Commentary Magazine


Topic: finance

Citizens United Protected Free Speech, Not the GOP

The one-year anniversary of the Citizens United Supreme Court decision is being treated in some quarters as a Republican triumph. According to this reading, the ruling that invalidated legislation that unconstitutionally attempted to restrict the political speech of groups was strictly a partisan affair. In this version of reality, the upshot of the 2010 election was that Republican and conservative organizations were freed up by the High Court’s spiking of provisions of the McCain-Feingold campaign-finance bill and therefore coasted to victory last November. Thus the spin today is that since the Democrats have no chance of undoing the Court’s decision via legislation, they must now retool their fundraising operations to adjust to the post–Citizens United world.

But this interpretation is entirely fallacious. Conservatives have historically opposed restrictive campaign-finance laws because they believed that attempts to silence political speech, such as the documentary film about Hilary Clinton that was at the heart of Citizens United, was inherently illegitimate. Campaign-finance “reform” laws have never, as their authors claim, eliminated the role of money in politics. But they did play favorites as to which kind of money was legal. Such good laws are good for incumbent politicians because they stifle challengers, and great for media companies, which are free to spout their views about candidates on their editorial pages and, alas, in their news columns as well, while restricting the right of others to purchase the same freedom.

But the main point here is that the focus on Citizens United allows liberals to engage in conspiracy theories about why they lost the last election rather than face up to the fact that the grassroots uprising against the policies of the Obama administration is what accounted for the GOP landslide victory in the congressional elections, not the money that some conservative groups were allowed to spend last year.

While Citizens United overturned regulations that were more likely to handicap conservative pro-business groups rather than liberal ones such as unions, the free flow of money in campaigns doesn’t necessarily mean either side will have an advantage in the future. Just as the Obama campaign broke records in 2008 by harnessing the enthusiasm of liberals, the lack of draconian regulations intended to silence free speech in the future will be no hindrance to the Democrats if they can manage to appear as the party with the answers again. That’s the thing about free speech: it allows the sentiments of the people, whether the pendulum has swung to the left or to the right, to be heard.

The Court’s verdict one year ago will continue to be felt not in terms of who wins the election in 2012 or any other year but in the ability of ordinary Americans to band together to speak out on the issues and the candidates. While at the moment that does not appear to appeal to many Democrats, it is the essence of democracy.

The one-year anniversary of the Citizens United Supreme Court decision is being treated in some quarters as a Republican triumph. According to this reading, the ruling that invalidated legislation that unconstitutionally attempted to restrict the political speech of groups was strictly a partisan affair. In this version of reality, the upshot of the 2010 election was that Republican and conservative organizations were freed up by the High Court’s spiking of provisions of the McCain-Feingold campaign-finance bill and therefore coasted to victory last November. Thus the spin today is that since the Democrats have no chance of undoing the Court’s decision via legislation, they must now retool their fundraising operations to adjust to the post–Citizens United world.

But this interpretation is entirely fallacious. Conservatives have historically opposed restrictive campaign-finance laws because they believed that attempts to silence political speech, such as the documentary film about Hilary Clinton that was at the heart of Citizens United, was inherently illegitimate. Campaign-finance “reform” laws have never, as their authors claim, eliminated the role of money in politics. But they did play favorites as to which kind of money was legal. Such good laws are good for incumbent politicians because they stifle challengers, and great for media companies, which are free to spout their views about candidates on their editorial pages and, alas, in their news columns as well, while restricting the right of others to purchase the same freedom.

But the main point here is that the focus on Citizens United allows liberals to engage in conspiracy theories about why they lost the last election rather than face up to the fact that the grassroots uprising against the policies of the Obama administration is what accounted for the GOP landslide victory in the congressional elections, not the money that some conservative groups were allowed to spend last year.

While Citizens United overturned regulations that were more likely to handicap conservative pro-business groups rather than liberal ones such as unions, the free flow of money in campaigns doesn’t necessarily mean either side will have an advantage in the future. Just as the Obama campaign broke records in 2008 by harnessing the enthusiasm of liberals, the lack of draconian regulations intended to silence free speech in the future will be no hindrance to the Democrats if they can manage to appear as the party with the answers again. That’s the thing about free speech: it allows the sentiments of the people, whether the pendulum has swung to the left or to the right, to be heard.

The Court’s verdict one year ago will continue to be felt not in terms of who wins the election in 2012 or any other year but in the ability of ordinary Americans to band together to speak out on the issues and the candidates. While at the moment that does not appear to appeal to many Democrats, it is the essence of democracy.

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Barak Pulls a Sharon

As Evelyn has noted, and in a move that surprised nobody except members of his own party, Ehud Barak today took a page from Ariel Sharon’s playbook, splitting from the ideologically founded movement he was leading to create a new centrist political party. Along with four other Labor members, the new party — it still doesn’t have a name — will remain committed to the current government, while in all likelihood the remaining members of Labor will, sooner or later, leave the coalition.

Before we dismiss the new party as yet another soon-forgotten splinter in Israeli politics, it’s worth considering the electoral reality Ehud Barak currently faces. When Sharon broke from Likud in 2005, he founded Kadima as a new centrist faction that would approve the disengagement from Gaza. Although he was joined by a few Labor icons like Shimon Peres and Chaim Ramon, many people saw in Kadima an incoherent collection of mostly moderate right-wingers and a few from the left. After Sharon’s stroke-induced departure from politics in early 2006, most people thought the party wouldn’t survive the next election.

They were wrong. Two leaders later, Kadima’s 28 seats is the largest single faction in the Knesset. This despite having few ranking members with serious governing experience, and despite the disgrace of its second leader, Ehud Olmert, and its finance minister, Avraham Hirschson, on corruption charges.

Why has Kadima survived? The answer should give pause to those who think Ehud Barak is on his last legs as an Israeli politician. For despite being essentially a Likud spin-off, Kadima has survived on the strength of a fairly large base of voters who traditionally saw themselves on the left — not the peace-process left of Yossi Beilin and Yossi Sarid, but rather the enlightened, heavily Ashkenazic, traditionally social-leaning yet nationalist left of David Ben-Gurion and Yitzhak Rabin. These are the voters who turned to Kadima in droves after the intifada made security more pressing, and more plausible, than peace — people who could never vote Likud for cultural reasons, even if they embraced most of its principles.

Nobody stands to lose more votes to Barak’s new party than Kadima. For if disaffected Laborites turned to Kadima as the closest expression of their political will, they may find a far more congenial home in the new party. As former IDF chief of staff and current defense minister, Barak suddenly embodies the pro-security, classic-Labor stance that neither the more dovish, pro-business, still-in-Labor types nor Kadima’s leader, Tzipi Livni, can hope to offer. To emphasize this, he’s taken with him a top former IDF general, Matan Vilnai. And he’s declared that his party “will follow David Ben-Gurion’s legacy.”

Much of how this turns out depends on the kind of people Barak can pull together around himself before the next election. If former-Labor people in Kadima start defecting to his new party, Israeli politics may see a major shift on the center-left. Barak’s personality has historically made it hard to keep the loyalty of those around him. But the field is open for him. Stay tuned.

As Evelyn has noted, and in a move that surprised nobody except members of his own party, Ehud Barak today took a page from Ariel Sharon’s playbook, splitting from the ideologically founded movement he was leading to create a new centrist political party. Along with four other Labor members, the new party — it still doesn’t have a name — will remain committed to the current government, while in all likelihood the remaining members of Labor will, sooner or later, leave the coalition.

Before we dismiss the new party as yet another soon-forgotten splinter in Israeli politics, it’s worth considering the electoral reality Ehud Barak currently faces. When Sharon broke from Likud in 2005, he founded Kadima as a new centrist faction that would approve the disengagement from Gaza. Although he was joined by a few Labor icons like Shimon Peres and Chaim Ramon, many people saw in Kadima an incoherent collection of mostly moderate right-wingers and a few from the left. After Sharon’s stroke-induced departure from politics in early 2006, most people thought the party wouldn’t survive the next election.

They were wrong. Two leaders later, Kadima’s 28 seats is the largest single faction in the Knesset. This despite having few ranking members with serious governing experience, and despite the disgrace of its second leader, Ehud Olmert, and its finance minister, Avraham Hirschson, on corruption charges.

Why has Kadima survived? The answer should give pause to those who think Ehud Barak is on his last legs as an Israeli politician. For despite being essentially a Likud spin-off, Kadima has survived on the strength of a fairly large base of voters who traditionally saw themselves on the left — not the peace-process left of Yossi Beilin and Yossi Sarid, but rather the enlightened, heavily Ashkenazic, traditionally social-leaning yet nationalist left of David Ben-Gurion and Yitzhak Rabin. These are the voters who turned to Kadima in droves after the intifada made security more pressing, and more plausible, than peace — people who could never vote Likud for cultural reasons, even if they embraced most of its principles.

Nobody stands to lose more votes to Barak’s new party than Kadima. For if disaffected Laborites turned to Kadima as the closest expression of their political will, they may find a far more congenial home in the new party. As former IDF chief of staff and current defense minister, Barak suddenly embodies the pro-security, classic-Labor stance that neither the more dovish, pro-business, still-in-Labor types nor Kadima’s leader, Tzipi Livni, can hope to offer. To emphasize this, he’s taken with him a top former IDF general, Matan Vilnai. And he’s declared that his party “will follow David Ben-Gurion’s legacy.”

Much of how this turns out depends on the kind of people Barak can pull together around himself before the next election. If former-Labor people in Kadima start defecting to his new party, Israeli politics may see a major shift on the center-left. Barak’s personality has historically made it hard to keep the loyalty of those around him. But the field is open for him. Stay tuned.

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Open Minds Open Wallets

The AP has a story about how American businesses are now looking to market products to Muslim consumers:

The worldwide market for Islamically permitted goods, called halal, has grown to more than half a billion dollars annually. Ritually slaughtered meat is a mainstay, but the halal industry is much broader, including foods and seasoning that omit alcohol, pork products and other forbidden ingredients, along with cosmetics, finance and clothing.

Corporations have been courting immigrant Muslim communities in Europe for several years. Nestle, for example, has about 20 factories in Europe with halal-certified production lines and advertises to Western Muslims through its marketing campaign called “Taste of Home.” Nestle plans to increase its ethnic and halal offerings in Europe in coming years.

In the United States, iconic American companies such as McDonald’s (which already has a popular halal menu overseas) and Wal-Mart have entered the halal arena. In August, the natural grocery giant Whole Foods began selling its first nationally distributed halal food product — frozen Indian entrees called Saffron Road.

There is no reason to think that Muslims, in themselves, represent a uniquely promising niche market. What’s happening here is subtler. It’s about branding, not selling. Companies want to be seen by all potential consumers as being socially aware, on the side of the good guys, and behind fashionable causes. Four years ago, with An Inconvenient Truth dominating the culture, this meant offering bottles with 20 percent less plastic or toilet paper made from 100 percent recycled paper. But the market is turbulent and with the increased discrediting of global-warming alarmism, the popularity of green brands has taken a measurable hit.  Today, with cover stories apologizing for American Islamophobia, being a compassionate corporation means offering halal frozen dinners and Islamic themed fabric patterns. In case it escapes the average consumer that these companies are brave and compassionate beyond measure, the AP story is peppered with ridiculous allusions to the “risks” these right-thinking businesses are incurring. It goes without saying that the planet was no more doomed to heat up than American Muslims are threatened by their neighbors. Under the guise of the great American tradition of equality, these companies are capitalizing on the great American tradition of PR. They got this story out of it, didn’t they?

The AP has a story about how American businesses are now looking to market products to Muslim consumers:

The worldwide market for Islamically permitted goods, called halal, has grown to more than half a billion dollars annually. Ritually slaughtered meat is a mainstay, but the halal industry is much broader, including foods and seasoning that omit alcohol, pork products and other forbidden ingredients, along with cosmetics, finance and clothing.

Corporations have been courting immigrant Muslim communities in Europe for several years. Nestle, for example, has about 20 factories in Europe with halal-certified production lines and advertises to Western Muslims through its marketing campaign called “Taste of Home.” Nestle plans to increase its ethnic and halal offerings in Europe in coming years.

In the United States, iconic American companies such as McDonald’s (which already has a popular halal menu overseas) and Wal-Mart have entered the halal arena. In August, the natural grocery giant Whole Foods began selling its first nationally distributed halal food product — frozen Indian entrees called Saffron Road.

There is no reason to think that Muslims, in themselves, represent a uniquely promising niche market. What’s happening here is subtler. It’s about branding, not selling. Companies want to be seen by all potential consumers as being socially aware, on the side of the good guys, and behind fashionable causes. Four years ago, with An Inconvenient Truth dominating the culture, this meant offering bottles with 20 percent less plastic or toilet paper made from 100 percent recycled paper. But the market is turbulent and with the increased discrediting of global-warming alarmism, the popularity of green brands has taken a measurable hit.  Today, with cover stories apologizing for American Islamophobia, being a compassionate corporation means offering halal frozen dinners and Islamic themed fabric patterns. In case it escapes the average consumer that these companies are brave and compassionate beyond measure, the AP story is peppered with ridiculous allusions to the “risks” these right-thinking businesses are incurring. It goes without saying that the planet was no more doomed to heat up than American Muslims are threatened by their neighbors. Under the guise of the great American tradition of equality, these companies are capitalizing on the great American tradition of PR. They got this story out of it, didn’t they?

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Cut and Run Was No Strategy for Iraq and Isn’t One for Afghanistan

Richard Haass, president of the Council on Foreign Relations, has written in the Wall Street Journal that we should “un-surge” in Afghanistan. While arguing against total withdrawal, he says “the U.S. effort there should be sharply reduced.”

Mr. Haass’s recommendation on Afghanistan sounds similar to his (flawed) recommendation on Iraq during the debate about the surge.

In a November 13, 2006, interview with Der Spiegel, Haass said: “We’ve reached a point in Iraq where we’ve got to get real. … The Iraq situation is not winnable in any meaningful sense of the word ‘winnable.’ So what we need to do now is look for a way to limit the losses and costs, try to advance on other fronts in the region and try to limit the fallout of Iraq. That’s what you have to do sometimes when you’re a global power.”

A few weeks later, on November 30, Haass said, “It’s not clear to me that even if you double the level of American troops you would somehow stabilize the situation [in Iraq].”

And on December 10, 2006, on NBC’s Meet the Press, he said this:

I would perhaps do it for a short amount of time, a surge, as part, again, of this narrative, as part of saying, “We’ve gone the extra mile.” I want to take away the arguments, quite honestly, from the critics of the [Iraq Study Group] report. I want to take away the argument that if Iraq turns out as badly as I fear it might, I want to take away the argument that it was because of what we didn’t do. If Iraq doesn’t work, I think it’s incredibly important for the future of the Middle East and for the future of American foreign policy around the world that the principle lesson not be that the United States is unreliable or we lacked staying power. “If only we’d done a little bit more for a little bit longer it would’ve succeeded.” To me, it is essentially important for the future of this country that Iraq be seen, if you will, as Iraq’s failure, not as America’s failure.

So Haass supported a temporary surge in Iraq not because he thought it would work but in order to place the blame on the Iraqis when it failed. There was a notably amoral quality to Haass’s recommendation (the realpolitik Haass might accept this as a compliment). Read More

Richard Haass, president of the Council on Foreign Relations, has written in the Wall Street Journal that we should “un-surge” in Afghanistan. While arguing against total withdrawal, he says “the U.S. effort there should be sharply reduced.”

Mr. Haass’s recommendation on Afghanistan sounds similar to his (flawed) recommendation on Iraq during the debate about the surge.

In a November 13, 2006, interview with Der Spiegel, Haass said: “We’ve reached a point in Iraq where we’ve got to get real. … The Iraq situation is not winnable in any meaningful sense of the word ‘winnable.’ So what we need to do now is look for a way to limit the losses and costs, try to advance on other fronts in the region and try to limit the fallout of Iraq. That’s what you have to do sometimes when you’re a global power.”

A few weeks later, on November 30, Haass said, “It’s not clear to me that even if you double the level of American troops you would somehow stabilize the situation [in Iraq].”

And on December 10, 2006, on NBC’s Meet the Press, he said this:

I would perhaps do it for a short amount of time, a surge, as part, again, of this narrative, as part of saying, “We’ve gone the extra mile.” I want to take away the arguments, quite honestly, from the critics of the [Iraq Study Group] report. I want to take away the argument that if Iraq turns out as badly as I fear it might, I want to take away the argument that it was because of what we didn’t do. If Iraq doesn’t work, I think it’s incredibly important for the future of the Middle East and for the future of American foreign policy around the world that the principle lesson not be that the United States is unreliable or we lacked staying power. “If only we’d done a little bit more for a little bit longer it would’ve succeeded.” To me, it is essentially important for the future of this country that Iraq be seen, if you will, as Iraq’s failure, not as America’s failure.

So Haass supported a temporary surge in Iraq not because he thought it would work but in order to place the blame on the Iraqis when it failed. There was a notably amoral quality to Haass’s recommendation (the realpolitik Haass might accept this as a compliment).

In his Journal op-ed arguing for undoing the surge in Afghanistan, Haass lays out the “broader reasons to recast policy.” They include:

The greatest threat to U.S. national security stems from our own fiscal crisis. Afghanistan is a significant contributor to this situation and could play an important role in reducing it. A savings of $75 billion a year could help finance much-needed military modernization and reduce the deficit.

Another factor is the increased possibility of a conflict with a reckless North Korea and the continued possibility of a confrontation with Iran over its nuclear program. U.S. military forces must be freed up to contend with these issues. The perception that we are tied down in Afghanistan makes it more difficult to threaten North Korea or Iran credibly—and makes it more difficult to muster the forces to deal with either if necessary.

Haass’s somewhat novel argument, then, is that in order to preserve our capacity to wage future wars, we should lose (in the guise of de-escalation) our current ones. He doesn’t take into account that retreating in Afghanistan would be (rightly) interpreted by nations like Iran and North Korea as weakness on the part of America, thereby emboldening our adversaries. And nowhere does Haass explain how his recommended offshore counterterrorism strategy would work, since credible counterterrorism strikes depend on good intelligence, which is best gathered by ground forces that enjoy the trust of the local population. If we pull out our troops, we lose even that capacity.

One cannot help but suspect that Haass has arrived at a position based on a theory he holds to with dogmatic certitude and has gone in search of arguments to support it. This may explain why Haass is forced to mimic David Stockman on the deficit and Richard Perle on Iran. It’s not a terribly persuasive pose.

Mr. Haass concludes his op-ed this way:

Ultimately Afghanistan is a strategic distraction. U.S. interests there are limited. So, too, are the resources available for national security. It is not surprising that the commander in the field, Gen. David Petraeus, is calling for committing greater resources to the theater. But it is the commander-in-chief’s responsibility to take into account the nation’s capacity to meet all of its challenges, national and international. It is for this reason that the perspectives of Gen. Petraeus and President Obama must necessarily diverge.

The notion that Afghanistan is nothing more than a “strategic distraction” is not terribly serious. Events of the past decade have turned it into something very much more than that.

Defeat there would have profound, negative effects on, among other nations, nuclear-armed Pakistan. While it’s obviously true that events in Afghanistan don’t have unlimited effects on Pakistan, Haass’s insistence that they are almost completely unrelated will come as news to the Pakistani government and virtually everyone else in the region. The capitulation of the United States and the fall of the existing government in a neighboring state, Afghanistan, would have significant ramifications in Pakistan. It would be an enormously important psychological victory for jihadists and the Taliban. Islamists all over the world would assume that if they wait long enough, the U.S. will cut out and move on. And defeat in Afghanistan would have baleful consequences for the people, and especially the women, of Afghanistan (though that dimension of this issue doesn’t appear to enter into Haass’s calculus at all).

When it comes to both military planning and strategic thinking, General Petraeus is simply in a different league than Mr. Haass. The four-star general and Princeton Ph.D. has proved himself to be far wiser, more prescient, and more knowledgeable than the former State Department official. Which is why I’m thankful that America’s 44th president, like America’s 43rd president, is listening to David Petraeus rather than to Richard Haass.

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A More Dangerous World

COMMENTARY contributor Bret Stephens identifies the cumulative danger posed by an administration obsessed by multilateralism and possessing many false and bad ideas about international affairs:

Last week, Mr. Obama was so resoundingly rebuffed by other leaders at the G-20 summit in Seoul that even the New York Times noticed: Mr. Obama, the paper wrote, faced “stiff challenges… from the leaders of China, Britain, Germany and Brazil.” His administration has now been chastised or belittled by everyone from the Supreme Leader of Iran to the finance minister of Germany to the president of France to the dictator of Syria. What does it mean for global order when the world figures out that the U.S. president is someone who’s willing to take no for an answer?

The answer is that the United States becomes Europe. Except on a handful of topics, like trade and foreign aid, the foreign policy of the European Union, and that of most of its constituent states, amounts to a kind of diplomatic air guitar: furious motion, considerable imagination, but neither sound nor effect. When a European leader issues a stern demarche toward, say, Burma or Russia, nobody notices. And nobody cares.

And, as Bret points out, the world becomes more chaotic, and the smaller democracies get the shaft as a result of America’s feckless approach:

The small and distant abuses of power, would grow bolder and more frequent. America’s exhortations for restraint or decency would seem cheaper. Multipolarity is a theory that, inevitably, leads to old-fashioned spheres of influence. It has little regard for small states: Taiwan, Mongolia, Israel, Georgia, Latvia, Costa Rica.

That approach to foreign affairs is also characterized by an inordinate amount of disingenuousness. Obama says he’s in favor of free trade but loses the face-off with South Korea because he is on the side of the auto companies’ efforts to maintain protectionist barriers just a little bit longer. Obama says he’s a grand friend of Israel but continues the lopsided public bullying of Israel. Obama says he’s a great champion of human rights and democracy, but his policy choices are curiously lacking in any meaningful assistance for the oppressed and any real opposition to the oppressors. There is, to be blunt, a collapse of our moral standing and our credibility, which is frittered away in an effort to mask the essential amorality of our policy.

Gradually the bullies and the despots get the idea the U.S. can be played and its allies pushed about. We’ve been down this road before, and the results are never good.

COMMENTARY contributor Bret Stephens identifies the cumulative danger posed by an administration obsessed by multilateralism and possessing many false and bad ideas about international affairs:

Last week, Mr. Obama was so resoundingly rebuffed by other leaders at the G-20 summit in Seoul that even the New York Times noticed: Mr. Obama, the paper wrote, faced “stiff challenges… from the leaders of China, Britain, Germany and Brazil.” His administration has now been chastised or belittled by everyone from the Supreme Leader of Iran to the finance minister of Germany to the president of France to the dictator of Syria. What does it mean for global order when the world figures out that the U.S. president is someone who’s willing to take no for an answer?

The answer is that the United States becomes Europe. Except on a handful of topics, like trade and foreign aid, the foreign policy of the European Union, and that of most of its constituent states, amounts to a kind of diplomatic air guitar: furious motion, considerable imagination, but neither sound nor effect. When a European leader issues a stern demarche toward, say, Burma or Russia, nobody notices. And nobody cares.

And, as Bret points out, the world becomes more chaotic, and the smaller democracies get the shaft as a result of America’s feckless approach:

The small and distant abuses of power, would grow bolder and more frequent. America’s exhortations for restraint or decency would seem cheaper. Multipolarity is a theory that, inevitably, leads to old-fashioned spheres of influence. It has little regard for small states: Taiwan, Mongolia, Israel, Georgia, Latvia, Costa Rica.

That approach to foreign affairs is also characterized by an inordinate amount of disingenuousness. Obama says he’s in favor of free trade but loses the face-off with South Korea because he is on the side of the auto companies’ efforts to maintain protectionist barriers just a little bit longer. Obama says he’s a grand friend of Israel but continues the lopsided public bullying of Israel. Obama says he’s a great champion of human rights and democracy, but his policy choices are curiously lacking in any meaningful assistance for the oppressed and any real opposition to the oppressors. There is, to be blunt, a collapse of our moral standing and our credibility, which is frittered away in an effort to mask the essential amorality of our policy.

Gradually the bullies and the despots get the idea the U.S. can be played and its allies pushed about. We’ve been down this road before, and the results are never good.

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Don’t Tell Me Why I Hate Woodrow Wilson

Professor David Greenberg writes in Slate today that the conservative dislike of Woodrow Wilson is “confused,” “bad as an interpretation of the facts,” and “demonstrably inaccurate.” He implies elsewhere that it is a “crackpot history” that requires not only debunking but also ridicule. But beyond the blustery rhetoric, Greenberg only proves that he misunderstands conservatives’ beef with the 28th president.

Full disclosure: in 2009, I graduated from Hillsdale College – which Greenberg blames for influencing Glenn Beck and, therefore, fueling the Tea Party’s hatred of Woodrow Wilson. More particularly, I was a student of Ronald J. Pestritto, whom Greenberg cites as particularly influential in demonizing Wilson. Having sat in Dr. Pestritto’s classroom and painstakingly highlighted my way through his book on Wilson, I understand his critique quite well. (I am also gruesomely familiar with Dr. Pestritto’s rigorous grading standards, and I can say with some certainty that the quality of Greenberg’s argument here would have earned him academic casualties.) I will not presume to speak for Dr. Pestritto — he has made his own case comprehensively — but after learning from him, I can at least explain why I dislike Woodrow Wilson as a president. It’s for very different reasons than those Greenberg presumes to attribute to me. Read More

Professor David Greenberg writes in Slate today that the conservative dislike of Woodrow Wilson is “confused,” “bad as an interpretation of the facts,” and “demonstrably inaccurate.” He implies elsewhere that it is a “crackpot history” that requires not only debunking but also ridicule. But beyond the blustery rhetoric, Greenberg only proves that he misunderstands conservatives’ beef with the 28th president.

Full disclosure: in 2009, I graduated from Hillsdale College – which Greenberg blames for influencing Glenn Beck and, therefore, fueling the Tea Party’s hatred of Woodrow Wilson. More particularly, I was a student of Ronald J. Pestritto, whom Greenberg cites as particularly influential in demonizing Wilson. Having sat in Dr. Pestritto’s classroom and painstakingly highlighted my way through his book on Wilson, I understand his critique quite well. (I am also gruesomely familiar with Dr. Pestritto’s rigorous grading standards, and I can say with some certainty that the quality of Greenberg’s argument here would have earned him academic casualties.) I will not presume to speak for Dr. Pestritto — he has made his own case comprehensively — but after learning from him, I can at least explain why I dislike Woodrow Wilson as a president. It’s for very different reasons than those Greenberg presumes to attribute to me.

Back to the Slate piece. The first several paragraphs can be skimmed, as the author bizarrely points out commonalities between Woodrow Wilson and George W. Bush and faults Glenn Beck for once not knowing something before he learned it. In the fifth paragraph, Greenberg makes a minor concession to the “nub of truth amid the distortion of the right’s Wilson-bashing.” He acknowledges that Woodrow Wilson expanded the power of the presidency, a Tea Party complaint.

But in actuality, that is only a secondary reason why conservatives dislike Wilsonian liberalism. In a nutshell, Wilson introduced the idea of a “living” Constitution, opening up infinite opportunities for revisionists to throw off the delicate balances within government so thoughtfully established in the original text. Wilson’s scholarly background taught him to embrace big government as the solution to the problems of the citizenry. He saw himself as a philosopher-king, much like the one we have today. And inherent in that perception was a condescending elitism. He became the patriarch of American paternalism, justifying his behavior with appeals to “history” as he perceived it.

The Tea Party movement argues that because of their academic snobbery, those who follow in the footsteps of Woodrow Wilson have lost touch with liberty-loving Americans. As evidence of this, I defer to Greenberg, who writes:

For Wilson, [presidential activism] involved regulating finance and the money supply, limiting the corporations’ demands on their laborers, aiding farmers, preventing monopolistic practices, and making the new federal income tax a graduated one. Just three months ago, I wrote in Slate that over the last century, almost no one has questioned these achievements; clearly, I hadn’t been watching enough Fox.

It is little surprise, then, that Greenberg defends Wilson in the ex-president’s own language. “Of course, even those who happily admit to wanting to repeal a century’s worth of regulation have to reckon with a fundamental flaw in today’s Wilson hatred: It’s completely ahistorical,” he writes. He goes on to paint Woodrow Wilson as the man of his times, a leader fearlessly responding to the pulse of his era, a president whose choices are only fathomable when history is properly considered. The problem with this argument is that the existence of “history” as a moving, authoritative force is questionable at best, and Woodrow Wilson made history as much as he responded to it. And it is a bit presumptuous of Greenberg, in any case, to claim a superior understanding of history’s motives and pathways.

But in the interest of dialogue, let’s grant Greenberg the generous assumption that Wilson really was the man of his time and that all his actions were justifiable as such. Toward the end of his article, he asserts:

Properly situated in this context, Wilson and other progressives emerge not as proto-fascists or wild renegades but as tempered, moderate reformers. They implemented major changes, but those changes were in tune with the mainstream of public sentiment.

In today’s electoral climate, this is precisely the last argument the author should be making – especially if the role of the president is to follow public opinion. But instead, today’s liberals take another cue from Wilson, who believed that a political leader must remain one step ahead of public opinion, pulling it along and shaping it without ever straying too far.

But Americans sense when they’re being dragged along by the ear. This, too, makes them resentful of Woodrow Wilson’s presidential example.

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Can Paladino Be New York’s Paladin?

Speaking of Tea Party successes in the elections last Tuesday, it seems the upset win of Christine O’Donnell in Delaware sucked most of the oxygen out of the blogosphere. Thus Carl Paladino’s success in capturing the Republican nomination for governor in New York has not received that much attention except to have it widely assumed that he cannot win against the Democratic candidate, Andrew Cuomo.

I’m not so sure. Paladino didn’t just defeat former congressman Rick Lazio, the anointed of the Republican establishment in New York; he crushed him 62 percent to 38 percent.

Paladino has been called a bomb-thrower, especially for his impolitic remarks like calling the speaker of the New York State Assembly, Sheldon Silver, the Antichrist. That might indeed be a tad over the top, but Sheldon Silver is very much the poster child for all that is wrong with Albany. I think many New Yorkers will agree with Paladino. And he has some baggage, including a 10-year-old out-of-wedlock daughter. But as his wife has evidently forgiven him and the daughter is very much a part of the Paladino family, I suspect that New Yorkers — a forgiving bunch when it comes to personal peccadilloes — will not hold it against him. An acknowledged illegitimate child didn’t stop Grover Cleveland from becoming governor of New York and then president. (Whether Cleveland was actually the father is a good question, as the mother had been bestowing her favors on more than one man, including Cleveland’s law partner. Cleveland apparently took responsibility because he was the only bachelor among the group, making him a gentleman twice over.)

Assuming there are no major skeletons to come out of the closet (and the media is surely scouring every nook and cranny of Paladino’s career looking for them) and he can come across in debate and on the campaign trail as mad-as-hell but not out-of-control, I think he has an excellent chance of winning on Nov. 2. A bomb-thrower, I think, is exactly what the long-abused citizens of New York are looking for. Add to that the fact that Paladino is seriously rich and can self-finance a credible campaign, even in super-expensive New York State. And his opponent is the very model of a modern political-establishment apparatchik, son of a former governor who presided over Albany for 12 years and did nothing — absolutely nothing — to reverse the slow decline of the Empire State or to reform its ever more corrupt political ways. He didn’t even try.

Mario Cuomo was the very embodiment of the status quo, and there is no reason whatever to think that his rather colorless son will be any different. This gives Paladino a heaven-sent political slogan: “No more of the status Cuomo!”

Speaking of Tea Party successes in the elections last Tuesday, it seems the upset win of Christine O’Donnell in Delaware sucked most of the oxygen out of the blogosphere. Thus Carl Paladino’s success in capturing the Republican nomination for governor in New York has not received that much attention except to have it widely assumed that he cannot win against the Democratic candidate, Andrew Cuomo.

I’m not so sure. Paladino didn’t just defeat former congressman Rick Lazio, the anointed of the Republican establishment in New York; he crushed him 62 percent to 38 percent.

Paladino has been called a bomb-thrower, especially for his impolitic remarks like calling the speaker of the New York State Assembly, Sheldon Silver, the Antichrist. That might indeed be a tad over the top, but Sheldon Silver is very much the poster child for all that is wrong with Albany. I think many New Yorkers will agree with Paladino. And he has some baggage, including a 10-year-old out-of-wedlock daughter. But as his wife has evidently forgiven him and the daughter is very much a part of the Paladino family, I suspect that New Yorkers — a forgiving bunch when it comes to personal peccadilloes — will not hold it against him. An acknowledged illegitimate child didn’t stop Grover Cleveland from becoming governor of New York and then president. (Whether Cleveland was actually the father is a good question, as the mother had been bestowing her favors on more than one man, including Cleveland’s law partner. Cleveland apparently took responsibility because he was the only bachelor among the group, making him a gentleman twice over.)

Assuming there are no major skeletons to come out of the closet (and the media is surely scouring every nook and cranny of Paladino’s career looking for them) and he can come across in debate and on the campaign trail as mad-as-hell but not out-of-control, I think he has an excellent chance of winning on Nov. 2. A bomb-thrower, I think, is exactly what the long-abused citizens of New York are looking for. Add to that the fact that Paladino is seriously rich and can self-finance a credible campaign, even in super-expensive New York State. And his opponent is the very model of a modern political-establishment apparatchik, son of a former governor who presided over Albany for 12 years and did nothing — absolutely nothing — to reverse the slow decline of the Empire State or to reform its ever more corrupt political ways. He didn’t even try.

Mario Cuomo was the very embodiment of the status quo, and there is no reason whatever to think that his rather colorless son will be any different. This gives Paladino a heaven-sent political slogan: “No more of the status Cuomo!”

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Flotsam and Jetsam

Israel can bank on the Tea Partiers (but the “pro-Israel left” – an oxymoron if there ever was one – not at all): “Now that the congressional supporters of the Tea Party movement have formed their own caucus, their policy positions are becoming easier to track. Expanding their foray into foreign policy, 21 members of the new caucus have now come out explicitly endorsing Israel’s right to strike Iran’s nuclear program.”

You can’t take any “facts” in an E.J. Dionne column to the bank. Quin Hillyer reads (and demolishes) Dionne’s latest so you don’t have to.

You can bank on Sen. Joe Lieberman to see through the hysteria on the Afghanistan war-documents leak: “The disclosure of tens of thousands of classified documents on the Afghanistan war is profoundly irresponsible and harmful to our national security. The Obama administration is absolutely right to condemn these leaks. ‘Most of these documents add nothing to the public understanding of the war in Afghanistan. The materials –which cover the period from 2004 to 2009 — reflect the reality, recognized by everyone, that the insurgency was gaining momentum during these years while our coalition was losing ground.’”

I guess the Palestinians can’t bank on Obama to deliver up Israel on a platter: “A senior U.S. envoy warned the Palestinian president that he must move quickly to direct talks with Israel if he wants President Barack Obama’s help in setting up a Palestinian state, according to an internal Palestinian document obtained by The Associated Press on Monday.”

Democrats banking on Obama or the capping of the BP oil leak to lift their poll numbers are going to be disappointed: “Republican candidates now hold a 10-point lead over Democrats on the Generic Congressional Ballot for the week ending Sunday, July 25, the widest gap between the two parties in several weeks.”

You can’t bank on the liberal media even to advertise their own leaks accurately these days. Peter Feaver: “Another week, and another Big Bombshell Story in the national security press, this time a series of stories based on the leak by Wikileaks of over 90,000 classified cables and reports from the Afghan theater. (A sidebar: The word “leak” just doesn’t seem adequate for a data dump and security breach of this magnitude. This is not so much a leak as a gusher.) … There does not appear to be any bombshell revelation here. Perhaps the more interesting and damning revelations are to come, but presumably the newspapers led with their best stuff.”

The Obama-Reid-Pelosi troika can’t even bank on a First Amendment–stomping win on campaign-finance “reform”: “Despite some last-minute prodding from President Barack Obama on Monday, Senate Democrats still are scrambling to find the remaining few votes needed to overcome a filibuster of a campaign finance bill that appears destined to fail Tuesday.”

Child rapists? Anti-Semites? You can always bank on Hollywood to support their own.

Israel can bank on the Tea Partiers (but the “pro-Israel left” – an oxymoron if there ever was one – not at all): “Now that the congressional supporters of the Tea Party movement have formed their own caucus, their policy positions are becoming easier to track. Expanding their foray into foreign policy, 21 members of the new caucus have now come out explicitly endorsing Israel’s right to strike Iran’s nuclear program.”

You can’t take any “facts” in an E.J. Dionne column to the bank. Quin Hillyer reads (and demolishes) Dionne’s latest so you don’t have to.

You can bank on Sen. Joe Lieberman to see through the hysteria on the Afghanistan war-documents leak: “The disclosure of tens of thousands of classified documents on the Afghanistan war is profoundly irresponsible and harmful to our national security. The Obama administration is absolutely right to condemn these leaks. ‘Most of these documents add nothing to the public understanding of the war in Afghanistan. The materials –which cover the period from 2004 to 2009 — reflect the reality, recognized by everyone, that the insurgency was gaining momentum during these years while our coalition was losing ground.’”

I guess the Palestinians can’t bank on Obama to deliver up Israel on a platter: “A senior U.S. envoy warned the Palestinian president that he must move quickly to direct talks with Israel if he wants President Barack Obama’s help in setting up a Palestinian state, according to an internal Palestinian document obtained by The Associated Press on Monday.”

Democrats banking on Obama or the capping of the BP oil leak to lift their poll numbers are going to be disappointed: “Republican candidates now hold a 10-point lead over Democrats on the Generic Congressional Ballot for the week ending Sunday, July 25, the widest gap between the two parties in several weeks.”

You can’t bank on the liberal media even to advertise their own leaks accurately these days. Peter Feaver: “Another week, and another Big Bombshell Story in the national security press, this time a series of stories based on the leak by Wikileaks of over 90,000 classified cables and reports from the Afghan theater. (A sidebar: The word “leak” just doesn’t seem adequate for a data dump and security breach of this magnitude. This is not so much a leak as a gusher.) … There does not appear to be any bombshell revelation here. Perhaps the more interesting and damning revelations are to come, but presumably the newspapers led with their best stuff.”

The Obama-Reid-Pelosi troika can’t even bank on a First Amendment–stomping win on campaign-finance “reform”: “Despite some last-minute prodding from President Barack Obama on Monday, Senate Democrats still are scrambling to find the remaining few votes needed to overcome a filibuster of a campaign finance bill that appears destined to fail Tuesday.”

Child rapists? Anti-Semites? You can always bank on Hollywood to support their own.

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The Law of Unintended Consequences

In addition to the insightful comments by John’s friend who works in finances, I wanted to call attention to an editorial in the Wall Street Journal on the Dodd-Frank financial “reform” bill.

According to the Journal,

The bill represents the triumph of the very regulators and Congressmen who did so much to foment the financial panic, giving them vast new discretion over every corner of American financial markets. … In the name of responding to a crisis, the bill greatly increases the power of politicians and regulators without addressing the real causes of that crisis. It makes credit more expensive and punishes business without reducing the chances of a future panic or bailouts.

Politico is reporting that several factors have converged, from the death of Senator Robert Byrd to the early negative reactions to the conference report by at least one key Republican, Senator Scott Brown of Massachusetts. This means that the Democrats face the real possibility of falling several votes shy as they try to finish the bill.

What ruffled several Senate feathers is the late addition of a 10-year, $19 billion tax on banks — something added without proper scrutiny, discussion, or debate. None of the Republican senators from Maine, Olympia Snowe and Susan Collins, were pleased. Neither was Senator Brown, who said he was “surprised and extremely disappointed” with a $19 billion bank tax added to the conference report and who signaled he might switch his vote from yes to no. “While I’m still reviewing the bill’s details, these provisions were not in the Senate version of the bill, which I previously supported,” Brown said. “My fear is that these costs would be passed on to consumers in the form of higher bank, ATM and credit card fees and put a strain on lending at the worst possible time for our economy. I’ve said repeatedly that I cannot support any bill that raises taxes.”

The Dodd-Frank legislation has generated attention in the world of finance. But if it passes, its ramifications will be felt far beyond Wall Street. It is an example of the law of unintended consequences, a concept understood by most social scientists but very few politicians. In this case, legislation that was crafted to respond to a very real problem would make things many times worse. The temptation for lawmakers to do something, anything, is often injurious.

What has emerged from Congress is a bill that is deeply flawed. If that legislation becomes law, it will do enormous harm to our financial sector and our country. It would, indeed, be fitting, if the addition of the dead-in-the-night tax on financial institutions helped bring this monstrosity down. We saw these kinds of shady dealings and legislative tricks during the health-care debate. It is becoming standard operating procedure for the 112th Congress, and something that will eventually cost them. The same may be true, alas, for the rest of us.

In addition to the insightful comments by John’s friend who works in finances, I wanted to call attention to an editorial in the Wall Street Journal on the Dodd-Frank financial “reform” bill.

According to the Journal,

The bill represents the triumph of the very regulators and Congressmen who did so much to foment the financial panic, giving them vast new discretion over every corner of American financial markets. … In the name of responding to a crisis, the bill greatly increases the power of politicians and regulators without addressing the real causes of that crisis. It makes credit more expensive and punishes business without reducing the chances of a future panic or bailouts.

Politico is reporting that several factors have converged, from the death of Senator Robert Byrd to the early negative reactions to the conference report by at least one key Republican, Senator Scott Brown of Massachusetts. This means that the Democrats face the real possibility of falling several votes shy as they try to finish the bill.

What ruffled several Senate feathers is the late addition of a 10-year, $19 billion tax on banks — something added without proper scrutiny, discussion, or debate. None of the Republican senators from Maine, Olympia Snowe and Susan Collins, were pleased. Neither was Senator Brown, who said he was “surprised and extremely disappointed” with a $19 billion bank tax added to the conference report and who signaled he might switch his vote from yes to no. “While I’m still reviewing the bill’s details, these provisions were not in the Senate version of the bill, which I previously supported,” Brown said. “My fear is that these costs would be passed on to consumers in the form of higher bank, ATM and credit card fees and put a strain on lending at the worst possible time for our economy. I’ve said repeatedly that I cannot support any bill that raises taxes.”

The Dodd-Frank legislation has generated attention in the world of finance. But if it passes, its ramifications will be felt far beyond Wall Street. It is an example of the law of unintended consequences, a concept understood by most social scientists but very few politicians. In this case, legislation that was crafted to respond to a very real problem would make things many times worse. The temptation for lawmakers to do something, anything, is often injurious.

What has emerged from Congress is a bill that is deeply flawed. If that legislation becomes law, it will do enormous harm to our financial sector and our country. It would, indeed, be fitting, if the addition of the dead-in-the-night tax on financial institutions helped bring this monstrosity down. We saw these kinds of shady dealings and legislative tricks during the health-care debate. It is becoming standard operating procedure for the 112th Congress, and something that will eventually cost them. The same may be true, alas, for the rest of us.

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A Pernicious New Tax, A Disastrous Bill

A friend who works in finance writes:

Just hours before finishing the 2,000-page Dodd-Frank financial reform bill at 5:40am Friday morning, leaders of the Democratic majority snuck in a wholly new, unprecedented, and very damaging tax on U.S.-based institutions that provide critical capital to small and large businesses across the country.

Specifically, a new Financial Stability Oversight Council (will impose an “assessment” on almost all types of financial institutions with more than $50 billion in assets (excluding banks that have deposit insurance, as well as Fannie Mae, Freddie Mac, and other types of “government-sponsored enterprise”) as well as hedge funds that manage more than $10 billion.

Collection of the tax will begin at yet-to-be-determined time prior to September 2012.  The funds will be placed in a “Financial Crisis Special Assessment Fund” at Treasury and cannot be removed for 25 years, after which time they will be used to pay down the deficit.

The insidious maneuver is the clearest indication that supporters of the Dodd-Frank bill will gladly sacrifice the growth and prosperity of the U.S. economy if it means they can spitefully “stick it” to U.S. financial institutions one more time. With unemployment figures lingering at recent highs and a growing recognition that previous so-called “stimulus” measures have failed to have a meaningful impact on the U.S. economy, the Democratic majority’s new tax will confiscate nearly $20 billion from institutions that lend money and provide equity capital to all types of businesses — including start-ups, large manufacturers, healthcare providers, and small family-owned businesses.

In its wildest dreams, the government could not conceive of a more anti-stimulative policy: To take $20 billion from the firms whose role it is to allocate money to the fastest growing and most productive, job-creating firms, and have that money lie dormant in a vault at the U.S. Treasury for two-and-a-half decades.

And it gets much worse. The criteria used to determine how much any given firm will owe are so nebulous that it is impossible for a firm to calculate its share of the tax.  For instance, included among the sixteen or so factors used to calculate an individual firm’s tax obligation are the following:

  • “the nature, scope, and mix of the company’s activities;”
  • “the extent and nature of the company’s transactions and relationships with other financial companies;”
  • “the amount and nature of the company’s financial assets;”
  • “the company’s importance as a source of credit for households, businesses, and State and local governments and as a source of liquidity for the financial system”
  • “the company’s importance as a source of credit for low-income, minority, or underserved communities and the impact the failure of such company would have on the availability of credit in such communities;”
  • “such other risk-related factors as the Council may determine to be appropriate.”

The uncertainty created by these completely ambiguous factors will invariably lead firms subject to this tax to reserve amounts that are several times what it may ultimately owe.  This will keep considerably more than the $20 billion from being put to productive use in the economy.  Banks, insurance companies, and investment funds are already hesitant to lend to businesses.  The tax will ensure that those capital providers sit indefinitely on the sidelines. Further, the imposition of last minute, middle-of-the-night tax increases make businesses even more apprehensive because they have no idea what government “surprises” lay in the future.

Can it get even worse?  Of course.  The largest hedge funds have achieved their size because they have demonstrated consistent success over one or more decades.  As responsible safe havens of capital, these investment funds attract a disproportionate amount of the money that public and private pension funds dedicate to the hedge fund sector.  The Dodd-Frank tax will flow directly from the investors of these hedge funds and punish hundreds of thousands (even millions?) of pensioners.

Similarly, the millions of investors and customers of the companies in the $50+ billion institutions will also feel the pain of the Dodd-Frank tax. Messrs Dodd and Frank seem to believe that you can punish a business without harming the millions of investors, customers and suppliers connected to that business. They suspend disbelief to not recognize that businesses are merely formal collections of people organized to provide services and goods to other people. Punitive measures against corporations do not impact the faceless corporation itself, but the millions of people whose livelihoods revolve around the services and goods provided by the corporation.

The Dodd-Frank tax also comes with exceptionally onerous information sharing obligations that allow regulators to perform on-site inspections and rummage through all of the firm’s books and records. There are no limitations; regulators are allowed to view anything deemed “necessary to determine appropriate risk-based assessments.” These burdensome requirements alone are sufficient to encourage financial institutions to pack up and move overseas.

Putting aside the tax issues for a moment, I see another cynical purpose for the new tax. The initial versions of both the House and Senate bills had bailout funds that would be stacked with money in advance of the next economic crisis. The money would sit patiently (and unproductively) and wait for a future economic crisis, at which time it would be used to support creditors of floundering Too Big To Fail firms. Due to public revulsion of bailouts, these “pre-crisis funds” ($150 billion in the House bill and $50 billion in the Senate bill) were eliminated in the final bill. However, it seems increasingly clear that the new Dodd-Frank tax is merely a clandestine attempt to reinstitute the pre-crisis fund.

The Dodd-Frank tax is being imposed on the exact same collection of businesses that were targeted in the House bill, and the assessments are being calculated based on the exact same criteria in the House and Senate bills. In fact, the only difference between the pre-crisis fund and the Dodd-Frank tax is a line that says the “Fund shall not be used in connection with the liquidation of any financial company under Title II [Orderly Liquidation Authority].”

But if it walks like a duck, swims like a duck, and quacks like a duck…you know the rest.  There is no getting around the fact that in both form and substance, the Dodd-Frank tax is the pre-crisis fund’s clone.  The meager line about not being used in an orderly liquidation can easily be removed by a future Congress or merely be ignored when the next crisis arrives.  Does anyone truly believe that if there’s a pool of money sitting at Treasury, that it won’t be used during an economic crisis? Besides, government funds are fungible and forever being misappropriated. How many times has government dipped previously “untouchable” pools of money, such as Social Security, to pay for a misguided government adventure?

This is noxious and injurious economic policy that will transform the fundamental relationship between business and government.  It will transfes billions of productive, job-creating dollars out of the economy, delaying additional growth for years.  And it is an insidious bait-and-switch tactic designed to re-insert, when no one is looking, a bailout fund that was previously rejected by the Senate and reviled by the public.

A friend who works in finance writes:

Just hours before finishing the 2,000-page Dodd-Frank financial reform bill at 5:40am Friday morning, leaders of the Democratic majority snuck in a wholly new, unprecedented, and very damaging tax on U.S.-based institutions that provide critical capital to small and large businesses across the country.

Specifically, a new Financial Stability Oversight Council (will impose an “assessment” on almost all types of financial institutions with more than $50 billion in assets (excluding banks that have deposit insurance, as well as Fannie Mae, Freddie Mac, and other types of “government-sponsored enterprise”) as well as hedge funds that manage more than $10 billion.

Collection of the tax will begin at yet-to-be-determined time prior to September 2012.  The funds will be placed in a “Financial Crisis Special Assessment Fund” at Treasury and cannot be removed for 25 years, after which time they will be used to pay down the deficit.

The insidious maneuver is the clearest indication that supporters of the Dodd-Frank bill will gladly sacrifice the growth and prosperity of the U.S. economy if it means they can spitefully “stick it” to U.S. financial institutions one more time. With unemployment figures lingering at recent highs and a growing recognition that previous so-called “stimulus” measures have failed to have a meaningful impact on the U.S. economy, the Democratic majority’s new tax will confiscate nearly $20 billion from institutions that lend money and provide equity capital to all types of businesses — including start-ups, large manufacturers, healthcare providers, and small family-owned businesses.

In its wildest dreams, the government could not conceive of a more anti-stimulative policy: To take $20 billion from the firms whose role it is to allocate money to the fastest growing and most productive, job-creating firms, and have that money lie dormant in a vault at the U.S. Treasury for two-and-a-half decades.

And it gets much worse. The criteria used to determine how much any given firm will owe are so nebulous that it is impossible for a firm to calculate its share of the tax.  For instance, included among the sixteen or so factors used to calculate an individual firm’s tax obligation are the following:

  • “the nature, scope, and mix of the company’s activities;”
  • “the extent and nature of the company’s transactions and relationships with other financial companies;”
  • “the amount and nature of the company’s financial assets;”
  • “the company’s importance as a source of credit for households, businesses, and State and local governments and as a source of liquidity for the financial system”
  • “the company’s importance as a source of credit for low-income, minority, or underserved communities and the impact the failure of such company would have on the availability of credit in such communities;”
  • “such other risk-related factors as the Council may determine to be appropriate.”

The uncertainty created by these completely ambiguous factors will invariably lead firms subject to this tax to reserve amounts that are several times what it may ultimately owe.  This will keep considerably more than the $20 billion from being put to productive use in the economy.  Banks, insurance companies, and investment funds are already hesitant to lend to businesses.  The tax will ensure that those capital providers sit indefinitely on the sidelines. Further, the imposition of last minute, middle-of-the-night tax increases make businesses even more apprehensive because they have no idea what government “surprises” lay in the future.

Can it get even worse?  Of course.  The largest hedge funds have achieved their size because they have demonstrated consistent success over one or more decades.  As responsible safe havens of capital, these investment funds attract a disproportionate amount of the money that public and private pension funds dedicate to the hedge fund sector.  The Dodd-Frank tax will flow directly from the investors of these hedge funds and punish hundreds of thousands (even millions?) of pensioners.

Similarly, the millions of investors and customers of the companies in the $50+ billion institutions will also feel the pain of the Dodd-Frank tax. Messrs Dodd and Frank seem to believe that you can punish a business without harming the millions of investors, customers and suppliers connected to that business. They suspend disbelief to not recognize that businesses are merely formal collections of people organized to provide services and goods to other people. Punitive measures against corporations do not impact the faceless corporation itself, but the millions of people whose livelihoods revolve around the services and goods provided by the corporation.

The Dodd-Frank tax also comes with exceptionally onerous information sharing obligations that allow regulators to perform on-site inspections and rummage through all of the firm’s books and records. There are no limitations; regulators are allowed to view anything deemed “necessary to determine appropriate risk-based assessments.” These burdensome requirements alone are sufficient to encourage financial institutions to pack up and move overseas.

Putting aside the tax issues for a moment, I see another cynical purpose for the new tax. The initial versions of both the House and Senate bills had bailout funds that would be stacked with money in advance of the next economic crisis. The money would sit patiently (and unproductively) and wait for a future economic crisis, at which time it would be used to support creditors of floundering Too Big To Fail firms. Due to public revulsion of bailouts, these “pre-crisis funds” ($150 billion in the House bill and $50 billion in the Senate bill) were eliminated in the final bill. However, it seems increasingly clear that the new Dodd-Frank tax is merely a clandestine attempt to reinstitute the pre-crisis fund.

The Dodd-Frank tax is being imposed on the exact same collection of businesses that were targeted in the House bill, and the assessments are being calculated based on the exact same criteria in the House and Senate bills. In fact, the only difference between the pre-crisis fund and the Dodd-Frank tax is a line that says the “Fund shall not be used in connection with the liquidation of any financial company under Title II [Orderly Liquidation Authority].”

But if it walks like a duck, swims like a duck, and quacks like a duck…you know the rest.  There is no getting around the fact that in both form and substance, the Dodd-Frank tax is the pre-crisis fund’s clone.  The meager line about not being used in an orderly liquidation can easily be removed by a future Congress or merely be ignored when the next crisis arrives.  Does anyone truly believe that if there’s a pool of money sitting at Treasury, that it won’t be used during an economic crisis? Besides, government funds are fungible and forever being misappropriated. How many times has government dipped previously “untouchable” pools of money, such as Social Security, to pay for a misguided government adventure?

This is noxious and injurious economic policy that will transform the fundamental relationship between business and government.  It will transfes billions of productive, job-creating dollars out of the economy, delaying additional growth for years.  And it is an insidious bait-and-switch tactic designed to re-insert, when no one is looking, a bailout fund that was previously rejected by the Senate and reviled by the public.

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Congressional Hypocrisy Watch

Speaking on the floor of the House of Representatives in support of the bill Congressional Democrats are putting forward to get around the Supreme Court’s decision to uphold free-speech rights in the Citizens United case, Rep. Hank Johnson (D-GA) pushes the limits of not only partisan demagoguery but also hypocrisy.

Johnson claims that a failure to pass this flimsy bill will mean that “we will see more Republicans getting elected.” That should help build a bi-partisan coalition for the bill.

Even worse, he claims that the failure of campaign-finance “reform” schemes, such as the provisions of the McCain-Feingold bill — that were rightly deemed unconstitutional by the high court — will allow “big business” to dominate American politics and thus benefit the GOP. The two examples of bad big businesses that he cites are the villainous BP and Goldman Sachs. But in doing so, he fails to mention that the head of his party, President Barack Obama, and not a Republican, got the most money of any politician from BP. As Politico reported back in May just after the Gulf oil spill began to gush, “During his time in the Senate and while running for president, Obama received a total of $77,051 from the oil giant and is the top recipient of BP PAC and individual money over the past 20 years, according to financial disclosure records.”

As for Goldman Sachs, it ranked second on the list of organizations or companies that bundled the most money for Obama in 2008. Its PACs and its individual employees donated a stunning $994,795 to the Democratic candidate.

But while Rep. Johnson and his colleagues attempt to revive restrictions on free speech in the name of electoral “reform,” there remain no laws on the books about Congressional hypocrisy.

Speaking on the floor of the House of Representatives in support of the bill Congressional Democrats are putting forward to get around the Supreme Court’s decision to uphold free-speech rights in the Citizens United case, Rep. Hank Johnson (D-GA) pushes the limits of not only partisan demagoguery but also hypocrisy.

Johnson claims that a failure to pass this flimsy bill will mean that “we will see more Republicans getting elected.” That should help build a bi-partisan coalition for the bill.

Even worse, he claims that the failure of campaign-finance “reform” schemes, such as the provisions of the McCain-Feingold bill — that were rightly deemed unconstitutional by the high court — will allow “big business” to dominate American politics and thus benefit the GOP. The two examples of bad big businesses that he cites are the villainous BP and Goldman Sachs. But in doing so, he fails to mention that the head of his party, President Barack Obama, and not a Republican, got the most money of any politician from BP. As Politico reported back in May just after the Gulf oil spill began to gush, “During his time in the Senate and while running for president, Obama received a total of $77,051 from the oil giant and is the top recipient of BP PAC and individual money over the past 20 years, according to financial disclosure records.”

As for Goldman Sachs, it ranked second on the list of organizations or companies that bundled the most money for Obama in 2008. Its PACs and its individual employees donated a stunning $994,795 to the Democratic candidate.

But while Rep. Johnson and his colleagues attempt to revive restrictions on free speech in the name of electoral “reform,” there remain no laws on the books about Congressional hypocrisy.

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Financial Regulation Bill

In its lead editorial today, the Wall Street Journal takes aim at the financial-reform legislation that passed last week. In the words of the Journal:

The unifying theme of the Senate bill that passed last week and the House bill of last year is to hand even more discretion and authority to the same regulators who failed to foresee and in many cases created the last crisis. The Democrats who wrote the bill are selling it as new discipline for Wall Street, but Wall Street knows better. The biggest banks support the bill, and the parts they don’t like they will lobby furiously to change or water down.

Big Finance will more than hold its own with Big Government, as it always does, while politicians will have more power to exact even more campaign tribute. The losers are the overall economy, as financial costs rise, and taxpayers when the next bailout arrives.

The editorial punctures the myth that derivatives were largely unregulated. Our “new lords of the finance look an awful lot like the old lords of regulation, but with much more discretion to write the rules as they please.” And for a market that is desperately in need of clearer rules, what we now have are more opaque and subjective ones.

This legislation is among the most pernicious bills that the Democratic Congress has passed — and that Senate Republicans lacked the will to stop this is, as the Journal points out, their biggest failure this Congress.

This issue is somewhat esoteric but terribly important. In an unstable economic environment, it is making things considerably worse, not better. The liberal Obama agenda continues to roll on, and our country and economy will pay a much higher price than most could have imagined.

In its lead editorial today, the Wall Street Journal takes aim at the financial-reform legislation that passed last week. In the words of the Journal:

The unifying theme of the Senate bill that passed last week and the House bill of last year is to hand even more discretion and authority to the same regulators who failed to foresee and in many cases created the last crisis. The Democrats who wrote the bill are selling it as new discipline for Wall Street, but Wall Street knows better. The biggest banks support the bill, and the parts they don’t like they will lobby furiously to change or water down.

Big Finance will more than hold its own with Big Government, as it always does, while politicians will have more power to exact even more campaign tribute. The losers are the overall economy, as financial costs rise, and taxpayers when the next bailout arrives.

The editorial punctures the myth that derivatives were largely unregulated. Our “new lords of the finance look an awful lot like the old lords of regulation, but with much more discretion to write the rules as they please.” And for a market that is desperately in need of clearer rules, what we now have are more opaque and subjective ones.

This legislation is among the most pernicious bills that the Democratic Congress has passed — and that Senate Republicans lacked the will to stop this is, as the Journal points out, their biggest failure this Congress.

This issue is somewhat esoteric but terribly important. In an unstable economic environment, it is making things considerably worse, not better. The liberal Obama agenda continues to roll on, and our country and economy will pay a much higher price than most could have imagined.

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The Dangers of the Peace-Prosperity Fallacy

Israel’s left-wing daily Haaretz isn’t one to cry uncle. “There will be no economic prosperity without peace,” it defiantly titled today’s editorial — published two days after Israel was admitted, by unanimous vote, to the club of the world’s wealthiest nations: the OECD.

“The link between the economic and political is clear,” the editorial asserted, serenely untroubled by the facts. “There can be no sustained economic growth without a substantive compromise with the Palestinians and Syria.”

The facts, of course, are that if sustained economic growth required peace, Israel could never have earned OECD entree: the country has been at war since its establishment in 1948, when it was attacked by five Arab armies. It fought conventional wars again in 1956, 1967, 1973, and 1982. It was bombarded by Iraqi missiles during the 1991 Gulf War. It fought asymmetric wars against terrorist organizations in the West Bank in 2002, Lebanon in 2006, and Gaza in 2009. And in between all the wars, it suffered nonstop terror attacks.

Some of these wars indeed produced temporary recessions. Yet the overall pattern has been one of, yes, sustained growth. Had it not, Israel would not today be the only one, out of dozens of countries established in the post-colonial upheavals that followed World War II, invited to join the OECD. It certainly wasn’t because its fellow OECD members love it so much: many routinely vote against it in other international forums.

But if Haaretz were merely spouting harmless nonsense, nobody would care. The problem is that this particular nonsense is deadly dangerous, because the editorial is right about one thing: “Israel’s economic status is conditional.” Wise choices by Israel’s leaders can facilitate continued growth; bad choices can reduce or even destroy it: look at Greece.

Yet for much of the past two decades, Israel’s leadership has been consumed with either pursuing an unobtainable peace or trying to contain the terrorist onslaughts that every such effort has spawned. The crucial domestic issues on which economic success in fact depends have consequently been neglected. Israel’s schools and universities are in free fall, which bodes ill for a country whose only natural resource is brainpower. And bureaucratic obstacles to doing business remain a fact of life.

Prime Minister Benjamin Netanyahu actually does care about domestic issues. As finance minister in 2003, he implemented economic reforms that produced five straight years of rapid growth, and his campaign for prime minister included detailed proposals for additional domestic reforms. But since taking office, he, too, has been consumed by the “peace process” — or rather, the crisis with Washington it has generated. Domestic reforms have fallen by the wayside.

And that is why the Haaretz fallacy is so dangerous. Roughly every other Israeli prime minister has, like Haaretz, viewed peace as essential to Israel’s survival and therefore devoted himself to fruitlessly pursuing it. Each of their successors has then had to devote himself to containing the fallout. And as long as this pattern continues, vital domestic issues will continue to be neglected.

Peace would certainly benefit Israel’s economy. But continued pursuit of a peace that is unobtainable could destroy it.

Israel’s left-wing daily Haaretz isn’t one to cry uncle. “There will be no economic prosperity without peace,” it defiantly titled today’s editorial — published two days after Israel was admitted, by unanimous vote, to the club of the world’s wealthiest nations: the OECD.

“The link between the economic and political is clear,” the editorial asserted, serenely untroubled by the facts. “There can be no sustained economic growth without a substantive compromise with the Palestinians and Syria.”

The facts, of course, are that if sustained economic growth required peace, Israel could never have earned OECD entree: the country has been at war since its establishment in 1948, when it was attacked by five Arab armies. It fought conventional wars again in 1956, 1967, 1973, and 1982. It was bombarded by Iraqi missiles during the 1991 Gulf War. It fought asymmetric wars against terrorist organizations in the West Bank in 2002, Lebanon in 2006, and Gaza in 2009. And in between all the wars, it suffered nonstop terror attacks.

Some of these wars indeed produced temporary recessions. Yet the overall pattern has been one of, yes, sustained growth. Had it not, Israel would not today be the only one, out of dozens of countries established in the post-colonial upheavals that followed World War II, invited to join the OECD. It certainly wasn’t because its fellow OECD members love it so much: many routinely vote against it in other international forums.

But if Haaretz were merely spouting harmless nonsense, nobody would care. The problem is that this particular nonsense is deadly dangerous, because the editorial is right about one thing: “Israel’s economic status is conditional.” Wise choices by Israel’s leaders can facilitate continued growth; bad choices can reduce or even destroy it: look at Greece.

Yet for much of the past two decades, Israel’s leadership has been consumed with either pursuing an unobtainable peace or trying to contain the terrorist onslaughts that every such effort has spawned. The crucial domestic issues on which economic success in fact depends have consequently been neglected. Israel’s schools and universities are in free fall, which bodes ill for a country whose only natural resource is brainpower. And bureaucratic obstacles to doing business remain a fact of life.

Prime Minister Benjamin Netanyahu actually does care about domestic issues. As finance minister in 2003, he implemented economic reforms that produced five straight years of rapid growth, and his campaign for prime minister included detailed proposals for additional domestic reforms. But since taking office, he, too, has been consumed by the “peace process” — or rather, the crisis with Washington it has generated. Domestic reforms have fallen by the wayside.

And that is why the Haaretz fallacy is so dangerous. Roughly every other Israeli prime minister has, like Haaretz, viewed peace as essential to Israel’s survival and therefore devoted himself to fruitlessly pursuing it. Each of their successors has then had to devote himself to containing the fallout. And as long as this pattern continues, vital domestic issues will continue to be neglected.

Peace would certainly benefit Israel’s economy. But continued pursuit of a peace that is unobtainable could destroy it.

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Another Approach to Iran

While the Obami fritter away time, dreaming up new excuses to do nothing on Iran, more responsible officials are moving forward. Today Sens. John Cornyn, John McCain, Joseph Lieberman, Richard Durbin, Jon Kyl, Evan Bayh, Susan Collins, Robert Casey. Lindsey Graham, Kristen Gillibrand, Sam Brownback, Ted Kaufman, and David Vitter announced legislation to support the Iranian opposition’s efforts to take down the regime of Ali Hoseyni Khamenei and Mahmoud Ahmadinejad.

In a statement, Cornyn and Brownback explained that the bill will “establish a program of direct assistance for the Iranian people and would help pave the way for a freely elected, open and democratic government in Iran. The Iran Democratic Transition Act would not only send a strong message of support to the Iranian people during this difficult time, it would also provide tangible resources needed to establish a democratic system in Iran in the near future.”

For starters, the bill will delineate the “Iranian regime’s human rights abuses, clear support of terrorism, pursuit of nuclear weapons, and belligerent rhetoric regarding attacks on both Israel and the United States.” Instead of mutely bearing witness, the U.S. government would help publicize the regime’s atrocities.

The bill would also stipulate full and public U.S. support of the Iranian people’s efforts to oppose and remove the current regime and transition to a freely elected, open, and democratic government. Furthermore, the bill would announce it is  U.S. policy to deny the current Iranian regime the ability to: oppress the people of Iran; finance and support terrorists; interfere with the internal affairs of neighbors (including Iraq and Afghanistan); and develop weapons of mass destruction.

The bill also authorizes the president to provide non-military assistance to Iranian democratic opposition organizations and to victims of the current regime. It would create an ambassador-level position of “Special Envoy for Democracy and Human Rights in Iran” to promote and support Iranian democracy and human rights. And the bill would suggest the “possibility of a multilateral and regional initiative to protect human rights, modeled after the Helsinki process established by the Organization for Security and Cooperation in Europe.”

It will be interesting to see the Obami’s reaction to this piece of legislation. Are they interested in aiding democratic activists, or are they committed to not rocking the boat? Do they have the nerve to document the specific Iranian human-rights atrocities, or would they prefer to say as little as possible? This will also test private groups. I’ll take a wild guess that J Street will not be thrilled by this approach.

There is reason to question whether anything short of military action can stop the Iranian regime at this point, but getting on the right side of history, re-establishing our moral leadership, and giving regime change a chance is a very good place to start.

UPDATE: I have updated the above to include the full list of co-sponsors. Sen. Joseph Lieberman made this noteworthy comment: “Just as the Iranian government is violating its responsibilities under the Nuclear Nonproliferation Treaty, it is likewise in flagrant breach of multiple international agreements it has signed that require it to respect the human rights of its own citizens. As the Iranian people risk their lives to demand the justice and freedom they deserve in the face of this lawless and oppressive regime, they should know that America is on their side.”

While the Obami fritter away time, dreaming up new excuses to do nothing on Iran, more responsible officials are moving forward. Today Sens. John Cornyn, John McCain, Joseph Lieberman, Richard Durbin, Jon Kyl, Evan Bayh, Susan Collins, Robert Casey. Lindsey Graham, Kristen Gillibrand, Sam Brownback, Ted Kaufman, and David Vitter announced legislation to support the Iranian opposition’s efforts to take down the regime of Ali Hoseyni Khamenei and Mahmoud Ahmadinejad.

In a statement, Cornyn and Brownback explained that the bill will “establish a program of direct assistance for the Iranian people and would help pave the way for a freely elected, open and democratic government in Iran. The Iran Democratic Transition Act would not only send a strong message of support to the Iranian people during this difficult time, it would also provide tangible resources needed to establish a democratic system in Iran in the near future.”

For starters, the bill will delineate the “Iranian regime’s human rights abuses, clear support of terrorism, pursuit of nuclear weapons, and belligerent rhetoric regarding attacks on both Israel and the United States.” Instead of mutely bearing witness, the U.S. government would help publicize the regime’s atrocities.

The bill would also stipulate full and public U.S. support of the Iranian people’s efforts to oppose and remove the current regime and transition to a freely elected, open, and democratic government. Furthermore, the bill would announce it is  U.S. policy to deny the current Iranian regime the ability to: oppress the people of Iran; finance and support terrorists; interfere with the internal affairs of neighbors (including Iraq and Afghanistan); and develop weapons of mass destruction.

The bill also authorizes the president to provide non-military assistance to Iranian democratic opposition organizations and to victims of the current regime. It would create an ambassador-level position of “Special Envoy for Democracy and Human Rights in Iran” to promote and support Iranian democracy and human rights. And the bill would suggest the “possibility of a multilateral and regional initiative to protect human rights, modeled after the Helsinki process established by the Organization for Security and Cooperation in Europe.”

It will be interesting to see the Obami’s reaction to this piece of legislation. Are they interested in aiding democratic activists, or are they committed to not rocking the boat? Do they have the nerve to document the specific Iranian human-rights atrocities, or would they prefer to say as little as possible? This will also test private groups. I’ll take a wild guess that J Street will not be thrilled by this approach.

There is reason to question whether anything short of military action can stop the Iranian regime at this point, but getting on the right side of history, re-establishing our moral leadership, and giving regime change a chance is a very good place to start.

UPDATE: I have updated the above to include the full list of co-sponsors. Sen. Joseph Lieberman made this noteworthy comment: “Just as the Iranian government is violating its responsibilities under the Nuclear Nonproliferation Treaty, it is likewise in flagrant breach of multiple international agreements it has signed that require it to respect the human rights of its own citizens. As the Iranian people risk their lives to demand the justice and freedom they deserve in the face of this lawless and oppressive regime, they should know that America is on their side.”

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The Public Recoils

Obama sold himself as the image of moderation and superior temperament. But there has been nothing moderate about his first year, and his temperament has turned crabby, irritable, and condescending. Perhaps that was always his disposition, but only on occasion did the mask slip (“Can’t I eat my waffle?” and his crack about Bible-clutching Americans, being two vivid examples). Some cling fast to the campaign persona. David Brooks insists that Obama “has created a thoughtful, pragmatic administration marked by a culture of honest and vigorous debate.” That would come as a shock to those whom he has vilified (the list includes Fox News and Gallup, remember) and the voters, who see an attempted government takeover of health care and a mound of debt. Indeed Brooks himself concedes:

Driven by circumstances and self-confidence, the president has made himself the star performer in the national drama. He has been ubiquitous, appearing everywhere, trying to overhaul most sectors of national life: finance, health, energy, automobiles and transportation, housing, and education, among others.

So perhaps Obama’s not so moderate after all. But the unveiling of Obama’s personality and of his policy goals has stirred the public, which, as Brooks concedes, recoils from “any effort to centralize authority or increase the role of government.” Unfortunately for Obama and his faithful pundits, that gives voters plenty to recoil from. Unlike Brooks, they no longer consider him “temperate, thoughtful and pragmatic.” His actions tell a different story; his policies reveal a radicalism and arrogance born of the belief that the federal government has nearly unlimited capacity to take over more and more decision-making authority and aggrandize more and more power.

There was an alternative for Obama, an alternative to this narcissism and aggressive statism. He could have governed as he campaigned. But he made a choice, and unless he reverses course, he’ll be judged on the results.

Obama sold himself as the image of moderation and superior temperament. But there has been nothing moderate about his first year, and his temperament has turned crabby, irritable, and condescending. Perhaps that was always his disposition, but only on occasion did the mask slip (“Can’t I eat my waffle?” and his crack about Bible-clutching Americans, being two vivid examples). Some cling fast to the campaign persona. David Brooks insists that Obama “has created a thoughtful, pragmatic administration marked by a culture of honest and vigorous debate.” That would come as a shock to those whom he has vilified (the list includes Fox News and Gallup, remember) and the voters, who see an attempted government takeover of health care and a mound of debt. Indeed Brooks himself concedes:

Driven by circumstances and self-confidence, the president has made himself the star performer in the national drama. He has been ubiquitous, appearing everywhere, trying to overhaul most sectors of national life: finance, health, energy, automobiles and transportation, housing, and education, among others.

So perhaps Obama’s not so moderate after all. But the unveiling of Obama’s personality and of his policy goals has stirred the public, which, as Brooks concedes, recoils from “any effort to centralize authority or increase the role of government.” Unfortunately for Obama and his faithful pundits, that gives voters plenty to recoil from. Unlike Brooks, they no longer consider him “temperate, thoughtful and pragmatic.” His actions tell a different story; his policies reveal a radicalism and arrogance born of the belief that the federal government has nearly unlimited capacity to take over more and more decision-making authority and aggrandize more and more power.

There was an alternative for Obama, an alternative to this narcissism and aggressive statism. He could have governed as he campaigned. But he made a choice, and unless he reverses course, he’ll be judged on the results.

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The Health-Care Backlash

Here are some thoughts on where things stand in the aftermath of the certain passage of the Senate health-care bill.

1. Few Democrats understand the depth and intensity of opposition that exists toward them and their agenda, especially regarding health care. Passage of this bill will only heighten the depth and intensity of the opposition. We’re seeing a political tsunami in the making, and passage of health-care legislation would only add to its size and force.

2. This health-care bill may well be historic, but not in the way the president thinks. I’m not sure we’ve ever seen anything quite like it: passage of a mammoth piece of legislation, hugely expensive and unpopular, on a strict party-line vote taken in a rush of panic because Democrats know that the more people see of ObamaCare, the less they like it.

3. The problem isn’t simply with how substantively awful the bill is but how deeply dishonest and (legally) corrupt the whole process has been. There’s already a powerful populist, anti-Washington sentiment out there, perhaps as strong as anything we’ve seen. This will add kerosene to that raging fire.

4. Democrats have sold this bill as a miracle-worker; when people see first-hand how pernicious health-care legislation will be, abstract concerns will become concrete. That will magnify the unhappiness of the polity.

5. The collateral damage to Obama from this bill is enormous. More than any candidate in our lifetime, Obama won based on the aesthetics of politics. It wasn’t because of his record; he barely had one. And it wasn’t because of his command of policy; few people knew what his top three policy priorities were. It was based instead on the sense that he was something novel, the embodiment of a “new politics” – mature, high-minded and gracious, intellectually serious. That was the core of his speeches and his candidacy. In less than a year, that core has been devoured, most of all by this health-care process.

Mr. Obama has shown himself to be a deeply partisan and polarizing figure. (“I have never been asked to engage in a single serious negotiation on any issue, nor has any other Republican,” Senator McCain reported over the weekend.) The lack of transparency in this process has been unprecedented and bordering on criminal. The president has been deeply misleading in selling this plan. Lobbyists, a bane of Obama during the campaign, are having a field day.

President Obama may succeed in passing a terribly unpopular piece of legislation – but in the process, he has shattered his carefully cultivated image. It now consists of a thousand shards.

6. This health-care bill shouldn’t be seen in isolation. It’s part of a train of events that include the stimulus package, the omnibus spending bill (complete with some 8,500 earmarks), and a record-sized budget. In addition, as Jim Manzi points out in the new issue of National Affairs:

[Under Obama] the federal government has also intervened aggressively in both the financial and industrial sectors of the economy in order to produce specific desired outcomes for particular corporations. It has nationalized America’s largest auto company (General Motors) and intervened in the bankruptcy proceedings of the third-largest auto company (Chrysler), privileging labor unions at the expense of bondholders. It has, in effect, nationalized what was America’s largest insurance company (American International Group) and largest bank (Citigroup), and appears to have exerted extra-legal financial pressure on what was the second-largest bank (Bank of America) to get it to purchase the ­country’s largest securities company (Merrill Lynch). The implicit government guarantees provided to home-loan giants Fannie Mae and Freddie Mac have been called in, and the federal government is now the largest de facto lender in the residential real-estate market. The government has selected the CEOs and is setting compensation at major automotive and financial companies across the country. On top of these interventions in finance and commerce, the administration and congressional Democrats are also pursuing both a new climate and energy strategy and large-scale health-care reform. Their agenda would place the government at the center of these two huge sectors of the economy…

Together, these actions tell quite a tale. Mr. Obama has revived the worst impressions of the Democratic party – profligate and undisciplined, arrogant, lovers of big government, increasers of taxes. The issues and narrative for American politics in the foreseeable future has been set — limited government versus exploding government, capitalism versus European style socialism, responsible and measured policies versus reckless and radical ones.

Barack Obama is in the process of inflicting enormous damage to his presidency and his party. And there is more, much more to come.

Here are some thoughts on where things stand in the aftermath of the certain passage of the Senate health-care bill.

1. Few Democrats understand the depth and intensity of opposition that exists toward them and their agenda, especially regarding health care. Passage of this bill will only heighten the depth and intensity of the opposition. We’re seeing a political tsunami in the making, and passage of health-care legislation would only add to its size and force.

2. This health-care bill may well be historic, but not in the way the president thinks. I’m not sure we’ve ever seen anything quite like it: passage of a mammoth piece of legislation, hugely expensive and unpopular, on a strict party-line vote taken in a rush of panic because Democrats know that the more people see of ObamaCare, the less they like it.

3. The problem isn’t simply with how substantively awful the bill is but how deeply dishonest and (legally) corrupt the whole process has been. There’s already a powerful populist, anti-Washington sentiment out there, perhaps as strong as anything we’ve seen. This will add kerosene to that raging fire.

4. Democrats have sold this bill as a miracle-worker; when people see first-hand how pernicious health-care legislation will be, abstract concerns will become concrete. That will magnify the unhappiness of the polity.

5. The collateral damage to Obama from this bill is enormous. More than any candidate in our lifetime, Obama won based on the aesthetics of politics. It wasn’t because of his record; he barely had one. And it wasn’t because of his command of policy; few people knew what his top three policy priorities were. It was based instead on the sense that he was something novel, the embodiment of a “new politics” – mature, high-minded and gracious, intellectually serious. That was the core of his speeches and his candidacy. In less than a year, that core has been devoured, most of all by this health-care process.

Mr. Obama has shown himself to be a deeply partisan and polarizing figure. (“I have never been asked to engage in a single serious negotiation on any issue, nor has any other Republican,” Senator McCain reported over the weekend.) The lack of transparency in this process has been unprecedented and bordering on criminal. The president has been deeply misleading in selling this plan. Lobbyists, a bane of Obama during the campaign, are having a field day.

President Obama may succeed in passing a terribly unpopular piece of legislation – but in the process, he has shattered his carefully cultivated image. It now consists of a thousand shards.

6. This health-care bill shouldn’t be seen in isolation. It’s part of a train of events that include the stimulus package, the omnibus spending bill (complete with some 8,500 earmarks), and a record-sized budget. In addition, as Jim Manzi points out in the new issue of National Affairs:

[Under Obama] the federal government has also intervened aggressively in both the financial and industrial sectors of the economy in order to produce specific desired outcomes for particular corporations. It has nationalized America’s largest auto company (General Motors) and intervened in the bankruptcy proceedings of the third-largest auto company (Chrysler), privileging labor unions at the expense of bondholders. It has, in effect, nationalized what was America’s largest insurance company (American International Group) and largest bank (Citigroup), and appears to have exerted extra-legal financial pressure on what was the second-largest bank (Bank of America) to get it to purchase the ­country’s largest securities company (Merrill Lynch). The implicit government guarantees provided to home-loan giants Fannie Mae and Freddie Mac have been called in, and the federal government is now the largest de facto lender in the residential real-estate market. The government has selected the CEOs and is setting compensation at major automotive and financial companies across the country. On top of these interventions in finance and commerce, the administration and congressional Democrats are also pursuing both a new climate and energy strategy and large-scale health-care reform. Their agenda would place the government at the center of these two huge sectors of the economy…

Together, these actions tell quite a tale. Mr. Obama has revived the worst impressions of the Democratic party – profligate and undisciplined, arrogant, lovers of big government, increasers of taxes. The issues and narrative for American politics in the foreseeable future has been set — limited government versus exploding government, capitalism versus European style socialism, responsible and measured policies versus reckless and radical ones.

Barack Obama is in the process of inflicting enormous damage to his presidency and his party. And there is more, much more to come.

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Sunset for Olmert

Yesterday saw a dramatic turn in Ehud Olmert’s bribery scandal, as Morris Talansky, the New York businessman at the center of the storm, testified before an Israeli court.

There was some good news here for Olmert. The prosecution questioned the witness for seven hours, during which time he insisted he neither asked nor received anything in return for the $150,000 in cash he gave Olmert over a fifteen-year period. This is plausible: There are many American philanthropists who, acting out of a genuine desire to help the Jewish state, regularly support one Israeli politician or another, and Talansky came across to reporters as motivated by ideology rather than business interests. Olmert’s people immediately began claiming that his testimony proves their side of the story.

But the rest of the story is wildly disgraceful for Olmert, and even if he never sees a prison cell, it is hard to imagine Israelis ever voting again for a party that counts him among its leadership. According to Talansky, in addition to the cash he handed Olmert in envelopes whenever they met, Talansky also covered Olmert’s intensely decadent lifestyle, such as flying first-class rather than business, a $30,000 vacation to Italy, or $4,700 for a single night at the Ritz Carlton in Washington. Such expenses may seem unremarkable in certain high-flying American circles, but for an Israeli public servant they are outrageous, an utter humiliation for Olmert.

And then there is the odd matter of an additional $380,000 which was apparently wired from Talansky’s own Israeli-based companies directly to Olmert’s assistant. It is very difficult to prove bribery in cases like these, since very often payment comes well before the favor is returned, and the quid pro quo is by implicit agreement rather than anything traceable in an email. Yet this is one of the main reasons that campaign finance is so heavily guarded, and why giving thousands of dollars in cash to politicians is regarded as highly problematic. Whatever Olmert’s legal case, it really looks like his political career is heading to its end.

This end may come sooner than it takes for the wheels of justice to do their work. Today’s Jerusalem Post tells us that Ehud Barak, head of Olmert’s main coalition partner, the Labor Party, is expected to hand Olmert an ultimatum: You quit, or we’re out. Which means either that Olmert’s own party will have the good sense to sack him, or we are going to elections.

Yesterday saw a dramatic turn in Ehud Olmert’s bribery scandal, as Morris Talansky, the New York businessman at the center of the storm, testified before an Israeli court.

There was some good news here for Olmert. The prosecution questioned the witness for seven hours, during which time he insisted he neither asked nor received anything in return for the $150,000 in cash he gave Olmert over a fifteen-year period. This is plausible: There are many American philanthropists who, acting out of a genuine desire to help the Jewish state, regularly support one Israeli politician or another, and Talansky came across to reporters as motivated by ideology rather than business interests. Olmert’s people immediately began claiming that his testimony proves their side of the story.

But the rest of the story is wildly disgraceful for Olmert, and even if he never sees a prison cell, it is hard to imagine Israelis ever voting again for a party that counts him among its leadership. According to Talansky, in addition to the cash he handed Olmert in envelopes whenever they met, Talansky also covered Olmert’s intensely decadent lifestyle, such as flying first-class rather than business, a $30,000 vacation to Italy, or $4,700 for a single night at the Ritz Carlton in Washington. Such expenses may seem unremarkable in certain high-flying American circles, but for an Israeli public servant they are outrageous, an utter humiliation for Olmert.

And then there is the odd matter of an additional $380,000 which was apparently wired from Talansky’s own Israeli-based companies directly to Olmert’s assistant. It is very difficult to prove bribery in cases like these, since very often payment comes well before the favor is returned, and the quid pro quo is by implicit agreement rather than anything traceable in an email. Yet this is one of the main reasons that campaign finance is so heavily guarded, and why giving thousands of dollars in cash to politicians is regarded as highly problematic. Whatever Olmert’s legal case, it really looks like his political career is heading to its end.

This end may come sooner than it takes for the wheels of justice to do their work. Today’s Jerusalem Post tells us that Ehud Barak, head of Olmert’s main coalition partner, the Labor Party, is expected to hand Olmert an ultimatum: You quit, or we’re out. Which means either that Olmert’s own party will have the good sense to sack him, or we are going to elections.

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A Saudi Woman Speaks

A Saudi woman has written a letter to the Jerusalem Post that just might force us obstinate Westerners to rethink our assumptions about the land of Mecca and Medina. Maybe we’ve been a little keen on the propaganda, and Saudi Arabia isn’t so bad after all! From the letter:

We do have a choice on who to marry. You do realize we live in the 21st century?! Both my sisters and brother knew their spouses before they were married, and I come from a relatively religiously committed family.

Hmmm. You don’t say. Well, what about that Saudi prohibition on all other religions thing?

It makes sense not to allow another religion to be practiced in such a sacred place. As far as I know there is no mosque in Vatican City. I respect the fact that it is a sacred place for a religion, and I would expect to receive the same respect from others about my country.

You know, I never thought of it that way. Say, you’re pretty smart. Where did you learn to reason like that?

As for our education, it is well on its way to becoming one of the best in the world. We have a wide range of opportunities. The college I attend has marketing, accounting, media, nursing, special education, electrical engineering, architecture, management, finance, and psychology.

I have to admit, that’s an impressive list. Can you attend these classes on your own?

. . .contrary to what people assume, we are allowed to leave the house. Even without our brothers or fathers. It is a cultural choice whether a mother of father permit their daughters out without male supervision. Perhaps one in 15 families take a stringent position.

Not bad odds. So, women live pretty decent lives there, huh?

Our way is our choice. Nothing is forced upon us.

I guess not. Thanks for clarifying things.

One day my country will rise and shine above all, and I am sure when that happens the world will suddenly want to befriend us.

Why wait? I want to befriend you right now. How can I get in touch with you? Wait . . .what’s this?

Editors note: The writer asked that her full name be kept in confidence.

Yep, life for women in Saudia Arabia seems pretty great. What with all the identity-concealing for fear of reprisals and whatnot.

A Saudi woman has written a letter to the Jerusalem Post that just might force us obstinate Westerners to rethink our assumptions about the land of Mecca and Medina. Maybe we’ve been a little keen on the propaganda, and Saudi Arabia isn’t so bad after all! From the letter:

We do have a choice on who to marry. You do realize we live in the 21st century?! Both my sisters and brother knew their spouses before they were married, and I come from a relatively religiously committed family.

Hmmm. You don’t say. Well, what about that Saudi prohibition on all other religions thing?

It makes sense not to allow another religion to be practiced in such a sacred place. As far as I know there is no mosque in Vatican City. I respect the fact that it is a sacred place for a religion, and I would expect to receive the same respect from others about my country.

You know, I never thought of it that way. Say, you’re pretty smart. Where did you learn to reason like that?

As for our education, it is well on its way to becoming one of the best in the world. We have a wide range of opportunities. The college I attend has marketing, accounting, media, nursing, special education, electrical engineering, architecture, management, finance, and psychology.

I have to admit, that’s an impressive list. Can you attend these classes on your own?

. . .contrary to what people assume, we are allowed to leave the house. Even without our brothers or fathers. It is a cultural choice whether a mother of father permit their daughters out without male supervision. Perhaps one in 15 families take a stringent position.

Not bad odds. So, women live pretty decent lives there, huh?

Our way is our choice. Nothing is forced upon us.

I guess not. Thanks for clarifying things.

One day my country will rise and shine above all, and I am sure when that happens the world will suddenly want to befriend us.

Why wait? I want to befriend you right now. How can I get in touch with you? Wait . . .what’s this?

Editors note: The writer asked that her full name be kept in confidence.

Yep, life for women in Saudia Arabia seems pretty great. What with all the identity-concealing for fear of reprisals and whatnot.

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Sovereign Wealth Funds

Brian Williams of NBC asked the Democrats a substantive and a provocative question about sovereign wealth funds — giant pools of money controlled and managed by foreign governments like China, Singapore, and Gulf oil states — investing in American companies like Merrill Lynch and Citigroup. This issue will be a rallying point for the protectionist left and right this campaign season. John Edwards and Hillary Clinton gave a lot of boiler point about more transparency and the need to do something. Barack Obama, clearly knowing nothing about the topic, talked about alternative energy.

But the U.S. attitude toward sovereign wealth funds is going to be the most important test of American acceptance of globalization. By this fall, there will be many more companies that get their funding from government investment funds from the Gulf State, Singapore, and China. Irwin Stelzer has made the best case for being wary about having a foreign government holding the purse strings of American businesses. But the fact is, these funds are going to be the most important engine of finance and growth capital in a global economy whether we like it or not. As a political matter, this is probably a losing issue for free traders. Yet all those politicians who want to deter foreign financial investment in American companies have to tell us what Citi, and Merrill, and all the other cash-strapped companies should do when they need to find new sources of capital if they can’t get access to these pools of wealth.

Brian Williams of NBC asked the Democrats a substantive and a provocative question about sovereign wealth funds — giant pools of money controlled and managed by foreign governments like China, Singapore, and Gulf oil states — investing in American companies like Merrill Lynch and Citigroup. This issue will be a rallying point for the protectionist left and right this campaign season. John Edwards and Hillary Clinton gave a lot of boiler point about more transparency and the need to do something. Barack Obama, clearly knowing nothing about the topic, talked about alternative energy.

But the U.S. attitude toward sovereign wealth funds is going to be the most important test of American acceptance of globalization. By this fall, there will be many more companies that get their funding from government investment funds from the Gulf State, Singapore, and China. Irwin Stelzer has made the best case for being wary about having a foreign government holding the purse strings of American businesses. But the fact is, these funds are going to be the most important engine of finance and growth capital in a global economy whether we like it or not. As a political matter, this is probably a losing issue for free traders. Yet all those politicians who want to deter foreign financial investment in American companies have to tell us what Citi, and Merrill, and all the other cash-strapped companies should do when they need to find new sources of capital if they can’t get access to these pools of wealth.

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Another Fundamental Mistake Involving Russia

Yesterday, Russia’s finance minister said that U.S. officials wanted to conclude discussions on the country’s accession to the World Trade Organization as quickly as possible. “I got the feeling that they are ready to push these negotiations forward,” noted Alexei Kudrin. Russia is the largest economy that is not a member of the global trading body.

And it should stay that way because the Russian Federation is not ready to trade fairly within the context of a rules-based system. For instance, last Wednesday, European Union Trade Commissioner Peter Mandelson again went public with complaints of Moscow’s violation of trade agreements with Brussels. Russia’s previous responses to European complaints have been to continue and even expand aggressive trade practices. For example, Moscow has indicated that it may extend its meat-and-plant ban, which it imposed on Poland almost two years ago.

There seems to be a general feeling in Washington and Brussels that Russia will somehow reform its bad practices once it becomes a WTO member. That sentiment mirrors American and European hopes and expectations regarding China at the end of last decade. Yet, as we have seen since Beijing’s accession in 2001, the Chinese have continued non-compliant trade practices. The United States has had to file five WTO cases against China; even with these complaints we have yet to scratch the surface of Chinese trade violations.

If the experience with China is any guide, Russia will change the WTO more than the WTO changes Russia. We will not be able to say that we were not warned. In June, President Vladimir Putin called for “the creation of a new architecture of international economic relations.” The question is why should we help him wreck pillar multilateral institutions, like the World Trade Organization, from the inside?

Yesterday, Russia’s finance minister said that U.S. officials wanted to conclude discussions on the country’s accession to the World Trade Organization as quickly as possible. “I got the feeling that they are ready to push these negotiations forward,” noted Alexei Kudrin. Russia is the largest economy that is not a member of the global trading body.

And it should stay that way because the Russian Federation is not ready to trade fairly within the context of a rules-based system. For instance, last Wednesday, European Union Trade Commissioner Peter Mandelson again went public with complaints of Moscow’s violation of trade agreements with Brussels. Russia’s previous responses to European complaints have been to continue and even expand aggressive trade practices. For example, Moscow has indicated that it may extend its meat-and-plant ban, which it imposed on Poland almost two years ago.

There seems to be a general feeling in Washington and Brussels that Russia will somehow reform its bad practices once it becomes a WTO member. That sentiment mirrors American and European hopes and expectations regarding China at the end of last decade. Yet, as we have seen since Beijing’s accession in 2001, the Chinese have continued non-compliant trade practices. The United States has had to file five WTO cases against China; even with these complaints we have yet to scratch the surface of Chinese trade violations.

If the experience with China is any guide, Russia will change the WTO more than the WTO changes Russia. We will not be able to say that we were not warned. In June, President Vladimir Putin called for “the creation of a new architecture of international economic relations.” The question is why should we help him wreck pillar multilateral institutions, like the World Trade Organization, from the inside?

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