GOP candidates: Fix US economy or fail like Europe

Πηγή: AP
By KASIE HUNT

Nov 10 2011

ROCHESTER, Mich. (AP) -- United in agreement for once, Republican presidential rivals warned forcefully Wednesday night the United States could be doomed to the same sort of financial crisis that is afflicting Europe unless federal deficits are drastically cut and the economy somehow revived.

Though sexual harassment allegations facing Herman Cain have dominated the GOP campaign for more than a week, the debate in economically ailing Michigan focused almost entirely on financial worries and proposed solutions in the U.S.

The candidates generally stuck to practiced speech lines - with a late exception. In the middle of one answer, Texas Gov. Rick Perry found himself unable to recall the names of all three of the Cabinet-level agencies he wants to eliminate, even leaning over to Rep. Ron Paul for help at one point.

"The third agency of government I would do away with - the Education, the Commerce. And let's see. I can't. The third one I can't. Oops," he said, forgetting for a moment that he wants to abolish the Department of Energy.

On one specific issue that Congress must address soon, the candidates generally backed an extension of the Social Security payroll tax cut scheduled to expire at the end of the year. That was a rare moment of accord with President Barack Obama and many congressional Democrats, who have been warning that consumers could be hurt if the reduction is not renewed.

"I'm not prepared to raise taxes on working Americans in the middle of a recession that's this bad," said former House Speaker Newt Gingrich, a sentiment quickly seconded by former Massachusetts Gov. Mitt Romney.

Perry disagreed, and Rep. Michelle Bachmann of Minnesota said she opposed the one-year reduction when it was approved late last year. She said it had so far "blown a hole of $100 billion in the Social Security trust fund."

Asked about Europe's financial troubles, the candidates seemed to speak with one voice in saying Italy and other European countries should rise or fall on their own without any American bailout. And several of the White House hopefuls warned that unless U.S. deficits are cut and the economy invigorated, America is headed for the same type of downward spiral.

"Europe is able to take care of their own problems. We don't want to step in and bail out their banks and their economies," former Massachusetts Gov. Mitt Romney said as he and GOP rivals met for the first time in three weeks in campaign debate.

Even so, he said the United States should continue contributing to organizations like the International Monetary Fund that are working to prevent a meltdown in troubled economies overseas.,

Paul was more emphatic about the debt. "You have to let it liquidate. We took 40 years to build up this worldwide debt," he added.

Cain said there wasn't much the United States could do to directly to help Italy at present because the economy there is in such difficult shape. "We need to focus on the economy or we will fail," he said, referring to the U.S. and calling for spending cuts, a strong dollar and measures to stimulate growth.

The Cain accusations did come up, though briefly.

"The American people deserve better than someone being tried in the court of public opinion due to unfounded accusations," he said when the question came up early in the debate. "I value my character and my integrity more than anything else. And for every one person that comes forward with an unfair accusation there are probably, there are thousands who come forward and say none of that ever happened with Herman Cain."

Romney, a former venture capitalist, was asked if he would keep Cain on the job as a CEO given the accusations. He responded, "Herman Cain is the person to respond to these questions. He just did."

On another point, Cain felt it necessary to make a post-debate apology to House Democratic leader Nancy Pelosi, whom he had called "Princess Nancy" for sidetracking Republican legislation when she was speaker.

The announced topic for the evening was the economy, a subject that produced few if any early sparks among rivals who often spar energetically.

Perry, Gingrich, Bachmann and former Pennsylvania Sen. Rick Santorum joined Romney, Cain, Paul and Huntsman on stage at Oakland University in Michigan, a state where unemployment is 11.1 percent and well above the national 9 percent jobless rate.

The debate took place less than two months before Iowa's kickoff caucuses, as the pace of campaign activity accelerates and public opinion polls suggest the race remains quite fluid. Romney and Cain currently share co-front-runner status in most surveys, with Perry and Gingrich roughly tied for third, within striking distance.

Not surprisingly, none of the contenders found much to like in Obama's economic stewardship.

Perry said the next president should systematically judge all of the government regulations enacted since Obama took office on a standard of whether they created jobs. Any that failed should be repealed, he said.

Bachmann sharply criticized Fannie Mae and Freddie Mac. She said the latter had recently given multimillion-dollar bonuses to executives even though it was seeking a new federal bailout.

Gingrich, who last held public office more than a decade ago, bristled when asked what advice his company had given Freddie Mac for a $300,000 fee. "Advice on precisely what they didn't do," he shot back - stop backing mortgages to applicants who aren't credit-worthy.

The government rescued mortgage giants Fannie Mae and Freddie Mac in September 2008 to cover their losses on soured mortgage loans. Since then, a federal regulator has controlled their financial decisions.

The cost to taxpayers so far has been about $169 billion, the most expensive bailout of the financial crisis.

There was only scant mention of the Michigan auto industry, which benefited in 2008 and 2009 from a federal bailout that both President George W. Bush and Obama backed.

All eight Republicans on the debate stage say they wouldn't have offered government assistance.

Not so Obama, who stood outside a factory not far from the debate site recently and said government bailouts of General Motors and Chrysler were a success that saved thousands of American jobs.

Obama's new theme: 'We can't wait' for lawmakers to act

Πηγή: Star Tribune
By JACKIE CALMES , New York Times

Oct 24 2011

WASHINGTON - With his jobs plan stymied in Congress by Republican opposition, President Obama on Monday will begin a series of executive-branch actions to confront housing, education and other economic problems over the coming months, heralded by a new mantra: "We can't wait" for lawmakers to act.

According to an administration official, Obama will kick off his new offensive in Las Vegas by promoting new rules for federally guaranteed mortgages so more homeowners, including those with little or no equity in their homes, can refinance and avert foreclosure.

And Wednesday in Denver, the official said, Obama will announce policy changes to ease college graduates' repayment of federal loans, seeking to alleviate the financial concerns of students considering college as states are raising tuition.

The president's announcements will bookend a three-day Western trip.

The "We can't wait" campaign is a new phase in Obama's effort to pressure Republicans to support the job-creation package he proposed after Labor Day. It comes after unanimous votes by Senate Republicans in the past week to block the plan; House Republican leaders have refused to put the measure to a vote.

Polls show overwhelming support for pieces of the $447 billion package, which includes expanded tax cuts for workers and employers and spending for state aid to keep teachers and emergency responders at work. But Republicans oppose provisions in Obama's plan that would offset the costs with higher taxes on the wealthy.

By resorting to executive actions using his wide-ranging authority, Obama seems intent on showing he is not powerless in the face of Republican opposition but is trying to strengthen the economy and help Americans in trouble.

Officials do acknowledge the coming policy changes, executive orders and agency actions are generally less far-reaching than the legislative proposals before Congress.

"The president will continue to pressure congressional Republicans to put country before party and pass the American Jobs Act," said Dan Pfeiffer, Obama's communications director. "But he believes we cannot wait, so he will act where they won't.

US: 'Twilight of the Wise Man'

Πηγή: Foreign Policy
BY JACOB HEILBRUNN

Oct 12 2011

The 2012 election may well mark the last gasp of the Republican foreign-policy establishment. But what’s more remarkable is that it lasted as long as it did.

In September 2005, two U.S. senators walked into a Soviet-era weapons factory in Donetsk, Ukraine. The elder of the two, Indiana Republican Richard Lugar, was such a familiar face in the world of international disarmament that he was waved past security at even top-secret Russian nuclear weapons facilities, according to a Chicago Tribune reporter who accompanied the lawmakers' weeklong tour of the remnants of Cold War arsenals in the former Soviet Union. But his traveling companion, a Democrat 29 years his junior and not even a full year into his first term, was in much less practiced terrain. "All of the workers have masks on," Barack Obama asked Lugar. "Why don't we?"

The white-haired Lugar, august enough to have briefed Dwight Eisenhower as a young Navy officer, was a shrewd choice of a mentor for Obama, then a rising star with presidential prospects but little international experience. Lugar had devoted his career to working on such unglamorous but significant issues as the Cooperative Threat Reduction program, passed by Congress in 1992, which reduced the swollen American and Soviet nuclear arsenals and kept dangerous materials from ending up in the hands of terrorists. Lugar's measured approach, which prompted Time to name him in 2006 as one of America's 10 best senators, necessarily involved crossing the aisle: "Even while you remain a strong advocate for your personal worldview, as President you must maximize bipartisan support and frequently seek bipartisan consensus on foreign policy issues," he cautioned in his 1988 book Letters to the Next President. "Lugar still refers to this chapter as a basic primer to the domestic politics of foreign policy," Lugar aide Andy Fisher told me via email.

This kind of above-politics deal-making on matters of global importance was once the hallmark of a whole caste of Republican policymakers, the so-called "wise men": avatars of the establishment who always maintained that foreign affairs is a lofty sphere to be left untainted by partisan bickering. So Lugar, who was enthusiastic about his apprentice as well, did not object when, during the 2008 presidential debates, Obama repeatedly invoked his name. Obama also aired advertisements in Indiana stating that Lugar belonged to a small group that has "shaped my ideas and will be surrounding me in the White House." The message was clear: Obama was anything but a radical and would compensate for his foreign-policy inexperience by seeking the counsel of elder statesmen. When Obama ran into Republican opposition in his efforts to get New START -- which continued nuclear arms-control reductions with Moscow -- ratified late last year, Lugar worked with his fellow nonproliferationists across the aisle to move it forward. The treaty passed and relations with Moscow improved.

Financial Corruption: Obama’s Politics of Deception

Πηγή: Scoop
By Michael Hudson
Oct 10 2011


The seeds for President Obama’s demagogic press conference on Thursday were planted last summer when he assigned his right-wing Committee of 13 the role of resolving the obvious and inevitable Congressional budget standoff by forging an anti-labor policy that cuts Social Security, Medicare and Medicaid, and uses the savings to bail out banks from even more loans that will go bad as a result of the IMF-style austerity program that Democrats and Republicans alike have agreed to back.

The problem facing Mr. Obama is obvious enough: How can he hold the support of moderates and independents (or as Fox News calls them, socialists and anti-capitalists), students and labor, minorities and others who campaigned so heavily for him in 2008? He has double-crossed them – smoothly, with a gentle smile and patronizing patter talk, but with an iron determination to hand federal monetary and tax policy over to his largest campaign contributors: Wall Street and assorted special interests – the Democratic Party’s Rubinomics and Clintonomics core operators, plus smooth Bush Administration holdovers such as Tim Geithner, not to mention quasi-Cheney factotums in the Justice Department.

President Obama’s solution has been to do what any political demagogue does: Come out with loud populist campaign speeches that have no chance of becoming the law of the land, while quietly giving his campaign contributors what they’ve paid him for: giveaways to Wall Street, tax cuts for the wealthy (euphemized as tax “exemptions” and mark-to-model accounting, plus an agreement to count their income as “capital gains” taxed at a much lower rate).

So here’s the deal the Democratic leadership has made with the Republicans. The Republicans will run someone from their present gamut of guaranteed losers, enabling Mr. Obama to run as the “voice of reason,” as if this somehow is Middle America. This will throw the 2012 election his way for a second term if he adopts their program – a set of rules paid for by the leading campaign contributors to both parties.

President Obama’s policies have not been the voice of reason. They are even further to the right than George W. Bush could have achieved. At least a Republican president would have confronted a Democratic Congress blocking the kind of program that Mr. Obama has rammed through. But the Democrats seem stymied when it comes to standing up to a president who ran as a Democrat rather than the Tea Partier he seems to be so close to in his ideology.

So here’s where the Committee of 13 comes into play. Given (1) the agreement that if the Republicans and Democrats do NOT agree on Mr. Obama’s dead-on-arrival “job-creation” ploy, and (2) Republican House Leader Boehner’s statement that his party will reject the populist rhetoric that President Obama is voicing these days, then (3) the Committee will get its chance to wield its ax and cut federal social spending in keeping with its professed ideology.

President Obama signaled this long in advance, at the outset of his administration when he appointed his Deficit Reduction Commission headed by former Republican Sen. Simpson and Rubinomics advisor to the Clinton administration Bowles to recommend how to cut federal social spending while giving even more money away to Wall Street. He confirmed suspicions of a sellout by reappointing bank lobbyist Tim Geithner to the Treasury, and tunnel-visioned Ben Bernanke as head of the Federal Reserve Board.

Yet on Wednesday, October 4, the president tried to represent the OccupyWallStreet movement as support for his efforts. He pretended to endorse a pro-consumer regulator to limit bank fraud, as if he had not dumped Elizabeth Warren on the advice of Mr. Geithner – who seems to be settling into the role of bagman for campaign contributors from Wall Street.

Can President Obama get away with it? Can he jump in front of the parade and represent himself as a friend of labor and consumers while his appointees support Wall Street and his Committee of 13 is waiting in the wings to perform its designated function of guillotining Social Security?

When I visited the OccupyWallStreet site on Wednesday, it was clear that the disgust with the political system went so deep that there is no single set of demands that can fix a system so fundamentally broken and dysfunctional. One can’t paste-up a regime that is impoverishing the economy, accelerating foreclosures, pushing state and city budgets further into deficit, and forcing cuts in social spending.

The situation is much like that from Iceland to Greece: Governments no longer represent the people. They represent predatory financial interests that are impoverishing the economy. This is not democracy. It is financial oligarchy. And oligarchies do not give their victims a voice.

So the great question is, where do we go from here? There’s no solvable path within the way that the economy and the political system is structured these days. Any attempt to come up with a neat “fix-it” plan can only suggest bandages for what looks like a fatal political-economic wound.

The Democrats are as much a part of the septic disease as the Republicans. Other countries face a similar problem. The Social Democratic regime in Iceland is acting as the party of bankers, and its government’s approval rating has fallen to 12 percent. But they refuse to step down. So earlier last week, voters brought steel oil drums to their own Occupation outside the Althing and banged when the Prime Minister started to speak, to drown out her advocacy of the bankers (and foreign vulture bankers at that!).

Likewise in Greece, the demonstrators are showing foreign bank interests that any agreement the European Central Bank makes to bail out French and German bondholders at the cost of increasing taxes on Greek labor (but not Greek property and wealth) cannot be viewed as democratically entered into. Hence, any debts that are claimed, and any real estate or public enterprises given sold off to the creditor powers under distress conditions, can be reversed once voters are given a democratic voice in whether to impose a decade of poverty on the country and force emigration.

That is the spirit of civil disobedience that is growing in this country. It is a quandary – that is, a problem with no solution. All that one can do under such conditions is to describe the disease and its symptoms. The cure will follow logically from the diagnosis. The role of OccupyWallStreet is to diagnose the financial polarization and corruption of the political process that extends right into the Supreme Court, the Presidency, and Mr. Obama’s soon-to-be notorious Committee of 13 once the happy-smoke settles from his present pretensions.

Obama chides banks, taps anger over Wall Street

Πηγή: Reuters
By Jeff Mason and Alister Bull

Oct 6 2011

President Barack Obama launched an onslaught against banks and Republicans on Thursday for working to block financial reform, using a populist tone amid public anger over Wall Street practices.

Obama, a Democrat who is fighting for re-election in 2012 against a backdrop of high unemployment, said his Republican opponents' primary plan to boost the economy involved rolling back Wall Street regulation his administration fought to pass.

The president also pressed Congress to approve his $447 billion jobs package and said he was "comfortable with" a proposal by fellow Democrats to pay for the plan with a tax on millionaires. John Boehner, the Republican speaker of the House of Representatives, accused Obama of political campaigning.

Obama spoke at a White House news conference after thousands of anti-Wall Street demonstrators protested at New York's financial district and in several U.S. cities this week over economic inequality and financial institutions' power.

"I think people are frustrated and ... the protesters are giving voice to a more broad-based frustration about how our financial system works," Obama said.

"What we've seen over the last year is not only did the financial sector with the Republican Party and Congress fight us every inch of the way, but now you've got these same folks suggesting that we should roll back all those reforms and go back to the way it was before the crisis."

Obama noted the "Dodd-Frank" financial reform bill he championed was designed to prevent Wall Street abuses, and his emphasis on the subject indicated he would use the theme heavily in the 2012 presidential race.

Banks, he said, "can't be competing on the basis of hidden fees, deceptive practices or, you know, derivative cocktails that nobody understands and that exposed the entire economy to enormous risks."

Vice President Joe Biden and a U.S. Federal Reserve official also expressed sympathy for the protesters, but some investors said Obama's populist tone was misplaced.

"If these statements were coming from a lowly congressman, that's one thing, but this is the president. It's class warfare at its finest, or at its worst," said Marshall Front, chairman of Front Barnett & Associates, which has $600 million in assets and owns bank stocks.

POPULISM AND POLITICS

Bank of America said last week it planned to charge customers who use debit cards to make purchases a $5 monthly fee. Obama said recent hikes in fees charged by banks were likely unfair to consumers. He said it was appropriate for the government to play an oversight role.

The depth of that oversight is as much a political issue as it is a financial one.

"You've got Republican presidential candidates whose main economic policy proposals is, 'We'll get rid of the financial reforms that are designed to prevent the abuses that got us into this mess in the first place,'" Obama said.

"That does not make sense to the American people. They are frustrated by it, and they will continue to be frustrated by it until they get a sense that everybody's playing by the same set of rules."

House Speaker Boehner said Obama had "given up on the country" to focus on his re-election rather than working with Republicans to boost the economy.

"Mr. President, why have you given up on the country and decided to campaign full time instead of doing what the American people sent us all here to do?" Boehner said.

Though criticizing Wall Street can tap into populist support, it could hurt Obama's campaign pocketbook. Like other presidential candidates, Obama is courting Wall Street contributions for his political goals.

Obama already has a tenuous relationship with some in the financial community for his harsh rhetoric about corporate compensation at the beginning of his term.

"It is pretty clear that the Obama 2012 campaign is going to try to take up the theme of economic populism -- how they (Obama and Biden) are the only ones standing in the way of the banks and corporations taking over Washington," said Paul Sracic, a political scientist at Youngstown State University in Ohio.

New York City protests over income inequality have spread to other U.S. cities. They were underway or planned on Thursday in Austin, Texas; Tampa, Florida; Washington, and Houston.

"We have a very frustrated people, and I can understand their frustration," Dallas Fed President Richard Fisher told a group of business people in Fort Worth, Texas.

"We have a very uneven distribution of income. We have too many people out of work for too long.

JOBS SALES PITCH

During his White House news conference, which lasted more than an hour, Obama continued a sales pitch for his jobs package, saying it was necessary to avoid another recession.

Republicans say the proposal -- a mix of stimulus spending and tax cuts for workers and small businesses plus an end to some tax breaks for corporations and the rich -- will never pass as a whole but that certain parts are worth considering.

Some Democratic lawmakers are also not fans of the bill. In response, Senate Majority Leader Harry Reid said he would substitute a new millionaire's tax for some of the tax hikes Obama had proposed in order to win more support.

Nevertheless, Republicans are still expected to block the measure in the Democratic-controlled Senate and it faces stiff opposition in the Republican-controlled House of Representatives.

Special report: How Washington took the U.S. to the brink

President Obama meeting with Speaker of the House John Boehner on the patio near the Oval Office, July 3, 2011.

Πηγή: Reuters
By Caren Bohan, Andy Sullivan and Thomas Ferraro

Sep. 22 2011

The world's largest economy was headed toward an unprecedented default, and all Washington wanted to talk about was the manner in which the president had left a room.

A White House meeting in mid-July between President Barack Obama and congressional leaders had ended with sharp words as Obama clashed with the brash Republican House majority leader, Eric Cantor.

Now Cantor was back on Capitol Hill, dishing details to a scrum of reporters -- a shift from the terse, vague statements that usually followed such meetings.

"He said to me, 'Eric, don't call my bluff. I'm going to the American people with this,'" Cantor said in his Southern drawl. "I was somewhat taken aback."

Republican aides filled in the gaps. Obama had "stormed out of the room," one said. At the White House, aides pushed back. One official demonstrated to reporters exactly how Obama had ended the meeting -- lightly pushing his chair back from the table, standing up deliberately, walking away calmly. "He didn't storm out. He just got up and walked into his office," one said.

That evening -- July 13, 2011 -- was one of the lowest points in the struggle to avert fiscal disaster and put the nation's budget on a sustainable path.

Congress needed to extend the country's $14.3 trillion debt ceiling before Tuesday, August 2, the date the Treasury Department would begin running out of cash to cover the country's bills. But Republicans and Democrats were deadlocked.

INSIDERS UNITE

As the deadline drew closer, the two sides abandoned a series of efforts to reach agreement, searching for the right combination of policies and personalities to get a deal done. In the end, it fell to two consummate Washington insiders to prevent the talks from collapsing.

A Reuters examination of the months-long showdown over the debt ceiling found that:

* Vice President Joe Biden and Senate Republican Leader Mitch McConnell emerged as critical players in the final stretch of the talks, as theirs was the only cross-party relationship built on decades of trust.

* Despite a belief among many rank-and-file Republicans that the government could muddle through a default, party leaders never doubted the Treasury Department's warnings that economic catastrophe was a real possibility if they didn't reach a deal by August 2.

* Although House of Representatives Speaker John Boehner, the top U.S. Republican, was eager to strike a bold deal with Obama, it was ultimately necessary for Boehner to distance himself from the White House to convince his House Republicans to back the final deal.

* The business community played an important behind-the-scenes role, with two White House foes -- Wall Street and the Chamber of Commerce -- rallying support for a compromise backed by Obama.

This account of America's journey to the brink of default is based on interviews conducted over the past six weeks with dozens of elected officials, business lobbyists and aides in the House, the Senate and the White House.

A ZEAL FOR CUTS

The U.S. congressional elections in November 2010 set the stage for confrontation over the congressionally mandated cap on the outstanding total of federal government borrowings. Republicans had harnessed voters' anxiety over the economy and soaring deficits to capture the House of Representatives.

Accusing Obama of overreaching with his stimulus package in 2009 and his drive for healthcare reform, Republicans vowed to slash spending and rein in the federal government's size.

A campaign document -- the "Pledge to America" -- promised to cut spending by $100 billion in the first year alone, back to the levels in place in Republican President George W. Bush's last year in office.

The newly elected Republicans, 87 in all, were not interested in compromise. Many felt a greater obligation to the grassroots Tea Party activists who had sent them to Washington than to the party elders who ran the place.

In a budget fight with the Democratic-controlled Senate that took the government to the brink of a shutdown in April, Republicans managed to cut spending by $38 billion, the largest domestic cut in U.S. history.

Still, 59 House Republicans voted against the bill because it did not go far enough.

BOEHNER'S BATTLELINES

That was a mere skirmish. The big battle lay ahead as the government was fast running up against its $14.3 trillion credit limit and would need Congress to raise it further. In early May, Boehner laid out his conditions for a debt-ceiling increase: spending cuts would need to exceed the amount of new borrowing authority.

Instead of billions of dollars, the debate would be measured in the trillions.

It would be a chance for Boehner to show his new troops that he could use the levers of Washington to get results.

An avid golfer and a chain-smoker, the 61-year-old Boehner is from an older generation than many of the Tea Party conservatives whose election to Congress made it possible for him to become House Speaker.

The seasoned legislator and former businessman grew up in Ohio from a family of modest means and worked as a janitor to help put himself through college.

Obama, 49, had a comfort level with fellow Midwesterner Boehner despite their philosophical differences. The speaker reminded the president, a former state senator from Illinois, of Republican legislators he used to play poker with in Illinois and with whom he forged bipartisandeals.

Both men are even-tempered and view themselves as Washington outsiders. Each has ambitions of transforming Washington and making a big mark on policy.

Those aspirations drove their on-again, off-again talks aimed at a far-reaching, bipartisan "grand bargain" that would put the United States on sounder fiscal footing for years to come.

On a golf outing in mid-June, the two agreed to work together on a broad deficit-reduction deal. "Let's give it a try," Obama told the speaker.

The following week, at a secret White House meeting, they agreed to have their staff draw up options. The aim was to craft a plan that would cut deficits by roughly $4 trillion over 10 years.

A 'GRAND BARGAIN?'

The challenges were steep. Democrats would have to agree to rein in cherished social programs like the Medicare health plan for retirees and the disabled. Republicans would have to accept a tax-code overhaul that would increase revenues through the elimination of tax breaks and deductions.

Boehner's enthusiasm for the "grand bargain" was not shared by his colleague, Senate Republican leader Mitch McConnell.

McConnell had confided to Vice President Joe Biden that he thought it was unrealistic to try to accomplish such a sweeping deal in the weeks before August 2 deadline.

The Senate Republican leader worried it would lead to a dead end when pressure was building to resolve the debt-limit standoff. Rating agencies were warning they might downgrade the country's top-notch credit score and, while there was no sign of panic yet in financial markets, investors were growing nervous.

McConnell, 69, had served in the Senate since 1985 and witnessed firsthand the divided-government battles of the 1990s, when Republican House Speaker Newt Gingrich and an earlier generation of firebrand conservatives went toe-to-toe with Democratic President Bill Clinton.

MEMORIES OF 1996

That confrontation led to a shutdown of the federal government and provoked a public backlash against Gingrich and his party. With the Republican brand tarnished, Clinton sailed to re-election in 1996.

McConnell, whose party is a minority in the closely divided Senate, viewed the 2012 elections as a chance to gain dominance in the chamber.

He feared the debt-limit fight would put that in jeopardy while also bolstering Obama's re-election prospects.

If Treasury Secretary Timothy Geithner's warnings were right -- and both McConnell and Boehner believed they were despite skepticism among their rank-and-file -- the fallout from a debt default would be calamitous, causing stocks and the dollar to sink and interest rates to surge.

Mortgage rates and business borrowing costs would spike, potentially sending the economy into another recession. That would mean Republicans -- whom Democrats had accused of intransigence over the debt limit -- would share in the blame for the economy's woes and suffer voter wrath as a result.

Many in the White House viewed McConnell as more of a tactician than a visionary and someone more focused on party politics than on setting policy. In the quest for a grand bargain, Boehner would make a better partner, they thought.

But in the end, after Boehner twice broke off talks with the White House, administration officials relied heavily on McConnell as an emissary to the speaker, and came to view him as a crucial player.

A BOND BETWEEN RIVALS

The administration's chief link to McConnell was Biden, 68, a 36-year veteran of the Senate with rock-solid Democratic credentials who nonetheless had a strong rapport with the Republican leader.

The two seemed to speak the same language from their years in the Senate together. Their bond grew closer when they worked together on a tax-cutting deal just before Christmas late last year, according to people who know both men.

"C'mon Mitch, you know what I'm dealing with here," Biden would sometimes tell McConnell -- Senate-speak to describe the pushback he would face from Democratic Party activists if he gave too much ground.

According to a former Biden aide, McConnell seemed to appreciate that Biden understood the GOP leader faced similar constraints within the Republican Party.

In April, Obama tapped Biden to lead a panel of lawmakers that would lay the groundwork for a deal. In an ornate corner room just off the Senate floor, the group pored through stacks of government and private-sector reports to identify more than $1 trillion in mutually acceptable spending cuts.

As the talks stretched into June, Biden gradually built up a rapport with Cantor, the House majority leader, who was leading the Republican side.

REPUBLICAN RIFT

In less than 10 years in Washington, Cantor had quickly climbed to the top rungs of Republican leadership. But his sharp elbows had earned him enemies -- some from within his own party.

He and Boehner had a cool relationship, say people who know both lawmakers. The rift extended into the lobbying community, where Republicans identified themselves as "Boehner people" or "Cantor people."

At the end of June, Cantor abruptly walked out of the Biden talks, saying the two sides could not agree on taxes. The "principals" -- Obama and Boehner -- would have to take it from there.

Even before the Biden talks began, members of Boehner's office dismissed them as political theater.

"This thing will ultimately get decided by Boehner and Obama," a Boehner aide said.

After weeks of back-channel negotiations with Obama, Boehner decided on July 22 that he could not work with the White House and would have to forge a deal with Democrats on Capitol Hill.

The two sides had come tantalizingly close to a deal, but stumbled again over the tax question.

Boehner felt the White House had shifted the goalposts at the last minute.

White House officials believed Boehner's departure stemmed from an unwillingness -- or an inability -- to take on the conservative rebels in his party. If Boehner had been willing to shake hands publicly with Obama on a "grand bargain," they said, there would have been a way to woo enough mainstream Republicans and Democrats to pass the bill.

They also disagreed with any suggestions that they had shifted the goalposts.

'A BOWL OF JELL-O'

"Dealing with the White House is like dealing with a bowl of Jell-O," Boehner said angrily at a press conference that night.

Obama called him back to the White House the following day and told him he should not be left out of the process.

"Mr. President, as I read the Constitution, the Congress writes the laws. You get to decide if you want to sign them," Boehner responded, according to his aides.

The action moved back to Congress. Like the deal that Boehner and the White House had abandoned, the latest plan would separate the relatively easy decisions -- curbs on annual discretionary spending -- from the difficult reforms to benefits and the tax code.

It wasn't the "grand bargain" Obama and Boehner had sought, but it would deliver trillions in savings and cover the nation's borrowing needs past the November 2012 elections.

There was one catch. The plan would require another debt-ceiling vote in a few months to ensure Congress would sign off on the second set of savings, and Obama had already ruled that out.

Around 10 p.m., on Saturday, July 23, Obama called Boehner to tell him he would veto the bill if it reached his desk. But he suggested that they could find another way to ensure Congress would actually follow through with the tax and benefit changes envisioned by the plan.

GOING SEPARATE WAYS

Congressional staff continued work on the plan the next day. Boehner told Fox News he would press ahead with his own legislation if the two sides could not agree. With no progress made on the enforcement mechanism, known as a "trigger" in Washington-speak, that appeared to be the case.

Boehner told Republicans he would unveil his version of the plan on Monday, July 25, while the Democratic leader of the Senate, Harry Reid, decided to advance a rival plan. Another effort had failed.

The final week would put Boehner's leadership to the test.

Boehner unveiled his plan to Republicans that Monday in a meeting room in the bowels of the Capitol. It wouldn't tie a debt-limit increase to the balanced-budget constitutional amendment, as many of them wanted, but it would deliver more than $2 trillion in savings. A vote was set for Wednesday, July 27.

Boehner launched a two-front lobbying blitz, alternating between in-person meetings with wavering lawmakers and phone calls to conservative media figures like talk radio host Rush Limbaugh and columnist Charles Krauthammer.

On Monday night, he touted the plan directly to a national audience, as television networks granted him air time to respond to a prime-time speech by Obama.

'READY TO DRIVE THE CAR'

Boehner's rally continued on Tuesday morning at the Capitol Hill Club, a social club for Republicans. Boehner's lieutenants took the lead. Cantor bluntly acknowledged that "the debt limit sucks." Kevin McCarthy, the House Republican whip, or lead vote counter, showed a clip from "The Town," a 2010 movie about bank robbers.

"I need your help," said a character played by Ben Affleck. "You can never ask me about it later and we're gonna hurt some people."

"Whose car are we going to take?" asks another character.

The message: it was time to get the job done, no matter how messy. The film clip appeared to win over at least one convert.

Representative Allen West, an outspoken Tea Party-aligned freshman, stood up and shouted: "I'm ready to drive the car!"

OBAMA'S UNLIKELY ALLIES

But momentum shifted as the day wore on. Outside conservative groups like the Club for Growth and the Heritage Foundation urged a vote against the bill.

At the White House, aides were batting away suggestions that Obama had been sidelined.

"He's working tirelessly, meeting with his economic team, doing a lot of outreach, exploring all opportunities for compromise," said senior White House adviser Valerie Jarrett.

Obama worked the phones, talking strategy with Democratic leaders and developing options for the final endgame.

Jarrett, one of the administration's envoys to the business community, said her phone was ringing off the hook with calls from retailers and other business owners worried about the prospect of another debt-limit fight in December if Obama was forced to accept Boehner's two-step plan.

The White House was also actively reaching out to the business community to spell out the dire consequences of a default.

The administration found an ally in the Chamber of Commerce, a group traditionally aligned with Republicans, who now urged the party to back the bill.

The financial services industry was also on the same page as the administration on this issue, despite its many skirmishes with the White House during the debate over Wall Street reform in 2010.

JAMMED CIRCUITS

In his public address on Monday night, Obama had implored Americans to intervene directly by calling, emailing or posting messages on Twitter to their lawmakers.

Telephone circuits on Capitol Hill seized up, email messages bounced back and Web sites crashed under the load.

The anxiety at the White House was building.

"It's fair to say that nobody here had any doubt that this was going to go right up to the line, even as we urged Congress not to take it right up to the line," one administration official said. "That's just the way Congress works."

Still, the path toward a deal was far from clear.

Over at Treasury, Geithner was trying to figure out what to do if Congress failed to reach a deal in time.

Should the government make debt service a top priority to prevent a meltdown on Wall Street? That could delay paychecks to soldiers, benefit checks to retirees, and payments to government contracts, sending ripples through the economy.

Back at the Capitol, Boehner's troubles mounted.

Representative Jim Jordan, a leader of the Republican Party's right wing, predicted Boehner wouldn't get the votes he needed from his own party. Democrats united against his bill.

The Congressional Budget Office, the official scorekeeper, said it would only deliver $850 billion in savings, rather than the $1.2 trillion it claimed. Late that evening, Boehner decided to rewrite the bill to make sure it complied with the party's vow to extract spending cuts greater than the size of the debt limit increase. That put off a vote until at least Thursday.

'FIRE HIM!'

The acrimony spilled into the open Wednesday morning, July 27, in the party's basement meeting room.

Representative Greg Walden, a Boehner ally, read aloud an email from a Jordan staffer that urged outside conservative groups to convince undecided members to vote against the bill. Many lawmakers in the room viewed the message as a betrayal of the Speaker. As the Jordan staffer stood uncomfortably against a wall, lawmakers chanted, "Fire him! Fire him!"

The usually jovial Boehner turned the screws. "Get your ass in line," he said. There was laughter, but the message was unmistakable.

As the meeting adjourned, lawmakers predicted the bill would pass. But a large number remained on the fence. Boehner spent the day listening to their concerns -- the cuts weren't big enough, the special committee might raise taxes, the balanced-budget amendment has been watered down.

Thursday morning, July 28: another meeting, another chance to rally the troops over fruit and doughnuts and signs that read "Play like a champion." Representative Mike Kelly, an alumnus of Notre Dame University, drew upon his school's storied legacy as he urged members to "put on your helmet, buckle your chin straps, run out onto the field and beat the shit out of your opponent!"

Doubters like Jordan stayed silent. As the meeting adjourned, they told reporters that their opposition had not changed.

With the rewritten bill ready to go, Republican leaders scheduled a vote for late Thursday afternoon. As debate started on the House floor, Boehner, Majority Leader Cantor and Whip McCarthy continued to meet with doubters, making the case that the party needed to stick together if it wanted an acceptable final product.

At 5:25 p.m., the Republican troika abruptly yanked the bill from the House floor with only one minute left of debate. They didn't have the votes.

'BLOODY AND BEATEN'

As floor action turned to naming post offices, Boehner summoned the holdouts to his office just off the Capitol rotunda. Whatever he was doing wasn't changing any minds.

"I'm a bloodied and beaten 'no,'" said Representative Louie Gohmert of Texas, one of several conservatives who had downplayed the consequences of a technical default, as he left the office.

At the beginning of the year, Republicans had enacted a ban on earmarks, the pet spending projects that had come to symbolize waste and corruption in the public imagination. That meant that Boehner had fewer carrots to offer reluctant members -- no highway overpasses.

"It is the most refreshing thing in the world to see what is going on here. These kinds of negotiations a couple of years ago would have cost $20 billion," said Representative Jeff Flake of Arizona, whose anti-spending stance had made him an outcast in the party in the past decade.

The five Republicans who represent South Carolina headed from Boehner's opulent suite to the Capitol's small, private chapel to pray.

As they knelt beneath a stained glass window depicting George Washington, they weren't praying for guidance, just strength to maintain their stand.

"I think divine inspiration has already happened. I was a 'lean-no,' now I'm a 'no,'" said Representative Tim Scott.

19 BOXES OF PIZZA

The action moved downstairs to McCarthy's office. The jovial 46-year-old Republican whip, from California's dusty interior, was a novice vote counter. He had presided over a few embarrassing setbacks earlier in the year. Now he was facing a true disaster.

As the night wore on, 19 boxes of pizza from Al's Pizzeria disappeared into McCarthy's office.

The holdouts weren't looking for pork-barrel spending or other favors -- though they didn't refuse the pizza. Instead, they wanted to strengthen the balanced-budget clause. That would certainly doom the bill in the Senate, but at that point Boehner just wanted to get it out of the House.

Even with that change, Boehner still appeared to be short of the 217 votes he needed. At 10:30 on Thursday night, the House adjourned without a vote.

House Republicans met in their basement clubhouse again on Friday morning, July 29. The holdouts came under more pressure -- this time from other rank-and-file members who said they were undermining the party's negotiating position. But a final count showed that the votes appeared to be there.

"I love you guys," Boehner said in a moment of levity.

The bill passed Friday evening on a vote of 218 to 210 -- just one vote more than needed. The Senate defeated it two hours later, and the House retaliated on Saturday by defeating a proposal put forth by Harry Reid, leader of the Democratic majority in the Senate.

Another week had elapsed, and Congress was no closer to consensus.

While the legislative chess game played out, Biden called McConnell on Wednesday and Friday.

MCCONNELL'S BOTTOM LINE

Out of loyalty to Boehner, the Senate Republican leader had refrained from talks with the White House for most of the week.

On Friday morning, McConnell told Biden there was "no daylight" between the two Republicans, but told the vice president to try later in the day.

"Call me back after these votes and I will tell you what it will take to get my support," McConnell said, according to a Republican aide.

Biden and McConnell spoke again Friday evening and in the early afternoon on Saturday. Negotiations began in earnest around 3 p.m., after the House defeated Reid's bill.

Tuesday, August 2, was three days away.

White House chief of staff Bill Daley's office became Grand Central Station for a rolling series of meetings among White House staff. The meetings moved on Sunday to the vice president's office and later to the Oval Office.

On Saturday, Obama asked Biden's chief of staff, Bruce Reed, whether his wife was angry that he was spending his wedding anniversary at the office.

"Previously, I was on negative watch but I've now been officially downgraded," Reed deadpanned.

CLIMACTIC PHONE CALLS

After months of high-profile meetings, nearly all of the negotiations on the final weekend took place by phone.

In the big gatherings, participants tended to emphasize "talking points" because of the expectation that the conversations would spill out into the public. Smaller meetings allowed participants to cut to the chase, according to an administration official, and details could remain private.

On Saturday night, a media report surfaced that there was a tentative framework for a deal.

White House reporters seeking an update chased a top communications aide toward the Oval Office, only to be told later that the two sides had not arrived at a deal yet.

Indeed, the negotiations ended up going down to the wire.

At 5 p.m. on Sunday night, White House officials discussed whether Treasury Secretary Geithner should make a statement to the financial markets that evening or perhaps the following morning.

GEITHNER'S GAME

Geithner, in his former role as head of the Federal Reserve Bank of New York, was one of the chief financial firefighters during the global markets meltdown triggered by the collapse of Lehman Brothers in September 2008.

Asian markets were about to open. The crisis had already roiled U.S. debt markets and taken a toll on the dollar and Wall Street stocks.

Administration officials feared worse bloodletting if investors returned to their desks at the start of the week without clarity on whether there would be a deal.

Geithner and a small team of aides had been quietly working on contingency plans in case Congress missed the August 2 deadline to raise the debt ceiling. Treasury had planned to brief markets on those plans no later than Monday.

Private-sector analysts believed that in a worst-case scenario, Geithner would be prepared to tell markets he would put a priority on paying the government's debt in order to avoid default -- even if that meant taking the politically explosive step of delaying payments to Social Security recipients and others.

PULLING THE TRIGGER

But the Treasury secretary never had to show his hand.

The final sticking point in the talks centered on the terms of the deficit-cutting "trigger." Democrats wanted automatic cuts in military spending if Congress balked at the second round of deficit reduction.

Biden and McConnell spoke four times on Saturday, five times on Sunday, circling around the two stumbling blocks that remained -- the nature of the "trigger" and the size of the defense cuts that Democrats wanted. McConnell kept in contact with Boehner.

On Sunday, July 31, there were less than two full days before Default Day. As Obama's budget director, Jack Lew, crunched numbers on the Republican defense cut proposals, the White House feared it might not get a deal. Biden spoke with Boehner around 4 p.m. and said, "We just can't get there."

McConnell floated a compromise to widen the trigger to all security-related programs -- the State Department, veterans' care, nuclear security -- and not just the Pentagon.

At 8:15 p.m. Sunday, Obama made a final call to Boehner as White House aides listened nearby.

"Do we have a deal?" Obama asked.

There was a moment of suspense, then: "Congratulations to you, too, John."

Former New York Mayor Ed Koch: "Obama change your position on Israel"

Former New York Mayor Ed Koch speaks during a news conference on March 1, 2011.

Πηγή: npr
Sep. 18 2011


Former New York Mayor Ed Koch just sent a message to President Obama: Change your position on Israel, or face trouble with Jewish voters in 2012.

And he delivered that message at the ballot box in New York City.

Koch is a Democrat, but in last week's special election to replace U.S. Rep. Anthony Weiner last week, Koch was a vocal supporter of Republican Bob Turner.

The reason, he tells weekends on All Things Considered host Guy Raz, is his unhappiness with the Obama administration's approach to Israel.

Turner, the Republican, won that race, in a heavily Jewish district dominated by Democrats. It's the first time the New York 9th has elected a Republican since 1922.

"I'm hopeful that the President and the Democratic Party will look at the election which took place in the 9th CD [Congressional District] in Brooklyn and Queens and decide that they were on the wrong track," Koch says. "They ought to revisit their position on how to deal with Israel in a way that would be comparable to what every president since 1948, Harry Truman, did — a special ally relationship."

Koch stumped for Obama throughout Florida and other heavily populated Jewish areas in 2008. He says he hopes to do so again in 2012, but says he needs more assurances from Obama.

"What the president can do is what Jack Kennedy did in the Cuban Missile Crisis of 1962," Koch says, referring to a letter that Kennedy sent to Soviet leader Nikita Khrushchev. That letter basically said that any attack on a country in the Western Hemisphere by the Soviet Union would be considered an attack on the United States. Koch says Obama should stand up for Israel in the same manner. "That would be the optimum," he says.

Koch says a White House official has already called him to talk about his concerns.

"Jews are only 2 percent of the American population but God put them in Florida and Pennsylvania ... where their votes are extremely important," he says.

And while he he doesn't see a GOP candidate that he could support in 2012, the ex-mayor says that if Obama doesn't change his stance, he might just stay home on Election Day 2012.

A Dictator's Handbook for the President

Πηγή: Foreign Policy

By BRUCE BUENO DE MESQUITA, ALASTAIR SMITH

Sep. 14 2011

Barack Obama can't get away from talking about dictators. Four years ago, candidate Obama controversially asserted that his administration would be open to negotiations with autocratic governments like Syria, Iran, and North Korea. Today, responding to Republican criticisms that he has been weak or hesitant on foreign policy, the U.S. president's supporters are more likely to trot out the fact that three longtime dictatorships have fallen under his watch.

How much credit the president deserves for this is certainly open to debate. And in any case, the 2012 election is more likely to hinge on the high U.S. unemployment rate and the United States' sluggish economic growth than the state of Arab democracy or whether such democracy is advantageous for Americans. But it might still benefit the president to take a closer look at the factors that brought down Middle Eastern autocrats this year. And because "leading from behind" is no way to win an election, Obama might want to learn from their mistakes to help him in his own bid to retain power.

The logic of politics -- in both democracies and dictatorships -- is not nearly as complex as many think. Forget the intricacies of individual states, grand strategy, and the national interest. And for now, let's forget about right and wrong. Indeed, the real, universal lessons of political life can be gleaned from how leaders survive and thrive when in power.

At this point, you may be saying, "Hold on! If the U.S. president tried to act like a dictator he'd be out of a job in no time flat." You're right -- almost. Democratic leaders are constrained by the laws of the land, which also determine, through election procedures, the size of the coalition that they need in order to come to and hold power. Nearly everything leaders -- of all kinds -- do while in power comes down to knowing how many backers they absolutely need and how big a pool these supporters are drawn from. An American president, for example, doesn't need a majority of voters to choose him even in a two-party race. As Al Gore learned the hard way in 2000, the Electoral College is the determinant of how large a coalition is needed to be president. Placed just right, it is possible to win the presidency with just 25 percent or even less of the popular vote. While no candidate has yet achieved that minimum, a few have managed to win with just 30-something percent, and several have won even though another candidate got more votes.

Those voters who are truly essential get rewarded for their support; but how big their rewards are depends on how many substitutes there are for them. Think about it: Is your vote really worth the same as a Wall Street hedge fund manager or someone in a key swing state? The more substitutes -- we call them the selectorate -- the more cheaply comes the loyalty of essential supporters. The combination of coalition and selectorate size shapes a surprisingly large number of domestic and foreign-policy choices, choices that often can be said to deviate from what the majority of Americans want.

Coalition and selectorate size shape taxing and spending decisions; they determine the extent to which leaders follow corrupt policies or those aimed at enhancing the welfare of the general populace; and they explain variations in the limits on freedom and prosperity. Don't be fooled: Democrats and dictators alike do what best secures their hold on power. Although their methods may differ, just five rules shape how they govern. These rules identify the incentives driving survival-oriented leaders, whether of the Qaddafi or Obama variety.

Rule 1: Keep the winning coalition as small as possible.

Leaders should rely on as few people as possible to stay in power. Fewer "essentials" mean more control and greater discretion over how money is spent.

Take North Korea's Kim Jong Il, a contemporary master at ensuring dependence on a small coalition. He doesn't lose sleep over his starving population, and he doesn't hesitate to take provocative foreign-policy actions, like sinking the Cheonan, a South Korean naval vessel, or attacking South Korea's Yeonpyeong Island, both in 2010. These acts weren't merely to unsettle his rivals down south; they helped him discover fissures in his own coalition, sorting out who was truly loyal to him. Indeed, Kim, preparing for a transition of power to his son, purged senior members of his government right after the Cheonan incident and just before attacking Yeonpyeong. His policies are certainly bad for North Korea's neighbors and North Korea's starving people, but they work great for him and for his small cadre of crony loyalists.

In the U.S. context, the president needs a vast coalition (though well short of a majority) to hold office. That is presumably why Obama, who ran with great appeal to the Democratic Party's liberal base, has continually shifted toward the center, trying to capture and hold independent voters. Of course, he would love to need a smaller coalition, but that's hard to control given the electoral rules in the United States.

Still, members of Congress, with the help of their fellow party members in state legislatures, are pretty good at manipulating the rules to keep their respective coalitions small and loyal. Congressional leaders love gerrymandered electoral districts -- which ensure that they pick their voters instead of the voters picking them. Gerrymandering is so effective that incumbents have a 95 percent chance of reelection. It's all about keeping the pool of essentials small and loyal.

Rule 2: Keep the selectorate as large as possible.

Maintain a large selectorate -- the pool of potential supporters from which your winning coalition is drawn -- to make it easy to replace any troublemakers in the coalition. A large selectorate pool permits a big supply of substitute supporters to put the essentials on notice that they should be loyal and well-behaved or else face replacement.

Ayatollah Ali Khamenei, Iran's supreme leader, has mastered this rigged coterie system. Khamenei depends on a small coalition of Revolutionary Guard leaders (especially Gen. Mohammad Ali Jafari), the Bonyads (who were originally created by the Shah, manage the coalition's money equal to approximately 20-25 percent of Iran's GDP, and are exempt from taxation or prosecution for corruption), the Basij (the thugs, led by Khamenei's son, who violently quell any hint of unrest), ayatollahs from outside the holy city of Qom, and some key business leaders. They are drawn from a large pool of prospective backers, including many aspiring junior clerics and a massive electorate of would-be supporters if the price is right. When he doesn't like the policies pursued by one of his erstwhile supporters, like former President Mohammad Khatami, he can simply get rid of him and find someone else -- like current President Mahmoud Ahmadinejad, for instance -- to take his place. Luckily for Khamenei, many people are willing to do his bidding in exchange for power and the riches that come with it. That is a critical reminder to Ahmadinejad that he should not wander too far from the policies Khamenei (and Jafari) favor.

Of course, U.S. Democrats would also like to enlarge the selectorate and hold the coalition's size constant, but they can't as long as checks and balances are in place. When elections are meaningful, electoral rules make enlarging the selectorate difficult without violating Rule 1. Still, the Democratic Party works hard to register new voters who happen to be in income brackets, age groups, and locales likely to vote in their favor. Republicans work equally hard to try to impede those newly registered voters from actually voting, even as they do everything they can to mobilize their own electoral base. Competition is all about shrinking the winning coalition relative to the actual selectorate.

Who, after all, can forget that in 1970, President Richard Nixon expanded the selectorate by lowering the voting age from 21 to 18? The impact of this expansion was, over the long term, to give Republican presidential candidates far more votes than the pundits expected from among young, newly enfranchised voters.

The best way to fight the two-party monopoly

Πηγή: Salon

By Michael Lind
Tuesday, Aug 9, 2011 07:01 ET

Envisioning a new movement that's actually capable of repairing our broken economic and political structures

Does America need a third party? Dissatisfaction with America’s dysfunctional political system has produced calls for alternatives to the Democratic-Republican duopoly. But a third major party cannot exist under the rules of America’s electoral system. A single-issue party might inject a new issue into American politics, but the challenges facing the country are too complex for simple answers. What America needs is not a new party but a new movement of reform, a movement that, even if it is largely identified with one national party, includes members of the other.

Most of the world’s democracies have adopted one or another version of proportional representation (PR), an electoral system that more or less accurately reflects the diversity of political views among the country’s citizens. Unfortunately, from 18th century Britain the U.S. inherited the older, less representative system called plurality voting or "first past the post" voting.

Under proportional representation, third, fourth and fifth parties can be elected to the legislature (most democracies that use PR impose rules that prevent minuscule, extremist parties from being represented or holding the balance of power). But under American-style plurality voting, a vote for a third party is usually a wasted vote. Plurality voting means that the winner is the candidate who gets the most votes, even if those votes do not add up to a majority. So in a three-way race in which the Republican wins 40 percent, the Democrat 30 percent and the Green Party candidate 30 percent, the Republican will win, even though 60 percent of the electorate opposed that candidate. If most Greens would have preferred the Democrat to the Republican, by voting for a Green candidate they not only wasted their own votes but also ensured the election of the politician they liked the least.

PR works in multi-member legislative districts. In elections for single offices, the alternative vote (also called the single transferable vote, or instant runoff) is superior to the plurality system as well. Voters list candidates in order of preference, and if no candidate receives a majority, the candidate who wins is the one who, in addition to first-choice votes, gets the most second- and, if necessary, third- and fourth-choice votes. This prevents a candidate who is despised by the majority from winning with a small plurality in a multi-candidate race.

America’s plurality voting rules impose a two-party system on a multi-party nation. Most Americans are neither consistent liberal Democrats nor consistent conservative Republicans. Two groups in particular are disfranchised by the first-past-the-post voting system: populists and libertarians. Populists, with their base among America’s working-class majority, tend to favor middle-class welfare programs like Social Security and Medicare but often have relatively conservative views on social issues. Libertarianism combines free market economics with liberal views on sex, drugs and rock 'n' roll.

A small but growing movement in the United States supports the replacement of archaic and unfair plurality voting with a more democratic system. But in a country that rejected the metric system in the 1970s as un-American, the replacement of our archaic, dysfunctional and undemocratic electoral system is not going to happen soon.

Even under the rules of the current American electoral system, a third party can sometimes serve a useful purpose if it injects a single issue into the bloodstream of the body politic. The historian Richard Hofstadter compared American third parties to bees (actually honeybees), which die after delivering their stings.

Before the Civil War, single-issue antislavery parties helped to prepare the way for Lincoln’s Republicans, and in the late 19th and early 20th centuries proposals from the Populist and Progressive parties pioneered what became New Deal liberalism. Third-party candidacies can have bad effects, too, of course. William Jennings Bryan’s campaign diverted populism into pursuit of the gimmick of bimetallism. Ross Perot’s campaigns contributed to the climate of exaggerated and irrational fear of deficits and debt in the U.S.

While single-issue parties can sometimes be helpful, the challenges that America faces today are too complex to be solved by a single reform. The country’s interlocking economic and political structures have collapsed. They need to be carefully disentangled and rebuilt over a generation or more.

National reconstruction is a task for movements, not single-issue campaigns. Comprehensive, multi-generational, nation-rebuilding movements on this scale are rare. There have been only two in the last century in the United States -- the progressive-liberal movement and the conservative-neoliberal movement.

The progressive-liberal movement was a broad school of thought that included progressive followers of Theodore Roosevelt and Woodrow Wilson and the New Deal liberals led by Franklin Roosevelt and Lyndon Johnson. "Modern Republicans" like Dwight Eisenhower and Richard Nixon formed the right wing of the progressive-liberal consensus. While there were many differences among members of this movement, all agreed that the economic management functions of the national government had to expand in order to deal with the challenges of an industrial, urban society.

The conservative-neoliberal movement, which has dominated American politics since the Carter and Reagan years, has been similarly broad and diverse, including both Goldwater-Reagan conservatives and Clinton-Obama New Democrats. All have agreed with the theory that the economy should be organized chiefly on the basis of the "free market" and that government intervention should be viewed with suspicion and is legitimate only in cases of "market failure" and the provision of basic public goods. Obama Democrats and Tea Party Republicans represent the left and right wings, respectively, of the post-Nixon conservative-neoliberal consensus.

In both its Reagan Republican and New Democrat forms, the conservative-neoliberal school asserted that the beneficial results of "statist" progressive-liberal reforms could be achieved, at even lower cost, by "free-market" methods. You could liberalize trade, at no harm to American manufacturing, and encourage or tolerate the decline of unions, with no reduction in worker incomes. Competition, not regulation, would rein in healthcare costs. You could deregulate airlines and electrical utilities, with no loss in quality of service or danger of bankruptcies and monopoly concentration. And so on.

In the last 30 years, under Republicans and Democrats alike, the conservative-neoliberal approach has been tried. It didn’t work. The result of trade liberalization was not a boom in American manufactured exports, but perpetual trade deficits, the offshoring of production by American companies to low-wage, repressive sweatshop countries, and the targeted destruction of one American industry after another by mercantilist foreign regimes like Japan and China. The result of the decline of unions has been a combination of lower wages and fewer benefits for most American workers. The result of airline deregulation has been chronic bankruptcy, awful service, predatory monopoly and the worst airline system outside of the Third World. Deregulation of electricity produced blackouts in California and the crimes of Enron.

The failure of the conservative-neoliberal theory of how the world works is manifest, even if Tea Party Republicans and Obama Democrats persist in revivals of the old time religion, each according to their own denomination. Unfortunately, there is no well-developed alternative waiting in the wings to make an entrance when the failed actors are booed off the stage.

We can be certain that the next American reform movement will be more "statist" than Reagan Republicans and Clinton-Obama Democrats. No intelligent American can believe any longer that the answer to all economic questions is more deregulation and more tax cuts.

The next great reform movement might build on the best of what remains of the mid-century New Deal, like Social Security, which remains a far more efficient way to provide individuals with economic security in retirement than costly, ineffective Rube Goldberg schemes for putting retirement savings in the casino of the stock market. But producing jobs and adequate income for a middle-class majority made up of service sector workers, in an overly financialized United States facing far greater international economic competition than ever before, will require strategies different from those of mid-century New Deal Democrats and modern Republicans.

It does not follow, however, that the next great reform movement in the United States will necessarily be considered liberal or progressive, rather than conservative or populist. Since the 1960s, the terms "liberal" and "progressive" have become increasingly detached from their older, economic meaning, and have become associated with views on sex and reproduction, censorship, environmentalism, multiculturalism and secularism with an exiguous relationship at best to the questions of political economy that define major political movements. In most other democracies, the right is not defined by free market fundamentalism, any more than were the Eisenhower-Nixon Republicans or the pre-Thatcher Conservatives in Britain. The reaction against the conservative-neoliberal consensus of the last generation, when it arrives, may not take forms that green feminist multicultural civil libertarians would approve.

Nor is it possible in advance to predict which of the two major national parties will be most closely associated with reform. In the early 1900s, the Democrats were still a Jacksonian party dominated by conservative Southern segregationists and Western agrarians, and observers might have assumed that the future of the progressive-liberal tradition lay with the Republican Party of Theodore Roosevelt. In any event, great reform movements include members of both parties. The New Deal coalition included liberal Republicans, and the conservative-neoliberal public philosophy has been shared by many Democrats with Republicans.

The scale of the intellectual challenge provided by the need to rebuild the economy of the U.S. and the world can be measured by the puniness of the proposals put forth today, even by many progressives -- a tax credit here, a little more training there. Important ideas, like the need for public investment by means of institutions like an infrastructure bank, are not yet part of a comprehensive new consensus.

The necessary rethinking of basic assumptions is still only in the early stages. But eventually, if only after years of economic distress and political turmoil, a well-thought-out alternative to the failed conservative-neoliberal order will coalesce. As Margaret Thatcher used to say: "There is no alternative."

US debt ceiling deadlock drags on

Πηγή: Yahoo Finance


North America correspondent Jane Cowan, On Monday 18 July 2011, 15:42 EST


The US president's attempt to forge a 'grand bargain' to prevent his country defaulting on its debt has gone nowhere over the weekend.

The president and senior leaders of both parties say they will not let the US default, but there is still no deal, and the gridlock is provoking more strident warnings that the US political system is broken.

Senior members of both parties at least now agree the debt limit should be raised.

"I don't think Republican leaders will allow the country to go into default," said Republican senator John Kyl.

"Let me tell you, when the doors are closed and the cameras are off every leader sitting down with the president said we cannot default on America's debt," said Democratic senator Dick Durbin.

"If we call into question the full faith and credit of the United States for the first time in our history, interest rates will go up and this recession will get worse." However, there are still prominent Republicans, like the Tea Party aligned Florida senator Marco Rubio, who are confusing the issue.

"Well certainly the debt limit is an issue, but I think the bigger issue here is the debt," he argued.

There are suggestions ratings agencies could remove America's AAA credit rating not only in the event of a default, but also if the US fails to come up with an accompanying plan to meaningfully rein in deficits and put the nation on a sustainable economic path.

The White House budget director Jacob Lew did the rounds of the Sunday talk shows to argue the case.

"The challenge is doing more.

It's not enough for us just to do what we have to do.

We need to do as much as we can do because the whole world is watching," he warned.

"This is not just a question of Washington politics, the US credit rating is at stake, our place in the world is at stake." It is far from clear what kind of deal will ultimately be agreed with the president offering a so-called grand bargain that would slash deficits by $4 trillion in part by trimming spending on entitlement programs like Medicare, which Democrats are traditionally reluctant to touch.

However, the prospects of that compromise look remote since Republicans will not agree to increased revenues through tax hikes in return.

"I think in the end they are going to go this, whatever it happens to be, some small combination of cuts with raising the debt ceiling but politically the president and the Congress both know they have to pass something," said Matthew Dowd, a former chief strategist for George W. Bush.

In the end, the larger questions of how to run government and deal with long term debt are likely to be put off and play out during next year's election campaign.