The Four Corners

Friday, May 02, 2003

Leading the way with his finger in the wind Avid readers of my postings will note that I have oft criticized Kerry and Clinton for whoring themselves to polls and have tried to have it both ways. However, these two men are not alone, however.

Truth is, the campaign trail is a conviction free zone. Just look at "Dr." Howard Dean. Who says he wants to have nothing to do with the war on Iraq, that it will be disastrous, dangerous, and never work. Oh and then by the way, he would have given the U.N. and Saddam 60 days to comply and then go in unilaterally himself. After a 21-day rout and people cheering (and looting and rioting) in the streets, Dean said on the day of liberation "I guess it is a good thing Saddam is gone."

I guess? This man was trying to be an Arab Stalin! He killed more of his own people than his enemies ever did. I could go on, but why restate the obvious repeatedly.

What irks "Blair Democrats" about Dean is not his anti-war rhetoric, but his sanctimonious "straight talk" and conviction. Dean has waffled on the South Carolina Confederate flag issue, first calling it a state's rights issue for SC to decide and then saying he supports the boycott. He has rightly criticized leftie icon Marion Wright Edelman of Children's Defense Fund, for her doomsday and incorrect predictions of Welfare Reform in 1996, but then cowardly backed away from them during the CDF debate last month. I could go on, but why restate the obvious repeatedly.

Dean too has decided to stick his finger out in the wind, but only in leftie Iowa or other places where that pesky tiny portion of the electorate really believe The West Wing could be a reality show someday. Unfortunately, conservatives well outnumber liberals in this country, and independents outnumber them both. And if proof is needed, I will gladly point anyone to polls after surveys after polls. His path to victory is on the backs of Senators and Congressmen he disingenuously criticizes for supporting tax cuts and unilateral war. And even then, the train stops in New Hampshire. Dean's pro-gay rights stance will not get him South Carolina, or any of the February 3rd primary states, after which, in all likelihood, a Democrat will be crowned.

If "the center won't hold" then we will see four more years of Dubya. More over, even if the center is crowded, it doesn't mean that centrists will cancel each other out. Uninformed voters will vote for Lieberman, because if anyone has followed his race they would know that he is neither center, nor left, nor right, but all pander. Bribed union members will vote Gephardt, because their union bosses owe him big time. People who read People and policy speeches will support Edwards because he "has" from fresh ideas (thanks Bruce Reed). Pragmatists will vote for Kerry, because he liberal enough for Democratic primary voters to sleep at night and has the best chance of beating Bush, Dukakis jokes aside.

By sucking up to the extreme left and hippie Hollywood, Dean has guaranteed he will drive Kerry and other actual winnable candidates to the left with him, dooming their chances against Bush and his $200+ million warchest.

But Kerry, you say, has never taken a firm stand on anything that might cost him his political career. With this point, I agree. But what about his life? He threw himself at Vietcong gunners, saved his crew, and got a Bronze Star for it.

If you are looking for a Democratic Presidential Candidate with political and personal convictions, look no further than might be candidate General Wesley Clark (Ret.).

Why do I keep pushing this guy? Because he has not changed his views on the war on Iraq, offered balanced, accurate analysis on CNN, despite repeated attacks by the likes of Russ Limbaugh-- who have called him Gen. McClellan. He has a nuanced, thoughtful stance on foreign policy that is internationalist, and supports the Democratic Party platform on domestic issues.

And instead of throwing someone else's medals over a wall, General Clark kept rapidly moving up the Army hierarchy, becoming a four-star general who ran an extremely successful war on airpower alone. He won with two hands tied behind his back, one by Washington, and the other by Brussels.

Clark also wasn't afraid to name names and step on toes in describing what really happened in the lead up and prosecution of the Kosovo campaign. For that, the Top Brass in the E-ring hate him.

You find me another Democrat (or Republican for that matter) who can match Bush on the "I won a war" test, and who has enormous amount of Charisma, was a Rhodes Scholar, (and unlike Clinton) was first in his class at West Point, has a Bronze and Silver Star, and Congressional Medal of Honor, etc. then I will work for them.

Until then, keep your self-righteous Dr. Dean as far away from a microphone as possible.

Thursday, May 01, 2003

The Reluctant Empire: Marshall's op-ed, at the very least, highlights an important consideration that must be made by Karl Rove and the rest of the Bush team as it looks to 2004. We all knew that the outcome of the campaign in Iraq would the litmus test of the effectiveness of Bush's term in the Oval Office, and would easily overshadow the tax cut debate and the rest of his domestic agenda. With Bush's declaration of the thinning of hostilities on the major fronts coming today, it seems pretty arguable that the war was a success, and that the naysayers should have backed Bush all along, even as he increasingly alienated key European allies in his attempt to push for hostilities as soon as possible. What Marshall saliently points out, though, is that there are a lot of pro-war Americans who can criticize the manner in which the war was fought, and the consequences besides the toppling of a dictator.

If Bush wants any chance of winning re-election, he's definitely going to have address the issue that this war really comes down to: multilateralism vs. unilateralism. Is the United States really ready to start the 21st Century as the successor to the global British empire? The parallels certainly exist: both nations in their respective time periods chose to cloak growing ambitions as the world's only superpower in the humanitarian framework of wanting to improve the conditions of other nations, the British attempting social reform under the rhetoric of "civilizing" non-Anglican regions of the world, and the United States seeking political reform under the rhetoric of democratization and liberation.

Niall Ferguson argues in last Sunday's NY Times Magazine, however, that the United States, despite its hope to play the role of global policeman, lacks precisely the prerequisites the Victorian Brits had that is necessary to carry out this task; namely, the desire to get its hands dirty in the actual logistics of social and political rebuilding once the fighting is over. The British empire of the 19th Century was capable of "going it alone" because it made no pretense of wanting to literally colonize far-away lands and bring them under British hegemony for as long as it was militarily feasible. It sought to check the growing power of the antebellum United States and recently united Germany with territorial acquisition and invested occupation, and made no bones about its reluctance to be a multilateralist decision-maker.

2003 is by no means similar to 1890, however, and not even Richard Perle is interested in using a word as dirty as "colony" to describe the Bush administration's foreign policy plans. This puts the United States in a tight spot: how do you pretend to be an altruistic superpower while showing such indignance toward the interests of key foreign allies? The efficacy of the United Nations as an effective governing body aside, the alienation of France, Germany, Russia and other nations with vital ties to the U.S. stands as a dangerous remnant of the otherwise victorious Baghdad campaign.

This is what the "Blair Democrats" are all about, trying to make Bush accountable for the diplomatic blunders that have created serious fissures in key historical alliances that may not be mended for quite some time. Despite the fact that most party-line Democrats are against the war, this growing faction will find much more media attention as the "Blair-Democratic" campaigns of Kerry et al. heat up.


Tony Blair for President? Even though there is a trip up with that pesky U.S. Constitution (just ask Michigan Gov. Jennifer Granholm), I would vote for him.

The man showed amazing courage and "testicular fortitude" (thanks Mankind) in face of opposition of not only his voting public, but also all of Western Europe (save Spain and Portugal, but who cares about them).

And unlike Bush, he thoroughly and thoughtfully laid out the liberal case for going to war against Saddam Hussein. In press conferences, Bush would say something vaguely belligerent, and then Blair would explain the big questions (like why now?) in ways people could understand logically.

His speech to Parliament, facing a vote that would mean resignation if he lost and with the majority of his own party against him, is the stuff of legends. Not only did he win the vote, but the war and the admiration of his people. All of a sudden he is being compared to Winston Churchill.

But assuming Americans won't change their constitution in time, I will have to support the next best thing: "Blair Democrats."

Will Marshall, president of the Progressive Policy Institute (whose name super leftie and war critic Michael Moore called "a bit of a misnomer") -- a think tank affiliated with the Pro-war Democratic Leadership Council, penned a Op-Ed in today's Washington Post arguing that these so-called "Blair Democrats" -- Lieberman, Gephardt, Edwards, and Kerry-- are actually better positioned than President Bush on the war in Iraq.

Wait a minute you say, isn't that a bit of wishful thinking? Didn't Bush and his neo-cons just win a war without the U.N. or any real support in 21 days? True, but does the U.S. have more or less friends than when it started off on this road to Baghdad last summer? [hint: LESS]

Although many like, "Dr." Dean, have called their position "Bush lite" or wishy washy, the "Yes-but" position is the one that the majority of Americans-- let alone Democrats-- support.

Further, if Bush had gone the multilateral route wholeheartedly early (pre-9/11) and with everything-- Kyoto, ICC, NPT, ABM, etc.-- he wouldn't have found such strong resistance from the likes of France and might have gotten tacit support in the U.N. or NATO.

Keep in mind, the UN has only approved wars on two occasions-- 1950 and 1990-- and both were with the abstention of permanent members. The UN has never been an effective, decisive body, but that is besides the point. What the UN or NATO gives is not military support but "soft" diplomatic support. That means that more allies would have been able to come out of the closet and support the war-- like Saudi Arabia. Further, it would be much less likely for incidents in Iraq after the war to occur like the ones we saw yesterday and Tuesday in Falluja -- anti-American protests that turn nasty with civilians and U.S. soldiers shot.

Not only does the lack of international support hurt the US diplomatically, it also costs US taxpayers more money, and endangers more US servicemen and women.

Meanwhile, things are so bad between France, Germany and the U.S. that France Germany and Belgium met in Brussels to discuss beefing up their military post-NATO.

John Kerry is right. Only a change of regime in the U.S. -- the dethroning of Bush-- will help heal the wounds caused by this war and his bungling administration. And the only one who can do that is a "Blair Democrat" and not a McGovern Democrat like Dean, Kucinich, Sharpton, Hart, and Mosley Braun (Sen. Graham is A. mentally ill and B. running for Vice President).

Wednesday, April 30, 2003

Which (supply) side are you on, anyway? As we have discussed repeatedly in these columns, we object to the Bush tax plan but for different reasons and different parts.

Even though many have called the CBO's analysis of the original $726 billion (that even with so-called "dynamic scoring" stated that the plan would have little positive economic effect) a death blow to supply siders it seems some still support the contention that lifting the 20% "double" tax on corporate dividends will not only stimulate the economy, but make crooked companies better and be a general panacea.

Color me unconvinced. Any potential benefits would be offset by losses for state and local governments, not to mention home buyers, and the working poor in general. Why? Well for one thing, state and municipal bonds would seem pretty unattractive compared to tax free stocks. And to keep their bonds attractive (especially in a time when the states are in the worst financial crisis since World War II with $80 billion deficits), they would have to lower their interest rates. In fact, California Treasurer Phil Angelides estimates that it could cost states and cities up to a whopping $115 billion.

OK, so he is a Democrat who fancies himself the next Governor of California where Bush bashing is in style but let me know if you, dear economists, can refute his analysis.

It all goes back to the "crowding out" theory of capital markets which Robert Rubin and our much worshiped Alan Greenspan, who testified before the Senate today saying the tax cuts needed to be offset by spending cuts.

Fat chance the Congress will ever gut the budget of pork.


MACRO LESSON REDUX: I argued that the tax cut is useful only as a short-term stimulus because the Bush administration is arguing that the tax cut plan will have a far greater time horizon for its effects, namely, over the course of at least ten years. In a simple macroeconomic framework that takes into account the ability of the Fed to respond to movements in aggregate demand with monetary policy adjustments, a tax cut, no matter what the size, will quickly be doused with interest rate movements designed to bring aggregate demand back into equilibrium with the economy's inherent maximum output. Without technological improvement that alters the long-run output of the economy, there's no way a tax cut will continue to expand output and create jobs year after year for 10 years, or even a few.

Why, then, is the administration trying to claim that it will? Because reducing the tax burden on the upper income earners does not sound nearly as convincing. I DO believe that cutting/eliminating tax on dividends will have a positive effect in terms of increasing incentives for companies to invest in other people, companies, and ideas, thereby enlarging the aggregate capital stock of the nation, which in turn could produce a shift in the long-turn aggregate supply potential of the economy (something I believed in years ago as a supply-sider). Once an economy is close to full employment, which I believe could happen if a smaller tax cut is put into effect and the economy is able to adjust in the absence of another Fed rate cut, any further tax cuts will have a far less effect. I'm now less convinced these days that such cuts will have a significant effect on the longer-term output potential of the economy, and that it will continue to create jobs year after year once the correction has been made.

Even the heads of the CBO and CEA believe this, which makes it pretty clear that this fiscal plan has an ulterior agenda.

I apologize to our faithful readers if I didn't make myself as clear in my earlier posting.


Econ 101 Ok, so I didn't take that many or do that well in my undergraduate economics courses, but I have to disagree with Anthony and Krugman while agreeing with them. [Huh? Have you gone Kerry or Clinton? -Ed]

That is, while I think giving additional tax breaks to the wealthiest Americans and removing taxes on corporate dividends will be horrible to economy, I think a WPA approach to the unemployment and uninsurement problem is not the answer.

Krugman, the man who claimed the war against Iraq would be long, brutal and evolve urban combat, has (after eating his crow) taken it upon himself to support Gephardt's health care plan AND government jobs for all instead of tax cuts.

Last time I checked, the U.S. is not the Soviet Union, or for that matter Canada. While Dick's goals are shared by nearly everyone-- cover the 41+ million uninsured-- most disagree with the employer mandate idea.

Plus, why give incentives to companies that have cheated out on their employees by giving them double the tax credit for heath insurance?

Personally, I favor a targeting a bigger tax credit increase and tax sheltered health care groups to help small businesses (100-25 employees) get health insurance for their workers and band together with local small businesses to enter a purchasing pool that would have the purchasing power of a much larger company (and thus lower rates). All of this of course, would be without more government mandates and regulations. (if you are really interested in the details of my idea, I can send you the 500 word version I wrote for the Kennedy School)

Giving companies and workers a lift on health insurance costs-- mostly via the lower resulting rates of covering more people-- would be a far greater stimulus to the economy that is experiencing exploding costs than lower tax rates for those making well over $1 million a year.

Now Anthony the quasi-economist has argued via Mankiw-- whose textbook I also used in college-- that such stimuli will be a short term phenomenon. Well then, why on Earth would Bush want to make these tax cuts long term then? Because economic stimulus was his last goal; the White House even calls it a "Jobs and Growth Package" because calling it an economic stimulus package would be too much of a joke.

Even our more noted economist Steve has said that the economy, despite its sluggishness, doesn't need any more stimuli. What is a president who wants to be "re"-elected in 2004 supposed to do then, just wait it out and pray?

Although that seems to be Bush's real strategy, I would suggest permanently repealing the payroll tax and funding Social Security & Medicare through ending corporate welfare, tightening loopholes, and simplifying the income tax code while raising it slightly for the wealthiest few. Call me crazy but I would rather be taxed all at once than be nickel and dimed every 15 days and feel sad every time I look at my paycheck.


Showing Off a Few Curves: Paul Krugman, the enfant terrible of the Bush-bashing populace, has created yet another firestorm of debate with his April 22 NY Times piece in which he castigates the Bush tax cut scenario yet again by comparing the overall cost of the tax cut with the average annual salary of an American worker. This one little mental exercise has prompted some pretty vituperative responses (would you expect anything less?) from National Review editors and other Bush fiscal apologists who attempt to grapple with his economic analysis, and even an extensive defense by fellow liberal economist Brad DeLong.

As I understand it, the economics (and arithmetic) of this analysis is pretty straightforward. In an economy such as the current one, which is experiencing a moderate sluggishness and is thereby operating below full employment, any aggregate demand stimulus, either in the form of a tax cut or spending increase, will create jobs in the short run while the Fed is unable to quickly offset this stimulus by cutting interest rates any further (which are currently at 40-year lows). After a year or so, the job creation should disappear, as aggregate supply rises and the economy moves back toward an equilibrium with its long-run supply curve, which only shifts due to endogenous changes to the economy, such as significant technological improvements that alter aggregate productivity levels.

Thus, the job creation should last only a year or so, such that the 1.4 million jobs Krugman cites will be the total benefit of the tax cut, and it therefore makes sense to take the $762 billion (the total cost of the tax cut), divide that by the total benefit, and arrive at (roughly) $500,000 cost per job created, when the average worker in the United States only makes $40,000. After about a year, the Fed should be less constrained to bring the economy back to its long-run equilibrium with the appropriate monetary policy response, which works its way through the economy much faster than tax cuts, whose effects are typically lagged over the course of several years.

This is, of course, all textbook stuff, anything you can learn over the course of a week in an introductory undergraduate economics course. Krugman himself cites most of his reasoning from a principles textbook by Greg Mankiw -- Bush's new top economic policy advisor.

Tuesday, April 29, 2003

Baq in Iraq... Remember this place? With the war over, many of my fellow (but infrequent) bloggers have focused on the North Korea, '04 presidential race, Sen. Rick "homosexuality=bestiality=incest=bigamy=polygamy" Santorum, Newt Gingrich, and Libertarians (OK, so most of these were mine). But meanwhile, the U.S.'s newest colony-- Iraq is still in turmoil.

First the good news. The power is finally on. The U.S. arrested Muhammad Mohsen Zobeidi, the self-proclaimed "Governor of Baghdad." Even Iraq-rebuilding critic Joshua Micah Marshall conceeded is a "very positive development." Viceroy Garner had his second meeting in Al Gore -style relaxed earth tones (and unbuttoned oxfords) on Saddam's birthday. Garner’s opening words were: “Today on the birthday of Saddam Hussein, let us start the democratic process for the children of Iraq”.

Unfortunately (or fortunately) the Shi'ite cleric group that wants to make Iraq into Iran declined Garner's invite.

Today, anti-US riots in Iraq got so out of hand that U.S. troops ended up killing 15 Iraqi protestors, who were probably egged on by Iranian government-based Shi'ite clerics, and wounded another 75. U.S. forces claim they were responding to fire.

The demonstrators "intentionally engaged American soldiers," said Capt. Mike Riedmuller, commanding officer of an Army troop with the Third Armored Cavalry Regiment in Fallujah, 30 miles west of Baghdad.

"Our soldiers returned deliberately fired shots at people with weapons, and only at people with weapons," he said.

Of course, the protestors claimed they were unarmed.

The Israeli Military/Intelligence Website DEBKAfile [one of my personal favorites] asks the appropriate question: "Who Will Rule Iraq Now? The Shiites, Kurds, Sunnis? Or Saddam Hussein’s former generals?"

I sure hope it is not Ahmed Chalabi, head of the Iraqi National Congress -- who recently settled in Uday Hussein’s palace in Baghdad, after decades of being supported in exile by Washington and London. The poor guy lives a rough life, even his own "people" don't support him. Why not run for president of the Defense Department, since the CIA and State have abandoned you?

Ideally, the future Iraq would be a federalist republic like the U.S. with three major states (a "Kurdistan" to the north, Shi'ite one in the middle, and Sunni to the south) with relative autonomy and a power sharing.

Of course, the word "Kurdistan" scares the crap out of the Turks. If the new Iraq can also sign some agreement with Turkey that it will not assist paramilitary groups in Turkey or try to expand Kurdistan into the bulk of its ethnic "territory in western Turkey, I don't see what ground Turks could object to. If Kurds in Turkey wanted to live somewhere were they could speak their language, teach their culture in schools, and not be arrested and tortured, why can't they move their family to "Iraqi Kurdistan?"

I wonder what the other three corners think about all this...

Monday, April 28, 2003

Next stop, New Hampshire? It's not what you are thinking. No news about politicians waging retail politics in New Hampshire. Instead I am reporting about the burgeoning 'Free State' movement and upcoming vote.

Attention all Libertarians! Want government out of your life but don't know how to do it? We got a solution less radical (and risky) than bombing the IRS, a mass migration to an unpopulated state which we can electorally "take over" and create a utopian libertarian paradise!

Last Thursday, CBS News reported that "A movement called the Free State Project has registered some 3,100 people who would help choose a 'candidate' state and move there in hopes of canceling laws against drugs, prostitution, guns and other individual liberties, while privatizing current state functions such as schools."

The project is the brain child of Yale Political Science PhD. student Jason Sorens, 26 (I guess he finished his dissertation already). He decided that after 2000, libertarians needed a new way to get attention. I am sure Republicans like ex-Rep. John Thune who lost his chance at a U.S. Senate seat by 524 votes to Sen. Tim Johnson (SD) in 2002 knows all about you-- much like the Democrats know all about those Greens since Nader handed Bush Florida (and tried to cost Gore other states like OR and WA).

The idea is move about 20 thousand or so people into states with less than 2 million people and persuade them that no-government government is the answer. "We're not going to be a large enough group to take over, " he said.

On the project's candidate state list are Idaho, Montana, Alaska, Wyoming, North Dakota, South Dakota, New Hampshire, Maine, Delaware and Vermont. All have current populations below 1.5 million.

Idaho's reaction? "Mark Snider, spokesman for Idaho Gov. Dirk Kempthorne, said he was sorry to learn that Idaho was on the list. He warned the Free Staters not to confuse Idahoans' love for small government with a desire for nearly no government.

'The majority of Idahoans want safe streets, and not to be under the threat of drunk drivers, drug addicts or criminals,' Snider added."

Well what about Montana? "Chuck Butler, a spokesman for Montana Gov. Judy Martz, said Montana is a huge state that welcomes newcomers. But he encouraged the Free Staters to take a closer look at Idaho.

'Idaho is more inviting,' Butler said." Tag, you're it! We have enough nuts in Montana, thank for very much. Remember, the Big Sky State used to be home to the Unabomber.

Sources closes to The Four Corners have said the group favors states like New Hampshire, Alaska, and Delaware, since they will have ports to conduct trade and wars from (in the event of Federal reaction). After all, who wants to live in North Dakota [if only their name was just "Dakota," it would seem so much warmer! --Ed]?

Plus, Free State Project Vice President Elizabeth McKinstry told the Boston Globe that "the group 'loves' the New England annual town meeting. ''We want things to be controlled at the most local level possible,' she says. 'We're looking at a reduction in the size of state government by one half.'"

On an unrelated note, The Four Corners wants to wish Saddam Hussein happy birthday. Here's to 66 years of murder, torture, and lying! Come and celebrate at the Mother of all Birthday Parties at U.S. Central Command, Doha Qatar. I am sure anyone around there will help you with directions. We got a big cake, just the way you like it, with blood of the innocents in the filling. Yum!