Commentary Magazine


Posts For: March 29, 2009

COMMENTARY on C-SPAN

The discussion featuring John Podhoretz, Bill Kristol and Jonah Goldberg on the future of conservatism and conservative magazines, sponsored by COMMENTARY, has now been posted online.

The discussion featuring John Podhoretz, Bill Kristol and Jonah Goldberg on the future of conservatism and conservative magazines, sponsored by COMMENTARY, has now been posted online.

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So Much for the World’s President

Last month, Vice President Joe Biden told the Munich security conference that the Obama administration would “lead by example.” The implication, of course, is that the U.S. will “no longer” attempt to persuade other nations with admonitions and threats, and will not “go it alone.” It is a fine idea. No one wants friction where merely setting a precedent would suffice. The hitch is that it’s not enough to “lead by example”; others have to follow.  And on the eve of the first G20 summit of Obama’s term, Europe has decided to go its own way on the most pressing international issue of the day. EU leaders rejected Obama’s and Gordon Brown’s “Global New Deal.”

“I will not let anyone tell me that we must spend more money,” said German Chancellor Angela Merkel. The sentiment was echoed by French and Spanish statesmen. As the Times of London points out, “The assault by European Union leaders also represents a defeat for President Barack Obama, who is desperate for other big economies to copy his $800 billion stimulus plan.”

It would be too easy to say the U.S.’s stimulus plan is terrible and that’s the only reason why Europe won’t follow suit. As it happens, Gordon Brown wants to increase tax cuts and the Eurozone is having none of that. The point is: the rest of the world will not follow the U.S. just because a charming American president smiles and compliments everyone in his path. This is not the first indication that Obama’s charm has its limitations. He is having a hard time getting Europe to pledge more troops to Afghanistan and convincing the Continent to take in Guantanamo Bay detainees. (This is to say nothing of his depressing failure to flatter hostile nations into cooperating with us.)

Taking personalities out of the equation, what indicates a higher degree of American arrogance: a president who understands the need to “go it alone” because he knows that other countries will sometimes cling to their own agendas no matter what, or a president who assumes that the rest of the world will follow America’s example because we are simply worth following?

Last month, Vice President Joe Biden told the Munich security conference that the Obama administration would “lead by example.” The implication, of course, is that the U.S. will “no longer” attempt to persuade other nations with admonitions and threats, and will not “go it alone.” It is a fine idea. No one wants friction where merely setting a precedent would suffice. The hitch is that it’s not enough to “lead by example”; others have to follow.  And on the eve of the first G20 summit of Obama’s term, Europe has decided to go its own way on the most pressing international issue of the day. EU leaders rejected Obama’s and Gordon Brown’s “Global New Deal.”

“I will not let anyone tell me that we must spend more money,” said German Chancellor Angela Merkel. The sentiment was echoed by French and Spanish statesmen. As the Times of London points out, “The assault by European Union leaders also represents a defeat for President Barack Obama, who is desperate for other big economies to copy his $800 billion stimulus plan.”

It would be too easy to say the U.S.’s stimulus plan is terrible and that’s the only reason why Europe won’t follow suit. As it happens, Gordon Brown wants to increase tax cuts and the Eurozone is having none of that. The point is: the rest of the world will not follow the U.S. just because a charming American president smiles and compliments everyone in his path. This is not the first indication that Obama’s charm has its limitations. He is having a hard time getting Europe to pledge more troops to Afghanistan and convincing the Continent to take in Guantanamo Bay detainees. (This is to say nothing of his depressing failure to flatter hostile nations into cooperating with us.)

Taking personalities out of the equation, what indicates a higher degree of American arrogance: a president who understands the need to “go it alone” because he knows that other countries will sometimes cling to their own agendas no matter what, or a president who assumes that the rest of the world will follow America’s example because we are simply worth following?

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Anti-Zionist Hipsters

This is deeply enjoyable:

They are, by and large, promoted by politically immature wannabe revolutionaries, often coming from comfy upper middle class backgrounds, who buy into a whole load of pseudo-leftist bull**** and who dream (assisted by copious amounts of weed) of being some kind of ‘revolutionary’ vanguard. Of course they don’t really care about Palestinians – they’re too wrapped up in their own narcissistic fantasies to seriously examine the Israel-Palestine situation. Having missed out on 1968, these kids instead indulge in Israel-bashing and the thrill of vicarious terrorism through their ’solidarity’ with Hamas and other Islamists. The only good news is that most of them will soon be getting their hair cut, packing away their keffiyehs and entering the adult world.

This is deeply enjoyable:

They are, by and large, promoted by politically immature wannabe revolutionaries, often coming from comfy upper middle class backgrounds, who buy into a whole load of pseudo-leftist bull**** and who dream (assisted by copious amounts of weed) of being some kind of ‘revolutionary’ vanguard. Of course they don’t really care about Palestinians – they’re too wrapped up in their own narcissistic fantasies to seriously examine the Israel-Palestine situation. Having missed out on 1968, these kids instead indulge in Israel-bashing and the thrill of vicarious terrorism through their ’solidarity’ with Hamas and other Islamists. The only good news is that most of them will soon be getting their hair cut, packing away their keffiyehs and entering the adult world.

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“Basra’s Back in Business.”

Time magazine has a photo essay titled “Basra’s Back in Business.” In a collection of 11 photographs, Abbie Trayler-Smith captures a welcome normalcy in the Iraq province. It is a beautiful collection that implicitly — the editors don’t explicitly give credit where it’s due — praises the allied efforts in Basra. A photo essay depicting normalcy in the lives of Iraqi citizens is a welcome sign — and a sign of progress that the media will be more likely to celebrate now that President Bush has left office.

Time magazine has a photo essay titled “Basra’s Back in Business.” In a collection of 11 photographs, Abbie Trayler-Smith captures a welcome normalcy in the Iraq province. It is a beautiful collection that implicitly — the editors don’t explicitly give credit where it’s due — praises the allied efforts in Basra. A photo essay depicting normalcy in the lives of Iraqi citizens is a welcome sign — and a sign of progress that the media will be more likely to celebrate now that President Bush has left office.

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Really, What Would Be the Point of Bipartisanship?

The Washington Times reports:

“There are things that, statements that then-candidate Obama made during the campaign over and over and over again that obviously he’s not staying with,” Mr. McCain told The Washington Times in an hour-long interview with reporters and editors.

McCain effectively compiles a list of Obama’s broken campaign promises — trade, nuclear power, and earmarks, to name a few. But nothing is more accurate than his analysis of Obama’s lack of bipartisanship. With substantial credibility on a topic he’s mastered (annoying his own base and defining his political persona), he explains:

” ‘We won, we wrote the bill.’ That applies not just to that bill, but it does to all of the other pieces of legislation, too,” he said, clearly exasperated. “We’re not in on the takeoff, and anybody who calls the stimulus package … bipartisan — you pick off three Republicans? That’s not bipartisanship.”

[. . .]

Mr. Obama, who vowed to change politics as usual in Washington, made a show of bipartisanship as he took office, even throwing an inaugural ball to celebrate his Republican opponent in the presidential race. But since then, Mr. McCain said he has been consulted just once by the administration, when a White House lawyer visited to discuss the closing of Guantanamo Bay.

“Aside from that, I have not known of an occasion where they sit down across the table. Now, there’s been occasions where the president comes and talks to Republicans, the president talks to — et cetera, but that’s not good bipartisanship,” he said. . . .”I’ve been around for a lot of administrations, and the way you address an issue in a bipartisan fashion is you invite somebody over and you sit down at a table and you say, ‘OK, here’s our position on this issue, and here’s what we want — what do you want? What’s your priority? And you sit down and work out an agreement and you come out and you say, like [former Democratic House Speaker] Tip O’Neill and Ronald Reagan did, that we’ve agreed and we’re going to push this through,” he said.

By now it should be apparent that bipartisanship was an Obama campaign pose meant to allay voters concerns that candidate Obama was a wide-eyed radical bent on taking the country sharply to the Left. Now that he is president, well, he’s pretty much bent on taking the country sharply to the Left. So there’s really nothing to talk about substantively with Republicans. They, of course, would only want to take the country not to the Left.

Bipartisanship per se is never exactly a winning political issue. But policy choices and perceived extremism do motivate and scare voters. It is not the absence of bipartisanship which may hobble Obama, but the reason he has eschewed bipartisanship: his desire to take the country dramatically to the Left. If that’s not where a majority of the country wants to go, he’ll be in trouble. So far, it’s not where many in his party want to go — which accounts for the resistance from his own ranks on everything from card check, to cap-and-trade, to the budget spending bonanza.

The Washington Times reports:

“There are things that, statements that then-candidate Obama made during the campaign over and over and over again that obviously he’s not staying with,” Mr. McCain told The Washington Times in an hour-long interview with reporters and editors.

McCain effectively compiles a list of Obama’s broken campaign promises — trade, nuclear power, and earmarks, to name a few. But nothing is more accurate than his analysis of Obama’s lack of bipartisanship. With substantial credibility on a topic he’s mastered (annoying his own base and defining his political persona), he explains:

” ‘We won, we wrote the bill.’ That applies not just to that bill, but it does to all of the other pieces of legislation, too,” he said, clearly exasperated. “We’re not in on the takeoff, and anybody who calls the stimulus package … bipartisan — you pick off three Republicans? That’s not bipartisanship.”

[. . .]

Mr. Obama, who vowed to change politics as usual in Washington, made a show of bipartisanship as he took office, even throwing an inaugural ball to celebrate his Republican opponent in the presidential race. But since then, Mr. McCain said he has been consulted just once by the administration, when a White House lawyer visited to discuss the closing of Guantanamo Bay.

“Aside from that, I have not known of an occasion where they sit down across the table. Now, there’s been occasions where the president comes and talks to Republicans, the president talks to — et cetera, but that’s not good bipartisanship,” he said. . . .”I’ve been around for a lot of administrations, and the way you address an issue in a bipartisan fashion is you invite somebody over and you sit down at a table and you say, ‘OK, here’s our position on this issue, and here’s what we want — what do you want? What’s your priority? And you sit down and work out an agreement and you come out and you say, like [former Democratic House Speaker] Tip O’Neill and Ronald Reagan did, that we’ve agreed and we’re going to push this through,” he said.

By now it should be apparent that bipartisanship was an Obama campaign pose meant to allay voters concerns that candidate Obama was a wide-eyed radical bent on taking the country sharply to the Left. Now that he is president, well, he’s pretty much bent on taking the country sharply to the Left. So there’s really nothing to talk about substantively with Republicans. They, of course, would only want to take the country not to the Left.

Bipartisanship per se is never exactly a winning political issue. But policy choices and perceived extremism do motivate and scare voters. It is not the absence of bipartisanship which may hobble Obama, but the reason he has eschewed bipartisanship: his desire to take the country dramatically to the Left. If that’s not where a majority of the country wants to go, he’ll be in trouble. So far, it’s not where many in his party want to go — which accounts for the resistance from his own ranks on everything from card check, to cap-and-trade, to the budget spending bonanza.

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Biden: A V.P., or a Cliche?

In today’s New York Times, we have the latest evidence that Vice-President Joe Biden remains without a meaningful role in the Obama administration.  Indeed, a slate of high-profile interviewees – President Barack Obama, Secretary of State Hillary Clinton, Senator Ted Kaufman, and David Axelrod – attempts to define Biden’s function within the administration by using a startling number of clichés:

Mr. Biden has settled into a role of what Mr. Obama compares to a basketball player “who does a bunch of things that don’t show up in the stat sheet,” the president said in an interview Friday. “He gets that extra rebound, takes the charge, makes that extra pass.”

“Joe is very good about sometimes articulating what’s on other people’s minds, or things that they’ve said in private conversations that people have been less willing to say in public. Joe, in that sense, can help stir the pot.”

“He was a good soldier,” said Senator Ted Kaufman.

“Like every single human being, his strength is his weakness, his weakness is his strength,” said Mr. Axelrod, now Mr. Obama’s senior adviser at the White House. “I think the strength outweighs the weakness to a large degree. And it’s all related to someone who speaks his mind and is forthright.”

“I think he’s playing the role as ‘adviser in chief’ that he has foreseen,” Mrs. Clinton said of Mr. Biden …

Of course, none of these clichés describes an actual job.  Clearly, this is the way the administration wants it: administration officials are so wary of Biden (can you blame them?) that they prevented the Vice-President from being interviewed in an article about himself!

In today’s New York Times, we have the latest evidence that Vice-President Joe Biden remains without a meaningful role in the Obama administration.  Indeed, a slate of high-profile interviewees – President Barack Obama, Secretary of State Hillary Clinton, Senator Ted Kaufman, and David Axelrod – attempts to define Biden’s function within the administration by using a startling number of clichés:

Mr. Biden has settled into a role of what Mr. Obama compares to a basketball player “who does a bunch of things that don’t show up in the stat sheet,” the president said in an interview Friday. “He gets that extra rebound, takes the charge, makes that extra pass.”

“Joe is very good about sometimes articulating what’s on other people’s minds, or things that they’ve said in private conversations that people have been less willing to say in public. Joe, in that sense, can help stir the pot.”

“He was a good soldier,” said Senator Ted Kaufman.

“Like every single human being, his strength is his weakness, his weakness is his strength,” said Mr. Axelrod, now Mr. Obama’s senior adviser at the White House. “I think the strength outweighs the weakness to a large degree. And it’s all related to someone who speaks his mind and is forthright.”

“I think he’s playing the role as ‘adviser in chief’ that he has foreseen,” Mrs. Clinton said of Mr. Biden …

Of course, none of these clichés describes an actual job.  Clearly, this is the way the administration wants it: administration officials are so wary of Biden (can you blame them?) that they prevented the Vice-President from being interviewed in an article about himself!

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Talking Sense

Sometimes the public at large, as inexpert as it may be on the intricacies of economic policy and unschooled as it is in the fine points of what has passed for sophisticated financial practices, get to fundmental truths before the Beltway and academic elites. The public has had it with bailouts — for banks, AIG, and car companies. They sense we are wasting billions, enriching the undeserving, sparing the mendacious and ultimately postponing and worsening the inevitable reckoning. And unlike Congress they understand that the bill will be coming to them, their kids and their grandkids. Not many inside the Beltway grasp this — or will admit it if they do.

Then along comes someone talking sense:

“If companies fail, you need to let them fail,” former SEC Chairman Richard Breeden told the Senate Banking Committee Thursday. Mr. Breeden went on to trash almost every premise behind Treasury Secretary Timothy Geithner’s year of bailouts. “We seem to have policy makers who either don’t understand it or are afraid to use it,” he said of Chapter 11 of the bankruptcy code.

Turning to Mr. Geithner’s latest idea of an overall regulator of systemic risk, Mr. Breeden said: “It won’t work to try to assign planning for every potential risk in the economy to a single agency unless we want a centrally planned economy like the old Soviet Union. . . . It is particularly hard for me to see a case that any single group of regulators did such a good job [in anticipating the current crisis] that they deserve becoming the Über Regulator of the country.”

[.   .    .]

“The rule of law is a very valuable thing,” said Mr. Breeden, especially when compared to the ad hoc rescues of the past year. Mr. Breeden added that the Federal Reserve “should be a central bank, not the world’s largest hedge fund.”

Mr. Breeden proposed a simple reform in which courts would be given the resources to quickly process an AIG-sized bankruptcy. He recommended “a special ‘systemic bankruptcy’ court composed of federal District or Circuit Court judges with prior experience in large bankruptcy or receivership cases,” much as the Foreign Intelligence Surveillance Court specializes in weighing warrant requests related to foreign spying in the U.S.

Gosh, that does make a whole lot of sense. We stop politicians and appointees from running businesses for which they have no expertise.  (No longer do we have a committee of a dozen people, who are only getting up to speed on the operation of the car industry, deciding the fate of billions in taxpayer subsidies.) We allow shareholders and management to bear the lionshare of the financial burden — not the taxpayers. And whatever taxpayer resources we have been spending by the boatload on ineffective bailouts can go toward retraining employees or providing incentives for viable firms to expand and hire.

You would think after the AIG bonus debacle the politicians would have learned some humility. But no, they’re still bent on micromanaging the economy. If you thought markets were imperfect, wait until the politicians and their hired hands run the show. There is another choice — one which the country at large seems to be embracing. We’ll have to see if any of the Washington crowd follows.

Sometimes the public at large, as inexpert as it may be on the intricacies of economic policy and unschooled as it is in the fine points of what has passed for sophisticated financial practices, get to fundmental truths before the Beltway and academic elites. The public has had it with bailouts — for banks, AIG, and car companies. They sense we are wasting billions, enriching the undeserving, sparing the mendacious and ultimately postponing and worsening the inevitable reckoning. And unlike Congress they understand that the bill will be coming to them, their kids and their grandkids. Not many inside the Beltway grasp this — or will admit it if they do.

Then along comes someone talking sense:

“If companies fail, you need to let them fail,” former SEC Chairman Richard Breeden told the Senate Banking Committee Thursday. Mr. Breeden went on to trash almost every premise behind Treasury Secretary Timothy Geithner’s year of bailouts. “We seem to have policy makers who either don’t understand it or are afraid to use it,” he said of Chapter 11 of the bankruptcy code.

Turning to Mr. Geithner’s latest idea of an overall regulator of systemic risk, Mr. Breeden said: “It won’t work to try to assign planning for every potential risk in the economy to a single agency unless we want a centrally planned economy like the old Soviet Union. . . . It is particularly hard for me to see a case that any single group of regulators did such a good job [in anticipating the current crisis] that they deserve becoming the Über Regulator of the country.”

[.   .    .]

“The rule of law is a very valuable thing,” said Mr. Breeden, especially when compared to the ad hoc rescues of the past year. Mr. Breeden added that the Federal Reserve “should be a central bank, not the world’s largest hedge fund.”

Mr. Breeden proposed a simple reform in which courts would be given the resources to quickly process an AIG-sized bankruptcy. He recommended “a special ‘systemic bankruptcy’ court composed of federal District or Circuit Court judges with prior experience in large bankruptcy or receivership cases,” much as the Foreign Intelligence Surveillance Court specializes in weighing warrant requests related to foreign spying in the U.S.

Gosh, that does make a whole lot of sense. We stop politicians and appointees from running businesses for which they have no expertise.  (No longer do we have a committee of a dozen people, who are only getting up to speed on the operation of the car industry, deciding the fate of billions in taxpayer subsidies.) We allow shareholders and management to bear the lionshare of the financial burden — not the taxpayers. And whatever taxpayer resources we have been spending by the boatload on ineffective bailouts can go toward retraining employees or providing incentives for viable firms to expand and hire.

You would think after the AIG bonus debacle the politicians would have learned some humility. But no, they’re still bent on micromanaging the economy. If you thought markets were imperfect, wait until the politicians and their hired hands run the show. There is another choice — one which the country at large seems to be embracing. We’ll have to see if any of the Washington crowd follows.

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Lessons from Columbia

In “Days of Rage Recalled,” Stefan Kanfer reviews Mark Rudd’s “Undergound” — an autobiography by the leader of the 1968 takeover of the buildings at Columbia University, which convulsed the campus and served as the prelude to a decade of bombings, armed robbery and incitement to murder, all in pursuit of a better Amerika.  Kanfer calls the book a series of rationales for Rudd’s toxic behavior, followed by “one of the most unconvincing mea culpas since Bernie Madoff turned himself in.”

In 1977, Mr. Rudd finally surfaced in a well-hyped, thoroughly lawyered surrender to federal authorities. He gloats that at his arraignment he was “treated more or less as a V.I.P. rather than a bail jumper and an accused felon revolutionary.” Another delight: Most of the charges against him were dropped, and he got off with two years’ probation and a $2,000 fine.

Guilty as hell, free as a bird. 

The March/April issue of Columbia College Today features an interview with Dean Austin Quigley, retiring after completing the second longest tenure in the College’s 255-year history.  There is a reference to 1968 in his answer to the question of the derivation of the phrase “intergenerational community,” which is how he describes the College and its family.  It is a remarkable answer that serves as a better autobiographical lesson than Rudd’s book:

Everybody is influenced to some extent by the circumstances in which they grew up. I grew up in England after the Second World War, after a period of destruction on a global scale. It’s hard for people in the United States to grasp how long the effects of that war lingered in England. The bombed and derelict buildings stayed that way for many, many years. Rationing of food was still typical into the early and mid-1950s. Normal life certainly didn’t resume when peace came in 1945. I vividly recall to this day the first time I went to a candy store (sometime in the 1950s) when I could finally buy anything I wanted without producing the dreaded coupons that rationed out some tiny portion for so many years.

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In “Days of Rage Recalled,” Stefan Kanfer reviews Mark Rudd’s “Undergound” — an autobiography by the leader of the 1968 takeover of the buildings at Columbia University, which convulsed the campus and served as the prelude to a decade of bombings, armed robbery and incitement to murder, all in pursuit of a better Amerika.  Kanfer calls the book a series of rationales for Rudd’s toxic behavior, followed by “one of the most unconvincing mea culpas since Bernie Madoff turned himself in.”

In 1977, Mr. Rudd finally surfaced in a well-hyped, thoroughly lawyered surrender to federal authorities. He gloats that at his arraignment he was “treated more or less as a V.I.P. rather than a bail jumper and an accused felon revolutionary.” Another delight: Most of the charges against him were dropped, and he got off with two years’ probation and a $2,000 fine.

Guilty as hell, free as a bird. 

The March/April issue of Columbia College Today features an interview with Dean Austin Quigley, retiring after completing the second longest tenure in the College’s 255-year history.  There is a reference to 1968 in his answer to the question of the derivation of the phrase “intergenerational community,” which is how he describes the College and its family.  It is a remarkable answer that serves as a better autobiographical lesson than Rudd’s book:

Everybody is influenced to some extent by the circumstances in which they grew up. I grew up in England after the Second World War, after a period of destruction on a global scale. It’s hard for people in the United States to grasp how long the effects of that war lingered in England. The bombed and derelict buildings stayed that way for many, many years. Rationing of food was still typical into the early and mid-1950s. Normal life certainly didn’t resume when peace came in 1945. I vividly recall to this day the first time I went to a candy store (sometime in the 1950s) when I could finally buy anything I wanted without producing the dreaded coupons that rationed out some tiny portion for so many years.

Growing up in that post-war environment in one of the many devastated European countries leaves a lasting mark on you. And in England, it wasn’t just that our industrial base was bombed or obsolete but that what was lost with it was an international role and standing that would never be recovered. After two world wars involving incalculable sacrifice, the post-war world was one of shortage and struggle, and the future looked dim.

Many families I knew, including my own, had missing members buried in distant graves somewhere at home or abroad. Lots of survivors had broken bodies and no jobs. Two generations of women who might have chosen to marry found themselves single after the slaughter of the two world wars, with no opportunity to have partners and families of their own. The physical damage, the bomb sites and the derelict factories also signaled the end of an earlier way of life, and large pockets of past grandeur remained to remind us of what had been, along with the glorious English countryside. Magnificent public buildings and parks, and marvelous museums, theaters and galleries preserved the great residue of English culture, for better or worse.

This strange mixture of decaying grandeur and beauty on one hand and derelict bomb sites and rubble on the other exemplified a world in which past, present and future were unclearly aligned and loss was intricately interwoven with gain. The long lingering wartime rhetoric registered the continuing clash between historical aspiration and current reality. For many a family, the grim recognition was that your country could ask of you the last full measure of your devotion, and deliver, in return, nothing very substantial.

What you come out of such a childhood with is a very real sense of the fragility of things, of how even the most advanced of societies can suddenly be at risk and at any moment, and that what has taken generations to build can be destroyed in a relatively short time. If centuries of investment of effort, lives, talents and wealth can be wiped away so suddenly, if so much that seems reliable is always at risk, your understanding of intergenerational responsibilities and of the life of institutions is inevitably informed by that.

Leaving to one side, for example, the arguments about what should and should not have happened in the demanding Columbia circumstances of 1968, you look at events like those of that time and realize how vulnerable universities are, how important it is both to preserve and to renew the great cultural institutions in which lots of the values and many of the resources of our community are embedded. . . .

It is in that context that I feel acutely this sense of generational responsibility and the imperative of reiterating its importance. We have to help students here now to recognize their responsibility to each other and to the students who will come after them. Our Core Curriculum . . . helps them recognize that much of what they are lucky enough to take for granted has been earned by their predecessors’ efforts, that many things that are valuable are constantly at risk and can easily disappear, and that they’ve got to work hard to pass along the best of what we have to their successors. . . . [W]e all must be very alert to things that can damage it irreparably, or destroy it entirely. Losses on such a scale have happened before and can happen again.

. . . We are all links in a chain that goes back to 1754 and we, in our time, must strive to be among the strongest links and deal well with the challenges of our era as others have dealt with the challenges of theirs.

Quigley was born in England in 1942; Rudd in America in 1947 – different worlds, different times, different lives.

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Did They Think We Wouldn’t Notice?

Robert Reich argues that the president really isn’t in favor of big government. That’s just perposterous. Stephen Moore explains:

Here are the unhappy totals: the debt is $6 trillion higher from 2010 to 2019 than Obama’s forecast. In no single year over the next decade, even when counting the Social Security trust fund surpluses, does the budget deficit fall below $800 billion. The interest on the national debt rises to $850 billion a year by the middle of the next decade, which will be the largest single expenditure item in the budget–eight times more than we now spend on education and four times more than we spend on homeland security. Federal spending remains well over 25 percent of GDP and in some years creeps closer to 28 percent of GDP under the Obama budget, which ironically enough is entitled “A New Era of Responsibility.”

We are closing in on stagnant Western European levels of government intrusion into the economy. That economic model, by the way, which the left in the United States openly wants to emulate, has created half the jobs that the United States has over the past two decades and generated half the growth rates. Is it any wonder that the Chinese want an extra guarantee on U.S. Treasury debt and say it might be time for a new reserve currency?

(And Moore argues persuasively that the actual numbers will be even worse, given the phony baloney assumptions built into the Obama budgeting.)

Aside from the size of the federal government Obama favors,  one can’t avoid the scope of its reach: cap-and-trade regulation for every business, national healthcare for all its citizens, Geithner/Bernanke’s empowerment to seize “failing” businesses at will, regulation of executive compensation, cradle to employment education, and on and on it goes. Really, do Reich and Obama think we don’t notice the largest expansion of the public sector since, well, ever?

Understandably it’s not popular — still — to say you favor big (really, gargantuan) government. But to deny it amid such a massive plot to expand the public sector suggests a lack of respect for the intelligence of the American people.

Robert Reich argues that the president really isn’t in favor of big government. That’s just perposterous. Stephen Moore explains:

Here are the unhappy totals: the debt is $6 trillion higher from 2010 to 2019 than Obama’s forecast. In no single year over the next decade, even when counting the Social Security trust fund surpluses, does the budget deficit fall below $800 billion. The interest on the national debt rises to $850 billion a year by the middle of the next decade, which will be the largest single expenditure item in the budget–eight times more than we now spend on education and four times more than we spend on homeland security. Federal spending remains well over 25 percent of GDP and in some years creeps closer to 28 percent of GDP under the Obama budget, which ironically enough is entitled “A New Era of Responsibility.”

We are closing in on stagnant Western European levels of government intrusion into the economy. That economic model, by the way, which the left in the United States openly wants to emulate, has created half the jobs that the United States has over the past two decades and generated half the growth rates. Is it any wonder that the Chinese want an extra guarantee on U.S. Treasury debt and say it might be time for a new reserve currency?

(And Moore argues persuasively that the actual numbers will be even worse, given the phony baloney assumptions built into the Obama budgeting.)

Aside from the size of the federal government Obama favors,  one can’t avoid the scope of its reach: cap-and-trade regulation for every business, national healthcare for all its citizens, Geithner/Bernanke’s empowerment to seize “failing” businesses at will, regulation of executive compensation, cradle to employment education, and on and on it goes. Really, do Reich and Obama think we don’t notice the largest expansion of the public sector since, well, ever?

Understandably it’s not popular — still — to say you favor big (really, gargantuan) government. But to deny it amid such a massive plot to expand the public sector suggests a lack of respect for the intelligence of the American people.

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How to Create a Big Blast of Inflation

There is an easy way to re-inflate the economy. Just abate everyone’s income, business and payroll taxes for a year, two years, or even longer if necessary.

Policy right now has become a mad scramble to get money flowing through the veins and arteries of the economy. We have Congress passing huge spending bills that depend on fiscal deficits. We have the Treasury trying to convince us that securities based on existing mortgages are worth much more than everyone knows. We have the FDIC trying to convince us that people in distressed mortgages shouldn’t be allowed to default. And we have the Fed monetizing hundreds of billions of dollars’ worth of Treasury debt.

Why does all of this inflationary activity have no effect on prices? Because credit intermediation is still frozen at levels far below the norms of recent years. Inflation isn’t too many dollars; it’s too many dollars chasing too few goods. The roughly two-thirds of retail and business credit that has been being supplied by asset securitizations is now gone, and there’s no way for it to come back except at much higher interest rates. Which is to say, it won’t happen, because those higher rates cut against the logic of borrowing money in the first place.

We’re caught in a deflationary cycle which may or may not be every bit as bad as that of 1930-32. There’s no way to actually know that, because today’s monetary authorities, with Ben Bernanke at the head of the list, understand how important it is to counteract deflation. They’ve ginned up a gale of inflation, blowing in the opposite direction from the gale of deflation, and they’re roughly canceling each other out. (We are starting to see some asset bubbles begin to re-form, of course. Keep your eyes on oil and gold again, as well as U.S. Treasury debt.)

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There is an easy way to re-inflate the economy. Just abate everyone’s income, business and payroll taxes for a year, two years, or even longer if necessary.

Policy right now has become a mad scramble to get money flowing through the veins and arteries of the economy. We have Congress passing huge spending bills that depend on fiscal deficits. We have the Treasury trying to convince us that securities based on existing mortgages are worth much more than everyone knows. We have the FDIC trying to convince us that people in distressed mortgages shouldn’t be allowed to default. And we have the Fed monetizing hundreds of billions of dollars’ worth of Treasury debt.

Why does all of this inflationary activity have no effect on prices? Because credit intermediation is still frozen at levels far below the norms of recent years. Inflation isn’t too many dollars; it’s too many dollars chasing too few goods. The roughly two-thirds of retail and business credit that has been being supplied by asset securitizations is now gone, and there’s no way for it to come back except at much higher interest rates. Which is to say, it won’t happen, because those higher rates cut against the logic of borrowing money in the first place.

We’re caught in a deflationary cycle which may or may not be every bit as bad as that of 1930-32. There’s no way to actually know that, because today’s monetary authorities, with Ben Bernanke at the head of the list, understand how important it is to counteract deflation. They’ve ginned up a gale of inflation, blowing in the opposite direction from the gale of deflation, and they’re roughly canceling each other out. (We are starting to see some asset bubbles begin to re-form, of course. Keep your eyes on oil and gold again, as well as U.S. Treasury debt.)

Everyone in Washington is looking for a magic bullet that will cause GDP growth to start spinning back up, so they can tell us the crisis is over. Well, GDP rose strongly nearly every year from 1933 until the start of World War II. Nominal GDP growth doesn’t mean an end to depressed conditions. It just means things could be even worse than they are.

What if it turns out that credit intermediation via asset securitization really doesn’t make a comeback? What if we have to start depending on banks again for credit? This is a plausible strategy, but it depends on increasing capital in traditional banks.

What’s an easy way to do that? Abate every single dime of income, business and payroll tax for at least a year.

This would produce fiscal deficits that aren’t much larger than the ones we’re already talking about; and they would be sustainable, on a percentage-of-GDP basis. The extra money not taken in taxes would find its way magically into savings accounts held by consumers. (Mainstream economists, of course, consider this a bad thing.) When it gets there, the money would automatically increase the capital levels of the banks that aren’t badly hamstrung with legacy mortgage portfolios. There are thousands of these banks in the U.S., many of them community or regional banks that have not been damaged by the crisis.

Many people fail to appreciate that the federal government doesn’t need to collect taxes in order to spend money. It prints its own money. In a fiat-money world with a very large government, the only economic reason to collect taxes is to control the overall inflation level. But today, the whole problem in the economy is deflation rather than inflation. The most direct way of counteracting it is to abate tax collections. So let’s declare a full federal tax holiday. And let’s give it a year or two or three to work. Private credit formation will come back and the economy will start growing again.

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Flotsam and Jetsam

Blanche Lincoln stops waffling and says, “not the time or place” for card check. Hmm, how are the Big Labor bloggers going to spin that one? Forget 60 votes in the Senate — they may not have 50. Round 2: What “compromise” can they come up with? I suspect business groups aren’t in much of a mood to deal with no real threat of card check hanging over their heads.

From the not-change-at-all file: “President Obama has promised to change the way the government does business, but in at least one respect, he is taking a page from the Bush playbook, stocking his town hall meeting Thursday with supporters whose questions provided openings to discuss his preferred message of the day.”

And what’s more, not much has changed around the world since the end of the Bush era: “Despite his immense popularity around the world, Mr. Obama will confront resentment over American-style capitalism and resistance to his economic prescriptions when he lands in London on Tuesday for the Group of 20 summit meeting of industrial and emerging market nations plus the European Union.The president will not even try to overcome NATO’s unwillingness to provide more troops in Afghanistan when he goes on later in the week to meet with the military alliance.” I guess the world did not fall down at his feet and that “repairing our reputation” isn’t really in the cards.

There seems to be some tension between the bankers and the president. The banks can’t wait to give the TARP money back and get out from under the government’s thumb; the president doesn’t want the money back yet. As some of us suspected, once the government got their mitts on big financial institutions it wasn’t going to be easy to get them to let go.

The frontrunner New Jersey GOP gubernatorial candidate Chris Christie is having a rather easy time of it in the run up local conventions to the June primary. And his opponent is lagging in fundraising. Christie will need to save every dime he can to compete against Jon Corzine who has tens of millions, but sagging poll numbers.

Matt Continetti wonders: “The Beltway is waking up to the realities of President Obama’s budget plan, which taxes, spends, and borrows as far as the eye can see. The president’s vast new commitments in the areas of health care, energy, and education have already spooked small-government Republicans and the foreign investors who help finance America’s public debt. Now even some Democrats are beginning to realize that the president’s fiscal policies are unsustainable in the long–and maybe medium–run. What took them so long?” Well alot of them like big government, albeit not this big.

The Republicans have latched onto a new catch phrase to describe the president’s budget: “It spends too much, taxes too much and borrows too much.” Not very slick but neither was “It’s the economy, stupid.” (By 2010 the real slogan may be “It’s the unemployment, stupid.”)

As Gail Collins points out, David Paterson is not without his achievements: “In a state capital where anybody who is anybody is under indictment, he managed to completely alienate the public just by being terrible at his job.”

If you thought Maureen Dowd was nuts before, read her discourse on eye color.

The Washington Post editors at least ask the right question about Tim Geithner’s demand for seemingly unlimited new regulatory powers for Treasury and the Fed: “If the Federal Reserve gets the job of naming and supervising systemically risky companies, as many expect, won’t that embroil the central bank in endless lobbying and litigation? But if not the Fed, then who? How will the government collect insurance premiums for the necessary bailout fund? Can anyone devise purely objective criteria for systemic risk, or is this a case of “You know it when you see it”? And if that’s true, would the new plan create so much uncertainty that it deters not only dangerous financial growth and innovation but the healthy kind, too? “

Blanche Lincoln stops waffling and says, “not the time or place” for card check. Hmm, how are the Big Labor bloggers going to spin that one? Forget 60 votes in the Senate — they may not have 50. Round 2: What “compromise” can they come up with? I suspect business groups aren’t in much of a mood to deal with no real threat of card check hanging over their heads.

From the not-change-at-all file: “President Obama has promised to change the way the government does business, but in at least one respect, he is taking a page from the Bush playbook, stocking his town hall meeting Thursday with supporters whose questions provided openings to discuss his preferred message of the day.”

And what’s more, not much has changed around the world since the end of the Bush era: “Despite his immense popularity around the world, Mr. Obama will confront resentment over American-style capitalism and resistance to his economic prescriptions when he lands in London on Tuesday for the Group of 20 summit meeting of industrial and emerging market nations plus the European Union.The president will not even try to overcome NATO’s unwillingness to provide more troops in Afghanistan when he goes on later in the week to meet with the military alliance.” I guess the world did not fall down at his feet and that “repairing our reputation” isn’t really in the cards.

There seems to be some tension between the bankers and the president. The banks can’t wait to give the TARP money back and get out from under the government’s thumb; the president doesn’t want the money back yet. As some of us suspected, once the government got their mitts on big financial institutions it wasn’t going to be easy to get them to let go.

The frontrunner New Jersey GOP gubernatorial candidate Chris Christie is having a rather easy time of it in the run up local conventions to the June primary. And his opponent is lagging in fundraising. Christie will need to save every dime he can to compete against Jon Corzine who has tens of millions, but sagging poll numbers.

Matt Continetti wonders: “The Beltway is waking up to the realities of President Obama’s budget plan, which taxes, spends, and borrows as far as the eye can see. The president’s vast new commitments in the areas of health care, energy, and education have already spooked small-government Republicans and the foreign investors who help finance America’s public debt. Now even some Democrats are beginning to realize that the president’s fiscal policies are unsustainable in the long–and maybe medium–run. What took them so long?” Well alot of them like big government, albeit not this big.

The Republicans have latched onto a new catch phrase to describe the president’s budget: “It spends too much, taxes too much and borrows too much.” Not very slick but neither was “It’s the economy, stupid.” (By 2010 the real slogan may be “It’s the unemployment, stupid.”)

As Gail Collins points out, David Paterson is not without his achievements: “In a state capital where anybody who is anybody is under indictment, he managed to completely alienate the public just by being terrible at his job.”

If you thought Maureen Dowd was nuts before, read her discourse on eye color.

The Washington Post editors at least ask the right question about Tim Geithner’s demand for seemingly unlimited new regulatory powers for Treasury and the Fed: “If the Federal Reserve gets the job of naming and supervising systemically risky companies, as many expect, won’t that embroil the central bank in endless lobbying and litigation? But if not the Fed, then who? How will the government collect insurance premiums for the necessary bailout fund? Can anyone devise purely objective criteria for systemic risk, or is this a case of “You know it when you see it”? And if that’s true, would the new plan create so much uncertainty that it deters not only dangerous financial growth and innovation but the healthy kind, too? “

Read Less




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