On Andrew Sullivan’s website, guest blogger Gregory Djerejian (whose normal home is The Belgravia Dispatch) bemoans what he calls “Syria Hysteria.” The supposed hysterics in question include Senator Joe Lieberman, former Bush speechwriter (and my current colleague at the Council on Foreign Relations) Mike Gerson, and yours truly, who is dubbed “our favorite Rudyard Kipling-lite.” That’s pretty distinguished company, even without the flattering comparison to one of the greatest writers in the history of the English language.
Djerejian, a lawyer who works at a financial services company in New York, is aghast that all of us have been sounding the alarm about Syria’s role in facilitating the infiltration of dozens of jihadists into Iraq, where they are responsible for carrying out some of the worst terrorist outrages. The fact that dozens of jihadists are entering Iraq from Syria every month is incontestable; this has been stated publicly by General David Petraeus and numerous other officials, who have based their claims on interrogations of captured terrorists and other hard intelligence.
Djerejian tries to wave away Syrian guilt by pointing to the recently released National Intelligence Estimate, which states, “Syria has cracked down on some Sunni extremist groups attempting to infiltrate fighters into Iraq through Syria because of threats they pose to Syrian stability, but the IC now assesses that Damascus is providing support to non-al-Qaeda-in-Iraq groups inside Iraq in a bid to increase Syrian influence.” That’s not much of an exoneration. Note the word “some”; Syria obviously has not cracked down on most Sunni extremist groups. And although the NIE says that Bashar Assad is not “providing support” to al Qaeda in Iraq (what’s the definition of “support”?), it is silent on whether the Syrian strongman is looking the other way as would-be suicide bombers transit his soil.
Djerejian naively imagines that the Damascus regime would have nothing to do with such Islamic radicals, since in 1982 Bashar’s father crushed an Islamist uprising in the Syrian city of Hama. This is, of course, the same mistake made by those who imagine that, evidence to the contrary, Saddam Hussein would never have made common cause with Islamic radicals. In fact, both the Baathist regime in Baghdad in its later years, and now the Baathist regime in Damascus increasingly rely on Islamic imagery to cement their authority.
For all Assad’s claims that he doesn’t want to allow an Islamic takeover of Syria, the evidence is overwhelming that he is deeply complicit with Islamic radicals operating against neighboring states. Damascus, after all, is the headquarters of Hamas, led by Sunni radical Khalid Meshal. Damascus has also established a very close alliance with the Shiite radical regime in Tehran. Syria, in fact, acts as principal middleman between Iran and the Shiite radicals of Hizballah in Lebanon. Imagine that—a supposedly secular Baathist regime led by Alawites (a Shiite sect) making common cause with both Sunni and Shiite radicals. Since all of this is common knowledge, the only surprise here is that Djerejian is surprised.
Given Djerejian’s stubborn unwillingness to grasp the fact that Syria has been waging war on the U.S. and our allies (viz., Iraq, Lebanon, Israel, and, in the past, Turkey), correspondingly he is agape at the arguments made by Lieberman, Gerson, and me to get tough with the Damascus regime. I suggested in contentions, for instance, that we might use our airpower to close Damascus airport until Assad cuts off the flow of foreign fighters, who mostly travel to Iraq through that same airport. Writes Djerejian, with heavy-handed irony: “A peachy idea! Save that using airpower against a sovereign nation’s airport is an act of war, you know.”
So is providing support to terrorist groups that are operating in another nation’s sovereign territory. Our inexplicable failure to respond accordingly does not change the fact that Syria (and Iran) is waging war on us. To speak bluntly about these matters does not constitute, as Djerejian huffily has it, “ignorance and adventurism.” It is no more than an acknowledgment of reality.
Harry Reid’s statement about Norm Coleman is outrageous, not only for the reason that Ms. Rubin points out, but because the normal post-election process in Minnesota is not over yet. Reid would profit from reading this excellent summary by John Hinderaker:
http://powerlineblog.com/archives/2009/01/022474.php
I noticed that at the site to which Ms. Rubin links, the commenters (on both sides) seemed to be under the impression that Coleman is appealing to the courts. He is not. The upcoming contest stage is part of the process prescribed by Minnesota election law.
Sorry, I posted that comment in the wrong place. It was supposed to be a comment on Jennifer Rubin’s “Flotsam and Jetsam.” I’ll post it there now.
To this post – isn’t it amazing how the impending life in the political wilderness can help focus one’s adherance to some form of political principle. Krugman long ago seemed to forget the economics he once knew. Now – if we cut back the corporate income tax, can we also eliminate some of these screwy provisions put in place to try and avoid taxes. The rate should be lower and the code book should be thinner. Less gaming by the business and political class, and more here are the rules, go forth and be profitable.
The Republicans, at least historically, have punched well above their weight as the minority party. Unfortunately, that’s due to being the minority party for so long, but true nonetheless. When the Dems were in the minority they were so rife with anti-Bush vitriol that they didn’t have say in anything. I would expect the Repubs to use their minority status more prudently.
Personally, I think the Repubs need to skip over the Majority Leadership in Congress and go to Obama directly and make an alliance with him on important matters such as Iraq, Afghanistan and Israel. Obama will want to be re-elected in 2012, the best way for that to happen is to be the Commander-in-Chief at the conclusion of successful military engagements. I think the Repubs in the Congress can dangle that in front of him and possibly convince him into making rational decisions regarding those areas of interest.
Republicans need to get the best deal possible on the stimulous. If the plan is truly is a disaster (and worse than the conditions we are facing), then by all means play the grid lock game. But if it is half good and will help prevent economic meltdown, then they better not be obstructionists.
Has the massive spending so far helped or been a waste? My guess is it actually helped, albeit in a clumsy sort of way. That does not mean unlimited spending is the answer, it is not. But some concentrated infrastructure spending and tax cuts are probably smart to do right now.
#5
I agree. We’re getting massive spending anyhow, better get something in it that will actually help growth. I also agree that the bailout that everyone loves to scorn may actually have saved us from a worse catastrophe. We won’t know for years to come, when we can do some serious analysis, but I suspect it helped. I think it’s important to note that Paulson and the Bush Administration are in virgin territory regarding this meltdown. Or at least it’s virgin territory in their attempt to avoid a catastrophe. I think history may well say they saved us from a much more painful crash.
Of course a lot of that depends on how the Obama Administration proceeds. Some signs are encouraging, some not so much.
I agree with all the economic points made. I like in particular the idea of a moratorium on business bailouts. There are no businesses too big to fail! As long as there are strong competitors in a particular industry-foriegn or domestic-no company should be bailed out. Another point about this package is the sheer size of it. If you are going to throw everything and the kitchen sink at the economy to get it going, why not cut corporate tax rates down to 20% or 15%? You can’t say its deficit spending, we are passed that! It would be the one thing in this package that would revive the dynamic parts of our economy. Those reductions for corporations should also apply to all enterprises.
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Steven Says,”—why not cut corporate tax rates down to 20% or 15%?
Steven, Cut it to 0%,that’s awesome,it is merely irrelevant. 70% of GDP is consumer driven. Until you factor that in you aren’t making any sense. This is a demand side not a supply side issue. What stimulates demand side activity: reliable jobs,wages that allow disposible income,avaliable credit at good interest rates,optimism. Supplies are there,go to any retail outlet in your area,Demand is non-existant. P.S. One Service Industry is doing record business/the legal services industry. It will take you six months just to meet with a bankruptcy lawyer. By the way, Bush’s Bankruptcy Revisions will be re-revised in short order.
Yes, RCR, but cutting corporate taxes will immediately enhance the value of corporations and therefore make the nearly hundre million Americans who own stocks wealthier, more confident, more certain to be employed and more likely to spend.
thats “RCAR”, of course.
9&10,”Yes, RCR, but cutting corporate taxes will “immediately” enhance the value of corporations
This is a medium, long term tactic that doesn’t address an acute short term problem. We’re burning up jobs at a record rate and as jobs disappear,the expoential effect is for more jobs to disappear even faster. Sales Growth and profitability also determine the value of corporations. Lack of Demand is killing business faster than tax relief can salvage it. You are like a physician trying to save a patient that’s bleeding out with good nutrition.
It’s the regulation, stupid. Government makes America cost too much, and there is no way to cover that up in an economic downturn. It IS a “good” if the GOP can get a consensus on at least some tax cuts, and a moratorium on “bailouts.”
But it’s essential to understand that tax cuts will largely serve to pay the freight for our frenzied regulatory environment, rather than having a 100% bang for their buck in investment stimulation.
Moreover, the bailouts are not of failing businesses or industries, they are of government policies that heap welfare and regulatory costs on business. Bailing out “GM” is merely a facade for bailing out federal and state labor policy, tax policy, CAFE regulation, federal secondary vehicle content regulation, and a laundry list of welfare state and environmental measures. The Feds and Michigan can’t let “GM” fail, because how else would they implement their various regulatory policies, extract their tax bite, and keep the political donations flowing from the unions? The same applies to the finance industry. Congress is bailing out 70+ years of statism and trying to legislate free lunches for a growing list of constituencies. We have got to stop being confused about that.
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J.E. Dyer Says:”It’s the regulation, stupid.”
How come you didn’t mention currency policy,trade policy and government deficits as part of the toxic environment that our government has created?
How fast the economy strips excess jobs is not going to make much difference. We’ve been running at essentially full employment for quite some time, getting the employment rate down to historic norms will barely dent the economy. We’re no way near having a jobs crisis despite the spin coming from the President-elect. Dems don’t know how to create real jobs, so they gin up a jobs crisis in order to create phony “shovel ready” jobs.
Whatever the current economic woes are job losses are not among them. We can shed plenty more jobs before it really starts to have an effect. Cutting corporate tax rates would help the consumer greatly by lowering the costs of goods and services, and encouraging investment. It would also have a stabilizing effect on the stock market. Even though this isn’t a jobs crisis it would also slow the rate of shedding jobs and get us heading back in the direction of full employment.
RCAR — there are different answers for trade policy and government deficits. Government deficit spending is part and parcel of our regulatory environment, so in my view, I actually did mention it, just not by name. It is regulation that makes us participate in Social Security and Medicare, by far the biggest causes of long-term deficit spending (I’m pretty sure you are referring to current-account deficit spending, but I regard it as superficial to assess that the deficit in any one year is what is driving business or the currency into the ground. Those consequences arise from persistent overcommitment, and the primary sources of that are our social welfare entitlements).
Both of these regulatory entitlements have a large and growing impact on the cost of business, as do health care regulation at the state level, and state-mandated welfare and health care benefits. Besides increasing direct costs to business, through employer contributions, these regulatory programs impose the indirect cost of an increased cost of living for employees — 13% of your income goes to just SS and Medicare contributions — which makes higher base salaries and wages a necessity just so employees can break even.
And those costs don’t even get to the long-term, insidious cost to business of devaluing the currency with spiraling government debt, meaning all future profits are worth steadily less.
When I speak of regulation, I include welfare and health care entitlements in the mix. They are forms of regulation. They represent by far the majority of our projected public debt, whether the $60-70 trillion in US federal debt today, or the $28-42 billion in state debt projected for California over the period 2009-2011. Spending on things like the war on terror, or repaving the interstate highway system, is laughably puny in comparison with the size of our unfunded commitments to welfare and health care entitlements.
This review, moreover, only looks at them in light of their impact on government debt, since that was the issue you brought up. Regulation also, however, uses government policy on welfare and health care to make US workers very expensive, by mandating employer contributions to a variety of government programs: SS, Medicare, private health insurance, state health care programs, state forms of SS, worker comp insurance. As I’ve outlined elsewhere, in a number of US industries, government regulation makes it cost an employer about twice what a full-time employee actually sees in his paycheck, to add that employee to the payroll.
Trade is a separate issue, and while I recognize the imperfections of existing trade accords, both multilateral and bilateral (directly between the US and other nations), I don’t regard trade policy as a big culprit in our current situation. I know you do, and on that we will just have to disagree. A country cannot keep all its jobs by keeping trade out; that is a fallacy that keeps haunting people’s minds, but it is a grave error. Historically, increased protectionism invariably goes hand in hand with poor economic performance, loss of jobs, low investment, and declining revenue for the treasury.
Nor do I think China has been achieving a great position of power by buying US securities. China’s “sovereign wealth fund” has suffered the same huge loss of value that Americans’ IRAs have over the last six months: China bought our securities depending on them to retain their market value, and has been injured financially because, at this present time, they have not. As Gordon Chang points out, however, China remains invested in our securities, as do many foreign investors, because foreign investors all expect other nations’ securities to perform worse in the coming months.
One more thing to consider. When contemplating whether to start a new business or not, or expand an exisiting one, Americans are not looking at trade patterns or policy to figure out what their operating costs will be. They are looking at regulatory costs — fees, state-mandated employer contributions, other regulatory compliance; they are looking at taxes; they are looking at the cost and availability of capital, which are dramatically affected by real estate values and the investment climate; and they are looking at the prospects for profit, to which the tax code and the soundness of the currency matter greatly.
#15,”They are looking at regulatory costs — fees, state-mandated employer contributions, other regulatory compliance; they are looking at taxes; they are looking at the cost and availability of capital, which are dramatically affected by real estate values and the investment climate; and they are looking at the prospects for profit, to which the tax code and the soundness of the currency matter greatly.
You mentioned everything but the most important item on their list,and that is Demand for their goods and services. If demand is there, they will find a way to satisfy it. Your Supply Side Centric view isn’t touching the core problems of our economy. Part of the core problem is that a GDP that is 70% dependent on consumer purchases is unsustainable. We have to have a much more vital Business to Business component.
The other area you didn’t touch is the international “floating” currency system which started in 1971. The damage it has done to us in incalculable.
RCAR I think you are spitting in the win. The economy maybe 70% consumption but that does not account for the needed growth in the economy at the margins. Increased investment is what brings growth, which is a marginal quantity. You saying that it all about consumption because its 70% of GDP, is like a stock analyst saying it all about sales or revenue when it comes to evaluating stocks. With stocks, profits matter, and with GDP GROWTH, investment matters.
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Steven Says:
January 6th, 2009 at 4:06 PM
RCAR I think you are spitting in the win.
I agree;I always do that. But there won’t be additional investment until there are signs of growth,and there’ll be no growth until there’s additional investment. But, what there will be,is shrinkage.
I think we are splitting hairs here. Demand is a given, and businesses are contracting right now for two reasons – consumers are being stingier with dollars, and businesses are facing at the same time the prospect of unknown regulatory changes where the marginal value of employment at a certain level is not known if it will exceed its costs. So they become very conservative. When that happens, along with the down economy, this is what happens. AS unemployment spikes, workers get even more concerned and the cycle keeps repeating itself.
I think most posters here would be aware that the government’s complicity in fostering both the financial crisis and on a more long term basis the hurdles the autos face is pretty plain to see. But that is a given, the government meddles, often screws it up and on we go. I think this meddling is the biggest danger the Obama administration presents. If he really sees the need for the 2nd coming of the new deal, then we are just going to be screwed for awhile.
I think what is necessary to see is where is the bottom. Do we have any signals that we are bottoming out. Construction spending seems to be moving up finally and some of the worst real estate areas , the ones where the bubble popped first are beginning to show signs of recovery. How long that takes to work its way through is anybody’s guess. Once those glimmers of hope become more obvious, as long as we don’t get too many stupid government rules, businesses will consider hiring again. But I see 2009 as being pretty slow, with the unemployment rate increasing.
One potential bright spot – businesses in general carry much less finished goods and in process inventory than they did in the past as JIT and logistics improvements reduce the need to keep alot of cash tied up in material. Therefore, when demand shows sign of improvement, businesses will be able to see it more quickly and will get to the point of evaluating the impact of comparing the cost of a new worker versus the benefit they bring. That may ease the sting of what in the past would have been a longer downturn.