The topic of the day, both in Washington, DC and in the states, is how to cut the deficits. One of the best ways to proceed, which has so far received scant attention, is for the federal government and most states to change the peculiar way they tax liquor, wine, and beer. With the exception of those 18 states that sell alcohol themselves, all the other states and the federal government impose a specific fee on each bottle or barrel of alcohol—rather than collect a percentage of the take. As a result, as the price of booze rises, as that of most products does over time, the amount the government collects stays the same. Moreover, the effect of the tax on deterring alcohol abuse is diluted.
If you want to know what is going to happen next to your investments, the job and housing markets, and more generally to the economy, you may want to follow what is happening to the ideas of British economist John Maynard Keynes. Keynes argued that when economies are sputtering, the government must increase deficits, because its increased expenditures will stimulate the economy to growth better. (The time to slash government spending is when the economy is running at full clip.) This is the theory Presidents Bush and Obama, as well as the Federal Reserve, have followed. However, the anti-Keynesians have long maintained that cutting government expenditures is the course to follow—because the more money that is left in private hands, the better for the economy. The Tea Party is full of anti-Keynesians, and these days, so are the GOP leaders in Congress.
The best advice I ever received from a psychoanalyst concerned the son of a friend of mine, let’s call him Joe. Joe kind of adopted me, and often came over seeking advice. The young man was unrealistically optimistic. If his boss complimented him on some job he carried out, Joe was sure he soon would receive a promotion. When none of was forthcoming, far from being crushed, Joe would spin a new tale: he expected to be soon moved to a choice location. And when this move did not materialize, Joe assumed it was just being delayed. The same with dating: a smile was interpreted as a sure sign of deep interest, a long deep look—a potential keeper. And there always was another tomorrow . Joe was never down—except when I tried to call his attention to his poor reality testing. The therapist warned me not to take away Joe’s defenses—before I provided him with some other foundations on which to base his self esteem. Sadly, I never found a way to help him find more realistic sources of contentment. Accordingly, I just listened sympathetically but tried not to reinforce his illusions.
Does it make sense to make airport security ever tighter and more intrusive while our shorelines are almost totally unsecured? Until recently, I kept my mouth shut when I was patted down more times than most because I have a pacemaker and cannot go through the screening gates. But then I stumbled upon a great gap in our security. I first learned about it when a friend hitched a ride on a sailboat that left Isla Mujeres in Mexico and docked at the owner’s home in St. Petersburg, Florida. As the passengers came ashore and unloaded the boat, they did not clear any customs or show their passports. My friend remembers someone muttering that they ought to check in with the local police, but no one bothered. I then checked with the Coast Guard and learned that our shorelines—some 95,000 miles, more than ten times longer than the land-based borders with Mexico and Canada combined—are wide open.
The president should declare that he would sign a bill that contains substantial additional budget cuts — but only if it sets a trigger that activates them automatically after the unemployment stays at or below 7 percent for six months.
President Obama has found a new way to deal with the difficult political situation he is facing as a result of the midterm elections. He recently unveiled a major policy move that cannot be easily boxed in as left or right, and hence serves his tendency to seek common ground. However, unlike previous moves, it does not seek to do so by splitting the difference or compromising. When this was done, as is all too clear in the case of the tax bill, the GOP got all they wanted and the Democrats got rather little. (A two-year extension of all the Bush tax cuts costing $544 billion over the next two years, and – for the richest of the rich—a very low tax on estates —in “exchange” mainly for a 13-month long extension of unemployment benefits, of an estimated value of $56 billion). This time, President Obama is calling for a major tax reform that would greatly simplify the code, close many loopholes, and thus allow reducing the rate without increasing the deficit.
The Economist argues that the “best card in a bad hand”—the one the U.S. holds—is to get China to reign in North Korea. Indeed, American pleading seems to have convinced Beijing to coax North Korea some. However, a much stronger effect might be achieved if the U.S. addressed China’s core interests in the matter.
One of the oldest rhetorical tricks is to present what is actually a political and ideological attack as if it were a mathematical inevitability, a purely scientific conclusion. Indeed, at first it is impossible to see the flaw in the argument that, because much of the federal budget is spent on Social Security and Medicare, that to reduce the deficit one “must” cut these entitlements. As the refrain goes: “This is where the big bucks are.” Speaking on NPR, Senator Michael Bennet (D-CO) pointed out that 65% of the federal budget is “Medicare, Medicaid, Social Security, and interest on the debt,” and argued that hence, “we can’t solve our budget crisis without dealing with our entitlements.” Mackenzie Eaglen of the Heritage Foundation writes that “entitlements now account for around 65 percent of all federal spending and a record 18 percent of GDP.” Referring to Social Security, Medicare, and Medicaid, she predicts, “If future taxes are held at the historical average, these three entitlements will consume all tax revenues by 2052.” And, as every high school kid knows, there is no more than 100%.
The most widely predicted course for Washington over the next two years is gridlock. “What we know is that we’re going to have gridlock,” says NBC’s Chuck Todd. “On the big questions, especially federal spending and taxing, confrontation will be the order of the day […] gridlock is likely to be the dominant theme,” predicts Congressional scholar Norm Ornstein. Washington is in for “two years of legislative deadlock,” holds Sarah Binder of the Brookings Institution. There will “absolutely” be “more intense” gridlock than there was before the 2010 elections, says Thomas Mann, also of the Brookings Institution.
The reports from our generals in Afghanistan—trying to convince the public to support extension of the war, to be shortly reviewed by the President– remind me of a study by anthropologist E. E. Evans-Pritchard. He wondered how rain makers could stay in business, given that they hardly produce rain on demand. The shamans, he found, had well-honed explanations that kept them in business. Our generals are using the same rationales to keep going. When no raindrops followed the rain makers’ dance, they would claim that the dance was not properly performed. Our generals argue that we did not fight right in the first six years of our engagement in Afghanistan—but now they have found a better way: it is called counterinsurgency. So far, though, it has not produced any better results.
I am asking for your “vote.” I posted on the CNN opinion page a call for a new antiwar movement, similar to the one against the war in Vietnam, teach-ins and rallies and all. If you find merit in the following, please consider (a) clicking “recommend” on CNN and (b) sharing with others.
The newest way General Petraeus plans to measure success in the war in Afghanistan reminded me of what the government did when its campaign to persuade the public to stop smoking did not make much headway. It stopped counting how many people had had their last cigarette — and started counting how many anti-smoking pamphlets it mailed.
There is nothing wrong with criticizing many of the policies of the current Israeli government — and those of the previous ones. And it is completely uncalled for to try to tar such critics as anti-Semites. Indeed, many Israeli citizens are more critical of their government than their American counterparts.
One cannot but respect President Obama for heeding his inner voice, come what may. It may be disastrous politics and cost the Democrats and the country dearly, but people claim that they want a public leader who does not mind the public opinion polls. Well they got one, with a vengeance.
A recent forum in The Nation includes commentaries by seven public intellectuals about the ways Obama is progressing. At least five of them blame his failing on The System and urge that more attention be paid to his “major achievements.” They are not doing any favors to the Democrats’ and the President’s reelection prospects or to his agenda, because they divert attention from those matters in which Obama has considerable degrees of freedom. I am not referring to past mistakes — those are water under the bridge — but to their extension into the near future.
The Obama loyalists argue that while he is being impolitic, he will leave a great legacy behind. True, they proffer, he may have gone for health care while the people wanted jobs, and tried to bail out Main Street by bailing out Wall Street rather than the other way around. However, look at the first major health care reform in decades, and the first major financial reform in years, and so on. (Actually there are not so many “and so ons”.) The president himself once intimated that if he had to choose, “I’d rather be a really good one-term president than a mediocre two-term president.” Most recently he allowed that he was governing while the Republicans were “politicking,” but now he must also do some of this degrading stuff.
As Israelis and Palestinians are getting together for direct talks, a waxing question is: what will be the final form of their relationship? Most observers expect two states (although some outliers hold for one state, in which Jews and Arabs have equal rights–but in effect the Palestinians soon will have the majority). Many observers on both sides agree on what the final outcome will look like: the line that separates the West and East Banks (the future Palestinian state and Israel) will be adjusted a bit, in both directions; different parts of Jerusalem will serve as a capital for both states; and the refugees, who cannot return, will be compensated.
The U.S. Department of Justice should draft a contract for every American who opposes “big government” and wishes to cut it down and have their taxes slashed. The contract should stipulate that those who sign it will have to pay only a third of the regular tax rate (to cover the costs of our military and homeland security). However, in exchange they will not be entitled to any government services.
The Republicans are willing to put the brakes on now despite the fact that the economy has not gained enough lift to take off. Indeed, their deficit-mongering is already causing a drag, which is slowing down the economy, and may well make it crash again. It is precisely the policy that Hoover notoriously embraced.
Here we go again. Corporations are making money not by producing a product and marketing it, but by loading consumers with loans they cannot pay and then sticking the taxpayers with the bill. Only this time, it’s not houses and mortgages but “higher” education and student loans.
In preparing for the 2010 midterm election, we need a progressive summit to prepare a shared narrative and shared positions. Currently, progressive groups are each pulling in a different direction, favoring distinct tactics, promoting their own rationales. True, despite all the talk about a “progressive movement,” there is no way to cobble the various progressive groups into one coherent force. However, one can find what political philosophers call “overlapping consensuses.” That is, instead of seeking one agreed-upon platform and strategy, progressives should identify major points all can agree to promote.
The political mavens who argue that President Obama has to be more expressive are barking up the wrong tree. The real question is if Obama has deep feelings (other than for his family) — or is a cold fish. If his blood does not boil when Republicans and conservative Democrats, in the same breath, refuse to extend unemployment benefits but further cut taxes for business; when he finds out that mine owners and oil companies bribe regulators rather than protect the lives of their employees; if he cannot feel the pain unemployment still inflicts on us rather than deficits — then he should not fake it and suddenly turn demonstrative.
Today the representatives of 188 nations (give or take a few) assembled in New York City to debate ways to revise the Nuclear Non-Proliferation Treaty. The issue could not be more important. As President Obama’s new Nuclear Posture Review declares, the greatest threats to global security are not the old Cold War adversaries but rogue states armed with nukes and terrorists with access to such bombs or the materials from which they can be made. Moreover, the NPT is severely challenged by Iran, which, the IAEA has repeatedly reported, is not living up to its obligations under the treaty. Other nations with nuclear ambitions are watching to see how the international community will react to Iran’s violations, as they figure out their own military futures.
I have a vivid memory of the day Israel was born as I both attended a meeting called by Ben-Gurion and joined the fighting that preceded and followed. Few remember that after decades of promises to create a homeland for Jews in Palestine (the Balfour Declaration) it took a very unusual constellation of international forces for the UN to vote to recognize the formation of the state of Israel. In effect, the majority of the Jewish leaders at the time felt that going for a state was too risky, and they favored seeking instead a greater level of autonomy for the Jewish community within the framework of the prevailing British colonial rule (“mandate”). It was left to Ben-Gurion to recognize the unique opportunity for the Soviet bloc and the U.S.—already engaged in a Cold War—to both to support the formation of a new state.
In 2007 I joined with several others who spent many years studying nuclear arms to form a mini consensus of the opinion that the greatest threat to our security, that of our allies, and the world, was the combination of terrorists and nukes. To quote, “The White House, Congress, and the media have focused heavily on the so-called Axis of Evil when dealing with WMD in general and nukes in particular. Since the introduction of this term, attention has been focused on three rogue states: North Korea, Iran, and Saddam’s Iraq. The 2003 invasion of Iraq, justified initially to prevent Iraq from using or acquiring further WMD, sharpened this focus. As I see it, the combination of terrorism and nuclear weapons poses a graver threat to international security” : (Security First, P220). The White House, President Obama’s newly released Nuclear Posture Review, and this week’s summit have shifted the focus from strategic weapons left over from the days of the Cold War (at the center of attention until and including last week) to where it belongs: to terrorists getting their hands on nukes or the materials from which they can be made.
To evaluate the outcomes of the summit, here are the hotspots that should be covered, but are not necessarily the ones that will be addressed:
1. One of the most likely places terrorists are may get what they would consider their dream ticket—and hence our nightmare—is Russia. Russia has somewhere between 3,000 and 15,000 (estimates vary) small tactical nuclear bombs. These are much less well guarded than the strategic big bombs. Moreover they are positioned much closer to Russia’s borders—including those with Muslim republics—than most of the strategic ones. No treaty covers them. So far there is no sign that these arms will be even discussed during the summit.
2. Next is Pakistan. It has an unstable government and strong anti-American insurgency groups which find allies in some of the nation’s forces, especially the notorious ISI (Inter-Services Intelligence). The Pakistani government has rejected many American efforts to help it to better guard these arms, fearing that the United States may grab them if the Taliban and their allies take over. Let’s see what the summit will do about this major challenge.
In reaction to a very unwise American policy to expand India’s nuclear program, Pakistan in effect is expanding its own. So far there is no indication that this thorny issue will be faced during the summit.
3. The third source of trouble is the considerable amounts of plutonium, highly enriched uranium, and radioactive waste that lie around in many parts of the world, from Chile to South Africa. This is the area in which we are making good progress. The U.S. does underwrite a global drive to neutralize these materials one way or another. President Obama wisely calls for accelerating this process. It is likely to get much attention during the summit, which is like focusing on low lying fruit. They deserved to be harvested as long as progress here does not deflect attention from those much harder to reach.
The new START treaty, just signed by President Obama and President Medvedev, is discussed as if the two global powers were engaged in a Tiger Woods marriage counseling session. The treaty is said to build trust, ‘reset’ the relationships, increase transparency, and send a message to others who may consider having a nuclear affair. As someone who spent the last fifty years studying sociology, I have no doubt that nations can improve their relationships and be better for it. But at the end of the day—and I do mean the day, not the decade—one must also count the silver. That is, what is real and what are mainly warm words? And who gets what?
Obama is in trouble, among other reasons, because there are thousands of voices out there dumping on the health bill, and we hear by and large only one voice defending it. Where is the cabinet? The VP? The elected Democrats who truely believe in it? I do not recall a more one-sided debate since I heard one hand clapping.
The cliché that Washington is deadlocked and dysfunctional is only partially true. Congress and Obama get done those things favored by lobbies with deep pockets that have their hooks into both the GOP and a fair number of Democrats. Thus, despite all the hullabaloo about deficits, the government is about to provide $8.33 billion in loan guarantees to the nuclear industry, which adds to government liabilities, and hence increases the deficit.
The time for muscular communitarianism has come. In his second year, President Obama best reveal that his communitarianism is not powerless, but indeed has muscles of its own, although these have so far been rarely exercised.
The Obama Administration is planning to start cutting the deficit soon for economic and political reasons. To now even merely discuss tax raises, expenditure cuts, and increases in interest rates that are entailed will slow the recovery. We know what must be done; it does not require long preparations. And there is no sign that the feared inflation that deficits are said to cause is anywhere in sight. True, once inflation settles in, it is difficult to eliminate — but it starts slowly. There is plenty of time.
The Democrats are caught between the need to set up structures that will prevent future meltdowns and the pressures they face from well-heeled Wall Street-based interest groups. They are under cross-pressure to act in the public interest and to survive in the political system: those who displease groups with deep pockets face tough re-election campaigns, as their opponents will get the large amounts of funds needed these days to run for office. Hence, despite all the talk about new regulations, surprisingly little is happening.
Some years back I wrote an essay for Time magazine. When I met with the editor, he told me that wanted “a forehead slapping piece.” When I meekly replied that I did not know what this meant, he explained that he wanted the “reader to exclaim ‘Wow, why did I not think about that?!’” The editor was much less keen to find out whether the idea could be well supported. All this came to mind when I read an article in a recent issue of Newsweek by a journalist, one Jonathan Tepperman. Time magazine would have loved his essay.