The Assassins Debate. By Michael C. Moynihan
Why Seymour Hersh is still wrong about Cheney's hit squad
Reason, July 17, 2009
A few months ago on this website, I cast doubt on a claim by investigative journalist Seymour Hersh that former Vice President Dick Cheney was running “an executive assassination ring” out of his West Wing office. Urging caution when repeating such claims—predictably, outside of the conspiracy-friendly websites like Raw Story and Digg, only MSNBC’s Keith Olbermann reported this dubious "scoop"—I argued that because Hersh had previously admitted exaggerating stories in order to “convey a larger truth,” a healthy dose of skepticism was warranted.
The story quickly disappeared, only to be reanimated this week by CIA director Leon Panetta’s revelation that the Bush administration deliberately obscured an unnamed secret CIA program from Congress. A flood of stories from the Wall Street Journal, The Washington Times, The Washington Post, Newsweek, and The New York Times followed, revealing that the CIA plan involved the targeted assassination of al-Qaeda targets. Many observers quickly connected the dots back to Hersh. The Huffington Post’s Sam Stein wondered if the CIA, with whom the Bush administration famously battled, was “hiding Cheney's executive assassination ring." A handful of indignant emailers, claiming vindication on behalf of Hersh, demanded a retraction of my blog post.
Not a chance.
Let's briefly revisit Hersh’s bombshell assassination claims. Last March, during a speech at the University of Minnesota, the Pulitzer Prize-winning investigative journalist revealed that the CIA "was very deeply involved in domestic activities against people they thought to be enemies of the state (emphasis added)." He offered the following as evidence: "[T]here was a story in the New York Times that if you read it carefully mentioned something known as the Joint Special Operations Command—JSOC it's called...They do not report to anybody, except in the Bush-Cheney days, they reported directly to the Cheney office...It's an executive assassination ring essentially."
But this is a non-sequitur. Hersh first references a secret, as-yet-unreported CIA program focusing on domestic targets after 9/11—which, as of this writing, hasn't been uncovered by those investigating the Panetta story, though it certainly doesn’t strain credulity—and quickly shifts gears to a discussion of the Joint Special Operations Command (JSOC), a special unit of the United States Special Operations Command known for tracking and assassinating the Jordanian al-Qaeda leader Abu Musab al-Zarqawi.
As pointed out by sources familiar with the program, Panetta cancelled the CIA operation before it became "fully operational,” though Hersh claims the Cheney “executive assassination ring” has been “going on and on and on” for years. Here is Newsweek's Mark Hosenball and Michael Isikoff, describing the lumbering and troubled evolution of the program:
Top CIA officials ultimately concluded the program posed an unacceptable risk of failure or exposure, according to another former official. As a result, the initial plans proposed by officers of the Directorate of Operations—now known as the National Clandestine Service—were put on hold by CIA Director George Tenet before he left office in 2004, former officials said. Tenet's two successors, Porter Goss and Gen. Michael Hayden, kept the plans in the deep freeze. But a former official said that until Panetta killed the program outright last month, the CIA never totally abandoned the plans for kill teams...
One journalist looking into the program—a person, it is worth noting, deeply critical of Bush and Cheney's terrorism policies—suggested a more logical explanation. Hersh, he informed me, might have stumbled across the program exposed this week but perhaps "didn't understand what his sources were telling him." When asked if these revelations vindicated the "executive assassination ring" claim, another journalist working on the story told me that those who connect the Panetta revelations to Hersh's breathless talk in Minneapolis "have no idea what they are talking about."
Simply put, Hersh’s narrative of an operational, domestic cadre of assassins doesn’t fit with what we know about the plan scuttled by Panetta.
Nevertheless, The Daily Beast’s Benjamin Sarlin huffed that Hersh "was mocked in March when he referred to Dick Cheney’s secret squad of CIA assassins" but now it appeared that Hersh was "prescient," the "man who knew Cheney’s secret." Those who distrusted Hersh would soon be forced to eat crow: "Yesterday, the New York Times reported the hidden program in question was a death squad authorized by Dick Cheney without Congressional approval—almost exactly what he described."
But as The Daily Beast editors soon realized, the Times story said nothing about domestic operations, didn't mention JSOC, a group not even under CIA command, and told a very different story than Hersh. An editor’s note was tacked on to the piece, telling readers that the article "was updated to reflect differences between Hersh’s story and The New York Times'." The claim that Hersh’s story was "exactly" what the Times reported vanished (though it can be viewed via Google’s cache), replaced with a more equivocal sentence: "Now, there are key differences between Hersh's reporting and the Times' latest piece."
In an attempt to keep the "executive assassination ring" angle in play, Sarlin’s updated story concluded gamely that "The Times and Hersh could conceivably be reporting two distinct squads." MSNBC’s Keith Olbermann offered a similar conclusion, telling a guest that "Seymour Hersh's hint of the story in Minnesota in the spring was about stuff run out of the Pentagon and specifically not tied to the CIA," though there might be "two secret assassination squads."
The desire to eschew these contradictory facts in pursuit of a political point spread throughout the blogosphere. Soon after Cheney's former national security adviser John Hannah told CNN’s Wolf Blitzer that it was “certainly true” that the there was a “well-vetted process, interagency process” targeting “those that have committed acts of war against the United States,” Center for American Progress blogger Satyam Khanna wrote that "a former Cheney aide suggests that Hersh’s account of [an] 'executive assassination ring' is 'certainly true.'" Well, no he didn’t.
My concern here is not with the efficacy, legality, or existance of Dick Cheney’s program to rub out members of al-Qaeda, but with those who warn us that journalism in the run up to the Iraq War failed the American people because its practitioners placed furthering a political agenda over the supremacy of truth. If the mainstream media in 2002 was hamstrung by sloppy and biased reporting, thereby necessitating a counterrevolution in blogging and online reporting, have the Enragés, the young bloggers who demanded higher standards and an upending of the old order, already become Robespierres? Is it now OK to engage in sloppy and lazy journalism, provided that the stakes are smaller and your target is widely considered to be a bastard?
In reporting the Panetta story, it was “old media” print journalists like Siobhan Gorman, Eli Lake, Joby Warrick, and Scott Shane that informed and illuminated, while the partisans of the new media took up the rear, pounding round pegs into square holes.
During the 2008 election, one writer praised the new breed of online journalists while cautioning that in rushing to scoop the mainstream media, Internet upstarts often risk missing “nuance and context,” valuing quantity over quality. Web journalists, he continued, often settle “for a timely article rather than a complete one,” though this is “an avoidable problem.”
Indeed it is. And the author, Huffington Post political reporter Sam Stein, might want to start taking some of his own advice.
Michael C. Moynihan is a senior editor of Reason magazine.
Friday, July 17, 2009
Is Food Aid for Africa Working?
Is Food Aid for Africa Working?: A Wall Street Journal reporter asks if western food aid policies are truly providing aid. By Brian Doherty
Reason Magazine, Jul 17, 2009
Although billions have been spent on foreign development and food aid to Africa in the decades since World War II, over half a billion people remain undernourished in Africa today according to the U.S. Department of Agriculture—a number that's 53 percent higher than it was in 1992 when the government first began accumulating such figures.
While the reasons for continuing poverty are manifold, Western government programs such as food aid and agriculture and ethanol subsidies deserve their share of the blame. So argues the new book Enough: Why the World's Poorest Starve in an Age of Plenty (PublicAffairs), written by Wall Street Journal reporters Roger Thurow and Scott Kilman, each of whom have years of experience writing page-one stories for the Journal on African matters, particularly African famine.
Unlike anti-aid anaylsts such as William Easterly and Dambisa Moyo, Thurow and Kilman see plenty of room for more (intelligent) action on the part of Western governments. In fact, Kilman argues that genuine agricultural development aid has yet to be sufficiently and intelligently attempted.
But their reporting in the Journal and in Enough provides vivid examples of the ways both aid policy and U.S. farm policy hurts, not helps, the long-term well-being of Africans as they struggle for self-sufficiency.
Senior Editor Brian Doherty spoke with Scott Kilman in July.
See interview in the link above.
Reason Magazine, Jul 17, 2009
Although billions have been spent on foreign development and food aid to Africa in the decades since World War II, over half a billion people remain undernourished in Africa today according to the U.S. Department of Agriculture—a number that's 53 percent higher than it was in 1992 when the government first began accumulating such figures.
While the reasons for continuing poverty are manifold, Western government programs such as food aid and agriculture and ethanol subsidies deserve their share of the blame. So argues the new book Enough: Why the World's Poorest Starve in an Age of Plenty (PublicAffairs), written by Wall Street Journal reporters Roger Thurow and Scott Kilman, each of whom have years of experience writing page-one stories for the Journal on African matters, particularly African famine.
Unlike anti-aid anaylsts such as William Easterly and Dambisa Moyo, Thurow and Kilman see plenty of room for more (intelligent) action on the part of Western governments. In fact, Kilman argues that genuine agricultural development aid has yet to be sufficiently and intelligently attempted.
But their reporting in the Journal and in Enough provides vivid examples of the ways both aid policy and U.S. farm policy hurts, not helps, the long-term well-being of Africans as they struggle for self-sufficiency.
Senior Editor Brian Doherty spoke with Scott Kilman in July.
See interview in the link above.
WaPo Editorial: Mr. Paulson on the Hot Seat - A congressional inquiry into the financial crisis and bailout ignores what went right
Mr. Paulson on the Hot Seat. WaPo Editorial
A congressional inquiry into the financial crisis and bailout ignores what went right.
Friday, July 17, 2009
HERE, MORE or less, is the state of the U.S. financial system as we enter the second half of 2009: The top 20 U.S. banks -- once thought to be insolvent and possibly in need of nationalization -- have survived a government stress test and begun raising private capital. The three-month London Interbank Offered Rate, which rises when banks are illiquid, has declined steadily since March. Several recipients of government bailout funds have repaid them. The Treasury Department felt confident enough of the system's soundness to deny further help this week to CIT Group, a previous recipient of bailout money.
All of this good news must be marked "tentative," of course, for the simple reason that the banks are floating on a sea of government-supplied liquidity, in the form of a near-zero Federal Reserve target rate, open-ended Treasury support to Fannie Mae and Freddie Mac, and multiple government credit guarantees. This is far from a self-sustaining recovery, and a new shock could push the system back to the brink. But all things considered, we could be doing much worse.
Under the circumstances, you might have thought Congress would hold a hearing about what has gone right so far and how to turn this incipient and vulnerable progress into something more permanent. Instead, we got yesterday's backward-looking affair at the House Committee on Oversight and Government Reform, the latest in a series of sessions aimed at December's federally engineered merger of Bank of America and Merrill Lynch, which has ended up costing taxpayers about $50 billion. Resentment of bailing out Wall Street is a bipartisan affair, so both Republicans and Democrats on this committee are determined to show how wrong it was for officials, including Federal Reserve Chairman Ben S. Bernanke, then-New York Fed boss Timothy F. Geithner and then-Treasury Secretary Henry M. Paulson to strong-arm Bank of America chief executive Kenneth D. Lewis into swallowing Merrill even after it turned out that the former Wall Street powerhouse faced much bigger losses than previously known.
In the witness chair yesterday, Mr. Paulson pretty much pleaded guilty to telling Mr. Lewis that he would be out of a job if he reneged -- with the explanation that the alternative would have been worse, namely a financial meltdown that would have spread around the world and probably cost taxpayers many billions more than did the Merrill-Bank of America merger or the bailout of insurance giant AIG. "By far the biggest advantage to the taxpayers is what didn't happen," Mr. Paulson said. Unsatisfied, several committee members arraigned Mr. Paulson for allegedly bailing out the banks and AIG to benefit his former Wall Street firm, Goldman Sachs. As proof, they cited Goldman's record profit of $3.4 billion in the second quarter.
Even though Mr. Paulson didn't quite dare to say it, Goldman's good quarter is a sign that he and other decision-makers made the right calls back in the scary fall and winter of 2008. The objective of government policy should be to get financial firms to where they are once again profitable without taxpayer support. It's absolutely true, as members of the committee said and as Mr. Paulson acknowledged, that the bailout of Wall Street is fraught with moral hazard: It broke the basic rule of capitalism, which says that business executives should bear all the costs of their bad decisions. But it's also true that financial stability is a public good. When the collapse of one or more financial institutions threatens to destroy financial stability, a government bailout can serve the public interest. Believing that, Mr. Paulson and his colleagues made some very difficult decisions under dangerous conditions. The ultimate results of those tough choices are still unknown. A fairer congressional inquiry, though, would start from the premise that, if he had not taken the actions that he did, the subject of today's investigations might have been a much, much bigger catastrophe.
A congressional inquiry into the financial crisis and bailout ignores what went right.
Friday, July 17, 2009
HERE, MORE or less, is the state of the U.S. financial system as we enter the second half of 2009: The top 20 U.S. banks -- once thought to be insolvent and possibly in need of nationalization -- have survived a government stress test and begun raising private capital. The three-month London Interbank Offered Rate, which rises when banks are illiquid, has declined steadily since March. Several recipients of government bailout funds have repaid them. The Treasury Department felt confident enough of the system's soundness to deny further help this week to CIT Group, a previous recipient of bailout money.
All of this good news must be marked "tentative," of course, for the simple reason that the banks are floating on a sea of government-supplied liquidity, in the form of a near-zero Federal Reserve target rate, open-ended Treasury support to Fannie Mae and Freddie Mac, and multiple government credit guarantees. This is far from a self-sustaining recovery, and a new shock could push the system back to the brink. But all things considered, we could be doing much worse.
Under the circumstances, you might have thought Congress would hold a hearing about what has gone right so far and how to turn this incipient and vulnerable progress into something more permanent. Instead, we got yesterday's backward-looking affair at the House Committee on Oversight and Government Reform, the latest in a series of sessions aimed at December's federally engineered merger of Bank of America and Merrill Lynch, which has ended up costing taxpayers about $50 billion. Resentment of bailing out Wall Street is a bipartisan affair, so both Republicans and Democrats on this committee are determined to show how wrong it was for officials, including Federal Reserve Chairman Ben S. Bernanke, then-New York Fed boss Timothy F. Geithner and then-Treasury Secretary Henry M. Paulson to strong-arm Bank of America chief executive Kenneth D. Lewis into swallowing Merrill even after it turned out that the former Wall Street powerhouse faced much bigger losses than previously known.
In the witness chair yesterday, Mr. Paulson pretty much pleaded guilty to telling Mr. Lewis that he would be out of a job if he reneged -- with the explanation that the alternative would have been worse, namely a financial meltdown that would have spread around the world and probably cost taxpayers many billions more than did the Merrill-Bank of America merger or the bailout of insurance giant AIG. "By far the biggest advantage to the taxpayers is what didn't happen," Mr. Paulson said. Unsatisfied, several committee members arraigned Mr. Paulson for allegedly bailing out the banks and AIG to benefit his former Wall Street firm, Goldman Sachs. As proof, they cited Goldman's record profit of $3.4 billion in the second quarter.
Even though Mr. Paulson didn't quite dare to say it, Goldman's good quarter is a sign that he and other decision-makers made the right calls back in the scary fall and winter of 2008. The objective of government policy should be to get financial firms to where they are once again profitable without taxpayer support. It's absolutely true, as members of the committee said and as Mr. Paulson acknowledged, that the bailout of Wall Street is fraught with moral hazard: It broke the basic rule of capitalism, which says that business executives should bear all the costs of their bad decisions. But it's also true that financial stability is a public good. When the collapse of one or more financial institutions threatens to destroy financial stability, a government bailout can serve the public interest. Believing that, Mr. Paulson and his colleagues made some very difficult decisions under dangerous conditions. The ultimate results of those tough choices are still unknown. A fairer congressional inquiry, though, would start from the premise that, if he had not taken the actions that he did, the subject of today's investigations might have been a much, much bigger catastrophe.
Judges Don't Belong on the Battlefield - Recent decisions have altered the way we're fighting in Afghanistan
Judges Don't Belong on the Battlefield. By DAVID B. RIVKIN JR. and LEE A. CASEY
Recent decisions have altered the way we're fighting in Afghanistan.
WSJ, Jul 17, 2009
Earlier this year, a Washington D.C.-based federal court extended the constitutional right to habeas corpus to three foreign nationals detained by U.S. forces in Afghanistan. The case, Maqaleh v. Gates, represents yet another step in the federal judiciary's transformation from Alexander Hamilton's "least dangerous branch" into a fully active policy maker.
Historically, the constitutional right to habeas corpus -- an ancient process permitting prisoners to challenge the legality of their confinement -- was available only to individuals present in the U.S., or to American citizens held by federal authorities overseas. In a leading World War II case, Johnson v. Eisentrager (1950), the high court decided, with "bright line rules," that habeas corpus is unavailable to foreign citizens held outside the U.S.
But last year, the high court reversed itself in Boumediene v. Bush. The court held, by a 5-4 vote, that foreign nationals detained at Guantanamo Bay, Cuba, also have a right to habeas corpus. Articulating a new, multifactor test for determining who can receive habeas corpus overseas, the court left open the possibility that aliens detained at any U.S. controlled foreign facility could sue the government for their release.
In Maqaleh the court concluded that three detainees, held at Bagram airbase in Afghanistan, but actually captured in other countries, have habeas corpus rights under the U.S. Constitution. It reasoned that permitting the president to move captured enemies from one location to another without judicial review would simply give the executive too much power.
What really is at stake is whether the president's actions overseas -- especially in military operations -- are to be subject to judicial supervision. In this light, the courts have never been so bold. Although the Maqaleh court denied it, the premise of its decision is that the Constitution permits judicial involvement in all U.S. actions abroad. While this particular ruling involves habeas rights in Afghanistan, there is in fact no principled limitation on the court's reasoning. The real test in any particular case is whether a federal judge believes the president is operating with insufficient constraints on his authority.
This new state of play has already affected U.S. military operations. American special forces, have now limited their activities in the Afghan-Pakistan border region -- where al Qaeda and the Taliban are now most active -- to avoid claims by enemy fighters that they were captured outside of Afghanistan, in Pakistan. If those enemy fighters were captured outside of Afghanistan, then according to the Maqaleh decision, they are eligible for habeas relief. This provides a strategic sanctuary for Pakistan-based enemy operatives, who are now effectively immune from U.S. ground attacks.
This is obviously not the first time the courts have overstepped their proper constitutional bounds, seeking a political role for themselves. Notorious examples include the Supreme Court's efforts to preserve slavery in Dred Scott v. Sandford (1857) and its determination to oppose federal economic regulation during President Franklin D. Roosevelt's New Deal. In each case, the judges have eventually been strong-armed back, through the force of the public opinion and political pressures, to a more appropriate role.
The sooner this process begins, the better. A good first step would be some questions for Supreme Court nominee Sonia Sotomayor by the Senate. Senate members should determine her views on the proper role of judges in reviewing U.S. military operations overseas.
Justice Robert Jackson, writing in the Eisentrager case, explained why foreign enemies should not have access to American courts. "It would be difficult to devise more effective fettering of a field commander than to allow the very enemies he is ordered to reduce to submission to call him to account in his own civil courts and divert his efforts and attention from the military offensive abroad to the legal defensive at home." The question is: Does Ms. Sotomayor agree?
Messrs. Rivkin and Casey, Washington D.C.-based attorneys, served in the Department of Justice during the Ronald Reagan and George H.W. Bush administrations.
Recent decisions have altered the way we're fighting in Afghanistan.
WSJ, Jul 17, 2009
Earlier this year, a Washington D.C.-based federal court extended the constitutional right to habeas corpus to three foreign nationals detained by U.S. forces in Afghanistan. The case, Maqaleh v. Gates, represents yet another step in the federal judiciary's transformation from Alexander Hamilton's "least dangerous branch" into a fully active policy maker.
Historically, the constitutional right to habeas corpus -- an ancient process permitting prisoners to challenge the legality of their confinement -- was available only to individuals present in the U.S., or to American citizens held by federal authorities overseas. In a leading World War II case, Johnson v. Eisentrager (1950), the high court decided, with "bright line rules," that habeas corpus is unavailable to foreign citizens held outside the U.S.
But last year, the high court reversed itself in Boumediene v. Bush. The court held, by a 5-4 vote, that foreign nationals detained at Guantanamo Bay, Cuba, also have a right to habeas corpus. Articulating a new, multifactor test for determining who can receive habeas corpus overseas, the court left open the possibility that aliens detained at any U.S. controlled foreign facility could sue the government for their release.
In Maqaleh the court concluded that three detainees, held at Bagram airbase in Afghanistan, but actually captured in other countries, have habeas corpus rights under the U.S. Constitution. It reasoned that permitting the president to move captured enemies from one location to another without judicial review would simply give the executive too much power.
What really is at stake is whether the president's actions overseas -- especially in military operations -- are to be subject to judicial supervision. In this light, the courts have never been so bold. Although the Maqaleh court denied it, the premise of its decision is that the Constitution permits judicial involvement in all U.S. actions abroad. While this particular ruling involves habeas rights in Afghanistan, there is in fact no principled limitation on the court's reasoning. The real test in any particular case is whether a federal judge believes the president is operating with insufficient constraints on his authority.
This new state of play has already affected U.S. military operations. American special forces, have now limited their activities in the Afghan-Pakistan border region -- where al Qaeda and the Taliban are now most active -- to avoid claims by enemy fighters that they were captured outside of Afghanistan, in Pakistan. If those enemy fighters were captured outside of Afghanistan, then according to the Maqaleh decision, they are eligible for habeas relief. This provides a strategic sanctuary for Pakistan-based enemy operatives, who are now effectively immune from U.S. ground attacks.
This is obviously not the first time the courts have overstepped their proper constitutional bounds, seeking a political role for themselves. Notorious examples include the Supreme Court's efforts to preserve slavery in Dred Scott v. Sandford (1857) and its determination to oppose federal economic regulation during President Franklin D. Roosevelt's New Deal. In each case, the judges have eventually been strong-armed back, through the force of the public opinion and political pressures, to a more appropriate role.
The sooner this process begins, the better. A good first step would be some questions for Supreme Court nominee Sonia Sotomayor by the Senate. Senate members should determine her views on the proper role of judges in reviewing U.S. military operations overseas.
Justice Robert Jackson, writing in the Eisentrager case, explained why foreign enemies should not have access to American courts. "It would be difficult to devise more effective fettering of a field commander than to allow the very enemies he is ordered to reduce to submission to call him to account in his own civil courts and divert his efforts and attention from the military offensive abroad to the legal defensive at home." The question is: Does Ms. Sotomayor agree?
Messrs. Rivkin and Casey, Washington D.C.-based attorneys, served in the Department of Justice during the Ronald Reagan and George H.W. Bush administrations.
WSJ Editorial Page: one of the greatest raids on private income and business in American history in a matter of weeks
A Reckless Congress. WSJ Editorial
Democrats want to ram through one of the greatest raids on private income and business in American history.
WSJ, Jul 17, 2009
Say this about the 1,018-page health-care bill that House Democrats unveiled this week and that President Obama heartily endorsed: It finally reveals at least some of the price of the reckless ambitions of our current government. With huge majorities and a President in a rush to outrun the declining popularity of his agenda, Democrats are bidding to impose an unrepealable European-style welfare state in a matter of weeks.
Mr. Obama's February budget provided the outline, but the House bill now fills in the details. To wit, tax increases that would take U.S. rates higher even than most of Europe. Yet even those increases aren't nearly enough to finance the $1 trillion in new spending, which itself is surely a low-ball estimate. Meanwhile, the bill would create a new government health entitlement that will kill private insurance and lead to a government-run system.
Hyperbole? That's what people said when we warned about this last fall in "A Liberal Supermajority," but even we underestimated the ideological willfulness of today's national Democrats. Consider only a few of the details:
[graph Top income tax rate including 2.9%. Some countries and US States. http://s.wsj.net/public/resources/images/ED-AJ861_1radic_NS_20090716184020.gif]
A huge new income surtax. The bill's main financing comes from another tax increase on top of the increase already scheduled for 2011 under Mr. Obama's budget. The surtax starts at one percentage point for adjusted gross income above $350,000 in 2011, rising to two points in 2013; a 1.5 point surtax at incomes above $500,000, rising to three in 2013; and a whopping 5.4 percentage points in 2011 and beyond on incomes above $1 million.
This would raise the top marginal federal tax rate back to roughly 47% or 48%, if you include the Medicare tax and the phase-out of certain deductions and exemptions. With the current top rate at 35%, this would be the largest rate increase outside the Great Depression or world wars.
The average U.S. top combined state-federal marginal tax rate would hit about 52%. This would be higher than in all but three (Denmark, Sweden, Belgium) of the 30 countries measured by the OECD. According to the nearby table compiled by the Heritage Foundation, taxpayers in at least five U.S. states would pay higher marginal rates even than Sweden. South Korea, which Democrats worry is stealing American jobs, would be able to grab even more as its highest rate is a far more competitive 38.5%.
House Democrats say they deserve credit for being honest about the tax increases needed to fund their ambitions. But then they also claim that this surtax would raise $544 billion in new revenue over 10 years. America's millionaires aren't that stupid; far fewer of them will pay these rates for very long, if at all. They will find ways to shelter income, either by investing differently or simply working less. Small businesses that pay at the individual rate will shift to pay the 35% corporate rate. When the revenue doesn't materialize, Democrats will move to soak the middle class with a European-style value-added tax.
Phony numbers. Democrats will have to come up with something, because even the surtax puts their bill at least $300 billion short of honest financing. The public insurance "option" doesn't even begin until 2013 and the costs are heavily weighted toward the later years, but the tax hikes start in 2011. So under Congress's 10-year budget window, the House bill is able to pay for seven years of spending with nine years of taxes. Andy Laperriere of the ISI Group estimates the bill would add $95 billion to the deficit in 2019 alone.
Then there's yesterday's testimony, from Congressional Budget Office (CBO) Director Doug Elmendorf, that ObamaCare's cost "savings" are an illusion. Mr. Obama claims government can cover more people and pay less to do it. But Mr. Elmendorf told the Senate Finance Committee that "In the legislation that has been reported we don't see the sort of fundamental changes that would be necessary to reduce the trajectory of federal spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health-care costs."
Further on the public plan: "It raises the amount of activity that is growing at this unsustainable rate."
No matter, Speaker Nancy Pelosi is whisking the bill through House committees even before CBO has had a chance to score it in detail. As Wisconsin Republican Paul Ryan put it to us, "We will not have read it, and we will not have a score of it, but we will have passed it out of committee."
A new payroll tax. Unemployment is at 9.5% and rising, but Democrats will nonetheless impose a new eight percentage point payroll tax on employers who don't provide health insurance for employees. This is on top of the current 15% payroll tax, and in addition to a new 2.5-percentage point tax on individuals who don't buy health insurance. This means that any employer with more than $400,000 in payroll would have to pay at least 25% above the salary to hire someone. Result: Many fewer new jobs, with a higher structural jobless rate, much as Europe has experienced as its welfare states have expanded.
Other new taxes, including an as yet undetermined levy on private health plans. This tax, which Democrats say could raise $100 billion or so, would make it even harder for private plans to compete with the government plan, which would already benefit from government subsidies and lower capital costs. For good measure, the House bill also gets the ball rolling on tax increases on foreign-source corporate income.
We could go on, and we will in coming days. But the most remarkable quality of this health-care exercise is its reckless disregard for economic and fiscal reality. With the economy still far from a healthy recovery, and the federal fisc already nearly $2 trillion in deficit, Democrats want to ram through one of the greatest raids on private income and business in American history. The world is looking on, agog, and wondering why the United States seems intent on jumping off this cliff.
Democrats want to ram through one of the greatest raids on private income and business in American history.
WSJ, Jul 17, 2009
Say this about the 1,018-page health-care bill that House Democrats unveiled this week and that President Obama heartily endorsed: It finally reveals at least some of the price of the reckless ambitions of our current government. With huge majorities and a President in a rush to outrun the declining popularity of his agenda, Democrats are bidding to impose an unrepealable European-style welfare state in a matter of weeks.
Mr. Obama's February budget provided the outline, but the House bill now fills in the details. To wit, tax increases that would take U.S. rates higher even than most of Europe. Yet even those increases aren't nearly enough to finance the $1 trillion in new spending, which itself is surely a low-ball estimate. Meanwhile, the bill would create a new government health entitlement that will kill private insurance and lead to a government-run system.
Hyperbole? That's what people said when we warned about this last fall in "A Liberal Supermajority," but even we underestimated the ideological willfulness of today's national Democrats. Consider only a few of the details:
[graph Top income tax rate including 2.9%. Some countries and US States. http://s.wsj.net/public/resources/images/ED-AJ861_1radic_NS_20090716184020.gif]
A huge new income surtax. The bill's main financing comes from another tax increase on top of the increase already scheduled for 2011 under Mr. Obama's budget. The surtax starts at one percentage point for adjusted gross income above $350,000 in 2011, rising to two points in 2013; a 1.5 point surtax at incomes above $500,000, rising to three in 2013; and a whopping 5.4 percentage points in 2011 and beyond on incomes above $1 million.
This would raise the top marginal federal tax rate back to roughly 47% or 48%, if you include the Medicare tax and the phase-out of certain deductions and exemptions. With the current top rate at 35%, this would be the largest rate increase outside the Great Depression or world wars.
The average U.S. top combined state-federal marginal tax rate would hit about 52%. This would be higher than in all but three (Denmark, Sweden, Belgium) of the 30 countries measured by the OECD. According to the nearby table compiled by the Heritage Foundation, taxpayers in at least five U.S. states would pay higher marginal rates even than Sweden. South Korea, which Democrats worry is stealing American jobs, would be able to grab even more as its highest rate is a far more competitive 38.5%.
House Democrats say they deserve credit for being honest about the tax increases needed to fund their ambitions. But then they also claim that this surtax would raise $544 billion in new revenue over 10 years. America's millionaires aren't that stupid; far fewer of them will pay these rates for very long, if at all. They will find ways to shelter income, either by investing differently or simply working less. Small businesses that pay at the individual rate will shift to pay the 35% corporate rate. When the revenue doesn't materialize, Democrats will move to soak the middle class with a European-style value-added tax.
Phony numbers. Democrats will have to come up with something, because even the surtax puts their bill at least $300 billion short of honest financing. The public insurance "option" doesn't even begin until 2013 and the costs are heavily weighted toward the later years, but the tax hikes start in 2011. So under Congress's 10-year budget window, the House bill is able to pay for seven years of spending with nine years of taxes. Andy Laperriere of the ISI Group estimates the bill would add $95 billion to the deficit in 2019 alone.
Then there's yesterday's testimony, from Congressional Budget Office (CBO) Director Doug Elmendorf, that ObamaCare's cost "savings" are an illusion. Mr. Obama claims government can cover more people and pay less to do it. But Mr. Elmendorf told the Senate Finance Committee that "In the legislation that has been reported we don't see the sort of fundamental changes that would be necessary to reduce the trajectory of federal spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health-care costs."
Further on the public plan: "It raises the amount of activity that is growing at this unsustainable rate."
No matter, Speaker Nancy Pelosi is whisking the bill through House committees even before CBO has had a chance to score it in detail. As Wisconsin Republican Paul Ryan put it to us, "We will not have read it, and we will not have a score of it, but we will have passed it out of committee."
A new payroll tax. Unemployment is at 9.5% and rising, but Democrats will nonetheless impose a new eight percentage point payroll tax on employers who don't provide health insurance for employees. This is on top of the current 15% payroll tax, and in addition to a new 2.5-percentage point tax on individuals who don't buy health insurance. This means that any employer with more than $400,000 in payroll would have to pay at least 25% above the salary to hire someone. Result: Many fewer new jobs, with a higher structural jobless rate, much as Europe has experienced as its welfare states have expanded.
Other new taxes, including an as yet undetermined levy on private health plans. This tax, which Democrats say could raise $100 billion or so, would make it even harder for private plans to compete with the government plan, which would already benefit from government subsidies and lower capital costs. For good measure, the House bill also gets the ball rolling on tax increases on foreign-source corporate income.
We could go on, and we will in coming days. But the most remarkable quality of this health-care exercise is its reckless disregard for economic and fiscal reality. With the economy still far from a healthy recovery, and the federal fisc already nearly $2 trillion in deficit, Democrats want to ram through one of the greatest raids on private income and business in American history. The world is looking on, agog, and wondering why the United States seems intent on jumping off this cliff.
Ted van Dyk: Obama Needs to 'Reset' His Presidency
Obama Needs to 'Reset' His Presidency. By TED VAN DYK
The president we have is very different from the man who campaigned for the office in 2008.
WSJ, Jul 17, 2009
Time out, Mr. President.
As we approach the August congressional recess, it's clear that our economic distress is deeper than we thought, and thus your health-care and energy initiatives are in danger of stalling out. You could use a reset button for domestic policy.
Let's take it from the top.
Your presidential campaign was superb. You restored hope to millions -- including me -- who had been demoralized by the political polarization that characterized the presidencies of Bill Clinton and George W. Bush. You talked about reaching across party and ideological lines to get the public's business done. Your biography was appealing, and for those of us who entered politics motivated by the civil-rights struggle, your candidacy represented an important culmination.
You displayed an intellect and sense of cool that made us think you would weigh decisions carefully and view advisers' proposals with skepticism.
The first warning signals for me came with your acceptance speech at the Democratic National Convention. In it, you stressed domestic initiatives that clearly were nonstarters in the already shrinking economy.
I had greater concern when you staffed your administration and White House with a large number of Clinton administration retreads who had learned their trade in the never-ending-campaign culture of the Clinton years. Some appeared to represent what you had pledged to eradicate in the capital.
Many of the missteps that have followed flowed, in part, from your reliance on these Clinton holdovers. Your chief of staff, Rahm Emanuel, defined your early strategy by stating that the financial and economic crises presented an "opportunity" to jam through unrelated legislation. To many of us, the remark was cynical and wrong-headed.
The crises did not represent an opportunity. They presented an obligation to do one thing: Return our financial system and our economy to good health.
Since January, your advisers have compared your situation to those of Presidents Franklin D. Roosevelt and Lyndon Johnson after their landslide victories in 1932 and 1964. In fact, your situation is quite different. Most centrally, FDR's and LBJ's victories and congressional majorities were far larger than yours. Thus their mandates were stronger.
FDR's first months in office were devoted entirely to financial and economic recovery. His big domestic initiative, Social Security, was not enacted until 1935. LBJ pushed an ambitious Great Society agenda into law in 1965. But the U.S. economy was growing robustly in 1965. Johnson referred to it as "an endless cornucopia" which would generate tax revenues to pay for the Great Society. When he learned in mid-1967 that the projected federal budget deficit was $28 billion -- almost twice the amount projected six months earlier -- he went to Congress to push for tax increases in order to prevent Vietnam War and Great Society spending from creating unacceptable deficits.
Your staff recently has compared your strategy in pushing health-care and energy initiatives to the way Johnson pushed his Great Society legislation. That's not a fair comparison. Johnson's initiatives were framed in the White House by his administration. But at every stage, congressional leaders of both political parties and financial, business, labor and other private-sector leaders were consulted. Johnson wanted to assure that his legislation was substantively sound and could get consensus support in the Congress and the country.
Your strategy, by contrast, has been to advocate forcefully for health-care and energy reform but to leave the details to Democratic congressional committee chairs. You did the same thing with your initial $787 billion stimulus package. Now, you're stuck with a plan that provides little stimulus until 2010. A president should never cede control of his main agenda to others.
This tactic has already had negative consequences. Frightened by the prospective costs of your health-care and energy plans -- not to mention the bailouts of the financial and auto industries -- independent voters who supported you in 2008 are falling away. FDR and LBJ, only two years after their 1932 and 1964 victories, saw their parties lose congressional seats even though their personal popularity remained stable. The party out of power traditionally gains seats in off-year elections, and 2010 is unlikely to be an exception.
What adjustments should be made?
- Cut back both your proposals and expectations. You made promises about jobs that would be "created and saved" by the stimulus package. Those promises have not held up. You continue to engage in hyperbole by claiming that your health-care and energy plans will save tax dollars. Congressional Budget Office analysis indicates otherwise.
It's time to re-examine these initiatives. Could your health plan be scaled back to catastrophic coverage for all -- badly needed by most families, but quite affordable if deductibles are set at the right levels? Should the Rube Goldbergian cap-and-trade proposals be replaced with a simple carbon tax, with proceeds to be allocated to alternative-fuels development?
The evolving health and cap-and-trade bills are loaded with costly provisions designed to gain support from congressional leaders and special-interest constituencies. In short, they have become an expensive mess. This legislation will not clear Congress by the August recess, as you have requested, and could be stalled for the remainder of 2009. Settle for incremental change: Do not press Democratic legislators to vote for something they fear will destroy them in 2010.
- Talk less and pick your spots.You are outdoing even Johnson and Mr. Clinton with your daily speeches in the capital and around the country.
Applause and adulation are gratifying. But the more you talk, the less weight your words will hold. Let voters see you at your desk, conferring with serious people about serious matters. When you do choose to talk, people will understand that it's important and they should listen.
- Conform your 2009 politics to your 2008 statements. During your campaign, you called for bipartisanship and bridge-building. You promised to reduce the influence of single-issue and single-interest groups in the policy process. Yet, in your public statements, you keep using President Bush as a scapegoat.
You have ceded content of your principal proposals to Democratic congressional leaders who in large part have yielded to special-interest constituencies and excluded Republican leaders from policy formulation. This certainly was the case with the stimulus plan. It has been the case with health and energy legislation, with the notable exception of Sen. Max Baucus's attempt in the Senate Finance Committee to develop genuinely bipartisan legislation.
You have an enormous reservoir of goodwill among Americans of all persuasions. They want you to succeed. Level with them and trim your proposals to what is practical in the current environment.
You had things right in 2008. Take a timeout. Get back to yourself. Make a fresh start.
Mr. Van Dyk was Vice President Hubert Humphrey's assistant in the Johnson White House and active in national Democratic politics over 40 years. He is the author of "Heroes, Hacks and Fools," (University of Washington Press, 2008).
The president we have is very different from the man who campaigned for the office in 2008.
WSJ, Jul 17, 2009
Time out, Mr. President.
As we approach the August congressional recess, it's clear that our economic distress is deeper than we thought, and thus your health-care and energy initiatives are in danger of stalling out. You could use a reset button for domestic policy.
Let's take it from the top.
Your presidential campaign was superb. You restored hope to millions -- including me -- who had been demoralized by the political polarization that characterized the presidencies of Bill Clinton and George W. Bush. You talked about reaching across party and ideological lines to get the public's business done. Your biography was appealing, and for those of us who entered politics motivated by the civil-rights struggle, your candidacy represented an important culmination.
You displayed an intellect and sense of cool that made us think you would weigh decisions carefully and view advisers' proposals with skepticism.
The first warning signals for me came with your acceptance speech at the Democratic National Convention. In it, you stressed domestic initiatives that clearly were nonstarters in the already shrinking economy.
I had greater concern when you staffed your administration and White House with a large number of Clinton administration retreads who had learned their trade in the never-ending-campaign culture of the Clinton years. Some appeared to represent what you had pledged to eradicate in the capital.
Many of the missteps that have followed flowed, in part, from your reliance on these Clinton holdovers. Your chief of staff, Rahm Emanuel, defined your early strategy by stating that the financial and economic crises presented an "opportunity" to jam through unrelated legislation. To many of us, the remark was cynical and wrong-headed.
The crises did not represent an opportunity. They presented an obligation to do one thing: Return our financial system and our economy to good health.
Since January, your advisers have compared your situation to those of Presidents Franklin D. Roosevelt and Lyndon Johnson after their landslide victories in 1932 and 1964. In fact, your situation is quite different. Most centrally, FDR's and LBJ's victories and congressional majorities were far larger than yours. Thus their mandates were stronger.
FDR's first months in office were devoted entirely to financial and economic recovery. His big domestic initiative, Social Security, was not enacted until 1935. LBJ pushed an ambitious Great Society agenda into law in 1965. But the U.S. economy was growing robustly in 1965. Johnson referred to it as "an endless cornucopia" which would generate tax revenues to pay for the Great Society. When he learned in mid-1967 that the projected federal budget deficit was $28 billion -- almost twice the amount projected six months earlier -- he went to Congress to push for tax increases in order to prevent Vietnam War and Great Society spending from creating unacceptable deficits.
Your staff recently has compared your strategy in pushing health-care and energy initiatives to the way Johnson pushed his Great Society legislation. That's not a fair comparison. Johnson's initiatives were framed in the White House by his administration. But at every stage, congressional leaders of both political parties and financial, business, labor and other private-sector leaders were consulted. Johnson wanted to assure that his legislation was substantively sound and could get consensus support in the Congress and the country.
Your strategy, by contrast, has been to advocate forcefully for health-care and energy reform but to leave the details to Democratic congressional committee chairs. You did the same thing with your initial $787 billion stimulus package. Now, you're stuck with a plan that provides little stimulus until 2010. A president should never cede control of his main agenda to others.
This tactic has already had negative consequences. Frightened by the prospective costs of your health-care and energy plans -- not to mention the bailouts of the financial and auto industries -- independent voters who supported you in 2008 are falling away. FDR and LBJ, only two years after their 1932 and 1964 victories, saw their parties lose congressional seats even though their personal popularity remained stable. The party out of power traditionally gains seats in off-year elections, and 2010 is unlikely to be an exception.
What adjustments should be made?
- Cut back both your proposals and expectations. You made promises about jobs that would be "created and saved" by the stimulus package. Those promises have not held up. You continue to engage in hyperbole by claiming that your health-care and energy plans will save tax dollars. Congressional Budget Office analysis indicates otherwise.
It's time to re-examine these initiatives. Could your health plan be scaled back to catastrophic coverage for all -- badly needed by most families, but quite affordable if deductibles are set at the right levels? Should the Rube Goldbergian cap-and-trade proposals be replaced with a simple carbon tax, with proceeds to be allocated to alternative-fuels development?
The evolving health and cap-and-trade bills are loaded with costly provisions designed to gain support from congressional leaders and special-interest constituencies. In short, they have become an expensive mess. This legislation will not clear Congress by the August recess, as you have requested, and could be stalled for the remainder of 2009. Settle for incremental change: Do not press Democratic legislators to vote for something they fear will destroy them in 2010.
- Talk less and pick your spots.You are outdoing even Johnson and Mr. Clinton with your daily speeches in the capital and around the country.
Applause and adulation are gratifying. But the more you talk, the less weight your words will hold. Let voters see you at your desk, conferring with serious people about serious matters. When you do choose to talk, people will understand that it's important and they should listen.
- Conform your 2009 politics to your 2008 statements. During your campaign, you called for bipartisanship and bridge-building. You promised to reduce the influence of single-issue and single-interest groups in the policy process. Yet, in your public statements, you keep using President Bush as a scapegoat.
You have ceded content of your principal proposals to Democratic congressional leaders who in large part have yielded to special-interest constituencies and excluded Republican leaders from policy formulation. This certainly was the case with the stimulus plan. It has been the case with health and energy legislation, with the notable exception of Sen. Max Baucus's attempt in the Senate Finance Committee to develop genuinely bipartisan legislation.
You have an enormous reservoir of goodwill among Americans of all persuasions. They want you to succeed. Level with them and trim your proposals to what is practical in the current environment.
You had things right in 2008. Take a timeout. Get back to yourself. Make a fresh start.
Mr. Van Dyk was Vice President Hubert Humphrey's assistant in the Johnson White House and active in national Democratic politics over 40 years. He is the author of "Heroes, Hacks and Fools," (University of Washington Press, 2008).
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