A More Conservative Union

Brown Wins Massachusetts Senate Seat, Potentially Upending Obama Agenda

2010-01-20T00:12:00.002-04:00

By GREG HITT and PETER WALLSTEN

BOSTON—A little-known Republican shook up the balance of power in Washington by winning a U.S. Senate seat in Massachusetts, a result that imperils President Barack Obama's top legislative priorities and augurs trouble for his party in this year's elections.
With 75% of the vote counted, Republican Scott Brown was leading his opponent, Massachusetts' Democratic Attorney General Martha Coakley 52.7% to 46.3%, according to the Associated Press, which declared Mr. Brown the winner.
The Brown victory forces the White House and congressional leaders to decide how—or whether—to salvage their long-sought health-care overhaul. Rushing the bill after losing Massachusetts carries political risks. So does letting it collapse.

The News Hub takes a look at a special election that threatens to tip the Senate's balance of power and undermine President Barack Obama's policy agenda. MarketWatch's Robert Powell reports from Massachusetts with more.

House Democrats Tuesday opened the door to passing the Senate version of the legislation, which the president could then sign into law. The White House has floated that idea, but it will be a hard sell. The Senate bill contains abortion, immigration and tax provisions opposed by many House members.
Anticipating rough sledding for the bill, the S&P health-care sector stock index surged by more than 2% Tuesday, leading all other industry sectors, with managed-care stocks posting strong gains.
Inside the Park Plaza hotel in Boston, thousands packed the second-floor ballroom. Waiting for Mr. Brown to appear, the crowd chanted, "John Kerry's next, John Kerry's next." Later the chant went up, "Yes we did, Yes we did," a tweak at Mr. Obama's 2008 signature line.
At Coakley headquarters, the mood grew somber as it became clear a loss was at hand, and some started dissecting where the campaign went wrong. In her concession speech, Ms. Coakley said she received a call from Mr. Obama who told her, "We can't win them all." Ms. Coakley thanked Mr. Obama and the Kennedy family. "Though our campaign ends tonight we know our mission goes on," she said.
Other Democratic priorities are now also uncertain. Although they still hold substantial majorities in both chambers, nervous Democrats with an eye on November midterm elections could start to keep their distance from the White House. Senate Banking Committee Chairman Christopher Dodd (D., Conn.) will be under increasing pressure to negotiate with Republicans who oppose the administration's overhaul of financial regulation, another centerpiece bill, congressional aides said.

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Associated Press

Residents in Seekonk, Mass., cast their votes in a special election to fill Sen. Ted's Kennedy senate seat on Tuesday.

As recently as a couple of weeks ago, few gave the 50-year-old Mr. Brown, a state senator, a chance to win the special election prompted by the death of liberal icon Sen. Edward Kennedy. A Republican last held a Senate seat here in 1979. Yet polls showed Mr. Brown benefited from antigovernment sentiment, a sour economy and discontent with Mr. Obama's agenda.
Mr. Brown will become the 41st Republican in the Senate, breaking the Democratic Party's 60-vote majority, and ensuring the minority has enough votes to block legislation.

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See a timeline of the Massachusetts Senate race.

The election results signal challenges for Democratic prospects in mid-term elections this fall, when the party will try to protect its majorities in the House and Senate. A handful of Democrats facing competitive races have announced plans to retire, and party officials are trying to prevent more following suit. Republicans, too, face challenges as the party navigates internal strife between anti-establishment activists and the party's Washington leadership, which remains unpopular.
Independents, who appeared to swing for Mr. Brown in Massachusetts, tend to be more anti-incumbent than anti-Democrat. A new Wall Street Journal/NBC poll shows nearly six in 10 independent voters think it's time to "give a new person a chance" rather than reelect their representatives. About half of all voters feel that way.
In Littleton, Mass., Alex Olsen, a professor at the University of Massachusetts and an independent, said he's fed up with Mr. Obama and Democratic majority. He voiced strong discontent with efforts to push the health bill through the Senate. "They're just trying to ram things down our throats," said Mr. Olsen, 65.
Democratic officials were already assessing their plans for this year's elections. Strategists said Tuesday that for the rest of the year the party must downplay health care and focus on addressing voter concerns about the economy. "You've got to focus on jobs. Nothing is more important in this economy than jobs," said Delaware Gov. Jack Markell, chairman of the Democratic Governors Association.

Journal Community

Discuss: What will the outcome mean for the Obama administration?

A faster recovery could soothe the national angst. Presidents Reagan and Clinton suffered big reversals in their first two years in office, only to rebound along with the economy.
Coming almost a year to the day of his inauguration, Tuesday's result is a blow to Mr. Obama, who was elected with heavy support from independents. He flew to Boston Sunday to stump for Ms. Coakley.
Even before Mr. Brown's win, Democrats engaged in a round of finger-pointing, with some blaming Ms. Coakley for running an ineffective campaign and others arguing that the party's national leadership and its focus on health care helped turn swing voters against the candidate.
White House officials declined to take responsibility for Ms. Coakley's defeat, saying the president and his policies remain popular in Massachusetts. White House press secretary Robert Gibbs released a statement saying only that Mr. Obama had spoken to both candidates and congratulated Mr. Brown.
On the campaign trail, Mr. Brown sounded like a member of the Republicans caucus in Washington, calling for tax and spending cuts, as well as opposing the current health-care bill. He touted himself as the "41st" Republican senator, reinforcing the threat he poses to the Obama agenda.

More on Massachusetts

Not all of his stances are clearly conservative. On social issues, he supports some abortion rights, although he opposes partial-birth abortion and supported efforts to overturn Massachusetts's same-sex marriage law. In one bill he sponsored, Mr. Brown took aim at auto emissions, a goal more commonly associated with Democrats.
"I'm Scott Brown from Wrentham," he said on the campaign trail over the weekend, skirting questions about whether he's a conservative.
In a recent interview, State Sen. Brian A. Joyce, a Coakley supporter, described Mr. Brown as a "moderate" along the lines of most Massachusetts Republicans. Mr. Joyce said Mr. Brown was once considered a "sacrificial lamb," running a presumably losing effort to catapult himself into higher state office. "I guess he didn't get the memo," Mr. Joyce said.

Healthcare and Progressivism

2010-01-19T00:49:00.004-04:00

By Rep. Paul Ryan

Remarks presented at the Hillsdale College and Allan P. Kirby, Jr. Center for Constitutional Studies and Citizenship Forum on Health Care Reform and the American Character
Someone has said that before there was the New Deal, there was the "Wisconsin Deal." In Wisconsin, where I come from, the politics of Progressivism still runs strong. It was imported through the University of Wisconsin where they read their Hegel, Max Weber, and other powerful German minds. These thinkers taught the American Progressives to make a sharp distinction between "administration" and "politics." These philosophers and their American disciples wanted to remodel society on the basis not of opinions or "values" but according to ‘rational calculation.'

The best known Wisconsin Progressive in American politics was Robert LaFollette. "Fighting Bob" was a Republican, as was that other early Progressive, Theodore Roosevelt. Progressivism has always been a powerful strain in the Republican bloodstream, as we saw in the presidential election last year.
The Progressives, like the American Founders, saw self-government in a large nation-state as a challenge. Can a modern democracy be both free and well governed?
These thinkers, particularly Weber, were not blind to the problem of how untrained average citizens were supposed to preserve freedom in a society administered by bureaucratic ‘specialists without soul.' But popular resistance to their agenda made the Progressives more and more elitist.
Theodore Roosevelt and Woodrow Wilson brought the Progressive movement to Washington, sowing the seeds for the paramount political problem of our time: centralized administration.
Progressivism came in on two great waves: the 1930s New Deal and the Great Society of the 1960s. President Obama often invokes Progressivism and plans to generate its third, and greatest, wave. American businesses large and small must be brought under centralized direction. Contracts, the very core of personal and social freedom, are scrapped or rewritten by the administration as decades old bankruptcy laws are cast aside in the reorganization of the auto makers. The compensation which employers pay to secure the services of executive employees is now reviewed and second-guessed by a presidential "pay czar." Marriage and family life, church and voluntary organizations are all being weakened mostly by nonrepresentative government agencies. First wave Progressives demanded the popular referendum. Third wave Progressives do everything possible to stop local and state referenda which citizens would use to end this assault on the pillars of free society.
Health Care reform is a prime example of Progressivism in action.
The delivery of health care services has grown costly, leaving many without coverage. But survey after survey shows that 75 or 80 percent of Americans or more are personally satisfied with the quality of their own health care.
The Democratic leaderships' brazen attempts to rush through a health care reform with little public debate and deliberation have disgraced the annals of government by consent. They frantically scribble thousand-page laws behind closed doors and demand midnight votes from members who are given no opportunity to read the legislation they are voting about. This farcical process flunks the Constitution's "due process of law" test.
The Framers saw every individual as having a "right of personal security" which includes being protected against acts that may harm personal health. This right is integral to the natural right to life which it is government's purpose to secure. But the personal right to protection of health does not imply that government must provide health care, any more than the right to food in order to live requires government to own the farms and raise the crops. Government's obligation is normally met by establishing conditions for free markets to thrive. Societies with economic freedom almost always have a growing abundance of goods and services at affordable cost for the largest number. When free markets seem to be failing to meet this goal - and I'd argue today's health care delivery is an example - government should not supply the need itself but look in the mirror, correct its own interventions, and unleash competition and choice.
Washington DC is no place to run health care services for the nation. Thus the Framers left public health decentralized. But if there were any doubt, the history of Medicare and Medicaid is the proof. Real cost control has become a national nightmare. Fraud has proliferated despite every effort to stop it. Program costs are always underestimated. In 1966 the cost of Medicare to the taxpayers was about $3 billion. The House Ways and Means Committee estimated that Medicare would cost taxpayers only about $12 billion by 1990 (adjusted for inflation). The actual cost? Nearly nine times as high - $107 billion. By 2006 Medicare reached $401 billion while Medicaid added another $309 billion for a total of $710 billion.
The health care programs Democratic leaders are pushing are outrageously expensive and fiscally irresponsible. The federal Health Care takeover will subsume about one-sixth of our national economy. Combined with current federal, state, and local spending, government will control about 50 percent of total national production. At this point the goal of centralized administration will be in sight, with less than half of our once free economy to be brought under government control.
There are essentially three models for health care delivery available to us. First, today's broken model in which bureaucratized insurance companies monopolize the field in each state - this is the "business-government partnership" model, the "crony capitalism" that corrupts our economy. Second, the Progressives' model where centrally administered government takes over the field and government bureaucrats decide which services you are allowed to have. Third, the only true American model in my view, a free market in which health care services compete, and individuals - the consumer-patients and their doctors - are in control.
Bureaucratized health care is not and cannot be "compassionate" health care. Government agents don't make decisions about how to treat the sick according to personalized need ... they ration health care resources according to a dollar-driven social calculus. This isn't a flaw in their plan. It is their plan.
Dr. Ezekiel Emanuel, the Obama Administration's point man on health care issues, advocates what he calls a "whole life system," a comprehensive formula for health care rationing. Under this system, government makes treatment decisions for individual persons using a statistical formula based on average life expectancy and "social usefulness." In other words, socially "useful" patients deserve more care than "useless" persons. Consider the legislation's new Medicare board of unelected specialists whose job is to determine the program's treatment protocols as a method of limiting costs. We already have a new comparative effectiveness research bureaucracy whose sole mission is make government determinations about which health procedures it deems are most cost effective and will be allowed by health care bureaucrats. The whole purpose of this heartless calculus is to eliminate compassionate personal care by loved ones under free markets with a diversity of health resources at proportional costs.
The idea that the government should make decisions about how long people should live and who should be denied medical healing is morally repugnant and deeply offensive. The supply of every service or product that exists is limited, but it is a mistake to conclude that government must ration them. This is what free markets do: finite amounts of goods and services, including health care, are rationed by each purchaser ordering his unique needs and allocating his resources among competing producers. Government rationing denies personal and natural rights. And our sick, special needs patients, and seniors - those most at risk when the government involves itself in these tough decisions - deserve better. Once government-run health care is a fait accompli, government rationing must be the necessary and logical outcome.
Government-monopolized health service conflicts with the American character as a free people. It conflicts with moral truth, with market freedom, with democracy, and with the health care excellence that has always drawn patients from socialist utopias to this country for medical treatment.
An authentic solution to the problem of affordability should be guided by the sure principles of moral and political freedom. It should respect doctor and patient privacy, restrain spending, and channel the energy of our free market system, not dry it up. Contrary to the false claim of Democratic leaders, there is no lack of sensible alternative solutions proposed by Republicans to put patients first. Last year in May, Senators Coburn and Burr, and Congressman Nunes and I offered one, the Patients Choice Act. It would eliminate government-driven market distortions that exclude many from affordable health care delivery. It would cover more uninsured Americans by spending current dollars wisely and efficiently than by throwing trillions more dollars at the problem. Our health care delivery alternative is guided by moral and political principles that respect the dignity of the person. It reflects America's commitment to compassion, family choice, and individual freedom, together with responsibility for the nation's economic well-being.
But the struggle over federal health care reform, the Democratic leaders' signature program, goes beyond the problem of national health. This debate encapsulates the defining issue of our generation: should we reform and strengthen America's free market democracy, or should we abandon it for a European-style social welfare state, the dream of third wave Progressives? Ultimately this is about an ideological crusade.
If we follow the Progressive path down which our current leaders plan to take us, creating entitlement after entitlement, promising benefits which can never be provided, the American Union will become something like the European Union: a welfare state society where the majority of people pay little or no taxes but become dependent on government benefits; where tax reduction is impossible because more people have a stake in the welfare state than in free enterprise; where permanent high unemployment is a way of life, and the spirit of risk-taking is smothered by a thick web of regulations from all-providing centralized government.
The US is already perilously close to this "tipping point." While exact and precise measures cannot be made, the Budget Committee minority staff have developed the warning indicators. In 2004, by our measure, 20% of US households were getting about 75% of their income from the federal government and have already become government dependents. Another 20 percent were receiving almost 40 percent of their income from federal programs, and are certainly already reliant on government for their livelihood.
All in all, about 60% of US households were receiving more government benefits and services (in dollar value) than they were paying back in taxes. We estimate that President Obama's first budget alone raises this "net government inflow" from 60% to 70%.
In my view, the Health Care reform plan is the vanguard of the Democratic leaders' crusade against the American idea. That's a harsh charge, but I can see only two possibilities: either they are ignorant of the consequences of their own programs - or they know and intend them.
In a TV interview in mid-December, President Obama said: "If we don't pass it...the federal government will go bankrupt, because Medicare and Medicaid are on a trajectory that are [sic] unsustainable....if we don't do this, nobody argues with the fact that health care costs are going to consume the entire federal budget."
The Democratic leaders' "credibility gap" has reached Grand Canyon proportions! You stop the nation from going broke by enacting a program costing $800 billion or more in the first decade? The President knows this will only accelerate the bankruptcy. If he means what he said, there is only one way to achieve that goal under the design of this plan: the government must ration health care, deeply and comprehensively.
The national health care exchange created by this legislation, together with its massive subsidies for middle income earners, will be the greatest expansion of the welfare state in a generation and possibly in history. Some health care experts estimate as many as 110 million citizens could claim this new entitlement within a few years of its implementation. According to our analysis, the new bill will provide subsidies that average a little less than 20% of the income of persons earning between zero and 400% of the Federal Poverty Level. As income rises, of course, the health care subsidies phase out. This in effect imposes a huge marginal tax penalty acting as a massive disincentive on work, entrapping in greater dependency precisely those who need more incentive to escape.
American citizens once took pride in being responsible for their individual well-being and for governing themselves in freedom. They are now to become passive subjects of government leaders, wheedling for hand-outs, more concerned about their security than their liberty. Isn't it wiser to suppose that those who promote this program are smart enough to know what they are doing? When we reach their intended goal, those who still cherish human freedom will be reduced to near-silence. Whatever you call the post-American regime they would impose on this land, it will be no democracy.
The Progressives and the Founders both saw popular government as a problem, but their solutions were nearly opposite. Progressivism argues that there are no timeless ideas of right or wrong. Everything is "relative to history," and history keeps changing. Progressivism says the US needs a "living constitution" that keeps up with the "change." Their practical solution is to centralize government and direct society through all the turns of history. The political, representative bodies, such as Congress, should enact laws that propose goals - for example, "America should have clean air, pure water, better health care..." - and then let trained specialists issue the detailed regulations to achieve these goals. These experts, selected by merit, should be protected from public accountability for their directives. The Progressives say that popular control over bureaucracy can be maintained by legislative oversight and the budget process. But how can the people hold legislators accountable if they have no professional training or responsibility for the regulations? So the centralized administrative state finds itself in a perpetual blame game between bureaucrats and elected officials when things go wrong, as we have seen.
In the current economic crisis there has been no lack of greed, envy, ambition, and plain ignorance in corporate boardrooms, financial markets, and government hallways. The capital sins are always with us. But the foundations for this crisis were laid by Progressivism itself, above all by encouraging "crony capitalism." The Democratic leadership is trying to cure the diseases of "crony capitalism" with more "crony capitalism." What we really need is a new engagement with the principles Progressives repudiate, the principles that founded this land of freedom.
This nation was based on the self-evident truth that unalienable rights were granted to human beings not by government but by "nature and nature's God." The truths of the American founding cannot become "obsolete" because they are not temporal. They are eternal. "The laws of Nature and of Nature's God" are the sure touchstones of right and wrong for individuals and societies, for all time. They are the most inclusive ideas ever embodied in a government. If all human beings have equal natural rights, that is final. "All" means "all."
The Founders taught us that when government goes beyond the high mission of securing these God-given rights of all - even if the intent is benevolent - the results will weaken freedom, reduce prosperity, undermine authority, and make government intrusive and arrogant. They tried to make sure that self-government remained free by writing a constitution that recognized and enforced those timeless principles. The Constitution would embody popular consent by being ratified by the people. In particular, the words spelled out the limits of federal power and left the rest to the people.
A government that expands beyond its high but limited constitutional mission of securing equal rights is not "progressive," it's reactionary. It privileges some at the expense of others. The American Revolution was fought to abolish artificial distinctions that confiscated the wealth of some and gave it to others. The promise of keeping the earnings of your work is central to justice, freedom, and the hope to better your life.
President Obama famously said that he wants to "spread the wealth around." Democratic Party leaders hanker for those Old World notions of rule by the patronage of bureaucrats and judges. The chair of the House Financial Services Committee, Barney Frank recently said as much: Democrats "are trying on every front to increase the role of government." I appreciate his candor but I can't help hearing an echo of George III excusing "taxation without representation." We swore off rule by the "better classes" a long time ago.
These leaders underestimate the American people. They have broken faith with independents, Republicans, and their own rank-and-file. They have walked away from the foundational truths that made America the wonder and envy of the world. And the price of their infidelity will be high.
The Health Care delivery problem can be solved without social welfare models. As Republicans present the nation with an alternative in 2010, our message on health care cannot be: "we can fix and reform this bill." Our message must be: "we will repeal and replace this government takeover, masked as Health Care reform." My party must insist on a serious public debate over the two different paths before us-calmly, honestly, and openly.
The Congressional elections this year will not be one of those normal local politics affairs. 2010 will be a national watershed, in every state and congressional district. A realignment of political parties is underway. But which way? Will we tolerate the replacement of the American idea with the social welfare state, or will we begin to reclaim and reapply the principles that gave America its greatness? We have had major political realignments before. In 2008 we just finished one: the Reagan revolution. In a strange way, the left is helping by making this moment crystal clear for the American people to see it.
Americans will sacrifice lives and treasure when they are called on to secure our safety and our freedom. But we will not endure the choice for decline - economic decline, global decline, or the decline of family and all we hold dear. We have always risen up against threats to our freedom, however disguised as benevolence by bureaucrats of big government or big business. Americans put country above party and will repudiate partisan leaders who try under cover of night to impose regime change on America. A new day is coming - time for a rebirth of democratic prosperity from the principles that still make America an exceptional nation and a providential gift to freedom's seekers in every land!

Paul Ryan represents Wisconsin's First Congressional District. He serves as ranking member of the House Budget Committee and senior member of the House Ways and Means Committee.

To Help Haiti, End Foreign Aid

2010-01-19T00:45:00.002-04:00

For Haitians, just about every conceivable aid scheme beyond immediate humanitarian relief will lead to more poverty, more corruption and less institutional capacity.

It's been a week since Port-au-Prince was destroyed by an earthquake. In the days ahead, Haitians will undergo another trauma as rescue efforts struggle, and often fail, to keep pace with unfolding emergencies. After that—and most disastrously of all—will be the arrival of the soldiers of do-goodness, each with his brilliant plan to save Haitians from themselves.
"Haiti needs a new version of the Marshall Plan—now," writes Andres Oppenheimer in the Miami Herald, by way of complaining that the hundreds of millions currently being pledged are miserly. Economist Jeffrey Sachs proposes to spend between $10 and $15 billion dollars on a five-year development program. "The obvious way for Washington to cover this new funding," he writes, "is by introducing special taxes on Wall Street bonuses." In a New York Times op-ed, former presidents Bill Clinton and George W. Bush profess to want to help Haiti "become its best." Some job they did of that when they were actually in office.

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Associated Press

Kindness comes to Haiti, but too much kindness can kill.

All this works to salve the consciences of people whose dimly benign intention is to "do something." It's a potential bonanza for the misery professionals of aid agencies and NGOs, never mind that their livelihoods depend on the very poverty whose end they claim to seek. And it allows the Jeff Sachses of the world to preen as latter-day saints.

For actual Haitians, however, just about every conceivable aid scheme beyond immediate humanitarian relief will lead to more poverty, more corruption and less institutional capacity. It will benefit the well-connected at the expense of the truly needy, divert resources from where they are needed most, and crowd out local enterprise. And it will foster the very culture of dependence the country so desperately needs to break.
How do I know this? It helps to read a 2006 report from the National Academy of Public Administration, usefully titled "Why Foreign Aid to Haiti Failed." The report summarizes a mass of documents from various aid agencies describing their lengthy records of non-accomplishment in the country.
Here, for example, is the World Bank—now about to throw another $100 million at Haiti—on what it achieved in the country between 1986 and 2002: "The outcome of World Bank assistance programs is rated unsatisfactory (if not highly so), the institutional development impact, negligible, and the sustainability of the few benefits that have accrued, unlikely."
Why was that? The Bank noted that "Haiti has dysfunctional budgetary, financial or procurement systems, making financial and aid management impossible." It observed that "the government did not exhibit ownership by taking the initiative for formulating and implementing [its] assistance program." Tellingly, it also acknowledged the "total mismatch between levels of foreign aid and government capacity to absorb it," another way of saying that the more foreign donors spent on Haiti, the more the funds went astray.
But this still fails to get at the real problem of aid to Haiti, which has less to do with Haiti than it does with the effects of aid itself. "The countries that have collected the most development aid are also the ones that are in the worst shape," James Shikwati, a Kenyan economist, told Der Spiegel in 2005. "For God's sake, please just stop."
Take something as seemingly straightforward as food aid. "At some point," Mr. Shikwati explains, "this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unscrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the U.N.'s World Food Program."
Mr. Sachs has blasted these arguments as "shockingly misguided." Then again, Mr. Shikwati and others like Kenya's John Githongo and Zambia's Dambisa Moyo have had the benefit of seeing first hand how the aid industry wrecked their countries. That the industry typically does so in connivance with the same local governments that have led their people to ruin only serves to help keep those elites in power, perpetuating the toxic circle of dependence and misrule that's been the bane of countries like Haiti for generations.
A better approach recognizes the real humanity of Haitians by treating them—once the immediate and essential tasks of rescue are over—as people capable of making responsible choices. Haiti has some of the weakest property protections in the world, as well as some of the most burdensome business regulations. In 2007, it received 10 times as much in aid ($701 million) as it did in foreign investment.
Reversing those figures is a task for Haitians alone, which the outside world can help by desisting from trying to kill them with kindness. Anything short of that and the hell that has now been visited on this sad country will come to seem like merely its first circle.
Write to bstephens@wsj.com

The Underlying Tragedy

2010-01-15T13:27:00.002-04:00

David Brooks
By DAVID BROOKS
Published: January 14, 2010

On Oct. 17, 1989, a major earthquake with a magnitude of 7.0 struck the Bay Area in Northern California. Sixty-three people were killed. This week, a major earthquake, also measuring a magnitude of 7.0, struck near Port-au-Prince, Haiti. The Red Cross estimates that between 45,000 and 50,000 people have died.

This is not a natural disaster story. This is a poverty story. It’s a story about poorly constructed buildings, bad infrastructure and terrible public services. On Thursday, President Obama told the people of Haiti: “You will not be forsaken; you will not be forgotten.” If he is going to remain faithful to that vow then he is going to have to use this tragedy as an occasion to rethink our approach to global poverty. He’s going to have to acknowledge a few difficult truths.

The first of those truths is that we don’t know how to use aid to reduce poverty. Over the past few decades, the world has spent trillions of dollars to generate growth in the developing world. The countries that have not received much aid, like China, have seen tremendous growth and tremendous poverty reductions. The countries that have received aid, like Haiti, have not.

In the recent anthology “What Works in Development?,” a group of economists try to sort out what we’ve learned. The picture is grim. There are no policy levers that consistently correlate to increased growth. There is nearly zero correlation between how a developing economy does one decade and how it does the next. There is no consistently proven way to reduce corruption. Even improving governing institutions doesn’t seem to produce the expected results.

The chastened tone of these essays is captured by the economist Abhijit Banerjee: “It is not clear to us that the best way to get growth is to do growth policy of any form. Perhaps making growth happen is ultimately beyond our control.”

The second hard truth is that micro-aid is vital but insufficient. Given the failures of macrodevelopment, aid organizations often focus on microprojects. More than 10,000 organizations perform missions of this sort in Haiti. By some estimates, Haiti has more nongovernmental organizations per capita than any other place on earth. They are doing the Lord’s work, especially these days, but even a blizzard of these efforts does not seem to add up to comprehensive change.

Third, it is time to put the thorny issue of culture at the center of efforts to tackle global poverty. Why is Haiti so poor? Well, it has a history of oppression, slavery and colonialism. But so does Barbados, and Barbados is doing pretty well. Haiti has endured ruthless dictators, corruption and foreign invasions. But so has the Dominican Republic, and the D.R. is in much better shape. Haiti and the Dominican Republic share the same island and the same basic environment, yet the border between the two societies offers one of the starkest contrasts on earth — with trees and progress on one side, and deforestation and poverty and early death on the other.

As Lawrence E. Harrison explained in his book “The Central Liberal Truth,” Haiti, like most of the world’s poorest nations, suffers from a complex web of progress-resistant cultural influences. There is the influence of the voodoo religion, which spreads the message that life is capricious and planning futile. There are high levels of social mistrust. Responsibility is often not internalized. Child-rearing practices often involve neglect in the early years and harsh retribution when kids hit 9 or 10.

We’re all supposed to politely respect each other’s cultures. But some cultures are more progress-resistant than others, and a horrible tragedy was just exacerbated by one of them.

Fourth, it’s time to promote locally led paternalism. In this country, we first tried to tackle poverty by throwing money at it, just as we did abroad. Then we tried microcommunity efforts, just as we did abroad. But the programs that really work involve intrusive paternalism.

These programs, like the Harlem Children’s Zone and the No Excuses schools, are led by people who figure they don’t understand all the factors that have contributed to poverty, but they don’t care. They are going to replace parts of the local culture with a highly demanding, highly intensive culture of achievement — involving everything from new child-rearing practices to stricter schools to better job performance.

It’s time to take that approach abroad, too. It’s time to find self-confident local leaders who will create No Excuses countercultures in places like Haiti, surrounding people — maybe just in a neighborhood or a school — with middle-class assumptions, an achievement ethos and tough, measurable demands.

The late political scientist Samuel P. Huntington used to acknowledge that cultural change is hard, but cultures do change after major traumas. This earthquake is certainly a trauma. The only question is whether the outside world continues with the same old, same old.

The Next Meltdown

2010-01-15T00:50:00.001-04:00

The man who predicted the real-estate crash says to buy gold.

By Stephen Spruiell

Bob Wiedemer is explaining to a roomful of hedge-fund investors that the end of America as we know it won’t be as bad as they think. Wiedemer is co-author of the new book Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown. Sound overblown? That’s what they said about his first book, America’s Bubble Economy, in which Wiedemer and his co-authors, his Ph.D. brother David and writer Cindy Spitzer, predicted that the U.S. residential real-estate market was overvalued and due for a crash. That was in 2006, months before the crash actually occurred. Now Wiedemer is warning people that another bubble is about to collapse: America itself.

More specifically, it is Wiedemer’s view that the U.S. dollar will be the next bubble to burst. The government’s fiscal position, he explains, is unsustainable. America owes six times what it collects in tax revenues each year, and that ratio is projected to explode with the retirement of the baby boomers. On top of that, nearly 40 percent of U.S. debt must be refinanced each year, leaving the government highly vulnerable to rising interest rates. The Fed’s printing presses have been working overtime throughout the crisis, buying Treasuries and other securities to keep the economy afloat. This is a recipe for hyperinflation, and the New York Hedge Fund Roundtable has invited Wiedemer to this small conference room overlooking Park Avenue to tell investors how they can protect themselves from the fallout. His advice in one word: “Gold.”

Of late, it has become fashionable for the cool kids in the American media to mock conservative talkers for endorsing gold. For one thing, gold offers up a bountiful supply of admittedly hilarious punchlines involving pirates, Bond villains, and video games. (As Stephen Colbert quipped, “Did you know that if you collect 100 gold coins, you get an extra life?”) For another, some people really are “buggy” about gold. (That is, they hold some questionable beliefs about gold’s superiority over other forms of money.)

Wiedemer acknowledges that a few years ago, mentioning gold was the quickest way to lose credibility in a room full of investors, and for good reason: It doesn’t generate income, and it is not the invulnerable store of value its most fervent backers claim. But Wiedemer maintains that it is a good investment right now because its price tends to go up in response to fear, and in a hyperinflationary environment, there will be plenty of that to go around.

Wiedemer doesn’t fit into the thesis, so popular on MSNBC these days, that conservative talkers such as Glenn Beck dreamed up the gold racket as a profitable sideline to their main business of selling fear to people who “cling to guns and religion” (in Obama’s infamous formulation). He is a donor to Democratic politicians and causes, and his book contains asides on global warming and gun control that will leave liberals nodding. But he tells investors to check politics at the door and focus on the fundamentals of America’s fiscal situation. Fear will be a consequence of the popping of the dollar bubble, he says. But it won’t be the nightmarish apocalypse that some predict.

“The post-dollar bubble world is quite real and that is what makes it so bad,” he and his co-authors write in Aftershock. “It is real and we will have to deal with it. It’s a lot like going bankrupt — really terrible, but hardly the end of the world.” To the hedge-funders, he compares it to Pearl Harbor (and the war that followed): a terrible shock that inflicts a lot of damage, but one that forces the U.S. finally to confront a growing menace to its way of life and leaves it stronger. And it won’t be as bad as the Great Depression: America will fall farther, but only because it rose so high during the bubble years.

Wiedemer could be wrong, and some muttering in the elevator after the talk suggests that many people aren’t ready to believe him. But he is not alone. He notes that famed investors like John Paulson and David Einhorn have made gold “respectable” again — meaning that lots of smart money is on his being right. It’s a depressing thought. But when one considers the total disconnect from reality we are witnessing in Washington — new and costly health-care entitlements, endless rounds of “stimulus,” and trillion-dollar deficits projected for ten years or more — it is hard to come to any other conclusion. We have met the bubble, and it is us.

— Stephen Spruiell is an NRO staff reporter.

The President's Bait-and-Switch Operation

2010-01-15T00:36:00.000-04:00

Which campaign promises has he kept?

By KARL ROVE

Americans learned last year that President Obama discards campaign promises like most people discard used Kleenex. Among the pledges he cast aside were reducing the deficit, reining in federal spending, not allowing lobbyists to work in his administration, increasing taxes only on those who make more than $250,000, and opposing "government-run health care" because it is "extreme."
This year, Mr. Obama is picking up where he left off.
Consider presidential signing statements. Since Andrew Jackson, presidents of both parties have told Congress that while they are signing a bill into law, they intend to ignore specific provisions because they involve unconstitutional restrictions on the executive branch or are otherwise problematic. A president's power to do this springs from his oath of office, through which each new chief executive promises to "preserve, protect and defend the Constitution."
Because of Washington's hyperpartisan atmosphere, President George W. Bush drew heated criticism from Democrats for his signing statements. Among his toughest critics was Barack Obama, who in a questionnaire for the Boston Globe in 2007 accused Mr. Bush of "clear abuse" in using signing statements "to avoid enforcing certain provisions . . . the President does not like." He promised not to use signing statements to "nullify or undermine congressional instructions as enacted into law."

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Reuters

Yet Mr. Obama started issuing signing statements shortly after taking office. Democratic Reps. Barney Frank and David Obey called him out on it in a letter to the White House complaining that they were "chagrined" that Mr. Obama was issuing signing statements.

Recently, the Obama administration admitted that after receiving the letter from Messrs. Frank and Obey, it stopped the practice. But the president still has aides examine each bill to identify provisions the administration will disregard. It's just that Team Obama isn't telling Congress which provisions it is ignoring. It's right for him to defend the office of the presidency. The problem is that he is doing it in a way that violates his own standards of transparency and accountability.
This hypocrisy has not gotten much attention. But another act of duplicity has. During his campaign, Mr. Obama pledged that any negotiations on health-care legislation would be broadcast on C-SPAN, "so the American people can see what the choices are," and not conducted behind closed doors. "Such public negotiations," he said, were "the antidote" to "overcoming the special interests and the lobbyists who . . . will resist anything that we try to do."
Internet publisher Andrew Breitbart collected videotape of Mr. Obama making the same promise eight different times in 2007 and 2008—evidence that this was not a hasty or ill-considered pledge. It was supposed to epitomize the "change" that was at the core of the Obama campaign.
Now, however, the final negotiations on health-care reform are being conducted behind closed doors and there's no formal legislative conference between the House and Senate, which would guarantee Republicans at least a few seats at the table. This bill is not only being written in secrecy, it is being written by an anonymous group of Democrats. We can therefore throw Mr. Obama's commitment to bipartisanship onto his mountain of broken promises.
Instead, he's practicing hardball politics, aiming for a health-care bill that gets just enough Democrats to jam it through Congress with lighting speed before the American people's justified anger gets even hotter than it already is. This is dangerous, both for the country which gets saddled with a lousy piece of legislation and for Democrats, who will bear sole responsibility for the bill's deep cuts in Medicare, rising insurance premiums, increased taxes, and decline in the quality and availability of health care.

About Karl Rove

Karl Rove served as Senior Advisor to President George W. Bush from 2000–2007 and Deputy Chief of Staff from 2004–2007. At the White House he oversaw the Offices of Strategic Initiatives, Political Affairs, Public Liaison, and Intergovernmental Affairs and was Deputy Chief of Staff for Policy, coordinating the White House policy-making process.
Before Karl became known as "The Architect" of President Bush's 2000 and 2004 campaigns, he was president of Karl Rove + Company, an Austin-based public affairs firm that worked for Republican candidates, nonpartisan causes, and nonprofit groups. His clients included over 75 Republican U.S. Senate, Congressional and gubernatorial candidates in 24 states, as well as the Moderate Party of Sweden.
Karl writes a weekly op-ed for the Wall Street Journal, is a Newsweek columnist and is the author of the forthcoming book "Courage and Consequence" (Threshold Editions).
Email the author atKarl@Rove.comor visit him on the web atRove.com. Or, you can send a Tweet to @karlrove.

Maybe it was naïve for Mr. Obama to make the C-SPAN promise. But it was his pledge to do business in a different way, and it likely helped him win over swing voters. Mr. Obama even talked this week about "changing the way Washington works." But we can see that Mr. Obama's preferred style is backroom legislative drafting and what that style produces—sweetheart deals like Nebraska Sen. Ben Nelson's "Cornhusker Kickback" and dozens of other special-interest provisions that benefit one state or a group at the expense of good policy. Mr. Obama should insist that every last payoff be removed from whatever bill is cobbled together.
This all plays into a broader narrative: Mr. Obama is not the centrist or new-style bipartisan leader he presented himself to be. On many of the most basic issues raised in the campaign, and in describing the kind of leadership he would practice, Mr. Obama misled voters. Americans will overlook a lot of things when it comes to politicians—but being on the receiving end of a giant bait-and-switch game isn't one of them.
Mr. Rove, the former senior adviser and deputy chief of staff to President George W. Bush, is the author of the forthcoming book "Courage and Consequence" (Threshold Editions).

Open Letter to Democratic Pols...

2010-01-13T18:59:00.000-04:00

Need a Reason to Vote Republican in 2010? Nancy Can Give You 14 Paragraphs Worth...

2010-01-13T01:09:00.000-04:00

Progress for U.S. Families, Businesses

: Nancy Pelosi outlines the goals of the 111th Congress. Photo: AP

At the halfway mark in this Congress, our priorities are clear: strengthening the security of the American people and building a new economy that offers our families lasting prosperity. These priorities are the new direction the American people demanded in 2008 — with the historic election of President Barack Obama and the 111th Congress. In the days since, this Congress has responded with an agenda focused on rebuilding, reforming and restoring the promise of progress and prosperity to America’s families and businesses.

A record of achievement

To address the worst economic crisis since the Great Depression, Congress passed the American Recovery and Reinvestment Act — an unprecedented measure that has created or saved as many as 1.6 million jobs so far, invested in infrastructure and clean energy, cut taxes for 95 percent of American households and kept teachers in our classrooms. The result: Job losses are reversing course, and our economy has swung from downturn to growth.

We built on this recovery with the popular Cash for Clunkers program, giving a critical boost to our automakers, a break for families and an incentive to reduce carbon pollution, which causes climate change.

We then laid out a long-term economic plan for America — a budget blueprint founded on three pillars of our prosperity: a highly educated work force, a clean energy economy and quality, affordable health care for every American. This framework reduces the deficit, restoring critical fiscal restraint as our economy recovers.

The 111th Congress has acted to restore accountability to government, and we acted on the promise of some of our deepest values: service, equality and fairness for all. We upheld our pledge to never leave any veteran behind, securing timely and reliable funding for the Department of Veterans Affairs, building on this country’s largest investment in veterans’ health care and ensuring our men and women in uniform get a fair pay raise. The Edward M. Kennedy Serve America Act will expand service opportunities for our youth and restore a sense of common purpose and shared sacrifice among our next generation.

The expansion of the State Children’s Health Insurance Program means affordable, accessible medical care for 11 million kids — and Food and Drug Administration regulation of tobacco finally offers children some protection from the No. 1 cause of preventable death in America. The Lily Ledbetter Fair Pay Act will ensure that workers who face pay discrimination can seek justice in our courts. And the Credit Cardholders’ Bill of Rights will protect consumers from the predatory practices, unfair fees and fine print of the financial industry.

The way forward

This record of results responded to the call for change. But we know our work is far from over. While some try to use partisan politics to slow our efforts to create jobs and make America stronger, Congress will stay focused on our top priorities: putting Americans back to work and boosting the paychecks of America’s households.

Essential to our economic strength is realizing the century-old dream of affordable health care for all Americans — reform that cuts costs and reduces our deficit. Today, we stand at the doorstep of history, preparing to send a bill to the president’s desk that achieves affordability for the middle class, accountability for insurance companies and access for millions more Americans.

Working with the Senate, we will pass a broadly based jobs initiative that continues the work of the Recovery Act and helps Americans emerge stronger from this economic storm.

Working with the Senate — and building on the bill passed by the House last spring — we must address the greatest challenge of our time: climate change. In doing so, we can build a clean energy economy that creates millions of new jobs and reduces our dependence on foreign oil.

Working with the Senate, we will send the president the Student Aid and Fiscal Responsibility Act — the largest investment in higher education in American history, passed by the House last year.

Working with the Senate, the Wall Street Reform and Consumer Protection Act will become law. The most sweeping reform of the financial industry since the Great Depression will protect Main Street from the worst of Wall Street and rein in the excesses that put Americans’ homes, retirements and college savings at risk. And it will restore transparency, accountability and strong enforcement to our financial sector.

Making change a reality

Years of inaction on our toughest challenges will take time to reverse. But we have answered the call for a different approach. We’ve taken swift action to restore accountability to Washington and opportunity for the middle class, to create good-paying jobs for our workers, to use innovation to power America in a global economy and build a strong and smart national defense. Together, America’s leaders will work to make the promise of change a reality for all Americans.

Rep. Nancy Pelosi (D-Calif.) is speaker of the House.

Union workers would be exempt from Dem health care tax

2010-01-12T22:56:00.000-04:00

By: Susan Ferrechio
Chief Congressional Correspondent
June 23, 2009

The best chance for compromise legislation on health care may be a plan under construction in the Senate Finance Committee that would pay for a public plan in part by taxing some worker health benefits.
But the union workers who helped Democrats win Congress and the White House and whose support will be key in getting a health bill signed into law would not pay the tax.
With cost estimates already as high as $1.6 trillion, Senate Finance Committee Chairman Max Baucus, D-Mont., has proposed paying for the bill in part by taxing health care benefits for workers who earn more than $100,000, or $200,000 for married couples, according to those familiar with the discussions.
Baucus is also weighing a tax based on the value of health care benefits that exceed a yet-to-be determined cap. A tax on benefits that exceed the cap by a mere $3,000 could amount to $750 in taxes annually for a worker who earns as little as $34,000, say experts.
But those union members serving under collective bargaining agreements would not be subjected to the tax, according to proposals under discussion.
Union workers enjoy some of the most extensive and costliest health benefits, and union officials complained their members would be unfairly burdened by a health care tax because their contracts cannot be changed quickly enough to avoid it.
Union members also represent one of the biggest and most powerful Democratic constituencies and their support of any health care reform proposal is viewed as essential to getting a bill passed in Congress.
Baucus has proposed the tax threshold on health care benefits be set higher than the cost of policies available to federal employees and he has proposed exempting until 2013 those plans negotiated as part of union contracts.
“It’s a means of making sure that unions are foursquare behind any reform bill that comes out,” said Henry Aaron, a health care policy expert at Brookings Institution, a Washington think tank.
Critics of the Baucus proposal to exempt unions from a health care benefits tax said the exclusion could be used to lure into unions employees who are anxious to avoid the benefits tax.
Paul Fronstin, a senior research associate with the nonpartisan Employee Benefit Research Institute, said excluding union benefits is also practical.
“The reality is, unions are in the position where they are going to get hit the hardest on that tax, and they just can’t change it on a dime like everyone else,” Fronstin said.
Baucus is said to be considering a delay for everyone, not just unions.
“And there is precedent for that,” Fronstin said. “When the Clinton health plan was put on the table in 1993, the effective date was 1998. It was giving the industry time to implement whatever adjustments they needed to make.”

The Trouble with Harry

2010-01-11T22:21:00.000-04:00

Reid's racial comments aren't his worst rhetorical offense.

We can think of several reasons for Harry Reid to resign as Senate Majority Leader, though the flap over his obtuse racial comments isn't one of them. The uproar is nonetheless instructive about the perils of identity politics.
Mr. Reid is apologizing to all and sundry for saying in private in 2008 that Barack Obama should run for President because he was "light-skinned" and spoke with "no Negro dialect, unless he wanted to have one." Republicans are calling for Mr. Reid to resign, on grounds of the Trent Lott precedent.
When the Republican leader in 2002 joked at a birthday party for Strom Thurmond that America might have been better off had the one-time Dixiecrat won his 1948 Presidential campaign, Democrats demanded Mr. Lott's resignation. An Illinois state senator with a big political future went so far as to suggest at the time that Republicans needed to "drive out" Mr. Lott in order to "stand for something." Mr. Lott resigned, notwithstanding his profuse apologies.

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European Pressphoto Agency

Senate Majority Leader Harry Reid

In contrast, Mr. Obama and various black Democrats have rushed to Mr. Reid's defense. The President said he accepted Mr. Reid's apology because "I've known him for years, I've seen the passionate leadership he's shown on issues of social justice and I know what's in his heart."

We've never peered into Mr. Reid's heart, but here's hoping the President will be equally quick to absolve the next Republican who says something stupid about race. Not every racial malaprop merits political banishment, and it would be edifying to the American public to hear this President say so on behalf of someone who isn't a partisan ally.
Some Americans, white and black, might be more insulted by Mr. Reid's implication that most Americans—45 years after the Civil Rights Act of 1964—are still so residually racist that they would only vote for a black candidate who isn't really . . . black. In reality, we saw in November 2008 that Americans were more than ready to elect a black politician who campaigned to be President of all Americans, in contrast to previous candidates who ran expressly and principally as candidates of black America. Democrats like Mr. Reid still see the American electorate through the prism of identity politics, which leads them to such condescending conclusions.
The irony is that Democrats are increasingly the victims of this kind of racial politicking. Bill Clinton's dismissal of Mr. Obama as a Jesse Jackson-style "black candidate" hurt his wife's candidacy in 2008. Democratic Congressman Artur Davis, vying to become the first black governor of Alabama, has been declared a traitor to his race for having voted against Nancy Pelosi's health bill.
Mr. Reid's allies are even now responding to critics by playing the race card. Democrats are pointing to the NAACP's voting assessments of Republicans who have called on him to resign. "Senator Reid's record provides a stark contrast to actions of Republicans to block legislation that would benefit poor and minority communities—most recently reflected in Republican opposition to the health bill," says Congressional Black Caucus leader Barbara Lee (D., Calif.). Thus do Mr. Reid's ill-chosen words morph into the accusation that Republicans are racist for opposing government health care.
In any event, this is hardly Mr. Reid's worst rhetorical offense. That prize goes to his all too public comments in April 2007 that "the war is lost" in Iraq, even as the surge was finally making victory possible. That was a betrayal of American soldiers risking their lives in Iraq, and to the extent it emboldened the enemy, it may have cost American lives.
If Mr. Reid has apologized for that defeatism, we don't recall it. That's reason enough to resign.

He Said What?!?! Harry and the 'Negro'

2010-01-10T01:54:00.000-04:00

Reid apologizes for 'no Negro dialect' comment

By PHILIP ELLIOT, Associated Press Writer Philip Elliot, Associated Press Writer – Sat Jan 9, 2:59 pm ET

WASHINGTON – The top Democrat in the U.S. Senate apologized on Saturday for comments he made about Barack Obama's race during the 2008 presidential bid and are quoted in a yet-to-be-released book about the campaign.
Senate Majority Leader Harry Reid of Nevada described in private then-Sen. Barack Obama as "light skinned" and "with no Negro dialect, unless he wanted to have one." Obama is the nation's first African-American president.
"I deeply regret using such a poor choice of words. I sincerely apologize for offending any and all Americans, especially African-Americans for my improper comments," Reid said in a statement released after the excerpts were first reported on the Web site of The Atlantic.
"I was a proud and enthusiastic supporter of Barack Obama during the campaign and have worked as hard as I can to advance President Obama's legislative agenda."
Reid remained neutral during the bitter Democratic primary that became a marathon contest between Obama and then-Sen. Hillary Rodham Clinton, whom Obama tapped as the United States' top diplomat after the election.
Reid's comments are included in the book, obtained Saturday by The Associated Press and set to be published on Monday. "Game Change" was written by Time Magazine's Mark Halperin and New York magazine's John Heilemann.
The book also says Reid urged Obama to run, perceiving the first-term senator's impatience.
"You're not going to go anyplace here," Reid told Obama of the Senate. "I know that you don't like it, doing what you're doing."
In another section, aides to Republican nominee John McCain described the difficulties they faced with their vice presidential pick, then-Alaska Gov. Sarah Palin. Steve Schmidt, a senior member of Sen. John McCain's presidential team, is quoted telling Palin's foreign policy tutors: "You guys have a lot of work to do. She doesn't know anything."
The authors also quote Obama's initial reaction to McCain's selection of a little-known governor: "Wow. Well, I guess she's change."
Vice presidential nominee Joe Biden was direct. "Who's Sarah Palin?" the book quotes the then-senator as asking as they left the nominating convention in Denver.
Reid, facing a tough 2010 re-election bid, needs the White House's help if he wants to keep his seat. Obama's administration has dispatched officials on dozens of trips to buoy his bid and Obama has raised money for his campaign.
Recognizing the threat, Reid's apologies also played to his home state: "Moreover, throughout my career, from efforts to integrate the Las Vegas strip and the gaming industry to opposing radical judges and promoting diversity in the Senate, I have worked hard to advance issues."
Even before his ill-considered remarks were reported, a new survey released Saturday by the Las Vegas Review Journal showed him continuing to earn poor polling numbers. In the poll, by Mason-Dixon Polling & Research, Reid trailed former state Republican party chairwoman Sue Lowden by a 10 percentage points, 50 percent to 40 percent, and also lagging behind two other opponents.
More than half of Nevadans had an unfavorable opinion of Reid. Just 33 percent of respondents held a favorable opinion.

Undressing the Terror Threat

2010-01-09T00:46:00.002-04:00

Running the numbers on the conflict with terrorists suggests that the rules of the game should change

By PAUL CAMPOS

I'm not much of a basketball player. Middle-age, with a shaky set shot and a bad knee, I can't hold my own in a YMCA pickup game, let alone against more organized competition. But I could definitely beat LeBron James in a game of one-on-one. The game just needs to feature two special rules: It lasts until I score, and when I score, I win.
We might have to play for a few days, and Mr. James's point total could well be creeping toward five figures before the contest ended, but eventually the gritty gutty competitor with a lunch-bucket work ethic (me) would subject the world's greatest basketball player to a humiliating defeat.
The world's greatest nation seems bent on subjecting itself to a similarly humiliating defeat, by playing a game that could be called Terrorball. The first two rules of Terrorball are:
(1) The game lasts as long as there are terrorists who want to harm Americans; and
(2) If terrorists should manage to kill or injure or seriously frighten any of us, they win.

Photo illustration by John Kuczala

Crunching the Risk Numbers

These rules help explain the otherwise inexplicable wave of hysteria that has swept over our government in the wake of the failed attempt by a rather pathetic aspiring terrorist to blow up a plane on Christmas Day. For two weeks now, this mildly troubling but essentially minor incident has dominated headlines and airwaves, and sent politicians from the president on down scurrying to outdo each other with statements that such incidents are "unacceptable," and that all sorts of new and better procedures will be implemented to make sure nothing like this ever happens again.
Meanwhile, millions of travelers are being subjected to increasingly pointless and invasive searches and the resultant delays, such as the one that practically shut down Newark Liberty International Airport last week, after a man accidentally walked through the wrong gate, or Tuesday's incident at a California airport, which closed for hours after a "potentially explosive substance" was found in a traveler's luggage. (It turned out to be honey.)
As to the question of what the government should do rather than keep playing Terrorball, the answer is simple: stop treating Americans like idiots and cowards.
It might be unrealistic to expect the average citizen to have a nuanced grasp of statistically based risk analysis, but there is nothing nuanced about two basic facts:
(1) America is a country of 310 million people, in which thousands of horrible things happen every single day; and
(2) The chances that one of those horrible things will be that you're subjected to a terrorist attack can, for all practical purposes, be calculated as zero. (See article below by Nate Silver.)
Consider that on this very day about 6,700 Americans will die. When confronted with this statistic almost everyone reverts to the mindset of the title character's acquaintances in Tolstoy's great novella "The Death of Ivan Ilyich," and indulges in the complacent thought that "it is he who is dead and not I."
Consider then that around 1,900 of the Americans who die today will be less than 65, and that indeed about 140 will be children. Approximately 50 Americans will be murdered today, including several women killed by their husbands or boyfriends, and several children who will die from abuse and neglect. Around 85 of us will commit suicide, and another 120 will die in traffic accidents.
No amount of statistical evidence, however, will make any difference to those who give themselves over to almost completely irrational fears. Such people, and there are apparently a lot of them in America right now, are in fact real victims of terrorism. They also make possible the current ascendancy of the politics of cowardice—the cynical exploitation of fear for political gain.
Unfortunately, the politics of cowardice can also make it rational to spend otherwise irrational amounts of resources on further minimizing already minimal risks. Given the current climate of fear, any terrorist incident involving Islamic radicals generates huge social costs, so it may make more economic sense, in the short term, to spend X dollars to avoid 10 deaths caused by terrorism than it does to spend X dollars to avoid 1,000 ordinary homicides. Any long-term acceptance of such trade-offs hands terrorists the only real victory they can ever achieve.
It's a remarkable fact that a nation founded, fought for, built by, and transformed through the extraordinary courage of figures such as George Washington, Susan B. Anthony and Martin Luther King Jr. now often seems reduced to a pitiful whimpering giant by a handful of mostly incompetent criminals, whose main weapons consist of scary-sounding Web sites and shoe- and underwear-concealed bombs that fail to detonate.
Terrorball, in short, is made possible by a loss of the sense that cowardice is among the most disgusting and shameful of vices. I shudder to think what Washington, who as commander in chief of the Continental Army intentionally exposed himself to enemy fire to rally his poorly armed and badly outnumbered troops, would think of the spectacle of millions of Americans not merely tolerating but actually demanding that their government subject them to various indignities, in the false hope that the rituals of what has been called "security theater" will reduce the already infinitesimal risks we face from terrorism.
Indeed, if one does not utter the magic word "terrorism," the notion that it is actually in the best interests of the country for the government to do everything possible to keep its citizens safe becomes self-evident nonsense. Consider again some of the things that will kill 6,700 Americans today. The country's homicide rate is approximately six times higher than that of most other developed nations; we have 15,000 more murders per year than we would if the rate were comparable to that of otherwise similar countries. Americans own around 200 million firearms, which is to say there are nearly as many privately owned guns as there are adults in the country. In addition, there are about 200,000 convicted murderers walking free in America today (there have been more than 600,000 murders in America over the past 30 years, and the average time served for the crime is about 12 years).
Given these statistics, there is little doubt that banning private gun ownership and making life without parole mandatory for anyone convicted of murder would reduce the homicide rate in America significantly. It would almost surely make a major dent in the suicide rate as well: Half of the nation's 31,000 suicides involve a handgun. How many people would support taking both these steps, which together would save exponentially more lives than even a—obviously hypothetical—perfect terrorist-prevention system? Fortunately, very few. (Although I admit a depressingly large number might support automatic life without parole.)
Or consider traffic accidents. All sorts of measures could be taken to reduce the current rate of automotive carnage from 120 fatalities a day—from lowering speed limits, to requiring mechanisms that make it impossible to start a car while drunk, to even more restrictive measures. Some of these measures may well be worth taking. But the point is that at present we seem to consider 43,000 traffic deaths per year an acceptable cost to pay for driving big fast cars.
For obvious reasons, politicians and other policy makers generally avoid discussing what ought to be considered an "acceptable" number of traffic deaths, or murders, or suicides, let alone what constitutes an acceptable level of terrorism. Even alluding to such concepts would require treating voters as adults—something which at present seems to be considered little short of political suicide.
Yet not treating Americans as adults has costs. For instance, it became the official policy of our federal government to try to make America "a drug-free nation" 25 years ago.
After spending hundreds of billions of dollars and imprisoning millions of people, it's slowly beginning to become possible for some politicians to admit that fighting a necessarily endless drug war in pursuit of an impossible goal might be a bad idea. How long will it take to admit that an endless war on terror, dedicated to making America a terror-free nation, is equally nonsensical?
What then is to be done? A little intelligence and a few drops of courage remind us that life is full of risk, and that of all the risks we confront in America every day, terrorism is a very minor one. Taking prudent steps to reasonably minimize the tiny threat we face from a few fanatic criminals need not grant them the attention they crave. Continuing to play Terrorball, on the other hand, guarantees that the terrorists will always win, since it places the bar for what counts as success for them practically on the ground.
—Paul Campos is a professor of law at the University of Colorado.

Research: The Democrats’ Job Standard

2010-01-08T11:25:00.000-04:00

After Attacking Bush During Periods Of Job Growth, And Pledging Their Stimulus Would Create Millions Of Jobs, Where’s The Dems’ Outrage?

RNC CHAIRMAN MICHAEL STEELE: “For close to a full year the American people have been forced to watch and in many cases bear the burden of our ever increasing national unemployment rate which unfortunately remained in the double digits throughout the month of December. More than 85,000 Americans lost their jobs in the month of December, meaning more than 2.8 million Americans have lost their jobs since the stimulus passed, and the national unemployment rate remains at 10 percent. The American economy is a powerful and amazingly resilient system that will always naturally return to balance because of the determination and unique ingenuity of the American worker. But President Obama’s singular focus on enacting his government-run liberal policies are single handily preventing this return. It’s time for President Obama to heed the recent words of Democrat Senator Ben Nelson and finally do what he should have been doing over the past year – put his full and undivided attention on fixing our economy.”

LEADING DEMS ATTACKED BUSH WHEN MILLIONS OF JOBS WERE BEING CREATED …

In 2003, Over 87,000 Jobs Were Created. (U.S. Bureau of Labor Statistics, www.bls.gov, Accessed 1/6/10)

But House Speaker Nancy Pelosi (D-CA) Criticized 2003 Job Creation As “Far From Enough.” “The slight increase in jobs last month is wonderful news for 57,000 Americans. But the 2.1 million Americans who have been actively looking for work for more than two years … know that it is far from enough …” (Rep. Nancy Pelosi, “Pelosi: ‘Slight Jobs Increase Far From Enough -- We Must Do More to Create Jobs and Growth,’” Press Release, 10/3/03)

In 2004, Over 2 Million Jobs Were Created. (U.S. Bureau of Labor Statistics, www.bls.gov, Accessed 1/6/10)

But In 2004, Sen. Dick Durbin (D-IL) Claimed Bush “Created A Climate … Where The Number of Jobs Is Not Growing.” “This President has created a climate in this country where the number of jobs is not growing. It did not have to be that way.” (Sen. Dick Durbin, Congressional Record, 10/08/04, p. S10764)

In 2005, Over 2.5 Million Jobs Were Created. (U.S. Bureau of Labor Statistics, www.bls.gov, Accessed 1/6/10)

But Pelosi Called 2005 Job Creation Numbers “Anemic.” “Today’s anemic jobs numbers confirm that President Bush has still failed to create a single new private-sector job since he became President.” (Rep. Nancy Pelosi, “Pelosi: ‘Today’s Anemic Jobs Numbers Confirm the Administration Has Failed to Create a Single New Private-Sector Job,’” Press Release, 6/3/05)

In 2006, Over 2.1 Million Jobs Were Created. (U.S. Bureau of Labor Statistics, www.bls.gov, Accessed 1/6/10)

But Pelosi Claimed Bush Policies “Favored The Privileged Few At The Expense Of America’s Working Families.” (Rep. Nancy Pelosi, “Democrats Will Restore the Economic Security of America’s Working Families,” Press Release, 9/22/06)

By 2007, 5.7 Million Jobs Had Been Created Under Bush. (U.S. Bureau of Labor Statistics, www.bls.gov, Accessed 1/6/10)

But Senate Majority Leader Harry Reid (D-NV) Claimed Bush Had “Shameful History Of Losing American Jobs.” (Sen. Harry Reid, “Reid: As Unemployment Reaches Two-year High, American Jobs Are The Latest Casualty Of Bush’s Failed Economic Policies,” Press Release, 1/4/08)

THEN PROMISED THEIR $787 BILLION STIMULUS WOULD CREATE MILLIONS OF JOBS

In February, Obama Signed $787 Billion Stimulus Bill, Claiming It Would “Fix The Economy.” “President Obama on Tuesday signed the $787 billion stimulus package ... ‘We have begun the essential work of keeping the American dream alive in our time,’ Obama said, calling the legislation ‘the beginning of the end’ of what needed to be done to fix the economy.” (Michael A. Fletcher, “Obama Leaves D.C. To Sign Stimulus Bill,” The Washington Post, 2/18/09)
And Obama Pledged That Stimulus Would Create 3.5 Million Jobs By End Of 2010. “[W]hat makes this recovery plan so important is not just that it will create or save 3.5 million jobs over the next two years ...” (President Barack Obama, Remarks At The Signing Of The American Recovery And Reinvestment Act, Denver, CO, 2/17/09)

SO DEMS NEED TO CREATE 6.3 MILLION JOBS IN 2010 TO MEET THEIR OWN STANDARD, A LEVEL OF JOB GROWTH THAT HAS NEVER BEEN ACHIEVED

2.8 MILLION Jobs Lost Since Obama’s Signed His $787 Billion Stimulus In February 2009. (U.S. Bureau of Labor Statistics, www.bls.gov, Accessed 12/10/09)

Including 85,000 More Jobs Lost Last Month. (U.S. Bureau of Labor Statistics, www.bls.gov, Accessed 1/8/09)

In Addition To 3.5 MILLION Jobs Obama Promised Would Be Created By His $787 Billion Stimulus By December 2010. (President Barack Obama, Remarks At The Signing Of The American Recovery And Reinvestment Act, Denver, CO, 2/17/09)
That Equals 6.3 MILLION Jobs Dems Need To Create This Year Alone To Declare Economic Success, A Level Of Job Growth That Has Never Been Achieved in American History. (U.S. Bureau of Labor Statistics, www.bls.gov, Accessed 1/6/10)

Because In 1946, 4.3 MILLION Jobs Were Created, Largest Job In A Single Calendar Year In American History. (U.S. Bureau of Labor Statistics, www.bls.gov, Accessed 1/6/10)

KNOWING AMERICANS WILL JUDGE THEM ON JOB CREATION, AT LEAST ONE DEM IS OUTRAGED OVER SQUANDERED 2009

Obama Says “The Yardstick Should Be … Am I Creating These Jobs?” (Sam Stein, “Obama: Judge Me On The Jobs I Create,” The Huffington Post, 12/15/08)

Pelosi: “Jobs, Jobs, Jobs … We Will Measure Our Success In That Way; And Hopefully The American People Will, Too, In The Next Election.” (Greg Sargent, “Pelosi: Judge Dems’ Success On Whether We Create ‘Jobs, Jobs, Jobs,’” “The Plum Line” Blog, 12/3/09)

DGA Chairman, Gov. Jack Markell (D-DE), Says “Burden Of Proof” On Dems To Show That They’re Creating Jobs. “When you've got as many people unemployed in the country as you do, it's understandable that folks will be looking to their leaders to do everything possible to create jobs. As Democrats, there's a burden of proof here.” (Peter Wallsten and Naftali Bendavid, “Departures Shake Democrats,” The Wall Street Journal, 1/7/09)

But Sen. Ben Nelson (D-NE) Says Obama Made A Mistake In Pushing Health Care, And Should Have Focused On Jobs. “I think it was a mistake to take health care on as opposed to continuing to spend the time on the economy… I would have preferred not to be dealing with health care in the midst of everything else, and I think working on the economy would have been a wiser move …” (Chris Zavadil, “Nelson: We Should Have Waited On Health Care,” The Fremont Tribune, 1/6/10)
And Obama’s Liberal Agenda Preventing Small Businesses From Creating Jobs, “Could Impede An Economic Recovery.” “But a health-care overhaul grinding through Congress could bring unknown new obligations to insure employees. Bush-era tax cuts are set to end next year, and their fate is unclear. Legislation aimed at tackling climate change might raise businesses’ energy costs. … Many companies say they have responded by freezing hiring, cutting benefits and delaying expansion plans. With at least 60% of job growth historically coming out of the small-business sector, according to the government’s Small Business Administration, that kind of inertia could impede an economic recovery.” (Gary Fields, “Political Uncertainty Puts Freeze on Small Businesses,” The Wall Street Journal, 10/28/09)

'A Failure to Connect the Dots'

2010-01-08T00:14:00.000-04:00

A lesson in the lack of bureaucratic intelligence.

The antiterror education of President Obama continued yesterday, with his release of a White House report blaming the "counterterrorism community" as a whole for "a failure to connect the dots of intelligence" that would have prevented Umar Farouk Abdulmutallab from boarding a plane to Detroit on Christmas Day.

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TKTK

President Obama meets with his national security team in the Situation Room of the White House Jan. 5, 2010, about the attempted Christmas Day terrorist act.

Mr. Obama blamed no one in particular for the failure, not even George W. Bush. In one sense this is refreshing. The President said the buck stops with him, not his underlings, and he ordered the usual agencies to review their usual procedures and institute changes to make sure information is shared more quickly and analyzed more comprehensively. This all seems worthwhile as far as it goes, and it may well do some good by shaking up settled behavior patterns, at least for a while.

On the other hand, it's impossible to read even the six-page unclassified summary of the White House review without a rising sense of frustration, even anger. This was above all a failure of bureaucracy. Consider (or rather, bear with) this mouthful of an explanation from the White House review:
"Notwithstanding [the National Counterterrorism Center's] central role in producing terrorism analysis, CIA maintains the responsibility and resource capability to 'correlate and evaluate intelligence related to national security and provide appropriate dissemination of such intelligence.' CIA's responsibility for conducting all-source analysis in the area of counterterrorism is focused on supporting its operations overseas, as well as informing its leadership of terrorist threats and terrorist targets overseas. Therefore, both agencies—NCTC and CIA—have a role to play in conducting (and a responsibility to carry out) all-source analysis to identify operatives and uncover specific plots like the attempted December 25 attack. . . .
"Though the consumer base and operational capabilities of CIA and NCTC are somewhat different, the intentional redundancy in the system should have added an additional layer of protection in uncovering a plot like the failed attack on December 25. [White House emphasis.] However, in both cases, the mission to 'connect the dots' did not produce the result that, in hindsight, it could have—connecting identifying information about Mr. Abdulmutallab with fragments of information about his association with [al Qaeda in the Arabian Peninsula] and the group's intention of attacking the U.S."
Translating from the Esperanto, the point is that a pair of agencies were supposed to figure this out, but neither one did, perhaps because each thought the other one was responsible, or perhaps because the "dots" didn't find their way into the right person's computer inbox. To put it another way, if everyone is responsible, then no one is. This is the tao of modern bureaucracies, and there is nothing larger, more complex or harder to attach responsibility to than America's intelligence labyrinth. Jack Bauer exists only on TV.
If Mr. Obama isn't angry, he should be, because Americans were told by our leaders that the "intelligence reform" of the last decade would fix this. A smaller Counterterrorism Center had existed for years inside the CIA, but the Bush Administration yanked it out to assert more control. This later became the NCTC when the 2004 intelligence reform created the Director of National Intelligence, which was supposed to prevent these kind of screw-ups by sharing information and "connecting the dots."
However, the DNI has since become its own vast bureaucracy with thousands of employees, whose main job seems to be micromanaging or duplicating the CIA. We—and many others—opposed the 2004 reform on grounds that it would create precisely this redundant layer of intelligence bureaucracy, and so it has. This is one mess that Mr. Obama really can blame on Mr. Bush and especially the 9/11 Commission that came up with the idea and lobbied furiously for it.
We'd feel better if an individual were to blame. At least a President could fire the hapless Bartleby and find someone better. The lesson of Abdulmuttalab is that rearranging the bureaucratic furniture is always the first resort of politicians who want to be seen "doing something" about a problem, but it almost never works. A President has to drive the bureaucracy by making the fight against terrorism a daily, personal priority.
Perhaps now Mr. Obama will, and yesterday he finally said after a year in office that "We are at war. We are at war against al Qaeda." But in fighting that war, he'd be better off shrinking the DNI to 20 or 30 people—and the CIA by half—and starting over.

A No-Fly List? Count Me In

2010-01-07T00:59:00.000-04:00

Flying before 9/11 was already awful, and it has only become worse.

By Jonah Goldberg

Almost exactly ten years ago, I boarded a Northwest Airlines plane in Minneapolis. As I started toward my veal-pen seat in steerage, I saw the faces of the preboarded aristocrats in business class. But before I could glare at them with proletarian rage and envy, I heard a loud bang and felt a sharp pain on the top of my head. Everyone looked to see what the sound was; even the two flight attendants chatting like village women around the well broke off their no-doubt-vital conversation.

The source of the preflight disturbance? I’d smacked my enormous gourd of a head on a television hanging from the ceiling above the center aisle that hadn’t been stowed for boarding. I lifted my hand to my scalp and drew back a palm glistening with fresh blood.

The response from the flight attendants? A shrug from one and the faint hint of a chuckle from another. They went back to their conversation. Dumbfounded, I proceeded to my seat to nurse my head wound, fuming over the fact that customer service at even the most rancid highway-rest-stop taco joint requires providing a moist towelette for seeping head wounds.

It’s not the worst flight-from-hell story. Heck, it’s not even my worst flight-from-hell story. So what’s my point?

Well, for starters, it’s a small reminder that flying before 9/11 was already awful, and it has only become worse.

Over the weekend, an idiot walked the wrong way through a secure exit for arriving passengers at Newark airport. An entire terminal was shut down so that everybody on the “sterile” side of the security barriers could be herded back out and rescreened. The entire process took just under seven hours. The cascading delays disrupted air travel worldwide. They didn’t even catch the doofus who caused the ruckus. No doubt, if they’d announced his location over the paging system, he’d have been drawn and quartered by a mob of traveling salesmen from 3M and a gaggle of middle-school girls returning from a volleyball tournament.

Now, I should back up. When I referred to the “sterile” side of the security barrier, I was using the term narrowly, to refer to folks who’d been through the metal detectors. Because to use the word “sterile” in its usual context in a sentence with “airports” — those belching Petri dishes of bathroom effluence and unidentifiable noisome miasma — would be a grotesque abrogation of journalistic trust.

According to the latest epidemiological research, airports reside somewhere between no-frills Haitian brothels and Penn State fraternity bathrooms when it comes to hygiene. USA Today recently surveyed the health-inspection records of airport restaurants and found that serious code violations were as commonplace as rat and mouse droppings; 77 percent of 35 restaurants reviewed at Reagan National Airport had at least one major violation.

I could go on, of course. The petty humiliations, the routine deceptions from airline employees desperate to rid themselves of troublesome travelers (“Oh, they can definitely help you at the gate!”), the stress-position seats, the ever-changing rules for what can and cannot be in your carry-on, being charged for food that the Red Cross would condemn if it were served at Gitmo: Air travel is the most expensive unpleasant experience in everyday life outside the realm of words ending in -oscopy.

And speaking of unwelcome intrusions, the current debate over the “underwear bomber” is important and necessary, but it is detached from basic reality. To listen to the experts, the only relevant choice is between privacy and security. But the average person already understands that privacy is something you have to compromise to fly. The white zone has been for unloading your dignity and civil liberties for generations. This isn’t to say that retaining what’s left of our privacy isn’t an important priority. But I, for one, would gladly sacrifice more privacy in exchange for more decency and efficiency. As it stands, Shlomo Dror, an Israeli air-security expert, had it right in 2002 when he said: “The United States does not have a security system; it has a system for bothering people.”

Public-private partnerships are all the rage these days. Progressives insist the judicious application of regulations, the cooperation of “responsible” corporations, and the acquiescence of the American people are all that’s needed to deliver everything from high-quality and affordable health care to “green” cars that run on little more than love for mother Earth.

No realm of American life is as auspiciously fecund with precisely such conditions as air travel. So — put up or shut up.
— Jonah Goldberg is editor-at-large of National Review Online and the author of Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Meaning. © 2010 Tribune Media Services, Inc.

Hanging Mao on the Tree?

2010-01-06T22:55:00.003-04:00

By Dr. Paul Kengor
January 05, 2010

Dr. Paul Kengor
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I’ll begin this article with a few justifications to try to preempt irate emails from Obama supporters: First off, I write on faith, politics, and the presidency, having done books on the subject and lots of articles; this includes the faith of President Obama. Second, I’ve been recently writing on Mao’s China; specifically, on modern Americans’ dreadful ignorance of the horrors that happened there. Third, I most recently wrote on the exclusive attempts by liberals to be “inclusive” at Christmas time. Finally, I’ve waited until well after Christmas to do this article, not out of seasonal charity but because I couldn’t bear to keep silent anymore. With that, here it goes:

This past Christmas was one of the strangest in the long history of the White House—America’s first house. A December 6 article in the New York Times noted that within the Obama White House “there had been internal discussions about making Christmas more inclusive and whether to display the crèche.” Here again, liberals’ definition of inclusiveness means exclusion—exclusion, that is, of the central/Christian reason for the season.

Well, Americans voted for change in the White House. And this would indeed break new ground, as no White House before—Democrat or Republican—deliberated the appropriateness of displaying a Nativity scene at Christmas.

This follows a profile in People magazine last year in which Barack Obama said that he and his wife do not give their children Christmas gifts. Of course, that’s their prerogative. It is, however, unusual, certainly compared to previous White House Christmases.

But while gifts for children may not have been on display at the White House this year, and the display of a crèche was likewise in question, something peculiar was on display—a most curious image. Hung on the historic White House Christmas tree this year was a rather novel ornament: a glistening, glimmering Mao Tse-Tung.

How’s that for inclusion? Baby Jesus—maybe, maybe not? Chairman Mao, yes!

I know this is unbelievable. (Click here for photos.) But, hey, this time of year is filled with the seemingly inconceivable. And most unlike the Incarnation, this manifestation does not inspire hope. When I first heard about it from Sandy, one of our good friends and faithful e-mailers at The Center for Vision & Values, I was dumbfounded.

Lo and behold, it is true. The bad boys at the Fox News Channel and various conservative bloggers apparently noticed the twinkling little chairman behind Barack and Michelle Obama in a warm and fuzzy photo in front of the White House Christmas tree. (Or, as we native Pittsburghers are expected to call it, “The Unity Tree.”) For this, Fox received the righteous indignation of the liberal faithful for having the audacity to file this report: another sin of anti-communism.

What of this? We’ve heard of presents under the tree, lights around the tree, and, as one anachronistic Christmas carol puts it, even candles on the tree. But Mao Tse-Tung on the tree? The Chinese communist dictator who was responsible for the deaths of 60-70 million people?

Needless to say, Mao is not traditionally associated with Christmas, just as he is not typically associated with, say, Mother Teresa—except in the mind of President Obama’s former communications director Anita Dunn, who cites Mao and Mother Teresa as her two favorite philosophers. To the contrary, Mao brutally persecuted those who recognized Christmas. One of the first things he did when taking over China in October 1949—a moment recently commemorated by oblivious New Yorkers—was boot out the Western missionaries. Shortly thereafter, the blood began to flow, befitting the usual pattern: France, 1789; Russia, 1917; Cambodia, 1975. Mao’s subsequent annihilation made him worthy not of Christmas ornamentation but the trophy of worst mass murderer in all of history. Yes, a puzzling choice for Christmas veneration.

In fact, the one figure who would have been most shocked by this confusing cameo at the Obama White House is Chairman Mao. Mao hated Christians, their blasted trees, their Christmas, and their Christ. And if Obama supporters are angry at me for daring to call attention to this borderline blasphemy—shoot the messenger, as they did with Glenn Beck for exposing Anita Dunn’s invocation of Mao—they should consider themselves lucky: If they had committed this malfeasance in China during Mao’s reign, the Dear Leader would have executed them for counter-revolutionary activity.

The White House explanation has been so unclear as to be basically a non-response, other than to suggest that the Mao adornment was not hung by Barack Obama. The mysterious malefactor apparently ranges from some anonymous “local community group” to some zealous student or “school.” Sure, happens all the time.

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Dr. Paul Kengor is professor of political science and executive director of the Center for Vision & Values at Grove City College. His books include "God and Ronald Reagan," "God and George W. Bush," and "God and Hillary Clinton."

Dorgan and Dodd Quit Sinking Ship

2010-01-06T21:21:00.000-04:00

By Dick Morris

The retirements of Chris Dodd of Connecticut and Byron Dorgan of North Dakota are the latest evidence that the Democrats understand what they have done to their party by following Obama's radical agenda. That they both lack the courage to face the music for their own roles in this debacle says more about their character than their ideology.

But the broader problem the party faces is that it no longer has a right or a center, only a left wing.

The very public way in which the existence of a center-right in the Democratic Party proved to be a mirage has done more to undermine the party's chances for victory in 2010 than any other aspect of the healthcare debate.

When liberal Republicans failed to rally to Bill Clinton's 1993-1994 agenda -- including his failed healthcare proposal -- they laid the basis for their total demise in subsequent years. Sens. Jeffords, Chaffee, D'Amato, Packwood, Hatfield and Specter (as a Republican) are gone. Sens. Snowe and Collins are all that remain of the once-dominant Rockefeller wing of the GOP. They have been replaced by real Democrats.

Now that Ben Nelson, Blanche Lincoln, Mary Landrieu and Byron Dorgan in the Senate and the likes of Marion Berry, Tom Perriello and John Spratt in the House have shown how easily they fold under pressure and how thin their conservatism really is, their states and districts will no longer be deceived into reelecting them. They will be replaced by real Republicans.

The Democratic game of electing moderates in conservative districts who then vote to keep liberals in power is over. It overreached. By collapsing so completely and so publicly, it has become self-evident to even the most gullible of voters that there is no such thing as a moderate Democrat. You are either an Obama, Pelosi or Reid clone or you are a Republican. That's the new two-party system.

In Bill Clinton's day, there were such things as moderate Democrats. Voters were not deceived when they cast their ballots for center-right Democrats.

For example, when welfare reform passed in 1996, it got the support of 99 House Democrats, while 99 voted against it. But those days are long gone. Only their memory remains. And voters have only just come to grasp this essential fact.

All of which leaves the Democrats with a problem: America is not as liberal as they are. Voters will no longer return moderate Democrats to Congress any more than they select liberal Republicans.

Democrats have had a tortuous history as a party.

After Lyndon Johnson and Vietnam, they were consigned to permanent minority status. Nixon's excesses earned them a second chance from a wary electorate, but Jimmy Carter blew it and they were back in the minority again for 12 more years. The likes of Carter, Walter Mondale and Mike Dukakis kept the party in the minority. Voters simply would not trust their liberal ways with the country.

Bill Clinton ended the exile by persuading voters that there was a center-right in the party after all and the Democrats were freed but on probation.

And they screwed it up by passing tax hikes and pushing healthcare reform, leading to the GOP sweep of 1994.

Then Clinton's moderation in 1995 and 1996 assuaged voter skepticism again and put the Democrats back in the game. By 2008, voters were actually willing to elect a liberal Democrat. Now that Obama's administration is exploding due to its own extremism, the Democrats again face consignment to minority status. And the first to go will be those who try to make their political living on the conservative edge of a liberal party.

For them, in 2010, the mandate is clear: Switch parties or lose the election.

The New Two Party System

2010-01-06T00:43:00.002-04:00

By Dick Morris - 01/05/10 08:00 PM ET

The very public way in which the existence of a center-right in the Democratic Party proved to be a mirage has done more to undermine the party’s chances for victory in 2010 than any other aspect of the healthcare debate.
When liberal Republicans failed to rally to Bill Clinton’s 1993-1994 agenda — including his failed healthcare proposal — they laid the basis for their total demise in subsequent years. Sens. Jeffords, Chaffee, D’Amato, Packwood, Hatfield and Specter (as a Republican) are gone. Sens. Snowe and Collins are all that remain of the once-dominant Rockefeller wing of the GOP. They have been replaced by real Democrats.

Now that Ben Nelson, Blanche Lincoln, Mary Landrieu and Byron Dorgan in the Senate and the likes of Marion Berry, Tom Perriello and John Spratt in the House have shown how easily they fold under pressure and how thin their conservatism really is, their states and districts will no longer be deceived into reelecting them. They will be replaced by real Republicans.
The Democratic game of electing moderates in conservative districts who then vote to keep liberals in power is over. It overreached. By collapsing so completely and so publicly, it has become self-evident to even the most gullible of voters that there is no such thing as a moderate Democrat. You are either an Obama, Pelosi or Reid clone or you are a Republican. That’s the new two-party system.
In Bill Clinton’s day, there were such things as moderate Democrats. Voters were not deceived when they cast their ballots for center-right Democrats.
For example, when welfare reform passed in 1996, it got the support of 99 House Democrats, while 99 voted against it. But those days are long gone. Only their memory remains. And voters have only just come to grasp this essential fact.
All of which leaves the Democrats with a problem: America is not as liberal as they are. Voters will no longer return moderate Democrats to Congress any more than they select liberal Republicans.
Democrats have had a tortuous history as a party.
After Lyndon Johnson and Vietnam, they were consigned to permanent minority status. Nixon’s excesses earned them a second chance from a wary electorate, but Jimmy Carter blew it and they were back in the minority again for 12 more years. The likes of Carter, Walter Mondale and Mike Dukakis kept the party in the minority. Voters simply would not trust their liberal ways with the country.
Bill Clinton ended the exile by persuading voters that there was a center-right in the party after all and the Democrats were freed but on probation.
And they screwed it up by passing tax hikes and pushing healthcare reform, leading to the GOP sweep of 1994.
Then Clinton’s moderation in 1995 and 1996 assuaged voter skepticism again and put the Democrats back in the game. By 2008, voters were actually willing to elect a liberal Democrat. Now that Obama’s administration is exploding due to its own extremism, the Democrats again face consignment to minority status. And the first to go will be those who try to make their political living on the conservative edge of a liberal party.
For them, in 2010, the mandate is clear: Switch parties or lose the election.

Morris, a former adviser to Sen. Trent Lott (R-Miss.) and President Bill Clinton, is the author of Outrage and Fleeced. To get all of his and Eileen McGann’s columns for free by e-mail or to order a signed copy of their new best-selling book, Catastrophe, go to dickmorris.com. In August, Morris became a strategist for the League of American Voters, which is running ads opposing the president’s healthcare reforms.

Uncertainty and the Slow Recovery

2010-01-04T01:15:00.000-04:00

A recession is a terrible time to make major changes in the economic rules of the game.

By GARY S. BECKER, STEVEN J. DAVIS AND KEVIN M. MURPHY

In terms of U.S. output contractions, the so-called Great Recession was not much more severe than the recessions in 1973-75 and 1981-82. Yet recovery from the latest recession has started out much more slowly. For example, real GDP expanded by 7.7% in 1983 after unemployment peaked at 10.8% in December 1982, whereas GDP grew at an unimpressive annual rate of 2.2% in the third quarter of 2009. Although the fourth quarter is likely to show better numbers—probably much better—there are no signs of an explosive take off from the recession.
We believe two factors are behind this rather tepid rebound. An obvious one is the severe financial crisis that precipitated this recession, with many major financial institutions receiving large bailouts from the federal government. The confidence of bankers and venture capitalists has been shattered, at least for a while, and it will take time for them to recover from the financial turmoil of the past couple of years. The household sector also faces a difficult period of financial retrenchment in the wake of a major collapse in home prices, overextended debt positions for many, and high unemployment.
The second factor is less obvious, but possibly also of great importance. Liberal Democrats won a major victory in the 2008 elections, winning the presidency and large majorities in both the House and Senate. They interpreted this as evidence that a large majority of Americans want major reforms in the economy, health-care and many other areas. So in addition to continuing and extending the Bush-initiated bailout of banks, AIG, General Motors, Chrysler and other companies, Congress and President Obama signaled their intentions to introduce major changes in taxes, government spending and regulations—changes that could radically transform the American economy.
The efforts to transform the economy began with a fiscal stimulus package of nearly $800 billion. While some elements served the package's stated purpose and helped to soften the recession's impact, the overall package was not well designed to foster a speedy recovery or set the stage for long-term growth. Instead, the "stimulus" was oriented to sectors that liberal Democrats believe are deserving of much greater federal help. This explains why much of the stimulus money is going toward education, health, energy conservation, and other activities that would do little to soak up unemployed resources and stimulate the economy.

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Chad Crowe

In terms of discouraging a rapid recovery, other government proposals created greater uncertainty and risk for businesses and investors. These include plans to increase greatly marginal tax rates for higher incomes. In addition, discussions at the Copenhagen conference and by the president to impose high taxes on carbon dioxide emissions must surely discourage investments in refineries, power plants, factories and other businesses that are big emitters of greenhouse gases.

Congressional "reforms" of the American health delivery system have gone through dozens of versions. The separate bills passed by the House and Senate worry small businesses, in particular. They fear their labor costs will increase because of mandates to spend much more on health insurance for their employees. The resulting reluctance of small businesses to invest, expand and hire harms households as well, because it slows the creation of new jobs and the growth of labor incomes.
The administration also indicated early on that it would take a different approach to antitrust policy, reversing a 30-year trend toward more consumer-based interpretations of antitrust laws. Likewise, the installation of a pay "czar" in Washington is scary, even though his activities are so far confined to companies that received substantial bailout assistance from the Treasury. Perhaps as a next step, Congress will decide that executive pay is too high generally and levy special taxes on bonuses, or impose other controls over executive compensation—as the British and French have done. Congress is also considering major new regulations on consumer financial products.
In its efforts to combat the financial crisis and recession, the Fed created over $1 trillion of excess reserves at banks through various bailout programs and open market operations. When banks draw on these reserves for loans to businesses and households, there is a potential for the money supply to grow rapidly, possibly producing a substantial inflation. How hard the Fed will fight inflationary pressures through open market sales and other actions that raise interest rates is a significant source of uncertainty about future inflation and about the potential for monetary policy tightening to choke off the recovery.
The uncertainty about monetary policy has important political dimensions as well. The Fed now faces greater political pressures than at any other time in the past quarter century, as seen from the grilling the Senate Banking committee gave to Fed Chairman Ben Bernanke in deciding whether to approve his reappointment. These pressures may intensify greatly if, and when, future Fed actions to restrain inflation conflict with politicians' desires to prop up housing and the major government enterprises enmeshed in housing finance.
Even though some of the proposed antibusiness policies might never be implemented, they generate considerable uncertainty for businesses and households. Faced with a highly uncertain policy environment, the prudent course is to set aside or delay costly commitments that are hard to reverse. The result is reluctance by banks to increase lending—despite their huge excess reserves—reluctance by businesses to undertake new capital expenditures or expand work forces, and decisions by households to postpone major purchases.
Several pieces of evidence point to extreme caution by businesses and households. A regular survey by the National Federation of Independent Businesses (NFIB) shows that recent capital expenditures and near-term plans for new capital investments remain stuck at 35-year lows. The same survey reveals that only 7% of small businesses see the next few months as a good time to expand. Only 8% of small businesses report job openings, as compared to 14%-24% in 2008, depending on month, and 19%-26% in 2007.
The weak economy is far and away the most prevalent reason given for why the next few months is "not a good time" to expand, but "political climate" is the next most frequently cited reason, well ahead of borrowing costs and financing availability. The authors of the NFIB December 2009 report on Small Business Economic Trends state: "the other major concern is the level of uncertainty being created by government, the usually [sic] source of uncertainty for the economy. The 'turbulence' created when Congress is in session is often debilitating, this year being one of the worst. . . . There is not much to look forward to here."
Government statistics tell a similar story. Business investment in the third quarter of 2009 is down 20% from the low levels a year earlier. Job openings are at the lowest level since the government began measuring the concept in 2000. The pace of new job creation by expanding businesses is slower than at any time in the past two decades and, though older data are not as reliable, likely slower than at any time in the past half-century. While layoffs and new claims for unemployment benefits have declined in recent months, job prospects for unemployed workers have continued to deteriorate. The exit rate from unemployment is lower now than any time on record, dating back to 1967.
According to the Michigan Survey of Consumers, 37% of households plan to postpone purchases because of uncertainty about jobs and income, a figure that has not budged since the second quarter of 2009, and one that remains higher than any previous year back to 1960.
These facts suggest that it was a serious economic mistake to press for a hasty, major transformation of the U.S. economy on the heels of the worst financial crisis in decades. A more effective approach would have been to concentrate first on fighting the recession and laying solid foundations for growth. They should have put plans to re-engineer the economy on the backburner, and kept them there until the economy emerged fully from the recession and returned to robust growth. By failing to adopt a measured approach to economic policy, Congress and the president may be slowing the economic recovery, and thereby prolonging the distress from the recession.
The authors are economists at the University of Chicago. Messrs. Becker and Murphy are also fellows of the Hoover Institution of Stanford University. Mr. Davis is also a visiting scholar at the American Enterprise Institute.

Intelligence Is a Terrible Thing to Waste

2010-01-04T01:14:00.000-04:00

President Obama doesn't need an investigation to figure out how Umar Farouk Abdulmutallab got on a Detroit-bound plane.

Intelligence about terror threats rarely comes on such a silver platter: A Nigerian banker went to the U.S. Embassy in Lagos to warn that his son had fallen under "the influence of religious extremists based in Yemen" and was a security risk. This came after months of U.S. intelligence intercepts about al Qaeda plans for an attack using a Nigerian man. Umar Farouk Abdulmutallab paid for his ticket with cash and didn't check any luggage.
Yet a headline in the Washington Post summed up the current state of our intelligence: "Uninvestigated Terrorism Warning About Detroit Suspect Called Not Unusual."
President Obama promises to investigate what went wrong, but there's no big mystery. He should simply review testimony put in the public record in early December, before the Christmas Day incident. Sen. Joe Lieberman's Homeland Security Committee heard an explanation of how U.S. intelligence agencies decide when to put suspected terrorists on a watch list or a no-fly list.

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Timothy Healy, the head of the FBI's Terrorist Screening Center, explained the unit's "reasonable suspicion" standard like this:

"Reasonable suspicion requires 'articulable' facts which, taken together with rational inferences, reasonably warrant a determination that an individual is known or suspected to be or has been engaged in conduct constituting, in preparation for, in aid of, or related to, terrorism and terrorist activities, and is based on the totality of the circumstances. Mere guesses or inarticulate 'hunches' are not enough to constitute reasonable suspicion."
If this sounds like legalistic language, it is. Indeed, a quick Web search was a reminder that this language is adapted from Terry v. Ohio, a landmark Supreme Court case in 1968 that determined when Fourth Amendment protection against unreasonable searches allows the police to frisk civilians or conduct traffic stops. In other words, foreign terrorists have somehow now been granted Fourth Amendment reasonableness rights that courts intended to protect Americans being searched by the local police. Thus was Abdulmutallab allowed on the airplane with his explosives.
The difference between law-enforcement procedures and preventing terrorism could not be clearer. If a well-respected banker takes the initiative to come to a U.S. embassy in Nigeria to report that he thinks his son is a terrorist, we expect intelligence officers to make "hunches," such as that this person should have his visa reviewed and be searched before getting on a plane. Information is our defense against terrorism, but evidence of terror plots is often incomplete, which is why intelligence requires combining facts with hunches.
The result of prohibiting hunches was that Abdulmutallab was waved through. Information about suspected terrorists flows into a central Terrorist Screening Database, which is then analyzed by the Terrorist Screening Center, where FBI agents apply the "reasonable suspicion" standard to assign people to various watch lists including "selectee" lists and the "no-fly" list. It's at this point where an approach based on domestic law enforcement trump prevention, undermining the use of information.
Aside from concluding that we are misapplying a reasonableness test, the Abdulmutallab investigation likely will conclude that information in the databases of the National Security Agency, CIA and State Department weren't properly mined to connect dots. His name went onto the list of 400,000 people who might have links to terror, but not the list of 14,000 subject to multiple screenings before boarding an airplane or the list of 3,400 people who are not permitted to fly.
The Obama administration has leaned toward treating terrorism as a matter for domestic law enforcement, such as trying terrorists in civilian courts instead of in military tribunals. But this legalistic culture also undermined intelligence in the Fort Hood case in November. The FBI knew that Maj. Nidal Malik Hasan had been exchanging emails with a Yemen-based imam with ties to the 9/11 hijackers. The agency, operating by the standards of domestic law enforcement instead of applying information to prevention, surmised that the "content was explainable by his research" and failed to warn the Army of its potential risk.
In contrast, British authorities last May denied Abdulmutallab the right to re-enter the United Kingdom, where he had been president of an Islamic Society while in college. In Britain, domestic intelligence is the job of M15, which unlike the FBI has no power to arrest or responsibility for criminal prosecutions. Instead, it is free to focus on gathering intelligence, making hunches and preventing wrongdoing. The British ban on Abdulmutallab didn't require any FBI-like "reasonable suspicion" test.
After 9/11, the key political issue that went unresolved was what Americans expect from their intelligence agents. We send the mixed message that we want them to prevent attacks, but only if they operate under strict restrictions based on rules crafted for domestic law enforcement.
We have a choice. We can limit how information is used or we can allow smart use of information to prevent attacks. If we continue to choose to limit how information can be used in our defense, we shouldn't be surprised when our defenses fail.

Why the Health-Care Bills Are Unconstitutional

2010-01-03T00:52:00.000-04:00

If the government can mandate the purchase of insurance, it can do anything.

By ORRIN G. HATCH, J. KENNETH BLACKWELL AND KENNETH A. KLUKOWSKI

President Obama's health-care bill is now moving toward final passage. The policy issues may be coming to an end, but the legal issues are certain to continue because key provisions of this dangerous legislation are unconstitutional. Legally speaking, this legislation creates a target-rich environment. We will focus on three of its more glaring constitutional defects.
First, the Constitution does not give Congress the power to require that Americans purchase health insurance. Congress must be able to point to at least one of its powers listed in the Constitution as the basis of any legislation it passes. None of those powers justifies the individual insurance mandate. Congress's powers to tax and spend do not apply because the mandate neither taxes nor spends. The only other option is Congress's power to regulate interstate commerce.
Congress has many times stretched this power to the breaking point, exceeding even the expanded version of the commerce power established by the Supreme Court since the Great Depression. It is one thing, however, for Congress to regulate economic activity in which individuals choose to engage; it is another to require that individuals engage in such activity. That is not a difference in degree, but instead a difference in kind. It is a line that Congress has never crossed and the courts have never sanctioned.
In fact, the Supreme Court in United States v. Lopez (1995) rejected a version of the commerce power so expansive that it would leave virtually no activities by individuals that Congress could not regulate. By requiring Americans to use their own money to purchase a particular good or service, Congress would be doing exactly what the court said it could not do.
Some have argued that Congress may pass any legislation that it believes will serve the "general welfare." Those words appear in Article I of the Constitution, but they do not create a free-floating power for Congress simply to go forth and legislate well. Rather, the general welfare clause identifies the purpose for which Congress may spend money. The individual mandate tells Americans how they must spend the money Congress has not taken from them and has nothing to do with congressional spending.

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Associated Press

Barack Obama.

A second constitutional defect of the Reid bill passed in the Senate involves the deals he cut to secure the votes of individual senators. Some of those deals do involve spending programs because they waive certain states' obligation to contribute to the Medicaid program. This selective spending targeted at certain states runs afoul of the general welfare clause. The welfare it serves is instead very specific and has been dubbed "cash for cloture" because it secured the 60 votes the majority needed to end debate and pass this legislation.

A third constitutional defect in this ObamaCare legislation is its command that states establish such things as benefit exchanges, which will require state legislation and regulations. This is not a condition for receiving federal funds, which would still leave some kind of choice to the states. No, this legislation requires states to establish these exchanges or says that the Secretary of Health and Human Services will step in and do it for them. It renders states little more than subdivisions of the federal government.
This violates the letter, the spirit, and the interpretation of our federal-state form of government. Some may have come to consider federalism an archaic annoyance, perhaps an amusing topic for law-school seminars but certainly not a substantive rule for structuring government. But in New York v. United States (1992) and Printz v. United States (1997), the Supreme Court struck down two laws on the grounds that the Constitution forbids the federal government from commandeering any branch of state government to administer a federal program. That is, by drafting and by deliberate design, exactly what this legislation would do.
The federal government may exercise only the powers granted to it or denied to the states. The states may do everything else. This is why, for example, states may have authority to require individuals to purchase health insurance but the federal government does not. It is also the reason states may require that individuals purchase car insurance before choosing to drive a car, but the federal government may not require all individuals to purchase health insurance.
This hardly exhausts the list of constitutional problems with this legislation, which would take the federal government into uncharted political and legal territory. Analysts, scholars and litigators are just beginning to examine the issues we have raised and other issues that may well lead to future litigation.
America's founders intended the federal government to have limited powers and that the states have an independent sovereign place in our system of government. The Obama/Reid/Pelosi legislation to take control of the American health-care system is the most sweeping and intrusive federal program ever devised. If the federal government can do this, then it can do anything, and the limits on government power that our liberty requires will be more myth than reality.
Mr. Hatch, a Republican senator from Utah, is a former chairman of the Senate Judiciary Committee. Mr. Blackwell is a senior fellow with the Family Research Council and a professor at Liberty University School of Law. Mr. Klukowski is a fellow and senior legal analyst with the American Civil Rights Union.

Back to GOP Basics

2010-01-02T02:54:00.002-04:00

Virginia's governor-elect Bob McDonnell on his plans for spending cuts, offshore drilling and charter schools.

By BRENDAN MINITER

Richmond, Va.
'I'm sorry," Bob McDonnell says, shaking my hand. It's a recent rainy morning in Virginia's capital, and the incoming Republican governor is late to start our meeting at his transition headquarters. His previous meeting ran over because Democratic legislative leaders were telling war stories. "Unfortunately," he says with a smile, "all of their stories involved Republican governors."
The new governor is in high spirits. Along with New Jersey's Chris Christie, in November he was one of two Republicans elected governor in states that Barack Obama carried a year ago. Mr. McDonnell won by a 17-point landslide and captured independents by a two-to-one margin. Many wonder if his victory is a sign that Republicans will run the table in the upcoming congressional elections.
So how did he win a state that Obama Democrats had thought was part of a permanent national shift to the left? "I ran on Virginia issues," Mr. McDonnell says, "which were jobs and the economy." These were, he says, "far and away" the top issues. Virginia's unemployment rate, 6.6%, is lower than the 10% national average, but it is up sharply from its low of below 3% in 2007.
"In the worst economy in 80 years," says Mr. McDonnell, "it didn't take a rocket scientist to figure out what we ought to be talking about." He adds: "I do think that talking about the excesses of the federal government is something you are going to hear Republican and Democratic candidates for statewide office talk about for a while because I think you're going to see a resurgence of discussions of federalism, about the 10th Amendment, about limits on federal power, and federal spending."

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Terry Shoffner

Given his emphasis on economic issues, I ask Mr. McDonnell whether he was able to win because he downplayed his social conservatism. He brushes off the question. "I am 100% prolife . . . We were unequivocal about our position on marriage," he says.

"I have a record," he says, that includes 14 years in the House of Delegates and three years as the state's attorney general that made it possible for him to spend the bulk of his time talking about fiscal issues. When social issues did come up during the campaign, he was able to state his position and then say "OK, now let's talk about the economy."
The clearest example came in late August, when Mr. McDonnell referred to his master's thesis at Regent University in a meeting at the Washington Post. A little reporting revealed that the thesis contained controversial social positions—such as the argument that working women and feminists were "detrimental" to building strong families. A Washington Post poll released about two weeks after news of the thesis showed Mr. McDonnell leading Democrat R. Creigh Deeds 51% to 47%—down substantially from a lead of 54% to 39% in August. The campaign was at a pivot—the point at which Mr. McDonnell might have been sent down to defeat.
Mr. McDonnell doesn't take the bait when I mention his thesis, and within weeks of the issue surfacing during the campaign he was back talking about the economy in general and energy in particular. In short order he was back to outdistancing Mr. Deeds. He had laid the groundwork to do that in February when he blasted congressional Democrats for pushing cap-and-trade legislation, and he spent months telling voters it would hit some families with as much as $1,700 in additional electricity costs each year.
Mr. McDonnell also scored politically with his proposal to allow oil drilling in the state's coastal waters. His proposal builds on a policy set in motion a year ago when a federal ban on drilling off the Atlantic Coast was allowed to expire.
"We are set to be the first state in the country in 2011 to drill [for oil] offshore, off the Atlantic Coast," he says, downplaying the environmental lobby's intense efforts to reimpose the ban. "Unfortunately, the administration is dragging its feet. So I am going to do everything I can to push federal regulators to keep us on track."
Virginia isn't as bad off as California, which has been battered by deficits in the tens of billions of dollars over the past year. But it is facing a budget crunch. Its $80 billion biannual budget is estimated to be $4.2 billion in the hole. This deficit comes after incumbent Gov. Tim Kaine, a Democrat, cut $6 billion in state spending over the past two years.
"It has been a darn tough time to be governor," Mr. McDonnell tells me. But at the same time he sees "an enormous opportunity to rethink the way we deliver government, to look at ways to privatize, to consolidate, to innovate with technology . . . The private sector is doing this all of the time—asking how it can deliver better services to its customers and cut operating expenses. Government doesn't do that very well. I've told everybody I'm going to make that a big point."
Mr. McDonnell needs bipartisan support in the Democratic state Senate. So he is reaching across the aisle. He's informed officials in the outgoing Democratic administration that they won't necessarily be bounced from government (they are invited to reapply for positions in his administration). He has also picked one high-profile issue that might win him support among Democrats in Richmond and Washington: education reform.
The Obama administration has invited states to compete for education grants in a program called "Race to the Top." The grants will be given to states that demonstrate a commitment to education reform through charter schools, merit pay for teachers, and other policies. Mr. McDonnell is asking Democrats—including Gov. Kaine, who doubles as the chairman of the Democratic National Committee—for help in applying for these grants.
"I think this is a great opportunity for me," he says, "because we have the president of the United States and [U.S. Education Secretary] Arne Duncan promoting charter schools with $4.35 billion of federal help behind it . . . We could get hundreds and hundreds of millions of dollars for Virginia to promote charter schools and merit pay."
Mr. McDonnell has already coordinated with Gov. Kaine on the grant application, and he says Mr. Kaine "seems to be very willing to work together on that. So I am excited. This education reform is something I will push aggressively in the first year."
"But," he adds, "it's not just charter schools and merit pay" that matter. It's also "restructuring where the money goes."
Mr. McDonnell points out that there are only 42 schools in the state, mostly around Petersburg, that are considered failing. He says he has "a detailed plan for turnaround specialists to be involved in these 42 schools" and, more broadly, to spend more money on students than the state spends now: "I've said we need to put more money in the classroom and less into administration and overhead. I ran on the idea that 65% of the dollars [should] go to the classroom. Right now the average is 61%. So if you can transfer another 4%, it amounts to about half a billion dollars in new money."
With the state in deficit, Mr. McDonnell is likely to find broad agreement on the need to cut spending elsewhere. But where those cuts are made, how deep they are, and whether they include eliminating programs will likely be sharply contested.
The new governor seems intent on making fundamental changes to the budget: "I've told the legislature that I'm going to be asking for money to do audits of major state agencies, like the [Department of] Medical Assistance Services, the Department of Transportation. . . . In short order, we'll recommend some restructuring of state government, and maybe the elimination of some agencies."
Cutting back is a necessity, he says. "When government has billion-dollar shortfalls, you are forced to go to the table and say 'How can we do things differently?' So I am going to probably propose some things that they [legislators] may not like."
One fundamental reform Mr. McDonnell campaigned on last year is to repeal the state's monopoly on the sale of hard alcohol, and to sell off state-owned liquor stores. Locally known as the ABC stores—they are run by the state's Department of Alcohol Beverage Control—the idea of selling them has been kicked around for years. But it has been a nonstarter because lawmakers like the revenue the stores generate, and because some argue that selling them would lead to a spike in alcohol consumption.
Mr. McDonnell disagrees, and he says that selling the stores shouldn't be a hard decision: "This is a vestige of Prohibition that doesn't fit the model of the free enterprise system . . . I think it can be done in a way that gives us a huge chunk of money up front for transportation and gives us a revenue stream for down the road. We are going to try to find a way to make this happen."
While Mr. McDonnell says that his reform agenda may bring him into conflict with Democrats, he has not mentioned divisions that have surfaced among Virginia Republicans in recent years. In 2004, 34 Republican state legislators voted for a $1.38 billion tax increase. In the years that followed, Republicans lost a governor's race and both U.S. Senate seats to Democrats—evidence that the tax hike splintered public support for the GOP.
I ask Mr. McDonnell how he united his party and even overcame the ouster of his state party chairman earlier this year. He responds by praising Lt. Gov. Bill Bolling (who ran for re-election rather than challenge Mr. McDonnell in a primary), Pat Mullins (the new party chairman who quickly reached out to party conservatives), and others for smoothing over rifts within the GOP.
***
But what I'm really after is whether Republicans are now determined to stand together on hard fiscal policy fights ahead. So I ask about a "Least Wanted" poster that Americans for Tax Reform, an advocacy group in Washington, D.C., distributed to lawmakers across the country with the names and faces of Virginia Republicans who backed the tax hike. "I remember," Mr. McDonnell says of the poster. "I was glad not to be on it."
As for the damaged Republican brand, one message voters sent with Mr. McDonnell's election is that they don't want the GOP to repeat its mistakes from the past decade. Mr. McDonnell seems to have received that message, saying that it was important for him to run on fiscal issues, because "we've got to hold the line on taxes and we've got to cut spending."
Mr. Miniter is an assistant features editor at the Journal.

2010: AMEN In Washington, There Will Be Blood

2009-12-31T11:57:00.000-04:00

The forecast for 2010.

As a young political junkie and wannabe wordsmith, one of my favorite year-end traditions was reading William Safire's "Office Pool" column in The New York Times with his predictions for the year ahead. No one did smart and tart like the legendary language maven and pundit, who inspired countless scribes and speechwriters (like myself) during his 40 years in public life before passing away in September. So to pay tribute to Safire's hefty legacy, I thought I would revive his prognostication ritual here (and consistent with the name of my column, risk making a fool of myself).

A quick side note: I originally planned to offer my 2010 forecast next week and to write a standard political year in review column for today. But 2009 was such a miserable slog, with infinitely more embarrassing than ennobling moments in Washington, that I soon realized that I had nothing much constructive to add. So I figured I would do everyone a favor, dispense with the pundit equivalent of spinach eating and skip straight to the dessert. With that, here are my most Safire-ean predictions for the year to come.

There Will Be Blood (White House Edition): In the cable TV and Internet eras, staff shakeups have become the norm for the first two years of a new presidency. Some top advisors get ground down by the grueling demands of the job, others screw up and become liabilities to the president and others show they are just mismatched for their roles. Expect the Obama White House, which has been put under enormous strain by the economy/Afghanistan double whammy and has suffered (as I have noted before) from having too many political hacks in the president's inner circle, to be no different. The question is not if but when--and who will come in to help Obama regain his mojo.

Obama is well known for taking the long view. But his patience has limits, and he can be ruthless with staff when he needs to be--witness the Corleone-ish disposal of White House Counsel Greg Craig, the first high-level casualty. My sense is that there will be a few minor departures in the first half of 2010 but that the president will wait until after the mid-terms to make any major changes. One likely scenario: The Democratic majorities in Congress shrink dramatically in November, Obama decides he needs to lower the partisan temperature and the president replaces hard-charging Chief of Staff Rahm Emanuel with someone better positioned to cut deals with Republicans (in the mold of Tom Daschle).

Cabinet Unmaking: The safest bet I will make here is which Cabinet secretary will be the first to go, long a favorite Washington guessing game. Treasury Secretary Tim Geithner was the early conventional choice after his shaky debut and the mounting resentment toward him in Congress and on the left. But, justified or not, he seems to have maintained the full confidence of the president. I suspect the same can't be said of Department of Homeland Security Secretary Janet Napolitano, who badly embarrassed the administration with her Brownie-esque performance this weekend, and I predict she will be pushed out in the next couple months after the current furor recedes.

Napolitano compiled an impressive record as a smart, tough governor in Arizona, and on paper she seemed a great fit for the DHS job. But her short tenure has been marred by a series of public gaffes--starting with her tone-deaf response to a report her staff prepared on homegrown terrorism that clumsily slurred conservatives and culminating in her jaw-dropping assertion that the "system worked" in foiling the Christmas day terror attack over Detroit--that have badly undermined confidence in her judgment and steadiness. That's a no-go in this key terror-fighting job, which demands a reassuring presence, and why Napolitano will be the first must-go from the Cabinet.

There Will Be Blood (House Edition): Congressional Democrats know they are in trouble, and their whole strategy for 2010 will be to do what they can to minimize their losses in the mid-terms. That's why the House leadership will cave quickly to the Senate in the negotiations on the health care bill, to clear the decks for action on jobs as soon as possible. But my reading of the polling suggests those efforts will be futile. There is an unstoppable wave of anti-incumbent, anti-bailout anger coming that will take out many if not most of the first- and second-term House Democrats who rode the Bush backlash to steal GOP-leaning districts--and put Nancy Pelosi's current 40-seat majority in real jeopardy.

My bet: Assuming there is not a serious drop in the jobless rate, the House Dems lose somewhere between 30 seats and the 54 seats that they lost in 1994 to put Newt Gingrich in power. But far more interesting to me is what happens to Pelosi after the blood is let. So far her caucus has been mostly blind to what a giant liability she has become; her approval ratings now rival Gingrich's at his low point during the infamous government shutdown in 1995. Will the moderating forces get religion after they get creamed at the polls? There will be remote rumblings of a coup among the smaller pack of Blue Dogs, but the Speaker's loyal liberal allies will succeed in quashing it. That's in large part because with Rahm-bo gone, there is no clear-cut, confidence-regaining successor.

Harry-Kari in the Senate: I suspect the Senate Democrats' losses will be less severe, between three and five, mostly because the numbers and matchups generally favor them. But one of the few Democratic victims will be Majority Leader Harry Reid, who outside of Chris Dodd has the worst reelect numbers of any Democratic incumbent up in 2010. Reid's wounds have mostly been self-inflicted: He has been dogged by a series of intemperate remarks in Washington and integrity-denting scandals in Nevada. Yet his coup de grace with his constituents may be his finest hour of legislative leadership: pushing through the Democrats' health care holy grail without a vote to spare.

Assuming Reid does become the second Democratic majority leader in a row to lose his seat, the Senate Dems will be forced to have the leadership tussle that their House counterparts will foolishly duck. Reid's current No. 2, Dick Durbin of Illinois, will have a strong claim to the post, serving as a solid, well-liked lieutenant and having a hometown hotline to the White House. But Durbin is a stock liberal, not exactly the right profile to steer the caucus after a big government blowout, and is almost as unpersuasive on television as Reid. Expect a fierce and ultimately winning challenge from New York's Chuck Schumer, who is regarded as a much savvier strategist and more effective public spokesman for the caucus.

The Huntsman Returns: Most 2012 presidential bird-dogging will focus on the two top establishment candidates (Tim Pawlenty and Mitt Romney) and the rogue regime in waiting (Sarah Palin). But don't count out the popular former Utah governor Jon Huntsman yet. Team Obama may have thought they were taking a formidable rival off the board by picking the broadly appealing, Mandarin-speaking Huntsman to be their ambassador to China. And Huntsman may have calculated Obama was probably not beatable in 2012 when he accepted the job early this year. But circumstances have changed just a bit now that Obama's approval ratings have dipped below 50%.

My bet: Huntsman resigns his post in the summer, frees himself up to campaign for GOP candidates in the fall, then forms an exploratory committee by year's end. He'll start out behind, and he'll have to deal with the baggage of being tied to Obama. But Huntsman, who worked in the Reagan White House and helped lead his family's global chemical company, brings a lot of comparative advantages to the table. He hails from a pivotal electoral region for the GOP; he is far more engaging and genuine than the flat Pawlenty and the flip-flopping Romney; and he can match if not beat Romney on economic policy credibility without his fellow Mormon's corporate-raiding baggage, which will be an issue in the post-bailout era. So expect him to at least be in the (ahem) hunt.

Dan Gerstein, a political communications consultant and commentator based in New York, is the founder and president of Gotham Ghostwriters. He formerly served as communications director to Sen. Joe Lieberman (I-Conn.) and as a senior advisor on his vice-presidential and presidential campaigns. He writes a weekly column for Forbes.

Barack Obama gets an 'F' for protecting Americans

2009-12-30T14:57:00.000-04:00

Toby Harnden is the Daily Telegraph's US Editor, based in Washington DC. More about Toby. Contact toby.harnden@telegraph-usa.com.

There is no more solemn duty for an American commander-in-chief than the marshalling of “all elements of American power” – the phrase Obama himself used on Monday – to protect the people of the United States. In that key respect, Obama failed on Christmas Day, just as President George W. Bush failed on September 11th (though he succeeded in the seven years after that).
Yes, the buck stops in the Oval Office. Obama may have rather smugly given himself a “B+” for his 2009 performance but he gets an F for the events that led to Umar Farouk Abdulmutallab boarding a Detroit-bound plane in Amsterdam with a PETN bomb sewn into his underpants. He said today that a “systemic failure has occurred”. Well, he’s in charge of that system.
The picture we’re getting is more and more alarming by the hour. Here are some key elements to consider:
1. Abdulmutallab’s father spoke several times to the US Embassy in Abuja, Nigeria and visited a CIA officer there to tell him, apparently, that he feared his son was a jihadist being trained in Yemen. According to CNN, the CIA officer wrote up a report, which then sat in the CIA headquarters at Langley for several weeks without being disseminated to the rest of the intelligence community. This was not just a casual encounter. Again according to CNN, there were at least two face-to-face meetings, telephone calls and written correspondence with the father. If it’s true that the CIA sat on this then it beggars belief.
2. After 9/11, the huge bureaucracies of the Homeland Security Department and the Directorate of National Intelligence (DNI) were created. Inside the DNI, the National Counter Terrorism Center was created. These organisations were created to “connect the dots”. It may well be that the fault lay with NCTC and not the CIA – CIA spokesman George Little says here that “key biographical information” and information about “possible extremist connections in Yemen” was passed to NCTC. If NCTC knew about it, then did someone at the National Security Council within the White House? There’s a huge blame game beginning so we’ll no doubt know soon enough.
3. It wasn’t just the meeting with the father. According to CBS, “as early as August of 2009 the Central Intelligence Agency was picking up information on a person of interest dubbed ‘The Nigerian’ suspected of meeting with ‘terrorist elements’ in Yemen”. So there were other parts of the jigsaw that were not put together.
4. In his studied desire to be the unBush by responding coolly to events like this, Obama is dangerously close to failing as a leader. Yes, it is good not to shoot from the hip and make broad assertions without the facts. But Obama took three days before speaking to the American people, emerging on Monday in between golf and tennis games in Hawaii to deliver a rather tepid address that significantly underplayed what happened. He described Abdulmutallab as an “isolated extremist” who “allegedly tried to ignite an explosive device on his body” – phrases that indicate a legalistic, downplaying approach that alarms rather than reassures. Today’s words showed a lot more fire and desire to get on top of things – we’ll see whether Obama follows through with action. In the meantime, he went snorkelling.
5. There has been a pattern developing with the Obama administration trying to minimise terrorist attacks. We saw it with Abdul Hakim Mujahid Muhammad, a Muslim convert who murdered a US Army recruit in Little Rock, Arkansas in June. We saw it with Major Nidal Malik Hassan, a Muslim with Palestinian roots who slaughtered 13 at Fort Hood, Texas last month. In both cases, there were Yemen connections. Obama began to take the same approach with Umar Farouk Abdulmutallab. We’ll see whether this incident shakes him out of that complacency. Whether it’s called the war on terror or not, it’s clear that the US is at war against al-Qaeda and radical Islamists.
6. Guantanamo Bay. It seems that two of the Al-Qaeda in the Arabian Peninsula (AQAP) planners behind this attack were released from Guantanamo Bay during the Bush administration. That calls into question the competence of Bush administration officials but also the wisdom of closing Guantanamo Bay. How many other enemies of America and the West are going to be released back to the battlefield? As Mike Goldfarb asks: “Is the Obama administration seriously still considering sending some 90 Yemeni detainees now being held at Gitmo back to their country of origin, where al Qaeda are apparently running around with impunity?”
7. Janet Napolitano, Obama’s Homeland Security Chief, has been a disaster in this, exhibiting the kind of bureaucratic complacency that makes ordinary citizens want to go postal. On Sunday, she told CNN that “one thing I’d like to point out is that the system worked” and ABC News that “once the incident occurred, the system worked”. A day later, she grumbled that quoted “out of context” before reversing herself, telling NBC: “Our system did not work in this instance. No one is happy or satisfied with that. An extensive review is under way.” The “system worked” comment was a “heckuva job, Brownie” moment. Is she up to the job?
8. Will Obama hold individuals accountable? Briefing the press today behind a cloak of anonymity as a “Senior Administration Official”, Denis McDonough, NSC chief of staff (he gave the game away by saying he was from Minnesota), said that Obama “intends to demand accountability at the highest levels” before adding: ” It remains to be seen what that means exactly.” If heads don’t roll – and soon – then Obama’s words will seem hollow. It’s an opportunity for him to show some real steel.
9. There’s a continued, unfortunate tendency for everyone in Obamaland to preface every comment about something going wrong with a sideswipe against the Bush administration. On Sunday, Bill Burton, Deputy White House Press Secretary, briefed: “On the Sunday shows, Robert Gibbs and Secretary Napolitano made clear that we are pressing ahead with securing our nation against threats and our aggressive posture in the war with al Qaeda. We are winding down a war in Iraq that took our eye off of the terrorists that attacked us, and have dramatically increased our resources in Afghanistan and Pakistan where those terrorists are.” Why pat yourself on the back for “winding down a war in Iraq that took our eye off of the terrorists that attacked us” when the issue at hand is why the US government under Obama, er, took its eyes off a terrorist who did try to attack us and nearly killed 300 people? It’s bordering on the juvenile. Obama’s been president for a year now. It’s time for him to accept that things that happen as his responsibility, not Bush’s. It’s time for him to echo Ronald Reagan, who said over Iran-Contra: “I take full responsibility for my own actions and for those of my administration.”
10. Will there be US air attacks against targets in Yemen? Watch this space. It’s safe to say that Al-Qaeda in the Arabian Peninsula or AQAP, described to me by a senior intelligence official today as “officially recognised and in corporate terms a sanctioned franchise of al-Qaeda” that is plainly now seeking to become an international rather than just a regional Islamist player.

The Price for Fannie and Freddie Keeps Going Up

2009-12-30T01:11:00.002-04:00

Barney Frank's decision to 'roll the dice' on subsidized housing is becoming an epic disaster for taxpayers.

By PETER J. WALLISON

On Christmas Eve, when most Americans' minds were on other things, the Treasury Department announced that it was removing the $400 billion cap from what the administration believes will be necessary to keep Fannie Mae and Freddie Mac solvent. This action confirms that the decade-long congressional failure to more closely regulate these two government-sponsored enterprises (GSEs) will rank for U.S. taxpayers as one of the worst policy disasters in our history.
Fannie and Freddie's congressional sponsors—some of whom are now leading the administration's effort to "reform" the financial system—have a lot to answer for. Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee, sponsored legislation adopted in 2008 that established a new regulatory structure for the GSEs. But by then it was far too late. The GSEs had begun buying risky loans in 1993 to meet the "affordable housing" requirements established under congressional direction by the Department of Housing and Urban Development (HUD).
Most of the damage was done from 2005 through 2007, when Fannie and Freddie were binging on risky mortgages. Back then, Mr. Frank was the bartender, denying that there was any cause for concern, and claiming that he wanted to "roll the dice" on subsidized housing support.

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Associated Press

In 2005, the Senate Banking Committee, then controlled by Republicans, adopted tough regulatory legislation that would have established more auditing and oversight of the two agencies. But it was passed out of committee on a partisan vote, and with no Democratic support it never came to a vote.

By the end of 2008, Fannie and Freddie held or guaranteed approximately 10 million subprime and Alt-A mortgages and mortgage-backed securities (MBS)—risky loans with a total principal balance of $1.6 trillion. These are now defaulting at unprecedented rates, accounting for both their 2008 insolvency and their growing losses today. Since 2008, under government control, the two agencies have continued to buy dicey mortgages in order to stabilize housing prices.
There is more to this ugly situation. New research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A.
In general, a subprime mortgage refers to the credit of the borrower. A FICO score of less than 660 is the dividing line between prime and subprime, but Fannie and Freddie were reporting these mortgages as prime, according to Mr. Pinto. Fannie has admitted this in a third-quarter 10-Q report in 2008.
An Alt-A mortgage is one in which the quality of the mortgage or the underwriting was deficient; it might lack adequate documentation, have a low or no down payment, or in some other way be more likely than a prime mortgage to default. Fannie and Freddie were also reporting these mortgages as prime, according to Mr. Pinto.
It is easy to see how this misrepresentation was a principal cause of the financial crisis.
Market observers, rating agencies and investors were unaware of the number of subprime and Alt-A mortgages infecting the financial system in late 2006 and early 2007. Of the 26 million subprime and Alt-A loans outstanding in 2008, 10 million were held or guaranteed by Fannie and Freddie, 5.2 million by other government agencies, and 1.4 million were on the books of the four largest U.S. banks.
In addition, about 7.7 million subprime and Alt-A housing loans were in mortgage pools supporting MBS issued by Wall Street banks—which had long before been driven out of the prime market by Fannie and Freddie's government-backed, low-cost funding. The vast majority of these MBS were rated AAA, because the rating agencies' models assumed that the losses that are incurred by subprime and Alt-A loans would be within the historical range for the number of high-risk loans known to be outstanding.
But because of Fannie and Freddie's mislabeling, there were millions more high-risk loans outstanding. That meant default rates as well as the actual losses after foreclosure were going to be outside all prior experience. When these rates began to show up early in 2007, it was apparent something was seriously wrong with assumptions on which AAA ratings had been based.
Losses, it was now certain, would invade the AAA tranches of the mortgage-backed securities outstanding. Investors, having lost confidence in the ratings, fled the MBS market and ultimately the market for all asset-backed securities. They have not yet returned.
By the end of 2007, the MBS market collapsed entirely. Assets once carried at par on financial institutions' balance sheets could not be sold except at distress prices. This raised questions about the stability and even the solvency of most of the world's largest financial institutions.
The first major victim was Bear Stearns, the smallest of the five major Wall Street investment banks but one invested heavily in risky MBS. The government rescue of Bear Stearns in March 2008 signaled that the U.S. government, and perhaps others, would stand behind other large financial institutions. The moral hazard this engendered was deadly when Lehman Brothers' solvency came under challenge. Spreads in the credit default swap market for Lehman, despite massive short-selling, showed very little alarm by investors until just before the fateful weekend of Sept. 13 and 14, when they blew out on fears that the firm might not be rescued.
By that time it was too late for Lehman's counterparties to take the protective action that might have cushioned the shock. As it turned out, however, none of Lehman's largest counterparties failed—so much for the idea that the financial market is "interconnected"—but all market participants now realized they had to know the true financial condition of their counterparties. The result was a freeze-up in interbank lending.
For most people, that freeze-up is the beginning of the financial crisis. But its roots go back to 1993, when Fannie and Freddie began stocking up on subprime and other risky loans while reporting them as prime.
Why Fannie and Freddie did this is still to be determined. But the leading candidate is certainly HUD's affordable housing regulations, which by 2007 required that 55% of all the loans the agencies acquired had to be made to borrowers at or below the median income, with almost half of these required to be low-income borrowers.
Another likely reason for Fannie and Freddie's mislabeling of mortgages was their desire to retain congressional support by "rolling the dice" while making believe they weren't betting. With the Federal Housing Administration, Wall Street investment banks, and Fannie and Freddie all competing for these loans, the bottom of the barrel had long before been scraped and the financial system set up for a crisis.
Mr. Wallison is a senior fellow at the American Enterprise Institute.

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The Price for Fannie and Freddie Keeps Going Up

Barney Frank's decision to 'roll the dice' on subsidized housing is becoming an epic disaster for taxpayers.

By PETER J. WALLISON

By: Susan Ferrechio
Chief Congressional Correspondent
June 23, 2009