Cato Recent Op-eds

The $1.5 Trillion Fraud by Michael F. Cannon

Thu, 05 Nov 2009 23:00:00 -0600

If House Democrats hold a vote on their health-care overhaul this weekend, they might as well vote on abolishing the Congressional Budget Office too. It would be no more audacious — and much more honest — than their current strategy for hiding the true cost of their legislation.

Never mind the everyday budget gimmicks House Democrats have used, such as removing $250 billion of deficit spending to be voted on separately. Or claiming their bill would cost just $894 billion — around $400 billion less than the CBO actually projected. We've seen this kind of trickery plenty in recent years; to suppress an inconvenient cost estimate of its proposed Medicare drug entitlement, the Bush administration threatened to fire Medicare's chief actuary.

Deceptions on this scale are child's play, at least when compared to what has to be the biggest fiscal obfuscation in the history of American politics: The current leadership has rigged the legislation so that 60 percent of its total cost will not be made public by the CBO in advance of the House vote. Here's how they did it.

The centerpiece of the bills currently under consideration is not the "public option," but the "individual mandate" — a legal requirement that all U.S. residents purchase health insurance, on penalty of fines and/or imprisonment.

The CBO describes an individual mandate as "an unprecedented form of federal action" whose closest analogue in federal law is the draft. But as President Obama told a joint session of Congress, the rest of the legislation won't work unless the federal government forces Americans to purchase health insurance.

President Clinton's ill-fated health plan had an individual mandate, too. Back in 1994, the CBO decided that since "the mandatory premiums . . . would constitute an exercise of sovereign power," the agency would treat all premiums as federal revenues, including them in the federal budget.

That revealed to the public the full cost of Clinton's health plan. Clinton's secretary of health and human services, Donna Shalala, called the CBO's decision "devastating." Journalist Ezra Klein writes that it "helped kill the bill."

Rather than admit the individual mandate's unpopularity and move on, congressional Democrats simply ensured that its costs would not appear in the federal budget this time around by gaming the CBO's rule for what constitutes "federal revenues."

The CBO explains it will not count mandatory premiums as federal revenues if the individual mandate leaves consumers with what the CBO considers a "sufficient" or "meaningful" or "substantial" degree of choice among health plans. That rule is both amorphous and arbitrary. (For example, it presumes that the freedom not to purchase health insurance — which an individual mandate would eliminate — is not "meaningful." Millions of Americans would disagree.) More important, evading that rule doesn't make an individual mandate any less compulsory, or any less costly. It just hides those costs by pushing them off-budget.

Obama budget director Peter Orszag laid the groundwork for this feat. While director of the CBO in 2007 and 2008, he fostered a more collaborative relationship between the CBO and members of Congress, which enabled the agency to provide behind-the-scenes guidance to Democrats crafting their mandate. That's why the cost of the Democrats' individual mandates appears nowhere in the half-dozen or more "preliminary cost estimates" the CBO has completed on various Democratic health-care bills.

In Massachusetts, which has enacted what is essentially the Democrats' health plan, mandatory premiums account for about 60 percent of overall costs, according to the Massachusetts Taxpayers Foundation. On-budget government spending is just 40 percent. By my count, mandatory premiums accounted for a similar share of the Clinton health plan's projected cost.

So while the CBO estimates that the coverage expansions in the House Democrats' legislation would trigger about $1 trillion of new federal spending over ten years, the actual cost of those coverage expansions is more like $2.5 trillion.

The CBO exists to bring honest accounting to the federal government. House Democrats are gaming the CBO, subverting this purpose. Anyone who cares about honest accounting or transparency in government should put the brakes on this vote until the American people have all the facts.

Health Care Solutions Already Here by Shirley Svorny

Thu, 05 Nov 2009 23:00:00 -0600

Two of the biggest concerns of those who support a federal health care overhaul are expanding availability of health care for those in need and making sure that individuals with preexisting conditions have access to affordable insurance. It may come as a surprise to learn that California has programs in place to do just that. The crux of the problem in California is not a lack of programs, but a lack of funding.

Why support a costly federal mandate that may include directives and programs ill-suited to California, when there are existing programs in place? The proposed federal program would not be free; Gov. Schwarzenegger has said it would cost California an additional $1 billion per year. Given that cost, rather than signing on for expensive federally mandated policies that may or may not meet the needs of California, California legislators should be pressed to re-order spending priorities to fund existing programs.

California already has a program for middle-class individuals with pre-existing conditions. However, California's Major Risk Medical Insurance Program is seriously underfunded. California's high-risk-pool policies have the lowest cap on payments of any state – $75,000 a year. It is estimated that a half million Californians are uninsurable in private markets, making them eligible for an MRMIP subsidized policy. Yet, the program costs so much and offers such limited benefits that fewer than 10,000 Californians are enrolled.

California already has a program to serve residents of medically underserved communities. Over 600 primary health care delivery sites serve over 1.6 million patients, with grants from the federal Health Center Program. Ranked as one of the 10 most-effective federal programs by the Office of Management and Budget, the Health Center Program offers a program in place with the potential to improve access to health care. However, the centers rely heavily on state funding to provide care.

California already has a program to insure individuals who are poor and disabled. Like MRMIP, Medi-Cal is seriously underfunded. Medi-Cal spending per enrollee in fiscal year 2006 was $2,740 compared with the U.S. average of $4,575. Reimbursement rates are so low that many private physicians refuse to serve Medi-Cal patients. Stories abound about the lack of access to both primary and specialty care for Californians insured through Medi-Cal, and it is only getting worse.

Adequate funding requires a realignment of state spending priorities. However, the state Legislature seems incapable of taking steps that would reduce spending in other areas, such as privatizing some prison facilities or contracting with other states to provide prison services.

Similarly, the Legislature is unwilling to take a firm position on cutting state funding for higher education. Despite recent fee increases, student fees remain relatively cheap.

Reducing funding for higher education and prisons would free funds to help the needy and those with preexisting conditions buy health care. It's a matter of setting priorities.

Other adjustments won't have as big a fiscal impact but, for example, licensing hairdressers, contractors and other professionals may be something California can do without – many states manage without state licensing. Politicians have to say no to strong political constituencies when their interests do not align with those of the state at large.

California has programs in place to help individuals with preexisting conditions and those who are too poor to buy insurance. A new round of programmatic changes at the federal level which would impose federal mandates on California and won't solve the underlying problem – a lack of sound priorities in state funding.

The Spirit of 1989 by Doug Bandow

Thu, 05 Nov 2009 23:00:00 -0600

Only yesterday, it seems, decades of oppression disappeared overnight. On November 9, 1989, the Berlin Wall, the most dramatic symbol of the most grotesque human tyranny ever to plague the globe, was opened. Free, free at last, shouted residents of half a continent and beyond.

So dramatic was the ensuing revolution that it is easy today to forget that communism ever existed — or at least what it really meant. Decades of totalitarianism impoverished people spiritually as well as economically. Those decades of oppression were swept away in an instant. What may be the most important liberating moment in human history should give us hope even as we despair about the future of our own nation and of Western civilization.

Communism's body count dwarfs that of fascism and Nazism. The latter was uniquely monstrous in its attempt to eradicate an entire people. But communism was unmatched in its endless slaughter. The Black Book of Communism, written by several European intellectuals — attacked for their effrontery in criticizing Joseph Stalin, Mao Zedong, and other well-meaning mass murderers — estimated the death toll at more than 100 million. And the killings continue in such communist hell-holes as North Korea.

Today the former communist states range from robustly democratic to unpleasantly authoritarian. However, all have moved light years beyond what President Ronald Reagan so accurately termed the Evil Empire. Freedom now is widely viewed as the normal human condition.

What seems inevitable today was not obviously so in 1989, however. As the year dawned, the Soviet bloc was stirring. In Russia Mikhail Gorbachev had unleashed perestroika and glasnost; several satellite regimes were trembling.

Still, liberty had always seemed to end up stillborn in the Soviet empire. Somewhat less thuggish apparatchiks, not cosmopolitan liberals, replaced brutal murderers in the USSR. The 1953 East German demonstrations, the 1956 Hungarian Revolution, and the 1968 Prague Spring were all summarily crushed. Poland's Solidarity movement was suppressed in the dead of cold night in December 1981.

But 1989 was different.

Hungary led the way. The man who betrayed his colleagues in 1956, Janos Kadar, had been deposed the previous year. The murdered revolutionary leaders, most notably Imre Nagy, were reburied. Plans for multiparty elections were announced. The Communist Party was dissolved.

In Poland the Solidarity union stirred anew and the communist leadership retreated. The regime was foolish enough to hold free elections — which it lost, dramatically.

Hungary tore down its wall with Austria. It didn't matter so much to Hungarians, who already had been allowed to travel. But Budapest's action freed everyone else in Eastern Europe, who had been allowed to vacation within the Soviet bloc. In particular, East Germans began streaming out of their country and then through Hungary. Others fled to the West German embassy in Prague, Czechoslovakia. The human flood destabilized East Germany, the formerly bedrock Soviet satellite that trailed only Nicolae Ceausescu's Romania as Eastern Europe's most rigid and authoritarian regime.

Demonstrations first occurred in the so-called German Democratic Republic during the spring over yet another predictably fraudulent election. By the fall there were weekly marches in Leipzig: The GDR leadership temporized, causing the number of protesters to multiply. Communist Party boss Erich Honecker wanted to shoot them; rather than commit mass murder, the Politburo dumped Honecker. On November 4 a million people gathered in Alexanderplatz in East Berlin to demand the end of communism.

On November 9 the regime opened the Wall. In fact, the desperate communist leadership had decided only to relax travel restrictions, but Politburo member and spokesman Guenter Schabowski misunderstood his colleagues' decision and announced at a press conference that the border was opening at that moment. Tens of thousands of people gathered at still closed checkpoints, causing befuddled border guards to stand aside. The Berlin Wall was open, never to be closed again. Within a year the ugly, brutish regime, which had distinguished itself by shooting desperate people seeking to escape to freedom, disappeared.

The other European communist autocracies fell as well. Bulgaria dumped its ruler of 35 years, Todor Zhivkov. The tottering Czech regime yielded power in the so-called "Velvet Revolution." A mixture of popular demonstrations and military revolt unseated the monstrous Ceausescus in Romania. As revolution erupted they fled by helicopter. Their pilot observed: "They look as if they were fainting. They were white with terror." On Christmas Eve they were executed after a drumhead court martial.

The newly free countries have been bedeviled by problems. Of most concern is Russia's retreat towards authoritarianism. Nevertheless, the collapse of communism remains a fantastic triumph of the human spirit. With minimal bloodshed, average people overthrew a gaggle of tyrannies. What some thought to be impossible became real, as the desire for liberty trounced the desire for power.

There were heroes in all of the communist countries. Average people willing to speak out, demonstrate, and demand their rights as human beings. Average people willing to say no to the apparatchiks who had so long lived off the workers they were supposed to represent.

Some stand out. Aleksandr Solzhenitsyn, the Soviet novelist who chronicled the horrors of the gulag and stripped the Soviet regime of any claim to legitimacy. Dissidents like Andrei Sakharov, who was banished internally after protesting Soviet man's inhumanity to man.

Lech Walesa, the electrician who nearly a decade before the Wall's collapse famously hopped over a shipyard fence in Gdansk, Poland, to declare that the time of repression was over. The forces of reaction reasserted themselves martial law in late 1981, but nine years later Walesa was elected president of Poland.

In Czechoslovakia there was Alexander Dubcek, who attempted to give communism a human face. The playwright, and first president, Vaclav Havel, called the regime to account for its crimes. Current President Vaclav Klaus engineered his nation's adoption of market economics as well as peaceful split between the Czech Republic and Slovakia.

More than four decades ago Imre Nagy, Pal Maleter, and thousands of Hungarian revolutionaries demanded freedom and were murdered by the Soviets and their Hungarian stooges. In 1989 Imre Pozsgay broke with his Poliburo colleagues, calling the earlier uprising a "popular revolt." He also pushed to tear down Hungary's wall with Austria.

Even more important was Mikhail Gorbachev. He was, of course, a reform communist, not a Western-style democrat. His crackdown in the Baltic states left blood on his hands.

Nevertheless, he was the necessary transition from communist totalitarianism to everything else. His decision to loosen the repressive bonds in the Soviet Union was heroic: events spun out of his control, but he was willing to pay that price in order to humanize the most murderous political regime in human history.

Equally important was his decision to keep the Soviet troops in their barracks throughout Eastern Europe. Moscow had ruthlessly crushed all previous attempts by subject peoples to lessen, let alone eliminate, communist repression. In 1989, however, Gorbachev let Eastern European communist leaders stand alone. They could not count on the loyalty of their own militaries. Nor could they depend on Soviet aid. In every country but Romania the ruling elites blinked. In the latter they lost anyway.

Finally, there was Ronald Reagan. He understood what communism was about, that it truly was an "Evil Empire." But he also believed that communism could be defeated, that the most ruthless totalitarian system ever created could be tossed into the dustbin of history.

On June 12, 1987 he stood in front of the Brandenburg Gate and said: "General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalization: Come here to this gate! Mr. Gorbachev, open this gate! Mr. Gorbachev, tear down this wall!"

Another 29 months would pass, and Ronald Reagan would leave office, but the Brandenburg Gate did open.

Today it is almost as if the Wall never existed. Only a few small sections remain of the massive concrete structure that ran roughly 100 miles around West Berlin, a free island deep within the Evil Empire. Yet it is a testament to man's inhumanity to man which we can ill afford to forget.

The "wall" started out as barbed wire along streets, followed by brick walls. The structure grew more fearsome over time, mixing concrete walls, wire mesh fencing, watch towers, and anti-vehicle trenches. Yet several thousand people made it over, under, or around the Wall and border fortifications lining the rest of the border between the two Germanys. Human ingenuity knows few bounds when people are seeking freedom.

Alas, far more people failed in their attempt to be free. Tens of thousands of East Germans were imprisoned for "Republikflucht," or attempting to flee the East German paradise. Worse, roughly 1,000 people were murdered attempting to escape East Germany, some 200 from Berlin.

The first person to die while attempting to escape was 58-year-old Ida Siekmann, who jumped from her building to the bordering road in West Berlin on August 22, 1961 (the structure was later demolished to create a "death strip"). Two days later a 24-year-old tailor, Guenter Litfin, was shot and killed while attempting to swim the River Spree.

A year later an 18-year-old bricklayer, Peter Fechter, was shot and left to bleed to death in the death strip near Checkpoint Charlie within full view of residents in West Berlin — who could do nothing for him. On February 6, 1989, 20-year-old Chris Gueffroy became the last East German to be murdered while seeking to escape his national prison. He and a friend thought the order to shoot had been lifted; he was hit ten times and died on the spot. His friend was injured but survived — to spend time in prison. On March 8, 32-year-old Winfried Freudenberg, an electrical engineer, became the last person to die in an escape attempt, when his home-made balloon crashed.

The fall of the Wall, and the evil system behind it, deserves to be celebrated. Not just on November 9. But every day.

Two decades later much remains to be done by those who love liberty. Abroad tyranny remains: North Korea's odious dictatorship brutalizes and starves its people, the Castros' dictatorship remains in power a half century after the Cuban revolution, and China has reformed its economy, not its political system. Russia is retrogressing, while in some Eastern European states economic reforms have stalled, political systems have deadlocked, and communist crimes remain unpunished.

At home liberty is threatened, though not as dramatically. The expansive welfare state rather than the brutal authoritarian state is on the march, threatening to consume the health care system. While spending wildly on bailouts, pork, and everything in between, Congress is considering a massive energy tax, which would devastate the private economy. Our society seems set to become both less free and less prosperous.

Yet hope remains. Two decades ago what had only seemed to be a faint dream became a reality. The Berlin Wall fell. Communism disappeared. Hundreds of millions of subjects of the Soviet empire became free.

The spirit of liberty remains. Sometimes deeply buried. But the spirit of liberty remains.

Choosing Fantasy or Facts by Richard W. Rahn

Wed, 04 Nov 2009 23:00:00 -0600

Tax cuts keep industry here and humming

Have you noticed that many politicians who have trouble dealing with reality also seem to prefer fantasyland when dealing with budgets?

Those on the left never stop claiming that problems will be solved if only tax rates are increased. Why then does California, with its 10.6 percent state income tax rate, have a huge budget deficit and a 12.2 percent unemployment rate, while Texas, which does not have a state income tax, enjoys a budget surplus and a below average unemployment rate of 8.2 percent?

Why then does nearly bankrupt Rhode Island with the eighth-highest overall state tax burden in the United States, including a 7.75 percent income tax rate, have a 13 percent unemployment rate, while South Dakota with the fourth-lowest state tax burden and no state income tax, have virtually full employment with only 4.8 percent unemployment?

New York politicians have been living in political fantasyland for many years. Upper-income people living in New York City have faced the highest state and local income tax rates in the country (over 12 percent). Recent studies show high-income earners are in mass flight from New York to friendlier tax environments. The rational thing for New York politicians to do would be to cut tax rates to make New York more competitive; but no, they increased taxes on the top earners (many of whom continue to pack their bags).

It is not only politicians who live in fantasyland, but others as well, such as some labor leaders. The new (in office since January) Republican governor of Puerto Rico, Luis G. Fortuno, inherited a budget deficit of $3.2 billion, which is larger than any state budget in the United States on a per capita basis.

For many years, Puerto Rico has suffered from bloated government with five times as many government workers per capita than California. Seventy percent of the budget goes for government salaries and benefits.

Mr. Fortuno has had little choice but to take drastic action to keep the government from going bankrupt and losing its credit rating. He has already laid off 4,000 government employees, and he plans to lay off another 17,000 this week.

As would be expected, the Service Employees International Union (SEIU), who brought on a good part of the crisis through its excessive employment and wage demands, is now trying to prevent the governor from doing what is needed.

The SEIU has yet to learn that a parasite that kills its host soon finds it has no place to live (work) — just ask the auto union. Unlike the governor, the SEIU and the others continue to live in fantasyland, ignoring the fact that the cookie jar is empty.

Vice President Joseph R. Biden Jr., who has a long history of confusing facts with fiction, this past week added to the administration's claim that "nearly 650,000" jobs have been created or saved by the stimulus package. He said the recovery plan "is operating as advertised" and is on target to reach the president's goal.

In reply, the highly respected economist, Alan Meltzer, who has a long history of being able to distinguish between facts and fiction, said: "The administration can make up any number it pleases. The number has no meaning. The Council of Economic Advisers gets a number for jobs saved using the same model that Dr. Christina Romer and Jared Bernstein used when they forecast that the $787 billion stimulus program would keep the worst unemployment rate in this recession at about 8 percent. But as we all know, since that bill became law, our economy has shed some 3 million jobs and the unemployment rate is nearing double digits."

Ironically, the Obama administration and the politicians who run New York, California, etc., may ultimately help Mr. Fortuno by driving many of their highest-earning and most productive citizens to Puerto Rico.

Mr. Fortuno has made it clear that he believes the key to solving Puerto Rico's economic problems is to reduce the size of the government and take its foot off the windpipe of the private sector. He told me at a breakfast meeting last week that he wants to reform the tax system and reduce rates for everyone.

Any American citizen (which includes all native-born Puerto Ricans) who resides in Puerto Rico pays income taxes to the Puerto Rican, not to the U.S., government. The maximum income tax rate in Puerto Rico is now 33 percent, just a couple of points lower than the U.S. federal rate.

But if Mr. Obama succeeds in raising the maximum federal income tax rate up to the 50 percent range (by letting the Bush tax cuts expire and increasing "surtaxes" to fund his health care and energy schemes), and if the high-tax states continue to raise their rates so the total burden on upper-income people reaches 60 percent or more, Puerto Rican residency is going to become increasingly attractive.

At the moment, most who flee the high-tax states go to states without an income tax like Texas, Florida, and so on, but they still have to pay the federal income tax. Thus if Mr. Fortuno is able to reduce the maximum marginal tax rates in Puerto Rico to the mid-20s, many job-creating entrepreneurs are likely to make a beeline toward what will increasingly be an island paradise, where tax rates will be half of what they are on the mainland.

Re-Educating Americans about Our Identity by Nat Hentoff

Wed, 04 Nov 2009 23:00:00 -0600

My favorite magazine by far was Constitution, published by the Foundation for the U.S. Constitution. No longer in existence, it was full of riveting stories — for students and adults — with beautifully reproduced historic documents, portraits and paintings of how we came to be distinguished from all other nations.

Such a magazine, in print or digitally, is sorely needed now. Interactive civics classes have been replaced by testing and retesting assembly lines of students so that the state can evaluate whole schools rather than individual, evolving citizens. David Souter warned in May, as he was retiring from the Supreme Court, that surveys show many Americans cannot name the basic three branches of government (executive, legislative and judicial). He stressed that "(we need) to start the re-education of a substantial part of the public."

Souter's concern about "the restoration of the self-identity of the American people" was the urgent theme in the first issue of Constitution (Fall 1988) in Lynne Cheney's article "A Fading Heritage."

At the time, she was chair of the National Endowment for the Humanities, and we used to share, in phone conversations, our forebodings of the growing spread of "political correctness" on campuses and at large — a compulsory conformity of opinions that would have been foreign to such free-thinkers as James Madison and Thomas Jefferson.

I have not spoken with Lynne Cheney for a long time, figuring she would hardly welcome my call after what I've written about her husband, former vice president Dick Cheney. But I continue to find her article in Constitution energizing and disturbingly contemporary.

"Consider," she wrote then, "how little history is required of our students. Once it was taught every year kindergarten through 12th grade; now many states require but one year." If that, these days.

Today, in a contemporary book that should be in every school, and certainly within reach of members of Congress and the Obama administration, The Genius of America: How the Constitution Saved Our Country and Why It Can Again (Bloomsbury USA, New York) — Eric Lane and Michael Oreskes write: "We are not burdened by a sense of history, our own or anyone ... Our sense of our own past, to put it politely, is thin and growing thinner. The evidence for this is all around us."

Lynne Cheney, in the magazine Constitution, quoted a political philosopher who had been chosen in 1986 as the Jefferson Lecturer by the National Council on the Humanities. Leszek Kolakowski emphasized in that lecture that among America's young, "the erosion of a historically defined sense of 'belonging' plays havoc in their life and threatens their ability to withstand possible trials of the future."

"Havoc," for example, surely exists among those of our young whose acute need 'to belong' somewhere brings them into the increasingly brutal gangs, not only in urban centers.

And many other youths, including in prestigious lower schools and colleges, would be very hard put to say why we have the First, Fifth, Fourth and Ninth Amendments in our Constitution, let alone tell why they could be so important in their own lives. Where are their moorings as Americans?

And how many in or out of school have a meaningful or even scant knowledge of such contributors to the roots of this nation as George Washington (except maybe for the cherry tree), Tom Paine, John Marshall, Frederick Douglass, Mark Twain or Elizabeth Cady Stanton?

"Ideally," Lynne Cheney advised, "there would be fewer textbooks used in our schools. Teachers would enlighten their students with current and classic works of literature or historical documents. But to find and bring these into the classroom takes a breadth of knowledge that may be beyond some teachers ... because their preparation has been misdirected ... taking just courses in education. Because time spent taking these types of courses is time that cannot be spent studying 'content' areas like history, teachers find themselves knowing less than they should about the subjects they are teaching."

This includes knowing less about what students should know about this nation so that they can begin to feel they "belong" to it.

If an American roots coalition can be formed — across political and professional lines — with maybe Lynne Cheney involved, our history can be brought off the pages and into Americans' lives. David Souter is already showing the way, having joined a committee in his home state that is changing the civic curriculum for New Hampshire's public schools.

During his retirement speech at Georgetown University Law Center, Souter looked at his audience, saying: "If I can do it, you can do it, too."

A book I would love to see come into all Americans' lives is by a master narrator of our identities, Ray Raphael, whose abundant volume, Founders: The People Who Brought You a Nation (New Press) has the reverberating impact of the former CBS-TV series You Are There!

When, for instance, in 1772, at Faneuil Hall in Boston, as Samuel Adams, James Otis and other patriots formed a Committee of Correspondence to inform all the colonies of British abuses of these Americans' privacy rights in their homes and offices, you too are there in a meeting that was vital in precipitating the American Revolution. That's how to make the Fourth Amendment come alive again! Not only in schools.

As Kathryn Sinclair, a high school student in Murfreesboro, Tenn., engaged in a First Amendment battle with her principal 25 years ago, asked me: "Why don't the schools teach why we're Americans? So few people know."

A quarter-century later, sadly, there still isn't a reassuring answer for her.

More 'Work' for the President by Patrick J. Michaels

Wed, 04 Nov 2009 23:00:00 -0600

The Obama administration takes aim at climate scientists.

In the blame game, the Obama administration isn't about to stop with Fox News. Instead, it's moving on to lowly scientists.

Last month, President Obama gave a somewhat chilling, if somewhat ignored, speech on climate change at the Massachusetts Institute of Technology. He stated that any scientific debate about the magnitude of global warming is unscrupulous, decrying "those who . . . make cynical claims that contradict the overwhelming scientific evidence when it comes to climate change, whose only purpose is to defeat or delay the change that we know is necessary."

Then, the president talked tough, saying, "We'll just have to deal with those people," language familiar to anyone who knows the vagaries of Chicago politics.

This surely isn't the first time in world history that some president, premier, or pope has attempted to define science and threaten those who disagree. But the truth of the matter is that disagreement, one way or another, is a given. One can selectively cite recent climate data in support of pretty much any point of view, from the rejection of any influence by humankind at all to the wild notion that the world is about to come to an end.

The ease with which anyone can construct just about any climate argument he wants has to do with the inconstant nature of climate itself. The sun warms the earth, but the amount of energy it radiates changes (right now it's pretty cold). The earth's surface is dominated by two very different substances — uneven rocks and large, smooth oceans — so internal climate oscillations and accidents happen as well.

Temperatures seesaw up and down depending upon ever-changing currents of air in the tropical atmosphere and oceans, including El Niño in the Pacific and other weather features elsewhere. They can be either cold or warm. When the warm ones are absent or weak for a decade or so — a common occurrence — temperatures may stay the same or even fall. When there's a huge warm phase in El Niño, global temperatures rise, as they did in 1998, setting records that have yet to be broken.

Finally, there's carbon dioxide itself. We put it in the air whenever we burn pretty much anything, be it in a power plant or in an automobile. Everything else being equal, that will warm temperatures at the surface and in the lower atmosphere. Just how much is the subject of a great scientific debate that has yet to be resolved.

And everything else is never equal. Cold portions of El Niño and a cold sun can completely halt carbon-dioxide–induced warming (and clearly have for more than ten years now). And this behavior creates a fertile environment for criticism of the projections of computer models for this century.

What you can say is happening to the climate depends on the period you choose to study. Using the surface-temperature record that scientists cite the most, you will find a significant cooling trend after 2000. You'll find no significant trend whatsoever if you start in any year between 1996 and 2000. Beginning your trend before 1996 will yield you significant warming. And so forth.

It's therefore not surprising that anyone can see anything on the climate Ouija board.

In fact, though, there's only one thing that is clear: For the last decade and a half, our climate has not behaved in accordance with the predictions of most climate models. They just don't predict such a long hiatus in warming even as carbon-dioxide emissions from human activity continue to climb.

Note to the president: I do not say that to "defeat or delay" your policies on climate change. The fact is that the U.S. Senate is likely to do that anyway, with or without this information. Early on Election Day, the GOP boycotted a session of the Environment and Public Works Committee in protest of a climate-change bill's costs, and Democrats were split on the legislation as well. Tuesday's election results are likely to give Blue Dog Democrats further pause.

If the Senate does not pass a climate bill that is acceptable to the president, Obama is almost certain to ask the Environmental Protection Agency to issue regulations on carbon-dioxide emissions that he can take to the Copenhagen climate conference next month as evidence of America's efforts. These will then be used to extract some vague concessions on the part of the world's largest emitter of greenhouse gases, China, and the Copenhagen Protocol will be hailed as a major victory over global warming.

Of course, it will be no such thing. If the EPA does issue global-warming regulations, it will have to defend the science that it uses to raise the price of virtually everything. And it is true, Mr. President, that people will use the inconvenient facts of recent climate behavior to defeat or delay the "change" the EPA commands. The administration may respond by "working on" the global-warming people it doesn't like, but it can't "work on" the obvious and growing disconnect between what was forecast and what is happening.

The administration did a great job of increasing the ratings of Fox News. Maybe it can do the same for dissident scientists.

Has Federal Involvement Improved America's Schools? by Andrew J. Coulson

Wed, 04 Nov 2009 23:00:00 -0600

The No Child Left Behind Act is up for renewal. It costs taxpayers tens of billions of dollars every year but the Obama administration is giving its reauthorization less serious attention than most people pay to their phone bill. Families facing tight budgets actually consider cancelling a service that doesn't benefit them. ("Do I really need a landline if I already have a cell phone?") But ending federal involvement in k-12 schooling is not something that education secretary Arne Duncan is even willing to talk about.

Here are three good reasons why we need to have that conversation:

First, we have little to show for the nearly $2 trillion dollars spent on federal education programs since 1965. As the chart demonstrates, federal education spending per pupil has nearly tripled since 1970 in real, inflation-adjusted dollars — but achievement has barely budged. In fact, the only subject in which achievement at the end of high school has changed by more than 1 percent is science, and it has gotten worse.

This overall average masks some tiny gains for minority children, such as a 3 to 5 percent rise in the scores of African American 17-year-olds. But even these modest improvements can't be attributed to federal spending. Almost all of the gain occurred between 1980 and 1988, a period during which federal spending per pupil actually fell. And the scores of African American 17-year-olds have declined in the twenty years since, even as federal spending has shot through the roof.

The second reason we should seriously consider getting Congress and the White House out of America's classrooms is that they are likely to make matters worse rather than better if we let their involvement continue. Consider this comment made by education secretary Arne Duncan in his recent speech about NCLB reauthorization:

"The biggest problem with NCLB is that it doesn't encourage high learning standards. In fact, it inadvertently encourages states to lower them.... Low standards also contribute to the nation's high school dropout rate."

Duncan is mistaken. NCLB did lower academic standards, but it also lowered the dropout rate. Unfortunately, it appears to have done that by pressuring schools to graduate more unprepared students who haven't mastered high school material. One of President Obama's favorite economists, Noble laureate James Heckman, has shown that graduation rates declined steadily from the late 1960s until 2002, when NCLB was enacted. Then, suddenly, they ticked upward.

Why is that apparent improvement worrisome? Heckman explains: "NCLB gives schools strong incentives to raise graduation rates by any means possible." He notes that as soon as the law was passed, schools started flunking far fewer kids and graduating more of them. Heckman isn't absolutely sure if these sudden gains are real "or are an indication of schools cheating the system in the face of political pressure." But he concludes that the timing suggests schools are cheating. And it's not "the system" that's being cheated, it's the kids.

It's troubling that Duncan seems unaware of this, because his proposed changes to NCLB would likely encourage the apparent cheating revealed by Heckman. Duncan wants to be tighter on the goals and looser on the means for meeting them. In other words, he wants to put even more pressure on districts to show results, and leave them even freer in the way they get them. If schools were already scamming the system when they had less freedom and pressure, Duncan's recommendation seems bound to make matters worse.

Finally, unless American families and educators send Washington packing, federal involvement will become even more intrusive. A key goal of this administration is to homogenize standards and testing nationwide. Is your son or daughter really identical to every other child you've ever met? Does he or she learn math, reading, biology, and history at the same pace as every other 9, 12, or 15 year old? If not, it makes no sense to place all children on a national education conveyor belt that drags them through the curriculum at a fixed pace.

Wouldn't it be better to make schools adapt to the needs of individual kids instead of trying to forcibly fit the kids into a single bureaucratic learning schedule? Wouldn't it be better to give teachers the professional freedom to do their jobs, and then make it easier for families to pick the best schools for their children — public, private, or parochial?

Unless we tell Congress and the administration to butt out of the nation's schools we may never find out.

The GOP Should Dump the Neocons by Edward H. Crane

Tue, 03 Nov 2009 23:00:00 -0600

The founders envisioned a federal government constitutionally limited to defending our rights to life, liberty and the pursuit of happiness. For that to happen, we must have at least one political party that strongly advocates limiting the power of government. For much of the 19th century, that party was the Democrats. For the early part of the 20th century and from the early 1960s through 1988, that party was the Republicans.

Today, it is difficult to find noninterventionists in either party.

The Democrats demonstrate a disdain for capitalism, free trade and the validity of contracts. They cheer the restriction of certain types of speech on campus and in federal law, and think nation-building is our moral obligation, even when there is no discernible U.S. interest involved. Lately, the Democrats have been popularly associated with principled opposition to waging war in far-flung corners of the globe. But evidence on the ground today tells a somewhat different tale.

As for the GOP, it has outwardly abandoned the limited-government principles of Barry Goldwater and Ronald Reagan. Little other evidence is needed than the Medicare prescription drug benefit -- with its $13-trillion unfunded liability -- passed with a strong-arm campaign by the Bush White House and a Republican congressional majority.

What happened to the Republicans? Well, the two Bush presidencies didn't help. Neither did the supply-side movement, focused on tax cuts and economic growth. Supporters of those ideas didn't talk about spending cuts, much less the proper role of government. They had the effect of replacing "liberty" as the motivating force behind the GOP with "growth," a somewhat less-inspiring ideal.

But perhaps most pernicious has been the role played by the neoconservatives. The late William F. Buckley used his conservative flagship publication, National Review, to make anti-communism the litmus test for joining the conservative movement. Dealing with the Soviets during the Cold War was clearly an important task, but it should not have opened the door of the limited-government movement to the neoconservatives, who are now -- and always have been -- advocates of big government. With the neocon foot in the policymaking door after the Cold War ended, the drumbeat for war in Iraq began in earnest a decade before 9/11.

It is important to realize that neocons are not just nation-building, America-first advocates. They like big government across the board. No Child Left Behind, the thinly disguised effort to nationalize education in America, was principally a neocon initiative. Consider this comment from the late Irving Kristol, self-described "godfather" of the neoconservative movement: "Neocons do not feel that kind of alarm or anxiety about the growth of the state in the past century, seeing it as natural, indeed inevitable." Indeed.

There is an insidious philosophy underlying this acceptance of the "natural" growth of statism. Neoconservative columnist David Brooks wrote in the late 1990s that we need "a vigorous One Nation Conservatism that will connect a revived sense of citizenship with the long-standing national greatness Americans hold dear." In another essay, he wrote: "Ultimately, American purpose can find its voice only in Washington. ... Individual ambition and willpower are channeled into the cause of national greatness. And by making the nation great, individuals are able to join their narrow concerns to a larger national project." A frightening worldview.

Which brings us to the war in Afghanistan. The neocons are predictably enthused about the prospect of a prolonged U.S. occupation there. A dozen or so of them recently sent a letter to President Obama urging him to up the ante. Astonishingly, the president who was elected as the antiwar left's protest candidate appears poised to take the neocons' advice and commit tens of thousands more troops to a conflict in which immediate U.S. interests are unclear at best.

Meanwhile, Obama's domestic agenda is in shambles. Americans are outraged at the prospect of trillion-dollar deficits, auto bailouts and the subsidies to irresponsible bankers. And they don't want socialized medicine.

The "tea parties" and town hall meetings are essentially libertarian. There is no conservative policy agenda -- only a demand that the government stop trying to run our lives.

Republicans should take this opportunity to return to their traditional noninterventionist roots and throw their neoconservative wing under the bus. The Republicans have a chance at this moment to reclaim the mantle of the party of nonintervention -- in your healthcare, in your wallet and in the affairs of other nations.

Republicans Should Quit with 'Mediscare' by Michael D. Tanner

Tue, 03 Nov 2009 23:00:00 -0600

What profiteth a political party if it gains congressional seats but loseth its soul?

Among the many Republican complaints about Democratic health reform plans, one – chiefly heard of late from Senate Minority Leader Mitch McConnell – is that it would "cut Medicare."

That McConnell can go home and sleep at night after uttering that charge is a grand testament to the jaded, disconnected, and often surreal nature of Washington politics.

What McConnell is doing is engaging in the time-honored tradition of "Mediscare": pandering to seniors – a crucial political constituency because they are well-organized and turn out to vote in high numbers – by suggesting that one of their pet entitlement programs is imperiled.

This effective tactic has most often been the bailiwick of Democrats, back when Republicans were the party of fiscal discipline and made pronouncements about getting federal deficits and entitlement spending under control (boy does that seem like a long time ago now). That McConnell and the GOP have now embraced it with gusto demonstrates how screwed we are as a country, because neither main political party is at all serious about facing fiscal reality.

Now, let's be clear. The Democrats do cut Medicare, by more than $500 billion under the bills now being considered. And, while the Democrats claim that all they are doing is eliminating "fraud, waste, and abuse," the reality is that under the Democratic bills, seniors will get less.

For example, roughly 10.2 million seniors currently receive their health care through the Medicare Advantage program. That program offers many seniors benefits not included in traditional Medicare, including preventive-care services, coordinated care for chronic conditions, routine physical examinations, additional hospitalization, skilled-nursing facility stays, routine eye and hearing examinations and glasses and hearing aids.

The bills currently making their way through Congress would cut payments to Medicare Advantage plans by $100 billion to $150 billion. In response, many insurers are expected to stop participating in the program, while others will probably increase premiums. Millions of seniors will likely be forced off their current plans and back into traditional Medicare. The Congressional Budget Office makes it clear that, at the very least, the cuts "would reduce the extra benefits that would be made available to beneficiaries through Medicare Advantage plans."

The Democratic cuts also hit traditional Medicare. For example, the bills would reduce reimbursements for diagnostic imaging – things like CT scans, MRIs and X-rays – by as much as 25 percent. And the Senate Finance Committee's bill would penalize doctors who perform too many procedures or tests. Providers whose utilization is in the 90th percentile or above, compared with national averages, will have their Medicare reimbursements cut.

The whole point of such provisions is to reduce services. But none of this justifies the Republican's hypocrisy on this issue.

For example, Republicans just finished voting unanimously against an attempt to block a Democratic proposal to stop a 21 percent reduction in Medicare provider payments scheduled to go in effect next year, the so-called "doc fix." And, earlier this year, Republicans released an alternative budget that contained even bigger reductions in Medicare spending than the Democrats now propose.

That was the fiscally responsible position to take. The "doc fix" was not paid for and would have added an additional $250 billion to the federal deficit. That's why 13 fiscally responsible Democrats joined Republicans in voting against this bill.

And, Medicare is already facing unfunded liabilities of $50 trillion to $100 trillion. As a percentage of GDP, Medicare costs are expected to rise from 2.7 percent today to 9.4 percent by 2050. Unless we are prepared to completely mortgage our children's future, Republicans were right to propose cuts in their budget proposal.

But now, sensing political advantage, Republicans are in danger of reverting to the fiscally irresponsible "big-government" conservatism that all but destroyed the Republican brand during the Bush years.

There are many good reasons for opposing the Democrat's health reform. It is government takeover of the health care system that would dramatically increase both taxes and insurance costs, while all forcing millions of Americans into a government-run system. There is no need for Mediscare – especially for a party that so desperately needs to return to its fiscally responsible, limited-government roots.

Three Cheers for Divided Government by Gene Healy

Mon, 02 Nov 2009 23:00:00 -0600

This election day, the punditocracy is closely watching the off-year contests, thinking they predict how the president's party will do in next year's congressional midterms. If so, things don't look so hot for President Obama.

In New Jersey, Democratic governor Jon Corzine has done surprisingly well with his "make fun of the fat kid" reelection strategy, yet portly Republican Chris Christie retains a narrow advantage.

In Virginia, the GOP's Bob McDonnell is comfortably ahead in a state that Obama won by over 200,000 votes, and a Sunday poll had Conservative Party upstart Doug Hoffman 16 points ahead of his Democratic opponent in New York's 23rd congressional district.

If history is any guide, Democrats have reason to worry about 2010. In every midterm election but two since the end of WWII, the president's party has lost seats, and it's a fair bet that the Blue Team faces double-digit losses next year.

The "Hopefest 2009" aura surrounding Obama's inauguration reminds us that Americans are still suckers for the romance of Camelot. But though we periodically swoon for heroic presidents who pledge to heal the country and the world, when we sober up, we vote to check the hero's power.

In fact, in the past half century, voters have opted for divided government over 60 percent of the time. We Americans rest easier when the purse and sword are in different hands.

Why shouldn't we, given the horrors of one-party government? Whenever one faction controls both elected branches, checks and balances disappear.

My colleague Bill Niskanen, former chairman of President Reagan's Council of Economic Advisors, points out that since the start of the Cold War, we've had only a dozen years of real fiscal restraint: Six under Eisenhower and a Democratic Congress, and six under Clinton and a GOP majority.

Per Niskanen's calculations, since FDR, unified governments have spent roughly three times as fast as divided ones, and they've been much more likely to waste blood and treasure abroad.

The Framers tried to craft a constitution that gave politicians proper incentives to check each other. "Ambition [would] counteract ambition," as James Madison saw it, with congressmen keeping presidents honest and vice-versa.

Things haven't worked out as planned. Too often, party loyalty trumps constitutional fidelity, as evidenced by former House speaker Denny Hastert's self-image as a "lieutenant" of George Bush rather than a guardian of congressional prerogatives.

But when different parties hold the legislature and the executive, the Madisonian system works better. Divided government leads to many more congressional investigations into presidential misconduct, and, as two University of Chicago scholars demonstrated recently, "the White House's propensity to exercise military force steadily declines as members of the opposition party pick up seats in Congress."

When politicians wax sentimental about "the wisdom of the American people," it's usually a good idea to hold on to your wallet. If we're so smart, who's to blame for the clowns we elect?

But when it comes to separating the purse and the sword, we may be brighter than expected. A good chunk of us deliberately split our tickets. In 2004, two political scientists crunched the numbers, estimating that more than 20 percent of American voters were "cognitive Madisonians." In plain English, these voters consciously tried to "divide power and balance policy."

Even if the "cognitive Madisonians" are energized in 2010, it will be difficult for the GOP to seize the House. As analyst Charlie Cook notes, there are fewer open seats for the taking then there were during the Republican Revolution of '94.

Ironically enough, though, if things were easier for the Republicans, the embattled Obama might have a better shot at a successful presidency. Divided government tends to boost the president's approval rating.

It's no accident that the few modern presidents who left office with high popularity — Eisenhower, Reagan, and Clinton — had to battle a Congress controlled by the opposition. We tend to like the guy better when he doesn't have a free hand.

No doubt Obama's pulling for Corzine, Deeds, and Owens today, and for a Democratic majority in 2010. But if he knew what was good for him — and for the country — he'd silently root for divided government.

Only Pay for Health Care That Works by David A. Hyman and Charles Silver

Mon, 02 Nov 2009 23:00:00 -0600

Health care is expensive partly because governmental payers and insurers foot the bill for large quantities of medical services that are ineffective, unnecessary or unproven. According to a RAND report, studies of clinical efficiency "indicate that one-third or more of all procedures performed in the United States are of questionable benefit."

When state and federal governments set the minimum terms for insurance coverage, this problem is likely to worsen. Governmental decisions reflect the political power of providers (who want to sell more services), the sympathy felt for patients (who want to consume more services and have other people pay for them), and the desires of bureaucrats (who generally want to maximize their budgets and their importance). These interests coalesce, causing governments to aggressively mandate coverage of services that may or may not be necessary.

The health reform proposals pending in Congress require all Americans to have insurance coverage. The problem with this "individual mandate" is that Congress (or some other regulator) will have to decide the minimum amount of insurance Americans can carry.

The need to set this requirement is an open invitation to aggressive lobbying by health care providers. Wanting to ensure that the minimum benefit package covers their services, providers will spend millions on advertisements and campaign contributions to persuade legislators and regulators that more coverage is better.

Lobbying from providers and supportive patients explains why many states already mandate coverage of elective services like in-vitro fertilization, massage therapy, and visits to athletic trainers. Concerns about the efficacy and cost-effectiveness of treatments are washed away by a stream of campaign contributions, and sad stories about patients who can only obtain the "necessary" services if the insurer will pay for them. The result is a one-way ratchet toward richer (and more expensive) benefit packages.

A similar political dynamic explains why Medicare, Medicaid, Tricare (the health insurance system for people connected to the military), the federal employees' health benefit system and private insurers have spent tens of millions of dollars on non-medical services, such as prayers, for Christian Scientist patients "who choose to rely solely upon a religious method of healing."

There is no persuasive evidence that prayer treatments work. A recent large study found that prayers had no effect on the rate of complications among heart surgery patients. In fact, patients who knew others were praying for them had slightly more post-operative complications than patients who did not.

Even though prayers are obviously not medical treatments, Christian Science practitioners charge for their services at rates comparable with those of real health care providers. In Minnesota, a Christian Science practitioner reportedly charged the parents of Ian Lundman, an 11-year-old with diabetes, $446 for two days of prayer-treatments. (Ian died.) In Michigan, a Christian Science practitioner demanded $1,775 after praying for someone in a coma. State Farm initially refused to pay but capitulated after they were sued.

One of the major health care bills pending in Congress would continue and almost certainly expand this indefensible stream of payments. It uses the language of discrimination to hide what's going on. The problem isn't discrimination against members of a particular religion. It is that public officials should not spend our tax and insurance dollars on services of no proven medical value.

Christian Scientist practitioners account for an infinitesimal fraction of the cost of health care. Indeed, it is almost always cheaper to pay for prayer-based treatment than to pay for medical treatment for patients with the same illness. But our willingness to waste tax and insurance dollars on prayer treatments is symptomatic of a larger failing. Wasteful spending abounds in health care because providers have defeated all efforts to control costs — and routinely lobby for laws requiring that they be paid for the services they render, regardless of whether their efforts actually improve patients' health. A business that charged through the nose for repairing cars or computers would quickly find itself out of business if "one third or more [of its work] was of questionable benefit." Why shouldn't we subject health care to the same discipline?

Congress seems bent on imposing an individual mandate. If so, it should impose a strict efficacy requirement as well. Congress' rule should be: No governmental payments or insurance mandates for any goods or services not proven to work. Christian Scientists and others who want ineffective, unnecessary, or unproven services will still be able to get them. They will just have to pay for them.

Increasing Risk, Hurting Patients by Shirley Svorny

Sun, 01 Nov 2009 23:00:00 -0600

The cost of capping medical malpractice damages.

A new Congressional Budget Office report estimates that a set of tort reform measures — including caps on awards for non-economic and punitive damages — would have lowered total national health care spending in 2009 by $11 billion, largely by reducing so-called defensive medicine. Damage caps, though, would result in patients losing the benefit of the market oversight and penalties associated with malpractice underwriting. Capping liability could have the unintended consequence of reducing private market efforts to investigate the risk characteristics of the individuals they insure and of hurting patients.

A careful reading of the report shows that a significant portion of the problem can be attributed to fee-for-service physician reimbursement, a system that fails to discourage spending on services that have "marginal or no benefit to patients." The findings suggest an alternative to caps on damages: moving Medicare recipients into managed-care arrangements where defensive medicine is controlled. The advantage of using managed-care arrangements over caps is that this would allow medical professional liability insurance underwriters to continue to provide both oversight and penalties for negligence and substandard care.

The medical malpractice industry provides valuable private market oversight of physicians. Underwriters review each physician annually, examining a clinician's claims history in detail and investigating myriad possible practice-related issues. Premium surcharges penalize physicians with a history of negligence or substandard care; claims-free physicians are rewarded with premium credits. In some cases, as in anesthesiology, some insurance policies dictate very specific evidence-based standards of care that must be used for coverage to apply. These financial arrangements create incentives among all physicians for risk management.

Physicians rejected by state-regulated "admitted" companies for substandard care are forced into the surplus lines market. There, they bear additional costs, including carrying a deductible and a much higher annual premium — generally between one-and-a-half to five times higher.

Once in the surplus lines market, the high cost provides a strong incentive to physicians to take steps to reduce their perceived risk so that they can return to the admitted market. Often specific remedial actions are required, particularly of those physicians with substance abuse problems. Some surplus lines companies offer risk management services on a case-by-case basis.

Some physicians are in the surplus lines market because they perform fairly unique or risky procedures that companies in the admitted market do not have the expertise to underwrite. The surplus lines industry plays a role when doctors are just getting experience with a new procedure, as with the introduction of laparoscopic gallbladder surgery (cholecystectomy) and bariatric procedures (including gastric bypass and lap band). Underwriters keep an eye on claims and verify a physician's training to be sure it is adequate, managing the risk associated with the introduction of new medical procedures.

Decisions about the tasks physicians take on are best made with information about the magnitude of the underlying risk to patients. In the surplus lines market, malpractice insurance underwriters convey this information to physicians through their brokers in the form of pricing options for insurance. One option may include surgical coverage while another option, with a lower premium, would not cover surgery. This creates the appropriate incentive for physicians to consider the risk associated with their practice patterns.

All of this protects consumers. The potential for surcharges or cancellation of policies offered by admitted carriers and the higher cost of obtaining insurance in the surplus lines market create an incentive for physicians to practice care that meets medical community standards.

Rarely, in the very worst cases, physicians will be denied coverage in the surplus lines market. It may be because the physician is such a danger to the public that there is no viable restriction that would permit the physician to continue in practice. Even when a state medical board fails to sanction a physician who should not be practicing medicine, denial of malpractice insurance precludes affiliations with most hospitals and other provider organizations, protecting consumers served by those providers. In the seven states where medical malpractice is mandated for practice, all consumers benefit from these protections.

Medical professional liability insurance companies use experts to assess the validity of claims against a physician. This not only works to preserve the reputation of a falsely accused physician, but pushes the entire tort system toward more accurate penalties. More accurate penalties for negligence and substandard care create incentives better aligned with society's objective of quality care.

The oversight, risk management, serious financial penalties for negligent and substandard care, efforts to assess the validity of claims, and policy exclusions on practice associated with medical malpractice underwriting and insurance improve safety in the provision of medical care. By setting up appropriate incentives, medical professional liability insurance can be viewed as contributing to consumer protection in the market for physician services. Putting caps on damages would inhibit these efforts and hurt consumers.

Murderous Idealism by Paul Hollander

Sun, 01 Nov 2009 23:00:00 -0600

The Berlin Wall that came down 20 years ago this month was an apt symbol of communism. It represented a historically unprecedented effort to prevent people from "voting with their feet" and leaving a society they rejected. The wall was only the most visible segment of a vast system of obstacles and fortifications: the Iron Curtain, which stretched for thousands of miles along the border of the "Socialist Commonwealth." I am one of those who managed to cross these obstacles in November 1956, when they were partially and temporarily dismantled along the Austrian-Hungarian border. My experiences in communist Hungary, where I lived until age 24, had a durable impact on my life and work.

While greatly concerned with communism in the late 1940s and early 1950s, Americans -- hostile or sympathetic -- actually knew little about communism, and little is said here today about the unraveling of the Soviet empire. The media's fleeting attention to the momentous events of the late 1980s and early 1990s matched their earlier indifference to communist systems. There is little public awareness of the large-scale atrocities, killings and human rights violations that occurred in communist states, especially compared with awareness of the Holocaust and Nazism (which led to to far fewer deaths). The number of documentaries, feature films or television programs about communist societies is minuscule compared with those on Nazi Germany and/or the Holocaust, and few universities offer courses on the remaining or former communist states. For most Americans, communism and its various incarnations remained an abstraction.

The different moral responses to Nazism and communism in the West can be interpreted as a result of the perception of communist atrocities as byproducts of noble intentions that were hard to realize without resorting to harsh measures. The Nazi outrages, by contrast, are perceived as unmitigated evil lacking in any lofty justification and unsupported by an attractive ideology. There is far more physical evidence and information about the Nazi mass murders, and Nazi methods of extermination were highly premeditated and repugnant, whereas many victims of communist systems died because of lethal living conditions in their places of detention. Most of the victims of communism were not killed by advanced industrial techniques.

Communist systems ranged from tiny Albania to gigantic China; from highly industrialized Eastern European countries to underdeveloped African ones. While divergent in many respects, they had in common a reliance on Marxism-Leninism as their source of legitimacy, the one-party system, control over the economy and media, and the presence of a huge political police force. They also shared an ostensible commitment to creating a morally superior human being -- the socialist or communist man.

Political violence under communism had an idealistic origin and a cleansing, purifying objective. Those persecuted and killed were defined as politically and morally corrupt and a danger to a superior social system. The Marxist doctrine of class struggle provided ideological support for mass murder. People were persecuted not for what they did but for belonging to social categories that made them suspect.

In the aftermath of the fall of Soviet communism, many Western intellectuals remain convinced that capitalism is the root of all evil. There has been a long tradition of such animosity among Western intellectuals who gave the benefit of doubt or outright sympathy to political systems that denounced the profit motive and proclaimed their commitment to create a more humane and egalitarian society, and unselfish human beings. The failure of communist systems to improve human nature doesn't mean that all such attempts are doomed, but improvements will be modest and are unlikely to be attained by coercion.

Soviet communism collapsed for many reasons, including the economic inefficiency that resulted in chronic shortages of food and consumer goods, and pervasive and mendacious propaganda, which amounted to the routine misrepresentation of reality highlighting the gap between theory and practice, and promise and fulfillment. The political will of leaders behind the Iron Curtain diminished over time -- in part because of Nikita Khrushchev's 1956 revelations about Joseph Stalin's crimes but also because of their own experiences of the system's flaws. They no longer had the will to crush dissent. In the 1980s, Mikhail Gorbachev allowed new revelations of the errors and evils of communism to be aired -- further undermining the legitimacy of communist rule.

The failure of Soviet communism confirms that humans motivated by lofty ideals are capable of inflicting great suffering with a clear conscience. But communism's collapse also suggests that under certain conditions people can tell the difference between right and wrong. The embrace and rejection of communism correspond to the spectrum of attitudes ranging from deluded and destructive idealism to the realization that human nature precludes utopian social arrangements and that the careful balancing of ends and means is the essential precondition of creating and preserving a decent society.

Did the Stimulus Work? by Jeffrey A. Miron

Sat, 31 Oct 2009 23:00:00 -0500

The Obama administration and many economists believe the fiscal stimulus package caused the positive G.D.P. growth, but this conclusion is not warranted. For starters, monetary policy has been highly expansionary over the past year, with short-term interest rates near zero, so the Fed may have played the major role in turning the economy around.

Research finds more evidence for the efficacy of monetary as opposed to fiscal policy in ending recessions. And the studies on fiscal stimulus have shown more impact from tax cuts than from spending increases.

We also do not know whether the positive G.D.P. growth resulted partially or mainly from natural equilibrating mechanisms, rather than from monetary or fiscal policy. Much discussion of the recession presumes it will end only because government comes to the rescue.

In fact, the U.S. economy recovered from significant recessions before 1914, when monetary and fiscal policy had not even been invented. Economies can and do recover on their own, and intervention might make things worse by generating uncertainty and distorting the economy's allocation of resources.

A further caveat is that two elements of the fiscal stimulus — cash-for-clunkers and the $8,000 tax credit for first-time home buyers — probably shifted significant activity from the fourth quarter and beyond to the third quarter because consumers knew these provisions would expire soon. Thus the stimulus plausibly shifted the timing of economic activity without necessarily improving the long-term path.

The case for additional stimulus is weak. If further stimulus occurs, it should focus on changes in policy that make sense independent of the recession. This means reductions in tax rates rather than increases in expenditure. Repeal of the corporate income tax would be ideal.

Bhutan's Happiness Is Large Dam, Fast GDP by Swaminathan S. Anklesaria Aiyar

Sat, 31 Oct 2009 23:00:00 -0500

We should measure Gross National Happiness, not Gross National Product (GDP), said Bhutan in 1972. Ever since, it has been a poster child for happiness. Its pursuit of happiness has influenced many people including Nobel Laureates Joseph Stiglitz and Amartya Sen, who helped produce a recent UN report on ''The Measurement of Economic Performance and Social Progress."

GDP is a vulgar measure that misses many issues that make people happy, says the report. So, countries should also measure quality-of-life indicators such as leisure, education, social relationships, political voice and governance. Bhutan's own happiness index includes the frequency of meditation and prayer.

Now, everybody will agree that happiness is much more than GDP. However, Bhutan's dirty secret is that it is world champion in GDP growth.

The global recession sent growth plunging in many countries in 2008, but Bhutan had the fastest GDP growth rate in the world at 21.4%, says the CIA World Factbook. Back in the 1980s, Bhutan was much poorer than India. Today, thanks to galloping economic growth for two decades, Bhutan is almost twice as rich as India: its per capita income was $1,900 in 2008 against India's $1,070.

Was record GDP growth spurred by the pursuit of happiness? Actually, it was spurred by giant hydropower projects that India has been building in Bhutan for two decades. Bhutan's current hydropower capacity is 1,480 MW, and it plans additional projects to generate 10,000 MW of power by 2020, almost entirely for export to India, which provides all the financing.

Large dams are not usually regarded as recipes for happiness. Environmentalists usually condemn them for displacing people and submerging forests. Bhutan's neat ploy has been to adopt a green name (Druk Green Power Corporation) for its hydropower producer. It gets away with this since environmentalists don't want to attack a much ballyhooed Shangri-La of happiness.

Its first big hydropower project of 336 MW capacity at Chuka was commissioned in 1988. This was followed by Kurichhu (60MW) in 2001, Basochho (40MW) in 2005 and the giant Tala project (1,020 MW) in 2007. The commissioning of Tala largely explains the subsequent huge jump in GDP in 2008. Electricity revenue will provide no less than 60% of the government's entire revenue in 2009. Yet, barely 66% of Bhutanese households and 39% of its villages are electrified.

Developing countries with rich natural resources, like oil, often fare very badly (as in Africa). Economists talk of a "resource curse" that enables a kleptocratic ruling elite to become very rich, without any productive effort or decent governance. Revenues from natural resources flow directly to governments, bypassing citizens.

Hydropower potential is Bhutan's big natural resource, generating vast revenues for its government. To its credit, kleptocracy and misgovernance have been kept at bay so far. Yet, as hydropower revenue keeps soaring, the risks will keep rising.

Bhutan has done many things to deserve its Shangri-La reputation. Its forest cover is a very high 72%, and it has pledged to keep this above 60% forever. It admits only a small number of high-end tourists, helping preserve the traditional character of its delightful towns. Tourists say the people are very friendly, tranquil and hospitable.

Yet, appearances can be deceptive. A nasty ethnic struggle has led Bhutan to expel 100,000 people of Nepali origin, who now languish in refugee camps in Nepal. Ethnic Bhutias constitute 50% of Bhutan's population, and ethnic Nepalese 35%. Nepalese migrants have swamped original ethnic groups in neighbouring parts of India like Sikkim and Darjeeling. The Bhutias of Bhutan are determined not to be swamped too. Those expelled say they are regular citizens who have been ethnically cleansed, while the government claims they are illegal immigrants. Such ethnic strife does not look like a recipe for happiness.

In most countries women outnumber men. But Bhutan has only 89.2 females per 100 males. This is worse even than India (93.3 females per 100 males) where female foeticide and infanticide are common. Bhutan's gender ratio suggests strong discrimination against female children in access to health and food.

The CIA World Factbook estimates literacy in Bhutan at 47%, while a recent Bhutanese publication puts it at 59.5%. The country banned TV for decades to protect its people from pernicious modern influences, but finally allowed TV in 1999. Low literacy and media bans are not usually associated with happiness, but some will say that ignorance is bliss.

I cannot say whether Bhutan is truly happy. But if that's true, Bhutan seems to have proved that the happiness flowing from large dams and fast GDP growth more than compensates for the unhappiness caused by ethnic strife, gender discrimination and low literacy.

Recognizing the Limits of American Power in Afghanistan by Doug Bandow

Fri, 30 Oct 2009 23:00:00 -0500

Candidate Barack Obama was widely seen as running on a peace platform. More recently President Barack Obama was awarded the Nobel Prize for Peace for supposedly offering a new international approach. Yet he is considering a major military escalation in Afghanistan.

Instead, the president should rethink Washington's objective. The conflict has become his war. He should not ask, is Afghanistan winnable? Rather, the right question is what should the U.S. attempt to achieve? The goal should be to advance American security, not build an Afghan state.

The president need not rush his decision. Hawkish demagogues who entrapped the U.S. in an unnecessary war in Iraq hope to do the same in Afghanistan. For instance, Rep. Cynthia Lummis (R-Wyoming) claimed: "the lack of decisiveness about how to best proceed is emboldening our enemies and endangering our troops and friends." The worst policy, however, would be to mimic the foolish decisiveness of President George W. Bush.

Afghanistan was President Bush's "good war," in which Washington ousted the ruling Taliban for hosting al-Qaeda. But he quickly lost interest in Afghanistan, shifting Washington's attention and resources to Iraq. Conflict in Afghanistan has raged for eight years--longer than the U.S. spent fighting World Wars I and II combined--consuming nearly 900 U.S. and 600 allied lives, as well as $220 billion. The Afghan people, too, have suffered greatly.

Yet "victory" looks ever more distant. Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, warned that the situation in Afghanistan is "deteriorating." The government barely functions; drug money pervades the otherwise moribund economy. The number of estimated insurgents, Taliban attacks, and allied casualties all are rising. Barely a third of the territory can be said to be under the central government's (very loose) control, and even large urban areas are no longer safe. Afghan President Hamid Karzai's supporters engaged in ostentatious and widespread electoral fraud.

Indeed, the election imbroglio highlights the administration's challenge. White House Chief of Staff Rahm Emanuel declared: "The result, for us and for the president, is whether, in fact, there's a credible government and a legitimate process." But that question has been answered--in the negative. The initial vote was marred by widespread irregularities; the fraudulently reelected president accepted a run-off only because the foreign military powers keeping him in power demanded one; no one imagines President Karzai losing even if Abdullah Abdullah reverses his decision to boycott the poll. A forced coalition/national unity government would offer little more legitimacy.

President Obama termed the war one of "necessity" and in March added 21,000 combat troops to the 47,000 Americans already stationed in Afghanistan. (Another 37,000 allied, largely NATO, forces are on station, though often where they are not needed.) Now the president's hand-picked commander, Gen. Stanley McChrystal, is pushing for upwards of 80,000 more personnel, with 40,000 apparently the "minimum" acceptable in his view.

The administration is worried about the political implications of escalation and is considering a compromise--adding some troops, but fewer than desired by Gen. McChrystal. However, pursuing expansive objectives without providing the necessary resources would be the worst policy. Commented Washington Post columnist Eugene Robinson: "This game's been going on for eight years. It's time to raise or fold."

But raising would not guarantee success. The allies initially deployed 60,000 personnel in Bosnia, a much smaller territory in which conflict had ceased. At its maximum Russia had 118,000 troops in Afghanistan, which proved to be too few. Even an extra 80,000 troops--which the U.S. does not have handy to deploy in Afghanistan--would not be enough. Under traditional counterinsurgency doctrine, Afghanistan, with 33 million people, many of them living in remote villages amidst rugged terrain, warrants 660,000 allied personnel. Nor is NATO reinforcement a realistic option. President Obama, Defense Secretary Robert Gates, and Gen. McChrystal all have pushed for more assistance, but garnered few commitments and even fewer boots on the ground. Europeans have far less stomach for continuing the war than do Americans.

The critical issue is Washington's objective. The U.S. long ago achieved its goal of displacing and weakening al-Qaeda (despite the failure to capture or kill Osama bin Laden) and ousting the Taliban government which gave the organization refuge. That success persists despite recent Taliban gains. National Security Adviser James Jones estimated fewer than 100 al-Qaeda members are operating in Afghanistan, and said they have "no bases, no ability to launch attacks on either us or our allies."

Ousting the Taliban was simple compared to creating "an effective and representative government," in the words of Marin Strmecki, formerly at the Pentagon, or "a national representative government that is able to govern, defend, and sustain itself," according to four scholars at the Center for American Progress, or "a credible Afghan partner for this process that can provide the security and the type of services that the Afghan people need," in Rahm Emanuel's words. Such a partner doesn't currently exist and is no where close to existing.

Everyone uses the old adage that Afghanistan is the "graveyard of empires," but outside powers never have had much success in imposing their will on the Afghan people. Nation-building is difficult enough: only in Germany and Japan, with ordered societies and democratic traditions, has the U.S. had unambiguous success. Third World states have proved largely impervious to Western attentions.

Afghanistan is no different. Afghanistan "worked" during the mid-20th century under a monarchy which understood the limits of its power. The regime respected the poor, traditional, autonomous tribal-based society which it purportedly ruled. And, most important, there were no foreign military occupiers.

Social engineering by Washington would be difficult in the best of circumstances. Afghanistan's challenges are daunting. Observed the Economist magazine: "The country's mountains and deserts are forbidding; its tribal make-up bewildering; and, after three decades of war, its communities broken, poor and ignorant. Well-meant actions often have unintended effects: fighting can create more insurgents than it kills; foreigners are blamed for attacks that hurt Afghan civilians; and schemes to win people over can deepen antagonism."

Afghanistan hosts 20 ethnic groups. Even the Pashtuns are divided into 50 tribes. This is not a society traditionally welcoming to outsiders, let alone foreigners. Afghanistan has become the world's largest opium producer. Finally, Afghan society has been badly deformed by three decades of war.

After eight years, Washington has not created the answer in Kabul. Matthew Hoh, a former Marine Corps officer who recently resigned from the State Department, explained: "Like the Soviets, we continue to secure and bolster a failing state, while encouraging an ideology and system of government unknown and unwanted by its people." Ralph Peters, a columnist who backed the Iraq war, criticized protecting "an Afghan government the people despise."

The inadequacies of the Karzai regime are manifest and multiple. The International Crisis Group pointed to "a highly centralized constitutional order in which the legislature has been denied the tools to check an overbearing executive, and a neglected judiciary, which contributes to the climate of impunity and corruption fuelling the insurgency." Malalai Joya, vilified by fundamentalists for daring to run for parliament and promote women's rights, complained: "Your governments have replaced the fundamentalist rule of the Taliban with another fundamentalist regime of warlords."

Then there is the recent flagrant election fraud, which, wrote Hoh, "will call into question worldwide our government's military, economic and diplomatic support for an invalid and illegitimate Afghan government." Karzai's allies claim that the Afghan president has learned from the experience, but what has he learned? If he can get away with rampant fraud, whether or not a second poll is held, he likely will become even less tractable. U.S. escalation will be seen as support for the existing regime, not for the sort of idealized system Washington claims to support.

No intrinsic strategic importance justifies attempting to construct a genuine Afghan state. Boston University's Andrew Bacevich explained: "No serious person thinks that Afghanistan--remote, impoverished, barely qualifying as a nation-state--seriously matters to the United States." Afghanistan's importance primarily derives from its impact on nuclear-armed Pakistan, whose largely ungoverned border territories provide a haven for both Taliban forces and what remains of al-Qaeda.

Blogger Paul Mirengoff contended that "Ceding Afghanistan to [America's main] enemy would have serious adverse implications for Pakistan." The Washington Post worried: "success by the [Taliban] movement in toppling the government of either country would be a catastrophe for the interests of the United States and major allies such as India." Others predict a veritable regional disaster if the U.S. withdraws.

However, a semi-stable, semi-workable Afghan state doesn't necessarily work to Pakistan's advantage. First, how would it affect Islamabad's most serious security concern--the regional balance with India? Pakistan strongly supported the Taliban regime pre-9/11 for a reason. Second, Afghans enjoying the benefits of peace might not welcome jihadists and terrorists, encouraging the latter to remain in Pakistan's largely autonomous border provinces.

Most important, Pakistan seems more likely to be destabilized by an endless, escalating conflict than a Taliban advance. Islamabad's vulnerabilities are obvious, with a weak civilian government facing a complex mix of poverty, instability, insurgency, and terrorism.

Unfortunately, the war in neighboring Afghanistan exacerbates all of these problems. Argued Hoh: "Our presence in Afghanistan has only increased destabilization and insurgency in Pakistan." First, the war has pushed Afghan insurgents across the border. Second, cooperation with unpopular U.S. policy has reinforced the Zardari government's appearance as an American toady. Ever-rising American demands further undercut Pakistani sovereignty and increase public hostility.

From Pakistan's perspective, limiting the war on almost any terms would be better than prosecuting it for years, even to "victory," whatever that would mean. In fact, the least likely outcome is a takeover by widely unpopular Pakistani militants. The Pakistan military is the nation's strongest institution; while the army might not be able to rule alone, it can prevent any other force from ruling.

Indeed, Bennett Ramberg made the important point: "Pakistan, Iran and the former Soviet republics to the north have demonstrated a brutal capacity to suppress political violence to ensure survival. This suggests that even were Afghanistan to become a terrorist haven, the neighborhood can adapt and resist." The results might not be pretty, but the region would not descend into chaos. In contrast, warned Bacevich: "To risk the stability of that nuclear-armed state in the vain hope of salvaging Afghanistan would be a terrible mistake."

Washington is left with only bad options. One is to continue trying to "fix" Afghanistan. Gen. Stanley McChrystal argued: "A strategy that does not leave Afghanistan in a stable position is probably a short-sighted strategy." Moreover, said Gen. McChrystal, American strategy must "earn the support of the people," which will win the war "regardless of how many militants are killed or captured."

Max Boot of the Council on Foreign Relations even suggested that "Poor governance is an argument for, not against, a troop surge. Only by sending more personnel, military and civilian, can President Obama improve the Afghan government's performance, reverse the Taliban's gains and prevent al-Qaeda's allies from regaining the ground they lost after 9/11." In short, failing to create a functional state after eight years of war means Washington should double down, pushing more lives and money into the growing pot.

America's well-disciplined and well-trained forces can do much, but not everything. Hoh observed that no "military force has ever been tasked with such a complex, opaque and Sisyphean mission as the U.S. military has received in Afghanistan." Even if better deployed in more heavily populated areas, the odds of reasonable success in reasonable time at reasonable cost seem long at best.

The point is not that the majority of Afghans love the Taliban. But many dislike the Karzai government, local warlords, and/or allied forces. The costs of "winning" such a complicated game almost certainly would outweigh the benefits of even the most optimistic projections. As Peters bluntly states, "the hearts and minds of the Afghans not only can't be won, but aren't worth winning." More likely than victory would be years of war, persistent insurgent activity, thousands more American casualties, hundreds of billions of dollars more outlays, persistent regional instability, and ultimate U.S. withdrawal.

What are the alternatives? The status quo offers little hope of reversing the Taliban's gains. Concentrating allied troops in the cities might offer greater urban security but would concede most of the country to the insurgency. Accelerating training and equipping of the Afghan army and police would yield positive results only if the resulting forces proved to be competent and honest, as well as competently and honestly led.

The better policy would be for Washington to begin drawing down its combat forces. The outcome might be Taliban conquest and rule, but equally likely is continuing conflict and divided governance amongst competing political factions, ethnic groups, and tribes. The resulting patchwork would be tragic, but the fighting would no longer be inflamed by outside intervention.

Would adverse consequences extend beyond the region? The Economist hyperbolically fears that "defeat for the West in Afghanistan would embolden its opponents not just in Pakistan, but all around the world, leaving it more open to attacks." However, jihadists are most likely to attack Westerners when their grievances are ongoing. Groups based in Amman, London, Madrid, and Riyadh as well as America are more likely to act if the American government is killing more rather than fewer Muslims in Afghanistan.

Moreover, escalation, followed by additional years of conflict and then ultimate defeat would multiply the harm to America's reputation. The Soviet Union made this mistake. Author Victor Sebestyen reviewed the minutes of meetings between Politburo and military officials and reported: "The Soviets saw withdrawal as potentially fatal to their prestige in the cold war, so they became mired deeper and deeper in their failed occupation." Even reformist Mikhail Gorbachev dithered out of fear of the impact on Moscow's image before finally withdrawing Soviet forces in 1989.

The most serious argument against withdrawal is that al-Qaeda would gain additional "safe havens." Fred Kagan of the American Enterprise Institute argued that "Afghanistan is not now a sanctuary for al-Qaeda, but it would likely become one again if we abandoned it." Richard Holbrooke, the Obama administration's special envoy to South Asia, contended: "without any shadow of a doubt, al-Qaeda would move back into Afghanistan, set up a larger presence, recruit more people and pursue its objectives against the United States even more aggressively." Preventing this is "the only justification for what we're doing," he insisted.

Yet there is no evidence that al-Qaeda has moved into territory currently governed by the Taliban. Even Taliban-controlled Afghanistan would not be a genuine safe haven. Noted Stephen Walt of the Kennedy School: "The Taliban will not be able to protect [bin Laden] from U.S. commandos, cruise missiles and armed drones. He and his henchmen will always have to stay in hiding, which is why even an outright Taliban victory will not enhance their position very much."

Indeed, anti-terrorism expert Marc Sageman observed in recent congressional testimony: "there is no reason for al-Qaeda to return to Afghanistan. It seems safer in Pakistan at the moment." Other options include other failed or semi-failed states, such as Somalia and Yemen. The defuse jihadist movement which has organized most of the terrorist plots since 9/11 has found adequate safe havens even in Europe.

No wonder Stephen Biddle of the Council on Foreign Relations admitted, while calling for continuing "a war effort that is costly, risky and worth waging--but only barely so," that preventing al-Qaeda from moving back into Afghanistan was "the weakest argument for waging the kind of war we are now waging." The U.S. doesn't have the resources necessary to wage war everywhere terrorists might conceivably seek a safe haven and need not do so in any case.

The administration should adjust its policy ends. Washington's principal objective should be protecting U.S. security. The Washington Post's David Ignatius railed against adopting "a more selfish counterterrorism strategy that drops the rebuilding part and seeks to assassinate America's enemies." But the U.S. government's overriding obligation is to protect U.S. citizens, and that means focusing on al-Qaeda rather than the Taliban, forestalling and disrupting terrorist operations against America. Doing so requires sharing intelligence widely among affected nations, squeezing terrorist funding networks, utilizing Special Forces on the ground, employing predator and air strikes--judiciously, given the tragic risk of civilian casualties, which both raises moral issues and fuels anti-American sentiment--and cooperating with various Afghan forces and the Pakistani government.

In contrast, it is not necessary to build a functional state in Kabul allied with the U.S. Noted Sageman: "The proposed counter-insurgency strategy in Afghanistan is at present irrelevant to the goal of disrupting, dismantling and defeating al-Qaeda, which is located in Pakistan. None of the plots in the West has any connection to any Afghan insurgent group, labeled under the umbrella name 'Afghan Taliban'." In Afghanistan Washington should tolerate any regime or group, or combination of regimes or groups, willing to cooperate in preventing terrorist attacks.

Obviously, policymakers disagree on the likelihood of success of such a political strategy. One unnamed anti-terrorism official told the Washington Post that the prospects of political reconciliation are "dim and grim." Other analysts contend that only major battlefield victories would encourage Taliban forces to surrender.

Yet history suggests that accommodation is possible and certainly worth pursuing. After all, the Karzai government has made deals with warlords and narcotics producers alike. Washington once worked, reluctantly to be sure, with the Taliban regime to combat drug production. There are indications that the Taliban was angered by al-Qaeda's 9/11 assault on the U.S. Moreover, a number of Taliban commanders defected in the early years after American intervention.

Thus, Washington should attempt to split the Afghan insurgency. Secretary of State Hillary Clinton once equated al-Qaeda and the Taliban, but more recently admitted: "Not every Taliban is an extremist ally." In fact, the Taliban mixes hard-core militants and disaffected residents. Arsalan Rahmani, once Islamic affairs minister in the Taliban government and now a member of the Afghan parliament, explained: "Some are fighting to go to paradise, but among the Taliban leaders most want peace. Afghanistan is their homeland and they want peace here."

The distinction is widely recognized. Newsweek's Fareed Zakaria wrote: "It is unclear how many Taliban fighters believe in a global jihadist ideology, but most U.S. commanders with whom I've spoken feel that the number is less than 30 percent. The other 70 percent are driven by money, gangland peer pressure or opposition to Karzai." Similarly, the Boston Globe quoted an American intelligence official who contended that only ten percent of insurgents were Taliban ideologues, while "Ninety percent is a tribal, localized insurgency."

Even Gen. McChrystal advocated going "pretty high up" to give even Taliban commanders "the opportunity to come in." He added that Pashtuns "have always been willing to change positions, change sides. I don't think much of the Taliban are ideologically driven; I think they are practically driven. I'm not sure they wouldn't flip to our side."

Washington will need to display both knowledge and nuance, admittedly too often in short supply, to exploit Taliban differences. However, being out of power apparently has left the Taliban even less well-disposed to bin Laden & Co. Explained John Mueller of Ohio State University: "There are reports that Omar's group has made clear its rupture with al-Qaeda in talks with Saudi Arabia."

Thus, the Taliban may well focus on its own interests. Mullah Mutawakkil, once a minister in the Taliban government, believes a deal is possible: remove bounties on commanders, release insurgent prisoners held at Bagram air base, and accept Taliban rule in Afghanistan's southern provinces in return for a commitment not to allow use of Taliban-controlled territory in attacks on the West.

This would not be a radical policy, since Washington already has ceded certain areas to warlord control. Insurgent leaders know well that denial is less costly than control: Washington could launch targeted strikes against any al-Qaeda operations and oust any regime, Taliban or other, which allied itself with terrorists. This approach also would demonstrate to the Muslim world that the U.S. is targeting terrorists, not Islamic governments. In contrast, warns Mutawakkil: "If the Taliban fight on and finally became Afghanistan's government with the help of al-Qaeda, it would then be very difficult to separate them."

Currently joined with the Taliban are opportunistic warlords such as Gulbaddin Hekmatyar and Jalaluddin Haqqani. Washington should appeal to differences among uneasy allies and offer to buy off--or lease--the more venal opposition.

An essential aspect of this strategy, however, is withdrawing allied troops, since many Afghan fighters are determined to resist any foreign occupiers. A continuing occupation, no matter how well-intentioned from our perspective, will generate "more casualties, irritation and recruitment for the Taliban," in the words of Nicholas Kristof.

In fact, the longer more U.S. forces remain, the harder more insurgents will resist. In 2007, for instance, 27 often feuding groups coalesced in Pakistan in response to U.S. airstrikes. In Afghanistan the population has not turned on the Taliban the way Iraqis turned on the al-Qaeda. Lt. Col. Daniel L. Davis, who served in both Afghanistan and Iraq, advocated a U.S. withdrawal over the next 18 months: "Many experts in and from Afghanistan warn that our presence over the past eight years has already hardened a meaningful percentage of the population into viewing the United States as an army of occupation which should be opposed and resisted."

Unfortunately, there are limits to Washington's ability to ameliorate this result. Argued Hugh Gusterson, of George Mason University: "The Pentagon will try to minimize the insult through cultural sensitivity training and new doctrines that emphasize befriending the locals, but they will fail because it's in the very nature of counterinsurgency that occupying forces must be intrusive to be effective. And when you have thousands of foreign troops being shot at, accidents and atrocities happen. The more such troops you have, the more accidents and atrocities you get."

There remains the emotional case for escalation. Army Sgt. Teresa Coble complained to the Washington Times: "We would not be honoring the lives of the troops who died if we left here without finishing our mission." But what is the mission? One should mourn those whose lives were sacrificed by their government for any policy which failed. However, al-Qaeda has been largely defanged. The failure to create an Afghan nation is one of policy, not personnel. It would not honor American servicemen and women to needlessly toss away even more lives to continue this failed policy.

It would be especially foolish to embark upon a campaign of escalation if it is not sustainable over the long-term. And escalation is not. After nearly eight years of war, the American people are losing faith--not in the necessity of killing or capturing terrorists, but in the dream of remaking Afghanistan. The latest CNN poll indicates that six of ten Americans oppose sending more troops to Afghanistan. Nearly half want to reduce manpower levels or even withdraw all troops. A majority also believes that Afghanistan has turned into another Vietnam.

Advocates of years more of costly war for dubious gain argue that the public should support their policy, but that is irrelevant. The president must base U.S. policy on what the public likely will support. Else his strategy will be doomed from the start.

In 2002 Barack Obama warned against fighting a war "without a clear rationale and without strong international support," and that an invasion of Iraq would yield: "a U.S. occupation of undetermined length, at undetermined cost, and with unintended consequences." That is happening in Afghanistan. In fact, one could imagine bin Laden hoping to ensnare the U.S. in a no-win war in Afghanistan. Seth Jones and Martin Libicki of the Rand Corporation noted that "combat operations in Muslim societies" are "likely to increase terrorist recruitment." Indeed, parody has become truth. "Reported" the Onion: "According to sources at the Pentagon, American quagmire-building efforts continued apace in Afghanistan this week, as the geographically rugged, politically unstable region remained ungovernable, death tolls continued to rise, and the grim military campaign persisted as hopelessly as ever."

Of course, the desire of many Washington policymakers to improve the lives of Afghans is genuine. Most Afghans want peace and many Afghans desire American aid to better their land. Given enough resources and time, courageous and dedicated U.S. personnel could conceivably succeed in remaking Afghanistan. But the chances are slim while the cost in lives and treasure inevitably would be high--too high.

Getting out of Afghanistan won't be as easy as getting in. The administration should develop a strategy to steadily reduce rather than increase America's military presence. Combat forces should be fully withdrawn. The U.S. should focus on counter-terrorism. The time and manner of getting out should reflect potentially changing circumstances. But withdrawal should be Washington's ultimate objective.

An independent America was born of a rugged determination by common folk to govern themselves. It should not surprise modern Americans that many Afghans feel the same way. Despite the persistent delusion in Washington that the rest of world desperately desires to become America's next attempt at social engineering, most Afghans are not waiting for U.S. advisers, diplomats, and soldiers to show them a better way. To the contrary, many are ready to fight to follow their own way.

Their determination presents the president with a momentous decision. The administration should narrow the Afghan mission. Washington's objective should be disrupting al-Qaeda wherever located, whether Afghanistan, Pakistan, or elsewhere. On occasion that will warrant military action, but more often other tools will be required. Even with the finest military on earth the U.S. government cannot do everything. Reconsidering American strategy in Afghanistan is an important way for Washington policymakers to acknowledge the limits of U.S. power. Changing American priorities in this way would be a giant step by President Obama towards actually earning a Nobel award bestowed more out of future hope than past achievement.

Health Reform: Dems' Deep Divisions by Michael D. Tanner

Fri, 30 Oct 2009 23:00:00 -0500

Weary of news stories that legislative support for health-care reform is all but dead, Democratic leaders have been seizing every handy podium to declare that "the votes are almost there," "there is 90 percent agreement" on a proposal, "we are now prepared to move forward" and so on. In fact, even among Dems, there's nothing close to agreement on the major issues that have held up reform so far. Here's a primer on where the gaps between Democrats are wide:

Individual Mandate: This should've been low-hanging fruit. Democrats agreed on a mandate early in the process. But it became increasingly plain that a mandate would hit those with insurance as well as the uninsured -- forcing people who are happy with their plan to switch to a different, possibly more expensive plan. With this mandate now being seen as a middle-class tax hike, qualms have developed. Now senators such as Chuck Schumer (D-NY) and Olympia Snowe (R-Maine) are leading an effort to water down the mandate's penalties.

But without a mandate, the reform bill will significantly drive up the cost of insurance. For example, reform is expected to prohibit insurers from refusing to sell policies to those with pre-existing conditions. But if people can wait to buy insurance until after they are sick, why would anyone buy it when they are healthy? Young and healthy people will drop out of the insurance market in droves. With the insurance pool left older and sicker, insurance premiums will rise. That's why the House bill includes heavy penalties for failure to comply with the mandate -- 2.5 percent of an individual's income. In essence, reform backers must decide between a huge tax on the middle class or a huge increase in insurance premiums.

Employer Mandate: Most Americans get health insurance via their job. A mandate that all but the smallest employers provide insurance to their workers seemed an obvious example of "shared responsibility." Problem is, such a mandate simply drives up the cost of employing workers. With unemployment closing in on 10 percent, this seems a poor time to make it harder to hire people.

The Senate Finance Committee therefore largely abandoned an employer mandate, opting instead to make companies repay the government for subsidies to low-income workers who don't get employer-provided insurance. But that leaves a bill that penalizes workers who don't buy health insurance, but not employers who don't provide it. Better economics, perhaps -- but tough politics.

The Public Option: A trigger. Opt-in. Opt-out. Lately, Democrats have floated just about every possible permutation of a government-run insurance plan, designed to "compete" with private insurance. Many on the left have vowed to vote against any reform proposal that doesn't include a "robust" public option.

But moderates recognize that a government-run plan would have an inherent advantage in the marketplace, because it ultimately would be subsidized by taxpayers. The government plan could keep its premiums artificially low or offer extra benefits, because it could turn to taxpayers to cover any shortfalls.

This means the public option would be much cheaper than private insurance -- not because it would out-compete its private counterparts, but thanks to its unfair advantages. Businesses would have every incentive to dump their workers into the government plan. Estimates of how many people would ultimately be forced out of their current insurance and into the public plan vary, but go as high as 90 million workers. So moderates have resisted signing on to any of the public-option proposals -- no matter how often they're reconfigured.

Paying for it: Democratic leaders have used every budgetary sleight-of-hand they can conjure to pretend their bill costs less than the $900 billion marker set down by President Obama -- but those efforts have not gone well.

For example, the Senate tried to shift $250 billion in Medicare pay-outs from the health-care bill to separate legislation. The result was a humiliating 53-47 defeat on the measure, with 13 moderate Democrats jumping ship. Beyond the total cost, there is a nearly unbridgeable divide between the House and Senate on new taxes needed to finance the bill:

The House wants to add a surtax on incomes of $500,000 or more a year. Combined with state and local taxes and Obama's plans to allow the Bush tax cuts to expire, that would raise marginal tax rates above 50 percent in 38 states. Those are some of the highest tax rates in the world.

The Senate wants to slap a 40 percent excise tax on "Cadillac" insurance plans. But there's widespread recognition that insurers will merely pass that tax on to their customers in the form of still-higher premiums. And as inflation drives costs higher, more and more plans will be subject to the tax. Over time, an ever-larger number of middle-class workers will be hit with the news that, under the government's definition, they own a Cadillac.

Democratic leaders may yet twist enough arms, promise enough pork and fudge enough language to get a bill passed. But despite their most wishful pronouncements, they're a long way from done.

Letter to the Editor: Equal rights? Not quite... by Nat Hentoff

Thu, 29 Oct 2009 23:00:00 -0500

The October 28 editorial "A civil rights advance," applauding President Obama's imminent signing of "hate crimes" legislation, ignored the legislation's plain violation of the 14th Amendment's "equal protection of the laws." As a result of this law, those convicted of serious bodily harm against protected classes of Americans -- based on their gender or transgender identity, sexual orientation, disability, race, color, religion or national origin -- could get longer prison sentences than persons convicted of bodily harm against victims outside protected classes. Perpetrators of a violent act not designated a "hate crime" -- for example, against a homeless person on the street, or a police officer, or a former employer -- could receive lesser prison terms.

Furthermore, the Fifth Amendment states: "Nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb." This "hate crimes" statute gives federal prosecutors the authority to try a defendant a second time for an alleged hate crime after prosecution in a state court.

America's Brother Karzai Problem by Malou Innocent

Thu, 29 Oct 2009 23:00:00 -0500

The war in Afghanistan has taken a turn for the worse. According to the New York Times, Ahmed Wali Karzai--brother of Afghanistan's incumbent president, and a notorious drug baron--is also a long-time employee of the Central Intelligence Agency.

President Karzai has long been considered a U.S. puppet. And now, with evidence that his brother has been on the CIA payroll for the past eight years (a claim conveniently disclosed ahead of the second-round presidential election), shows why Afghanistan's "democratic experiment" is largely a sham. But what's new? What does "justice" really mean when someone with friends in high places can get away with a $4 billion drug trafficking racket; while poor local farmers have their opium crops eradicated and their drug processing facilities destroyed?

According to New York Times reporters Dexter Filkins, Mark Mazzetti, and James Risen, brother Karzai helps the CIA by operating a paramilitary group; renting out housing to U.S. forces, and acting as a go-between for the Americans and the Taliban. This should come as no surprise. Even though free markets, democracy, and freedom are the principles that define the United States of America, these have not always been the principles that guided its foreign policy. From time to time, America's perceived national security interests have led it to cooperate with some of the world's most repressive regimes and unsavory political movements. U.S. policymakers often openly embrace authoritarian allies. But such prominent alliances are all too often coupled with America's simultaneous promotion of democracy, liberty and human rights. These mixed messages have severely compromised America's image and interests on more than one occasion.

Which brings us to Afghanistan. The U.S. has assisted and sponsored a corrupt, illegitimate and slightly autocratic regime there while purporting to advance the values of freedom and democracy. The entire rationale for the presence of the U.S. and its allies in Afghanistan rests on democracy, stability and winning hearts and minds.

President Obama has just signed a $680 billion defense appropriations bill with a provision giving commanders in Afghanistan the ability to pay Taliban members to switch sides. Sponsoring assets is not necessarily a bad thing. But the U.S. government works at cross purposes when it attempts to install a "legitimate" centralized government, wags a sanctimonious finger when elections are riddled with pervasive levels of fraud and vote-fixing, and then go behind the backs of millions of Afghans by having a close working relationship with the brother of the incumbent candidate.

Brother Karzai is one of the most powerful figures in the southern province of Kandahar; the heart of Taliban country. This ongoing relationship with the CIA is arguably critical in getting information on the whereabouts of insurgents, which is a U.S. interest. But it undermines America's stated policy of trying to transform what is a deeply divided, poverty stricken, tribal based society into a self sufficient, non-corrupt, stable electoral democracy, which is not a U.S. interest.

"If we are going to conduct a population-centric strategy in Afghanistan, and we are perceived as backing thugs, then we are just undermining ourselves," said Maj. Gen. Michael T. Flynn, the senior American military intelligence official in Afghanistan quoted in the NYT piece. The U.S. Army and Marine Corps' Counterinsurgency Field Manual states that the legitimacy of the host nation's government is a critical component of combating an insurgency. We are sending our brave, disciplined and highly dedicated men and women in uniform to fight the Taliban; yet, as Spencer Ackerman at the Washington Independent noted, "CIA money funds a politically connected drug dealer. Opium funds the Taliban. We are in Afghanistan to fight the Taliban. How much CIA money has indirectly funded the Taliban?"

Certainly, America's national interests sometimes dictate cooperation with a foreign government or movement that does not share America's values. Some partnerships are unavoidable. Even so, Washington's goal should be to foster only as much cooperation as is necessary to protect and advance the vital interests of the American people. To what end are we needlessly compromising our values in Afghanistan? That is a question that should not be answered with more troops.

A Financial Super-Regulator by Jagadeesh Gokhale

Wed, 28 Oct 2009 23:00:00 -0500

In light of the recent asset price implosions and failures of large investment banks, should the Fed try to pre-emptively prick asset price bubbles? Furthermore, should the Fed be vested with the responsibility of regulating all financial institutions? Short answer: "no" and "no."

The "Greenspan doctrine" on monetary policy says that the Fed should not attempt to check asset price surges ahead of time but just manage the aftermath if they turn out to be bubbles and eventually burst. Such bubbles are difficult to detect before they actually burst, and a consistent policy intended to check presumed bubbles would reduce the economy's long-term growth potential. The job of regulating asset prices rests with market participants whose interests motivate self-regulation against undue market-risk exposures.

But in a speech last week, Fed governor Don Kohn said that "central banks are being encouraged to 'lean against the wind' in the face of asset price bubbles. We need to be honest about our very limited ability to assess the 'fundamental value' of an asset or to predict its price. Research should help to identify risks and inform decisions about the costs and benefits from a possible regulatory or monetary policy decision attempting to deal with a potential asset price bubble."

This suggests a re-thinking of the Greenspan doctrine within the Fed. The recession that began in 2007 has been enormously costly in terms of output and job losses. It is not surprising that Fed economists are examining whether monetary policy could prevent such episodes in the future instead of simply "mopping up" after the fact.

It's well known that the Fed successfully averted economic meltdowns after Wall Street swooned on several occasions: the stock market crash of 1987, its intervention to resolve the LTCM failure during 1998 and the even sharper bursting of the stock price bubble in 2001.

However, memories of those "successful" Fed interventions may have spurred even larger subsequent surges in asset prices because of their moral hazard effects on investor attitudes toward risk. Although other factors such as ratings errors and improper SEC regulations were important contributing factors, the recent financial collapse would not have been as severe without prior Fed-induced moral hazard among investors. So should the Fed now be formally vested with the responsibility of containing asset price bubbles pre-emptively and regulating financial firms?

Economists have long lamented problems in assessing whether asset price increases constitute bubbles and in predicting the timing of asset price bubble bursts. Setting capital standards and ancillary regulatory frameworks for financial institutions is more art than science. Given economists' poor predictive ability in evaluating macroeconomic risks and setting appropriate capital buffers for financial institutions, the Fed is bound to eventually (and spectacularly) fail at preventing asset price bubble bursts followed by severe financial disruptions. Then calls for congressional investigations and oversight on monetary policy would threaten the Fed's independence.

Indeed, making the Fed a financial super regulator would only provide formal sanction to policies that have increased moral hazard effects in the first place. Once the current recession is over and the Fed has withdrawn its extra-normal initiatives to restore credit markets, the correct policy approach may be to do the exact opposite — to signal that there will be no super regulator for financial institutions and to formally prohibit the Fed from engaging in bailouts of non-bank financial firms. Such a formal stance by Congress on financial regulatory policy is the best bet for developing mechanisms for sustained and effective self-regulation by market participants.

Fed officials are probably well aware of the dangers of accepting responsibility for setting financial regulatory standards and using monetary policy to prick asset price bubbles. The dangers are in setting anti-bubble policies that are so draconian they reduce the economy's long-term growth potential and eventually fail to protect financial institutions and the economy from a large macroeconomic shock. Such failures could permanently compromise the Fed's independence in monetary policymaking.

Although Fed analysts will doubtless continue research on the causes of asset price bubbles, they would be foolish to accept formal responsibilities for pre-emptively containing asset price surges and becoming financial super-regulators.