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Happy 2003


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Officially Denied

Was it Otto von Bismarck who said that nothing should be taken as true until it has been officially denied? If not, he should have. Anyway, Canadian authorities are now officially denying that the five Middle Eastern men now being sought by the FBI may have crossed into the United States via a Canadian Indian reserve.

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The Akwesasne reserve through which the five men may have come conveniently straddles the border between eastern Ontario and New York state. Over the past decade and a half, the reserve has become a conduit for smuggled cigarettes, alcohol, drugs, and weapons. The Canadian authorities know perfectly well what is going on – but they will not act. Canadian reserves have become no-go areas for Canadian police and the Canadian military. If terrorists have joined the illegal traffic at Akwesasne, it is a reminder of how much of our vulnerability to attack must be blamed – not on the terrorists’ evil cleverness – but on the West’s own self-destructive folly.

Thinking Big

It’s good to see that the Bush administration has returned to thinking big on domestic as well as foreign affairs. The Medicare reform plan being floated in the New York Times today is an update of ideas originally broached by the president in the summer of 2001. The plan would offer Medicare recipients a choice of different kinds of plans, most of which would cover more of their medical expenses than Medicare does now – but which would actually cost the taxpayer less because they would break free of the inefficiencies and irrationalities that have hobbled traditional Medicare.

Before Christmas, the administration revealed that it had been working on another big idea – a proposal to allow Mexicans who worked in the United States and paid into Social Security to receive some benefits from the program. This idea has alarmed some who fear it could legitimize illegal immigration. If done right, though, the concept could have exactly the opposite effect. Sen. Phil Gramm years ago suggested that Social Security could become a mechanism for enforcing the immigration laws. Under his plan, Mexicans would be admitted to work temporarily in the United States. They would pay taxes – including Social Security contributions. In return, they would receive a Social Security pension – payable only in Mexico. It’s the germ of an idea that would give Americans the benefit of Mexican labor without law-breaking and without erasing either country’s sovereignty.

A third big idea appears on the Washington Post front page this morning: a cut in the tax on dividends. From a public policy point of view, this reform makes perfect sense. It’s unwise and unfair to tax companies more heavily for financing themselves through equity rather than debt. President Bush’s plan will reduce this harsh double-taxation and inject a little vitality in stock market.

Personally, though, I’d feel more confidence in the plan’s prospects if Bush had proposed giving the deduction to the corporations that pay the dividends rather than the individuals who receive them. The economic effect would have been just the same, but the plan would have looked much more like a necessary and sensible correction of a quirk in the tax code – and much less like a special favor to stockholders. I’m nervous about the optics of a Repubilcan President and Congress passing a dividend tax cut while rejecting a cut in the payroll tax. You understand and I understand why the President and Congress would be right. But shouldn’t we make it a little easier for everyone to understand?

Au Revoir

Today’s post will be the last for 10 days: I am beginning next week a tour to promote my new book on George Bush. The tour will continue for most of the month, but after the intense first week I’ll be filing occasional dispatches from the road. The tour starts on Tuesday with an interview on the Today show – if you have time and interest, I hope you will tune in.




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