Lexington
Charlie Rangel's taxes
Those who write laws should obey them
IT WAS so cold that rifles jammed and blood froze in men’s wounds. Chinese soldiers were cascading across the border into Korea. The Americans in their path were helplessly outnumbered. Private Charlie Rangel was lying in a gully where an explosion had tossed him, punctured with shrapnel and scared to death. He told Jesus that if he ever got out of this mess, he would “never be a problem to anybody, ever again.” He thought he heard Jesus reply: “Boy, if you want any help you’d better get out of that hole.”
So he crawled over a ridge, where he found his comrades panicking. “What should we do, Sarge?” they hollered. Private Rangel was not a sergeant, but he had an air about him, a mixture of bravado and charisma, that made people think he was. And since these terrified 18-year-olds expected him to lead them, he did: over a mountain, through enemy lines and to safety. “Because I appeared to be less scared than the 43 enlisted men who followed me, I received the Bronze Star,” he recalls.
Mr Rangel is a war hero. But his ascent from the streets of Harlem to the corridors of Congress is, in some ways, even more impressive. His father was “absolutely no good”, he says in his memoirs. At the age of five or six, he tried to stop him from beating his mother by hitting him with a broom. When his father walked out and his mother had to travel to work, young Charlie was sometimes left with uncles who got drunk and lost him. He hung out with hoodlums. But he also hung out with altar boys (“I was running after their fine and proper Catholic schoolgirls,” he explains). And when the two groups met, he mediated, sometimes persuading his criminal friends to give his Catholic friends their watches back.
Before the Korean war, he was a high-school dropout. Afterwards, he used the GI bill to put himself through college. He decided to become a lawyer because his grandfather, who worked the lift at a courthouse, admired lawyers. He went into politics because he had a flair for it. (At law school, he says, he orchestrated ethnic factions “like Toscanini conducting Beethoven’s Ninth”.) He was elected to Congress in 1970. Since 2007, he has been chairman of the mighty House Ways and Means Committee, which writes the nation’s tax laws. And alas, he is now accused of failing to obey those laws.
Mr Rangel owns a villa in the Dominican Republic, but forgot to report or pay taxes on $75,000 of rental income from it. He occupies four rent-controlled apartments in New York, courtesy of a developer. When disclosing his assets to Congress, he appears to have omitted roughly half of them, including an account with at least $250,000 in it. The New York Times, which is seldom in the vanguard of witch-hunts against Democrats, has already urged him to resign his chairmanship. So, in blunter language, did many of the tens of thousands of “tea party” protesters who flocked to Washington on September 12th to complain about big government. Some chanted “Boot Rangel!” A typical placard showed Mr Rangel and Tim Geithner, the treasury secretary, who also neglected to pay some of his taxes, with the slogan: “The best tax advisers I’ve ever had”.
For now, Mr Rangel is holding tightly to his chair, insisting that any errors were inadvertent and that no one should prejudge the results of two congressional probes. His admirers are appalled that such an immense figure might fall over a few instances of sloppy book-keeping. This is a man who marched with Martin Luther King. He changed the tax code to make sanctions against apartheid South Africa bite. He created “empowerment zones” to boost inner cities. He fought to expand the “earned-income tax credit”, which helps the working poor. And he is still fighting doughtily for health reform. “This has nothing to do with black, white, Republican [or] Democrat,” he said this week. “It has to do with the fiscal survival of our nation.”
Rage against the machine
Mr Rangel’s critics will have none of this. But some comfort themselves with the belief that he is the last of a dying breed of machine politician. He owed his first job in politics to a Tammany Hall boss. He cut deals with Nelson Rockefeller, the Republican governor of New York, who in 1970 handed him a pencil and let him draw his own congressional district. He runs a big patronage network and never has to worry about re-election. But he is nearly 80, and the new generation of politicians are different.
Or are they? Steven Malanga of the Manhattan Institute, a conservative think-tank, argues that they are worse. Old-style political bosses handed out patronage jobs here and there, he says. Their modern counterparts lavish huge sums on groups that support them. And some of these groups are a bit iffy. A reporter posing as a pimp recently filmed staff (since fired) at a radical group called ACORN advising him to claim some of the underage prostitutes working for him as dependants for tax purposes. ACORN, alongside which the young Barack Obama worked on voter-registration in the 1990s, has received tens of millions of taxpayer dollars. It is not only the tea-party protesters who figure that, if this is what the government does with their hard-earned money, they would rather keep it.
Which is why, for all Mr Rangel’s charm and back-room savvy, he is now an obstacle to his party’s agenda. Mr Obama insists that health-care reform will not add to the deficit, and that only the rich will pay more taxes. But few Americans believe him. Some 91% of Republicans, 71% of independents and even 48% of Democrats expect their tax bills to rise, reckons Gallup. If Democrats want to get anything done this year, they must heed such fears. And if they want everyone to pay a fair share, they need leaders who are seen to do likewise. Mr Rangel should resign.
Chile's surprising president
The Bachelet model
A politician on top of her game
Much more to smile about nowWHEN she was elected as Chile’s president in January 2006 Michelle Bachelet promised to be a different kind of politician. A paediatrician and twice-separated mother of three children, she was the first woman to be elected to the top job in a Latin American country who was not the widow of an illustrious husband. She promised a “citizens’ democracy” of greater participation. Her first cabinet was selected according to gender as much as party: half its members were women, several were independents and only two had previous ministerial experience.
She quickly ran into troubles, ranging from protests by schoolchildren to transport chaos in Santiago. A year ago, her Concertación coalition lost a municipal election—its first-ever defeat. She is barred from standing in the coming presidential election, yet if the Concertación wins, it will be partly down to Ms Bachelet. She has evolved into one of the most formidable political leaders in Latin America. When The Economist went to see her in La Moneda, the presidential palace, she was relaxed and unhurried, keen to answer questions at length rather than in sound bites.
What explains her change of political fortune? Her consultative method of leadership may have looked like “weakness” to traditionalists, partly because “women speak more softly,” she concedes. “There is still a lot of machismo and sexism.” But Chileans have come to see her as empathetic, as a mother figure who is protecting them, and who had been “in command” when recession struck, she adds. In practice, however, she has been forced into some compromises, bringing political heavyweights into the cabinet, and delegating more.
A second reason is that, while sticking to fiscal rigour (at some political cost), she opted to make social protection and the promotion of equality of opportunity her main priority. Her government is building 3,500 crèches for poorer children. It has introduced a universal minimum state pension and extended free health care to cover many serious conditions. Its housing policy features better-quality homes, in model neighbourhoods. But its efforts to shake up education have been disappointingly timid.
It will take time and study before it is clear whether these programmes work. Certainly, it was a while before they made their mark in Chile—“a crèche isn’t sexy,” says Ms Bachelet. But it adds up to one of the most far-reaching attempts to combine economic growth and a welfare state in Latin America. That is a tacit critique of Hugo Chávez’s contention that only his revolution can tackle inequality in the region. And it suggests that Ms Bachelet’s political career is far from over.
Venezuela's foreign policy
Dreams of a different world
Arms and the tyrants
Putin finds a customer for his missilesAFTER a two-week tour that included stops in Libya, Algeria, Syria, Iran, Turkmenistan, Belarus and Russia, where he placed orders for tanks and missiles, Hugo Chávez this week got what he seemed to be seeking all along: the attention of the United States. Hillary Clinton, the secretary of state, worried that Venezuela’s weapons’ purchases might trigger an “arms race” in Latin America, and her spokesman described Mr Chávez’s actions as a “serious challenge to stability”.
Nowadays Mr Chávez’s foreign policy gives top priority—outside Latin America—to forging an anti-American political alliance with Iran, Syria, Belarus and Russia. Mr Chávez told Le Figaro, a French newspaper, that he had clinched a deal on nuclear co-operation with his Iranian counterpart, Mahmoud Ahmadinejad. In response, France’s foreign minister reminded Venezuela that a United Nations resolution forbids Iran exporting material from its controversial nuclear programme, of which Mr Chávez is a supporter.
Robert Morgenthau, Manhattan’s veteran district attorney, told an audience in Washington, DC, earlier this month that Venezuela’s alliance with Iran was a direct threat to American interests. Bank accounts in Andorra, supposedly belonging to people close to Mr Chávez, have been frozen at the request of the United States Treasury, reportedly because of suspicions of links to terrorism.
But the more immediately worrying development may be Venezuela’s arms build-up. Mr Chávez has already spent at least $4.4 billion on Russian fighter jets, military helicopters and rifles. This month he said he had ordered 92 tanks and anti-aircraft missiles using a $2.2 billion loan from Russia. Press reports say three submarines may follow.
The Venezuelan army’s tanks are in poor shape: the president was said to be shocked last year when he ordered them to the Colombian border only to find that few completed the journey, according to a foreign diplomat. The missiles seem to be a hasty response to an agreement last month under which Colombia gave the United States facilities at seven bases for anti-drug operations. Mr Chávez chose to see this as a threat. The missile batteries would make it “very difficult for foreign aircraft to come and bomb us”, he said. But his own buys will in turn alarm Colombia.
In Moscow Mr Chávez played up his claim that Russia and Venezuela were “strategic allies”, and followed the Kremlin in recognising the independence of the enclaves of Abkhazia and South Ossetia, carved from Georgia last year by Russian troops. But Russia’s leaders seem to see Mr Chávez primarily as a useful customer for their arms industry.
Mr Chávez offers his allies oil and gas. He promised Iran 20,000 barrels a day of petrol, even though Venezuela’s refineries are struggling to supply the local market. He granted Russia’s national energy consortium a block in the Orinoco heavy-oil belt. On the way home he dropped in on Spain’s leaders just as Repsol, a Spanish company, announced the discovery of a big natural-gas field in Venezuelan waters.
Closer to home, Mr Chávez’s plans have come unstuck. His application to join the Mercosur trade block has stalled in Brazil’s Senate. His anti-American alliance, called ALBA, lost a member with the coup in Honduras in June. This week he once again failed to obtain an explicit condemnation of Colombia’s base agreement with the United States from Unasur, the Union of South American Nations.
Government policy documents suggest that Mr Chávez’s aim is to stir up troubles for the United States in many places at once, eventually bringing about the collapse of what he calls “the empire”. Most of the regimes he is cultivating in this enterprise are marked by rigged elections, media censorship, the criminalisation of dissent and leaders for life. Is that the future of Venezuela?
Chile's presidential election
The strange chill in Chile
After presiding over Latin America’s big success story for two decades, the centre-left Concertación coalition looks tired and divided
ALONGSIDE an urban motorway in Lo Espejo, a crowded working-class district of Santiago, Chile’s capital, builders are labouring in the mud of the southern-hemisphere winter to complete 125 new houses of brick and timber. In the next few weeks families from the dilapidated huts that once stood on the site will move in. The poorest among them will pay just $400 for a house costing about $20,000, part of a government policy aimed at abolishing the last remaining shantytowns in Chile by next year. They are among the 600,000 families who will have received housing grants during the four-year term of Chile’s president, Michelle Bachelet, which ends in March.
This year the programme has been expanded, as part of a fiscal stimulus totalling $4 billion (or 2.8% of GDP). This has not prevented recession: in the second quarter the economy was 4.5% smaller than in the same period last year. But it has mitigated its effects. Some 270,000 building workers are now employed on social-housing schemes, up from 145,000 a year ago. “All these projects are helping the unemployed,” says Willy Gutiérrez, a carpenter at the site in Lo Espejo.
They have also lifted the popularity of Ms Bachelet, a Socialist (see article). Despite the recession, her approval rating has soared to 72%, up from 40% in June 2008, according to polls by the Centre for Public Studies (CEP), a think-tank. So has that of her finance minister, Andrés Velasco, a liberal former Harvard professor. If the constitution did not prohibit consecutive terms, Ms Bachelet would be strongly placed to win the presidential election in December. As it is, her centre-left coalition, called the Concertación, risks losing power for the first time since democracy was restored in Chile in 1990.
As campaigning formally got under way on September 15th, the latest CEP poll gave Sebastián Piñera, the businessman candidate of the conservative opposition, 37% of the vote. Eduardo Frei, a Christian Democrat who was Chile’s president from 1994-2000 and is the official Concertación candidate, trailed on 28%, while Marco Enríquez-Ominami, a dissident Socialist congressman standing as an independent, had 17%. The past four presidential elections mirrored the result of a plebiscite in 1988 in which 56% of voters backed a return to democracy, whereas 44% wanted General Augusto Pinochet’s 16-year dictatorship to continue. Will this one break the most stable political pattern in Latin America?
Under the Concertación, Chile has been the region’s big success story, adding an increasingly robust democracy and welfare provision to the free-market economic policies bequeathed by Pinochet. In the 20 years to 2006, the poverty rate fell from 45% of the population to just 13.7%. Income distribution remains highly unequal but opportunities are widening. Eight out of ten youths now finish secondary school. Four out of ten go on to higher education and of these 70% are the first in their families to do so, in many cases thanks to government-backed grants or loans, points out Mr Velasco.
Thanks to its prudent macroeconomic policies, Chile was able to do more than many of its neighbours when recession struck last year. The Concertación has written into law a fiscal rule requiring the government to balance the budget over the economic cycle. It has paid for the large fiscal stimulus by drawing on savings piled up when the price of copper, the main export and a big source of government revenue, reached record levels in the early years of Ms Bachelet’s term.
Yet despite all these achievements, the sense of malaise in Chile is as palpable as the snow blanketing the Andes. Businessmen worry that the economy is no longer the most dynamic in South America (see chart). For years politicians have talked of the urgent need to improve the dismal quality of education and invest more in innovation and research and development if Chile is to become a developed country. They are still talking about it.
“We’ve gone from the Chilean miracle to the Chilean siesta,” declares Mr Piñera. He would keep the fiscal rule and the social-protection net, he says. But he accuses the Concertación of, in essence, caging the animal spirits of entrepreneurship. Pointing to falling productivity, he blames rigid labour legislation and the mismanagement of public investment (where $10 billion has been wasted in the past four years, he claims, citing the botched overhaul of the railway network and Santiago’s public transport). His economic adviser, Felipe Larraín, says that a Piñera government would raise the annual rate of growth to 6%, boosting productivity through tax breaks for investment, a more flexible labour market and civil-service reforms.
Mr Velasco counters that as Chile gets richer—its income per head was $10,100 in 2008—it is harder for the country to grow as fast. If Chile continues to progress at around 4% a year, that would be broadly in line with the performance of such successful economies as Finland and South Korea at the equivalent stage in their development. He points out that investment and productivity always fall during a recession. Public investment on research and development is rising. Chile continues to score highly in international league tables of competitiveness and the ease of doing business. And growth has been clipped partly by rising energy costs after Argentina ended gas exports to its neighbour.
The Concertación is more vulnerable to the charge that in its way of doing politics it has lost touch with ordinary Chileans. That is the main argument of Mr Enríquez-Ominami. Aged just 36, he describes himself as “an illegitimate child” of the ruling coalition. His father was a guerrilla leader killed by the Pinochet regime. His stepfather is a Socialist senator; his mother’s grandfather was a founder of the Christian Democrats. He grew up in France, returning to become a television director. His boyish good looks, charm and speed of phrase make him “one of the best communicators Chilean politics has ever had,” writes Patricio Navia, a political scientist, in a forthcoming book.
The young desert politics
Mr Enríquez-Ominami’s thinking is a shallow mixture of social liberalism and old-fashioned social democracy. But he, rather than his policies, is the message. His candidacy is a protest against the Concertación’s failure to hold a national primary election and against what he sees as the domination of ageing and unaccountable party bosses. He wants a political reform, partly to sweep away the electoral system of two-member constituencies bequeathed by Pinochet. This is widely reckoned to cement the power of the party bosses, block minority parties and prevent political renewal. It has contributed to a worrying alienation from politics among younger Chileans. Almost a third of adults have not bothered to register to vote (this is voluntary in Chile).
Nearly all political commentators in Chile reckon that Mr Enríquez-Ominami cannot win. But he has made Mr Frei, a decent and competent man, look reactionary and old (he is 67). His response has been to promote young advisers and espouse many of his opponents’ arguments, such as the need for political reform, changes to the labour code and modernisation of the state. He is the only one who could actually get these things done, he claims.
All three candidates agree that Chilean society has changed faster than the state and the political system. After 20 years, a change at the top would hardly be surprising. But the right has not won a presidential election in Chile since 1958. Mr Piñera and Mr Frei will almost certainly go through to a run-off election in January—a contest that either man could win.
Counter-terrorism in Indonesia
Toppled
A terrorist leader is killed in Indonesia
INDONESIA’S police chief, General Bambang Hendarso Danuri, can probably be forgiven his air of triumphalism in confirming on Friday September 18th that officers had killed Noordin Mohammed Top, the most wanted terrorist in Indonesia, and perhaps in South-East Asia. The police said that fingerprint tests confirmed that they had got their man. DNA tests are expected to be released on Saturday. Three other suspected terrorists died in the same police raid that did for Mr Top and three more people were arrested. Mr Top's role in recruiting, planning, financing and leading terrorist attacks, particularly against Western targets, was substantial.
At first he was happy to be part of Jemaah Islamiah (JI), the regional group affiliated to al-Qaeda, which rose to prominence with the deadly bombing of nightclubs in Bali in 2002, although he was not thought to have been directly involved in that attack. Then, along with his fellow Malaysian, Azahari Husin, he broke away to form a splinter group. The leaders of JI had developed reservations about hitting Western targets because they led to arrests and community revulsion, especially because Muslims were inevitably caught up and killed in any terrorist attack in Indonesia. For their part, Mr Top, Azahari and their followers adhered to Osama bin Laden’s orthodoxy of promoting terrorism.
Mr Top and Azahari led the 2003 attack on the Marriott hotel in Jakarta, the Indonesian capital, the 2004 bombing of the Australian embassy and the second Bali bombing, in 2005. By then the group was calling itself “al-Qaeda for the Malay Archipelago”. After Azahari was killed in a police raid in November 2005, Mr Top became the undisputed leader. His group fell silent until July this year, when suicide bombers hit the Marriott (again) and Ritz-Carlton hotels in Jakarta.
Mr Top developed an almost mythical status among his followers and pursuers as he repeatedly evaded capture. In recent years foreign investors, among others, have worried that more bombings were likely, even though hundreds of suspects were rounded up and many were tried and convicted. As long as Mr Top was at large, more attacks were expected.
The bad news for the subscribers to this argument is that, despite his death, more terrorist attacks are still a real possibility. Sidney Jones of the International Crisis Group, a think-tank, estimates any one of some half a dozen disciples could attempt to step into Mr Top’s shoes. None may have his charisma, but new leaders are sure to emerge from among the many active followers. And the numerous Islamic boarding schools in Indonesia continue to act as fertile grounds for new recruits.
Unfortunately for the terrorists, however, the Indonesian police have become increasingly competent. Years of training and co-operation with the Australian and American governments have turned Detachment 88, an anti-terror unit, into an effective force. The operation that ended in Mr Top’s death was an entirely a domestic one.
The international reaction to the deaths of Mr Top and two of his closest associates has been uniformly positive, praising Indonesia’s authorities. More importantly, the domestic response has been mostly enthusiastic. Mr Top’s adherence to Mr bin Laden had left him marginalised, dismissed as the violent extreme of the radical fringe in Indonesian society. Some commentators have voiced doubts that the terrorists had to be killed, but most accept the police version of events: that officers tried to capture them but this soon proved impossible.
The positive reaction is partly a result of the authorities’ even-handed approach to countering terrorism over the past seven years. Force has been used where necessary but suspects have been prosecuted rather than detained without charge. Well-publicised programmes designed to deradicalise suspects have also won the police much-needed support. The police chief has promised there will be no let up in eradicating terrorism. Right now, at least, that claim looks convincing.
The West and Russia
Less chilly
A slightly warmer relationship between the West and Russia
GEORGE BUSH'S planned missile-defence system in eastern Europe was always contentious: would it provoke Russia into an arms race, was the threat of Iranian missiles real and would the proposed shield even work? But President Barack Obama’s decision to scrap it, arguably his biggest break yet with the foreign policy of his predecessor, is proving controversial too.
Allies in eastern Europe and Republican critics at home have been quick to cry treason and appeasement. “Betratyal! The USA has sold us to the Russians and stabbed us in the back,” screamed one Polish tabloid, Fakt. Senator John McCain, who lost the presidential race to Mr Obama last year, called the move “seriously misguided”. John Bolton, America’s tough ambassador to the UN under Mr Bush, declared: “Russia and Iran are the big winners. I just think it’s a bad day for American national security.”
In the view of Mr Obama’s critics, America retreated in the face of Russian bullying, and its threats to aim nuclear missiles at eastern Europe. Allies who took the risk to back the project, and tried to convince their sceptical publics of its value, have been left exposed. The potential costs of Mr Obama’s move are apparent. But what might he get in return? For now, little that is concrete: the hope that the gesture would help improve relations with Russia and unlock a host of foreign-policy issues, from arms-control agreements to enhanced sanctions against Iran and co-operation over Afghanistan.
President Dmitry Medvedev said there was no “primitive” bargain with America, but he dropped a tantalising hint: “The fact that they are listening to us is an obvious signal that we should also attentively listen to our partners, our American partners.” Yet Mr Medvedev’s may not be the voice that matters. Vladimir Putin, the Russian prime minister and still the real power of the land, suggested that he wants more concessions. “I do anticipate that this correct and brave decision will be followed by others,” Mr Putin said, pointing in particular to the joint bid by Russia, Belarus and Kazakhstan to join the World Trade Organisation (WTO).
An early chance to gauge Russia’s response will come on October 1st, at talks in New York between Iran and the permanent members of the UN Security Council (including America, which is seeking to engage Iran) as well as Germany. Iran has steadfastly refused to halt its nuclear-enrichment programme, which it says is to make fuel for civil reactors but which the West and others suspect is a cover to develop nuclear weapons. Russia and China have been most resistant to tightening economic sanctions against Tehran. Sanctions will not be on the agenda next month, but Western diplomats will be looking for signs of a change in Russia’s “mood music”, particularly whether it shares the same sense of urgency about the need to stop Iran’s nuclear work quickly.
“What I would expect is that Russia will join us in putting maximum political and diplomatic pressure on Iran to stop Iran’s nuclear aspirations,” declared NATO’s Secretary-General, Anders Fogh Rasmussen on Friday. He said that the world may be at a “nuclear tipping point”. Iran’s unchecked enrichment work, along with North Korea’s nuclear test this year, means that many other countries could soon seek to acquire nuclear weapons.
Still, the Obama administration has been at pains to say there was no bargain with Russia, and the decision to abandon Mr Bush’s missile-defence scheme was taken on its own merits.
Firstly, an unspecified fresh intelligence assessment concludes that the earliest Iran could develop long-range missiles—which Mr Bush’s shield was designed to defeat—is 2018 rather than 2015 as previous reckoned. Until then, the real Iranian threat comes from hundreds of short- and medium-range missiles.
So instead of having a large radar in the Czech Republic and powerful interceptors in Poland, Mr Obama says he will reconfigure the missile shield to establish smaller radars closer to Iran (perhaps in Turkey) and to deploy smaller interceptor missiles on board Aegis warships.
By 2015, more capable interceptors would be deployed at unspecified sites on land and by 2018 these would be replaced by even more capable ones that would provide coverage for all of Europe. Moreover, improvements in sensor technology and computer networks mean that the system would not need a large radar in central Europe. Instead the sensors would be mobile and dispersed on land, at sea, on aircraft and in space. Their information would be linked up by computer systems that could guide the interceptors. This, said Mr Obama, would offer “stronger, smarter and swifter defences”.
Roubini and Taleb: Government's Socialization of Losses Is Destroying the Real Economy
In an essay last month, Nouriel Roubini wrote:
This is a crisis of solvency, not just liquidity, but true deleveraging has not begun yet because the losses of financial institutions have been socialised and put on government balance sheets. This limits the ability of banks to lend, households to spend and companies to invest...
The releveraging of the public sector through its build-up of large fiscal deficits risks crowding out a recovery in private sector spending.
Roubini has previously written:
We're essentially continuing a system where profits are privatized and...losses socialized.
Now Nassim Nicholas Taleb is saying the same thing:
After finishing The Black Swan, I realized there was a cancer. The cancer was a huge buildup of risk-taking based on the lack of understanding of reality. The second problem is the hidden risk with new financial products. And the third is the interdependence among financial institutions.(PhD economist Steve Keen uses the same analogy of a patient with a tumor and the unwitting mainstream doctor).
[Interviewer]: But aren't those the very problems we're supposed to be fixing?
NT: They're all still here. Today we still have the same amount of debt, but it belongs to governments. Normally debt would get destroyed and turn to air. Debt is a mistake between lender and borrower, and both should suffer. But the government is socializing all these losses by transforming them into liabilities for your children and grandchildren and great-grandchildren. What is the effect? The doctor has shown up and relieved the patient's symptoms – and transformed the tumour into a metastatic tumour. We still have the same disease. We still have too much debt, too many big banks, too much state sponsorship of risk-taking. And now we have six million more Americans who are unemployed – a lot more than that if you count hidden unemployment.
[Interviewer]: Are you saying the U.S. shouldn't have done all those bailouts? What was the alternative?
NT: Blood, sweat and tears. A lot of the growth of the past few years was fake growth from debt. So swallow the losses, be dignified and move on. Suck it up. I gather you're not too impressed with the folks in Washington who are handling this crisis.
Ben Bernanke saved nothing! He shouldn't be allowed in Washington. He's like a doctor who misses the metastatic tumour and says the patient is doing very well.
Socialism, Capitalism or Fascism?
Some, however, argue that the economy is more like fascism than socialism. For example, leading journalist Robert Scheer writes:
What is proposed is not the nationalization of private corporations but rather a corporate takeover of government. The marriage of highly concentrated corporate power with an authoritarian state that services the politico-economic elite at the expense of the people is more accurately referred to as "financial fascism" [than socialism]. After all, even Hitler never nationalized the Mercedes-Benz company but rather entered into a very profitable partnership with the current car company's corporate ancestor, which made out quite well until Hitler's bubble burst.Is Scheer right?
I don't know. But Italian historian Gaetano Salvemini argued in 1936 that fascism makes taxpayers responsible to private enterprise, because "the State pays for the blunders of private enterprise... Profit is private and individual. Loss is public and social" (page 416).
This perfectly mirrors Roubini's statement about the American government's bailout plan.
Remember that one of the best definitions of fascism - the one used by Mussolini - is the "merger of state and corporate power".
That could never happen in America, right?
Again, I don't know. But consider:
- Two powerful congressmen have said that banks run Congress
- The head of the Federal Reserve Bank of Kansas City, the former Vice President of the Dallas Federal Reserve, and two top IMF officials have all said that we have - or are in danger of having - oligarchy in the U.S.
- Economist Dean Baker says that the real purpose of bank rescue plans was "A massive redistribution of wealth to the bank shareholders and their top executives"
- The big banks killed any real chance for financial reform months ago
Was Joe Wilson Right?
There is no question that under the present law, Congress simply cannot pick and choose which “persons” to whom it will afford social benefits and to which “persons” it will not. How could the president not have known that?
Congressman Joe Wilson (R-SC) has been disciplined by his colleagues in the House of Representatives because he called President Obama a ”liar" during the president’s address to a joint session of Congress last week. The statement that the president made, which apparently provoked the Congressman’s outburst, stated that illegal aliens would not receive health care benefits under the president’s government option proposal, which essentially proposes a Medicare-type program for everyone in America under the age of 65.
The president was the editor-in-chief of the Harvard Law Review when he was in law school. -- This is the single most prestigious position to which any law student can aspire. The president was also a member of the faculty of the University of Chicago Law School, where he taught constitutional law. This is the most difficult to join and most demanding of all law school faculties in the country. His legal education and his academic credentials as a legal thinker are truly extraordinary. From this we can conclude that he knows, or ought to know, the basic law of the land.
The Constitution imposes on the government numerous burdens that we as individuals do not have. For example, I can tell my nephew to keep quiet at the dinner table because I don’t like what he said about grandma, but the First Amendment prevents the government from keeping him silent on a street corner when he criticizes it. Similarly, I can give a gift to some of my nephews and nieces because they are great kids, but I don’t need to give gifts of equal value, since I can spend my money on gifts however I wish. But the government has some burdens here that individuals do not. The Constitution requires that the government treat all persons similarly situated in a similar manner. This is the essence of “Equal Protection,” which the Constitution requires of the states and the federal government.
In the late 1970s, the State of Texas enacted legislation that denied a public school education to the children of illegal immigrants and denied state aid to municipalities that attempted to educate those children. Many illegal immigrants filed suit and all of the cases made their way to the Supreme Court. In a landmark ruling, that most lawyers know about, and that every professor of constitutional law knows about, called Plyler vs. Doe (1982), the Court ordered Texas to make the same education available to illegal immigrants as it does to citizens. In so doing, the Court held that: (a) the Constitution protects “persons” ; and (b) “persons” are citizens as well as strangers, people born here and people who end up here, people here lawfully and people here unlawfully; and (c) in the area of social services, whatever benefits the government makes available to the general public cannot be kept away from a class of persons based on their immigration status or that of their parents.
It is because of this ruling that Proposition 187 in California, which attempted to do via a referendum what Texas attempted to do via legislation, was invalidated. It is clear from the broad language in the Plyler case that providing an education is in the same class of social benefits as providing health care.
Now, back to Congressman Wilson and President Obama. Can anyone really suggest that the Harvard Law School-educated University of Chicago-employed professor of constitutional law did NOT know the law when he contended that the Congress can keep universal health care away from illegals? He must have known that, short of amending the Constitution to re-define “persons” and “Equal Protection”, whatever the Congress makes available by way of social services to the general population, it must make available to all persons.
There is no question that under the present law, Congress simply cannot pick and choose which “persons” to whom it will afford social benefits and to which “persons” it will not. How could the president not have known that?
Judge Andrew Napolitano is the senior judicial analyst for FOX News Channel.
WASHINGTON — President Obama sent a secret letter to Russia’s president last month suggesting that he would back off deploying a new missile defense system in Eastern Europe if Moscow would help stop Iran from developing long-range weapons, American officials said Monday.
The letter was hand-delivered to President Dmitri A. Medvedev, above, three weeks ago.
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The letter to President Dmitri A. Medvedev was hand-delivered in Moscow by top administration officials three weeks ago. It said the United States would not need to proceed with the interceptor system, which has been vehemently opposed by Russia since it was proposed by the Bush administration, if Iran halted any efforts to build nuclear warheads and ballistic missiles.
The officials who described the contents of the message requested anonymity because it has not been made public. While they said it did not offer a direct quid pro quo, the letter was intended to give Moscow an incentive to join the United States in a common front against Iran. Russia’s military, diplomatic and commercial ties to Tehran give it some influence there, but it has often resisted Washington’s hard line against Iran.
“It’s almost saying to them, put up or shut up,” said a senior administration official. “It’s not that the Russians get to say, ‘We’ll try and therefore you have to suspend.’ It says the threat has to go away.”
On Tuesday, a press secretary for Dmitri A. Medvedev told the Interfax news agency that the letter did not contain any “specific proposals or mutually binding initiatives.”
Natalya Timakova said the letter was a reply to one sent by Mr. Medvedev shortly after Mr. Obama was elected.
“Medvedev appreciated the promptness of the reply and the positive spirit of the message,” Ms. Timakova said. “Obama’s letter contains various proposals and assessments of the current situation. But the message did not contain any specific proposals or mutually binding initiatives.”
She said Mr. Medvedev perceives the development of Russian-American relations as “exceptionally positive,” and hopes details can be fleshed out at a meeting on Friday in Geneva between Foreign Minister Sergei V. Lavrov and Secretary of State Hillary Rodham Clinton.
Mr. Obama and Mr. Medvedev will meet for the first time on April 2 in London, officials said Monday.
Mr. Obama’s letter, sent in response to one he received from Mr. Medvedev shortly after Mr. Obama’s inauguration, is part of an effort to “press the reset button” on Russian-American relations, as Vice President Joseph R. Biden Jr. put it last month, officials in Washington said. Among other things, the letter discussed talks to extend a strategic arms treaty expiring this year and cooperation in opening supply routes to Afghanistan.
The plan to build a high-tech radar facility in the Czech Republic and deploy 10 interceptor missiles in Poland — a part of the world that Russia once considered its sphere of influence — was a top priority for President George W. Bush to deter Iran in case it developed a nuclear warhead to fit atop its long-range missiles. Mr. Bush never accepted a Moscow proposal to install part of the missile defense system on its territory and jointly operate it so it could not be used against Russia.
Now the Obama administration appears to be reconsidering that idea, although it is not clear if it would want to put part of the system on Russian soil where it could be flipped on or off by Russians. Mr. Obama has been lukewarm on missile defense, saying he supports it only if it can be proved technically effective and affordable.
Mr. Bush also emphasized the linkage between the Iranian threat and missile defense, but Mr. Obama’s overture reformulates it in a way intended to appeal to the Russians, who long ago soured on the Bush administration. Officials have been hinting at the possibility of an agreement in recent weeks, and Mr. Obama’s proposal was reported on Monday by a Moscow newspaper, Kommersant.
“If through strong diplomacy with Russia and our other partners we can reduce or eliminate that threat, it obviously shapes the way at which we look at missile defense,” Under Secretary of State William J. Burns said about the Iranian threat in an interview with the Russian news agency Interfax while in Moscow last month delivering Mr. Obama’s letter.
Attending a NATO meeting in Krakow, Poland, on Feb. 20, Defense Secretary Robert M. Gates said, “I told the Russians a year ago that if there were no Iranian missile program, there would be no need for the missile sites.” Mr. Obama’s inauguration, he added, offered the chance for a fresh start. “My hope is that now, with the new administration, the prospects for that kind of cooperation might have improved,” he said.
The idea has distressed Poland and the Czech Republic, where leaders invested political capital in signing missile defense cooperation treaties with the United States despite domestic opposition. If the United States were to slow or halt deployment of the systems, Warsaw and Prague might insist on other incentives.
For example, the deal with Poland included a side agreement that an American Patriot air defense battery would be moved from Germany to Poland, where it would be operated by a crew of about 100 American service members. The administration might have to proceed with that to reassure Warsaw.
Missile defense has flavored Mr. Obama’s relationship with Russia from the day after his election, when Mr. Medvedev threatened to point missiles at Europe if the system proceeded. Mr. Medvedev later backed off that threat and it seems that Moscow is taking seriously the idea floated in Mr. Obama’s letter. Kommersant, the Moscow newspaper, on Monday called it a “sensational proposal.”
Mr. Medvedev said Sunday that he believed the Obama administration would be open to cooperation on missile defense.
“We have already received such signals from our American colleagues,” he said in an interview posted on the Kremlin Web site. “I expect that these signals will turn into concrete proposals. I hope to discuss this issue of great importance for Europe during my first meeting with President Barack Obama.”
David E. Sanger and Thom Shanker contributed reporting from Washington, and Michael Schwirtz and Ellen Barry from Moscow.
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