Loving Barack's Budget

Everyone loves President O's budget, so I've decided to love it too.  From the Left (Paul Krugman) and from the Right (Charles Krauthammer, David Brooks), hosannas ring out.  Its clarity is admired, its willingness to count that which must be counted (the costs of the wars, for example), its visionary embrace of health care reform and energy research -- all good.

Why should I be special?  Why don't I just love it too?  Well, I do love it.  That's what I'm saying. I love it because it is a quintessentially American budget, and I'm a quintessential American. Indeed, I've been an American my entire life, even during the Bush 43 years.

You're waiting for the other shoe to drop.  The other shoe will not drop.  Prez O, after all, inherited this steaming pile of economic doo-doo from his truly, monumentally incompetent predecessor, the aforementioned W.  The $1.75 trillion deficit is Bush's fault; at least $1 trillion of it was inevitable after Bush, and that's without regard to the stimulus bill, which is also Bush's fault because he drove the economy into a ditch. 

In fact, everything is Bush's fault.  Let's just stipulate that and move on.  Anything which can be blamed on Bush, should be blamed on Bush, because he was just awful.  Maybe what we need in America are periodic "Hate Sessions," as in Nineteen Eight-Four.  Remember? The government (Big Brother) would display a picture of the armies of Eurasia or Emanuel Goldstein on TV screens, and workers in Oceania would get up from their desks and scream "Hate! Hate!" for a few minutes.  Could we put Bush's stupid visage up on a few thousand Jumbo-Trons around the country and try that?  I know, I know -- not very bipartisan.  The gentle Barack would never go for it, and he's right.  There's no telling where that kind of energy might lead, you know?  I sense there's a great deal of pent-up rage in this country.

But the budget, the budget.  It's just great.  Bear in mind that we start with a basic template that already allocates 64% of the discretionary budget to the military, homeland security, the nuclear program at the Department of Energy, all the spy agenices, and interest on that part of the national debt attributable to past military spending.  So we have only 36% of the discretionary budget (outside of the entitlement programs) to fool around with in the first place.  And Barack moves this around in nice ways.

That's what being a progressive President is, these days.  Moving the 36% around so some goes to good stuff like energy research and forming committees to see if we can try and get our for-profit medical system to cooperate a little and maybe bring down their premiums a little so we have fewer than 50 million people without health insurance, like maybe just 10 or 20 million, like a civilized country.  Okay, not exactly like a civilized country, but like the old United States.

Let's face it, being the world's mightiest military power is what we do.  We're not going to change that.  President Obama's budget increases military spending a little, because, you know, the world just keeps getting more dangerous all the time.  Ann Coulter, noted defense analyst, is right.  Anyone who doesn't want to spend as much as we do is an unrealistic, unpatriotic Liberal.  We should spend more, really, because the world is counting on us to do all of the military work on a global basis, and we pretty much do that all the time.  In point of fact, other than a few lapses, such as overthrowing liberal, democratically elected presidents in Third World countries because they posed a threat to the United Fruit Co., Standard Oil or ITT, we operate with pretty good restraint.  Noam Chomsky can rave on, but the fact is that probably no other country, with this much power, would use it as responsibly as we do.

I'm not sure what that proves, either, but it looks and sounds kind of nice.  Ann Coulter might be after my phone number after that line.  If she calls, I will just tell her to give O a break for once.  He's surging the troops in Afghanistan, he's going to negotiate for a long-term garrison in Iraq, he's increasing military spending.  So what if he believes in global warming?  That doesn't make him a bad person.  And this health care reform no doubt will stagger out of the committee room stiff-legged, arms thrust forward at shoulder level, its head all stitched up, like the Frankenstein monster it will no doubt be.  Ann and Rush and Bill O'Reilly can take heart in the certainty that medical care will remain out of reach for America's losers, the way it should.

Anyway, Prez O, count me in.  I'm back on the bus.  Or the high speed train, zipping down to the free medical clinic located just across the New Urban plaza from the solar panel farm.

Can Obama escalate the war in Afghanistan without Congressional approval?

Sandy Levinon, a professor of law at the University of Texas who writes very interesting stuff on the legal blog Balkinization, poses a provocative question which I have not seen elsewhere asked: does our most recently installed Constitutional Dictator, Barack Obama, actually have the power to escalate the war in Afghanistan without seeking some further auhorization from Congress?  By "Dictator" I mean no disrespect; Caesar, after all, was a dictator yet much beloved by his Roman subjects.  The "Fifth Republic" style of governance which has taken hold in the United States yields up most of its power to the Executive.  Thus, most people don't even notice anymore that the War Power, strictly speaking, is vested in the Congress, not the President.

It is fitting that the question was asked by an academic because the question, and answer, if there is one, are also academic.  No one in the Congress is going to challenge the planned increase of 17,000 troops in Afghanistan, there will be no Congressional debate, any request for money to fund the escalation will be hurriedly and gladly given -- in short, it's a done deal.  But just for the sake of tracking where we've been and where we're going, it's at least intellectually interesting to see how it all happened.

So that original Authorization, passed in a heated rush on September 18, 2001 stated as follows: 

Section 2 - Authorization For Use of United States Armed Forces

(a) IN GENERAL- That the President is authorized to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.

Rather vague and amorphous, of course, but try to remember that we didn't know much, one week after the 9/11 attacks, about what had happened, other than the basic facts.  19 young Arab men had boarded American planes, hijacked them, flew three of them into buildings and one into the ground.  Not one of them was from Afghanistan; Afghanistan, indeed, is not Arab, but it is Muslim.  Be that as it may, and returning to our foundational document: the President is authorized to use force against "those nations, organizations, or persons" involved in the 9/11 attacks. The disjunctive phrase states "or harbored such organizations or persons."  What is the subject or antecedent of this phrase?  It must be "nations" in order to avoid what is somethimes called the "Russian doll" fallacy in legal construction; otherwise we're talking about "organizations or persons" harboring organizations or persons, which while technically possible, is probably not what Congress had in mind.  If there are two possible interpretations of Congressional action, and one involves simple stupidity, that's where to put your money.

But let's just say that the President was authorized to use military force against any nation, organization or person involved in 9/11 or involved in harboring people who were involved in carrying out the attacks.  That's broad enough, I think, and it gives the President and Congress the benefit of every doubt.  How does this relate to what's going on in Afghanistan right now?

The original idea was that the government of Mullah Omar and his Taliban gang provided a sanctuary for Osama bin Laden near Kandahar; bin Laden was the brains and money behind 9/11, and his fearsome array of jungle gyms and Gymboree tunnels were critical in training the hijackers to overpower the unarmed flight crews and gain access to the unlocked cockpits that fateful day.  Everyone now concedes that (a) the Taliban are no longer in power, (b) Mullah Omar was dethroned, and in fact may have been killed by an October, 2008, drone missile attack, and (c) bin Laden fled Afghanistan.

So Afghanistan still technically exists, of course, but now under the government of the Mayor of Kabul, Hamid Karzai, former Unocal consultant and dapper headpiece wearer.  Afghanistan was the "nation," but as presently constituted, it had nothing to do with 9/11, nor in harboring those who attacked or planned.  Are there any "organizations or persons" in Afghanistan in Column A (active planning or execution of 9/11) or Column B (harboring)? That would presumably be al Qaeda.  They don't wear badges or uniforms, so how will we know when we get to the end of al Qaeda in Afghanistan?  And are the al Qaeda in Afghanistan "persons" who were actually involved in 9/11, or involved in "harboring" those who were?  How do we know that?  And what is the technical or operative distinction between al Qaeda that we might find in Afghanistan and al Qaeda we might find in, say, Saudi Arabia?  Why war in one place but not in the other?

As I say, an interesting academic question Professor Levinson has posed.  Congress won't touch it because the whole idea of the "war on terror" is to keep it as vague and amorphous as possible, the better to use it as a funding mechanism for the Pentagon and as a means of concentrating power in the Presidency.  The one thing we can know for certain is that it certainly doesn't have to make any sense.  That's now how they do things on Capitol Hill.

Obama - Change I'm Trying to Figure Out!

A tip o' the hat to Prez O for his speech last night.  His performance reminded me of his very best efforts on the campaign trail: the soaring rhetoric, the carefully planned moments when he continued speaking over the applause (a nuance learned from his true teacher, Martin Luther King), the natural aura of leadership.  What was also fun was the way he boxed the Republicans in; at first they sat on their hands in angry defiance, but Barack forced them to cheer along.  What were the Repubs going to do, act as if they were for bank executives buying up private jets and $85,000 area rugs? And once he had them cheering against the plutocrats, it was natural that the Republicans found themselves in favor of restoring the top marginal tax rate of 39% when Bush's tax plan expires.  But if the Republicans desert the fat cats, who the hell do they represent?  Everyone knows that their pretended advocacy for the Evangelicals is only a gag to give them a slightly broader base than the foursomes about to tee off at Burning Tree.

The First Dude is a master politician, a preternatural talent, no doubt about it. He threw in some red meat for the mouth-breathers, too.  His non-withdrawal withdrawal from Iraq, for example.  Will all the troops in Iraq really be home by the summer of 2010? "We are now carefully reviewing our policies in both wars, and I will soon announce a way forward that leaves Iraq to its people and responsibly ends this war."  If all the troops were coming home next summer, wouldn't that be the "way forward" announced now?  What the speech "announces" now is that we will "end this war," and that's what people hear, and are meant to hear.  Meanwhile, one learns from the New York Times that the "end" of the war means that a garrison of 50,000 troops will still be in Iraq for "training" and to "guard American institutions."  Those institutions, of course, would include the American embassy, permanent bases and the Iraqi oil industry, which we will not give up without a fight.

If you're scratching your head and wondering how this is different from what Bush would have done, do not distress yourself unduly.  Bush, because of the obnoxiousness of his own personality, so exasperated Nouri al-Maliki that the Iraqis pushed for our expulsion.  President Smooth, on the other hand, knows how to play people to get what he wants, and now Nouri doesn't want to lose his own access to Obamania.  Pretty cool, huh?

Of course, that does mean that Americans will continue to get picked off over in Diyala, Anbar, Mosul, etc., but hell -- enlistment is way up because the economy sucks.  It's a win-win! And meanwhile, the Afghanistan war is entering a growth phase because we need to make sure that no one can "use" that land "halfway" around the world to stage attacks against America; we want them to have to use Saudi Arabia or Yemen or Germany instead.

So, what do we got here?  A "better" health care system is promised.  Universal, free, like France?!  Don't get hysterical. He didn't say that.  Just tweak it to get rid of "waste."  

We will double our supply of renewable energy in the next three years.  That's better than nothing, especially if Obama is not counting his oxymoronic inclusion of "clean coal" in the mix.  But current renewable use supplies only 10% of our energy, and reality-based hysterics, such as those at RealClimate.org (to the right), argue along with Al Gore that if we're going to avoid the worst effects of global warming (as opposed to those which are now inevitable), we really need to use goals like 100% by the year 2020.  Obama proposes to invest $150 billion in renewable research over the next 10 years, or approximately the amount the United States was spending on Iraq on an annual basis during the height of the insurgency.

So:  Obama is not really serious about an alternative energy regime.  His policies in Iraq and Afghanistan are virtually indistinguishable from his predecessor, except to the extent his approach to Afghanistan is worse.  He's carried forward a lot of the Bushian bullshit about detainee and "state secret" policy, using Bagram as his substitute for Guantanamo, just as Bush did when the Supreme Court went upside his head on the Cuban gulag.

But man - does he sound good!  It's almost as if I can't believe I'm writing what I'm writing, because it's so hard to believe that in actuality, nothing much is changing.  How can that be?  Should I clap?  Or scowl and sit on my hands?  Republicans -- I feel you!

The Casino at the End of the Universe

I have referred before to a remarkably prescient book, published some years back, entitled Infectious Greed by Frank Partnoy, which detailed the tenuous world of derivatives and the threat they posed to the world's financial stability.  Partnoy took as a jumping-off place the meltdown of Long-Term Capital Management, that giant hedge fund quietly working its sinister magic in the sylvan quiet of the Connecticut suburbs.  LTCM innovated like crazy and had the inspiration, and genius, of sensing it required the services not of standard issue MBAs, but of math PhDs from MIT and Harvard who could construct the arcane and insanely complicated algorithms necessary for LTCM to optimize its computer-driven arbitrage strategies.  The system couldn't miss, until it missed entirely.

The nightmare, house-of-cards scenario which Partnoy predicted in detail has now actually happened.  Usually these sci-fi disaster movies remain fictional; not this time.  Instead of learning anything from LTCM's game-playing and ultimate implosion, what Wall Street learned was that even in a stagnant economy, where nothing of real worth is being produced, enormous sums can still be earned by playing games with money.  Any common financial...thing, such as a residential mortgage or a VISA card balance, could, with sufficient scale, aided and abetted by millions of side bets, become the stuff of new fortunes.  And so we witnessed (we didn't really see it, and we certainly never regulated it) the massive proliferation of mortgage-backed securities, collateralized debt obligations, short selling, and credit default swaps.  

These all interplayed and interacted; for example, Bank A might bundle together a few thousand mortgages into a pool, and base the issuance of bonds upon them, creating a Special Purpose Vehicle to issue the bond (and to keep the liability off the books of Bank A).  The actual bonds were sliced, diced and parsed into tranches of relative risk: top level (AAA), mezzanine, lower equity, which might be retained by Bank A itself.  To insure the risk involved in these mortgages (and the MBS based upon them), credit default swaps were bought and sold, sometimes by the issuer and purchaser, sometimes by insurance companies such as AIG.  

The swap guaranteed payment in the event of default.  To make it all more fun, there was no requirement that the swap be held by someone with any real interest in the MBS at all; anyone could buy one, thousands of people could place bets on whether the MBS would pay or fail. Then to stack the deck a little further, the playuhs, the Big Boyz, could increase their chances of collecting on their bet the MBS would fail by short selling the underlying instrument to drive down its price.  What made it all the more creative and exciting is that no one regulated the world of credit default swaps. Not the SEC, certainly not the Federal Reserve of Ayn Greenspan.  One can only guess as to their total "notional value;" some people estimate a total value of $1.4 quadrillion, or more money than exists in the world.  Did the United States, in purchasing an 80% stake in AIG, succeed to an exposure for $1.4 quadrillion in swaps?  Hey, I guess we'll find out!

Does any of this actually sound like a process by which one puts vegetables on the table or heats one's dwelling?  I think Thoreau said, in more eloquent words than these, that one should beware of solutions to the problem of living that are more complicated than the problem itself.  I was thinking of this last night as I was watching the PBS "Frontline" special called "Inside the Meltdown" which tried (really tried) to explain what's happened to us. Personally, I don't think it came close.  There were the usual tableaux vivants: the big conference room videos with Bush, Paulson, Schumer, Dodd, Reid, Pelosi, Bernanke sitting around a table, and then someone like Chris Dodd standing in front of a microphone saying stuff like, "When we heard how close we were to a meltdown, the oxygen left the room.  We've got to get this right."

It's all so dramatic.  But it occurred to me (a) the ones sitting around the conference table were the ones who let it all happen and (b) they are entirely the wrong people to fix it.  It's as if these same people sitting around the table were asked to come up with an innovative approach to string theory.  The complexity of the problem is simply beyond their understanding.  The only hope, and it's not much of one, would be to enlist the MIT PhDs who constructed the algorithms in the first place to conduct a seminar for a month or so and to suggest ways to unravel and unwind the puzzles they had constructed.

Instead, the Treasury and the Fed are going to continue down a path of reacting to the latest bad news, without really understanding the underlying origins of the problems they're confronting.  How big they are, how long they might go on.  They are going to treat this enormous financial Frankenstein as if it were the normal outcome of "banking" and "investing," and sacrosanct because, after all, these were all "contracts" freely entered into by capitalists pursuing their trade.  No matter how far the contagion spreads, the U.S. government is going to keep doling out billions, hundreds of billions, trillions of dollars in an effort to stanch the infection.  To keep this enormous Casino at the End of the Universe, these palaces of greed and bad judgment, standing for as long as possible, until they topple over from the rot within.

Twenty-five Years after Nineteen Eighty-Four

One of George W. Bush's recurrent fantasies was that if we could simply democratize the whole world, war and terrorism would disappear, rainbows would appear in the sky on cloudless days and the world's rivers would flow with milk and honey.  History does not really support the point of view that democracies are incapable of aggressive war; this simpleton's analysis was part-and-parcel of what I always thought of as Bush's World Book Encyclopedia approach to international relations.  His ideas about the world entered a condition of stasis when he was about 12 years old and never really developed much beyond that.  Thus, America could do what it wanted because it was "good," and apparently bad things that America did were not bad because it was America that did them.  These ideas are familiar to me as relics of my own elementary school years.  In the dichotomous world of America vs. the Soviet Union, it's how we were all taught to think back then.

In point of fact, the 20th Century was probably the high point for liberal democracy worldwide, yet it's possible to argue that the absolutely worst things in human history happened during the same epoch.  The two total wars, the Holocaust, the Stalinist Gulags, the use of nuclear weapons on civilian populations, the killing fields of Cambodia, the Cultural Revolution in China. These were all events of mass horror and carnage.  They were also all triumphs of state power over the helplessness of the individual.  One can argue that a great deal of the mischief was caused by totalitarian governments, and I would agree.  The essential problem, however, is that even in those situation where a government is elected democratically, as in the case of the National Socialist Party in Germany in 1933, there is no guarantee that a stable regime dedicated to individual liberty will survive. I'm sure that Iraq will bear this thesis out once they are free from our custodial supervision.

Even here in the good ol' USA, a pretty funky devolution is going on right now. A number of modern thinkers are trying to describe it, and Glenn Greenwald (linked to the right) is one of the best, but it's a murky phenomenon that is difficult to encapsulate in a few words.  In essence, there seems to be an almost complete disconnect between what you might call populist sentiment (majority will) and the actual policies pursued by the federal government.  For years, for example, poll after poll demonstrated that the general American populace was way ahead of the Congressional establishment on the subject of Iraq withdrawal. The people wanted out; yet the Congressional consensus, reinforced by the Beltway media, kept repeating that "no one" wanted a precipitous withdrawal or one that "abandoned" our troops.  So one appropriations bill after another was rubber-stamped by Congress, even after the Democrats took over.

The same nonsense has gone on with the question of investigating/prosecuting the Bush regime for war crimes.  In point of fact, reliable polls demonstrate that about 64% of Americans want the Bush people at least investigated, and a substantial plurality want them prosecuted.  Yet the "official" position, which Obama has adopted, is that "no one" wants to get bogged down in a "partisan" argument and that we must "look forward."

I was reminded of this principle reading Paul Krugman's column in the New York Times today where he mused about the Obama Administrations's obvious reluctance to nationalize banks such as Citigroup and Bank of America, choosing instead to shovel money their way even as it becomes apparent that the bailout sums exceed, by several multiples, the total capitalization of the corporations at their current stock price.  Of course, certain individuals at these banks would take a financial hit if the government assumes control, dismisses management and declares the stock worthless, and it's worth remembering that Wall Street in general donated about $18 million to the Obama election campaign.  And the choice of Timothy Geithner as Treasury Secretary, a fellow club member with all the high rollers on the Street, may also be a telltale sign.  

Still, the Obama campaign was the first presidential campaign in history to eschew entirely public financing, raising about $700 million, and most of that from individuals. It seems like a populist triumph; yet the actual policies of the Obama Administration do not seem to line up with the expressed will of the majority of the American people, as reflected in national polls.  This is a little scary.  What does it even mean to have a choice in candidates if the federal government does whatever the hell it feels like doing despite that "choice?"  

Obama is now going to guide his own surge of troops into Afghanistan. In some vague way, I recall that the war in Afghanistan is supposed to have something to do with the 9/11 attack by a group of Egyptians, Lebanese, UAE, Yemenis and (mostly) Saudis as planned in apartments in Hamburg, Germany starting about a decade ago.  (We probably felt like we couldn't bomb Hamburg again, not after the fire bombing of July 1943.) I wonder if the Afghanistan war, at this point, is not a great deal like the war which Oceania fought in perpetuity against East Asia and Eurasia in 1984.  It transfixes the populace and keeps us in a state of constant anxiety and aggressiveness.  We're at war! It doesn't do to question the government excessively when they are leading us in a fight for our very survival against the Evil-Doers.

So Obama, like Bush before him, has his war, which provides a covering rationale for the continued programs of extraordinary rendition, state secrets, telecom immunity, and, most important of all, no reduction in the massive amounts spent on defense and our 700+ military bases in foreign countries. I am beginning to form the opinion that the stock markets, which continue their elevator ride south to the basement, are reacting because of unconscious perceptions at work in the minds of average Americans. A country which continues its profligate waste of money on imperial nonsense, such as the war in Afghanistan, and which refuses to pay for anything with real money in real time, is not a country which is going to evade financial ruin.  So that while the federal government believes that it is escaping the judgment of the American people by traducing their will, it will not escape the judgment of reality, which has always dealt with similar hubris in the same way.