Should We Lose Our Top Spot If We Default?

The clock is ticking away as Washington drags closer and closer towards default without an actual deal.  Right now, the Boehner plan might pass the House.  Even if it does, it goes nowhere in the senate.  At this point, the House and Senate could work out a deal, but no one really knows.

My question would be: If we default, should we lose our top spot in the international community?  I only ask because not even the fragile European economies (Spain, Portugal, Ireland, Italy, or Greece unless you count selective default) have defaulted yet.  Furthermore, the U.S. would be the first country large enough to make an impact.  The entire global economy is determined by confidence in the American economy and the U.S. dollar.  If that trust is lost, nothing good can happen.

If we default, the international community must have a conversation about who should be the responsible power in charge.  Since, as I argue, we have been in a downward slide for a while now, everyone knew this day would come.  Most just assumed we would hold on for another 20 years.  This impacts our power in negotiations, leadership, and how we conduct business in international organizations.  If we do default on our debt, that means we neglect our responsibility.  We lose trust in the international arena.  Building credibility will be tough again.

Now, this is not to say an automatic leader would emerge.  Every country would be in bad shape if we defaulted, including China.  This is just a conversation that I'm not hearing, but we should be having it just in case.

To Abstain or Not Abstain? That is the Question

Outside the nowhereland debt talks in Washington, the U.S. formally announced it would not vote for Palestine's "Plan B" approach to statehood.  This involves Fatah going to the U.N. Security Council and declaring unilateral statehood.  If the Security Council approves, it does not automatically give the Palestinians a state, but it does provide them with leverage in the 40 plus year negotiations with Israel.

It is not surprising the U.S. wasn't going to vote for unilateral Palestinian statehood.  Rather, the question is whether the U.S. will veto that unilateral declaration or just abstain, in which case it can still pass.  With the Obama administration's continuing frustration at Benjamin Netanyahu over settlement freezes stopping the negotiations, abstaining is not a radical position for the U.S.  However, with an election year around the corner, the last thing President Obama wants to be hammered by the GOP for siding against Israel.

On the other hand, the veto looks out of fashion.  Both Russia and China have been abstaining on more votes than vetoing.  It gives you leverage of not getting yelled at for supporting a position, while not officially voting for it at the same time.  The Libya vote was an example of this. Great power politics might not be defined by asserting ultimate authority, but over being elastic to making friends.  What's a better way to make friends and enemies by supporting and not supporting at the same time?

Obama vs. Boehner: The Final Smackdown

Tonight, both President Barack Obama and Speaker John Boehner made separate speeches addressing the problem of the debt ceiling.  With 8 days left, Washington and the world are on the edge of their seats for this nail biter to come to a close.  The worst part: no one knows what the ending is going to be.  Right now, I have a better chance at choosing which career I pursue than whether the debt ceiling will be increased.

Both speeches wreaked of a partisan stench that the president so clearly lambasted that no joke is necessary due to its ironic nature so gallantly portrayed in the speech.  In his speech, the president tried to come off as the calm, collective peace keeper who was the most reasonable man in the room.  He also gave a speech to his base that most progressives wished he would have given a month ago.  Once again, he went after corporate jet owners, hedge fund managers, and rejected the GOP's so called "Cut, Cap, and Balance" bill (which failed in the senate) as just a plan for cuts.  Instead, the president recommended a balanced approach of tax increases and spending cuts.  He also endorsed Senate Majority Leader Harry Reid's Plan to increase the debt ceiling, without serious cuts, and extend it past the 2012 election.

Boehner's speech portrayed him as the realistic businessman with a bizarre combination of Jefferson Smith and a veteran politician rolled into one contradictory human being.  He called for "Cut, Cap, and Balanced" to be the approach congress should take.  The speaker also pledged no tax increases, again. His plan would raise the debt ceiling until the middle of 2012 and then add another vote on the debt ceiling then.  His plan would also promise a "super committee" made up of representatives from both sides of the aisle to come together and propose a bipartisan plan for spending cuts. Finally, the speaker would push for a balanced budget amendment to voted on in both chambers in the winter or spring.

Beyond their obvious partisan flaws, the speeches were not great political calculations.  First, Obama will not get any tax increases, maybe some loopholes or loss of subsidies, but that is about all he can hope for.  Second, there will not be a balanced budget amendment to the U.S. Constitution passing anytime soon.  Ratifying an amendment is tedious, arduous, and hasn't been done in about 20 years.  I'm surprised and disappointed the president did not attack this more.  He is a real policy wonk at heart and listing reasons why a balanced budget amendment is not feasible for Washington is not hard to do.  Finally, this new "super committee" is hardly going to help.  We had the Simpson-Bowles plan, the Gang of Six plan, and details for deals made by the president and Boehner.  All of them come out the same, they are a no go.  The president is right in this respect.  Real deficit reduction for political compromise requires both tax increases and spending cuts.  All bipartisan plans offered these ideas and no one took them.  Politicians like cutting the deficit as long as it cuts only what they want or gets revenue their way.  In the end, there are only so many ways to cut the deficit and one more commission report yielding the same results won't get us anywhere.

Both sides won points with their base and wanted the people to flood the congressional phone lines and email inboxes with disgruntled letters.  Something tells me both sides see real negotiation as futile and have now resorted to P.R. wars.  For the sake of the full faith and credit of the United States, I hope maybe tomorrow the kids will grow up and negotiate.  Otherwise, prayer is about all we have left.

Photo Credit: Politico

WHO Declares 5 Regions of Somalia Close to Famine

The World Health Organization (WHO) is warning that Somalia, a country that is riddled with civil strife, a strong Al-Qaeda presence, and has been without a strong central government since 1991, has many regions sliding closer to famine.  The Voice of America notes:

She says up to 50 percent of children in southern regions of Somalia are malnourished.  And, adults too are malnourished because of lack of food.  She says bad nutrition leads to bad health.  She says there is a remarkable increase in measles and waterborne diseases also are on the rise.  
WHO has recorded more than 50,000 cases of acute watery diarrhea and cholera since January.   Everard says there is no breakdown as to the number of cholera cases.  But, adds the disease is under control.  She says there is no cholera epidemic because WHO has set up a good monitoring system. Two days ago, the United Nations declared two regions in southern Somalia as suffering from famine.  Everard says a third region also is affected and famine appears to be spreading to other regions as well.  “We have declared only three regions in south Somalia.  But, the five others are on the brink of also being seen as a famine.   So, these areas indeed appear to be coming to a full-blown famine if we are not responding from now on to this enormous crisis,” she said.  

Graphic of the Day: South China Sea Debate

ASEAN continues to debate the South China Sea problem between China, the Philippines, and Vietnam.  The BBC explains this fight better than I can.  Basically, it has all the elements of international intrigue: oil reserves, a large superpower asserting itself, and small countries standing up for the little guy.

Russia Turns East

The Russian sleeping bear should be moving towards the awaking Asian Panda.  Russia has a complicated history with Asia, especially Japan after a 1905 civil war over Manchuria and some bickering with China over Siberia.  The Soviet-Chinese power struggle for Asian dominance during the Cold War era didn't help matters either.  Sergei Karaganov still says Russia should move towards Asia despite its troubled history.  Here is his proposal:

That goal requires that Russia rely on its real competitive advantages. Consider basic foodstuffs.  Rising food prices plague most of Asia, while Russia’s potential for expanding grain output is enormous. According to some estimates, Russia could increase its arable area by 10 million hectares, and its crop yields by 250%, thereby boosting grain exports dramatically.But an even larger vision is needed. A modern Asian strategy for Russia – call it “Project Siberia” – should combine Russian political sovereignty with foreign capital and technologies. Investment should come not only from China, but also from the United States, Japan, South Korea, the ASEAN countries, and the EU, all of which are keen to prevent China’s exclusive dominance east of the Urals. The workforce can be found to undertake the development projects in Russia’s east, including clusters of high-yielding agricultural production for grain, fodder, meat, poultry, pork, and possibly beer. There are still a few million surplus workers in Central Asia. Seasonal workers can be brought in from India and Bangladesh. And, yes, some will have to be brought in from China.

N. and S. Korea Resume Nuclear Talks?

At the Association of South East Asian Nations Security Regional Forum, both North and South Korea held sideline meetings addressing disarmament talks in the Korean peninsula.  The prospects between the two diplomats was pretty positive according to reports.  Usually, these talks get delayed because North Korea acts out in some provocative manner.  Secretary of State Hillary Clinton, who is at the forum herself, welcomes the idea, but also says the U.S. want so actual meetings before promises are made.

Besides international peace, both parties have a domestic reason for wanting to achieve results in these talks.  The Associated Press reports:

Pyongyang wants to achieve a diplomatic breakthrough and outside aid ahead of the 2012 centennial of the birth of North Korea founder Kim Il Sung, which it is promoting as a milestone in its history. South Korea's conservative government also doesn't want be blamed for leaving the disarmament talks suspended and wants to report progress before it leaves office in early 2013, Kim said.

The crucial point here: international negotiations work better if there is a domestic benefit by both parties involved.

Is the EU's Plan Just About Confidence?

My earlier post describing the Eurozone's plan to fix solve Greece's debt problem and save the Euro shows a comprehensive plan to solve the problem where it started, at the regional level.  The Atlantic's Meghan Mcardle criticizes the plan as nothing more than just way to temporarily increase confidence in the European markets.  She writes:

The spreads on Spanish, Italian, Irish, and Portuguese bonds are not widening because investors think that Greece needs a debt swap, or because the solons of Brussels haven't made enough announcements about the virtues of budget-cutting.  They're widening because there are questions about whether these countries--or Europe--have the economic means or the political will to ensure that investors get paid back. This plan doesn't answer those questions; aside from what seem to be extremely minor changes to the stabilization fund's intervention rules, it just reiterates that austerity is going to be awesome,and that the rest of the PIIGS spit shake and pinky swear, cross their heart and hope to die, that they won't default on their debt.  It does not put an adequate backstop behind Spain and Italy, whose bond yields have been steadily rising; it does not even try.  Yet this has always been the real threat to the euro zone, not a Greek default.

She is right.  There is not a substantive plan to deal with the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) or at least all of them.  Each economy has its own mold and a different solution will be needed for all for them.  However, isn't most of economics just about throwing your penny in the fountain and praying to God the monetary or fiscal solution works?  Economics is far from an exact science, otherwise recessions wouldn't happen.  Nothing can be solved by a one-size fits all solution, which is what the EU is trying to avoid.  

China Sides With The AU on Libya

It's hardly surprising that China decided to side with the African Union on Libya today.  President Hu Jintao of China meet with President Jacob Zuma of South Africa to discuss China's support.  At AU believes Libya is an African conflict and should be dealt with an African Solution.  Further, the AU a ceasefire in Libya and a democratic process to take hold.  The AU also rejects the International Criminal Court's (ICC) ruling asking Gadhafi to be arrested for crimes against humanity because the AU sees the ICC as a western agent that is biased towards African countries.

China did not veto the U.N. Security Council's "No Fly Zone" resolution, but it did abstain, while at the same time campaigning against it.  The philosophy China has developed in terms of foreign policy is "sovereignty comes first."  It should be a regional decision and a country's decision to solve a crisis, not the international community's responsibility.  On a different, more self interested level, China trades with much of the AU and wants to stay in their good graces.

However, all this does not mean China is siding with the Gadhafi regime.  On the contrary, it is not picking sides at all. The Transitional National Council (TNC) or Gadhafi's family would both satisfy China.  What China is interested in is China.  If it can play safe with all sides the conflict, then post conflict rehabilitation might lead to economic rewards for the rising power.

Another Debt Across the Ocean

Right now the Eurozone leaders are meeting in Brussels to decide the fate of Greece's debt.  The first rescue package to the tune of 440 billion Euros negotiated by the European Union (EU) and the International Monetary Fund (IMF) in the spring of 2010 was not large enough.  The Eurozone has 17 members and 2 countries and 1 organization will make the biggest decisions.  France, led by the charismatic Nicholas Sarkozy, and Germany, led by the audacious Angela Merkel, are the power players who will decide the final package.  The European Central Bank (ECB), controlled by Jean-Claude Trichet has the power to decide whether to loan money to the troubled Greek economy.

A lot of comparisons have been made between America and Greece.  On the surface, this might be a fair comparison, but there are many differences.  First, Greece has always had debt problems.  Second, the American banks, Lehman Brothers and Goldman Sachs among them, provided investments to Greece and the government cooked the books to make it look like profits were increasing when that wasn't the case.  Finally, Greece had plenty of structural problems with its economy that America simply doesn't have.  The retirement age is 53 for starters and Greece has a much larger public sector.  So, in their case, austerity was the way to go.

The EU and the IMF feel obligated to bailout Greece because if Greece falls, that weakens the Euro, and destroys the Euro as a currency.  The problem is how to raise the money Greece needs.  France wants to increase a bank tax on European banks, that was quickly struck down.  Germany, and others, want to lower the interest payments on Greece from  5.5% to 3.5% and extend the pay period to 15 years.  This would yield a lower risk chance that Greece defaults.  The European Financial Stability Facility (EFSF) wants to intervene and lower the costs on bond borrowing to shore up weak banks in the Eurozone.  Finally, another process called "selective default" is being batted around by the "Gang of 17."  The Washington Post explains it best:

As opposed to a general default, when a borrower simply misses debt payments, a selective default involves specific bonds. It can be a short-lived condition, and ratings agencies have said that once they impose such a designation, they would factor the country’s improved condition into their analysis and possibly issue better ratings for future bond sales.

Why do this?  It allows for Greece to eliminate worse bonds and get a higher credit rating by agencies to show investors the country is more sustainable.  Selective default gets risky because the ECB could decide not to loan out to the Greece if the situation looks fragile.

Also at work here is a more powerful form of regionalism between nations and institutional cooperation.  Being too interlinked is both the problem and the solution to this crisis.  If Greece defaults, the Euro is down for the count.  Ironically, its regionalism that caused this problem and it is the only mechanism that can clean it up.  The EU, the IMF, the ECB, and the EFSF can provide a framework that works to solve an imminent regional contagion from getting worse.

Photo Credit: AP

Every Cut Has a Consequence

As the debate drags on in Washington over raising the debt ceiling, let's not forgot that other organizations are feeling cash strapped too.  This time it can cost lives.  Elizabeth Dickinson writes this morning about how the U.N. must rid itself of offices in Columbia, a place of protracted civil war and where refugees continue to flourish.  She notes:

Incredibly, the cash-strapped international community has mobilized to accommodate all these new migrations. But in a year when European countries, the United States, and other traditional donors are looking for ways to balance their budgets, how exactly is the United Nations paying for it? In part by cutting resources in protracted crisis zones. One of those places is here in Colombia, where more than 3.6 million of the country’s 45 million people are still displaced from the country’s decades-long conflict. Many of these people haven’t gone home in years or even decades. Still others have been displaced more than once. And it’s not over. In the first three months of 2011, more than 8,000 people were displaced — more than all of last year.
The needs are as great as ever, but the means are not. The U.N. High Commission for Refugees office here is facing a $2 million shortfall and it’s closing offices — one in the country’s North Atlantic coast and another in the central department of Santander. These cuts are happening at a critical moment in Colombia’s crisis. Over the last decade, the government here has worked tirelessly to restore security to the country’s main urban areas and roads to great effect. But such visible successes have had their drawbacks — namely, pushing the fighting into rural areas that are far less accessible to government and international officials. A disproportionate number of indigenous people, for example, are now being displaced as armed groups confiscate their land.

This comes after an alarming report explains how the number of refugees and displaced people is increasing.  A broader lesson here is that all cuts have consequences.  In the end, someone will not receive a service or provide for their families.  Whether its on the domestic or international level, cuts hurt, plain and simple.

The World Bank Saves Lives in Sierra Leone

In the tiny African country of Sierra Leone where civil war has been the norm for years, a new hope has been found by the World Bank to saves infants lives by reducing the number of at home deliveries.  The reason these home deliveries occur is because a lack of infrastructure exists and, the larger reason, a fee must be paid for woman to have their baby delivered.  The World Bank recently worked in tandem with Sierra Leone to subsidize health programs, killing the fee for many. The New York Times reports the new program is making a significant difference.  Once can't argue with results like this:

The results in Sierra Leone have been “nothing short of spectacular,” said Robert Yates, a senior health economist in Britain’s Department for International Development, which is paying for almost 40 percent of the $35 million program, with most of the rest coming from donors like the World Bank. Since waiving the fees, Sierra Leone has seen a 214 percent increase in the number of children under 5 getting care at health facilities, a 61 percent decrease in mortality rates in difficult pregnancy cases at health clinics, and an 85 percent drop in the malaria fatality rate for children treated in hospitals, according to figures Mr. Yates supplied.“We have signs that there are positive results,” said Vijay Pillai, the World Bank country manager in Sierra Leone.

In recent years, Zambia, Burundi, Niger, Liberia, Kenya, Senegal, Lesotho, Sudan and Ghana have gone to some form of free care, particularly for pregnant women and young children, Mr. Yates noted two years ago in the health journal The Lancet. Rwanda has been offering nominal rates for health insurance for over a decade, and after fees were dropped in Burundi in 2006, average monthly births in health facilities rose by 61 percent and Caesarean sections went up by 80 percent, he found.

Change the IMF, Don't Dump It!

Amar Bhide and Edmund Phelps, a Nobel Prize winning economist in 2006, wrote a piece for Newsweek that says the International Monetary Fund (IMF) has outlived its original purpose.  The IMF was meant to provide loans, with conditions, that allowed for countries to get loans.  For example, a country may receive a loan from the IMF, if it decides to lower tax rates and balance its budget.  Most of this aid went to developing countries.

The authors contend that with new models established by the BRICs (Brazil, Russia, India, and China) where massive government subsidies and large government poverty programs have proven the old IMF model, or the Washington Consensus is faltering.  Now, countries like Greece, Ireland, and Portugal are the ones who need it. So, their conclusion is that because new models of development exist and many of these countries cannot possibly pay back their loans right away, the IMF should be dismantled.

They often forget about how Brazil, a brick country used the IMF to fix its problems and paid back its loans. Their problem area is right.  However, their solution is wrong.  The IMF should be reformed.  More voices from the developing world should exist in the top ranks and a new consensus, other than the western perspective of development, should be established.  The IMF is also late to recognize problems, like the late 90s Asian financial crisis.

A broader point is that international organizations missions change as time changes.  NATO is a great example of this.  After the USSR hit its demise, there was no need to have an organization built for the purpose of opposing the Soviet Union.  So, now it still is a collective security organization, but with a broader focus.  NATO is still finding its way towards a mission, but that shows how international organizations mold and change shape.  Reforms are best not complete destruction.

Welcome to the International Community South Sudan!

On Saturday, South Sudan officially became the newest country.   After years of protracted civil war with the North, and a devastating genocide in Darfur, the moment is finally here.  Sadly, these statistics are not uplifting about its success:

"Only 20 percent of the population ever during their life will use a health facility," she begins. "Half of kids will never enter a school. Ninety percent of women can't read or write. More than 90 percent (of the population) is living on less that a dollar per day."

It continues: 

On the one hand, USAID, the billion-dollar-per-year UN peacekeeping mission, and UN agencies, among others, have helped stand up the southern government, an enormous feat in a region where the majority of the population has little more than primary education.
On the other, efforts aimed at "capacity building" in the government's whopping 32 upstart ministries receive mixed reviews and smack slightly of condescension: government officials may not always appreciate being told how to perform their duties by a slick Western consultant.

With a terrible record so far with massive amounts of aid, the problem still looks bleak.

Stop Psychoanalyzing the GOP!

In my last post, I talked about different scenarios that could play out if the debt ceiling is not raised, outlining the different winners and losers.  Others have taken the route of wondering why the Republicans are holding so tight to the no tax increases pledge?  Both liberals and moderate conservatives wonder about this point.  At the New York Times alone, Paul Krugman writes a column every week denouncing Republican policies as fanatical, David Brooks (a moderate Republican) thought they were too tied to an ideology, and Ross Douthat (another Republican) took a whack at it this morning.  This is just at one paper by the way, don't even make me go to other sources or quote television pundits.

Many see this "no increase in taxes" idea as a Freudian concept that must be GOP revenge for past events.  One of the many ideas floating around today was that they were still mad Reagan and Old H.W. had to cave into tax hikes.  Despite those being true, I don't think that's their motivation.  Many liberals just cannot accept that some people support low taxes and low regulations fosters economic growth.  It does not go much deeper than that.  The story of the debt talks is just two conflicting economic philosophies butting heads against one another.

With the unemployment rate at 9.2%, many in the GOP feel the country is on the wrong track and a new idea should be tried.  And, hey, they've got an idea that just might do the trick.  As superficial as it sounds, the debate doesn't go much deeper than that.  There's no Oedipal or Phallic complex, just one party's collective unconscious telling them what to do.

Scenarios on the Debt Ceiling Debate

For the next 10 days, all eyes will be on one room in the White House where top congressional leaders and the president will meet to discuss the debt ceiling debate.  With my active mind and all the commentary I've read, the scenarios for this new deal look interesting.  On Saturday, Speaker Boehner said they would go for a $2 Trillion deal instead of a more comprehensive $4 Trillion deal proposed earlier.  The $2 Trillion figure was the one talked about during the Biden negotiations about 2 weeks ago until they collapsed when House Majority Leader Eric Cantor exited stage left because he thought tax increases were on the table.  $2 Trillion is the goal, $4 Trillion is the wish, and both ideologies are at stake. One side will come out the winner and the other the loser.  If we default, no one wins.  My predictions are this, keep in mind these are political:

Republicans Win: This happens if taxes are not increased and no revenue is raised.  Cuts in entitlements like social security, Medicare, and Medicade will happen from this deal.  It easily breezes through the house and has a tough debate in the senate.  Make no mistake, Republicans will hold out until the vary end, its the only way I can see this scenario happening.

Democrats Win: If any revenue increases are agreed to or taxes are increased.  Some big cuts are made in entitlements.  Entitlement cuts will happen no matter what.  Social Security is off the table, Medicare cuts will be rather smaller than Republicans want, and revenues will be raised by cutting subsidies.  I have doubts that any new taxes will happen or taxes will be raised in any way here.  The point is cuts will happen, but if the impact is minimized and revenue is raised through closing tax loopholes, Democrats can probably claim some victory here.

Default: Since this is unprecedented, it becomes hard to predict.  The party that walks out on the negotiations gets definitely gets blamed.  Republicans get blamed if they hold out on raising any revenue, even closing tax loopholes.  Democrats lose if they refuse to compromise on entitlements.  The President gets blamed if he appears extremely partisan and stops playing the pragmatic negotiator.  I think both parties will receive some blame.  It just depends on who holds out longer and appears more stubborn.  PR is super important here.  Dueling statements will come out by both parties over the next 10 days.  The party with the worst or harshest message will definitely miss a victory.

Temporary Stopgap Measure: President Obama put this idea down this morning.  Nevertheless, don't count this out.  A Temporary Stopgap would extend the debt ceiling for about 30-180 days until the negotiations are complete.  If Obama and Boehner think they are on the goal-line, but do not have the bill written, then this option could be deployed.  Another options is for President Obama to extend the debt ceiling by executive order, he also ruled this out.  But, in Washington, no never means hell no.

Leadership Change: This affects the GOP more than the Democrats.  If Boehner makes a conscious decision to ignore the Tea Party's wishes, they might go searching for a new majority leader.  Eric Cantor is poising himself to fill that leadership vacuum if need be.  Boehner has a strange relationship with the Tea Party.  He must appease them, but he is not a card carrying member of the movement.  I don't foresee Democrats forcing Obama out of office or putting up a primary challenge.  No one has laid the groundwork for that.  Progressives will balk, but not take strong action.  Leadership change will only occur if the caucus is so angry they want someone who will play ball.

Of course, your party affiliation will form the decision about who wins this win, lose, or draw scenario.  No one will come out unscathed, that's for sure.

Photo Credit: ABC News

Weekend Review: July 9

Weekend Review: July 9

The Left Should Get Angry

President Obama and Speaker Boehner are stuck in a tizzy over raising the debt ceiling.  The GOP wants massive spending cuts before the debt ceiling is raised, without raising taxes or increasing revenues.  The Democrats want to raise taxes, although it is off the table now, and are resistant to cuts in entitlements, like social security, Medicare, Medicade, and food stamps.  The left's frustration comes from Obama unwillingness to stand up for anything, well, left like.  While the GOP holds firm on not increasing revenues, Obama decides to cut spending and put social security on the table.  In other debates, like extending the Bush tax cuts, Obama also caved to the right's pressure.

What is odd to me is how the Republicans, who only control one-third of the government, can drive the conversation.  More surprising, the Tea Party wing of the GOP can drive where the negotiations go.  The Democrats control the senate and the White House, yet they seem to get nowhere in driving the conversation.  Can you imagine if the Progressive Caucus, the most liberal wing of the Democratic Party, had the same amount of power as the Tea Party does?

From my view, the Progressives are not angry enough at most of Obama's economic policies.  The stimulus was not big enough, healthcare was basically a Republican plan that they abandoned for reason, and Obama caved on extending the Bush tax cuts.  As economist Paul Krugman pronounced this morning:

But let’s be frank. It’s getting harder and harder to trust Mr. Obama’s motives in the budget fight, given the way his economic rhetoric has veered to the right. In fact, if all you did was listen to his speeches, you might conclude that he basically shares the G.O.P.’s diagnosis of what ails our economy and what should be done to fix it. And maybe that’s not a false impression; maybe it’s the simple truth. One striking example of this rightward shift came in last weekend’s presidential address, in which Mr. Obama had this to say about the economics of the budget: “Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.”

Not to say deficit reduction isn't important, but if Obama really was the liberal messiah everyone thought he was and the FDR/JFK/LBJ anti-Christ the GOP predicted, why has he moved towards the center right? Not fighting hard for a public option in the healthcare bill is a pretty bad move for a "Progressive candidate."  Its not like deficit cutting solutions don't exist for Progressives.  Eugene Robinson outlines a simple plan to fix that problem:

Start by allowing the Bush-era tax cuts for households making more than $250,000 a year to expire; this would cut deficits by about $700 billion over a decade. Add in the revenue that would be gained by closing the tax loopholes that Obama keeps talking about — eliminating some deductions for high earners, requiring hedge fund executives to pay taxes at the same rate as their chauffeurs, eliminating the tax break for corporate jets and so on — and soon you’re in the neighborhood of a trillion dollars.The nominal corporate tax rate of 35 percent is a joke, since big corporations don’t actually pay that much; those loopholes, too, could be eliminated. Then we could look at measures that would have broader impact — say, hiking or eliminating the income cap for Social Security payroll contributions.The point is that it doesn’t take much imagination to get within shouting distance of $2 trillion in deficit reduction over 10 years — looking at the revenue side alone. That’s half of the $4 trillion that both Republicans and Obama have set as a target.

Sadly, none of these plans are remotely close to being on the table in the talks.  Democrats appear afraid of engaging in a fight.  Obama wants to transcend party politics to be the pragmatic negotiator.  For his base, this is not enough.  Progressives need to pressure the president and get angry.  Do what the Tea Party is doing to the GOP. Threaten to throw the bums out, it works sometimes. If he knows that he can't take that vote for granted, he might think twice about throwing his base under the bus.

Photo Credit: Google Images

China Gets Served WTO Style

On Tuesday, the World Trade Organization ruled in a suit brought against China by the U.S. and Mexico.  The plaintiffs allege China was have too tight of environmental constraints on certain raw materials. China says its within the legal bounds of international trade. The WTO ruled in favor of the U.S. and Mexico.

The WTO serves as a model for international justice in the economic realm.  China may now appeal the ruling to a higher committee on procedural grounds, which it will most likely do.  If China does not comply, then sanctions are allowed to be level by the U.S. against China.  The purpose of the WTO is to provide a fair trade balance and some order to the system.  Opponents of the WTO, and most international organizations in general, is that they are inefficient and encroach on sovereignty of nation-states.  While some sovereignty is lost, what is gained is a stronger sense of community in the international community and common standards.

If every nation pursued their own unilateral national interest willy-nilly without a referee in the room, then developed countries would trample on developing nations and countries would not comply with the rules of the game.

Why does the WTO work better than the ICC in terms of justice or organizations lumbering like the U.N.?  For thing, the WTO is a member driven organization.  All members agree on a specific charter as a contract.  Also, it is not run by just outside hired bureaucrats, like the U.N., but member states who join.  This makes it more like the G-20 or G-8 than the U.N.  Another reason is that the worst that can happen to a country is economic sanctions, which is much more toned down than getting arrested and prosecuted for war crimes.  The WTO also has a legislative component with an arbitration component, unlike the ICC that is separated from the U.N. as its partner.  Appeal also exists in the WTO and not in the ICC.

Now that is not to say that rulings are imperfect or the WTO couldn't use reform.  All that is true and cases can take a long time to go through the process.  What I see from the WTO is proof that international organizations are not useless and can function if the world has confidence in them.  The WTO also only came into existence in 1994-1995.  Every IO should strive for the same quality as the WTO.

Photo Credit: Google Images

Do the Perp Walk!

Normally, I don't comment on trials.  But since the media has this incessant infatuation with the Casey Anthony trial and once again about the 5th "Trial of Century" has just happened some reflection might be in order.  I do not have the necessary legal background to comment on the proceedings.  The big problem I have with the trial is how it was presented.  Basically, the media thought she was guilty from day one because the formula was the same.   If you have money or power, have a messed up family, your remorse level does not seem high enough, or you are just plain weird, that person instantly fits the formula of a guilty verdict by the media.

Think of each big trial covered by the media over the last twenty years.  Michael Jackson was wealthy, creepy, and had a messed up childhood.  Instantly he was guilty.  Kobe Bryant was wealthy, did not look sorry enough, and was in Denver for some weird reason.  Practically guilty.  Robert Blake was  wealthy, had a messed up relationship with his wife, and a bad excuse. O.J. Simpson was wealthy, acted funny and vitriolic, and the had bad encounters with the police, so he's guilty.  Of course, all these are celebrities, but the concept is the same for other trials too.  In all these cases, the personally was judged before the evidence was even examined.  If being weird was crime, the jails would be flooded with people.

In another ongoing example, former head of the IMF Dominique Strauss-Kahn was completely guilty by the media standards because he is wealthy, has power, and acts funny.  Not to mention, the picture of him in handcuffs coming out of a New York hotel gave people the impression he was guilty.  Now, the case is slowly falling apart.

My point is not that any of these people are innocent.  All these incidents could have taken place.  On the contrary, my point is that the media builds these cases up so much and draws the same sickening, personality portrait, narrated with Nancy Grace's lugubrious and annoying voice that everyone expects the person to guilty no matter what.  Case in point, every time these crimes happen, the media instantly flocks to when the person is arrested and brought into custody, also known as the "perp walk."  That conjures up an image of devil horns to the viewers at home and before you know it, the people are against them.

Our legal system might be innocent until proven guilty, but in the court of public opinion you will always be guilty until proven innocent.  That is, if the media wants you to be.

Photo Credit: ABC News and AP

David Brooks Is Just Venting

Twitter was a flutter with constant information about NYT columnist David Brooks' piece this morning.  Brooks, who is a moderate Republican, took his own party to town by claiming that risking a possible default on U.S. debt for an ideology of "No New Taxes or Tax Increases" is more fanaticism and will not play well with voters.  He writes:

The struggles of the next few weeks are about what sort of party the G.O.P. is — a normal conservative party or an odd protest movement that has separated itself from normal governance, the normal rules of evidence and the ancient habits of our nation.
If the debt ceiling talks fail, independents voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern. And they will be right.

Is Brooks correct in his assumption?  Yes and no.  I think he is right that taking a tax increase off the table when you claim everything is on the table is contradictory.  In my view, Democrats have given up more in the negotiations that the GOP was willing to concede.  However, using the debt ceiling as leverage is just a tactic to get spending cuts by the Republicans.  Both Eric Cantor and John Boehner have said they will end up raising the debt ceiling.  The vote will just be last minute.

It's the same story as the government shutdown.  The leadership guaranteed the government would not shutdown and it didn't because of a last minute vote.  The GOP just wanted to extract more and score points with their base.  Why would the story be any different here?

Meanwhile, the Democrats plan to say the GOP is obstructing the negotiations with impossible demands.  Their hope is to make the GOP back down while the GOP wants to stand firm.  Both sides are playing a dangerous game.  But I don't see it as more than a political strategy rather then an ideology taking control of the party.  After all, even old H.W. and the sainted Ronald Reagan gave in and raised taxes.

Photo Credit: Google Images

Happy 4th of July

I had a hard time thinking of post that would be appropriate for today.  So, instead of droning on about a debate on American exceptionalism or the many problems I can list about the U.S., I decided to have others do it for me.  Here are a few articles worth reading today:

Walter Russell Mead's take on the U.S. power
Jennifer Palmieri on the music culture wars
One Liberian says "Hurrah" to the U.S.
Jackson Diehl discusses Obama's Sudan policy - a good achievement of president, but he does not mention that Bush helped make the peace deal

Photo Credit: Google Images

Weekend Review: July 2

Weekend Review: July 2