Commentary Magazine


Topic: Department of the Treasury

Exemptions Granted by U.S. Prove Iran Sanctions Won’t Work

Those aware of the profound nature of the threat that an Iranian nuclear weapon would pose to the West and to Israel have long been assured by the Washington foreign policy establishment that if diplomacy fails to persuade Tehran to behave, international sanctions provide the leverage that can solve the problem. Well, after two years of an administration dedicated to “engagement,” even President Obama seems to know diplomacy won’t work. So that leaves us with sanctions.

Amassing an international coalition to back the sort of economic sanctions that could bring Iran to heel has proven beyond the capacity of the United States. Even if our European allies are now prepared to think about tough sanctions, the Chinese and the Russians are not. So the best President Obama could do was to get the United Nations to pass a set of mild sanctions this past year that didn’t impress the Iranians. We knew that the confidence of the Khamenei/Ahmadinejad regime as they faced down the West was due to its knowledge that Russia and China would never allow serious sanctions to be passed. We also knew that Tehran felt it could count on its Western European business partners to ensure that the West was sufficiently divided on the need to enforce sanctions, let alone resort to force to prevent Tehran from achieving their nuclear ambitions.

But today we learned another reason why the Iranians were so confident about their chances for victory: the United States government has been allowing a vast number of companies to evade the existing sanctions and to do literally billions of dollars in business with Iran. Read More

Those aware of the profound nature of the threat that an Iranian nuclear weapon would pose to the West and to Israel have long been assured by the Washington foreign policy establishment that if diplomacy fails to persuade Tehran to behave, international sanctions provide the leverage that can solve the problem. Well, after two years of an administration dedicated to “engagement,” even President Obama seems to know diplomacy won’t work. So that leaves us with sanctions.

Amassing an international coalition to back the sort of economic sanctions that could bring Iran to heel has proven beyond the capacity of the United States. Even if our European allies are now prepared to think about tough sanctions, the Chinese and the Russians are not. So the best President Obama could do was to get the United Nations to pass a set of mild sanctions this past year that didn’t impress the Iranians. We knew that the confidence of the Khamenei/Ahmadinejad regime as they faced down the West was due to its knowledge that Russia and China would never allow serious sanctions to be passed. We also knew that Tehran felt it could count on its Western European business partners to ensure that the West was sufficiently divided on the need to enforce sanctions, let alone resort to force to prevent Tehran from achieving their nuclear ambitions.

But today we learned another reason why the Iranians were so confident about their chances for victory: the United States government has been allowing a vast number of companies to evade the existing sanctions and to do literally billions of dollars in business with Iran.

A story on the front page of today’s New York Times informs us that a “little known office of the Treasury Department has granted more than 10,000 licenses” allowing Americans to trade with Iran and other blacklisted countries. The companies that have gained these exemptions include some of the biggest, such as Kraft Food and Pepsi as well as major banks. While the purpose of the statute that allows for exemptions was to provide humanitarian aid, the Obama administration has let things like chewing gum, sports equipment and even hot sauce be sold to Iran. Even worse, it has allowed an American company to “bid on a pipeline job that would have helped Iran sell natural gas to Europe, even though the United States opposes such projects. Several other American businesses were permitted to deal with foreign companies believed to be involved in terrorism or weapons proliferation.”

An administration spokesman claimed that focusing on the vast number of exemptions “misses the forest for the trees,” since “no one can doubt that we are serious about this.” But as even former Clinton administration official Stuart Eizenstat told the Times, “When you create loopholes like this that you can drive a Mack truck through, you are giving countries something for nothing, and they just laugh in their teeth. I think there have been abuses.”

The loopholes in the law are bad enough. But, as the Times reports, they are widened by the influence of politicians who seek to grant favors to local businesses and contributors. In one instance, Sen. Daniel Inouye (D-Hawaii) intervened to force the Treasury office to allow a company owned by one of his contributors to do business with a Chinese firm that had been banned for its role in selling missile technology to Iran and Pakistan.

The point here is not so much the corruption of our political system. Rather it is that as much as we doubted the determination of our allies to enforce sanctions, the United States government has shown itself to be equally incapable of getting tough with Iran. While concerned citizens can pray that clandestine operations, such as the Stuxnet virus, will undermine Iran’s nuclear program, the fact remains that the countdown toward an Iranian nuke proceeds. Though it was common knowledge that this administration, like its predecessor led by George W. Bush, seemed to lack the will to fully confront Iran, we didn’t know just how much our own government was allowing the existing sanctions to be flouted. In light of these revelations, it’s clear that sanctions will never work to halt the march of this terror sponsor toward nuclear capability. After reading this shocking story, there’s little doubt that Ahmadinejad and his tyrannical Islamist confederates are laughing at us.

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Radical Islam to Be Investigated: CAIR Cries Foul

Rep. Peter King (R-NY) said yesterday that the House Committee on Homeland Security that he will chair in the next Congress will hold hearings on the radicalization of American Islam.

Given the string of terrorist plots in the past few years that can be directly linked to radical Islam, it’s reasonable for the U.S. Congress to devote some time to studying what’s been going on. But, predictably, the group the mainstream media treat as the mouthpiece of American Muslims is screaming bloody murder about the prospect of such hearings. In fact, Ibrahim Hooper, the spokesman for the Council on American-Islamic Relations (CAIR), said such hearings will be an “anti-Muslim witch hunt.”

It is true that any congressional hearing, no matter how important the topic or germane the line of questioning might be to public policy, can be an excuse for shameless grandstanding by politicians who know little about the subject matter but are hungry for a good sound bite. But Hooper and CAIR have their own agenda here, and it is far more sinister than that of any of the publicity-hungry members of Congress who participate in such forums.

Founded as a political front for a group that funneled money to the Hamas terrorist group (the Holy Land Foundation, which has since been closed down by the Treasury Department) back in the early 1990s, CAIR poses as a civil-rights group for Arabs and Muslims, but its true purpose is to put a reasonable face on a radical ideology. It rationalizes anti-American and anti-Jewish acts of terror and seeks to demonize Israel and its supporters while falsely portraying American Muslims as the victims of a mythical reign of terror since 9/11. Most insidious is its attempt to deny the very existence of radical Islamism, either here or abroad. Indeed, during a debate in which I participated at Baruch College in New York City last month, a spokesman for CAIR claimed it was racist to even use the word “Islamist” or to dare point out the danger from radical Islam to highlight the way foreign interests in this country have funded mosques in which such radicals have found a platform. Though there has been no backlash against Muslims, CAIR has been successful in manipulating the mainstream media into claims of victimization. Indeed, rather than listen to the evidence of the threat from Muslim radicals, we can expect many in the media to hew to CAIR’s talking points about “witch hunts” in their coverage of King’s hearings.

While Rep. King will have to carefully manage such hearings to prevent his colleagues from hijacking their serious purpose, his main problem will be in combating the successful efforts of CAIR to label any such inquiry as beyond the pale. It will be up to the committee’s staff to assemble the compelling evidence already largely on the public record and focus the public’s attention on the real danger. Otherwise, this initiative will become yet another opportunity for CAIR to stifle discussion on the source of motivation for home-grown Islamist terror.

Rep. Peter King (R-NY) said yesterday that the House Committee on Homeland Security that he will chair in the next Congress will hold hearings on the radicalization of American Islam.

Given the string of terrorist plots in the past few years that can be directly linked to radical Islam, it’s reasonable for the U.S. Congress to devote some time to studying what’s been going on. But, predictably, the group the mainstream media treat as the mouthpiece of American Muslims is screaming bloody murder about the prospect of such hearings. In fact, Ibrahim Hooper, the spokesman for the Council on American-Islamic Relations (CAIR), said such hearings will be an “anti-Muslim witch hunt.”

It is true that any congressional hearing, no matter how important the topic or germane the line of questioning might be to public policy, can be an excuse for shameless grandstanding by politicians who know little about the subject matter but are hungry for a good sound bite. But Hooper and CAIR have their own agenda here, and it is far more sinister than that of any of the publicity-hungry members of Congress who participate in such forums.

Founded as a political front for a group that funneled money to the Hamas terrorist group (the Holy Land Foundation, which has since been closed down by the Treasury Department) back in the early 1990s, CAIR poses as a civil-rights group for Arabs and Muslims, but its true purpose is to put a reasonable face on a radical ideology. It rationalizes anti-American and anti-Jewish acts of terror and seeks to demonize Israel and its supporters while falsely portraying American Muslims as the victims of a mythical reign of terror since 9/11. Most insidious is its attempt to deny the very existence of radical Islamism, either here or abroad. Indeed, during a debate in which I participated at Baruch College in New York City last month, a spokesman for CAIR claimed it was racist to even use the word “Islamist” or to dare point out the danger from radical Islam to highlight the way foreign interests in this country have funded mosques in which such radicals have found a platform. Though there has been no backlash against Muslims, CAIR has been successful in manipulating the mainstream media into claims of victimization. Indeed, rather than listen to the evidence of the threat from Muslim radicals, we can expect many in the media to hew to CAIR’s talking points about “witch hunts” in their coverage of King’s hearings.

While Rep. King will have to carefully manage such hearings to prevent his colleagues from hijacking their serious purpose, his main problem will be in combating the successful efforts of CAIR to label any such inquiry as beyond the pale. It will be up to the committee’s staff to assemble the compelling evidence already largely on the public record and focus the public’s attention on the real danger. Otherwise, this initiative will become yet another opportunity for CAIR to stifle discussion on the source of motivation for home-grown Islamist terror.

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Flotsam and Jetsam

So much for the notion that it wasn’t a referendum on Obama. “I’m not recommending for every future President that they take a shellacking like they — like I did last night.” Notice the “I.”

So much for the Bill Clinton–like adjustment. “Obama admits he got a ’shellacking,’ but shows no sign of budging on core agenda.”

So much for the wishful thinking of the left blogosphere: “Republicans have picked up a net gain of 53 seats and were leading for another 13 Democratic-held seats. If current trend holds, Republicans could record their largest gains in the House in more than 70 years.”

So much for historical accuracy: “The newly divided government could be a recipe for gridlock or, as some veteran Capitol Hill operatives suggest, an opportunity for President Barack Obama and Congress to improve their weak standing with the American public by working together — a la Bill Clinton and Speaker Newt Gingrich.” Um, I don’t think Gingrich improved his standing.

So much for lessons learned. The left blogosphere is still spinning: “I think the root of the Democrats’ political troubles lies in the initial flurry of activity — the stimulus, restructuring TARP, and the auto bailout. In the public mind, this all become jumbled together as ‘the bailouts’ — a conflation carefully nurtured by Republicans — even though obviously Keynesian fiscal policy is not the same thing as a bailout. But the truth is that all those policies were highly unpopular, and all came to symbolize big government rescuing bad actors while average people paid the bill. It became a frame that colored perceptions of the entire Democratic agenda.” It didn’t “symbolize” big government — together with ObamaCare, it was big government.

So much for Rahm Emanuel’s handiwork. “The Democrats who handed Speaker Nancy Pelosi her majority were largely wiped out of Congress on Tuesday. Fourteen members of the freshman class of 2006, dubbed by Pelosi (D-Calif.) as her ‘majority makers,’ and 21 freshman elected in 2008 lost their seats with a handful of races still undecided. Republicans were able to win several more open seats that Democrats had won in those cycles.” No wonder Rahm developed a yen to be mayor.

So much for getting our money back. “GM said it intends to sell almost a quarter of its 1.5 billion shares of common stock, at a price between $26 to $29 a share. It also intends to sell 60 million shares of preferred stock with a liquidation value of $50 a share. That price range would suggest that the Treasury Department’s 60.8% stake in the company would be worth between $23.7 billion to $26.5 billion once the stock starts trading. That value would be well below the $40 billion in taxpayer money GM received from the government and has yet to repay.”

So much for stonewalling. Rep. Lamar Smith, who together with Rep. Frank Wolf labored to get to the bottom of the New Black Panther Party scandal, will be the House Judiciary chairman. Eric Holder therefore may be the first subpoenaed member of the administration. I sense a stampede of officials at DOJ running to spend more time with their families.

So much for the notion that it wasn’t a referendum on Obama. “I’m not recommending for every future President that they take a shellacking like they — like I did last night.” Notice the “I.”

So much for the Bill Clinton–like adjustment. “Obama admits he got a ’shellacking,’ but shows no sign of budging on core agenda.”

So much for the wishful thinking of the left blogosphere: “Republicans have picked up a net gain of 53 seats and were leading for another 13 Democratic-held seats. If current trend holds, Republicans could record their largest gains in the House in more than 70 years.”

So much for historical accuracy: “The newly divided government could be a recipe for gridlock or, as some veteran Capitol Hill operatives suggest, an opportunity for President Barack Obama and Congress to improve their weak standing with the American public by working together — a la Bill Clinton and Speaker Newt Gingrich.” Um, I don’t think Gingrich improved his standing.

So much for lessons learned. The left blogosphere is still spinning: “I think the root of the Democrats’ political troubles lies in the initial flurry of activity — the stimulus, restructuring TARP, and the auto bailout. In the public mind, this all become jumbled together as ‘the bailouts’ — a conflation carefully nurtured by Republicans — even though obviously Keynesian fiscal policy is not the same thing as a bailout. But the truth is that all those policies were highly unpopular, and all came to symbolize big government rescuing bad actors while average people paid the bill. It became a frame that colored perceptions of the entire Democratic agenda.” It didn’t “symbolize” big government — together with ObamaCare, it was big government.

So much for Rahm Emanuel’s handiwork. “The Democrats who handed Speaker Nancy Pelosi her majority were largely wiped out of Congress on Tuesday. Fourteen members of the freshman class of 2006, dubbed by Pelosi (D-Calif.) as her ‘majority makers,’ and 21 freshman elected in 2008 lost their seats with a handful of races still undecided. Republicans were able to win several more open seats that Democrats had won in those cycles.” No wonder Rahm developed a yen to be mayor.

So much for getting our money back. “GM said it intends to sell almost a quarter of its 1.5 billion shares of common stock, at a price between $26 to $29 a share. It also intends to sell 60 million shares of preferred stock with a liquidation value of $50 a share. That price range would suggest that the Treasury Department’s 60.8% stake in the company would be worth between $23.7 billion to $26.5 billion once the stock starts trading. That value would be well below the $40 billion in taxpayer money GM received from the government and has yet to repay.”

So much for stonewalling. Rep. Lamar Smith, who together with Rep. Frank Wolf labored to get to the bottom of the New Black Panther Party scandal, will be the House Judiciary chairman. Eric Holder therefore may be the first subpoenaed member of the administration. I sense a stampede of officials at DOJ running to spend more time with their families.

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Mosque Builders Drop Mask of ‘Reconciliation’

Apparently getting their talking points from David Axelrod (or is it the other way around?), the Ground Zero mosque builders are comparing opposition to the mosque to anti-Semitism. Honest:

A leader of a planned Muslim community center near Manhattan’s Ground Zero compared opposition to the project to the persecution of Jews, in comments that could add to the controversy over the center’s proposed site. … Ms. [Daisy] Khan, appearing on ABC News’s “This Week” on Sunday, vowed to push ahead with plans to build a 15-story complex two blocks from the site of the 9/11 terrorist attacks in lower Manhattan, saying there was “too much at stake.”

The words could further inflame an already angry debate about the proposed location of the community center, which opponents denounce as a “victory mosque.”

Ya think? Now you might expect Khan’s inflammatory assertion to have been seriously challenged by the interviewer. Not with Christiane Amanpour as the host. The discussion went like this:

AMANPOUR: You talked about the state of Islam in the United States. And then we have this “Time” magazine cover that’s being talked about a lot right now. Basically, is America Islamophobic?

Is America Islamophobic? Are you concerned about the long-term relationship between American Muslims and the rest of society here?

KHAN: Yes, I think we are deeply concerned, because this is like a metastasized anti-Semitism. That’s what we feel right now. It’s not even Islamophobia, it’s beyond Islamophobia. It’s hate of Muslims. And we are deeply concerned. You know, I have had, yesterday had a council with all religious — Muslim religious leaders from around the country, and everybody is deeply concerned about what’s going on around the nation.

AMANPOUR: Do you agree with what she just said and how she described it?

LEVITT: Well, there is some part of it that feels very familiar, you know. Peter Stuyvesant refused to allow synagogues to be built in New York in the 1600s. It took an act of Congress here in Washington to allow a synagogue to be built. In Connecticut, there were no synagogues allowed to be built in the 1600s and the 1700s. The British wouldn’t allow synagogues to be built in New York City. So, we understand some of this pain, and yet we’ve also experienced a tremendous amount of support in this country, so I think we actually are in a position to both understand and be helpful, to support religious tolerance in this country.

A liberal with a Jewish organization was incensed: “Any suggestion that this particular mosque not be built in this particular place, and the objections of family members of 9/11, are in any way analogous to anti-Semitism or the struggles of the Jewish community in America is as insensitive and ignorant as it is offensive.” He continued:

And while it is not the case with this Imam, who at least appears to reject radicalism — despite his unwillingness to call Hamas a terrorist group and his suggestion that some terrorists are better than others — there is no corollary to Judaism, from the birth of the religion to that practiced by the first immigrants to this great country of ours or by Jews today. Judaism has never called for restoring the caliphate or violent jihad to kill Americans and infidels. You will hear that in mosques in America and around the world, but never in a synagogue, now or ever. To invoke anti-Semitism and ignore that further contradiction in the broader debate, and the concomitant lack of an Islamic reformation — as we have seen in both Judaism and Christianity — is also dishonest.

Nor did Amanpour challenge the imam’s refusal to detail the source(s) of the mosque’s funding:

AMANPOUR: How much money has been raised and are you prepared to discuss the issue of foreign funding? Let’s say there was foreign funding. How would you be able to know exactly where that money was coming from, what other projects elsewhere that they may have given money to?

KHAN: Well, this is where my counselor on my right is helping us, because our funding is going to be pretty much follow the same way that JCC got its fund-raising. First, we have to develop a board. Then the board is going to have a financial committee, fund-raising committee that will be in charge of the fund-raising. And we have promised that we will work with the Charities Bureau, that we will adhere to the highest and the strictest guidelines set forth by the Treasury Department, because there is so much angst about this. But we will follow the lead from Rabbi Joy Levitt.

AMANPOUR: Let me ask you also…

LEVITT: What Daisy means by that is that we went to our neighbors, we said who believes in our vision, who believes in a center of tolerance, who believes in diversity? We went to parlor (ph) meetings in people’s houses, and that’s how the support for the JCC came about.

That’s it. Not a single question about foreign funding or whether they’d open up their books. There was a good reason to go on This Week. (I suspect they wouldn’t have gone with Jake Tapper.)

The obscene comparison between opposition to the mosque and anti-Semitism (how do Abe Foxman, Harry Reid, and Howard Dean feel about this?) should obliterate the left’s claim that this is all about “understanding” and “reconciliation.” It seems the mosque builders are interested, just as their critics claimed, in perpetuating the Muslim victimology meme and stirring dissension. And how interesting that they chose to stir the pot with Jewish analogies.

Apparently getting their talking points from David Axelrod (or is it the other way around?), the Ground Zero mosque builders are comparing opposition to the mosque to anti-Semitism. Honest:

A leader of a planned Muslim community center near Manhattan’s Ground Zero compared opposition to the project to the persecution of Jews, in comments that could add to the controversy over the center’s proposed site. … Ms. [Daisy] Khan, appearing on ABC News’s “This Week” on Sunday, vowed to push ahead with plans to build a 15-story complex two blocks from the site of the 9/11 terrorist attacks in lower Manhattan, saying there was “too much at stake.”

The words could further inflame an already angry debate about the proposed location of the community center, which opponents denounce as a “victory mosque.”

Ya think? Now you might expect Khan’s inflammatory assertion to have been seriously challenged by the interviewer. Not with Christiane Amanpour as the host. The discussion went like this:

AMANPOUR: You talked about the state of Islam in the United States. And then we have this “Time” magazine cover that’s being talked about a lot right now. Basically, is America Islamophobic?

Is America Islamophobic? Are you concerned about the long-term relationship between American Muslims and the rest of society here?

KHAN: Yes, I think we are deeply concerned, because this is like a metastasized anti-Semitism. That’s what we feel right now. It’s not even Islamophobia, it’s beyond Islamophobia. It’s hate of Muslims. And we are deeply concerned. You know, I have had, yesterday had a council with all religious — Muslim religious leaders from around the country, and everybody is deeply concerned about what’s going on around the nation.

AMANPOUR: Do you agree with what she just said and how she described it?

LEVITT: Well, there is some part of it that feels very familiar, you know. Peter Stuyvesant refused to allow synagogues to be built in New York in the 1600s. It took an act of Congress here in Washington to allow a synagogue to be built. In Connecticut, there were no synagogues allowed to be built in the 1600s and the 1700s. The British wouldn’t allow synagogues to be built in New York City. So, we understand some of this pain, and yet we’ve also experienced a tremendous amount of support in this country, so I think we actually are in a position to both understand and be helpful, to support religious tolerance in this country.

A liberal with a Jewish organization was incensed: “Any suggestion that this particular mosque not be built in this particular place, and the objections of family members of 9/11, are in any way analogous to anti-Semitism or the struggles of the Jewish community in America is as insensitive and ignorant as it is offensive.” He continued:

And while it is not the case with this Imam, who at least appears to reject radicalism — despite his unwillingness to call Hamas a terrorist group and his suggestion that some terrorists are better than others — there is no corollary to Judaism, from the birth of the religion to that practiced by the first immigrants to this great country of ours or by Jews today. Judaism has never called for restoring the caliphate or violent jihad to kill Americans and infidels. You will hear that in mosques in America and around the world, but never in a synagogue, now or ever. To invoke anti-Semitism and ignore that further contradiction in the broader debate, and the concomitant lack of an Islamic reformation — as we have seen in both Judaism and Christianity — is also dishonest.

Nor did Amanpour challenge the imam’s refusal to detail the source(s) of the mosque’s funding:

AMANPOUR: How much money has been raised and are you prepared to discuss the issue of foreign funding? Let’s say there was foreign funding. How would you be able to know exactly where that money was coming from, what other projects elsewhere that they may have given money to?

KHAN: Well, this is where my counselor on my right is helping us, because our funding is going to be pretty much follow the same way that JCC got its fund-raising. First, we have to develop a board. Then the board is going to have a financial committee, fund-raising committee that will be in charge of the fund-raising. And we have promised that we will work with the Charities Bureau, that we will adhere to the highest and the strictest guidelines set forth by the Treasury Department, because there is so much angst about this. But we will follow the lead from Rabbi Joy Levitt.

AMANPOUR: Let me ask you also…

LEVITT: What Daisy means by that is that we went to our neighbors, we said who believes in our vision, who believes in a center of tolerance, who believes in diversity? We went to parlor (ph) meetings in people’s houses, and that’s how the support for the JCC came about.

That’s it. Not a single question about foreign funding or whether they’d open up their books. There was a good reason to go on This Week. (I suspect they wouldn’t have gone with Jake Tapper.)

The obscene comparison between opposition to the mosque and anti-Semitism (how do Abe Foxman, Harry Reid, and Howard Dean feel about this?) should obliterate the left’s claim that this is all about “understanding” and “reconciliation.” It seems the mosque builders are interested, just as their critics claimed, in perpetuating the Muslim victimology meme and stirring dissension. And how interesting that they chose to stir the pot with Jewish analogies.

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It’s the Incompetence

This report confirms what conservatives have long argued: Obama is dragging the government into sectors of the economy in which it has little competence:

A report to be released [today] by the Treasury Department’s Special Inspector General for the Toxic Asset Relief Program (SIGTARP) will contend that President Obama’s push for General Motors and Chrysler to close thousands of dealerships across the country as part of their government bailouts “may have substantially contributed to the shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls, all based on a theory and without sufficient consideration of the decisions’ broader economic impacts.”

The SIGTARP report will further contend, according to Rep. Darrell Issa, the ranking minority member of the House Oversight and Government Reform Committee that it is questionable whether the closings were “either necessary for the sake of the companies’ economic survival or prudent for the nation’s economic recovery.”

You are surprised? Obama’s notion that pristinely apolitical technocrats with great resumes can flip all the switches, turn the knobs, and get the economy purring is exploding before our eyes. The government doesn’t create wealth by massive spending, doesn’t do a better job than the private sector in running industries, and has an agenda based not on economics but on politics (e.g., protecting unions, sparing a vulnerable congressman).

More than the specific maladies of ObamaCare (which are many), this is the core problem with Obama’s great legislative “accomplishment”: it assumes that a centralized bureaucracy can do a better job of containing costs and maintaining quality care than the hundreds of millions of citizens making daily decisions with their doctors. With each revelation — for example, that choice in doctors will be severely restricted – the public gets an inkling that the one-size-fits-all federalized health-care system is going to be every bit as expensive and every bit as objectionable as the nationalized health-care systems that have been tried out in other Western democracies.

All of this is a fine argument for government to do less, not more. Much less.

This report confirms what conservatives have long argued: Obama is dragging the government into sectors of the economy in which it has little competence:

A report to be released [today] by the Treasury Department’s Special Inspector General for the Toxic Asset Relief Program (SIGTARP) will contend that President Obama’s push for General Motors and Chrysler to close thousands of dealerships across the country as part of their government bailouts “may have substantially contributed to the shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls, all based on a theory and without sufficient consideration of the decisions’ broader economic impacts.”

The SIGTARP report will further contend, according to Rep. Darrell Issa, the ranking minority member of the House Oversight and Government Reform Committee that it is questionable whether the closings were “either necessary for the sake of the companies’ economic survival or prudent for the nation’s economic recovery.”

You are surprised? Obama’s notion that pristinely apolitical technocrats with great resumes can flip all the switches, turn the knobs, and get the economy purring is exploding before our eyes. The government doesn’t create wealth by massive spending, doesn’t do a better job than the private sector in running industries, and has an agenda based not on economics but on politics (e.g., protecting unions, sparing a vulnerable congressman).

More than the specific maladies of ObamaCare (which are many), this is the core problem with Obama’s great legislative “accomplishment”: it assumes that a centralized bureaucracy can do a better job of containing costs and maintaining quality care than the hundreds of millions of citizens making daily decisions with their doctors. With each revelation — for example, that choice in doctors will be severely restricted – the public gets an inkling that the one-size-fits-all federalized health-care system is going to be every bit as expensive and every bit as objectionable as the nationalized health-care systems that have been tried out in other Western democracies.

All of this is a fine argument for government to do less, not more. Much less.

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Flotsam and Jetsam

Among the top 10 places Ahmadinejad won’t be going to in New York: “Down on Houston Street sits Katz’s Deli, a venerable New York institution since 1888. But Ahmadinejad’s punim is unlikely to join the sea of faces smiling out from the walls of the not-quite-kosher deli, which is festooned with pro-Israel signs and a world-famous slogan: ‘Send a salami to your boy in the Army.’ While Ahmadinejad probably won’t be tearing into one of Katz’s juicy triple-decker pastramis any time soon, even a Holocaust-denying would-be genocidist can hardly say no when you throw a knish into the bargain.”

Giving thumbs up to Sarah Palin (“All responsible energy development must be accompanied by strict oversight, but even with the strictest oversight in the world, accidents still happen”), Jonathan Capehart writes: “I won’t join the chorus demanding that off-shore drilling be stopped forever in the U.S. for one simple reason: Until renewable energy sources are more widely available we have no choice. We need the fuel.”

So why isn’t he pressing for regime change or objecting to the administration’s attempt to undercut congressional sanctions? “Iranian President Mahmoud Ahmadinejad should be arrested and tried with war crimes while he’s in the United States, Rep. Steve Israel (D-N.Y.) said Monday. Ahmadinejad is in New York for the United Nations nuclear summit, and Israel wants to use the opportunity to have the Iranian president taken into custody. ‘Ahmadinejad shouldn’t just be protested in NYC, he should be arrested and tried for incitement to commit genocide,’ Israel said on his Twitter feed.”

Joe Sestak is gaining on Arlen Specter in the Pennsylvania Senate primary race. Maybe the party-switching wasn’t such a great idea. But even if Specter loses in the primary, he could pull a Crist and run as an independent. Hey, he’s not a party man anyway.

Trouble (for Democrats) in paradise: “The White House and top Democratic officials are circulating a new, private poll to suggest that only one of two Democrats splitting votes in a tightly contested Hawaii special election has a chance of winning the race.” This follows another poll showing Republican Charles Djou leading the race.

Hillary is thinking big again: “The United States and the great majority of the nations represented here come to this conference with a much larger agenda: to strengthen a global non-proliferation regime that advances the security of all nations, to advance both our rights and our responsibilities.” How about just stopping Iran’s nuclear program? Really, do the Saudis, Jordanians, Egyptians, and the Gulf States really think Israel’s nukes are the problem?

Double-talk from the Obami again: “Herbert M. Allison, Jr., Assistant Secretary of the Treasury for Financial Stability, told three House Republicans in a recent letter that ‘Treasury has never represented that the loan payment represented a full return of all government assistance.’ … Interestingly, however, the first sentence in the April 21 news release circulated by the Treasury Department said: ‘The U.S. Department of the Treasury today announced that General Motors (GM) has fully repaid its debt under the Troubled Asset Relief Program (TARP)’ So the truth is exactly the opposite of what Treasury’s Allison claimed in this regard.”

Among the top 10 places Ahmadinejad won’t be going to in New York: “Down on Houston Street sits Katz’s Deli, a venerable New York institution since 1888. But Ahmadinejad’s punim is unlikely to join the sea of faces smiling out from the walls of the not-quite-kosher deli, which is festooned with pro-Israel signs and a world-famous slogan: ‘Send a salami to your boy in the Army.’ While Ahmadinejad probably won’t be tearing into one of Katz’s juicy triple-decker pastramis any time soon, even a Holocaust-denying would-be genocidist can hardly say no when you throw a knish into the bargain.”

Giving thumbs up to Sarah Palin (“All responsible energy development must be accompanied by strict oversight, but even with the strictest oversight in the world, accidents still happen”), Jonathan Capehart writes: “I won’t join the chorus demanding that off-shore drilling be stopped forever in the U.S. for one simple reason: Until renewable energy sources are more widely available we have no choice. We need the fuel.”

So why isn’t he pressing for regime change or objecting to the administration’s attempt to undercut congressional sanctions? “Iranian President Mahmoud Ahmadinejad should be arrested and tried with war crimes while he’s in the United States, Rep. Steve Israel (D-N.Y.) said Monday. Ahmadinejad is in New York for the United Nations nuclear summit, and Israel wants to use the opportunity to have the Iranian president taken into custody. ‘Ahmadinejad shouldn’t just be protested in NYC, he should be arrested and tried for incitement to commit genocide,’ Israel said on his Twitter feed.”

Joe Sestak is gaining on Arlen Specter in the Pennsylvania Senate primary race. Maybe the party-switching wasn’t such a great idea. But even if Specter loses in the primary, he could pull a Crist and run as an independent. Hey, he’s not a party man anyway.

Trouble (for Democrats) in paradise: “The White House and top Democratic officials are circulating a new, private poll to suggest that only one of two Democrats splitting votes in a tightly contested Hawaii special election has a chance of winning the race.” This follows another poll showing Republican Charles Djou leading the race.

Hillary is thinking big again: “The United States and the great majority of the nations represented here come to this conference with a much larger agenda: to strengthen a global non-proliferation regime that advances the security of all nations, to advance both our rights and our responsibilities.” How about just stopping Iran’s nuclear program? Really, do the Saudis, Jordanians, Egyptians, and the Gulf States really think Israel’s nukes are the problem?

Double-talk from the Obami again: “Herbert M. Allison, Jr., Assistant Secretary of the Treasury for Financial Stability, told three House Republicans in a recent letter that ‘Treasury has never represented that the loan payment represented a full return of all government assistance.’ … Interestingly, however, the first sentence in the April 21 news release circulated by the Treasury Department said: ‘The U.S. Department of the Treasury today announced that General Motors (GM) has fully repaid its debt under the Troubled Asset Relief Program (TARP)’ So the truth is exactly the opposite of what Treasury’s Allison claimed in this regard.”

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Flotsam and Jetsam

Uh oh: Eliot Spitzer is back in the political ring, “acting as an unofficial adviser to New York’s current governor, the hapless David Paterson, whose campaign for re-election is basically in the toilet.” But not to worry, he’s going through an intermediary, an arrangement with which the shameless Spitzer “has had rather a lot of experience.”

Uh oh: Cliff May reviews the troubling trends in Iraq and efforts by Iran to ban candidates and manipulate the Iraqi elections. “It would be a cruel irony — not to mention a terrible defeat — if the sacrifices Americans have made were, in the end, to produce an Iraq dominated by Iranian Supreme Leader Ali Khamenei and President Mahmoud Ahmadinijad [sic], enemies of Iraq, freedom, and democracy — enemies sworn to bringing about a ‘world without America.’ Why don’t Biden and Obama recognize that? And why are their critics not more vocal about the fact that they do not?”

Uh oh: ” Both the number of workers filing new applications for unemployment insurance and producer prices unexpectedly surged, dealing a setback to hopes the economy was showing a strong recovery.Initial claims for state unemployment benefits increased 31,000 to a seasonally adjusted 473,000 in the week ended Feb. 13, up from an upwardly revised 442,000 the prior week, the Labor Department said.”

Uh oh: “The Treasury Department said Wednesday that the deficit for January totaled $42.63 billion. That left the total of red ink so far this budget year at $430.69 billion, 8.8 percent higher than last year when the deficit soared to an unprecedented level of $1.42 trillion. Obama, in sending Congress a new budget plan on Feb. 1, projected that this year’s deficit would hit $1.56 trillion and would remain above $1 trillion for three consecutive years. He forecast the 2011 deficit, for the budget year that begins next Oct. 1, would total $1.27 trillion.”

Uh oh (for the Obami): A new low — only 24 percent of voters think health care is the most likely achievement for Obama.

Uh oh: Evan Bayh is going to lose his halo in the mainstream media. “Sen. Evan Bayh is throwing a wrench in the works of a signature administration initiative, expressing reservations about the plan for the government to eliminate private-sector middlemen and make student loans directly.” Translation: he’s against a government takeover of student loans.

Uh oh: Michael Bennet’s embrace of the public option and reconciliation isn’t playing well back home in Colorado: “Most Americans want Congress to start over on health care reform, but it seems Colorado Sen. Michael Bennet would rather jam it down our throats. Ignoring the message that voters sent in Massachusetts, and shedding any notion that he intends to be a moderate Democrat, Bennet is leading a pack of liberal senators who want to push through health-care reform using a process known as reconciliation. How is it possible that Sen. Bennet, yet to receive one vote from a Coloradan, has such a tin ear for what most Coloradans and Americans want?” Colorado is already rated a “toss-up” (subscription required), but recent polling had Bennet down by double digits.

Uh oh (for the Left): Politico runs a forum entitled “Liberals( progressives) are they finished?” Hard to say any major political movement is ever “finished,” but it isn’t a healthy sign when you have to ask.

Uh oh: Eliot Spitzer is back in the political ring, “acting as an unofficial adviser to New York’s current governor, the hapless David Paterson, whose campaign for re-election is basically in the toilet.” But not to worry, he’s going through an intermediary, an arrangement with which the shameless Spitzer “has had rather a lot of experience.”

Uh oh: Cliff May reviews the troubling trends in Iraq and efforts by Iran to ban candidates and manipulate the Iraqi elections. “It would be a cruel irony — not to mention a terrible defeat — if the sacrifices Americans have made were, in the end, to produce an Iraq dominated by Iranian Supreme Leader Ali Khamenei and President Mahmoud Ahmadinijad [sic], enemies of Iraq, freedom, and democracy — enemies sworn to bringing about a ‘world without America.’ Why don’t Biden and Obama recognize that? And why are their critics not more vocal about the fact that they do not?”

Uh oh: ” Both the number of workers filing new applications for unemployment insurance and producer prices unexpectedly surged, dealing a setback to hopes the economy was showing a strong recovery.Initial claims for state unemployment benefits increased 31,000 to a seasonally adjusted 473,000 in the week ended Feb. 13, up from an upwardly revised 442,000 the prior week, the Labor Department said.”

Uh oh: “The Treasury Department said Wednesday that the deficit for January totaled $42.63 billion. That left the total of red ink so far this budget year at $430.69 billion, 8.8 percent higher than last year when the deficit soared to an unprecedented level of $1.42 trillion. Obama, in sending Congress a new budget plan on Feb. 1, projected that this year’s deficit would hit $1.56 trillion and would remain above $1 trillion for three consecutive years. He forecast the 2011 deficit, for the budget year that begins next Oct. 1, would total $1.27 trillion.”

Uh oh (for the Obami): A new low — only 24 percent of voters think health care is the most likely achievement for Obama.

Uh oh: Evan Bayh is going to lose his halo in the mainstream media. “Sen. Evan Bayh is throwing a wrench in the works of a signature administration initiative, expressing reservations about the plan for the government to eliminate private-sector middlemen and make student loans directly.” Translation: he’s against a government takeover of student loans.

Uh oh: Michael Bennet’s embrace of the public option and reconciliation isn’t playing well back home in Colorado: “Most Americans want Congress to start over on health care reform, but it seems Colorado Sen. Michael Bennet would rather jam it down our throats. Ignoring the message that voters sent in Massachusetts, and shedding any notion that he intends to be a moderate Democrat, Bennet is leading a pack of liberal senators who want to push through health-care reform using a process known as reconciliation. How is it possible that Sen. Bennet, yet to receive one vote from a Coloradan, has such a tin ear for what most Coloradans and Americans want?” Colorado is already rated a “toss-up” (subscription required), but recent polling had Bennet down by double digits.

Uh oh (for the Left): Politico runs a forum entitled “Liberals( progressives) are they finished?” Hard to say any major political movement is ever “finished,” but it isn’t a healthy sign when you have to ask.

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Unplug The Phone Already

Hillary Clinton’s latest “3 a.m.” ad is dopey. What economic crisis hits at 3 a.m, demanding immediate resolution? (The ad makes it sound as if Hillary hasn’t paying been attention and has let the economy collapse, the very indictment Democrats have leveled at the Bush administration.) And doesn’t she still have to beat Barack Obama before worrying about John McCain? I frankly don’t get the whole effort, which risks becoming a Saturday Night Live parody.

However, John McCain’s rapid response team was rapid indeed and came back promptly with a funny one-liner (“With ads like that, it’s more likely the call at 3 am is ‘Senator, you just lost another superdelegate.’”) and an ad of their own. This just underscores how predictable and tired the Clinton campaign has become. The sure sign that a campaign is running out of gas is when your opponents’ responses are better than your ads. It seems painfully obvious the Clinton team has run out of material. Perhaps she could tell that one about running through sniper fire at the Treasury Department.

Hillary Clinton’s latest “3 a.m.” ad is dopey. What economic crisis hits at 3 a.m, demanding immediate resolution? (The ad makes it sound as if Hillary hasn’t paying been attention and has let the economy collapse, the very indictment Democrats have leveled at the Bush administration.) And doesn’t she still have to beat Barack Obama before worrying about John McCain? I frankly don’t get the whole effort, which risks becoming a Saturday Night Live parody.

However, John McCain’s rapid response team was rapid indeed and came back promptly with a funny one-liner (“With ads like that, it’s more likely the call at 3 am is ‘Senator, you just lost another superdelegate.’”) and an ad of their own. This just underscores how predictable and tired the Clinton campaign has become. The sure sign that a campaign is running out of gas is when your opponents’ responses are better than your ads. It seems painfully obvious the Clinton team has run out of material. Perhaps she could tell that one about running through sniper fire at the Treasury Department.

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Osama bin Laden’s Schwab Account?

Not long before September 11, 2001, someone placed large bets on Wall Street—buying “put” contracts—on the possibility that the shares of airline stocks would decline. After the attacks, the shares did fall sharply and a great deal of speculation ensued that the trades were placed by parties who had advance knowledge of the attack.

This theorizing was knocked down by the 9/11 Commission, which noted in a footnote in its report that there was an entirely innocuous explanation for the trading. Alexander Rose of National Review did an even more thorough job of explaining the irregular-appearing transactions and knocking down the rumors.

The same story has now resurfaced interestingly again with rumors circulating that a number of recent and odd Wall Street bets suggest that a September 11 reprise is on its way. Details, and another persuasive knock-down of the rumors, can be found on TheStreet.com. Read More

Not long before September 11, 2001, someone placed large bets on Wall Street—buying “put” contracts—on the possibility that the shares of airline stocks would decline. After the attacks, the shares did fall sharply and a great deal of speculation ensued that the trades were placed by parties who had advance knowledge of the attack.

This theorizing was knocked down by the 9/11 Commission, which noted in a footnote in its report that there was an entirely innocuous explanation for the trading. Alexander Rose of National Review did an even more thorough job of explaining the irregular-appearing transactions and knocking down the rumors.

The same story has now resurfaced interestingly again with rumors circulating that a number of recent and odd Wall Street bets suggest that a September 11 reprise is on its way. Details, and another persuasive knock-down of the rumors, can be found on TheStreet.com.

But let’s assume for a moment that Osama bin Laden, logging on to a laptop in his cave, decided to make his portfolio grow via terrorism. Would he risk operational security by placing the trades or having a proxy place the trades?

That always seemed unlikely, and is especially unlikely now because the CIA and the Treasury Department are able to monitor all sorts of transactions through SWIFT, the European financial clearinghouse. The New York Times compromised the program when it tipped off bin Laden, and the whole world, to the existence of the highly classified monitoring program in June 2006.

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Come Home, Mr. Hill

The State Department’s chief North Korean negotiator, Christopher Hill, is currently in Pyongyang. He should not be there; his presence can only worsen the state of affairs between the U.S. and North Korea. In fact, it already has.

To understand why requires some background. In February of this year, Hill negotiated a two-stage interim arrangement with North Korea. During the first stage, the militant state agreed to shut down and seal by April 14 its reactor in Yongbyon, under the supervision of international inspectors. In the second, the North Koreans promised to disable all their nuclear facilities and to disclose all their nuclear programs. In return, the United States and Japan agreed to lift some sanctions and to start the process of normalizing relations—and to provide a million tons of heavy fuel oil or an equivalent amount of aid. The State Department called this deal a “breakthrough.”

Not formally part of the deal was America’s promise to allow the return of about $25 million in North Korean funds held in the Macau-based Banco Delta Asia (BDA). In September 2005, the Treasury Department effectively froze these assets by designating BDA a “primary money-laundering concern.” (BDA had previously helped North Korean leader Kim Jong Il hide his cash, distribute counterfeit American currency, and launder the proceeds of other state-sponsored criminal activities.) Pyongyang refused to continue participating in Beijing-sponsored disarmament talks until all frozen funds were returned, and the Chinese sided with Kim’s government. In a humiliating about-face, Washington ultimately bowed and freed all the monies as of April 11 of this year.

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The State Department’s chief North Korean negotiator, Christopher Hill, is currently in Pyongyang. He should not be there; his presence can only worsen the state of affairs between the U.S. and North Korea. In fact, it already has.

To understand why requires some background. In February of this year, Hill negotiated a two-stage interim arrangement with North Korea. During the first stage, the militant state agreed to shut down and seal by April 14 its reactor in Yongbyon, under the supervision of international inspectors. In the second, the North Koreans promised to disable all their nuclear facilities and to disclose all their nuclear programs. In return, the United States and Japan agreed to lift some sanctions and to start the process of normalizing relations—and to provide a million tons of heavy fuel oil or an equivalent amount of aid. The State Department called this deal a “breakthrough.”

Not formally part of the deal was America’s promise to allow the return of about $25 million in North Korean funds held in the Macau-based Banco Delta Asia (BDA). In September 2005, the Treasury Department effectively froze these assets by designating BDA a “primary money-laundering concern.” (BDA had previously helped North Korean leader Kim Jong Il hide his cash, distribute counterfeit American currency, and launder the proceeds of other state-sponsored criminal activities.) Pyongyang refused to continue participating in Beijing-sponsored disarmament talks until all frozen funds were returned, and the Chinese sided with Kim’s government. In a humiliating about-face, Washington ultimately bowed and freed all the monies as of April 11 of this year.

The North Koreans, however, did not attempt to repatriate the funds for more than two months. The money finally moved last week, passing through the New York branch of the Federal Reserve on its way to a North Korean account in Russia. Pyongyang subsequently invited inspectors from the International Atomic Energy Agency (IAEA), the UN’s nuclear watchdog, to come to the North to prepare for Yongbyon’s shutdown. But today Kim Jong Il’s government told the IAEA inspectors to stay at home: reports had surfaced that the Banco Delta Asia money had not yet reached North Korean hands.

Hill is still in Pyongyang, presumably trying to get the February deal on track again. This is a mistake. It is now more than two months since April 14, the date the North Koreans should have shut down Yongbyon. The United States has already let them use the American banking system to return tainted funds, possibly in violation of American law.

What more can we do to accommodate Pyongyang? Hill has certainly done too much. The dispute over the funds in Macau was never about the $25 million—a relatively small sum even by North Korean standards. It was Pyongyang’s way of testing Washington’s will. Having prevailed in forcing America to unfreeze the money, North Korea is now pushing its advantage even further. And Hill’s continued presence is sure to be read as evidence of American weakness.

The New York Times this morning reported that the Bush administration is now considering buying the uranium-enrichment equipment the North Koreans purchased from Pakistan’s Dr. A.Q. Khan, the infamous nuclear black marketeer. But the U.S. government has tried repeatedly to acquire the North Korean nuclear program with cold, hard cash—and failed. (The first such attempt was in 1994, under the Agreed Framework brokered by Jimmy Carter.) By now, everyone should know that this approach is unworkable as long as Kim remains in power. And Christopher Hill should get back on his plane as soon as possible.

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China’s Visible Hand

Yesterday, Senators Baucus, Grassley, Schumer, and Graham unveiled legislation aimed at China’s currency-fixing practices. The bill, which does not mention any country by name, targets “fundamentally misaligned currencies.” If enacted, it would require the Treasury and Commerce Departments first to determine if the “misalignment” is intentional and then to take a series of actions—ranging from suspension of that country’s procurement rights to intervention by the WTO and the Federal Reserve—if the problem is not remedied.

There seems little question that the misalignment of China’s renminbi is intentional. The currency was pegged to the dollar until July 2005. After intense pressure from the international community, Beijing made a slight upward adjustment—about 2 percent—and then freed its currency to trade within an extremely tight band. Since then, the renminbi has appreciated about 6 percent against the greenback. Today, some think the yuan, as the renminbi is informally known, is still undervalued by as much as 15 to 40 percent. Beijing keeps the renminbi undervalued by intervening in domestic money markets almost every day.

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Yesterday, Senators Baucus, Grassley, Schumer, and Graham unveiled legislation aimed at China’s currency-fixing practices. The bill, which does not mention any country by name, targets “fundamentally misaligned currencies.” If enacted, it would require the Treasury and Commerce Departments first to determine if the “misalignment” is intentional and then to take a series of actions—ranging from suspension of that country’s procurement rights to intervention by the WTO and the Federal Reserve—if the problem is not remedied.

There seems little question that the misalignment of China’s renminbi is intentional. The currency was pegged to the dollar until July 2005. After intense pressure from the international community, Beijing made a slight upward adjustment—about 2 percent—and then freed its currency to trade within an extremely tight band. Since then, the renminbi has appreciated about 6 percent against the greenback. Today, some think the yuan, as the renminbi is informally known, is still undervalued by as much as 15 to 40 percent. Beijing keeps the renminbi undervalued by intervening in domestic money markets almost every day.

Nonetheless, in its twice-yearly currency report, released yesterday, the Treasury Department again declined to label China a currency manipulator. Treasury said it was

unable to determine that China’s exchange-rate policy was carried out for the purpose of preventing effective balance of payments adjustment or gaining unfair competitive advantage in international trade.

Common sense tells us this can’t be true. A cheap renminbi keeps Chinese goods less costly, conferring a huge advantage on manufacturers looking to export. And export is perhaps the most significant prop of the Chinese economy. China’s trade surplus against the United States amounted to $232.5 billion in 2006. This year, Beijing’s overall trade surplus is projected to grow an astonishing 43 percent.

The Bush administration will undoubtedly fight hard against the new Senate bill, just as it will try to derail other pending China-currency legislation, including the Hunter-Ryan bill in the House and the Dodd-Shelby bill in the Senate. The White House and the Treasury Department say that only engagement and dialogue will work—a point Beijing also maintains—but China has rebuffed American advances on this issue for years.

The President’s policies have obviously been ineffective. Worse, by allowing China to continue to game the international system, the White House may erode the American public’s support for multilateral trade. China’s predatory policies are de-legitimizing the basic concept of free trade: just as bad currencies drive out good ones—Gresham’s Law—irresponsible trade practices undermine responsible ones.

This week Beijing unleashed a blistering attack on Congress for merely considering currency legislation, saying the Chinese government would not “obey an order from Capitol Hill.” Such a response from that quarter is only to be expected. What is slightly harder to explain is the President’s taking the side of mercantilist Chinese autocrats on an issue of such importance to America’s economic health.

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Fiscal Chicken Littles

Some news about the federal budget deficit: the sky still isn’t falling.

It was only a few short years ago that the deficit was held up as evidence of the Bush administration’s fiscal recklessness. From nearly every corner, someone was arguing that the end was nigh. Fortune called the deficit “staggering.” Tim Russert, while interviewing the President, referred to his “deficit disaster.” Andrew Sullivan was convinced that “soaring deficits” necessitated a new gas tax. Even Alan Greenspan went to Europe and told reporters that the U.S. budget deficit was “out of control.”

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Some news about the federal budget deficit: the sky still isn’t falling.

It was only a few short years ago that the deficit was held up as evidence of the Bush administration’s fiscal recklessness. From nearly every corner, someone was arguing that the end was nigh. Fortune called the deficit “staggering.” Tim Russert, while interviewing the President, referred to his “deficit disaster.” Andrew Sullivan was convinced that “soaring deficits” necessitated a new gas tax. Even Alan Greenspan went to Europe and told reporters that the U.S. budget deficit was “out of control.”

Yesterday, with little fanfare, the Treasury Department reported that the federal deficit fell from October to February, down 25.5 percent from the same period last year. This is consistent with the dramatic fall in the budget gap over the past two years. The White House projects the deficit will be $244 billion by the end of the year. The Congressional Budget Office is even more optimistic, forecasting a deficit of $214 billion. If the White House’s more conservative estimate is right, the deficit will be around 1.7 percent of GDP. The average federal budget deficit over the past 40 years has been 2.4 percent.

I won’t pretend that a single quarterly announcement on deficit figures means that much. But surely it’s time for the legions of economic doomsayers to admit that they were wrong. Or maybe it’s simply an evergreen of American politics to talk about budget deficits as if they were a sign of the end of life as we know it. The country was full of such talk during the 1992 election, when the Concord Coalition was predicting all sorts of horrible fiscal scenarios. Four years later, the country was running a budget surplus. And here is an article from Time that does all the usual hand-wringing on the subject. It is a classic of the genre, peppered with generous citations of the Brookings Institution and containing the apparently essential line: “Some economists are frankly afraid that the nation’s budget is out of control.” The article appeared in 1972.

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