‐ Who would have guessed that Moammar Qaddafi would outlive America’s AAA rating?
‐ Wisconsin Democrats have gone to extraordinary lengths ever since Republicans introduced legislation to scale back the collective-bargaining privileges of the state’s public-sector unions. Each time their unprecedented efforts have been thwarted. First Democratic state senators left the state to deny a quorum, until Republicans found a procedural remedy for the problem. Then Democrats mounted a campaign to deny reelection to a justice on the state supreme court in the hope of getting a liberal majority that would strike down the new law — only to see the justice narrowly win. Now six recall elections against Republican state senators have concluded. The Democrats needed to gain three seats to take control of the body, but won only two. The Democrats’ next move is likely to be to try to recall the governor, but they would be unwise to extrapolate too far from their two victories: One of the defeated Republicans had left his wife for a younger woman, and Democrats made the most of it. It has been a long and bitter fight, but so far Republicans have successfully vindicated an important principle: that the government’s workforce should not also be its primary constituency.
‐ The Tea Party has become, in the rhetoric of its critics, an agent of terrorism. “Never negotiate with terrorists,” wrote New York Times columnist Joe Nocera after the budget deal, in a piece titled “Tea Party’s War on America.” “We have negotiated with terrorists,” said Rep. Mike Doyle (D., Pa.) in a meeting of the House Democratic Caucus. “They have acted like terrorists,” Vice President Biden agreed. Nocera, to his credit, recognized that he had overstepped and apologized in a subsequent column. Biden, recognizing that he could be criticized for overstepping, denied using “the terrorism word,” compounding shoddiness with cowardice. Politics is not, and never has been, for the faint of heart. But ten years ago, almost 3,000 Americans experienced actual terrorism at the World Trade Towers and the Pentagon and on Flight 93. Could the vice president and Representative Doyle honor the commemoration, in a few weeks, by keeping their mouths shut?
‐ Texas governor Rick Perry, a Republican, led a prayer rally in Houston, formally ecumenical, in fact saturated with evangelical piety. He prayed for President Obama (“Impart Your wisdom upon him . . . guard his family”); for the “loved ones” and “warrior brothers” of special forces killed in Afghanistan; for all who have lost “jobs,” “homes,” or “hope.” Pundits and political scientists can debate whether presidents should be more like Thomas Jefferson writing the Danbury Baptists, or Franklin Roosevelt singing “O God, Our Help in Ages Past” on the deck of HMS Prince of Wales alongside Winston Churchill. Perry’s conspicuous convocation reminds us that his great strength as a not-quite-candidate, newness, is also a potential weakness. He is a blank slate both for Republican dreams and for the scribbles of opponents, right and left, as the details of his life and personality become nationally known. Perry’s acquaintance curve will be short, steep — and not entirely under his control.
‐ Unhappy days are here again as Democrats see the second coming of FDR become the reincarnation of Jimmy Carter. The budget deal pushed left-wing unhappiness with Barack Obama up a notch. Sen. Bernie Sanders, the Vermont socialist, prescribed a structural remedy. “One of the reasons the president has been able to move so far [sic] to the right,” said Sanders on a radio talk show, “is that there is no primary opposition to him.” Sanders called for a candidate who could show “what is a progressive agenda, as opposed to what Obama is doing.” The deeper fear, however, is not that Obama is trapped in a bad political dynamic, but that he is a bad leader: weak, befuddled, unforceful. Maybe it was a bad idea to tap a tyro U.S. senator, a “present”-voting state senator, and a community organizer for the toughest executive job in the world.
#page#‐ A Chinook helicopter was shot down in Wardak Province in eastern Afghanistan, killing 30 special-forces members, including 22 Navy SEALs belonging to the same unit (though not the same team) that killed Osama bin Laden. Irony is the inevitable accompaniment to any long war. Eight hundred eighty sailors died when the USS Indianapolis was torpedoed in July 1945 between Guam and the Philippines. The ship had just delivered materials for “Little Boy,” the atom bomb destined for Hiroshima. Ironists only comment on wars, they do not win them. Our blows then were harder than the enemy’s, just as our blows are now. “It’s a combat incident,” said a Pentagon spokesman of the Chinook crash. “We take casualties. . . . We still have the Taliban on the run.”
‐ For months now, journalists and legislators have been trying to pry information from the government about Operation Fast and Furious, the misguided sting operation in which agents of the Bureau of Alcohol, Tobacco, Firearms, and Explosives deliberately allowed gun traffickers to purchase weapons at Arizona gun shops and sell them to Mexican cartels. One important question: Was this bizarre plan hatched among a few ATF officials, or was knowledge of it widespread? Recent congressional testimony by William Newell, a former ATF special agent who was in charge of the Phoenix area, revealed that a raft of other federal agencies — the Department of Homeland Security, the Internal Revenue Service, the Drug Enforcement Administration, and Immigration and Customs Enforcement — were also involved. Add the White House to that list: Newell informed Obama’s national-security director for North America, Kevin O’Reilly, about the operation in an e-mail that began, “You didn’t get this from me.” Instead of letting details leak out one at a time, the executive branch should let them out fast. We’ll supply the fury.
‐ About a year from now, insurance plans will be required to provide birth control — including the morning-after pill “ella,” which seems to work as an abortifacient in some cases — free of charge. This is thanks to new rules from the Department of Health and Human Services, which is acting under the blank-check authorization of Obamacare. Of course, insurance companies don’t provide anything for free; any time they cover a new service or eliminate co-pays, they charge higher premiums to make up the lost revenue. So the department is forcing people who do not use birth control to subsidize it, through higher premiums, for people who do. The complications do not end there: It is unclear whether the mandate will override state laws that require parental consent for minors who want birth control, and while the policy does allow for some religious exemptions, many religious health-care providers will not qualify for them. Meanwhile, it is hard to see what this measure is supposed to accomplish; there is no evidence that making birth control even less expensive than it is now will decrease unwanted pregnancies or abortion rates. This is yet more evidence that Obamacare represents a takeover of Americans’ health-care decisions, and deserves to be repealed.
‐ The No Child Left Behind education reform enacted under President Bush requires that all students be judged proficient in reading and math by 2014, but leaves it to each state to define proficiency. The perversities of the law are many. States are encouraged to set the bar for proficiency low. They are discouraged from devoting time and money to making proficient students exceptional, or bringing subpar students closer to proficiency. The Obama administration has sought to make changes that address some of these concerns, but Congress has not acted (including when Democrats had full control of it). So Education Secretary Arne Duncan is handing out waivers: If states adopt education reforms to the administration’s liking they can get out of the act’s requirements. Perhaps this is the correct solution, although it gives the executive branch of the federal government rather a lot of power over schools. But it does not appear to be a solution that the law permits: The act does not confer such broad discretion on the secretary. If they still teach civics, perhaps Secretary Duncan should be required to prove his proficiency?
‐ London is burning, Philadelphia has imposed a curfew to contain racially charged “flash mob” rampages, and the Wisconsin State Fair, of all places, was the scene of a full-scale race riot. Transcripts of 9-1-1 calls from Wisconsin contain these observations: “There’s a white guy getting beaten up by about 100 black people”; “It’s like a fricking riot out there, they’re jumping on our cars and everything”; “My mom just got attacked by a black mob. . . . She’s bleeding a lot.” The Milwaukee police chief conceded that “some people were singled out for violence because of their race.” The Milwaukee NAACP put out a perfunctory statement calling for the redress of the riot’s “root causes,” in the words of Reuters, but the organization’s main concern at present is undermining a new law designed to prevent voter fraud. Some early media reports dutifully obscured the racial angle of the story, and liberal commentators strayed predictably far from reality: A Milwaukee columnist called for more funding for programs that “offer an alternative for those who need outlets for their rage and frustration.” The president of the local Urban League fretted that “we cannot allow this to divide our community along racial lines.” Attitudes like these do not cause criminality, but they are the root cause of the authorities’ helplessness in response to it.
#page#Competing for Last Place
‘Is Paris Burning?” No, not yet. That smell (at least as of this writing) is London aflame (you can tell from the peatier notes to the smoke). Greece has been a barely contained conflagration for about a year now. Italy appears to be a tinderbox. Japan is still reeling from the tsunami earlier this year. Oh, and China? Well, China’s looking a bit iffy too. A recent high-speed-rail crash so vexed the leadership that it ordered the media to find only “uplifting” stories in the wreckage. Meanwhile, their economy is starting to slow, inflation is starting to rise.
This should all be awesome news for America, right? I mean, if the plan is to “win the future” by being more competitive than China and Europe, then we should cheer every time one of our trading partners takes it in the neck, right?
The idea that “competitiveness” is vital to our economic health is bunk. If China spiraled out of control tomorrow with riots and civil war, that would be very bad for China’s economy, hence good for our “competitiveness,” but it would also be very bad for our economy (it could be in our long-term strategic interest, of course, but in the short term it would be awful).
If competitiveness with our trading partners is so zero-sum, why isn’t Obama citing the Japanese earthquake as a boon to our economy? Because it wasn’t one. That’s why he always mentions the disruption to the supply chain as one of the causes of the downturn. Of course, the downturn has more to do with other things, including his craptacular economic policies. But he is not wrong about Japan.
One hates to admit it, but one of the best things ever written on this point was an essay called “Competitiveness: A Dangerous Obsession,” by New York Times columnist Paul Krugman. He produced it for Foreign Affairs in 1994, back when he was an interesting writer endowed with an abiding hatred of the Clinton administration. Krugman notes that the appeal of competitiveness lies in its power as a buzzword, not in its seriousness as an economic concept. Business audiences love to hear that running a country is like running a big corporation fighting for market share (it’s not). And Americans like the idea of “beating” other countries at this or that.
But, most of all, liberal politicians love the concept of competitiveness because it allows them not only to avoid tough-and-dreary economic decisions, but to pick exciting new “investments” that sound bold and visionary, making themselves seem cool and government vital. We will beat the Chinese by having faster trains that waste money at three times the rate of conventional trains! We will crush the Europeans with our windmills. Sure, they may be expensive, but they’re really inefficient too!
Competiveness empowers supposed internationalists with the language of nationalism so they can get away with industrial policy. But being more competitive doesn’t necessarily make an economy richer. Being more productive does. Other than doing such relatively boring things as improving education (which is so not the same thing as spending more on education), government’s role in boosting productivity is modest at best. It can get out of the way, of course. If we opened up our domestic energy resources, we might become less competitive in terms of solar-panel production, but we would get richer.
I’m not sure whether President Obama believes the Tom Friedmanesque competitiveness claptrap he spouts at every stump speech or simply sees it as useful spin for selling statism. I suspect it’s a little of both. Regardless, as the world burns around us, one thing is clear: Nobody’s winning the future right now.
#page#‐ “Ignorance is behind the criticism of Sohail Mohammed,” says New Jersey governor Chris Christie, defending one of his judicial picks. “I’m tired of dealing with the crazies.” But Mohammed has served on the board of the American Muslim Union, which has, as NR’s Andrew McCarthy points out on our website, “a checkered past of rationalizing jihadist attacks and supporting jihadists.” Mohammed has been a vocal defender of the Holy Land Foundation and Sami Al-Arian, both of which were found in court to be involved in terrorism. The truly dangerous ignorance, in other words, is behind this appointment, and it belongs to Governor Christie.
‐ London’s Tottenham neighborhood erupted into riots in early August when locals responded with outrage after the police shot dead local man Mark Duggan. The disorder soon spread to other parts of the city, with shops being looted, buildings being set alight, and one man being murdered. Although there appeared to be some genuine dismay at the shooting, the scale of the disruption suggests that the event was seized upon by anarchists and employed as a neat excuse for a general revolt. Home Secretary Theresa May did little to inspire confidence when she refused to countenance using water cannons to disperse the mob, instead assuring reporters that she had a “different attitude to the culture of policing,” and in Britain “the way we police . . . is through consent of communities.” When the will of portions of those communities is to set fire to their buildings, perhaps another strategy is needed.
‐ Some 2,000 people have been shot dead so far in the streets of Syria, and another 12,000 or so have disappeared. Some tens of thousands have fled into neighboring Lebanon and Turkey and some even to Iraq. Bashar Assad is evidently stopping at nothing in order to save his despotic rule. He is a member of the Alawis (a minority Shiite sect), and the victims of his regime are the majority Sunnis, who constitute about three-quarters of the population. Alawi units have brought in tanks and heavy artillery to shell the two Sunni cities of Hama and Deir al-Zour, and to cut off water and power. With one side of his mouth Assad promises reform, and with the other he arrests potential reformers like Walid al-Bunni and his sons. Assad and the Alawis are making sure that the Sunnis will do everything possible to have an equally brutal sectarian revenge. As murderous folly spreads, the world’s response is pitiful. The United Nations cannot even pass a resolution to condemn Assad. Marvelously true to stereotype, a Russian official said, “We are not categorically against everything,” and the egregious Navi Pillay, supposedly commissioner for human rights, could come up only with the customary weasel words “gravely concerned.” Officials say there is little Washington can do, and President Obama has conceded impotence in the inapposite remark that Assad is on “the wrong side of history.” King Abdullah of Saudi Arabia, the premier Sunni country, has at least withdrawn his ambassador to Syria and told Assad to “stop the killing machine.” The Syrian tragedy has a long and dangerous course to run.
‐ The slow-motion conversion of Turkey into an Islamist state is the work of Recep Tayyip Erdogan, its prime minister. The constitution charged the army with defending secular and democratic values, and Erdogan has devised a way around that obstacle. The armed forces are accused of complicated conspiracies involving Greeks, Christians, Kurds, anyone and everyone, to overthrow the government. Some 250 senior officers, including 40 generals, are under arrest. So far, not one has been convicted in a court. The implicit trial of strength has come to a head. Warrants are out for more arrests. Late at night and all of a sudden, Gen. Isik Kosaner, head of the Turkish armed forces, and three other generals in charge of the army, navy, and air force, resigned. The purging of so many colleagues, they said, made their task impossible. In all likelihood, they expected to be arrested themselves. Perhaps they intended to turn the fantasy of a coup into a reality. Asli Aydintasbas, a prominent columnist, has no hesitation saying that this is the moment when “the first Turkish republic ends and the second republic begins.” Erdogan has announced his intention to change the constitution, and having broken the armed forces he can draft it to suit himself and give the weight he wants to Islam.
#page#‐ Back at the beginning of the year, few people expected that popular demonstrations would force Hosni Mubarak to resign the presidency of Egypt, and even fewer people expected he would ever be brought to trial for supposed misdeeds during his 30 years as head of state. Eighty-three now, he is reported to be mortally ill, and besides, it hurts the national sense of honor that the former and once respected president should be publicly humbled. But humbled he most certainly was, dressed in prisoner’s uniform, brought to a Cairo courtroom on a hospital gurney, and placed within a smallish metal cage — which may be standard procedure, but is mightily symbolic all the same. With some anger he refuted the accusation of corruption and complicity in the killing of demonstrators during the uprising leading to his downfall. The death penalty is theoretically possible. Saddam Hussein was executed, but that was thanks to the Americans. Half-thrilled and half-shocked, Arabs everywhere are saying they have never seen any attempt like this trial to reach justice in any of their countries. And they are right.
‐ “China is doing moon shots,” columnist Tom Friedman gushed in the New York Times last year. One such “shot” was that country’s “web of high-speed trains connecting major cities.” Today, it looks like China has missed its target. On July 23, two high-speed trains collided in Shuangyu when a lightning strike caused a malfunction, killing 40 people. Yet this is only the latest scandal for Friedman’s, er, China’s pet project. Earlier this year, rail minister Liu Zhijun was removed after taking bribes, and the National Audit Office discovered that 187 million yuan had been embezzled from the Beijing–Shanghai bullet-train line. China’s high-speed-rail network isn’t the technocratic triumph Friedman imagines. It is a tangled mess of bureaucratic corruption.
‐ An election is upcoming in the African nation of Zambia, and the nation’s constitution requires both of a candidate’s parents to be Zambian-born. This clause of the constitution was inserted in 1996 by the then-ascendant enemies of Kenneth Kaunda, who had been the nation’s first president, but whose parents came from Malawi. The clause is still in play, though, and opponents of current president Rupiah Banda claim it disqualifies him because his father, like Kaunda’s, was Malawian. The nation’s highest court has now dismissed the case. Banda will run, and likely get another five years as president. The disputes seem a bit academic, since these nations did not exist when the principals were born: Zambia was Northern Rhodesia and Malawi was Nyasaland, both British colonies. We await a deep analysis from the media on the motives of these Zambian birthers.
‐ The late paleoconservative Sam Francis coined the expression “anarcho-tyranny” to describe that state of society in which, as he put it, “we refuse to control real criminals (that’s the anarchy) so we control the innocent (that’s the tyranny).” There could hardly be a better illustration of the phenomenon than the current rash of police action against kids’ lemonade stands. Authorities in Bethesda, Md., did not stop at merely closing down a stand, but also hit the offenders’ parents with a $500 fine (which was later waived after public protest). There is life in American democracy yet, though: In reaction against these outrages, the website www.LemonadeFreedom.com has been established. It offers an action guide for the harassed, is diligently logging lemonade-stand shutdowns nationwide, and has declared August 20 Lemonade Freedom Day. That’s Americans for you: When life hands us anarcho-tyranny, we make lemonade.
‐ The Unemployed Philosophers Guild, a firm based in Brooklyn, has for some time been selling novelty breath-mint candies with punning names: Retire Mints for oldsters, Atone Mints for guilty sinners, Anti-Establish Mints for radicals, and so on. A co-owner of the firm, contacted by the Chicago Tribune, says they “lean liberal”; and indeed, their website also features Sarah’s (guess who) Embarrass Mints. They went too far, however, with a line of Disappoint Mints. The box carries a picture of President Obama and the question: “This is change?” Seeing the Disappoint Mints on sale at a University of Tennessee bookstore, state representative Joe Armstrong (D.) took exception and forced the university to withdraw them. The story, when it came out, proved irresistible to punsters. They called for a new line of First Amend Mints with Representative Armstrong’s picture on the can, and for comments from U.S. Sen. Jim DeMint of nearby South Carolina. We decline to join in the low punning, noting only that if Armstrong’s actions are indicative, perhaps the Democratic party is in the market for some Sour Patch Kids.
#page#‐ Many of the leftist fulminations over the Budget Control Act of 2011, a.k.a. the debt deal, were colorfully vituperative. Some others were just strange. Emanuel Cleaver, a Democratic congressman from Missouri, called the deal “a sugar-coated Satan sandwich.” What did he mean? How do you get the Prince of Darkness into a sandwich? One of those “urban dictionary” websites suggested merely “a sandwich made by Satan,” though it offered as an alternative something involving deviled eggs and Hellmann’s mayonnaise. A Southern friend advises us, however, that in expressions like this, “Satan” is the common regional euphemism for a different filling whose name also begins with “s.” We make no judgment, but note with interest that a Thai restaurateur in Palm Beach has developed a Satan Sandwich recipe. “He stuffed it with B.S. — beef short ribs, that is,” reports the Palm Beach Post. The chef elaborates: “You got a lot of B.S. in that compromise.”
‐ The holy grail of automotive technology is the self-driving car. Big automakers are known to be experimenting with computer-controlled vehicles. Software firms too: The ubiquitous Google Inc. has been test-driving robotic cars on the roads of California for some time. The company recently boasted that its vehicles had logged 160,000 miles without incident. Naturally everyone who follows these matters has been waiting for an incident. One duly took place near Google’s Mountain View, Calif., headquarters on August 6 when a computerized Google Prius struck another, non-Google Prius, triggering a chain collision that damaged four cars. Fortunately no one was hurt. Before representatives of the anti-robot underground could begin to crow, however, Google released a statement saying that the offending vehicle had been under manual control at the time. Human error, then. At least that resolves the cop’s dilemma of what to write on the accident report in the box for “driver.”
‐ After ascending to the mayoralty of Sunland Park, N.M., in 2008, Martin Resendiz pledged to “create a better tomorrow” that would be “respectful and compassionate as well as fiscally well managed.” The border town of 14,000 is currently being sued by a California architecture firm that claims it is owed $1 million for work on a series of projects commissioned by the mayor. But Resendiz has a defense: “The day I signed [the contracts], I had way too much to drink. It was after 5 p.m. . . . and I didn’t know what I was signing,” he stated in a 2010 deposition. He further clarified: “Again, this was after two or three hours of us drinking . . . not exactly the best time to read over legal documents.” The deposition transcript was released last month after city attorney Frank Coppler publicly accused the mayor of negotiating the deal while inebriated. Resendiz has since issued a statement expressing his regret over Coppler’s “lack of professionalism.”
‐ Hugh Carey had the makings of a fungible politician: a last-century Irish Catholic Democrat, devoted to his 13 children, and to mainstream liberal politics. From 1975 to 1982, however, he was a unique thing — a governor of New York who cut spending and taxes and left the budget smaller, in real terms, than he found it. Over the last 65 years, no predecessor or successor has matched his record. His opportunity was a crisis: the looming bankruptcy of New York City as he entered office. “The days of wine and roses are over,” he said in his first state-of-the-state address, and managed to bail out the city while keeping its finances, and the state’s, in order. His personal style was agreeably frumpy, between the billionaire pretensions of Nelson Rockefeller and the rhetorical pretensions of Mario Cuomo. Mario’s son, Andrew, the current governor, could look a lot further for inspiration, and do a lot worse. Dead at 92. R.I.P.
#page#THE U.S. ECONOMY
A Downgraded President
Barack Obama promised to make history, and he has: The United States has lost its AAA credit rating, which it had enjoyed for as long as there have been national credit ratings. The Obama administration, dismayed but not surprised by the development, has made rhetorical war on Standard & Poor’s, the first of the major rating agencies to downgrade the U.S., and it has extended its campaign of ritual denunciation to the conservative populists who have been demanding reductions in the budget deficit, with Democrats calling this the “tea-party downgrade.”
Democrats’ rhetorical assault on S&P and the Tea Party also puts them at war with the facts, which are these: The credit-rating agencies suggested that the United States needed to lop about $4 trillion off of future deficits in order to maintain the AAA rating, but the original debt-ceiling deal put forward by the Obama administration contained not one penny in debt reduction, leaving us far short of the savings that the credit-rating agencies suggested would constitute a “credible” step toward avoiding a downgrade. This nothing-down program was the so-called clean debt-ceiling bill — the one that contained not a farthing of debt reduction. Even congressional Democrats could not endorse irresponsibility on that scale, and 82 of them joined every Republican in the House in voting against it, and for good reason: Doing nothing at all is hardly a “credible” program. To the extent that there was one dollar in debt reduction in the final deal, it is because Republicans, including the Tea Party Caucus, insisted that it be so.
The Democrats have suggested that Republicans’ refusal to accede to tax hikes is the main reason Standard & Poor’s felt it necessary to issue a downgrade. In their assessment of Standard & Poor’s reasoning, the Democrats are acutely at odds with Standard & Poor’s: “Standard & Poor’s takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.’s finances on a sustainable footing,” the agency wrote in its report. But S&P, along with the other credit-rating agencies, has long taken a position on one aspect of our fiscal troubles: entitlement reform. From S&P again: “The plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.”
As anybody who has looked at our long-term deficit projections knows, entitlement spending is the major driver of our future deficits. With unfunded liabilities for Social Security and Medicare already running into trillions of dollars — many multiples of our GDP — it is implausible that taxes will be raised sufficiently to meet those obligations. Sustaining present spending levels over coming decades while maintaining current levels of debt would mean nearly doubling every federal tax: income, payroll, inheritance, excises, etc. To repeat: That’s to maintain current debt levels, not to reduce them. Even if the political will existed to inflict such tax increases on the American people, doing so would prove economically ruinous. Entitlement reform, then — not taxes, not President Obama’s fictitious “balanced approach” — is rightly understood, as S&P argues, as the “key to long-term fiscal sustainability.” Tea-party leaders, far from being a barrier to entitlement reform, have demanded it. Democrats have obstructed it. And that is why we have been downgraded.
Dealing with Debt
The deal to raise the debt ceiling had some merit: It included some cuts to domestic spending, it did not raise taxes, and it avoided the risk of disruption to the operations of the federal government and the credit markets. While it did not incorporate the major reforms to the welfare state we will need to make to safeguard the nation’s fiscal and economic future, nobody could reasonably have expected President Obama and a Democratic Senate to accede to those reforms.
The worst feature of the deal is its establishment of a “supercommittee” that is to identify further measures to reduce the deficit; if it does not identify sufficient savings, or Congress fails to enact them, planned spending on defense and domestic discretionary programs will have to be reduced starting in 2013. These automatic cuts have been structured so that both parties have an incentive to see the supercommittee succeed. They have not been structured with any particular national-security strategy in mind.
The defense cuts would total at least $500 billion over the next ten years. It may be possible in theory to extract those savings without harming our military readiness. But the politically easiest course will be to take the money out of procurement and training. The deal is, in short, irresponsible. New defense secretary Leon Panetta has said as much.
Liberals want to force conservatives to choose between a strong defense and low taxes. But there is no mathematical need to do so: Restrain entitlement spending, and we can have both. Nor is there any political need for defense hawks and anti-tax activists to turn on each other, a fight liberals dearly hope this deal will occasion. Conservatives on the committee can foil this plot by holding the line on taxes while proposing entitlement reforms that save money over the next ten years. As we have previously editorialized, the Coburn-Lieberman legislation to trim Medicare — by raising eligibility ages, increasing premiums, and so on — is, though imperfect, the place to start seeking near-term entitlement savings. If Democrats balk at these reforms, they will have to accept much lower domestic discretionary spending than they otherwise would have.
Speaker John Boehner and Senate minority leader Mitch McConnell should make appointments to the committee that can be expected to follow this strategy. If it does not work, Republicans — and defense-minded Democrats — will simply have to restore funding for the military, which will require getting legislation through both chambers of Congress and the White House. Which in turn suggests that the defense budget should be an issue in the 2012 elections, with Republicans running as the party that can be trusted to ensure that any defense cuts will be carefully considered so as to leave our security undiminished.
Where defense savings can responsibly be made, they should be. But we should not set arbitrary targets to spare the welfare state, let alone to initiate a game of chicken. National defense is the first responsibility of the federal government, which means it is the first responsibility of those who hold national office, and those who seek it.
#page#THE GLOBAL ECONOMY
The Euro in Retrospect
About twelve years ago, at an American Enterprise Institute conference in Boulder, Colo., a brilliant forecast about the future of the euro (then merely the embryo of a European single currency) was made in the form of a joke. Helmut Schmidt was urging the conference to move on from the tedious annual clash between economists who argued that a single European currency could not succeed and European leaders who insisted that it was certain to be introduced. Someone interjected (Antonio Martino, the Italian economist and politician, if memory serves): “And what happens if they are both right?”
They were both right. The euro was introduced in January 2002, and it is manifestly not working almost a decade later.
The essential problem is that — as economists from Martino to British finance minister Norman Lamont saw and argued — the 17 countries that constitute the eurozone are too diverse to be a workable currency area, let alone an optimal one. A single currency means a single interest rate, whereas the 17 national economies constituting the eurozone require several different rates.
That simple discontinuity has many damaging effects. In the real economy it means that a monetary policy set to restrain inflationary economies will impose unemployment on stagnant ones, and vice versa — and lower the general economic performance of the entire zone in both cases. In the financial markets it means that governments with poor credit histories can borrow as readily as governments with strong ones — for quite a long time. Even if investors are skeptical of their promises, they will calculate that other EU governments are likely to bail them out. (Not wrongly.) And that expectation provides a further incentive for overspending and general financial recklessness.
All this, of course, is exactly what has happened. Economies in the eurozone have had a lower average rate of economic growth than European economies outside it in the last decade. The overspending and excess borrowing of countries such as Greece and Portugal have produced mayhem in the bond and currency markets. This market reaction is now undermining the Italian and Spanish economies and threatening the breakup of the euro itself. That in turn promises financial turmoil and economic stagnation to nations in and out of the single currency.
These malign consequences may be less surprising once we realize that the euro is less an economic project than a political one. It was designed as one further and vital step towards the creation of a single European political entity. If it created an economic crisis on the way, that was simply collateral damage. Some euro-enthusiasts, realizing that a single currency needed a single fiscal policy to work, even welcomed such a crisis as a way of getting reluctant Europeans to accept the kind of centralized economic government in Brussels (i.e., political integration) they would otherwise resist. The crisis engulfing us has surely been more dangerous than they calculated. Yet they still hope that a euro-government, issuing its own euro-bonds and harmonizing common European tax and spending levels, will emerge from it before the voters realize what has happened.
If that were to happen — which, fortunately, is unlikely — it would be a direct denial of democracy rather than merely a “democratic deficit.” It would amount to a rejection of the principle of “no taxation without representation.” And it still wouldn’t work. What would Brussels do when the Greeks refused to respect the spending levels decided by “Europe”? Or the Germans the taxation levels? What common memories could Eurocrats call upon to justify joint sacrifices? What police or tax inspectors could they order to enforce their edicts? Eventually the euro — and perhaps the entire project of European integration — would collapse in the messiest possible way.
Ordinary Europeans have already suffered needlessly from a currency policy that subordinates their economic welfare and democratic rights to the great-power fantasies of their political elites. The time has come to dismantle the euro before it collapses — and crushes more than a dream of Europe in its ruin.