Friday, October 8, 2010

Press Briefing

Oct 08, 2010

The Employment Situation in September

Tibetans Find Freedom in Exile - Since the Dalai Lama's expulsion in 1959, India has become home to at least 120,000

New Patterns of Investment in the Global Economy: Implications for U.S. Leadership

The U.S. Will Lose a China Trade War - Washington can't afford a weak-dollar policy. The only thing standing between the U.S. and a Greek-style sovereign debt crisis is the dollar's status as the global currency.

Update: U.S. Response to Pakistan's Flooding Disaster

Missed Trade Opportunity - The European Union capitalizes on U.S. protectionism -- South Korea Free Trade Agreement

Community of Democracies Informal Ministerial Meeting

The 'Limited Inflationists' - Fed Chairman Ben Bernanke and his QE Street Band

Remarks at the Trygve Lie Symposium on Business and Human Rights

Murdoch: Unless we measure success by how children perform, we'll have higher standards for pop stars than public schools

How to Contain Radical Islam: Lessons from South Asia

How a Bagram Detainee Foiled the Euro Terror Plot - The plan was disrupted because we were lucky enough to have the key witness in detention. It's a shame we didn't try to extract similar intelligence from Times Square bomber Faisal Shahzad.

Using Functional Populations to Create More Realistic Simulations

Revolt of the Accountants - Washington is turning America into Paperwork Nation

Remarks for Launch of Global Leaders Council for Reproductive Health

Obama's Energy-Policy Goals Versus China's

China's Ambitions in the South China Sea

Side Effects: Obamacare Compels More Employers to Dump Coverage

The Protectionist Instinct - Political support for free trade is a remarkable achievement of civic education—one threatened by our weak economy

Will Growing Government Debt Undermine the American Dream? The Implications of Mounting Federal Debt and Spending for the Debt-Paying Generation

Thursday, October 7, 2010

Press Briefing

Oct 07, 2010

The Obama Administration's Support for the Global Fund to Fight AIDS, Tuberculosis, and Malaria

Geithner's 'Cooperation' - Dollar devaluation is not economic leadership

Secretary of Treasury Timothy F. Geithner Remarks at the Brookings Institution

Toward a New American Century - Immigration reform, investments in human capital, and a saner housing policy can help restore U.S. economic leadership

Fighting Back Against Arbitrary Government Rule

ObamaCare and the Election - The GOP needs to raise the health-care stakes in 2010, and beyond

Wednesday, October 6, 2010

Press Briefing

Oct 06, 2010

The Coming Golden Age of Television - TV networks and video programming are among the only traditional media to grow since the advent of the Internet

The Demilitarization of Europe - Our NATO allies aren't spending enough to be credible security partners anymore

Of Scoundrels and Speech - The First Amendment protects even jerks

Undiplomatic Hold-Ups - Boxer and Brownback vs. U.S. interests

UNHCR Roundtable on Asylum-Seekers and Refugees Seeking Protection on Account of Their Sexual Orientation and Gender Identity

Pax Americana and the New Iraq - Iraq's Shiites, especially, have a healthy fear of Iran and a desire to keep Persian power at bay

Assistant Secretary for Financial Markets Mary J. Miller Remarks before the Future Industry Association Treasury and Rates Conference

The Soul of the Spending Machine - Republicans need new rules to aid their policy priorities

61st Session of the UNHCR Executive Committee - U.S. Government Plenary Statement

Why praise violent, misogynistic hip-hop stars?

Remarks by Delegation of the United States of America to the First Committee of the United Nations General Assembly

The Private Sector Can Improve Infrastructure with Privatization not a Bank

Serendipitous Connections - Innovation occurs when ideas from different people bang against each other

How Handwriting Trains the Brain - Forming Letters Is Key to Learning, Memory, Ideas

Tuesday, October 5, 2010

Press Briefing

Oct 05, 2010

Readers Write: Healthy Children Need Healthy Parents

Jennifer Rubin on how California's optimism has been replaced by cynicism and regulation

Truth in the Time of Putinism - Kremlin critics fear assassination and kangaroo courts

Obama Tactics Rebound on Rahm - Rahm runs into a Chicago roadblock

President Obama Meets with Economic Recovery Advisory Board

Hating 'Superman' - Teachers unions are on the moral defensive

White House Women's Entrepreneurship Conference: Closing Session

Manchin vs. Obama(Care) - A West Virginia Democrat tries to get elected

White House Press Briefing

The 'Pay for Delay' Rap - The drug industry, the FTC and overzealous antitrust

President's Economic Recovery Advisory Board Meeting

Speak Up on D.C. Schools, Mr. President - The president remains silent about the fate of Michelle Rhee, the successful chancellor of public schools in the nation's capital

White House Women's Entrepreneurship Conference: Opening Session

The Bill Gates Income Tax - If Washington's most famous billionaires are really worried about their state's finances, they'd write personal checks to the government and leave everyone else alone

New START: Security Through 21st-Century Verification

The Red Dragon’s Carbon Footprint

Monday, October 4, 2010

Press Briefing

Oct 03, 2010

Will Obama's foreign policy follow his new democracy rhetoric?

From Wikinomics to the Tea Party - Government is the institution most obviously frozen in the pre-Web era

The case for ambulance service fees

Adam Smith - A mind that ranged over politics, law and ethics—and produced the definitive defense of free markets

Right call on the Black Panthers

Target: Ireland - Europe tries to beat the Republic into tax submission

White House - Building Skills for America’s Future

Leahy's Supreme Tie-Breakers - A plan for liberal Justices to come out of retirement

Helping More Women-Owned Small Businesses Compete for Federal Contracts

'Essential' Bailouts - Under Dodd-Frank, some creditors are more equal than others

National Cyber Security Awareness Month Kicks Off

The Lap Dog Coalition - Blue Dog Democrats voted with Nancy Pelosi 80% of the time on economic issues

Statement by the President on the Occasion of the 20th Anniversary of the Reunification of East and West Germany

Historian Victor Davis Hanson writes that the American university is the most politically intolerant and monolithic institution in the country

The White House Women’s Entrepreneurship Conference

The Trade and Tax Doomsday Clocks

U.S. Stabilization Capabilities: Lessons Learned From Kyrgyzstan

Peace Doesn't Keep Itself - Defense spending has increased at a much lower rate than domestic spending in recent years and is not the cause of soaring deficits

Enough With the Low Interest Rates! - Fed policy punishes savers without making credit more readily available

The Obama Experts vs. the Rule of Law

George Washington was a genius and a titan, but it was politics, not war, at which he excelled

Alien Tort Victory - Business can't be held liable for overseas human rights abuses

IMF: Shaping the New Financial System
             Press release:

School Reform Rainmakers - John Walton had the right idea for education donors

Weekly Address: Solar Power & a Clean Energy Economy

China's Aggressive New Diplomacy - Beijing drives its neighbors into the arms of the U.S.

Saturday, October 2, 2010

Press Briefing

Oct 02, 2010

Implementing the National Space Policy: Opportunities and Challenges

San Franciscans Try to Take Back Their Streets - Even the liberal mayor is backing an initiative that would make public spaces safe again from the homeless industry and young thuggish vagrants

New Executive Order Targeting Iranian Officials Responsible for or Complicit in Serious Human Rights Abuses

'Things Could Get Pretty Messy' - The man who would be the next House majority leader talks about the GOP agenda and working with Obama

White House: A Living-Room Discussion with Middle Class Families

MSCs a viable alternative?

Rebuilding Together: Europe and the United States after the Global Financial Crisis

Healthamburglar - McDonald's meets ObamaCare

Comparative counterinsurgency in Yemen

Our Afghanistan mission diverts us from meeting China’s naval challenge

White House White Board: CEA Chair Austan Goolsbee Explains the Tax Cut Fight

The 'Spillover' Fallacy: Islamic Militants in Central Asia

Scientists conclude current guidelines on BPA are safe

Critical questions regarding the role of foreign fighters in Shabaab

Friday, October 1, 2010

Press Briefing

Oct 01, 2010

Warren op-ed: It's Time To Simplify Financial Regulation - Can customers easily understand the product? Regulators should be focused on that question

Black Churches and the Prosperity Gospel - Depending on miracles as a financial strategy is a dangerous way to live

Companies Reducing Energy-related Business with Iran

Former Bush White House staffer Peter Wehner on ObamaCare and the New Republic's Jonathan Chait

Two Cheers for the New Bank Capital Standards - Why do we still rely on the rating agencies, and why are we still allowing Lehman Brothers levels of leverage?

Remarks at Vital Voices of Asia Women's Summit

Beggar the World - Monetary instability is a threat to the global recovery

Russ Feingold: ‘The Conscience of the Senate and Wisconsin’s Strongest Advocate’

Echoes of the Great Depression. By Phil Gramm
As in the 1930s, policy uncertainty and hostility to business have retarded recovery. At least this time around the political price for economic failure promises to be swift.
WSJ, Oct 01, 2010


This may not be your grandfather's Great Depression, but many aspects of today's situation would remind him of the 1930s. If the recession that officially ended a year ago feels uncomfortably surreal to you yet familiar to him, it's probably because the recovery went missing.

During the average recovery since World War II, gross domestic product (GDP) surpassed the pre-recession high five quarters after the recession began. It has never taken longer than seven quarters. Yet today, after 11 quarters, GDP is still below what it was in the fourth quarter of 2007. The economy is growing at only about a third of the rate of previous postwar recoveries from major recessions.

Obama administration officials such as Treasury Secretary Tim Geithner have argued that without their policies the economy would be worse, and we might have fallen "off a cliff." While this assertion cannot be tested, we can compare the recent experience of other countries to our own.

[Change in total employment, 2007 compared to Q2-2010]

The chart nearby compares total 2007 employment levels in the United States, the United Kingdom, the 16 euro zone countries, the G-7 countries and all OECD (Organization for Economic Cooperation and Development) countries with those of the second quarter of 2010. There are 4.6% fewer people employed in the U.S. today than at the start of the recession. Euro zone countries have lost 1.7% of their jobs. Total employment in the U.K. is down 0.6%, G-7 average employment is down 2.4%, and OECD employment has fallen 1.9%.

This simple comparison suggests two things. First, that American economic policy has been less effective in increasing employment than the policies of other developed nations. Second, that if there was a cliff out there, no country fell off. Those that suffered the most were the most profligate, such as Greece, and their problems can't be blamed on the financial crisis. While the most recent quarterly growth figures are just a snapshot in time, it is hardly encouraging that economic growth in the U.S. (1.7%) is lower than in the euro zone (4%), U.K. (4.8%), G-7 (2.8%) and OECD (2%).

Most striking about these comparisons is their similarity to the U.S. experience in the Great Depression. Using data from the League of Nations' World Economic Survey, we can look at unemployment in developed nations between 1929 and the end of 1938. Ten years after the stock market crash, total employment in the U.S. was still almost 20% below the pre-Depression level. The decline in France was similar. But in the U.K. and Italy, total employment was up 10% and 12%, respectively. Industrial production on average in the six most developed countries was almost 16% above their 1929 levels by the end of 1938, but industrial production had declined by 20% in the U.S.

Today's lagging growth and persistent high unemployment are reminiscent of the 1930s, perhaps because in no other period of American history has our government followed policies as similar to those of the Great Depression era. Federal debt by the end of 1938 was almost 150% above the 1929 level. Federal spending grew by 77% from 1932 to 1934 as the New Deal was implemented—unprecedented for peacetime.

Still the economy did not take off. Winston Churchill gave a contemporary evaluation of the Roosevelt policy by observing, in the April 24, 1935, Daily Mail, "Nearly two thousand millions Sterling have been poured out to prime the pump of prosperity; but prosperity has not begun to flow."

The top individual income tax rate rose from 24% to 63% to 79% during the Hoover and Roosevelt administrations. Corporate rates were increased to 15% from 11%, and when private businesses did not invest, Congress imposed a 27% undistributed profits tax.

In 1929, the U.S. government collected $1.1 billion in total income taxes; by 1935 collections had fallen to $527 million. In 1929, individual income taxes accounted for 38% of government revenues, corporate taxes accounted for 43%, and excise taxes for 19%. By 1939, individual income taxes made up only 26% of federal revenues, corporate income taxes made up 29%, and excise taxes made up 45%.

When Treasury Secretary Henry Morgenthau suggested to President Roosevelt that the administration cut income tax rates in 1939, Roosevelt, apparently concerned about the possible effect of deficit-financed tax cuts on interest rates, asked, "You are willing to pay usury in order to get recovery?" Morgenthau said that he responded, "Yes sir." The president disagreed.

The Roosevelt administration also conducted a seven-year populist tirade against private business, which FDR denounced as the province of "economic royalists" and "malefactors of great wealth." The war on business and wealth was so traumatic that the League of Nations' 1939 World Economic Survey attributed part of the poor U.S. economic performance to it: "The relations between the leaders of business and the Administration were uneasy, and this uneasiness accentuated the unwillingness of private enterprise to embark on further projects of capital expenditure which might have helped to sustain the economy."

Churchill, who was generally guarded when criticizing New Deal policies, could not hold back. "The disposition to hunt down rich men as if they were noxious beasts," he noted in "Great Contemporaries" (1939), is "a very attractive sport." But "confidence is shaken and enterprise chilled, and the unemployed queue up at the soup kitchens or march out to the public works with ever growing expense to the taxpayer and nothing more appetizing to take home to their families than the leg or wing of what was once a millionaire. . . It is indispensable to the wealth of nations and to the wage and life standards of labour, that capital and credit should be honoured and cherished partners in the economic system. . . ."

The regulatory burden exploded during the Roosevelt administration, not just through the creation of new government agencies but through an extraordinary barrage of executive orders—more than all subsequent presidents through Bill Clinton combined. Then, as now, uncertainty reigned. As the textile innovator Lammot du Pont complained in 1937, "Uncertainty rules the tax situation, the labor situation, the monetary situation, and practically every legal condition under which industry must operate."

Henry Morgenthau summarized the policy failure to the House Ways and Means Committee in April 1939: "Now, gentleman, we have tried spending money. We are spending more than we have ever spent before and it does not work . . . I say after eight years of this administration we have just as much unemployment as when we started . . . and an enormous debt, to boot."

Despite the striking similarities between then and now, there is one major difference: Roosevelt's policies remained popular even as the economy faltered. The magnitude of the Depression, with its lack of stabilizers and safety nets, traumatized Americans and undermined their confidence in the economic system. This induced voters, as historians would later do, to judge Roosevelt not on his results but on his intentions.

Today, however, the Obama program appears to be failing politically as well as in the marketplace. The trauma of the financial crisis did not approach that of the Great Depression, and Americans do not appear to have lost faith in our economic system or come to see government as the savior. While progressivism gave the New Deal its intellectual foundations, history today is driven by the freedom tide that produced our economic revival in the 1980s and '90s and still drives economic liberalization in China and India.

Finally, we should not underestimate that this administration faces stronger and more united congressional opposition than FDR ever faced. The House and Senate Republican leadership has far surpassed all expectations of a minority party.

Mr. Gramm is a former U.S. senator from Texas and former professor of economics at Texas A&M University.

Treasury Announces Further Sales of Citigroup Securities and Cumulative Return to Taxpayers of $41.6 Billion

U.S. Imposes Offshore Drilling Moratorium, but Other Countries Fail to Follow

Thursday, September 30, 2010

Press Briefing

Sep 30, 2010

Reforming Government: Congressional Republicans Haven't Changed & Can't Bring the Change We Need

Grading the Governors - A new Cato Institute report on the fiscal best and worst

Assistant Sec for International Markets and Development Marisa Lago Introductory Comments for Eurofi Panel Discussion of "Prospects of future G-20 discussions and Expected impacts for the EU"

Why Congressional intelligence is an oxymoron

Treasury Deputy Secretary Neal Wolin Written Testimony before the Senate Banking Committee on "Implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act"

McDonald's May Drop Health Plan - the law ripples through the real world

Distrust in U.S. Media Edges Up to Record High

Conservatives: The Bipartisan Fight Against the Obama Tax Hikes

Statement by the President on the House Approval of the James Zadroga 9/11 Health and Compensation Act

In Elizabeth Warren We Trust? - The unaccountable head of the new Consumer Financial Protection Bureau has repeatedly used shoddy data to push policies she favors
By Todd Zywicki
WSJ, Sep 30, 2010

The Obama administration has promised that the Federal Reserve's new Consumer Financial Protection Bureau will be independent from politics, a model of regulatory expertise grounded in sound data and economics. Naming Harvard Law Prof. Elizabeth Warren as de facto agency head undermines both goals.

By appointing another White House czar to avoid Senate confirmation, the administration politicized the powerful new bureaucracy from its birth. And by appointing an individual with a track record of using questionable research to advance policy ends, it has jeopardized the second goal as well.

Consider Ms. Warren's much-ballyhooed study on the alleged link among health problems, medical expenses and personal bankruptcy filings. Published in the February 2005 issue of Health Affairs, the report was timed to head off bipartisan bankruptcy legislation that was enacted later that year. Ms. Warren and her co-authors claimed that "at least" 46% of personal bankruptcy filings in 2001 (the year from they collected the data) were the result of "medical causes," and that this represented a 23-fold increase over 20 years.

Both conclusions are extremely suspect. First, the study provided an implausibly broad definition of "medical bankruptcy"—including any filer who reported uncontrolled gambling, drug or alcohol addiction, or the birth or adoption of a child.

Equally dubious, the authors classified a bankruptcy as having a "major medical cause" if the individual had accumulated more than $1,000 in out-of-pocket medical expenses (uncovered by insurance) over the course of two years prior to filing—regardless of income, and even if the debtor did not cite illness or injury among the reasons for bankruptcy.

In 2001, average per capita out-of-pocket medical expenses were $683. During the two-year period Ms. Warren and her co-authors studied, in other words, Americans spent an average of $1,366 on uninsured medical expenses, or 30% more than their threshold definition of a "major medical cause." There was no larger context for their threshold figure: A debtor with $1,001 in uncovered medical expenses and $50,000 on a Saks card would constitute a "medical bankruptcy" in their study.

The claim of a 23-fold increase in medical bankruptcies was based on a comparison of their 2001 data with Ms. Warren's research in a 1981 study—which appears to count only those who self-reported as having filed bankruptcy for medical reasons. This is a completely different and much narrower definition of "medical bankruptcy" than the one she used 20 years later, and obviously inflates the increase.

In contrast to Ms. Warren's studies, a battery of analysis, including research done by the Department of Justice's Executive Office of the United States Trustee (which oversees the administration of bankruptcy cases), and by Daniel Dranove and Michael Millenson of Northwestern University, concluded that fewer than 20% of bankruptcies are caused by health problems or medical expenses.

Last year Ms. Warren and her co-authors were back with an even more dramatic study, in the American Journal of Medicine, timed to promote President Obama's health-care reform law. Drawing on 2007 filings, the authors concluded that 62% of bankruptcy filings were the result of medical issues and that the odds that a bankruptcy had a medical cause had doubled between just 2001 and 2007. This study was also flawed.

After Congress made it harder for people to skip out on their debts in 2005, the number of bankruptcy filings plummeted. In 2001, the year Ms. Warren used for the first study, there were 1,452,030 personal bankruptcy filings; in 2007 there were 822,590. Even if we are to accept the methodologies of the two studies for the sake of argument, there were 670,838 "medical bankruptcies" in 2001 and 510,828 medical bankruptcies in 2007—a drop of 160,000 per year. Yet Ms. Warren's article nowhere acknowledges that the absolute number of bankruptcies and purported medical bankruptcies declined.

Concerns about Ms. Warren's presentation and interpretation of data have been longstanding. As I wrote in these pages in August 2007, her book "The Two-Income Trap" willfully ignores the obvious in her own data: that spiraling taxes—and not living expenses—were a major cause of middle class financial woes.

Similarly, reports of the Congressional Oversight Panel of the Troubled Asset Relief Program (TARP)—a panel of which she was chair—uniformly treated home foreclosures as the result of bank fraud and the bullying of helpless homeowners. Fraud and bullying there was, but her panel consistently ignored the many foreclosures that have resulted from a homeowner's strategic decision to walk away from a house whose value has fallen below the amount still owed on the mortgage. Economists and housing analysts widely agree that a substantial number of defaults occur for this reason. That reality is largely absent from the TARP panel's reports.

The head of the Consumer Financial Protection Bureau is one of the most powerful bureaucratic positions ever created in the American political system. It can regulate or ban almost every consumer credit product in the country, yet it is beyond Congress's power of the purse because its budget is guaranteed as a percentage of the Fed's annual revenues. Under normal circumstances, the Senate would have the opportunity to ask Ms. Warren to explain the way in which she has sometimes interpreted data in her research before entrusting her with control of the agency.

By doing an end-run around the confirmation process, the Obama administration has eliminated our opportunity to find out. And by installing the head of the agency as an assistant to the president inside the White House, it has insulated her from meaningful congressional oversight.

Mr. Zywicki teaches bankruptcy and contracts at the George Mason University School of Law, and is the co-editor of the University of Chicago's Supreme Court Economic Review.

Update: U.S. Response to Pakistan's Flooding Disaster

Democrats and the Health-Reform Albatross - By making so many misleading claims, the president created an army of opposition

IMF: Global Financial Stability Report

The Protectionist Threat of Another Great Depression

Wednesday, September 29, 2010

Press Briefing

Sep 29, 2010

Bangladesh, 'Basket Case' No More - Pakistan could learn about economic growth and confronting terrorism from its former eastern province

Barack Obama: Defender of State Secrets - The president has launched more leak prosecutions than all his predecessors combined. By Gabriel Schoenfeld
WSJ, Sep 29, 2010

'My administration is committed to creating an unprecedented level of openness in government," Barack Obama pledged to the nation when he took office. Things haven't quite worked out as the president promised.

Consider the fate of leakers of secret information—"whistleblowers" is the celebratory term employed by some in the press—at the hands of the Obama Justice Department. In December 2009, an FBI contract linguist pleaded guilty to passing classified information to a blogger. Shortly thereafter he was sentenced to 20 months in jail. This April, a high-ranking National Security Agency official was charged under the espionage statutes for passing secrets to a reporter at the Baltimore Sun. In August, a State Department contractor was indicted for passing secrets about North Korea to Fox News. On top of all of this, the military has charged a young army intelligence officer with the unauthorized transmission of national defense information. He is widely presumed to be the source of the huge trove of classified document published by WikiLeaks, the infamous online bulletin board for secrets.

Whatever one makes of the merits of any of these cases, the astonishing fact remains that in all of prior American history charges have only been brought in three instances for leaking classified information. In his first 21 months in office, President Obama has launched more such prosecutions than in all preceding administrations combined.

Then we have the Obama administration's invocation of the state secrets privilege in court—a practice for which the Bush administration was roundly criticized by the left. In a series of high-profile terrorism cases, the Justice Department has asked judges to toss out those in which secret information would be disclosed.

Most recently, it has invoked the privilege in a lawsuit filed by the American Civil Liberties Union (ACLU) on behalf of Anwar al-Awlaki, the U.S.-born cleric who resides in Yemen and is implicated in numerous terrorist attacks. "It strains credulity to argue that our laws require the government to disclose to an active, operational terrorist any information about how, when and where we fight terrorism," a Justice Department spokesman commented last week.

George W. Bush was slammed unrelentingly for engaging, in the words of John Podesta—Bill Clinton's former chief of staff and the founder of the liberal Center for American Progress—in a "prolonged assault on open government in the name of national security." These same voices are turning on the Obama administration in tones more plaintive than withering.

There is "real doubt," writes Ken Gude, a national-security expert at Mr. Podesta's think tank, "that the Obama administration will live up to its commitment to usher in a new era of transparency." Already last year, ACLU Executive Director Anthony Romero lamented that Mr. Obama has "disappointingly reneged" on some of his promises to be more open. "This is not change. This is definitely more of the same."

If it is indeed more of the same, it is worth asking why. Mr. Obama has discovered, as much as he may wish it otherwise, that he is a war president. And like his predecessor, he is not only a war president: He is presiding over a particular kind of war in Afghanistan and in the broader war against Islamic terrorists where intelligence is more critical than ever.

The effectiveness of our intelligence tools—from the interrogation of captured enemy combatants to the capabilities of satellite reconnaissance systems—remains overwhelmingly dependent on their clandestine nature. It is not an overstatement to say that secrecy today is one of the most critical tools of national defense.

Leaks of counterterrorism secrets to the press, and disclosure of counterterrorism techniques and procedures in courtrooms, can imperil the war effort. We are thus faced squarely with the abiding tension between liberty and security. The U.S. government, under successive administrations, has been struggling to find the proper balance.

Now that they're going after the Obama administration for its alleged unwarranted secrecy, the carping civil-libertarian critics are acquiring the virtue of consistency. Perhaps they can serve a useful purpose in guarding against government excesses. But one thing's certain: The more voluble they become, the more apparent it also becomes that Mr. Obama is doing the right thing.

Mr. Schoenfeld, a senior fellow at the Hudson Institute and resident scholar at the Witherspoon Institute, is the author of "Necessary Secrets: National Security, the Media, and the Rule of Law" (Norton, 2010).

The President on Our Veterans - Choosing Priorities in Albuquerque

Israeli-Palestinian Peace Talks Are Suspended. So What? - What matters is growth and state-building in the West Bank. Yet the Obama administration is still fixated on settlements.

Multilateral Engagement in Action

Department of Disinformation - Sebelius tells a North Carolina fairy tale

Helping Bangladeshis Achieve Food Security

The Pelosi-Reid Deficits - Blame Congress, not presidents Bush or Obama, for our perilous fiscal situation

U.S. Strongly Condemns Stoning Of Woman in Orakzai, Pakistan

Blaming the Voters - Democrats embrace the Chris Farley school of political motivation

Thinking beyond Kopassus: Why US Security Assistance to Indonesia Needs Recalibrating

The Litigious Legacy of Kelo - Eminent domain abuse and Justice Kennedy

State Dept: Unstinting Resolve

China's Next Leap Forward - The jump from middle-income to rich status is much harder to achieve than the ascent from poverty. But there are plenty of reasons to believe China's growth prospects remain strong.

Tuesday, September 28, 2010

Press Briefing

Sep 28, 2010

The election of 1860—between war and the bitterness of failed compromise - Review of Douglas R. Egerton's "Year of Meteors"

What Ahmadinejad Knows - Iran's president appeals to 9/11 Truthers

Black Colleges Need a New Mission - Once an essential response to racism, they are now academically inferior

A Game of Trade Chicken - Poultry protectionism shows where the U.S. and China are heading

Remarks to 2010 Multinational BMD Conference and Exhibition

What's the Matter With Wall Street? - There are too many traders, bankers and salesmen to support the new level of business. Thanks to Dodd-Frank, the shrinking of finance will continue.

The U.S. Record on Financing for Development in 2009

Low Carbon Fuel Standards: A Threat to Our Most Secure Source of Foreign Oil

Sebelius op-ed: Health Insurers Finally Get Some Oversight - In the past, these companies ran wild with no accountability

ObamaCare's Hotel California - The state moves to impose price controls you can never leave

Monday, September 27, 2010

Press Briefing

Sep 27, 2010

White House Council on Women and Girls’ Friday Highlights

The Regulation Tax Keeps Growing - Blame Washington, not China, for the decline of American manufacturing

White House: Emergency Planning for the Entire Community

The Send Jobs Overseas Act - Ending the deferral of foreign income is another tax on U.S. employment

Curb Corruption or Lose the War - Association with the CIA has given some Afghan officials a sense of impunity, which threatens Gen. Petraeus's hearts-and-minds effort

How to Grow Out of the Deficit - Limiting spending increases to inflation minus 1% would balance the budget in less than a decade

White House - Dodging the Impact of Their Policies "Across the Board"

The Non-Economist's Economist - John Kenneth Galbraith avoided technical jargon and wrote witty prose—too bad he got so much wrong

Saturday, September 25, 2010

Press Briefing

Sep 25, 2010

President Obama Addresses Ministerial Meeting on Sudan

Tax Cuts and Revenue: What We Learned in the 1980s - Supply-siders never argued that all tax cuts pay for themselves. But the evidence is clear that lower rates on high earners do produce more revenue over time.

Where Should the UN Focus Its Peacekeeping Resources, and Why?

Kids 0, Insurance 0 - The first fruits of ObamaCare

NATO-Russia Council Meeting:  Building a Stronger Partnership

The Administration’s De Facto Moratorium on Shallow Water Energy Exploration

President Obama: GOP Leadership Standing up for Outsourcing and Special Interests, Instead of American Workers

Tony Blair in Defense of the West—and the Third Way - 'In today's world, a progressive party that stands essentially for big government is not going to succeed'
By Bret Stephens
The Wall Street Journal, sEP 25, 2010, page A17

New York
Tony Blair believes in "Islamist extremism."

It's U.N. week, and the former British prime minister is in town as the representative of the Quartet—the U.S., Russia, the EU and the U.N.—that aims to broker Mideast peace. We are in his suite at a posh Upper East Side hotel, talking about a passage in his just-published memoir in which he discusses the reach of the radical Islamist "narrative." It's a narrative, he argues, that needs to be "challenged head on."

This prompts me to ask whether he thinks that the widespread reluctance to use the word "Islamist" alongside the word "extremist" is a kind of evasion from reality.

"I think it is, I'm afraid," Mr. Blair answers, deploying the famously elegant diction that used to make for such invidious contrasts in the days when he shared a podium with George W. Bush. By way of explanation, he turns to the recent, aborted attempt by Florida Pastor Terry Jones to burn the Quran.

"I have no difficulty in saying this person is a Christian pastor but I completely and totally disagree with him," he explains. "It's fascinating, though, that when that happens the whole of the Western leadership have to come out and denounce it. . . . Let's say some cleric in some remote part of Pakistan turns up and says, 'I'm going to burn the Bible tomorrow.' What would we all say?"

Mr. Blair has been out of office for more than three years, but he is still sounding the same themes that were the touchstones of his decade in office. He is still faithful to the Third Way school of politics, still believes that government should be for empowerment not entitlement, and is still fighting a rear-guard action against fellow "progressives" who think it ought to be the other way round. But above all, Mr. Blair remains seized by the scope of the challenge posed by radical Islam.

"I think there is a tendency to regard the activities of the extremists who use terrorism and suicide bombings and so on as this small group of people unrelated to the broader [Muslim] community in which they exist," he says. "And I feel that narrative penetrates a lot deeper. And if you can't take that narrative on, you are left in a position where you end up semi-apologizing for your own position in relation to these things. And I think that's dangerous."

The narrative, as Mr. Blair describes it, consists of the view that the West is in cahoots with its client regimes in the Middle East—not just Israel, but also countries like Pakistan, Egypt and the Gulf emirates—to oppress Muslims and denigrate Islam. That narrative has its own subscribers among Western leaders and opinion-makers who believe the right approach is to say, in Mr. Blair's mocking paraphrase, "We kind of understand why you feel like this about us and maybe it's our fault but, you know, let's try and work this out."

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Terry Shoffner

Mr. Blair has little patience with this view: It rubs him wrong not only because he believes the analysis is flawed and the prescription misguided, but also—and here I'm reading between the lines—because it suggests Muslims should be held to a different set of standards and values.

Yes, he says, the Muslim world needs "genuine demonstrations of equality, respect, partnership and so on." That's one reason, he adds, why he puts so much stock in the Israeli-Arab peace process. But Mr. Blair also stresses that what the Muslim world—or at last the modernizing forces within it—need from the West is "for us to be really strong about our own confidence in our position, our own way of life and the values we represent."

Part of that confidence is affirming the rightness of what the U.S., Britain and the rest of the Coalition of the Willing did in Iraq—and what they continue to do in Afghanistan. Regarding the so-called occupation of Iraq, Mr. Blair notes that from the middle of 2003 coalition forces were in the country "with full U.N. authority." The international community followed up with billions in aid to the country. Democratic elections were held; Iraqis indicated the kind of future they wanted for their country.

And then the effort nearly fell apart on account of the unremitting savagery of Baathist holdouts, al Qaeda recruits, and Iranian-backed militias. Mr. Blair would like to know why Iraq's tormentors should be let off the hook while its liberators are vilified. "For us to end up in this situation where people say this is an indication that you should never have gone there, that you should have just let Saddam stay—we really need to think about what we're saying when we're saying that."

Mr. Blair feels the same way about the apportionment of blame in the Israeli-Palestinian conflict. He is confident of the good intentions of both Palestinian President Mahmoud Abbas and Israeli Prime Minister Benjamin Netanyahu (about whom, he adds, he is "absolutely sure [he] would sign a deal"). But he is also mindful of the way Israel is mindlessly castigated in the West, "particularly in Europe," for its every misstep, real or alleged.

"You cannot refuse to accept that Israel has a genuine security problem," he insists. "What does it mean when, the other day, President Obama launches the [Israeli-Palestinian] talks in the White House . . . and Hamas kill those [Israelis], including a pregnant woman and the parents of six children, and then put out a statement saying that this is an heroic act of courage? What does it say of the nature of what we're up against?"

Mr. Blair is equally emphatic about the need to confront Iran, which in his memoir he treats as morally equivalent to al Qaeda. Though he says he agrees with President Obama's approach to the regime—summed up as "here's a hand of friendship and now it's your choice"—he is under no illusions about the threat Iran poses. He is particularly enraged at the role it played in Iraq, including the supply of IEDs to insurgent forces that killed British and American troops. Might things in Iraq have gone better had the coalition confronted Iran's meddling sooner than it did? "I think that's a very, very good question," he replies.

The interview turns to the subject of Tehran's nuclear program. Could an Iran with nuclear weapons be contained, I ask, as it is now so fashionable to argue?

"I wouldn't take that risk," he replies without hesitation. "It is perfectly possible that a nuclear-armed Iran might be contained. But I think it's impossible to guarantee that, and it so drastically changes the balance of power within the region that it's not responsible" to allow it.

I say that sounds like he'd be prepared to countenance military strikes if other options fail.

Mr. Blair hedges for a moment: "When I'm asked this, [I always] default to the traditional line, which is to say I don't think you can take any option off the table."

I press: "But it sounds like you actually mean it."

He comes back more firmly: "I do mean it. . . . The alternative is to say that you are prepared to contemplate [a nuclear Iran], which, by the way, the moment you send that signal makes it a lot more likely to happen. So I think it's perfectly possible that we can avoid the situation. But I think the stronger and clearer we are, the more likely we are to avoid it."

Mr. Blair's tenure in office—begun, as he accurately puts it in his memoir, as a veritable love affair between him and the British electorate—is widely believed to have soured precisely because he holds these foreign policy views and was willing to act on them. Given that the Labour Party in Britain and the Democrats in the U.S. have now turned their back on the Third Way politics that gave Mr. Blair and Bill Clinton their resounding electoral victories, I wonder whether those politics would not have been more in vogue today had it not been for Iraq.

Mr. Blair demurs. "People forget this, but the closest I came to losing my job in a [parliamentary] vote was actually over tuition fees [for university students], and not over Iraq. The most difficult things were . . . introducing private-sector [reforms] into the health-care system, introducing academy schools, the equivalent of charter schools, and law and order."

It's a useful reminder. When Mr. Blair and Gordon Brown first came to office, the New Labour moniker was widely suspected of being a kind of political marketing device rather than representing a real change of heart by a party that had once been a de facto subsidiary of Britain's trade unions. But if Mr. Blair's memoir is anything to go by, he for one was a sincere convert to the New Labour faith. Among other things, it explains his current opposition to high rates of marginal taxation.

"The most important thing is to encourage strong growth, for the economy to create wealth. And I just think this is a very basic point . . . you need tax rates that are competitive with the world in which we live and in which people's hard work and enterprise is rewarded." As for the notion that the purpose of progressive governance is to tax the wealthy and redistribute it to the rest, Mr. Blair urges caution: "The people you end up hitting are not the very wealthy, because in my experience the very wealthy can make their own arrangements."

Mr. Blair is similarly worried about the perils of excessive regulation. While he believes that governments were right to respond to the financial crisis as they initially did, he worries that the recovery runs the risk of regulatory strangulation. "How you stabilize the economy is not the same as how you then get it let out of the crisis and back to strong growth, where you will need the private sector to be enterprising, innovative and able to compete." Nor does he have any patience with the demonization of the financial sector as "the bad guys" in the crisis.

The question arises of how Mr. Blair—a prep school boy and Oxford graduate who came to the Labour Party more from its intellectually Fabian wing than from the trade union movement—came by his views. Partly it's to do with his own father's rise from working-class roots, and partly by the pre-political years he spent as a commercial and industrial-relations lawyer, where he learned that "most people aspire to do better and most people actually want their kids to do better than them—and these are actually great engines of growth and progress."

But he also says his views are informed by traveling to emerging economies such as China. "These are all places where, if we're not careful, they are going to learn the lessons of our development and, funnily enough, they're not going to replicate all those lessons. . . . They will learn from our successes as well as our mistakes. And if we're not careful, they are going to leave us behind."

So much of what Mr. Blair says is so consonant with the political right-of-center that I ask him if he doesn't feel closer to John McCain politically than to Barack Obama. He laughs it off, calling himself a straight "Democrat-Labour" kind of guy. But elsewhere in the interview he offers a political warning to his fellow progressives:

"In today's world, in the 21st century, a progressive party that stands essentially for the state and big government is not going to succeed. Simple as that." I wonder if anyone in the White House is listening.

Pastors For ObamaCare? - If the White House office of faith-based initiatives is going to be used as propaganda unit, it might as well be shut down

State Dept Officials: Remarks to the Press from UN General Assembly

The Democratic Tax Retreat - The economic policies of the last four years are being repudiated

Avoiding the Internet's Black Holes

Well-functioning capital markets are critical for job creation. Congress should ease the burden on companies that go public—and fast

Friday, September 24, 2010

Press Briefing

Sep 24, 2010

Organizing for America: "This is health reform"

Andy Stern Sees the Light on Overseas Profits - The labor icon now supports reducing the double taxation of foreign-earned corporate income

White House Blog - The Congressional Republicans' Pledge: What if the Rubber Hit the Road?

Iran's Defecting Diplomats - Signs that the Green movement is alive, even within the government

The United States in UN Peacekeeping: Strengthening UN Peacekeeping and Conflict Prevention Efforts

Fannie Mae Motors - GM lobbies the government that owns it

2010 FSI Survey on the Implementation of the New Capital Adequacy Framework

The GOP Agenda - Weaknesses aside, Republicans give voters a clear choice

Remarks by President Obama and Premier Wen Jiabao of China before Bilateral Meeting

Inside the Republican Money Machine - This year GOP backers have come close to matching spending by independent Democratic groups

International Alliance Launched to Support Country-Led Progress in Reproductive, Maternal and Newborn Health

Campaign Finance Reform: A Libertarian Primer

USAID and the President's Global Development Policy

How the Woodward saga could make for a Greek tragedy in the White House

Thursday, September 23, 2010

Press Briefing

Sep 23, 2010

Excerpts of President Obama's Remarks to the United Nations General Assembly

Update: U.S. Response to Pakistan's Flooding Disaster

Don't Be Afraid of Frankenfish - Genetically engineered salmon will meet growing demand for protein-rich food without depleting wild fish stocks

Sec Clinton Remarks at UN Secretary General Ban Ki-moon's Millennium Development Goals' Maternal and Child Health Event

Shakedown in the Rain Forest - The attempt to loot Chevron for $27 billion is falling apart

Sec Clinton Remarks at "Inclusive Finance: A Path to the MDGs" Luncheon

Too Little Inflation? - Central bankers who say they want higher prices usually get them

Breakfast With Ahmadinejad

How Seniors Will Pay for ObamaCare - In many areas, Medicare Advantage enrollees will lose about one-third of their health insurance benefits. The cuts will finance new subsidies for younger people.

Obama Administration September Housing Scorecard Shows Continued Advances in Housing Market

Industry Views: IER Testimony for the Hearing on the Global Clean Energy Race

Briefing on the P-5+1 Ministerial Meeting by a Senior Administration Official Via Teleconference

How to Level the Capital Playing Field - The best way to deal with China's exchange-rate policy may be to borrow a page from its monetary playbook

Treasury Sec Tim Geithner Written Testimony House Financial Services Committee - Basel III

Red Tape Rises Again: Cost of Regulation Reaches $1.75 Trillion

Wednesday, September 22, 2010

Press Briefing

Sep 22, 2010

Global Alliance for Clean Cookstoves: The United States Commitment By the Numbers

A Teacher Quality Manifesto - What happens to bright teachers stuck in schools that don't have the right to hire by performance and build a culture of excellence? They quit.

Transforming Distressed Neighborhoods into Neighborhoods of Opportunity

The Carter-Obama Comparisons Grow - Walter Mondale himself sees a parallel

White House: Building a New Foundation

Questions for Mahmoud Ahmadinejad - Do democracy, freedom and human rights have a place in Islamic theology? Is Iran holding two American hikers hostage?

Why They Go Green - A green breakfast to thank Harry Reid

Republicans in Congress Push to End Consumer Protections, Let Wall Street Run Loose

The Real Gulf Disaster - The well is plugged. The moratorium drags on.

State Dept.'s Multilateral Newsletter: Volume 2 - September 17, 2010

Obama, Warren and The Imperial Presidency - The Senate should vote on all senior appointments within 60 days. But the president should give it a chance to vote

Infrastructure Investment in the Long-Term & The Case for a National Infrastructure Bank. By Assistant Secretary Krueger. Testimony Before Senate Banking, Housing and Urban Affairs Committee

Massive Medicare Advantage Cuts

Implementing the National Space Policy: Opportunities and Challenges

More Proof We Can't Stop Poverty By Making It More Comfortable

Tuesday, September 21, 2010

Press Briefing

Sep 21, 2010

The Pentagon Is Serious About Saving Money - Last year we awarded $55 billion in 'competitive' contracts for which only one bid was received

Cap Gains Taxation: Less Means More - A new study suggests a zero cap gains rate could create millions of jobs at a fraction of the cost of the spending stimulus

Fighting Fraud and the Consequences of Defunding the Affordable Care Act

A Tale of Two Recoveries - The state of the economy after a year of 'rebound'

President Obama's Town Hall on the Economy, Business and the Middle Class

The Recession and the Housing Drag - The more the government tries to prevent prices from finding an equilibrium, the longer it will take for the economy to begin growing again

Public-Private Partnership Brings Clean Drinking Water to Flood Victims

Republicans should be grateful tea partiers did not run as third-party candidates and split the antistatist vote

Under Secretary Levey Remarks at the Center for Strategic and International Studies

Don’t Wish Upon an Energy Star to Save the Environment

U.S.-Colombia Action Plan on Racial and Ethnic Equality

Conservatives: The Economic Toll of the Federal President's Tax Hikes

Monday, September 20, 2010

Press Briefing

Sep 20, 2010

Federal President Castigates GOP Leadership for Blocking Fixes for the Citizens United Decision

Barbara Boxer (D., Armenia) - The Democrat trashes an Obama nominee

In "My Nigeria," Peter Cunliffe-Jones traces Nigeria's history since independence and tries to measure the legacy of British rule

Stimulus for Clunkers - A new study charts an economic failure
WSJ, Sep 20, 2010

By now, the only defense Democrats can mount of the Obama stimulus programs is that the economy would have been worse without them. There's no way to disprove this counterfactual, but now we have some empirical evidence other than 9.6% unemployment and 1.6% growth.

To wit, economists Atif Mian of the University of California Berkeley and Amir Sufi of the University of Chicago have examined "cash for clunkers," the $2.85 billion program that subsidized consumers to buy new cars and destroy older ones. Their conclusion: The program "had no long run effect on auto purchases." It did juice sales during its two-month run last summer, by about 360,000 cars, but then it quickly hurt sales by about the same amount, in effect stealing purchases from the future. The program was a wash in a mere seven months.

White House economists might dismiss that finding because their larger goal with cash for clunkers was to stimulate "aggregate demand" in the overall economy. Earlier this year, Christina Romer, the former chairman of the Council of Economic Advisers, wrote that cash for clunkers was an example of "very nearly the best possible countercylical fiscal policy in an economy suffering from temporarily low aggregate demand." The program wasn't sold as a discount for cars people were already planning to buy, but rather to encourage knock-on economic activity such as more consumer spending and job creation.

It's impossible to test what would have happened without cash for clunkers because there's no control group. But Messrs. Mian and Sufi do the next best thing by looking at how clunkers were distributed around the country. Comparing high-clunker areas to low-clunker areas—and thus the areas that were more "stimulated"—allowed them to measure relative economic outcomes.

Lo, Messrs. Mian and Sufi found in their paper for the National Bureau of Economic Research that there was "no noticeable difference" in economic outcomes among the 957 metropolitan areas they studied. They did detect an economic blip in cities where the auto industry is concentrated but note that the rebound can't be disentangled from the Chrysler and GM bailouts.

Messrs. Mian and Sufi caution that their findings "do not warrant the claim that all forms of fiscal stimulus fail to boost long-run economic output" (their emphasis). But if this is the result from the "best possible" stimulus program—per Ms. Romer—the impact of the others must have been awful.

White House Blog - No Excuse for Holding Middle Class Tax Cuts Hostage

New START treaty's China challenge

Hiring More Veterans to Keep Serving America

The Christie Example - New Jersey government workers should have 401(k) plans instead of pensions

U.S. Goals and Priorities at UN General Assembly

'There Is No More Molly' - NYC Mosque it's the only time Barack Obama has ever stood up for anybody's First Amendment rights

Update: U.S. Response to Pakistan's Flooding Disaster

Let Them Eat Tax Hikes - Thirty-one House Democrats signed a letter urging Ms. Pelosi to bring a bill to extend all the tax rate reductions, not just the middle-class cuts

Japan: Lost in Translation? - Why the world's third largest economy has dropped out of the global conversation

The 1099 Stonewall - Harry Reid keeps his majority together - Small business requirements

How the Surge Was Won - America's longest-serving general in Iraq says that when they realized the U.S. presence in their communities was permanent, allies came 'out of the woodwork'

The Republican Answer to George Soros's Money - Steven Law admires how the left organized itself during its wilderness years. Now he's got $50 million to help elect candidates on the right

U.S. Counterterrorism Strategy in Yemen

On Elizabeth Warren - Obama to Senate: Stick that in your advice and consent clause

On 15th Anniversary of the 4th UN Conference on Women, State Department Co-Sponsors Summit to Empower Women Across Asia

Lady Gaga and Liberace: Separated at Birth? - His spangles, her spikes. Hmm. Makes you miss the old days.

State Security, Post-Soviet Style - Closing down independent political life, branding critics as 'extremists.' Review of Andrei Soldatov and Irina Borogan's "The New Nobility"

Sunday, September 19, 2010

Demirgüç: one of the culprits was the duo of Fannie Mae and Freddie Mac

In "Life After the Crisis: Where do we go from here?", World Bank Chief Economist Asli Demirgüç-Kunt says:
[...] while the recent global crisis had multiple causes, one of the culprits was the duo of Fannie Mae and Freddie Mac. U.S. policymakers encouraged these financial institutions to increase the availability of mortgages to borrowers with questionable ability to repay. Subsequent relaxing of standards, the increase in home prices due to a larger pool of “qualified” borrowers, and their eventual default in large numbers during the downturn all added to the severity of the crisis.
I asked her (first comment to her post above):
hi, can you provide references for that part of your post? Stiglitz [2] is very adamant that this is a red herring.

I know that AEI's Peter J. Wallison has persuasively shown arguments putting guilt on the GSEs, the CRA and lawmakers and the Executive [3], but I'd like to see analyses a bit less political and clearly academic about the subject, replying to Stiglitz's comments and his references:
Those that want to believe in the market have struggled to find someone else to whom blame can be shifted. One often heard candidates are government efforts to encourage lending to minorities and underserved communities through the Community Reinvestment Act (CRA) requirements and to increase home ownership through Fannie Mae and Freddie Mac. Default rates on CRA lending are actually lower than on other categories of lending, and CRA lending is just too small, in any case, to have accounted for the magnitude of the problem.14

His reference #14 is a note:
See Canner and Bhutta (2008) and Kroszner (2008).

Those references, in turn, are [4] and [5]. Both Stiglitz's comments and his references are preivous to July 2009, that is a bit old.


[1]  Asli Demirgüç-Kunt: "Life After the Crisis: Where do we go from here?", Sep 17, 2010,

[2]  Joseph Stiglitz: Interpreting the causes of the great recession of 2008. Lecture prepared for the Eighth BIS Annual Conference, Basel, 25–26 June 2009.

[3]  Peter Wallison: "The True Origins of This Financial Crisis", in "Getting the Story Right: The True Origin of the Financial Crisis", AEI Online, Feb 2009,

[4]  Canner, G. and N. Bhutta, “Staff Analysis of the Relationship between the CRA and the Subprime Crisis,” memorandum, Board of Governors of the Federal Reserve System, November 21, 2008.

[5]  Kroszner, R.S., “The Community Reinvestment Act and the Recent Mortgage Crisis,” speech at Confronting Concentrated Poverty Policy Forum, Board of Governors of the Federal Reserve System, Washington, D.C., December 3, 2008.

Thursday, September 16, 2010

Press Briefing

Sep 17, 2010

U.S. Can't Risk Slow START

Wealth and Poverty - How's that inequality thing working out?
WSJ, Sep 17, 2010

If there is a single unifying principle behind the Democratic agenda of the last two years, it is this: Reduce income inequality. So yesterday's annual Census Bureau review of American incomes is a kind of progress report on how this agenda is working out. In a word, our wealth isn't spread any more equitably, though more of us are poor.

The Current Population Survey shows that in 2009 the poverty rate climbed to 14.3% from 13.2% in 2008—the highest since 1994. That figure translates into 43.6 million Americans living below the poverty line, the largest absolute number in the half-century for which comparable data are available. At $49,777, the real median household income fell slightly, though not in a statistically significant way. It declined 1.8% among families and rose 1.6% for individuals.

In a statement yesterday, President Obama attributed these results to the financial panic and recession, and that's true in part. The Census data also overstate the true level of poverty because they don't include noncash government payments like housing subsidies, food stamps, the earned income tax credit or entitlements like Medicaid.

But then Mr. Obama couldn't resist adding that "Even before the recession hit, middle class incomes had been stagnant and the number of people living in poverty in America was unacceptably high, and today's numbers make it clear that our work is just beginning." So to address the rising poverty on his watch, the President wants to plow ahead with the same policies that aren't reducing poverty.

We draw a different lesson, which is the continuing imperative of rapid economic growth. Census Bureau figures over the last 50 years show that poverty falls most rapidly during times of the most sustained growth—the 1960s, 1980s and second half of the 1990s. The poverty rate also fell in the mid-2000s before heading up again when the recession hit. The most important goal of economic policy should be to increase society's overall wealth. This helps the poor and everybody else.

Yet starting with his first budget proposal, Mr. Obama has made clear that his main policy purpose is reducing inequality. As the White House budget scribes put it, "There's nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few. . . . It's a legacy of irresponsibility, and it is our duty to change it."

Thus the 2009 stimulus was assembled around social programs and redistribution, defying even Keynesian precepts about immediate job creation. Among its many other goals, ObamaCare is intended to produce "a leveling" of the "maldistribution of income in America," as Senate Finance Chairman and chief author Max Baucus put it. Even now, amid a mediocre recovery and 9.6% unemployment, the inequality imperative is driving Democrats to insist on a huge tax increase—no matter the impact on growth.

The irony is that, while there has been a modest widening of the income gap in recent decades, the Census (as measured by the "Gini index") shows that inequality has remained mostly unchanged since the early 1990s—regardless of which party is in power. The reasons are many and rooted in larger economic and social forces that can't be fixed with higher taxes and White House social engineering.

More important, this preoccupation with inequality is actively harmful because it leads to economic policies that inhibit growth. That's the real warning in the new Census data. Democrats are succeeding in their goal of punishing business and the wealthy, but to the extent that this has produced anemic growth it is also punishing the poor and middle class.

The moral claim of Obamanomics is that it ensures that everyone pays his "fair share," but its early returns show this agenda is producing more poverty. In their obsession with income shares and how many people have how much wealth, the Obama Democrats are imposing policies that ensure only that there will be less wealth for everyone to spread around.

China's Currency Policies and the U.S.-China Economic Relationship. Sec Timothy F. Geithner

Constitution Day and the Perilous Future: "The federal government, yes, can do most anything in this country."

Is Google a Monopolist? A Debate

China's Real Monetary Problem - Focus on yuan sterilization, not the yuan-dollar rate

The U.S. at the U.N. and Beyond: A World of Transnational Challenges

On Wind Power: : Where’s the Empirical Proof?

NASA Ready to Send Humanoid Robot to Space

The Uninsured Numbers Are Bad, but Obamacare Can Make Them Worse

Press Briefing

Sep 16, 2010

President Obama on Small Business Jobs & Tax Cuts: "We Don't Have Time for Any More Games"

Rooting for Redistribution - Are Americans easily fooled about their real interests? Review of Jacob S. Hacker and Paul Pierson's "Winner-Take-All Politics"

White House - New Plans Underway to Increase Contracts to Small Business

The Case for a 'Repeal Amendment' - Virginia will consider proposing a constitutional amendment that would allow two thirds of the states to repeal a federal law

President Obama's Message to Veterans on Retroactive Pay Due to 'Stop Loss'

Principles for Economic Revival - Our prosperity has faded because policies have moved away from those that have proven to work. Here are the priorities that should guide policy makers as they seek to restore more rapid growth.

Republican Tax Plan Doubles Nation's Deficit in Just Ten Years

Conservatives: The New START Rubberstamp Threat to National Security

Conversations With America: Meeting the Millennium Development Goals

Too Much Progress - D.C. voters give a reform mayor, Fenty, the boot

Update: U.S. Response to Pakistan's Flooding Disaster

It's the Spending, Stupid - A chronic voter 'concern' has now exploded into a broad public movement

Wednesday, September 15, 2010

Press Briefing

Sep 15, 2010

Speech by Assistant Secretary for Financial Institutions Michael S. Barr, Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprise of House Committee on Financial Services

Tax Cuts vs. 'Stimulus': The Evidence Is In - A review of over 200 fiscal adjustments in 21 countries shows that spending discipline and tax cuts are the best ways to spur economic growth

The President's Forum With Young African Leaders

Conservatives: The Obamacare and Obama Tax Hike Double Whammy on Seniors

Ayman al-Zawahiri: Nine Years After the Start of the Crusader Campaign

OVERBLOWN: Windpower on the Firing Line (Part I)

Working To Expand Opportunities in Tajikistan

Federal President's Proposed Oil and Gas Tax Hikes to Cost U.S. Economy 154,000 Jobs in 2011

A Discussion on the New START Treaty

Conservatives: Holding Economic Recovery Hostage

Statement by President Obama on the Small Business Jobs Bill

Obamacare: The Real Price Tag is a Moving Target

Intensifying Diplomacy in the Lead up to the Referenda in Sudan

Short Sales Bans: Shooting the Messenger?