Thursday, March 19, 2009

New Alliances Emerge in Advance of Iraq Elections

New Alliances Emerge in Advance of Iraq Elections. By Anthony Shadid
Negotiations Raise Possibility That Politicians Could Bridge Ethnic, Sectarian Divides
Washington Post, Thursday, March 19, 2009; 6:01 PM

BAGHDAD, March 19 -- Six weeks after provincial elections, Prime Minister Nouri al-Maliki has allied himself with an outspoken Sunni leader in several provinces and broached a coalition with a militant, anti-American cleric, suggesting the emergence of a new axis of power in Iraq centered on a strong central government and nationalism.

Negotiations are still under way in most provinces, distrust remains entrenched among nearly all the players and agreements could crumble. But the jockeying after the Jan. 31 elections indicates that politicians are assembling coalitions that cross the sectarian divide ahead of parliamentary elections later this year, a vote that will shape the country as the U.S. military withdraws.

"There is a new political map," said Anwar al-Luheibi, a Sunni adviser to Maliki, who is a Shiite. "And I anticipate this map will be far better than the one we had before."

The negotiations and deal-making mark a departure from politics that have hewed almost exclusively to ethnic and sectarian lines, fomenting the discord that brought Iraq to the precipice of civil war in 2006 and 2007. They represent the first round of a great game that may resolve a question unanswered since Saddam Hussein's fall in 2003: What coalition of interests will find the formula to wield power in Iraq from Baghdad?

With his strong performance in the provincial elections, Maliki is the front-runner in forging such an alliance, a remarkable ascent for a lawmaker considered weak and pliable when he was put forward as a consensus candidate for prime minister three years ago.

Forgoing the slogans of his Islamist past for a platform of law and order, his party won a majority of seats on the council in Basra, Iraq's second-largest city, and emerged as the single biggest bloc in Baghdad and four other provinces in the south, which has a Shiite Muslim majority. In most provinces, though, his party must make coalitions if it hopes to help determine who will fill the governorship and other key provincial positions.

Saleh al-Mutlaq, a leading secular Sunni Arab politician known for his nationalism and strident opposition to the U.S. occupation, said his supporters would ally with Maliki in four provinces: Diyala, Salahuddin, Baghdad and Babil. Mutlaq heads the Iraqi National Dialogue Party, but his supporters ran under different labels in provincial contests. Mutlaq said Ayad Allawi, a former prime minister who led a secular list in the campaign, would also join the alliances.

The convergence of their interests is a stark contrast to the alliances that followed elections in 2005, which Sunni Arabs largely boycotted. Their refusal to vote gave religious Shiites and Kurds disproportionate power in provinces such as Baghdad, Diyala and Nineveh, all with substantial Sunni populations. In predominantly Shiite southern Iraq and Sunni western Iraq, power coalesced around ostensibly religious parties, whose members built their appeal on clandestine organizations in exile, underground networks under Hussein, support from Iran and other neighbors and, occasionally, the end of a militiaman's gun.

This time, some coalitions seem to be based on ideology: a strong central government that Maliki, along with secular candidates such as Allawi and Mutlaq, have endorsed, as well as opposition to the kind of federalism espoused by Maliki's Shiite rivals, who favor a Shiite-ruled zone in the south, and Kurdish parties that control an autonomous region in northern Iraq. Both Maliki and Mutlaq have rallied support among Arab and nationalist constituents by opposing Kurdish territorial claims, particularly around the contested northern city of Kirkuk.

Mutlaq draws backing from among the still numerous supporters of Hussein's Baath Party in Sunni regions, and he has long pushed for reconciliation with its members. Despite his reputation as a Shiite hard-liner when he came to power in 2006, Maliki echoed the call this month. In a speech, he urged Iraqis to reconcile with rank-and-file Baathists, those he described as "forced and obliged at one time to be on the side of the former regime."

He declared that it was time "to let go of what happened" in the past.

Mutlaq said he told Maliki in a meeting two months ago that "there was a time when you stood against me on those issues. 'You should be happy I changed,' he told me." Smiling in the interview, Mutlaq joked that first the prime minister "stole the government from us, and now he's trying to steal our political speech from us."

Mutlaq said that Maliki had proposed an alliance for parliamentary elections, too. But, he said, "we're still studying the message."

Since the fall of Hussein, religious Shites and Kurds had effectively served as the coalition at the heart of power in Iraq. Maliki's emergence has upset that formula, and virtually each component of the Shiite alliance has now gone its own way. The bloc that claimed to speak on behalf of long reticent Sunnis has splintered, too, unable even to agree on a replacement for the speaker of parliament, who resigned in December.

Fayed al-Shammari, a leader of Maliki's Dawa Party in Najaf, who will serve on the provincial council there, said he foresaw a grand coalition for the December parliamentary elections that would join Maliki with influential Sunni leaders, elements of the U.S.-backed Sunni movement that turned against the insurgency and perhaps even Moqtada al-Sadr, a militant Shiite cleric whose followers witnessed a political resurgence in the January vote. Strikingly, it would not include Maliki's other Shiite rivals or Kurds.

A hint of that alignment emerged in Wasit province, where Maliki's supporters were reported to have joined with Allawi's list and Sadr's followers.

"There's a great possibility for this," Shammari said, although even he questioned whether it could withstand the still-seismic conflicts over the very nature of the Iraqi state, namely its power in relation to the provinces. "With any coalition, you have an ambition for it to be permanent," he said. "But ambition doesn't always match reality."

Mutlaq envisioned three main groups competing in the December vote: A list that he led, Maliki's group and an alliance of Kurds and religious parties -- both the Shiite Islamic Supreme Council of Iraq and the Sunni-led Iraqi Islamic Party. One example of the third grouping has emerged in Diyala province, where the Supreme Council agreed to an alliance with the Islamic Party, said Ridha Jawad Taqi, a lawmaker from the Supreme Council.

Mutlaq, an agricultural engineer who grew wealthy under Hussein's government and is sometimes spoken of as a candidate for Iraq's presidency, said any future national alliance with Maliki would depend on cooperation in the provincial councils.

"We want to see what he's going to give," he said in the interview. "Is he going to behave as a real partner or is he going to try to isolate the others?"

He said he was still skeptical. "We don't think Maliki is going to act in a democratic way. We're worried that he's collecting power in a dictatorial way."

Mutlaq said he understood that Maliki had already reached provincial alliances with an electoral list supported by Sadr's followers, a deal that Shammari, of Maliki's Dawa Party, called likely. But spokesmen for Sadr and the list of candidates he supported said negotiations were still under way.

"We think they only want alliances in the provinces where they're facing difficulties. They reject us in the provinces where they feel comfortable," said Ameer al-Kinani, the head of the Trend of Free Independents, the list Sadr's followers supported.

Sadr's supporters did especially well in Dhi Qar and Maysan provinces in southern Iraq, where negotiations are still under way to choose the top officials.

To help win their support, Sadr's officials have insisted Maliki play a role in freeing their supporters in prison. Hazem al-Araji, a Sadr spokesman, estimated as many as 1,500 remained in U.S. custody and 2,500 in Iraqi custody. Like other Sadr officials, he complained that security forces were still arresting their followers in southern provinces.

"There has been a step toward each other," said Salah al-Obeidi, another Sadr spokesman in Kufa, near the sacred city of Najaf. "But until now, Maliki's coalition refuses to give any kind of guarantees and any kind of details of the map they will follow in representing the provinces. This arouses many fears with out friends."

Earlier in his tenure, when his position was far weaker, Maliki courted the Sadrists as a source of support. Last year, though, he turned on them, dispatching the military against their militiamen in Baghdad and Basra. This time around, Sadr's supporters say, Maliki seems to be trying to negotiate from a position of strength.

"He's not in need of the Sadrists anymore?" Obeidi asked. "Maybe, maybe."

But like Mutlaq, he said they would watch the behavior of Maliki's officials in the provincial councils to determine whether they could enter a broader alliance in the next election. "Until now we haven't decided," he said. "Yes, there are big obstacles between us. They can all be bridged. But until now, Maliki has not acted on any promises he made us."

Asked if he trusted Maliki, he shrugged his shoulders. "I don't trust any political figure," Obeidi said.

Special correspondents Zaid Sabah and Qais Mizher contributed to this report.

Obama picks the right man for drug czar - Seattle Police Chief Gil Kerlikowske

Obama picks the right man for drug czar. By Paul Butler
The Progressive, March 18, 2009

President Obama made a courageous, farsighted choice for the nation’s drug czar.

In his appointment of Seattle Police Chief Gil Kerlikowske, Obama has nominated the most progressive person to hold that position in the nation’s history. Kerlikowske is in a position to change the nation’s “lock ’em up” attitude and refocus the issue of illegal drugs where it belongs: public health.

At first glance, the selection of a police officer as drug czar might suggest the old government response: arrest, prosecute and punish as many “offenders” as possible. But Kerlikowske comes from a state that has been at the forefront of drug policy reform.

Seattle, where Kerlikowske headed the police force from 2000 until his appointment, has taken a more practical approach. Its citizens voted, in 2003, to make marijuana prosecution the lowest law enforcement priority. The city has been a champion of using the public health system rather than criminal justice to address problems caused by illegal drugs. It has promoted anti-addiction treatments, which reduce the demand for drugs, thus getting dealers off the street. And to reduce HIV transmission among IV drug users, the city of Seattle has listed on its Web site the locations where addicts can get clean needles.

Not only is this approach more sensible and humane. It is also more cost-effective.

A Rand Corporation study found that law enforcement costs fifteen times more than treatment for drug users to achieve the same benefit.

Kerlikowske’s appointment comes at a time when states are under tremendous fiscal pressure to cut back. Their corrections budgets are burdensome. This reality may make the necessary job of reform easier.

The war on drugs spurred a massive increase in the size and budgets of American criminal justice agencies. During the Clinton administration, police departments actually got more federal funds based on the number of drug arrests they made.

Currently, the War on Drugs costs the federal government approximately $20 billion a year. In 2004, there were more than 40,000 Americans locked up for nonviolent marijuana offenses. Incarcerating these people costs us more than $1 billion a year. And while most of the 800,000 people who are arrested every year for marijuana offenses don’t end up doing time, taxpayers still have to pay the substantial police and court costs — money most governments can no longer afford.

Previous drug czars promoted this irrational and expensive approach, maintaining a bizarre, “Reefer-Madness”-like obsession with marijuana. Between 1998 and 2006, the White House drug office spent $1.4 billion on advertising aimed at preventing teenagers from smoking pot.

The result of this approach? Nothing other than classic wasteful government spending. According to Justice Department statistics, almost one in three high school seniors smoked marijuana in the past twelve months. A study commissioned by the Office of National Drug Control Policy said the advertising actually makes teens more aware of how many of their peers use marijuana.

During the presidential campaign, Barack Obama had the wisdom to say, “The war on drugs has been a failure” and to describe the policy of locking up nonviolent drug users as “blind and counterproductive.”

His nomination of Kerlikowske shows that he meant what he said.

Paul Butler, a former federal prosecutor, is a professor of law at the George Washington University Law School and author of the forthcoming book “Let’s Get Free: A Hip Hop Theory of Justice” (The New Press). He can be reached at

Grist board member Michelle DePass appointed to EPA

Grist board member appointed to Obama administration, by Kate Sheppard
Mar 18, 2009

On Wednesday, the Obama administration officially announced that Grist board member and Ford Foundation program officer Michelle DePass has been nominated to serve as the assistant administrator for international affairs at the Environmental Protection Agency.

Michelle currently manages the Ford Foundation's initiative on Environmental Justice and Healthy Communities, concentrating on the intersections of environmental and social justice both in the United States and internationally. She has taught federal environmental law and policy at the City University of New York, and developed a workforce development training program for disadvantaged youth on Superfund waste sites. She also served as executive director of the New York City Environmental Justice Alliance and co-organized the Northeast Environmental Justice Network.

She previously served as the assistant to the city manager of San Jose, Calif., on environmental policy matters and was an Environmental Compliance Manager for the City of San Jose. She was a William Kunstler Racial Justice Fellow at the Center for Constitutional Rights in New York, and later worked as a senior policy adviser to the commissioner of the New Jersey Department of Environmental Protection.

This is big news for Michelle. Congratulations!

Russia Test Fires Cruise Missiles From Planes - Reports

Russia Test Fires Cruise Missiles From Planes - Reports
Mar 19, 2009 14:12

MOSCOW (AFP)--Russian Tupolev bombers Thursday successfully test-fired cruise missiles in the country's far-northern Vorkuta region, Interfax and Ria Novosti news agencies reported.

"The last two bombers returned a few minutes ago to their permanent base after launching the missiles. In all six long-range bombers took part," in the exercise, said air force spokesman Vladimir Drik.

Tu-95Mc and Tu-160 bombers were involved in the mission, "the first time missiles of this type were fired this year by long-range bombers," he said.

03-19-09 1412ET

Edward Liddy's testimony on AIG bonuses

Minority View. By John Hinderaker
PowerLine Blog, March 19, 2009 at 10:19 AM

As I explained on Bill Bennett's radio show this morning, I don't think there is anything wrong with the AIG bonuses, and the people who got them should keep them. This is based on the testimony of Edward Liddy, who said yesterday:

* All of these payments, as to AIG's troubled financial products division, are retention bonuses, not performance bonuses.
* The money is not going to anyone responsible for the implosion of AIG--those people, who were in the credit default swap area, are gone.
* These retention bonuses were promised to AIG employees who are responsible for winding down the company's financial products division. At the beginning, this division had a potential exposure of $2.7 trillion. Winding down AIG's book of business in this area was a dead-end job, and there was a great likelihood that the people responsible for the work, who knew the most about the products involved, would take jobs elsewhere.
* In late 2007 or early 2008, AIG made a deal with these employees: if they would stay at AIG until specified conditions were met, i.e., either certain business was wound down or a given period of time had elapsed, they would receive a specified retention bonus.
* As to all of the employees involved, they satisfied the terms of the bonus by wrapping up a portfolio for which they were responsible and/or staying on the job until now. As a result of the efforts of this group, AIG's financial products exposure is down from $2.7 trillion to $1.6 trillion.

There is no legal principle that would justify not paying these bonuses. If you make an offer to someone along the lines of, if you do X I will pay you Y dollars, and he does X, it's too late to change your mind. You're on the hook for Y dollars, and you should be.

The legislation introduced by the Democrats today to tax these bonuses (and possibly a few others, although it isn't clear that any others have been or will be paid that are covered by the statute) at a 90 percent rate is an outrage. It is, in my legal opinion, obviously unconstitutional. It is evidently intended to calm the current political firestorm and not to achieve any real objective.

The Republicans' alternative, which basically just demands that AIG give the money back, somehow, is better but still silly. No doubt one could deduct $165 million from past and future bailout payments to AIG and thereby make the taxpayers "whole." But that just illustrates the foolishness of concentrating on these bonuses rather than the larger picture.

The Obama administration has done a great many things about which taxpayers should be livid--one bailout after another, mammoth tax increases, the bogus "stimulus" bill, the $410 billion leftover appropriations bill, the multi-trillion dollar budget with a $1.7 trillion deficit. Paying employees of AIG money which they have earned and are owed is at the very bottom of the list of actions for which we should be enraged at the Obama administration.

The other lesson of this story is the futility of having the federal government running the world's largest insurance company. When the salaries earned by derivative traders at an insurance company can become a major political issue, you know the government has gotten way too deeply involved in the private sector.

AIG, like GM, should have been allowed to go into bankruptcy. In bankruptcy, it could have wound down its financial products division just as it is doing now. Bankruptcy would not have affected the company's international insurance businesses, distinct corporate entities which are both solvent and profitable. Those businesses could have been sold, which is what AIG now plans to do.

Why did the federal government prefer to bail AIG out rather than let the bankruptcy court unwind its business? Because of "systemic" risk; that is, the feds wanted AIG in business and funded with $80 billion in taxpayer money so that it could make good on its commitments to third parties, especially third parties to whom it had guaranteed the value of residential mortgage-backed securities. But if AIG had gone into bankruptcy, and there were third parties in danger of failing because AIG couldn't pay what it owed, and it really was in the taxpayers' interest to save those third parties, then the government could have paid the bailout money not to AIG, but selectively to the third parties it deemed important to the economy.

Why wasn't that approach followed? Because of politics. Much of the money that AIG owed was due to European banks. For the American government to bail out European banks would have been a tough sell, to put it mildly. Other third parties were entities like Goldman Sachs, which said it didn't need to be bailed out but received, I believe, $13 billion in taxpayer dollars that was funneled through AIG.

What is happening in Washington is a scandal and an outrage. Barack Obama, Harry Reid and Nancy Pelosi should not be allowed to divert attention from the disastrous policies they are pursuing by focusing on the sideshow of AIG bonuses.

Instituting national standards will not solve the problems facing our schools

Let's Not Play Standards Roulette, by Neal McCluskey
Cleveland Plain Dealer, March 18, 2009

Whether it's blind hope that Washington can fix anything, a lack of ideas for reforming our crummy schools, or some other reason entirely, calls for national academic standards are increasingly loud and frequent. And while President Barack Obama stopped short of explicitly advocating for them in his first major education address, there have been several high—profile calls recently by American Federation of Teachers president Randi Weingarten, the National Governor's Association and Obama's education secretary, Arne Duncan.

But instituting national standards will not solve the problems facing our schools. Indeed, it would be like playing Russian roulette with our kids — with only one empty chamber.

What's driving this bandwagon?

The No Child Left Behind Act is a big part of it. NCLB requires schools to bring all students to math and reading "proficiency" by 2014, but leaves it to states to define what that means. This practically begs states to set weak standards in order to stay out of trouble, and has led to standards that vary markedly from state to state but are almost always very low.

Of course, NCLB isn't designed like this because it yields the best educational results. It's optimal politically. The law is structured to make federal politicians appear both tough on failing schools and dedicated to cherished local control.

But NCLB isn't the only problem. Many people simply don't trust the states, and reasonably so. As the Thomas B. Fordham Institute, a longtime national standards supporter, has repeatedly documented, even before NCLB, state standards were all too often light and fluffy, not meaty and rigorous. In 2000, the Institute gave state standards an average grade of C minus, and concluded that only five states combined solid standards with strong accountability.

Like NCLB, politics explains this pitiful performance. As Fordham wrote, "Some people seem quite content to let it [establishing strong standards] take forever. ... That will allow all the standards setters, enforcers, testers, monitors and analysts to maintain full employment, and will enable elected officials to continue to claim that they and their states are fully engaged in standards—based reform."

In light of dismal state and federal track records, why should anyone expect national standards to miraculously avoid crippling politics and end up with anything better than what we've seen so far? No one should. Knowing that only a few states have occasionally gotten standards right, trying to nationalize them would be at best a high—risk game of Russian roulette.

Just think about how education politics works. Because their very livelihoods come from the public schools, the teachers, principals and bureaucrats who are to be held to performance standards exert outsized influence over them, and strongly resist being subjected to tough accountability. Meanwhile, politicians do whatever is easiest for them, trying to be all things to all people while keeping on the good sides of powerful interests such as teacher unions and administrator associations.

Political reality simply offers no support for national standards. Likewise, national standards supporters offer no convincing arguments for their proposal.

Randi Weingarten claims that "the countries that consistently outperform the United States on international assessments all have national standards." But most of the countries that do worse than we do also have national standards, making the correlation between national standards and academic success at best pretty weak.

How about the unreasonableness of states having "50 different goal posts," as was cited by Secretary Duncan?

Certainly no child should be legally condemned to a bad school, but the fundamental problem isn't that standards differ. Indeed, since all children are unique, differentiation at the individual level is critical to success. No, the fundamental problem is the "legally condemned" part. Unless their parents can afford private schools on top of taxes, children are forced to attend government schools that, by their very one—size—fits—all nature, stifle specialization and are powerfully inclined to low standards.

The last thing we need are government—driven national standards. We must not play Russian roulette with our kids. Indeed, we need to take the political revolver out of education completely. We need to let parents control education dollars, let autonomous schools freely set their own standards, and allow competition to continuously drive standards higher. We need universal school choice.

Neal McCluskey is associate director of the Cato Institute's Center for Educational Freedom and author of Feds in the Classroom: How Big Government Corrupts, Cripples, and Compromises American Education.

Libertarian on Wyeth v. Levine: The Supreme Court botches a drug preemption case

Needle and the Damage Done. By Gregory Conko
The Supreme Court botches a drug preemption case
Reason, March 18, 2009

The Supreme Court handed down its decision this month in the case of Wyeth v. Levine, ruling that federal law did not bar plaintiff Diana Levine from suing pharmaceutical maker Wyeth over allegedly insufficient drug safety warnings, even though the warnings had been approved by the Food and Drug Administration (FDA). This decision establishes the troubling precedent that a sympathetic jury can now supersede the expert opinions of the FDA on what qualifies as adequate safety labeling. Ultimately, that means drug firms face higher costs and greater uncertainty. Both are bad for patients.

Levine lost an arm to gangrene after a physician's assistant injected the Wyeth drug Phenergan in such a way that it came into contact with oxygen-rich arterial blood. Although the drug's label explicitly warned that doing so poses a high risk of tissue damage, Levine claimed that the label should have instructed physicians not to use this intravenous "IV-push" method at all. A Vermont jury agreed, and awarded Levine $7.4 million, which the court reduced to $6.7 million.
On appeal, Wyeth could not challenge the jury's fact finding, but argued that the FDA's extensive regulation of drug labeling should preclude claims of negligent failure to warn. The Supreme Court held, by a 6-3 majority, that federal law does not preempt Levine's claim.

According to Justice John Paul Stevens' majority opinion, "The history of the [Food, Drug, and Cosmetics Act] shows that Congress did not intend to preempt state-law failure-to-warn actions." Although true in a general sense, the Court failed to recognize that this is not a typical failure-to-warn case. As Justice Samuel Alito's dissenting opinion notes, Levine conceded that, in 1988, Wyeth proposed a label change that "if followed, would have prevented the inadvertent administration of Phenergan into an artery," but the FDA rejected that language.

Nevertheless, Levine alleged not only that the warning on Phenergan's label wasn't strong enough, but that Phenergan was "not reasonably safe for intravenous administration"—and that the label should have said so. That, however, poses a question regarding FDA's approval of the product for that use, not Wyeth's alleged negligence in drafting the label.

The FDA first approved Phenergan in 1955. And, as the risk of arterial injection became apparent over the years, the agency approved several changes to the drug's label, which now contains six statements (two in all capital letters and bold face type) warning doctors about the exact nature of that risk.

The doctor and physician's assistant who treated Levine nevertheless administered a dose twice as high as indicated, injected it into the inner crook of her arm where the risk of accidental arterial injection is very high, and continued to push in the syringe's plunger despite Levine's protestations of pain, each in direct contravention of explicit label warnings. It was this negligent administration that caused the massive tissue damage that led to the amputation of her arm.

Levine settled a claim against the physician's assistant and the prescribing doctor, then turned her sights on Wyeth. At trial, Levine's attorney argued that, despite the FDA's approval of Phenergan's label, the drug firm acted negligently by failing to add even sterner warnings or changing the label to rule out intravenous injection altogether. But doing the latter would have overruled a FDA decision that permits IV-push injections when that method could provide more benefits than the alternative.

Justice Stevens's majority opinion asserts that the FDA can't keep track of all safety issues that arise after a drug is approved and that the agency never specifically made a determination regarding the safety of IV-push administration. Consequently, Wyeth could have changed its label without the FDA's pre-approval upon receiving information regarding the risk of arterial injection of Phenergan. But that assertion is plainly wrong. The case record shows that the FDA repeatedly and intensively investigated this exact question and determined that IV-push injection provided important medical benefits.

Furthermore, there are no allegations that Wyeth hid any information about the risks of IV injection, nor has any new information regarding the risks arisen that would call the FDA's decision into question. So, the decision in Levine is tantamount to letting a group of laymen overrule the FDA's expert opinion regarding safety. In his closing arguments at trial, Levine's attorney told the jury, "Thank God we don't rely on the FDA to...make the safe[ty] decision...The FDA doesn't make the decision, you do."

A majority of the Supreme Court agreed, concluding that FDA regulation should be seen as a floor, but should not preempt stricter state tort laws. That, however, conflicts with longstanding Court precedent regarding implied pre-emption of state laws that conflict with federal regulatory decisions. As Justice Alito's dissent notes, "the ordinary principles of conflict pre-emption turn solely on whether a State has upset the regulatory balance struck by the federal agency." That is exactly what has happened here.

The Supreme Court could have and should have held in Wyeth's favor with a narrowly tailored opinion confined to the facts of this case. Doing so would not have insulated wrongdoers from punishment, but would have recognized that Congress gave FDA statutory authority over questions of safety and efficacy because it believed a federal expert body could most effectively balance the benefits and risks of new medicines. Empowering lay juries to override those decisions means that fewer patients will benefit from important medicines in the future. Not only is the majority's decision bad law, it's very bad for patients.

Gregory Conko is a senior fellow with the Competitive Enterprise Institute in Washington, DC.

Libertarian on high-speed rail

Trains Are For Tourists, by Randal O'Toole, March 19, 2009

When I went to Europe, I loved to ride the trains, especially the French TGV and other high-speed trains. So President Obama's goal of building high-speed rail in the United States sounded good at first.

But when I looked at the details, I discovered that — while high-speed rail may be good for tourists — it isn't working very well in either Europe or Japan.

Japan and France have each spent as much per capita on high-speed rail as we spent on our Interstate Highway System. The average American travels 4,000 miles, and ships 2,000 ton-miles, per year on the interstates. Yet the average resident of Japan travels only 400 miles per year on their bullet trains, while the average resident of France goes less than 300 miles per year on the TGV — and these rail lines carry virtually no freight.

Throughout the world and throughout history, passenger trains have been used mainly by a wealthy elite and have never given the average people of any nation as much mobility as our interstate highways.

Moreover, the interstates paid for themselves out of gas taxes and other user fees, while high-speed rail requires huge subsidies from general taxpayers.

Personally, I would much rather ride a train than drive anywhere. But I have to admit that automobiles are the most egalitarian form of travel ever invented. Throughout the developed world, people of all income levels regularly travel by car, while only a small number of people regularly ride trains. For example, the average American drives for 85 percent of their travel; the average European 79 percent — not much difference.

The environmental benefits of high-speed rail are also questionable.

President Obama's plan actually calls for moderate-speed rail:

110-mile-per-hour passenger trains sharing tracks with freight trains. These moderate-speed trains will mostly be Diesel-powered, and for safety purposes they will be heavy. By the time these trains start operating, both cars and airplanes will use less energy and emit far less greenhouse gases per passenger mile than the moderate-speed trains.

True high-speed rail — trains going 200 miles per hour or more — requires costly dedicated tracks: a national network would easily cost more than half a trillion dollars. Considering that both airplanes and cars are getting more fuel-efficient all the time, the environmental costs of constructing these lines will never be recovered in any operational savings.

True high-speed trains are electrically powered, but if that electricity comes from fossil fuels it will produce as much greenhouse gases, per passenger mile, as autos or planes. As we develop more renewable electricity, we would do better to dedicate that power to plug-in hybrids than to build expensive but little-used train lines.

We have a choice between a transportation system that everyone uses and that pays for itself, or one that requires everyone to pay for through their taxes but that is used by only a small elite. Which is the better symbol for the America President Obama wants to rebuild?

Randal O'Toole is a Cato Institute Senior Fellow working on urban growth, public land, and transportation issues.

Saving Pakistan: The U.S. will need to foster political stability if it wants success against al-Qaeda and the Taliban

Saving Pakistan. WaPo Editorial
The U.S. will need to foster political stability if it wants success against al-Qaeda and the Taliban.
WaPo, Thursday, March 19, 2009; A14

PAKISTAN'S LATEST crisis has eased, after President Asif Ali Zardari capitulated to protesters who threatened to march on the capital, Islamabad. But for the Obama administration, the challenge of political dysfunction in this nuclear-armed state has hardly diminished. As they showed during the past week, Pakistan's civilian and secular political leaders are more concerned with destroying each other than with fighting the Islamic extremists who are rapidly gaining strength in the country. The Pakistani army, for its part, remains more focused on the perceived threat from India than on the Taliban and al-Qaeda. These problems are deeply rooted -- but the new U.S. administration will have to take them on if it is to successfully combat the terrorist threat to the United States.

Pakistan's return to democratic government a year ago ended an increasingly authoritarian regime that lacked both the will and the political authority to take on the Taliban. But the transition also reopened the feuding between civilian political parties that dominated national politics in the 1990s. While saying they recognize the jihadist threat, Mr. Zardari -- the widower of former prime minister Benazir Bhutto -- and former prime minister Nawaz Sharif have resumed their ruthless competition. Both have employed undemocratic tactics: Mr. Sharif has chosen to fight the government mostly in the streets rather than in Parliament, while Mr. Zardari tried to block last weekend's protests with mass arrests and media censorship.

A third secular force, a movement of judges and lawyers that rallied behind former Supreme Court chief justice Iftikhar Mohammed Chaudhry, is seen by many middle-class Pakistanis as representing the rule of law. Mr. Zardari's agreement to restore Mr. Chaudhry to the court Monday ended the protest march and was celebrated as a victory for democracy. But Mr. Chaudhry, who takes pride in his maverick decisions, could easily destroy the fragile system if he chooses to reopen old cases involving Mr. Zardari, Mr. Sharif or former president Pervez Musharraf. He could set an example for the political leaders by embracing restraint and compromise -- qualities sorely missing from Pakistani politics.

In the past, Pakistan's political feuding has inexorably led to military coups, which have been tolerated if not welcomed by the United States. But in the era of the Taliban and al-Qaeda, which grow stronger with each new crisis in Islamabad, that pattern must be broken. Pakistan's military leadership and the Obama administration need to play a stabilizing role for the civilian leaders by arbitrating and limiting their conflicts. They should insist on faithfulness to the rule of law and to the democratic process, rather than picking a winner -- in the case of the United States -- or directly intervening, in the case of the military. And they should press for agreement on the country's main enemy -- jihadism -- and a comprehensive strategy for confronting it.

As it formulates its broader strategy for the region, the Obama administration should recognize that it cannot combat the threat of terrorism in Afghanistan and western Pakistan without tackling the larger issues of governance in both countries. The events of the past week showed that the United States must help to foster a stable and representative government in Islamabad. The same principle applies in Kabul.

Washington Has Always Demonized Wall Street

Washington Has Always Demonized Wall Street. By Zachary Karabell
WSJ, Mar 19, 2009

'Wall Street, as we knew it, is dead. The system that allowed the U.S. economy to be a dynamic innovator has been fundamentally broken and the implications of these structural changes have yet to be fully felt."

It's now commonly accepted that the economic meltdown has forever changed the nature of the financial industry. But the words above weren't written in the past weeks. They were penned by financial analyst Richard Wayman in 2003, after investigations by then New York Attorney General Eliot Spitzer led to a structural shift in the relationship between research and investment banking following the stock-market collapse of 2001-02.

Among the many remarkable aspects of our present crisis is the speed with which we have collectively forgotten past crises, even ones that happened recently. The current meltdown is substantial, dramatic, and systemically dangerous -- but it is hardly the first to merit that description. And each crisis, without fail, results in unequivocal pronouncements that such excesses will never again be allowed.

When President Barack Obama lambastes Wall Street bonuses as "shameful," he is keeping up with the American tradition of vilifying Wall Street. Almost since the founding of the country, the U.S. has oscillated between admiration and condemnation of money men. When the first Bank of the United States was established in Philadelphia in 1791, it was amid fears that it would allow merchants and speculators to subvert the new republic for their own gain. Decades later, Andrew Jackson's presidency was bolstered by his staunch opposition to the Second Bank of the United States. He positioned himself as the defender of the common man against supporters of the bank who used their money to obtain influence.

From the 19th century to the present day, denunciation of financiers has gone hand in hand with each recession, speculative bust and depression. Each time the economy falls, the chattering classes announce that the old ways have brought the country to the brink of ruin and that the riches of society will no longer remain in the hands of the greedy few.

Little recalled now is "The Long Depression" of the 1870s that began with the Panic of 1873. The Panic was triggered by the collapse of the Jay Cooke and Company Bank, which came on the heels of Jay Gould's infamous attempt to corner the national gold market in 1869 and the speculative boom in railroad building. During the 1870s, as much as 50% of the U.S. labor force was out of work at one time or another, making it by far the worst economic collapse in the country's history. In the agrarian heartland of the country, early stirrings of populism led to attacks on eastern barons for robbing Americans of their birthright.

From then on, busts followed almost like clockwork every 20 years, with the panics of 1873 and 1877 followed by the panic of 1893 and then the "Bankers' Panic" of 1907, when J.P. Morgan orchestrated the recapitalization of the financial system from his mansion in Manhattan. It was the TARP, the "bad bank," and the stimulus of its day, and it earned Morgan the gratitude of a nation and the applause of President Theodore Roosevelt.

Having lionized Morgan, a few years later the country turned on him and his ilk with a vengeance. In 1913, a populist congressman from Louisiana, Arsène Pujo, launched an investigation of the so-called "Money Trust" that he claimed was exerting undue and deleterious influence on the body politic. Exhibit No. 1 was none other than one-time savior Morgan, who was interrogated by the committee as if he had committed a heinous crime. One member of the committee said Morgan represented "a moneyed oligarchy more despotic and dangerous to industrial freedom than anything civilization has ever known." Strict regulations followed -- as they always have on the heels of such crises.

Yet 20 years later, the market imploded with the crash of 1929. The ranks of the unemployed swelled to at least 25%, and the country was plunged into the Great Depression. Franklin Delano Roosevelt famously indicted the "money changers" in his 1933 inaugural address, but he was even more caustic in private, vowing to end forever "speculation with other people's money." The raft of modern regulatory institutions, from the Securities and Exchange Commission to the Federal Deposit Insurance Corporation, was one result. Wall Street was tamed and quiet for a while.

Later on, the "Go-Go" years of Wall Street in the late 1960s quickly gave way to the bust of the so-called "Nifty-Fifty," the 50 largest blue-chip companies. Then came inflation, severe unemployment, and the stock market collapse of 1973-74. Between 1964 and 1982, the major stock indices went nowhere fast -- the Dow began that period at about 800 and ended at the same. Wall Street in those years was more of a cottage industry, one that few suspected would again return to its prominent and controversial position at the apex of American society.

The booming 1980s -- mergers and acquisitions and arbitrage -- were capped by the highly publicized trials of Ivan Boesky and Michael Milken, who were pursued by the Eliot Spitzer of his day, Rudy Giuliani. Combined with the market crash of 1987, the subsequent Savings and Loan debacle (which had little to do with Wall Street per se, but was wrapped up with the same crowd in public imagining), and the recession of 1991-92, Wall Street was once again pronounced immoral and in need of tight reins. Yet within a few years, the Nasdaq was soaring, animal spirits were in control, and the Internet bubble was in full bloom.

Wall Street's obituary has been written many times. Yet what is striking today is that cycles that used to take a few decades now take a few years. And our cultural amnesia has gotten worse. The rapid sequence of the dot-com bubble of the 1990s, the recession of 2001, and the 2002 collapse of Enron combined with major fines levied against investment banks, all became a distant echo in a surprisingly short amount of time. At the rate we've been going, we're due for a new boom with obscene profits for the financial industry -- albeit with different names and different companies -- before Mr. Obama runs for re-election.

The fact that we have been in similar places in the past doesn't make the specific problems we face any less pressing. New regulations may prevent an exact recurrence of yesterday's crises, but our relentless capacity for reinvention means that we will produce innovations that will in turn create new problems.

Recognizing that our present is not quite so breathlessly unprecedented doesn't make the challenges less critical, but it could lead to a more level approach. That can begin with steady leadership from President Obama. Wall Street has been humbled and will change, but capital will continue to flow. That much, at least, is certain.

Mr. Karabell is president of River Twice Research. His new book, "In the Red: How China and America Became One Superpower Economy," will be published by Simon & Schuster in October.

WSJ Editorial Page: Obama's AIG Panic

Obama's AIG Panic. WSJ Editorial
WSJ, Mar 19, 2009

The AIG Beltway bonfire continued yesterday with the spectacle of Ed Liddy, AIG's government-appointed CEO, enduring the wrath of Congress for embarrassing the Members with post-bailout bonuses. What we now have is a full-blown political panic ignited by no less than President Obama himself that is threatening to engulf his attempts to revive the financial system, and is undermining confidence in his leadership. This is no way to promote an economic recovery.

As recently as Sunday morning, White House economist Larry Summers was saying the bonuses were regrettable but there wasn't much that could be done to stop them. "We are a country of law. There are contracts. The government cannot just abrogate contracts," he said, with great good sense. Assorted Congressmen then did what comes naturally, which is declare their mock outrage. Rather than keep his legendary cool, Mr. Obama and the White House panicked as well and joined the braying pack.

Speaking on Monday of the $165 million paid to members of AIG's Financial Products division, the President asked, "How do they justify this outrage to the taxpayers who are keeping this company afloat?" Treasury Secretary Tim Geithner, who had known about the bonuses, was also trotted out to express his "outrage" and declare that Treasury would somehow try to claw back the bonuses. By shouting "greed" in a crowded and panicky Washington, our supposed financial stewards thus gave license to everyone in the media and Capitol Hill to see who could claim to be most shocked and appalled at AIG.

We've now got a full-fledged mob on our hands, with Congress looking to string up bankers in whatever bunker they can be found. Senators Chuck Grassley and Max Baucus want to double the current income tax on these bonuses, to 70% from 35%, and that's one of the more reasonable proposals. Congresswoman Carolyn Maloney, the Democrat from silk-stocking Manhattan, wants to tax it all -- at 100%.

Senator Chris Dodd, down in the 2010 election polls after his sweetheart Countrywide mortgages, is busy rewriting the TARP compensation limits he only recently stuck in the stimulus bill. His last-minute measure explicitly exempted from compensation limits bonuses agreed to prior to the passage of the stimulus bill: "The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009 . . ." So Senator Hedge Fund is suddenly morphing into Huey Long to save his career.

This is all too much even for Rep. Charlie Rangel, the House's chief tax writer, who says the tax code shouldn't be deployed as a "political weapon." He's right. AIG's managers may be this week's political target of choice, but the message to every banker in America, indeed every business in America, is that you could be next. At least we haven't yet seen the resolution that was proposed in the English parliament, in 1720 in the aftermath of the South Sea bubble, that bankers be tied in sacks filled with snakes and tipped into the Thames. But it's still early days.

One consequence will be that every bank executive in America will try to repay his Troubled Asset Relief Program, or TARP, money as rapidly as possible. The political punishment for accepting public money is becoming higher than the benefits of the extra capital cushion. According to Wells Fargo Chairman Richard Kovacevich, "If we were not forced to take the TARP money, we would have been able to raise private capital." On Tuesday, Bank of America CEO Ken Lewis joined the rush for the TARP exits, saying he hoped to pay back the $45 billion BofA has received by 2010 if not sooner. It's hard to argue with the sentiment.

For the larger banking system, however, this is exactly the wrong time to be shedding capital. The main point of the TARP was to backstop the financial system against systemic failure. Treasury botched the roll out and the execution, but with the economy still in recession and housing prices still falling, banking losses will surely grow. Mr. Geithner has projected the need for more than $1 trillion more in public capital, and the FDIC has asked Congress to increase its credit line to as much as $500 billion.

If we're lucky, the banks will be able to use today's steep yield curve to earn their way out of this mess, but no one can be sure and before this is over the FDIC and Treasury are going to need more public capital to protect depositors of failed institutions. The last thing we need is for this year's political panic to recreate the circumstances for another financial panic like the one we had last fall.

The Beltway's banker baiting seems to increase in direct proportion to the government's incompetence in nurturing a financial recovery. Anger rises when Americans learn after three bailout revisions that they haven't been told the truth that the AIG nationalization was a conduit to save counterparties, and even hedge funds, that gambled on housing. Only two weeks ago, Federal Reserve Vice Chairman Donald Kohn told Congress he couldn't disclose who AIG's counterparties were. Americans also wonder why taxpayer guarantees should be provided to Citigroup, a three-time loser, but with little accountability for the board and managers who brought the company low.

Reviving a financial system is a long process that requires a combination of capital support, workout ability and discipline for mistakes. The public has to believe the end result will be a better, sturdier system in return for taxpayer support, while at the same time being assured that gamblers aren't saved from their own mistakes.

If this balance is beyond the ability of Mr. Obama's current economic team, he needs a better team. The worst mistake he can make is to deflect attention away from government's mistakes by joining the attack on the very bankers he needs to lead an economic recovery. That's how a deep recession becomes a Depression.

Elaine Chao: Two Steps Back on Labor Rights

Two Steps Back on Labor Rights, by Elaine Chao
WSJ, Mar 19, 2009

The Obama administration's zeal to not "waste a good crisis," as Secretary of State Hillary Clinton put it, has been stunning even for Washington insiders to behold. In the first 50 days of Barack Obama's presidency, Congress approved $1.2 trillion dollars in new spending, or $24 billion a day. That's $1 billion every hour. The national debt now is $11 trillion and climbing.

The Democratic Party's governing elite has long believed there is no problem that European-style policies cannot cure. This is why President Obama's agenda centers on vastly expanding entitlement programs, strengthening unions, and increasing government control over the private sector.

The stimulus bill contains multiple provisions that burden the already strained unemployment insurance system with new entitlements, such as paying workers who choose to leave the workforce for "family-related" reasons. Imposing such entitlements on an insurance system designed to support workers who are laid off compromises the integrity of the program. To sustain the expanded system in the future, states will have to levy higher unemployment insurance taxes on employers. And raising taxes on jobs will only lead to fewer job opportunities. That is why some governors such as Rick Perry (R., Texas) and Bobby Jindal (R., La.), are taking a pass on stimulus money that would broaden their states' unemployment benefits.

In a move that certainly pleased unions, within days of taking office Mr. Obama issued executive orders rescinding requirements for workers to be informed of their right not to pay portions of union dues attributable to political activities with which they may disagree. These orders are mere prelude to the forthcoming congressional debate over the "Employee Free Choice Act," which should more accurately be called the "Employee No Choice Act." This bill will deprive workers of their right to secret ballot elections in unionization efforts, and impose a 120-day deadline for companies to sign a labor contract -- after which government arbitrators would dictate labor contracts.

Efforts are also underway to cut the budget of the lone federal agency charged with protecting union members' rights and ensuring union integrity. In January, the Department of Labor's Office of Labor-Management Standards implemented a rule requiring that relevant information on union finances be provided to rank-and-file union members to better ensure transparency and accountability, as required by the Labor-Management Reporting and Disclosure Act of 1959. In the rush of actions after the inauguration, the Obama administration delayed the effective date of this rule. It remains to be seen if other union transparency and accountability rules will be gutted or revoked.

Americans should also be concerned about the protectionist impulses -- as evidenced by the "Buy American" provision of the stimulus package -- of those now in charge, which run counter to one of the painful lessons of the Great Depression. Impeding international trade will ignite retaliation by America's trading partners, deepening and prolonging the economic downturn. Policy makers should also resist closing America's doors to skilled workers from overseas, many of whom are educated in our universities and whose talent can help make our economy stronger. Yet provisions like the "Employ American Workers Act" in the stimulus package limits banks that receive government funding from employing skilled foreign workers.

European-style interventions to which the Obama administration is inclined will not make America more competitive in the world-wide economy. Such policies will not increase growth, will not decrease unemployment, and will not increase wages for workers. Evidence of this has been apparent for decades in Europe's declining growth rates, higher unemployment, lower per-capita income, and longer durations of unemployment. America has problems; Europe's are worse.

Yet despite all of this, the Obama administration seems intent on radically expanding government's role. This is because, as White House Chief of Staff Rahm Emanuel has stated, "crises are opportunities to do big things."

It was telling that in his recent address to Congress, the president downplayed the credit crisis's culpability for the recession and swiftly segued to implicating oil, health care and education. Why would the president draw a line between the recession and these other issues, unless he wants to exploit the current situation to advance an agenda unrelated -- and even antithetical -- to fixing the economy?

Perhaps spending trillions of taxpayers' yet unearned dollars seems trivial when socialized medicine and rewarding political allies are your priorities. But it is not the change most Americans had in mind.

Ms. Chao was the 24th U.S. Secretary of Labor.

Canadian Energy Industry to Target Asian Trade, Avoid New U.S. Regulations

Canadian Energy Industry to Target Asian Trade, Avoid New U.S. Regulations
The Institute for Energy Research, Mar 18, 2009

WASHINGTON, D.C. - In response to a Globe and Mail report that indicated that Canadian energy producers will increasingly look to Asia to sell their energy resources thanks to President Obama’s proposed new and costly regulations and taxes, IER President Thomas J. Pyle released the following statement:

“The Obama administration knows that Canada’s energy resources are among the most significant in the world, and with a population one-tenth the size of the United States, our neighbors to the north have always been ready and willing to share. In spite of that knowledge, the administration developed and proposed plans that will force Canada’s energy producers to send their products to Asia to avoid America’s regulatory and tax-related mess.

“If President Obama won’t let us import oil and natural gas from Canada, he will force us to buy higher-priced energy from highly unstable and largely unfriendly nations in the Middle East. The Obama administration may understand this reality and it may be concerned, but it is not fighting to keep Americans’ access to Canada’s affordable, reliable, and abundant energy resources intact. We hope the administration will take notice and see that their proposals have serious and detrimental consequences.”

Note: The Globe and Mail quoted the Canadian Association of Petroleum Producers president David Collyer as saying, “We see potential constraints to access to the U.S. market…the only realistic option, as an alternative to the U.S. in the near term, would be exports off the West Coast to the Far East.”

More from IER on domestic energy policy:

IER Study: Low Carbon Fuel Standards: Recipes for Higher Gasoline Prices and More Middle East Oil
Primer on Oil Shale: What is it? How much do we have? How do we produce it?
Press Release: Embrace Canadian Energy
IER Study: Green Jobs: Fact or Fiction?

Japan: Number of households receiving single-mother allowance tops 1 mil

Number of households receiving single-mother allowance tops 1 mil
Japan Today, Thursday 19th March, 05:26 AM JST


The number of households receiving allowances for low-income single-mother families has topped 1 million for the first time on record, the Health, Labor and Welfare Ministry said Wednesday. The figure stood at 1,000,552 as of December against a backdrop of a rising number of divorces, while the average income of single-mother households remained at around 40% of average households.

The latest figure represents an increase of about 10,000 from December 2007, when it stood at around 990,000. Of the 1 million households, 878,000 became single-mother families through divorce while the families of unmarried mothers accounted for 79,000. State and municipal governments provide up to 42,000 yen in monthly allowances to single-mother families with one child.