The Armchair Intelligentsia Blog

Why the federal deficit will raise taxes

2009-08-31T07:50:00.000-05:00

By Jeanne Sahadi

A $9 trillion federal deficit over 10 years may be too hard to comprehend. But this part is easy: Such unwieldy amounts of debt could have an impact on Americans' bottom line one way or the other -- if not tomorrow, then the day after.

The U.S. government has been spending a great deal more than it has been taking in, and it is on track to do so well beyond the next 10 years. It has been borrowing money to make all that spending possible and it has to pay the money back with interest. How, you ask? By borrowing more.

The solution is straightforward if unpleasant: Shy of finding a fairy willing to leave trillions under Uncle Sam's pillow, lawmakers will have to raise taxes and cut spending.

The more the country lives on a credit card, the more it makes itself beholden to the demands of its creditors -- many of which are overseas. The danger is that buyers of U.S. debt could become concerned that the country is running too high a balance. If so, they will demand higher interest rates -- thereby making the country's debt problem worse -- or they'll put their money elsewhere.

At that point, things would get ugly.

"Taxes would rise to levels that would make a Scandinavian revolt. And the government would not be able to provide anything but the most basic public services. We would no longer be a great power (or even a mediocre one), and the social safety net would evaporate," tax policy expert and Syracuse University professor Len Burman wrote in a recent op-ed cheerfully titled "Catastrophic Budget Failure."

That's why acting sooner rather than later makes sense. But acting too soon could cause its own set of problems since the economy is only beginning to lick its wounds from a punishing recession.

Economists and tax experts, no matter their ideological position, agree raising taxes when the economy is down is self-defeating.

But as the economy finds a solid footing, the hard choices will have to be made.

more...

How Congress Will Steal the Recovery

2009-07-01T10:45:00.001-05:00

by Janet Novack and Brian Wingfield

The economy got stimulated. That was Act I. in Act II it is going to be smothered.
Tech companies won big when the money was being dished out, with $37 billion of the February stimulus set aside for health information technology, smart electric grid and broadband investments. They'll also be a prime beneficiary if Congress adopts President Barack Obama's bid to make the research and experimentation tax credit permanent at a cost of $74 billion over a decade.
But at the Technology CEO Council, Executive Director Bruce Mehlman says his "number one, two and three" priority these days is to block a Treasury proposal to wring $210 billion more in taxes over the next decade from multinationals' offshore profits. "We found the Obama Administration a great partner on infrastructure and research and we hope the distraction of populist tax policies can be shelved so we can help enable a long-term recovery," says Mehlman, whose members include the honchos of IBM, Intel, Dell, HP and Motorola.
When Washington was putting trillions in bailouts and stimulus on Uncle Sam's credit card, many business leaders applauded (or at least stuck out their hands for the cash). Now, with the economy seemingly back from the brink, the cheering has stopped and the defensive game is on. Someone, after all, must pay for all that emergency deficit spending; for the $46 trillion (net present value) of Medicare and Social Security benefits already promised but not funded under current law; for renewing some of the expiring Bush tax cuts and containing the growth of the dreaded alternative minimum tax. Moreover, someone must pay for the Democrats' expensive shopping list: covering 46 million Americans without health insurance; mandating paid sick leave; moving to a low-carbon economy; and adopting tougher consumer, worker and investor protections.
The stock market, now trading at 134 times trailing earnings, can be justified only with the presumption that profits will snap back to pre-2008 levels as soon as the recession ends. That may be a naive presumption. No sooner will there be a recovery in corporate profits than Congress will find ways to snatch them away.
"Once the economy looks a little better, we move on to higher taxes, more regulations--all the punitive things that had to be put on the shelf as we saved the economy," says longtime Washington analyst Gregory Valliere, now at Soleil Securities. "It's going to be a modest recovery with all sorts of political risk," he adds.
Candidate Obama promised no tax hikes on families earning less than $250,000, so Democrats are coming after upper-income folks and big business first. Assuming an economic recovery, rates for the better off will rise in 2011 as the Bush tax cuts expire. Clint Stretch, managing principal of tax policy at Deloitte Tax, speculates Congress might consider following the lead of states such as California, New York and Maryland and creating an even higher rate that kicks in at $500,000 or $1 million.
The moral justification for such tax grabs is "pay as you go" budgeting--meaning if Congress wants to give a tax break or a new benefit to one group it must raise taxes or cut benefits for another. The nature of politics is such that over time tax raises are more likely than benefit cuts.

more...

Republicans Should Blow Up Party, Not Marriages

2009-07-01T09:44:00.002-05:00

by Amity Shlaes

The Grand Old Party needs a new credo. New credos are best forged in non-election years. So instead of blowing up their marriages, Republicans might try blowing up their party platform.

The single most-profitable franchise for the Republican Party is growth, the kind of growth that sustains the relative competitiveness of the U.S. Instead of being the GOP, the Republicans should become the POG, the Party of Growth.

This growth franchise is Republicans’ for the taking because the Democratic Party leadership is in hot pursuit of other franchises -- the green biz, civil rights and their dearest goal, more government health care.

The growth franchise is also valuable because a lot of people, including many Democrats, recognize that a growth agenda is the only way to preclude a crisis worse than the current one. That crisis is the currency crisis that will occur if the world no longer wants to invest here.

How to make the GOP a POG? Four suggestions:

Stop Moralizing
-- Junk the social conservatism.

Can’t Outgrow Deficit
-- Take budget-balancing seriously.

Bondholder Rights
-- Stand up for property rights.

If all the GOP is doing is looking to start somewhere, it might want to start with thinking about jettisoning the social conservatism from its program. The GOP ails. Long live the POG.

more...

Iranian Opposition Leader Calls New Government 'Illegitimate'

2009-07-01T09:31:00.001-05:00

Associated Press

The semiofficial Fars news agency said Wednesday that the militia — known as supreme leader Ayatollah Ali Khamenei's street enforcers — sent the prosecutor a letter accusing Mousavi of taking part in nine offenses against the state, including "disturbing the nation's security," which carries a maximum penalty of 10 years' imprisonment.

Iran's regime says 17 protesters and eight Basiji were killed in two weeks of unrest that followed the June 12 election. Mousavi insists the vote was tainted by massive fraud and that he — not incumbent President Mahmoud Ahmadinejad — is the rightful winner.

The powerful Guardian Council, Iran's top electoral oversight body, pronounced the election results valid earlier this week — paving the way for Ahmadinejad to be sworn in later this month for a second four-year term.

"Whether he wanted to or not, Mr. Mousavi in many areas supervised or assisted in punishable acts," said the Basij letter, which also accused Mousavi of bringing "pessimism" into the public sphere.

Mousavi has slipped from public view in recent days, and he did not immediately respond to Wednesday's allegations.

In another sign of a tightening government clampdown on anyone challenging Ahmadinejad, a reformist political group said Wednesday that authorities banned a newspaper allied to presidential candidate Mehdi Karroubi after he denounced Iran's government as "illegitimate" because of claims of voting fraud.

more...

Navy Positions Destroyer For Possible Intercept of North Korean Ship Suspected of Proliferating Missiles, Nukes

2009-06-19T16:41:00.000-05:00

FOXNews

The U.S. military is preparing for a possible intercept of a North Korean flagged ship suspected of proliferating weapons material in violation of a U.N. Security Council resolution passed last Friday, FOX News has learned.

The USS John McCain, a Navy destroyer, is positioning itself in case it gets orders to intercept the ship Kang Nam as soon as it leaves the vicinity off the coast of China, according to a senior U.S. defense official. The order to inderdict has not been given yet, but the ship is moving into the area.

"Permission has not been requested. Nor is it clear it will be," a military source told FOX News. "This is a very delicate situation and no one is interested in precipitating a confrontation."

The ship left a port in North Korea Wednesday and appears to be heading toward Singapore, according to a senior U.S. military source. The vessel, which the military has been tracking since its departure, could be carrying weaponry, missile parts or nuclear materials, a violation of U.N. Resolution 1874, which put sanctions in place against Pyongyang.

The USS McCain was involved in an incident with a Chinese sub last Friday - near Subic Bay off the Philippines. The Chinese sub was shadowing the destroyer when it hit the underwater sonar array that the USS McCain was towing behind it.

This is the first suspected "proliferator" that the U.S. and its allies have tracked from North Korea since the United Nations authorized the world's navies to enforce compliance with a variety of U.N. sanctions aimed at punishing North Korea for its recent nuclear test.

The ship is currently along the coast of China and being monitored around-the-clock by air.

more...

Obama's Doctor Knocks ObamaCare

2009-06-19T16:31:00.000-05:00

by David Whelan

Scheiner, 71, was Obama's doctor from 1987 until he entered the White House; he vouched for the then-candidate's "excellent health" in a letter last year. He's still an enthusiastic Obama supporter, but he worries about whether the health care legislation currently making its way through Congress will actually do any good, particularly for doctors like himself who practice general medicine. "I'm not sure he really understands what we face in primary care," Scheiner says.

Scheiner takes a few other shots too. Looking at Obama's team of health advisors, Scheiner doesn't see anyone who's actually in the trenches. "I have a suspicion they pick people from the top echelon of medicine, people who write about it but haven't been struggling in it," he says.

Scheiner is critical of Obama's pick for Health and Human Services secretary--Kansas Gov. Kathleen Sebelius, who used to work as the chief lobbyist for her state's trial lawyers association.

"He doesn't see all the pain, it's so tragic out here," he says. "Obama's wonderful, but on this one I'm not sure if he's getting the right input."

What should the president be focused on? Scheiner thinks that a good health reform would be "Medicare for all," a single-payer system where the government would cover everyone and pay for it by cutting out waste in the system. "A neurosurgeon gets paid $20,000 for cutting into the neck of my patient. Have him get paid $1 million a year instead of $2 million or $3 million. He won't starve," Scheiner says.

more...

'6% see US administration as pro-Israel'

2009-06-19T14:57:00.000-05:00

By GIL HOFFMAN

Only 6 percent of Jewish Israelis consider the views of American President Barack Obama's administration pro-Israel, according to a new Jerusalem Post-sponsored Smith Research poll.

The poll, which has a margin of error of 4.5%, was conducted among a representative sample of 500 Israeli Jewish adults this week, following Prime Minister Binyamin Netanyahu's speech in which he expressed his support for a demilitarized Palestinian state.

Another 50% of those sampled consider the policies of Obama's administration more pro-Palestinian than pro-Israeli, and 36% said the policies were neutral. The remaining 8% did not express an opinion.

The numbers were a stark contrast to the last poll published May 17, on the eve of the meeting between Netanyahu and Obama at the White House. In that poll, 31% labeled the Obama administration pro-Israel, 14% considered it pro-Palestinian and 40% said it was neutral. The other 15% declined to give an opinion.

more...

House passes first approps bill after long day of votes

2009-06-19T14:53:00.000-05:00

By Walter Alarkon

House Appropriations Committee Chairman David Obey (D-Wis.) has laid out a detailed schedule that seeks to get the House to approve the 12 spending bills before the August recess. Senate Democrats have also said they wish to pass the bills on time — before the start of the next fiscal year, Oct. 1 — but the Senate has yet to get its first bill onto the floor. Congress hasn't passed all of the spending measures before the start of the fiscal year since 1994.

Obey had slated the Commerce, Justice and Science measure for House passage Wednesday, but it stalled over a debate over how many amendments Republicans could offer on the floor.

Obey and Democrats limited the amendments to 33, down from the total of 127 initially offered. Republicans had offered more than 100 amendments, most of them aimed at reducing spending. While Republicans protested the lack of open debate, Obey criticized the GOP strategy of trying to throw up procedural obstacles to the Democrats' agenda.

The GOP frustration spilled over into Thursday, as Republicans forced Democrats to take vote after vote on the amendments. Voting started at 10:30 in the morning and continued until 6:30 in the evening.

more...

China Orders Google to Suspend Foreign Site Searches

2009-06-19T10:03:00.000-05:00

by Owen Fletcher

China has ordered Google to suspend its foreign Web site search service after warning that the company's filtering of pornography was too weak, state media said Friday.

Google was also ordered to revamp its service immediately and remove all links to pornographic and "vulgar" material, the official Xinhua news agency said.

The Google function that suggests search keywords as users type stopped working on google.cn during the day on Friday, though it still worked in the country on google.com. Google was also ordered to remove that ability, the report said.

The function was shown to recommend suggestive terms based on mundane inputs during a news program broadcast by state-owned CCTV a day earlier. The station showed Google suggesting "illicit mother-son relations" as a search phrase in Chinese when a user typed in the word "son."

A government-backed Internet watchdog also condemned Google for "disseminating pornography and vulgar information" from abroad on Thursday.

Xinhua did not explain the demand to end search services for foreign Web sites.

A Google spokeswoman confirmed the company had met with Chinese officials Thursday to discuss problems with its China search service.

more...

Poll: Obama down, Cheney up

2009-06-19T09:31:00.001-05:00

by Kathy Kiely

A new NBC/Wall Street Journal poll shows President Obama's favorability ratings still sky-high but slipping slightly, while former vice president Dick Cheney, seen here during at recent appearance at the National Press Club, appears to be improving his image

Of those responding, 60% had a very or somewhat positive view of the president, comparedÂ with 66% in January, when Obama took office. Cheney's numbers moved up from 21% in December to 26% today. As our Gannett Washington Bureau colleague Chuck Raasch recently pointed out, the former veep has been on a full-court public relations press lately defending the foreign policy and national security efforts of his boss, former president George W. Bush.

more...

Iran's supreme leader defends election

2009-06-19T09:29:00.000-05:00

by Badi Badiozamani

Ayatollah Ali Khamenei addressed a crowd at Tehran University in a sermon during Friday prayers.

His speech was greatly anticipated amid massive protests from supporters of opposition leaders such as Mir Hossein Moussavi, who disputed the government's assertion that Ahmadinejad won in a landslide.

While Khamenei called on those who don't believe the results to use proper legal avenues, such as requesting the recounting of ballots in their presence, he did not issue a call for a new vote.

He also criticized the street protests and said those who caused violence during demonstrations would be held accountable.

Khamenei said Ahmadinejad got more than 24 million votes, defeating Moussavi, his main challenger.

"Eleven million votes difference? Sometimes there's a margin of 100,000, 200,000, or 1 million maximum. Then one can doubt maybe there has been some rigging or manipulation or irregularities," Khamenei said.

"But there's a difference of 11 million votes. How can vote rigging happen?" he asked.

He lauded the election as a "political earthquake."

"The 10th presidential election was actually a great show in which people indicated their responsibility towards the destiny of their country. It was a great manifestation of people's participation in the affairs of their country. It depicted very well people's solidarity with their establishment," he said.

Khamenei praised the 85 percent voter turnout of about 40 million people, but said that some critics "wanted to indicate that as a doubtful victory. Some even wanted to show that this is a national defeat.

more...

How to Prepare for the End of Social Security

2009-06-19T09:07:00.001-05:00

by Kimberly Palmer

Indeed, the entire premise of the Social Security system is that Americans will continue to innovate and the economy will grow so that the current generation of workers will be able to fund current retirees' benefits. But because of shifting demographics and the added stress of the recession, when the baby boomers begin to retire in 2016, the benefits being paid out will start to exceed the amount being taken in. After the trust fund is depleted in 2037, beneficiaries will be able to receive only what current workers are paying in, which will be about three quarters of the scheduled benefits, unless changes are made.

"It's very much a Ponzi scheme where the next generation will get stuck holding the bag," says Laurence Kotlikoff, author of The Coming Generational Storm and a longtime advocate of reform. "We have a huge generational imbalance."

The justice of the situation is up for debate. David Walker, former U.S. comptroller general, says that Social Security was never designed to be a quid-pro-quo system. It was designed to provide extra income to lower-income groups at the expense of those with higher incomes, so analyzing the rate of return for current workers doesn't make much sense, he says. "I hear young people saying, 'I'm not getting a good deal.' That's technically right, but it doesn't reflect the nature of what Social Security is," he explains.

Besides, while workers in their 20s and 30s may not get a full return on their payments, they do benefit from older workers' and retirees' innovations, says Bernard Wasow, senior fellow and economist at the Century Foundation. "The premise that there shouldn't be any transfer between generations doesn't make much sense. All the inventions, improvements, and technology that my generation generates will be passed on to my kids," he says. Plus, he adds, retirees often face poverty and need the financial support. "We can't just tell old people they should have saved more and should sleep under bridges," he says.

With people in their 50s and 60s getting ready to retire just as the stock market has taken a big hit, plenty of workers in their 20s and 30s are just as concerned about their parents' financial well-being as their own. "I don't think, 'Grandpa's getting this much and I'm getting this much, and that's not fair,' " says Anya Kamenetz, author of Generation Debt: Why Now Is a Terrible Time to Be Young. "My worry is, how do you get benefits to people who need it? That's the bigger issue. I have parents who are turning 60 soon, and they'll be relying on 401(k)s that aren't as strong, so I want to know the [Social Security] benefits are there."

The baby boom generation "has seen much of its retirement savings wiped out at a point when it's too late for many to recover. So the new context is, the elderly are going to be the fastest-growing poverty group in the United States...so we're going to have to spend a lot of money on the elderly," says Phillip Longman, author of Born to Pay: The New Politics of Aging in America and a senior fellow at the New America Foundation.

more...

The Laffer Curve of the Left

2009-06-17T14:28:00.001-05:00

By Megan McArdle

I'd say we have substantial empirical evidence that we are not going to control the health care cost inflation which is busting Medicare's budget, much less the new costs the administration is planning to add. We have been trying to control health care costs since the 1970s made it clear that Medicare was going to get really, really expensive. And any idea that you care to name, from comparative effectiveness research to healthcare IT to preventive medicine . . . these have all been on the table for more than thirty years, under one name or another. They haven't happened.

The answer that those promising magical cost reductions need to ask is "Why haven't they happened?" and "What has changed to make them feasible now?" But when I ask this question, I get angry demands that I put forward my plan for cost control, rather than merely critiquing everyone else's. This seems rather like demanding that I put forward my design for a perpetual motion machine before I am allowed to point out problems in the US energy market.

To those who say, pretty reasonably, "Why not demonstrate that you can control these costs in Medicare before asking us to believe you can do it with a broader program?" the response is something like a snapped, "But I don't want to just control Medicare costs! I want universal coverage!" Ah. Well, Republicans don't want to maximize tax revenue; they want to cut taxes. This does not make their now-deliberate wishful thinking any prettier. Nor obligate the rest of us to fulfill their desire at the expense of sound budget policy.

Both Medicare cost control and Republican tax cuts are like the Red Queen's strategy in Alice in Wonderland: "Jam yesterday, and jam tomorrow, but never jam today". They promise sweeteners to sell their favored policies, but when the day actually arrives, time and time again we're left holding an empty jar.

more...

For Dems In 2010, Tomorrow May Not Come

2009-06-17T13:27:00.000-05:00

by Amy Walter

As the "cheerleader in chief" for stimulus spending, Biden's been touring local communities to give an "all politics is local" pitch for the benefits of the program. But if voters are looking at high unemployment next year, the promise of a $1.7 million replacement bridge over Conodoguinet Creek in Carlisle, Pa., isn't going to make them feel much better.

It's not just Republicans who are complaining about the stimulus package. The U.S. Conference of Mayors, meeting this weekend in Providence, R.I., complained that cities have been shortchanged when it comes to federal stimulus money.

Some congressional Democrats, especially those facing unpalatable votes on health care reform (i.e. raising taxes), will be tempted to vote against the president to avoid being pulled down in 2010. But with their party in control of Congress and the White House, it's going to be really hard for any Democrat to run as a "lone wolf," especially if that member is a freshman without an established identity back home. This isn't to suggest that Democrats should simply follow Obama lockstep. But as we've seen with Republican moderates the last two cycles, if the brand goes bad, sometimes it doesn't matter how you voted.

For now, Obama still has a reservoir of good will built up with the public, and his high approval numbers may help insulate members of his party.

Ultimately, though, watching Democrats these days reminds me of the kids' board game "Don't Break the Ice." In that game, a plastic polar bear was placed on top of an elevated board made up of individual cubes of "ice." The goal of the game was to knock out as many pieces as possible without sending the polar bear crashing to the ground. Sometimes the polar bear came down after one piece was knocked out; sometimes he could still be standing even as his ice world crumbled all around him.

more...

Congress advances $106 billion war-funding bill

2009-06-17T13:04:00.001-05:00

By Jim Abrams

Senate Majority Leader Harry Reid said Wednesday that this is the last time Congress will go through the ordeal of passing an expensive, unpaid-for war spending bill. It may also be one of the more difficult.

The House, with almost no Republican support, on Tuesday barely approved a $106 billion emergency spending measure that includes $80 billion to sustain military operations in Iraq and Afghanistan through this budget year ending Sept. 30.

Republicans supported the war funds but objected to other parts of the bill, particularly $5 billion to open up a U.S. line of credit for an International Monetary Fund loan program for poorer countries hit by the world recession.

The war spending bill sailed through the Senate on a 86-3 vote last month, but passage of the House-Senate compromise worked out last week will be more of a challenge.

Sen. Judd Gregg, R-N.H. is expected to raise a point of order against a provision inserted in the compromise providing $1 billion for a "cash for clunkers" program that gives consumers government rebates when they trade in old vehicles for more fuel efficient models.

more...

Recession boosts global human trafficking, report says

2009-06-17T12:51:00.001-05:00

By Elise Labott

The global financial crisis has increased the worldwide trade in trafficked persons, says a State Department report released Tuesday.

The State Department's annual Trafficking in Persons Report also says trafficking has increased in Africa and slaps six African nations on a blacklist of countries not meeting the minimum standard of combating trafficking.

The report, mandated by Congress, features data and statistics from 175 countries around the world regarding the amount of human trafficking that goes on within their borders.

The report cites the International Labor Organization, which estimates that at least 12.3 million adults and children are victims of forced labor, bonded labor and sex slavery each year.

"This is modern slavery. A crime that spans the globe, providing ruthless employers with endless supply of people to abuse for financial gain," Secretary of State Hillary Clinton said as she announced the report. "With this report, we hope to shine the light brightly on the scope and scale of modern slavery, so all governments can see where progress has been made and where more is needed."

The report says the global economic crisis is boosting the demand for human trafficking because of a growing demand for cheap goods and services.

"A striking global demand for labor and a growing supply of workers willing to take ever greater risks for economic opportunities seem a recipe for increased forced labor cases of migrant workers and women in prostitution," it says.

more...

U.S. to Extend Its Job Benefits to Gay Partners

2009-06-17T10:51:00.002-05:00

By JEFF ZELENY

President Obama will sign a presidential memorandum on Wednesday to extend benefits to same-sex partners of federal employees, administration officials said Tuesday evening, but he will stop short of pledging full health insurance coverage.

Mr. Obama, in an Oval Office announcement, is expected to offer details about which benefits will be provided. It is the most significant statement he has made on gay issues, and it comes as he faces intense criticism from several gay rights leaders over what they suggest has been a failure to live up to campaign promises in the first months of his presidency.

Mr. Obama will be weighing in for the first time on one of the most delicate social and political issues of the day: whether the government must provide benefits to same-sex partners of federal employees. While he will announce a list of benefits, officials said, they are not expected to include broad health insurance coverage, which could require legislation to achieve.

The initial reaction from some gay rights advocates was mixed.

“Extending benefits to partners of gay federal employees is terrific, but at this point he is under enormous pressure from the gay civil rights community for having promised the moon and done nothing so far,” Richard Socarides, an adviser to the Clinton administration on gay issues, said Tuesday evening. “So more important now is what he says tomorrow about the future for gay people during his presidency.”

more...

Lockheed Martin Sees Sales Of Up To 6,000 Joint Strike Fighters

2009-06-17T10:44:00.000-05:00

WSJ

U.S. defense contractor Lockeed Martin Corp. (LMT) said Wednesday it has received 31 firm orders for its Joint Strike Fighter plane and foresees potential sales coming to 6,000.

"We have 31 production airplanes in backlog - that means in contract," Thomas Burbage, executive vice president of the JSF program, said at the Paris Air Show underway in Le Bourget.

Most of the orders have been placed by the U.S. government, along with two from the U.K., he added,

The JSF, or F-35, is a joint project grouping industries in the U.S., Britain, the Netherlands, Canada, Denmark, Norway, Australia, Turkey and Italy.

The $300 billion program is to replace the fleet of F-16 and F-18 fighter jets now in service in the second half of the next decade.

"Amongst the partnership, we are predicting somewhere around 3,100 airplanes," Burbage said. "Outside of that ... the potential for sales, which is problematical right now to estimate what that is, but it quite likely is somewhere between a thousand and more."

more...

Sweden’s Koenigsegg to buy Saab from GM

2009-06-17T10:36:00.000-05:00

Business Journal

Sweden’s Koenigsegg, the maker of luxury sportscars, has agreed to buy Saab from bankrupt General Motors Corp.

The deal, announced Tuesday, is expected to close by the end of the third quarter of 2009 and includes an expected $600 million funding commitment from the European Investment Bank (EIB) guaranteed by the Swedish government. Additional support is to be provided by GM and Koenigsegg Group AB to fund Saab’s operations and product program investments, according to statements from the companies.

more...

Barack Obama to end carrot-and-stick dance with North Korea

2009-06-17T10:34:00.000-05:00

by Brad Norington

Taking an uncompromising stand, Mr Obama vowed to "pursue denuclearisation on the Korean peninsula vigorously".

The strong language from the White House suggests the US might be willing to use force if necessary against Pyongyang, following concerns over two nuclear tests and a belief the rogue state has enough weapon-active plutonium for up to six atom bombs.

But it remained unclear yesterday if Mr Obama meant he was willing to back his threat with war to stop Pyongyang having any form of nuclear program.

After meeting South Korean President Lee Myung-bak at the White House, Mr Obama said he wanted to end a cycle of allowing North Korea to manufacture crises and then get rewarded to stop developing nuclear weapons.

"This is a pattern they've come to expect," he said. "We are going to break that pattern."

North Korea warned that its military would launch "one hundred or one thousand-fold retaliation" against the US and its allies if provoked or attacked.

Pyongyang accused Mr Obama of being a hypocrite for advocating a nuclear-free world while the US developed new weapons.

Mr Obama said North Korea's track record of threatening other countries and exporting dangerous nuclear technology around the world meant it could not be recognised as a legitimate nuclear power, even for peaceful means.

more...

4 Ways to Ride Oil's Ups and Downs

2009-06-16T11:09:00.001-05:00

By David Fessler

When crude oil prices spiked to $147 a barrel, there was no question that speculation played a significant role in getting it there. But speculation also played a role in getting it to $38 a barrel, too.

In the end, for oil and just about everything else, it all comes down to supply and demand. We’re in a recession, and demand continues to slacken. OPEC’s response has been to cut supply, with the thought that - everything else being equal - prices would eventually stabilize at some level.

But everything else isn’t equal: The Federal government has been dumping cash into the financial system at unprecedented levels. It’s caused the dollar to drop in value with respect to other world currencies and with respect to gold.

Since oil on all the world markets is priced in dollars, its price rises as the value of the dollar declines. It’s one of the reasons many oil-producing countries have suggested that the price of oil be tied to a basket of currencies instead of just to the dollar.

Unfortunately, there aren’t any other currencies that are as abundant or - more importantly - strong enough to handle the sheer volume of the transactions that occur daily in the oil market.

So we have demand and supply destruction in a race downward here in the United States that’s kept oil inventories high - up until a few weeks ago. Add to that steadily rising demand coming from emerging markets around the world. Throw a declining dollar into the mix and stir.

The result is rising oil prices - in all likelihood heading to $80 a barrel or possibly even higher by the end of the year.

more...

Waste Management to Offer New Solar Powered Trash Compactor

2009-06-16T09:47:00.000-05:00

Yahoo Finance

Waste Management (NYSE: WMI - News) today announced that it has entered into an agreement with BigBelly Solar under which Waste Management will provide WM Solar Powered Trash Compactors to its customers including municipalities and high-traffic facilities. Under the agreement, Waste Management has become the exclusive waste and environmental services company distributor of BigBelly solar compactor technology in North America.

The new service offering was officially launched at the U.S. Conference of Mayors in Providence, Rhode Island, with a solar powered compactor present at the conference.

"We know busy intersections, public parks, city streets, sporting events and other public spaces can be magnets for trash," said Dave Aardsma, senior vice president of sales and marketing for Waste Management. "Ordinary trash barrels can easily overflow and become eyesores. The Waste Management solar powered trash compactor can provide a number of solutions in those uses, by reducing waste collection frequency, lowering costs for our customers and ensuring a greener, cleaner environment."

WM Solar Powered Trash Compactors are completely self-powered, using built-in solar panels to compact trash. About the same size as a standard 35-gallon trash barrel, each compactor provides five times the capacity of a traditional trash receptacle. When the unit reaches capacity, sensors trigger an internal compactor that flattens the contents, converting 180 gallons of waste into easy-to-collect bags. A wireless system then signals that the unit is ready to be picked up. This cuts the need for trash pickup by up to 80 percent, which reduces collection costs, fuel use and greenhouse gas emissions. The compactors also include receptacles for collecting plastic bottles, newspapers, glass and other recyclables.

more...

Stimulus Spending: So Effective That It Works Before It Happens

2009-06-15T15:08:00.003-05:00

By Jacob Sullum

One problem with attributing America's slightly less bad economic news to the Obama-backed $787 billion stimulus package is that very little of the money actually has been spent. As of a month ago, less than 6 percent of the stimulus money had gone out, and only 25 percent is expected to make its way into the economy by the end of the year. Assuming the spending is spread evenly over that period, less than 9 percent has been spent so far. That's not even one-tenth of an amount that Treasury Secretary Timothy Geithner suggested would prove inadequate.

In the 13th paragraph (the traditional burial spot for crucial concessions), the Times alluded to the problem of effect preceding cause, allowing that "it is impossible to know how much the apparent, if nascent, stabilization of the American economy comes from the stimulus spending and how much from moves like propping up the banking and credit systems, especially because much of the stimulus money has yet to make it to the economy." I'd say 91 percent is a bit more than "much."

more...

So I guess all those economists claiming at doing nothing would prove more effective than blowing billions on a stimulus were right, in your face Obama.

'#CNNFail': Twitterverse slams network's Iran absence

2009-06-15T14:18:00.000-05:00

by Daniel Terdiman

As the Iranian election aftermath unfolded in Tehran--thousands of demonstrators took to the streets to express their anger at perceived electoral irregularities--an unexpected hashtag began to explode through the Twitterverse: "CNNFail."

Even as Twitter became the best source for rapid-fire news developments from the front lines of the riots in Tehran, a growing number of users of the microblogging service were incredulous at the near total lack of coverage of the story on CNN, a network that cut its teeth with on-the-spot reporting from the Middle East.

For most of Saturday, CNN.com had no stories about the massive protests on behalf of Mir Hossein Mousavi, who was reported by the Iranian government to have lost to the sitting president, Mahmoud Ahmadinejad. The widespread street clashes--nearly unheard of in the tightly controlled Iran--reflected popular belief that the election had been rigged, a sentiment that was even echoed, to some extent, by the U.S. government Saturday.

"The Obama administration is determined to press on with efforts to engage the Iranian government," The New York Times cited senior officials as having said Saturday, "despite misgivings about irregularities in the re-election of President Mahmoud Ahmadinejad."

Yet even as word of the urban strife, seemingly led by those posting to Twitter, spread next around the world on news networks like the BBC, NPR, and the Times, CNN remained mostly mute. Even when the network's Internet site finally posted a story late Saturday, the network's first "story highlight" was, "Ahmadinejad plans rally after winning second presidential term."

Increasingly, Twitter has become the go-to source for breaking news about any kind of notable event, be it an earthquake, terrorist attacks in Mumbai, or post-election riots in Tehran. Yet many Twitter users found CNN's lack of attention to what could end up being one of the biggest stories in years appalling.

"CNN just loops the same stories endlessly, while ignoring the biggest story," posted Twitter user MediaButcher.

"CNN needs to talk about the important things like Ms. California and who Paris Hilton is (sleeping with)," wrote Twitter user ArchivalQuality.

more...

Don't Call What Happened in Iran Last Week an Election

2009-06-15T12:51:00.000-05:00

By Christopher Hitchens

Iran and its citizens are considered by the Shiite theocracy to be the private property of the anointed mullahs. This totalitarian idea was originally based on a piece of religious quackery promulgated by the late Ayatollah Ruhollah Khomeini and known as velayat-e faqui. Under the terms of this edict—which originally placed the clerics in charge of the lives and property of orphans, the indigent, and the insane—the entire population is now declared to be a childlike ward of the black-robed state. Thus any voting exercise is, by definition, over before it has begun, because the all-powerful Islamic Guardian Council determines well in advance who may or may not "run." Any newspaper referring to the subsequent proceedings as an election, sometimes complete with rallies, polls, counts, and all the rest of it, is the cause of helpless laughter among the ayatollahs. ("They fell for it? But it's too easy!") Shame on all those media outlets that have been complicit in this dirty lie all last week. And shame also on our pathetic secretary of state, who said that she hoped that "the genuine will and desire" of the people of Iran would be reflected in the outcome. Surely she knows that any such contingency was deliberately forestalled to begin with.

In theory, the first choice of the ayatollahs might not actually "win," and there could even be divisions among the Islamic Guardian Council as to who constitutes the best nominee. Secondary as that is, it can still lead to rancor. After all, corrupt systems are still subject to fraud. This, like hypocrisy, is the compliment that vice pays to virtue. With near-incredible brutishness and cruelty, then, the guardians moved to cut off cell-phone and text-message networks that might give even an impression of fairness and announced though their storm-troop "revolutionary guards" that only one form of voting had divine sanction. ("The miraculous hand of God," announced Supreme Leader Ali Khamenei, had been present in the polling places and had announced a result before many people had even finished voting. He says that sort of thing all the time.)

The obvious evidence of fixing, fraud, and force to one side, there is another reason to doubt that an illiterate fundamentalist like Mahmoud Ahmadinejad could have increased even a state-sponsored plebiscite-type majority. Everywhere else in the Muslim world, in every election in the last two years, the tendency has been the other way. In Morocco in 2007, the much-ballyhooed Justice and Development Party wound up with 14 percent of the vote. In Malaysia and Indonesia, the predictions of increased market share for the pro-Sharia parties were likewise falsified. In Iraq this last January, the local elections penalized the clerical parties that had been making life a misery in cities like Basra. In neighboring Kuwait last month, the Islamist forces did poorly, and four women—including the striking figure of Rola Dashti, who refuses to wear any headgear—were elected to the 50-member parliament. Most important of all, perhaps, Iranian-sponsored Hezbollah was convincingly and unexpectedly defeated last week in Lebanon after an open and vigorous election, the results of which were not challenged by any party. And, from all I hear, if the Palestinians were to vote again this year—as they were at one point supposed to do—it would be highly improbable that Hamas would emerge the victor.

more...

Health-Care’s Fate May Be Shaped by Party Elders: Albert Hunt

2009-06-15T12:29:00.000-05:00

by Albert R. Hunt

Don’t blink: The fate of the world’s most costly health-care system will be shaped in the next six weeks. A leading indicator will be reactions to a report in a few days by people who have no vote on it.

If a major overhaul of the U.S. health-care system, now President Barack Obama’s top priority, doesn’t clear the House or Senate -- the two bodies are jockeying over who goes first - - by the early August congressional recess, prospects of anything happening are dim.

“The probabilities are not great,” says Donna Shalala, who was secretary of the Department of Health and Human Services during the ill-fated Clinton health-care effort 15 years ago and is now president of the University of Miami. “But they are good.”

On Wednesday, a bipartisan study group headed by former Senate leaders Tom Daschle, a Democrat, and Republicans Bob Dole and Howard Baker will release recommendations. These will displease interest groups on all sides, and may also form a realistic basis for any final compromise.

Barring snags, the committee will call for universal coverage and a radical change in the system of reimbursements, while offering only a minimal, perhaps fallback, plan for a public insurance entity, and spelling out ways to pay for it. These would include taxing employer-provided health benefits that exceed the generous federal health plan. That would raise more than $400 billion over the next decade, or one-third of the cost.

The group will espouse other tax increases, such as those on sugary drinks, and savings of about $350 billion. That would achieve about two-thirds of the cost of the health-care reform. The panel will simply lay out options to consider for the difficult, final $400 billion.

If liberals, unions and industry interest groups pronounce this unacceptable, the prospects for the whole enterprise may blow up. If these groups offer conditional support, it may be a catalyst for the political and policy tradeoffs that will ensue.

more...

“Conservatives” Are Single-Largest Ideological Group

2009-06-15T12:12:00.001-05:00

Gallup

Thus far in 2009, 40% of Americans interviewed in national Gallup Poll surveys describe their political views as conservative, 35% as moderate, and 21% as liberal. This represents a slight increase for conservatism in the U.S. since 2008, returning it to a level last seen in 2004. The 21% calling themselves liberal is in line with findings throughout this decade, but is up from the 1990s.

These annual figures are based on multiple national Gallup surveys conducted each year, in some cases encompassing more than 40,000 interviews. The 2009 data are based on 10 separate surveys conducted from January through May. Thus, the margins of error around each year's figures are quite small, and changes of only two percentage points are statistically significant.

To measure political ideology, Gallup asks Americans to say whether their political views are very conservative, conservative, moderate, liberal, or very liberal. As has been the case each year since 1992, very few Americans define themselves at the extremes of the political spectrum. Just 9% call themselves "very conservative" and 5% "very liberal." The vast majority of self-described liberals and conservatives identify with the unmodified form of their chosen label.

more...

What Hillary Can Teach Sarah Palin

2009-06-15T12:05:00.000-05:00

by Tina Brown

Here’s one thing Sarah could learn from Hillary: Cheerfulness is more impressive than resentment. Is the secretary of State lugging around a Palin-size grudge about having to play a subservient role to the man who humbled her at the polls? Doesn’t Clinton have a better reason to resent Obama than Palin has to bang on about Letterman? I mean, if it weren’t for Barack, Hillary would now be president of the United States. How’s that for “hurtful”? Yet the president and his highest-ranking Cabinet officer seem to be getting along like Nick and Nora Charles. Or that‘s how Hillary’s playing it anyhow.

Here’s something Palin could learn from Letterman: Leave the jokes to the comedians. Does anyone believe that Palin really, truly thought Letterman’s sexual joke was about her 14-year-old daughter, Willow, not her 18-year-old, Bristol—who, after all, actually did get knocked up? My reading is she didn't believe it, but she was happy to have you believe it. Happy to have people—too many of them, unfortunately, who only pay attention with one ear—be her target audience.

The governor of Alaska doesn’t object to every wisecrack that relies for its punchline on a mental picture of a Palin daughter having sexual intercourse with an older man, even when the daughter is the one who’s still a minor. Here’s the statement Palin spokeswoman Meghan Stapleton issued after Dave invited the governor and her husband to come on the air with him: “The Palins have no intention of providing a ratings boost for David Letterman by appearing on his show. Plus, it would be wise to keep Willow away from David Letterman.” Just to ensure that her youngest daughter wouldn't enjoy a weekend without embarrassment, Sarah Palin launched into a fresh tirade to CNN's Wolf Blitzer about Letterman's "crude, sexist, perverted joke about a 14-year-old being 'knocked up' by Alex Rodriguez."

Letterman’s joke may not have been his finest hour, but at least he swiftly apologized. Meanwhile, the nation’s hockey mom scores another goal for intellectual dishonesty.

more...

Global economy to shrink by 3 percent in 2009

2009-06-11T09:36:00.000-05:00

by Lucia Mutikani

The global economy is set to contract by close to three percent this year, worse than the previous estimates for a 1.75 percent decline, World Bank President Robert Zoellick said on Thursday.

In a statement ahead of the Group of Eight finance ministers meeting in Italy at the weekend, Zoellick said poor countries were the hardest hit by the global crisis.

"Although growth is expected to revive during the course of 2010, the pace of the recovery is uncertain and the poor in many developing countries will continue to be buffeted by the aftershocks," Zoellick said ahead of the Group of Eight finance ministers meeting in Italy.

more...

European Voters Know What They Don't Want

2009-06-10T13:58:00.000-05:00

By Henryk M. Broder

How, the media seemed to be asking, could the social democrats have fallen so far?

Maybe like this. Germany, and a large part of Europe, has in recent decades incorporated vast swaths of social democratic values into their societies. The Social Democrats have lost their unique selling point. With the exception of the business-friendly Free Democrats, Germany's parliament is full of politicians who are, in some shade or another, adherents of the social democratic worldview. The Christian Social Union (the Bavarian sister party to Chancellor Angela Merkel's Christian Democratic Union) is to the left of the SPD on some issues. Merkel's CDU is sometimes greener than the Greens and the far-left Left Party continues to cozy up to Germany's mainstream parties.

When almost all the parties on offer are center-left, there is no longer a compelling reason to vote SPD. On the contrary, there is nothing wrong with taking a look at those who offer something a bit different -- not unlike the way loyal Aldi shoppers take an occasional look at what rival supermarket chain Lidl is offering.

The European shift to the right, which is being decried across the continent, isn't one. Rather, it is a signal for a return to reality. The established centrist parties -- in Germany, in the Netherlands, in Sweden, Austria and elsewhere -- are busy with crisis management, with the nationalization of ailing banks and bankrupt companies. They are neither able nor willing to attend to other problems.

They aren't thinking about the consequences of immigration, about the loss of cultural identity that many people with "non-immigrant backgrounds" sense -- people who do not want to be labeled as xenophobes, right-wing extremists or neo-Nazis as a result. This omission benefits so-called "populists" like Geert Wilders, who are not afraid to tackle politically incorrect issues and provide answers to questions that nobody else wants to pose.

In this regard, "xenophobia" is a term which should be used only where it is really appropriate. For example, when the residents of the eastern German state of Mecklenburg-Western Pomerania campaign against Poles who invest in the economically weak state, open businesses, create jobs and pay taxes. Or when foreigners get chased through the eastern German town of Guben and no locals come to their rescue

more...

The language of empire

2009-06-10T13:07:00.000-05:00

By Ali Wyne

With the June 10 addition of "noob" (a pejorative description of a newcomer to a particular task or group) to its lexicon, English will boast one million words - twice as many as Cantonese, four times as many as Spanish, and 10 times as many as French. Half the world's people are projected to be speaking English by 2015. And so long as English is on track to become the world's unofficial language, the United States will likely be center stage.

The stats say it all. In mid-2007, the International Herald Tribune stated that "English is spoken in some form by three times as many nonnative speakers as native speakers." English is a first language for 400 million people, and a fluent second for between 300 and 500 million more, the IHT wrote. Add on top of that the 750 million who have studied English as a foreign language and you have well over 1 billion members of the English-speaking world. Every globally influential newspaper is either written in English or has an English-language version. The same is nearly true for science, where more than 90 percent of the world's major journals are printed in English. With all this at stake, it's no surprise that the global market for English-as-a-second-language training products and services is worth $50 billion (that's more than Lithuania's 2008 GDP).

Why the English explosion? It's all about upward mobility. In China, America's putative superpower replacement, learning English is considered a gateway to middle-class security; 300 million people speak it there, and another 350 million people speak it in India. According to a recent report by the Chicago Council on Global Affairs, between 96 and 100 percent of people in China, Indonesia, Japan, South Korea, and Vietnam believe children should learn English. Their goal is reflected in the more than 90 percent of Japanese elementary schools that offer English programs. Children in China start learning the language in third grade and more than 50,000 English-training centers there offer further instruction. Chris Gibson, the British Council's director for South India, aims to have every South Indian speaking it by 2010, at which point he believes that English will be a codified world language (Penguin Books' operations in India, meanwhile, are salivating at what they see as the world's fastest-growing English-language market).

more...

Obama invokes Jesus more than Bush

2009-06-10T12:09:00.001-05:00

By Eamon Javers

Obama’s invocation of the Christian Messiah is more overt than Americans heard in the public rhetoric of Bush in his time in the White House — even though Bush’s victories were powered in part by evangelical voters.

“I don’t recall a single example of Bush as president ever saying, ‘Jesus’ or ‘Christ,’” said Tony Perkins, president of the conservative Christian group Family Research Council. “This is different.”

To Perkins, Obama’s overtly Christian rhetoric is a welcome development from an administration that he largely disagrees with on the issues, though Perkins sees a political motive behind it, as well.

“I applaud that. It gives people a sense of comfort,” Perkins said. “But I think it’s a veneer, a facade that covers over a lot of policies that are anti-Christian.” That includes, in his view, Obama’s stance in favor of abortion rights.

The Rev. Barry Lynn, the executive director of the group Americans United for Separation of Church and State, doesn’t like the trend with Obama: “I don’t need to hear politicians tell me how religious they are,” Lynn said. “Obama in a very overt way does what Bush tended to do in a more covert way.”

Obama’s public embrace of his Christianity so far has not included choosing a church in the capital. Since taking office, he has attended Sunday services in Washington just once, on Easter Sunday. The White House said at the time the family was still looking for a spiritual home. White House officials say the president also has attended church services at Camp David, but could not say how many times.

more...

Do Republicans Need Their Own Bill Clinton?

2009-06-10T11:18:00.000-05:00

by Derek Thompson

The trouble with buiding a "co-opter" for the GOP is that, although some right wingers are convinced that Republicans suffer from a lack of principles, the truth is that the party today suffers in fact from a diversity of principles, and it only gets worse as the party gets smaller. For the last 20 years, Republicans strength has often come from the simplicity of their message: Always Lower Taxes; Always Stronger Defense; Always Family Values. Today's GOP is a victim of that success precisely because that simple all-inclusive message is seen as insulated and calcified.

The key to building a RepubliClinton is knowing where to stick to that message and where to deviate. We can imagine how a 2012 election could look a bit like the 1992 election, when growing concerns about the deficit led to a tax increase that damaged George H. W. Bush's credibility. From today's vantage point, it seems pretty clear that deficits and taxes will be a major issue in 2012 -- an opening, perhaps, for fiscal conservatives. But like Clinton, they will also have to accept certain political realities. Health care will almost certainly pass in some form this year. Can a viable candidate be seen as standing athwart health reform yelling stop in 2012? I doubt it. On education, I could see a conservative embracing student loan reform and a national test standard, while holding firm to district innovation and school choice.

more...

In Albany, it's coup, chaos and now, coalition?

2009-06-10T11:06:00.001-05:00

Newday

New York sure is amazing. It's a place where, within several weeks, State Sen. Pedro Espada Jr. (D-Bronx) can rocket from a position of censure - as a serial campaign-rules scofflaw and the target of a fraud investigation - to standing a heartbeat away from becoming governor.

It's a place where billionaire businessman Tom Golisano, having lost three legitimate elections for governor, can interfere with the State Senate to pursue his agenda instead. His backing - assuming this week's new leadership deal holds - turned the Senate into a different, unfamiliar animal overnight.

And it's a place where Senate Republicans, led by Sen. Dean Skelos (R- Rockville Centre), can grab power under the cloak of reform, which didn't much interest them in recent regimes when they held the majority. And in doing so, they can ally themselves with the likes of Espada and Sen. Hiram Monserrate (D- Jackson Heights), who faces domestic violence charges this month for slashing his girlfriend's face.

At the moment, New York is a place where hypocrisy thrives.

This page said in January that if Senate leaders gave in to demands by rogue Democrats selling their votes for power and money, the rogues would rule the Senate indefinitely. We were right - and if he's not careful, Skelos will be judged by the company he keeps.

more...

Chrysler and Fiat make it official

2009-06-10T11:00:00.000-05:00

By David Goldman

Chrysler and Italian automaker Fiat on Wednesday officially signed a strategic alliance brokered by the U.S. government, one day after the Supreme Court cleared the path for the deal.

Fiat will initially take a 20% stake in the company, which can go up to 35% if it reaches certain fuel-efficiency goals.

...

The deal formed a new company, called Chrysler Group LLC, after the former Chrysler LLC sold nearly all of its assets to the new firm.

Chrysler Group is mostly owned by the United Auto Workers union (a 55% stake) and issued minority stakes to governments: 8% for the United States and 2% for Canada. Fiat will not be allowed to take a majority stake until the new Chrysler pays back the $15.5 billion lent to it from the Treasury Department.

Chrysler's new board will consist of three Fiat directors, four representing the U.S. government, one from the UAW and one from the Canadian government. The company said it expects to name former Borden Chemical and Duracell chief executive as its chairman.

more...

Rogue MPs face being thrown out of Commons under new reform proposals

2009-06-10T10:57:00.001-05:00

By Philip Webster

The last time a person was expelled from the House was 55 years ago and MPs can still keep their seats even if they are sentenced for up to a year in prison, Mr Brown said.

He has asked all parties to agree to proposals under which MPs could be “recalled” by their constituency parties and asked to face an immediate by-election or stand down.

The misbehaviour would be identified by the new independent regulator of standards, which is to be included in an emergency Bill to be brought before the Commons shortly. That, and a new statutory code of conduct for MPs, will be rushed through Parliament in autumn, before the end of this session.

The power of recall is used in the United States but there had been no suggestion that Mr Brown was to table it so soon. During lengthy exchanges today, the Prime Minister ruled out an early referendum on electoral reform, although he hinted strongly that he may propose a change - possibly to the Alternative Vote system - in Labour’s election manifesto.

Today’s statement was an attempt by Mr Brown to reassert his political authority. In a wide-ranging Commons speech on future constitutional reform, he said that changes to the electoral system could only be made if there was a “broad consensus in the country” and also said consideration would be given to lowering the voting age.

The Justice Secretary Jack Straw was considering whether the scope of the Freedom of Information Act should be extended to further bodies which spend public money, Mr Brown told MPs.

more...

Accused Cuban spy couple ordered held in jail

2009-06-10T10:51:00.000-05:00

by Tabassum Zakaria

A former U.S. State Department official and his wife, accused of spying for the Cuban government for nearly 30 years, were ordered Wednesday to be kept in jail until their trial.

U.S. Magistrate Judge John Facciola agreed with a Justice Department prosecutor that Walter Kendall Myers, 72, and his wife Gwendolyn Myers, 71, should remain in jail.

Prosecutor Michael Harvey said that if freed, the couple posed a flight risk and could go to Cuba or the Cuban interest section in Washington, D.C., and that the U.S. government would have no authority to retrieve them.

more...

The next great crisis: America's debt

2009-06-09T12:12:00.000-05:00

By Shawn Tully

Normally Paul Krugman, the liberal pundit and Nobel laureate in economics, and Paul Ryan, a conservative Republican congressman from Wisconsin, share little in common except their first names and a scorching passion for views they champion from opposite political poles. So when the two combatants agree on a fundamental threat to the U.S. economy, Americans should heed this alarm as the real thing. What's worrying both Krugman and Ryan is the rapid increase in the federal debt - not so much the stimulus-driven rise to mountainous levels in the next few years, but the huge structural deficits that, under all projections, keep building the burden far into the future to unsustainable, ruinous heights. "The long-term outlook remains worrying," warned Krugman in his New York Times column. Krugman strongly supports President Obama's spending plans but bemoans the shortfall in taxes to pay for them.

Ryan flays the administration for piling new spending on top of already enormous deficits. "This isn't a temporary stimulus but a ramp-up in debt followed by a greater explosion in spending and debt," he told Fortune, predicting a day when America's creditors will start viewing the U.S. Treasury as a risky bet. "The bond markets will come after us with a vengeance. We're playing with fire." Krugman favors far higher taxes, while Ryan wants to curb spending, but for now what's so big and so dangerous that it distresses such diverse types as Krugman and Ryan - and should scare all Americans - is the Great Debt Threat.

The bill is far too big for only the rich to pick up. There aren't enough of them. America will have to lean on citizens far below the $250,000 income threshold: nurses, electricians, secretaries, and factory workers. Within a decade the average household that pays income tax will owe the equivalent of $155,000 in federal debt, about $90,000 more than last year. What the Obama administration isn't telling Americans is that the only practical solution is a giant tax increase aimed squarely at the middle class. The alternative, big cuts in spending, aren't part of the President's agenda. To keep the debt from wrecking the economy, the U.S. would need to raise annual federal income taxes an average of $11,000 in 2019 for all families that pay them, an increase of about 55%. "The revenues needed are far too big to raise from high earners," says Alan Auerbach, an economist at the University of California at Berkeley. "The government will have to go where the money is, to the middle class." The most likely levy: a European-style value-added tax (VAT) that would substantially raise the price of everything from autos to restaurant meals.

more...

Why Would Lebanon's Christians Side With Iran?

2009-06-09T11:45:00.001-05:00

By Brian Palmer

In Sunday's elections in Lebanon, the local Christian population split its vote between the pro-Western government and an opposition party backed by Syria and Iran. Why would so many Lebanese Christians reject the U.S.-backed politicians?

They're more afraid of Saudi Arabia than they are of Iran. The influence of foreign governments is unusually strong in Lebanese politics, and the governing and opposition coalitions each have their own network of backers. Although those in power today are often identified as "pro-Western," Saudi Arabia wields just as much influence within the governing March 14 coalition, as do the United States and France. Many Christians prefer these benefactors to Syria, Iran, and Qatar—the major supporters of the opposition. But others fear the potential Islamization of Lebanon by the Saudis.

Sectarianism has been enshrined in the Lebanese political system since its independence. In 1932, the French colonial government conducted a census, determining that Maronite Christians represented a slight majority in Lebanon. When the country won its independence in 1943, parliamentary seats were allocated based on the 1932 census figures: six Christian representatives for every five Muslim representatives. The 1989 Taif Agreement, which ended the Lebanese Civil War, adjusted the balance to 50-50. The highest offices are also distributed among Christians, Sunnis, and Shiites. (This confessional system makes it virtually impossible for any nonsectarian political movement, such as the Lebanese Communist Party, to gain significant power.)

more...

Kim's No 1 son confirms succession of little brother Kim Jong Un

2009-06-09T11:41:00.001-05:00

By Richard Lloyd Parry

The oldest son of Kim Jong Il, North Korea’s supreme leader, has given the first confirmation that his youngest brother is to inherit power in the isolated dictatorship, even as its Government is threatening pre-emptive nuclear attack against any infringements of its “dignity and sovereignty”.

Months of rumours and speculation were confirmed today when Kim Jong Nam, the first son of the country’s “Dear Leader”, told Japanese television that his half-brother, Kim Jong Un, 26, had been designated heir apparent.

“I hear the news by media. I think it’s true,” Mr Kim told the Japanese television station TV Asahi in an interview recorded in the Chinese enclave of Macau, where he is a regular visitor. “[it] is my father’s decision, so once he decides we have to support . . .

“I hope he can do his best for North Korean people for their happiness and better life.”

Mr Kim added: “I cannot tell what kind of person is my brother. Just I can say it’s my brother. My father loves very much my brother as his son.”

He denied rumours circulating among Asian diplomats that people close to him in North Korea have been purged, and said that he had no personal interest in power. “Sorry, I’m not interested in politics,” he said.

more...

Gunship backing for Taliban fight

2009-06-09T11:37:00.001-05:00

BBC News

Helicopter gunships have been sent to a district in north-western Pakistan to support hundreds of tribesmen fighting the Taliban, officials say.

Tribesman in Upper Dir blame the Taliban for a bomb attack on a mosque that killed 35 people on Friday.

Officials say they have been joined in their fight by residents from two villages and a town.

There are now about 2,000 of them fighting 200 surrounded Taliban militants, officials say.

Upper Dir district police chief Ejaz Ahmad said that militants including foreign fighters were putting up tough resistance in the villages of Shatkas and Ghazi Gai.

But he said that the tribesmen were foiling the fighters' attempts to flee.

Senior police officer Rahim Gul told Reuters news agency that two helicopters had attacked the militants.

"There must be militant casualties but we don't know at the moment," Mr Gul said.

He said more people were joining the tribesmen, who were making advances after heavy clashes. Paramilitary soldiers had set up mortars on high ground above the village.

The army says that it did not come to aid the tribesmen earlier because they were engaged in close-quarter fighting with the Taliban and the military was worried it might hit them by mistake.

more...

Tiller's Kansas Abortion Clinic Will Not Reopen

2009-06-09T11:10:00.001-05:00

By Peter Slevin and William Branigin

The Kansas abortion clinic run by slain doctor George R. Tiller will not reopen, lawyers for the Tiller family announced Tuesday morning.

For decades, the clinic located near a Wichita highway was a haven for women seeking late-term abortions and a target for abortion foes, who vilified clinic staff and patients. As recently as last month, vandals attacked the building.

But, with Tiller dead at the hand of a gunman who confronted him in a church lobby, the family decided the facility's doors will not reopen to patients and the sign will come down.

"Effective immediately, Women's Health Care Services, Inc., will be permanently closed," lawyers Dan Monnat and Lee Thompson announced in a statement e-mailed to reporters.

"Notice is being given today to all concerned that the Tiller family is ceasing operation of the clinic and any involvement by family members in any other similar clinic," the statement continued.
....
Tiller, 67, was shot and killed as he handed out bulletins at his Lutheran church on May 31. Scott P. Roeder, a longtime activist who has said he believes the killing of an abortion doctor is justifiable homicide, is awaiting trial for murder.

The shutting of Tiller's clinic reduces by one the handful of places in the United States where women could receive a late-term abortion. Lawyers for the family promised that patient files will be protected, but they offered no word about the future of the clinic's patients, or where they would be sent.

In a jailhouse interview with CNN in Wichita, Roeder expressed satisfaction Tuesday upon hearing that the Tiller clinic has been closed.

"Good, good," CNN reporter Ted Rowlands quoted Roeder as saying when informed that the clinic would not be reopening.

more...

High court puts Chrysler sale on hold

2009-06-09T10:39:00.001-05:00

By Chris Isidore

The Supreme Court threw a wrench into the plans to have a quick bankruptcy process at Chrysler LLC, delaying the company's combination with Italian automaker Fiat.

The bankruptcy judge overseeing the Chrysler case had given approval for the company's most valuable assets, such as plants, dealerships and contracts, to become part of a new company in which Fiat would hold a significant stake.

Supreme Court Justice Ruth Bader Ginsburg, in an order issued late Monday, granted a request for a delay of that approval sought by Indiana state pension funds, which had argued that they and other lenders deserved better treatment by the bankruptcy court.

No reason for the delay was given in the order, and there were no details about how quickly the issue could be resolved by the nation's highest court.

The Treasury Department said in a statement that "we understand this to be an administrative extension designed to allow sufficient time for the Court to make a determination on the merits of the request for a stay."

Chrysler said it had no comment about the Supreme Court's ruling.

Thomas Goldstein, a partner at law firm Akin, Gump, Strauss, Hauer & Feld and the founder of Scotusblog.com, which tracks Supreme Court cases, said Ginsburg's decision gives the court more time to consider arguments being made by the two sides. Without the order, a lower-court stay would have expired at 4 p.m. Monday.

more...

10 big banks get OK to repay $68B in bailout money

2009-06-09T10:24:00.001-05:00

By Daniel Wagner and Martin Crutsinger

The Treasury Department has approved plans by 10 of the nation's largest banks to repay $68 billion in government bailout money.

The department on Tuesday said the banks, which were not named, will be allowed to repay the money they received from the $700 billion Troubled Asset Relief Program created by Congress last October at the height of the financial crisis.

The banks have been eager to get out of the program to escape government restrictions such as caps on executive compensation.

Among the banks that last month passed government "stress tests" and confirmed that they received permission to repay the bailout funds were JPMorgan Chase & Co., American Express Co., U.S. Bancorp, Capital One Financial Corp., Bank of New York Mellon Corp. and BB&T Corp.

Morgan Stanley did not pass the government test, but on Tuesday said it had raised enough capital quickly and was approved to repay its TARP money.

Northern Trust Corp. was not among the 19 banks subjected to stress tests, but the company said it also had received permission to repay the bailout funds.

Experts say allowing 10 banks to return $68 billion in bailout money illustrates some stability has returned to the system but caution that the crisis isn't over. Some worry the repayments could widen the gap between healthy and weak banks.

More than 600 banks nationwide have received nearly $200 billion in TARP money, and 22 smaller banks already have repaid it.

more...

Benefit spending soars to new high

2009-06-05T14:51:00.000-05:00

By Dennis Cauchon

The recession is driving the safety net of government benefits to a historic high, as one of every six dollars of Americans' income is now coming in the form of a federal or state check or voucher.
Benefits, such as Social Security, food stamps, unemployment insurance and health care, accounted for 16.2% of personal income in the first quarter of 2009, the Bureau of Economic Analysis reports. That's the highest percentage since the government began compiling records in 1929.

In all, government spending on benefits will top $2 trillion in 2009 — an average of $17,000 provided to each U.S. household, federal data show. Benefits rose at a 19% annual rate in the first quarter compared to the last three months of 2008.

The recession caused about half of the increase, according to the report. Unemployment insurance nearly tripled in the past year. The other half is the result of policies enacted during President George W. Bush's first term.

more...

There’s No Doubt Now

2009-06-05T14:38:00.001-05:00

By James C. Capretta

On Tuesday, President Obama sent a letter to Senators Kennedy and Baucus outlining what kind of bill he wants and will support. And what he wants is a government takeover of American health-care, plain and simple.

Sure, the letter’s only three pages long (that constitutes a “plan” in this administration). But it was probably written to give the senators some political cover for the more controversial provisions they plan to pass, and thus it contains just enough coded language to confirm that all involved are planning to hand full control over American health-care to the federal government.

For starters, President Obama unequivocally endorses the creation of a new government-run insurance option for working age Americans and their families. For weeks, Senator Baucus has hinted that, well, maybe such an option isn’t necessary. That led many on the left to put pressure back on Democrats in Congress to deliver what they had promised — or else. With the president’s re-endorsement of the idea (he supported it during his campaign), it is now inconceivable that the Democrats won’t include a heavily price-controlled government-run plan in the bill they try to pass.

The Obama letter also endorses a so-called “individual mandate” — a requirement that everyone enroll in some kind of insurance or pay a penalty. During the 2008 campaign, then-Senator Obama made a big deal of opposing this idea — which was the centerpiece of Senator Hillary Clinton’s reform agenda. Now, however, he has flip-flopped — as Politico reported — and endorsed it, so long as “hardship” cases are exempt.

The individual mandate has long been accepted orthodoxy among most Congressional Democrats. For them, the real goal is to be able to say they passed “universal coverage,” and the only way they can say that they did is if they make those who would opt out enroll in something anyway.

more...

White House Set to Appoint a Pay Czar

2009-06-05T14:36:00.000-05:00

By DEBORAH SOLOMON

The Obama administration plans to appoint a "Special Master for Compensation" to ensure that companies receiving federal bailout funds are abiding by executive-pay guidelines, according to people familiar with the matter.

The administration is expected to name Kenneth Feinberg, who oversaw the federal government's compensation fund for victims of the Sept. 11, 2001, terrorist attacks, to act as a pay czar for the Treasury Department, these people said.

Mr. Feinberg's appointment could be announced as early as next week, when the administration is expected to release executive-compensation guidelines for firms receiving aid from the $700 billion Troubled Asset Relief Program. Those companies, which include banks, insurers and auto makers, are subject to a host of compensation restrictions imposed by the Bush and Obama administrations and by Congress.

Wall Street has been anxiously awaiting more details on how the rules will be applied. "The law is confusing and a bit ambiguous, and so we're looking for certainty as to how to structure pay incentives," said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a trade association.

The move comes amid a series of sometimes-overlapping efforts to curb pay at financial firms following perceived industry excesses that led to the lending boom and bust.

more...

‘Legacy of Debt’ Gives Fiscal Stimulus Bad Name

2009-06-05T12:21:00.001-05:00

by Caroline Baum

By the time the U.S. government unveiled its Public Private Investment Partnership in March, the toxic loans and securities clogging bank balance sheets had become “legacy assets.”

What if deficit hawks took the same tack and marketed the $787 billion fiscal stimulus as “legacy debt?”

“The $787 billion the U.S. Treasury will be borrowing or confiscating from you via taxation will saddle future generations with a legacy of debt,” the press release might read. “Your children and grandchildren can look forward to higher taxes, a lower standard of living and minimal government support in their old age.”

Maybe the public would balk. And maybe some member of Congress would be bold enough to sponsor a measure to call off the still-uncommitted expenditures.

After all, the economy appears to be recovering without fiscal stimulus. The rate of decline in real gross domestic product has slowed from an average 6 percent in the fourth quarter of last year and first quarter of 2009. Real GDP is expected to fall 1.9 percent in the current quarter, according to the median forecast of 61 economists in a Bloomberg News survey from early May. Less negative is the first step toward positive.

And that’s before any real money gets spent. So far $36.7 billion has been distributed via various government agencies, according to Recovery.gov, the Web site that tracks where your tax dollars are going. That’s 7.4 percent of the $499 billion of outlays ($288 billion of the $787 billion is “tax relief”) and 29 percent of the funds that have been committed to a purpose or a project.

more...

The Roots Of Liberalism

2009-06-05T11:20:00.001-05:00

By Peter Robinson

"The 20th century was really the liberal century," says Kesler, a professor of government at Claremont McKenna College, and the editor of the Claremont Review of Books. "Conservatives came on the scene very late--remember, there was no organized conservative movement until William F. Buckley Jr. in the '50s--but the liberal effort to expand the state dates back 100 years. What Barack Obama is trying to do is complete an old project."

Liberalism, Kesler argues, established itself in three distinct stages. The first wave, which Kesler calls "political liberalism," rolled in just after the turn of the last century.

The liberals in this first wave, also known as progressives, "regarded the Constitution and the old forms of American politics as outmoded," Kesler says. Whereas the old order valued "tranquility," a word that appears in the preamble to the Constitution, progressives valued movement, dynamism, change. They wanted "to take the American people in hand, showing them the New Jerusalem."

President Woodrow Wilson, a leading progressive, spoke often of his "vision," introducing a term that has now become central to our understanding of presidential politics. Wilson believed, as Kesler puts it, "that to become a leader you have to have a vision of the future and communicate that vision to the unanointed, mass public. You have to make them believe in your prophetic ability."

The second wave of liberalism, which Kesler calls "economic liberalism," crashed over the country during the Great Depression, informing Franklin Roosevelt's New Deal.

Economic liberals quickly came to consider the original Bill of Rights insufficient. Americans, they believed, needed a second set of rights--economic rights. "A right to a job, a right to health care, a right to a home, a right to an education. All these things," says Kesler, "became as fundamental to liberals as the rights to 'life, liberty and the pursuit of happiness' that we find in the Declaration of Independence."

Kesler calls the third wave of liberalism "cultural liberalism." It roared in during the '60s, right along with the birth control pill, psychedelic drugs, no-fault divorce, free love and hippie festivals like Woodstock. Liberals, Kesler argues, now came to believe that "the purpose of government is to take charge of your necessities so you can live in a new kind of freedom, the freedom of liberation, which is really freedom from responsibilities."

They also came to believe in identity politics.

"Women's liberation," Kesler explains, "could not be the liberation of individual women alone. It had to be the liberation of the sisterhood. Individual homosexuals could not be fully liberated. They needed the support of their peers. So what began as individual kinds of liberation became group forms of liberation."

Which brings us back to Obama's agenda.

In his eagerness to expand the role of the federal government in the economy--the commandeering of the Detroit automakers, the plans to rush through national health care legislation and the whole list of outrages with which I began this column--Obama is simply elaborating an "economic liberalism" that dates back some eight decades.

In his nomination of Sonia Sotomayor to the Supreme Court, a step calculated to appeal to Hispanics and women, the chief executive is merely playing upon the identity politics of a "cultural liberalism" that has been with us for almost half a century.

And in presenting himself as a transcendent, almost messianic figure--in championing "Change We Can Believe In"--Obama is displaying the style of leadership advocated by "political liberals" such as Woodrow Wilson, a man born four years before the Civil War.

"Conservatives," says Kesler, "made the mistake of assuming that the victory Reagan won was a permanent victory. But the liberal victories of the past century changed American politics deeply."

What, then, are conservatives to do?

"Conservatives today," says Kesler, "need to go back to the deeper sources of the American political tradition, rediscovering the founders, and Lincoln, who was always looking back at the principles of the Declaration of Independence and the Constitution. Conservatives need to go back to the order that liberalism was invented to replace."

Liberals have Woodrow Wilson, the welfare state and the hippie movement. Conservatives have the Declaration of Independence, the Constitution and Abraham Lincoln.

This is a fight from which conservatives need not shrink.

more...

Rise in global corruption fears

2009-06-03T10:41:00.001-05:00

BBC News

The impact of the financial crisis has increased people's fears of corruption among private companies, a global survey has said.

Transparency International said 53% of 73,000 respondents from 69 countries now saw the private sector as being corrupt, up from 45% in 2004.

The report also found that a majority of people believed private firms paid sweeteners to influence public policy.

However, respondents said political parties were the most corrupt bodies.

more...

Israel 141st out of 144 in Global Peace Index

2009-06-03T10:16:00.001-05:00

By JPOST.COM

A Global Peace Index (GPI) published Tuesday by the Australia-based Institute for Economics and Peace places Israel in the 141st spot, safer only than Somalia, Afghanistan and Iraq which is the most dangerous country on the planet, according to the report.
...
The index found that in general, the world has become less safe in the last year. The rise of food prices and the global economic crisis are cited as significant agents of instability.

The price of conflicts around the world stands at approximately $7.2 trillion per year, according to the report.

The GPI found New Zealand to be the safest country in the world. Last year, Iceland was in top spot, but it dropped after its economic collapse late last year. Denmark, Norway, Iceland, Austria and Sweden follow in the top places. The United States climbed six places and is now ranked 83rd, despite involvement in two concurrent wars abroad. Syria is ranked 92nd, seven spots higher than Iran.

more...

On the tracks of 'Kim's successor'

2009-06-03T09:59:00.000-05:00

BBC News

So little is known about Kim Jong-un - the youngest son and reportedly the named successor of North Korean leader Kim Jong-il - that even his date of birth is uncertain: no-one is really sure whether he was born in 1983 or 1984.

But it is known that the third Kim, like his two elder brothers, was sent to school in Switzerland. The BBC's Imogen Foulkes reports on the young Kim's school days, and the unusually close relationship between Switzerland and North Korea.

more...

Is the Abortion Debate Changing?

2009-05-30T11:09:00.000-05:00

By David Harsanyi

After a life of being pro-choice, I began to seriously ponder the question. I oppose the death penalty because of the slim chance innocent people will be executed and because I don't believe the state should have the authority to take a citizen's life. So don't I owe a nascent human life at least the same deference? Just in case?

Now, you may not consider a fetus a "human life" in early pregnancy, though it has its own DNA and medical science continues to find ways to keep the fetus viable outside the womb earlier and earlier. It's difficult to understand how those who harp on the importance of "science" in public policy can draw an arbitrary timeline in the pregnancy, defining when human life is worth saving and when it can be terminated.

The more I thought about it the creepier the issue got. Newsweek, for instance, recently reported that 90 percent of women whose fetuses test positive for Down syndrome choose to abort. Another survey showed that only a small percentage of mothers even use the test. So what happens when 90 percent of parents test their fetuses? Does it mean the end of the disorder, or are we stepping perilously close to eugenics?

What about future DNA tests that can detect any defects in a fetus? What happens when we can use abortion to weed out the blind, the mentally ill, the ugly, or any other "undesirable" human beings?

Recently, Sweden's National Board of Health and Welfare ruled that women are permitted to abort their children based on the sex of the fetuses. In the United States, a woman can have an abortion for nearly any reason she chooses. In fact, a health exemption for the mother allows abortions to be performed virtually on demand.

If you oppose selective abortions but not abortion overall, I wonder why? How is terminating the fetus because it's the wrong sex any worse than terminating the fetus for convenience's sake? The fate of the fetus does not change; only the reasoning for its extinction does.

Now, I happen to believe (as civil libertarian and pro-life activist Nat Hentoff once noted) that the right to life and liberty is the foundation of a moral society. Then again, I also believe a government ban on abortion would only criminalize the procedure and do little to mitigate the number of abortions.

more...

The Straw Men of Social Security

2009-05-30T10:46:00.000-05:00

By Andrew Biggs

Social Security is the largest single spending program of the federal budget. Its costs relative to its tax base will rise by 26 percent over the next two decades and it is badly in need of reform.

This week the Trustees of the Social Security program released their annual report. The recession has taken a toll on the program’s finances: the system will run deficits beginning in 2016 rather than 2017 and the program’s trust fund will run out in 2037 rather than 2041. (I’d guestimated something close to this in an earlier blog post.) Due to the recession and to faster-than-expected increases in life expectancies, the long-term 75-year deficit increased by 18 percent, from 1.7 percent of payroll to 2.0 percent of payroll. This implies that if the 12.4 percent payroll tax were immediately and permanently increased by 2.0 percentage points (or benefits were cut across the board by 13 percent), the system would remain solvent through 75 years. In the 76th year, however, it would once again become insolvent. This means that workers who paid a full career of tax increases would not receive their promised benefits. To make the system sustainably solvent would require an immediate increase in the payroll tax of 3.4 percentage points, to 15.6 percent of wages.

more...

What is Driving Rising Healthcare Costs?

2009-05-30T10:27:00.002-05:00

By Dustin Chambers

The United States relies on a third-party payment system whereby individuals and employers purchase insurance that allows patients to receive healthcare services that are in turn paid for by insurance providers. For the elderly and disabled, the government assumes the role of the insurer, using funds from payroll taxes (rather than insurance premiums) from current workers to pay medical providers for care provided to those currently enrolled in Medicare, Medicaid, and other public healthcare programs.

The current system overextends and perverts the use of insurance. The purpose of insurance, whether public or private, is to spread catastrophic risks over a large pool of individuals. Automobile insurance provides a great illustration of this. When was the last time you submitted a claim to your auto insurer asking to be reimbursed for an oil change or a tire rotation? Never. But that begs the question, why do you have auto insurance? For most of us, the answer is to cover the cost of a new car if we total our current one or to cover the expense (both property and medical) of the other party if we are involved in a multivehicle crash.

For the sake of argument, let’s assume that auto insurance did pay for routine maintenance. How would this affect your behavior? Most consumers are very price conscious and will only take their cars to repair shops they believe to be honest, and they are quick to question recommended repairs. If, on the other hand, auto insurance began to pay maintenance bills, I suspect that most drivers would select the most convenient shop, and would cease to be concerned with the price or the necessity of recommended repairs, because after all, it is being billed to the insurance company. We would end up with drivers unwilling to do any due diligence regarding the price or efficacy of auto repairs, and thus as a nation we would grossly overspend on them. With time, auto insurers would significantly increase premiums to cover these high repair costs, and would likely seek to screen out the owners of older cars that are more likely to need significant repairs. Soon, poorer Americans who simply want basic liabilitycoverage would find it difficult to afford the premiums and would become uninsured drivers.

Health insurance should not cover basic or routine medical services, but instead should cover major illnesses, surgeries, etc. Moreover, the government should require that healthcare providers charge all patients the same fees for out-of-pocket medical procedures (insurance companies and the government should be free to negotiate discounted prices for the services for which they directly pay, but these preferred rates would not apply to the services paid out-of-pocket by their members). This would bring normal, competitive market forces to bear on the provision of routine medical services. Insurance would then provide (as it is properly intended) coverage against significant and expensive maladies. This helps the poor in two ways. First, routine services would be much cheaper, and so the poor and uninsured would be able to afford (out-of-pocket) basic services. Second, the price of catastrophic medical insurance would be within reach of many more Americans. While high-deductible insurance plans already exist (in which the insured pays the first $1,500 to $2,000 in medical expenses and the insurer pays everything above this amount), what is really needed is for Medicare and Medicaid along with most employer-provided plans to adopt this high-deductible model. Although the current system epitomizes the overuse or misuse of insurance, the Obama plan fails to recognize this, and instead seeks to expand the size and scope of this distorted system.

more...

What Norm Coleman & Al Franken Have Taught America

2009-05-29T11:43:00.000-05:00

By Nick Gillespie

It has nothing to do with the intricacies of the recount mechanism (we learned that during the 2000 presidential election), or the great goddamn glory of the American system by which power is transferred peacefully from one party to another (thanks, John Adams, because otherwise you pretty much sucked as president, though you really did make 1776 a toe-tapping musical), or even that a dicey showbiz background full of more bombs than an Afghan playground can be overcome if you're good enough, smart enough, and dog-gone it, if people like you enough (a long line of rehashed celebs from George Murphy to Ronald Reagan to Fred "Gopher" Grandy had already poured that knowledge into us like a pina colada mixed on the Love Boat's lido deck).

No, the lesson is simply this: We've gotten by fine these past few months with just one senator from Minnesota. So fine, in fact, that in this century of constant cost-cutting and rising unemployment, the federal government should do its share by immediately downsizing the World's Greatest Deliberative Body by 50 percent.

Think about it, is any near-bankrupt work unit in America this side of a shovel-ready stimulus project more clogged with redundant and/or phantom employees? Does Massachusetts really need John Kerry and Ted Kennedy? Does Arkansas really need Blanche Lincoln and somebody whose last name is Pryor? I'm betting dollars to donuts that Idaho can get by with either Mike Crapo or Jim Risch. If Idahoans are like regular Americans, then more of them know that Jar Jar Binks was senator from the Chomell Sector than have any idea of who these guys are.

Even in the 11 states where the senatorial team is split between Coms and Yangs Republicans and Democrats, you'd need an electron microscope to fully grok the value of paying a salary to, say, both George Voinovich and Sherrod Brown. Put plainly, the U.S. Senate is carrying more dead weight than an Uruguayan rubgy squad.

Cutting the Senate workforce in half will immediately save $8.7 million per year in direct salary costs, plus millions more in pension plans, entourage costs, inevitable sexual-harassment lawsuits, and skyrocketing bean soup expenditures. If the folks who believe that government spending has a multiplier effect can be trusted (and they can't), then cutting government spending at the highest level should send more fiscally responsible ripples through the system than slapping Sen. Robert Byrd's stomach while he's playing Hooverball.

more...

Iran reformist candidate wants end of US sanctions

2009-05-29T11:41:00.000-05:00

By NASSER KARIMI

The leading reformist challenger to Mahmoud Ahmadinejad in the Iranian presidential race said Friday his country's ties with the U.S. could improve if Washington were to halt economic sanctions against Iran.

A suspension of the U.S. sanctions imposed since 1995 would be a "positive sign" and inspire optimism, Mir Hossein Mousavi said at a press conference in Tehran.

Mousavi has campaigned for the June 12 vote on the promise of a change in Iran's foreign policy under hardline Ahmadinejad, who he says only isolated Iran further from the international community.

Mousavi's remarks came as the candidates in the Iranian election are staking out their positions on the Obama administration's offer of a dialogue with Iran.

Ahmadinejad made a bold gesture on Monday, proposing a face-to-face debate with Obama at the United Nations if he is re-elected next month. But he balanced the proposal with a sharp rebuke to Washington, saying Iran would never abandon its advances in uranium enrichment in exchange for offers of easing sanctions or other economic incentives.

Conservative candidate Mohsen Rezaei this week offered a step-by-step approach to end the diplomatic estrangement with Washington that has been in effect since shortly after the 1979 Islamic Revolution.

A former head of Iran's powerful Revolutionary Guard, Rezaei said he was open to talks with the West on Iran's nuclear program — the only candidate to do so. However, Rezaei is not considered a serious contender, although he could draw votes from Ahmadinejad in the conservative camp and thus aid the reformists.

more...

Climate change causes 315,000 deaths a year-report

2009-05-29T11:19:00.001-05:00

By Megan Rowling

Climate change kills about 315,000 people a year through hunger, sickness and weather disasters, and the annual death toll is expected to rise to half a million by 2030, a report said on Friday.

The study, commissioned by the Geneva-based Global Humanitarian Forum (GHF), estimates that climate change seriously affects 325 million people every year, a number that will more than double in 20 years to 10 percent of the world's population (now about 6.7 billion).

Economic losses due to global warming amount to over $125 billion annually -- more than the flow of aid from rich to poor nations -- and are expected to rise to $340 billion each year by 2030, according to the report.

"Climate change is the greatest emerging humanitarian challenge of our time, causing suffering to hundreds of millions of people worldwide," Kofi Annan, former U.N. secretary-general and GHF president, said in a statement.

"The first hit and worst affected are the world's poorest groups, and yet they have done least to cause the problem."

more...

Group Tallies Families' 'Hidden Health Tax'

2009-05-29T11:04:00.000-05:00

By PATRICK YOEST

The average family with health insurance in 2008 paid a "hidden health tax" of $1,017 to cover the health-care costs of the uninsured, according to a report released Thursday by advocacy group Families USA.

The report by the group, which promotes universal health insurance, found that a total of $42.7 billion in care for those without insurance was passed on to health insurers. The insurers, in turn, passed on the costs through higher premiums, the report said.

The report comes as Congress debates proposals to provide health-insurance coverage to all Americans -- a key part of President Barack Obama's legislative agenda. The report uses data primarily from consulting firm Milliman Inc.

When those without insurance sought care, often in emergency rooms, government and charities picked up more than a quarter of the $116 billion tab last year, the report said. More than a third was paid for by those seeking the care, and the rest was passed on to health insurers and eventually to insured people through higher costs, it said.

"There is something clearly that affects the pocketbook as a result of the hidden health tax," said Ron Pollack, executive director of Families USA. "I think the key to it is having a system that will make health more affordable."

more...

North Korea Test-Fires Short-Range Missile

2009-05-29T10:17:00.000-05:00

By Blaine Harden

South Korea is preparing for possible missile or artillery strikes near the disputed western sea border, the Seoul-based daily Chosun Ilbo reported Thursday. The North said this week it would no longer respect that border, which has been the site of two naval skirmishes in the past decade.

The latest missile firing comes after the joint command for South Korean and U.S. forces on the Korean Peninsula raised its alert Thursday to the second-highest level, "Watch Condition II" in response to the extraordinary week of truculence from North Korea. With 655,000 troops from the South and 28,500 troops from the United States, the joint command last raised its alert to this level in 2006, after North Korea's first nuclear test.

Secretary of Defense Robert M. Gates said Friday in Guam that he saw no troop movements in North Korea that would cause a need for more U.S. troops in South Korea. "I am not aware of any military moves in the North that are out of the ordinary, at least," Gates told reporters while traveling to a regional security meeting in Singapore. "I don't think there is a need for us to reinforce our military presence in the South."

However, South Korean Defense Ministry spokesman Won Tae-jae said, "Surveillance over the North will be stepped up, with more aircraft and personnel mobilized."

At the United Nations, the Security Council's five major powers, along with Japan and South Korea, began negotiations Thursday on a draft resolution that would condemn North Korea's latest underground nuclear test as "a flagrant violation" of U.N. resolutions prohibiting the communist state from developing nuclear weapons.

more...

Judge OKs request for secret Burris tapes

2009-05-27T07:30:00.000-05:00

CNN.com

A federal judge on Tuesday approved sending to the U.S. Senate Ethics Committee recordings of secretly taped conversations between Sen. Roland Burris and former Illinois Gov. Rod Blagojevich's brother, which took place before the Burris appointment.

The conversations, in which Burris offers to cut a check to the governor's campaign, were taped in November, about a month before the governor appointed Burris to fill the Senate seat vacated by President Obama.

However, Burris' attorney Timothy Wright told CNN that his client eventually decided against writing the check, thinking it would be a bad idea.

The tapes were requested by the Ethics Committee as part of an investigation into Burris' appointment and seating.

During the November 18 conversation, Burris tells Robert Blagojevich, "I know I could give him a check," then says he may make the contribution under Wright's name (his attorney) " because Tim's not looking for an appointment." Burris promises he'll write the check by December 15.

Throughout the talk, Burris presses Blagojevich to tell him how he can help with the campaign without looking like he bought the appointment.

If convicted, Blagojevich would face up to 20 years in prison for each of the 15 most serious charges in the indictment, and five years on a single charge of making false statements.

more...

Army chief: U.S. ready to be in Iraq 10 years

2009-05-27T05:49:00.000-05:00

AP

The Pentagon is prepared to leave fighting forces in Iraq for as long as a decade despite an agreement between the United States and Iraq that would bring all American troops home by 2012, the top U.S. Army officer said Tuesday.

Gen. George Casey, the Army chief of staff, said the world remains dangerous and unpredictable, and the Pentagon must plan for extended U.S. combat and stability operations in two wars. "Global trends are pushing in the wrong direction," Casey said. "They fundamentally will change how the Army works."

He spoke at an invitation-only briefing to a dozen journalists and policy analysts from Washington-based think-tanks. He said his planning envisions combat troops in Iraq and Afghanistan for a decade as part of a sustained U.S. commitment to fighting extremism and terrorism in the Middle East.

more...

Is Obama Another Jimmy Carter?

2009-05-26T15:03:00.001-05:00

By Bahukutumbi Raman

The defiant action of North Korea in testing a long-range missile with military applications last month, and its latest act of defiance in reportedly carrying out an underground nuclear test on May 25, can be attributed--at least partly, if not fully--to its conviction that it will have nothing to fear from the Obama administration for its acts of defiance. It is true that even when George Bush was the president, North Korea had carried out its first underground nuclear test in October 2006. The supposedly strong policy of the Bush administration did not deter it from carrying out its first test.

After Obama assumed office in January, whatever hesitation that existed in North Korea's policy-making circles regarding the likely response of U.S. administration has disappeared, and its leadership now feels it can defy the U.S. and the international community with impunity.

A series of actions taken by the Obama administration have created an impression in Iran, the "Af-Pak" region, China and North Korea that Obama does not have the political will to retaliate decisively to acts that are detrimental to U.S. interests, and to international peace and security.

Among such actions, one could cite: the soft policy toward Iran: the reluctance to articulate strongly U.S. determination to support the security interests of Israel; the ambivalent attitude toward Pakistan despite its continued support to anti-India terrorist groups and its ineffective action against the sanctuaries of Al-Qaida and the Taliban in Pakistani territory; its silence on the question of the violation of the human rights of the Burmese people and the continued illegal detention of Aung San Suu Kyi by the military regime in Myanmar; and its silence on the Tibetan issue.

Its over-keenness to court Beijing's support in dealing with the economic crisis, and its anxiety to ensure the continued flow of Chinese money into U.S. Treasury bonds, have also added to the soft image of the U.S.

more...

Who Controls the Internet?

2009-05-26T14:59:00.001-05:00

by Ariel Rabkin

In order to please our European allies and our Third World critics, the Obama administration may be tempted to surrender one particular manifestation of American "dominance": central management of key aspects of the Internet by the U.S. Department of Commerce. Other countries are pushing for more control. Early this year, British cabinet member Andy Burnham told the Daily Telegraph that he was "planning to negotiate with Barack Obama's incoming American administration to draw up new international rules for English language websites." It would be a mistake for the administration to go along. America's special role in managing the Internet is good for America and good for the world.

Internet domain names (such as www.google.com) are managed hierarchically. At the top of the hierarchy is an entity called IANA, the Internet Assigned Numbers Authority, operated on behalf of the Commerce Department. The U.S. government therefore has the ultimate authority to review or revoke any decision, or even to transfer control of IANA to a different operator.

Until now, the management of the Domain Name System has been largely apolitical, and most of the disputes that have arisen have been of interest only to insiders and the technology industry. IANA has concerned itself with fairly narrow questions like "Should we allow names ending in .info?" Commercial questions about ownership of names, like other property disputes, are settled in national courts. Political questions like "Who is the rightful government of Pakistan, and therefore the rightful owner of the .pk domain?" are settled by the U.S. Department
of State.

There are persistent proposals to break the connection between IANA and the U.S. government. In these schemes, IANA would be directed by some international body, such as the United Nations or the International Telecommunication Union, which coordinates international phone networks. It is unclear what problem such proposals attempt to solve. There have been no serious complaints about American stewardship of the Internet, no actual abuses perpetrated by American overseers. But were we to abdicate this stewardship, a number of difficulties could arise.

Domain names sometimes present political questions. Which side in a civil war should control Pakistan's Internet domain? Should Israel's .il be suspended as punishment for its being an "Apartheid state"? What about Taiwan's .tw if China announces an attempt to "reabsorb its wayward province"?

more...

North Korea's nuclear test - Here we go again

2009-05-26T13:39:00.001-05:00

Economist.com

THE news that North Korea has conducted a second nuclear test, three years after its first, caused international consternation on Monday May 25th. America’s president, Barack Obama, issued a statement of concern, although he also noted that it was not too surprising to hear that North Korea is trying to whip up a commotion. On the same day the North Koreans launched a short-range missile. The events on Monday followed previous efforts that seemed designed to get the attention of America’s new-ish president, such as the launch in April of a rocket carrying a satellite.

The immediate international reaction has been relatively robust. The United Nations Security Council is due to discuss North Korea’s latest behaviour on Monday. Japan's government is calling for strong measures. The European Union’s foreign-policy chief, Javier Solana, wants a “firm” response. South Koreans, already mourning the death a former president at the weekend, had been expecting a launch: seismologists in South Korea had spotted evidence on Monday that a small explosion had taken place, apparently under a mountain in the north-east of North Korea. The South has anyway abandoned a “sunshine” policy to the North, in which diplomatic, social and economic engagement was encouraged. The current president of South Korea, Lee Myung-bak, says that even humanitarian assistance will be withheld until outsiders verify that North Korea has given up its (small) nuclear stockpile and long-range missiles. How China and Russia respond will determine how forceful a Security Council resolution might be.

more...

How Sex Sells the Loss of Freedom

2009-05-26T12:24:00.001-05:00

by Shannon Love

[Leftists] have defined "personal" to mean only those decisions that touch upon sex. Anything that doesn't touch on sex is not personal and is therefore a matter subject to state control. With this definition they can claim to protect personal freedoms while locking down every other freedom. More and more people have to go hat-in-hand to politicians just get the basic necessities.

As you go through your day-to-day life, watch all the decisions that you make that influence your total quality of life. Each time you make such a decision, ask yourself if a leftist would let you make that decision if they had the power to stop you. Would they let you have your house, your job, your car, your food, your random stuff? Would they let you run your own business? Would they protect your right to free speech if they disagreed with you? Would they let you educate your children as you see fit? Would they let you have input on your minor children's reproductive choices?

Finally, Ask yourself how many of those decisions would you trade for your sex life?

The Left has learned the first truth of marketing: Sex sells. In their case, it sells the incremental loss of real freedom.

more...

New Dem Health Care Pitch: "We'll Deny Treatment!"

2009-05-26T11:52:00.002-05:00

By Micky Kaus

Put it this way: I'm for universal health care in large part precisely because I think the government will be less tough-minded and cost-conscious when it comes to the inevitable rationing of care than for-profit insurance companies will be. Take Arnold Kling's example of a young patient with cancer, where "the best hope is a treatment that costs $100,000 and offers a chance of success of 1 in 200." No "rational bureaucracy" would spend $20 million to save a life, Kling argues. I doubt any private insurance company is going to write a policy that spends $20 million to save a life. But I think the government--faced with demands from patient groups and disease lobbies and treatment providers and Oprah and run, ultimately, by politicians as terrified of being held responsible for denying treatment as they are quick to pander to the public's sentimental bias toward life--is less likely to be "rational" than the private sector.

That is to say, the government's more likely to pay for the treatment (assuming a doctor recommends it). So it's government for me.

Now, I understand that President Obama has chosen to sell his health care plan in the current budget as a way to control costs. How else to even colorably bill it as a policy response to the immediate economic crisis? That it won't control costs seemed, initially, to be merely disingenuous--and what's a little deception if that's what it takes to get a good universal health care law passed? But on second thought, Obama's strategy isn't just disingenuous. In the not-so-long run it's ineffective, a political loser.

more...

No, You May Not Put My Taxes Toward Your Floating Duck House

2009-05-26T11:13:00.001-05:00

By Anne Applebaum

Drip, drip, drip: The never-ending stream of revelations was compared by one British Member of Parliament to "torture"—water-boarding?—and rightly so. One day, it emerges that a senior Member of Parliament has charged British taxpayers more than 2,000 pounds for the cleaning of the moat on his 13th-century estate. A few days later, another MP is revealed to have charged 1,645 pounds for a floating duck house. On almost every day over the past two weeks, in fact, the British press has published accounts of the ginger cookies, the stainless-steel dog bowls, the swimming pool heaters, the spousal iPhones, and the 119-pound trouser press that British legislators charged to the government.

Which isn't bad compared with the MP who claimed interest payments on a mortgage he had already repaid or those who kept swapping properties in order to avoid taxes. Outrage is genuine. The Daily Telegraph—the newspaper that obtained the expense receipts (and isn't saying how; most assume the newspaper bought them)—is calling for early elections. So is just about everybody else—except, naturally, the ruling Labor Party.

There is a degree of unfairness about this scandal: With the exception of a handful of real cheaters and tax dodgers, most of the MPs were operating within a legal system; according to parliamentary rules, they were allowed to claim for the expenses of maintaining a second home, either in London or in their constituency. But only a degree. After all, the reimbursement system was set up and run by the MPs themselves, under the aegis of soon-to-be-retired yet apparently unrepentant Michael Martin, the first speaker of the House of Commons to be forced out of office since 1695.

more...

Big Crowd for Moderate Reflects Serious Challenge to Iran’s Leader

2009-05-26T06:40:00.000-05:00

By NAZILA FATHI

The crowd for the challenger, Mir Hussein Moussavi, was extraordinary not only for its size — an estimated 30,000 — but also because the supporters were not paid, given free food, bused in or ordered by their workplaces to attend, a tactic sometimes used by Mr. Ahmadinejad’s campaign.

Many traveled here in private cars and learned about the rally despite new government restrictions on Facebook, the social networking site, which Mr. Moussavi’s campaign had been using to spread word of his candidacy among the country’s predominantly young electorate. The supporters gave a rousing welcome to Mr. Moussavi, who was born in Khameneh, a small town in the Azerbaijan area of Iran.

“Azerbaijan is my home; Moussavi is my life!” they chanted to him in their native dialect, Turkish Azeri.

Mr. Moussavi’s appearance here was the first stop of a two-day tour of northwestern Iran, part of his effort to attract the votes of 15 million Turkish speakers around the country, nearly one-third of eligible voters, before the June 12 vote.

“People of Tabriz and Azerbaijan have changed the fate of this country several times,” Mr. Moussavi said, referring to several historic revolts against the central government in the region.

“They have always resisted dictatorship.”

Mr. Moussavi, a former prime minister whose moderate views have won him support from other reformers in Iran including former President Mohammad Khatami, has positioned himself as the strongest challenger to Mr. Ahmadinejad, a religious conservative whose backing by the Islamic authorities here has weakened and who is now widely criticized for Iran’s economic malaise.

more...

Somalia facing 'foreign invasion'

2009-05-26T06:38:00.000-05:00

Al Jazeera

Somalia's president has condemned the presence of foreign fighters in his country and called for help to tackle armed opposition groups seeking to topple his government.

"Somalia is being invaded by foreign fighters, whose main purpose is to turn the country into an Afghanistan or an Iraq," Sharif Ahmed said on Monday.

His comments came a day after after the al-Shabab group claimed responsibility for a deadly suicide attack in the Somali capital.

Authorities suspect the bomber, a teenage boy, was one of hundreds foreigners, from countries including Pakistan, Yemen and the United States, that the UN believes have joined Somali groups.

"We urge Somalis to defend against those groups that include foreigners, and we ask the international community to back us," Ahmed said at a news conference at his Villa Somalia residence.

Al-Shabab, in alliance with the Hizbul Islam group, has vowed to overthrow Ahmed, accusing him of being a traitor after he signed a peace deal with the interim government last year.

Ahmed was previously a leader of the Islamic Courts Union, which effectively controlled much of southern and central Somalia in late 2006, and counted al-Shabab and other groups fighting the government as its allies.

more...

France opens UAE military base

2009-05-26T06:37:00.000-05:00

Al Jazeera

France has opened its first military base in the Gulf Arab region, with French officials saying the facility will strengthen efforts to battle piracy and defend trade.

Nicolas Sarkozy, the French president, inaugurated the base, dubbed Peace Camp, in the United Arab Emirates on Tuesday.

Located in Abu Dhabi, the facility will host up to 500 troops stationed at three sites: a navy and logistical base, an air base housing three fighter planes and a training camp.

Speaking at a maritime security conference, Sheikh Khalifa bin Zayed al-Nahayan, the UAE's president, called the deal "an important pillar of our foreign policy because it helps the stability in the Gulf region".

The base sits on the banks of the Strait of Hormuz, through which 40 per cent of the world's crude oil is transported.

Bernard Kouchner, the French foreign minister, said that the naval base in Abu Dhabi was aimed at supporting and training France's allies in the region.

"Some 90 per cent of European trade traffic is by sea and we have to defend traffic and trade and we are interested in the Gulf and want to bring about the necessary balance in this region," he said.

more...

Uncle Jay Explains: May 25, 2009

2009-05-26T06:29:00.000-05:00

Washington Post and RNC Pave The Road to Socialism

2009-05-26T06:23:00.000-05:00

by Conor Clarke

It's mildly frustrating that when the Washington Post has a chance to interview Tim Geithner, the Secretary of the United States Treasury, the first question they ask about the administration's policies is: "How is this not socialism?" But it is surely just one big, festering national embarrassment that that the Republican Party actually considered a resolution to rename the Democratic Party the "Democrat Socialist Party" and passed a resolution urging the Democrats to "stop pushing our country towards socialism and governmental control."

The problem with the socialism tactic -- and it is quite obviously just a desperate tactic -- is that it relies not on any strange new insight into the administration, but instead rests entirely on a strange new definition of the word socialism. It's a tactic that proceeds by misinformation, and can end only with a confused public or a new definition of the word in question.

And since the public has been warming up to the word ever since the McCain campaign called Barack Obama a socialist for supporting the progressive income tax, I assume we are on the road to a new definition. Which is fine, really, since it's possible to imagine a world in which "socialism" refers to method for making ice cream or healing puppies. The word still wouldn't give any additional insight into Barack Obama, or Republicans any edge in the next election.

more...

Bear Stearns to Algebra I Means Lost Dollars in Trickle-Down

2009-05-22T16:11:00.001-05:00

By Peter Robison

Cavonberry’s, Yang’s 46th Street shop near the headquarters of the New York firm taken over by JPMorgan Chase & Co., once bustled with finance workers jostling to buy a barbeque chicken chopped salad and bottled water for $12. “They used to be turning them away at the door,” Irace said.

Last week, slow enough that one cashier instead of the usual two operated the register at midday, Yang tallied up the ripple effect of the financial slump that cost Bear Stearns its independence: He negotiated a $4,000 monthly decrease in rent with Sierra Realty Corp., to $17,000, and is spending 35 percent less a week with Fischer Foods of New York Inc. for such things as artichokes and ham.

“Since January, everything’s dead,” said Yang, 52.

The biggest Wall Street crisis since the Great Depression isn’t just a setback for New York or bankers. The finance industry’s contraction may wipe out $185 billion in wages and profits, or $600 for every man, woman and child in the U.S., according to Thomas Philippon, a finance professor at New York University’s Stern School of Business. The trail of reduced income affects car mechanics, waiters, sports teams, hair stylists, jewelers, housecleaners and watch repair shops.

“We’re seeing lots of lives derailed,” said Simon Johnson, professor of entrepreneurship at the Massachusetts Institute of Technology.

Irace, who worked at Bear Stearns for 19 years and is now a teacher in Uniondale, New York, is one of 255,441 people who’ve lost U.S. finance jobs since January 2008, according to data compiled by Bloomberg. Thousands more have seen cutbacks in pay.

In New York City alone, bonuses fell to $18.4 billion last year from $32.9 billion in 2007, the largest absolute drop ever, according to the state comptroller’s office.

The consumer discretionary and industrial sectors -- dependent on people who buy refrigerators, restaurant meals or cars -- are the only areas that have shrunk more than finance, with 383,340 and 270,278 job losses, according to the data. For each finance post eliminated, 3.3 in other industries will vanish, the comptroller’s office estimated.

“The higher your income, the more in services you consume,” said Ariell Reshef, an economics professor at the University of Virginia in Charlottesville. “You don’t iron your own shirt.”

more...

For GOP, A Southern Exposure

2009-05-22T15:42:00.000-05:00

By Ronald Brownstein

Founded in the decade before the Civil War as the Northern voice of union, the Republican Party today is more electorally dependent on the South than at any point in its past.

In the House and Senate, nearly half of all Republicans were elected from that region, defined as the 11 states of the Confederacy, plus Kentucky and Oklahoma. In each chamber, Southerners are a larger share of the Republican caucus than ever before. Similarly, beginning with the 1992 presidential election, the South has provided at least 59 percent of the Electoral College votes won by the GOP nominee, including by George W. Bush in his 2000 and 2004 victories. That percentage is nearly double the South's share of all Electoral College votes and by far the most that GOP presidential nominees have relied on the region over any sustained period.

Republican strength in the South has both compensated for and masked the extent of the GOP's decline elsewhere. By several key measures, the party is now weaker outside the South than at any time since the Depression; in some ways, it is weaker than ever before.

Today the GOP holds a smaller share of non-Southern seats in the House and Senate than at any other point in its history except the apex of President Franklin D. Roosevelt's popularity during the early days of the New Deal.

more...

The Backdoor Bailout for Banks and the FDIC

2009-05-22T13:16:00.000-05:00

by Daniel Indiviglio

Originally, a 20 basis point per insured dollar assessment fee was proposed. For some banks, that amounts to a lot of money. Bank of America, one of the most troubled out there, has something like $880 billion in deposits. Not all those deposits are insured, but even if only $500 billion are, then that assessment amounts to $1 billion -- not chump change for an institution already struggling to stay afloat.

But fear not, this is the United States. So like every other financial problem, it can be solved with borrowing. The FDIC's borrowing authority was $30 billion -- until Wednesday of this week. That's when President Obama signed the "Helping Families Save Their Homes Act," which included a provision permanently raising that borrowing authority to $100 billion, and temporarily to $500 billion. That money comes from the Treasury, who also doesn't have that kind of cash lying around, but can also just borrow it from others. Like China.

The expanded borrow authority for the FDIC means the assessment finalized today will be much smaller, probably between 6 and 10 basis points. This does present some good news for banks. And by "good news," I mean "backdoor bailout."

A bank's depository base exists, at least in part, because of the insurance the FDIC provides. After all, who in their right mind would still have accounts with banks like Citigroup or Bank of America if their deposits were not FDIC insured? Insurance should not come for free, which is why banks pay a fee for those deposits to be insured.

But that fee was not enough, so the FDIC is borrowing money to cover what it should have been charging banks for depository insurance. The bailout here is that 10 to 14 basis points that banks will not have to pay on that special assessment, or the proper amount that should have been required to legitimately insure their deposits in the first place.

Like some of the other bailouts, this one probably falls into the "better than the alternative" category. The last thing the U.S. needs is a run on banks because the FDIC is insolvent. The bailout still deserves attention, however, because it would not have been necessary if the FDIC had properly priced the insurance it provides to banks.

more...

Just 24% Favor Federal Bailout for California

2009-05-22T11:24:00.001-05:00

Rasmussen Reports

“Twenty-four percent (24%) of voters nationwide favor federal bailout funds for states like California that are encountering ’serious financial problems.’ The latest Rasmussen Reports national telephone survey found that 59% are opposed to such bailouts.”

So better than 2-1 against. But wait, there’s more: “Voters from outside the Golden State oppose federal loan guarantees by a 69% to 20% margin.” But there’s also this: “Voters have consistently opposed federal bailout funds for the auto industry, the banking industry and insurance companies. Looking back on the bailouts that were provided, most continue to believe they were a bad idea.”

So why did we get them anyway? An answer: “As on many issues, the difference in opinion between the Political Class and the rest of the nation is larger than the gap between the political parties.”

more...

U.S. Markets Wrap: Stocks, Dollar, Treasuries Fall; Gold Rises

2009-05-22T11:19:00.000-05:00

By Eric Martin and Margot Habiby

Stocks and Treasuries fell, and the dollar dropped to a four-month low on speculation the U.S. government’s creditworthiness is deteriorating.

U.S. stocks declined for a third day, extending a global slump, after jobless claims topped economists’ forecasts and Standard & Poor’s said the U.K. may lose its AAA credit rating. Treasury Secretary Timothy Geithner said after the markets closed that the Obama administration is committed to reducing the budget deficit amid concerns about creditworthiness.

“The markets are beginning to anticipate the possibility of” a downgrade to the U.S.’s top AAA credit rating, and it will “eventually” be lost, said Bill Gross, co-chief investment officer of Pacific Investment Management Co. in Newport Beach, California, in a Bloomberg Television interview. “It’s certainly nothing that’s going to happen overnight.”

The S&P 500, which has rebounded 31 percent from a 12-year low on March 9, slid 1.7 percent to 888.33 at 4:07 p.m. in New York as nine of 10 industry groups declined. The Dow Jones Industrial Average dropped 129.91 points, or 1.5 percent, to 8,292.13. Europe’s Stoxx 600 Index tumbled 2 percent, while the MSCI Asia Pacific Index lost 0.5 percent.

Initial jobless claims fell by 12,000 to 631,000 in the week ended May 16 from a revised 643,000 the prior week that was higher than initially estimated, the Labor Department said in Washington. Economists surveyed by Bloomberg had forecast claims would drop to 625,000, according to the median of 42 estimates. The total number of workers receiving benefits rose to a record, a sign that the job market continues to weaken even as the economic slump eases.

more...

WHAT RAILS AND ROADS TELL US ABOUT CLASS & POWER

2009-05-22T10:54:00.000-05:00

By Sam Smith

But a surprising number of factors involved class and power. For example, the subway was approved the same year as the 1968 riots and begun the year after. It would allow white DC residents to escape the troubled city yet still use - and travel safely to and from - it for work and entertainment. Interestingly, the first route went from the suburbs through an almost all white section of a two-thirds black town to the center of the city. I called it the Great White Way and dubbed the much later route to heavily black Anacostia the Underground Railroad. But you would hear not a word about this on the TV news or in the Washington Post.

The subway, while not competing with the automobile, did compete with bus lines replacing them with more expensive underground travel. In one or two cases these bus lines were actually making a profit. As time went on, and the Metro did not do as well as predicted, more and more bus routes were adjusted to force people onto the subway. And, as transit service for white commuters improved, that for inner city residents deteriorated.

Besides, it was clearly a one way system. If you lived the suburbs it would take you within walking distance of your downtown job. If you lived in the city and worked in the suburbs, you could take the new system out to the burbs and find yourself miles from work. I suggested a subsidized jitney service to help city workers reach suburban employment but nobody in power was interested in anything like that.

Now, more than 30 years after the Metro began, we finally have a study that confirms many of these concerns and it's not just about one system. It's about how we plan transportation policy all over America and how some get favored and some get screwed, and why we're about to have high speed rail for some and still have lousy bus and train service for many more.

more...

Independents Take Center Stage in Obama Era

2009-05-22T10:45:00.002-05:00

Democrats continue to overwhelmingly say that labor unions are necessary to protect working people. However, there have been sharp declines in the proportions of independents and Republicans who express this view.

Democrats’ opinions about the importance of unions have been remarkably stable: Currently, 80% agree that “labor unions are necessary to protect the working person, which is unchanged from 2007 and from a decade ago.

But only about half of independents (53%) now see labor unions as necessary to protect working people, a decline of 14 points from 2007 and 23 points from 2003. The percentage of independents agreeing with this statement is at its lowest point since the question was first asked in 1987. The proportion of Republicans who believe unions are necessary to protect working people also has hit a new low (44%); in 2003, 62% of Republicans saw unions as necessary.

Racial differences over whether unions are necessary to protect working people also have widened considerably. Currently, 82% of African Americans say unions are necessary, compared with 54% of whites. Labor unions have lost support among white men, in particular, over the past several years. Just 47% of white men agree that labor unions are necessary to protect working people, down from 67% six years ago. Over that period, the percentage of white women who see unions as necessary has declined by 11 points (from 72% to 61%).

more...

The public takes a somewhat less cynical view of government today than it did in 2007. Americans are less likely to say that government is wasteful and inefficient (57%, compared with 62% in 2007) and more likely to believe that government is “really run for the benefit of all the people” (49%, compared with 45% in 2007). In addition, fewer Americans now say government controls too much of our daily lives or that the federal government should run only those things that cannot be run at the local level.
....
The improved ratings of government responsiveness and performance largely reflect the overwhelmingly positive responses of Democrats, but also somewhat more favorable assessments than in 2007 from independents as well. On a number of items, Democrats today express more positive views of government than at any other point in the last 22 years. This spike in positive assessments among Democrats has been matched by a countervailing negative trend among Republicans. In fact, Republican skepticism about government is now at its highest level since 1994, the last point when the party was out of power in both Congress and the White House. As a result, the current partisan gaps on many measures of satisfaction with government are now more pronounced than at any other point in the last two decades, with independents almost squarely in the middle.

The current shift in opinion is consistent with a long-standing pattern of partisan change in opinion following changes in party control. In general, people tend to hold more favorable opinions of government when their party is in control of the presidency. In 2007, about six-in-ten (61%) Republicans said that government was run for the benefit of all people, while just 40% of Democrats said the same. Today, those sentiments are reversed – 60% of Democrats say the government is run for the benefit of all, while just 41% of Republicans agree. Independents, typically skeptical about government responsiveness regardless of the party in power, remain so today; just 44% of independents now say government is run for the benefit of all.
...
Overall, views of the dependence of the poor on government programs have not changed substantially from two years ago. But there is a more noticeable economic divide in assessments of the poor’s dependence on government, as higher income Americans are now more likely to say that the poor are too dependent on government aid than they have been over the course of the last decade.

More than three-quarters (77%) of those with family incomes of $75,000 or more now say this, a 10-point increase since 2007, while opinions among those with lower incomes have not changed. College graduates, too, have taken a more critical view over the past two years – the number saying poor people are too dependent on government aid grew from 60% two years ago to 71% today. Today there are no significant educational differences on this question; two years ago, those with college degrees were less likely than others to agree with the statement.

African American opinion on the poor’s dependence on government help is nearly unchanged since 2007, while a greater percentage of whites (76%, up from 71%) now say the poor are too dependent on government assistance, a return to the levels seen in the late 1990s.

The opinions of Republicans and Democrats are largely unchanged over this period. However, independents’ views have taken a rightward shift. Three-quarters (75%) of independents now say that the poor are too reliant on government assistance programs, a seven-point increase since 2007.

more...

Obama's Deeds Vindicate Bush

2009-05-22T09:58:00.000-05:00

By Charles Krauthammer

Cosmetic changes such as Obama's declaration that "we will give detainees greater latitude in selecting their own counsel." Laughable. High-toned liberal law firms are climbing over each other for the frisson of representing these miscreants in court.

What about disallowing evidence received under coercive interrogation? Hardly new, notes former prosecutor Andrew McCarthy. Under the existing rules, military judges have that authority, and exercised it under the Bush administration to dismiss charges against al-Qaeda operative Mohammed al-Qahtani on precisely those grounds.

On Guantanamo, it's Obama's fellow Democrats who have suddenly discovered the wisdom of Bush's choice. In open rebellion against Obama's pledge to shut it down, the Senate voted 90 to 6 to reject appropriating a single penny until the president explains where he intends to put the inmates. Sen. James Webb, the de facto Democratic authority on national defense, wants the closing to be put on hold. And on Tuesday, Democratic Senate Majority Leader Harry Reid said, no Gitmo inmates on American soil -- not even in American jails.

That doesn't leave a lot of places. The home countries won't take them. Europe is recalcitrant. Saint Helena needs refurbishing. Elba didn't work out too well the first time. And Devil's Island is now a tourist destination. Gitmo is starting to look good again.

Observers of all political stripes are stunned by how much of the Bush national security agenda is being adopted by this new Democratic government. Victor Davis Hanson (National Review) offers a partial list: "The Patriot Act, wiretaps, e-mail intercepts, military tribunals, Predator drone attacks, Iraq (i.e. slowing the withdrawal), Afghanistan (i.e. the surge) -- and now Guantanamo."

Jack Goldsmith (The New Republic) adds: rendition -- turning over terrorists seized abroad to foreign countries; state secrets -- claiming them in court to quash legal proceedings on rendition and other erstwhile barbarisms; and the denial of habeas corpus -- to detainees in Afghanistan's Bagram prison, indistinguishable logically and morally from Guantanamo.

What does it all mean? Democratic hypocrisy and demagoguery? Sure, but in Washington, opportunism and cynicism are hardly news.

more...

GMAC receives $7.5 billion in new Treasury aid

2009-05-22T09:36:00.000-05:00

By Jeannine Aversa and Marcy Gordon

Auto lender GMAC Financial Services will receive $7.5 billion in additional government aid to keep loans flowing to would-be buyers of GM and Chrysler vehicles and shore up its capital postion -- marking the second time the government has stepped in to prop up the lender.

To help GMAC raise additional funds, the Federal Deposit Insurance Corp. took the rare step Thursday of allowing the junk-rated company to gain access to its debt guarantee program. GMAC will be allowed to issue as much as $7.4 billion in debt, guaranteed by the FDIC in case the company defaults on payment.

In addition, the Federal Reserve waived rules to give GMAC's new bank, called Ally Bank, more leeway to make loans to GM customers.

Analysts suggest that the new government support will make GMAC a lending powerhouse that will give GM and Chrysler a huge advantage over their competitors -- including U.S. rival Ford Motor Co., which hasn't taken any government aid. It would have the power to offer better loan terms to buyers of GM and Chrysler cars and trucks as a way of steering business to those automakers.

GMAC received $5 billion in December from the Treasury Department's $700 billion financial bailout program in exchange for 5 million common shares and the promise to extend financing to dealers of Chrysler LLC, which is restructuring under Chapter 11 bankruptcy protection.

more...

Olbermann responds to Limbaugh's 30-day challenge

2009-05-22T09:30:00.000-05:00

By David Bauder

Limbaugh, who has increased his already high profile as an insistent voice of opposition to the Obama admininstration, said he wanted to see if MSNBC could go on "Rush withdrawal."

"Thirty days without anything mentioning me," Limbaugh said on his show Tuesday. "No video of me, no guests commenting on me. See if you can do it. You know, stand on your own two feet. Stand on liberalism. Stand on what you believe. Stop bleeding off me."

Olbermann said Wednesday night that Limbaugh had "suddenly gone all Greta Garbo on us. He wants to be left alone. He has surrendered."

"Suddenly, the impact of being accurately called out, day after day, hour after hour, as a faux populist, press-release regurgitating lackey of repressive and regressive political flunkeys has hit bone," Olbermann said.

Olbermann said Limbaugh had no business being able to decide how people react to him.

"You built this little world," he said. "Either man up and live through the bad press, or get out."

He said he'd agree to the prohibition "provided you go 30 days on your program without mentioning what has been done or said or boasted about by Rush Limbaugh. Hannity would last longer on the waterboard."

more...

The Coming California Bailout

2009-05-21T11:43:00.000-05:00

By George Will

Now California's mostly Democratic political class will petition Washington for a bailout to nourish the public sector that is suffocating the state's dwindling -- and departing -- private sector. The Obama administration, which rewarded the United Auto Workers by giving it considerable control over two companies it helped reduce to commercial rubble, will serve the interests of California's unionized public employees and others largely responsible for reducing the state to mendicancy.

These factions will flourish if the state becomes a federal poodle on a short leash held by the president. He might make aid conditional on the state doing things that California Democrats and their union allies would love to be "compelled" to do: eliminate the requirements of two-thirds majorities of both houses of the Legislature to raise taxes and pass budgets, and repeal Proposition 13, which voters passed in 1978 to limit property taxes. These changes would enable the Legislature (job approval: 14 percent) to siphon away an ever-larger share of taxpayers' wealth and transfer it to public employees. Such as prison guards, whose potent union is one reason California's cost-per-inmate (about $49,000) is twice the national average.

California's voters are complicit in their state's collapse. They elect and re-elect the legislators off whom public employees unions batten. Also, voters have promiscuously used their state's plebiscitary devices to control and fatten the budget. Last November, as the dark fiscal clouds lowered, they authorized $9.95 billion more in debt as a down payment on a perhaps $75 billion high-speed rail project linking San Francisco and Los Angeles -- a delight California cannot afford.

In a surreal attempt to terrify voters into supporting the propositions, Schwarzenegger (job approval: 33 percent) threatened to do something sensible: sell such state assets as San Quentin prison, which sits on prime ocean-view real estate. But Californians should now pay a real price, in realism about ways and means, for Schwarzenegger's wasted years. His governance-by-attention-deficit-disorder has involved flitting from one trendy irrelevance (e.g., stem cell research) to another (e.g., cooling the planet) while the state has sagged. Fittingly, he was in Washington as his shambolic legacy was being defined by Tuesday's defeat.

more...

Poll: Favorable opinions of Cheney rise

2009-05-21T07:47:00.000-05:00

By Paul Steinhauser

As Dick Cheney prepares to give a major speech on the battle against terrorism, a new national poll suggests that favorable opinions of the former vice president are on the rise.

But the CNN/Opinion Research Corporation survey, released Thursday morning, indicates that a majority of Americans still have an unfavorable opinion of Cheney.

Fifty-five percent of people questioned in the poll say they have an unfavorable opinion of the former vice president. Thirty-seven percent say they have a favorable opinion of Cheney, up 8 percentage points from January when he left office.

In the past two months, the former vice president has become a frequent critic of the new administration in numerous national media interviews.

"Is Cheney's uptick due to his visibility as one of the most outspoken critics of the Obama administration? Almost certainly not," says Keating Holland, CNN polling director.

"Former President George W. Bush's favorable rating rose 6 points in that same time period, and Bush has not given a single public speech since he left office."

more...

4 arrested in plot to bomb NYC targets

2009-05-21T06:46:00.000-05:00

NBC

The FBI arrested four men Wednesday in what authorities called a plot to detonate a bomb outside a Jewish temple and to shoot military planes with guided missiles.

Authorities said the four men have long been under investigation and there was little danger they could actually have carried out their plan, NBC News' Pete Williams reported.

James Cromitie, David Williams, Onta Williams and Laguerre Payen, all of Newburgh, N.Y., about 70 miles north of New York City, were charged with conspiracy to use weapons of mass destruction within the United States and conspiracy to acquire and use anti-aircraft missiles, the U.S. attorney's office said.

The men, described as Black Muslims, had planned to detonate a car with plastic explosives outside a temple in the Bronx neighborhood of Riverdale and to shoot military planes at the New York Air National Guard base at Stewart Airport in Newburgh with Stinger surface-to-air guided missiles, authorities said.

The defendants planned to "destroy a synagogue and a Jewish community center with C-4 plastic explosives," Acting U.S. Attorney Lev L. Dassin said.

The religious targets were the Riverdale Temple, founded in 1947, and the Riverdale Jewish Center, authorities said.

more...

Norwegian team reveals 'missing link'

2009-05-20T14:30:00.002-05:00

By Emma Woollacott

Discovered in the Messel Pit in Germany, the fossil - dubbed Ida - is a transitional species. It shows characteristics of both the very primitive nonhuman evolutionary line of prosimians, such as lemurs - but even more similarity to the anthropoid evolutionary line, which includes monkeys, apes and humans.

Ida, who measured around two feet in length, lived 47 million years ago, during the Eocene Epoch, a time when modern species were just starting to emerge. She was preserved in Germany's Messel Pit, a mile-wide crater of oil-rich shale, and is, astonishingly, 95 percent complete.

Two years of fossil analysis by Dr Jorn Hurum of the University of Oslo's Natural History Museum reveals that the prehistoric primate was a young female. Opposable big toes and nails rather than claws confirm that the fossil is a primate, and the presence of a talus bone in the foot links Ida directly to humans.

The fossil also features the complete soft body outline as well as the gut contents, which show that Ida ate fruits, seeds and leaves. X-rays reveal both baby and adult teeth, and the lack of a "toothcomb," which is an attribute of lemurs. The scientists estimate Ida's age when she died to be approximately nine months.

more...

Utilities Test Google Software To Save Energy

2009-05-20T14:28:00.000-05:00

By Cassandra Sweet and Mark Peters

A handful of electric utilities are rolling out software made by Internet giant Google Inc. (GOOG) as part of their "smart- meter" programs in hopes it will help customers conserve energy.

Utilities including Sempra Energy's (SRE) San Diego Gas & Electric unit, Energy Future Holdings Corp.'s TXU Energy, and Integrys Energy Group Inc.'s ( TEG) Wisconsin Public Service Corp. are testing Google's software as part of programs to digitize their utility meters and relay usage information to the utility and to customers.

The application, called Google PowerMeter, reads information coming from a smart meter, and displays it in real-time on a Web site. As utilities increasingly embrace smart meters as a way to cut energy use, in part by charging customers for the power they use at real-time prices, they've been searching for ways to display the information in a user-friendly manner that allows customers to adjust their power use. Smart meters and their potential to help cut U.S. energy consumption and greenhouse-gas emissions, have been embraced by President Barack Obama and Congress, in part through billions of dollars in grants made available for smart-meter programs as part of the Recovery Act.

"A smart meter is just a meter unless you're able to utilize the information and get it into customers' hands," said Hal Snyder, vice president of customer solutions at San Diego Gas & Electric. The utility is rolling out Google's PowerMeter as part of its $572 million smart-meter program.

more...

Texas Senate backs guns on campus

2009-05-20T14:19:00.000-05:00

UPI

The Texas Senate is backing a measure allowing college students and employees who are at least 21 years old to carry concealed handguns on campus.

The bill, declared all but dead in the House last week, received preliminary Senate approval on a 20-10 vote after 90 minutes of debate, the Houston Chronicle reported Wednesday.

If the Senate gives the measure final approval it will go back to the House where it died last week because of failure to meet a debate deadline.

The measure's sponsor, Sen. Jeff Wentworth, R-San Antonio, said he introduced the bill because he didn't want to see a repeat of the 2007 Virginia Tech massacre at a Texas institution.

more...

Republican Newt Gingrich Calls for Democratic Speaker Nancy Pelosi to Resign

2009-05-20T14:09:00.001-05:00

By HUMA KHAN and JONATHAN KARL

Former Speaker of the House Newt Gingrich today called on current speaker Nancy Pelosi, D-Calif., to resign, saying her accusation that the CIA lied to her threatens national security.

"She really disqualified herself to be the speaker," Gingrich said on "Good Morning America" today. "She has a unique responsibility for national security. ... She made this allegation that smears everyone who's trying to defend her."

Leaving her in her place would be "very dangerous for the country," Gingrich added.

Last Thursday Pelosi denied that she knew the CIA employed waterboarding, a harsh interrogation technique that simulates drowning. The speaker said the CIA "misinformed" her when they briefed her in September 2002, the month after Guantanamo Bay detainee Abu Zubaydah was subjected to waterboarding.

Gingrich said on "GMA" that Pelosi is the one who misinformed the American people.

"What she said Thursday was a stunning dishonest statement about a major American institution that has a key role in our survival," he said. "I think the Democrats should get a new speaker."

more...

Oil Rises Above $62 on Larger-Than-Forecast U.S. Supply Decline

2009-05-20T12:59:00.001-05:00

By Mark Shenk

Crude oil rose above $62 a barrel for the first time in six months after a government report showed that U.S. inventories declined more than forecast.

Stockpiles dropped 2.11 million barrels to 368.5 million in the week ended May 15, the Energy Department said today. A 400,000-barrel decline was forecast, according to a Bloomberg News survey. Prices also climbed after refinery fires and unrest in Nigeria threatened supplies and the falling dollar spurred investors to purchase raw materials.

“We’re off to the races,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “The crude and gasoline inventory drops are very supportive to the market. The problems in Nigeria and refinery disruptions are contributing to the rally.”

Crude oil for July delivery rose $1.84, or 3.1 percent, to $61.94 a barrel at 1:52 p.m. on the New York Mercantile Exchange. Futures touched $62.14, the highest price for the contract closest to expiration since Nov. 11. Oil is up 39 percent this year.

“If people were surprised by how fast crude oil moved from $50 to $60, they will be really shocked by how quickly the market will hit $70,” said Nauman Barakat, senior vice president of energy at Macquarie Futures USA Inc. in New York.

Yesterday, the industry-funded American Petroleum Institute reported a decline of 4.47 million barrels for the period.

“The drop in crude stocks was widely anticipated because of yesterday’s API number,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “If it weren’t for yesterday’s report, the response to these numbers would be much stronger.”

more...

Is California Too Big to Fail?

2009-05-20T12:51:00.000-05:00

By Megan McArdle

So what about California? A reader asks. Ummm, that's a tough one. No, wait, it's not: California is completely, totally, irreparably hosed. And not a little garden hose. More like this. Their outflow is bigger than their inflow. You can blame Republicans who won't pass a budget, or Democrats who spend every single cent of tax money that comes in during the booms, borrow some more, and then act all surprised when revenues, in a totally unprecedented, inexplicable, and unforeseaable chain of events, fall during a recession. You can blame the initiative process, and the uneducated voters who try to vote themselves rich by picking their own pockets. Whoever is to blame, the state was bound to go broke one day, and hey, today's that day!

There is a surprisingly sizeable blogger contingent arguing that we have to bail them out because however regrettable the events that lead here, we now have no choice. But actually, we do have a choice: we could let them go bankrupt. And we probably should.

I am not under the illusion that this will be fun. For starters, the rest of you sitting smugly out there in your snug homes, preparing to enjoy the spectacle, should prepare to enjoy the higher taxes you're going to pay as a result. Your states and municipalities will pay higher interest on their bonds if California is allowed to default. Also, the default is going to result in a great deal of personal misery, more than a little of which is going to end up on the books of Federal unemployment insurance and other such programs.

Then there are the actual people involved. Whatever you think of, say, children who decided to be born poor, right now they are dependent on government programs, and will be put in danger if those programs are interrupted.

On the other hand, I don't really see another way out of it. If Uncle Sugar bails out California, California will not fix its problems. Perhaps you want Obama to make it fix the problems, using the same competence, power, and can-do spirit with which he has repaired all the holes in the banking and auto manufacturing sectors. But Obma is not in a good position to do this. California Democrats are a huge part of his governing coalition. All Obama can do is shovel money into the bottomless pit of California's political system.

more...

Several Bush officials work in areas related to former jobs

2009-05-20T12:48:00.000-05:00

By Fredreka Schouten

More than one in four members of President George W. Bush's Cabinet have landed jobs with consulting or lobbying firms in which they can help clients navigate the departments they once oversaw, a USA TODAY analysis shows.

Michael Chertoff, who served as secretary of the Department of Homeland Security (DHS) until January, launched a consulting business two months ago to provide "risk-management advice" to private companies and governments. His predecessor, Tom Ridge, also is a security and crisis-management consultant.

Former attorney general John Ashcroft has registered as a lobbyist and runs a firm whose clients include software giant Oracle, which was the subject of a Justice Department anti-trust case during Ashcroft's tenure.

In all, 10 of the 34 former Cabinet secretaries who served during Bush's eight years in office have registered as lobbyists or joined consulting or lobbying firms, the analysis shows. Others sit on the boards or work for industries they regulated. For instance, Gale Norton, who once oversaw 500 million acres of public land as Interior secretary, now is a lawyer in a Shell Oil division for oil exploration.

more...

Schwarzenegger's 3rd budget reform attempt flops

2009-05-20T12:45:00.000-05:00

By JULIET WILLIAMS

Political observers say Schwarzenegger and lawmakers will have little choice but to go after even politically sacred programs such as schools. An unusually high two-thirds vote threshold in the Legislature for passing budgets and partisan polarization could combine for a painful summer.

"The choices facing the governor and Legislature are daunting," said Jack Pitney, a political science professor at Claremont McKenna College in Southern California. "Democrats have taken heat for accepting spending cuts. Certain Republicans have taken heat for accepting tax increases, and the heat's only going to get more intense this summer."

Many Californians have been hearing about the state's budget problems but have yet to feel the severity of the crisis. That will soon change, Pitney said.

"For a lot of people, the budget's been an abstraction. But with the next round, there will probably be serious consequences, particularly in the schools," Pitney said.

Last week, the governor said he will consider shortening the school year by seven days, laying off up to 5,000 state employees and taking money from local governments, which likely would translate into cuts to police and firefighting services.

Tens of thousands of teachers also face the prospect of layoffs.

Schwarzenegger's warning did not sway voters, many of whom said they did not trust that the ballot propositions would do much to solve California's budget trouble.

The majority of registered voters didn't bother to vote at all. Partial results from nearly 70 percent of precincts reporting late Tuesday showed only 19 percent of voters had cast a ballot, according to the secretary of state's office.

more...

Democrats in Senate Block Money to Close Guantánamo

2009-05-20T11:16:00.001-05:00

By DAVID M. HERSZENHORN

In an abrupt shift, Senate Democratic leaders said they would not provide the $80 million that President Obama requested to close the detention center at Guantánamo Bay, Cuba. The move escalates pressure on the president, who on Thursday is scheduled to outline his plans for the 240 terrorism suspects still held there.

In recent days, Mr. Obama has faced growing demands from both parties, but particularly Republicans, to lay out a more detailed road map for closing the Guantánamo prison and to provide assurances that detainees would not end up on American soil, even in maximum security prisons.

The move by Senate Democrats to strip the $80 million from a war-spending bill and the decision to bar, for now, transfer of detainees to the United States, raised the possibility that Mr. Obama’s order to close the camp by Jan. 22, 2010, might have to be changed or delayed.

“Guantánamo makes us less safe,” the Senate majority leader, Harry Reid of Nevada, said at a news conference where he laid out the party’s rationale for its decision, which is expected to be voted on this week. “However, this is neither the time nor the bill to deal with this. Democrats under no circumstances will move forward without a comprehensive, responsible plan from the president. We will never allow terrorists to be released into the United States.”

more...

Did Obama Get Suckered?

2009-05-20T11:13:00.000-05:00

by Martin Indyk

Whatever else happened in the private Netanyahu-Obama meeting, this Israeli prime minister certainly didn’t sound like he was willing to take any risks for peace. Reflecting his fear of antagonizing his right-wing supporters, Netanyahu avoided publicly committing himself to accepting an independent Palestinian state as the outcome of peace negotiations. Instead, he spoke of “self-government” for the Palestinians and laid down what sounded like a new precondition: The Palestinians would have to “allow Israel the means to defend itself.”

What Netanyahu apparently means by that is a Palestinian state minus the means to defend itself, or to control its airspace, or its international passageways. Not unreasonable concerns given Israel’s experience with Gaza, but to put forward such requirements at the outset looks more like a well-practiced Netanyahu negotiating tactic: Raise the bar as high as possible and require the United States to lift the Palestinians over it before he has to make any concessions.

So too with the new potential for Arab state involvement in the peace process: Netanyahu correctly identifies the shared concern of the U.S., Israel, and the Arab states about Iran’s hegemonic regional ambitions and its aggressive nuclear program. In Obama’s view, working with Arab leaders to resolve the Israeli-Palestinian conflict could help counter Iran. But Netanyahu appears to have tasked Obama with the challenge of bringing these Arab leaders to the peace party without indicating what he will do either to get them there or to reward them for the risk of coming. That’s an invitation they will easily refuse. And if they do, will Netanyahu then have the explanation he needs for taking no risks himself?

There’s one Israeli action that might help move things forward, and Obama was not shy in bringing it up at the press conference—Israel’s roadmap obligation to stop settlements. A real settlements freeze would give Palestinians renewed hope in negotiations and boost the failing fortunes of their president, Mahmoud Abbas. And if Netanyahu were willing to live up to that commitment, Obama might be able to persuade the Saudis and other Gulf Arabs to reciprocate by normalizing relations with Israel—through diplomatic engagement, direct flights, phone communications, etc. Such confidence-building steps could in turn give Israelis greater faith in the potential of peace with the Arab world. Not exactly a breakthrough, but some baby steps in the right direction. Only trouble is Netanyahu was completely silent on the settlements freeze in public; in private, I’m told, he said it would be difficult to do.

more...

Rush Limbaugh challenges MSNBC: Don’t mention me

2009-05-20T10:43:00.001-05:00

By ANDY BARR

Conservative radio host Rush Limbaugh challenged MSNBC on Tuesday to go 30 days without mentioning his name on television.

“Throughout the busy broadcast day, MSNBC cannot go an hour without mentioning me or playing video of me or having me discussed,” Limbaugh said. “I challenge you, MSNBC! Thirty days without anything mentioning me. No video of me, no guests commenting on me. See if you can do it.”

Limbaugh accused the cable network of trying to “build its ratings on my back” by making him a frequent subject of discussion and portraying him as a leader of the Republican Party.

“It seems that the liberalism that is MSNBC isn't selling as well as they would like because they cannot — from the Scarborough show in the morning, all the way to night, they cannot … go any appreciable length of time without showing video of me, the CPAC speech or excerpts from this radio show or having a bunch of hack guests on to discuss me,” he said, according a transcript on his website.

Limbaugh also suggested that the network may not be able to withstand a ratings plunge if mentions of him were pulled from the network.

more...

Bankrupt companies making 39 mpg autos. Are we nuts?

2009-05-20T10:42:00.001-05:00

WSJ.com

The President's proposed standards would raise fuel economy goals higher and faster than even the National Highway Transportation Safety Administration believes is practical. Last year, NHTSA issued a proposed rule making that would have raised fuel economy to 32.2 mpg by 2015 for cars and light trucks combined. Its 376-page report notes that "the resources used to meet overly stringent CAFE standards . . . would better be allocated to other uses such as technology research and development, or improvements in vehicle safety."

The new U.S. fleet will almost certainly be made up of hybrids and electric cars. This comports with the explicit intention of the President and his environmental partners to back out fossil fuels. One may ask: Once Detroit is forced to build these cars, will free Americans want to buy them, at any price?

Unless we outlaw the bigger cars that recent sales figures have shown Americans prefer any time gas prices fall below $4 per gallon, Detroit will need help marketing these small vehicles. As GM's Bob Lutz put it not long ago, "Very few people will want to change what has been their 'nationality given' right to drive big and bigger if the price of gas is $1.50 or $2 or even $2.50. Those prices will put the CAFE-mandated manufacturers at war with their customers."

All solutions to this problem flow from Washington. One would be to give substantial tax subsidies to buyers. Another would be to impose a federal gas tax to jack up the price of gasoline to $4 per gallon and keep it there. This is the solution that keeps Europeans driving small cars with tiny engines. High gasoline prices have become a political third rail in U.S. politics, and the Obama Administration insists it isn't interested in subsidies or taxes.

That puts the burden back on the beleaguered auto makers. The Detroit Three already sell small cars at a loss to meet the current 27.5 mpg fleet average. The car companies may hope that if the whole industry is forced to move up the fuel-economy ladder, consumers will have no choice other than to buy these cars. But experience suggests companies that have specialized in making smaller cars, such as the Japanese-owned auto makers, are more likely to be able to sell them at a profit.

more...

Barack Obama's biggest critic: Charles Krauthammer

2009-05-20T10:24:00.002-05:00

By BEN SMITH

"He became Ground Zero among the neo-cons, but he's vastly smarter than most of them," said Time's Joe Klein, an admirer and critic who praised Krauthammer's "writing skills and polemical skills" as "so far above almost anybody writing columns today."

"There's something tragic about him too," Klein said, referring to Krauthammer's confinement to a wheelchair, the result of a diving accident during his first year of medical school. "His work would have a lot more nuance if he were able to see the situations he's writing about."

"My writing speaks for itself," Krauthammer responded in a curt email.

Krauthammer's politics are, more than anything, shaped by the familiar course of a hawkish former Democrat toward neo-conservatism.

"What's important about Charles is that he began life as more of a liberal," said the liberal Post columnist E.J. Dionne, who likes Krauthammer, and noted that he writes with a level of restraint absent from the works of conservative firebrands like Glenn Beck and Ann Coulter.

"Charles is not a hater, but he can be an intense disliker," he said.

Krauthammer's formative departure from liberalism came in response to the anti-nuclear movement of the early Reagan years. In 1981, he wrote a scathing attack on the massive Nuclear Freeze movement, which he now describes as "hysteria." The editorial, New Republic editor Marty Peretz told him at the time, cost the magazine more cancelled subscriptions than any before.

By coincidence, Krauthammer shares that formative moment with the president he criticizes. As a student at Columbia University, Obama wrote his senior thesis on nuclear disarmament. His first published prose, in a student magazine, discussed student efforts to prevent nuclear war, and criticized the "narrow focus of the Freeze movement" as insufficiently radical.

"I don't get caught in enthusiasms," Krauthammer said of the nuclear freeze movement, and of Obama's mass appeal.

The columnist says he doesn't hold any personal animus for Obama.

"This is a formidable, impressive, interesting man," said Krauthammer, wearing reading glasses around his neck, a black turtleneck and black jeans. "It's a privilege to live in a time where there's this kind of ferment."

The columnist is less impressed by the current state of the conservative resistance.

"It's completely incoherent, fractured and inconsistent," he said, calling the recent anti-tax tea parties "a perfect example."

"They were ostensibly about taxes. Obama hasn't raised taxes as of now by a penny. So what was all that about? It was a natural pushback by people who have sense of the government expanding rapidly in its size and control," Krauthammer said. "It was simply an inchoate reaction, the sort of thing that happens very early on in a very important and consequential presidency."

Leaving the verdict on the Bush Administration to "the next generation's David McCullough," Krauthammer also told POLITICO that he isn't rooting for Obama to fail.

more...

GOP Youth Woes: Can Economic Conservatism Work?

2009-05-19T16:28:00.000-05:00

by Chris Good

It used to be fashionable, in some places, to say, "I'm socially liberal, but fiscally conservative." That was the case among some people I knew growing up in the Midwest, and some people I went to college with in the early 2000s. It was a good way to be moderate--to communicate social open-mindedness and shrewd economics, simultaneously. And it was good for young people, with liberal social views and a skepticism of government's reach.

But as Derek points out, the Millenial generation is allegedly quite liberal on the economic side. This is certainly something economic liberals want us to think, as the GOP blasts President Obama's stimulus and budget, looking for electoral gains. The economic liberals want to say that young people are immune to all that--but are they right?

According to a Gerstein Agne poll conducted for the Center for American Progress (CAP) and released yesterday, they are--mostly.

60 percent of 18-29 year olds agree that "It's time for government to take a larger and stronger role in making the economy work for the average American," according to that survey; 27 percent agree that "Turning to big government to solve our economic problems will do more harm than good"; 13 percent said "both." The poll includes results from targeted online samples (people recruited on demographic basis to complete a survey online) and phone surveys on both land lines and cell phones.

(The bar graph in Ruy Texeira's CAP blog post was mis-labeled with results from a different question, asked by the 2008 National Election Studies--so it's not actually a 78/22 split. Texeira has since corrected it.)

So that's a solid majority, 60-27, but it's not unanimous. And given the way Gerstein Agne worded its question, who doesn't think government should work hard to make the economy work for everyone?

more...