not intend to insult homosexuals when as a campaign press aide to then-Sen. Jesse Helms (R-N.C.) he referred to "queers." He also said he was "deeply conflicted" about a Helms filibuster against creation of a federal holiday for the Rev. Martin Luther King Jr., saying King was "a hero for me and my family."AB
Tuesday, October 28, 2003
Falsifiability and Pangloss
First, you weren't seeing enough of the good news. Now, the bad news is good news. Here's President Bush, implying that the attacks are a sign that things are going well:
"The more progress we make on the ground, the more free the Iraqis become, the more electricity that's available, the more jobs are available, the more kids that are going to school, the more desperate these killers become"
Bush also directly stated a causal relationship between success on the ground and more resistance:
"The more successful we are on the ground, the more these killers will react."
I know science and the scientific method are not a high priority with this administration (e.g., see Salon today), but seriously, come on. We can all agree that no attacks would in fact constitute good news. We are now told that the current level of attacks is also good news, and that when the attacks escalate, that's a sign of more success on the ground. Bertrand Russell and Karl Popper had it wrong, while Candide's devoted advisor Pangloss had it right the whole time:
"It is demonstrable," said he [Pangloss], "that things cannot be otherwise than as they are; for as all things have been created for some end, they must necessarily be created for the best end. Observe, for instance, the nose is formed for spectacles, therefore we wear spectacles. The legs are visibly designed for stockings, accordingly we wear stockings. Stones were made to be hewn and to construct castles, therefore My Lord has a magnificent castle; for the greatest baron in the province ought to be the best lodged. Swine were intended to be eaten, therefore we eat pork all the year round: and they, who assert that everything is right, do not express themselves correctly; they should say that everything is best."
New and improved epistemology coming soon to science textbooks near you!
AB
Monday, October 27, 2003
Daily Howler
Somerby is good today, if I bit more perturbed by the media than usual ("EXTRA! IT’S TIME FOR NAGOURNEY TO GO: Adam Nagourney needs to be fired for his work in this morning’s New York Times"). Why? Nagourney, whose work I often like, is faking quotes. Here's what Nagourney has Clark saying (quote doctored to make it look like Clark "appeared to struggle"):
"No, I always — I'm a fair person. And when this administration's done something right, well, if they were Russians doing something right, Chinese doing something right, French doing something right or even Republicans doing something right, I'm going to praise them.
"Right after 9/11, this administration determined to do bait and switch on the American public," he said. "President Bush said he was going to get Osama bin Laden, dead or alive. Instead, he went after Saddam Hussein. He doesn't have either one of them today."
Note that not only are there no ellipses anywhere, the closing quote in the first paragraph is also missing. Why no ellipses? Because ellipses do not imply time travel.
From the transcript of the debate, the latter half of the quote ("Right after 9/11 ...") precedes the first half of the quote and is in response to a different question!
Now let's take a look at Nagourney, as he "struggles" to make sense. This is an exact quote of Nagourney's first paragraph in the article:
Rough and intensively, and if the congress should have authorized $87 billion which would help the democratic candidates of president, here discussing, other Sunday one harms on the intelligence to maintain president Bushs of the invasion making of Iraq the effort of war.(*)
AB
(*) Actual text, translated into German, then French, then back to English using BabelFish. With sufficient creative license, it's easy to make anyone sound like they're "struggling."
UPDATE: Thanks to Jay, I see that the NYT has added this "correction":
An article on Monday about a debate in Detroit by Democratic presidential candidates referred incorrectly to a response from Gen. Wesley K. Clark: "Right after 9/11, this administration determined to do bait-and-switch on the American public. President Bush said he was going to get Osama bin Laden, dead or alive. Instead, he went after Saddam Hussein. He doesn't have either one of them today." The comment responded to a question about where he stands on the war in Iraq, not to the question "Are we to understand that what you're saying now is that those things you have said that were positive about the war was not what you meant?"
I think that's a pretty sorry excuse for a correction in that it completely mis-states the original error and hides the intentional mendacity of the authors.
MemoryHole.txt
If you know what a robots.txt file is, take a look at the White House's. Why would they do this [disable outside searching and archiving of White House material related to Iraq]? Here's a tidbit from Google's FAQ [emphasis mine]:
Google takes a snapshot of each page examined as it crawls the web and caches these as a back-up in case the original page is unavailable. If you click on the "Cached" link, you will see the web page as it looked when we indexed it. The cached content is the content Google uses to judge whether this page is a relevant match for your query.
When the cached page is displayed, it will have a header at the top which serves as a reminder that this is not necessarily the most recent version of the page. Terms that match your query are highlighted on the cached version to make it easier for you to see why your page is relevant.
The "Cached" link will be missing for sites that have not been indexed, as well as for sites whose owners have requested we not cache their content.
Thus, absent someone or some organization periodically visiting and cataloging the contents of the White House's web page, you won't know the next time that "combat operations" magically becomes "major combat operations" (see also Spinsanity). Nice. I should learn to never go to work without my copy of 1984--I'm sure I could quickly find some parallel scene. Via CalPundit.
AB
UPDATE: Via Amazon's new super-cool search inside the book feature:
Winston dialed "back numbers" on the telescreen and called for the appropriate issues of the Times, which slid out of the pneumatic tube after only a few minutes' delay. The messages he had received referred to articles or news items which for one reason or another it was thought necessary to alter, or, as the official phrase had it, to rectify. For example, it appeared in the Times of the seventeenth of March that Big Brother, in his speech of the previous day, had predicted that the South Indian front would remain quiet but that a Eurasian offensive would shortly be launched in North Africa. As it happened, the Eurasian Higher Command had launched its offensive in South India and left North Africa alone. It was therefore necessary to rewrite a paragraph of Big Brother's speech, in such a way as to make him predict the thing that had actually happened.
Sunday, October 26, 2003
Conventional Distortion
David Broder, alternatively heralded as the Dean of the Washington Press Corps or the Standard Bearer of Conventional Wisdom, is really stretching logic in his column in today's Washington Post. It's not quite an attack on Dean, but it's a clearly intentional distortion of facts that's fairly obviously intended to belittle Howard Dean's support and advance GOP strategy.
First, Broder comments on Dean's prodigious lead in New Hampshire (38% Dean, 21% Kerry, 11% Clark), and then adds this:
By contrast, Dean was essentially tied with Rep. Dick Gephardt of Missouri among prospective Iowa caucus-goers.
Is that really such a contrast? Iowa is tailor-made for Dick Gephardt (he has the backing of Iowa unions, has long professed his love of ethanol, is from a neighboring state, and won the Iowa caucus when he ran in 1988). Sure, Dean also supports ethanol, but I doubt that Dean ever addressed the issue until this year (you can't win in Iowa if you're not big on ethanol, which in no small part explains Lieberman and Clark skipping Iowa). The point: being tied with Gephardt in Iowa is quite an accomplishment for a governor from the Northeast. But this point is minor in comparison to Broder's next bit of silly reasoning:
Since Dean has emphasized his early opposition to the war in Iraq as his calling card in the race, it is easy to assume that his antiwar stand and his criticism of Lieberman, Gephardt, Kerry and Edwards for supporting the resolution authorizing the use of force must account for his strong showing -- especially in New Hampshire.
Wrong.
[snip--Broder talking about how New Hampshire is not a pacifist hippy commune]
The fact that Democratic primary voters in New Hampshire are not reflexively opposed to our involvement in Iraq is underlined by the poll finding that, by a margin of 54 percent to 38 percent, they favor a nominee who "reluctantly supports" Bush's $87 billion aid request over one who opposes it -- while Iowa and South Carolina voters lean slightly the other way.
If it's not his early antiwar stand that is powering Dean, what explains his lead in the Jan. 27 primary? The Democracy Corps poll strongly suggests it is the fact that the New Hampshire primary electorate -- including many of those independents -- is overwhelmingly liberal on social issues on which Dean has identified himself. By a margin of 76 percent to 18 percent, they favor civil unions giving gay couples the same legal rights as married couples. Dean signed the first such law as governor of Vermont. Two-thirds of those likely to vote in New Hampshire also approve of gay marriage.
[snip]
In short, it is cultural forces -- far more than anything else -- that explain Dean's appeal in New Hampshire, forces that may tug the other way when the race moves to more typical battleground states.
Get it? New Hampshire voters like Dean in spite of his Iraq position! Broder intentionally conflates Dean's pre-war opposition with "reflexive opposition to our involvement in Iraq." Wrong. That's Dennis Kucinic's view, not Dean's. Broder says that New Hampshirites' views on Iraq differ from Dean's, but let's listen to Howard Dean, in his own words:
DEAN: We have no choice [but to approve the $87 billion for Iraq], but it has to be financed by getting rid of all the president's tax cuts. Even though I did not support the war in the beginning, I think we have to support our troops. The $87 billion ought to come from the excessive and extraordinary tax cuts that this president foisted upon us, that mainly went to people like Ken Lay who ran Enron.
That sounds a lot like, perhaps even exactly like, "reluctant support" to me.
Broder wants you to think New Hampshirites like Dean primarily because he is in favor of gay marriage. Why would Broder bend, stretch, and distort to make such a point? Apparently, because the GOP wants him to. From Saturday's Washington Post:
Republican lawmakers and conservative activists are making plans to turn gay marriage into a major issue in next year's elections ... Party strategists said the issue could be a bonanza for mobilizing conservatives to fund campaigns and turn out to vote, particularly in the South.
Note that I agree with Atrios, that this position may cost the Democratic candidate some votes, but that they "can't out-gaybait the Republicans" and that they should therefore "Do the right thing, and explain why." My point is that for Broder to claim that this issue is the source of Dean's support is, at best, feebleminded.
AB
P.S. Speaking of Dean's avowed support for ethanol subsidies, Matt Y. has an interesting take on Dean's free trade views: Dean is a free-trader at heart, as evidenced by his record, but he's paying lip service to protectionist sentiment to keep Gephardt from getting the still-open AFL-CIO endorsement. Matt might be right--Dean just needs to stall till Gephardt drops out. Assuming the field narrows to Dean, Clark, Lieberman, and Kerry, Dean is surely the front-runner for the endorsement.
Un-Tubular
A story in today's Washington Post, Iraq Survey Fails to Find Nuclear Threat: No Evidence Uncovered Of Reconstituted Program, should put the final nail in the bogus aluminum tubes for uranium-enriching centrifuges claim. As the story makes clear, US experts opined before the war that the tubes were neither suitable for, nor intended for, use in such centrifuges.
According to records made available to The Washington Post and interviews with arms investigators from the United States, Britain and Australia, it did not require a comprehensive survey to find the central assertions of the Bush administration's prewar nuclear case to be insubstantial or untrue. Although Hussein did not relinquish his nuclear ambitions or technical records, investigators said, it is now clear he had no active program to build a weapon, produce its key materials or obtain the technology he needed for either.
Among the closely held internal judgments of the Iraq Survey Group, overseen by David Kay as special representative of CIA Director George J. Tenet, are that Iraq's nuclear weapons scientists did no significant arms-related work after 1991, that facilities with suspicious new construction proved benign, and that equipment of potential use to a nuclear program remained under seal or in civilian industrial use.
Throughout, the story is consistent with claims made by former State Department Director of the Office of Strategic Proliferation and Military Affairs Greg Thielmann on 60 Minutes II last week (which I excerpted here). The Post story is also a compelling addition to Sy Hersh's in-depth piece last week for the New Yorker.
As numerous observers (most vigorously, Bob Somerby) point out, the primary bias in the media is laziness--it's much easier to write a story that someone else has already written. So expect more articles similar to this one. In this case I think that the White House, by not releasing the Kay Report, is adding a layer of intrigue and thereby fueling the media flames.
AB
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