With about 6 weeks remaining before the ability of the U.S. Treasury Department to prevent U.S. national debt from exceeding the debt limit is exhausted, the prospect of a simple resolution to the problem - increasing the debt ceiling - dims with each passing day. The Republican Party insists on significant budget reductions as the price for increasing the debt limit. The Democratic Party has tried to separate the two issues by dividing the debt problem into short-term versus long-term problems. Conflation of the two types of debt problems aids the Republican Party's attack on Medicare and Medicaid, while the position of the Democratic Party suggests that it has no real plan to attack the increasing debt level. What is lost in the discussion is an historical perspective, one dating back to the late 1940s at least. Which party can be trusted to actually do something about the national debt?
Unsurprisingly, to this blogger, at least, the Democratic Party historically has reduced the public debt as a percentage of GDP when it has occupied the White House. The Republican Party - since the Reagan era - has added to the debt by leaps and bounds and has pushed the debt ever higher as a percentage of GDP. While it is true that initiatives such as FDR's and Obama's to reverse a sinking economy added to the budget defict, the gamble (and hope) was that increased economic activity would stimulate the economy and enhance government revenues so that in the long-run economic stimulus would not contribute to a permanent increase in the national debt. FDR's initiatives might well have succeeded had not the mini-recession of 1937, brought on when concern over the national debt caused FDR to reign in budget deficits caused the economy to stall. World War II rescued the economy as the America was mobilized to fight a two front war. While the 2 1/2 wars waged by Obama might seem comparable, these wars of choice have been so compartmentalized that their stimulative impact has been marginal.
Like the fate of the economy after FDR's retrenchment in the face of deficit (1937), the economy appears to be sputtering. The stimulus of 2009 and 2010 is now a spent force. Though many economists prefer a new round of stimulus, it is extremely improbable that such fiscally based stimuli would have any chance in the Republican controlled House of Representatives where any fiscal stimulus legislation would have to originate. At best, we might hope for tax incentives of the sort that saw the continuation of Bush era tax cuts, principally for the benefit of the wealthy, coupled with payroll tax rebates designed to put more money into wage-earner hands, money that has the advantage of being spent immediately as opposed to being socked away in savings accounts.
As a stimulus, the tax deal struck during December 2010 is probably a non-factor. The continuing lack of demand from a stagnant and in some areas still declining housing sector has been a big drag on the economy. The debt overhang for many wage-earners more than nullifies the stimulative effect of a few more dollars in net wages as families seek to reduce personal debt. The temporary increase in food and energy costs has further diminished the stimulative impact of a few dollars more.
Worse: the tax deal aggravates both the short-term and long-term deficit problems. In the short-run, it reduces government revenues. As a percentage of GDP, government revenue has been reduced to that of the Eisenhower era, an era pre-dating Great Society social spending. In the long-run, if the Bush era tax cuts are continued, the job impacts will remain negligible and the drag on government revenue palpable. In addition, by taking money from Social Security (to finance the payroll cut) the long-term deficit of Social Security is marginally affected.
In the meantime, QEII is ending. This monetary stimulus probably helped prop up the mortgage market by keeping mortgage interest rates lower than they otherwise might have been. And, it did stimulate American exports by causing the value of the dollar to fall (and aggravating trading partners). Fed Chairman Ben Bernanke has dismissed the prospects of further monetary stimulus by the Fed as highly unlikely.
While one might view the debt debate in the US as a highly partisan affair that amounts to nothing more than a tempest in a teapot, it is disturbing that this rancorous debate coincides with the on-going attempt to renegotiate Greek debt in order to prevent a sovereign debt default in the Eurozone. Failure to reach an increase in the US debt limit might technically lead to a default here, but is unlikely to. The US Treasury might well maintain the good faith reputation of US government debt by continuing to pay interest to Treasury bondholders. It could delay payments to vendors doing business with the US government and delay payments to Social Security recipients and to doctors and hospitals in order to avert an across the board default. Still, a Greek default and the likelihood of increased debt difficulties for the remaining PIIGS within the European Union would add stress to international finance that could well impact the United States. At the very least, it could lead to a rush of investors into US Treasury bonds and thus maintain the near zero coupon rates that Treasury has been able to maintain since 2009. This would help banks, already larger than when they were too big to fail, to muddle through despite the presence of toxic assets still on their balance sheets and the decline of bank stocks in general. On the other hand, it could lead private investors to hoard money and demand higher interest rates from many debtor nations, including the US, and thus aggravate the short-term debt burden by increasing interest payments on the debt.
What is to be done? The obvious need is to increase the debt limit in the United States as soon as possible. Some have argued that this should be increased to accomodate the desired, but at the moment politically impossible, Ryan tax cuts to the wealthy. The sooner the debt ceiling is raised, the better. But, Tea Party nonsense, the conflation of short and long-term debt by Republicans motivated by a desire to dismantle Medicare and Medicaid, and the craven inability of the Obama Administration to dig in its heels and speak truth to propaganda do not augur well for immediate resolution of the debt ceiling issue.
One scenario that might play out is the following: a Greek government increasingly rocked by widespread protests against austerity cannot push through a second round of austerity legislation. The EU balks at renegotiating Greek debt, but cannot swallow the damage to French and German banks if Greece were to default. The inability of the EU to act decisively increases the pressure on the remaining PIIGS as interest rates rise with respect to the rollover of short-term government bonds. The United States treasury is negatively impacted as well as it is forced to pay higher interest on short-term government roll-over bonds. Shorting European and American bank stocks may well ensue in order to shake out weak and weakened financial institutions. Combine this with shorts on credit default swaps and we could find ourselves back to square one. But, would a Republican House of Representatives, reluctant to pass an increase in the debt ceiling, have the courage to bail out the banks again?
What can be done? Not much if you don't have much at stake. Too many Americans have no skin in the game because they are excluded from credit markets. To the extent that Americans used their home equity as an ATM to pay down credit card debt or finance extravagant spending, such people have no stake in finance today because the ATM is out of service. Others are so far underwater in their mortgages that there really is no need to worry about further decreases in equity. True, some homeowners might fear a new wave of foreclosures as banks push foreclosures harder to meet their own capital demands. Yet, the foreclosure is fraught with delay in large measure due to the lax paperwork procedures tolerated and encouraged during the mortgage securitization boom of the early 00s. Unemploymnent might be a worry, but many large companies have enough cash on hand to weather another international financial crisis. Thus, a new round of massive layoffs probably will not ensue immediately, if at all.
What is needed is a revolt against Reagan era policies that have led to a widening gap between the rich and superrich classes as against an embattled middle class. Until we put an end to financial machinations that have seen the growth of ever more complex financial instruments that serve no apparent social utility other than to stick some unsuspecting investor or class of investors with the financial downside of casino style gambling. A new round of bank bailouts ought to lead to bank nationalizations and the breakup of mega-banks and the elimination of compensation systems that reward incompetence and feed otherwordly expectations for bonuses.
Monday, June 20, 2011
Monday, September 7, 2009
AFGHANISTAN OR BUST
In recent days, the problem of Afghanistan has arisen anew. Amidst widespread allegations and the actual disqualification of ballots from over 400 precints, the democratic deficit of the Karzai government has been brought to the fore. The American generals responsible for planning and execution of the NATO force in Afghanistan have also questioned whether there are adequate troops to carry out the war against the Taliban. With the Obama administration seemingly committed to a continuation of moderate increases in troops in the field in parallel to the development of a peace corps for Afghanistan to dispense American knowhow and expertise to needy Afghanis, critics have weighed in with questions regarding the prospects for success and the need for clear benchmarks towards assessing progress in Afghanistan.
In the face of these questions, Professor Andrew J. Bacevich, in an op ed piece appearing in the September 7, 2009 issue of the Los Angeles Times, calls upon President Obama to make the case for engagement in Afghanistan by reassuring the American public on five key points.
In Professor Bacevich's view, Obama needs to insist that "Afghanistan constitutes a vital national security interest" such that success here would "contribute materially to driving a stake through the heart of violent jihadism". Second, Obama needs to persuade us that "armed nation building ... provides the provides the most realistic and effective way to satisfy those interests". Third, Obama needs to assure us that past is not prologue. By that, Professor Bacevich, means that "the failure of past efforts by other great powers to impose their will on Afghanistan is beside the point". Perhaps most of important of all, President Obama needs to let a skeptical American public know that "the United States possesses the money, troops, expertise and will to get the job done". Finally, Obama needs to state with absolute clarity that "no other priorities, foreign or domestic, exist that outrank Afghanistan and should have first call on the resources that additional war will consume".
That's a tall order for any president to achieve, especially after the misrepresentations, distortions and outright fabrications that accompanied the Bush boondoogle in Iraq. Worse: what support could be brought to bear in support of such assertions. Specifically, what is the truth content of each of the assertions that Professor Bacevich claims are needed to stay the present course in Afghanistan or even deepen it with respect to the military side of the equation.
Does Afghanistan constitute a vital national security interest? Hardly. An argument can be made that what is most in the interests of the United States is the denial of territory to non-governmental armed groups that would be used as a staging ground for future attacks in Europe and the United States. Afghanistan under the Taliban was just such a threat. The Taliban ceded control of substantial parts of its territory to al-Quaede and allowed that territory to be used as a training grounds for the terrorists who attacked targets in Africa, the Middle East, Europe and the United States.
Today's Afghanistan clearly does not pose such a threat. However, the presence of an ongoing insurgency by the Taliban from protected bases in Pakistan's Northwest Territories and the inability of the Karzai government in Kabul to maintain the control it once exercised in territories liberated after 2001 from the direct control of the Taliban suggest that Afghanistan is again in play. Would a victory by the Taliban - at least to the extent that the Taliban regain control of Kabul and the formal tools of government - in the immediate future imply that once again al-Quaeda would gain safe haven in Afghanistan? Not necessarily.
Certainly, the ability of the Taliban to control western Afghanistan, as well as the previously uncontrollable Tajik northwest, is open to question. That it could once again - through intimidation, ideology or control of poppy distribution - gain control of largely Pashtun Afghanistan is probably well within their reach. Certainly, the corrupt Karzai government is no match to the Taliban. Nor apparently is an undersized NATO military that cannot seize and hold Pashtun provinces in play.
Still, there is no reason to assume that a Taliban in control of most of Afghanistan would once again allow al-Quaeda unfettered access to Afghani territory. And, there's no reason to suppose that American drones and bombers would allow training camps to once again flourish without challenge.
If vital American national intest is defined as the denial of safe havens to non-governmental actors such as al-Quaeda, then American self-interest is not limited to Afghanistan. Rather, it extends into the Northwest Territories of Pakistan where both elements of the Pakistani Taliban and al-Quaeda enjoy unencumbered control of nominally Pakistani territory. How does the focus on Afghanistan deal with an even greater threat posed by these lawless Pakistan territories that a sofar ineffectual Pakistani military has been unable to tame? And, how does the fragility of the Pakistani government suggest confidence that the Pakistani Taliban can not overcome recent setbacks to pose a direct challenge to the government in Islamabad and the security of Pakistani nuclear weapons?
Third, the problem facing the United States is not limited to the Afghanistan/Pakistan border regions populated by the Pashtun. Rather, the ongoing turmoil in Somalia and the inability of any government to exercise any effective control both within and beyond Mogadishu carries with it the threat that al-Quaeda will simply re-establish itself in Eastern Africa. Certainly, there is some evidence that this is the case.
Armed nation-building presumes that there is a nation to build. Critics legitimately questioned whether nation-building could proceed in Iraq where divisions among Sunni, Shia and Kurd have yet to be meaningfully resolved. Afghanistan is in even worse shape.
Unlike the presence of rich oil reserves that might tempt disparate tribes in Iraq to cooperate, there is no such resource base in Afghanistan that could lend support to the construction of a nation-state. The largely tribal nature of Afghanistan and the presence of poppy production that is certainly not in the West's interest might suggest that rather than integrate the diverse and competing tribes into a united Afghanistan we might be better off breaking this failed state and apportioning it among various existing states. Let Iran gain control of largely Farsi speaking western Afghanistan and let Tajikistan gain territory among the Tajik speaking tribes of northwest Afghanistan. Out of rump Afghanistan, why not allow the northwest territories of Pakistan, where the Pakistani government has rarely exercised any effective control in the sixty years since indepence, to merge with their Pashtun cousins and create an Afghani state in borders more in agreement with tribal and linguistic loyalties?
If one chooses to ignore the very tribal loyalties that exist in and compete against each other in Afghanistan, then the past will once again be prologue. Controlling Kabul and imposing a government their as the Soviets tried will not work. Nor were the British any better at controlling tribes opposed to foreign rule. Allowing a corrupt government such as the present Karzai government to continue to rule, even if "legitimated" by the elections of 2009, that at best seems capable only of tolerating local war lordism and rolling back promises of an end to discrimination against women does not bode well. On such a rotten basis, no nation-building can proceed. Nor is such a feeble government likely to win over a skeptical and fearful Afghani public. At least, in Iraq there was some foundation to build on, however fragile the results have been to date. To find anything comparable in Afghanistan is to look in vain for the needle in the haystack.
And, exactly how is the United States to pay for all that would be required to make Afghanistan capable of nation-state status? With the present trillion dollar deficit, anchored upon an unfunded ongoing "war" in Iraq and an economy in trouble, the United States does not have unlimited coin at its disposal to support another Iraq type war. Borrowing more on international financial markets to support necessary expenditures for national defense is not what the international community appears willing to support without question. The United States has to get its house in order before embarking on a deepening Afghanistand engagement.
Is it fair to assume that the United States has the wherewithal in terms of armed forces and military hardware to continue such a course of action? Maybe not. The all-volunteer army that the United States has fielded has been worn down with repeated rotations into and out of Iraq. To add Afghanistan to that mix risks the destruction of American military assets. Maybe men and women will be tempted to join in unprecedented numbers to fight the good battle in Afghanistan, but it is silly to count on that happening. Indeed, with NATO allies such as Germany and Britain growing increasingly squeamish with respect to their limited participation in Afghanistan, is the United States once again facing a long-term coalition of the unwilling?
Finally, why exactly should Afghanistan be elevated to the status of primus unter pares in the sphere of foreign politics? Does the possibility that the Taliban might regain control of Kabul and allow itself to be coopted by al-Quaeda to cede territory for the latter's unfettered use outweight the danger of Pakistan losing control of its nuclear weapons or Iran developing weapons of mass destruction?
And, do domestic issues such as the rickety health care delivery "system" and attempts at reform pale in comparison to the needs of Afghanistan? Or, should we forget that global warming carries with it a far greater threat than a bunch of misguided jihadis?
Yes, radical jihadis do pose a threat to the international distribution of power and wealth. But, the so-called war on terror has done little to rein in such threats. If anything, the Bush administration war on terror decentralized terror through the partial decapitation of al-Quaeda and attracted new recruits to the campaign.
To end the threat, those most immediately impacted by these jihadis will have to take steps to deal militarily with threats on their territory, much as the Pakistani government and military have slowly come to realize. In addition, autocratic governments that are unable to meet the needs of their populations need to give way to more democratically based governments. That, however, may not be possible as long as radical Islam is able to exploit specific grievances and bundle them in opposition to governments from Saudi Arabia to Indonesia. But, the alternative - an armed West rooting out radical islam while tolerating corrupt and anti-modern tenets that we in the West intrinsically oppose now and had fought against for over 500 years - hardly seems compelling. Good luck Mr. Obama if that's the flawed course you wish to follow.
In the face of these questions, Professor Andrew J. Bacevich, in an op ed piece appearing in the September 7, 2009 issue of the Los Angeles Times, calls upon President Obama to make the case for engagement in Afghanistan by reassuring the American public on five key points.
In Professor Bacevich's view, Obama needs to insist that "Afghanistan constitutes a vital national security interest" such that success here would "contribute materially to driving a stake through the heart of violent jihadism". Second, Obama needs to persuade us that "armed nation building ... provides the provides the most realistic and effective way to satisfy those interests". Third, Obama needs to assure us that past is not prologue. By that, Professor Bacevich, means that "the failure of past efforts by other great powers to impose their will on Afghanistan is beside the point". Perhaps most of important of all, President Obama needs to let a skeptical American public know that "the United States possesses the money, troops, expertise and will to get the job done". Finally, Obama needs to state with absolute clarity that "no other priorities, foreign or domestic, exist that outrank Afghanistan and should have first call on the resources that additional war will consume".
That's a tall order for any president to achieve, especially after the misrepresentations, distortions and outright fabrications that accompanied the Bush boondoogle in Iraq. Worse: what support could be brought to bear in support of such assertions. Specifically, what is the truth content of each of the assertions that Professor Bacevich claims are needed to stay the present course in Afghanistan or even deepen it with respect to the military side of the equation.
Does Afghanistan constitute a vital national security interest? Hardly. An argument can be made that what is most in the interests of the United States is the denial of territory to non-governmental armed groups that would be used as a staging ground for future attacks in Europe and the United States. Afghanistan under the Taliban was just such a threat. The Taliban ceded control of substantial parts of its territory to al-Quaede and allowed that territory to be used as a training grounds for the terrorists who attacked targets in Africa, the Middle East, Europe and the United States.
Today's Afghanistan clearly does not pose such a threat. However, the presence of an ongoing insurgency by the Taliban from protected bases in Pakistan's Northwest Territories and the inability of the Karzai government in Kabul to maintain the control it once exercised in territories liberated after 2001 from the direct control of the Taliban suggest that Afghanistan is again in play. Would a victory by the Taliban - at least to the extent that the Taliban regain control of Kabul and the formal tools of government - in the immediate future imply that once again al-Quaeda would gain safe haven in Afghanistan? Not necessarily.
Certainly, the ability of the Taliban to control western Afghanistan, as well as the previously uncontrollable Tajik northwest, is open to question. That it could once again - through intimidation, ideology or control of poppy distribution - gain control of largely Pashtun Afghanistan is probably well within their reach. Certainly, the corrupt Karzai government is no match to the Taliban. Nor apparently is an undersized NATO military that cannot seize and hold Pashtun provinces in play.
Still, there is no reason to assume that a Taliban in control of most of Afghanistan would once again allow al-Quaeda unfettered access to Afghani territory. And, there's no reason to suppose that American drones and bombers would allow training camps to once again flourish without challenge.
If vital American national intest is defined as the denial of safe havens to non-governmental actors such as al-Quaeda, then American self-interest is not limited to Afghanistan. Rather, it extends into the Northwest Territories of Pakistan where both elements of the Pakistani Taliban and al-Quaeda enjoy unencumbered control of nominally Pakistani territory. How does the focus on Afghanistan deal with an even greater threat posed by these lawless Pakistan territories that a sofar ineffectual Pakistani military has been unable to tame? And, how does the fragility of the Pakistani government suggest confidence that the Pakistani Taliban can not overcome recent setbacks to pose a direct challenge to the government in Islamabad and the security of Pakistani nuclear weapons?
Third, the problem facing the United States is not limited to the Afghanistan/Pakistan border regions populated by the Pashtun. Rather, the ongoing turmoil in Somalia and the inability of any government to exercise any effective control both within and beyond Mogadishu carries with it the threat that al-Quaeda will simply re-establish itself in Eastern Africa. Certainly, there is some evidence that this is the case.
Armed nation-building presumes that there is a nation to build. Critics legitimately questioned whether nation-building could proceed in Iraq where divisions among Sunni, Shia and Kurd have yet to be meaningfully resolved. Afghanistan is in even worse shape.
Unlike the presence of rich oil reserves that might tempt disparate tribes in Iraq to cooperate, there is no such resource base in Afghanistan that could lend support to the construction of a nation-state. The largely tribal nature of Afghanistan and the presence of poppy production that is certainly not in the West's interest might suggest that rather than integrate the diverse and competing tribes into a united Afghanistan we might be better off breaking this failed state and apportioning it among various existing states. Let Iran gain control of largely Farsi speaking western Afghanistan and let Tajikistan gain territory among the Tajik speaking tribes of northwest Afghanistan. Out of rump Afghanistan, why not allow the northwest territories of Pakistan, where the Pakistani government has rarely exercised any effective control in the sixty years since indepence, to merge with their Pashtun cousins and create an Afghani state in borders more in agreement with tribal and linguistic loyalties?
If one chooses to ignore the very tribal loyalties that exist in and compete against each other in Afghanistan, then the past will once again be prologue. Controlling Kabul and imposing a government their as the Soviets tried will not work. Nor were the British any better at controlling tribes opposed to foreign rule. Allowing a corrupt government such as the present Karzai government to continue to rule, even if "legitimated" by the elections of 2009, that at best seems capable only of tolerating local war lordism and rolling back promises of an end to discrimination against women does not bode well. On such a rotten basis, no nation-building can proceed. Nor is such a feeble government likely to win over a skeptical and fearful Afghani public. At least, in Iraq there was some foundation to build on, however fragile the results have been to date. To find anything comparable in Afghanistan is to look in vain for the needle in the haystack.
And, exactly how is the United States to pay for all that would be required to make Afghanistan capable of nation-state status? With the present trillion dollar deficit, anchored upon an unfunded ongoing "war" in Iraq and an economy in trouble, the United States does not have unlimited coin at its disposal to support another Iraq type war. Borrowing more on international financial markets to support necessary expenditures for national defense is not what the international community appears willing to support without question. The United States has to get its house in order before embarking on a deepening Afghanistand engagement.
Is it fair to assume that the United States has the wherewithal in terms of armed forces and military hardware to continue such a course of action? Maybe not. The all-volunteer army that the United States has fielded has been worn down with repeated rotations into and out of Iraq. To add Afghanistan to that mix risks the destruction of American military assets. Maybe men and women will be tempted to join in unprecedented numbers to fight the good battle in Afghanistan, but it is silly to count on that happening. Indeed, with NATO allies such as Germany and Britain growing increasingly squeamish with respect to their limited participation in Afghanistan, is the United States once again facing a long-term coalition of the unwilling?
Finally, why exactly should Afghanistan be elevated to the status of primus unter pares in the sphere of foreign politics? Does the possibility that the Taliban might regain control of Kabul and allow itself to be coopted by al-Quaeda to cede territory for the latter's unfettered use outweight the danger of Pakistan losing control of its nuclear weapons or Iran developing weapons of mass destruction?
And, do domestic issues such as the rickety health care delivery "system" and attempts at reform pale in comparison to the needs of Afghanistan? Or, should we forget that global warming carries with it a far greater threat than a bunch of misguided jihadis?
Yes, radical jihadis do pose a threat to the international distribution of power and wealth. But, the so-called war on terror has done little to rein in such threats. If anything, the Bush administration war on terror decentralized terror through the partial decapitation of al-Quaeda and attracted new recruits to the campaign.
To end the threat, those most immediately impacted by these jihadis will have to take steps to deal militarily with threats on their territory, much as the Pakistani government and military have slowly come to realize. In addition, autocratic governments that are unable to meet the needs of their populations need to give way to more democratically based governments. That, however, may not be possible as long as radical Islam is able to exploit specific grievances and bundle them in opposition to governments from Saudi Arabia to Indonesia. But, the alternative - an armed West rooting out radical islam while tolerating corrupt and anti-modern tenets that we in the West intrinsically oppose now and had fought against for over 500 years - hardly seems compelling. Good luck Mr. Obama if that's the flawed course you wish to follow.
Tuesday, August 25, 2009
WHAT WOULD JESUS DO?
The elderly woman tersely stated that her husband had been denied further medical care by the health insurance company with whom the couple had been insured. What were they to do was the question she posed to Oklahoma Senator Tom Coburn. Indeed, what were they supposed to do?
The answer supplied by Senator Coburn was as shocking as it was eye-opening. Rely on your friends and neighbors to help you in your hour of need. No matter that the cost of such help was likely to reach into the hundreds of thousands. By no means, should government be counted on to come to the rescue.
There, in a nutshell, is the sheer bankruptcy of the Republican and lunatic opposition to any change in health care as presently delivered in the United States through a variety of mechanisms. No one should have to appeal to the vagaries of individual circumstances. Alone in Alaska? Appeal to your neighbors, however few and relatively impoverished these might be. Trouble in the Ninth Ward, ask your neighbors for help.
Government exists, if it must, to provide a safety net for its citzenry. Traditionally, this was understood to mean the provision of a common defense. With most people living lives that were short and sometimes brutish, the needs of an elderly population didn't matter. Once industrialization began and life expectancies improved, the needs of the aged and those whose lives suffered from the pollution of industrial society and dangers inherent in an unregulated workplace became of paramount concern. To stave off the growing power of the working class in Imperial Germany, Otto von Bismarck crafted a social pact that sewed the seeds of the modern social welfare state. Other nations followed, and by the 1960s, most Western societies had some form of social welfare state.
The United States remained unique, however. A national health care system never emerged. What developed was an employer based health care system begun during World War II, as employers, unable to raise worker wages, offered supplemental benefits (health care and retirement benefits) as enticements. After World War II, industrial unions sought to extend such employer based health and retirement benefits. The public sector followed suit, and many working Americans enjoyed relative security during their working lives and into retirement.
For those not able to reap the benefits of union action, presidents John F. Kennedy and Lyndon Baines Johnson sought to provide a safety net for elderly citizens. Social security had already provided a modicum of economic safety, but dire health needs always remained a threat to many elderly. Passage of the landmark Medicare Act as part of LBJ's Great Society, gave protection to those elderly not protected through union or public sector agreements.
But, the poor, especially the working poor, who did not have access to unions that could extract excellent health and retirement benefits, were left to fend for themselves. Many went without health insurance and hoped that their relatively youthful age might tip the odds in their favor. Older working poor could rely on whatever care they might receive in emergency rooms at local hospitals.
Those who lost jobs or changed jobs and lost the provision of health insurance might try to cobra their benefits for a while and then seek insurance on their own in the market place. If too expensive, some might choose to forgo continued insurance coverage. Others might hope to land a job in an industry with excellent benefits.
All told, about 46 million people at present do not enjoy health insurance coverage. For some, it is an act of choice. For others, it is a question of necessity. For still others, it is an unfortuate turn of fate. For those with pre-existing medical conditions, private health insurance is well nigh impossible to find and, if available, prohibitively expensive.
The last two countries that rejiggered their health systems were Taiwan and Switzerland. The Swiss managed to rein in private insurance providers and get every one covered. No public option was offered, but restrictions were placed on health providers. Taiwan sought to create a public health system whole cloth. It studied various health care systems and crafted a program that best suited its needs and society.
For the United States, it seems unlikely that Americans could ever accept the intrusiveness of a Taiwanese style health care system where those who "overuse" medical services may be visited by a government agent in order to assess what changes might be required in order to bring medical service usage more into line with societal norms. Still, the United States could try to Swissify the American "system". It could require every American citizen to have health insurance. It could require insurance providers to end recisions and the refusal to provide or continue health care coverage to people with pre-existing conditions. It could place limits on administrative costs for private insurers that now amount to 20% of health care expenses. And, if private insurers refuse to cooperate, then it could use a public option to cover those whom the insurance industry does not want to insure and use its lower administrative costs to push down private sector costs.
The United States COULD do all that. Some of this might even emerge from the U.S. Congress this year. But, most elected Republicans do not want any change that would rein in the private insurance providers or place limits on prescription costs. Instead, as Senator Coburn made all to clear, reliance on the local community is preferable to meaningful change.
As a largely Christian nation, many of whose most outspoken adherents claim allegiance to the Republican party, it is worth asking what Jesus would do. Yes, what would Jesus do? Alas, his first task would be to visit those temples of modern Christianity and expose the hypocrisy espoused by many leading Christians. Turning the other cheek does not mean looking away from the needs of needy. It means to use whatever means necessary to alleviate pain and suffering. If government is the best available means to provide for the needs of the many, then so be it.
I got mine, screw you is nowhere to be found in the Bible - not in the Old or the New Testament. What we are reminded is that the meek shall inherit the earth. By that, I understand that those most in need and unable to fend for themselves shall be blessed because the rest of us who are more fortunate and are able to exercise some measure of control in our lives are COMPELLED to do all that we can to care for others. We are both stewards of the land and compatriots of our fellow citizens. To continue to bow before the god of capital is a violation of the Christian spirit and an invitation to Jesus to throw out the money changers and the money grubbing "Christian" capitalists who use the word to make it what it's not.
Jesus was about change, and change is what is needed now. Shame on you, Mr. Coburn. You just don't get it, do you?
The answer supplied by Senator Coburn was as shocking as it was eye-opening. Rely on your friends and neighbors to help you in your hour of need. No matter that the cost of such help was likely to reach into the hundreds of thousands. By no means, should government be counted on to come to the rescue.
There, in a nutshell, is the sheer bankruptcy of the Republican and lunatic opposition to any change in health care as presently delivered in the United States through a variety of mechanisms. No one should have to appeal to the vagaries of individual circumstances. Alone in Alaska? Appeal to your neighbors, however few and relatively impoverished these might be. Trouble in the Ninth Ward, ask your neighbors for help.
Government exists, if it must, to provide a safety net for its citzenry. Traditionally, this was understood to mean the provision of a common defense. With most people living lives that were short and sometimes brutish, the needs of an elderly population didn't matter. Once industrialization began and life expectancies improved, the needs of the aged and those whose lives suffered from the pollution of industrial society and dangers inherent in an unregulated workplace became of paramount concern. To stave off the growing power of the working class in Imperial Germany, Otto von Bismarck crafted a social pact that sewed the seeds of the modern social welfare state. Other nations followed, and by the 1960s, most Western societies had some form of social welfare state.
The United States remained unique, however. A national health care system never emerged. What developed was an employer based health care system begun during World War II, as employers, unable to raise worker wages, offered supplemental benefits (health care and retirement benefits) as enticements. After World War II, industrial unions sought to extend such employer based health and retirement benefits. The public sector followed suit, and many working Americans enjoyed relative security during their working lives and into retirement.
For those not able to reap the benefits of union action, presidents John F. Kennedy and Lyndon Baines Johnson sought to provide a safety net for elderly citizens. Social security had already provided a modicum of economic safety, but dire health needs always remained a threat to many elderly. Passage of the landmark Medicare Act as part of LBJ's Great Society, gave protection to those elderly not protected through union or public sector agreements.
But, the poor, especially the working poor, who did not have access to unions that could extract excellent health and retirement benefits, were left to fend for themselves. Many went without health insurance and hoped that their relatively youthful age might tip the odds in their favor. Older working poor could rely on whatever care they might receive in emergency rooms at local hospitals.
Those who lost jobs or changed jobs and lost the provision of health insurance might try to cobra their benefits for a while and then seek insurance on their own in the market place. If too expensive, some might choose to forgo continued insurance coverage. Others might hope to land a job in an industry with excellent benefits.
All told, about 46 million people at present do not enjoy health insurance coverage. For some, it is an act of choice. For others, it is a question of necessity. For still others, it is an unfortuate turn of fate. For those with pre-existing medical conditions, private health insurance is well nigh impossible to find and, if available, prohibitively expensive.
The last two countries that rejiggered their health systems were Taiwan and Switzerland. The Swiss managed to rein in private insurance providers and get every one covered. No public option was offered, but restrictions were placed on health providers. Taiwan sought to create a public health system whole cloth. It studied various health care systems and crafted a program that best suited its needs and society.
For the United States, it seems unlikely that Americans could ever accept the intrusiveness of a Taiwanese style health care system where those who "overuse" medical services may be visited by a government agent in order to assess what changes might be required in order to bring medical service usage more into line with societal norms. Still, the United States could try to Swissify the American "system". It could require every American citizen to have health insurance. It could require insurance providers to end recisions and the refusal to provide or continue health care coverage to people with pre-existing conditions. It could place limits on administrative costs for private insurers that now amount to 20% of health care expenses. And, if private insurers refuse to cooperate, then it could use a public option to cover those whom the insurance industry does not want to insure and use its lower administrative costs to push down private sector costs.
The United States COULD do all that. Some of this might even emerge from the U.S. Congress this year. But, most elected Republicans do not want any change that would rein in the private insurance providers or place limits on prescription costs. Instead, as Senator Coburn made all to clear, reliance on the local community is preferable to meaningful change.
As a largely Christian nation, many of whose most outspoken adherents claim allegiance to the Republican party, it is worth asking what Jesus would do. Yes, what would Jesus do? Alas, his first task would be to visit those temples of modern Christianity and expose the hypocrisy espoused by many leading Christians. Turning the other cheek does not mean looking away from the needs of needy. It means to use whatever means necessary to alleviate pain and suffering. If government is the best available means to provide for the needs of the many, then so be it.
I got mine, screw you is nowhere to be found in the Bible - not in the Old or the New Testament. What we are reminded is that the meek shall inherit the earth. By that, I understand that those most in need and unable to fend for themselves shall be blessed because the rest of us who are more fortunate and are able to exercise some measure of control in our lives are COMPELLED to do all that we can to care for others. We are both stewards of the land and compatriots of our fellow citizens. To continue to bow before the god of capital is a violation of the Christian spirit and an invitation to Jesus to throw out the money changers and the money grubbing "Christian" capitalists who use the word to make it what it's not.
Jesus was about change, and change is what is needed now. Shame on you, Mr. Coburn. You just don't get it, do you?
Monday, August 17, 2009
LEMMINGMANIA
The dog days of August are usually a slow news period. Leading politicians go on vacation, while Congressional representatives return home to touch base with their constituents. Town halls are often a good venue for representatives to state their positions and receive feedback. Concerned constituents have an opportunity to express their views on issues that matter to them or comment on Congressional action or inaction. Rarely, do town halls get much press coverage. Not this year!
No, for the past several weeks we have witnessed irate constituents berating Democratic representatives in the House and the Senate for betraying the Constitution, taking aim at Grandma and attempting to turn the United States into a 21st century USSR. A few of the participants seemed to be in search of answers. Too often, representatives were treated to boorish individuals rude enough to shout and shove to cut off debate before it began. Many of these were egged on by media bloviators such as Rush Limbaugh. Others, perhaps, read the blogs of former Alaskan governor Sarah Palin or sought inspiration in the musing of Sen. Charles Grassley of Wisconsin who claimed that Americans had every right to be fearful of Obama style health reform. The spectre of "death panels" dooming decrepit granny to a premature death were just the tip of Republican demagogy. At the more extreme wing of the opposition, there was a display of one representative dangling from a noose.
Whew! For the mostly older participants of these angry demonstrations of know-nothingism, it is tempting to give them exactly want they want: no government run health care. Take away Medicare, the primary care vehicle for most retired persons, and let these people insure themselves in the private market. Take that you ignorant old farts!
Where would the many elderly constituents who most prominently savaged Senator Specter of Pennsylvania during not one, but two town halls be without Medicare, the last major contested innovation in the American health delivery system? Destitute. Indeed, even with Medicare, many elderly have had problems coping with infirmity in old age. Prescriptions are expensive and many have fallen through the donut hole created in the Bush era modification of Medicare to include partial government aid for prescription drugs. Medicare, at least, ensures that the elderly will receive health care that would not and could not receive through private insurance.
Lost in all the hyperbole about health care is a very simple fact. The United States is the last advanced economy to expand health coverage to all of its citizens. Every major economic competitor has some form of universal health coverage. Indeed, the last two countries to revise their health care delivery systems - Taiwan and Switzerland - did so without much of the political bile that has been spilled this past August. Taiwan took the time to study other health care systems and crafted a program best suited Taiwanese expectations. It even included health care auditors who visit those patients excessively accessing health care. Imagine that coming to an American hospital near you!
As Paul Krugman noted in today's New York Times op-ed, at best it can be argued that Obama and the Congressional democrats are steering the United States towards a Swiss style health care system where coverage is provided by private insurers. Whether there is a public option to get coverage for those individuals whom private insurers least desire to cover - those with pre-existing conditions or those facing catastrophic medical procedures - now hangs in the balance as the result of constant demagoguery. And, in the absence of a public option, what would pressure private insurers to act more reasonably and accept a Swiss style health care system?
With whom should one have a rational health care debate? Newt Gingrich? His op ed in Sunday's Los Angeles Times might have conveyed the impression that he could reasonably debate the various Democratic positions. Senator Chuck Grassley? At his outdoor address to his Wisconsin constituents, he admitted that his presence on one of the Senate committees reporting out health care legislation was essentially a stalling operation. That he confessed this while stating that American citizens were justified in fearing Obamacare ought to remove him from any bi-partisan considerations. Sarah Palin? She is a one-woman wrecking crew would shouldn't be allowed to blog, let alone get her bizarre views broadcast on a national basis.
Indeed, some of the most reasonable voices have been heard at Mr. Obama's town hall fora. It certainly is a legitimate question to ask how a public entity would impact private insurance providers, especially when the playing field might not be level. Would a public entity be allowed to lose money providing coverage for those least able to afford it or those whose medical bills would threaten private insurers? Would a public entity be subject to political tampering every time it went to Congress to make up for deficits that it could conceivably run?
There may be answers to these questions, but you won't hear them from voices within the Republican party. The Republican party - what's left of it - seems hell-bent on marching toward the sea. Lemmings everywhere unite and head toward the cliffs, and let the rest of us reform a health care delivery system on the verge of collapse.
No, for the past several weeks we have witnessed irate constituents berating Democratic representatives in the House and the Senate for betraying the Constitution, taking aim at Grandma and attempting to turn the United States into a 21st century USSR. A few of the participants seemed to be in search of answers. Too often, representatives were treated to boorish individuals rude enough to shout and shove to cut off debate before it began. Many of these were egged on by media bloviators such as Rush Limbaugh. Others, perhaps, read the blogs of former Alaskan governor Sarah Palin or sought inspiration in the musing of Sen. Charles Grassley of Wisconsin who claimed that Americans had every right to be fearful of Obama style health reform. The spectre of "death panels" dooming decrepit granny to a premature death were just the tip of Republican demagogy. At the more extreme wing of the opposition, there was a display of one representative dangling from a noose.
Whew! For the mostly older participants of these angry demonstrations of know-nothingism, it is tempting to give them exactly want they want: no government run health care. Take away Medicare, the primary care vehicle for most retired persons, and let these people insure themselves in the private market. Take that you ignorant old farts!
Where would the many elderly constituents who most prominently savaged Senator Specter of Pennsylvania during not one, but two town halls be without Medicare, the last major contested innovation in the American health delivery system? Destitute. Indeed, even with Medicare, many elderly have had problems coping with infirmity in old age. Prescriptions are expensive and many have fallen through the donut hole created in the Bush era modification of Medicare to include partial government aid for prescription drugs. Medicare, at least, ensures that the elderly will receive health care that would not and could not receive through private insurance.
Lost in all the hyperbole about health care is a very simple fact. The United States is the last advanced economy to expand health coverage to all of its citizens. Every major economic competitor has some form of universal health coverage. Indeed, the last two countries to revise their health care delivery systems - Taiwan and Switzerland - did so without much of the political bile that has been spilled this past August. Taiwan took the time to study other health care systems and crafted a program best suited Taiwanese expectations. It even included health care auditors who visit those patients excessively accessing health care. Imagine that coming to an American hospital near you!
As Paul Krugman noted in today's New York Times op-ed, at best it can be argued that Obama and the Congressional democrats are steering the United States towards a Swiss style health care system where coverage is provided by private insurers. Whether there is a public option to get coverage for those individuals whom private insurers least desire to cover - those with pre-existing conditions or those facing catastrophic medical procedures - now hangs in the balance as the result of constant demagoguery. And, in the absence of a public option, what would pressure private insurers to act more reasonably and accept a Swiss style health care system?
With whom should one have a rational health care debate? Newt Gingrich? His op ed in Sunday's Los Angeles Times might have conveyed the impression that he could reasonably debate the various Democratic positions. Senator Chuck Grassley? At his outdoor address to his Wisconsin constituents, he admitted that his presence on one of the Senate committees reporting out health care legislation was essentially a stalling operation. That he confessed this while stating that American citizens were justified in fearing Obamacare ought to remove him from any bi-partisan considerations. Sarah Palin? She is a one-woman wrecking crew would shouldn't be allowed to blog, let alone get her bizarre views broadcast on a national basis.
Indeed, some of the most reasonable voices have been heard at Mr. Obama's town hall fora. It certainly is a legitimate question to ask how a public entity would impact private insurance providers, especially when the playing field might not be level. Would a public entity be allowed to lose money providing coverage for those least able to afford it or those whose medical bills would threaten private insurers? Would a public entity be subject to political tampering every time it went to Congress to make up for deficits that it could conceivably run?
There may be answers to these questions, but you won't hear them from voices within the Republican party. The Republican party - what's left of it - seems hell-bent on marching toward the sea. Lemmings everywhere unite and head toward the cliffs, and let the rest of us reform a health care delivery system on the verge of collapse.
Saturday, January 10, 2009
BOOGIE WITH BURRIS
With all the hoopla surrounding the selection of Roland Burris to be the junior Senator from Illinois, it's easy to miss the larger issue at stake. Certainly, there is plenty of buffoonery to please the bloviators throughout the blogosphere. Whether it's the farcical press conferences put on by B-Rod (Rod Blagojevich, Governor of Illinois) and punctuated with poetic musings or the downhome pladoyer of Mr. Burris before whichever panel he appears, there is much to latch onto. Yet, the way Senate vacancies are filled - be it in New York, Colorado, Delaware or Illinois - both violates the spirit of the Constitution and confers advantages where none should be rendered. Enjoy the melodrama as it unfolds: to seat or not to seat Roland Burris. Whether 'tis nobler to suffer the slings and arrows of outraged and babblling Bobby Rush or put paid to perfidy and break the ban on Burris.
To provide just the barest of sketches is sufficient to provoke plenty of guffaws. On tape, now impeached Governor Blagojevich has revealed how he and many politicians of his ilk view politics. It's a question of money, power and influence. So you want to be Senator. How much is it worth to you? You want to criticize me? Well, forget about any help you might need in selling the Chicago Cubs baseball team. I will help the poor and needy and most innocent among us (children), but only if you make it worth my while. Donations gladly accepted.
Whether Mr. Burris or any of his representatives participated in preliminary talks pursuant to the auctioning of Mr. Obama's Senate seat is unclear. Certainly, he has admitted before a house committee preparing impeachment of Governor Blagojevich that he had dropped a hint to an aide six months ago that he'd like a chance to become the appointed replacement. But, that was before it was even clear that Obama was likely to win election as President and need to resign his seat as the junior Senator from Illinois. No one has suggested that Mr. Burris participated in the more recent round of bargaining that led federal prosecutor Patrick Fitzgerald to blow the lid on a brewing scandal. There just ain't no taint!
However, some have likened Mr. Burris's appointment to the ill-gotten gains from an illegal search. As most fans of Law and Order are well aware, the harvested fruits from a poisoned tree will be excluded without fail. Since the process prior to Mr. Burris's selection was tainted, any appointee should be barred from taking the seat no matter what his or her merits might be.
Does Mr. Burris merit appointment to the U.S. Senate? He does, of course, meet the qualifications to serve as a senator. His appointment, despite the refusal of Illinois Secretary of State Jesse While to certify his selection, falls entirely within the purview of the governor's power to appoint a temporary replacement when a position has been vacated as Mr. Obama's Senate seat has been. No one has claimed that Mr. Burris was selected because he was the highest bidder. Indeed, Mr. Burris had plead poverty in this regard. Even if he had been asked to contribute to B-Rod, he would not have had the means to win this particular auction!
Mr. Burris probably hasn't paid to play, but he does bring a refreshing dose of eccentricity to the position. Many commentators have pointed out Mr. Burris's seeming narcissism. Who else but a narcissist names his offspring Rolando and Rolanda? And, he does have that mausoleum adorned with chiseled resume announcing Mr. Burris as a trailblazer from his earliest days as a student at Southern Illinois University through his tenure as the first elected African-American attorney general in Illinois. Whether he blazed trails as, say, a Martin Luther King or a Rosa Parks is open to debate. Clearly, Mr. Burris parlayed his race into a winning hand in this particular instant. However, his good fortune in this regard must not gloss over the difficulty most black candidates have when running for statewide office.
But, Mr. Burris also comes across as an affable fellow, an educated everyman if you will. Flying to DC from Midway and landing at BWI on Southwest Airlines was an indirect, inexpensive and pedestrian route to Washington. Weathering the rain without raising much fuss when denied participation in the swearing in ceremony for members of the 111th Congress also helped cast Mr. Burris as a regular guy. Indeed, all of his protestations about his inability to pay to play and his apparent willingness to be forthcoming about contacts with the Blagojevich staff endears him to the public. Besides, it cannot be denied that his presence in the Senate would constitute a small step towards providing a minority voice in what is now - without Senator Obama - an assemblage without a black voice. That he is able to do so without displaying the stridency of, say, a Jesse Jackson or former Black Panther Bobby Rush speaks volumes about Mr. Burris.
However, one may judge Governor Blagojevich, he certainly is a sly fox. He outmaneovred his opponents and selected perhaps the one candidate whom the Senate cannot reject out of hand. Had Mr. Burris been Caucasian, or had he even been a she, Harry Reid would have had fewer qualms about barring him from taking his appointed seat. In this respect, being a black male was an advantage. Blagojevich knew that and thus he was quite content in reneging on his own promise not to make an appointment after his "pay to play" scheme had been outed by Patrick Fitzgerald. Still, the clever can get too clever even for themselves. Governor Blagojevich may have dared his opponents to tape away, but it is the very existence of those tapes that led the Illinois House to almost unanimously vote to impeach the governor for various acts of corruption. He will be convicted and that will be the end of B-Rod.
Burris, though, will remain. For certainly, the U.S. Senate will seat Mr. Burris. Eccentricities aside, Mr. Burris will go to Washington as the legal designee to the vacant Senate seat formerly held by President Obama. Whether he remains for two years in that post or serves only until a special election can be held is an open issue. Though it seems probable that he will remain in office until 2010, there is doubt whether he can use the power of incumbency to translate his appointment into a full six year term.
And, therein hangs the tale. As Thomas Geoghegan, labor lawyer and author of "See You in Court: How the Right Made America a Lawsuit Nation", opined in the New York Times, that the 17th Amendment to the Constitution mandates that governors "shall issue writs of elections to fill such vacancies" when Senate seats open up unexpectedly due to death, resignation, or incapacity. In practice, governors fill such vacancies by appointment and wait until the next round of Senate elections allow the vacancy to be eliminated through election. As Geoghegan argued, such practices set the 17th Amendment on its head by allowing a legal proviso which logically allowed temporary appointments by the governor until an election can fill the vacancy for the remainder of the term.
Legislatures have been unwilling to demand special elections in order to fill such vacancies. Indeed, the Illinois legislature refused to consider holding a special election for fear that the Republicans might win a seat away from a Democrat. Whatever Mr. Burris's merits may be, he clearly is a Democrat and can be counted on to support the agenda of President Obama. Even when the legislature is controlled by a party opposed to the governor and could use its authority to prevent a governor from choosing a candidate of his or her own liking (and party), legislatures have been loathe to exercise their constitutional authority. As a result, governors everywhere have acquired a power unintended by the 17th Amendment and it has allowed corrupt practices to pervert the democratic process. B-Rod was only the most blatant of abusers.
At present, there are in play four Senate seats, each held by a Democrat. Two are open because the holders of these seats were elected to the executive branch and cannot serve in both branches of government. President-elect Obama resigned his seat in December, while Senator Biden has yet to resign his. Secretaries designate Salazar and Clinton must resign their seats in order to become members of the Obama cabinet. Senator Salazar has already resigned and his seat filled by the former superintendent of Denver public schools. Governor Patterson has toyed with the notion of replacing Senator Clinton with Caroline Kennedy, though her selection has stirred much controversy, given that she has never held elective office and - like Senator Clinton - represents perhaps the continuation of a political dynasty. Senator Biden's replacement most likely will be a close associate of the senator and someone who will only serve until 2010.
What does it matter whether these vacancies are filled temporarily or for the full two-years until the next election cycle? Maybe not much, but one should never underestimate the power of incumbency. Even Mr. Burris who has had difficulty winning state-wide elections may have an advantage in 2010 simply because he is the incumbent. Most voters are reluctant to turn out incumbents. The only way for incumbents to lose their seats is through death, personal choice, or the infrequent, but powerful political tsunamis that sweep aside incumbents whether deserving or not.
2008 was just such an election, at least as regards to Republican candidates. Not even Christopher Shays, a well-respected and moderate Republican from New England, could not hold onto his seat in the House of Representatives. And other incumbents, be they Senator Coleman from Minnesota or Senator Stevens from Alaska, could not withstand the rising tide against incumbent Republicans.
To be appointed for the full two years is, then, to gain an advantage, one that might be parlayed into electoral victory when the regular electoral cycle is adhered to. Governors gain immense power in the selection process and can thus use their power to sell the seat to the highest bidder (Blagojevich), reward political cronies, perpetuate political dynasties or exercise caution and choose a relative newcomer (Michael Bennett from Colorado).
That this thwarts the democratic process is obvious. It does not create a level playing field or give the appearance of a such an open process. As such, it is yet another impediment to democracy, an impediment that could be eliminated if governors and legislatures adhered to the dictates of the 17th Amendment. So, enjoy the cirque du Burris while you can, but keep your eye on the prize, not just in Illinois, but everywhere where vacancies in the U.S. Senate arise.
To provide just the barest of sketches is sufficient to provoke plenty of guffaws. On tape, now impeached Governor Blagojevich has revealed how he and many politicians of his ilk view politics. It's a question of money, power and influence. So you want to be Senator. How much is it worth to you? You want to criticize me? Well, forget about any help you might need in selling the Chicago Cubs baseball team. I will help the poor and needy and most innocent among us (children), but only if you make it worth my while. Donations gladly accepted.
Whether Mr. Burris or any of his representatives participated in preliminary talks pursuant to the auctioning of Mr. Obama's Senate seat is unclear. Certainly, he has admitted before a house committee preparing impeachment of Governor Blagojevich that he had dropped a hint to an aide six months ago that he'd like a chance to become the appointed replacement. But, that was before it was even clear that Obama was likely to win election as President and need to resign his seat as the junior Senator from Illinois. No one has suggested that Mr. Burris participated in the more recent round of bargaining that led federal prosecutor Patrick Fitzgerald to blow the lid on a brewing scandal. There just ain't no taint!
However, some have likened Mr. Burris's appointment to the ill-gotten gains from an illegal search. As most fans of Law and Order are well aware, the harvested fruits from a poisoned tree will be excluded without fail. Since the process prior to Mr. Burris's selection was tainted, any appointee should be barred from taking the seat no matter what his or her merits might be.
Does Mr. Burris merit appointment to the U.S. Senate? He does, of course, meet the qualifications to serve as a senator. His appointment, despite the refusal of Illinois Secretary of State Jesse While to certify his selection, falls entirely within the purview of the governor's power to appoint a temporary replacement when a position has been vacated as Mr. Obama's Senate seat has been. No one has claimed that Mr. Burris was selected because he was the highest bidder. Indeed, Mr. Burris had plead poverty in this regard. Even if he had been asked to contribute to B-Rod, he would not have had the means to win this particular auction!
Mr. Burris probably hasn't paid to play, but he does bring a refreshing dose of eccentricity to the position. Many commentators have pointed out Mr. Burris's seeming narcissism. Who else but a narcissist names his offspring Rolando and Rolanda? And, he does have that mausoleum adorned with chiseled resume announcing Mr. Burris as a trailblazer from his earliest days as a student at Southern Illinois University through his tenure as the first elected African-American attorney general in Illinois. Whether he blazed trails as, say, a Martin Luther King or a Rosa Parks is open to debate. Clearly, Mr. Burris parlayed his race into a winning hand in this particular instant. However, his good fortune in this regard must not gloss over the difficulty most black candidates have when running for statewide office.
But, Mr. Burris also comes across as an affable fellow, an educated everyman if you will. Flying to DC from Midway and landing at BWI on Southwest Airlines was an indirect, inexpensive and pedestrian route to Washington. Weathering the rain without raising much fuss when denied participation in the swearing in ceremony for members of the 111th Congress also helped cast Mr. Burris as a regular guy. Indeed, all of his protestations about his inability to pay to play and his apparent willingness to be forthcoming about contacts with the Blagojevich staff endears him to the public. Besides, it cannot be denied that his presence in the Senate would constitute a small step towards providing a minority voice in what is now - without Senator Obama - an assemblage without a black voice. That he is able to do so without displaying the stridency of, say, a Jesse Jackson or former Black Panther Bobby Rush speaks volumes about Mr. Burris.
However, one may judge Governor Blagojevich, he certainly is a sly fox. He outmaneovred his opponents and selected perhaps the one candidate whom the Senate cannot reject out of hand. Had Mr. Burris been Caucasian, or had he even been a she, Harry Reid would have had fewer qualms about barring him from taking his appointed seat. In this respect, being a black male was an advantage. Blagojevich knew that and thus he was quite content in reneging on his own promise not to make an appointment after his "pay to play" scheme had been outed by Patrick Fitzgerald. Still, the clever can get too clever even for themselves. Governor Blagojevich may have dared his opponents to tape away, but it is the very existence of those tapes that led the Illinois House to almost unanimously vote to impeach the governor for various acts of corruption. He will be convicted and that will be the end of B-Rod.
Burris, though, will remain. For certainly, the U.S. Senate will seat Mr. Burris. Eccentricities aside, Mr. Burris will go to Washington as the legal designee to the vacant Senate seat formerly held by President Obama. Whether he remains for two years in that post or serves only until a special election can be held is an open issue. Though it seems probable that he will remain in office until 2010, there is doubt whether he can use the power of incumbency to translate his appointment into a full six year term.
And, therein hangs the tale. As Thomas Geoghegan, labor lawyer and author of "See You in Court: How the Right Made America a Lawsuit Nation", opined in the New York Times, that the 17th Amendment to the Constitution mandates that governors "shall issue writs of elections to fill such vacancies" when Senate seats open up unexpectedly due to death, resignation, or incapacity. In practice, governors fill such vacancies by appointment and wait until the next round of Senate elections allow the vacancy to be eliminated through election. As Geoghegan argued, such practices set the 17th Amendment on its head by allowing a legal proviso which logically allowed temporary appointments by the governor until an election can fill the vacancy for the remainder of the term.
Legislatures have been unwilling to demand special elections in order to fill such vacancies. Indeed, the Illinois legislature refused to consider holding a special election for fear that the Republicans might win a seat away from a Democrat. Whatever Mr. Burris's merits may be, he clearly is a Democrat and can be counted on to support the agenda of President Obama. Even when the legislature is controlled by a party opposed to the governor and could use its authority to prevent a governor from choosing a candidate of his or her own liking (and party), legislatures have been loathe to exercise their constitutional authority. As a result, governors everywhere have acquired a power unintended by the 17th Amendment and it has allowed corrupt practices to pervert the democratic process. B-Rod was only the most blatant of abusers.
At present, there are in play four Senate seats, each held by a Democrat. Two are open because the holders of these seats were elected to the executive branch and cannot serve in both branches of government. President-elect Obama resigned his seat in December, while Senator Biden has yet to resign his. Secretaries designate Salazar and Clinton must resign their seats in order to become members of the Obama cabinet. Senator Salazar has already resigned and his seat filled by the former superintendent of Denver public schools. Governor Patterson has toyed with the notion of replacing Senator Clinton with Caroline Kennedy, though her selection has stirred much controversy, given that she has never held elective office and - like Senator Clinton - represents perhaps the continuation of a political dynasty. Senator Biden's replacement most likely will be a close associate of the senator and someone who will only serve until 2010.
What does it matter whether these vacancies are filled temporarily or for the full two-years until the next election cycle? Maybe not much, but one should never underestimate the power of incumbency. Even Mr. Burris who has had difficulty winning state-wide elections may have an advantage in 2010 simply because he is the incumbent. Most voters are reluctant to turn out incumbents. The only way for incumbents to lose their seats is through death, personal choice, or the infrequent, but powerful political tsunamis that sweep aside incumbents whether deserving or not.
2008 was just such an election, at least as regards to Republican candidates. Not even Christopher Shays, a well-respected and moderate Republican from New England, could not hold onto his seat in the House of Representatives. And other incumbents, be they Senator Coleman from Minnesota or Senator Stevens from Alaska, could not withstand the rising tide against incumbent Republicans.
To be appointed for the full two years is, then, to gain an advantage, one that might be parlayed into electoral victory when the regular electoral cycle is adhered to. Governors gain immense power in the selection process and can thus use their power to sell the seat to the highest bidder (Blagojevich), reward political cronies, perpetuate political dynasties or exercise caution and choose a relative newcomer (Michael Bennett from Colorado).
That this thwarts the democratic process is obvious. It does not create a level playing field or give the appearance of a such an open process. As such, it is yet another impediment to democracy, an impediment that could be eliminated if governors and legislatures adhered to the dictates of the 17th Amendment. So, enjoy the cirque du Burris while you can, but keep your eye on the prize, not just in Illinois, but everywhere where vacancies in the U.S. Senate arise.
Wednesday, December 31, 2008
MIDDLE EAST MANIA
As Israel presses on its air retaliation in Gaza, many in the world have called for a 48 hour cease-fire, a plea that the Israeli government has chosen for the moment to ignore. Writing in today's New York Times, David Grossman argues that now is precisely the time for Israel to pause its strategic campaign. Hamas cannot be driven from power by repeated air assaults on a vulnerable population. Nor can rubble be pounded relentlessly. Rocket fire from Gaza has diminished, but is unlikely to cease. Of utmost emergency is the evacuation of wounded citizens from Gaza to hospitals in Egypt and Israel. The borders need to be opened for UN emergency services. And talks brokered by Egypt or Turkey need to take place.
An unlikely scenario, perhaps, but nothing should surprise us in the Middle East. Once hopeful glimmers such as the Israeli military withdrawal and evacuation of settlers in Gaza during August 2005 and the unexpected Hamas victory in elections during January 2006 have long since been extinguished as Israel has attempted to quarantine Gaza to drive Hamas from power. For its part, Hamas has sought to use the abduction of Israeli soldier Shalit as leverage to free 1,400 Palestinian prisoners in Israeli jails. As a result, Gaza has been turned into a heavily armed ghetto whose very existence strikes fear into the heart of Israel.
In the meantime, we are treated to the blame game. Palestinians blame Israel for crimes against humanity, demand an end to the bombing, the targeted assassinations of Hamas leaders and the occupation of the West Bank. Israel blames Hamas for the resumption of indiscriminant rocket firing into southern Lebanon once it chose to let the six-month cease-fire expire.
Cooler heads might prevail, but not as long as testerone levels soar sky high. Alas, a lot of innocent people will suffer. But such is the stuff of life in the Middle East.
An unlikely scenario, perhaps, but nothing should surprise us in the Middle East. Once hopeful glimmers such as the Israeli military withdrawal and evacuation of settlers in Gaza during August 2005 and the unexpected Hamas victory in elections during January 2006 have long since been extinguished as Israel has attempted to quarantine Gaza to drive Hamas from power. For its part, Hamas has sought to use the abduction of Israeli soldier Shalit as leverage to free 1,400 Palestinian prisoners in Israeli jails. As a result, Gaza has been turned into a heavily armed ghetto whose very existence strikes fear into the heart of Israel.
In the meantime, we are treated to the blame game. Palestinians blame Israel for crimes against humanity, demand an end to the bombing, the targeted assassinations of Hamas leaders and the occupation of the West Bank. Israel blames Hamas for the resumption of indiscriminant rocket firing into southern Lebanon once it chose to let the six-month cease-fire expire.
Cooler heads might prevail, but not as long as testerone levels soar sky high. Alas, a lot of innocent people will suffer. But such is the stuff of life in the Middle East.
Friday, October 10, 2008
BAILOUTS, BALANCE SHEETS AND B.S.
The steep fall in stock markets around the world during October is troubling news in nearly every respect. Despite the efforts of central banks and individual countries to come to the rescue of banks and other lending institutions, the crisis continues to spread and deepen. No financial institution seems willing to lend substantial amounts of money to other institutions, though conservative banks in the U.S. and abroad have used their strong capital positions to take over failing institutions. Unfortunately, in the midst of this financial free-fall, the United States is engaged in a highly partisan political debate that only occasionally focuses on the problem at hand.
It was certainly unwise for Secretary Paulson to allow the proposed $700 billion rescue package to be characterized as a bailout. To an extent, it certainly was a bailout of investment banks and other financial institutions that had accumulated large amounts of worthless mortgage backed securities on their balance sheets. Allowing these entities to pawn off this "toxic waste" was certainly one way of rescuing these wobbly lending institutions that could neither lend nor repay monies from a weakened capital base.
Yet, in the political discussion leading up to Congressional approval of the revised bailout package, now laden with special sweeteners, some Republican representatives decried accounting rules as one cause of the distress. Mark to market accounting had led financial institutions to mark down the value of mortgage based securities and derivatives once it became apparent that there no longer was a market in this financial inventions. Mark to market markdowns were thus not a cause, but a reflection of the loss of value that any financial institution holding such junk had experienced. In order to fairly reflect this loss of capital on the balance sheet, these mortgage based securities were reduced in value.
To advocate, as many Republican representatives attempted, the suspension of "mark to market" accounting in favor of some alternative - mark to make believe - might have rescued some balance sheets, but would have worsened the crisis in confidence that has led to the seizure of various credit markets. Balance sheets must reflect accurately the present value of a company or corporation. To game the balance sheets or to allow questionable transactions to remain off-balance sheet items will not save the system, but merely hasten its demise.
If Enron taught us nothing at all, it should have warned us that playing fast and loose with accounting rules and resorting to off-balance sheet accounting to hide losses and inflate profits does not eliminate problems, it merely postpones them. Then, when the deceit can no longer be maintained, the collapse is inevitably short, swift and brutal.
In the current crisis, the root cause is the frivolous waste of capital on mortgage loans that could not be repaid by those agreeing to interest free subprime mortgages and the like. Once, the default rate in the subprime market exploded, it caused lenders to pause with respect to refinancing teaser lows. When those holding mortgages in need of refinancing in order to avoid the balloon payments inherent in interest-free mortgages could no longer find refinancing, they too joined the chorus of mortgage defaults.
Unlike the past, many financial institutions were not directly impacted by the increased rate of defaults in the housing sector. Most of the original mortgages, especially the questionable ones involving subprime, Alt-A and option ARM mortgages, had been sliced and diced and packaged with other mortgages in order to spread the risk. At a certain tipping point, however, no matter how much repackaging had been done, the level of risk had to increase.
At the ground level, of course, foreclosures in one community reduced the property values of all surrounding homes. This led to negative equity scenarios that afflicted even reasonable mortgages. Once the mortgage value of the house exceeded the market value, even honest people were put in a bind. They could continue to pay the mortgage, even though they were paying more than the house was presently worth, and hope for an upturn in the housing market to bail them out. They could seek to refinance their mortgages at a better rate. Or, they could walk away from the negative equity by refusing to throw good money after bad. Unfortunately, many chose the latter.
The cascading of defaults on mortgages put pressure on the lenders. Ameriquest and Countrywide were the first large lenders to go under. Indeed, Countrywide burned through a loan from Bank of America in such short time that Bank of America had to buy Countrywide in order to have any hope of recouping its investment. Later, WaMu and Wachovia, a savings and loan and commercial bank respectively, were taken over as the burden of bad loans brought down their value.
It was certainly unwise for Secretary Paulson to allow the proposed $700 billion rescue package to be characterized as a bailout. To an extent, it certainly was a bailout of investment banks and other financial institutions that had accumulated large amounts of worthless mortgage backed securities on their balance sheets. Allowing these entities to pawn off this "toxic waste" was certainly one way of rescuing these wobbly lending institutions that could neither lend nor repay monies from a weakened capital base.
Yet, in the political discussion leading up to Congressional approval of the revised bailout package, now laden with special sweeteners, some Republican representatives decried accounting rules as one cause of the distress. Mark to market accounting had led financial institutions to mark down the value of mortgage based securities and derivatives once it became apparent that there no longer was a market in this financial inventions. Mark to market markdowns were thus not a cause, but a reflection of the loss of value that any financial institution holding such junk had experienced. In order to fairly reflect this loss of capital on the balance sheet, these mortgage based securities were reduced in value.
To advocate, as many Republican representatives attempted, the suspension of "mark to market" accounting in favor of some alternative - mark to make believe - might have rescued some balance sheets, but would have worsened the crisis in confidence that has led to the seizure of various credit markets. Balance sheets must reflect accurately the present value of a company or corporation. To game the balance sheets or to allow questionable transactions to remain off-balance sheet items will not save the system, but merely hasten its demise.
If Enron taught us nothing at all, it should have warned us that playing fast and loose with accounting rules and resorting to off-balance sheet accounting to hide losses and inflate profits does not eliminate problems, it merely postpones them. Then, when the deceit can no longer be maintained, the collapse is inevitably short, swift and brutal.
In the current crisis, the root cause is the frivolous waste of capital on mortgage loans that could not be repaid by those agreeing to interest free subprime mortgages and the like. Once, the default rate in the subprime market exploded, it caused lenders to pause with respect to refinancing teaser lows. When those holding mortgages in need of refinancing in order to avoid the balloon payments inherent in interest-free mortgages could no longer find refinancing, they too joined the chorus of mortgage defaults.
Unlike the past, many financial institutions were not directly impacted by the increased rate of defaults in the housing sector. Most of the original mortgages, especially the questionable ones involving subprime, Alt-A and option ARM mortgages, had been sliced and diced and packaged with other mortgages in order to spread the risk. At a certain tipping point, however, no matter how much repackaging had been done, the level of risk had to increase.
At the ground level, of course, foreclosures in one community reduced the property values of all surrounding homes. This led to negative equity scenarios that afflicted even reasonable mortgages. Once the mortgage value of the house exceeded the market value, even honest people were put in a bind. They could continue to pay the mortgage, even though they were paying more than the house was presently worth, and hope for an upturn in the housing market to bail them out. They could seek to refinance their mortgages at a better rate. Or, they could walk away from the negative equity by refusing to throw good money after bad. Unfortunately, many chose the latter.
The cascading of defaults on mortgages put pressure on the lenders. Ameriquest and Countrywide were the first large lenders to go under. Indeed, Countrywide burned through a loan from Bank of America in such short time that Bank of America had to buy Countrywide in order to have any hope of recouping its investment. Later, WaMu and Wachovia, a savings and loan and commercial bank respectively, were taken over as the burden of bad loans brought down their value.
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