It may be that the cumulative hospitality of my genial hosts in the U.S. government, as I await the positive demonstration of the exceptionalism of the U.S. justice system, is clouding my vision. But I believe I see, amid the inexorably advancing Florida crabgrass that is a central part of my enfolding ecosystem here, the green shoots of positive movement in a couple of key national-policy areas.
I have never had any insight into who is really doing what in and around the U.S. Treasury. But the two greatest domestic-policy soft points in the Obama record to date are that, after 15 months, the administration has given no hint of how it proposes to avoid or absorb trillion-dollar annual money-supply increases for a decade, without either massive devaluation or tax increases that will hobble or strangle economic growth, or both; and energy-environment policy.
As was predicted here and elsewhere, Federal Reserve chairman Ben Bernanke, after the proverbial decent interval following his reconfirmation in office and the principal hearings into the 2008 economic debacle, is calling for deficit reduction. It is not his place to tell the administration how to do this, but it is a reasonable supposition that if nothing happens, he will become steadily more helpfully explicit.
The 81-year-old Paul Volcker, who, following the power-dive of the Greenspan-Rubin infallibility, has been excavated by the Stiglitz-Krugman economic Left as the conquering lion of 20 percent interest rates 30 years ago, has been bruiting alternatives. He has allegedly suggested taxes on financial transactions and gasoline sales. This is unambiguously good news. The budgetary estimates for the health-care bill are a fairy tale of underestimation and everyone knows it. Over 40 percent of the population pays no federal income taxes, and most of those receive income supplements, and about 5 percent of the population provides around 60 percent of federal personal-income-tax revenue.
One of the first rules of economics is not to increase taxes (income taxes especially) when trying to exit a recession. These taxes Paul Volcker envisions would reduce the numbers of needless, overpaid financial-services providers who accelerate the velocity of money but don’t really create much wealth; and would reduce gasoline consumption and oil imports. So much of economics is psychology: A great deal would be accomplished by just showing a road map to non-stagflationary deficit reduction.
The most embarrassing question incited by this administration’s first 15 months will surely be what possessed it to plump for an insane cap-and-trade measure that would not have reduced carbon emissions or increased federal-government revenues, and to mount the indelible spectacle of Mr. Obama plying the rounds in Copenhagen between the charlatans and eco-geeks dressed as seals and bunnies and so forth, seeking pledges to a $100 billion annual transfer to the most egregious regimes of the Third World, as Danegeld for the advanced economies’ contribution to carbon emissions.
History is replete with strange, swiftly passing political preoccupations, such as Nelson Rockefeller’s bomb shelters and Jerry Brown’s Medflies. But President Obama should be aware that he will be spending the rest of his time in office trying to amass credits that will cause historians to overlook his signing on to the inconvenient untruth of Al Gore’s self-enriching magic carpet of eco-bunk. The Himalayan glaciers are not melting; world water levels are not rising; nor is the world’s temperature; and there is no evidence, none, that human-generated carbon emissions have any impact on the world’s temperature at all, whatever other problems they create.
The clock struck midnight; Al Gore turned back into a (rich) pumpkin; the Prince of Wales can go back to talking to his tomatoes; and the whole gigantic fraud has been borne away by a swarm of killer bees that was supposed to have done us all in decades ago, leaving the president of the U.S. panhandling the kooks of Copenhagen for a slush fund for Mugabe and Chávez. The last time so prominent an American championed such a mad enterprise was Douglas MacArthur’s advocacy of nuclear side arms for American forces in Korea (the subject of television commentator Chris Matthews’s university thesis); if not Eleanor Roosevelt’s proposal to her husband to drop swarms of hornets and wasps over German troop emplacements. And they weren’t the president.
The imposition of an increased gasoline tax, like the opening up of some areas for offshore drilling, and the long-delayed return to serious emphasis on nuclear power, before the Satanic buzz of thousands of windmills and the hecatomb they would inflict on the bird population, may save the president (and the inexplicably erratic Boone Pickens) from the mockery of their further, greener fantasies.
The other point of optimism, in foreign policy, is the apparent endorsement by the most promising Arab leader since Anwar Sadat, Palestinian (West Bank) prime minister Salam Fayyad, of the right of return of displaced Palestinians to Palestine, rather than Israel. For decades, the Arab leaders kept the Palestinian refugees festering in camps that were just breeding grounds for terrorists, to distract the Arab masses from their own misgovernment, with the red herring of Israel.
After the Hamas victory in the Gaza election in 2006, the U.S. and Israel promoted economic policies that heavily penalized Gaza, as long as Hamas was a terrorist regime opposed to Israel’s right to exist as a Jewish state, while encouraging economic growth on the West Bank. The results have been a spectacular contrast in levels of prosperity and public satisfaction in the two areas. Fayyad, the first serious Palestinian leader who is not essentially a terrorist, advocates statehood for the West Bank, security and economic policies conducive to economic growth, and attraction and resettlement of refugees to make the West Bank decisively more important in Palestinian matters than Gaza.
Always before, there would be accords such as Camp David and Oslo and the Sharon-Bush agreement on settlements (the existence of which agreement this administration briefly attempted to deny); Israeli performance of its obligations, but not the other side’s.
The Obama administration had another try at pushing Israel into more concessions on the sideshow of construction within the borders of agreed settlement areas. The plan was to extract in return a peppier Arab attitude to Iran. The Israelis balked; the Arabs balked; the uproariously light-hearted regime in Tehran had a good laugh at America’s expense; and the regrettably cavalier treatment of Joe Biden by Israel was exaggerated into a diplomatic incident.
The Fayyad right-of-return initiative, if it gets any traction, could be the most positive development in the area in a very long time. This administration is making its share of mistakes, but seems to get up off the canvas quickly. It could yet prove a successful tortoise, even if its hare-like qualities, to date, have chiefly been matters of judgment.