Total Information Awareness

The administration can keep boasting of the Iraqi military's progress in taking over for Americans and keep maintaining that, as Dick Cheney put it, the insurgency is in its "last throes." But when even the conservative Republican congressman who pushed the House cafeteria to rename French fries "freedom fries" (Walter B. Jones of North Carolina) argues for withdrawal, it's fruitless. Once a story line becomes incredible, it's hard to get the audience to fall for it again.

I'm not sure why Tom doesn't know this, but we don't have the troops to do that. There are only 10 fighting divisions in the Army, and standing up more would take 5 years. (A division is typically between 20,000 and 25,000 troops). You can't put all ten into Iraq (remember Afghanistan and South Korea?), and couldn't keep them all there permanently if you could. Friedman's suggestion literally cannot be implemented.[...]

It is an index of how desperate the US political class is that impractical ideas are put forward by major journalists in newspapers of record that have already reported on their impracticality.

Conservatives don't want to talk about [Iraq] because, with a few exceptions, they think their job is just to applaud whatever the Bush team does. Liberals don't want to talk about Iraq because, with a few exceptions, they thought the war was wrong and deep down don't want the Bush team to succeed.

Friedman's a pretty important guy and surely knows a lot of liberals, so he probably knows some liberals worth naming. This is a pretty serious allegation -- who's he talking about? If he would tell us, then maybe people would have a chance to defend themselves against this smear.

One thing we do need to do regardless of what happens in Iraq is raise taxes, which, I suppose, is when we find out just how much Americans really support this kind of project. [emphasis in original]

If you are worried about the federal deficit (and you should be), ask yourself which would do more to improve the country's finances - President Bush's latest budget or a pastrami sandwich. The administration made much of the fact that the budget Bush proposed in February was his tightest yet and was projected to reduce the deficit by half, to $207 billion, in 2010. What the administration did not make much of - you had to look deep in the fine print - is that the deficit would actually decline a bit more between now and 2010 if the Bush plan were not enacted and existing laws were just left alone.

In other words, go with the pastrami. It is fiscally sounder, plus it's good with mustard and a dill pickle.

Would it really be so bad if living standards in the United States stagnated - or even declined somewhat - for a decade or two? It might well be worse than most people imagine. History suggests that the quality of our democracy - more fundamentally, the moral character of American society - would be at risk if we experienced a many-year downturn. As the distinguished economic historian Alexander Gerschenkron once observed, even a country with a long democratic history can become a "democracy without democrats." Merely being rich is no bar to a society's retreat into rigidity and intolerance once enough of its citizens sense that they are no longer getting ahead.[...]

The reason is not hard to understand. When their living standards are rising, people do not view themselves, their fellow citizens, and their society as a whole the way they do when those standards are stagnant or falling. They are more trusting, more inclusive, and more open to change when they view their future prospects and their children's with confidence rather than anxiety or fear. Economic growth is not merely the enabler of higher consumption; it is in many ways the wellspring from which democracy and civil society flow. We should be fully cognizant of the risks to our values and liberties if that nourishing source runs dry.

Everything changed in 2001. But it didn't all change on September 11.[...]

Yes, the ramifications of 9/11 will be with us for decades, much as the aftereffects of Pearl Harbor explain the presence of thousands of U.S. troops in Asia seventy-five years later.[...]

Before there was 9/11, however, there was June 7, 2001. For our purposes modern economic history began that day.

On June 7 President George W. Bush celebrated his first big legislative victory. Only two weeks earlier his new administration had suffered a terrible political blow, when a Republican senator left the party and gave Democrats a one-vote majority in the Senate. But the administration was nevertheless able to persuade a dozen Democratic senators to vote its way and authorize a tax cut that would decrease federal tax revenues by some $1.35 trillion between then and 2010.

This was presented at the time as a way to avoid the "problem" of paying down the federal debt too fast. According to the administration's forecasts, the government was on the way to running up $5.6 trillion in surpluses over the coming decade. The entire federal debt accumulated between the nation's founding and 2001 totaled only about $3.2 trillion - and for technical reasons at most $2 trillion of that total could be paid off within the next decade. Therefore some $3.6 trillion in "unusable" surplus - or about $12,000 for every American - was likely to pile up in the Treasury. The administration proposed to give slightly less than half of that back through tax cuts, saving the rest for Social Security and other obligations.[...]

If the president or anyone else...had had perfect foresight, he would have seen that no surpluses of any sort would materialize, either for the government to hoard or for taxpayers to get back. (A year later the budget would show a deficit of $158 billion; a year after that $378 billion.) By the end of Bush's second term the federal debt, rather than having nearly disappeared, as he expected, had tripled. If those in the crowd had had that kind of foresight, they would have called their brokers the next day to unload all their stock holdings. A few hours after Bush signed the tax-cut bill, the Dow Jones industrial average closed at 11,090, a level it has never reached again.

In a way it doesn't matter what the national government intended, or why all forecasts proved so wrong. Through the rest of his presidency Bush contended that the reason was 9/11 - that it had changed the budget as it changed everything else. It forced the government to spend more, for war and for homeland security, even as the economic dislocation it caused meant the government could collect less. Most people outside the administration considered this explanation misleading, or at least incomplete. For instance, as Bush began his second term the nonpartisan Congressional Budget Office said that the biggest reason for growing deficits was the tax cuts.

But here is what really mattered about that June day in 2001: from that point on the U.S. government had less money to work with than it had under the previous eight presidents. Through four decades and through administrations as diverse as Lyndon Johnson's and Ronald Reagan's, federal tax revenue had stayed within a fairly narrow band. The tax cuts of 2001 pushed it out of that safety zone, reducing it to its lowest level as a share of the economy in the modern era. And as we will see, these cuts - the first of three rounds - did so just when the country's commitments and obligations had begun to grow.

Bush's first-term deficits were defensible as responses to emergencies, but the emergencies are over; and the strategy of avoiding the extreme downside and picking up the pieces later works only if you do pick up the pieces later. That would involve cutting spending more deeply than Bush has yet proposed, revoking some of his tax cuts or reforming the tax system in ways that generate new revenues, and, at the very least, paying for his initiatives. So far he has shown little inclination to do any of those things; in fact, he wants to make the tax cuts permanent. [emphasis added]

// posted by Eric Martin @ 4:45 PM |