Greetings from the Left Coast, where we here at LeftCoastBlues do the heavy thinking for those who just can't be bothered.
The other day I was headed out to lunch with some business colleagues, and the subject turned to fuel prices. I was astounded when one of my colleagues went off on the "obscene profits" the oil companies were making. I was astounded because this person used to work for a consulting company that went into troubled businesses, analyzed their financial statements and business practices, and told them what they needed to do to fix things. Of all the people I know, he certainly understands - at least intellectually - that the percentage numbers are what matters, not the dollars. Yet he was joining in the chorus condemning Exxon Mobile for their Q1 profit number - the biggest ever, as we have repeatedly been told.
Now I understand that people are hurting, and they want someone to blame. Heck, I've got a pretty fuel-efficient car, and I live less than 10 miles from my office, and I'm still not crazy about paying nearly five bucks per gallon for gas. And the oil companies are an easy, obvious target, and it's all too easy for the people who are really to blame for this mess to shift our attention to the big, bad oil companies.
But can we have some perspective here, please?
Exxon Mobile is a publicly traded company. It is therefore required to make its financial statements public as well. You can go to their Web site and download their annual report, along with several other documents that they are required to publish.
In 2007, Exxon Mobile's net income was roughly 10.4% of sales. Of course, sales and other operating revenue totaled almost $400 Billion, so that 10.4% is a huge number. But the revenue number is also huge - almost mind-bogglingly huge - and the income number is only important as it relates to the revenue number. Now a net income of 10.4% is indeed good, solid performance. It's about on par with AT&T, whose net income was about 10%. It's a heck of a lot better than, say, Costco, whose net income in 2007 was only 1.7% of sales, or Fluor Corporation, with 3% of sales. On the other hand, the Boeing Company had net income of 12%. Do we need a windfall profits tax on the obscene profits of the aerospace industry? 3M had net profits of 16.7% - do we need a windfall profits tax there? How about the software industry? After all, Microsoft's 2007 net income was 27.5% of sales! Oracle's was 23.7% of sales! Time for a windfall profits tax on the software industry!
A publicly held corporation exists for one and only one reason: to deliver value to its shareholders. So who are the shareholders of Exxon Mobile? No corporate officer or board member owns more than 0.02% of the company's outstanding shares. We know that, because that's the kind of information a publicly held corporation has to publicize. The rest are owned by...well, by everyone from millionaire investors to the proverbial little old lady in tennis shoes. You may own some if you have money in a mutual fund, or a retirement or pension plan. And the corporate officers and board members have a fiduciary responsibility to the shareholders that can result in them going to jail if it is breached. Remember Kenneth Lay and Enron?
Congress doesn't have the power to repeal the law of supply and demand. If supply is constant or declining, and demand is rising, the price will go up. It's one of the most fundamental laws of economics. If you want to see lower prices in a free, global market - which the market for crude oil is, whether we like it or not - you must either increase supply or decrease demand. And if you control prices by artificially forcing them lower without increasing supply, you will have shortages. Anyone else out there remember the days of the Arab oil embargo and the long lines at the gas pumps back in the 1970s? Want to go back to that? Me neither. Right now gas is expensive, but it's available. That's a good thing. That's how free markets work, if they're allowed to function.
Can someone tell me, please, exactly how a windfall profits tax on the oil companies is going to make the price of crude oil or gasoline go down? Those of you who are in business, imagine a situation where you are told by the government: "Look, you're making too much money on this stuff you're producing and selling. So we're going to pass a special tax that will take away from you any money you make that's in excess of what we think you should make." Is that going to give you an incentive to make more of whatever it is that you produce, or less? Why should you try to make more of it if you aren't going to get to keep the fruits of your labors?
Next in line for blame seems to be "the speculators." Even the Saudis are now blaming "the speculators" for bidding up the price, and denying that the law of supply and demand is responsible. Of course they are. After all, they and their OPEC colleagues are guilty of artificially controlling supply to keep prices high. If you're looking for villians in this situation, OPEC certainly is worth of consideration. So naturally they want to deflect responsibility to someone else - even as they increase the amount they're pumping for fear that the price will go too high, people will seriously start turning to alternate sources of energy, and they'll be hurt in the long run.
But "speculators" are nothing more or less than investors who are trying to figure out whether the price of something is going to go up or down in the long run (no different in that respect from investors in the stock market), and they actually provide a stabilizing effect on long term commodities prices. Suppose you're General Mills, and you need a lot of corn for making corn flakes. It will really help your business planning process to know what you're going to have to pay for corn in the next 12 months or so - particularly when the Law of Unintended Consequences is pushing the price of corn through the roof because...wait for it...demand has gone up because people are now using corn to make ethanol. But I digress. Thanks to the commodities market, you can purchase a contract today for corn to be delivered at some point in the future at a price fixed by the contract. It helps General Mills, because it now knows what it's going to pay for corn. It helps the suppliers, because they now know what they're going to get for their corn.
Here's where you get to play. If you think the price of corn is going to go up, you can buy a contract for a million bushels of corn to be delivered, say, six months from now at today's contract price. You can buy that contract for a fraction of the actual value of the corn. Seeing as how you probably don't have a driveway big enough to hold a million bushels of corn, what you're counting on is that sometime in the next six months, you'll be able to sell your contract to someone (e.g., General Mills) who actually does need the corn. If the price goes up enough, you'll be able to make a profit, and the person who buys the contract from you will still pay less for the corn than if they had to buy the corn at the market price at that time. And the profit can be substantial, because the profit will be the difference in price on the whole million-bushel lot, whereas you only had to put up a fraction of that amount to buy the contract in the first place.
Sounds like a great deal, doesn't it? But if you guess wrong, and the price of corn goes down in the next six months, you're going to end up having to sell your contract for a loss - and it could be a really big loss, because, once again, the loss will be the difference in price on the whole million-bushel lot, meaning that you could lose a lot more money that you put up to buy the contract.
Conversely, if you believe that the price of corn is going to go down, you can sell a contract to deliver corn that you don't actually have yet, in the belief that, before that contract comes due, you'll be able to buy the corn at a lower price than the one you've contracted to sell it for. Once again, if you guess correctly, you can make a lot of money. If you guess wrong, you can lose a lot of money.
It certainly is possible for buyers and sellers in the commodities market to bid up the price of something in the short term, if a lot of people believe that the price is going to keep going up. But it is not possible for them to keep the price up by themselves. At some point, demand will begin to fall off, prices will stabilize or begin to decline, and if you're stuck with the wrong kind of futures contract, you will lose a lot of money.
We're already beginning to see this reduction in demand. Somewhere between $4 and $5 per gallon, gas hit a point where we began to change our behavior to use less of it. We started to drive less. Public transportation ridership is up. We've started buying smaller, more fuel-efficient cars. Hybrid sales are up. It's painful, but free market forces are working, and we are adjusting. Our politicians may not be noticing, but the Saudis are. Whatever you may think about them, they're not stupid, and they didn't decide to increase production by a half-million barrels per day out of the goodness of their hearts. They did it because they saw our behavior patterns starting to change, and they're afraid we will find a way to wean ourselves away from our oil dependence, which would, of course, reduce demand even further, which would at some point begin to hurt them financially.
So, if it isn't the oil companies, and it isn't the speculators, who is to blame? That, my friends, will be the subject of our next post - this one is already long enough.
Thanks for listening.
Saturday, June 28, 2008
Thursday, June 26, 2008
The Second Amendment Dodges a Bullet
Greetings from the Left Coast, where we here at LeftCoast Blues do the heavy thinking on behalf of those who just can't be bothered.
The big news of the day is that the Supreme Court decided that the Second Amendment to the Constitution actually says what it says. The even bigger news, in my opinion, is that four of the nine Supreme Court Justices believed that it didn't.
The issue in question was a 32-year-old ban on handgun ownership in Washington DC. This was, in a sense, an indirect ban: it's a crime in DC to carry an unregistered firearm, and the registration of handguns is prohibited. So there was no way to legally own one. Dick Heller, a DC special police officer, applied for a registration certificate for a handgun that he wanted to keep at home, and was turned down - so he sued.
The court struck down the ban, and also struck down the requirement that all firearms be equipped with trigger locks or kept disassembled.
Here's what the Second Amendment says: "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed." Those who oppose private gun ownership do so by claiming that this language only protects the right to possess and carry a firearm in connection with militia service. Justice Scalia, writing for the majority, points out that "the Constitution was written to be understood by the voters; its words and phrases were used in their normal and ordinary as distinguished from technical meaning." It "excludes secret or technical meanings that would not have been known to ordinary citizens in the founding generation."
In one of the clearest interpretations of the Second Amendment ever, Justice Scalia wrote: "The Second Amendment is naturally divided into two parts: its prefatory clause and its operative clause. The former does not limit the latter grammatically, but rather announces a purpose. The Amendment could be rephrased, 'Because a well regulated Militia is necessary to the security of a free State, the right of the people to keep and bear Arms shall not be infringed'...other legal documents of the founding era, particularly individual-rights provisions of state constitutions, commonly included a prefatory statement of purpose...a prefatory clause does not limit or expand the scope of the operative clause."
He goes on to observe that, "Three important founding-era legal scholars interpreted the Second Amendment in published writings. All three understood it to protect an individual right unconnected with militia service."
Justice Scalia points out that nothing in this opinion should cast doubt on "longstanding prohibitions on the possession of firearms by felons and the mentally ill, or laws forbidding the carrying of firearms in sensitive places such as schools and government buildings," and that the sorts of weapons protected by the Second Amendment are those "in common use," and that it is not unconstitutional to, for example, ban private ownership of fully automatic military weapons or bazookas.
However, "the inherent right of self-defense has been central to the Second Amendment right," and the DC law "amounts to a prohibition of an entire class of 'arms' that is overwhelmingly chosen by American society for that lawful purpose. The prohibition extends, moreover, to the home, where the need for defense of self, family, and property is most acute."
And here's the part I really love: "The very enumeration of the right takes out of the hands of government - even the Third Branch of Government - the power to decide on a case-by-case basis whether the right is really worth insisting upon. A constitutional guarantee subject to future judges' assessments of its usefulness is no constitutional guarantee at all. Constitutional rights are enshrined with the scope they were understood to have when the people adopted them, whether or not future legislatures or (yes) even future judges think that scope too broad...We are aware of the problem of handgun violence in this country...The Constitution leaves the District of Columbia a variety of tools for combating that problem...But the enshrinemen of constitutional rights necessarily takes certain policy choices off the table...it is not the role of this Court to pronounce the Second Amendment extinct."
The majority opinion is really quite brilliantly written, and I would encourage everyone to read it in its entirety. You can download it from http://www.scotusblog.com/wp/wp-content/uploads/2008/06/07-2901.pdf.
What is truly frightening is that four of the nine justices apparently felt that they could, in Scalia's words, "pronounce the Second Amendment extinct." In a dissenting opinion, Justice Stevens wrote that the majority opinion "would have us believe that over 200 years ago, the Framers made a choice to limit the tools available to elected officials wishing to regulate civilian uses of weapons."
Note to Justice Stevens: Yes! That's exactly what they did! The entire Bill of Rights has the express purpose of limiting what elected officials, or any other branch of the government, can do! These people came from nations where the government could, at a whim, make decisions that would abridge their individual rights, and they had had enough of that. They were rightly concerned about what a central government could and would do if there were not very clear limitations on its power. The Constitution specifies a process by which it can be amended. Existing amendments can be reversed through this process, if the people decide it's the right thing to do - after all, prohibition was reversed through exactly that process. But you, Justice Stevens, do not have the right to circumvent that process because you don't like what an existing amendment says. And the people of the United States should be very concerned that you, and your three dissenting colleagues, apparently believe that you do!
And to my conservative friends, I will say this: if you don't think there's any difference between the Presidential candidates this year, think about the fact that the next President is probably going to get to name at least one, if not two, Supreme Court Justices, and think about the fact that the Second Amendment to the Constitution survived, on June 26, 2008, by a single vote, 5 to 4. If that doesn't get you off your backsides and out to the polls, then I don't know what will. Because after all the votes are counted, the American people pretty much end up with the government they deserve.
Thanks for listening.
The big news of the day is that the Supreme Court decided that the Second Amendment to the Constitution actually says what it says. The even bigger news, in my opinion, is that four of the nine Supreme Court Justices believed that it didn't.
The issue in question was a 32-year-old ban on handgun ownership in Washington DC. This was, in a sense, an indirect ban: it's a crime in DC to carry an unregistered firearm, and the registration of handguns is prohibited. So there was no way to legally own one. Dick Heller, a DC special police officer, applied for a registration certificate for a handgun that he wanted to keep at home, and was turned down - so he sued.
The court struck down the ban, and also struck down the requirement that all firearms be equipped with trigger locks or kept disassembled.
Here's what the Second Amendment says: "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed." Those who oppose private gun ownership do so by claiming that this language only protects the right to possess and carry a firearm in connection with militia service. Justice Scalia, writing for the majority, points out that "the Constitution was written to be understood by the voters; its words and phrases were used in their normal and ordinary as distinguished from technical meaning." It "excludes secret or technical meanings that would not have been known to ordinary citizens in the founding generation."
In one of the clearest interpretations of the Second Amendment ever, Justice Scalia wrote: "The Second Amendment is naturally divided into two parts: its prefatory clause and its operative clause. The former does not limit the latter grammatically, but rather announces a purpose. The Amendment could be rephrased, 'Because a well regulated Militia is necessary to the security of a free State, the right of the people to keep and bear Arms shall not be infringed'...other legal documents of the founding era, particularly individual-rights provisions of state constitutions, commonly included a prefatory statement of purpose...a prefatory clause does not limit or expand the scope of the operative clause."
He goes on to observe that, "Three important founding-era legal scholars interpreted the Second Amendment in published writings. All three understood it to protect an individual right unconnected with militia service."
Justice Scalia points out that nothing in this opinion should cast doubt on "longstanding prohibitions on the possession of firearms by felons and the mentally ill, or laws forbidding the carrying of firearms in sensitive places such as schools and government buildings," and that the sorts of weapons protected by the Second Amendment are those "in common use," and that it is not unconstitutional to, for example, ban private ownership of fully automatic military weapons or bazookas.
However, "the inherent right of self-defense has been central to the Second Amendment right," and the DC law "amounts to a prohibition of an entire class of 'arms' that is overwhelmingly chosen by American society for that lawful purpose. The prohibition extends, moreover, to the home, where the need for defense of self, family, and property is most acute."
And here's the part I really love: "The very enumeration of the right takes out of the hands of government - even the Third Branch of Government - the power to decide on a case-by-case basis whether the right is really worth insisting upon. A constitutional guarantee subject to future judges' assessments of its usefulness is no constitutional guarantee at all. Constitutional rights are enshrined with the scope they were understood to have when the people adopted them, whether or not future legislatures or (yes) even future judges think that scope too broad...We are aware of the problem of handgun violence in this country...The Constitution leaves the District of Columbia a variety of tools for combating that problem...But the enshrinemen of constitutional rights necessarily takes certain policy choices off the table...it is not the role of this Court to pronounce the Second Amendment extinct."
The majority opinion is really quite brilliantly written, and I would encourage everyone to read it in its entirety. You can download it from http://www.scotusblog.com/wp/wp-content/uploads/2008/06/07-2901.pdf.
What is truly frightening is that four of the nine justices apparently felt that they could, in Scalia's words, "pronounce the Second Amendment extinct." In a dissenting opinion, Justice Stevens wrote that the majority opinion "would have us believe that over 200 years ago, the Framers made a choice to limit the tools available to elected officials wishing to regulate civilian uses of weapons."
Note to Justice Stevens: Yes! That's exactly what they did! The entire Bill of Rights has the express purpose of limiting what elected officials, or any other branch of the government, can do! These people came from nations where the government could, at a whim, make decisions that would abridge their individual rights, and they had had enough of that. They were rightly concerned about what a central government could and would do if there were not very clear limitations on its power. The Constitution specifies a process by which it can be amended. Existing amendments can be reversed through this process, if the people decide it's the right thing to do - after all, prohibition was reversed through exactly that process. But you, Justice Stevens, do not have the right to circumvent that process because you don't like what an existing amendment says. And the people of the United States should be very concerned that you, and your three dissenting colleagues, apparently believe that you do!
And to my conservative friends, I will say this: if you don't think there's any difference between the Presidential candidates this year, think about the fact that the next President is probably going to get to name at least one, if not two, Supreme Court Justices, and think about the fact that the Second Amendment to the Constitution survived, on June 26, 2008, by a single vote, 5 to 4. If that doesn't get you off your backsides and out to the polls, then I don't know what will. Because after all the votes are counted, the American people pretty much end up with the government they deserve.
Thanks for listening.
Wednesday, June 25, 2008
Can We Have Some Perspective, Please?
Greetings from the Left Coast, where we here at LeftCoastBlues do the heavy thinking for those who just can't be bothered.
Wow, I didn't realize my sabbatical has lasted this long! And there's so much to catch up on! I've been busy doing some rather tedious research on your behalf that I will be sharing with you over the coming weeks. But first things first.
I popped up my browser a few days ago only to see the following headline: "US jobless rate takes biggest jump since '86!" OMG! The sky is falling! One more piece of evidence that things are terrible! I clicked through to the article to find that the national unemployment rate had soared - soared - from 5% to 5.5%!
Now certainly that's not good news, particularly if you're one of the unemployed. But, as is so often the case, all of the news articles seem to lack historical perspective here.
The fact is that the unemployment rate has never been, and will never be, zero. There are a lot of reasons for this. But economists talk about something they call the "Non-Accelerating Inflation Rate of Unemployment," often abbreviated "NAIRU." The theory goes that there is a threshold of unemployment where, if governments try to push the unemployment rate any lower, the inflation rate tends to accelerate. Economists being economists, there is no agreement on exactly what the NAIRU is, and it may in fact be a different number at different points in history, but it is generally agreed to be somewhere between 4.3% and 7.3%.
So...is an increase from 5% to 5.5% a reason for caution? Yes, it probably is. Is it a reason for breathless, "the sky is falling," reportage? No. Particularly when the cost of energy has gone sky high over the last couple of years. It is, I believe, at testament to the incredible robustness of our economy in recent years that we have been able to absorb the spike in energy prices without having the economy go totally into the toilet long before now.
The fact is that over the last 50 years, the national unemployment rate has seldom been under 4%, and has spent most of its time between 4% and 6%. (See http://en.wikipedia.org/wiki/Image:Us_unemployment_rates_1950_2005.png) My younger readers may be interested to know the following: Inflation was just over 8% in 1975 - the second highest peak in the last 50 years. It was already starting to fall when Jimmy Carter was elected in 1976, dipped briefly below 6% in 1978 - his second year in office - then climbed steadily back up through the remainder of his presidency. When Ronald Reagan was elected in 1980, it was already nearly back to 8%.
The popular wisdom, reinforced by most of our media outlets at every opportunity, is that "Reaganomics" - the concept that cutting taxes would actually lead to greater tax revenues through the economic growth that would result from letting people keep more of their own money - didn't work and should therefore never be tried again. But the reality is that after peaking at almost 10% in 1982 (the highest rate in the last 50 years), Reagan's policies took hold, and the unemployment rate fell steadily thoughout the rest of his presidency, and stood at about 5.75% when he left office.
Nothing lasts forever, though, and the economy always has, and always will be, cyclical. President Bush the Elder had the misfortune to take office just as the cycle was turning. During his presidency, the unemployment rate rose from just over 5% to just over 7.5% - leading to the legendary "It's the economy, stupid!" theme of Bill Clinton's successful campaign in 1992. Unemployment was already falling when President Clinton took office in 1993, and, regardless of his other shortcomings, he did manage to not screw up the economy for most of his presidency. In this, he was helped considerably by the fact that the Republicans took control of Congress in 1994 and prevented the enactment of flagrant new government spending programs, e.g., "HillaryCare."
In the year 2000, the dot-bombs started going off, and the economy started to turn again. After hitting a low of roughly 4% in 2000, it jumped to 5% in 2001. President Bush the Younger was of course blamed for this, although he had little or nothing to do with it. (See my earlier post on the phenomonon of "hysteresis.") Of course, we all know what happened in 2001. The terrorist attacks just greased the slope that the economy was already on. Fortunately, the much-maligned "Bush Tax Cuts" were enacted, and, despite what you may have been told, they worked. After peaking at just over 6% in 2003, the unemployment rate started falling steadily again.
So what should we take away from this history lesson?
Thanks for listening.
Wow, I didn't realize my sabbatical has lasted this long! And there's so much to catch up on! I've been busy doing some rather tedious research on your behalf that I will be sharing with you over the coming weeks. But first things first.
I popped up my browser a few days ago only to see the following headline: "US jobless rate takes biggest jump since '86!" OMG! The sky is falling! One more piece of evidence that things are terrible! I clicked through to the article to find that the national unemployment rate had soared - soared - from 5% to 5.5%!
Now certainly that's not good news, particularly if you're one of the unemployed. But, as is so often the case, all of the news articles seem to lack historical perspective here.
The fact is that the unemployment rate has never been, and will never be, zero. There are a lot of reasons for this. But economists talk about something they call the "Non-Accelerating Inflation Rate of Unemployment," often abbreviated "NAIRU." The theory goes that there is a threshold of unemployment where, if governments try to push the unemployment rate any lower, the inflation rate tends to accelerate. Economists being economists, there is no agreement on exactly what the NAIRU is, and it may in fact be a different number at different points in history, but it is generally agreed to be somewhere between 4.3% and 7.3%.
So...is an increase from 5% to 5.5% a reason for caution? Yes, it probably is. Is it a reason for breathless, "the sky is falling," reportage? No. Particularly when the cost of energy has gone sky high over the last couple of years. It is, I believe, at testament to the incredible robustness of our economy in recent years that we have been able to absorb the spike in energy prices without having the economy go totally into the toilet long before now.
The fact is that over the last 50 years, the national unemployment rate has seldom been under 4%, and has spent most of its time between 4% and 6%. (See http://en.wikipedia.org/wiki/Image:Us_unemployment_rates_1950_2005.png) My younger readers may be interested to know the following: Inflation was just over 8% in 1975 - the second highest peak in the last 50 years. It was already starting to fall when Jimmy Carter was elected in 1976, dipped briefly below 6% in 1978 - his second year in office - then climbed steadily back up through the remainder of his presidency. When Ronald Reagan was elected in 1980, it was already nearly back to 8%.
The popular wisdom, reinforced by most of our media outlets at every opportunity, is that "Reaganomics" - the concept that cutting taxes would actually lead to greater tax revenues through the economic growth that would result from letting people keep more of their own money - didn't work and should therefore never be tried again. But the reality is that after peaking at almost 10% in 1982 (the highest rate in the last 50 years), Reagan's policies took hold, and the unemployment rate fell steadily thoughout the rest of his presidency, and stood at about 5.75% when he left office.
Nothing lasts forever, though, and the economy always has, and always will be, cyclical. President Bush the Elder had the misfortune to take office just as the cycle was turning. During his presidency, the unemployment rate rose from just over 5% to just over 7.5% - leading to the legendary "It's the economy, stupid!" theme of Bill Clinton's successful campaign in 1992. Unemployment was already falling when President Clinton took office in 1993, and, regardless of his other shortcomings, he did manage to not screw up the economy for most of his presidency. In this, he was helped considerably by the fact that the Republicans took control of Congress in 1994 and prevented the enactment of flagrant new government spending programs, e.g., "HillaryCare."
In the year 2000, the dot-bombs started going off, and the economy started to turn again. After hitting a low of roughly 4% in 2000, it jumped to 5% in 2001. President Bush the Younger was of course blamed for this, although he had little or nothing to do with it. (See my earlier post on the phenomonon of "hysteresis.") Of course, we all know what happened in 2001. The terrorist attacks just greased the slope that the economy was already on. Fortunately, the much-maligned "Bush Tax Cuts" were enacted, and, despite what you may have been told, they worked. After peaking at just over 6% in 2003, the unemployment rate started falling steadily again.
So what should we take away from this history lesson?
- The economy is cyclical. It will always have its ups and downs, and it doesn't turn on a dime. It takes a while before the results of any particular economic action will actually show up. This is, in fact, a cause for some concern, because it is entirely possible that the run-up in fuel prices simply hasn't had time to ripple through the entire system yet - we just don't know for sure.
- At the moment, however, the sky is not falling. The 5.5% rate of unemployment is still pretty darned good by historical standards, and is well within the generally accepted range of the NAIRU - although, again, that's not to minimize the hardship if you're part of that 5.5%.
- The historical evidence of the last 25 years shows that "supply side economics" actually does work, and tax cuts actually do spur economic growth, and do increase tax revenues as a result. That should cause at least a momentary pause for thought when you hear the Democrats promising that if they are elected this year they (1) will not increase taxes, but (2) will allow the "Bush Tax Cuts" to expire. This is disingenuous at best, and downright dishonest at worst, because allowing the tax cuts to expire would actually result in a HUGE tax increase, which is NOT what you want to happen at a time when the economy is hitting a rough spot in the road.
- If the economic cycle is indeed turning, then whomever takes office in January of 2009 is going to face a delicate balancing act to avoid a recession. If the Democrats get their way, and taxes do in fact go up, the next four years probably won't be pretty, and, since most of the electorate apparently doesn't grasp the principle of hysteresis, President Obama would get the blame. The Senator from Illinois should be careful of what he wishes for, because I don't think that would be the kind of "change" the American people are looking for.
Thanks for listening.
Monday, January 21, 2008
A Reality Check (and a Little Civics Lesson)
Greetings from the Left Coast! The 2008 Presidential campaign is heating up, and, to no one's surprise, every candidate is going on record as the candidate for "change." That's what we all want, right? If as many people as the pollsters claim believe that the country is headed in the wrong direction, then of course we would want change! And of course all of the candidates will tell us what we want to hear.
But just how much change can a President actually cause? No matter whom he or she may be? What, in fact, can a President do? Well, that's fairly clearly defined in this thing called the Constitution of the United States. According to Article Two, here's what a President can do:
But just how much change can a President actually cause? No matter whom he or she may be? What, in fact, can a President do? Well, that's fairly clearly defined in this thing called the Constitution of the United States. According to Article Two, here's what a President can do:
- He or she is the Commander in Chief of the nation's military forces. That means that once Congress authorizes military action, the President gets to make the decision of how the troops get deployed. The Founding Fathers knew that you can't run a war by committee. Someone must have the ultimate decision-making responsibility. That someone is the President.
- He or she "may require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any subject relating to the Duties of their respective Offices." This phrase contains the seeds of what has become the "Cabinet," made up of the heads of the various departments that compose the Executive Branch of government.
- He or she may grant pardons and reprieves, except in cases of impeachment.
- He or she may make treaties, provided that two-thirds of the Senate ratifies them.
- He or she "shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the Supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law..." (The article goes on to say that Congress may determine by law whether certain other appointments are made by the President, by courts of law, or by "Heads of Departments.")
- He or she has the power to make appointments to fill vacancies "that may happen during the Recess of the Senate," but these appointments expire at the end of the Senate's next session, unless the Senate votes to confirm them permanently.
- He or she "shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient."
- He or she may call special sessions of either or both Houses of Congress when necessary.
- He or she "shall receive Ambassadors and other public Ministers."
- He or she "shall take Care that the Laws be faithfully executed." (This is what takes up most of the time and effort of the Executive Branch.)
- He or she "shall Commission all the Officers of the United States."
That's it, folks. According to the Constitution, that's what the President gets to do. So keep that in mind when you're listening to campaign promises, such as:
Vote for me so we can end our dependence on foreign oil. Really? How is a sitting President going to do that? The Bush administration hasn't done it in the last seven years. And, guess what? The Clinton administration didn't do it in the eight years before that, either. (And if we have another Clinton administration, they won't do it either.) And it wasn't because it didn't need to be done - it was because the President can't do it. The President only gets to execute the laws that Congress passes, and no President in recent memory has ever gotten things entirely his own way...not even when his own party controlled Congress.
There are only two ways to end our dependence on foreign oil. Either increase our domestic supplies, or reduce demand. But we can't easily increase our domestic supplies, because environmental interest groups have managed to block every attempt at new drilling, or new refineries (we haven't built a new refinery in 30 years, which is why prices ratchet up every time one shuts down for maintenance). And how, exactly, would you suggest that we reduce demand? Increased mileage standards are a mere drop in the barrel. Let's see a show of hands from everyone who wants to see additional taxes of a buck or two a gallon so we can depress demand for gasoline by artificially raising the price. Anybody? How about some windfall profit taxes on the oil companies? Boy, that'll show them! But will it produce one extra drop of oil?
The best way to end our dependence on foreign oil is to let the free market do it. We're actually fortunate that the recent run-up in oil prices has happened at a time when the economy was so strong that we've been able to absorb it without having the economy go completely into the toilet. Do you realize just how remarkable that is? And does George Bush get any credit for the resilience the economy has shown? Of course not. But the higher prices go, the more price competitive alternate sources of energy become: biofuels, fuel cells, gas/electric hybrids - and the more affordable it becomes to use more expensive extraction methods to get oil from shale deposits, tar sands, and existing wells where all the oil that could be easily extracted has already been extracted. Market forces will work if they're allowed to - and I'd rather bet on them than bet on the government to solve the problem.
How about "climate change?" (This is the new term for what used to be called "global warming," now that the evidence is mounting that "global warming," at least of the man-made variety, is a gigantic hoax.) Both Barak Obama and Hillary Clinton support the Kyoto Treaty...but back when Bill was President, the Senate (that would be the Democrat-controlled Senate) voted 98 - 0 to reject it. See, it costs the candidates nothing to tell you they support that treaty - because they know that there aren't enough Senators who are willing to commit economic suicide to ratify it.
Fiscal responsibility? Well, the President gets to submit a budget to Congress, but Congress then immediately gets to start stuffing it full of pork. Remember how the Democrats promised to eliminate "earmarks" if only we'd give them control of the House in 2006? Guess how that worked out? According to a December, 2007, article in USA Today, all 49 new Democrat legislators sponsored or co-sponsored at least one earmark. According to the article, "Freshmen Democrats were the sole sponsors on projects worth $351 million." Republicans, by contrast, only got $65 million approved. Those Democrat reformers are responsible for six times as much pork as the Republicans they criticized. What the Democrats have done is make more of an effort to hide what they're doing: rather than inserting earmarks into legislation as it's being written, they've decided to allow them to be inserted into conference reports, which are not publicly negotiated, and which cannot be further amended when they reach the House or Senate floor for a vote. I guess this is a new definition of reform that I wasn't previously familiar with.
And remember, the President doesn't have the "line-item veto" power that many state governors have. He or she can't just strike out offending portions of appropriations bills - it's a take it or leave it situation, which is why defense appropriations bills are such rich targets for the insertion of non-defense-related earmarks. (E.g., $24 million for sugar beets, and $40 million for something called the "Tree Assistance Program," inserted into the Iraq funding bill last spring.) And the Supreme Court has held that, in general, the President can't refuse to spend what Congress has appropriated, either, because that would amount to a de facto line-item veto, which is unconstitutional.
How about reforming the Income Tax code? Moving to a "flat tax" or a "fair tax?" Believe me, I'd love to see that happen, but, again, the President can't just do it. According to that pesky old Constitution, Congress - specifically the House of Representatives - gets to write the tax laws. The President can ask Congress to do what he or she wants, but can't make them do it.
The Founding Fathers were amazingly smart in how they designed this government. Congress is composed of two Houses. The House of Representatives is, by intent, the voice of the people. Its members are apportioned according to population, with the more populous states getting more seats in the House. And every seat in the House is up for grabs every two years, so it responds very quickly to the desires of the people - if the Representatives aren't doing what the people want, the makeup of the House can be changed very quickly. The Senate, on the other hand, is the voice of caution, tradition, and deliberation. Every state gets two Senators, regardless of how large or small it may be. Senators are elected for six-year terms, and only one-third of the seats are up for grabs in any given two-year election cycle. In fact, until the Seventeenth Amendment was ratified in 1913, Senators weren't even elected directly by the people - they were appointed by the legislators of their respectives states. The Senate is, by intent, the voice of continuity, the counterweight to the potential volatility of the House, the voice that says, "Wait a minute, let's think this over first."
The need for compromise was deliberately built into our system of government by its architects. No one branch of government, no one person, no one President can deliver on most of the things you're going to hear about this campaign season. So what should you be voting on? I'd suggest that we should choose a Commander in Chief that would be an effective leader of, and would command the respect of, our nation's military. Someone whose foreign policy you trust, seeing as how they do get to appoint ambassadors and tell them what to say. Someone who has proven his or her ability to manage large budgets effectively, since the President is responsible for spending (and managing) the money that Congress appropriates. Someone who has the ability to inspire others to follow him or her, since the promised changes aren't going to be things that can just be rammed down Congress' collective throat.
But, please, don't believe everything you hear. And thanks for listening.
Sunday, January 20, 2008
A Left Coast Book Review - Conservatives Without Conscience
Greetings from the Left Coast! Some weeks ago, my wife and I met with some dear family friends down in Tacoma whom we hadn’t seen socially for quite some time. I made the mistake, before my wife kicked me under the table, of mentioning that I was now blogging, and confessed that my political leanings were “somewhere to the Right of Atilla the Hun,” if I recall my words correctly. I soon learned that their political leanings, um, weren’t. As we parted, they handed me John Dean’s 2006 bestseller, Conservatives Without Conscience, and suggested that I would find it enlightening, as it came from someone who was within the Conservative camp, as it were.
In case you don’t remember John Dean, he was the White House legal counsel to President Richard Nixon when the Watergate scandal broke. The FBI referred to him as the “master manipulator of the cover up.” On November 30, 1973, he pled guilty to obstruction of justice and was sentenced to one to four years in a minimum-security prison. He never served that sentence, however – he instead became a star witness for the prosecution, and was held in a special “safe house,” when he wasn’t working with the Watergate Special Prosecutor and testifying in the trial of other Watergate figures. On January 8, 1975, in return for his cooperation, Judge John Sirica reduced his sentence to time served.
Now, that in itself doesn’t mean that he doesn’t have good ideas, or that we shouldn’t pay attention to what he has to say. He paid his debt to society, and is entitled to make a living like anybody else. Personally, I haven’t been following his career of late, but he has apparently been doing very well for himself writing a series of books that are critical of today’s Republicans in general and the Bush administration in particular. According to Wikipedia, he has frequently been a guest on Keith Olbermann’s MSNBC show, as well as on the Randi Rhodes Show on the Air America radio network. Since I don’t listen to either MSNBC or Air America, I’ll take their word for it…but I will say that those are venues that aren’t known for giving air time to conservatives.
I found the book disappointing, and somewhat difficult to read. Certainly John Dean has some valid beefs against certain self-styled “conservatives.” The allegations leveled at Dean and his wife by Leonard Colodny and Robert Gettlin in their book Silent Coup: The Removal of a President are truly despicable. I also suspect there just may have been some hard feelings toward Dean on the part of the people he helped send to prison. But that’s no excuse for deliberate distortions in his own works.
Dean spends a lot of time in this book talking about the psychological profile of “Authoritarians,” and explaining why, especially if they are “Social Dominators,” it’s dangerous to have them in power. (And I do mean a lot of time – there were times it felt like I was reading a psychology textbook.) What he doesn’t mention, because this is basically a Conservative Republican-bashing book, is that there are plenty of authoritarian personalities on both sides of the political aisle. In fact, it's arguable that an authoritarian personality is what drives most people to seek political office. And the most egregious examples of the suppression of rights these days – particularly the right of free speech – are coming from the left, not the right...but that's another post for another day.
In case you don’t remember John Dean, he was the White House legal counsel to President Richard Nixon when the Watergate scandal broke. The FBI referred to him as the “master manipulator of the cover up.” On November 30, 1973, he pled guilty to obstruction of justice and was sentenced to one to four years in a minimum-security prison. He never served that sentence, however – he instead became a star witness for the prosecution, and was held in a special “safe house,” when he wasn’t working with the Watergate Special Prosecutor and testifying in the trial of other Watergate figures. On January 8, 1975, in return for his cooperation, Judge John Sirica reduced his sentence to time served.
Now, that in itself doesn’t mean that he doesn’t have good ideas, or that we shouldn’t pay attention to what he has to say. He paid his debt to society, and is entitled to make a living like anybody else. Personally, I haven’t been following his career of late, but he has apparently been doing very well for himself writing a series of books that are critical of today’s Republicans in general and the Bush administration in particular. According to Wikipedia, he has frequently been a guest on Keith Olbermann’s MSNBC show, as well as on the Randi Rhodes Show on the Air America radio network. Since I don’t listen to either MSNBC or Air America, I’ll take their word for it…but I will say that those are venues that aren’t known for giving air time to conservatives.
I found the book disappointing, and somewhat difficult to read. Certainly John Dean has some valid beefs against certain self-styled “conservatives.” The allegations leveled at Dean and his wife by Leonard Colodny and Robert Gettlin in their book Silent Coup: The Removal of a President are truly despicable. I also suspect there just may have been some hard feelings toward Dean on the part of the people he helped send to prison. But that’s no excuse for deliberate distortions in his own works.
Dean spends a lot of time in this book talking about the psychological profile of “Authoritarians,” and explaining why, especially if they are “Social Dominators,” it’s dangerous to have them in power. (And I do mean a lot of time – there were times it felt like I was reading a psychology textbook.) What he doesn’t mention, because this is basically a Conservative Republican-bashing book, is that there are plenty of authoritarian personalities on both sides of the political aisle. In fact, it's arguable that an authoritarian personality is what drives most people to seek political office. And the most egregious examples of the suppression of rights these days – particularly the right of free speech – are coming from the left, not the right...but that's another post for another day.
Dean points out several cases of Republicans who were caught violating the law as examples of what he’s talking about. And, indeed, in the cases he mentions, these were people who betrayed the public trust, and got what they deserved. I’ve noticed something interesting, though: In general, when Republican politicians get caught with their hands in the proverbial cookie jar, their own constituents generally vote them out of office. When Democrats get caught, their constituents generally keep re-electing them. Here are just a few examples:
- Democrat Congressman Gerry Studds was censured by the House of Representatives in 1983 for his part in a Congressional page sex scandal. He admitted having a sexual relationship with a 17-year old male congressional page who, while a minor, was of the age of “legal consent” under state law. Studds was re-elected six more times after being censured. He defended his actions as having a “consensual relationship with a young adult.”
- Democrat Congressman William Jefferson was videotaped by the FBI on July 30, 2005, receiving $100,000 in a leather briefcase. On August 3, they raided his home in Washington DC, and found $90,000 wrapped in aluminum foil and stuffed in his freezer. He is alleged to have received over $400,000 in bribes from iGate, Inc., of Louisville, KY. In January, 2006, Brett Pfeffer, a former Jefferson aide who was on trial himself on bribery and conspiracy charges, implicated Jefferson in a corruption scheme involving an Internet company. In May, 2006, Vernon Jackson, the CEO of iGate, admitted to bribery of a public official. According to the Associated Press, the court documents made clear that Jefferson was the public official in question. That same month, Nancy Pelosi, then the House Minority Leader, publicly requested his immediate resignation from the House Ways and Means Committee (the primary tax-writing committee of the House). Jefferson refused. In June, 2006, House Democrats voted 99 to 58 to strip him of the committee assignment. That’s right: 58 other Democrats felt that it was appropriate, in spite of the evidence against him, for him to keep his seat on the committee whose primary responsibility is to figure out how the United States Government is going to fund its operations. Later that year, he was re-elected to his Congressional seat. (In June of 2007, a federal grand jury indicted him on 16 corruption-related charges.)
- Don’t even get me started on Ted Kennedy. Just Google “Chappaquiddick” and go from there.
Had any one of these examples featured a Republican, does anyone doubt that they would have been hounded from office with howls of outrage? But that’s OK. This is a book that was specifically written about the evils of Republicans, not Democrats. I get it. Unfortunately, Dean then goes off the rails and joins the standard chorus of criticism of the Bush administration: Bush is dumb; Cheney is evil; the U.S. tortures terrorist detainees; the pre-war intelligence was manipulated in a deliberate effort justify war in Iraq; we’re in danger of losing our rights because of the War on Terror - but he doesn't cite any hard evidence for any of these allegations. In terms of his intended audience, he's preaching to the choir - they already believe all these things, so evidence isn't required. That clearly can sell a lot of books, but I had hoped for more intellectual honesty from someone like Dean.
John Dean is clearly one of many intellectuals in our nation who live in a theoretical world. He actually seems to think that we shouldn’t be all that concerned about terrorism. After all, as he points out in his book, in 2001, when roughly 3,000 Americans were killed by terrorists, over 700,000 also died from heart disease, nearly 554,000 from cancer, and over 100,000 in various accidents. So, according to Dean, we need to keep the threat in perspective.
Gee, John, too bad you weren’t there at the World Trade Center with a bullhorn. You could have pointed out those statistics to the people who chose to jump out the windows rather than burn to death. I’m sure it would have comforted them on the way down to know that they were such an insignificant proportion of the country's total death toll for the year. (No, I haven’t gotten over 9/11. I never will. And neither should you. And, yes, I do get a little testy when I read or hear things that imply that it really wasn't that big of a deal.)
But the point is, it isn't the federal government's job to protect you from heart disease, cancer, or accidents (with a few obvious exceptions in the latter case, e.g., enforcing workplace safety laws). It is the federal government's job to protect you from people from other countries who want to destroy the nation's economy, bring down our government, and kill you. In fact, one could argue that this is the most important job the government has!
Dean also quotes Jim Harper of the Cato Institute, who compares the risk of terrorist attack to the Cold War, when the U.S. and the Soviet Union “drew within a few figurative seconds of midnight” in their nuclear stalemate. We “didn’t throw out the rulebook” then, and we shouldn’t do so now, either. This is a staggering display of ignorance of the enemy we face today. The U.S. and the Soviet Union avoided nuclear holocaust largely through the doctrine of “Mutually Assured Destruction” – the assurance that neither nation would be able to survive once the missiles started to fly. But the terrorists don’t have a nation to worry about. And they frankly don’t care how many people die in their pursuit of jihad. If they could get their hands on a nuclear weapon, and somehow get it into the U.S., they would use it without a moment’s concern about possible repercussions.
John Dean, and others like him, don’t really understand this. In their theoretical world, we shouldn’t ever use force unless it’s first used against us. Carried to its logical conclusion, that means they are willing to accept the possibility that we could lose an American city to a terrorist attack rather than take any kind of pre-emptive action to take the terrorists out before they have the chance to bring the fight back to our soil - but they don't see it that way, because they simply don’t take the threat seriously. And if you live in, say, a major port city that handles a lot of container freight, as my Tacoma friends do, that should worry you a lot more than whether we’re using coerced interrogation methods on detainees in Guantanamo.
Thanks for listening.
Friday, January 11, 2008
A Word About Intelligence
Greetings from the Left Coast! I recently saw an item in the local newspaper about the passing of Philip Agee, who died in Cuba on January 7 at age 72. What was he doing in Cuba? Well, his U.S. passport was revoked back in 1979, and he’s spent a lot of time in Cuba since then. According to Wikipedia, Agee ran the cubalinda.com Website from his home in Havana – a business that specialized in using “loopholes in American law to arrange holidays to Cuba for American citizens.”
You may not remember Philip Agee, but I do. Agee worked for the CIA during the 1960s and, after resigning from the CIA in 1968 (or being forced to resign for a variety of reasons, depending on who you talk to), went on to write a book entitled Inside the Company which was first published in Britain in 1975. Among other things, the book identified some 250 CIA officers and agents. Covers were blown, and people had to be pulled out of undercover positions that had been painstakingly constructed. Years of effort were destroyed. In 1978, Agee and a group of supporters started publishing the Covert Action Information Bulletin, the stated purpose of which was to promote “a worldwide campaign to destabilize the CIA through exposure of its operations and personnel.”
Since the fall of the Soviet Union, we’ve learned a lot of things from KGB records that have been made public, and former KGB agents and officials who have gone public with what they know. You probably haven’t heard a lot of coverage about this, because some of it is extremely embarrassing to those who cover the news – like the revelations that there really were Russian agents in this country who were manipulating the anti-war movement of the 1960s and 1970s. And we now know a lot more about Agee’s motivations as well.
According to Vasili Mitrokhin, Agee’s “bulletin” was supported by both the KGB and the Cuban General Intelligence Directorate. Oleg Kalugin, the former head of the KGB’s Counterintelligence Directorate, stated that Agee had approached the KGB in Mexico City in 1973, and been turned away, whereupon he “…went to the Cubans, who welcomed him with open arms…The Cubans shared Agee’s information with us.” In fact, talking about his 1975 book, Agee himself said, “Representatives of the Communist Party of Cuba also gave important encouragement at a time when I doubted that I would be able to find the additional information I needed.” Not surprisingly, his former CIA colleagues and U.S. officials called Agee a traitor. Agee, on the other hand, said he thought of himself as part of “the American tradition of dissent.” (Gee, where else have we heard that?)
Agee was never prosecuted in the United States. According to Vince Cannistraro, a former CIA counterterrorism chief, this was because U.S. officials feared that a trial would expose Soviet defectors who were living here under new identities. This, by the way, illustrates one of the biggest reasons why terrorists we capture on the battlefields of Iraq and Afghanistan should not be prosecuted in the U.S. civilian court system. Under the rules of evidence “discovery,” it would be impossible to effectively prosecute them without giving away crucial information on how we know what we know about them. But I digress.
Agee’s book hit the market in the midst of the “Church Committee” hearings of 1975-76 – a U.S. Senate committee chaired by Democratic Senator Frank Church of Idaho (who also sought the Democratic nomination for president in 1976). For a summary of the impact of the Church Committee, and subsequent Congressional restrictions on the operations of America’s intelligence agencies, I strongly recommend reading Congressional Oversight and the Crippling of the CIA, an excellent article by Stephen F. Knott, published by George Mason University’s History News Network. It says, in part:
Now, the essence of “human intelligence” (a.k.a. spying), is either infiltrating your own people into the target organization, or convincing someone who is already part of it to pass information to you. While we might want to think that those whom we recruit have decided to work with us for altruistic reasons (because we are the good guys, after all, and they surely recognize the inherent superiority of the American way of life) - and indeed some do work for us for precisely that reason - you can’t always find someone who fits that description. You must then work with whomever you can find to get the intelligence you need. You might even have to (gasp!) pay money for it. And people who are willing to betray their country or (in the case of Al Qaeda) their comrades for money tend to be, by definition, “unscrupulous characters.” If you prohibit the CIA from working with them, you are, as my daddy used to say, cutting off your nose to spite your face.
Spying is a dirty, dangerous job. It often requires ruthless decisions and unscrupulous characters to get the job done. For most of human history, a spy who was caught faced immediate (and often spectacularly brutal, to discourage others) execution. But the intelligence gathered is indispensible. Information about your enemy is the most valuable weapon you can have in any kind of conflict. It can sometimes give you the leverage you need to defuse a situation without resorting to force. It can also help you spot the situations where armed conflict is going to be inevitable, and you might as well get it over with. And sometimes, in the real world, a surgical covert operation can save thousands of lives on both sides.
Henry Kissinger once said, in referring to the Church Committee, that it’s an illusion to believe that “tranquility can be achieved by an abstract purity of motive for which history offers no example.” Still, there are those who insist on living in a theoretical, idealistic world where, if we would just be nice to other people, they will naturally be nice to us in return. In 1974, seventeen Senators, including Senator Joe Biden (Democrat – Delaware), voted to ban all covert operations. During his 1988 presidential campaign, Biden proudly noted that he had threatened to “go public” with covert action plans during the Reagan administration, thus causing those operations to be canceled. (Judging from his recent statements, Biden hasn’t learned much in the last 30+ years, either.) Former Congressman Leo Ryan (Democrat – California) contended that leaks were an important tool. As Knott points out in his article, “Leaks have occurred repeatedly since the mid-1970s, and in very few cases has the offending party been disciplined.” (And Congress has the nerve to complain that they’re not fully briefed on every intelligence operation we conduct.)
Robert Ellsworth (former U.S. Ambassador to NATO, former Deputy Secretary of Defense, and former 3-term Republican Congressman from Kansas) said, referring to the Church Committee, “They were very specific about their effort to destroy American intelligence [capabilities].” That the committee did not succeed in dismantling the CIA and other intelligence organizations entirely was due largely to the efforts of Ellsworth and the much-maligned Donald Rumsfeld (in his first stint as Secretary of Defense under President Gerald Ford).
Over the years, the actions of a Democrat-controlled Congress, aided and abetted by the Carter and Clinton administrations, have cut the heart out of our “Human Intelligence” operations, and forced us to rely more and more on electronic intelligence. Presidents Reagan and Bush (the Elder) did their best to improve things - Bush, after all, had been Director of the CIA during the Ford administration, so he knew a few things about the business - but “human intelligence assets” take years to cultivate and very little time to destroy. And since we are often asking those “assets” to risk their lives to pass intelligence to us, once you’ve lost their trust, it’s really hard to get it back.
So we found ourselves on 9/11 wondering how our intelligence apparatus could have failed so miserably. And we find ourselves today faced with an enemy that knows not to use electronic communications channels that we can intercept – thanks in part to a helpful news media that’s only too glad to report on, for example, how intercepting satphone transmissions was helping us locate Al Qaeda members. (Guess what? They’ve stopped using satphones! What a surprise!) And this enemy is extremely difficult to infiltrate, because we have very few human intelligence assets who can pass themselves off as convincing Islamic jihadists. (Never mind the things they would probably be forced to do to “prove” themselves.) And the same politicians who were instrumental in putting us in this position are now blasting the intelligence community that they crippled because our intelligence is “flawed.”
But some of us are old enough to remember the 60s and 70s, and the Church Committee, and Philip Agee, and the Carter administration, and we know exactly why our intelligence community is in the situation it’s in today. And we’re not particularly excited about handing more political power to the party that’s largely responsible for it.
Thanks for listening.
You may not remember Philip Agee, but I do. Agee worked for the CIA during the 1960s and, after resigning from the CIA in 1968 (or being forced to resign for a variety of reasons, depending on who you talk to), went on to write a book entitled Inside the Company which was first published in Britain in 1975. Among other things, the book identified some 250 CIA officers and agents. Covers were blown, and people had to be pulled out of undercover positions that had been painstakingly constructed. Years of effort were destroyed. In 1978, Agee and a group of supporters started publishing the Covert Action Information Bulletin, the stated purpose of which was to promote “a worldwide campaign to destabilize the CIA through exposure of its operations and personnel.”
Since the fall of the Soviet Union, we’ve learned a lot of things from KGB records that have been made public, and former KGB agents and officials who have gone public with what they know. You probably haven’t heard a lot of coverage about this, because some of it is extremely embarrassing to those who cover the news – like the revelations that there really were Russian agents in this country who were manipulating the anti-war movement of the 1960s and 1970s. And we now know a lot more about Agee’s motivations as well.
According to Vasili Mitrokhin, Agee’s “bulletin” was supported by both the KGB and the Cuban General Intelligence Directorate. Oleg Kalugin, the former head of the KGB’s Counterintelligence Directorate, stated that Agee had approached the KGB in Mexico City in 1973, and been turned away, whereupon he “…went to the Cubans, who welcomed him with open arms…The Cubans shared Agee’s information with us.” In fact, talking about his 1975 book, Agee himself said, “Representatives of the Communist Party of Cuba also gave important encouragement at a time when I doubted that I would be able to find the additional information I needed.” Not surprisingly, his former CIA colleagues and U.S. officials called Agee a traitor. Agee, on the other hand, said he thought of himself as part of “the American tradition of dissent.” (Gee, where else have we heard that?)
Agee was never prosecuted in the United States. According to Vince Cannistraro, a former CIA counterterrorism chief, this was because U.S. officials feared that a trial would expose Soviet defectors who were living here under new identities. This, by the way, illustrates one of the biggest reasons why terrorists we capture on the battlefields of Iraq and Afghanistan should not be prosecuted in the U.S. civilian court system. Under the rules of evidence “discovery,” it would be impossible to effectively prosecute them without giving away crucial information on how we know what we know about them. But I digress.
Agee’s book hit the market in the midst of the “Church Committee” hearings of 1975-76 – a U.S. Senate committee chaired by Democratic Senator Frank Church of Idaho (who also sought the Democratic nomination for president in 1976). For a summary of the impact of the Church Committee, and subsequent Congressional restrictions on the operations of America’s intelligence agencies, I strongly recommend reading Congressional Oversight and the Crippling of the CIA, an excellent article by Stephen F. Knott, published by George Mason University’s History News Network. It says, in part:
“The damage done to the CIA by this congressional oversight regime is quite extensive. The committees increased the number of CIA officials subject to Senate confirmation, condemned the agency for its contacts with unscrupulous characters, prohibited any further contact with these bad characters, insisted that the United States not engage or assist in any coup which may harm a foreign leader, and overwhelmed the agency with interminable requests for briefings (some 600 alone in 1996)…The CIA was also a victim of the renowned congressional practice of pork barrel politics. The intelligence committees forced the agency to accept high priced technology that just happened to be manufactured in a committee member’s district…On some occasions, members of Congress threatened to leak information in order to derail covert operations they found personally repugnant.”
Now, the essence of “human intelligence” (a.k.a. spying), is either infiltrating your own people into the target organization, or convincing someone who is already part of it to pass information to you. While we might want to think that those whom we recruit have decided to work with us for altruistic reasons (because we are the good guys, after all, and they surely recognize the inherent superiority of the American way of life) - and indeed some do work for us for precisely that reason - you can’t always find someone who fits that description. You must then work with whomever you can find to get the intelligence you need. You might even have to (gasp!) pay money for it. And people who are willing to betray their country or (in the case of Al Qaeda) their comrades for money tend to be, by definition, “unscrupulous characters.” If you prohibit the CIA from working with them, you are, as my daddy used to say, cutting off your nose to spite your face.
Spying is a dirty, dangerous job. It often requires ruthless decisions and unscrupulous characters to get the job done. For most of human history, a spy who was caught faced immediate (and often spectacularly brutal, to discourage others) execution. But the intelligence gathered is indispensible. Information about your enemy is the most valuable weapon you can have in any kind of conflict. It can sometimes give you the leverage you need to defuse a situation without resorting to force. It can also help you spot the situations where armed conflict is going to be inevitable, and you might as well get it over with. And sometimes, in the real world, a surgical covert operation can save thousands of lives on both sides.
Henry Kissinger once said, in referring to the Church Committee, that it’s an illusion to believe that “tranquility can be achieved by an abstract purity of motive for which history offers no example.” Still, there are those who insist on living in a theoretical, idealistic world where, if we would just be nice to other people, they will naturally be nice to us in return. In 1974, seventeen Senators, including Senator Joe Biden (Democrat – Delaware), voted to ban all covert operations. During his 1988 presidential campaign, Biden proudly noted that he had threatened to “go public” with covert action plans during the Reagan administration, thus causing those operations to be canceled. (Judging from his recent statements, Biden hasn’t learned much in the last 30+ years, either.) Former Congressman Leo Ryan (Democrat – California) contended that leaks were an important tool. As Knott points out in his article, “Leaks have occurred repeatedly since the mid-1970s, and in very few cases has the offending party been disciplined.” (And Congress has the nerve to complain that they’re not fully briefed on every intelligence operation we conduct.)
Robert Ellsworth (former U.S. Ambassador to NATO, former Deputy Secretary of Defense, and former 3-term Republican Congressman from Kansas) said, referring to the Church Committee, “They were very specific about their effort to destroy American intelligence [capabilities].” That the committee did not succeed in dismantling the CIA and other intelligence organizations entirely was due largely to the efforts of Ellsworth and the much-maligned Donald Rumsfeld (in his first stint as Secretary of Defense under President Gerald Ford).
Over the years, the actions of a Democrat-controlled Congress, aided and abetted by the Carter and Clinton administrations, have cut the heart out of our “Human Intelligence” operations, and forced us to rely more and more on electronic intelligence. Presidents Reagan and Bush (the Elder) did their best to improve things - Bush, after all, had been Director of the CIA during the Ford administration, so he knew a few things about the business - but “human intelligence assets” take years to cultivate and very little time to destroy. And since we are often asking those “assets” to risk their lives to pass intelligence to us, once you’ve lost their trust, it’s really hard to get it back.
So we found ourselves on 9/11 wondering how our intelligence apparatus could have failed so miserably. And we find ourselves today faced with an enemy that knows not to use electronic communications channels that we can intercept – thanks in part to a helpful news media that’s only too glad to report on, for example, how intercepting satphone transmissions was helping us locate Al Qaeda members. (Guess what? They’ve stopped using satphones! What a surprise!) And this enemy is extremely difficult to infiltrate, because we have very few human intelligence assets who can pass themselves off as convincing Islamic jihadists. (Never mind the things they would probably be forced to do to “prove” themselves.) And the same politicians who were instrumental in putting us in this position are now blasting the intelligence community that they crippled because our intelligence is “flawed.”
But some of us are old enough to remember the 60s and 70s, and the Church Committee, and Philip Agee, and the Carter administration, and we know exactly why our intelligence community is in the situation it’s in today. And we’re not particularly excited about handing more political power to the party that’s largely responsible for it.
Thanks for listening.
Sunday, January 6, 2008
But It's Really No Laughing Matter!
Greetings from the Left Coast - and Happy New Year!
A couple of weeks ago, when referring to the New York Sun article about discovering that Bill Clinton had blocked the release of some 2,600 documents from his presidency, when advisor Bruce Lindsey had said in a written statement, "Bill Clinton has not blocked the release of a single document," I made the comment that sometimes you just have to shake your head and laugh. But the fact is that it's really no laughing matter when politicians go out of their way to make statements that are technically true, but totally misleading.
A great example of this is the hand-wringing over "tax cuts for the rich" that I wrote about a couple of months ago. Since the "wealthy" pay the majority of the income tax that's collected (households making over $157,176 paid 58% of all income taxes collected in 2004), it would be impossible to have any kind of meaningful tax cut that wouldn't disproportionately favor those peolple - because they're paying a disproportionate amount of the tax! So, is it true that most tax cuts disproportionately favor the wealthy? Yes. Is that statement extremely misleading? Yes. And, by the way, these hand-wringers are the same people who don't think that allowing the "Bush tax cuts" to expire should count as a "tax increase," and will talk about a "reduction in government spending" when what they really mean is a reduction in the rate of increase in government spending.
Here's another one for you. As the campaign season progresses, expect to hear more and more from the Democratic candidates about the woes of the shrinking Middle Class in this country. This will, of course, happen against the media drumbeat of how we are facing an impending recession because of rising oil prices, a disappointing Christmas shopping season, and the subprime mortgage crisis. (And, before you take me to task over my media-bashing, please answer this: A recent Gallup poll found that 84% of Americans are satisfied with their personal lives, and 59% say they are "very satisfied." Yet only 27% were satisfied with the way things were going in the country as a whole. How can you explain that disparity other than to lay it at the feet of those in the media who, day in and day out, tell us how terrible things are going?)
Is the Middle Class shrinking? Yes, it is, depending on how you define "Middle Class." But the reason might surprise you. One definition of "Middle Class" is households making between $30,000 and $75,000 per year. In 1979, about 53% of American households fell into that category. Roughly 21% made less than $30,000 per year, and roughly 26% made more than $75,000. Between 1979 and 2004, the percentage of households making between $30,000 and $75,000 per year dropped by roughly 13%! Wow! But did they make less money? No - the percentage of households making between $75,000 and $100,000 per year went up by about 1%, and the percentage of households making over $100,000 per year went up by roughly 13%! The percentage of households making below $30,000 per year was basically unchanged.
(This information, by the way, was in an article by Stephen Rose that was published back in September, 2006, by The American Prospect, which is not a particularly conservative publication.)
So, is it true that the Middle Class (as defined above) is shrinking? Yes, it is. Is it also extremely misleading when used, as it usually is, to imply that Americans today are worse off than they were a few years ago? Yes.
And lest you think that the numbers are just being skewed by the dollar amounts involved, the median household income in 2004 for families beween the ages of 25 and 59 was $63,300. If you just consider married households, the median income jumped to roughly $70,000, and if you consider two-earner households, it was nearly $80,000.
"Median," by the way, means that there were just as many households above that number as there were below that number...which brings me to another point: Be very careful when you hear someone use the word "average." There are four different definitions of "average" - the "mean," the "median," the "mode," and the "midrange." Consider the following set of numbers: 2, 2, 3, 9, 15, 63, and 75.
It brings to mind the old cliche: "Figures don't lie, but liars can figure!" And so can politicians.
Thanks for listening.
A couple of weeks ago, when referring to the New York Sun article about discovering that Bill Clinton had blocked the release of some 2,600 documents from his presidency, when advisor Bruce Lindsey had said in a written statement, "Bill Clinton has not blocked the release of a single document," I made the comment that sometimes you just have to shake your head and laugh. But the fact is that it's really no laughing matter when politicians go out of their way to make statements that are technically true, but totally misleading.
A great example of this is the hand-wringing over "tax cuts for the rich" that I wrote about a couple of months ago. Since the "wealthy" pay the majority of the income tax that's collected (households making over $157,176 paid 58% of all income taxes collected in 2004), it would be impossible to have any kind of meaningful tax cut that wouldn't disproportionately favor those peolple - because they're paying a disproportionate amount of the tax! So, is it true that most tax cuts disproportionately favor the wealthy? Yes. Is that statement extremely misleading? Yes. And, by the way, these hand-wringers are the same people who don't think that allowing the "Bush tax cuts" to expire should count as a "tax increase," and will talk about a "reduction in government spending" when what they really mean is a reduction in the rate of increase in government spending.
Here's another one for you. As the campaign season progresses, expect to hear more and more from the Democratic candidates about the woes of the shrinking Middle Class in this country. This will, of course, happen against the media drumbeat of how we are facing an impending recession because of rising oil prices, a disappointing Christmas shopping season, and the subprime mortgage crisis. (And, before you take me to task over my media-bashing, please answer this: A recent Gallup poll found that 84% of Americans are satisfied with their personal lives, and 59% say they are "very satisfied." Yet only 27% were satisfied with the way things were going in the country as a whole. How can you explain that disparity other than to lay it at the feet of those in the media who, day in and day out, tell us how terrible things are going?)
Is the Middle Class shrinking? Yes, it is, depending on how you define "Middle Class." But the reason might surprise you. One definition of "Middle Class" is households making between $30,000 and $75,000 per year. In 1979, about 53% of American households fell into that category. Roughly 21% made less than $30,000 per year, and roughly 26% made more than $75,000. Between 1979 and 2004, the percentage of households making between $30,000 and $75,000 per year dropped by roughly 13%! Wow! But did they make less money? No - the percentage of households making between $75,000 and $100,000 per year went up by about 1%, and the percentage of households making over $100,000 per year went up by roughly 13%! The percentage of households making below $30,000 per year was basically unchanged.
(This information, by the way, was in an article by Stephen Rose that was published back in September, 2006, by The American Prospect, which is not a particularly conservative publication.)
So, is it true that the Middle Class (as defined above) is shrinking? Yes, it is. Is it also extremely misleading when used, as it usually is, to imply that Americans today are worse off than they were a few years ago? Yes.
And lest you think that the numbers are just being skewed by the dollar amounts involved, the median household income in 2004 for families beween the ages of 25 and 59 was $63,300. If you just consider married households, the median income jumped to roughly $70,000, and if you consider two-earner households, it was nearly $80,000.
"Median," by the way, means that there were just as many households above that number as there were below that number...which brings me to another point: Be very careful when you hear someone use the word "average." There are four different definitions of "average" - the "mean," the "median," the "mode," and the "midrange." Consider the following set of numbers: 2, 2, 3, 9, 15, 63, and 75.
- The "mean," or, more accurately, "arithmetic mean," is what most people think of when they hear the word "average." That means you add up the values and divide that total by the number of values in the set. So, for the example above, the "mean" would be 2 + 2 + 3 + 9 + 15 + 63 + 75 (which equals 169) divided by 7, because there were 7 numbers in the example. That works out to 24 point something.
- The "median" means the value in the set of numbers where there are just as many values higher as there are lower. So the median value of the set is 9, because there are three numbers in our example that are greater than 9, and three that are less than 9. The "median" is a good value to consider when looking at things like income distribution, as in the example above, because it gives you the "midpoint" of the range of values. (Before you ask, if there is an even number of values in the set, the median value is the mean of the middle two values.)
- The "mode" is the value that appears most frequently. So the mode of our example is 2, because the number 2 appears twice in the example, and all of the other numbers appear only once. If no value appears more than once, there is no mode, and if multiple values are duplicated, a mathemetician would say that the set is "multi-modal."
- The "midrange" is the arithmetic mean of the highest and lowest values in the set. So the midrange of our example would be (2 + 75)/2 = 38.5. This can be extremely misleading, because the term "midrange" would suggest that it refers to a value somewhere in the middle of the range of numbers, when in fact it can be even more skewed by extreme values than the arithmetic mean of the entire set, as we see in our example here.
It brings to mind the old cliche: "Figures don't lie, but liars can figure!" And so can politicians.
Thanks for listening.
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