The Angry Cyclist

A fleeting grasp of civil, well reasoned discourse.
This blog will comment on topics of interest like politics, business, taxation, the War with Islam / Islamofascists, road cycling, football, and others.


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Wednesday, March 31, 2004
 
Lies, Damned Lies and Robert Kuttner

Robert Kuttner's anti-Bush rhetoric has reached a fever pitch.

The failure to keep America safe


Hey, Bob: have there been any terrorist attacks on American soil since 9/11/2001?

By Robert Kuttner, 3/31/2004

TWO PIVOTAL recent events should make a shambles of President Bush's contention right after 9/11 that a war on terrorism would be the defining mission of his presidency.

In late January David Kay, the president's own chief weapons inspector, admitted that no nuclear, chemical, or biological weapons were found in Iraq. That finally made it respectable to question the wisdom of the Iraq war.


Were we wrong to liberate 20 million Iraqis from underneath the tyrannical boot of Saddam Hussein?

Then, last week, the explosive testimony of the president's former counterterrorism chief Richard Clarke invited intense discussion about whether the Bush administration had done enough to avert the 9/11 attack.


When even partisan liberals like Gregg Easterbrook think Richard Clarke's full of it, it's not an argument I'd be making.

However, a third and even more important inference is seeping into public consciousness: The failure to protect the United States against terrorism is ongoing and directly related to Iraq. The Iraq detour has set back America's security in at least five mutually reinforcing ways.


How many attacks on our soil, Bob? How's zero sound to you?

First, the war distracted top officials from domestic preparedness, which remains in organizational chaos. No senior White House official is coordinating antiterrorism, which sprawls across the CIA, the FBI, the National Security Agency, and the unionized hapless Department of Homeland Security.


Wow - a Federal program Kuttner doesn't like! I never thought I'd read that...

Second, the war diverted resources -- regular troops, commandos, Arab-speaking analysts, and Predator spy missiles, which otherwise might have been deployed to tighten the noose around Al Qaeda in Afghanistan. Two precious years have been lost.


When you come up with a better idea to make Pakistan a more cooperative ally, Bob, I'll be listening.

Third, Iraq replicated the very scene that triggered Osama bin Laden's holy war in the first place -- the presence of US troops in Saudi Arabia after the first Gulf War. Iraq repeats a direct American occupation of a Muslim nation, helping recruit new young Jihadists unknown to Western intelligence agencies.


We're not in Saudi Arabia anymore, Bob. We've 130,000 troops to the north, so if bin Laden now decries our presence in Iraq we'll know that he (as well as you, Bob) will always keep moving the rhetorical goalposts and will never be satisfied with any action taken by us, the Great Satan.

Fourth, despite blather about a "forward strategy" to advance democracy, the invasion of Iraq significantly reduced American leverage against Syria and Iran (who really do harbor terrorist organizations like Hezbollah) because we need their military cooperation to secure Iraq's borders. We've also lost leverage with Saudi Arabia, the breeding ground of Al Qaeda.


That must be why Syria is making kissy faces with the Aussies so we won't stomp on their asses down the road. And Bob? We've never had leverage with the Saudis. Why do you think they're cutting oil production? Wake the fuck up, Bob - We're all but at war with Saudi Arabia; it's just an economic war right now.

Finally, the war undermined foreign cooperation against terrorists. "It used to be that when relations became testy with our friends, at least the intelligence cooperation continued to work," says a former CIA station chief in a Mideast post. "I used to be able to walk into a president or a prime minister and say, `Look, here's the deal.' I guarantee, today they'd say, `Sure, get out of here.' " A former ambassador told me, "Cooperating with the United States starts being seen as a political liability. It becomes repugnant to the political class."


'Today they'd say' - I don't know, Mr. former CIA station chief, has anybody actually asked them recently? I'd rather know from a source that, you know, actually knows what's going on than a retired spook, perhaps many years out of the loop, whose opinion is pure speculation.

Whatever you think of Richard Clarke's book promotion tour motives, this larger story of the anti-terrorism fiasco has been hidden in plain view for the past year. Much of Clarke's tale of White House misplaced priorities and more was previously revealed by former national security senior officials Daniel Benjamin and Steven Simon in their 2003 book, "The Age of Sacred Terror."


Kuttner deliberately omits the fact that the majority of Clarke's criticism of the Bush administration was pre-9/11 and that, in fact, Clarke himself didn't think 9/11 could have been prevented:


If President Bush had followed every last letter of Richard Clarke's recommendations starting Inauguration Day, it still would not have prevented 9/11. How do we know this? Richard Clarke says so.

Here's how the disgruntled National Security Council veteran put it last week in an exchange with Slade Gorton, a member of the 9/11 Commission and former Washington Senator:



Mr. Gorton: "Assuming that the recommendations that you made on January 25 of 2001 . . . including aid to the Northern Alliance which had been an agenda item at this point for two and a half years without any action, assuming that there had been more Predator reconnaissance missions, assuming that that had all been adopted, say, on January 26, year 2001, is there the remotest chance that it would have prevented 9/11?"



Mr. Clarke: "No."



It has been documented in a score of reports by the RAND Corporation, the General Accounting Office, the Markle and Century foundations, three national commissions, and a dozen congressional reports. Nor are others who have observed this fiasco close up shy about revealing their frustrations to reporters. "It's bad enough that they screwed it up before 9/11," says a career counterintelligence official -- not Clarke -- who served well into the Bush administration. "What's really galling is that these people screwed up afterwards."


So we have an unnamed 'career counterintelligence official' who served well into the Bush administration who claims that 'these people screwed up afterwards.' Does Bob believe this adds any credibility to his argument? I don't.

Unfortunately, much of the media, especially television, still treat all of this as a merely partisan story of charge and counter-charge. It is not. The administration's gross failure to keep America safe from terrorism has been amply documented.


Last time, Bob - how many successful terrorist attacks have there been on American soil since 9/11?

Instead of limiting their focus to Clarke and reducing the story to "he said/she said" partisan catfight, the media should grasp the immense import of what has been revealed. If I hear the phrase, "There's plenty of blame to go around" one more time, I may take an ax to the TV.


I often feel the same way after reading nonsense like your column, Bob. So, in a sense you're saying Clinton is completely free of any blame for ignoring terrorism during his eight years in office?

There is, however, a partisan implication. Before the Vietnam schism, Democrats and liberals were not just credibly tough about protecting America. They were the realists while the Republican right were the utopians.


Of course, this has nothing to do with the problem at hand, but bash go on...

While the right lobbied, in the late 1940s, to start World War III (was this while Harry Truman - D, was in office? - Ed.), statesmen like George Kennan appreciated that containment of Soviet expansion and George Marshall's plan for the reconstruction of Europe added up to a policy that was more proportional and more effective. When right-wing extremists wanted to risk a nuclear exchange over Cuba, President Kennedy executed a policy that was both prudent and tough.


So we wind up with a fifty year Cold War in which these matters were (get this) actually taken seriously by both political parties:

So they (Europeans) discount the fact that America remained steadfast during the entire Cold War despite both parties electing Presidents during that interval. There were differences in style and approach towards how the Cold War should be handled, but never any doubt that it would be handled, no matter which party held the White House.


So much for your partisan implication, Bob.

Now, courtesy of Bush's astonishing bungling, Democrats are on the verge of reclaiming that legacy -- not by being more-extreme saber rattlers, as some on their party's right commend, but by being better realists about how best to keep America safe. The country has never faced a more fateful choice.


The only thing I find astonishing is that fact-challenged bullshit like this column is allowed to see the light of day in the sole major New England newspaper. That's before I remember that the Boston Globe is owned by the New York Times company, which explains everything.

Robert Kuttner is co-editor of The American Prospect. His column appears regularly in the Globe.

Copyright 2004 Globe Newspaper Company.


Tuesday, March 30, 2004
 
And O.J.'s Still Looking For The Real Killers

Tom Oliphant hitches his wagon to Richard Clarke's horse, in light of recent revelations, not that good of a move.

Understanding the real costs of Iraq war

By Thomas Oliphant, 3/30/2004

WASHINGTON


FOR MORE THAN a year, the people who follow international terrorism professionally have cautioned those of us who write about it occasionally not to misuse the term Al Qaeda the way we used to misuse the term Mafia.

Just as the fabled "commission" of organized crime family bosses obscured a wide variety of independently rapacious and murderous activity, they say, so Al Qaeda's existence obscures a wide variety of murderous activity that indicates substantial decentralization, if not actual independence. The term former counter-terrorism coordinator Richard Clarke has used since his book and critical views of the Bush and Clinton administrations surfaced this month -- "hydra-headed monster" -- is considered to be both accurate and ominous.


Some news flash. "Terrorist organizations are dangerous - Details at 11:00". Like we couldn't have figured that out after 9/11...

Worse, the fact that Al Qaeda has "morphed" (into what? - Ed.) -- to use another commonly employed word in the terrorism profession -- lends credence to perhaps Clarke's most telling criticism of all, that President Bush's decision to invade Iraq almost unilaterally last year has "seriously undermined" (Clarke's phrase) the more important struggle against worldwide terrorism by Islamic fanatics.


Clarke / Oliphant imply no connection between Saddam's Iraq and terrorism, a notion that does not square with the facts.

His concern that confronting effectively the change in terrorism's structure and tactics has been undercut by the events in Iraq is but one of three major points he is making on this topic, and others would add a fourth.

Iraq and its impact on the war against terrorism was not the issue at hand when the House and Senate Intelligence Committees did their examination of the events leading up to Al Qaeda's attack on the United States in September 2001. It is also not the issue before the so-called 9/11 Commission, the independent body established for the same purpose that is getting far more access to Clinton and Bush administration records than did the initial inquiry.

However, the issue of Iraq is central to a substantive understanding of Clarke's criticism of Bush's war on terror that followed the 9/11 assaults. I know it is more fun to play the politics of all this, but the fact that the country's security is involved, and this influences the tone of the public discussions. even though the


Not sure what was omitted, but one thing is clear from the paragraph above. This 9-11 Commission has clearly descended into political grandstanding by Clarke and his supporters. The notion that Bush should be criticized for doing nothing eight months before the 9/11 attacks while Clarke, Clinton & Company did nothing for eight years is laughable, if it weren't so bloody transparent.

Clarke assumes that the almost entirely covert efforts to destroy the original Al Qaeda's leadership, to the extent we are fully aware of its membership, are going to keep on succeeding -- most likely with the elimination fairly soon of Osama bin Laden and his top strategist, Ayman Al-Zawahri. This is, however, an essential, minimal requirement whose actual impact on terrorism may not be all that substantial.


If that's the case, why wasn't this done while Clinton was in office?

According to experts in and out of government, the reason is that Al Qaeda and terrorism have changed, and we have not kept up with the changes. The most dramatic evidence was the hideous attacks on the Madrid commuter train this month -- showing the ability of terrorists with roots outside Spain to plan, finance, and carry out an attack on a vulnerable target that was timed virtually on the eve of national elections for maximum impact.


First, the nature of al Qaeda - decentralized by Oliphant's own acknowledgement - will lead the decentralized cells to adapt as the situation requires, not exactly a news item. Second, the Madrid bombings were different from 9/11 only in scale.

This ability to adapt and grow should be deeply disturbing. As Clarke put it acerbically last week, it also should be disturbing that international terrorists have carried out more attacks in the 30 months since 9/11 than they did in the 30 months before it.


How many more? Wonder why he doesn't say...

His second point is that the decision to invade Iraq and the way we did it diverted resources and top-level attention from the struggle with terrorism. The famous example is the elite Special Forces unit, complete with Arabic speakers and other highly specialized people, that was taken out of Afghanistan in 2002 and given new missions in Iraq; it has only just recently been transferred back to Afghanistan. That is the tip of a much larger iceberg.


The concept is known as deploying your assets where they're needed the most. Perhaps the 'tip of the iceberg' they're missing is that Iraq isn't the hot spot it was a few months ago?

The third point Clarke makes should be obvious. The invasion of Iraq was not just initially extremely unpopular in the Islamic world, it has been enduringly so. Much worse, the evidence indicates that while what Clarke used to refer to as the "human conveyor belt" of trained fighters and terrorists may have been destroyed in Afghanistan, it has been recreated in covert, more sinister form all over the Islamic world.


I hate to break this to you, Tom, but war isn't a fuckin' popularity contest. Perhaps you're forgetting the fact that 19 of the 19 9/11 hijackers came from Islamic countries? Blame them, not us. The point I'd like to make, which should be obvious, is what would you have done differently to eliminate this threat? That lack of detail is the one thing that really fries my ass about this kind of sniping.

As the recent, shocking (shocking!) Pew Center survey of public opinion in Arab countries showed, support for terrorism is overwhelming, even in countries nominally allied with US policies, such as Tunisia and Morocco. The enormous opportunity that existed 30 months ago because of the widespread revulsion at the attacks in New York and here to undermine terrorism's appeal has been largely lost. Instead the appeal has been inflamed.


Tom, this has been going on for a lot longer than 30 months. How do you propose to placate the Madrid bombers, who were (laughably or otherwise) trying to justify their attacks by citing the Crusades?

Last week a previously unknown group threatened violence in France and listed the banning of the veil from schools alongside continuing American support for Israel, the war in Iraq and the killing of civilians in Afghanistan as evidence that the West never abandoned the Crusades.

This perception that a belligerent West is set on the humiliation, division and eventual conquest of the Islamic world is at the root of Muslim violence. The militants believe they are fighting a last-ditch battle for the survival of their society, culture, religion and way of life. They are fighting in self-defence and understand, as we in the West also believe, that self-defence can justify using tactics that might be frowned on in other circumstances.

In addition, an explanation for the parlous state of the Middle East must be found. If Islam is the perfect social system, the militants' logic runs, then something else must be to blame for the second-rate status, economically, militarily, politically, of their lands. They blame the West - and the failure of most Muslims to practise their religion with sufficient discipline and devotion. The bombs are designed to restore the pride of Muslims worldwide and, by weakening the 'Crusaders' and their allies, hasten the eventual return to the golden age of a thousand years ago when the lands of Islam were the world's leading power.

The cosmic scale of the militants' aims make them very difficult to counter. But somehow we must halt the spread of their worldview, deny them political oxygen and strip away the legitimacy that allows them to operate. There is no silver bullet.


A final point involves Iraq itself. US officials admit they do not yet fully understand the nature of the continuing insurgency, but there is no doubt that foreign fighters with links across borders have a presence there that they did not have before the war.


Um, it's something like this, Tom - there's a bunch of religious Islamic fanatics that like shooting and killing infidels and blowing up cars, restaurants and buildings.

The invasion, in other words, had real costs and consequences because of its nature and timing. Instead of assaulting the messenger, the Bush White House would help the stumbling president's political fortunes much more if it faced these consequences squarely and stopped denying the obvious.


If only Tom and his band of fellow travelers would only answer the obvious: Do you guys have any credible alternatives to fighting terrorists? Until they produce such, I for one call on them to stop their moralistic grandstanding. Fat fuckin' chance, that.

Thomas Oliphant's e-mail address is oliphant@globe.com.

Copyright 2004 Globe Newspaper Company.


Wednesday, March 24, 2004
 
Channeling the Guiness Guys - "Brilliant!"

The Boston Globe's ace economist, Robert Kuttner, has taken a temporary reprieve from the Blame BushTM barrage that's all the rage nowadays.

Fix economy by targeting tax cheats

By Robert Kuttner, 3/24/2004

GEORGE BUSH has left his challenger, John Kerry, with a huge fiscal headache.


Yes, I was bullshitting you!

This is either a misapplication of logic or a huge Freudian slip by Kuttner. I'll choose the latter, since it's more than obvious how much Kuttner despises Republicans in general and Bush in particular. I mean, come on now! What, exactly, did Bush 'leave' to his challenger? Did Kerry actually win the election that has yet to take place, and our 'intellectual superiors' Kuttner just forget to tell us?

Kerry, as president, would need to drastically reduce the inherited budget deficit, much as Bill Clinton did in the 1990s.


About $290 billion (middle of article), which is usually fine with Keynesians when the economy is in recession (pump priming and all that), unless it's a Republican president doing the spending...

But Kerry also champions massive new entitlements promising everything to everybody social investment that the country cannot afford needs and DemocRATS voters want -- in health care, education, and energy independence. The budget deficits now appear so immense that Kerry cannot do both things, even if he carries out his promise to repeal tax cuts on people making more than $200,000 a year. But there is an ingenious way out of this fiscal trap.


It must be ingenious - it's Kuttner's idea!

A Kerry administration should go after tax cheats, both individual and corporate, who now cost the US Treasury something like $300 billion a year. Going after major tax cheats would be good politics as well as sound policy.

Corporate and individual tax evaders are overwhelmingly wealthy.


Bullshit, according to 1) the IRS and 2) my four years experience as a desk & field auditor with the Mass. Department of Revenge Revenue. Kuttner seems to have obtained the $300 billion from his compatriots at TAP, of which $85 billion attributed to offshore tax evasion (more here), and he 'neglects' to give the range ($250 to $300 billion) so he can deliberately slant the number higher. I opine that his use of the word 'overwhelming' to describe the erstwhile tax evaders is wrong. In the year 1999 alone, abuse of the Earned Income Tax Credit cost the American taxpayer $11 billion. People in this income tax bracket aren't 'overwhelmingly wealthy', are they?

Side note - read that TAP article; Kuttner does a lot of cherrypicking from it to make his big points that follow.

They are either overt criminal tax evaders or corporate money launderers who take advantage of gaps in reporting requirements to hide profits in tax havens. These abuses not only starve the Treasury of revenue owed under the existing tax code. They also breed disrespect for law and undermine tax compliance by the rest of us.


I would also state that high tax rates encourage tax evasion, too. Should I even bother to ask if Kuttner considers that angle?

Why should you and I have to worry about cuts in services, the prospect of tax hikes on working families, or the fiscal deterioration of our economy because scofflaws cheat on their taxes? Why should we pay taxes when others don't?


That's a good point, Mr. Kuttner, but why did you resort to class warfare to make the point?

Just before he left office in 2002, IRS Commissioner Charles Rossotti testified to Congress on a new epidemic of tax shelters so complex that the IRS couldn't keep up. About one such shelter in 400 is audited. The cost just in domestic cheating: more than $100 billion a year.

The mismatch started during the Clinton administration was compounded by restrictions imposed on the IRS by the Republican Congress, hyping a few cases where revenue agents overstepped their bounds no surprise there to hamstring enforcement generally. The Bush administration then added insult to injury by shifting scarce auditing resources away from the wealthy to low-income families who use the Earned Income Tax Credit (mentioned above, and no, it doesn't look like such a shift of audit agents took place - Ed.).


So the IRS's goons revenue agents acting like jackbooted thugs is kinda, sorta the fault of the Bush administration? That's a new one...

A Kerry administration should restore enforcement on tax cheats so it doesn't need to raise tax rates on law-abiding taxpayers. And there's a second front where the Bush administration is even more vulnerable to criticism.


Why not repeal the laws that allow for tax shelters? And why didn't the Clinton administration do anything about it while they were in power?

In early 2001, one of Bush's first actions was to kill a joint effort by the United States and its European allies to crack down on offshore tax havens. These are tiny countries in the Caribbean and elsewhere whose main economic products are a little tourism and a lot of money-laundering.


That's right - Once again, it's All Bush's FaultTM that other countries actively hold themselves out as tax havens.

Hey, Bob, when did all of these tax shelters start?

These tax schemes, which proliferated during the late 1990s boom,


Just wanted to clarify things, thanks.

The joint US-European tax-haven initiative reflected two concerns. First, multinational corporations were increasingly booking taxable profits in tax havens that collect no corporate income tax. These rogue ministates have no tax treaties with the law-abiding countries, and the evasions were costing the United States and Europe more than $200 billion a year in revenue (emphasis added - Ed.).


So now it gets interesting. Countries with low tax rates actively seek corporations to incorporate there, knowing that in the absence of a reciprocal tax treaty, such moves, while not ethical in Kuttner's some minds, is perfectly legal to do.

Second, the growing concern about Al Qaeda required a crackdown on global money laundering. The US-European plan would have tightened reporting requirements on banks and corporations, dramatically reducing criminals' ability to channel profits into tax havens. But the Bush administration put the tax- avoidance interests of its corporate allies ahead not just of the solvency of the US Treasury but of the war against money laundering by terrorists.


Money laundering by terrorists is a different ball of wax than money laundering by what are essentially shell corporations, the former of which are identifiable as well as the latter, albeit by different means. Nice try, Bobby...

So a Kerry administration if it ever gets elected should put the US-European initiative against tax havens back on track. And candidate Kerry ought to be explaining this sordid history to the American voters.


And if it's a European joint venture, that's a good thing. Right?

Tax havens also play a role in the serial cases of corporate bilking of investors.


Not exactly. Corporations have a fiduciary duty to maximize returns for the shareholder, which would include reducing after-tax rates of return, so you would expect some corporations to relocate to a tax shelter country, so let's take the token isolated incident as proof of continued corporate perfidity:

The Parmelat case, in which executives of the Italian food giant fraudulently diverted tens of billions of dollars, relied heavily on tax havens. After Parmelat, which is Europe's version of Enron, European tax and regulatory authorities are especially keen to crack down on tax havens but can't do so without the active collaboration of the United States.


Why is that, Bob? Didn't you state the actual reason thusly: These rogue ministates have no tax treaties with the law-abiding countries? Why is 'Europe' (i.e. a bunch of sovereign countries) incapable of entering tax treaties on their own without our help? My theory: Like the Iraq war, derided by leftists like Bob Kuttner as 'illegitimate' and 'illegal', such activity by individual countries is 'unilateral' and therefore bad because it isn't signed off by France the United Nations transnational NGO's every freakin' country on Planet Earth. Group hug, everybody!

By making this a campaign theme on which he will take both sides of the issue, Kerry would also force the press to shine more of a spotlight on this tax scandal, which has gone largely unremarked. (Two exceptions are David Cay Johnston in The New York Times and Sam Loewenberg in The American Prospect. This column relies entirely in part on their diligent reporting.)


Knock me over with a feather! An honest sentence from Robert Kuttner! Quick, Ethel, my pills!

Going after an estimated $250 to $300 billion in revenue from tax cheats (What, they're not 'overwhelmingly wealthy' anymore? - Ed.) would transform the fiscal assumptions of the campaign. Kerry could restore America to fiscal soundness without giving up needed government spending social investment. This tale also usefully reminds the voters of one more sordid aspect of an appalling incumbency.


As mentioned before, for the record, these tax havens proliferated during the 1990's while President Blowjob Clinton was on watch...

Robert Kuttner is co-editor of the American Prospect. His column appears regularly in the Globe.

Copyright 2004 Globe Newspaper Company.


Wednesday, March 17, 2004
 
Bob Kuttner, Statistician / Conspiracy Theorist

In addition to being an economist, the Boston Globe's Robert Kuttner helpfully guides us through the difficulties of modern statistical reporting. In his mind, statistical indicators such as averages aren't simply inaccurate, they lie. Here's more by the Globe's second-leading conspiracy theorist:

Statistics lie on the true cost of living

By Robert Kuttner, 3/17/2004

WHAT IS THE MATTER with the whiny American voters?


That's an excellent way to win over new converts, Bob...

They keep telling pollsters that they think America is on the "wrong path." But don't they read the statistics? Don't they know that unemployment is at a comfortable 5.6 percent, that inflation is almost nonexistent, that the economy is growing smartly at around 4 percent?


Sorry. That was Bob's rare foray into sarcasm.

These happy statistics, alas, don't accurately capture the economic reality of ordinary people. Take inflation. It's true that measured inflation is very low, but look at all that's left out.


It's readily acknowledged that measured inflation does not include every possible input:

Income taxes and investment items (like stocks, bonds, and life insurance) are not included.


In the case of health care, the government's consumer price index tracks the cost of medical services. But it is less precise about tracking who pays for them.


Well, maybe that's because that's not what's being measured?

If your employer's health plan is increasing your share of premiums and cutting the company's contribution or if the plan is increasing out-of-pocket charges or reducing what drugs it will cover, this shift is accounted for indirectly, after a lag of two years. But it hits your pocketbook immediately. And if rising medical costs deter you from seeing the doctor, that doesn't show up in the index at all.

Or consider housing. There are parts of the country where housing prices have been declining for a decade because few people want to move there. Statistically, these declines get averaged with astronomical housing costs in major metropolitan areas to show only modest average housing inflation.


That's why it's called an average, isn't it?

Around big cities, prices have plateaued at very high levels that are plainly outstripping incomes. Try telling a young person in Greater Boston or New York or LA that there's no serious housing inflation or that rents have not increased faster than earnings.


If Bob a) bothered to look or b) acknowledged the obvious, many discussions on housing prices differentiate between regions of the nation. You'd think an economist would know this, wouldn't you?

Another case of hidden inflation: A great many people in late middle age find themselves subsidizing their newly launched young. The causes of this trend are multiple: low starting salaries, skyrocketing rents, and the high cost of college tuitions and health insurance. Is this a dent in the cost of living for the middle aged? You bet. Does it show up in government statistics? Nope.


You'd also think that an economist would use more precise terms in describing an economic phenomenon than 'A great many people'. Does this mean over one-quarter / half / three-quarters of all families subsidize their children in all those ways? More? Less? Which one has the biggest dollar impact? Do the parents just pay for tuition? Do families pay rent for their children to live elsewhere, as Bob implies? Do these children have jobs while they're in school? Are these children in college at all, and just living at home until they're 25 or older? Why can't the parents just say no to their children and make them grasp the concept that they're adults? Bob's example is so amorphous it's difficult to disprove, but not amorphous enough to question.

The inflation numbers also fail to capture pocketbook realities for retired Americans. A low official inflation rate plays a cruel trick on seniors. For starters, it means that cost-of-living adjustments in Security Security checks are mere pocket change. One new prescription can more than eat up this year's Social Security increase.


One of my clients had a year-to-year Social Security increase of $400. First, is $400 'mere pocket change' to any of you? Maybe to Bob Kuttner, 'Friend of the Working Class', it is. Second - Am I really supposed to believe a single (average priced) prescription runs $400?

Further, a low rate of inflation translates into a low interest rate on savings accounts, Treasury securities, and other prudent investments for the elderly. Moreover, older people on fixed incomes who are not homeowners are also at the mercy of rising rents.


What about alternate investments like dividend yield mutual funds, or corporate bonds or long-term CD's, which can also be classified as prudent (i.e., low risk or insured) investments? If they don't own a home, whose fault is that? Are there 'A great many' seniors who are forced to rent?

And the same deficiencies in the consumer price index that fail to capture cost shifting in health care particularly affect the elderly, who spend a disproportionate share of their income on doctor's bills, hospital costs, and drugs.

Or take energy costs. Gasoline is near an all-time high. That doesn't affect the overall index much because energy costs are a relatively small share of average total consumer spending.


One wonders why you mention it, then...

But if you need your car for your business, you certainly feel it.


Or maybe you can change jobs?

Then we have the unemployment numbers. Nominally, unemployment is a nice, manageable 5.6 percent -- about where it was during much of the booming 1990s. But that statistic leaves out all the people who left the labor force because they gave up on ever finding a job. If you include those, the real unemployment number is more like 7.7 percent. The proof of the soft job market is that earnings have not kept up with inflation. In 2003, the official inflation rate was 2.3 percent. The median wage increase was just 2 percent. And the 2004 statistics are likely to be worse.


Official unemployment numbers don't capture under the table workers or self-employed workers, which would bring that 'real unemployment number' closer to its original starting point. Kuttner also makes no statement as to why '2004 statistics are likely to be worse', so chalk that one up to mere assertion.

The "average" voter got a tax decrease that the administration likes to put at around $1,000. But that artful statistic averages Joe Sixpack with Bill Gates.


That's why it's called an average...

The typical voter got a federal income tax cut of more like $300, and in many cases that small federal tax cut was overwhelmed by local property tax increases that were caused by declining federal aid to states and cities.


By now we KNOW where Bob's going with all this, don't we?

President Bush may have gotten away with telling the voters things about Iraq that just aren't true.


For instance? Just one example will do; it can't be that hard to come up with just one little example, can it?

But he'd better watch out when the evidence against his rosy statistics is right in voters' pocketbooks.

Ordinary people may not be professional statisticians, but they are not fools. America's voters know better than the experts (including you, Bob? - Ed.) whether their own personal economy is thriving. Bogus economic optimism only reinforces the growing sense that this president speaks with a forked tongue.


I'm continually amazed at the number of times the likes of Robert Kuttner paint the US economy under a Republican president as such a bleak, desolate, hopeless picture and continue to be taken seriously. Given that I'm perusing the Boston Globe, maybe I shouldn't be. Glenn Reynolds has a few rejoinders:

THE ECONOMIST: "Anxiety is turning to paranoia about jobs. Take a deep breath: most Americans have rarely had it better."



UPDATE: Read this, too.



Lies, damned lies and statistics. Bob's hit the trifecta today!

Robert Kuttner is co-editor of The American Prospect. His column appears regularly in the Globe.

Copyright 2004 Globe Newspaper Company.


To expand further on the subject, it's painfully obvious that Robert Kuttner is afflicted with a mild case of a recently discovered disease known as Bush Derangement Syndrome, where every known wrong in the world can be laid at the feet of our current Republican president, George W. Bush. It's quite easy to do, as Kuttner illustrates in excruciating detail in the preceding paragraphs. Take a known set of facts (that the CPI inflation index doesn't include everything), connect them to a result of some action (that people face increasing prices for things) and blame it on President Bush. No connection needs to be made between the facts and Bush, or the action and Bush; you simply connect them, and that's that! Easy, isn't it?

Rantburg commentator Atomic Conspiracy, presumably a GWB supporter, gives an excellent illustration:

Once a scapegoat has been nominated, however, no real effort is required to blame him for literally anything. A few weeks ago, an Al Guardian columnist stupidly lost some money in a Nigerian e-mail scam and seriously blamed Bush for it.

It's ridiculously easy to blame Bush for nearly anything. I'll demonstrate: A couple of weeks ago, there was a bizarre accident at my home. My overweight neighbor was trimming a tree in his backyard. The ladder fell, depositing the neighbor against the fence, which collapsed. The ladder itself continued onto my side, and knocked down my electric powerline, leaving me in the dark for 3 hours. Remarkably enough, the neighbor was not seriously injured.

This was obviously Bush's fault. How, skeptical Rantburgistas might ask? Simple, my neighbor is a car dealer, he makes a killing from SUVs (when these aren't roaming about killing and plundering on their own). If it weren't for Bush limiting our freedom by failing to ban these diabolical machines, this guy wouldn't be rich enough to live in my neighborhood. I would have a slender, athletic vegan commissar or such for a neighbor, and the accident would not have happened.

Last year, I was returning to my car from a night class. I slipped in the darkness, hit my noggin on the curb and required several stitches to fix it. Again, Bush's fault; no doubt about it. You see, if Bush allowed the government to provide a guaranteed minimum income of $26,500 a year(as the Green Party advocates) nobody would have to work, there would be no night classes and clumsy middle-aged professors like myself would not be wandering about in dark parking lots.


Tuesday, March 16, 2004
 
Like Father, Like Son?

This is a favorite meme of hacks like the Boston Globe's James Carroll. There's simply too much nonsense in refuting the entire bucket of slop; let's just examine the key paragraph:

The situation hardly needs rehearsing.


But let's do it again, just to remove any doubt...

In Iraq, many thousands are dead, including 564 Americans. Civil war threatens.


This poll shows no such indication of that threat.

Afghanistan, meanwhile, is choked by drug-running warlords. Islamic jihadists have been empowered.


Empowered to turn tail and run whenever the heat's on!

The nuclear profiteering of Pakistan has been exposed but not necessarily stopped.


If they want those shiny new F-16's, they'll have no choice but to stop.

Al Qaeda's elusiveness has reinforced its mythic malevolence.


Real elusive, catching all those bullets...

The Atlantic Alliance is in ruins.


What the hell is the Atlantic Alliance? Does he mean NATO? Some trans-national group he just invented?

The United States has never been more isolated.


Isolated, with the likes of the United Kingdom, Australia, Poland, Japan, Ukraine, Denmark, Bulgaria, Albania, the Netherlands, Mongolia, The Philippines, South Korea, Qatar, etc. And we may have to act regardless of who our allies are, or how many we have.

A pattern of deception has destroyed its credibility abroad and at home.


Besides the common perception of exaggerated claims about WMD, what other things fit into this 'pattern'? How come I never see examples of this?

Disorder spreads from Washington to Israel to Haiti to Spain.


"Disorder! Chaos! Pandemonium! Plague! Pestilence! Locusts!"

Whether the concern is subduing resistance fighters far away or making Americans feel safer, the Pentagon's unprecedented military dominance, the costs of which stifle the US economy, is shown to be essentially impotent.


The common liberal answer to all of our economic woes - take the money from the military. Well, at least he's not advocating a tax increase!

If the above rebuttal was my courtroom argument against the likes of James Carroll having any impact as to the functioning of a) the War on Terror or b) anything relating to the government or the economy, I rest my case.



.....

Note to both of my readers: I am taking a temporary leave from this column to concentrate on other work, including a few courses in logic and cause & effect a television documentary based on my book "Constantine's Sword." I will return to this page regularly beginning the Tuesday after Labor Day. Until then, Peace.


Yeah, I'll miss him.


 
News Flash - John Kerry Keeps His Word!

John Kerry was fond of telling anyone who would listen that some 'foreign leaders' backed him for President in this year's election. Today, perhaps a first, he stands by his statement:

"I'm not going to betray a private conversation with anybody," he said Sunday. "I have heard from people, foreign leaders elsewhere in the world who don't appreciate the Bush administration and would love to see a change in the leadership of the United States."

Pressed on the campaign trail and by reporters to name the leaders, Kerry declined, although he said they were U.S. allies.

"I'm talking about people who were our friends nine months ago," said Kerry. "I'm talking about people who ought to be on our side in Iraq (news - web sites) and aren't because this administration has pushed them away."


...except that either a) The Boston Globe's Patrick Healy is trying to bail him out:

"I mistranscribed a key word," explains Patrick Healy, a political reporter for the BOSTON GLOBE who covered the event in a pool capacity.

"Listening to the audio recorder now, in the quiet of my house, I hear 'more leaders' and I am certain that 'more leaders' is what Senator Kerry said."


...or b) Senator Kerry is bullshitting us and exaggerated the claim, if it was even possible for him to have met with any foreign leaders during the past year.

Then again, if I was being supported by any of these foreign 'leaders', I doubt I'd have the balls to brag about it...

My verdict - This is a StraddleTM, as opposed to a Flip-FlopTM, since he never contradicted an earlier statement with a follow-up statement. I'll have to consult the official Kerry referee just to be sure. I may have invented a new drinking game!


Wednesday, March 10, 2004
 
'Ask' And You Shall Receive

... a big freakin' tax increase, if John 'Fuckin' ' Kerry becomes president:

Kerry Calls for Return to Clinton Policies


Even though Clinton eventually admitted that he raised taxes too much...

Kerry, meanwhile, asked Americans earning more than $200,000 a year to pay the taxes they paid under President Clinton and pledged to retain the Bush tax cuts for the middle class and even add to them.


'Ask', what a nice euphemism!

"Under George Bush's policies, middle-class families are paying more. America's middle class can't afford a tax increase," Kerry told labor leaders. He accused the president of draining thousands of dollars from working families and practicing "the politics of blame."


As a tax professional, I must say that statement is complete bullshit. Marginal and average tax rates have declined from last year, and most refunds have increased for the overwhelming majority of my direct clients. The 'politics of blame' commet is rich, considering on whom he's trying to lay it.

"George Bush is running on the same old Republican tactics of fear ? and they're already getting tired," he said. "It's clear that this president will fight like hell to keep his own job, but he won't lift a finger to help Americans keep theirs."


Tired, as in hearing endless class warfare bombast from a candidate whose favorite tactics are to demagogue and sling mud.

The four-term senator also said he will propose new middle-class tax credits to pay for health care and college tuition. He agrees with Bush on extending some tax cuts past next year.


Knock me over with a feather? Not that I believe it for a second...

Republicans charge that the combined cost of Kerry's proposed social spending on top of the taxes he plans to raise will total a whopping $900 billion over 10 years.


Makes Bush's deficit pale in comparison, doesn't it? I wonder how a President Kerry would close that gap?

Not to take the criticism lying down, Bush-Cheney campaign spokesman Steve Schmidt said Kerry "has voted for higher taxes 350 times and his numbers for new spending don't add up. His campaign trail promises mean that he is going to raise taxes by at least $900 billion. It is a tax increase for every American."


Of that, you can be sure.

Schmidt added, "John Kerry's rhetoric that he is only going to raise taxes on the rich is not credible, is not believable, and it doesn't add up."

Kerry earlier took some heat after he was heard off camera telling supporters urging him to beat Bush: "Let me tell you, we've just begun to fight ... We're going to keep pounding. These guys are the most crooked, you know, lying group I've ever seen. It's scary."


"George Bush John Kerry is running on the same old Republican Democratic tactics of fear ? and they're already getting tired,"

Kerry spokesman David Wade said the senator was referring to Republican critics in general. "The Republicans have launched the most personal, crooked, deceitful attacks over the last four years," Wade said. "He's a Democrat who fights back."

The Bush-Cheney campaign answered back, saying, "At every turn, John Kerry has claimed to be the victim of an imaginary smear machine. John Kerry has run a relentlessly negative campaign from the very beginning and this comment is completely consistent with that."


...

And here's a soon to be Kerry's supporter:

Anticipating their meeting, the Bush campaign issued "Howard Dean's Greatest Hits on John Kerry," a 10-item recounting of Dean criticism of his rival for the nomination. The quotes from news stories include Dean's statement in January that "you're not going to change America by nominating somebody who is a Washington insider whose biggest long suit is talk."


YEEEEEEEEEEAAAAAAAAAAAAAAAGGGGGGHHHHH!







 
Let The Mudslinging Begin!

"I'm rubber and you're glue,
what you say bounces off me and sticks to you."


Couldn't help but think of that childish ditty when reading Robert Kuttner's brilliant title in his latest Kerry bootlick critique of the Bush Administration.

Mud tossed at Kerry might stick to Bush


Then again, it might not...

By Robert Kuttner, 3/10/2004

THE BUSH CAMPAIGN has a problem. Almost any unflattering issue they bring up about John Kerry tends to reflect worse on President Bush. One thinks of the old proverb, "Never mention a rope in the house of a man who was hanged."

On Monday, speaking at a fund-raiser in Houston, the president tried out what will doubtless be a Republican mantra: "Senator Kerry voted for the Patriot Act, for NAFTA, for No Child Left Behind, and for the use of force in Iraq. Now he opposes the Patriot Act, NAFTA, the No Child Left Behind Act, and the liberation of Iraq. My opponent clearly has strong convictions -- they just don't last very long."


This fits a pattern of straddling every major issue since Kerry's been a senator since 1984, as well as on more recent events. How do you argue against facts?

There are two very persuasive rejoinders. For starters, most senators and congressmen also voted for No Child Left Behind and for force in Iraq, but quickly turned into critics because Bush pulled a bait-and-switch.


Simple. You don't argue the facts. You make an assertion that Bush pulled a 'bait and switch' as though we're dealing with a used car salesman. Kuttner does not mention what this 'bait and switch' entails because it doesn't exist.

Similarly, most legislators were stampeded into supporting the so-called Patriot Act, which increases permissible spying on Americans, and now have regrets. Today, the Republican chairman of the House Judiciary Committee, Jim Sensenbrenner, says the Patriot Act will be extended "over my dead body." So Kerry is in very good company.


The Senate voted 98 to 1 for the PATRIOT Act, an expression of unanimity that doesn't square with Kuttner's accusation of 'stampeding', as though all Senators were somehow coerced to vote for it.

The second rejoinder is even more potent: Compared with whom? If Kerry occasionally modifies his positions as events change, his inconstancy is pretty mild compared with Bush's. This, after all, is a president who ran as a "uniter, not a divider," as a "compassionate conservative," and as a steward of budgetary prudence. The rest is history, and the history does not flatter the president.


There's a difference between saying something and having people disagree with that assessment, and having a proven track record of flip-flopping away on almost every issue. No less a Bush supporter than Andrew Sullivan points out that 'compassionate conservatism' costs money. Mr. Kuttner obviously believes President Bush should not try to engage undecided voters or reach out to them with such moderate positions.

Indeed, this is not an incumbent who should welcome close comparisons. Want to talk about Kerry's military record? Oops. Want to discuss No Child Left Behind, where Bush's failure to provide funding combined with impossible bureaucratic requirements has stoked a rebellion of Republican governors? Maybe you don't.


Or maybe we want to discuss the issue you're trying desperately to avoid, the prosecution of the War on Terror. Bush believes we're at war; Kerry wants to continue the Clinton policy of treating this effort as a law enforcement operation. Who would you feel safer with as Commander in Chief?

Want to make fun of Kerry as a preppy rich kid? A group of Bush supporters created an ad ridiculing Kerry's wealth, taunting him as an improbable advocate for the poor. But again, compared to whom?


Those are Bush supporters, not Bush himself. Stick to the script, Bob!

In America, some rich kids grow up to be adults who genuinely care about the poor -- the names Roosevelt and Kennedy come to mind -- and others couldn't care less. As Kevin Phillips's best-selling book, "American Dynasty," recounts, Bush father and son both fall into the latter category.


So the fact that Bush was a co-sponsor of the No Child Left Behind Act with Ted Freakin' Kennedy! is an example of his callousness towards the poor? Or is it because that act doesn't spend as much taxpayer money as Kuttner would like?

Bush junior, by his own account, was a dissolute who didn't get serious about his life until he was 40, when he got religion and sobered up.


Honesty is such a refreshing quality in a politician, isn't it?

His family connections then allowed him to fall upward. When Kerry, at age 25, was testifying before the Senate, Bush was partying. So maybe family affluence isn't such a great topic either.


Or the fact that Kerry, like Al Gore before him, has a lifelong ambition to become President and feels a sense of entitlement to it. Or maybe that's not such a great topic either?

Bush's kickoff commercial wrapped the president in the memory of 9/11. But this association is starting to feel like cheap grace. The families of many of the victims resent it,


You mean the 22 out of 3,000 families, some of whom are members of a left-wing fringe group receiving some of their funding from a philanthropic organization that counts Theresa Heinz Kerry as one of it's members?

and it flies in the face of earlier Bush pledges not to play politics with terrorism. Instead of evoking Bush's leadership, the commercial reminds us of Bush's cynicism. After the messy outcome in Iraq and the bungling of nuclear nonproliferation policy, terrorism no longer automatically plays to Bush's advantage.


The concept's called running on one's record. Get used to it.

Locating the GOP convention in New York (out of similar motives) could turn out to be an epic political blunder. Bush shouldn't expect a hero's welcome from New York's first responders, the real heroes of 9/11.


Even though Bush was at Ground Zero two days later and got a hero's welcome?

Bush walked away from financial commitments to New York;


Couldn't find much on that issue except for this; consider the source...

the firefighters union is very pro-Kerry;


What unions wouldn't be pro-Kerry?

and Bush is resented by New York's cops and EMT's for his opposition to urban aid and public-sector unions.


See above comment.

Also, Gotham's top three Republicans -- New York Governor George Pataki, Mayor Michael Bloomberg, and former Mayor Rudy Guiliani -- all favor gay rights.


They're still Republicans except for Bloomberg, and Pataki (who governs from um, Albany) and Guiliani aspire for higher offices; it's highly inconceivable that the gay marriage rights issue will have much impact when the convention rolls around.

Gay marriage, supposedly the ultimate wedge issue marginalizing Democrats like Kerry, could well play out against Bush. As civil union (Kerry's position) is fast becoming the national consensus, Bush finds himself marooned with the hard-core bigoted right and alienating people with no core political beliefs moderate swing voters.


Everyone that's opposed to gay marriages is a bigot? Argument by ad hominem, how Democratic of you, Bob!

So if a real comparison of records and personal achievements doesn't work so well, what do you do? You get really dirty, you have surrogates do the dirty work (remember Kerry's nonexistent affair?), and you hope that the mud so obscures the issues that by November the challenger's advantage on the substance is buried.


And we all know that the John Kerry campaign is above such pettiness like portraying his opponents as crooked and liars, placing blame on Bush for 'failure' in Iraq, accusations of deception in Iraq, setting up an economic raw deal for America and attributing plant closings in Dayton, Ohio to Bush, even though all Delphi plants in the US were getting closed six years ago during the Clinton administration by General Motors.

Nope, no mudslinging here...

This election is about profound differences -- what kind of a country we are becoming, and how to make the world tolerably safe. Let's hope the voters are paying attention.


It is about profound differences. Bush is a moderate Republican who took the War on Terror to our enemies while unnamed foreign leaders, some of whom likely opposed our efforts at the United Nations towards that end, are praying for a very liberal compliant Kerry Presidency.

More importantly, let's hope the American media does its job, Boston Globe editorials notwithstanding.

Robert Kuttner is co-editor of the American Prospect. His column appears regularly in the Globe.

Copyright 2004 Globe Newspaper Company.


Tuesday, March 09, 2004
 
Irish John Kerry - Bag O' Shit

Check out this hypocrisy:

Every time I look up from the keyboard there’s a new story about John Kerry’s mind-boggling hypocrisy making the rounds.

The latest: he relentlessly slams George Bush for not getting Europe on our side in the Iraq War—but in 1997 he expressed the completely opposite opinion about Clinton’s preparations to attack Iraq, even deriding Russia and France: Kerry Praised Clinton for Snubbing Iraq War Allies.

Likely Democratic presidential nominee John Kerry has repeatedly slammed President Bush for not getting the cooperation of European allies before attacking Iraq last year.

But in 1997, Kerry praised President Clinton for preparing to attack Iraq by deploying ships, aircraft and troops over the objections of France and Russia.

In a November 1997 audiotape broadcast by WABC Radio’s Monica Crowley on Monday, Kerry painted Clinton as resolute for putting U.S. war plans against Baghdad in motion.

“The president has, in effect, put military action on the table,” he told CNN’s “Crossfire.”

“Secretary Cohen canceled his trip, the chairman of the Joint Chiefs of Staff canceled a trip, troops are deployed, the aircraft carriers are being brandished. There’s no misunderstanding here about where the United States is prepared to go,” the Massachusetts Democrat assured.

Kerry praised the Clinton White House for thumbing its nose at our European allies.

“Clearly the allies may not like it,” said the top Democrat, before suggesting that France and Russia were spineless.

“Where’s the backbone of Russia, where’s the backbone of France, where are they in expressing their condemnation of such clearly illegal activity?” he railed.

Kerry also praised the White House for giving the United Nations the brush-off.

“The [Clinton] administration is leading. The administration is making it clear that they don’t believe that they even need the U.N. Security Council to sign off on a material breach because the finding of material breach was made by [U.S. weapons inspector Richard] Butler.”

Kerry defended President Clinton’s go-it-alone war plan as the best way to protect U.S. national security, telling “Crossfire,” “I think the United States has always reserved the right and will reserve the right to act in its best interests.”


If this isn't enough reason to question Senator Kerry's judgement, I don't know what is...


Sunday, March 07, 2004
 
Now It Makes Perfect Sense

Donald Luskin explains things succintly:

COMMIE TALKING POINTS The "Communist Party of India (Marxist)" cites the arguments of "well-known American economist Paul Krugman, writing in the New York Times."


 
Lots Of Luck

Your mission, should you choose to accept it:

Kerry looks to neutralize 'Mass. liberal' tag


Yeah, that'll happen...

...

Kerry strategists like the line about "dirtier water"; it aligns the candidate with families across the political spectrum. Yet they shudder at "Kerryisms" that reinforce an image that his campaign staff is now preoccupied with shaking: Massachusetts liberal. Kerry's line about going to the moon on Earth, some advisers say, can evoke the moonbeam caricatures of Democrats like Al Gore and Jerry Brown as off-the-wall thinkers on the environment and other issues. (emphasis added - Ed.)

"Swing voters and conservatives respond much better when Kerry talks about the environment in the context of jobs than when he talks about painting streets green," a longtime adviser to Kerry said.

With Republicans hammering the presumptive Democratic presidential nominee as an elitist liberal who would raise taxes and cut defense spending, not to mention that he served as lieutenant governor under 1988 nominee Michael S. Dukakis, Kerry and his advisers are plotting ways to try to neutralize the liberal tag. They also are repositioning Kerry to the political center in spite of 19 years of Senate votes that, according to an analysis by the nonpartisan National Journal magazine, puts him among the top 10 most liberal senators in recent years. This has become especially important now that a de facto general election race has begun and President Bush is targeting Independents and swing voters by offering himself as a "steady" leader and portraying Kerry's liberalism as anathema to most Americans who want a tough national security policy and greater tax relief.


No article on John Kerry is complete without the obligatory Vietnam reference:

The senator also is discussing his Vietnam War service in greater detail, noting his "first tour" to underline that he returned to Southeast Asia for a second tour, and recalling the time he spent with his crewmates where politics, class, and race did not matter.


Then he'll have to deal with what he said afterwards, which will matter.

As self-fisking an article as I've ever seen...


Thursday, March 04, 2004
 
The Issue Candidate

The Boston Globe's Robert Kuttner does his best to prop up the great black President Democratic hope.

Kerry should make an issue of trade

By Robert Kuttner, 3/4/2004

JOHN KERRY HAS declared war against the corporate "Benedict Arnolds" who ship American jobs overseas. This is a welcome, if slightly overheated, acknowledgement that outsourcing of jobs is a serious and growing problem.


Are these the same "Benedict Arnolds" he's accepting large campaign contributions from?

We've heard a lot from Democratic candidates about "labor and environmental standards" as well as eliminating tax advantages for moving jobs offshore. But little of this rhetoric goes much deeper than slogan. So if John Kerry expects to be the next president, he needs to educate public opinion on the whole complex set of remedies.


What's so complex about the issue? One major reason jobs get sourced overseas is because of excessive "labor and environmental standards" as well as eliminating tax advantages for moving jobs offshore. In other words, there's an incentive not based on market incentives to outsource jobs.

Standard economics commends free trade. By having open borders, American businesses get to sell their wares worldwide and locate production in its most efficient venue. American consumers get to choose from among the world's products. What could be bad?

But for millions of Americans, trade is a job-killer. Trade is playing havoc with what was once America's "blue collar middle class" and making inroads on high-skill service jobs like computer programming, too. Supposedly, it's fine to let the low-end jobs to go to poor countries and have Americans move to better jobs. But what happens when the poor countries take the good jobs too?


Um, you find another line of work?

If Chinese workers using identical technology and having identical skills were paid the same wages, there would be no problem. The Chinese economy would then have enough purchasing power to buy a lot of goods and services from us.

But a billion efficient Chinese and Indian workers using very advanced technology are paid a fraction of what their American counterparts make. In principle, they could export consumer goods to the United States and we could export more sophisticated production equipment to them and both would gain. But China has a deliberate policy of compelling its US trading partners to transfer advanced know-how so that China can start making the most advanced products at home. China, like Japan before it, is a free-trader when it comes to exports but mercantilist when it comes to its own economic development. (emphasis added - Ed.)


Kuttner touches on the one concept that he usually ignores in previous columns - productivity. He seems to assume that efficient foreign workers will be happy making far less then they're worth. Currently I think that assumption's bogus. Even is they are, it may hold in the short run, but, assuming foreign workers are our equals in terms of productivity, wait until they start demanding equal pay and / or try to unionize.

Tax laws that promote outsourcing are only a tiny part of the problem. Even without tax breaks, these trends will continue.


Not exactly. To the degree that changes in tax law affect a company's profits it will influence relocation decisions. What happens if you were to eliminate taxes entirely on foreign subsidiaries? Exactly. This is an attempt by Kuttner to discount supply-side tax policy that he hates almost as much as George Bush.

And some outsourcing makes economic sense.


And some doesn't?

Some Democrats


Any names?

have sponsored legislation requiring workers in call centers to identify their locations in the hope that consumers will demand American ones.


I think we could figure this out ourselves after the introduction.

But a lot of the tech-support people I reach in Bangalore are more customer-friendly than some of the yo-yos I speak to in America.


Your results may differ.

In the long run, as their productivity rates keeps rising, India and China will gain purchasing power. By 2040, they could be as wealthy as we are, and their artificial cheap-labor advantage could disappear. But in short run, a lot of Americans could become poorer as worldwide wages converge downward.


I swear I didn't read ahead on this one; I don't feel the need to do that with Kuttner columns because I usually find them so wrongheaded. There are a lot of conditionals that are being ignored, like Kuttner ignoring the fact that China's still communist and India has a strong socialist background; that he implies a significant lag (he doesn't mention specific timelines) between productivity increases and pay increases, and that these countries could be as wealthy as we are at a predetermined date. Then again, they could not.

There is no single solution but several. Raise purchasing power in the Third World (and at home.) Democrats have pledged support for global labor standards, including the right to join a union. But right now the United States would not pass that test because our own labor laws are not enforced.


How do you raise purchasing power in the Third World, Bob? Purchasing power will increase when real wages increase, which will happen in rough lockstep in productivity levels. That's a market mechanism.

Raise wages, especially in service-sector jobs.


Here or overseas? If here, doesn't that have the effect of negating purchasing power in the Third World?

Some jobs will never move overseas, because they have to be close to their customers -- teachers, health care workers, retailing and hospitality workers. This "new-collar" service sector is the successor to the blue-collar middle class. It needs higher minimum wages, benefits, and unions to fight for them.


Yep, that old saw horse, higher minimum wage jobs. Just what the doctor ordered to reduce unemployment and competition for union jobs:

Why is it that Washington state's entry-level job applicants faced one of the highest rates of unemployment in the nation this year? The state's unemployment rate is 15 percent higher than the national average and 42 percent higher than it was five years ago when the state introduced a minimum wage higher than the federal minimum.

Washington state is not alone in experiencing this perpetual high state unemployment. Oregon, Washington and Alaska are among the five states with the highest unemployment rates. It is perhaps no coincidence that these three states have the highest state minimum wages in the nation. Decades of research confirm Nobel Prize-winning economist Gary Becker's observation: "A higher minimum will further reduce the employment opportunities of workers with few skills."


Demand fair trade.


Doesn't mean you'll get it.

China and India have a right to compete for jobs, but not to steal our technology and intellectual property.


Thank you, President Clinton...

Japan needs to be as open as the United States. The administration needs to demand a level playing field.


I thought this was an article about the Third World? What about France, Germany, Russia, Ukraine, Poland... ?

Socialize costs that put US firms at a competitive disadvantage. American companies pay health care and pension costs that are paid socially overseas.


The path to competitiveness will be achieved through socializing large chunks of the economy? Yeah, that'll work. Just Say No!

Use public funds to invest in new technologies that create good jobs and serve other national goals such energy independence. John Kerry has led on this one.


More big government socialism, this time led by John Kerry. The only question is: How long will it take Kerry to get on the other side of this issue?

And don't blame the trade problem on America's public schools.


Even though we're churning out idiots?

Every American deserves a first-rate education, but that is a goal in itself and not a solution to the trade problem. For there are already millions of well educated Americans -- including skilled programmers and technicians -- losing jobs to overseas competition.

The right trade policy for the United States deserves to be a huge issue in this election and in the next administration's program. John Kerry, an advocate of good jobs but not a protectionist, has made a promising start. Now let's hear the whole program.


That'll have to wait until Mr. Decisive, who by the way wants to be the second black President, actually stands for something. I wouldn't hold your breath, Mr. Kuttner.

Robert Kuttner's is co-editor of The American Prospect. His column appears regularly in the Globe.

Copyright 2004 Globe Newspaper Company.


Tuesday, March 02, 2004
 
No Pander Too Small

John Kerry wants to be all things to all people. Even though he's pretty much locked up the Democratic nomination, you'd think his tone would become more presidential.

Not today. John Kerry takes a page out of the Clinton playbook and announces his plans to become the second black President:

"President Clinton (news - web sites) was often known as the first black president. I wouldn't be upset if I could earn the right to be the second," he told the American Urban Radio Network.


Yeah, I'm sure I you we black folks can relate to a multimillionaire who summers on Nantucket Island...