Saturday, October 30, 2010

Friday, October 29, 2010

Falling Into the Chasm By PAUL KRUGMAN


Falling Into the Chasm

This is what happens when you need to leap over an economic chasm — but either can’t or won’t jump far enough, so that you only get part of the way across.

Fred R. Conrad/The New York Times

Paul Krugman


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If Democrats do as badly as expected in next week’s elections, pundits will rush to interpret the results as a referendum on ideology. President Obama moved too far to the left, most will say, even though his actual program — a health care plan very similar to past Republican proposals, a fiscal stimulus that consisted mainly of tax cuts, help for the unemployed and aid to hard-pressed states — was more conservative than his election platform.

A few commentators will point out, with much more justice, that Mr. Obama never made a full-throated case for progressive policies, that he consistently stepped on his own message, that he was so worried about making bankers nervous that he ended up ceding populist anger to the right.

But the truth is that if the economic situation were better — if unemployment had fallen substantially over the past year — we wouldn’t be having this discussion. We would, instead, be talking about modest Democratic losses, no more than is usual in midterm elections.

The real story of this election, then, is that of an economic policy that failed to deliver. Why? Because it was greatly inadequate to the task.

When Mr. Obama took office, he inherited an economy in dire straits — more dire, it seems, than he or his top economic advisers realized. They knew that America was in the midst of a severe financial crisis. But they don’t seem to have taken on board the lesson of history, which is that major financial crises are normally followed by a protracted period of very high unemployment.

If you look back now at the economic forecast originally used to justify the Obama economic plan, what’s striking is that forecast’s optimism about the economy’s ability to heal itself. Even without their plan, Obama economists predicted, the unemployment rate would peak at 9 percent, then fall rapidly. Fiscal stimulus was needed only to mitigate the worst — as an “insurance package against catastrophic failure,” as Lawrence Summers, later the administration’s top economist, reportedly said in a memo to the president-elect.

But economies that have experienced a severe financial crisis generally don’t heal quickly. From the Panic of 1893, to the Swedish crisis of 1992, to Japan’s lost decade, financial crises have consistently been followed by long periods of economic distress. And that has been true even when, as in the case of Sweden, the government moved quickly and decisively to fix the banking system.

To avoid this fate, America needed a much stronger program than what it actually got — a modest rise in federal spending that was barely enough to offset cutbacks at the state and local level. This isn’t 20-20 hindsight: the inadequacy of the stimulus was obvious from the beginning.

Could the administration have gotten a bigger stimulus through Congress? Even if it couldn’t, would it have been better off making the case for a bigger plan, rather than pretending that what it got was just right? We’ll never know.

What we do know is that the inadequacy of the stimulus has been a political catastrophe. Yes, things are better than they would have been without the American Recovery and Reinvestment Act: the unemployment rate would probably be close to 12 percent right now if the administration hadn’t passed its plan. But voters respond to facts, not counterfactuals, and the perception is that the administration’s policies have failed.

The tragedy here is that if voters do turn on Democrats, they will in effect be voting to make things even worse.

The resurgent Republicans have learned nothing from the economic crisis, except that doing everything they can to undermine Mr. Obama is a winning political strategy. Tax cuts and deregulation are still the alpha and omega of their economic vision.

And if they take one or both houses of Congress, complete policy paralysis — which will mean, among other things, a cutoff of desperately needed aid to the unemployed and a freeze on further help for state and local governments — is a given. The only question is whether we’ll have political chaos as well, with Republicans’ shutting down the government at some point over the next two years. And the odds are that we will.

Is there any hope for a better outcome? Maybe, just maybe, voters will have second thoughts about handing power back to the people who got us into this mess, and a weaker-than-expected Republican showing at the polls will give Mr. Obama a second chance to turn the economy around.

But right now it looks as if the too-cautious attempt to jump across that economic chasm has fallen short — and we’re about to hit rock bottom.

Only $4.2 Billion to Buy This Election?

Only $4.2 Billion to Buy This Election?

By Robert Reich, Robert Reich's Blog

28 October 10

his, from the Washington Post's conservative pundit George Will:

Total spending by parties, campaigns and issue-advocacy groups concerning every office from county clerks to U.S. senators may reach a record $4.2 billion in this two-year cycle. That is about what Americans spend in one year on yogurt, but less than they spend on candy in two Halloween seasons. Proctor & Gamble spent $8.6 billion on advertising in its last fiscal year.

Those who are determined to reduce the quantity of political speech to what they consider the proper amount are the sort of people who know exactly how much water should come through our shower heads - no more than 2.5 gallons per minute, as stipulated by a 1992 law. Is it, however, worrisome that Americans spend on political advocacy - determining who should make and administer the laws - much less than they spend on potato chips, $7.1 billion a year?

In a word, Mr. Will, yes.

The number of dollars spent isn't the issue; it's the lopsidedness of where the dollars come from. Even if the total were only $1000, democracy would be endangered if $980 came from large corporations and wealthy individuals. The trend is clear and worrisome: The great bulk of campaign money is coming from a narrower and narrower circle of monied interests.

Anyone who doubts the corrupting effect has not been paying attention. Our elected representatives have been acutely sensitive to the needs of Wall Street bankers, hedge-fund managers, and the executives of big pharma, big oil, and the largest health insurance companies. This is not because these individuals and interests are particularly worthy or specially deserving. It is because they are effectively bribing elected officials with their donations. Such donations are not made out of charitable impulse. They are calculated investments no less carefully considered than investments in particular shares of stock. They are shares in our democracy.

Why $4.2 billion and not ten times that amount? Because the high-rolling political investors don't need to spend a dollar more in order to exert overwhelming influence.

This figure, by the way, leaves out the tens of billions of dollars dedictated to lobbying, lawyering, and public relations - all of which deliver specific legislative outcomes the campaign money fuels. The economy of Washington, D.C. depends on this gigantic flow of funds (supporting the polished facades of refurbished hotels, fancy restaurants, trendy bistros, office complexes of glass and polished wood, well-appointed condos, hotels with marble-floored lobbies and thick rugs, restaurants serving $75 steaks and offering $400 magnums of vintage French wine.) Washington's seven suburban counties are listed by the Census Bureau as among the nation's twenty with the highest per-capital incomes.

Failing to include this larger apparatus in an estimate for how much money now greases the legislative skids is analogous to estimating the cost of private transportation in America by what's purchased at the gas pump without mentioning automobiles, roads, and bridges. Indeed a full accounting of the cost of the flow of money into our political system would also include the dreadful carnage and destruction in its path - the public's increasing cynicism about democracy, and America's increasing incapacity to do what most of its citizens desperately need.

Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including "The Work of Nations," "Locked in the Cabinet," "Supercapitalism" and his latest book, "AFTERSHOCK: The Next Economy and America's Future." His 'Marketplace' commentaries can be found on and iTunes.

After the Midterm - Robert Reich

After the Midterms

By Robert Reich, Robert Reich's Blog

25 October 10

After the Midterms: Why Democrats Move to the Center, and Republicans Don't

f Republicans succeed in taking over the House and come even close to gaining a majority in the Senate, expect calls for the President to "move to the center." These will come not only from Republicans but also from conservative Democrats, other prominent Dems who have been defeated, Fox Republican News, mainstream pundits, and White House political advisers.

After the 1994 midterm, when Dems lost the House and Senate, Bill Clinton was told to "move to the center." He obliged by hiring the pollster Dick Morris, declaring the "era of big government is over," abandoning much of his original agenda, and making the 1996 general election about nothing more than V-chips in televisions and school uniforms.

It happened in the 1978 midterm when Dems lost ground and Jimmy Carter was instructed to "move to the center." He obliged by firing his entire cabinet, apologizing for the errors of his ways, and making the 2000 general election about absolutely nothing.

Oddly, though, after Republicans suffer losses in the first midterms they pay no attention to voices telling them to move to the center. If anything, Ronald Reagan and the two Bushes moved further right.

Could it be that Republican presidents understand a few things Democrats don't? For example:

1. There is no "center" to American politics. The "center" is merely what most people tell pollsters they think or want at any given time. Trying to move to the center by following polls means giving up on leadership because you can't lead people to where they already are.

2. By the first midterm the public is almost always grouchy because the president wasn't a messiah and didn't change the world. No single president has that kind of power. The higher the expectations for change at the start of an administration, the greater the disillusionment.

3. Presidents' parties always lose the first midterm elections because the President isn't on the ticket, and the opposing party has had time to regroup and refuel. It's always easier for the party on the outs to attack - and to mass troops for the assault - than for the party inside to defend.

4. The economy trumps everything else, even though presidents aren't really responsible for it. So when it's bad - as it was during the first midterms of Carter, Reagan, and Clinton - voters penalize the president's party even more than usual. When it's very bad, the electoral penalty is likely to be that much larger.

Why are Democratic presidents so much more easily intimidated by the "move to the center" rhetoric after midterm losses than Republican presidents?

Because Democrats think in terms of programs, policies, and particular pieces of legislation. It's easy to reverse course by compromising more and giving up on legislative goals. Bill Clinton never mentioned the words "health care reform" after the 2004 midterms.

Republicans think in terms of simple ideas, themes, and movements. It's far harder to reverse course on these (look what happened to the first George Bush when he raised taxes), and easier to keep them alive: Republican presidents just continue looking for opportunities to implement them.

Republicans are also more disciplined (ask yourself which party attracts authoritarian personalities and which attracts anti-authoritarians). This makes it easier for them to stay the course. Their base continues to organize and fulminate even after midterm defeats. Democrats, on the other hand, are less organized. Electoral defeats tend to fracture and dissipate whatever organization they have.

Republicans are cynical about politics from the jump. Political cynicism fuels them. Democrats are idealistic about politics. When they become cynical they tend to drop out.

Message to Obama: Whatever happens November 2, don't move to the center. Push even harder for what you believe in. Message to Democrats: Whatever happens, keep the courage of your conviction and get even more active.

Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including "The Work of Nations," "Locked in the Cabinet," "Supercapitalism" and his latest book, "AFTERSHOCK: The Next Economy and America's Future." His 'Marketplace' commentaries can be found on and iTunes.

WikiLeaks Expose Rumsfeld's Lies

WikiLeaks Expose Rumsfield's by Ellen Knickmeyer

Ellen Knickmeyer

Recent revelations by WikiLeaks show how top American leaders lied, knowingly, to the American public, to American troops, and to the world. Ellen Knickmeyer on the carnage she saw as Baghdad bureau chief.

In the dark morning hours of Feb. 22, 2006, a group of unknown attackers detonated bombs in the northern Iraqi city of Samarra, bringing down the golden dome of a revered Shia Muslim shrine.

A few hours later, I drove through Baghdad and watched the country descend into civil war. Then the Baghdad bureau chief for The Washington Post, I drove with Iraqi and American colleagues to Sadr City, the sprawling slum on the outskirts of the city. We watched hundreds of black-clad religious militiamen, waving their AK 47s in the air and calling for revenge, in what would be the start to a campaign of sectarian killing and torture.

During visits to Baghdad's morgue over the next two days, I saw Sunni families thronging to find

the bodies of loved ones killed by the militias. The morgue's computer registrar told the grim-faced families and me that we would have to be patient; the morgue had taken in more than 1,000 bodies since the Samarra bombing, and was way behind on processing corpses.

Here's the thing, though: According to then-Secretary of Defense Donald Rumsfeld and his top commanders, it never happened. These killings, these dead, did not exist. According to them, reporters like myself were lying.

"The country is not awash in sectarian violence,'' the top U.S. commander in Iraq, Gen. George Casey said, on talk show after talk show, making the rounds to tell the American home-front not to worry. Civil war? "I don't see it happening, certainly anytime in the near term,” he said, as he denied the surge in sectarian violence.

Casey had taken his own drive around Baghdad after the bombing of the Samarra mosque and had seen, not executed bodies in the streets but “a lot of bustle, a lot of economic activity. Store fronts crowded, goods stacked up on the street.”

Donald Rumsfeld held a news conference at the Pentagon to say that U.S. press reports of killings—such as mine that estimated 1,300 dead in the immediate aftermath of the bombing, based on what I had seen at the morgue, interviews with Sunni survivors, U.N. and Iraq health officials—were calculated "exaggerated reporting." Iraqi security forces, he said, “were taking the lead in controlling the situation,” everything he assured his listeners was “calming.”

Here's the thing, though: According to then-Secretary of Defense Donald Rumsfeld and his top commanders, it never happened. These killings, these dead, did not exist.

American journalists in Baghdad were under attack not just from Iraqi insurgents, but, at least verbally, from our own country's civilian and military commanders as well.

Article - Knickmeyer Wikileaks Rumsfeld CaseyGeneral George Casey and former U.S. Sec. of Defense Donald Rumsfeld attend a press briefing at the Pentagon on Oct. 11, 2006. (Photo: Jason Reed / Reuters)

After the mosque bombing, I had the twisting-in-the-wind experience of attending the weekly press briefings at the Green Zone—this war’s four o’ clock follies—and have the military spokesman insist that things were great, implying that the problem wasn’t the executed and mutilated bodies now found in the streets; the problem was people like me.

Thanks to WikiLeaks, though, I now know the extent to which top American leaders lied, knowingly, to the American public, to American troops, and to the world, as the Iraq mission exploded.

The American troops, who were risking their lives on the ground, witnessed and documented it themselves.

Heavily redacted, the log entries offer surreal but chilling glimpses of the chaos that followed the Samarra bombing on Feb. 22. Within hours of the bombing, U.S. troops reported gunmen attacking; open street fighting between Shia and Sunni militias; rocket-propelled grenade attacks on mosques; assassinations and kidnappings.

Later, one U.S. military patrol happens on militia members dumping bodies on the side of the street. The killers speed away, leaving the American soldiers with a grim discovery: “bodies shot in the face…still warm,” according to one log.

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Iraq was not “calming,” as Rumsfeld would have it. Rather, this was sectarian war, and, over the next few months, the Bush administration’s effort to convince the world that everything was hunky-dory in Iraq became less and less sustainable as the slaughter continued. According to the synopsis of the WikiLeaks documents by The New York Times, the death toll in 2006 reached beyond 3,000 one month.

Late last year, I sat in on a seminar at Harvard’s John F. Kennedy School of Government led by a former Bush official in Iraq and heard her say matter-of-factly that more than 1,000 people died in one day in the immediate killing after the Samarra bombing.

But as the WikiLeaks documents show, Casey and Rumsfeld must have known that all along, owing to the accounts from their forces. Despite the statements of the top U.S. commanders at the time, it wasn’t the journalists in Baghdad who were lying.

Ellen Knickmeyer is a former Washington Post bureau chief in Baghdad and Cairo. Before coming to the Post, she was the West Africa bureau chief for The Associated Press. This year, she graduated from Harvard University’s Kennedy School of Government.

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Congressman Considers Move to Impeach Chief Justice John Roberts - John Nichols

Congressman Considers Move to Impeach Chief Justice John Roberts

Oregon Representative Peter DeFazio is an unbought and unbossed member of Congress—a true heir to the best tradition of another Oregon rabble-rouser, former Senator Wayne Morse—so it should come as no surprise that the maverick Democrat is responding with appropriate boldness to the flood of corporate cash that threatens to overwhelm the 2010 mid-term elections.

About the Author

John Nichols
John Nichols, a pioneering political blogger, has written the Beat since 1999. His posts have been circulated...

Also by The Author

Candidates such as Christine O'Donnell and Ron Johnson imagine a very different Constitution than the one the founder's drafted and defined. So it comes as no surprise that the Tea Partisans have a hard time finding their ideas in the document.

George Soros isn't backing candidates or parties this year. He's backing an idea: It's Time to End the Drug War.

No member of the House has been tougher on Wall Street than DeFazio. And Wall Street is pushing back.

A New York hedge-fund manager dumped $300,000 into a shadowy group that has funded a television campaign seeking to defeat the congressman who opposed the 2008 bank bailout and who has been one of the House's most dogged advocates for holding bad banks and sleazy speculators to account.

Thanks to the meddling of the Supreme Court, the hedge fund manager was able to fund an assault on DeFazio without having to reveal his identity at the time the attack ads began airing.

But DeFazio went after the culprit and finally unearthed the identity of his attacker, after a required Federal Election Commission document was filed.

So now we know that DeFazio was targeted for defeat by a wealthy Wall Streeter who didn't want to be held to account—let alone required to pay his fair share of taxes.

DeFazio could get mad at the hedge-fund manager. But dozens of hedge-fund managers, bankers and CEOs are meddling in this year's elections, spending hundreds of millions of dollars to buy the results they want.

So DeFazio is focusing on the real wrongdoer—the jurist who schemed to make it possible for shadowy players to warp the political process without identifying themselves.

Specifically, the congressman says, he is "investigating" the prospect of impeaching Supreme Court Chief Justice John Roberts.

Roberts, an ardent judicial activist, manipulated deliberations in the case of Citizens United v. FEC in order to create an opening for a sweeping 5–4 ruling that effectively eliminated limits on campaign spending by corporations. That decision helped create the current circumstance, where special-interest spending is shouting down the democratic discourse in states across the money.

Never one to back away from a fight, DeFazio is opening a discussion about whether it isn't time to hold Roberts to account.

"I mean, the Supreme Court has done a tremendous disservice to the United States of America," DeFazio told The Huffington Postlast week. "They have done more to undermine our democracy with their Citizens United decision than all of the Republican operatives in the world in this campaign. They've opened the floodgates, and personally, I'm investigating articles of impeachment against Justice Roberts for perjuring during his Senate hearings, where he said he wouldn't be a judicial activist, and he wouldn't overturn precedents."

Supreme Court justices, who after their confirmation by the Senate serve life terms, can be held to account only via the impeachment power, which the founders outlined with specific references to their concern about judicial abuses.

Most of the successful impeachments since the founding of the republic have involved jurists, although Supreme Court justices have rarely been targeted.

Could DeFazio make a case against Roberts? By most reasonable measures, yes. The evidence of manipulation of the Citizens United case is well established—under Roberts's leadership, the High Court went so far as to demand that lawyers resubmit briefs so that they would raise issues that Roberts wanted to address. And plenty of questions have been raised about the Roberts's ties to political and corporate players that are now taking advantage of the Citizens United ruling.

That said, the impeachment process is rarely quick or easy. And it will be even harder to advance if Republicans—the primary beneficiaries of this year's corporate spending—take control of the House.

But the founders did not say that impeachment would be easy.

What they said—and what Peter DeFazio recognizes—was that, sometimes, impeachment is the only remedy left to citizens (and congressmen) who would defend American democracy.

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Arise Awake Stop not till the goal is reached. - Swami Vivekananda Swami ji is my inspiration, not as a monk but as a social reformer and for his universal-ism.