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Lawmakers Have Real PensionsCox News Service – by Julia Malone – October 7, 2002
(10/2/02) - WASHINGTON - It has been more than six months since senators listened sympathetically as Enron employees told how their retirement savings had been wiped out.
Steven Lacey, who had worked 21 years at an Enron-owned utility in Portland, Ore., said he "broke down and cried" the night he told his wife that his 401(k) retirement account was filled with stock from the bankrupt company.
Since then, more major bankruptcies have left thousands more employees with worthless company stock.
Yet on Capitol Hill, the long-promised pension reform has become ensnarled in a legislative pileup as Congress tries to shut down and head home for reelection campaigns.
One thing is certain, however. Even if lawmakers lose their $150,000-a-year jobs on Election Day, those with 20 or more years in office can look forward to a secure retirement.
"The benefits are better than the typical rank and file pensions out in the country - even for large companies," said Ron Gebhardtsbauer, who helped draw up the current congressional pension in 1984 when he worked at the federal government's Office of Personnel Management.
Now senior pension fellow for the Washington-based American Academy of Actuaries, Gebhardtsbauer said that the lawmakers are able to retire younger, with higher guaranteed pensions and a better savings plan than most corporate employees at similar salary levels.
That view is seconded by Ethan Kra, chief actuary for Mercer Human Resource Consulting, a company with offices in 40 U.S. cities that advises employees on pension plans.
Kra compared the retirement package for a member of Congress with two decades of service to the benefits offered by one of his corporate clients - a communications enterprise with more than 10,000 employees.
A match-up of the two programs shows major advantages for congressional retirees in almost every respect:
- AGE OF RETIREMENT.
Lawmakers who lose their seats this year after serving 20 years can take their pensions as early as age 50, and any member with at least five years of service can receive full benefits at age 62.
An executive working for the private communications firm at a similar salary level would not be able to retire with full benefits until age 65.
"In corporate America, you don't get to retire at 50," Kra said. "The only time you see unreduced benefits at age 50 with 20 years of service is in some collectively bargained agreements in a very tough manual industry."
- PENSION FORMULA.
The "accrual rate" for calculating pensions for lawmakers is 1.7 percent of the average of their last three years' salaries, multiplied by the number of years of service. A member retiring after 20 years of service would have a starting annual benefit next year of $49,460.
The private company uses a more typical accrual rate of 1.5 percent based on the average of the employee's last five annual salaries. For the corporate retiree with the same pay history as members of Congress, the starting pension would be just under $42,600.
- COST OF LIVING INCREASES.
Congressional pensions, by law, are increased each year to keep pace with inflation. ,p> The private company, like most employers nationwide, offers only infrequent and partial inflation adjustments.
- CONTRIBUTIONS BY EMPLOYEES TO THEIR PENSION PLANS.
In perhaps the only way that the congressional retirement system is less generous than private ones, lawmakers pay 1.3 percent of their annual salaries toward their pensions.
The private company employee is not required to make such a contribution.
Also as part of the congressional plan, members of Congress have a better-than-average tax-deferred savings plan similar to the 401(k) investment accounts provided by many private employers. The government matches dollar-for-dollar all contributions to these accounts made by a lawmaker, up to 5 percent of the lawmaker's annual salary. Private plans generally match only a fraction of each dollar contributed by an employee.
Moreover, the lawmakers do not have the insecurity of Enron workers and others whose 401(k) retirement accounts are glutted with their employer's stock, which many were barred from selling even as they watched its value drain away.
The congressional retirement program is richer than most for a reason, according to Gebhardtsbauer: "There's risk that they can lose their jobs."
That rationale does not sway critics, however.
Karen Friedman, director of policy strategies for the Pension Rights Center, a private advocacy group in Washington, pointed to the protections Congress has given its retirement plan.
"Why are members of Congress so weak-kneed and cowardly about passing good legislation to give the same protections for workers that they themselves have?" asked Friedman, whose group is dissatisfied with a private pension reform that passed the House last April as well as a proposal that is still awaiting Senate action.
Others say Congress ought to cut back or cancel its pension program. Among the most outspoken critics, the conservative National Taxpayers Union continually reminds the public of how much citizens pay for the congressional pension.
The group hits especially hard when a member departs under a cloud.
After Ohio Democratic Rep. Jim Traficant was convicted last summer of bribery, tax evasion and racketeering, the group issued a press release estimating that, even though he was heading for jail, he is still eligible to collect a pension of $37,120 the first year and $1.2 million over his actuarially-projected lifetime.
Only if a lawmaker were to be found guilty of treason could he lose this valuable perk of office.
The congressional pension was created by Congress in 1942. The idea caused such a storm of protest that most members did not start participating until after World War II.
The early pension plan, which had even more largesse than the current plan, provided benefits for some retirees that rose above the pay of active members.
Congress modified its retirement benefit plan in 1984. It reduced the pension formula and required lawmakers, for the first time, to join the Social Security system and pay the customary payroll tax - 6.2 percent of their salaries - for the coverage. (The additional 6.2 percent in Social Security taxes normally paid by employers for each employee is drawn from taxpayer funds.)
Rarely do members opt out of the retirement system.
Rep. Ron Paul, a Republican from Texas with a libertarian bent refused to join it after he first won a House seat in the 1970s, a time of rampant inflation.
"It was clear to me that it wasn't fair for somebody in politics to protect themselves from all the disadvantages" of the economy, he said in a recent interview.
Moreover, Paul sees the pension as a symptom of an overgrown government that now requires full-time lawmakers.
"We're not citizens who go to Washington and represent our people and then go home and make a living, which was the original intent," Paul said.
"And the people have created the system. They want professional politicians to manage their affairs and do so many things that I don't think the government should be doing."
Among lawmakers departing at year's end who will be collecting retirement benefits, the National Taxpayers Union lists some as potential pension millionaires.
Sen. Phil Gramm, the Texas Republican, began his service 24 years ago in the House under the old, more lucrative pension plan. He stands to collect an estimated $78,500 the first year and $2.8 million over his expected lifetime, according to the Taxpayers Union.
Another retiring Texas Republican, House Majority Leader Dick Armey, has served 18 years under the new pension plan and will be entitled to $44,500 his first year out of office. He is expected to collect $1.3 million over his expected lifetime.
Among other departing members with less tenure, benefits are lower:
- Rep. Cynthia McKinney, the Democrat who failed in her renomination race in Georgia after serving 10 years, can look forward to an annual pension of $17,300, but not until 2011, the year she reaches age 55.
- Rep. Gary Condit, D-Calif., lost his primary after allegations of an affair with a young government intern who went missing and whose body was later found in a Washington park. After 14 years as a congressman, Condit will be able collect an estimated $19,500 his first year of retirement.
- Rep. Bob Barr, who lost his Georgia Republican primary, will be able to add his earlier CIA tenure to his eight years in Congress for an estimated pension of $33,500 his first year out of office.
Ralph Nader takes on Wall StreetBBC News Online – by David Schepp – October 7, 2002
(10/4/02) - Could consumer-advocate Ralph Nader do for Wall Street what he did for Detroit?
The thousands of vocal protesters who turned up on Friday in New York's financial district to cheer him on certainly hope so.
Mr Nader, who became famous for taking on the US auto industry and ushering in a wave of regulation that led to safer cars, is now calling for greater regulation and enforcement of the securities industry.
Under dreary Autumn skies, angry investors and others gathered near the steps of the New York Stock Exchange to cheer on the former Green Party presidential candidate and his crusade to "crack down on corporate crime."
"We're gathered here because we're concerned that not enough is being done about the most gigantic grand larceny episode in American history," Mr Nader said.
The result of that theft, he said, is that millions of Americans have been robbed of billions of dollars in stock and pension savings.
The recent wave of accounting scandals and bankruptcies have cost American workers over $175bn (£112bn) in retirement savings, with pension losses from the Enron bankruptcy alone totalling $1.69bn as of February.
Mr Nader, who resembles a modern-day Abraham Lincoln, peered down from the podium on the steps of historic Federal Hall and told his audience that Wall Street is corrupt and something must be done about it.
"They have turned the New York Stock Exchange into a speculative casino ridden by corruption, deception and crime."
He said the trust held by millions of Americans in the country's institutions, including investment banks, and state and federal regulators, had been broken.
No American would be happy until busloads of crooked executives are hauled off to jail, he said.
In that vein, he praised the work of state Attorney General Eliot Spitzer, whose high-profile investigations into the practices of investment banks and corporate executives have resulted in numerous lawsuits.
Mr Spitzer announced on Thursday that New York had filed complaints against five former and current executives at four troubled telecommunications firms.
'Recipes for reform'
Asked by BBC News about the arrest of Andrew Fastow, the former chief financial officer at disgraced energy giant Enron, Mr Nader said it should send a message about corporate crime.
"But remember we're talking about tens of thousands of corporate crooks who were involved in these schemes and these deals, who aided, who abated, who implemented [and] who covered up," he said.
"If a dozen of these guys go to jail, that simply is not enough."
Mr Nader listed 12 "recipes for reform" that he called on his followers to push Congress to implement.
They include a crackdown on corporate corruption, a call for more protection for workers and investors, and a rollback of the "tide" of corporate deregulation.
"Corporations were never designed to be our masters," Mr Nader said.
"They were designed to be our servants in the public interest."
Leave Our Pensions AloneL. A. Times – by Robert M. Ball – September 30, 2002
(9/27/02) - Older working people thinking about retirement can be thankful that President Bush's plan to substitute private savings accounts for part of Social Security isn't already in effect. The stock market's gyrations would create enormous problems for anyone trying to retire and convert a private investment account into an annuity.
This summer, Brookings Institution economist Gary Burtless studied how workers retiring would have fared if a Bush-type plan had been in existence. He found that a savings account built up over 40 years and invested 100% in stocks could have been converted into an annuity equal to somewhat more than recent average earnings--if it had been applied for at age 62 on Jan. 1, 2000. But the annuity would be less than half as much if applied for at age 62 on Jan. 1, 2003, assuming the same stock market averages on that date as the actual averages on July 19, 2002.
Facing this situation, anyone contemplating retirement would have to make an agonizing decision: Retire now, hoping to protect against further loss, or hold off in hopes of a higher stock market later. Guessing wrong would have serious consequences.
The suddenly conspicuous vulnerability of Bush's plan to market downturns helps explain why so many previously supportive Republican candidates are backpedaling, and why the president is working so hard to persuade retirees and older workers that their benefits are safe regardless of how younger workers might fare.
Whether he succeeds may determine whether Democrats or Republicans control the next Congress.
Older Americans vote in greater numbers than any other age group, and concerns about Social Security can easily determine how they'll vote. (The poorest two-fifths of those over 65 get 82% of their income from Social Security; the middle fifth, 64%; and the next highest fifth, 46%. Even the top fifth will be significantly dependent on Social Security when large numbers of them retire.)
But can older voters count on keeping the full benefits provided by current law if the president's plan is enacted? The honest answer is no.
To begin with, the commission charged with implementing the president's goals was given conflicting instructions: Protect the benefits of the retired and the soon-to-retire and bring Social Security into long-range balance while diverting billions of dollars in program funding into private accounts.
The president made the task harder by ruling out two obvious options: raising Social Security taxes and directly investing program funds in stocks (to secure, over the long run, better returns than are attainable from investing in government bonds).
The panel produced three proposals, one of which doesn't even claim to bring Social Security into long-range balance and so can be ignored. The others bring Social Security into balance by cutting benefits.
One plan cuts benefits more than enough for balance; the other achieves balance by combining benefit cuts with funding from general revenues. Both establish individual savings accounts using major additional infusions of general revenue.
Even with such infusions, however, under either plan many workers now younger than 55 would end up with less in total retirement income--Social Security plus income from their savings accounts--than under the current Social Security program alone. The situation would be worse for those whose investments do less well than average.
Meanwhile, the dependence of both plans on huge infusions of general revenues has been undermined by the Bush tax cuts, which, if allowed to go fully into effect, will mean there won't be any surpluses. In that case, any general revenues spent on Social Security would add to the overall deficit.
Would Congress support what appears to be a dubious deal? No one can predict. But remember, many supporters of privatization have proposed cutting benefits of the elderly and near-elderly by such strategies as reducing the annual cost-of-living adjustment and raising the retirement age. Such proposals could be brought forth again.
It appears that the only entities assured of doing well under partial privatization are financial services firms.
The moral is clear: Older workers and retirees should be deeply skeptical about promises that their benefits are protected. Such pledges are sure to become negotiable in the real world of lawmaking.
The only safe course for voters is to insist on preserving Social Security for the benefit of all workers--past, present and future.
Robert M. Ball was commissioner of Social Security under presidents Kennedy, Johnson and Nixon and served the Clinton administration in various advisory capacities. His latest book is “Insuring the Essentials.”
Cheney Wants Energy Execs ID's ConcealedNew York Times – by Don Van Natta Jr.– September 29, 2002
WASHINGTON, Sept. 27 — Lawyers for the General Accounting Office and Vice President Dick Cheney clashed today before a federal judge here over which branch of government's claim is paramount: the executive power to keep records confidential or the legislative right to investigate how public money is spent.
For the first time in the 81-year history of the agency, the auditing arm of Congress, the comptroller general of the United States went to federal court to ask a judge to order a member of the executive branch to turn over records to Congress.
Lawyers for David M. Walker, the comptroller general and head of the General Accounting Office, and for the vice president argued over whether a judge could require the White House to reveal the identities of industry executives who helped the administration develop its energy policy last year.
Judge John D. Bates of Federal District Court, who was appointed in December by President Bush, did not decide the case today. "I will consider this as quickly as I can," Judge Bates said before returning to his chamber.
The lawsuit, Walker v. Cheney, raises important constitutional questions, including whether the vice president can ignore a request for information from the accounting office without the president's exercising executive privilege.
It also carries potential political consequences for the White House since the dispute has made it difficult for the administration to distance itself from the collapse of the Enron Corporation, whose executives met with Mr. Cheney and other task force members six times last year.
Carter G. Phillips, a lawyer representing the accounting office, argued that if Judge Bates sided with the administration, the decision would have a devastating effect on "the G.A.O.'s ability to do its job."
"It would have an extraordinarily sweeping effect and would significantly halt the Congress's use of the General Accounting Office to conduct nonpartisan investigations," said Mr. Phillips, a partner in the Washington law firm of Sidley, Austin, Brown & Wood.
Mr. Phillips argued that a 22-year-old law allowed the comptroller general to "investigate all matters related to the receipt, disbursement and use of public money."
He also contended that the law gives the comptroller general the right to obtain all "information the comptroller requires about the duties, powers, activities, organization and financial transactions" of the agency under investigation.
Paul D. Clement, the principal deputy solicitor general, representing Mr. Cheney, told the judge that the agency lacked the legal standing to bring the case against the vice president. Mr. Clement also argued that the law cited by Mr. Phillips did not give the accounting office the authority to demand records from the vice president.
"No court that I'm aware of has ever ordered the executive branch to turn over a document to a Congressional agent," Mr. Clement argued. "This is unprecedented."
Mr. Clement said that if the judge ordered the records to be released, there would be no end to similar lawsuits filed by the G.A.O. against the executive branch.
Mr. Clement was joined at the defense table by the solicitor general, Theodore B. Olson, who does not often attend arguments at the district court level. Mr. Olson's presence demonstrated the importance of the case to both Mr. Cheney and Mr. Bush, who have said that disclosure of the information would hamper the executive branch's ability to solicit the advice of outside experts.
Both sides told the judge that an important constitutional principle was at stake in the dispute. Mr. Phillips said if Mr. Cheney was forced to release the information, it was not "going to bring the republic to its knees." But the information was essential, he said, for the agency to do its job to "look over the shoulder" of the executive branch as it spent taxpayers' money.
"How do you engage in a meaningful oversight function of the way public funds are spent if you cannot look at the highest level of the executive branch?" Mr. Phillips said.
In a series of questions to lawyers on both sides, Judge Bates seemed to grapple with the question of whether the agency could sue the vice president.
Lawyers for Mr. Cheney argued that the comptroller general lacked standing because he had not suffered any personal injury and has no genuine stake in the outcome of the litigation.
From February to May last year, Mr. Cheney and the task force held a series of meetings with as many as 400 people from 150 corporations, trade associations, environmental groups and labor unions, to devise a new energy policy for the nation. The task force report recommended more drilling for oil and gas, and promoted the need to build 1,300 to 1,900 electric plants to meet the nation's projected energy demand over the next two decades.
Since May 2001, the administration has repeatedly refused to turn over the documents the General Accounting Office seeks: lists of people present at each meeting of the national energy task force, and lists of the people who met with each member of the task force, including the date, subject and location of each meeting.
In February, the office sued Mr. Cheney for the documents.
Last summer, the administration turned over 77 pages of documents to the accounting office related to the costs of the task force. But Mr. Walter said those documents did not provide the identities of the industry executives who had advised the task force.
The documents were first sought in April 2001 by Representatives John D. Dingell, Democrat of Michigan, and Henry A. Waxman, Democrat of California.
Mr. Clement argued that there were other means that Congress could have used to obtain the documents, including a subpoena sent by the committee on which both men serve, the House Governmental Affairs Committee. But it is unlikely that the full committee, which is controlled by Republicans, would have approved the subpoena of the White House.
California: “We Told You So”The Daily Enron – September 19, 2002
Californians have long suspected that Texas energy producers and wholesalers like Enron and Dynegy, mugged them back in 2000-2001. Yesterday they presented the proof.
“The report by the California Public Utilities Commission blamed Houston-based power generators Dynegy and Reliant as well as Duke Energy, Mirant and AES/Williams for keeping significant portions of their capacity idle or off the market on key days from November 2000 through May 2001, the height of California's energy crisis. - Houston Chronicle
"Had the generators produced the power they had available, most of the statewide blackouts and service interruptions could have been avoided without overloading the transmission lines linking Northern and Southern California," the report concluded.
Democratic California Gov. Gray Davis has long been critical of both the Bush administration’s Federal Energy Regulatory Commission and the Justice Department for failing to take action against rogue energy companies. Yesterday he said the state’s own investigation challenges the DOJ to finally take action.
"This report confirms that energy generators manipulated California's energy market and stopped at nothing -- including putting the health and safety of Californians at risk -- in the name of ripping off California ratepayers," said Davis in a statement.
Bush 'Wags the Dog'The Daily Enron – September 17, 2002
Last week while the attention of the nation and the world was focused on the terrorist threat and the gathering talk of war, it was left to House and Senate Democrats to remind the Bush administration that, while they seek to introduce representative government into Iraq, he should lead by example by respecting the one we already have here at home.
Senate Majority Leader, Tom Daschle (D-SD), appearing on weekend talk shows, beseeched the administration to open a bipartisan dialog with Congress before taking the nation to war.
But, the administration and GOP leaders in Congress instead decided to squelch any criticism of the administration’s foreign or domestic policies by casting both in terms of homeland security.
Bush infuriated Democrats on Friday when he warned them to get on board with his war plans and to stop worrying about the United Nations. "If I were running for office, I'm not sure how I'd explain to the American people -- say, vote for me, and, oh, by the way, on a matter of national security, I think I'm going to wait for somebody else to act," he said. The president's remark mirrored those used earlier by one of his top advisers in a briefing Thursday, indicating a coordinated White House strategy to paint Democrats as soft on terrorism.
Democrats responded by accusing the administration of politicizing war. "It's hard not to notice that the sudden urgency of war with Iraq has coincided precisely with the emergence of the corporate scandal story...and with the decline in the Republicans' prospects for retaking the Senate majority," said Jim Jordan, director of the Democrats' Senate Campaign Committee. "It's absolutely clear that the administration has timed the Iraq public relations campaign to influence the midterm elections...and to distract the voting public from a failing economy and an unpopular Republican domestic agenda."
But the decision to politicize war with Iraq has been made at the highest levels of the administration. GOP strategists are hoping to use any questioning of the administration’s Iraq policy against Democrats against the party in upcoming elections.
The GOP strategy goes well beyond foreign policy issues. Since Bush took office, Democrats have watched with mounting alarm as the nation’s economy has spiraled out of control. What had been a fat budget surplus from the Clinton years vanished in months and as since returned to deficits in the triple digit billions.
Dissatisfaction with the Bush administration’s domestic economic policies was growing before 9/11. After the attacks, concerns over terrorism took the forefront for months. But, by early this summer voters were again beginning to focus on the slipping economy and stock market, and Democratic candidates for this November’s House and Senate races were seeing their poll numbers on the rise as they bored in on economic issues and the Bush tax cuts.
The Bush administration has responded to Democratic condemnation over its domestic policies by blaming economic declines on the terrorist attacks of last year and the mounting deficits on the costs of fighting terrorism. By doing so the administration effectively wrapped domestic economic issues together with the highly charged issues of war and national security.
“Suddenly it’s unpatriotic to raise questions about how this administration is handling our economy,” said Mike Lux, President of American Family Voices. “We need to be very careful here that this administration does not succeed in leading us down a classic Orwellian path. Even in these dangerous and difficult times we need to remember who we are as nation and what we stand for. And right at that top of that list is the right to open and unfettered debate on national issues, foreign and domestic.”
The strategy may or may not work. Voters seem willing and able to separate domestic and foreign policies. In recent weeks polls show voters supporting the administration’s policy toward Iraq while freely voicing their dismay over the nation’s failing economy.
A Field Poll conducted last week in California, for example, showed a majority of the state's registered voters -- 56 percent -- believe the economy is in "bad times" at the moment. Forty-six percent of voters said the stock market's decline since Bush took office has had a "very serious" or "somewhat serious" impact on their own or their family's finances.
The findings were a stunning reversal for California voters who, as recently as January 2001, responded positively to the same question. In that poll 69 percent of Californians said they believed the economy was in good shape.
But since then, millions of high tech jobs have disappeared and the state had to endure a manufactured energy crisis that cost the state’s economy billions in lost revenues.
Though Democrats risk being accused of partisan politics by the administration for mentioning it, the numbers strongly support their concerns. When Bush took over the White House early last year, the Congressional Budget Office was forecasting U.S. budget surpluses of $5.6 trillion over 10 years.
In contrast, last month the CBO said there would be budget deficits through fiscal year 2005 before a return to surpluses that will total only $336 billion through 2011.
And, while the administration blames these setbacks on terrorism, Democrats will remind voters that during the 2000 presidential campaign, Bush’s Democratic opponent, Al Gore, warned that Bush's sweeping tax-cut plan would reduce government receipts by about $1.4 trillion, would cause the deficit to rise again and scuttle all hope for reforming Social Security and Medicare.
And so it came to pass.
“With virtually no solutions to the nation’s economic problems, Medicare or Social Security, the folks in the Bush administration have discovered that pounding a war drum – no matter what the merits of the argument - is also an extremely effective way to drown out its critics and shut down debate,” said Mike Lux.
Stocks and BombsNew York Times – by Paul Krugman – September 14, 2002
(9/13/02) - "This stock-market situation — what are the military options?" That was the caption of a New Yorker cartoon last month. But these days reality has a way of outrunning satire; way back in June the CNBC pundit Larry Kudlow published a column in The Washington Times with the headline "Taking Back the Market — by Force." In it he argued for an invasion of Iraq to boost the Dow.
Pretty amazing stuff, though not as amazing as a July column in The New York Post by John Podhoretz, whose headline read "October Surprise, Please," followed by the injunction "Go On, Mr. President: Wag the Dog."
In general it's a bad omen when advocates of a policy claim that it will solve problems unrelated to its original purpose. The shifting rationale for the Bush tax cut — it's about giving back the surplus; no, it's a demand stimulus; no, it's a supply-side policy — should have warned us that this was an obsession in search of a justification.
The shifting rationale for war with Iraq — Saddam Hussein was behind Sept. 11 and the anthrax attacks; no, but he's on the verge of developing nuclear weapons; no, but he's a really evil man (which he is) — has a similar feel.
The idea that war would actually be good for the economy seems like just one more step in this progression. But one must admit that there are times when war has had positive economic effects. In particular, there's no question that World War II pulled the United States out of the Great Depression. And today's U.S. economy, while not in a depression, could certainly use some help; the latest evidence suggests a recovery so slow and uneven that it feels like a continuing recession. So is war the answer?
No: World War II is a very poor model for the economic effects of a new war in the Persian Gulf. On balance, such a war is much more likely to depress than to stimulate our struggling economy.
There is nothing magical about military spending — it provides no more economic stimulus than the same amount spent on, say, cleaning up toxic waste sites.
The reason World War II accomplished what the New Deal could not was simply that war removed the usual inhibitions. Until Pearl Harbor Franklin Roosevelt didn't have the determination or the legislative clout to enact really large programs to stimulate the economy. But war made it not just possible but necessary for the government to spend on a previously inconceivable scale, restoring full employment for the first time since 1929.
By contrast, this time around Congress is eager to spend on domestic projects; if the administration wants to pump money into the economy, all it needs to do is drop its objections to things like drought aid for farmers and new communication gear for firefighters. In other words, if the economy needs a burst of federal spending, neither economics nor politics requires that this burst take the form of a war.
And in any case it's not clear how much stimulus war would provide. One assumes that the necessary munitions are already in stock, so there will be no surge in factory orders. There will be spending on peacekeeping — won't there? — but it will be spread over many years.
Meanwhile there is the potential economic downside, which may be summed up in one word: oil.
Iraq itself currently supplies so little oil to the world market that wartime disruption of its production would pose little problem. But neither the Arab-Israeli war of 1973 nor the Iranian revolution of 1979 directly affected oil production.
Instead, the indirect political repercussions of conflict were what caused oil prices to surge. This time around, Arab leaders have warned that an invasion of Iraq would open the "gates of hell." That doesn't sound good for the oil market.
It's worth remembering that each of the oil crises of the 1970's was followed by a severe recession — and that the milder oil price spike before the gulf war was also followed by a recession. Could rising crude prices undermine our weak economic recovery, creating a double-dip recession? Yes.
None of this should deter us from invading Iraq if the administration makes a convincing case that we should do so for security reasons. But it's foolish and dangerous to minimize the potential economic consequences of war, let alone claim that it will be good for the economy.
The Bully's PulpitNew York Times – by Paul Krugman - September 7, 2002
(9/6/02) - War is peace. Freedom is slavery. Ignorance is strength. Colin Powell and Dick Cheney are in perfect agreement. And the Bush administration won't privatize Social Security.
Ari Fleischer's insistence that Mr. Powell and Mr. Cheney have no differences over Iraq seems to have pushed some journalists into facing up, at least briefly, to the obvious. ABC's weblog The Note described it as a "chocolate-is-vanilla" claim, admitting that "The Bush team has always had a credibility problem with some reporters because of their insistence on saying 'up is down' and 'black is white.' "
But the administration needn't worry; if history is any guide, many reporters will soon return to their usual cringe. The next time the administration insists that chocolate is vanilla, much of the media — fearing accusations of liberal bias, trying to create the appearance of "balance" — won't report that the stuff is actually brown; at best they'll report that some Democrats claim that it's brown.
The Bush team's Orwellian propensities have long been apparent to anyone following its pronouncements on economics. Even during campaign 2000 these pronouncements relied on doublethink, the ability to believe two contradictory things at the same time. For example, George W. Bush's plan to partially privatize Social Security always depended on the assertion that 2-1=4 — that we can divert payroll taxes into high-yielding personal accounts, yet still use the same money to pay benefits to retirees.
The Orwellian tactics don't stop with doublethink; they also include newspeak, the redefinition of words to rule out disloyal thoughts. Again, Social Security is a perfect example. Republican political consultants have found that in an era of plunging stocks and corporate scandal the word "privatization" has taken on negative connotations. The answer? Deny that personal accounts constitute privatization, and bully the press into going along. A Republican National Campaign Committee memo lays out the new strategy: "It is very important that we not allow reporters to shill for Democrat demagoguery by inaccurately characterizing 'personal accounts' and 'privatization' as one and the same."
Is it inaccurate to say that personal accounts equal privatization? We could argue on the merits. Under the Bush plan, a worker's personal account reflects any gains or losses on the stocks it represents. When risks and rewards accrue entirely to the individual, isn't that privatization?
But wait, we can do better. The push to convert Social Security into a system of personal accounts has been led by the Cato Institute. The Bush plan emerged directly from Cato's project on the subject, several members of Mr. Bush's commission on Social Security reform had close Cato ties, and much of the commission's staff came straight from Cato. You can read all about Cato's role on the special Web site the institute set up, socialsecurity.org.
And what's the name of the Cato project to promote personal accounts? Why, the Project on Social Security Privatization, of course.
Which brings us back to the issue of intimidation. The R.N.C.C. doesn't really think it can convince people that privatization isn't privatization. But that's not the goal. The memo doesn't talk about how to communicate with the public; it's a list of demands to place on journalists. As Joshua Marshall put it at talkingpointsmemo.com, the goal is to "mau-mau reporters out of using the word 'privatization' in this context."
And the intimidation will probably succeed. Indeed, it's already working. As Mr. Marshall notes, in a recent interview of the House minority leader, Richard Gephardt, Judy Woodruff of CNN duly echoed the R.N.C.C.'s memo.
Unfortunately, this isn't just a question of Social Security policy. Once an administration believes that it can get away with insisting that black is white and up is down — and everything in this administration's history suggests that it believes just that — it's hard to see where the process stops. A habit of ignoring inconvenient reality, and presuming that the docile media will go along, soon infects all aspects of policy. And yes, that includes matters of war and peace.
The trouble is that eventually reality has a way of asserting itself. And in case you are wondering, ignorance isn't strength.
Edwards Blasts Bush on Dirty AirAssociated Press – by Josef Hebert – September 6, 2002
WASHINGTON - New proposals to ease air pollution requirements on power plants will produce dirtier air and harm the public's health, the woman who headed the Environmental Protection Agency during the Clinton administration said Tuesday.
Former EPA Administrator Carol Browner accused the Bush administration of misleading lawmakers by suggesting that the agency during her tenure sought a similar easing of requirements on power plants in 1996 and again in 1998.
While the EPA looked at possible changes in the clean air rules, known as "new source review," Browner said at a Senate hearing, "we didn't support the changes. ... We didn't adopt them."
In a letter last week to Sen. John Edwards, D-N.C., who held Tuesday's hearing, Christie Whitman, the current EPA administrator, suggested many of the proposed changes now being pursued were proposed first by Browner in 1996. The head of the EPA's air pollution control office reiterated the claim at Tuesday's hearing.
"Taking (public) comments on ideas should not be taken as support," Browner insisted. She said such changes were later dropped because she determined they would harm air quality.
Jeffrey Holmstead, chief of the EPA's air office, said he was caught off guard by Browner's testimony. "I quite frankly was surprised and I'm not sure what to make of it," he said.
"Everything that we're doing is well within the scope of what was proposed back in 1996," he said. "The agency formally proposed these ideas and formally analyzed them at the time."
The dispute concerns a Bush administration proposal to make it easier for operators of power plants to make changes that would allow them to produce more power without having to install new air pollution equipment. Federal clean air laws require new pollution controls if the changes result in a certain amount of additional smokestack emissions.
"The proposed rule changes amount to a gift for oil companies and power companies and a kick in the gut for thousands of people with serious health problems," said Edwards, a potential Democratic presidential contender.
The Bush administration has been viewed as politically weak when it comes to environmental issues. Edwards appeared Tuesday to be ready to use air quality as an issue should he challenge Bush in 2004.
Edwards, chairman of the Health, Education and Labor subcommittee on public health, said the administration has produced "zero analysis" on the health impacts of the proposed changes, which critics argue will produce more pollution from power plants and refineries.
Browner, in her first public comment on the issue, unleashed a detailed critique of the Bush administration proposal and said it would create "loopholes that fly in the face of common sense" by allowing more pollution. "They will allow the air to become dirtier," insisted Browner.
Many Democratic senators have sharply criticized the proposed changes, which are under review in the White House, and demanded a detailed analysis from the EPA on their effect on public health. Power plant emissions are a major source of chemicals that produce smog and acid rain.
The EPA has refused to produce such an analysis until after a final proposal is made.
"EPA will provide a full opportunity to comment on these changes, and EPA will consider these comments in the development of the final rules," Whitman wrote Edwards in her Aug. 28 letter responding to the request from 44 senators, mostly Democrats.
Edwards said he and other senators are considering a rider to the EPA's budget that would block further action on the proposal, pending a clearer picture on health impacts.
The EPA's Holmstead said the changes will improve power plant efficiency and remove obstacles that now inhibit plant operators from engaging in environmentally beneficial projects, including those that encourage emissions reductions and pollution prevention.
Browner replied: "There is ... no evidence or disclosure demonstrating that the current administration's announced or proposed changes will make the air cleaner. In fact, they will allow the air to become dirtier."
Bush Caters to Energy Industry
Who's Your Daddy?New York Times – by Maureen Dowd – September 6, 2002
(9/4/02) - WASHINGTON — In the Bush family, the gravest insult is to be called a wimp.
When Newsweek published its "Fighting the `Wimp Factor' " cover about Bush senior when he was running for president in 1987, he was so angry he refused to talk to the magazine again until he had a meeting with the editors and the publisher, Katharine Graham. Mr. Bush even knew the precise number of times the word "wimp" appeared in the article.
In his memoir, Bush Junior wrote: "My blood pressure still goes up when I remember the cover."
The Bushes arranged their whole lives to put a veneer of Texas lock-'n'-load over Greenwich lockjaw.
After he buried Iraq as commander in chief, Bush Senior assumed he'd buried the W-word. And yet here it is again, the nightmare from which it is impossible for a Bush to awake, hurled at him by his own son's supporters.
As crazy Al Haig said Sunday on Fox, Bush 43 "has to be careful of the old gang. These are the people that created the problems in the first place by not handling Saddam Hussein correctly. . . . I'm talking about the previous administration and their spokesmen, Jim Baker, Scowcroft, and a very wise daddy who's not talking at all and he shouldn't."
The pathologically blunt General Haig simply spit out what other conservatives imply: Daddy wimped out in Iraq and Junior has to fix it.
You might think the United States would have an elevated debate before deciding to launch a major war against another country. But we've simply had a childish game of Chicken, with different factions sneering at one another: "You're a wimp!" "No, you're a wimp!"
The clique of conservative intellectuals pushing the war has labeled Colin Powell and the Bush I crowd wimpy "appeasers."
Richard Perle, Paul Wolfowitz and Bill Kristol echo the message of Eliot Cohen, author of "Supreme Command": "As Lord Salisbury said, `If you ask the soldiers, nothing is safe.' To which the politicians must respond, `Neither is inaction.' "
They paint the military brass as wimpy. "Powell did not want to do Bosnia," said a whack-Iraq'er. "The Pentagon was reluctant on Kosovo. On Iraq, Powell and Schwarzkopf dragged their feet on the first war. And the civilians are right this time, too. Iraq has had 11 years to comply with cease-fire arrangements on weapons of mass destruction."
The military types snipe back that the loudly squawking hawks — Cheney, Wolfowitz, Perle — are war wimps. "All the generals see it the same way," said the retired Marine Corps general Anthony Zinni, a Powell adviser, "and all the others who have never fired a shot and are hot to go to war see it another way."
And Senator Chuck Hagel, a hero in Vietnam, chimed in: "Maybe Mr. Perle would like to be in the first wave of those who go into Baghdad." (Maybe he would.)
Giving a new definition of chutzpah, the conservatives pushing for war began taunting W., saying he had gone too far on Iraq to turn back now without being a wimp.
"The failure to take on Saddam after what the president said," Mr. Perle said, "would produce such a collapse of confidence in the president that it would set back the war on terrorism." Or: Nice little administration you have here; pity if something should happen to it.
The Bushies figured if they went after Saddam, whom they could find, as opposed to the vanished Osama, they would not seem wimpy.
But the more the president let Dick Cheney make the case for him, the more he risked being seen as wimpy. He was saved only by the Democrats, silent all summer, too wimpy to take on the White House and carve out their own case on Iraq.
It seems that Mr. Cheney now regards the end of the gulf war as a great historic gaffe and wants to earn his immortality correcting it.
But the more Junior goes along with his vice president and surrogate Daddy and stakes his entire presidency on trying to finish the job, the more he underscores the contention that his real Daddy went wobbly.
Last night conservatives were muttering that the inscrutable president was losing control of the debate. He could not simply persuade the Congressional leaders gathering at the White House today, they argued. He had to do something really forceful, like asking for a resolution authorizing the use of force against Saddam.
Otherwise, they warned, W. might inherit the W-word.