Relevant and even prescient commentary on news, politics and the economy.

Presidential Reading Material

Earlier I posted this exchange from Brit Hume’s Monday interview of President Bush:

HUME: How do you get your news?

BUSH: I get briefed by Andy Card and Condi in the morning. They come in and tell me. In all due respect, you’ve got a beautiful face and everything.

I glance at the headlines just to kind of a flavor for what’s moving. I rarely read the stories, and get briefed by people who are probably read the news themselves. But like Condoleezza, in her case, the national security adviser is getting her news directly from the participants on the world stage.

HUME: Has that been your practice since day one, or is that a practice that you’ve…

BUSH: Practice since day one.

HUME: Really?

BUSH: Yes. You know, look, I have great respect for the media. I mean, our society is a good, solid democracy because of a good, solid media. But I also understand that a lot of times there’s opinions mixed in with news. And I…

HUME: I won’t disagree with that, sir.

This naturally leads one to wonder what Mr. Bush does read (we already knew he likes The Hungry Caterpillar). Fortunately, former librarian and current First Lady Laura Bush decided to fill us in:

She said the one of President Bush’s favorites was the Dr. Seuss’ book “Hop on Pop.”

“George loved to read to our girls and they would actually act it out. He would lie on the floor and read ‘Hop on Pop’ and they would jump up and down on him.”

AB

P.S. I was tempted to clip the quote and omit the part about reading it to the daughters, but that would be too Safirian.

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Spies at Guantanamo

Two soldiers are now charged with espionage. From what I’ve read, it could be something as innocuous as passing messages to and from prisoners’ family members in the Middle East, or it could be something more sinister. Overall, I’m having trouble coming up with a scenario in which prisoners at Guantanamo can do much of anything to harm US interests. I suppose al Qaeda leaders could be sending messages to followers to do something, but presumably those followers were going to do something bad anyway. And I find this part particularly implausible:

Officials are considering several theories regarding Yee and Al-Halabi. Among them: that the two were in a plot to help detainees escape or be rescued from the camp.

Where the heck do you go from Guantanamo without taking an easily spotted plane? Florida? Havana? Any escapee surely does not speak Spanish and probably doesn’t speak English. Crazy.

AB

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The Clark Economic Proposal

Yesterday Clark issued his economic plan. Here’s an excerpted synopsis from the NYTimes:

General Clark, who is retired from the Army, said he would devote $100 billion over two years to three programs, which he said would not expand the federal deficit because he would repeal President Bush’s tax cuts for people earning more than $200,000 a year.

…He said he would invest $40 billion over two years to create jobs that improve domestic security, including in the Coast Guard and Customs Service, as well as construction projects to strengthen bridges and tunnels that might be subject to terrorist attacks.

He would give $40 billion over two years to the states to ease cuts in health and education programs. And he would provide $20 billion over two years in tax incentives to businesses to create jobs, giving them a $5,000 tax credit for each employee they hire.

In my opinion, there are some good bits and some bad bits here. The good bits are the things that he wants to spend money on — they’ll definitely help the US economy over a period of 1-2 years. The financial aid to states would be particularly helpful, I think; I don’t have expertise on the effects that the hiring tax credit might have, but it sounds like a pretty good immediate stimulus.

The bad bits are the things that the plan doesn’t address. It doesn’t do anything to help balance the US budget over the long haul, something that doesn’t need to happen next year, but definitely needs to happen over the next 3-5 years. Also, some of Bush’s tax cuts really need to go, in my opinion. The top of the list is the estate tax – for social, economic, and moral reasons I think that any decent Democratic plan should end its gradual repeal. Also, there should probably be some contingency attached to his proposal — he doesn’t need to try to boost the economy if the economy is already doing well, which it might be by January 2005.

One bit of unfair criticism that his plan has received: it’s similar to other Democrats’ proposals. I don’t care where the Democratic nominee got his plan from, as long as its a good plan.

Kash

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What Would Happen?

Wow. You have probably figured out that I’m often a tad critical of the Bush administration. I think they’ve really screwed the pooch on Iraq (along with pretty much everything else they’ve touched), and I’m enjoying watching the Bushies squirm up on Capitol Hill as they take the heat for the (very forseeable) hefty price tag for Iraq. But I never really considered the possibility that they wouldn’t get the money to rebuild Iraq. Until I read this:

WASHINGTON (CBS.MW) – President Bush has failed to make the case for more than $20 billion in funds to reconstruct Iraq included in the administration’s recently unveiled $87 billion emergency spending request, the Senate’s top Democrat said Tuesday.

“I think there is a real possibility that the [reconstruction funds] now requested by the administration do not have the support in the Senate sufficient to pass,” said Senate Minority Leader Tom Daschle, D-S.D.

I’m still guessing the Congress will swallow hard and approve the full amount — but what if they don’t? We have all seen the polls showing that a large majority of Americans do not want Congress to approve the reconstruction funds. Many people, including me, warned very vocally before the war that it was going to be expensive and dangerous once we got tangled up there. But now that we’re there, I can’t help but think that we’re responsible for helping to rebuild the country. Iraq could really turn into an even bigger disaster without US money for reconstruction… So it’s interesting to think about what might happen if Congress doesn’t go along with Bush’s request.

Kash

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Gray Davis and Spam

If Gray Davis successfully ends spam in California by October 7th, I predict that he will win the recall election by a large margin. On the other hand, I’m not sure the law can do much about spam originating from outside of California, much less spam from Nigeria.

AB

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Compare and Contrast

Here are two reports of the same incident yesterday in Iraq. First, from CNN, reporting from US headquarters in Baghdad:

BAGHDAD, Iraq (CNN) — Coalition airstrikes killed an attacker early Tuesday after members of the U.S. Army’s 82nd Airborne Division came under fire near Fallujah, west of the Iraqi capital, the Coalition Press Information Center said.

According to the coalition, members of the 82nd Airborne came under attack near Fallujah — a town about 43 miles (70 kilometers) west of Baghdad — just after 2 a.m. (6 p.m. EDT Monday). Coalition forces pursued the attackers into a building and set up a perimeter around it before calling in air support.

Now, the same incident as reported by a reporter for the Guardian, who was at the scene of the incident:

Wednesday September 24, 2003, The Guardian: Rory McCarthy reports from al-Jisr, scene of the killing of three farmers at hands of US troops

It was the middle of the night when the crack paratroopers from America’s 82nd Airborne Division arrived outside Ali Khalaf’s farmhouse in the parched fields of central Iraq.

“We heard voices and so my husband went out to check what was happening. We thought they were thieves,” said [one of the Iraqis]. “My husband shouted at them and then immediately they started shooting.”

By the family’s account, the troops of the 82nd Airborne – known proudly as the “All American” – opened up a devastating barrage of gunfire lasting for at least an hour. When the shooting stopped, three farmers were dead and three others were injured, including Hudood’s two sons, Tassin, 12, and Hussein, 10.

Eventually the shooting stopped, the soldiers pulled back and then they called in the air strike. At least seven missiles were fired but only one hit the house, tearing through the ceiling of an unoccupied storeroom.

…”My brother was a polite and decent man. He was poor and we had only enough farmland to survive,” said Ali Khalaf’s brother Zaidan, who lives nearby.

“None of us are interested in politics, none of us worked in Saddam’s regime. We got nothing from Saddam… We don’t have any weapons in our homes and we don’t have any intention to fight the Americans.”

Kash

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Bush Economic Policy as Designed by Karl Rove

I’ve written about the issue of the value of the dollar a few times before, but it keeps coming up in the news. Here are some bits from a Washington Post story on the front page of today’s business section:

The Bush administration has embarked on a high-stakes effort to reduce the value of the dollar in Asia, hoping to stimulate exports and jump-start the U.S. job market but risking a sudden spike in interest rates and an eventual slide on the stock market.

…”It’s domestic politics — that’s the long and short of it,” said Daniel K. Tarullo, a Georgetown University law professor who was President Bill Clinton’s senior international economic adviser. “This is the administration’s effort to deflect attention from the hemorrhaging of manufacturing jobs from the United States by trying to place all the blame on other countries.”

It’s yet another example of how policy-making in the Bush administration is driven by short-term political concerns rather than sound long-run policies. They are facing lots of heat on manufacturing job losses. So, they have now decided to the reverse US policy of the last 10 years, which has been to say that we like a strong dollar. Their hope is to convince the US manufacturing sector that they’re trying to help. But their policy prescription is not going to work, as is typical of Bush administration economic policies, which are made by political hacks rather than economists.

Here’s why it won’t work:

The hope is that a weaker dollar will make imports into the US seem more expensive to Americans, thus reducing the importing that the US does and shrinking the trade deficit. (*) Similarly, the hope is that a weaker dollar will make US exports seem cheaper to the rest of the world, so the US can export more. This, should, according to some reasonable but incomplete logic, increase the number of jobs in the US.

The problem is that things aren’t that simple. (That’s why we international economists spend years learning how to think this sort of stuff through all the way.) There are three possible consequences of a weak dollar policy:

(1) The US buys fewer imports, and makes up the difference by domestically producing more of the goods that we used to be importing. Unfortunately, given a fixed number of factories and workers in the US at any point in time, this means we have to make less of something else. Resources are shifted away from some other types of production (such as producing US exports) into producing things that we used to import. Therefore, if this scenario happens, there’s no net increase in jobs, just a reallocation across industries.

(2) The US sells more exports, which means that production in the exporting sector goes up. Again, given how much stuff the US economy can produce in general, this means that the US will produce less of something else (such as those items that we can import instead), as resources shift into the exporting industries.

(3) The US buys fewer imports, and sells more exports. The only way this can happen is if US businesses and individuals buy less stuff — more is being exported, after all, and the US is cutting back on consumption of those goods that it imports. Both of these things mean that overall consumption and business spending in the US must fall. Lower spending means an economic slowdown. And of course, an economic slowdown means that jobs are lost, not gained.

The most likely outcome is a mix of these three, with emphasis on #3. A weaker dollar will cause some foreign investors to shift their investments from the US to other countries. This will drive up interest rates in the US, which will reduce business spending and thus slow down the economy. The ONLY WAY that the US can reduce its trade deficit is if there’s an economic slowdown. So the policy hacks in the Bush administration, while embarking on a policy intended to garner votes in the manufacturing sector, are only going to further harm the US economy. Too bad they don’t let economists run their economic policies.

Kash

(*) Think about it this way: if a bottle of Spanish wine (one of the best things in the world, btw) costs €10 in Spain, and the exchange rate is $1/€1, then it costs $10 in the US. But if the dollar gets weaker so that the exchange rate is $2/€1, then it costs $20 in the US. We would expect the US to buy less Spanish wine as a result.

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Missed an Opportunity

The initial reviews weren’t too bad, but the Times has a new story, Bush’s U.N. Speech Gets Scathing Reviews on Capitol Hill. Here are some highlights:

  • Mr. Daschle, who is not running for president, continued: “He has now asked for $87 billion more. And I wish he would have made a stronger case, a better case with more specificity about a plan. He hasn’t presented a plan to the United Nations. He hasn’t presented one to this country or to this Congress. It was a missed opportunity, and that’s very disappointing.”
  • “But once again he has failed to tell us exactly what role he expects the United Nations to play now and what timetable he envisions for the transfer of sovereignty to the Iraqi people,” said Mr. Kerry, who is running for president.
  • Lieberman of Connecticut, another White House hopeful, called the speech an “11th-hour, half-hearted appeal” delivered in an “I told you so” tone that makes it more difficult to secure international help in Iraq.
  • Senator John Edwards of North Carolina, another presidential candidate, said that Mr. Bush had “missed an opportunity”
  • Senator Bob Graham of Florida, accused Mr. Bush of taking a “my way or the highway” approach by trying to force other nations to comply with Washington’s demands…”He missed an opportunity.”

At least it’s nice to see that the faxes at the DNC headquarters are working–the Democrats appear to have a unified message: “missed an opportunity.”

Conservative pundit/editorialist Bill Saffire sagely observed that, “Hillary Clinton saying that Bush ‘missed an opportunity’ is clear evidence that she, in conjunction with the Templars, Free Masons, and The Trilateral Commission, are planning to sabotage the Democrats in 2004, thereby paving the way for Hillary Rodham’s election in 2008–unless they do it in 2004.”

AB

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UN Speech

On balance, Bush’s speech was apparently not as aggressive as the advance billing suggested (as I previously) speculated would be the case. On the other hand, it wasn’t conciliatory either, and was sandwiched in between an obliquely critical speech by Annan (before) and a more direct critical statement by Chirac (after).

Looking for something he could find that other nations might agree with him on, Bush spent a fair amount of time decrying the international trafficking of women. Sex trafficking is a problem, and Angry Bear is firmly against it, but I fail to see the connection to the need for troops and money in Iraq. On the other hand, I have a pretty good idea of what the proposed solution will be: tax cuts.

AB

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