Higher Rates in Europe, Too?
The markets took to heart Greenspan’s comments about the danger of deflation receding, and bond yields rose to their highest level in months. Some of Morgan Stanley’s European economists think that the same may be true for Europe – that we’re now definitely at the bottom of the interest rate cycle, and they will only go up from here.
Kash
Tuesday, April 20, 2004
Greenspan Agrees
I’m not saying that this is the definitive word (because I certainly believe that he has been wrong about things before), but apparently Greenspan agrees with my earlier assessment that the danger of deflation is behind us.
Kash
Powell Responds
I've commented on revlations about Powell in Woodward's new book, so it's only fair that I also highlight Powell's denial:
Powell also said he cooperated with Woodward -- at the behest of the White House.Oops. Wrong paragraph. Here's the denial:
"We all talked to Woodward. It was part of our instructions from the White House," Powell said. "It was an opportunity to help him write a contemporary history of this period. It was no secret that all of us were encouraged to talk to Mr. Woodward. In my case, it was just a couple phone calls."
However, Powell said he "will always plead guilty to being cautious about matters having to do with war and peace," and he confirmed journalist Bob Woodward's account that he warned President Bush before the war that the situation in post-war Iraq could prove difficult.Wait, that's not it. Here it is:
Asked about that characterization [of Cheney as one of the driving forces in favor of invading Iraq], Powell said, "Was the vice president determined that we had to do something about Saddam Hussein and that evil regime? You bet he was."Damn. That's not it either. Try this one:
"When the president decided that we had to go down the road of military action, it was a road I knew was there all along, and I was as committed as anyone else to see the end of this regime," Powell told reporters. "My support was willing, and it was complete."And, later,
"I was included in all of the military planning preparations. I was briefed on a regular basis," said Powell, a retired Army general and former chairman of the Joint Chiefs of Staff. "I was intimately familiar with the plan. I was aware that Prince Bandar was being briefed on the plan."There you have it.
AB
I Can't Explain It
So I'll just relay it:
Bush led Kerry, the presumptive Democratic nominee, 51 percent to 46 percent in the survey of likely voters, which was conducted Friday through Sunday. The survey interviewed 1,003 adults, including a subsample of 767 respondents deemed most likely to vote in November.Well, maybe I can explain it. It may have something to do with this:
When consumer activist Ralph Nader's independent candidacy was factored in, the survey's results were 50 percent for Bush, 44 percent for Kerry and 4 percent for Nader among likely voters.
The previous CNN/USA Today/Gallup Poll, conducted April 5-8, showed Bush leading Kerry 48 percent to 45 percent among likely voters.
Neither the intensified fighting in Iraq nor the public hearings held by the independent commission investigating the September 11, 2001, attacks appear to have hurt Bush's overall standing -- in part, the current poll suggests, because Kerry has not convinced Americans of his ability to handle those issues.
... When asked which candidate would do a good job handling the situation in Iraq as the next president 40 percent backed Bush, 26 percent backed Kerry and 15 percent thought both would do a good job.
WASHINGTON — President Bush has spent $98 million in his re-election campaign, nearly as much as he spent to win the Republican nomination four years ago.Budget allowing, you know what to do.
In a report to be filed with the Federal Election Commission today, Bush discloses that he raised $184.4 million by the end of March, and his campaign had $86.6 million in the bank.
The spending — rivaling the $101 million he spent in 2000 — reflects heavy television ad buying in February and March, when the campaign put on a blitz aimed at shaping an unfavorable image of Kerry in voters' minds. The campaign also has been building an organization in key states.
AB
Monday, April 19, 2004
Today's Howler
Sommerby finds something of a contradiction:
RICE V. BUSH: Thanks to an alert e-mailer, here’s one more highlight from Bush’s press conference. Our reader emitted those low, mordant chuckles when President Bush said the obvious:As my father knew all too well in my younger days, an ever-shifting story is a hallmark of deception. In other words, if the administration intends to successfully deceive, then it should first get its story straight.
BUSH (4/13/04): Now, in the, what’s called the PDB, there was a warning about bin Laden’s desires on America.
There was a warning! Why did our reader find that amusing? Because five days earlier, Condi Rice had hotly insisted that there wasn’t a warning in that same PDB! We all recall the heartfelt testimony she gave to her nation, under oath
RICE (4/8/04): Commissioner, this was not a warning. This was a historic memo.
Oh, what a difference five days makes! For the record, why did Bush say there was a warning, while Rice kept insisting “this wasn’t a warning?” Simple! Bush was speaking straightforward English. Rice was deceiving the American public and making a joke of her oath.
AB
Worse Than You Thought
From Woodward, on 60 Minutes last night:
“They describe in detail the war plan for Bandar. And so Bandar, who's skeptical because he knows in the first Gulf War we didn't get Saddam out, so he says to Cheney and Rumsfeld, ‘So Saddam this time is gonna be out, period?’ And Cheney - who has said nothing - says the following: ‘Prince Bandar, once we start, Saddam is toast.’"
After Bandar left, according to Woodward, Cheney said, “I wanted him to know that this is for real. We're really doing it."
But this wasn’t enough for Prince Bandar, who Woodward says wanted confirmation from the president. “Then, two days later, Bandar is called to meet with the president and the president says, ‘Their message is my message,’” says Woodward.
Prince Bandar enjoys easy access to the Oval Office. His family and the Bush family are close. And Woodward told 60 Minutes that Bandar has promised the president that Saudi Arabia will lower oil prices in the months before the election - to ensure the U.S. economy is strong on election day.
Woodward says that Bandar understood that economic conditions were key before a presidential election: "They’re [oil prices] high. And they could go down very quickly. That's the Saudi pledge. Certainly over the summer, or as we get closer to the election, they could increase production several million barrels a day and the price would drop significantly.”
Didn't George Washington say something about questionable leaders and foreign entanglements? Yes, yes he did:
The alternate domination of one faction over another, sharpened by the spirit of revenge, natural to party dissension, which in different ages and countries has perpetrated the most horrid enormities, is itself a frightful despotism. But this leads at length to a more formal and permanent despotism. The disorders and miseries which result gradually incline the minds of men to seek security and repose in the absolute power of an individual; and sooner or later the chief of some prevailing faction, more able or more fortunate than his competitors, turns this disposition to the purposes of his own elevation, on the ruins of public liberty.AB
Without looking forward to an extremity of this kind (which nevertheless ought not to be entirely out of sight), the common and continual mischiefs of the spirit of party are sufficient to make it the interest and duty of a wise people to discourage and restrain it.
It serves always to distract the public councils and enfeeble the public administration. It agitates the community with ill-founded jealousies and false alarms, kindles the animosity of one part against another, foments occasionally riot and insurrection. It opens the door to foreign influence and corruption, which finds a facilitated access to the government itself through the channels of party passions
Powell May Be Next to Join the DisgruntledTM
My initial list of The DisgruntledTM (people who work or worked in and around the Bush White House who have been critical of the administration's policy-making) is in this post; commenters ably filled out the list. We know they are disgruntled for there can be no other reason why they would criticize this administration; certainly such criticisms are not valid.
At the time, Colin Powell wasn't in the Disgruntled column, nor even the Possibly Disgruntled column. But now the NYT is reporting that he and his staff were major sources for Woodward's new book.
But Mr. Powell's apparent decision to lay out his misgivings even more explicitly to the journalist Bob Woodward for a book has jolted the White House and aggravated long-festering tensions in the Bush cabinet. Moreover, some officials said, the book has created problems for the secretary inside the administration just as the situation in Iraq is deteriorating and President Bush is plunging into his re-election drive.AB
Mr. Powell has not acknowledged that he cooperated with Mr. Woodward, but the book presents the secretary's reservations in such detail that it leaves little doubt. A spokesman for Mr. Powell said again Sunday that he would not comment on the book, "Plan of Attack."
Critics of Mr. Powell in the hawkish wing of the administration said they were startled by what they saw as his self-serving decision to help fill out a portrait that enhances his reputation as a farsighted analyst, perhaps at the expense of Mr. Bush.
Sunday, April 18, 2004
Truth v. Fantasy
I still like Kash's version better, but this latest chart from the Center on Budget and Policy Priorities is pretty good too (via Matt Yglesias):
AB
Pretty Much Sums It Up
The miserable failure that is the Bush administration’s Iraq policy can pretty much be summed up by this quote from an Iraqi in today’s Washington Post:
“When the fighting is over in Fallujah, I will sell everything I have, even my home,” said a resistance fighter who gave his name as Abu Taif Mashhadani. He wept as he recalled his 8-year-old daughter, who he said was killed by a U.S. sniper in Fallujah a week ago. “I will send my brothers north to kill the Kurds, and I will go to America and target the civilians. Only the civilians. Eye for an eye, tooth for a tooth. And the one who started it will be the one to be blamed.”One thing that I conclude about the siege of Fallujah, the terror inflicted on the population there, and the concomitant killing of several hundred civilians, is this: in its ham-handedness and short-sightedness the decision fits right into the Bush administration’s general handling of the situation in Iraq, from start to finish.
Kash
Bob Woodward's Plan of Attack
The book comes out Monday, but some claims and excerpts are coming out early:
"Let's get started on this,'' Bush recalled telling Defense Secretary Donald Rumsfeld on Nov. 21, 2001, according to "Plan of Attack'' by Washington Post assistant managing editor Bob Woodward, a Post account of the book says. "And get (Army General) Tommy Franks looking at what it would take to protect America by removing Saddam Hussein if we have to.''And
The account and excerpts from the book, published in an early version of the Post's Sunday edition, support testimony by former White House counter-terrorism adviser Richard Clarke that the Bush administration was focused more on Iraq than the al- Qaeda terrorists blamed for the attacks.
The Woodward book, which will go on sale Monday, says Secretary of State Colin Powell opposed the war and warned Bush that if he sent U.S. troops to Iraq "you're going to be owning this place.''I don't know exactly know what Powell meant by "owning this place," but my guess is that he meant that if Iraq goes to Hell in a handbasket (as Powell apparantly thought it would) then the blame would rest with Bush. Here's Bush's explanation, so far:
The relationship between war-proponent Vice President Dick Cheney and Powell, who believed Cheney was trying to establish a connection between Iraq and al-Qaeda, became so strained that they are barely on speaking terms, according to the book. White House communications director Dan Bartlett described Powell's agreement to make the U.S. case against Hussein at the United Nations in February 2003 as "the Powell buy-in,'' the book says.
"I can't remember exact dates that far back,'' Bush told reporters yesterday after talks at the White House with British Prime Minister Tony Blair, his chief Iraq ally. "But I do know that it was Afghanistan that was on my mind. And I didn't really start focusing on Iraq until later on.''I do give Bush some credit for at least not saying "it was a map of Afghanistan that was rolled out on the table [after 9/11]."
And a reminder about Bob Woodward: he wrote the sycophantic hagiography, Bush at War, so I'm not sure what to make of a book by him that is reportedly strongly critical (in terms of detail if not tone) of Bush. Perhaps Woodward was caught up in a patriotic fervor when he wrote Bush at War, but that's more of an explanation than an excuse. On the plus side, I suppose that the access he got from writing that puff-piece is partially responsible for the material in his new book.
Here's a fun game you can play over the next week. Watch for the inevitable posts, Op/Eds, reviews, and TV punditry from right wingers claiming that Woodward is a deranged leftist with a vendetta against the President, Republicans, and the American Way of Life. Then go to Google or Lexis and find the same person commenting glowingly about Woodward's 2002 book. For example, here's a snippet from Amazon customer rnjbond's review of Bush at War at Amazon.com:
It's a timely book to read, as well, because it directly contradicts the books of both Paul O'Neil and Richard Clarke. Bush truly was in charge and made decisions for himself, and truly was focused on Al Qaeda prior to 9/11.rnjbond gives two stars to Howard Dean's Winning Back America, O'Neill's The Price of Loyalty, Franken's Lies and the Lying Liars Who Tell Them, and Peter Hart's The Oh Really? Factor: Unspinning Fox News Channel's Bill O'Reilly. He did, however, love Rich Lowry's Legacy: Paying the Price for the Clinton Years (in fairness to rnjbond, he gave Colmes' book 5 stars too.) You get half credit for finding contrasting quotes by liberals who hated Woodward in 2002 but love him now.
AB
Friday, April 16, 2004
Just Plain Wrong
Via Mark Schmitt:
This whole thing is just disgraceful. To top it all off, every Treasury release now has the following useful public service announcement at the bottom:ABAmerica has a choice: It can continue to grow the economy and create new jobs as the President's policies are doing; or it can raise taxes on American families and small businesses, hurting economic recovery and future job creation.I'm sure Brad DeLong can confirm that this is the kind of thing that, in the Rubin/Summers Treasury Department -- and in fact in every Treasury Department from Hamilton and Gallatin forward -- not only would not have been done, but wouldn't even be considered.
UPDATE: See Demagogue for the shocking source of this "Treasury Department" Advisory.
I am once again, sadly, once again reminded that the Mayberry Machiavellis are in charge. From the DiIulio letter:
In eight months, I heard many, many staff discussions, but not three meaningful, substantive policy discussions. There were no actual policy white papers on domestic issues. There were, truth be told, only a couple of people in the West Wing who worried at all about policy substance and analysis, and they were even more overworked than the stereotypical, non-stop, 20-hour-a-day White House staff. Every modern presidency moves on the fly, but, on social policy and related issues, the lack of even basic policy knowledge, and the only casual interest in knowing more, was somewhat breathtaking—discussions by fairly senior people who meant Medicaid but were talking Medicare; near-instant shifts from discussing any actual policy pros and cons to discussing political communications, media strategy, et cetera. Even quite junior staff would sometimes hear quite senior staff pooh-pooh any need to dig deeper for pertinent information on a given issue.So, in a bizarre sense, Treasury's addendum is honest -- at least, it's honest in the very narrow sense that virtually no one in the White House knows any better.
More Consumer Confidence Surprises
You’d think that, in the wake of the strong jobs report two weeks ago, surveys of consumer confidence would start showing some improvement. But no, consumer confidence continues to fall. We’ve already had a thorough discussion about the fact that this probably tells us little about consumer spending, but it’s still interesting news in a “huh, I wonder why?” sort of way. Do consumers really care that much about Iraq? That would surprise me, though I suppose it's possible.
Kash
Capacity Utilization
Industry in the US seems to be struggling a bit in their battle to increase capacity utilization. The Fed just released data for March showing capacity utilization down a bit after several months of increases. As usual, I’ll repeat the caveat that one month of data doesn’t mean much – but it’s a piece of data that we need to keep our eyes on. Here's the picture:
Needless to say, overall capacity utilization is very low by historical standards (i.e. compared to the past 20 years or so), despite some improvement over the past year. As I’ve said before, I don’t expect any serious increase in inflation until this ratio increases somewhat – which could take while. But if this month’s decline turns out to be a small blip downward in an otherwise positive trend, maybe 6 months or a year from now I’ll start believing people who forecast an increase in inflation...
Kash
Postcards from Old Europe - New meets old
We are only about two weeks away from one of the most important things to hit Europe this year. I am of course talking about the upcoming enlargement of the EU. May 1st will see 10 countries enter the European Union. As a result, the EU will expand to 25 states and have a combined population of around 480 million people. Eight of the new EU members come from Central and Eastern Europe (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, the Slovak Republic and Slovenia), the other two are Cyprus and Malta.
The entry into the EU does not mean that these countries are going to introduce the Euro. Most people are forecasting Eurozone entry to be around 2009 - 2012 for the biggest accession economies (Czech Rep., Hungary and Poland) and some time later for the others. Entry into the EU means that - at the most basic level - that the new members subscribe to the basic tenets of the club as described by the "Four Freedoms"
Free movement of goods (Articles 23 to 31 of the Treaty establishing the European Community)If you view EU enlargement through the filter of economics you quickly start asking questions about the effects on growth, migration, the EU budget, employment and numerous other factors.
Free movement of persons (Articles 39 to 48 of the Treaty establishing the European Community)
Freedom to provide services (Articles 49 to 55 of the Treaty establishing the European Community)
Free movement of capital (Articles 56 to 60 of the Treaty establishing the European Community)
If we look at the aforementioned basic freedoms one by one we can easily see that most of the points are pretty uncontroversial. Free movement of goods and services or the freedom to invest somewhere isn't something which gets Hans or Francois riled up. The reaction to the free movement of persons is much more hotly debated. It doesn't only mean that tourism is easier, it also means that Zbigniew from Poland can now hop over the border and start work in Germany just as if he were German.
This does not sit well with the border countries such as Germany and Austria and they have secured the right to restrict free movement of labor for the next seven years. Most other countries have followed suit except for the UK and Ireland who have no restrictions at all (and are pretty far away anyway + have robust labor markets).
Why is there so much angst? Well most Old Europeans are afraid that the relatively high incomes in their countries will cause a wave of mass migration. Germany and Austria both pay very much for low skilled work as these incomes have a natural floor in form of (high) welfare entitlements. Classical theory of migration world run the numbers and find that the income differentials are so high making the decision to move from Poland to Austria a foregone conclusion.
But is this really the case? I don't think so. Looking around Berlin (and most other parts of this country) shows me that most of those Eastern Europeans who want to work here are here already. The other factor to keep in mind is that history shows that living standards of countries entering the EU tend to rise rather quickly. Spain, Greece and Portugal saw average incomes rise at a very fast clip after joining the European Union - this led to a net migration of zero.
People often speak of the "United States of Europe" and draw comparisons to the US of A. In this case they say that Americans will pack up and move if there are jobs to be had in other states - so why shouldn't Europeans react in the same way? I'm always suspicious of these kinds of oversimplifications. I argued last week that Europeans - and Germans in particular - are risk averse. This inertia extends to moving as well. Research has shown that
By contrast, OECD figures for 1987 showed that French and German workers were only a third as likely to move between departements and Länder as US citizens between States - let alone between France and Germany themselves!I'll admit that there could be a higher incentive for workers from the new accession countries to move than there was for - say - Spaniards to migrate. The difference being the fact that average Spanish incomes were at around 70% of the EU average at the time they joined vs. 40% or so in the new members. But please keep in mind that there are very formidable obstacles in moving within the Union. Contrast the following with moving from New York to California
From here
Clearly, some endemic obstacles to labour mobility exist in Europe which are almost - though not entirely - absent in the US: notably differences of language and culture. Other obstacles are the result of divergent action by public authorities: for example, the non-transferability of pension rights, restrictions on the right to social security, inflexibility in housing markets, nationality restrictions on recruitment in the public sector, non-recognition of qualifications, lack of information about jobs in other Member States, etc. Progress in removing these obstacles - as in implementing the "free movement of persons" principle in general - is proving extremely slow.So why is everyone afraid? Is it simple xenophobia? Or are there other forces at work? I think general anti-immigration sentiment is strong in many European countries but I also think that the main reason people are against (im)migration is that they think there is only a fixed number of jobs to be had. This so-called "lump of labor" fallacy is also behind the idea that reducing the amount of hours worked will increase the number of employed people. There is actually no evidence I know that supports this. On the contrary: higher supply can create it's own demand in the jobs market if labor markets are flexible.
I would wager that migration will not be necessary anyway - the jobs will move to where the people are. Foreign direct investment in the accession countries has been strong and will continue to get stronger as hindrances on the movement of capital are eliminated. This will lead to even more lower skilled jobs moving out of Old Europe into "New Europe" and see the establishment of a NAFTA-like production belt on the border. This could of course have bad consequences for the countries losing manufacturing jobs.
A look at the US shows that a large part of "lost" manufacturing jobs turned up as (lower paid) service jobs. The big difference is that in Western Europe many workers might consider two years of unemployment benefits at around 65 - 70% of last wages to be more attractive than a job in the service sector. Add in the fact that the service sector might not want to hire anyone as they will find it exceedingly difficult to get rid of their new workers in an economic downturn.
To sum it up: I don't think that we'll see a wave of mass migration rolling over Western Europe after EU enlargement. What we will see is more pressure being put on governments to reform the system of entitlements and to increase the flexibility in their labor markets. The source of this pressure is to be found in the free movement of goods and capital which will accelerate the movement of manufacturing jobs to countries with lower wages.
I wish you all a very nice weekend - if you don't know what to do with the time on your hands I suggest that you visit my other home on the web: CurryBlog.
Thursday, April 15, 2004
Shorter Angry Bear
Fred Kaplan in Slate:
Throughout that summer, we now well know, Tenet, Richard Clarke, and several other officials were running around with their "hair on fire," warning that al-Qaida was about to unleash a monumental attack. On Aug. 6, Bush was given the now-famous President's Daily Brief (by one of Tenet's underlings), warning that this attack might take place "inside the United States." ... And now, we learn today, at this peak moment, Tenet hears about Moussaoui. Someone might have added 2 + 2 + 2 and possibly busted up the conspiracy. But the president was down on the ranch, taking it easy. Tenet wasn't with him. Tenet never talked with him. Rice—as she has testified—wasn't with Bush, either. He was on his own and, willfully, out of touch.AB
Meetings and Battle Stations
I'm beginning to better understand what Richard Clarke meant when he talked about the importance of high level meetings during high threat periods. The latest piece of this unforunate puzzle comes in today's NYT:
George J. Tenet and his deputies at the Central Intelligence Agency were presented in August 2001 with a briefing paper labeled "Islamic Extremist Learns to Fly" about the arrest days earlier of Zacarias Moussaoui, but did not act on the information, the independent commission investigating the Sept. 11 attacks said on Wednesday.
An interim report by the panel's staff offered a stinging assessment of the C.I.A. under Mr. Tenet's leadership and was made public during a hearing at which Mr. Tenet disclosed that he had little contact with President Bush during much of the summer of 2001, a period when intelligence agencies were warning of a dire terrorist threat.
Let's suppose that Bush and Tenet actually had a meeting in August, particularly on August 6th. Here's how it might have played out:
BUSH: George, today's PDB is titled "Bin Laden determined to strike in US." It mentions "bring the fighting to America," Al Qaeda members who "have resided in or traveled to the U.S. for years," hijackings, "recent surveillance of federal buildings in New York," and "attacks with explosives." What's your assessment of the risk we're facing?
TENET: Did you say hijackings?
BUSH: Yes.
TENET: That's an interesting coincidence. A briefing just crossed my desk the other day warning that an Islamic extremist is taking flying lessons. I wonder if the two are related? And why would a hijacker need flying lessons?
Now, there's a lot of speculation in this. For example, the NYT only reports that the "Islamic Extremist Learns to Fly" memo was presented in August, not whether it was presented before or after August 6th. Still, if Tenet had seen the Aug. 6th PDB and received the flying lessons memo shortly thereafter, it still seems likely that he would have made a connection. It's also unclear whether Tenet personally read the flying lessons memo; still, the NYT story makes it seem nearly certain that at least one of his deputies did. Would those deputies be included in a "Principals Meeting"? I'm not sure, but if so, there's yet another chance for a connection to be made.
What if a connection had been made? At that point we would hope for some "shaking of the trees," including disseminating warnings throughout the intelligence bureacracy to watch for and report all instances of potential extremists taking flying lessons (ideally, to Clarke, Tenet, and acting FBI Director Pickard.) The extremist in question was Zacarias Moussaoui, who had raised the suspicions of the FBI's Minneapolis field office. As FBI agent Collen Rowley recounts in detail, her field office was unable to get FBI headquarters to act:
The fact is that key FBIHQ personnel whose job it was to assist and coordinate with field division agents on terrorism investigations and the obtaining and use of FISA searches (and who theoretically were privy to many more sources of intelligence information than field division agents), continued to, almost inexplicably5 throw up roadblocks and undermine Minneapolis' by-now desperate efforts to obtain a FISA search warrant, long after the French intelligence service provided its information and probable cause became clear. HQ personnel brought up almost ridiculous questions in their apparent efforts to undermine the probable cause. In all of their conversations and correspondence, HQ personnel never disclosed to the Minneapolis agents that the Phoenix Division had, only approximately three weeks earlier, warned of Al Qaeda operatives in flight schools seeking flight training for terrorist purposes!Moreover, were the trees being shaken, somewhat might have recalled the 7/10/2001 memo from FBI agent Kenneth Williams:
The purpose of this communication is to advise the Bureau and New York of the posssibility of a coordinated effort by USAMA BIN LADEN (UBL) to send students to the United States to attend civil aviation universites and colleges.Would regular meetings between Tenet and Bush in August of 2001 have lead to someone connecting the dots? It's impossible to say with any certainty. But it would have been substantially more likely.
... these individuals will be in a position in the future to conduct terror activity against civil aviation targets.
And in his testimony, Clarke even explained what went wrong and how it could have gone otherwise:
BEN-VENISTE: Well, the FBI was a principal agency upon which you had to rely, is that not the case?Once again, it's speculative to say that 9/11 could have been prevented, but regular top-level meetings would have made it much more likely. Rice may have been right when she said that "there was no silver bullet that could have prevented" the 9/11 attack; instead it looks increasingly like a clip full of regular lead bullets might have done the job.
CLARKE: It is.
BEN-VENISTE: Now, with respect to what you were told -- you were the principal coordinator for counterterrorism for the chief executive flowing up and down through you, correct?
CLARKE: Yes, sir.
BEN-VENISTE: Did you know that the two individuals who had been identified as Al Qaida had entered the United States and were presently thought to be in the country?
CLARKE: I was not informed of that, nor were senior levels of the FBI.
BEN-VENISTE: Had you known that these individuals were in the country, what steps, with the benefit of hindsight, but informed hindsight, would you have taken, given the level of threat?
CLARKE: To put the answer in context, I had been saying to the FBI and to the other federal law enforcement agencies and to the CIA that because of this intelligence that something was about to happen that they should lower their threshold of reporting, that they should tell us anything that looked the slightest bit unusual.
In retrospect, having said that over and over again to them, for them to have had this information somewhere in the FBI and not told to me, I still find absolutely incomprehensible.
BEN-VENISTE: And I will have to end it here although I'd like to go further. Was the information with respect to Moussaoui and his erratic behavior in flight school ever communicated to you?
CLARKE: Not to me.
BEN-VENISTE: Given the fact that there was a body of information with respect to the use of planes as weapons within the intelligence community's knowledge, had you received information about Moussaoui training to fly a commercial airplane? Would that have had some impact on the kind of efforts which might be made to protect commercial aviation?
CLARKE: I don't know. The information to which you refer, information in the intelligence community's knowledge about Al Qaida having thought of using aircraft as weapons, that information was old relatively speaking -- five years, six years old -- hadn't reoccurred to my knowledge during those five or six years -- and has to be placed -- to give the intelligence community a break -- it has to be placed in the context of the other intelligence reports.
CLARKE: The volume of intelligence reports on this kind of thing, on Al Qaida threats and other terrorist threats, was in the tens of thousands, probably hundreds of thousands over the course of the five or six years.
Now, in retrospect, to go back and find a report six years earlier that said perhaps they were going to use aircraft as weapons, it's easy to do now. But I think the intelligence community analysts can be forgiven for not thinking about it given the fact that they hadn't seen a lot in the five or six years intervening about it and that there were so many reports about so many other things.
BEN-VENISTE: And yet -- with your indulgence, Mr. Chairman...
KEAN: Short indulgence.
BEN-VENISTE: And yet, an FAA advisory went out. The FAA advised on the potential for domestic hijackings.
CLARKE: I asked them to.
BEN-VENISTE: And had you known on top of that that there was a jihadist who was identified, apprehended in the United States before 9/11 who was in flight school acting erratically...
CLARKE: I would like to think, sir, that even without the benefit of 20-20 hindsight, I could have connected those dots.
AB
Housing Bubble?
Kevin notes a report that the "median [home] sale price [in Los Angeles is] up 29%, to a record $375,000, according to data released Monday" and says
I don't care what anyone says, including the happy talk analysts quoted farther down in the story: this kind of panic buying is a sign of a late-stage bubble. It's true that bubbles usually last longer than skeptics think they will, but this one has been firing on all cylinders for a while now. I doubt there's more than a few months or a year left before it bursts.
Brad reads Kevin's post and says
A 30% rise in local housing prices in a year in which short interest rates have not fallen and the yield curve not flattened is hard to explain as anything other than a bubble. But I still don't see the housing bubble as covering enough of the nation to be a danger.
Meanwhile, young Matt Y. in DC, after reading this, made this announcement:
I decided to halt my inquiries into the possibility of youthful homeownership.
DC's an odd case. I was there recently and everywhere I looked, I saw new condos being built and old boarded-up houses with "sold" signs and construction company signs on them. On the one hand, I've heard that Bush's massive spending and the creation of the Dept. of Homeland Security have increased DC's population by 20-something thousand (about 5%). So population is up, but I'm guessing that DC's housing capacity is growing faster than its population (which should push prices down at some point.) In any case, housing prices in DC have more than doubled over the last four or five years, and the rate of increase has shown no sign of slowing yet.
Also, while DC was once a pretty run down city, many areas are revitalized or revitalizing -- new shops, restaurants, night life, and so on. On the other hand, crime is still high and the public schools remain notoriously bad.
So, knowledgeable readers: is there a housing bubble in DC?
AB
Wednesday, April 14, 2004
Incredible
Via Atrios, from the NYT:
ROEMER: Would it have made any difference if you had mentioned -- did you ever mention it, for instance, to the president -- your briefing the president from August 6th on?Here's Bush, on Tuesday:
TENET:: I didn't see the president. I was not in briefings with him during this time. He was on vacation. I was here.
ROEMER: You didn't see the president between August 6, 2001, and September 10th?
TENET:: Well, no. Before -- saw him after Labor Day, to be sure.
ROEMER: So you saw him September 4th -- at the principals' meeting?
TENET:: It was not at principals' meeting.
ROEMER: Well, you don't see him...
TENET:: Condoleezza Rice -- Condoleezza -- I saw him in this time frame, to be sure.
ROEMER: OK. I'm just confused. You see him on August 6th with the PDB.
TENET:: No, I do not, sir. I'm not there.
ROEMER: OK. You're not -- when do you see him [Bush] in August?
TENET:: I don't believe I do.
ROEMER: You don't see the president of the United States once in the month of August?
TENET:: He's in Texas and I'm either here or on leave for some of that time, so I'm not here.
ROEMER: So who's briefing him on the PDBs?
TENET:: The briefer, himself. We have a presidential briefer.
ROEMER: But you never get on the phone or in any kind of conference with him to talk at this level of high chatter and huge warnings during the spring and summer to talk to him through the whole month of August?
TENET:: We talked to him directly throughout the spring and early summer almost every day.
ROEMER: But not in August?
TENET:: In this time period, I'm not talking to him, no.
And of course, that concerns me. All those reports concern me. As a matter of fact, I was dealing with terrorism a lot as the President when George Tenet came in to brief me. I mean, that's where I got my information. I changed the way that -- the relationship between the President and the CIA Director. And I wanted Tenet in the Oval Office all the time. And we had briefings about terrorist threats. This was a summary.I guess Bush meant to add, "except, of course, when I'm on vacation." But, "with all the pressure of trying to come up with an answer," it didn't "pop into [his] head."
... The way my administration worked, Ed, is that I met with Tenet all the time, obviously met with my principals a lot. We talked about threats that had emerged. We had a counterterrorism group meeting on a regular basis to analyze the threats that came in. Had there been a threat that required action by anybody in the government, I would have dealt with it. In other words, had they come up and said, this is where we see something happening, you can rest assured that the people of this government would have responded, and responded in a forceful way.
AB
It's Your Children's Money, Quick Take It!
WASHINGTON - Uncontrolled U.S. budget deficits would pose a serious threat to global prosperity in coming years as rising interest rates depress economic growth in the United States and around the world, the International Monetary Fund (news - web sites) warned Wednesday.AB
The IMF released a new analysis that predicted if nothing is done to get control of the soaring U.S. deficits, it would shave global economic output by 4.2 percent by 2020 and reduce U.S. economic growth by 3.7 percent during the same period.
IMF economists said much of the adverse impact would occur because of increased borrowing demands in the United States to finance the budget deficit. This would drive up U.S. interest rates and interest rates in other countries as the global supply of available capital is reduced, they said.
"The rest of the world is affected seriously by the U.S. fiscal deficit," IMF chief economist Raghuram Rajan told reporters in a briefing on the new report.
The IMF's forecast that the U.S. budget deficit will be a significant drag on growth reflected what will occur if there is no improvement in the deficit, which the Bush administration projects will hit $521 billion this year, a record in dollar terms, and show little improvement in coming years.
The Lost Art of Diplomacy
In Iraq, the standoff between Sadr's militias in Najaf and 2500 US Army troops (and their tanks, artillery, and air support) is a tense and extremely dangerous one. However, it looks like some careful diplomacy by an Iranian delegation may be easing the situation there. The Iranians, being from the only Shiite-ruled country in the world, have special influence with the Shiite community in Iraq. Happily, news reports are saying that since the Iranian delegation has arrived in Najaf to try to diffuse the situation, Sadr has relented on many of his most contentious demands.
So why do I refer to diplomacy as a "lost art"? Because it turns out that the only reason the Iranians are so helpfully mediating in the standoff is because the British asked them to. If it hadn't been for the initiative of the British diplomatic corps, it seems likely that no negotiated progress would be being made, and that there would be no possibility of a peaceful resolution to the standoff. To the Bush administration, diplomacy is indeed a lost art. Whatever small diplomatic successes do happen in Iraq are despite the Bush administration's efforts, not because of them.
Kash
CPI Release
The BLS just released the CPI data for March. It shows a surprisingly large increase in prices: +0.4% for consumer items excluding food and energy. That means that prices have increased over the past 12 months by 1.6%, which is the fastest rate of price increase since mid-2001. Even the chained core CPI is rising. The chart below tells the story.
This data reinforces what I said the other day: I think the danger of deflation is behind us.
Kash
Favorite Moments
Two favorite moments from Bush’s press conference last night come to mind. The first was already alluded to by AB’s post from last night. ("Something will pop into my head...") The second is this one, which I’ll simply reproduce straight from the transcript:
Q. Mr. President, Why are you and the vice president insisting on appearing together before the 9/11 commission? And Mr. President, who will you be handing the Iraqi government over to on June 30?Frankly, I’m astonished that the White House still hasn’t thought of an excuse to justify their demand that Bush only be interviewed with Cheney at his side. 10 days ago, Karen Hughes awkwardly indicated on Meet the Press that the White House couldn’t come up with a reasonable fiction – as Brad DeLong put it: “Shorter Karen Hughes: ‘I can't think up a convincing lie, and nobody else has thought up a convincing lie either.’”
A. We'll find that out soon. That's what Mr. Brahimi is doing. He's figuring out the nature of the entity we'll be handing sovereignty over. And secondly, because the the 9/11 commission wants to ask us questions. That's why we're meeting, and I look forward to meeting with them and answering their questions.
Q. Mr. President, I was asking why you're appearing together rather than separately, which was their request.
A. Because it's a good chance for both of us to answer questions that the 9/11 commission is looking forward to asking us, and I'm looking forward to answering them.
Shorter George Bush: "What Karen said."
Honestly, I really thought that they’d have thought of something since then.
Kash
Tomahawk = Lawyer?
Ashcroft on Tuesday:
Mr. Ashcroft said that to the contrary, he personally went to the national security adviser, Condoleezza Rice, on March 7, 2001, and urged her to scuttle what he characterized as an ineffective policy of the Clinton administration specifying that Mr. bin Laden had to be captured, and only in a way that lawyers would approve.CNN, 8/20/1998:
"Even if they could have penetrated bin Laden's training camp, they would have needed a battery of attorneys to approve the capture," Mr. Ashcroft said sarcastically.
American cruise missiles pounded sites in Afghanistan and Sudan Thursday in retaliation for the August 7 bombings of U.S. embassies in Kenya and Tanzania.I can't figure out how or why, but I suppose this loony conflating of lawyers and cruise missiles somehow means that we can't defeat the terrorists until and unless we have tort reform.
U.S. officials say the six sites attacked in Afghanistan were part of a network of terrorist compounds near the Pakistani border that housed supporters of Saudi millionaire Osama bin Laden.
American officials say they have "convincing evidence" that bin Laden, who has been given shelter by Afghanistan's Islamic rulers, was involved in the bombings of the east African embassies.
... The president [Bill Clinton] said he ordered the strike against bin Laden and his compatriots because of "compelling information they were planning additional terrorist attacks against our citizens and others with the inevitable collateral casualties and .. seeking to acquire chemical weapons and other dangerous weapons."
... U.S. Defense Secretary William Cohen said the goal of the strikes was to disrupt and attempt to destroy the suspected training and support facilities used to train "hundreds, if not thousands, of terrorists."
"We recognize these strikes will not eliminate the problem," Cohen said. "But our message is clear. There will be no sanctuary for terrorists and no limit to our resolve to defend American citizens and our interests -- our ideals of democracy and law -- against these cowardly attacks."
AB
Tuesday, April 13, 2004
What, No Press Conference Post in Real Time?
READER: Hey, Angry Bear, where's your real-time commentary on Bush's press conference?
ME: Sorry, I'm out of ideas at the moment. "I wish you would have given me this written question ahead of time, so I could plan for it." But, "... something will pop into my head here in the midst of this press conference post, with all the pressure of trying to come up with an answer, but it hadn't yet. "
READER: Don't you mean "hasn't"?
ME: Hasn't what?
READER: Popped into your mind.
ME: Popcorn?
READER: Who said anything about popcorn?
ME: "Now is the time to talk about winning this war on terror." And, might I add, "one thing is for certain, though, about me -- and the world has learned this -- when I say something, I mean it."
AB
For substantive commentary, see Dave Sirota and CalPundit.
UPDATE: See Wonkette for more. While there, make sure to read this one too. And this -- She's really on a roll.
UPDATE 2: Word O' Crap has a must-read overview.
Consumer Confidence and Consumer Spending, Part II
Today the Commerce Department reported rapidly rising retail sales in March. Some read this as renewed evidence that the recovery is roaring ahead. The bond market is dutifully plunging in response.
Note one interesting thing: this follows closely on the heels of several reports that consumer confidence has been falling. Add another data point to my suspicion that consumer confidence has little or nothing to do with actual consumer spending.
Kash
Bush’s Approval Ratings
Perhaps surprisingly, Bush’s approval ratings have held roughly constant over the past month. The chart below shows the running average of 10 national polls from January 1 of this year to today, with 95% confidence bands. (For context, take a look at this post about Bush’s approval ratings on the American Street.)
The recent stability in Bush’s approval ratings may be surprising to some, given that over the past month people heard about Richard Clarke’s damaging book, saw further administration stonewalling and obfuscation regarding the 9/11 commission, and watched the situation in Iraq become more deadly and chaotic by the day.
So why aren’t his approval ratings suffering? There are several theories.
First, one must keep in mind that there has been some good news, too, such as improving employment statistics. Perhaps this good news has counteracted the bad news. Second, it’s possible that the particular examples of bad news that I mentioned above are seen (at least by those who were still approving of Bush a month ago) as not being Bush’s fault. Third, perhaps it those pieces of bad news were not given much importance by those who still approve of Bush. For example, maybe people who approve of Bush didn’t place much stock in Clarke’s testimony and don’t see the increased difficulty in Iraq as being surprising or particularly worrying.
Put another way, we may be at or near the lower bound of Bush’s approval ratings. It may be the case that those who still support Bush at this point are likely to do so no matter what happens. If things continue on their current trajectory in Iraq and regarding the 9/11 commission, we may well find this theory tested over the coming months.
Kash
The Daily Show
Not having sufficiently debased itself by endorsing Joe Lieberman, The New Republic has now hired a new TV critic, Lee Siegel. His (her?) first target: Jon Stewart's The Daily Show -- a show that regular readers know I regularly cite:
To be honest, I was never a huge fan of Stewart's humor, which he custom-crafts for a mostly college-age audience. "The Daily Show"'s intention of showing clips from the news in order to mock the conventional coverage of the news and get to the bottom of what's really going on in the world always seemed to me too dependent on the thing it derided--the comic equivalent of covering an old song. Stewart's deflate-the-talking-heads shtick consists too much of sarcastic jibes at the Pompous or Deceitful Public Figure, at the Underlying Reality of Self-Interest; it's more like throwing fruit than making jokes. [... commentary progressively degrades for another ten paragraphs]Now, I had a brilliant take-down of Siegel at the ready, but Digby beat me to it:
Methinks that journalist, TV critic and all around pompous ass Lee Siegel just doesn't get the joke. But that's not surprising. He is, after all, the punch line.AB
Monday, April 12, 2004
Does Bad Data Explain the Unusual Recovery?
From last week’s Economist (subscription required):
DESPITE the welcome leap in American employment in March (see article), America's job market has been surprisingly weak in the past couple of years—surprising, at least, to economists. Some have explained this by pointing to rapidly rising productivity figures. Perhaps firms have not needed more workers. But there is another explanation: America's GDP figures, which have been strong, may be inaccurate, and may be exaggerating the extent of economic growth.The picture below illustrates one piece of evidence to support this hypothesis.
...Why might official statisticians be overstating America's GDP—and productivity with it? Mr Hatzius [an economist at Goldman Sachs] suggests that they may be undercounting imports of intermediate inputs of goods and services produced abroad by American firms that have outsourced jobs to cheaper countries. Since GDP is calculated as domestic spending plus exports less imports (including imports of intermediate inputs), this would lead to an overstatement of GDP.
Typically industrial production and GDP figures match each other pretty well. But since 2001 there has been a growing discrepancy.
The article does not address the obvious question, however: if there has been a sudden decrease in the quality of data on imports of intermediate goods and services (and I haven’t seen any direct evidence to support this theory, yet), then why did this just start happening 3 years ago? And why are the errors all in one direction, so that they understate US imports (rather than overstate imports or, as we would typically expect, have errors in both directions cancel each other out)? I don't know the answers to these questions, though I think we can probably rule out one possibility right away: if it's a tax avoidance story one would expect US firms to overstate imports, to make their US profits look lower so that they owe fewer US taxes.
Regardless, if it turns out that this theory is indeed true, at least this sure would make more sense out of some unusual features of this recovery.
Kash
Bush to Discuss Iraq
The White House just announced that Bush will hold a press conference on Tuesday evening to discuss Iraq. That gives reporters 24 hours to come up with some good questions. Here’s my suggestion to get the ball rolling:
1. “Is the occupation of Iraq going about as you expected it, or has it been more difficult than you expected?”
2a. Follow-up to 1, if “about like I expected it”: “Why did you feel that there was no need to tell the American people that Iraq would still be dangerous, chaotic, and a significant drain on US taxpayer and military resources even after a full year of US occupation?”
2b. Follow-up to 1, if “more difficult”: “Why do you think we underestimated how difficult it would be to establish a stable regime in Iraq? Is it because we had poor intelligence, were over-optimistic, or because we’ve made mistakes while there? Who do you think it to blame for whatever errors were made?”
Kash
Good Analogy
Here’s what a CBSMarketwatch article about this week’s upcoming CPI release said regarding the potential danger for inflation that it may or may not show:
WASHINGTON (CBS.MW) -- Imagine coming across an apartment building where half of the residents are shouting fire and throwing their possessions from their windows and the other half are calmly sitting on the front stoop, chatting, and drinking cans of beer wrapped in paper bags.Myself, I was in the camp of those worried about deflation for much of last year. But in the last few months I’ve stopped worrying about deflation. However, this doesn’t mean that I agree with those who are already worrying about inflation. I think there’s enough slackness in the economy that it will still be several months before we see the inflation rate creep up. On Wednesday (when the March CPI figures are released) we’ll have a tiny bit more information to see who’s right.
Such a dichotomous view is what emerges when you talk to Wall Street economists about inflation. Many economists are certain that higher inflation is a foregone conclusion, while others dismiss the concern. Who is right?
Kash
Analysis of the Falluja Ceasefire
I found some interesting analysis of the ceasefire (now in its second day) that was agreed to in Falluja. The website DEBKA, an independent web-based newspaper based in Jerusalem devoted to security issues in the Middle East (and writing from the perspective of the Israeli right) argues that the US military agreed to the ceasefire under pressure by the IGC, and that it reflects the weakness of the US position there. In an article over the weekend DEBKA asserted several things that I haven't seen anywhere else in the media (which they say are supported by military intelligence sources, presumably in the Israeli military community):
- "Thursday night, April 8, US forces, diverted to regain the southern town of al Kut from Sadr's militia, rolled into the town center. They rolled out again with all speed once they saw the steady barrage directed against them could be halted only by a heavy bombardment of the streets and residential districts with resultant heavy civilian casualties."
- "Friday afternoon, intelligence reached the US command that a combined Shiite-Sunni-al Qaeda attack on Mosul was in the offing. US forces were ordered to evacuate bases in the city area and barricade themselves in camps outside. The immediate result was the breakdown of Iraqi administrative and police authority in this part of northwestern Iraq. Iraqi police and security officers began surrendering to the various militias including al Qaeda and handing over the weapons distributed by the Americans. The breakdown touched off the flight of tens of thousands from the Sunni suburbs of Mosul."
- "US forces withdrew from Baghdad's Sadr City suburb at the same time as they left Mosul. By Friday nightfall, the last US patrol had left the hostile suburb to the control of Sadr's militia in the hope of stemming further bloodshed on both sides."
- "According to DEBKAfile's military sources, a wave of desertions is sweeping the 150,000-strong command and rank-and-file levels of the Iraqi army, border guard and police. Faced with these desertions, the Iraqi Governing Council is beginning to fall apart as one minister after another abandons the government. Turning on its maker, the IGC demands that the US halt its military offensive in Iraq without delay."
I'm not exactly sure how much stock to put in this source. We haven't been hearing much about ongoing military developments in Iraq for the past few days, other than a downed helicopter yesterday and the ceasefire in Falluja. But for a weekend that was supposedly quiet, there certainly were a lot of casualties -- at least 25 US soldiers were killed in just the past 3 days -- which may suggest that there's a lot going on in Iraq that we're not hearing about. Regardless of the details, however, the dilemma faced by the US authority in Iraq is clear. I see no good options at all at this point.
What a miserable failure.
Kash
Huh?
Roger Ailes finds this statement in Clifford May's 4/8/04 column in National Review Online:
President Roosevelt waited until after World War II to put in place a commission to investigate what mistakes led to Pearl Harbor.Roger clearly documents that the Roosevelt actually issued an executive order on December 18, 1941 appointing a commission to investigate Pearl Harbor. So May flat-out made that part up. And if you'll re-read the above sentence a bit more slowly, you'll find even more convincing evidence that May was just writing down whatever sounded good to him at the time. Pathetic and ignorant.
AB
Sunday, April 11, 2004
Connect the Dots
Max Sawicky connects the dots in the August 6th, 2001 Presidential Daily Briefing. Definitely take a look.
AB
UPDATE: Viq Digby, this transcript of Bush being interviewed over the PDB. At one point Bush says
"And you might recall the hijacking that was referred to in the PDB. It was not a hijacking of an airplane to fly into a building, it was hijacking of airplanes in order to free somebody that was being held as a prisoner in the United States."That sounds oddly like a statement that it's ok to ignore threats of hijackings when the intent is to barter for prisoners: Had the PDB warned that planes would be hijacked and flown into buildings, we would have taken forceful action; since only regular hijackings were warned of, we didn't take additional preventative measures. Is that really going to be the official line on this? Ok, then. But I don't think it will work.
End Corporate Taxation!
Via the Salt Lake Tribune:
Nearly two-thirds of the companies operating in the United States reported owing no taxes from 1996 through 2000, according to a recent government study.First I support free trade, and now I'm for eliminating the corporate income tax. At this rate, I'll have to rename the blog InstaBear.
Foreign companies doing business here were more likely than American-based ones to claim they owed no taxes, according to the report filed this week by the General Accounting Office, the investigative arm of Congress.
Among American corporations, an average of 6 in 10 reported no tax liabilities on their U.S. income tax returns filed for the five years from 1996 through 2000, the study found. The percentage of American companies saying they owed nothing increased steadily but slightly in the period, to 63 percent in 2000 from 60.3 percent in 1996.
But seriously, I think eliminating the corporate income tax in a revenue-neutral fashion (i.e., raising other taxes at the same time to leave federal revenue unchanged) might make sense for a number of reasons. Here are some off the cuff thoughts:
- As the excerpt above makes clear, it's not a particularly effective tax (remember the data in the article cited above are from 1996-2000, the Clinton Boom Years, so it's unlikely that zero or negative profits are the reason companies weren't paying taxes.)
- While taxing money first as profits and then as income isn't, as Republicans allege, bad because it's "double-taxation" (just about everything in life is taxed more than once), it does complicate the tax system.
- Eliminating the tax would reduce the incentive to move corporate headquarters overseas.
- If corporate taxes were eliminated, then all dividend income should be taxed as regular income. This would go part of the way to achieving revenue-neutrality; the rest would come from progressive tax increases. Why progressive and not across the board? Because the benefits of eliminating the corporate income tax would accrue disproportionately to the upper brackets.
- Corporate taxes currently generate about 20% of the government's operating revenue, so the requisite increases in income taxes would be non-trivial.
- Very small business owners, who by definition make less money, would benefit from having the profits of their business taxed at their personal marginal rate instead of at the corporate tax rate (35%).
- The IRS would need to monitor in-kind compensation to make sure that income is not being disguised as business expenses.
- Note that I'm only talking about corporate income taxes, not FICA or Payroll taxes paid by corporations.
- Another complicating factor would be the profits of foreign-owned companies with operations and sales inside the US. One proposal is for such companies to continue paying taxes in proportion to their ownership held outside of the US. For example, if 10% of Toyota is owned by US citizens, then it would continue to pay taxes on 90% of the profits from its US operations. However, something like this would remove a lot of the simplicity from the proposed system and would likely create some odd distortions, (the Law of Unintended Consequences), so I'm unsure whether this would be worth the trouble.
- Even the Liberal Matt Yglesias recently endorsed this, though not enthusiastically: "Nevertheless, the corporate income tax concept doesn't make a great deal of sense to me ... Eliminating the corporate income tax and replacing it with higher taxes on large personal incomes and capital gains seems like it would be efficiency-enhancing, revenue neutral, and about the same from the standpoint of fairness." Matt also links to a CAP article with more details on corporations not paying taxes.
AB
UPDATE:
WASHINGTON - The Internal Revenue Service (news - web sites) audited fewer corporations, small businesses and partnerships last year but more individual taxpayers, according to a study of government data.
Syracuse University's Transactional Records Access Clearinghouse, in its analysis of IRS data, concluded that the audit rate for businesses of all sizes slid slightly last year to 2.1 audits for every 1,000 businesses, down from 2.2 audits per 1,000 businesses the previous year.
At the same time, the IRS audited 14 percent more individual tax returns. The audit rate for individuals increased last year to 6.5 audits for every 1,000 taxpayers.
Saturday, April 10, 2004
More Navel Gazing
I just came across a site, BlogRunner, that archives weblogs and compiles statistics about them, statistics that, at least in my case, the proprieter is not even aware of. For example, here are the bloggers I link to, the bloggers who link to me, and the sites I link to most often:
| Top Outbound Weblogs 1. CalPundit 2. Eschaton 3. P.L.A. 4. Talking Points Memo 5. ~~~TBOGG~~~ 6. Matthew Yglesias 7. Off the Kuff 8. Hullabaloo 9. Random Thoughts 10. Roger Ailes | Top Inbound Weblogs 1. Off the Kuff 2. Pacific Views 3. The Mad Prophet Blog 4. Lean Left 5. Skeptical Notion 6. Matthew Yglesias 7. Left is Right 8. Path of the Paddle 9. TAPPED 10. Brad DeLong | Top Outbound Sites 1. www.washingtonpost.com 2. www.nytimes.com 3. www.cnn.com 4. www.salon.com 5. atrios.blogspot.com 6. calpundit.com 7. pla.blogspot.com 8. talkingpointsmemo.com 9. www.matthewyglesias.com 10. offthekuff.com 11. www.amazon.com 12. dailyhowler.com 13. rightwingnews.com 14. www.msnbc.com 15. pandagon.net |
The BlogRunner algorithm seems to have some flaws. For example, I know that I link to Orcinus far more often than I link to Random Thoughts (through no fault of Susan's), and due to Dwight Meredith moving to Wampum, I definitely haven't linked PLA in a long time. But all in all, if you want to get a feel for the ties between your favorite blog and other blogs, it's not too far off. Just go here and type the name of any blog (not the url).
AB
Friday, April 09, 2004
This post may someday be historical, but it's unlikely to be historic
During her Thursday testimony, Rice used the word "historic" once and used the word "historical" almost ten times. For example, this exchange with Chairman Kean (full transcript here), on the historical nature of information about planes-as-weapons:
KEAN: I've got a question now I'd like to ask you. It was given to me by a number of members of the families.Here's another, on the historical nature of the 8/6/01 PDB:
Did you ever see or hear from the FBI, from the CIA, from any other intelligence agency, any memos or discussions or anything else between the time you got into office and 9/11 that talked about using planes as bombs?
RICE: Let me address this question because it has been on the table ... And I said, at one point, that this was a historical memo, that it was -- it was not based on new threat information. And I said, "No one could have imagined them taking a plane, slamming it into the Pentagon" -- I'm paraphrasing now -- "into the World Trade Center, using planes as a missile."
BEN-VENISTE: I want to ask you some questions about the August 6, 2001, PDB. ... Did you tell the president, at any time prior to August 6th, of the existence of al Qaeda cells in the United States?And here's the most widely shown exchange:
[crosstalk -- my redaction]
RICE: If you'll just give me a moment, I will address fully the questions that you've asked.
First of all, yes, the August 6th PDB was in response to questions of the president -- and that since he asked that this be done. It was not a particular threat report. And there was historical information in there about various aspects of al Qaeda's operations.
BEN-VENISTE: Isn't it a fact, Dr. Rice, that the August 6th PDB warned against possible attacks in this country? And I ask you whether you recall the title of that PDB?Other usages of variants of "historic" by Rice include
RICE: I believe the title was, "Bin Laden Determined to Attack Inside the United States."
Now, the...
BEN-VENISTE: Thank you.
RICE: No, Mr. Ben-Veniste...
BEN-VENISTE: I will get into the...
RICE: I would like to finish my point here.
BEN-VENISTE: I didn't know there was a point.
RICE: Given that -- you asked me whether or not it warned of attacks.
BEN-VENISTE: I asked you what the title was.
RICE: You said, did it not warn of attacks. It did not warn of attacks inside the United States. It was historical information based on old reporting. There was no new threat information. And it did not, in fact, warn of any coming attacks inside the United States.
- Commissioner, this was not a warning. This was a historic memo -- historical memo prepared by the agency because the president was asking questions about what we knew about the inside.
- The president was told this is historical information.
- It is just not the case that the August 6th memorandum did anything but put together what the CIA decided that they wanted to put together about historical knowledge about what was going on and a few things about what the FBI might be doing.
- Well, August 6th is most certainly an historical document that says, "Here's how you might think about al Qaeda."
From Thursday until this evening, everyone thought that by "historical," Rice meant old, outdated, and from the past. But now details of that August 6th PDB are leaking out and it turns out that the threat information was nearly contemporaneous with the August 6th meeting and PDB:
President Bush's August 2001 briefing on terrorism threats, described largely as a historical document, included information from three months earlier that al-Qaeda was trying to send operatives into the United States for an explosives attack, according to several people who have seen the memo.Without reflection, one might conclude that Dr. Rice was being misleading and intentionally deceptive, but one would surely be wrong. Let's turn to the dictionary:
The so-called presidential daily briefing, or PDB, delivered to Bush on August 6, 2001 -- a month before the September 11 attacks -- said there were various reports that Osama bin Laden had wanted to strike inside the United States as early as 1997 and continuing into the spring of 2001, the sources told The Associated Press.
his-tor-ic adj.Dictionary.com even includes this cautionary usage note:
1. Having importance in or influence on history.
2. Historical.
Usage Note: Historic and historical have different usages, though their senses overlap. Historic refers to what is important in history: the historic first voyage to the moon. It is also used of what is famous or interesting because of its association with persons or events in history: a historic house. Historical refers to whatever existed in the past, whether regarded as important or not: a minor historical character. Historical also refers to anything concerned with history or the study of the past: a historical novel; historical discoveries. While these distinctions are useful, these words are often used interchangeably, as in historic times or historical times.So, the explanation is clear: the one time Condi said "historic," she meant it in the sense of really, really, really, important. The remaining times when she said "historical", she meant it in the sense of "historic." She surely never meant to imply that intelligence from May of 2001 indicating that "al-Qaeda was trying to send operatives into the United States" was dated or not cause for action. To the contrary, she must have meant that its importance was
AB
UPDATE: Via Atrios, I see that the NYT has failed to correctly understand Dr. Rice's meaning:
The disclosure appears to contradict the White House's repeated assertions that the briefing the president received about the Qaeda threat was "historical" in nature and that the White House had little reason to suspect a Qaeda attack within American borders.
Pot, Meet Kettle. Call it Black.
This comes on the heels of GOP allegations that MoveOn is coordinating with the Kerry campaign.
House GOP Committee Pays Soft Money Fine
WASHINGTON — The National Republican Congressional Committee has agreed to pay a $280,000 civil fine for transferring big donations known as "soft money" to an outside group to finance ads in the 2000 election.AB
.. The U.S. Family Network sent $300,000 to another group, Americans for Economic Growth. AEG then spent about $260,000 to run radio ads in fall 1999 accusing Democrats of planning to raid the Social Security fund and use it on other programs.
Can't Say I Feel Sorry for Him
Enron's Skilling hospitalized after bar incidents
Former Enron CEO Jeffrey Skilling was taken to a hospital early Friday after several people called police saying he was pulling on their clothes and accusing them of being FBI agents, a police source told The Associated Press.
Police found Skilling at 4 a.m. at the corner of Park Avenue and East 73rd Street and determined he might be an "emotionally disturbed person," said the source, speaking to the AP on condition of anonymity.
...Skilling was at two bars in Manhattan – American Trash and The Voodoo Lounge – where he allegedly ran up to patrons and pulled open their clothes, the source said.
"He was shouting at them 'You're an FBI agent and you're following me,"' the source said.
Skilling allegedly did the same thing to people on the street, the source added. He was with his wife at the time.
AB
Not Much to Say
I want to write something, but I don't have much to say. Rice's testimony is big news, but it's been well-covered elsewhere. Ditto for the insertion of Iraq into a handbasket headed (but hopefully not unswayably so) towards Hell.
What do most people talk about when they've got nothing to say? Themselves, of course. So here's some navel-gazing.
- Traffic continues to grow nicely. It's a rare weekday that we don't get more than 1,000 unique visitors and weekend traffic hovers around 600, for an overall average of about 965/day, which is more than I ever expected. What's the secret? Mostly, persistence I think. There's a clear relationship between the age of a blog and its traffic, with Wonkette being the exception that proves the rule. However, this is not a purely causal relationship. There's selection bias: we don't observe the old blogs that failed to generate traffic and then vanished. More likely, good blogging -- or at least blogging that appeals to a certain audience -- causes both high traffic and longevity. Also, the political season that is upon us and secular growth appear to be increasing traffic across the board. Still, Angry Bear is growing relative to other blogs. If my readers could convince about 400 of their dearest friends to read the blog every day, we could break into N.Z. Bear's top 100, as measured by traffic (the currrent ranking is 135.)
Links only seem modestly proportional to traffic; based on that measure, this blog is currently rated #279 and it would take about 150 additional unique links for us to evolve from a "large mammal" to a "playful primate." Gaining a pair of opposable thumbs would take about 500 new links.
- We've raised $3,176 for John Kerry, putting us well on our way to the cumulative goal of $10,000 by the convention. Thanks!
- I've been pretty busy lately, which explains the dearth of in-depth posts about economics and policy (I made a modest attempt to rectify this in this post.) It's much easier, and often more fun, to point out that either God or nature is about to send a plague of locusts to Washington. Hopefully, things will slow down in a few weeks. Kash has similarly been busy of late, but I think he'll be back to full speed soon as well.
- I had high expectations when I invited Karsten to post from Europe on Fridays. I am very happy to see that my expectations have been exceeded.
- The RSS feed appears to be fully functional, at last.
AB
The Daily Show
Thursday night's coverage of Rice's testimony was hilarious, though somewhat depressing if you reflect on it. Comedy Central replays TDS at 10:00 a.m. and 7:00 p.m, Eastern time. Catch it if you can.
AB
Thursday, April 08, 2004
Pharaoh George Bush II?
Let's say you're a deeply religious and born-again President of The United States. Furthermore, you have ties extending deeply into the evangelical church. Then it must assuredly be a bad sign when a Plague of Locusts (billions of them!) is set to descend upon the nation's capital, Washington, D.C. (Read about Pharoah, Moses, God, and plagues here.)
Now, you might think of this as an innocent biological coincidence, something involving evolution, natural selection, 17-year life cycles, and so forth. If so, then you fail to grasp the concept of Intelligent Design: "The theory of intelligent design holds that certain features of the universe and of living things are best explained by an intelligent cause, not an undirected process such as natural selection," so there may well be some deeper purpose or message underlying this.
AB
P.S. Ok, they aren't really locusts, they're 17-year cicadas, but (1) they look like locusts to me, and (2) they are often called "17-year locusts," to the chagrin of entomologists.
Postcards from Old Europe - Special Easter edition
Note: This week's postcard comes one day early courtesy of Easter!
Easter is a time to celebrate rebirth and renewal; something many European economies could really profit from. In discussions with friends and colleagues I've often heard the question: "Well, why don't you change something? Why don't you implement reforms over there in Europe?".
The question is obviously not that easy to answer - there is no single factor which is blocking reforms. Some hindrances to reform are common to most western democracies, while others are unique to specific countries. As I am German, I feel that I am best qualified to write about the situation in this country so I'll take the next couple of paragraphs to lay down my opinion on the so-called "Reformstau" (Reform [traffic]jam).
Reforms are usually instituted to increase a countries rate of economic growth or to remove something which is considered to be unfair. A problem can arise when people think that increased growth will not benefit everyone equally. Many European countries have deep-rooted egalitarian instincts - people put a high value on the uniform distribution of wealth across the population. German basic law (i.e. the constitution) has an express provision in article 72 which obligates the government to establish "equal living conditions throughout the federal territory".
One could argue that economic reforms initially heighten inequality because they benefit some constituencies more than others. This becomes even more problematic when reforms entail reducing entitlements - people quickly assume that they have more to lose than they could ever gain because they focus on the present, not the future.
The other question is: "Why do we need reforms at all?". Most people will agree that the quality of life in Germany is very high already. Keep in mind that the growth of GDP is not the sole determinant of economic well being - most people would certainly agree that there is more to their life than GDP. Researchers at the Centre for the Study of Living Standards find that:
Per capita gross domestic product (GDP) is a poor measure of economic well-being. It measures effective consumption poorly (ignoring the value of leisure and of longer life spans) and it also ignores the value of accumulation for the benefit of future generations.Seen against this backdrop one could understand that people could be against reforms if they have the impression that one of the other contributors to their well being could potentially suffer as a result of implementing them.
[...]
We argue that a better index of economic well-being should consider: current effective per capita consumption flows; net societal accumulation of stocks of productive resources; income distribution; and economic security.
Much data shows that Germans are rather risk averse and value the status quo highly. A visible manifestation of this is the provision of high unemployment and welfare benefits in comparison with anglo-saxon countries. A good overview of this subject is provided by the OECD survey of "Benefit Systems and Work Incentives". Although the last survey is somewhat dated (1995) it does provide a more or less accurate view. It is unsurprising that the Scandinavian countries and Germany are at the top of the list with regard to the amount of transfers the unemployed or people on welfare receive. One only needs to look at the amount of debate which surrounded the latest bout of reforms to see that reforming this system of entitlements is very difficult. If you keep in mind that the German economy is anemic, you can readily imagine that convincing someone to give up some of his safety net today to help secure the future is a very difficult proposition.
Is this - understandable and specific - risk aversion a symptom of a timid culture. I think it is. Take the Global Entrepreneurship Monitor (GEM) for instance. It shows that Germans are much less likely to start their own company than the inhabitants of very many other countries. The GEM officially classifies Germany as "below average" along with countries such as Belgium, Sweden or Switzerland and finds that higher levels of social security lead to "much less start-up and firm entrepreneurship". Germany also stigmatizes failure. Someone who fails in business is usually viewed as someone who "had it coming" or "who deserved it" - no wonder that the word "Schadenfreude" is unique to the German language.
As politicians are the filter through which a democratic society's ideas pass before coming into effect via laws, it should be helpful to look at who is actually representing the German public in parliament. I don't intend to examine party affiliations, I just want to give you an impression of the type of people that we elect into our Bundestag. Most deputies (around a third!) are career civil servants. If you add in other people from quasi-governmental institutions you get a share of 54%. This compares to around 5% in the general public. Very representative. In my opinion civil servants have learned to trust regulation and instinctively distrust market forces. This is manifest in countless bits of legislation which assume that the man on the street is incapable of talking his own life into his hands. It is very German to try to legislate everything - from how you can save to retirement to when a shopkeeper is allowed to open his store.
The combination of high living standards, a myopic outlook on life, low risk tolerance and an overbearing government which is distrustful of markets are - at least in my opinion - the major stumbling blocks in the path of any meaningful reform. Although this entire situation might seem outlandish when seen from an anglo-saxon perspective I can assure you that it is consistent when seen against the backdrop of our value system. To paraphrase a research report by Deutsche Bank "In Germany poverty is considered to be the product of injustice, while in the US the root cause of poverty is considered to be laziness".
I wish all readers a great Easter and am looking forward to seeing you here or over at CurryBlog!
Reality in Iraq v. the Bush Administration
From today’s NYTimes:
Account of Broad Shiite Revolt Contradicts White House StandA bit of perspective is in order. A year ago when Iraqis were fighting against the US, one could argue that they didn’t understand that the US was going to help the Iraqi people, and that once they found out that the US was there for their own good, the Iraqi people would be glad. (In fact, I vaguely remember statements to that effect by Rumsfeld et al., but don’t have a specific quote to give you.) But now we’ve been there for a year. They know exactly what to expect from the Bush administration’s governance of Iraq. In economists’ parlance, they pretty much have full information at this point. That makes this revolt all the more telling.
United States forces are confronting a broad-based Shiite uprising that goes well beyond supporters of one militant Islamic cleric who has been the focus of American counterinsurgency efforts, United States intelligence officials said Wednesday. That assertion contradicts repeated statements by the Bush administration and American officials in Iraq.
... American intelligence officials now believe that hatred of the American occupation has spread rapidly among Shiites, and is now so large that Mr. Sadr and his forces represent just one element. Meanwhile... United States intelligence says that the Sunni rebellion also goes far beyond former Baathist government members. Sunni tribal leaders, particularly in Al Anbar Province, home to Ramadi, the provincial capital, and Falluja, have turned against the United States and are helping to lead the Sunni rebellion, intelligence officials say.
The result is that the United States is facing two broad-based insurgencies that are now on parallel tracks.
Why does the phrase "miserable failure" keep coming to mind?
Kash
Kerry’s Fiscal Prudence
Yesterday Kerry gave a major policy address, in which he reoriented his economic proposals around the idea of fiscal discipline. As the Washington Post describes it:
Sen. John F. Kerry outlined a broad deficit-reduction policy yesterday, scaling back several campaign promises that he now concedes the country cannot afford if his new budget goals are to be met.In addition, Kerry said that he would ask that all proposed spending and tax changes (including his own) must be offset by other changes in the budget, as was standard until a couple of years ago. He also suggested that the growth of certain discretionary programs (those not related to defense or education) should be held to the rate of inflation.
In his second major policy address of the general election campaign, the Massachusetts Democrat harked back to the fiscal and political policies of President Bill Clinton, sacrificing social spending to the goal of reducing the budget deficit by half in five years and eventually eliminating it by raising taxes on the rich and restraining government spending.
The details aren’t what’s important here, though. The significance of this address was that it signaled that Kerry has decided to adopt fiscal prudence as a core economic principle. This is a good change in emphasis for the Kerry campaign. The theme of fiscal discipline is one that sets up an easily understood contrast with Bush, is one that resonates with voters (at least in the abstract), and best of all, makes for good economics.
Kash
Echo Chamber?
Arianna Huffington on blogs, in Salon:
And because blogs are ongoing and daily, indeed sometimes hourly, bloggers will often start with a small story, or a piece of one -- a contradictory quote, an unearthed document, a detail that doesn't add up -- that the big outlets would deem too minor. But it's only minor until, well, it's not. Big media can't see the forest for the trees. Until it's assembled for them by the bloggers.AB
Wednesday, April 07, 2004
What’s Up with Import Prices?
Some people may find this morning’s release of the March import price data by the BLS a bit puzzling. It shows that, excluding oil, the price of imported goods into the US hasn’t really been rising – it has gone up by just 1.0% in the past 12 months (between March 2003 and March 2004). In fact, the rate of import price inflation has actually fallen rather than risen over the past year – despite the fact that during that time period we’ve seen a dramatic decline of the dollar against most major currencies, which one might expect should make imported goods more expensive. This data therefore throws some cold water on the expectations of people who think that a weaker dollar should, by causing imports to become more expensive, reduce US imports and thus help improve the US’s trade balance.
There are a couple of possible explanations. One is simply that the exchange rate hasn’t really changed against the US’s major trading partners. There’s some truth to that idea, since the dollar hasn’t weakened against China or Mexico. Nevertheless, it has weakened against many of the US’s largest trading partners, like Canada, the U.K., and Germany, so we would still expect to see some effect. (On a trade weighted basis, the dollar is still down by about 15% over the past year.)
A second possibility is that prices may be falling in some countries that we import a lot from. This may actually be true in some places like Germany and Japan. (Karsten, any comments?) The weaker dollar would then simply counteract import prices that would otherwise be falling. A third explanation is that firms selling imports in the US (note that these include both foreign firms like Toyota, and domestic firms like Wal-Mart) are accepting lower profit margins in order to maintain US market share. There's a long history of this happening in the US (especially in the late 1980s), so this would come as no surprise if it's true.
Regardless of the explanation, however, the result is that we should not expect to see US imports slowing down any time soon.
Kash
Interest Rates and Employment Reports
Take a look at the yield on the 10 year bond over the past 3 months (40 indicates an interest rate of 4.0%, etc.):
Something seems a bit odd to me about this picture: namely, those massive swings in bond prices (and thus yields) that have happened with each of the last 2 employment reports in early March and early April. Bond yields plummeted on March 5, when the employment report was somewhat weaker than expected. And bond yields shot up on April 2, when the employment report was stronger than expected.
Are such extreme reactions to a monthly report sensible? Some movement in bond yields in response to the employment report is only natural – surprises in the data, by definition, should be expected to change expectations about the future. But the magnitude of these movements in the interest rate seem incredibly large to me. Month-by-month statistics are notoriously volatile, easily affected by relatively small one-time events (such as the ending of the grocery workers strike in California), and thus generally only tell us a lot about the economy when a trend is sustained over multiple months. But looking at this interest rate data, it looks like with each new unemployment report, the market takes the result as an iron-clad forecast valid for many more months to come. Until the next report, that is.
I’m not trying to second-guess the market. But I do wonder if this is an example where traders may sometimes get carried away by a hyped-up emotional response to one month’s data, rather than take it for what it really is – data about just one month.
Kash
Promoting Economic Growth in Developing Countries
I found a nice paper that addresses an issue occasionally touched on here – economic growth (and the lack thereof) in the developing world. It’s an IMF working paper by Philippe Beaugrand, one of the IMF’s Africa specialists, and it nicely summarizes one school of thought about how to make poor countries grow richer. As he puts it in the introduction: “It’s entrepreneurship, stupid!”
How does one encourage productive entrepreneurship? Beaugrand provides a convenient seven step summary:
- Peace and stability: establish a credible political system that ensures legitimacy and continuity.
- Governance and the rule of law: maintain law and order; enforce property rights; avoid capricious changes in the legal and regulatory framework; set up a credible judiciary.
- Mentality: drum up support for economic and social reforms, encourage innovation, and place economic success at the forefront of the political discourse.
- Economic incentives: adopt sound economic policies including hard budget constraints, open competition, a neutral tax system, no nontariff barriers and low tariffs, basic protection for FDI, etc.
- Basic infrastructure: ensure the provision of a minimum array of public services, especially as regards the transportation network and utilities.
- Access to capital: develop efficient financial intermediation systems [i.e. a sound banking system]; mobilize external savings, but with prudent debt management.
- Education: build up human capital – raise literacy and gain access to up-to-date knowledge.
Kash
Iraq Deteriorates Further
The violent uprising has now spread to at least half a dozen cities in Iraq. Perhaps even more worrying than simply the number of cities that have turned into combat zones in the past few days, or even than rapidly climbing casualty figures (39 coalition troops killed in the past 7 days), however, is the fact that Sunni and Shiite groups are beginning to bridge the gap between them and are uniting against their common enemy – the United States occupation. It looks increasingly likely that this won’t be ended quickly or easily.
Kash
Daddy, Where Do Republicans Come From?
Seriously, I read something like this (and this) and I can reach only one conclusion: come November, if more than half the people who vote (roughly; see Florida, 2000) actually vote for George W. Bush then I'll have to simply give up. Politics, sound policy, and the common weal will all be irrelevant. The only thing remaining will be to put as many dollars in my own pocket, as fast as I can. People get the government -- and the President -- they deserve.
AB
Tuesday, April 06, 2004
More From Gary Hart
In Salon today:
The U.S. Commission on National Security/21st Century, co-chaired by former Sen. Warren Rudman and myself, reported to President George W. Bush and his new administration in January 2001 that terrorists were surely going to attack the United States and that our country was woefully unprepared. We documented the lack of intelligence coordination against this threat and the lack of preparation of up to two dozen federal agencies, as well as state and local governments, to prevent such attacks or respond to them when they did occur. Though we had no ability to forecast specific times, places and methods for such attacks, we were united in our certainty that they were bound to occur. In our first report we said: "America will become increasingly vulnerable to hostile attack on our homeland [and] Americans will likely die on American soil, possibly in large numbers." In our final report we urged the new Bush administration to create a national homeland security agency to prevent terrorist attacks.Read the rest.
AB
Indeed
John Kerry, in Cincinnati:
"There is nothing conservative about running up deficits as far as the eye can see, there is nothing conservative about piling debt on our children and building up the annual interest payments for that debt so we can't fund education, health care."AB
Hidden Cost Update
Yesterday, I asked which official, "before the war, put the cost [of Iraq] in the low single-digit billions." This is what I was vaguely recalling:
On April 23, 2003, Andrew S. Natsios, head of the U.S. Agency for International Development, laid out in a televised interview the costs to U.S. taxpayers of rebuilding Iraq. "The American part of this will be $1.7 billion," he said. "We have no plans for any further-on funding for this."Thanks to Melanie for the reminder.
AB
Monday, April 05, 2004
Bad Poll News for Bush
From the latest Pew poll, via Yahoo:
Still, a majority supports his decision to use military force in Iraq, says the poll released Monday.AB
Four in 10, or 40 percent, approve of the way Bush is handling Iraq, while 53 percent disapprove. That's down from six in 10 who approved in mid-January, according to the poll by the Pew Research Center for the People & the Press.
Bush's overall job approval is at 43 percent, a low point for his presidency, down from 56 percent in mid-January. In the new poll, 47 percent disapproved of Bush's job performance. Bush's job approval soared to 90 percent after the terrorist attacks of Sept. 11, 2001, and remained in the 70s for almost a year after that.
Operation Liberty and Justice for All
Can we fire whoever it is that comes up with names for military operations these days? Afghanistan is "Enduring Freedom," the Iraq War is codenamed "Iraqi Freedom," and now the current operations in and around Fallujah are codenamed "Vigilant Resolve." It's a codename, not an explanation, statement of principal, or bumper sticker slogan.
In the good old days, circa World War II, we gave our operations tough names like Dragoon, Cobra, Sledgehammer, Avalanche, Grenade, Torch, and best of all, Overlord. More of that, please. And no, naming operations after cheesy 1980s movies, no matter how many great deer-blood-drinking jokes they inspire, does not count.
AB
Urban Job Markets Under Reagan, Bush I, Clinton, and Bush II
In a nice bit of work, G. Scott Thomas of American City Business Journals (a non-partisan straight news entity as far as I can tell) crunched the last 25 years' job numbers; his results put last weeks's good jobs news into context:
• Nearly two-thirds of [the 100 largest urban] areas -- 63 of 100 -- had fewer jobs in 2003 than in 2000, the final year of Bill Clinton's administration. The collective loss in those 63 markets was roughly 2.1 million jobs, which was larger than the total national decline.There's a lot more in the full story, including job numbers for each of the last four presidents. There's even good news for conservatives. Well, at least for fans of Ronald Reagan; neither Bush fares well on the jobs metric:
• Seventy-nine of the top 100 metros posted slower job-growth rates during Bush's first three years than under any of his three predecessors: Clinton, George H.W. Bush or Ronald Reagan.
• Ninety-nine of the 100 largest markets had worse employment records under George W. Bush than Clinton. The sole exception was Honolulu.
Reagan emerged as the leader, with 53 of the 100 markets posting their highest job-growth rates during his administration. Thirty-eight markets enjoyed their strongest growth under Clinton, and nine reached their peak under George H.W. Bush. No markets did best under the current administration.The city-by-city data are available from American City Business Journals (html or Excel) -- be sure to take a close look at the aptly located far right column.
The flip side was dominated by George W. Bush, with 79 [of 100] markets registering their lowest job-growth rates during his tenure. Eighteen hit bottom under his father, two did worst under Reagan and one reached its nadir during Clinton's administration.
Of course, part of Reagan and Clinton's strong performances on these scores is attributable to the low baselines each inherited due to the 1980 and 1991 recessions, respectively. Notwithstanding that, there appears to more than that at work here (for example, Bush II hasn't just had slow job growth, he's had negative job growth, a feat last achieved by Herbert Hoover.) And besides, while correlation is not necessarily causation, it does make for good bumper stickers.
AB
Lies, Bribes and Hidden Costs
Eric Boehlert has a good piece in Salon analogizing the Bush administration's selling of the Prescription Drug Bill to the selling of the Iraq Invasion: hype the benefits and willfully suppress the true costs.
In Iraq, the benefits were hyped primarily by promoting the WMD claims (thus creating the bogus benefit of removing WMD from Iraq) and, to some extent, by expressing too much faith in Iraq's rapid transformation into a shining beacon of democracy.
The distortions on the cost side were equally egregious. Larry Lindsey, Bush's then Economic Advisor was roundly chastised by the administration and the Right more generally for saying in September 2002 that the Iraq invasion might cost between $100 billion and $200 billion. White House OMB Director Mitch Daniels was similarly dressed down in January 2003 for proffering a $50-$60 billion cost estimate.(*) Of course, Daniels was too optimistic and Lindsey's number was in the ballpark: costs to date are about $150 billion and the administration is still not including the future costs of the occupation in its budget forecasts. Clearly, officials at the time knews that the invasion would be very costly, but they were pushed to the side.
Similarly, Gen. Shinseki was widely criticized in February 2003 by the administration -- most vocally, Paul Wolfowitz -- for saying that "several hundred thousand" troops would be required to stabilize Iraq after the invasion (Shinseki retired last August.) Now, it is unfortunately becoming increasingly clear that the roughly 130,000 troops now deployed are not enough. Worse, I cannot recall a single pre-war mention that the cost in American lives would top 600. There was a clear and concerted effort to minimize the costs -- whether measured by troops, dollars, or lives -- of the invasion. Those who disagreed were disgregarded and marginalized.
Focusing on the actual costs and benefits of the invasion is important because of a sleight of hand tactic employed by war supporters. Often, in response to criticism of the invasion, supporters will ask questions such as
- Don't you think it's good that Saddam is out of power? (e.g., here)
- Don't you want the Iraqi people to be free? (e.g., here)
Are the benefits of removing Saddam from power greater than the costs, in lives and dollars, of removing him?By hyping the benefits and downplaying the costs, Bush and his supporters lead the public to believe that the answer to this last question was yes. Increasingly, the public's answer appears to be no. Thus, the ex-post justification perforce devolves into a claim that the benefits are positive, not that the benefits exceed the costs.
It is in this context of comparing benefits and costs that the Medicare Drug Benefit and the Iraq War are properly juxtaposed. Could anyone answer no to this question?
Would it be a good thing for all the nation's elderly to have access to life-saving and life-improving drugs?Surely not. What about this question?
Is it worth $400 billion for the nation's elderly to have access to life-saving and life-improving drugs?As it turns out, the answer in the Congress was, narrowly, yes. But that answer was only achieved by hyping the benefits (upon reflection, seniors are not particularly pleased with the plan) and understating the costs by $140 billion, or 35%. While the answer to the previous two questions is apparently yes, had the question been honestly posed as
Is it worth $540 billion to give seniors a modest drug plan under which most will pay 60% or more of their total drug costs out of pocket?then the answer would almost surely have been no. Only by concealing costs and exaggerating benefits is this administration able to get its major initiatives enacted.
Certainly, all politicians cast their proposals in the best possible light. But the Bush administration consistently pushes this to new heights. The old process of starting with analysis, selecting proposals based on that analysis, and then advocating for those proposals is now turned on its head. Policy is first and foremost derived from political exigencies; then the costs and benefits are transmogrified as needed to justify the policy. In 2002, John DiIulio made this painfully clear:
"There is no precedent in any modern White House for what is going on in this one: a complete lack of a policy apparatus ... What you've got is everything -- and I mean everything -- being run by the political arm. It's the reign of the Mayberry Machiavellis."Sadly, bad policy is the predictable result when decisions are made politically and justified by distorted cost and benefit projections. This is true in the context of Iraq, true in the context of Medicare, and true in the context of tax cuts (hyping the job-creating effects while understating the resulting revenue shortfalls). More simply, it's true.
AB
(*) I can't recall which official, before the war, put the cost in the low single-digit billions; hopefully a commenter can help me out.
Sunday, April 04, 2004
Tempest in a Blogspot
For those who are curious, Angry Bear has no plans to start accepting ads. I do however, plan to keep the contribute to Kerry link up ($2175 raised so far!) until either the convention or I think Kerry has enough money, at which point I'll probably switch it to fund-raising buttons for individual Senate campaigns and/or the Democratic Senatorial Campaign Committee.
For those who are easily confused, this means that I am endorsing them, not the other way around. In other words, the opinions expressed here are the respective author's and not necessarily those of anyone who links to this blog (though they probably should be.)
If you have no idea why I'm making this disclaimer, but would like to know, then see Matt Stoller, Digby, Atrios, Kevin Drum, Mark Kleiman, Matt Y. (from whom I got the title of this post), and of course Kos.
Finally, note that while I don't run ads, I see absolutely nothing wrong with other bloggers doing so.
AB
More Evidence Supporting Clarke
This from a lengthy NYT piece:
... The warnings during the summer [of 2001] were more dire and more specific than generally recognized. Descriptions of the threat were communicated repeatedly to the highest levels within the White House. In more than 40 briefings, Mr. Bush was told by George J. Tenet, the director of central intelligence, of threats involving Al Qaeda.The story does detail a number of anti-terrorism measures that the Administration initiated -- or talked about initiating -- before 9/11, but there was little follow-through. For example, this:
The review suggests that the government never collected in one place all the information that was flowing into Washington about Al Qaeda and its interest in using commercial aircraft to carry out attacks, and about extremist groups' interest in pilot training. A Congressional inquiry into intelligence activities before Sept. 11 found 12 reports over a seven-year period suggesting that terrorists might use airplanes as weapons.
Mr. Bush proposed a 7 percent increase in overall spending on counterterrorism programs, a larger increase than was proposed for any cabinet department or agency other than education.AB
... The report also called for a $6.6 million program to improve intelligence collection at ports of entry; an additional $10 million, for a total of $76.7 million, to help state and local authorities learn to detect biological warfare agents; and a $17.3 million increase for a program to help purchase special equipment for fire departments, emergency medical services and law enforcement agencies, bringing the cost to $126.7 million.
But on Capitol Hill, the administration put relatively little political capital behind its proposals, choosing instead to emphasize its plan for a missile defense system.
When Senator Carl Levin, a Michigan Democrat who was then chairman of the Armed Services Committee, sought to transfer money to counterterrorism from the missile defense program, Defense Secretary Donald H. Rumsfeld sent a letter on Sept. 6 2001, saying he would urge Mr. Bush to veto the measure. Mr. Levin nonetheless pushed the measure through the next day on a party-line vote.
Time For Senator Frist to Apologize on The Senate Floor
In the Sunday Washington Post:
The most sweeping challenge to Clarke's account has come from two Bush allies, Senate Majority Leader Bill Frist (R-Tenn.) and Fred F. Fielding, a member of investigative panel. They have suggested that sworn testimony Clarke gave in 2002 to a joint congressional committee that probed intelligence failures was at odds with his sworn testimony last month. Frist said Clarke may have "lied under oath to the United States Congress."Sen. Frist, as you may recall, stood on the floor of the Senate and said (full statement here), among other things, that
But the broad outline of Clarke's criticism has been corroborated by a number of other former officials, congressional and commission investigators, and by Bush's admission in the 2003 Bob Woodward book "Bush at War" that he "didn't feel that sense of urgency" about Osama bin Laden before the attacks occurred.
In addition, a review of dozens of declassified citations from Clarke's 2002 testimony provides no evidence of contradiction, and White House officials familiar with the testimony agree that any differences are matters of emphasis, not fact. Indeed, the declassified 838-page report of the 2002 congressional inquiry includes many passages that appear to bolster the arguments Clarke has made.
I am troubled by these charges. I am equally troubled that someone would sell a book, trading on their former service as a government insider with access to our nation's most valuable intelligence, in order to profit from the suffering that this nation endured on September 11, 2001. I am troubled that Senators on the other side are so quick to accept such claims. I am troubled that Mr. Clarke has a hard time keeping his own story straight.At the time, I wrote that "I'm not sure how or why I have this feeling, but I suspect [the] statement by Senate Majority Leader Bill 'Cat Killer' Frist is going to backfire." Thankfully, it looks like I may have been right for once.
AB
UPDATE: Atrios says, "Censure Frist," which I think is as appropriate as it is unlikely (not that an apology is any likelier.)
Which NY Times Op-Ed Columnist Are You?
I am Tiger Woods Paul Krugman:
You are Paul Krugman! You're a brilliant economist with a knack for both making sense of the current economic situation and exposing the Bush administration's lies about it. You somehow came out as the best anti-war writer on the Op-Ed staff. Other economists hate your guts for selling out to the liberals. To hell with 'em.Via Roger Ailes (the non-evil one), whose essense I don't really think most closely matches Maureen Dowd's.
Which New York Times Op-Ed Columnist Are You?
brought to you by Quizilla
AB
Saturday, April 03, 2004
At Last
On Wednesday, responding to the news that Bush would need to be accompanied by a guardian/vice-president in order to testify before the 9/11 commission. At the time I remarked that "[It] seems like some enterprising young Photoshopper could get some mileage from a few pictures of ventriloquists, their dummies, Bush, and Cheney." The General has delivered the goods.
AB
The Wizard of Oz
Via TBogg, this from Eleanor Clift on the subject of Bush's agreement to testify before the full 9/11 Commission, but only if Uncle Dick is at his side:
A top Republican strategist dubbed the legal document striking the unusual deal “the Wizard of Oz letter” because it strips away the myth that Bush is in charge. Until now, it’s been all speculation about Vice President Cheney’s influence. With the revelation of the tandem testimony, nobody with a straight face can deny Cheney is a co-president or worse, the puppeteer who pulls Bush’s strings.AB
... Try thinking about it this way: can anyone imagine Bush’s father in a similar situation bringing his vice president?
Friday, April 02, 2004
Gary Hart
In Salon today, an interview of Gary Hart who, in 2000, co-chaired the little-publicized U.S. Commission on National Security:
Hart was co-chair (with former Sen. Warren Rudman, R-N.H.) of the U.S. Commission on National Security, a bipartisan panel that conducted the most thorough investigation of U.S. security challenges since World War II. After completing the report, which warned that a devastating terrorist attack on America was imminent and called for the immediate creation of a Cabinet-level national security agency, and delivering it to President Bush on January 31, 2001, Hart and Rudman personally briefed Rice, Rumsfeld and Secretary of State Colin Powell. But, according to Hart, the Bush administration never followed up on the commission's urgent recommendations, even after he repeated them in a private White House meeting with Rice just days before 9/11.The whole interview is facscinating; here's a telling exchange:
HART: ... And then as Congress started to move on this, and the heat was turned up, George Bush -- and this is often overlooked -- held a press conference or made a public statement on May 5, 2001, calling on Congress not to act and saying he was turning over the whole matter to Dick Cheney.AB
So this wasn't just neglect, it was an active position by the administration. He said, "I don't want Congress to do anything until the vice president advises me." We now know from Dick Clarke that Cheney never held a meeting on terrorism, there was never any kind of discussion on the department of homeland security that we had proposed. There was no vice presidential action on this matter.
In other words, a bipartisan commission of seven Democrats and seven Republicans who had spent two and a half years studying the problem, a group of Americans with a cumulative 300 years in national security affairs, recommended to the president of the United States on a reasonably urgent basis the creation of a Cabinet-level agency to protect our country -- and the president did nothing!
By the way, when our final report came out in 2001, it did not receive word one in the New York Times. Zero. The Washington Post put it on Page 3 or 4, below the fold.
So there was absolutely no follow-up on your commission's recommendations once Bush referred the matter to Cheney?
Right.
Labor Market Turnaround?
You’ve probably already seen the news, but if not: The BLS’s labor market report for March is out, and it includes a blowout job creation number of 308,000. This is well past economists’ average expectations. The unemployment rate rose from 5.6% to 5.7%, which somewhat paradoxically may also be a signal of a stronger labor market – apparently lots of people are reentering the labor force after sitting it out for a while.
This is a big, big report, and it is almost completely good. One month doesn’t make a trend... but could it be the start of one?
Kash
Postcards from Old Europe - The rocket that didn't launch
Trying to divine central bank's policies by interpreting the public statements made by their representatives always reminds me of the arcane art of Kremlinology. Practitioners of Centralbankology must have been working overtime the past couple of weeks to make sense of the many little tidbits emanating from the bank's ivory towers. One thing that was evident is that the US and European monetary policy seem to be moving towards each other - the Fed's comments are getting a little more hawkish, while the ECB's governors are signaling a possible cut in rates.
Although the ECB has refrained from hiking rates at their meeting on the 1st of April a whole raft of comments before and after the meeting give the impression that an interest rate cut might be in the offing. I don't want to beat my own drum, but I do have to mention that this was my opinion all along. The simple fact of the matter is that the Eurozone's recovery is half dead already.
Optimists keep citing the an imminent "export led recovery" as the catalyst for higher growth rates in the Eurozone. This is understandable as the major European countries have usually exported or devalued and the exported their way out of economic weakness. As the devaluation route is now mostly closed, they now have to rely on exports to dig themselves out of their hole. In an interview with the German daily Handelsblatt ECB president Trichet said:
In the normal course of economic activity, recovery most often starts with net exports, then passes over to investment and then, as the third stage of the rocket, so to speak, arrives at consumption.The only problem is the fact that this doesn't seem to be working. A look at the ECB's March report showed that the volume of exports to countries not in the Eurozone actually fell in the last quarter of 2003! This is not something we should be happy to see as it implies that Europe is not able to profit from the rapid pace of US consumption. The rocket is fizzling on the launchpad. While the Asian economies are reaping the benefits of the credit-fueled and consumption driven boom in the US economy the Eurozone has been left standing on the sidelines and has been trying to convince itself that a strong euro doesn't really matter.
The euro-strength has been helping the consumer by making imports cheaper. The purchasing public responded by increasing the amount of imported goods in their shopping carts all through last year. As it usually takes a while for the effects of a rising currency to fully trickle through into import prices we can probably look forward to European consumers continuing to increase the amount of foreign goods on their shopping list. The only problem with this is that it doesn't help Eurozone companies one bit.
A rising share of imported goods is doubly negative as consumer confidence is still very low in the Eurozone. The consequence of this double whammy is that the recovery rocket's third stage is also in danger of malfunctioning. This is in sharp contrast to the US where the third stage of the rocket has firing all through the recession and hasn't stopped burning yet. The US rocket is burning on fuel supercharged by easy credit and rising asset prices. Some members of the Fed's mission control team think that this sustained buying spree is harmful and are trying to dampen the perceived speculative excesses by ways of hawkish talk.
A quick glance at the media could support this view, some prices (Gas!) are rising right through the roof! Surely there must be inflation right around the corner? Some people are even suggesting that core CPI is a sham. I don't think that this is the case. A look at the medium term shows that core CPI and CPI are almost identical. I am assuming that people are looking at price hikes in frequently purchased goods (think gas) and concluding that all prices are rising. This is simply not true. Many goods are falling quite sharply in price - the only problem is that we tend to remember price increases and forget the bargains. Core CPI (and CPI) are low by any standard so I don't see a rate hike just around the corner.
Back across the Atlantic inflation is low (1.6%) as well which could give the ECB some leeway to cut rates. The only problem that I see, is the fact that a rate cut will not address the root cause of sluggish growth. The relative inflexibility of the major European economies is the major reason why the Eurozone is not able to grow GDP in a meaningful way. Yesterday's ECB meeting threw cold water on expectations of a quick cut in rates. Could it be possible that the ECB intends to keep monetary policy tight with the aim of "encouraging" Europe's larger economies to finally speed up their pace of reforms?
Thanks for reading and don't forget to check out CurryBlog!
Thursday, April 01, 2004
Can You Blame The Kid?
Here's the now famous bored-kid, instigator of the CNN-White House-David Letterman flap (via Atrios), looking at his watch:
But who was his role model? For that we have to turn to the Elder Bush in (roughly) the year of the bored kid's birth, when George Bush Sr. found that he even bored himself:
AB
Saddam's WMD
Note: This is *not* a 4/1 joke.
Based on a story today, Saddam Hussein possessed half the components required to build a nuclear landmine based on 1950's era British technology:
LONDON - A claim that Britain considered using live chickens in a nuclear weapon aroused skepticism Thursday, but officials insisted it was not an April Fool's hoax.Here's the half of the 50's era British WMD system (found in the "area around Tikrit and Baghdad and east, west, south and north somewhat") that Saddam had in his possession:
"It's a genuine story," said Robert Smith, head of press and publicity at The National Archives.
The archives released a secret 1957 Ministry of Defense report showing that scientists contemplated putting chickens in the casing of a plutonium land mine.
The chickens' body heat was considered a possible means of preventing the mine's mechanism from freezing.
His scientists, however, were still having trouble with these parts:
 |  |
AB
P.S. Be careful when Googling for images of "little boy" without adding "+Nagasaki" or "+atomic." The results are, sadly, not pretty. Who knows what watchlists I'm on now?
Flippity-Floppity
Yesterday, I quoted an AP story on some of Bush's reversals. The Center for American Progress has a more complete, though I'm sure not comprehensive, list.
AB
The Headline Says it All
Page 1, Washington Post. Top Focus Before 9/11 Wasn't on Terrorism: Rice Speech Cited Missile Defense.
On Sept. 11, 2001, national security adviser Condoleezza Rice was scheduled to outline a Bush administration policy that would address "the threats and problems of today and the day after, not the world of yesterday" -- but the focus was largely on missile defense, not terrorism from Islamic radicals.AB
The speech provides telling insight into the administration's thinking on the very day that the United States suffered the most devastating attack since the 1941 bombing of Pearl Harbor. The address was designed to promote missile defense as the cornerstone of a new national security strategy, and contained no mention of al Qaeda, Osama bin Laden or Islamic extremist groups, according to former U.S. officials who have seen the text.
An Inside Look at Rumsfeld's Talking Points
This is an interesting tidbit. Apparently someone walked into a Starbucks over the weekend and found some notes that were obviously written by someone prepping Rumsfeld for his Sunday morning interviews on the news shows. That individual then gave them to the Center for American Progress, the Democrats' think tank. The notes are quite entertaining, and both the CAP and the Washington Post are having some fun with them.
You can view .pdf files of the actual notes here.
Kash
Tomorrow’s Big Economic News
I’m referring to the release of the March employment report, which will be released by the BLS at 8:30am tomorrow (EST). This is what CNN/Money has to say about it:
Since at least November, there have been signs of a long-hoped-for jump in jobs, leading economists to make fairly rosy forecasts. And since November, those forecasts have been wrong, and job growth has disappointed.Tune in tomorrow to find out if we’ve received a pleasant surprise, or been disappointed yet again by the US’s job market.
Will March's jobs data, due on Friday, finally be the moment when the loop is broken? Maybe not -- though things could look a sight better than in February, when just 21,000 new jobs were added to a labor market of more than 130 million.
On Friday, the Labor Department prints the biggest economic report of the month, its measure of March's unemployment rate and growth in non-farm payrolls. Economists, on average, expect unemployment to hold steady at 5.6 percent and non-farm payrolls to grow by about 123,000 new jobs, according to Briefing.com.
Kash
Wow!
Great news today, on almost every front!
- Latest report: 600,000 jobs added in March; Bush now on pace to meet jobs projection in the Economic Report of the President.
- Budget will be in balance in 2006, due to rapid economic growth caused by Bush tax cuts. Trade deficit plummets as current accounts deficit turns into surplus.
- Citing the shining beacon of democracy in the adjacent country, Iran announced today that it will abandon its WMD program and hold democratic elections next October.
- Outing himself, Richard Clarke admitted this evening that his only objective was to maximize book sales; retracts allegations that fighting terrorism was not the Bush administration's top priority from day one.
- Ken Lay was indicted this morning; arrest is imminent.
- President's Mars plan unveiled. Scientists concur that man will land on the Red Planet in 2007.
- Mathematical error discovered: President's Medicare plan will cost $400 billion as promised, not $540 billion!
- Actual WMD found in Iraq. Hidden bunker containing 1.5 tons of VX gas, 8,000 liters of anthrax, 7,000 liters of botulinum toxin and nearly 1,000 liters of aflatoxin found in the "area around Tikrit and Baghdad and east, west, south and north somewhat."
- Income inequality lessened over the last year. While all income brackets saw gains, the poorest households gained the most.
AB
Wednesday, March 31, 2004
Angry Bear, Now With WorkingTM RSS (I think)
I thought I had it working before, but based on a number of emails, the feed quit updating many moons ago. I think I've got it working now, and it gives the full post instead of just the first part. Here's the link:
http://angrybear.blogspot.com/atom.xmlThe link in the sidebar should work as well. If this doesn't work, let me know in comments.
AB
Your Tax Dollars at Work
Generating talking points for the Bush Campaign, via the WSJ (subscription required):
WASHINGTON -- The Treasury tapped civil servants to calculate the cost of Sen. John Kerry's tax plan and then posted the analysis on the Treasury Web site. A federal law bars career government officials from working on political campaigns.AB
The Treasury analysis doesn't mention Mr. Kerry by name. Rather it sketches out the potential cost of a tax plan that rolls back tax reductions for taxpayers with incomes above $200,000 -- the nub of the Democratic presidential candidate's plan. The result, the Treasury said in the analysis posted March 22, would be a tax increase of as much as $477 billion over 10 years on "hardworking individuals and married couples." The same day, the Republican National Committee issued a press release in which it unveiled what it called its "John Kerry $pendometer," and cited the same $477 billion figure as the cost of "raising taxes on the top income bracket."
Yet More Outsourcing Fuel
Here's one more recent piece of data and analysis about offshore outsourcing, to add to the analysis discussed in the post below.
Jason Kirkegaard of the Institute for International Economics (a nonpartisan think tank devoted to careful research on current issues in international economics) made an extremely detailed examination of the BLS’s labor statistics by industry, occupation, and state to try to identify an impact of offshore outsourcing on those occupations said to be most vulnerable. One could spend hours poring over the detailed cross-tabulations showing exactly which types of jobs have been lost in recent years. In general, the report does not turn up any evidence the offshore outsourcing is responsible for significant job losses in any particular industry or occupation.
Some of the most interesting results can be summarized as follows:
- “The vast majority of the jobs lost in the post-bubble US economy from 2000 to 2002 in occupational categories threatened by offshore outsourcing has occurred in the manufacturing sector. This indicates that discussions of white-collar job losses cannot be separated from economic problems in the manufacturing sector.” In other words, the problems of the manufacturing sector affect not just blue collar workers in those firms, but white collar workers as well.
- “Most jobs lost have been in high-paying management positions, a different occupational category from the projections most frequently cited.” Since there seems to be little evidence that management jobs are being moved offshore, the cause of these job losses is likely something other than offshore outsourcing.
- “Jobs have been lost non-uniformly across different states, with some gaining and others losing jobs, suggesting that no singular nationwide trend other than the regular business cycle is occurring.” For example, in administrative support occupations New York has lost more than 30,000 jobs while California has gained over 30,000 jobs. Thus there seems to be significant relocation and movement of jobs even within the US.
- “The US economy every quarter generates many more jobs than are projected to be lost to offshore outsourcing over the next decades.”
- “The majority of US jobs projected... to be lost in occupational categories threatened by offshore outsourcing pay less than the US average, suggesting that many of these jobs may face medium-term elimination through technological change, regardless of whether they are outsourced to offshore locations or not.”
- “Some IT occupations have declined, but the declines are concentrated in low-skilled IT occupations, and in occupations where economy-wide trends dominate (managers and manufacturing).”
- “More than 70,000 computer programmers have lost their jobs since 1999. But more than 115,000 higher paid computer software engineers have gotten jobs since 1999.”
Put another way, even if we imposed a moratorium on offshore outsourcing, the job market would still remain weak because of the weak economy. We won't stop losing jobs, or gain new ones, until demand picks up in the economy, no matter how much or how little international trade the US engages in. So if you’re worried about the job market (which I am), then focus your attention on the pitiful economic management that the Bush administration has shown, and the weak economy that has persisted as a result.
Kash
Adding Fuel to the Outsourcing Fire
The Information Technology Association Of America has just released the results of a study they commissioned from an economic consulting firm called Global Insights. The punch line of the analysis:
This major study conclusively demonstrat[es] that worldwide sourcing of computer software and services increases the number of U.S. jobs, improves real wages for American workers, and by pushing the U.S. economy to perform at a higher level, has many other economic benefits.Of course, keep in mind that this was the result that the ITAA had hoped for when they commissioned the study, so one must look very carefully at the assumptions made and models used by Global Insight to arrive at their estimates. Unfortunately, it's a little hard for me to form an opinion about them without having the full report to read, which costs $350. (Though if someone wants to send me a copy, I'd be happy to take a whack at it!) However, from the executive summary it seems that their results are driven by pretty standard and uncontroversial economic effects -- namely, higher productivity and lower prices in the US that are the result of offshore outsourcing.
My initial conclusion? This report by no means provides us with a final or definitive answer -- but it does provide some ammunition for those who point out that there are benefits as well as costs to offshore outsourcing, and that, on an economy-wide basis, those benefits may even outweigh the costs.
Kash
UPDATE: Last sentence modified slightly in response to a reader's comments. Thanks for the input.
Yen/Dollar Update
FYI:
TOKYO (CBS.MW) - The dollar fell to the lowest level in almost four years in Asia Wednesday as market participants tested Japan's resolve for its dollar-buying intervention policy ahead of Japan's "tankan" business sentiment survey to be released Thursday.For a bit of context, see this post.
The dollar traded at 104.29 yen after briefly falling to 103.98. The dollar traded at 105.91 yen late Tuesday in New York. It fell below 104 yen for the first time since June 2000.
Kash
UPDATE: Karsten reports on the just-released data describing Japan's interventions in the currency markets over the past month. Japan was apparently still buying lots and lots of dollars in March...
Via the AP
Headline: A look at Bush's reversals
(AP) -- President Bush's decision Tuesday to allow his national security adviser, Condoleezza Rice, to testify publicly before the commission investigating the September 11, 2001, terrorist attacks reversed earlier White House insistence that she would only appear privately.And speaking of Bush reversals, he's apparently going to testify before the full 9/11 Commission, but only if Dick Cheney is with him. Seems like some enterprising young Photoshopper could get some mileage from a few pictures of ventriloquists, their dummies, Bush, and Cheney.
Some previous Bush reversals in the face of criticism:
# He argued a federal Department of Homeland Security wasn't needed, then devised a plan to create one.
# He resisted a commission to investigate Iraq intelligence failures, but then relented.
# He also initially opposed the creation of the independent commission to examine if the 2001 attacks could have been prevented, before getting behind the idea under pressure from victims' families.
# He opposed, and then supported, a two-month extension of the commission's work, after the panel said protracted disputes over access to White House documents left too little time.
# He at first said any access to the president by the commission would be limited to just one hour but relaxed the limit earlier this month.
AB
UPDATE: TBogg found this CNN story before I did, and he also has the better take:
His supporters will say he is just "evolving". Or, in his case, "creationing".....
EasterSlap
We need a name for things like this; I propose EasterSlap.
AB
Tuesday, March 30, 2004
Child Care Support for Welfare Recipients
From the NYTimes:
In a direct rebuff to the White House, the Senate voted today to increase the amount of money available to provide child care to welfare recipients, who would be subject to stricter work requirements under sweeping welfare legislation favored by President Bush and Congressional leaders.Why does the Bush administration go out of its way to make life more difficult for the most disadvantaged in this country? The cost of providing extra child care support is minimal – just over $1bn per year – and the benefit can be enormous to individuals on welfare, who are told to return to work even if their child care bills exceed the potential income they would earn from working. It may even be the case that increased support for child care will largely pay for itself by moving more people from the welfare rolls and onto private payrolls. So in addition to being mean-spirited, the White House position on this issue makes no economic sense.
The vote, 78 to 20, expressed broad bipartisan support for a proposal to add a total of $6 billion to child care programs over the next five years, beyond the additional $1 billion already included in the bill. The federal government now earmarks $4.8 billion a year for such child care assistance.
The vote came one day after the Bush administration expressed its objections to increasing the child care grant, saying in a written statement that it was not needed.
Kash
Consumer Confidence
Here is the headline from today’s edition of CNN/Money:
Confidence hits 5-month low : Job worries push closely watched measure of sentiment lower in March, though it is above forecasts.We’ve seen indicators that consumer confidence was low for over a month now, so this is completely unsurprising. But given how low consumer confidence has been for the past year or so, I’ve started wondering about whether consumer confidence readings actually tell us anything useful about where the economy is headed.
NEW YORK (CNN/Money) - Worries about the job market pushed consumer confidence to its lowest level in five months in March, a research group said Tuesday -- although its index came in above Wall Street forecasts.
The Conference Board’s consumer confidence index comes from tallying the results of a survey of 5,000 randomly selected individuals. A description from their web site follows.
The questions asked to compute the indexes have remained constant throughout the history of the series. The Index is based on responses to 5 questions:Do these questions actually do a good job of predicting consumer spending? The graph below shows the plot of consumer spending (the orange line, measured in percent shown on the right axis) superimposed on the graph of the consumer confidence rating (the blue line, measured as an index shown on the left axis).For each of the 5 questions, there are three response options: POSITIVE, NEGATIVE and NEUTRAL.
- Respondents appraisal of current business conditions.
- Respondents expectations regarding business conditions six months hence.
- Respondents appraisal of the current employment conditions.
- Respondents expectations regarding employment conditions six months hence.
- Respondents expectations regarding their total family income six months hence.
Other than both series being unusually high in the late 1990s, it’s hard to see much of a relationship between the two. Formal econometrics may tease out more of a relationship than casual observation suggests (something that I will leave as an exercise for the reader), but it’s not obvious to me that consumer confidence really does a good job at predicting consumer spending.
Kash
That Liberal Media
Next time your conservative friends whine about the liberal media, tell them they're right, and try to make them listen:
Rumor has it that Atrios will be on Janeane Garofalo and Sam Seder's show
AB
Rice to Testify
She'll probably get points now just for testifying, regardless of what she actually says. In an odd twist, the administration is trying to borrow a page from Bush v. Gore:
In a letter to the commission, White House counsel Alberto Gonzales said the commission must agree in writing that Rice's appearance would not set a precedent for testimony by White House staff.In Bush v. Gore, the majority knew they were writing a bad ruling, and so decided to simply declare that the case would not serve as a precedent for future cases:
Our consideration is limited to the present circumstances, for the problem of equal protection in election processes generally presents many complexities.Of course, things become precedents by virtue of happening, not by virtue of beind declared a precedent. On the other hand, I supposed Gonzales is technically correct that Rice's appearance won't be a precedent since previous National Security Advisors Zbigniew Brzezinski and Sandy Berger have testified before Congress. So what Gonzales must mean is that Rice's testimony could not serve as a precedent for National Security Advisors testifying before "independent, bipartisan commission created by congressional legislation and the signature [of the President]."
I now present to you, without further ado, Rice's upcoming testimony:
- Saddam Hussein was a dangerous man in the world's most dangerous region.
- No one could have predicted that terrorist would use planes as weapons. But had we known that terrorists were going to attack with planes on September 11th, 2001, in the a.m., we would have done everything in our power to prevent it.
- When we went to Camp David to plan our response to the al Qaeda attack, it was a map of Afghanistan that was rolled out on the table.
Economic Advice for the Next President
C. Fred Bergsten, of the Institute for International Economics, has a piece in the current issue of Foreign Affairs in which he outlines his suggested advice for the next president. It’s a lengthy essay, full of sensible thoughts about needed changes to US international economic policy. Highlights:
A reelected President Bush or his successor will have to design and implement new initiatives to address global economic challenges of the highest national and international priority:Take a look at the essay if you have a chance.He will have to do all of this in a new global economic context, in which a unified Europe, a rising China, and a new Asian bloc are shattering the final vestiges of U.S. economic hegemony.
- forging a new domestic consensus in support of globalization;
- restoring and maintaining a sustainable external financial position;
- reviving trade liberalization;
- and freeing the world economy from the manipulation of energy markets by leading producers.
Kash
Robert Novak: Douchebag for Liberty
You must watch The Daily Show. On Monday's show, Jon Stewart lead off with some great commentary on the recent talk show circuiting by Rumsfeld, Powell, Cheney, and Clarke.
Addressing Rice’s 60 Minutes appearance in which she said, "Nothing would be better, from my point of view, than to be able to testify":
[Stewart qua Rice] You see, here with you, I can lie. But those people [the 9/11 Commission] want you to put your hand on a Bible and swear to all kinds of crazy stuff. And that, that is not going to help us fight al Qaeda.On Clarke suggesting, in response to charges that his recent testimony contradicts his 2002 testimony, that the administration not only declassify his October 2002 testimony, but also his 1/2001 memo, the eventual 9/2001 plan, all his emails and memos, and Dr. Rice’s testimony:
[Stewart qua Clarke] I see your declassified memo, and I raise you my hard drive.Then things got really funny when Stewart turned to Bob Novak, who recently asked Congressman Rahm Emanuel whether he, "believe[s] watching these hearings that Dick Clarke has a problem with this African-American woman Condoleezza Rice?"
NOVAK: Congressman, do you believe – and you’re a sophisticated guy – watching these hearings that Dick Clarke has a problem with this African-American woman Condoleezza Rice?”Indeed.
EMANUEL: [looks stunned, grabs earpiece] Say that again.
STEWART: [interrupting the video] Yes, Robert Novak. Please! Say that again.
NOVAK: Do you believe that Dick Clarke has a problem with this African-American woman Condoleezza Rice?
EMANUEL: [mixture of non-plussed and bewildered expression] No. Bob, give me a break, no.
STEWART: Wow. Who even knew this deck had a race card? Don't you get it people? Civil rights activist Robert Novak is implying Richard Clarke was never interested in fighting terrorism -- he just hates black people.
That’s the thing about Robert Novak. He’s all about fighting injustice. Whenever he sees a white man attacking a black woman, he’s gotta say something. Or when he hears about a CIA agent still working undercover, he has to reveal that person. That’s Robert Novak. A douchebag for liberty.
AB
P.S. Clarke wasn't on The Daily Show last night, but apparently he'll be on Tuesday night, followed by Karen Hughes on Wednesday.
UPDATE: Via Digby:
. But during the Democratic primaries, an unexpected foe stole the ratings crown from all three. The Daily Show With Jon Stewart, a mock news program airing on Viacom's (VIA) Comedy Central, attracted more viewers at 11 p.m. than any of the cable news channels in the last two weeks of January, outdoing Fox by 20 percent even as the news network was running live campaign coverage.
Monday, March 29, 2004
Rice to Testify?
Perhaps, but there's still the hang-up of whether or not she'll swear to tell the truth:
The White House looked for a deal on Monday with the Sept. 11, 2001, commission under which national security adviser Condoleezza Rice would appear in private before the panel, but it refused to budge in the face of demands she testify in public and under oath.I'll repeat my earlier point: Dr. Rice can refuse to answer questions (e.g., if the answers would compromise national security or violate executive priviledge), so I can only divine one reason why she would refused to testify under oath, which I'll politely leave unsaid.
AB
The End of Japan's Buying Spree?
From Bloomberg:
Japan to End Yen Sales, London Times SaysSuch rumors have been floating around for over a week now, but the fact that they persist and seem to be gaining credibility may be significant. The telltale sign will be if they allow the yen to fall below about 105 yen/dollar, since that seems to have been where they've dug their heels in up to now:
March 29 (Bloomberg) -- U.S. 10-year Treasury notes fell, pushing yields to their highest in more than three weeks, after the London-based Times said the Bank of Japan may end yen sales, fueling speculation it will buy less U.S. government debt.
Accelerating economic growth means Japan no longer needs a weaker currency to boost exports, the Times said, citing unidentified officials at Japan's central bank, which buys and sells yen on behalf of the Ministry of Finance. The BOJ typically buys U.S. debt with the proceeds of dollar purchases. A ministry official said Japan's currency policy hasn't changed.
The drop in the yen/dollar exchange rate below 105 would have a minimal impact on the US economy, at least this year. However, given that Treasury data shows that Japan has recently been buying a net of $20-25bn in US government bonds per month, if Japan were to stop buying US treasuries there could be an effect on long-term interest rates. Exactly how much long-term rates will rise is the $64,000 question.
Kash
Compare and Contrast
President Bush, November 19, 2003, London:
I've noticed that the tradition of free speech -- exercised with enthusiasm -- (laughter) -- is alive and well here in London. We have that at home, too. They now have that right in Baghdad, as well.The New York Times, March 29, 2004, Baghdad:
American soldiers shut down a popular Baghdad newspaper on Sunday and tightened chains across the doors after the occupation authorities accused it of printing lies that incited violence.The US continues to competently win over hearts and minds in Iraq…
Thousands of outraged Iraqis protested the closing as an act of American hypocrisy, laying bare the hostility many feel toward the United States a year after the invasion that toppled Saddam Hussein.
…[T]he letter outlining the reasons for taking action against Al Hawza did not cite any material that directly advocated violence. Several Iraqi journalists said that meant there was no basis to shut Al Hawza down. "That paper might have been anti-American, but it should be free to express its opinion," said Kamal Abdul Karim, night editor of the daily Azzaman.
Omar Jassem, a freelance reporter, said he thought that democracy meant many viewpoints and many newspapers. "I guess this is the Bush edition of democracy," he said.
Kash
Sunday, March 28, 2004
Condi on 60 Minutes
First, Clarke: once again, very clear and compelling (I particularly liked this statement.) I also thought Russert was pretty easygoing throughout and let Clarke give detailed answers.
This evening, Dr. Rice was on 60 Minutes to attempt to rebut Clarke's charges. It was the same spin that you've heard before: no plan, we were focused on terrorism and al Qaeda from day one, and so on. But at one point, Dr. Rice did say something interesting:
When we went to Camp David to plan our response to the al Qaeda attack, it was a map of Afghanistan that was rolled out on the table. It was Afghanistan that became the focus of the American response. And Iraq was put aside."And Iraq was put aside"? Put aside from what? I thought the administration said Paul O'Neill was lying or mistaken when he said the administration had plans for Iraq from day one? Or did Rice mean that Iraq was in fact the focus during the period from 9/11 to the Camp David meeting and only then were the Iraq plans put aside (which is basically what Clarke charged)? Seriously, I'd like to know what she meant by this.
AB
UPDATE: In a post titled Clarke Revelations Take Their Toll, Ruy T. reports a slew of bad numbers for Bush, including this:
A just-released Newsweek poll has Bush's approval rating on handling terrorism and homeland security down to 57 percent, a sharp decline from 70 percent two months ago. It is also significant that this rating is down in the 50's--Bush's ratings on terrorism, homeland security and related issues have been steadily in the 60's or above in this and other public polls for a very long time.
Saturday, March 27, 2004
Richard Clarke on Meet the Press
Sunday. Set your Tivo's. Also, unless Jon Stewart was kidding, Clarke will be on The Daily Show Monday night.
AB
UPDATE: Dr. Rice on 60 Minutes, too.