Hersh Denial
If everything Hersh wrote is true, this sounds exactly like what the Pentagon would say. On the other hand, it also sounds exactly like what the Pentagon would say if everything Hersh wrote is false.
AB
Monday, May 17, 2004
Where's the Blogroll?
It's to the right, along with the Rumsfeld Wire, hit counter, RSS feed, and the Archives. Now everything that runs a script is in the right panel and will be brought up after the center panel. Everything in the left panel is hosted directly on the Blogger servers and requires no scripts.
AB
At Least He's Not Joe Lieberman
I'm still pondering the merits of McCain as a veep choice, though I'm pretty sure that I'm against it. Basically, it still seems so unlikely that it's not worth considering too carefully. Besides, Mark Kleiman's done some of the thinking for me so I don't have too.
But there is one factor weighing strongly in favor of John McCain: he's not Joe Lieberman, who yesterday embraced torture
On CNN's "Late Edition with Wolf Blitzer, Sen. Joseph Lieberman (D-Conn.), a member of the Armed Services Committee, called the allegations serious and said they should be investigated. But, he said, if a special interrogation unit focused on suspected terrorists could have prevented Sept. 11, "I don't think there are many Americans who would say we shouldn't use whatever means are necessary to extract that information."
Great point, you sanctimonious twit. One question: how do you know who to torture? Many of us, including me, will agree that if we (1) Knew something like 9/11 was going to happen, and (2) Knew and had access to those with the information needed to prevent said attack, then we'd endorse applying whatever force is necessary to extract the information (others might choose to draw an absolute moral line and still object.) But in virtually any case where conditions (1) and (2) hold, we would already have the information needed to stop the plot.
So Joe's either engaging in more self-aggrandizement or he's endorsing widespread torture in the hopes of finding a needle in a haystack. If the latter, what's the right yield rate (accurate tips per person tortured) and what's the threshold number of prevented deaths? (The footnote to this old post has some thoughts on acceptable ratios of punishment of the innocent to punishment of the guilty.) Until he can answer the tough questions, Lieberman should stick to complaining about indecent video games and blaming stuff on Hollywood.
Back to the McCain question, not being Joe Lieberman is a major plus for him, but many other viable candidates (I'd venture to say all but one) cross that threshold as well (I like Kleiman's idea of Zinni or Shinseki.) I do, however, like McCain heading State or Defense -- positions where his experience and multilateral appeal could add a lot of value yet he would have little purview over areas where his conservative views would be problematic (e.g., judicial appointments.)
AB
In Good Company
The following is a screenshot of the Rumsfeld Wire from Sunday afternoon and evening:
Angry Bear, Atrios, CalPundit, Josh Marshall, and the DCCC's blog: birds of a feather.
AB
P.S. Alert or suspicious readers may note that it appears I pasted two different shots from the Rumsfeld Wire. The break in the image is there because the only way I know how to take screenshots is with Acrobat, which I couldn't get to make one continuous page. Since the page broke right in the middle of the Wire, I had to append the two halves.
UPDATE: Wow, just hit "Prt Scr" and paste the clipboard into your favorite application -- it's that simple! How did I manage never to learn that?
Sunday, May 16, 2004
Ambassador Atrios
Atrios is running a pledge drive this week. Meanwhile, by way of Mark Kleiman, I find this in today's Washington Post:
Of the 246 fundraisers identified by The Post as Pioneers in the 2000 campaign, 104 -- or slightly more than 40 percent -- ended up in a job or an appointment. A study by The Washington Post, partly using information compiled by Texans for Public Justice, which is planning to release a separate study of the Pioneers this week, found that 23 Pioneers were named as ambassadors and three were named to the Cabinet: Donald L. Evans at the Commerce Department, Elaine L. Chao at Labor and Tom Ridge at Homeland Security. At least 37 Pioneers were named to postelection transition teams, which helped place political appointees into key regulatory positions affecting industry.
... When Kenneth L. Lay, for example, a 2000 Pioneer and then-chairman of Enron Corp., was a member of the Energy Department transition team, he sent White House personnel director Clay Johnson III a list of eight persons he recommended for appointment to the Federal Energy Regulatory Commission. Two were named to the five-member commission.
Since Atrios has raised $161,705 (and counting) for John Kerry, by the Bush Pioneer standards, he should be entitled to an ambassadorship of Kerry's choosing or a seat on a regulatory committee of his own choosing.
Here at Angry Bear, Kash and I have raised $5,161.78 to date, well on our way to the $10,000 cumulative goal (donate here). If we hit $10,000, Kash or I might be entitled to the unpaid internship of our choice.
AB
Rumsfeld Should Go
By now, you've probably read or read about Seymour Hersh's latest for the New Yorker, The Gray Zone, in which he writes that the events in Abu Ghraib were the result of a slippery slope that began with the creation of a hihgly targeted Special Access Program:
Rumsfeld reacted in his usual direct fashion: he authorized the establishment of a highly secret program that was given blanket advance approval to kill or capture and, if possible, interrogate "high value" targets in the Bush Administration’s war on terror. A special-access program, or SAP—subject to the Defense Department’s most stringent level of security—was set up, with an office in a secure area of the Pentagon. The program would recruit operatives and acquire the necessary equipment, including aircraft, and would keep its activities under wraps. America’s most successful intelligence operations during the Cold War had been SAPs, including the Navy’s submarine penetration of underwater cables used by the Soviet high command and construction of the Air Force’s stealth bomber. All the so-called "black" programs had one element in common: the Secretary of Defense, or his deputy, had to conclude that the normal military classification restraints did not provide enough security.Over time, and spurred by the growing insurgency in Iraq, the program expanded:
Rumsfeld and Cambone went a step further, however: they expanded the scope of the SAP, bringing its unconventional methods to Abu Ghraib. The commandos were to operate in Iraq as they had in Afghanistan. The male prisoners could be treated roughly, and exposed to sexual humiliation.
"They weren’t getting anything substantive from the detainees in Iraq," the former intelligence official told me. "No names. Nothing that they could hang their hat on. Cambone says, I’ve got to crack this thing and I’m tired of working through the normal chain of command. I’ve got this apparatus set up—the black special-access program—and I’m going in hot. So he pulls the switch, and the electricity begins flowing last summer. And it’s working. We’re getting a picture of the insurgency in Iraq and the intelligence is flowing into the white world. We’re getting good stuff. But we’ve got more targets”—prisoners in Iraqi jails—“than people who can handle them."
Cambone then made another crucial decision, the former intelligence official told me: not only would he bring the sap’s rules into the prisons; he would bring some of the Army military-intelligence officers working inside the Iraqi prisons under the sap’sauspices. "So here are fundamentally good soldiers—military-intelligence guys—being told that no rules apply," the former official, who has extensive knowledge of the special-access programs, added. "And, as far as they’re concerned, this is a covert operation, and it’s to be kept within Defense Department channels."
The military-police prison guards, the former official said, included "recycled hillbillies from Cumberland, Maryland." He was referring to members of the 372nd Military Police Company. Seven members of the company are now facing charges for their role in the abuse at Abu Ghraib. "How are these guys from Cumberland going to know anything? The Army Reserve doesn’t know what it’s doing."
There's a lot more in Hersh's piece, most of it casting substantial doubt on the current line that the problems were the results of a few low level MPs gone wild.
The Pentagon, of course, refutes Hersh's account in its entirety and released a statement on Saturday saying in part that
"The abuse evidenced in the videos and photos, and any similar abuse that may come to light in any of the ongoing half dozen investigations into this matter, has no basis in any sanctioned program, training manual, instruction, or order in the Department of Defense."
Now, Newsweek has a story out, The Roots of Turture, that is completely in accord with Hersh's account. Apparently, Newsweek obtained a Jan. 25, 2002 memo from White House Council Gonzales to President Bush, that explains the origins of lax standards [emphasis mine]:
"As you have said, the war against terrorism is a new kind of war," Gonzales wrote to Bush. "The nature of the new war places a high premium on other factors, such as the ability to quickly obtain information from captured terrorists and their sponsors in order to avoid further atrocities against American civilians." Gonzales concluded in stark terms: "In my judgment, this new paradigm renders obsolete Geneva's strict limitations on questioning of enemy prisoners and renders quaint some of its provisions."
Newsweek also goes into some detail on Powell's immediate and continuing, but ultimately fruitless, opposition to the new Geneva-Free protocol.
How did the program devolve from a tight focus on top al Qaeda targets and implementation by seasoned intelligence experts to the generalized debasement in Abu Ghraib? Newsweek also pins the blame on Rumsfeld's frustration with the worsening situation in Iraq:
Rumsfeld was getting impatient about the poor quality of the intelligence coming out of there. He wanted to know: Where was Saddam? Where were the WMD? Most immediately: Why weren't U.S. troops catching or forestalling the gangs planting improvised explosive devices by the roads? Rumsfeld pointed out that Gitmo was producing good intel. So he directed Steve Cambone, his under secretary for intelligence, to send Gitmo commandant Miller to Iraq to improve what they were doing out there. Cambone in turn dispatched his deputy, Lt. Gen. William (Jerry) Boykin—later to gain notoriety for his harsh comments about Islam—down to Gitmo to talk with Miller and organize the trip. In Baghdad in September 2003, Miller delivered a blunt message to Brig. Gen. Janis Karpinski, who was then in charge of the 800th Military Police Brigade running Iraqi detentions. According to Karpinski, Miller told her that the prison would thenceforth be dedicated to gathering intel. (Miller says he simply recommended that detention and intelligence commands be integrated.) On Nov. 19, Abu Ghraib was formally handed over to tactical control of military-intelligence units.(*)
It is increasingly implausible that the torture in Abu Ghraib was just the work of low level MPs actiing without direction from above and, accordingly, it is increasingly unlikely that this will go away soon. Two independent sources -- Hersh and Newsweek -- cite the growing insurgency in Iraq as the impetus for the orders from above to expand and "Gitmo-ize" intelligence gathering in Iraq. The roots of the insurgency lie, in no small part, in Rumsfeld's refusal to follow the advice of his senior advisors and send more troops to Iraq.
That Rumsfeld's judgement is poor can no longer be questioned; the only question at issue is whether his culpability for Abu Ghraib is direct or indirect. I am un-moderating my views: Rumsfeld should go, forthwith.
AB
(*) For some disturbing background on Boykin and Cambone, see this post from Dave Neiwert.
UPDATE: Kevin read the same two stories and notes that "Hersh says abusive interrogation was the Pentagon's idea and CIA resisted," while "Newsweek says the Pentagon and the CIA were on board, but the State Department resisted." Both sources do agree, however, that orders and direction came from above.
UPDATE 2: Matt Yglesias adds this amusing caveat:
Now at this point there's so much interagency ill-will that you could probably find "intelligence officials" willing to say they've witnessed Donald Rumsfeld communing with the devil while someone at State assures you that Colin Powell was against the whole Faustian bargain concept from the beginning.
Saturday, May 15, 2004
Wow
Bush’s poll numbers keep sinking. From the latest issue of Newsweek:
May 15 - As his administration grapples with the fallout from the Iraqi prisoner abuse scandal, President George W. Bush’s approval ratings have dropped to 42 percent, according to the latest NEWSWEEK poll, a low for his presidency. Fifty-seven percent say they disapprove of Bush’s handling of the war in Iraq. And 62 percent say they are dissatisfied with the way things are going in the United States, a number that has been steadily increasing since April, 2003, when it was 41 percent.For some historical context on how these numbers may translate into an election outcome, see this post on The American Street. The Newsweek article goes on to note that Bush’s falling support has not translated into increasing support for Kerry. I’m not quite sure what the explanation for that is, other than the obvious – Kerry hasn’t inspired one-time Bush supporters, who may be disillusioned with the president but are not particularly attracted to Kerry, either. The crucial question is whether the Kerry campaign can change that.
Kash
Friday, May 14, 2004
Minor Changes
I've moved most slow-loading scripts (e.g., sitemeter) to the right panel, which should mean that the page will load the center panel before running them (which sometimes causes the page to hang for a while before loading). If this works then you will be able to read the hot fresh content while the rest of the page is loading.
I still need to fix the blogroll, which also hangs sometimes. One plan is to just switch it with the book recommendations (I put the images directly on the site instead of using Amazon to host them.) The other plan is to maintain it manually. Whichever I choose, by Monday slow-loading should be a thing of the past.
Thanks to twh, Wayne B., and Kevin Drum for the tips.
AB
New Data: Everything’s Up
The CPI was up in April, with the core rate rising 0.3%. The 12-month change in the core CPI is therefore up 1.8%, another sign that the US inflation rate is still rising. Just a few months ago the 12-month core CPI inflation rate was only 1.25%. (By the way, the reason that I like to use the core CPI is because it's less volatile than the full CPI, and thus better reflects the underlying inflation pressures in the economy. However, the full CPI does a better job of depicting what's happening to real purchasing power.)
Meanwhile the Fed’s monthly estimate of industrial production shows a healthy rise in April, too. The same data release shows that capacity utilization is also up, to its highest level in 3 years. The rise reflects increases in both manufacturing and in other industrial activities.
Finally, interest rates are also up, though they seem to have leveled off over the past week or so at their highest levels in about 2 years. The 10-year bond now yields around 4.8%, and the 5-year bond yields around 4.0%. Both of these interest rates are about 1 full percentage point higher than 2 months ago.
These are all classic signs of solid economic growth. The recovery is indeed in full swing.
The question of sustainability is still an open one, though. Will housing prices peak and start to fall? Will the impetus provided by tax cuts and government spending wane in coming months? Will consumers slow their spending as interest rates rise and house prices fall? (See Karsten's post below for more on this.) Will the price of oil cut into the recovery this summer? I’ve been answering yes to all of these questions for a while, and I don’t see any reason to change my answer yet. I don’t think that anything dramatic will happen, but I do think that all of these forces will have some effect, and that the economy will noticeably cool later this year.
Kash
Postcards from Old Europe - In debt we trust
The FOMC's recent change in the wording of their statement has clearly shown that the times of E-Z financing are coming to an end. The recent past has seen the Fed engineer a near-rational bubble in asset prices which has served to push household wealth up past the levels of the stock market bubble. Cheap credit has supported household spending at a time in which incomes have been growing at a snail's pace.
A quick series of (substantial) interest rate hikes could therefore lead to a substantial slowdown in consumption and thereby negatively impact future GDP growth. Consumer credit delinquency rates are already at near record highs while ever more home buyers finance their homes with no money down and use adjustable rate mortgages to squeeze out a larger loan. The reasoning behind this behavior is nicely stated in this NY Times article. Excerpt:
"I'm too young to be scared," he said last week, betting that both the value of the house and his income will keep rising. If the bet fails, he said, it will not be the end of the world, adding: "There is a difference between being poor and being broke. Being broke is more of a temporary condition. Donald Trump has been broke a couple of times."What I like most about this statement is that the person cited is supposed to be a "management consultant". I'm sure that an optimist like him is much in demand!
[...]
Mr. Thompson, who completed the purchase of his townhouse near Denver on Friday, said he would have qualified to borrow $330,000 if he had taken out a traditional fixed-rate mortgage. He qualified for a loan up to $550,000 by taking an adjustable-rate mortgage that will be constant for the first five years and that requires only interest payments.
This kind of mindset has kept consumers spending all through the recent economic weakness and has also served to boost consumer credit to a level of over $2 trillion. Total household debt is at a level of around 90% of GDP and the average American now spends almost 20% of their disposable income servicing debt. This is in sharp contrast to Euroland where household debt stands at around 60% of GDP.
The picture looks a little different if you look at household debt as a percentage of disposable income. Some European countries - such as Germany or the Netherlands - have a household debt to disposable income ratio which is higher than the US ratio. The Euro-average is around 30% below the US level though.
Another thing to keep in mind is the evolution of the savings rate. While the US savings rate is at a rock bottom 2% the Euro-average stands at around 13%! Europeans have reacted to sluggish economic growth and high unemployment by retrenching and saving more. In sharp contrast US consumers have decided to take a different course and spend more - even if it means taking on more debt.
The US consumer's decision has been vindicated by the behavior of asset prices. Up until the popping of the bubble the stock market did the job of saving for the individual. Rising house prices took up much of the slack after the bubble burst. This asset price inflation with corresponding price disinflation has made many households feel wealthy and consume more.
The only problem is that asset prices are just numbers in a ledger until you liquidate the asset. You need real money to consume and pay down debt. The worst scenario would entail your debt-service costs rising faster than your income - this leads to a sharp curtailing of other expenses to reduce the onerous costs of debt. This scenario isn't that far-fetched. Anyone with an adjustable rate mortgage or sizeable credit card debt should think long and hard about what could happen.
If the Fed really takes the bunch bowl away by raising - say - by 150bp over the next 12 months people with adjustable credit terms will find that E-Z financing can quickly turn into E-Z bankruptcy. While the press tells us that consumers are getting more bang for their (debt service) buck
[...]thanks in part to lower interest rates, monthly debt payments consume a smaller share of monthly income today than in late 2001.we shouldn't forget that this doesn't mean that people are actually saving money. Consumers have simply adjusted the amount of principal upwards!
To sum it up: while Eurozone consumers are saving more and spending less, US consumers are borrowing more and spending more. The US private sector has kept the economy afloat over past years - albeit at the cost of rising exposure to the vagaries of the financial markets. Households have turned into mini-banks who have to manage their assets and liabilities in such a fashion that they remain solvent. Let us hope that they're up to the task!
Want more? CurryBlog provides you with regular updates on financial markets and related subjects.
Thursday, May 13, 2004
Question
The blog's been taking a long time to open today because blogrolling.com, the site that maintains my blogroll is down (I've removed it for now.) The same thing happens whenever sitemeter is down, too.
Is there some way to make the blog first load the background and the center table where the posts are, and only then run all the scripts? Any tips will be greatly appreciated.
AB
PPI Data
Today’s BLS release of PPI data for April show a 12-month increase in producer prices of 5.1%, thanks largely to higher energy prices. That's the fastest annual PPI inflation that we've seen in a long time. (The one-month change in prices was 0.7%.) But I've said before that I think it’s more useful to look at the core inflation rate, excluding food and fuel price changes. The core rate was up just 0.2% last month, which implies a rise of about 1.5% over the past year. The core rate tells us more about the inflation pressures that the economy is generating on its own. The story there is that the core rate is rising, but from a very low level.
However, at some point sharply higher energy prices do become relevant in and of themselves. They do reduce the purchasing power of consumers in a very real way, and they often do eventually filter into other price increases. I’ve said it before and I’ll say it again: if the price of oil doesn’t start falling sometime soon (it’s still holding firm at close to $41 per barrel), it’s going to start having some very real effects on the economy this summer.
Kash
Let’s Call It What It Is
Take a look at the following opening sentence from an AP story on the crimes at Abu Ghraib:
WASHINGTON - Fresh photos showing American soldiers brutalizing Iraqi prisoners with snarling dogs or forced sex left members of Congress angry and disgusted...Why beat around the bush? Why the careful avoidance of the obvious term for “forced sex”? The pictures show soldiers committing rape.
I guess the media is (once again) taking their cue from the administration. On Monday the Pentagon’s spokesperson simply said that the photos showed “inappropriate behavior of a sexual nature.” It doesn’t sound as bad as rape when you put it that way.
By the way, in case you were wondering (as I was) if the media simply tries to avoid using the term rape in general, the answer seems to be no. A quick search of Yahoo news turned up 11,707 recent news articles that use the word rape. But interestingly, almost none of them are about the crimes at Abu Ghraib.
Kash
Campaign Fundraising
The FEC is set to rule today on the legality of soft money-funded 527 issue groups that have been working to boost or blast one candidate or the other. Indications are that the FEC will decide to postpone their decision by another 90 days. Of course, that effectively means that they’re making a decision to leave the current rules in place for the bulk of the 2004 election.
Some Republicans are saying that if the FEC does indeed decide to do that, then they are going to start using 527 groups more intensively themselves, to counter lots of ad buys by MoveOn and other such anti-Bush groups. Republicans (and some Democrats) have been surprised by the amount of money that the Kerry campaign has been able to raise, so they have unexpectedly been put slightly on the defensive regarding fundraising.
By the way, Kerry has launched a new $10 million in 10 days fundraising campaign. You know what to do.
Kash
The Abu Ghraib Prisoner's Dilemma, Revisited
If you will look to your right, you'll see that I've added The Rumsfeld Wire, an application created by the DCCC that tracks blog posts relating to Abu Ghraib and/or removing Rumsfeld. Now, I think the Abu Ghraib scandal is a true scandal, and deserving of all the abhorrence it has received and probably more, the tragic events surrounding Nick Berg notwithstanding. However, I'm actually not ready to embrace Rumsfeld's removal.
Even as I type that, I'm surprised. Rumsfeld's done little right that I can think of, and if he's been superb then I'm due for the next Nobel Prize in Economics. My primary concerns with Rumsfeld leaving his position in the next six months are the prospect of (1) the gigantic clown circus his successor's confirmation hearings would inevitably create, and (2) Paul Wolfowitz running the show in the interim. So I'm not personally advocating his ouster at this point, but I will certainly not argue with those who do, nor side with Rumsfeld's defenders. The best plan, of course, remains getting rid of the entire lot of them.
By way of contributing to The Rumsfeld Wire, I'm reprinting a post from 5/2 that I think has, sadly, proved true. (The post was no great act of prophecy; the escalation was all too predictable. But it does point to a way out -- as Lindsey Graham said, "When you are the good guys, you've got to act like the good guys.")
The Abu Ghraib Prisoner's Dilemma
Phil Carter's Intel Dump is the place to go for real-time analysis of military issues, from a former Army officer. Reading Phil's thoughts on the Abu Ghraib situation, I was struck by this passage:
What's worse is that other American soldiers may suffer for the brutal excesses of these MPs, interrogators, and OGA ("other government agency" = CIA) employees. Reciprocity is a very real thing where the laws of wars are concerned, and we should be very concerned about retaliation against any Americans captured by Iraqi insurgents in the future. Similarly, reprisals are very real problem in war; they're often fueled by anger over mistreatment of one side's own troops.Carter is describing a classic Prisoner's Dilemma: a situation in which, when two opposing parties pursue actions in their own best interest, the outcome for each is worse than if they had instead cooperated. Such instances are called prisoner's dilemmas because the canonical example is two prisoners being interrogated in separate rooms. Each suspects the other will confess and so confesses in order to receive a lighter sentence, even though they would both be better off had neither confessed. Attempting to maximize short-run gain results in each party being worse off than if they had followed a cooperative strategy.
If, however, the game is repeated indefinitely, the outcome can change. In repeated interactions, one player can reward cooperation by the other player by cooperating tomorrow. A common outcome involves tit-for-tat strategies: each side pursues the cooperative action; if, however, one side should fail to live up to its side of the deal by taking an opportunistic action, then the other side will respond by also taking the opportunistic action in the next period.
One of the more classic examples of a repeated Prisoner's Dilemma is in John Axelrod's book, The Evolution of Cooperation. There, Axelrod (*) examines accounts of trench warfare in World War I, noting how on a day to day basis, the opposing troops pursued a cooperative strategy that basically entailed not shooting every enemy soldier they could:
A fascinating case of the development of cooperation based on continuing interaction occurred in the trench warfare of World War I. In the midst of this very brutal war there developed between the men facing each other what came to be called the "live and let live system." The troops would attack each other when ordered to do so, but between large battles each side would deliberately avoid doing much harm to the other side -- provided tthat thte other side reciprocated (p. 61).Thus, there is a long history supporting Carter's claim that "reciprocity is a very real thing where the laws of wars are concerned" and we should, therefore, be very concerned about reprisals against captured Americans. Each side can realize some gain by torturing its captives (e.g., intelligence and propaganda); the cost of doing so is that their respective troops are more likely to be tortured in the future. When either side does so, it gains some strategic advantage (we assume -- otherwise they would not use torture), but over the long run, there is little relative strategic advantage when both sides employ extreme measures.
... the historical situation in the quiet sectors along the Western Front was an iterated Prisoner's Dilemma. In a given locality, the two players can be taken to be the small units facing each other. At any time, the choices are to shoot to kill or deliberately to shoot to avoid causing damage. For both sides, weakening the enemy is an important value because it will promote survival if a major battle is ordered in the sector. Therefore, in the short run it is better to do damage now whether the enemy is shooting back or not ... mutual defection is preferred to unilateral restraint [and] unilateral restraint by the other side is even better than mutual cooperation. In addition, the reward for mutual restraint is preferred by the local units to the outcome of mutual punishment, since mutual punishment would imply that both units would suffer for little or no relative gain (p. 75).
For example, just today [5/2/2004], we received the good news that Halliburton truck driver Tommy Hamill escaped after three weeks in captivity near Baghdad. Part of the reason Hamill was able to escape is that he had not been beaten, tortured, and chained. The likelihood of such restraint in the future is now, sadly, less than it was before Iraqis learned of the abuse at Abu Ghraib.
A paradoxical aspect of this situation is that to avoid the outcome in which both sides use torture, it must be the case that both sides are in fact willing to resort to torture or other vicious measures. Otherwise, the threat to punish the other side tomorrow for resorting to torture today is empty. Returning to the trench analogy, if the Germans never retaliated then the Americans would have no incentive not to shoot. It was the proven willingness of the Germans to strike back that rendered such striking back unnecessary, and vice-versa.
A second implication is that, in order to sustain the "cooperative" outcome in which torture is not used by either side, each side must also be willing to not use torture even when there are short-run benefits to doing so. Both sides have demonstrated their willingness and ability to break the cooperative, reciprocal, tacit agreement (see Fallujah and Abu Ghraib, respectively.) An open issue is whether the situation will spiral into a descending series of reprisals and counter-reprisals or whether reciprocity will emerge.
AB
(*) See Chapter 5, The Live and Let Live System in Trench Warfare in World War I.
Read This
Harsh C.I.A. Methods Cited in Top Qaeda Interrogations. The headline barely does justice to the content, about which you should be outraged (let Sen. Inhofe howl in outrage at your outrage.)
AB
UPDATE: Read this too, on Congressmembers' reactions to seeing the still classified photos and videos from Abu Ghraib:
- "Hard on the stomach lining," said Sen. Ron Wyden (D-Ore.)
- "Disgusting," said Sen. Joe Lieberman (D-Conn.) [Lieberman failed to mention that this was all fine because "The people who attacked us on September 11 never apologized."].
- "Horrible," added Sen. Lincoln Chafee (R-R.I.)
- Sen. Ben Nighthorse Campbell (R-Colo.): "These people are not members of my Army"
- Sen. Ron Wyden (D-Oreg.): "It was beyond anything that I had anticipated ... All I can tell you is that this means that it is so urgent that steps are taken to try to begin to repair the damage."
- "I saw things that made me sick," said Rep. Zoe Lofgren (D-San Jose).
- "It had nothing to do with trying to break them," said Rep. Barney Frank (D-Mass.) "It was sadomasochistic sexual degradation."
- "Even more disturbing was a video of a man who seemed to be flailing himself against a door," said Rep. Joseph Crowley (D-N.Y.), "... The nature of these photos is more inflammatory than the original photos"
- Rep. Sherwood L. Boehlert (R-N.Y.): "... no one can convince me, knowing the situation as I do, that this is all about seven reservists from Maryland ... It's about more than that."
- Sen. Feinstein (D-Ca): "[There was] not a strong chain of command in place, and the Geneva Convention was winked at. Somebody gave the order that prisoners had to be softened up, and someone came up with this idea of doing it in this disgusting way."
Wednesday, May 12, 2004
Data Roundup
Some recent tidbits of economic data that I haven’t had time to comment on:
The US trade deficit hit $46 billion in April. That’s a huge number. No one really knows how huge. I mean really, who actually can grasp how big a million is, much less a billion, much less 46 billion? (I’m feeling a bit like Douglas Adams at this point, but nevermind.) Yet still, I can’t get worked up about a big trade deficit like the US currently has. Trade deficits can be good and can be bad, just like a trade surplus can be good or bad. I think the US has plenty of other more fundamental, underlying problems to worry about.
Import prices rose 0.2% in April, which was a rather small increase (for which we can thank the stronger dollar in April). But still, for the past year import prices are up 4.6%, which goes some way toward explaining the recent rise in inflation in the US.
Oil prices have continued their climb, and crude oil is now nearing $41 per barrel. Gasoline prices rose in lockstep.
Tax refunds rose an average of just $98 this year compared to last year. That’s a rather smaller number than the optimistic $300 that the Treasury Department had predicted a couple of months ago. But of course since the Treasury Department's analysts are not influenced by politics, we know that this was just an honest mistake on their part.
That's all for now.
Kash
Now In Graph Form
I thought the approval/disapproval numbers from the previous post might look nice in graphical form. Here is the result:
Notice any trends? Interestingly, the recent sharp approval drop/dissaproval spike appears to be simply an acceleration of a pre-existing trend.
AB
Waking Up and Smelling The Coffee
But why did it take so long?
President Bush's overall approval rating has fallen to the lowest level of his presidency, 44 percent, in the latest CBS News poll, reflecting the weight of instability in Iraq on public opinion of Mr. Bush even as the economy shows signs of improvement.And this is probably the worst news for the President:
Two weeks ago, 46 percent of Americans approved of the job President Bush was doing. On April 9, his approval rating was 51 percent.
American's opinion of Mr. Bush's handling of the economy is also at an all-time low, 34 percent, while 60 percent disapprove, also a high of the Bush presidency. Increasing employment is seemingly not affecting Americans' view of Mr. Bush's economic policy.
... The highest figure ever recorded, 64 percent, say the result of the war in Iraq has not been worth the cost in lives or money. Only 29 percent, the lowest figure yet, believe the war has been worth it. And just 31 percent of Americans now say the United States is winning the war.
BUSH’S HANDLING OF CAMPAIGN AGAINST TERRORISMIf voters lose their faith in Bush's ability to conduct the War on Terror, or at least to keep American safe, then he's basically got nothing compelling, outside of his appeal to the Religious Right, on which to run. More tax cuts? Been there done that. More steel tariffs? Not a net vote-getter. More prescription drug plans? Republicans will revolt. More NCLB? States, including ones with Republican governors, will revolt.
Approve
Now51%
Two weeks ago
12/2003
Disapprove
Now
Two weeks ago
12/2003
Am I missing anything? Once you get past tax cuts, there's really not much of a domestic agenda.
Some Modestly Positive News
Cisco is hiring:
Cisco Systems's announcement yesterday that it plans to hire 1,000 more workers is sure to bring throngs of out-of-work technology workers streaming into the city hoping that the company's expansion, coupled with Google's IPO, signals that the boom is officially on again.This is presumably an indication that the commmunications companies that comprise Cisco's customers are increasing their infrastructure investment (or at least have stopped reducing it.)
AB
Monday, May 10, 2004
From the Huh? Department
Via Mark Kleiman, Time is reporting that
It's not exactly every day that the Pentagon warns military personnel to stay away from Fox News. But that's exactly what some hopeful soul at the Department of Defense instructed, in a memo intended to forbid Pentagon staff reading a copy of the Taguba report detailing abuse of detainees at prisons in Iraq that had been posted at the Fox News web site.Time put the original email up as well:
Fox News and other media outlets are distributing the Tugabe report (spelling is approximate for reasons which will become obvious momentarily). Someone has given the news media classified information and they are distributing it. THE INFORMATION CONTAINED IN THIS REPORT IS CLASSIFIED. ALL ISD CUSTOMERS SHOULD ...I suppose that, in writing that "spelling is approximate for reasons which will become obvious," the sender meant that it was so secret that even he hadn't read the report and learned the author's name. You can read the executive summary of the report here and the full report here. In keeping with Pentagon directives, neither source is Fox News.
AB
Bush’s Disapproval Ratings
The bad news for Bush throughout late March and April – including the Clarke revelations about Bush’s lack of focus on terrorism, his reluctantly-given personal testimony in front of the 9/11 commission, and the sharp increase in violence in Iraq – all seemed to have no effect on how the US public viewed Bush’s presidency. In fact, if anything the adversity seemed to improve people’s opinions of him.
But in the past week or two that may have begun to change. Gallup’s new poll, reported by PollingReport.com, shows George Bush’s disapproval ratings above 50% for the first time in his presidency:
Clearly the horrible stories about prisoner abuse in Iraq at the hands of the US military bothers people in a way that events in March and April did not. Furthermore, poll results such as these may indicate that many people believe that the crimes at Abu Ghraib reflect poorly on George Bush’s presidency, not just on a few individual members of the military.
The White House may want to move up their date for a dramatic OBL capture.
Kash
Looks Like Kash Was Right
Earlier this morning, Kash wrote, "this Could be a Bad Day for Wall Street." Now from CNN, we see that
Stocks tumbled for a second straight session Monday on worries that interest rates will rise soon, pushing the Dow Jones industrial average below 10,000 for the first time since December.The major indices were off between 1-1.25%. While this is only one day's worth of data, it does highlight the risk that massive deficits will lead to long term interest rate increases, crowding out private investment.
AB
The Triumph of The Hacks
Dana Milbank and Jonathan Weisman covered little new ground, but they did pen a great overview of how and why policy-making -- domestic and foreign -- is so consistently wrong in this administration:
... Bush has also discouraged the sort of free-wheeling policy debates that characterized previous administrations, and he relies on a top-down management style that has little use for "wonks" in the federal bureaucracy. At the same time, many of the top domestic policy experts in the Bush White House have moved on to other jobs; in many cases they have been replaced by subordinates with much less experience in governing.AB
Bruce Bartlett, a conservative economist with the National Center for Policy Analysis, said policy ideas typically bubble up from experts deep inside federal agencies, who put together working groups, draft white papers, sell their wares in the marketplace of ideas and hope White House officials act on their suggestions. In this case, ideas are hatched in the White House, for political or ideological reasons, then are thrust on the bureaucracy, "not for analysis, but for sale," Bartlett said.
'The Triumph of the Hacks'
The result is a White House that has become unimaginative with domestic policy and, in foreign policy, has struggled to develop new policies to adapt to changing circumstances in Iraq, according to several conservatives...
P.S. In other news,
the cost of the war in Iraq could top $150 billion through the next fiscal year - as much as three times what the White House had originally estimated. And, according to congressional researchers and outside budget experts, the war and continuing occupation could total $300 billion over the next decade, making this one of the costliest military campaigns in modern times.
Who Wrote This?
The one anti-war argument that, in retrospect, I did not take seriously enough was a simple one. It was that this war was noble and defensible but that this administration was simply too incompetent and arrogant to carry it out effectively. I dismissed this as facile Bush-bashing at the time. I was wrong.Surprising answer here. (Via CalPundit.)
AB
UPDATE: Kevin's got more questioning thoughts from unlikely suspects. This is starting to remind me of the five stages of response to a loss:
(1) denial,I've seen denial (We'll find the WMD and they'll give us flowers. They love us and we're restoring electricity.), and bargaining (Hey, it's not as bad as what Saddam did. Plus it's only a few bad apples.) The writers Kevin quotes appear to be somewhere around the border between anger and despair. When acceptance comes, will it carry an endorsement of John Kerry?
(2) bargaining,
(3) anger,
(4) despair, and
(5) acceptance.
This Could be a Bad Day…
…for Wall Street. Sharply higher US interest rates have spooked many markets around the world:
NEW YORK (Reuters) - Stocks were set to sink at the open on Monday as fears the Federal Reserve (news - web sites) will raise interest rates as early as June weighed on markets around the world.As I said the other day, it seems that we may now find out how robust the US economy is to higher interest rates.
…Overnight in Japan, stocks fell sharply, with the TOPIX index posting its biggest percentage drop [of about 5%] since the September 11, 2001 attacks as the prospect of higher U.S. interest rates fanned fears of further Wall Street losses.
Kash
Sunday, May 09, 2004
That Sinking Feeling
Apparently more and more of the US military’s leadership has it. From today’s Washington Post:
U.S. May Be Winning Battles in Iraq But Losing the War, Some Officers SayPerhaps in addition to more tanks, the Defense Department should order more historians.
Deep divisions are emerging at the top of the U.S. military over the course of the occupation of Iraq, with some senior officers beginning to say that the United States faces the prospect of casualties for years without achieving its goal of establishing a free and democratic Iraq.
…Army Col. Paul Hughes, who last year was the first director of strategic planning for the U.S. occupation authority in Baghdad, said he agrees with that view and noted that a pattern of winning battles while losing a war characterized the U.S. failure in Vietnam. "Unless we ensure that we have coherency in our policy, we will lose strategically," he said in an interview Friday.
"I lost my brother in Vietnam," added Hughes, a veteran Army strategist who is involved in formulating Iraq policy. "I promised myself, when I came on active duty, that I would do everything in my power to prevent that [sort of strategic loss] from happening again. Here I am, 30 years later, thinking we will win every fight and lose the war, because we don't understand the war we're in."
Kash
Baghdad Art Mirrors Baghdad Life
Submittted with only one comment: it "was fashioned two months ago":
We are living in an American democracy
AB
Saturday, May 08, 2004
Why is George Bush President?
Matt Yglesias asks this question today, with a follow-up from Kevin Drum. Specifically, he says:
There was no reason whatsoever back in 1994 to think that George W. Bush was the best choice the Republicans had to run for governor of Texas -- he was totally unqualified. His entire political career has been utterly devoid of real accomplishments, he's just a kind of inept loafer relying on his father's name and connections, and the assistance of more competent people willing to humble themselves by working for him.The answer, I think, is that the Republican party leadership – fiercely determined and extremely disciplined – were able to arrange some unprecedented coordination before the primary season. In the late 1990s, various factions of the Republican Party, bitter after several years of a Democrat in the White House (and their failure to impeach Clinton), were casting about for the candidate for President in 2000. And then something remarkable happened, in 1998 and 1999 – the leaders of those various factions (I don’t mean individuals, but rather small groups of individuals) were able to agree that George W. Bush was both acceptable to each faction and appealing to the general electorate. With this agreement, they were able to unite the vast majority of Republicans – and Republican money – behind Bush’s candidacy. This gave him the giant head start that an otherwise mediocre candidate would need to win the presidency.
So the next question is: what was it about GWB that caused Republicans to unite behind him so early in the political cycle? I won’t go into details about my opinion right now, but I think it had to do with a few simple traits. Bush was: the heir to a nationally prominent family name; deeply conservative while having a moderate public image; well-connected with the national Republican establishment; from a large, vote-rich state; a governor; personally likeable; and popular in his home state. If you're a Republican looking for a candidate with this sort of resume in 1999, there's exactly one person who fit the description. And among the American public, these facts were able to mask the fact that Bush was not really qualified to be President.
Kash
Food for Thought
If Rumsfeld resigns heeds an urge to spend more time with his family, wouldn't that mean that Paul Wolfowitz will, at least temporarily, be in charge of The Pentagon? Can Wolfowitz's family preemptively ask him to spend more time with them?
AB
A fish rots from the head down ...
... until it's just a big, stinking, oozing pile of offal:
The experts also point out that the man who directed the reopening of the Abu Ghraib prison in Iraq last year and trained the guards there resigned under pressure as director of the Utah Department of Corrections in 1997 after an inmate died while shackled to a restraining chair for 16 hours. The inmate, who suffered from schizophrenia, was kept naked the whole time.From the NYT, by way of Josh Marshall. Doesn't The Pentagon check backgrounds on people before they hire them for jobs like running prisons in Iraq? Yes, I'm sure such checks are routine, but the question is what they are checking for.
The Utah official, Lane McCotter, later became an executive of a private prison company, one of whose jails was under investigation by the Justice Department when he was sent to Iraq as part of a team of prison officials, judges, prosecutors and police chiefs picked by Attorney General John Ashcroft to rebuild the country's criminal justice system.
AB
P.S. Speaking of Abu Ghraib, be sure to read this post by Ogged of Unfogged.
UPDATE: If you want to read just one heart-tugging story this weekend, I recommend this one on Pat Tillman's funeral (Max is definitely right about Ted Rall.) It is, of course, not a happy story, but it does show the human side of the Americans fighting and dying in Iraq and around the world.
Friday, May 07, 2004
Digby's The Leviathan
Digby:
... It's hard to tell who's bad or good and it's not enough to simply assert that one group is and one isn't. We need systems and institutions to sort these things out in the most perfect way we can find and those systems and institutions are imperfect indeed. If we ever had a strength in America, a source of pride and superiority, it was that we put our trust in the rule of law not men.You really should be reading Digby's Hullabaloo anyway, but in case you haven't been, here's a tip: start. He's really been on a roll with his coverage of the recently revealed outrages in Iraq. Also, don't miss this post on Joe "Outraged by Blowjobs But Not by Torture" Lieberman's statment today that "The people who attacked us on September 11 never apologized. [He continued in a similar vein for 1-2 minutes.]" I won't spoil it all, but here's an excerpt from the exciting conclusion:
And that is precisely the opposite of what our president has been saying. He's said "trust us" because we are good. We don't need to provide any explanations or adhere to any laws, treaties or agreements because the character of our people doesn't require it. And that is why these pictures are being greeted around the world with both horror and glee...
By this [Lieberman's] logic, until we see some apologies from the Japanese, the Germans, the Brits and especially the French, it's perfectly ok for us to kill as many Canadians as we want.Also see ... just read the whole blog.
Just as long as nobody gets any consensual, unphotographed blow jobs. That would be immoral.
AB
Why TV Reporters Should Avoid Using Numbers
From a Thursday story on Survivor: All-Stars by Dennis Cass, who "writes about television for Slate":
According to a "tribal tidbit" on CBS's official Survivor site, 10 of the castaways (including all four sole survivors) have been voted out earlier than they were during their first time around. In most games, experience makes you a better player, but with Survivor it seems that the more you play, the worse you get.Yes. That does prove it. You see, if you start with 18 high finishers and 10 of them finish worse this time around than the time before when they finished high, then they are clearly worse at the game this second time around. If you're not yet convinced, note that from the parenthetic it's clear that not one of the four former winners was able to improve upon their prior performance and, stunningly, more than one of them did worse!!
In related news, shrinking deficits are invariably followed by rising tax revenues.
AB
The Bond Market Reacts
Apparently the bond market was taken by surprise by this morning’s employment report. The interpretation clearly seems to be that this is a strong sign that the economic recovery is seriously gathering strength, so interest rates are set to rise. Here is the yield on the 10-year bond over the past 5 days:
(note: interest rate expressed in tenths of a percentage point, so 45 = 4.5%.)
Note that of the 15 basis point rise in long term interest rates this morning, 11 of them reflect an increase in the real interest rate, and 4 of them reflect an increase in inflation expectations. (To see this, check the change in yields on inflation indexed and non-indexed treasuries, available here among other places.) For bonds of shorter maturity the carnage has been even worse this morning. Perhaps now we’ll see how robust the economic recovery is to noticeably higher interest rates.
Kash
p.s. Also note that the price of oil hit $40 per barrel this morning, for the first time since 1991. Not that $40 is a particularly magical figure, but landmarks like that always catch people's attention.
April Employment
The BLS’s newly released employment report for the month of April showed that the unemployment rate fell slightly to 5.6%. More importantly, it showed net job creation in the US of 288,000 jobs during the month. According to CNN/Money, the average forecast was for 173,000 new jobs, so this comes as a positive surprise, for the second month in a row.
This is a big, big number. In the wake of last month’s upwardly revised 337,000 new jobs, this number takes on added significance. One month of good job growth might be a fluke; two months is more likely the start of a trend. The recovery finally seems to be generating new jobs in a sustained way. Here’s the recent history of employment in the US:
With a little luck, this incipient recovery in the labor market will start translating into higher real incomes for average families; they have not been doing well in this recovery, especially compared to those hardworking individuals and married couples upon whom the Bush administration has showered much lavish attention.
Kash
Capturing the US Media’s Attention
It’s yet another a sad commentary on the state of the US media that (with rare exceptions, such as this and this) they completely ignored the stories of the crimes being committed in Abu Ghraib prison until there were pictures. The stories had been circulating for months, however. It seems that Arab language news channels regularly reported on it, and today’s NYTimes reports on the fact that the Red Cross had been complaining about the abuses since last fall.
One tidbit of interest about the reports that the ICRC presented months ago of abuses in the prisons of Iraq:
In addition, [the ICRC spokesman] said, the reports were given to senior officials in the Bush administration, but he declined to say which ones.It looks like we can expect the reveleations regarding who knew what and when to keep coming.
He said that it was the committee's practice to make its complaints known widely inside a government to prevent any one person from sitting on the report, allowing senior officials to claim ignorance later on.
Kash
Thursday, May 06, 2004
Kerry on Abu Ghraib
Kerry:
"As president I will not be the last to know what is going on in my command. I will demand accountability for those who serve, and I will take responsibility for their actions."That sounds about right.
"And I will do everything that I can in my power to repair the damage that this has caused to America's standing in the world and to the ideals for which we stand."
No mention yet of whether Bush or Rumsfeld have read the Taguba Report detailing the abuses. But Bush is standing by his man:
"He will stay in my Cabinet."AB
Oil Prices Keep Rising
The price of crude oil hit a new high yesterday (for the year, at least) of nearly $40 per barrel. The price of gasoline rose in lockstep. Prices at the pump will keep rising as long as the price of crude oil does.
Many analysts say that the price of oil has primarily risen due to an increase in the risk premium attached with oil, due to things like this week’s attack on oil facilities in Saudi Arabia. (Yes, high demand in China has certainly played some role, but I’m not convinced that China’s demand has changed that much in the past few months.) If the increased risk premium is indeed the principal cause of the recent run-up in oil prices, then I fear that the increase could be with us for a while – I don’t foresee any reduction in the risks to oil facilities in the middle east any time soon. Furthermore, I’m starting to think that this rise in oil prices, if it’s sustained for a little longer, will start to have some noticeable negative effects on the economy this summer. We may have a slowdown in the economy later this year after all.
Kash
Postcards from Old Europe - Consume your house!
Note: due to extensive traveling without access to the web this postcard is a day early.
As the past columns have been very Euro-centric I guess that it is high time to shift my view back to the goings-on in the US. While household demand has been flagging in Europe the US consumer has been a bastion of strength over the past couple of years. This is pretty astounding if you consider that the most recent past has seen a stock market crash and rising unemployment. One would think that these negatives would have led many households to retrench and start to consolidate their personal finances. This didn't happen. Consumers kept their wallets open - the only question is: "where did the money come from?".
Let's take a quick look at the numbers to set the stage: Household wealth saw massive equity-driven gains up to the year 2000. Holdings of equities and mutual funds peaked in 2000 at around 12 trillion dollars and then fell by around 25% before making a come-back over past couple of months. The year 2000 is also significant because it saw equity wealth overtake real estate wealth for the first time. The subsequent reduction in value of stocks (i.e. bubble-bursting) served to push houses back on top of the household wealth heap by 2001.
In the years after 2000 US households saw two things: their stocks were racing for the bottom while the value of their homes started taking off. This rise in real estate wealth took some of the sting out of looking at the diminishing value of the investment portfolio. For many families rising house-prices meant rising household wealth - even after taking into account the losses in other investments.
But while a single call to your broker will release the gains (losses) in your trading account selling a home isn't that easy. But wait, why sell? The financial service industry provides you with a host of possibilities to release all that equity locked up in your home! But that's not all - there's more! You can even deduct interest paid on home equity lines of credit (and mortgages) from income for tax purposes!
Let us take a step back here and look at what used to happen: a family would identify a home it wanted to buy and then make a down payment and finance the balance. The next couple of years would see the equity in the home increase primarily by the act of the family paying down the debt. If the family was lucky they would see interest rates fall which would then lead them to refinance their mortgage, thereby saving money. If the family was really lucky they would also see the price of their home rise.
This is what has been happening on a massive scale over the past couple of years. Rates have been falling while prices have been shooting upwards. This confluence of positive forces ignited a rocket in home equity which consumers have been riding hard.
A look at the Fed's Flow of Funds reports gets us the data. The carving out of home equity can be calculated by subtracting the growth in residential investment from the growth in mortgage debt. The amount of equity extraction has been staggering over the past two years! The past has only rarely seen phases of equity extraction at all! The last 20 years were characterized by homeowners paying down debt - i.e. investing equity!
Equity extraction peaked in the middle of 2003 at a time where the FOMC saw deflation just around the corner and interest rates on mortgages were at near-record low levels. These equity take outs boosted consumer disposable incomes by up to 3% - at a time when wages and salaries remained mostly flat. No wonder that the growth in consumption managed to outstrip the growth in "real" income.
But real income via wages is coming firmly back into focus. Interest rates are creeping up and most everyone who has wanted to refinance has refinanced by now. Momentum in existing home sales is moderating as record-high prices will probably see affordability drop and turnover moderate. Any slowdown in home equity extraction could lead to less consumption if disposable income doesn't get a boost via rising wages or from other sources. The missing tax refunds are not helping either!
To sum it up: consumers have been spending all through the recession and the following phase of economic weakness. As wages and salaries have been flat while the stock market has been sputtering, consumers have tapped into home equity to sustain their spending binge. As this possibility is becoming less attractive, consumers need other sources of income to compensate. Just one more reason why everyone is so focused on the payroll data.
Just a thought to finish off with: what happens if house prices fall?
Thank you for reading. If you'd like to read more of my ramblings, be sure to visit CurryBlog.
Evil Limbaugh Update
World O' Crap adds to Digby's case for Rush's evilness, though perhaps it's just the drugs (or maybe the jonesing) talking.
AB
Stupid Liberal Media
Well, the media actually aren't liberal. But there's a good case to be made for stupidity. The latest comes via today's Washington Post:
Registered lobbyists gave President Bush $1.8 million and Sen. John F. Kerry (D-Mass.) $520,000 in campaign contributions from Jan. 1, 1997, through March 31 this year, according to a study by the Center for Public Integrity.Let's spot the logical flaws in this analysis:
The amounts, while impressive in absolute terms, are tiny compared with total donations received by the politicians. Bush collected $228.4 million and Kerry took in $36.9 million over the period from people who gave $200 or more, additional numbers supplied by the nonpartisan research group show. Total contributions are higher but the campaigns are not required to disclose the names of people who give less than $200.
Over the period, 1,310 registered lobbyists contributed to Bush and 442 registered lobbyists gave money to Kerry, the center said. These numbers, too, are small compared with the total number of donors to both men. Bush had 156,989 contributors who gave $200 or more and Kerry had 30,223 individuals who gave similar amounts, according to the center.
Proportionately, Kerry had more lobbyist donors than Bush did. Registered lobbyists represented 0.8 percent of Bush's donors and of his itemized contributions, compared with 1.4 percent of Kerry's through March 31.
- The reporter (who gets his data from the Center for Public Integrity, though I can't find the exact report there) uses the time period from 1/1/1997 to 3/31/2004 to compare the two candidates' contributions from lobbyists. Given that for half of those years Kerry was a senator while Bush was a governor, this surely distorts the comparison, and most likely in a way unfavorable to Kerry. Particularly if the data only come from the Federal Election Commission then this statistic compares 7 years of Kerry's funding to 4 years of Bush's. Unfortunately, the article doesn't explain exactly what's being compared. But it's assuredly not apples-to-apples. If the objective is to describe how beholden each candidate is to lobbyists, then the meaningful statistic is contributions from lobbyists in the current election cycle.
- The reporter's claim that "Proportionately, Kerry had more lobbyist donors than Bush did" is also very suspect. The reporter first says that he's only looking at contributions of $200 or more and then claims that, since 1997, 1.4% of Kerry's funding is from lobbyists while only 0.8% of Bush's is. This comparison is specious because Kerry draws more from small donors than Bush. From the Campaign Finance Instutute:
... with less than five months of fundraising left in the pre-convention period, Bush had raised 71% of his $182 million primary period total in $1,000 and over donations (57% from $2000 contributions) and 20% in small donations. Kerry, less than four months from the Democratic convention, had raised 54% of his $75 million total in $1,000 and over contributions (32% from $2000 donations) and 29% in small donations
Adjusting total funds for the differences in excluded small donations, about 0.64% of Bush's funding and 1% of Kerry's are from lobbyists, which is a noticeably smaller gap. (When I started this post, I suspected this adjustment would wipe out all or most of Kerry's lead in fundraising from lobbyists. Funny how data work out sometimes. I suppose I could have followed the lead set by AEI's Kevin Hasset.)
The long and short of this is that if a reporter (1) Ignores a big chunk of Kerrry's donations and (2) Compares time periods which no sane analyst would consider comparable, then he can contend that "the results are surprising given Kerry's criticism of Bush for being close to corporate lobbyists."
AB
P.S. I can't figure out why the CPI, and by extension the Washington Post reporter, only look at $200+ contributions when the full data are available. For example, a quick check of fundrace.org for the Cleveland Park area of Washignton, DC shows all contributions, including those under $200.
Wednesday, May 05, 2004
Plenty of Blame to Go Around
Day by day, the scope of the prisoner abuse crimes grows. The number of prisoners suspected of being murdered by US guards and interrogators has now risen to 14. President Bush pled his case on a pair of Arab news channels today, Al-Arabiya and the new US-funded channel Al-Hurra. (Al-Jazeera was not granted an interview - apparently the Bush administration would like to reduce A-J's market share in any way that they can, even at the cost of getting their message out to fewer people in the Arab world.)
The Washington Post today wrote in an editorial that the crimes were the result of certain institutional failures. The Post specifically cites Rumsfeld's decision two years ago to institute "a system of holding detainees from Afghanistan not only incommunicado, without charge, and without legal process, but without any meaningful oversight mechanism at all," in addition to the fact that Congress has "neglected its responsibility to oversee the administration's conduct."
But I suspect that the source of the failure is far deeper. One of the Bush administration's guiding principles since entering office has been that international rules and norms do not apply to the US. (Just think about the Kyoto Protocol, treaties governing nuclear proliferation, and the International Criminal Court at the Hague, for examples.) The Bush administration has taken the following lesson from the fact that the US is the world’s lone remaining superpower: since no one in the world has the military or economic leverage that the US does, the US has no reason to heed the opinions of the rest of the world. The attitude conveyed by Bush has been that the US is accountable to no one. In other words, the US has the ability to be a bully among nations, and under the leadership of George Bush has in fact acted like one in many situations.
This zeitgeist, this sense that it’s okay for the US to use its overwhelming might to do what it wants without fearing the consequences, has percolated down through the pay scale of the government, and probably throughout the nation in general to some degree. The soldiers in the prison of Abu Ghraib were thus simply putting into practice the Bush administration’s doctrine of bullying the rest of the world, albeit on a very small scale. But it was the exact same doctrine. Responsibility for the crimes at Abu Ghraib thus lie squarely at the feet of the man who sets the tone of the US’s international dealings – George Bush.
Kash
Bond Yields
In the wake of the Fed’s meeting and press release yesterday, it’s time to check in with the bond market. The Fed’s announcement apparently came as no major surprise to the bond market, for yields changed very little. But over the past six weeks we’ve seen quite a major increase in long-term interest rates:
(Note: yield expressed in tenths of a percentage point, so 45 = 4.5%)
Interestingly, the increase in yields recently primarily reflects an increase in inflation expectations, not an increase in real interest rates. One can see this by comparing the yields on inflation adjusted bonds and regular, non-inflation adjusted bonds.
Expectations of inflation have increased steadily over the past 18 months, but the real (i.e. inflation adjusted) interest rate has not risen at all -- in fact, it's actually fallen a bit. What does this mean? One possible explanation is that the bond market doesn’t expect the demand for borrowing in the economy to increase much from current levels. Given that the bond market has learned a lot about the future course of government borrowing during the past 18 months, the fact that they expect overall borrowing in the US to remain roughly constant may imply an expectation that private sector borrowing will not increase much. Could this be a sign that the bond market isn’t expecting much of an economic boom over the next few years?
Kash
Monday, May 03, 2004
Is Rush Limbaugh Evil?
If you asked me on Friday I would have said "No, he's not really evil. More of an opportunistic loud-mouth junkie with a talent for fooling and entertaining the dim-witted and foolhardy." Digby, in a lengthy post that you should read all the way to the final paragraph's evoking of images from the dramatic "I'm a nerd, too!" end to the first Revenge of The Nerds movie, goes a long way towards changing my mind.
In related news, Digby draws his source material from Media Matters for America, a new site run by David Brock and "dedicated to comprehensively monitoring, analyzing, and correcting conservative misinformation in the U.S. media." Brock, for those who did not read Blinded by The Right, Brock was a former right-wing hit man who orchestrated the attacks on Anita Hill and was also behind many of the efforts to find people in Arkansas who would say bad things about Bill Clinton (in exchange for money and/or fame, of course.) Brock has since converted to the side of light and reason, but he has the history to know that of which he speaks when it comes to "conservative misinformation."
AB
P.S. I am a liberal and a Democrat, too.
Speaking of Buffet
Berkshire-Hathaway's annual shareholder meeting was held last weekend. Buffet invariably has a great line on any topic, and it looks like his designated successor right-hand man, Charlie Munger, is pretty good too. Here's Warren and Charlie on expensing stock options:
On stock optionsAnother good line arose in their discussion of CEO pay when Munger quipped, "I would rather throw a viper down my shirtfront than hire a compensation consultant" (compensation consultants are usually hired by the CEO and their prospects of being rehired in the future often depends in no small part on how much they recommend the CEO be paid.)
"... Write your congresspeople giving them your views on whether options should be expensed," said Buffett. "It was a disgrace 10 years ago when Congress bludgeoned the SEC and the [Financial] Accounting Standards Board to override FASB's decision to expense options. It accelerated the anything-goes mentality of the 1990s."
Buffett then told the crowd a story about a 19th-century bill in the state of Indiana that sought to "change" the value of pi.
"It seems there was a fellow who discovered some new relationship between circumference and diameter that would help students learn a better kind of geometry, so he wrote a law to change the value of pi from 3.14159 etc. to 3.20. It passed the Indiana house -- until the Indiana senate finally thought better of it."
After the audience stopped laughing, Buffett came to his point about options, "The U.S. Senate concluded that the world was flat, because their their contributors paid them enough to say the world was flat."
Then Munger weighed in: "It's worse than that. Those people who wanted to round pi to 3.2 were stupid. These people [the opponents of expensing options] are worse than stupid. They know it's wrong and want to do it anyway."
AB
Some Remarkable Statistics on China
In today’s piece, Stephen Roach of Morgan Stanley presents some amazing statistics on China’s economy. Here’s a sampling:
In March 2004, [China's] growth of industrial value added had surged to an astonishing 19.4% above its year-earlier level.Roach makes the point that when China’s economy slows (something that the government is currently trying to gently engineer), there will be repercussions far beyond China’s borders. Such statistics provide some compelling evidence that he will be right.
...[O]ur calculations suggest that China’s increase in industrial output in 2003 was about eight times as large as that of the United States.
...China’s leadership is most focused on bringing the nation’s runaway investment cycle back under control; growth in fixed asset investment spiked at an outsize 43% YoY rate in the first quarter of 2004.
...While [China] accounts for only about 4% of nominal GDP, in 2003 its portion of the world’s total materials consumption ballooned: For crude oil, it hit 7%; for aluminum it was 25%; for steel products, it was 27%; for iron ore, it was 30%; for coal, it was 31%; and for global cement consumption, China’ s 2003 share hit an astonishing 40%.
They also provide a pretty good argument for a Chinese revaluation later this year. I had been thinking that the revaluation would happen very late this year or, more likely, in 2005; I’m increasingly wondering if the revaluation can wait that long. The Chinese government may use it earlier than that, as an extremely effective way to curb inflation (especially in imported commodities) and to slow what I would describe as utterly manic business investment.
Kash
Steve Jobs and Warren Buffet
Both are backing John Kerry. So if you like iTunes, you'll love John Kerry.
Buffet did advise Shwarzenegger as well, but I won't hold that against him. Maybe he'll address it in his next shareholder's letter.
AB
The Abu Ghraib Prisoner's Dilemma
Phil Carter's Intel Dump is the place to go for real-time analysis of military issues, from a former Army officer. Reading Phil's thoughts on the Abu Ghraib situation, I was struck by this passage:
What's worse is that other American soldiers may suffer for the brutal excesses of these MPs, interrogators, and OGA ("other government agency" = CIA) employees. Reciprocity is a very real thing where the laws of wars are concerned, and we should be very concerned about retaliation against any Americans captured by Iraqi insurgents in the future. Similarly, reprisals are very real problem in war; they're often fueled by anger over mistreatment of one side's own troops.Carter is describing a classic Prisoner's Dilemma: a situation in which, when two opposing parties pursue actions in their own best interest, the outcome for each is worse than if they had instead cooperated. Such instances are called prisoner's dilemmas because the canonical example is two prisoners being interrogated in separate rooms. Each suspects the other will confess and so confesses in order to receive a lighter sentence, even though they would both be better off had neither confessed. Attempting to maximize short-run gain results in each party being worse off than if they had followed a cooperative strategy.
If, however, the game is repeated indefinitely, the outcome can change. In repeated interactions, one player can reward cooperation by the other player by cooperating tomorrow. A common outcome involves tit-for-tat strategies: each side pursues the cooperative action; if, however, one side should fail to live up to its side of the deal by taking an opportunistic action, then the other side will respond by also taking the opportunistic action in the next period.
One of the more classic examples of a repeated Prisoner's Dilemma is in John Axelrod's book, The Evolution of Cooperation. There, Axelrod (*) examines accounts of trench warfare in World War I, noting how on a day to day basis, the opposing troops pursued a cooperative strategy that basically entailed not shooting every enemy soldier they could:
A fascinating case of the development of cooperation based on continuing interaction occurred in the trench warfare of World War I. In the midst of this very brutal war there developed between the men facing each other what came to be called the "live and let live system." The troops would attack each other when ordered to do so, but between large battles each side would deliberately avoid doing much harm to the other side -- provided tthat thte other side reciprocated (p. 61).Thus, there is a long history supporting Carter's claim that "reciprocity is a very real thing where the laws of wars are concerned" and we should, therefore, be very concerned about reprisals against captured Americans. Each side can realize some gain by torturing its captives (e.g., intelligence and propaganda); the cost of doing so is that their respective troops are more likely to be tortured in the future. When either side do so, it gains some strategic advantage (we assume -- otherwise they would not use torture), but over the long run, there is little relative strategic advantage when both sides employ extreme measures.
... the historical situation in the quiet sectors along the Western Front was an iterated Prisoner's Dilemma. In a given locality, the two players can be taken to be the small units facing each other. At any time, the choices are to shoot to kill or deliberately to shoot to avoid causing damage. For both sides, weakening the enemy is an important value because it will promote survival if a major battle is ordered in the sector. Therefore, in the short run it is better to do damage now whether the enemy is shooting back or not ... mutual defection is preferred to unilateral restraint [and] unilateral restraint by the other side is even better than mutual cooperation. In addition, the reward for mutual restraint is preferred by the local units to the outcome of mutual punishment, since mutual punishment would imply that both units would suffer for little or no relative gain (p. 75).
For example, just today, we received the good news that Halliburton truck driver Tommy Hamill escaped after three weeks in captivity near Baghdad. Part of the reason Hamill was able to escape is that he had not been beaten, tortured, and chained. The likelihood of such restraint in the future is now, sadly, less than it was before Iraqis learned of the abuse at Abu Ghraib.
A paradoxical aspect of this situation is that to avoid the outcome in which both sides use torture, it must be the case that both sides are in fact willing to resort to torture or other vicious measures. Otherwise, the threat to punish the other side tomorrow for resorting to torture today is empty. Returning to the trench analogy, if the Germans never retaliated then the Americans would have no incentive not to shoot. It was the proven willingness of the Germans to strike back that rendered such striking back unnecessary, and vice-versa.
A second implication is that, in order to sustain the "cooperative" outcome in which torture is not used by either side, each side must also be willing to not use torture even when there are short-run benefits to doing so. Both sides have demonstrated their willingness and ability to break the cooperative, reciprocal, tacit agreement (see Fallujah and Abu Ghraib, respectively.) An open issue is whether the situation will spiral into a descending series of reprisals and counter-reprisals or whether reciprocity will emerge.
AB
(*) See Chapter 5, The Live and Let Live System in Trench Warfare in World War I.
Bremer Then and Bremer Now
Paul Bremer, Feb. 26, 2001:
"The new administration seems to be paying no attention to the problem of terrorism. What they will do is stagger along until there's a major incident and then suddenly say, 'Oh, my God, shouldn't we be organized to deal with this?'Pau Bremer today:
"That's too bad. They've been given a window of opportunity with very little terrorism now, and they're not taking advantage of it."
"Criticism of the new administration, however, was unfair. President Bush had just been sworn into office and could not reasonably be held responsible for the Federal Government's inaction over the preceding 7 months ... I regret any suggestion to the contrary. In fact, I have since learned that President Bush had shared some of these frustrations, and had initiated a more direct and comprehensive approach to confronting terrorism consistent with the threats outlined in the National Commission report.And no. I didn't embellish the more recent quote (both quotes in this story.) Is there anyone -- besides Richard Clarke -- that the administration does not have compromising photographs of?
"I am strongly supportive and grateful for the President's leadership and strategy in combating terrorism and protecting American national security throughout his first term in office."
AB
Reputation Update
In the previous post, I wrote that Brad DeLong might have been a bit hasty in saying, "No one, absolutely no one, is getting out of this administration with even the shreds of a reputation." My counter example was, and so far remains, Mark McClellan (previously in charge of the FDA, now heading the lower profile but quite possibly more important CMS.)
Now, Brad reconsiders, slightly:
Some say (with justice) that Tim Muris is going to get out of the Bush administration with his reputation intact. Others say that Mark McClellan is going to get out of the Bush administration with his reputation intact. Perhaps they are right.I agree that FTC head Tim Muris also still has his credibility. The total as it stands, then, is two. Am I missing anyone else? (Note that "credibility" and "advocating policies with which I agree" are two different things.)
AB
Saturday, May 01, 2004
Medicare.gov
Seniors basically don't like the Republican prescription drug plan. We've known that for a while (this graph shows why). This lack of enthusiasm explains why DHHS issued the infamous "video news releases" that purported to contain reporting from Karen Ryan on the myriad ways in which the new plan would be the greatest thing for seniors since high-fiber sliced bread. Except it turns out that Karen Ryan is an actress, not a reporter, and the "video news releases" were not news at all, but rather commercials bought and paid for with your tax dollars.
So, given the history, this news should come as no surprise:
A new Medicare Web site that allows people to compare drug prices is already drawing complaints that the information is incorrect.How does this administration manage to mess up just about everything it touches? Ideally, researchers and policy professionals would come up with proposals likely to have benefits exceeding their costs. The administration could then choose to adopt those that are in line with, or at least not at odds with, its ideology. Then the policy would be administrated by the policy arm, not the political arm, of the Executive. The progression would be
The site (www.medicare.gov ) is designed to enable people using the new Medicare-approved drug discount card to search for the lowest drug prices.
"Everybody seems to be finding problems with inaccuracies with the posted prices," Walgreens' spokeswoman Laurie Meyer told the Associated Press.
- Proposal based on serious science.
- Accept/Reject based on political considerations.
- Implementation by apolitical professionals.
- Proposal based on political objective.
- Accept/Reject based on political considerations.
- Implementation by apolitical professionals.
- Proposal based on political objective.
- Accept/Reject based on political considerations.
- Implementation to achieve, or at least appear to achieve, political objectives.
Mark McClellan (yes, Scott's brother, but an accomplished and, so far, still credible, economist nonetheless) is taking over Tom Scully's (yes, the Scully who hid the true price tag of the Medicare Drug Plan from Congress) position as head of the Centers for Medicare and Medicaid Services (CMS). Brad DeLong wrote the other day that
No one, absolutely no one, is getting out of this administration with even the shreds of a reputation.If the political operation keeps their hands off of CMS under McClellan, McClellan could prove Brad wrong. But that's a huge if and I'm not particularly optimistic.
AB
Friday, April 30, 2004
Letter to Sinclair Broadcasting
From John McCain:
I write to strongly protest your decision to instruct Sinclair’s ABC affiliates to preempt this evening’s Nightline program. I find deeply offensive Sinclair’s objection to Nightline’s intention to broadcast the names and photographs of Americans who gave their lives in service to our country in Iraq.Viewers of ABC affiliates owned by Sinclair Broadcasting will not hear tonight's Fallen, which Nightline says "will pay tribute to all the American servicemen and women who have died in Iraq by devoting the entire broadcast to reading their names and showing their photographs."
I supported the President’s decision to go to war in Iraq, and remain a strong supporter of that decision. But every American has a responsibility to understand fully the terrible costs of war and the extraordinary sacrifices it requires of those brave men and women who volunteer to defend the rest of us; lest we ever forget or grow insensitive to how grave a decision it is for our government to order Americans into combat. It is a solemn responsibility of elected officials to accept responsibility for our decision and its consequences, and, with those who disseminate the news, to ensure that Americans are fully informed of those consequences.
The statment on Sinclair's web page says, "the action [Koppel's plan to read the names of the dead] appears to be motivated by a political agenda designed to undermine the efforts of the United States in Iraq." For some other things Sinclair Broadcasting stands for, see this overview from the Center for American Progress.
You may now rant about media consolidation.
AB
Postcard Update
The Easter edition of my column "Postcard from Old Europe" talked about the low level of entrepreneurship in Europe. The Blog "Small Business Trends" tackles the same question - I would highly recommend looking at the whole thing. An excerpt:
The entrepreneurs who are successful in the US are often considered as heroes. In Europe, most of them hide themselves because success is not something you can show to the same extent, because many people around them start to become jealous.
Postcards from Old Europe - Four elections and a constitution
While much of the world has it's eyes firmly fixed on the US election in the fall, this column looks at some of the developments coming up on the European political stage.
June will see elections to the European parliament and another chance at agreeing on an EU constitution. Some people seem to think now that Spain and Poland have dropped their opposition to the so-called double majority voting system the chances are pretty good for an agreement on the constitution. Keep in mind that agreement doesn't mean that the constitution is ratified - some countries will elect to hold referendums. The outcome of these referendums is far from certain so it would be very premature to expect the EU constitution to sail through the ratification process.
The most interesting countries with regard to possible referendums on the constitution are the Netherlands, the UK and France. The Netherlands - formerly one of the most ardent supporters of European integration - are suffering from a bout of Euro-skepticism and are going to hold their first referendum. The UK is a special situation in which the electorate and much of the mainstream press is against most things European while the government (well at least the prime minister) is mostly for closer European integration. France is a very interesting story in this regard as the President Chirac can decide if the country will hold a referendum or not. As any election can - and will - be used to express discontent with the ruling party, the Elysee will probably try to avoid a vote if it can. The tricky thing is that UK prime minister Tony Blair has since openly called for a referendum and thereby heightened the pressure on Chriac to do the same.
The French not only face a potential referendum on the constitution but also a general election in 2007. The recent regional elections - which led to Chirac's center-right party losing almost across the board seem to have dampened the governments reform-spirits. I doubt that the French government will attempt to cut entitlements or implement any kind of wide ranging health-care reforms before the next big elections. The only problem is that the Maastricht deficit criteria should - in theory at least - punish countries for running a budget deficit of more than 3% of GDP. As France is already above this limit it will probably have a hard time boosting government spending in a bid to enliven the economy. The smart money is on the government engaging in some creative book keeping to help "reduce" the deficit whilst at the same time borrowing and spending more.
Italy is scheduled to hold an election by mid-2006. The government of Silvio Berlusconi will probably play dead on the reform front until then and concentrate on heading off the impending challenge by the opposition. One should add that the Berlusconi government didn't actually manage to do much in the way of reforms anyway. This disappointed quite a few voters who took the prime minister's tough businessman persona at face-value and are now pretty disillusioned. The probable candidate, the outgoing EU Commission President Prodi is certainly no pushover.
The German situation is quite similar to the one in France. Most people will tell you that reforms are absolutely necessary - just as long as they won't have to give up any entitlement themselves. The government's disastrous performance in recent polls (and in regional elections) has lead to the reform caravan coming to a grinding halt. I guess the situation will have to get much worse before a broad national consensus to support reforms emerges.
The next election coming up will determine the composition of the EU parliament. Pollsters are predicting a (first time) center-right win. This could influence the makeup of the new European Commission as the old one is disintegrating as most of it's members have jumped ship (or are going to).
What does it all mean? Most incoming governments have pushed a reform agenda and have been badly mauled for doing so. The reform window is in the process of slamming shut and the European Constitution is still a ways off. This failure to implement structural reforms will raise Europe's Beta with regard to exports and will make any domestic recovery harder to come by. Not much good news for the old world.
Remember to visit Curryblog for more news and views!
Thursday, April 29, 2004
Something to Hide
Bush, after today's meeting with the 9/11 Commission:
"If we had something to hide we wouldn't have met with them in the first place. We answered all their question. I came away good about the session because I wanted them to know how I set strategy, how we run the White House, how we deal with threats" Bush said.This reasoning must explain -- straight from the President himself -- why the administration is fighting so hard to keep the Energy Commission records closed and still hasn't released all of Bush's military records, and [insert description of act of secrecy here] ...
I suppose Bush's inadvertent candor also sheds some light on why they resisted testifying for so long, and did so only without recordings or transcripts, why Dr. Rice initially wouldn't testify under oath, why the administration fought against extending the deadline for the Commission's report, and [insert act stonewalling the 9/11 Commission here] ...
AB
UPDATE: Over at Tapped, Matt Y. noticed the same quote that I did and fills in some of the blanks:
... in the real world of course, Bush did refuse to meet with the commission, only to back down in the face of public pressure. Then he refused to meet for more than one hour and, again, he wound up backing down in the face of public pressure. Finally, he agreed to let the commission ask their questions, but only on the dual condition that Cheney be at his side and that no transcript of the meeting be released. That doesn't sound at all like the pattern of behavior of a president who's trying to hide something. Why, it's been "unprecedented cooperation" from the get-go. And we all remember how eager Condoleezza Rice was to testify. . . .
Unimpressive GDP Numbers
From today’s BEA release of the advance estimates of first quarter GDP growth:
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 4.2 percent in the first quarter of 2004, according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter [of 2003], real GDP increased 4.1 percent.This is a solid number, but nothing that will wow anyone -- and it's certainly not as impressive as a lot of people thought it would be. At first glance, one of the more surprising bits about it is the relatively fast rate of inflation included in the report: core inflation accelerated to a 2.3% annual rate, which strikes me as an unexpectedly large increase in inflation.
...The slight acceleration in real GDP growth in the first quarter primarily reflected a deceleration in imports, an upturn in government spending, and an acceleration in PCE that were largely offset by decelerations in exports, in inventory investment, and in residential fixed investment.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 3.2 percent in the first quarter, compared with an increase of 1.3 percent in the fourth. Excluding food and energy prices, the price index for gross domestic purchases increased 2.3 percent in the first quarter, compared with an increase of 1.5 percent in the fourth.
More on this report later.
Kash
The Testimony Will Not be Televised
Nor recorded. Nor transcribed. But Bush and Cheney are meeting with the 9/11 Commission today. I think The Onion has the right take on this:
Cheney Wows Sept. 11 Commission
By Drinking Glass Of Water
While Bush Speaks
AB
Wednesday, April 28, 2004
What’s Causing High Gasoline Prices?
The US Senate Republican Policy Committee has spent some time and effort investigating the cause of rising gasoline prices. Yesterday they published a policy report explaining their findings. The conclusion: rising gasoline prices are largely due to Federal regulations, such as those established by the Clean Air Act. Among their recommendations of things that will help bring down the price of gasoline:
- “The EPA should have the authority to temporarily suspend clean-fuel requirements…”
- “Congress should eliminate the Clean Air Act’s oxygenate requirement for reformulated gasoline…”
- “Congress and the Administration should reform other regulations (known as the New Source Review requirement) under the Clean Air Act that have resulted in the halt of construction of new refinery capacity.”
Actually, let me propose an alternate hypothesis: gas prices have been rising because crude oil prices have been rising. It sounds crazy, I know. Why do I propose such a theory? In part it’s because of graphs like this one, showing crude oil and wholesale gasoline prices since January 2, 1990:
Source: data from the Energy Information Administration, US Dept. of Energy.
I think that I can detect a relationship between gasoline prices and the price of crude oil that would pretty much explain why gas prices are currently so high. But apparently the Senate Republican Policy Committee doesn’t see it that way, and would rather use high gas prices as an excuse to change the Clean Air Act. I guess the only bit about it that surprises me is that they didn’t also find a way to suggest that another tax cut would be the cure for high gas prices.
Kash
Tuesday, April 27, 2004
Today's Howler
Somerby reads David Ignatius so you don't have to. Here's Mr. Ignatius explaining why, despite the information being readily available from military experts, the press failed to predict that the Iraq War and subsequent occupation would be tough:
The uniformed military privately had serious questions about the Iraq mission, but these only occasionally made their way into print.Investigating? No. Fact-checking claims? No. Waiting idly by the fax machine for your next story to arrive courtesy of the RNC or DNC? Yes. The party that writes the most stories for the press will apparently get the best coverage. Sweet Republican Jesus!
... In a sense, the media were victims of their own professionalism. Because there was little criticism of the war from prominent Democrats and foreign policy analysts, journalistic rules meant we shouldn't create a debate on our own. And because major news organizations knew the war was coming, we spent a lot of energy in the last three months before the war preparing to cover it -- arranging for reporters to be embedded with military units, purchasing chemical and biological weapons gear and setting up forward command posts in Kuwait that mirrored those of the U.S. military.
Or, in Somerby's words,
Why did they bungle the run-up to Iraq? We were just too professional, Ignatius says! Has history ever rewarded a nation which allows such fops to serve in high places? Disaster awaits if these people aren’t countered. That’s why decent people like E. J. Dionne must stand on their hind legs—and fight.AB
Labor’s Share, Part II
Following up on my post from the other day, I’m still thinking about the recent divergence between labor productivity and the income that labor gets. In the process of thinking about this, I’ve been looking at some more data.
The table below shows labor productivity and labor compensation in several countries compared to levels in the US. In each case, productivity and compensation is measured relative to the US level, so a productivity score of 50 would mean that workers in that country produce 50% of what US workers produce in an hour, and so forth.
Source: UNCTAD, Trade and Development Report, 2002.
Next, here’s a graph showing the relationship between productivity and compensation within the US since 1985.
Source: BLS.
Both of these point to the same conclusion: typically, the income that labor receives follows the productivity of labor. There are some exceptions, of course. Internationally, the relationship between productivity and compensation is true in a rough and general way, though with some variation from country to country. And over time in the US, there have been periods in recent history when either compensation or productivity has grown faster than the other. But in general, when productivity rises, so does labor income.
The last 3 years seem to be one of those times when compensation does not track productivity, however. As the graph shows, a relatively large gap has opened up between worker productivity and compensation. This is another reflection of labor’s shrinking share of national income.
Numerous good possible explanations were offered in the comments on my earlier post on the subject. Let me address about a couple of them. First of all, international trade seems an unlikely culprit here. Imports grew most rapidly during the period 1996-2000, which corresponds exactly with the period with fastest compensation growth in the US. On the other hand, imports into the US actually shrank in 2001 and grew very slowly in 2002, when wages diverged from productivity.
What about union power? I agree that, in theory, weaker unions should cause workers to receive a lower share of a firm’s rents. In this case, however, I think that there’s something else going on. Unions have been steadily losing power for the past two decades. I would therefore have expected workers to receive a steadily decreasing share of national income since the early 80s, not just something that has happened over the past 2 or 3 years.
Finally, what about this just reflecting the normal workings of the business cycle? There's probably something to that -- we do typically see a big increase in profits at this stage of the business cycle, and in part that serves as a signal to investors that it's time to start expanding businesses and building new businesses to take advantage of new profit opportunities. However, the fact remains that labor's share in national income has fallen more dramatically and to lower levels than anytime in the last 30 years. It's plausible to think that such extreme movements in labor income may be due to more than just the recovery from what was otherwise an unusually mild recession.
So I come back to my hypothesis. If anti-trust oversight has diminished in recent years (the change in Microsoft’s fate at the hands of the Justice Department provides one example of what I’m talking about) then firms have increased their ability to keep out competition. Industries move closer to oligopoly. Output is restricted by the oligopoly, leading to lower output and employment than would otherwise be the case, with stronger competition. The labor market is therefore weaker. Workers lose, and the owners of corporations gain. I'm still persuaded by this story.
Kash
More WTO Troubles for the US
The US has apparently lost another ruling in the WTO. This one was against US agricultural subsidies in the cotton industry, in a case levied by Brazil. Brazil had argued that US cotton subsidies were excessive, and thus violated WTO rules. In a preliminary ruling, the WTO agreed.
There are a couple of points to take notice of here. First, if the WTO finds that the US’s cotton subsidies contravene WTO rules, then there may be broader implications for other types of US agricultural subsidies. Those subsidies are substantial, and form a major sticking point in numerous ongoing trade negotiations, not least of which is the Doha round of WTO negotiations.
Second, if this case establishes a precedent of any sort, other countries could be next in the sights of the developing world. Specifically Japan, Korea, and the EU are among the world’s biggest agricultural subsidizers, and they all must be watching this case closely.
Finally, note that this is a good example of how economic integration necessarily involves some loss of sovereignty. The Bush administration argued that the cotton subsidies were purely domestic in nature (and it’s true that they do not explicitly have anything to do with trade), and therefore are exempt from WTO oversight. But of course, despite the fact that the subsidies were not specifically enacted to have any impact on international trade, all production subsidies have the effect of distorting international trade. So according to WTO rules, Brazil did indeed have every right to complain about the US’s subsidies. But the tension between the right to make domestic policies and their possible conflict with international agreements will only continue to grow, undoubtedly making many people unhappy.
The WTO’s final ruling won’t be out for another 6 weeks. But personally, I think it would be great if the WTO forced the US to reduce its agricultural subsidies, since (thanks largely to the Bush administration’s craven dependence on campaign donations from agribusiness) American politicians haven’t been able to do it by themselves. The WTO could be providing help for all of us who aren’t cotton growers in the US – which was exactly what it was intended to do.
Kash
All publicity is good publicity, as long as they spell your name right!
I just noticed that Angry Bear is linked by Marvin Olasky's blog. Yes, the Marvin Olasky. Journalism professor at Texas, sometimes called Bush's "Christian Guru," and coiner of the phrase "Compassionate Conservatism" as adopted by George Bush. A bit about his blog:
Posts are by Marvin Olasky, editor in chief; Ed Veith, cultural editor; Mindy Belz, international editor; Lynn Vincent, features editor; Bob Jones, national editor; and reporters Priya Abraham and John Dawson. We also draw on the insights of WORLD staffers Andrew Coffin and Ed Plowman, American Values president Gary Bauer, and Southern Baptist Theological Seminary president Albert Mohler.But Angry Bear isn't the only one; here are the links in Olasky's "Liberal" section of the blogroll (note the inclusion of the big media outlets):
LIBERALAnd, in fairness (and a rare bit of honesty from a Righty on the subject), Fox News is listed under "NEOCONSERVATIVE".
Joshua Micah Marshall
Calpundit
DailyKos
American Prospect
Counterspin
Angry Bear
Emerging Democratic Majority
The New York Times
The Washington Post
The Boston Globe
The Los Angeles Times
The Austin American-Statesman
ABC News
CBS News
CNN
MSNBC
AB
Military Records
When there was a mini-flareup last week of Kerry's military record, I speculated that "Kerry just might have a litttle Brer Rabbit in him, and the Republicans were kind enough to toss him right into the briar patch." We'll see if the issue gets anymore traction this time around in the mainstream press, but a Salon story today reminds us that much remains unknown about Bush's National Guard service, and the lack thereof:
Taking away a pilot's wings was not a minor decision. During the course of investigating this matter over the past decade, I was told by numerous Guard sources that pilots simply did not skip their physicals for any reason. Bush may have thought this was a good strategy for getting out of his obligation to the Guard. However, there had to be an investigation into his grounding. Normally, a formal board of inquiry would have been convened to examine the pilot's failure to keep his physical status current. At a minimum, a commanding officer would have been expected to write a narrative report on why one of his pilots had been taken off the flight duty roster. Either that report, or the findings of the board of inquiry, would then be sent to the Air Reserve Personnel Center in Denver and to the Texas Guard headquarters in Austin. A pilot simply did not walk away from all of that training with two years remaining on his tour of duty without a formal explanation as to what happened and why. This narrative report is the document the public has never seen and the Bush White House is unlikely to ever release. Disciplinary action taken against Bush ought to be a part of his personnel record. No such files have ever been disclosed.While visiting Salon, put on your tinfoil hat and check out this story as well.
When the Bush campaign began pressuring Sen. John Kerry to release his complete military file, Bartlett spoke as though Bush were occupying the moral high ground on the issue. "The president made a pledge before the American people, and he made his complete file available to the media and the public," Bartlett told the Boston Globe. "They were able to review all of his medical records." Bartlett, who acted as liaison between Gov. Bush's administration and the Texas Guard, has insisted all of the president's service points documents, performance sheets, and any existing records have been made public. This is, of course, patently not true. There is nothing that offers a report of disciplinary action against the young pilot, nor has anyone seen pay stubs or a total retirement-points sheet.
AB
Monday, April 26, 2004
GDP Data This Week
We have one interesting piece of economic data to look forward to later this week. The advance estimates of first quarter GDP growth will come out on Thursday. The consensus forecast seems to be for a big, big positive number, with perhaps around 5.0% annualized growth.
This release takes on added significance because the Fed’s Open Market Committee meets the following Tuesday (May 4) to decide whether a change in interest rates is called for. The proportion of Fed-watchers expecting an interest rate increase next week is small (most seem to expect an interest rate increase sometime over the summer, which this informal poll also indicates), but it could grow somewhat with a blowout number on Thursday. Stay tuned for all the excitement…
Kash
p.s. Yes, you know you’re an economist when this stuff classifies as “excitement”…
Decreasing Competition
From today’s headlines, here’s another example of exactly why I think competition has declined in recent years – with detrimental effects on workers and consumers. Of course, the pharmaceutical industry also gets a big hand in reducing competition thanks to the Bush administration’s opposition to international competition in pharmaceutical products...
Kash
Sunday, April 25, 2004
Free Trade
Brad DeLong:
I fully expect, someday, to read that Daniel Davies has been arrested in Manhattan outside the offices of the New York Times, and was carried away for psychiatric observation shouting incomprehensible slogans like "the international economy is not a zero sum game!"AB
Unless, of course, it happens to me first.
Friday, April 23, 2004
The Profit Mystery
The Economic Policy Institute recently posted an interesting brief on the incredible surge in corporate profits that has accompanied the economic recovery over the past two years. (Thanks, Greg, for alerting me to this.)
The data, from the BEA’s national income accounts, provides another representation of something that we’ve already seen in other ways (Brad DeLong has a couple of good posts on the subject) – the fact that the lion’s share of the increase in income in the US over the past few years has been in the form of profits, and relatively little has been in the form of higher labor income.
This is extremely unusual. Typically, labor income comprises close to two-thirds of total national income, while profits typically are only around 10% of national income. So why has this recovery been so different, with over 50% of the increase in income going to profits and just 15% going to labor? Put another way, why have the owners of corporations been able to increase their share of income at the expense of workers?
Part of the answer is surely connected to the jobless (or job-loss) nature of this recovery. Since productivity has been increasing, firms have been able to increase output (and thus sales) without increasing their labor inputs. But this just begs a new question: why haven’t workers been able to capture some of the gains from this increase in productivity? Typically we would expect worker to be paid their marginal product – as they become more productive, they should be able to demand (and firms should be able to afford) higher wages.
But this is obviously not happening right now. Why not? Here’s my nomination for the reason: insufficient competition.
Given the sky-high profits of American firms (due to the fact that firms have been able to increase their workers’ output without paying them more) we would typically expect to see lots of new firms entering the market, in addition to fierce competition among already existing firms, thus driving profits down. Specifically, greater competition should do two things: drive down the price of the goods being sold, and drive up the wages of the workers who know how to make those goods, as firms compete for them. Both forces would reduce profits, and increase labor’s share of income.
Hence my conclusion that too many industries in the US suffer from a lack of adequate competition, and that it has apparently become increasingly difficult for new firms to enter established industries. I’m not quite sure why competition has declined in recent years – though I think that less vigilant anti-trust oversight in the past few years, along with intense merger activity, is a likely culprit – but if my logic is right then I think that declining competition may be enough to explain the profit mystery.
Kash
The Memory Hole
Congratulations are due to The Memory Hole. Due to their Freedom of Information Act request, they have almost single-handedly splashed the banned images of coffins returning home from Iraq across the front pages of dozens, if not hundreds of newspapers in the US. (See for example the NYTimes, Washington Post, and the Boston Globe.) Some people may not agree with the printing of the images for personal reasons (and I myself feel ambivalent about them), but I think it’s important to take the decision of whether or not to print them out of the hands of the government and put it in the hands of individuals.
I’ve been a fan of the Memory Hole for a long time, and think that it provides a valuable service. This example of their work has achieved a particularly high profile, but is just one of many important contributions to the record that they have made over the past few years.
Kash
Postcards from Old Europe
I was in Romania until yesterday evening and am about to head off to an offsite meeting. This means that there won't be much of a postcard this week. Last week's card looked a the upcoming expansion of the European Union; this week's trip gave me a chance to talk about the subject with people who live in a country which is actively working on joing the Union by 2007 - 10. I was surprised by the fervor with which my clients viewed European integration - it would do us western Europeans a world of good to try to look at the subject from the perspective of our less fortunate neighbors.
Enough for today - I'll be back next week with an in-depth look at old and new Europe.
Thursday, April 22, 2004
What Happens if a Big Chunk of Congress is Killed?
Well, apparently there's currently no real plan, but Congress is working on one. The plan is to hold special elections within 45 days should 100 or more Congressmen and Congresswomen be killed. But, based on the following description, they may have failed to consider something:
Fearing that terrorists might target Congress, the House on Thursday approved a bill to set up speedy special elections if 100 or more of its members are killed ... The measure would require special elections within 45 days of the House speaker confirming that a catastrophic event had left at last 100 of the 435 seats vacant.At least the odds are around 75% that the plan would work for the minimal triggering catastrophe.
AB
Voting Machines
From everything I've read, I'm pretty sure that any election board, council, or panel would reach the same conclusion:
California should ban the use of 15,000 touch-screen voting machines made by Diebold Election Systems from the Nov. 2 general election, an advisory panel to Secretary of State Kevin Shelley recommended Thursday.AB
By an 8-0 vote, the state's Voting Systems and Procedures Panel recommended that Shelley cease the use of the machines, saying that Texas-based Diebold has performed poorly in California and its machines malfunctioned in the state's March 2 primary election, turning away many voters in San Diego County.
State Government Spending
The CBPP has a new report out about the decline in state government expenditures during the Bush administration. It’s pretty striking – state spending has taken quite a tumble over the past few years, as the following chart shows.
Source: CBPP.
The CBPP report details many particular examples of state government services that have been and will be cut in reaction to reduced state government revenue – examples that are very painful and costly to millions of individuals. But some people have also wondered if this is large enough to have any macroeconomic consequences. If state spending is currently 0.3% of GDP less than it was for during the 1990s, that translates into a reduction in state spending of about $35 billion per year. While not a huge number, it is certainly large enough to undo a non-negligible portion of the Bush tax cuts (especially since the majority of the Bush tax cuts is probably saved anyway, not spent). If we were to add local government spending cuts to these cuts in state spending, I suspect that the effect of this contraction in S&L spending counteracts a large portion of the increased consumption that results from last year’s tax cut.
It's a good example of fiscal policy that's a failure.
Kash
Is Meet the Press Unbiased?
Eric Alterman of the Center for American Progress does a side-by-side comparison (done New Yorker style) of Russert’s recent MTP interviews of Bush and Kerry. You probably won't be surprised to find that Russert seems to save his difficult (and often unanswerable) questions for Kerry.
Kash
Wednesday, April 21, 2004
The Master of Doublespeak
Take a look at these headlines from two different news sources, reporting on the exact same speech by Alan Greenspan that he made today:
From CBSMarketwatch: “Inflation no worry yet, Greenspan says… Greenspan remains unconcerned about inflation, suggesting that he is not in a hurry to raise interest rates from the current 46-year low of 1 percent. ”
And from CNN/Money: “Greenspan paves way for higher rates. The nation's economy is stronger and interest rates must rise eventually to keep inflation in check, Alan Greenspan said Wednesday…”
Yes, I realize that the two articles are not exactly contradictory, but each news source spun his speech in exactly opposite ways, and would leave readers with exactly the opposite impressions about the speech.
You know you’re a master of ambiguity, and of treading the fine line between sounding vacuous and actually providing new information, when stories about your speech can read so differently. My conclusion? 17 years of experience seem to have given Greenspan the magical ability to say whatever the listener wants to hear.
Kash
Why Didn’t Everyone Applaud Bush…
…when he decided to reverse 20 years of US foreign policy and endorse Israel’s settlements in the West Bank? Here’s Bush’s explanation, from a speech that he gave today in Washington:
The long-term strategy of this government is to spread freedom around the world. And I believe -- I told you, a free Iraq will be a major change agent for world peace. I also believe a free Palestinian state would be a major change agent for world peace. Ariel Sharon came to America and he stood up with me and he said, we are pulling out of Gaza and parts of the West Bank. In my judgment, the whole world should have said, thank you, Ariel. Now we have a chance to begin the construction of a peaceful Palestinian state. Yes, [But?] there was kind of silence, wasn't there? Because the responsibility is hard. It's hard to be responsible for promoting freedom and peace when you're used to something else. If you don't have the aspirations of the people firmly embedded in your soul, it's hard to take a gamble for peace by putting the institutions of a free society in place, institutions that are bigger than the people.Ah yes, I see. Those who thought it was a bad idea for Bush to reverse US policy on the issue of Palestine and Israel (i.e. most of the world) have a hard time handling the responsibility that freedom brings, and are generally used to something else. Everything is clear now... I think...
Huh?
Kash
That's Nice
Pentagon Deleted Rumsfeld Comment:
The Pentagon (news - web sites) deleted from a public transcript a statement Defense Secretary Donald H. Rumsfeld made to author Bob Woodward suggesting that the administration gave Saudi Arabia a two-month heads-up that President Bush (news - web sites) had decided to invade Iraq (news - web sites).Showing war plans and a "top secret map showing how the war plan would unfold" to freakin' Prince Bandar? Pop Quiz: how many Iraqis were involved with 9/11? How many Saudis? Even if Bandar is and was trustworthy, were they 100% certain -- top secret war plan sharing certain -- that no Wahhabists had infiltrated his staff?
At issue was a passage in Woodward's "Plan of Attack," an account published this week of Bush's decision making about the war, quoting Rumsfeld as telling Prince Bandar bin Sultan, the Saudi ambassador to Washington, in January 2003 that he could "take that to the bank" that the invasion would happen.
The comment came in a key moment in the run-up to the war, when Rumsfeld and other officials were briefing Bandar on a military plan to attack and invade Iraq, and pointing to a top-secret map that showed how the war plan would unfold. The book reports that the meeting with Bandar was held on Jan. 11, 2003, in Vice President Cheney's West Wing office. Gen. Richard B. Myers, chairman of the Joint Chiefs of Staff, also attended.
Pentagon officials omitted the discussion of the meeting from a transcript of the Woodward interview that they posted on the Defense Department's Web site Monday. Rumsfeld told reporters at a briefing yesterday that he may have used the phrase "take that to the bank" but that no final decision had been made to go to war.
Oh, and scrubbing transcripts isn't cool either, but I'm sadly becoming inured to that.
AB
The AMT
The Alternative Minimum Tax, or AMT, is the provision in the tax code that requires filers to calculate their taxes in two ways: the usual way, with the usual deductions and exemptions; and an alternate way that disallows most exemptions and deductions, but gives one big standard deduction instead. The idea is to be sure that taxpayers can't pay "too little" in taxes - particularly by taking so many deductions that they pay relatively little tax even though they have relatively high gross income. Brad DeLong is one example -- he was AMT'd just this year!
A few days ago, the CBO released a thorough analysis of the increasingly important role the AMT will play in the next few years. Put simply, thanks to the Bush tax cuts, the number of people whose tax calculated in the usual way will be "too low" according to the AMT is set to bloom over the coming few years. The picture below from the CBO report indicates that next year almost 10 million taxpayers will find that their tax cuts will be partially undone by the AMT. Once the Bush tax cuts pass their last year (recall the built-in sunset provisions of most of the tax cuts), taxpayers will see an increase in their taxes calculated the standard way, so the AMT will have less bite. (The left axis shows millions of returns, and the right axis shows AMT receipts in billions of dollars.)
Is this increase in the bite of the AMT over the coming few years a problem? It may be, at least politically. Some people have predicted that when 20 or 30 million taxpayers (many earning less than $100,000 per year) are faced with additional AMT payments, they will rise up against their legislators and demand a repeal of the AMT.
But I wonder – will individuals really be that outraged by the AMT, or will they just see it as another complication on their tax form that they have to deal with, and thus simply shrug their shoulders and jump through yet another IRS hoop? I'm not sure. In addition, repealing (or substantially reducing) the AMT will cost hundreds of billions of dollars in lost revenue to the government, since it would essentially be another tax cut. But even Republicans in Congress seem less inclined to pursue further tax cuts at this point. In fact, keeping the AMT in place could be a convenient way for Congress to try to keep revenues up without actually enacting a tax increase. (Of course, the Bush administration, if they were consistent, would start calling the absence of another tax cut a tax increase…) So I guess I have to express some skepticism that we'll see a repeal of the AMT any time soon.
Kash
More of This, Please
The Bush campaign raised a stink over Kerry's not releasing his military records immediately after saying he would do so during Sunday's Meet the Press interview. The records are out:
"I fought under that flag and I saw that flag draped over the coffins of friends," Kerry said. "I'm tired of Karl Rove and Dick Cheney and a bunch of people who went out of their way to avoid the chance to serve when they had the chance."There's apparently some questions about his first injury (after three Purple Hearts you have the option to go home). Specifically, a former CO questions the severity of his first injury (the second and third are well-documented). From the Washington Times:
The Purple Heart is awarded to soldiers who are wounded or killed by enemy forces. The Silver Star is awarded for gallantry in action, and the Bronze Star is for heroic achievement [Kerry has three Purple Hearts, one Silver Star, and one Bronze Star].
Kerry received the Bronze Star for his actions after being wounded by the mine, which led to the third Purple Heart. According to his citation, one of Kerry's boatmates was thrown overboard and Kerry pulled him to safety with "his arm bleeding and in pain and with disregard for his personal safety."
Mr. Kerry's commanding officer in Vietnam, Grant Hibbard, recently questioned the severity of the wound that led to Mr. Kerry's Purple Heart, saying the injury was so minor that it could have resulted from a fingernail scratch and questioning whether Mr. Kerry's crew had even come under enemy fire that day.Given that at the time, Kerry was just a regular guy (unlike, say Bush and even Gore), it seems pretty unlikely that he'd be able to finagle an unmerited Purple Heart, so I doubt there's anything to this.
Impressively, the same Washington Times story also points out a bit of Republican hypocrisy:
When questions arose earlier this year about Mr. Bush's National Guard duty during the Vietnam War, Bush supporters deflected criticism by saying that Democrats were concerned about something that happened "30 years ago" and that what was most important was Mr. Bush's performance in office as commander in chief.AB
UPDATE: Kerry's service records now online -- I can't vouch for the completeness, but there's a lot there. Let's see, on Sunday Kerry said he'd release the records; less than 72 hours later he does so. Pretty good, but I won't hold my breath waiting for those who were demanding the records to give him credit. And speaking of military records, aren't large chunks of the President's military history still unknown?
UPDATE: Just took a quick look at the Bronze Star and Silver Star citations. Impressive stuff. Kerry just might have a litttle Brer Rabbit in him, and the Republicans were kind enough to toss him right into the briar patch.
Is Your Family "Hardworking"?
Tuesday, Brad DeLong explored the mystery of "Hardworking Individuals and Married Couples." Who are these people? Mark Schmitt recently spotted them in a Treasury Department Press Release:
Treasury didn't use the standard categories that would go into a distributional analysis, such as income quintiles or households with income in certain ranges. Instead, they used a category of their own devising: "Hardworking Individuals and Married Couples."I like to call these people HIMC's for short (pronounced "HIM-SEEs", which flows more smoothly off the toungue than trying to rhyme it with "chimps".)
But who are the HIMCs? It sounds like the married couple working three jobs to put their kids through college. Maybe longshoremen; or maybe firemen and other first-responders -- they're a pretty hard working lot? Teachers? Sure, that's hard work, too. I bet it includes just about everyone with a job except professors and bloggers.
Brad explains:
To me, the most interesting thing is the phrase "hardworking individuals and married couples." It is clear from the rest of the document that the draft that emerged from Treasury OTA [Office of Tax Assessment] and was sent to Treasury Public Affairs had a different phrase in those five places: "individuals and married couples with taxable incomes exceeding $200,000." (And note that if your taxable income exceeds $200,000, your AGI [Adjusted Gross Income] is in all likelihood on the order of $250,000 and your FEI [Family Economic Income] somewhere near $280,000.) Treasury Public Affairs took a look at the document and decided that the phrase "individuals and married couples with taxable incomes exceeding $200,000" could not stand--so few journalists covering the Treasury have taxable incomes over $200,000 that the piece would backfire. So they decided to change it to "hardworking individuals and married couples."Oh. Those HIMCs. I see.(*)
AB
(*) My point is not that there's anything wrong with making $200,000+, or that it's not hard work. But I suspect a number of people voters in less highly remunerative occupations work pretty hard too.
Tuesday, April 20, 2004
Higher Rates in Europe, Too?
The markets took to heart Greenspan’s comments about the danger of deflation receding, and bond yields rose to their highest level in months. Some of Morgan Stanley’s European economists think that the same may be true for Europe – that we’re now definitely at the bottom of the interest rate cycle, and they will only go up from here.
Kash
Greenspan Agrees
I’m not saying that this is the definitive word (because I certainly believe that he has been wrong about things before), but apparently Greenspan agrees with my earlier assessment that the danger of deflation is behind us.
Kash
Powell Responds
I've commented on revlations about Powell in Woodward's new book, so it's only fair that I also highlight Powell's denial:
Powell also said he cooperated with Woodward -- at the behest of the White House.Oops. Wrong paragraph. Here's the denial:
"We all talked to Woodward. It was part of our instructions from the White House," Powell said. "It was an opportunity to help him write a contemporary history of this period. It was no secret that all of us were encouraged to talk to Mr. Woodward. In my case, it was just a couple phone calls."
However, Powell said he "will always plead guilty to being cautious about matters having to do with war and peace," and he confirmed journalist Bob Woodward's account that he warned President Bush before the war that the situation in post-war Iraq could prove difficult.Wait, that's not it. Here it is:
Asked about that characterization [of Cheney as one of the driving forces in favor of invading Iraq], Powell said, "Was the vice president determined that we had to do something about Saddam Hussein and that evil regime? You bet he was."Damn. That's not it either. Try this one:
"When the president decided that we had to go down the road of military action, it was a road I knew was there all along, and I was as committed as anyone else to see the end of this regime," Powell told reporters. "My support was willing, and it was complete."And, later,
"I was included in all of the military planning preparations. I was briefed on a regular basis," said Powell, a retired Army general and former chairman of the Joint Chiefs of Staff. "I was intimately familiar with the plan. I was aware that Prince Bandar was being briefed on the plan."There you have it.
AB
I Can't Explain It
So I'll just relay it:
Bush led Kerry, the presumptive Democratic nominee, 51 percent to 46 percent in the survey of likely voters, which was conducted Friday through Sunday. The survey interviewed 1,003 adults, including a subsample of 767 respondents deemed most likely to vote in November.Well, maybe I can explain it. It may have something to do with this:
When consumer activist Ralph Nader's independent candidacy was factored in, the survey's results were 50 percent for Bush, 44 percent for Kerry and 4 percent for Nader among likely voters.
The previous CNN/USA Today/Gallup Poll, conducted April 5-8, showed Bush leading Kerry 48 percent to 45 percent among likely voters.
Neither the intensified fighting in Iraq nor the public hearings held by the independent commission investigating the September 11, 2001, attacks appear to have hurt Bush's overall standing -- in part, the current poll suggests, because Kerry has not convinced Americans of his ability to handle those issues.
... When asked which candidate would do a good job handling the situation in Iraq as the next president 40 percent backed Bush, 26 percent backed Kerry and 15 percent thought both would do a good job.
WASHINGTON — President Bush has spent $98 million in his re-election campaign, nearly as much as he spent to win the Republican nomination four years ago.Budget allowing, you know what to do.
In a report to be filed with the Federal Election Commission today, Bush discloses that he raised $184.4 million by the end of March, and his campaign had $86.6 million in the bank.
The spending — rivaling the $101 million he spent in 2000 — reflects heavy television ad buying in February and March, when the campaign put on a blitz aimed at shaping an unfavorable image of Kerry in voters' minds. The campaign also has been building an organization in key states.
AB
Monday, April 19, 2004
Today's Howler
Sommerby finds something of a contradiction:
RICE V. BUSH: Thanks to an alert e-mailer, here’s one more highlight from Bush’s press conference. Our reader emitted those low, mordant chuckles when President Bush said the obvious:As my father knew all too well in my younger days, an ever-shifting story is a hallmark of deception. In other words, if the administration intends to successfully deceive, then it should first get its story straight.
BUSH (4/13/04): Now, in the, what’s called the PDB, there was a warning about bin Laden’s desires on America.
There was a warning! Why did our reader find that amusing? Because five days earlier, Condi Rice had hotly insisted that there wasn’t a warning in that same PDB! We all recall the heartfelt testimony she gave to her nation, under oath
RICE (4/8/04): Commissioner, this was not a warning. This was a historic memo.
Oh, what a difference five days makes! For the record, why did Bush say there was a warning, while Rice kept insisting “this wasn’t a warning?” Simple! Bush was speaking straightforward English. Rice was deceiving the American public and making a joke of her oath.
AB
Worse Than You Thought
From Woodward, on 60 Minutes last night:
“They describe in detail the war plan for Bandar. And so Bandar, who's skeptical because he knows in the first Gulf War we didn't get Saddam out, so he says to Cheney and Rumsfeld, ‘So Saddam this time is gonna be out, period?’ And Cheney - who has said nothing - says the following: ‘Prince Bandar, once we start, Saddam is toast.’"
After Bandar left, according to Woodward, Cheney said, “I wanted him to know that this is for real. We're really doing it."
But this wasn’t enough for Prince Bandar, who Woodward says wanted confirmation from the president. “Then, two days later, Bandar is called to meet with the president and the president says, ‘Their message is my message,’” says Woodward.
Prince Bandar enjoys easy access to the Oval Office. His family and the Bush family are close. And Woodward told 60 Minutes that Bandar has promised the president that Saudi Arabia will lower oil prices in the months before the election - to ensure the U.S. economy is strong on election day.
Woodward says that Bandar understood that economic conditions were key before a presidential election: "They’re [oil prices] high. And they could go down very quickly. That's the Saudi pledge. Certainly over the summer, or as we get closer to the election, they could increase production several million barrels a day and the price would drop significantly.”
Didn't George Washington say something about questionable leaders and foreign entanglements? Yes, yes he did:
The alternate domination of one faction over another, sharpened by the spirit of revenge, natural to party dissension, which in different ages and countries has perpetrated the most horrid enormities, is itself a frightful despotism. But this leads at length to a more formal and permanent despotism. The disorders and miseries which result gradually incline the minds of men to seek security and repose in the absolute power of an individual; and sooner or later the chief of some prevailing faction, more able or more fortunate than his competitors, turns this disposition to the purposes of his own elevation, on the ruins of public liberty.AB
Without looking forward to an extremity of this kind (which nevertheless ought not to be entirely out of sight), the common and continual mischiefs of the spirit of party are sufficient to make it the interest and duty of a wise people to discourage and restrain it.
It serves always to distract the public councils and enfeeble the public administration. It agitates the community with ill-founded jealousies and false alarms, kindles the animosity of one part against another, foments occasionally riot and insurrection. It opens the door to foreign influence and corruption, which finds a facilitated access to the government itself through the channels of party passions
Powell May Be Next to Join the DisgruntledTM
My initial list of The DisgruntledTM (people who work or worked in and around the Bush White House who have been critical of the administration's policy-making) is in this post; commenters ably filled out the list. We know they are disgruntled for there can be no other reason why they would criticize this administration; certainly such criticisms are not valid.
At the time, Colin Powell wasn't in the Disgruntled column, nor even the Possibly Disgruntled column. But now the NYT is reporting that he and his staff were major sources for Woodward's new book.
But Mr. Powell's apparent decision to lay out his misgivings even more explicitly to the journalist Bob Woodward for a book has jolted the White House and aggravated long-festering tensions in the Bush cabinet. Moreover, some officials said, the book has created problems for the secretary inside the administration just as the situation in Iraq is deteriorating and President Bush is plunging into his re-election drive.AB
Mr. Powell has not acknowledged that he cooperated with Mr. Woodward, but the book presents the secretary's reservations in such detail that it leaves little doubt. A spokesman for Mr. Powell said again Sunday that he would not comment on the book, "Plan of Attack."
Critics of Mr. Powell in the hawkish wing of the administration said they were startled by what they saw as his self-serving decision to help fill out a portrait that enhances his reputation as a farsighted analyst, perhaps at the expense of Mr. Bush.
Sunday, April 18, 2004
Truth v. Fantasy
I still like Kash's version better, but this latest chart from the Center on Budget and Policy Priorities is pretty good too (via Matt Yglesias):
AB
Pretty Much Sums It Up
The miserable failure that is the Bush administration’s Iraq policy can pretty much be summed up by this quote from an Iraqi in today’s Washington Post:
“When the fighting is over in Fallujah, I will sell everything I have, even my home,” said a resistance fighter who gave his name as Abu Taif Mashhadani. He wept as he recalled his 8-year-old daughter, who he said was killed by a U.S. sniper in Fallujah a week ago. “I will send my brothers north to kill the Kurds, and I will go to America and target the civilians. Only the civilians. Eye for an eye, tooth for a tooth. And the one who started it will be the one to be blamed.”One thing that I conclude about the siege of Fallujah, the terror inflicted on the population there, and the concomitant killing of several hundred civilians, is this: in its ham-handedness and short-sightedness the decision fits right into the Bush administration’s general handling of the situation in Iraq, from start to finish.
Kash
Bob Woodward's Plan of Attack
The book comes out Monday, but some claims and excerpts are coming out early:
"Let's get started on this,'' Bush recalled telling Defense Secretary Donald Rumsfeld on Nov. 21, 2001, according to "Plan of Attack'' by Washington Post assistant managing editor Bob Woodward, a Post account of the book says. "And get (Army General) Tommy Franks looking at what it would take to protect America by removing Saddam Hussein if we have to.''And
The account and excerpts from the book, published in an early version of the Post's Sunday edition, support testimony by former White House counter-terrorism adviser Richard Clarke that the Bush administration was focused more on Iraq than the al- Qaeda terrorists blamed for the attacks.
The Woodward book, which will go on sale Monday, says Secretary of State Colin Powell opposed the war and warned Bush that if he sent U.S. troops to Iraq "you're going to be owning this place.''I don't know exactly know what Powell meant by "owning this place," but my guess is that he meant that if Iraq goes to Hell in a handbasket (as Powell apparantly thought it would) then the blame would rest with Bush. Here's Bush's explanation, so far:
The relationship between war-proponent Vice President Dick Cheney and Powell, who believed Cheney was trying to establish a connection between Iraq and al-Qaeda, became so strained that they are barely on speaking terms, according to the book. White House communications director Dan Bartlett described Powell's agreement to make the U.S. case against Hussein at the United Nations in February 2003 as "the Powell buy-in,'' the book says.
"I can't remember exact dates that far back,'' Bush told reporters yesterday after talks at the White House with British Prime Minister Tony Blair, his chief Iraq ally. "But I do know that it was Afghanistan that was on my mind. And I didn't really start focusing on Iraq until later on.''I do give Bush some credit for at least not saying "it was a map of Afghanistan that was rolled out on the table [after 9/11]."
And a reminder about Bob Woodward: he wrote the sycophantic hagiography, Bush at War, so I'm not sure what to make of a book by him that is reportedly strongly critical (in terms of detail if not tone) of Bush. Perhaps Woodward was caught up in a patriotic fervor when he wrote Bush at War, but that's more of an explanation than an excuse. On the plus side, I suppose that the access he got from writing that puff-piece is partially responsible for the material in his new book.
Here's a fun game you can play over the next week. Watch for the inevitable posts, Op/Eds, reviews, and TV punditry from right wingers claiming that Woodward is a deranged leftist with a vendetta against the President, Republicans, and the American Way of Life. Then go to Google or Lexis and find the same person commenting glowingly about Woodward's 2002 book. For example, here's a snippet from Amazon customer rnjbond's review of Bush at War at Amazon.com:
It's a timely book to read, as well, because it directly contradicts the books of both Paul O'Neil and Richard Clarke. Bush truly was in charge and made decisions for himself, and truly was focused on Al Qaeda prior to 9/11.rnjbond gives two stars to Howard Dean's Winning Back America, O'Neill's The Price of Loyalty, Franken's Lies and the Lying Liars Who Tell Them, and Peter Hart's The Oh Really? Factor: Unspinning Fox News Channe