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Posts For: July 26, 2011

Reid’s VooDoo War Savings

Sen. Harry Reid’s debt reduction plan – endorsed by President Obama last night – includes $1 trillion in “spending cuts” from the planned drawdown of the wars in Iraq and Afghanistan. That’s more than a third of his entire $2.7 trillion proposed savings.

Needless to say, the ratings agencies aren’t delighted by the proposal to count war savings – which were already expected to happen anyway – as spending cuts. Goldman Sachs circled a memo yesterday warning that the war savings plan could lead to a credit downgrade:

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Sen. Harry Reid’s debt reduction plan – endorsed by President Obama last night – includes $1 trillion in “spending cuts” from the planned drawdown of the wars in Iraq and Afghanistan. That’s more than a third of his entire $2.7 trillion proposed savings.

Needless to say, the ratings agencies aren’t delighted by the proposal to count war savings – which were already expected to happen anyway – as spending cuts. Goldman Sachs circled a memo yesterday warning that the war savings plan could lead to a credit downgrade:

Nearly half of the deficit reduction in Reid’s plan would come from phantom war savings, according to the Goldman memo.

“The (withdrawal of troops from Iraq and Afghanistan) would show up in official budget estimates as savings of about $1.2 trillion versus current law,” the memo reads. “If this proposal were to prevail without a credible follow-on process, a ratings downgrade could ensue, since against most outside baseline budget estimates only the first portion of spending cuts, and not the war spending savings, would show up as deficit reduction.”

Democrats have countered that the Republican-supported Rep. Paul Ryan budget plan also included these so-called war savings. But as Phil Klein notes in the Washington Examiner, “the reality is more complicated.” Because there are varying estimates of what spending levels would look like if they continued unaltered, Ryan’s plan apparently included comparisons of these different baselines. One of the estimates he used was a Congressional Budget Office projection that included war savings.

Phil spoke with Ryan’s communications director Conor Sweeney, who ripped apart the Reid-Ryan comparison:

The CBO current law baseline assumes surge-level spending in Iraq and Afghanistan is scheduled to continue over the next decade. We – most Americans and the credit markets – would think that is a flawed assumption. In the interest of transparency, the House-passed budget does include comparisons to the current law baseline — but we also note repeatedly and consistently the flaws in using this benchmark to exaggerate savings.

Moreover, Sweeney notes Ryan didn’t count the $1 trillion as a spending cut. In contrast, it’s the backbone of Reid’s reduction plan.

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PA’s UN Bid Undermines its Own People’s Top Priority

Yesterday,  Jonathan discussed Israeli concerns the Palestinian Authority’s bid for UN recognition as a state in September might spark a third intifada. But while the PA’s indifference to Israel’s fears might be understandable, its blatant disregard of its own people’s concerns ought to trouble the West.

Last week, The Israel Project released further results of its in-depth survey of Palestinian opinion, conducted by American pollster Stanley Greenberg and the Palestinian  Center for Public Opinion via face-to-face interviews with 1,010 Palestinians. The poll’s first section, which focused on Palestinians’ long-term goals, found that 66 percent view a two-state solution as a mere stepping-stone to their ultimate goal of Israel’s eradication. The current section, which focused on near-term goals, found that fully 80 percent of Palestinians listed job creation as one of their two top priorities, far outstripping the second-place choice (healthcare, at 36 percent). By contrast, only 4 percent deemed UN recognition of a Palestinian state a top priority, while only 1percent viewed mass protests against Israel as a priority.

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Yesterday,  Jonathan discussed Israeli concerns the Palestinian Authority’s bid for UN recognition as a state in September might spark a third intifada. But while the PA’s indifference to Israel’s fears might be understandable, its blatant disregard of its own people’s concerns ought to trouble the West.

Last week, The Israel Project released further results of its in-depth survey of Palestinian opinion, conducted by American pollster Stanley Greenberg and the Palestinian  Center for Public Opinion via face-to-face interviews with 1,010 Palestinians. The poll’s first section, which focused on Palestinians’ long-term goals, found that 66 percent view a two-state solution as a mere stepping-stone to their ultimate goal of Israel’s eradication. The current section, which focused on near-term goals, found that fully 80 percent of Palestinians listed job creation as one of their two top priorities, far outstripping the second-place choice (healthcare, at 36 percent). By contrast, only 4 percent deemed UN recognition of a Palestinian state a top priority, while only 1percent viewed mass protests against Israel as a priority.

 

But the problem isn’t just that Palestinians don’t view UN recognition as a priority. It’s that the bid for UN recognition directly undermines the goal they do consider top priority: job creation.

First, the statehood bid easily could lead to renewed violence – which would devastate the Palestinian economy just as the second intifada did – because it creates expectations that can’t be met. UN recognition of a Palestinian state won’t bring statehood any closer in practice; Israeli troops and settlements won’t suddenly disappear. The ensuing frustration might well spark renewed Palestinian terror, or else mass protests that could quickly degenerate into violence especially if terrorists utilize their favorite trick of stationing snipers in the crowds to force Israeli soldiers to return fire).

This is especially likely because some Palestinian leaders are irresponsibly calling for precisely that. Just last week, Marwan Barghouti, the Fatah leader who is
widely considered the second intifada’s architect, called for mass protests in September from the Israeli jail where he is serving five life sentences for murder. And Barghouti remains wildly popular among Palestinians: Indeed, polls show he would beat Hamas’s candidate by a larger margin than current PA President Mahmoud Abbas would.

But even if violence doesn’t materialize, Israel will presumably penalize the PA somehow for blatantly violating yet another signed agreement – in this case, the 1995 Interim Agreement, which states that “Neither side shall initiate or take any step that will change the status of the West Bank and the Gaza Strip pending the outcome of the permanent status negotiations.” And any Israeli response is likely to hurt the PA’s economy: Israel is the PA’s largest trading partner; Israelis employed 11 percent of all working Palestinians last year; and under the very same Oslo Accords that the UN bid violates, Israel collects and transfers up to $1.4 billion a year in taxes for the PA, which comprise two-thirds of the PA budget.

Hence, the PA’s UN bid undermines its own people’s top priority. And that ought to make Western countries think twice about supporting it.

 

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