Sunday, May 22. 2011
Some scattered links I squirreled away during the previous week:
Simon Johnson: A Limit to Their Insanity:
Subtitle, "Why Republicans will eventually vote to raise the debt
If Republican threats were credible, any news that increased the likelihood
of a problem with the debt ceiling would send Treasury bond prices down and
yields up. This is not happening, because bond traders cannot imagine that
the Republicans would be able -- or even willing -- to follow through.
After all, the consequences of failing to increase the debt ceiling would
be catastrophic. The entire credit system in the United States -- and in
much of the rest of the world -- is based on the notion that there is such
a thing as a "risk-free asset," and that these assets are U.S. government
securities. There is no provision in the Constitution to guarantee that
the United States will always pay its debts, but the American Republic has
proved itself for 200-plus years to be about as good a credit risk as has
ever existed. [ . . . ]
Countries never default because they can't pay their debts; there are
always ways to decrease expenditures or raise taxes. Countries default
because their political systems bring them to the point where the people
in power decide, for whatever reason, not to pay the government's debts.
It is not difficult to identify who would bear what costs if the United
States did not pay -- or if it disrupted markets by not increasing its
debt ceiling. Everyone who borrows or interacts with the credit system
in any way would suffer a shock that would make the crisis of 2008 look
Among others, the U.S. corporate sector -- big and small business --
would be livid. [ . . . ] Simply put, America will
not score what is known in soccer as an "own goal" over the debt ceiling --
and Boehner must know it. Symbolic gestures are to be expected, as with
the threatened government shutdown earlier this year, which merely created
fodder for political advertising by both parties. But any manufactured
debt crisis now would deeply antagonize the corporate sector -- and most
of the electorate. In the wake of economic disaster, the party held
responsible could be exiled from power for a generation.
Andrew Leonard: Why the Debt Ceiling Absolutely, Positively, Will Be
Raised: video with Douglas Holtz-Eakin, a conservative economist
who otherwise I have little respect for, but even he gets it.
Andrew Leonard: Debt Ceiling Panic Attack:
Think of this as John Boehner reprising Richard Nixon's madman stratagem:
Let's think through this for a second. Who benefits from a rising sense
of debt ceiling panic? Republicans. Extortion only works if you
really think that the blackmailer will go through his threats -- a dynamic
that we saw played out to perfection in the struggle over the continuing
resolution to fund the U.S. government. Every spike upward on the
fear-and-trembling-meter gives John Boehner more leverage, empowering
him to go right up to the brink of disaster and extract the biggest
possible concession from Democrats. So it serves the GOP just fine that
the punditocracy regards it as irresponsible.
I won't deny that there's a possiblity that all hell could break
loose, but I'm standing by my original position. I don't think there
is any chance that the debt ceiling won't be raised, not least because
I'm pretty sure President Obama will decide that maintaining the good
credit of the United States is of paramount importance. He will cut a
deal, if forced to, because he takes the good of the nation seriously.
But the spectacle of everyone freaking out at the possibility of default
actually weakens his hand, and raises the likelihood that the terms of
that eventual deal will impose unnecessary and economically damaging
short-term spending cuts or overly harsh entitlement reductions.
So let's not be scared, let's just be clear: risking the good credit
of the United States is a profoundly stupid thing to do. If Republicans
provoke a bond market revolt that seriously raises the cost of government
borrowing, they'll do severe longterm damage to the U.S. economy. It's
hard to see how the GOP would be rewarded for such behavior in 2012.
Ezra Klein: Osama bin Laden Didn't Win, but He Was 'Enormously
Bin Laden, according to [Daveed] Gartenstein-Ross, had a strategy that
we never bothered to understand, and thus that we never bothered to
defend against. What he really wanted to do -- and, more to the point,
what he thought he could do -- was bankrupt the United States of America.
After all, he'd done the bankrupt-a-superpower thing before. And though
it didn't quite work out this time, it worked a lot better than most of
us, in this exultant moment, are willing to admit.
[ . . . ]
"He has compared the United States to the Soviet Union on numerous
occasions -- and these comparisons have been explicitly economic,"
Gartenstein-Ross argued in a Foreign Policy article. "For example, in
October 2004 bin Laden said that just as the Arab fighters and Afghan
mujaheddin had destroyed Russia economically, al Qaeda was now doing
the same to the United States, 'continuing this policy in bleeding
America to the point of bankruptcy.'"
For bin Laden, in other words, success was not to be measured in
body counts. It was to be measured in deficits, in borrowing costs,
in investments we weren't able to make in our country's continued
economic strength. And by those measures, bin Laden landed a lot of
Nobel laureate Joseph Stiglitz estimates that the price tag on the
Iraq War alone will surpass $3 trillion. Afghanistan likely amounts
to another trillion or two. Add in the build-up in homeland security
spending since 9/11 and you're looking at another trillion. And don't
forget the indirect costs of all this turmoil: The Federal Reserve,
worried about a fear-induced recession, slashed interest rates after
the attack on the World Trade Center, and then kept them low to combat
skyrocketing oil prices, a byproduct of the war in Iraq. That decade
of loose monetary policy may well have contributed to the credit bubble
that crashed the economy in 2007 and 2008.
Then there's the post-9/11 slowdown in the economy, the time wasted
in airports, the foregone returns on investments we didn't make, the
rise in oil prices as a result of the Iraq War, the cost of rebuilding
Ground Zero, health care for the first responders and much, much more.
Moreover, those trillions aren't over. Almost everything on that
list remains as a continuing expenditure, something we'll spend again
and again until we figure out a better way. But the more important
thing to realize is that bin Laden didn't force us to spend all that
treasure -- all he can be directly charged with was the dead on 9/11,
caring for the wounded, and repairing a few buildings. All the rest
resulted from a war we chose to fight: a war we let ourselves be
suckered into. That was above all else a political decision, one
made by one person, president G.W. Bush, no matter how easy it was
given how many people around him, and all across the nation, felt
the itch for war. I could imagine a very different president avoiding
bin Laden's trap, and prevailing in the court of public opinion. It
would have taken foresight and courage, the ability to see complex
issues from many sides, to think ahead, and to appeal to our better
natures. Such people were, and are, scarce in our government and in
the political class: something that bin Laden recognized, and took
tragic advantage of.
Jane Mayer: The Secret Sharer: Is Thomas Drake an enemy of the state?
Drake is a former NSA employee who leaked documents to a Baltimore Sun
reporter exposing "financial waste, bureaucratic dysfunction, and dubious
practices in NSA counterterrorism programs." He is charged with violating
the 1917 Espionage Act, subject to a prison term of 35 years.
Top officials at the Justice Department describe such leak prosecutions
as almost obligatory. Lanny Breuer, the Assistant Attorney General who
supervises the department's criminal division, told me, "You don't get
to break the law and disclose classified information just because you
want to." He added, "Politics should play no role in it whatsoever."
When President Barack Obama took office, in 2009, he championed the
cause of government transparency, and spoke admiringly of whistle-blowers,
whom he described as "often the best source of information about waste,
fraud, and abuse in government." But the Obama Administration has pursued
leak prosecutions with a surprising relentlessness. Including the Drake
case, it has been using the Espionage Act to press criminal charges in
five alleged instances of national-security leaks -- more such prosecutions
than have occurred in all previous Administrations combined. The Drake case
is one of two that Obama's Justice Department has carried over from the
Gabriel Schoenfeld, a conservative political scientist at the Hudson
Institute, who, in his book Necessary Secrets (2010), argues for
more stringent protection of classified information, says, "Ironically,
Obama has presided over the most draconian crackdown on leaks in our
history -- even more so than Nixon."
Much more about the case, and the NSA's illegal surveillance programs.
Ends with a discussion of similar cases, starting with the failed prosecution
of Daniel Ellsberg. Ends with this:
Mark Klein, the former A.T. & T. employee who exposed the telecom-company
wiretaps, is also dismayed by the Drake case. "I think it's outrageous," he
says. "The Bush people have been let off. The telecom companies got immunity.
The only people Obama has prosecuted are the whistle-blowers."
Alex Pareene: North Carolina Anti-Municipal Broadband Bill May Become
The Republicans who control state legislatures across the nation aren't
just sending immigrants to private prisons and forbidding children from
learning of the existence of gay people -- they are also working closely
with major telecommunications lobbyists to hobble municipal broadband
services. North Carolina Governor Bev Perdue is now deciding whether to
sign or veto a bill severely restricting local communities from creating
broadband networks. [ . . . ]
The basic argument for the bill -- made most convincingly by North
Carolina telecom lobby counsel Marcus Trathen here -- is that it's
"unfair competition" for local governments to offer better service at
lower prices than the private sector, which is also a compelling argument
for banning governments from setting up "public" schools that educate
children for "free."
These people would've also opposed rural electrification. We must
preserve the private sector's right to overcharge citizens for subpar
David Weigel: Air Rage:
It used to be said that railroads stagnated because they didn't have
enough imagination to realize that their real business was transportation,
not just railroads. This is laughable, because every railroad from the
1850s on realized exactly what business they were in: they auctioned
their routes for government-paid bribes, mostly in the form of free
land, which they spent more time managing than they did their routes.
Some people still think that Boeing is in the aircraft business, but
for a long time now Boeing's prime focus has been in sucking favors
from governments. For instance, when Boeing announces a new airplane,
their first concern isn't how to design and build it. No, their first
concern is to count up how many jobs they might create, then they go
around the world seeing who will bid the most for which jobs. Back
when they initially announced the 787, they were disappointed in that
no state or country bid enough so they were stuck having to use a
plant in Washington they had already built, and worse they'd have to
use the unionized workers on their payroll in that plant. However, in
divvying up all that work, it turned out that Boeing couldn't get to
the point of assembling those airplanes. That gave them more time,
and finally South Carolina came up with $900 million and the promise
to get rid of that pesky union. Only problem was that Boeing bragged
so much about how the move would screw the union that the NLRB found
the anti-union move to be illegal. Needless to say, Boeing's execs,
lobbyists, and political cronies are apoplectic. I mean, Boeing is
used to their executives getting slammed in jail for illegal bribes,
but for union busting? What kind of country is this?
Here's the legal argument made by the union and the NLRB. The Wagner
Act prohibits companies from moving operations to avoid unions. On
Feb. 28, the Seattle Times published an interview with Boeing's
CEO, Jim Albaugh, in which he seemed to say, yes, Boeing was basically
doing that. "The overriding factor was not the business climate,"
explained Albaugh, "and it was not the wages we are paying today.
It was that we can't afford to have a work stoppage every three years.
And we can't afford to continue the rate of escalation of wages."
That, say the unions, is all the proof you need. But Gould and other
critics say that while the board may look kindly upon the complaint,
its position won't stand up in the courts.
The NLRB, for its part, denies that it's a political fight at all
(although it launched Fact Check page on its website, which -- possibly
a first for the Obama administration -- rebuts a claim made on RedState.com).
"It wouldn't have mattered if the complaint was about moving from a union
state to another union state," said the NLRB's public affairs director
Nancy Cleeland, a former labor reporter for the Los Angeles Times.
"It has nothing to do with right-to-work states. These are the issues we
deal with every day."
For Republicans, that's the main issue: the very existence of the NLRB.
The board has a Democratic majority only because President Obama
recess-appointed Craig Becker, a former AFL-CIO and SEIU counsel. In
February, 176 House Republicans voted for an amendment to the budget
bill that would have completely defunded the board.
Pretty surprising to see Boeing caught up like this, but I bet Al
Capone was pretty surprised when that tax thing came down. It should
always be remembered that Boeing moved their corporate headquarters
from Seattle to Chicago so their execs would be less likely to run
into the people they laid off.
Philip Weiss: Report: Mitchell Resigned Because Dennis Ross Was Biased
and Working Against US Interests: Uh, Ross isn't biased. He's a
foreign agent, even when his salary is picked up by US taxpayers.
Abu Shareef said senior American officials informed him that Mitchell
viewed the appointment of Ross a step to obstruct the peace process. He
added that Mitchell believed Ross was working against US interests.
Sure worked, didn't it? To be sure, the US has a weak and fuzzy sense
of its own interest in the Middle East, even when it is fanatical about
asserting them. But generally speaking, a peaceful resolution of the
Israel/Palestine conflict would greatly improve US standing in the
region. It is certainly easy to see Ross as someone working against
US interests. The old-fashioned word for such a person is "traitor."