Wednesday, July 13, 2011

In Obamaland, the Past is Irrelevant

President Obama inhabits a very special world. It's a world in which his entire slate of previous statements, policy preferences, and actions is apparently wiped clean every time he delivers a new speech or press statement. As my friend Mary Katharine Ham likes to quip, what Obama said -- or did -- last week, last month, or last year is regarded as irrelevant, so long as he's making himself "crystal clear" today. Call it a transcendent belief in "the fierce urgency of now." I'll illustrate this phenomenon shortly.

First, a few basic takeaways from today's lengthy presidential news conference, which made little actual news. The president said a debt deal is still a ways off, and stated that although he appreciates John Boehner's "good faith efforts" to help prevent a disastrous default, Republicans must "budge" on taxes for a workable compromise to materialize. He called on both sides to make concessions, arguing that it's time to "rip off the Bandaid" and "eat our peas." He forswore short-term extensions, vowing to reject any 30-to-90 day debt ceiling patches. "This is the United States of America, and we don't manage our affairs in three-month increments," he asserted. (Except when we do, of course). He also flatly stated that an accord will be forged by the August 2nd deadline. "We're going to meet every day until we get this thing resolved," he said. Negotiations are ongoing.

Now, back to mystical Obamaland: The president talked quite a lot about the pressing and imperative need to strike a comprehensive debt deal this morning. Largely reprising his hectoring performance of June 29th, Obama called on both sides to sacrifice their respective sacred cows to facilitate an agreement post-haste. Such a visionary pragmatist. Except...this latest incarnation of Barack Obama seems to have forgotten that a previous one was demanding a "clean" debt ceiling hike as recently as six weeks ago. Out: We must hike this debt ceiling without any grand deal immediately! In: We must reach a grand deal to hike the debt ceiling immediately! No matter; new day, new paradigm. Head spin.

To oppose a debt limit increase would be patently "irresponsible," today's Barack Obama intoned -- an apparent repudiation of 2006's Barack Obama, who did precisely that. "Revenue increases" are "fair" and essential, today's Barack Obama insisted -- contradicting 2009's Barack Obama, who noted that raising taxes is "the last thing you want to do" in a sluggish economy. Head spin.

The president also spoke passionately about the necessity of making tough choices to help control the swollen national debt. He assured us he's "willing to do hard things politically" to reach an agreement. What might those "hard things" be? He won't say. It's as if today's Barack Obama has forgotten that when presented with an obvious opportunity to offer leadership on this front, February's Barack Obama introduced a budget that was universally panned for its inadequacy and utter refusal to propose any "hard things." And that April's Barack Obama discarded February's Barack Obama's budget in favor of a laughably non-specific "vision," which still hasn't been fleshed out. And that 2010's Barack Obama appointed a bipartisan debt commission to devise exactly the sort of comprehensive solution that today's Barack Obama demands -- but that February's Barack Obama completely disregarded its recommendations in crafting his (later abandoned) budget proposal. Head spin.

Applying icing to his rhetorical cake, the president wrapped up his press conference by promising that his policies will help corral deficits and debt, eventually. Without missing a beat, he closed with an astonishing brainstorm: He encouraged Americans to envision a large-scale government program to spur job growth through major infrastructure projects as a solution to high unemployment. Today's Barack Obama clearly didn't know or care that the large-scale government program to spur job growth through major infrastructure projects -- championed by 2009's Barack Obama, then mocked by June's Barack Obama -- didn't even come close to meeting the expectations and projections 2009's Barack Obama established. Head spin.

No worries, though. Today is a brand new day. Problem: Today's Barack Obama will soon become yesterday's Barack Obama -- whose stated policies and preferences are liable to slide into obsolescence as soon as tomorrow's Barack Obama opens his mouth. What comes next is anyone's guess.

This cycle of presidential body-snatching may be a totally incoherent approach to governance, but it sure is exciting.



What hope for the BRICs?

Financial writer and historian Martin Hutchinson gives his analysis below. I reproduce only his view of Brazil but in the full article he goes on to cover India, China and Russia. He sees them all headed for a crash

The 2008-9 Great Recession centered on the wealthy Western economies with emerging markets suffering significantly shorter, less painful downturns. Then in 2009-11 the emerging markets, particularly the BRIC countries (Brazil, Russia, India and China -- so named by Goldman Sachs’ Jim O’Neill in 2001) soared ahead of the wealthy West, leading to considerable talk of global economic realignment. However as we enter the second half of 2011 new doubts have emerged: are the BRICs overheating, and will they cease bringing growth to the rest of the world?

There has been a great deal of talk in the last few years that the Brazilian and Indian models of center-left social democracy could show the world that democracies with left-of-center governments were as efficient as truly free market administrations in generating growth. This column has warned on a number of occasions that the media admiration for both countries’ economic management was foolish, but until very recently this warning, like a number of this column’s doom-laden forecasts, appeared to have been overstated.

Now as often happens it is beginning to appear that the Bear may merely have been premature. Brazil in particular looks to be in deep trouble. Under Lula the country had an interesting mixture of an excellent monetary policy and an inferior fiscal policy, with interest rates firmly positive in real terms while the government persistently overspent. The fiscal problem was masked for a number of years by the relentless global increase in commodity prices, which improved Brazil’s balance of payments and allowed its public debt position to improve significantly as export revenues surged. Inflation, which would normally have become a serious problem in such a situation, was tamped down by the very high interest rates and the consequent strength of the real.

Then in 2010, as is often the case with center-left governments who have got lucky with the economy, Lula overdid the spending, as he attempted to secure election for his protégé Dilma Rousseff. Not only did the official budget deficit widen by about 2% of GDP, but the development bank BNDES went on a lending spree and the state corporate sector went wild with losses. The position was made to look respectable by the government extracting $50 billion from the unfortunate Petrobras, through selling the same oil reserves to it twice, but in reality overheating was inevitable, however sound the central bank’s monetary policy (12% interest rates – my kind of place, monetarily speaking!)

Rousseff has made only feeble attempts to control public spending, and has shown signs of meddling in Brazilian industry far beyond the official government companies, playing favorites recently in a retail takeover bid. Now Brazilian consumer borrowing is out of control, with consumer debt service at 28% of disposable income, compared with 16% in the U.S. at the height of the 2007 credit bubble. Admittedly high Brazilian interest rates (a mean 47% on consumer borrowing) make debt service greater than in the U.S. for a given amount of debt, but even so it seems likely that with both government and consumers overspending, Brazil is due for the father and mother of a credit crunch.



Wisconsin's Controversial Budget Law Begins to Pay Off

"This is a disaster," Mark Miller, the Wisconsin Senate Democratic leader, said in February after Republican Gov. Scott Walker proposed a budget bill that would curtail the collective-bargaining powers of some public employees. Miller predicted catastrophe if the bill were to become law -- a charge repeated thousands of times by his fellow Democrats, union officials and protesters in the streets.

Now the bill is law, and we have some early evidence of how it is working. And for one beleaguered Wisconsin school district, it's a godsend, not a disaster.

The Kaukauna Area School District, in the Fox River Valley of Wisconsin near Appleton, has about 4,200 students and about 400 employees. It has struggled in recent times and this year faced a deficit of $400,000. But after the law went into effect at 12:01 a.m. June 29, school officials put in place new policies they estimate will turn that $400,000 deficit into a $1.5 million surplus. And it's all because of the very provisions that union leaders predicted would be disastrous.

In the past, teachers and other staff at Kaukauna were required to pay 10 percent of the cost of their health-insurance coverage and none of their pension costs. Now they'll pay 12.6 percent of the cost of their coverage (still well below rates in much of the private sector) and contribute 5.8 percent of salary to their pensions. The changes will save the school board an estimated $1.2 million this year, according to board president Todd Arnoldussen.

Of course, Wisconsin unions had offered to make benefit concessions during the budget fight. Wouldn't Kaukauna's money problems have been solved if Walker had just accepted those concessions and not demanded cutbacks in collective-bargaining powers?

"The monetary part of it is not the entire issue," says Arnoldussen, a political independent who won a spot on the board in a nonpartisan election. Indeed, some of the most important improvements in Kaukauna's outlook are because of the new limits on collective bargaining.

In the past, Kaukauna's agreement with the teachers union required the school district to purchase health-insurance coverage from something called WEA Trust -- a company created by the Wisconsin teachers union. "It was in the collective-bargaining agreement that we could negotiate only with them," says Arnoldussen. "Well, you know what happens when you can negotiate with only one vendor." This year, WEA Trust told Kaukauna that it would face a significant increase in premiums.

Now the collective-bargaining agreement is gone, and the school district is free to shop around for coverage. And all of a sudden, WEA Trust has changed its position. "With these changes, the schools could go out for bids, and, lo and behold, WEA Trust said, 'We can match the lowest bid,'" says Republican state Rep. Jim Steineke, who represents the area and supports the Walker changes. At least for the moment, Kaukauna is staying with WEA Trust but saving substantial amounts of money.

Then there are work rules. "In the collective-bargaining agreement, high-school teachers had to teach only five periods a day out of seven," says Arnoldussen. "Now they're going to teach six." In addition, the collective-bargaining agreement specified that teachers had to be in the school 37-1/2 hours a week. Now it will be 40 hours.

The changes mean Kaukauna can reduce the size of its classes -- from 31 students to 26 students in high school and from 26 students to 23 students in elementary school. In addition, there will be more teacher time for one-on-one sessions with troubled students. Those changes would not have been possible without the much-maligned changes in collective bargaining.

Teachers' salaries will stay "relatively the same," Arnoldussen says, except for higher pension and health care payments. (The top salary is about $80,000 per year, with about $35,000 in additional benefits, for 184 days of work per year -- summers off.) Finally, the money saved will be used to hire a few more teachers and institute merit pay.

It is impossible to overstate how bitter and ugly the Wisconsin fight has been, and that bitterness and ugliness continues to this day with efforts to recall senators and an unseemly battle inside the state Supreme Court. But the new law is now a reality, and Gov. Walker recently told the Milwaukee Journal Sentinel that the measure would gain acceptance "with every day, week and month that goes by that the world doesn't fall apart."

In the Kaukauna schools, the world is definitely not falling apart -- it's getting better.



Ingratitude, Thy Name Is South Korea

South Korea has joined with only two other countries in the world in dropping the name of the forthcoming film "Captain America" and using the subtitle, "The First Avenger." The other two countries are Russia and Ukraine. According to the New York Times report, "Although that country (South Korea) is one of Hollywood's top-performing territories, resentment about the continued presence of the United States military runs deep."

For years now, I have intended to write a column about the most glaring case of international ingratitude of which I am aware. The "Captain America" story has finally pushed me over the edge.

For decades, there have been anti-U.S. demonstrations in South Korea. And each time I wonder the same thing: Do these people have any idea what the living hell known as North Korea is like? Do these people understand that the United States is the reason they are so free and prosperous, completely unlike their fellow North Koreans who had the horrible luck not to be liberated by America? Do these people know how many Americans died to enable them to be free?

Whenever I confront someone who claims that America's wars abroad were fought for economic gain or to extend its alleged imperialist empire, I ask the person about the Korean War: What imperialist or economic reasons were there to fight in that country?

The answer I most often receive is, "Frankly I don't know too much about the Korean War." And it's a good thing for the critics of America's wars that they don't know much about the Korean War. If they did, they would either experience cognitive dissonance or have to severely modify their position on America's wars.

Just five years after a war-weary America celebrated the end of World War II, Americans were asked to fight the successor-evil to Nazism, communism, in Korea, a country most Americans could not identify on a map or did not know anything about. In an earlier version of what happened in Vietnam, the Soviet Union and China backed a communist attempt to take over the southern half of the Korean peninsula -- the northern half had been communist since the end of World War II -- and install a Stalinist tyranny over the non-communist southern half.

Over 36,000 Americans died in America's successful attempt to keep South Korea from becoming communist. And another 92,000 were wounded.

So, forgive me for the contempt I feel for South Koreans who demonstrate against the United States and for the two-thirds of South Koreans who, according to a 2002 Gallup-Korea poll, view the United States unfavorably. Whenever I see those anti-American demonstrators or read such polls, all I can think about are the tens of thousands of Americans who died so that South Koreans would not live in the communist hell their fellow Koreans live in.

Younger South Koreans want American troops to leave their country? Do these young people not know that on planet Earth no other country suffers the mass enslavement, mass incarceration, mass death or the deadening of the mind and soul that North Koreans endure because of the psychopaths who run that country?

And if they do know all this about North Korea, how do they explain why South Korea is so different?

Here is a suggestion: The South Korean government should conduct a national plebiscite on whether America should withdraw its troops from that country. Before the South Korean people vote, the United States should make it clear that if it withdraws its troops and North Korea later invades the South, we will send no troops to die again for South Korea -- but we will vote to condemn North Korea's aggression at the United Nations.

If a majority of the South Korean people wants us to leave, we should.

The beauty of such a plebiscite is that if a majority of the South Korean people wants American troops out, we have no moral obligation to stay there. And if a majority wants us to stay, the South Korean left and other ingrates in that country should shut up.

I have been to South Korea, and I live in a community with many Koreans. I have always admired their industriousness, work ethic and strong families. But South Korea is surely the most ungrateful country in the world. Which is all the more remarkable since it is also the luckiest.



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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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