Commentary Magazine


Posts For: February 19, 2013

Is Netanyahu Outsmarting Himself Again?

Over the course of the last year, Israeli Prime Minister Benjamin Netanyahu made a series of decisions that took what seemed like an unassailable political position and turned into a shaky re-election. He choose to make an alliance with the faltering Kadima Party that soon unraveled rather than seek early an election in the fall of 2012 when he was at his strongest. His public grandstanding about President Obama’s stance on Iran and the slights he received from the White House was interpreted as an intervention in the U.S. election on behalf of Mitt Romney that did neither the Republican nor the prime minister any good. Then he merged his Likud Party with Avigdor Lieberman’s Yisrael Beitenu Party prior to the January Knesset election that served only to drive secular voters into the arms of upstart Yair Lapid’s Yesh Atid.

Given the paucity of credible opponents for the office of prime minister and the collapse of Israel’s political left none of this was enough to cost Netanyahu the election but the Likud’s haul of Knesset seats was less than he might have gotten a few months earlier had he avoided these mistakes. But as the PM conducts the negotiations to form a new government, it may be that he is about to commit another blunder. Though one should take any of the reports leaking out of the talks between the Israeli parties with more than a few grains of salt, right now it looks as if Netanyahu is on the verge of outsmarting himself again and setting up the Likud for a potential electoral disaster at the next election.

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Over the course of the last year, Israeli Prime Minister Benjamin Netanyahu made a series of decisions that took what seemed like an unassailable political position and turned into a shaky re-election. He choose to make an alliance with the faltering Kadima Party that soon unraveled rather than seek early an election in the fall of 2012 when he was at his strongest. His public grandstanding about President Obama’s stance on Iran and the slights he received from the White House was interpreted as an intervention in the U.S. election on behalf of Mitt Romney that did neither the Republican nor the prime minister any good. Then he merged his Likud Party with Avigdor Lieberman’s Yisrael Beitenu Party prior to the January Knesset election that served only to drive secular voters into the arms of upstart Yair Lapid’s Yesh Atid.

Given the paucity of credible opponents for the office of prime minister and the collapse of Israel’s political left none of this was enough to cost Netanyahu the election but the Likud’s haul of Knesset seats was less than he might have gotten a few months earlier had he avoided these mistakes. But as the PM conducts the negotiations to form a new government, it may be that he is about to commit another blunder. Though one should take any of the reports leaking out of the talks between the Israeli parties with more than a few grains of salt, right now it looks as if Netanyahu is on the verge of outsmarting himself again and setting up the Likud for a potential electoral disaster at the next election.

According to Haaretz, the first Israeli Party to accept Netanyahu’s invitation to join his government is something of a surprise: Tzipi Livni’s Hatnuah. Livni, a longtime Netanyahu antagonist who ran as a critic of the Likud’s stance on the peace process did poorly at the polls getting only six seats. But Netanyahu has nevertheless rewarded her with the post of Justice minister and leadership of peace negotiations with the Palestinians. In of itself that might not be such a dumb idea. Livni is desperate for office and sticking her with the thankless of job of negotiating with Mahmoud Abbas is setting her up for certain failure. But the problem here is that this seems to be part of a scheme to assemble a coalition involving the ultra-Orthodox Parties that is designed to marginalize Lapid as well as Naftali Bennett, the prime minister’s potent rival on his right who also came out of the voting a winner.

As Haaretz details, Netanyahu’s plan seems to be to create a 57-seat bloc without either Lapid or Bennett which will leave both the choice of joining the Cabinet on Netanyahu’s terms or being left in the cold. That would seem to be a clever way of cutting Lapid and Bennett down to size as well as to avoid pressure to adopt a far reaching plan to change the draft system to ensure the conscription of the ultra-Orthodox the same as other Israelis. It would give him a government that would offer cover on the peace process with the Americans while making sure that neither Lapid nor Bennett could topple him.

But if that is Netanyahu’s goal, he is missing a historic opportunity as well as sowing the seeds for defeat the next time Israelis vote.

The January vote presented the prime minister with the chance to do what had eluded every previous Israeli government: fix the Haredi draft problem. The combined strength of Likud, Yesh Atid and Bennett’s Habayit Hayehudi would ensure a solid majority that would easily be joined by smaller parties that would support a program of draft change and maybe even make election reform possible. That would enrage the two ultra-Orthodox Parties Shas and United Torah Judaism but they would be powerless to stop the measure. But Netanyahu seems to be more bothered by the prospect of an alliance with Lapid and Bennett — both of whom are feeling their oats since the election — than the prospect of allying himself again with the dead weight of the Haredim or even Livni.

Four years ago, it was Livni and her then powerful Kadima faction (it won 28 seats then but was whittled down to 2 under Livni’s successor) that passed up the opportunity to do something about the draft when her wounded pride prevented an alliance with Likud. But if he chooses to embrace Shas and UTJ at the expense of Lapid, this time it will be Bibi who will be blamed for another Haredi victory that will be deeply resented by most Israeli voters.

Even more dangerous for Netanyahu is the prospect that Lapid will be smart enough to stay out of a government in which Shas and UTJ will be able to veto draft reform. The prime minister appears to resent Lapid’s boasts that he will build on his 2013 success and be elected prime minister the next time around. But it looks as though he fails to understand that the surest path to that result will be to keep Lapid out of the cabinet rather than welcoming him into it.

Many independent centrists running on platforms calling for drafting the Haredim have done well in Israeli elections before. But all succumbed to the siren call of government office and were then co-opted by their major party rivals. The only way for Lapid to avoid that fate is precisely by not making the same mistake. The formula for election victory for any of those who hope to replace Netanyahu at the next election is to stay out of the Cabinet and to help lead the opposition to the prime minister. That’s something that the Labor Party’s Shelly Yacimovich seems to understand even better than Lapid.

It may be that before the negotiating is done, Netanyahu will have abandoned his ultra-Orthodox allies and swallowed his pride and have done a deal with Lapid and Bennett that will be good for his country and his political future. But if not, we may look back on what is going on this week in Israel as one more example of Netanyahu being too clever by half and setting the stage for his political undoing.

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Must the GOP Cave on the Sequester?

President Obama is pulling out all the stops in his campaign to blame Republicans for the impending sequester disaster looming over the federal government. In spite of the fact that the sequester was his idea and that he has had ample opportunities to avert the devastating across-the-board cuts that may shortly go into effect, the president is following the same playbook he used during the debt ceiling and fiscal cliff negotiations. This morning’s White House speech in front of a backdrop of first responders was typical of the genre in which he relentlessly demagogued the issue and placed the blame for the loss of public employee jobs as well as the deleterious impact of the cuts on the economy and national defense squarely on Republicans.

His position is that he will not consider any effort to avert the sequester except one based on the so-called “balanced” approach in which even more tax increases are added on those the GOP agreed to in the fiscal cliff deal. Buoyed by his re-election and the way he was able to bulldoze the House majority last month, the president clearly believes he need do nothing to accommodate opposition concerns. If they stand their ground on tax hikes, he seems to think the public will absolve him and blast his foes.

Given the unpopularity of Congress, especially as opposed to the president’s relatively high job approval ratings, he may be right. That means if the sequester is to be avoided it will require another Republican collapse. Since, as Max Boot wrote earlier today, the costs of the sequester will be disastrous for national defense, some conservatives are arguing, as Max did, that the GOP has no choice but to give in. I sympathize with that concern but this is not advice that House Republicans can heed.

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President Obama is pulling out all the stops in his campaign to blame Republicans for the impending sequester disaster looming over the federal government. In spite of the fact that the sequester was his idea and that he has had ample opportunities to avert the devastating across-the-board cuts that may shortly go into effect, the president is following the same playbook he used during the debt ceiling and fiscal cliff negotiations. This morning’s White House speech in front of a backdrop of first responders was typical of the genre in which he relentlessly demagogued the issue and placed the blame for the loss of public employee jobs as well as the deleterious impact of the cuts on the economy and national defense squarely on Republicans.

His position is that he will not consider any effort to avert the sequester except one based on the so-called “balanced” approach in which even more tax increases are added on those the GOP agreed to in the fiscal cliff deal. Buoyed by his re-election and the way he was able to bulldoze the House majority last month, the president clearly believes he need do nothing to accommodate opposition concerns. If they stand their ground on tax hikes, he seems to think the public will absolve him and blast his foes.

Given the unpopularity of Congress, especially as opposed to the president’s relatively high job approval ratings, he may be right. That means if the sequester is to be avoided it will require another Republican collapse. Since, as Max Boot wrote earlier today, the costs of the sequester will be disastrous for national defense, some conservatives are arguing, as Max did, that the GOP has no choice but to give in. I sympathize with that concern but this is not advice that House Republicans can heed.

The president seems to be operating on the theory that Republicans are powerless to oppose the drift toward higher taxes and bigger government. His false pose as the reasonable moderate willing to listen to both sides pays lip service to the notion that Americans want their leaders to compromise. But a closer look at his proposals shows that the cuts he says he is willing to agree to are largely ephemeral. Like his State of the Union speech which contained a laundry list of new government spending programs and entitlements but which he claimed with a straight face would not increase the deficit by “a single dime,” the president’s credibility on this score is nonexistent. Republicans are right to think that any revenue raised will simply lead to more government spending and enable Democrats to avoid thinking seriously about entitlement reform.

Yet to listen to much of the mainstream media and even some respected voices on the right, the idea of the GOP expending any political capital fighting Obama on tax increases is a replay of the Charge of the Light Brigade. It will, we are told, either lead to a cave-in which will make the party loose credibility in the short term or lead to electoral disaster in 2014. The conventional wisdom of the day on this dilemma is that Republicans might as well give up now rather than engage in a protracted and doomed political struggle that will only worsen their public standing. It was this thought that led the House leadership to punt on the question of extending the debt ceiling last month rather than fight it out.

It can also be argued that those Republicans who are welcoming the sequester as an opportunity to starve the government beast are not being any more responsible than the president. Just as some conservatives are prepared to accept the defense cuts as a fair price for shrinking domestic spending via the sequester, so, too, the president appears to be willing to live with the domestic cuts (his crocodile tears about first responders notwithstanding) in order to cut defense spending.

Given the president’s current political advantage, which is compounded by his manipulation of the media which I discussed earlier today, it would seem the sequester crisis is a perfect storm for Republicans to which the only rational response would seem to be surrender.

But if that is a course the House GOP caucus rejects, they should not be labeled as either extremist or suicidal.

As much as the shelf life of the Tea Party’s opposition to big government and higher taxes seems to have already expired, the idea that Republicans are better off abandoning their principles is not one that will ensure their political survival. A lot of the discussion about the GOP future rightly revolves around the need to put forward new ideas rather than to keep pounding the talking points of the past but a Republican Party that no longer possesses the ability to stand up to Obama’s demagoguery of these issues is not going to win in either 2014 or 2016. A defeat on the sequester after the fiscal cliff collapse could presage even worse to come as the president pursues the rest of his liberal agenda this year. If Republicans are incapable of mounting a spirited defense of their position that rejects the president’s false choices in which they are depicted as defending millionaires at the expense of the middle class and the poor, they might as well pack up and go home right now.

It is hard to compete with the bully pulpit of the presidency but there is still plenty of room for conservatives to make the case that the country has a spending addiction not a taxing problem. The president’s rhetoric seems to indicate that he doesn’t really want a deal to avoid the sequester but the idea that there is no political cost to him to such a course of action is based on a misreading of the situation.

The president may believe he can use the sequester to blame the economic downturn on Republicans much as he blamed the anemic economy of 2012 on George W. Bush. But the notion that he has nothing to lose in this standoff is White House spin, not common sense. The events the sequester will set in motion will do the GOP no political good. But it will hurt the president even more. It is he, and not Bush or John Boehner who will be blamed, as he should be, if the economy goes into another tailspin. Nor will he be able to pin all of the responsibility for the cuts on Republicans since they have consistently offered alternatives that avoid sequestration.

Now is not the time for Republican leaders to lose their nerve or to start thinking they must abandon the principles of limited government that elected them in the first place. The American public may like Barack Obama better than they do John Boehner or Eric Cantor but they are not stupid. The only way to deal with the president’s intemperate and misleading arguments is to answer them forthrightly. If that means going down to the wire on the sequester, then so be it.

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New Hagel Story Could Alter the Equation

Last week brought a new revelation of more proof of Chuck Hagel’s prejudicial attitudes toward Israel. But most observers concluded that the statements made over the weekend by Senators John McCain and Lindsey Graham that they would not support further delays as a vote on his nomination as secretary of defense as evidence that he would easily be confirmed once Congress returns from its recess next week. However the publication of yet another story today in which Hagel is reported to have made disparaging comments about Israel could alter that equation.

Our former colleague Alana Goodman broke last week’s story about a contemporaneous account of a 2007 speech given by Hagel at Rutgers University in which he made the outrageous charge that the U.S. State Department was being run by the Israeli Foreign Ministry. Today Goodman is at it again as she reports that there was yet another Hagel speech at the same venue three years later in which he again offended Israel and its supporters.

Secretary of defense nominee Chuck Hagel said Israel is on its way to becoming an apartheid state during an April 9, 2010, appearance at Rutgers University, according to a contemporaneous account by an attendee.

Hagel also accused Israel of violating U.N. resolutions, called for U.S.-designated terrorist organization Hamas to be included in any peace negotiations, and described Israeli Prime Minister Benjamin Netanyahu as a “radical,” according to the source.

Like the 2007 speech, no tape of these remarks has yet surfaced making it easy for Hagel to dismiss the controversy by saying he “doesn’t recall” them as he did in a letter to Senator Graham. Graham was willing to say that he would take Hagel at his word about that. But can he, or any other pro-Israel senator of either party, really believe any further denials or disavowals from Hagel?

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Last week brought a new revelation of more proof of Chuck Hagel’s prejudicial attitudes toward Israel. But most observers concluded that the statements made over the weekend by Senators John McCain and Lindsey Graham that they would not support further delays as a vote on his nomination as secretary of defense as evidence that he would easily be confirmed once Congress returns from its recess next week. However the publication of yet another story today in which Hagel is reported to have made disparaging comments about Israel could alter that equation.

Our former colleague Alana Goodman broke last week’s story about a contemporaneous account of a 2007 speech given by Hagel at Rutgers University in which he made the outrageous charge that the U.S. State Department was being run by the Israeli Foreign Ministry. Today Goodman is at it again as she reports that there was yet another Hagel speech at the same venue three years later in which he again offended Israel and its supporters.

Secretary of defense nominee Chuck Hagel said Israel is on its way to becoming an apartheid state during an April 9, 2010, appearance at Rutgers University, according to a contemporaneous account by an attendee.

Hagel also accused Israel of violating U.N. resolutions, called for U.S.-designated terrorist organization Hamas to be included in any peace negotiations, and described Israeli Prime Minister Benjamin Netanyahu as a “radical,” according to the source.

Like the 2007 speech, no tape of these remarks has yet surfaced making it easy for Hagel to dismiss the controversy by saying he “doesn’t recall” them as he did in a letter to Senator Graham. Graham was willing to say that he would take Hagel at his word about that. But can he, or any other pro-Israel senator of either party, really believe any further denials or disavowals from Hagel?

It may be that without a tape or official transcript of these events, the mainstream media will ignore the controversies as some have done with the 2007 Rutgers speech. Others will say it doesn’t meet their standard of a genuine bombshell since Hagel can deny them. Of course, some sectors of the media will find nothing wrong with these insults just as many continue to be amazed that anyone is bothered by Hagel’s boasts about standing up to the “Jewish lobby.”

But this latest story does make it clear that the person who has been chosen to lead the Pentagon in the second Obama administration is someone who is willing to parrot the ravings of the most radical anti-Israel figures in the Democratic Party. In effect, what the president has done is to nominate someone who is not only outside of the mainstream of either the Republican or Democratic Parties on Israel, Hamas, Hezbollah and Iran but is another Jimmy Carter.

This development once again puts the onus on Democrats to explain why they are willing to rubber stamp the president’s choice of someone whose views are antithetical to the maintenance of the U.S.-Israel alliance. Senators like New York’s Chuck Schumer spent the weeks prior to Hagel’s disastrous confirmation hearing saying they couldn’t oppose the nominee so long as mainstream and generally liberal Jewish groups were silent about his record. But that changed over the weekend when the American Jewish Committee demanded that the Senate not act on Hagel’s nomination without more debate about his questionable statements and even the Anti-Defamation League demanded an explanation. Even if the New York Times isn’t interested in Hagel’s statements, Jewish Democrats ought to be.

But before Democrats can act, Senate Republicans must not signal that they will give Hagel a pass on his own recognizance. Both Graham and McCain need to say that they will not accept any further disavowals from Hagel of what is a pattern of offensive statements that can’t be washed away by his post-nomination conversion to a position of support for Israel and a tough stand on Iran.

Hagel and the White House may feel they still have the odds in their favor. But if the GOP stands its ground, it will allow Democrats who were never happy about Hagel to start edging away from an unqualified and unsuitable nominee.

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Liberal Bias Central to Obama Media Edge

Politico writers Jim Vandehei and Mike Allen are on to something with their feature published today about President Obama’s mastery of the mainstream media. Their conclusion that the president and his staff have broken new ground in manipulating journalists and shaping favorable coverage of the administration is so obvious that it is almost inarguable. As I have argued several times over the past four years, no president since John F. Kennedy has enjoyed the sort of advantage or lack of serious scrutiny that the president has received. Vandehei and Allen are right when they point out that the calculated leaks and softball interviews combined with a command of social media and other methods that limit press access have combined to build the Obama juggernaut that won him re-election as well as give him an edge in any battle with Congress.

Yet Vandehei and Allen’s insistence that this has nothing to do with the conservative belief that “a liberal press willingly and eagerly allows itself to get manipulated” ignores some of the same facts that they amass in discussing the way the president has played the “puppet master” with the media. No matter how smart the strategies employed by the White House, the president’s ability to skate through four years without getting seriously challenged by the mainstream media would not have been possible if most of those being played were not willing accomplices. Due credit must be given to the administration’s ability to take advantage of technology as well as their brilliant if unscrupulous game playing with journalists. But without the liberal bias of most of the mainstream outlets that let the president play them like a piano, he would come across as a bully and a demagogue rather than the reasonable nice guy seen in those “60 Minutes” interviews he loves to give.

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Politico writers Jim Vandehei and Mike Allen are on to something with their feature published today about President Obama’s mastery of the mainstream media. Their conclusion that the president and his staff have broken new ground in manipulating journalists and shaping favorable coverage of the administration is so obvious that it is almost inarguable. As I have argued several times over the past four years, no president since John F. Kennedy has enjoyed the sort of advantage or lack of serious scrutiny that the president has received. Vandehei and Allen are right when they point out that the calculated leaks and softball interviews combined with a command of social media and other methods that limit press access have combined to build the Obama juggernaut that won him re-election as well as give him an edge in any battle with Congress.

Yet Vandehei and Allen’s insistence that this has nothing to do with the conservative belief that “a liberal press willingly and eagerly allows itself to get manipulated” ignores some of the same facts that they amass in discussing the way the president has played the “puppet master” with the media. No matter how smart the strategies employed by the White House, the president’s ability to skate through four years without getting seriously challenged by the mainstream media would not have been possible if most of those being played were not willing accomplices. Due credit must be given to the administration’s ability to take advantage of technology as well as their brilliant if unscrupulous game playing with journalists. But without the liberal bias of most of the mainstream outlets that let the president play them like a piano, he would come across as a bully and a demagogue rather than the reasonable nice guy seen in those “60 Minutes” interviews he loves to give.

Any analysis of the president’s media advantage must start with the understanding that his historical status as the first African-American president has given him far more leeway than any of his recent predecessors when it comes to scrutiny from the mainstream press. The broadcast networks as well as the liberal-leaning cable channels have treated Obama and his family as being above criticism. This has created a Camelot effect unseen in Washington since the days when the press was ignoring JFK’s personal immorality while turning his family into national icons.

The White House has ruthlessly exploited that willingness to portray the president in the sort of stained-glass light usually reserved for statesman of the past. But, as Politico rightly points out, they have doubled down on it by limiting access to the working press — even those from generally friendly liberal outlets — and going directly to the public via social media and White House-created content. That has been combined with cleverly staged leaks to journalists who then dutifully do the administration’s dirty work for it on a host of issues. All this allows the president to pose as the voice of reason on domestic issues and to generally avoid any pointed scrutiny on foreign affairs even when — as in the Benghazi fiasco — the duty of the press to focus on his lack of answers would seem obvious.

Politico is right that among those most frustrated by this are members of the White House press corps who may be liberals but are still eager to do their jobs. However, the only reason this has worked so well is the willingness of the editors and publishers who employ those frustrated reporters to roll over and play dead for the president. The unavoidable fact that Vandehei and Allen do their best to ignore is that the hamstringing of the working press’s ability to hold the president accountable dovetails nicely with the editorial stands of the vast majority of those outlets. That limits the time and space they are willing to give their staffers who might wish to push harder on an administration that is so careful about limiting access.

Just as important to the success of the White House’s puppetry is the eagerness of much of the liberal press to play ball with the president when given the opportunity to do so. As Steve Kroft of “60 Minutes” admitted, the reason why Obama loves to go on the CBS show is that he knows he won’t be “made to look stupid” or be subjected to the same “gotcha” kind of questions for which that television institution was so well known in the decades when it established its long since undeserved reputation as the gold standard of broadcast journalism. Though few other liberal hacks have been as honest about their bias as Kroft, the same rule applies to virtually every outlet that has been granted the same kind of access such as the recent Obama puff piece published in The New Republic.

It barely needs to be said that had the George W. Bush administration tried the same tactics as Obama has employed, it wouldn’t have worked a fraction as well. That is not just because Bush was not as comfortable in playing the role of inaccessible puppeteer as his successor. His administration, like everyone that preceded it, had its own strategies for coping with the press and did its best to outwit those tasked with holding it accountable that were not always unsuccessful. The Obama administration didn’t invent leaks even if it has perfected them into something approaching an art form.

But the difference is that the White House press corps as well as their editors and publishers were never prepared to lie down for Bush in the way they have done with Obama. The Bush team could never look for the sort of softball interviews that Obama’s staffers know to rely upon. They also knew that any tactical victories it might achieve in getting their message across would be countered and often wiped out by the liberal institutional bias of the networks and newspapers that Obama never has to worry about. No matter how much the Bush White House would have leaked to the New York Times, there is no way that would have generated the kind of fawning coverage the Grey Lady has given Obama.

That’s why the lessons of Obama’s press strategies are of only limited utility to Republicans. They can learn from the methods he uses to go directly to the public without the filter of the media. His command of social media and smart use of content created by the White House should be emulated by every politician who wants to win. But no conservative will ever be able to manipulate the media the way Obama does because of the simple fact that the liberal press will not allow it as they do with Obama. This doesn’t mean Republicans are doomed to perpetual defeat, but it does remind them that they have a steeper hill to climb than their Democratic counterparts. As much as the GOP has to get into the 21st century when it comes to technology, the liberal press will never give them the free passes it hands out to the Obama White House every day of the week.

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The Minimum Wage Folly

There are few policy prescriptions dearer to the hearts of liberals than the minimum wage. In theory it provides a “living wage” to those at the bottom of the economic pyramid and what could be wrong with that? Indeed, argue against it and the average liberal will look at you as though you were Mr. Bumble dismissing Oliver Twist’s request for some more porridge.

The concept dates back to the 1890’s when it was first used in Australia and New Zealand. American states first set minimum wage requirements in 1912, although the Supreme Court ruled them unconstitutional as an impairment of contract. The federal minimum wage appeared in 1938 and has been raised erratically ever since to keep pace with inflation. The New York Times on Sunday had a lead editorial calling for a raise in the minimum wage from $7.25 to $9.00 an hour, a whopping 24 percent increase. Paul Krugman chimed in the same day with a theoretical justification. He admits that it runs contrary to economic theory:

The question we need to ask is: Would this be good policy? And the answer, perhaps surprisingly, is a clear yes. Why “surprisingly”? Well, Economics 101 tells us to be very cautious about attempts to legislate market outcomes. Every textbook — mine included — lays out the unintended consequences that flow from policies like rent controls or agricultural price supports. And even most liberal economists would, I suspect, agree that setting a minimum wage of, say, $20 an hour would create a lot of problems. But that’s not what’s on the table. And there are strong reasons to believe that the kind of minimum wage increase the president is proposing would have overwhelmingly positive effects.

In other words, Professor Krugman is at odds with columnist Krugman, hardly for the first time.

But is it good public policy? I side with Professor Krugman.

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There are few policy prescriptions dearer to the hearts of liberals than the minimum wage. In theory it provides a “living wage” to those at the bottom of the economic pyramid and what could be wrong with that? Indeed, argue against it and the average liberal will look at you as though you were Mr. Bumble dismissing Oliver Twist’s request for some more porridge.

The concept dates back to the 1890’s when it was first used in Australia and New Zealand. American states first set minimum wage requirements in 1912, although the Supreme Court ruled them unconstitutional as an impairment of contract. The federal minimum wage appeared in 1938 and has been raised erratically ever since to keep pace with inflation. The New York Times on Sunday had a lead editorial calling for a raise in the minimum wage from $7.25 to $9.00 an hour, a whopping 24 percent increase. Paul Krugman chimed in the same day with a theoretical justification. He admits that it runs contrary to economic theory:

The question we need to ask is: Would this be good policy? And the answer, perhaps surprisingly, is a clear yes. Why “surprisingly”? Well, Economics 101 tells us to be very cautious about attempts to legislate market outcomes. Every textbook — mine included — lays out the unintended consequences that flow from policies like rent controls or agricultural price supports. And even most liberal economists would, I suspect, agree that setting a minimum wage of, say, $20 an hour would create a lot of problems. But that’s not what’s on the table. And there are strong reasons to believe that the kind of minimum wage increase the president is proposing would have overwhelmingly positive effects.

In other words, Professor Krugman is at odds with columnist Krugman, hardly for the first time.

But is it good public policy? I side with Professor Krugman.

Like rent control, the minimum wage is price fixing, setting the minimum price at which labor can be hired, just as rent control sets the maximum price at which living space can be rented. Both of these ideas are rooted in a pernicious medieval notion called the just price, the idea that everything has a proper price, one at harmony with the universe. But there is no more any such thing as a just price than there is a just temperature for a Sunday afternoon in April. Both result from the interaction of natural forces, with a result that we can like or dislike but have to accept.

Labor is a commodity, just like anything else bought and sold in the marketplace, from legal services to pork bellies. And economies consist of the exchange of commodities to the benefit of both parties. So if the employer cannot receive from an unskilled employee work worth what he is required to be paid, the employer will not hire him. No one, after all, willingly trades a ten-dollar bill for a five. 

Very few minimum-wage workers are heads of household. Most are teenagers just entering the jobs market or earning extra money after school. And teenage unemployment right now is horrendous, 23.4 percent. To raise the minimum wage by 24 percent is to guarantee that that rate will rise.

So why do liberal politicians like the minimum wage concept so much? There are two basic reasons. One is that many labor union contracts specify wage rates that are multiples of the minimum wage. Raise the latter, and you raise the former, much to the benefit of the unions that so generously fund Democratic candidates. The other is that the minimum wage is a benefit that politicians don’t have to pay for. Essentially, the politician gets to say, “See A over here? He needs help. You, B, pay him more money.” He then points to himself and says, “And you, A, don’t forget where the money came from on Election Day.”

Is there a better solution? Sure, there’s one already in place, the Earned Income Tax Credit. It is a refundable tax credit that is paid to low wage individual workers (principally those with qualifying children), raising their living standard by multiplying their earned income. Employers get to pay the market wage for labor, workers get to learn skills and experience the dignity of work. The problem, of course, is that the EITC adds to total federal outlays and thus the deficit.

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Sequestration and National Security

General Ray Odierno, the army chief of staff, has provided further details of what sequestration could mean for the army–and why it would be so devastating. Already the army is due to decline in size, because of existing budget cuts, from 570,000 active duty personnel today to 490,000 in a few years’ time. If sequestration occurs, Odierno says a total of 200,000 troops could be laid off—35% of the current force. That would result in the smallest army since the dark days of 1940 when, not coincidentally, German, Italian, and Japanese militarists were overrunning the globe.

Supporters of sequestration reply that it’s only fair the military absorb some cuts because of our fiscal crisis. But the military has already absorbed more than its share–unlike domestic programs. As Odierno reminded an audience at the Brookings Institution, in 2010 Secretary of Defense Bob Gates cancelled various procurement programs worth $300 billion, then in 2011 Congress enacted another $487 billion in cuts over 10 years. Thus the sequestration cuts, amounting to $500 billion, come on top of almost $800 billion in existing cuts. The drying up of funds for the war effort in Afghanistan will result in another major hit to the budget; that funding was used to pay for needed training and equipment refitting that will now have to be paid out of the regular defense budget.

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General Ray Odierno, the army chief of staff, has provided further details of what sequestration could mean for the army–and why it would be so devastating. Already the army is due to decline in size, because of existing budget cuts, from 570,000 active duty personnel today to 490,000 in a few years’ time. If sequestration occurs, Odierno says a total of 200,000 troops could be laid off—35% of the current force. That would result in the smallest army since the dark days of 1940 when, not coincidentally, German, Italian, and Japanese militarists were overrunning the globe.

Supporters of sequestration reply that it’s only fair the military absorb some cuts because of our fiscal crisis. But the military has already absorbed more than its share–unlike domestic programs. As Odierno reminded an audience at the Brookings Institution, in 2010 Secretary of Defense Bob Gates cancelled various procurement programs worth $300 billion, then in 2011 Congress enacted another $487 billion in cuts over 10 years. Thus the sequestration cuts, amounting to $500 billion, come on top of almost $800 billion in existing cuts. The drying up of funds for the war effort in Afghanistan will result in another major hit to the budget; that funding was used to pay for needed training and equipment refitting that will now have to be paid out of the regular defense budget.

Cumulatively, Odierno estimates, “if we implement the 2014 budget without sequestration, it’ll be a 45 percent reduction in the Army budget,” compared to the baseline of 2008. “If we implement sequestration, it’ll be over 50 percent.”

Little wonder than, that Odierno says “today, in my opinion, the greatest threat to our national security is the fiscal uncertainty resulting from the lack of predictability in the budget cycle.”

His words should not be dismissed as the pronouncements of a general bent on preserving his personal prerogatives. They are, instead, the words of a man who has devoted his life to the defense of his country and now sees our front line of defense in jeopardy of collapse. It is hard to exaggerate just how dire the situation is now, especially given that both Democrats and Republicans say there is virtually no chance of reaching a deal before sequestration hits on March 1.

The problem is that President Obama is demanding “revenue enhancements”—i.e., tax increases—along with further cuts to the defense budget as part of any deal to stop sequestration. Republicans, having already gone along on tax hikes once, aren’t budging this time around. Some privately even welcome sequestration; for instance John Makin of the American Enterprise Institute had an op-ed in the Wall Street Journal that made the pro-sequestration case without once mentioning its impact on defense.

This is the height of irresponsibility all around. Sequestration will have little impact on our fiscal situation (even eliminating the entire Department of Defense will not eliminate the budget deficit) but it will have devastating consequences for our military readiness in ways that will endanger our long-term security. In an ideal world lawmakers would reach a deal to cut entitlement spending instead since that is the real source of our budget woes. In today’s Washington, however, that won’t happen. If Republicans have no choice but to agree to tax hikes to stop sequestration, so be it: Almost any price is worth paying to prevent the evisceration of our most vital military capabilities.

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The GOP’s Intellectual Unfreezing

Ramesh Ponnuru, a leading thinker on the right, wrote an op-ed in the New York Times that is worth reading. He argues that Republicans “slavishly adhere to the economic program that Reagan developed to meet the challenges of the late 1970s and early 1980s, ignoring the fact that he largely overcame those challenges, and now we have new ones.”

Ponnuru provides examples; including pointing out that the top tax rate when Reagan took office was 70 percent v. 35 percent for most of the last decade. (The payroll tax is larger than the income tax for most people.) He also points out Reagan inherited an economy in which inflation was in double digits v. just two percent over the last five years. The conditions we face in 2013 are, as one would expect, quite a bit different than what Reagan faced more than three decades ago.

In the March issue of COMMENTARY, Michael Gerson and I offer a similar argument, saying:

And it is no wonder that Republican policies can seem stale; they are very nearly identical to those offered up by the party more than 30 years ago. For Republicans to design an agenda that applies to the conditions of 1980 is as if Ronald Reagan designed his agenda for conditions that existed in the Truman years. 

To be clear: Reasonable tax rates and sound monetary policy remain important economic commitments. But America now confronts a series of challenges that have to do with globalization, stagnant wages, the loss of blue-collar jobs, exploding health-care and college costs, and the collapse of the culture of marriage. 

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Ramesh Ponnuru, a leading thinker on the right, wrote an op-ed in the New York Times that is worth reading. He argues that Republicans “slavishly adhere to the economic program that Reagan developed to meet the challenges of the late 1970s and early 1980s, ignoring the fact that he largely overcame those challenges, and now we have new ones.”

Ponnuru provides examples; including pointing out that the top tax rate when Reagan took office was 70 percent v. 35 percent for most of the last decade. (The payroll tax is larger than the income tax for most people.) He also points out Reagan inherited an economy in which inflation was in double digits v. just two percent over the last five years. The conditions we face in 2013 are, as one would expect, quite a bit different than what Reagan faced more than three decades ago.

In the March issue of COMMENTARY, Michael Gerson and I offer a similar argument, saying:

And it is no wonder that Republican policies can seem stale; they are very nearly identical to those offered up by the party more than 30 years ago. For Republicans to design an agenda that applies to the conditions of 1980 is as if Ronald Reagan designed his agenda for conditions that existed in the Truman years. 

To be clear: Reasonable tax rates and sound monetary policy remain important economic commitments. But America now confronts a series of challenges that have to do with globalization, stagnant wages, the loss of blue-collar jobs, exploding health-care and college costs, and the collapse of the culture of marriage. 

Ponnuru in his op-ed, and Gerson and I in our essay, offer up policies that we believe address the issues facing America in the 21st century. People can read both pieces and judge the merits of our recommendations. But I want to make two other points.

The first is that there is an intellectual unfreezing that is taking place within the Republican Party that is all to the good. People from different parts of the party and who represent different strands within conservatism are offering up ideas for what needs to be done. Not all of them are wise, of course, but competing ideas need to be heard. Fortunately the impulse to attack people as heretics who should be expelled from the party is for the most part being held in check. That’s not true of everyone, of course. Some people are temperamentally attracted to an auto-da-fe. But it seems to me that in general there’s a real openness on the part of Republican lawmakers and conservatives to recalibration.

The second point is that Reagan himself was a fairly creative policy entrepreneur in his own right. He advanced what was essentially a new economic theory, supply side economics, and replaced détente and containment with a strategy of rolling back the Soviet empire.

Those approaches are well known and seem obvious now, but at the time they were unorthodox and controversial. It was Democrat Daniel Patrick Moynihan who in 1980 confessed, “Of a sudden, the GOP has become a party of ideas.”

Ronald Reagan adjusted his policies to meet the challenges of his time, and two generations after Reagan, Republicans and conservatives need to do the same thing.

Let the recalibration and rethinking continue. 

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