Entitlement reform would indicate maturity
By Russ Roberts The opinions expressed are his own.
Reuters invited leading economists and writers to reply to Larry Summers’ op-ed on his reaction to the debt ceiling deal. We will be publishing the responses here. Below is Roberts’ reply. Laura Tyson, James Hamilton, Donald Boudreaux, Robert Frank, Benn Steil and James Pethokoukis as well.
Summers begins with a refreshing instance of honesty about the effect of the debt deal:
Despite claims of spending reductions in the $1 trillion range, the actual agreements reached so far likely will have little impact on actual spending over the next decade.
It is hard to reconcile this likely truth with the accusations coming from the left that Obama has caved and the Republicans are “terrorists” for “slashing government spending” but such is the nature of political life these days. Summers is also right about the importance of the baseline. When is a cut not a cut? When it’s a reduction from an artificially high baseline. There is very little austerity in the debt deal.
Summers next claim is harder to swallow:
The deal confirms the very low levels of spending already negotiated for 2011 and 2012, and caps 2013 spending about where most would have expected this Congress to end up.
Regretting raising the debt-ceiling
By Donald Boudreaux The opinions expressed are his own.
Reuters invited leading economists and writers to reply to Larry Summers’ op-ed on his reaction to the debt ceiling deal. We will be publishing the responses here. Below is Donald Boudreaux’s reply. Here are responses from Laura Tyson, James Hamilton, Robert Frank, Russ Roberts, Benn Steil and James Pethokoukis as well.
Larry Summers’ cynicism about the new debt deal is justified. What, indeed, is the baseline from which $1.5 trillion is to be subtracted?
That there’s no clear answer to this question — and that there’s no serious effort to avoid the coming explosion of entitlement spending — drives home the truth that this deal really is nothing more than, as The Economist describes it, “a mishmash of expedient stop gaps and promises.”
My objections to the entire debt-ceiling brouhaha, however, run more deeply than those of Prof. Summers.
Unlike him, I dispute the claim that failure to raise the debt-ceiling would have been a calamity. Sure, failure to raise the debt-ceiling would have prevented Uncle Sam from doling out as much money as he promised to dole out to countless numbers of people counting on moola from Washington. But even without a higher debt ceiling, the government’s cash flow would have been more than adequate to pay all of its genuine creditors in full. No actual default would have been necessary.
When one considers how many ways the wealth of the nation is distributed and redistributed, from subsidies to the top, from the top, to the bottom, from the bottom, and very likely sideways, it should be a matter of real confusion and no doubt endless debate, what “other people’s money” really means.
No one really has anything but other people’s money, especially now. The process is supposed to work best when it is a matter of exchange. Somehow the reservoirs must be filled, or the fountains run dry and the gardens and the gardeners die.
Fountains usually pump water. It is not necessary for them to pump blood. I’ve never understood the theology of blood. Do those who believe in it, or seem to, understand it themselves?
Washington’s next challenge
By James Pethokoukis The opinions expressed are his own.
Reuters invited leading economists to reply to Larry Summers’ ope-d on his reaction to the debt ceiling deal. We will be publishing the responses here. Below is Reuters Breakingviews columnist James Pethokoukis’ reply. Here are responses from Laura Tyson, James Hamilton, Robert Frank, Russ Roberts, Benn Steil and Donald Boudreaux as well.
Like Larry Summers, I have a “multifaceted reaction” to Washington’s debt ceiling and budget deal. In fact, I have the exact same multifaceted reaction, except driven by completely different rationales.
1. Like Summers, I feel relief — but not because the agreement averted default and avoided harsh austerity. While the package doesn’t fundamentally change America’s fatal fiscal trajectory, it keeps the legislative momentum headed in the right direction with a focus on reducing debt via spending cuts rather than tax increases.
Nor do I think the process was some sort of “shabby spectacle.” The democratic process is always messy, and frequently driven by a sense of crisis. But it was designed to prevent tyranny; not to promote efficiency. And the recent House ban on earmarks ensured much of the haggling revolved around policy rather than political favors.
2. Likewise, I am cynical — but not about the nature of the debt deal. Future editions of Congress and the economic cycle will have great say about how much America taxes and spends in coming years. Fiscal norms are being set and attitudes changed now, such as when Congress rejected President Barack Obama’s recent budget 97-0. The new budget deal is part of that ongoing evolution.
I am bothered, however, by the unwillingness of the current administration to clearly outline its vision for America’s fiscal future. The consensus of left-of-center economists and policy wonks is that America needs to tax and spend far above traditional levels in coming decades due to America’s aging population and public investment deficit. The White House should come clean and have an upfront debate with Republicans about where the country needs to go.
We need a new Pakistan-U.S. relationship
By Farhana Qazi The opinions expressed are her own.
For the United States, Bin Laden is history. He is an after-thought. And it is almost certain that the Central Intelligence Agency has moved onto its next target. But for Pakistan, the death of the terrorist kingpin is not over as U.S policy makers debate Islamabad’s role in the war on terrorism.
Since the news of Bin Laden’s death, Islamabad’s elites are being attacked and accused of harboring a famed terrorist leader. In his latest piece for The Daily Beast, Salman Rushdie boldly stated that Pakistan should be declared a terrorist state for playing a “deadly game” with America unless Pakistan’s intelligence apparatus, or the ISI, can offer “satisfactory answers.” Rushdie is right to demand an answer but wrong to insist that Pakistan be isolated for protecting proxies and pariahs.
Less than a week after Bin Laden’s death, there are important details that have emerged that need to be answered. When did Bin Laden arrive in Abbottabad? Why did the local owner of the compound rent the home to an individual in Waziristan? Why did a rival to the once-deadly-terrorist leader of the Pakistani Taliban Baitullah Masud live in the same compound? And why was there indication that the compound was being expanded? What we have are details of a deadly mystery. What we do not have is any indication that Pakistan’s senior leadership had knowledge that al Qaeda’s elite moved to and from Abbottabad.
Immediate answers to the “after-Bin-Laden” mystery case have yet to be provided. We have to accept that the details about the legendary terrorist leader that will likely unfold over the coming days may not satisfy the American or Pakistani public. Newspaper sensationalism over who-knew-and-why adds to the fury inside both countries and detracts from the more important facts.
We should focus on what we do know. Bin Laden, and hundreds of other senior and low-level al Qaeda members, have been apprehended inside Pakistan with joint cooperation among the CIA and ISI. The kill-and-capture of al Qaeda operatives is a win-win situation for both countries. Mission accomplished.
In truth, caution defines the U.S.-Pakistan relationship. All intelligence agencies protect sources and methods. The CIA and ISI both have their dark secrets. And there will always be distrust and distance between them. Counter-terrorism cooperation between the United States and Pakistan is imperfect and has its limits. Only when mutual interest is established can the two agencies agree to capture — or kill — top al Qaeda operators. In a world driven by spymasters, there are no good guys or bad boys. There is only strategic benefit.
It is time we learnt that the US does not need Pakistan and india do not trust the pakistani isi. i belived that india helps the terrorists.in the time all we being a pakistani weak up because America cannot expect Pakistan to chase its insurgents. To expect Pakistan to disentangle its ties with local jihadi groups is unrealistic at this time .America is ready to ateck the pakistan
Japan shows another side of the press
By Anya Schiffrin The opinions expressed are her own.
Sitting in Japan in the days after the Friday earthquake and watching the official broadcaster NHK cover the disaster has been an unusual experience. There has been the typical blanket television coverage of this tragedy but the flavor of the reporting is different than it would be in the U.S. “Restrained” is how one friend described it. Over and over we’ve seen the same awful footage of the enormous dirty wave sweeping up cars and houses as it inches slowly along the land.
There are the inevitable interviews with displaced people and experts in their offices. But there are very few graphics or charts, no catchy logos and certainly no dead or injured on the screen. Just as U.S. presidents take off their ties when they visit the troops, Japanese officials appearing on television wear the blue uniforms of someone doing physical labor but with their logo of their ministry or office sewn on their pocket. “It’s theatre” a Japanese friend said dismissively as we watched television last night. But the purposefulness and determination of the government officials were evident — and even my skeptical friend agreed that this commitment would be well-received by the electorate.
At Columbia University we recently began a study with Professor Jairo Lugo in the UK comparing the New York Times and UK Guardian’s coverage of natural disasters. One thing that was immediately clear is how quickly newspaper coverage of natural disasters becomes coverage of the state. This is so even in the US where there is long standing skepticism about the state, and — these days — a widespread view that the government should play a limited role.
But things change when it comes to natural disasters. In Pakistan when religious groups stepped in to provide emergency care it was taken as a sign of how bad things have gotten there. When China’s premier Wen Jiabao immediately turned up in Sichuan after the earthquake there, he was thought of favorably. These responses inevitably are compared to the failure of the U.S. government after Hurricane Katrina.
A paper written by my students Alexandra Crabtree, Faith Kim and Lina Salazar noted that the New York Times reporting on Hurricane Katrina, the Haitian earthquake and floods in Pakistan critiqued the failures of government to administer aid and guarantee security and praised the role of non- governmental organizations. NGOs know that the media can help their cause and so work closely with reporters to highlight the work they do.
Digital media and the Arab spring
By Philip N. Howard, author of “The Digital Origins of Dictatorship and Democracy: Information Technology and Political Islam,” and director of the Project on Information Technology and Political Islam at the University of Washington. The opinions expressed are his own.
President Obama identified technology as one of the key variables that enabled and encouraged average Egyptians to protest. Digital media didn’t oust Mubarak, but it did provide the medium by which soulful calls for freedom have cascaded across North Africa and the Middle East. It is difficult to know when the Arab Spring will end, but we can already say something about the political casualties, long-term regional consequences and the modern recipe for democratization.
It all started with a desperate Tunisian shopkeeper who set himself on fire, which activated a transnational network of citizens exhausted by authoritarian rule. Within weeks, digitally-enabled protesters in Tunisia tossed out their dictator. It was social media that spread both the discontent and inspiring stories of success from Tunisia across North Africa and into the Middle East.
The protests in Egypt drew the largest crowds in 50 years, and a second dictator fell from power. The discontent spread through networks of family and friends to Algeria, Jordan, Lebanon and Yemen. Autocrats have had to dismiss their cabinets, sometimes several times, to placate frustrated citizens. Algerians had to lift a 19-year “state of emergency” and are gearing for demonstrations over the weekend. Even Libyan dictator Muammar Gaddafi has had to make concessions to activists brave enough to raise street protests against government housing policy.
But perhaps the most important casualty in terms of global politics is the U.S. preference for stability over democracy in North Africa and the Middle East. This preference, expressed in different foreign policies, seems untenable when groundswells of public opinion mobilize for democracy.
What are the lessons for the West? First, Islamic fundamentalists may terrorize parts of the region, but a larger network of citizens now has political clout, largely because of social media. The Muslim Brotherhood is no longer the only way to organize political opposition. In a digital world, older ideologically recalcitrant political parties may not even be the most effective way to organize effective political opposition.
Rumsfeld’s biggest unknown
By Joshua Spivak The opinions expressed are his own.
The knives are out in Donald Rumsfeld’s new memoir, Known and Unknown. In defense of his long public service career and the war in Iraq and Afghanistan, the man who was both the youngest and oldest Defense Secretary clearly believes that a good offense is the best strategy.
While the book is receiving press for the intra-cabinet fights and for Rumsfeld cherry-picking his facts, it ends up being a useful and needed work: In eviscerating fellow members of President George W. Bush’s national security team, Rumsfeld raises questions about how the most critical parts of the executive branch operate.
With the relentlessly negative portrayals of political and military figures and constant complaints about the press and the legislature, it is not obvious that Rumsfeld is looking to make a larger point other than defending his tenure and slashing at adversaries. And slash he does — among the many, many bold-faced names who receive unwelcome shout-outs are long-time Rumsfeld foe George H.W. Bush, Colin Powell, Condoleezza Rice, John McCain, Al Gore (he even takes an early whack at Gore’s father), Jerry Bremer, Eric Shinseki, and, in a golden oldies moment, Nixon’s counsel John Ehrlichman. His assessment of Ehrlichman may be the best line in the book, noting,“Certainty without power can be interesting, and even amusing. Certainty with power can be dangerous.”
What gives some of these criticisms weight is Rumsfeld’s highlighting of flawed presidential operations. He starts with citing mismanagement with the one president who he greatly respects and admires, Gerald Ford. Rumsfeld keeps coming back to the mismanagement theme. At the end of his tenure in the Bush Administration, he notes: “After five years back in government, wrestling with natural and man-made disasters as well as two wars, it became clear to me that our government institutions were proving inadequate to the challenges of the twenty-first century and the information age.”
The critiques multiply with a series of attacks on the Army leadership, the intelligence community, on Colin Powell and the State Department. Unfortunately, the question of what are the proper roles of the State and Defense departments in a modern war and its aftermath are not answered by Rumsfeld in this book. His complaints, though, don’t seem that much different from the usual battles that many Defense and State Departments wage in other administrations.
Rumsfeld’s attacks on Rice and her tenure as National Security Advisor are of another order. Rumsfeld argues that Rice fundamentally misconstrued the position of the National Security Agency, not understanding that her job was not to “issue orders, provide guidance, or give tasks to combat commanders.” In Rumsfeld’s view, Rice injected herself into policy rather than being an organizer and neutral arbitrator.
“Certainty with power can be dangerous.”
Said Rumsfeld??? But not about anyone in the Bush administration, certainly not Bush or himself.
I think that gives you an insight into his success in bureaucratic warfare.
A normally crippling lack of self awareness, a total absence of self criticism, a shameless disregard of facts leaves reasonable people lost for words. The war is then won.
Of course, the first thing you need is an immensely priveleged start in life. For most of us such behaviour would lead to a psychiatric diagnosis.
Why economists are part of the problem
Charles Ferguson is the director of Inside Job, a documentary about the financial crisis. The opinions expressed are his own.
Both Glenn Hubbard and Laura Tyson (pictured above, left to right) have played major roles in American economic policy, and both also, unfortunately, exemplify the disturbing, opaque conflicts of interest that pervade the economics discipline.
Over the last thirty years, academic economics has been penetrated by special interests, particularly financial services, in the same way that America’s political and regulatory systems have been compromised by campaign contributions and the revolving door. In fact, the “revolving door” is now a triangular trip between industry, government, and academia.
Prominent economists are now routinely paid to testify in antitrust cases, criminal trials, and regulatory proceedings; to testify in Congress; to give speeches to the industries and firms they study; to serve on boards of directors and as advisors; and to write supposedly objective analyses of industries, companies and policies. These payments and the conflicts of interest they generate are rarely disclosed, except when required by Federal law.
These activities are not marginal; they are now, literally, a billion dollar industry, managed by firms such as the Law and Economics Consulting Group (LECG), The Analysis Group, Compass Lexecon, Charles River Associates, and others. Professors’ income from such groups often dwarfs their academic salaries. That neither universities nor most publications require such disclosure was one of the most shocking facts I learned while making Inside Job, my documentary on the financial crisis.
From 2001 to 2003, Glenn Hubbard was chair of the Council of Economic Advisors in the George W. Bush administration. He was a major force behind the Bush administration’s tax cuts, over half of whose benefits went to the wealthiest 1% of the American population. Since becoming dean of Columbia Business School, Hubbard has written and spoken widely on financial regulation, and has served as co-chair of the Committee on Capital Markets Regulation, whose other co-chair is John Thornton, who is chairman of the Brookings Institution – and the former president of Goldman Sachs. Hubbard’s recent or current affiliations include but are not limited to Met Life ($250,000 per year), Capmark (a major commercial mortgage firm during the bubble, which went bankrupt in 2009), KKR, and Black Rock. In our on-camera interview, Hubbard refused to disclose his current consulting clients.
“Economics, as a branch of the more general theory of human action, deals with all human action, i.e., with mans purposive aiming at the attainment of ends chosen, whatever these ends may be.” Ludwig von Mises
I just checked on online college degree program with a very obscure college. They want about $26,100 for a 13 to 16 month 90 credit per hour bachelors degree working at home with one’s own computer.
Entitlement reform won’t indicate maturity anymore than those who grabbed the inefficiently loaded lifeboats of the Titanic indicated public spiritedness.
It is simply that those in the boats have to spend a great deal of time for the rest of their lives arguing with themselves that their own welfare was somehow better for society as a whole. Good Luck trying!
There will be many more riots in the street. Its very difficult not to when one find oneself freezing to death.