GOP still wants to privatize social security

It looks like House Republicans are at it again. Apparantly they are not satisfied with their efforts to block an increase in the federal minimum wage and their pushing for a repeal of the estate tax, which would deprive the government of billions that currently go to programs that help the neediest Americans--thus raising wages, but effectively defunding programs such as Medicaid, the Veterans Administration, and Social Security. It looks like another part of their legislative agenda includes privatizing Social Security. Only problem is that Social Security doesn't need to be privatized. While reform is indeed necessary, the changes that need to be made can be in the form of relatively small adjustments (such as, for example, eliminating the SS earnings cap), not a wholesale restructuring of the entire program.

As Josh Marshall has previously written in The Hill, what was going on last year wasn’t really a debate about “saving” Social Security or ensuring its long-term solvency. It was really a debate on whether to keep Social Security or phase it out and replace it with a system of 401(k)-style private accounts. It was a losing issue for the GOP in 2004 and it will be a losing issue again this year.

Courtesy of Think Progress:

Boehner Pledges To Privatize Social Security: ‘We’re Going to Get Serious About This’
In an interview with the Washington Times published yesterday, House Majority Leader John Boehner (R-OH) promised to privatize Social Security:

Q: Where does Social Security reform stand?

A: I just met with Congressman [Frank R. Wolf, Virginia Republican], a few minutes ago with his SAFE Commission [formed to fix the entitlement programs]. In 1990 when I first ran for Congress, I talked about the need to reform these big entitlement programs because the sooner we began the process, the easier it would be to make the necessary changes so that these programs were sustainable for the long term. … If I’m around in a leadership role come January, we’re going to get serious about this.

Time for a reality check. There is absolutely no need to privatize social security. It's a "phony crisis" in the words of economists Marc Weisbrot and Dean Baker. According to Josh Marshall, it's a scam all the way around.

For more background on the real issues behind Social Security and the bogus arguments made by the GOP, check out this definitive issue Guide from the Economic Policy Institute. It contains a wealth of information and tons of informative links. In particular, be sure to read page 36 of the report, which analyzes the fallout that would result from privatization.

Citing a study by respected Yale economics professor Robert Schiller at CBPP, we learn that:

"[T]he returns to life-cycle portfolios [the GOP proposal to balance risks and returns by defaulting younger workers into a higher stock allocation and then shifting more towards bonds as workers approach retirement] are considerably lower than the rates of return typically used by the Social Security actuaries in evaluating returns for personal accounts that do not have the lifecycle option. In addition, life-cycle portfolios are considerably riskier than what some would think.

By suggesting that the life-cycle portfolio is the recommended portfolio for everyone, the plan neglects the variability across workers of economic situations, and of psychological barriers to good financial planning: given the risks, the plan could be disastrous for some workers."

The Center for Economic Policy Research has a useful backgrounder entitled "Basic Facts on Social Security and Proposed Benefit Cuts/Privatization".

To get an idea of how Social Security privatization has impacted the economy and benefits in other countries, read this report from the non-partisan Congressional Budget Office.

Finally, for some idea of how Wall Street bankers will reap billions of dollars in management fees, see this and this.

If the GOP goes ahead with this, it's essential for Democrats to aggressively oppose their efforts, and perhaps turn it (along with raising the federal minimum wage) into a winning political message for the midterm elections in November.

Update: Washington Monthly notes that new Treasury Secretary Hank Paulson seems keyed in to the Social Security privatization fight Bush seems to be spoiling for. Speaking to students at Columbia Business School, he also made some other nonsensical remarks:

"Paulson said the slow growth in take-home pay was simply an economic reality "and it is neither fair nor useful to blame any political party."

"Rather than playing the blame game, we must focus on helping workers move up the economic ladder," Paulson said....If economic growth continues and productivity stays strong, income growth will eventually follow, he said."

As Kevin Drum notes: "I wonder how long he thinks we should wait? We've had economic growth and strong productivity gains for the last 30 years or so, but we still don't have the promised increases in take-home pay. So here's an idea: In the same way that waiting another six months for progress in Iraq is now called a "Friedman," perhaps another decade waiting for increases in take-home pay should be called a "Paulson."

The GOP's plot to screw the working class and hurt the economy

Why does the GOP House leadership hate regular, working-class Americans so much? I know their core constituency are those who stand to benefit greatly from a repeal of the Paris Hilton Tax for multimillionaires, but it is truly amazing to me that there is such a visceral opposition to raising the federal minimum wage for the first time in nine years.

Statehouses are starting to take action by raising minimum wages, which makes a lot of sense on both equity as well as efficiency grounds. As the Fiscal Policy Institute noted in a report released last March, "for the 10 states and the District of Columbia that had set their minimum wages above the federal level for most of this period [between 1997 to 2006], indicators of economic performance were consistently better than for the other 40 states where the federal minimum wage of $5.15 an hour prevailed.

For the GOP supporters of the Estate Tax repeal, which effects less than 0.5% of American families but not an increase in the federal minimum wage to correct for its 20% decline in real purchasing due to inflation, saving millionaires a few thousand dollars a year is more important than boosting small business job growth. Because as the aforementioned FPI report notes:

•The number of small businesses across the economy with fewer than 50 employees grew by 5.4% from 1998 to 2003 in the higher minimum wage states, compared to a 4.2% increase for the balance of the states; and Higher Minimum Wages and Faster Small Business Job Growth and

• In the higher minimum wage states as a group, small businesses had faster job growth (6.7% vs. 5.3% for the other 40 states combined); total annual payroll grew more (24.5% vs. 21.2%); and average payroll per worker increased by 16.7%, a greater increase than the 15.1% increase for the 40 states observing the federal minimum wage.

As far as the benefits to the domestic economy that would stem from repealing the Estate Tax, most economists are not sure there really are any. According to the Center for Budget Policy and Priorities, the "repeal of the estate tax would add about $1 trillion to federal deficits over the first decade in which its costs would be fully felt (2012-2021). These higher deficits would reduce national savings, with the consequence that, in the long run, estate tax repeal would have at best negligible, and possibly negative, effects on the economy."

Update: Looks like Republicans in the House have done exactly what Democrats expected and passed a bill to "slash" the estate tax as well as increase the minimum wage.

As the Wall Street Journal reports, "Republican leaders saw combining the wage and tax issues as their best chance for getting permanent cuts to the estate tax, a top GOP priority fueled by intense lobbying by farmers, small business owners and super-wealthy families. "This is the best shot we've got; we're going to take it," said Rep. Boehner. The unusual packaging also soothed conservatives angry about raising the minimum wage over opposition by GOP business allies. [. . .]

Senate Minority Leader Harry Reid (D., Nev.) vowed Democrats would kill the hybrid bill, along with its 10-year, $300 billion-plus cost. "The Senate has rejected fiscally irresponsible estate tax giveaways before and will reject them again," he said. "Blackmailing working families will not change that outcome.""

As Senate Minority Leader Nancy Pelosi predicted, this bill was shamelessly crafted by GOP lawmakers to be dead on arrival going into the Senate, as it is well-known by anyone even casually following this debate that previous efforts to cut the estate tax have already repeatedly failed there.

Media Matters analyzes the mainstream media's innaccurate and even misleading coverage of this issue, domonstrating that the Democrats' efforts in getting a minimum wage increase are getting downplayed.

An excerpt from EPI's forthcoming "State of Working America"

I haven't had a chance to read the whole thing yet, but the Economic Policy Institute, by far the best progressive economic research not-for-profit in the US, has published a chapter from its forthcoming 2006-2007 State of Working America report. The chapter is called "International Comparisons: How Does the United States Stack Up?", and it provides an interesting frame of reference in which to view the health of our domestic economy vis-a-vis the middle class.

No question GDP has continued to post increases since the end of the 2000-2001 recession, but the distribution of wealth has continued to favor the already wealthy, leaving the lower and middle classes far behind. As Elizabeth Warren, a professor at Harvard Law School and a blogger at TPM Cafe recently pointed out, "the vice has continued to tighten on the Middle Class." According to Warren:

Rapid inflation coupled with slowly-rising wages put the squeeze on every worker. But Americans owe more money than ever before in history—an average of 108% offf their annual incomes. The rising cost of servicing that debt acts like a multiplier, increasing financial pressures even if family spending stays steady.

The debt squeeze didn’t just happen on its own. When Congress and the Supreme Court combined to get rid of interest rate caps on credit cards in the early 1980s, the stage was set for credit card interest rates to float completely out of sight. When mortgage companies, cheered on by Alan Greenspan, marketed variable rate mortgages to millions of families, the good times of low interest were bound to be followed by the tough times of high interest.

Interest rate fluctuations may be a fact of a modern economy. But whether those rate fluctuations will be borne collectively by the institutions that issue consumer debt or one-at-a-time by the families who face rising costs and flat incomes is a matter of deliberate public policy. Current policy says individual families bears those risks. These families lack both the information advantages of big institutions and the ability to spread their risks over millions of other customers and longer time horizons, but folks like Alan Greenspan urged them to take on interest rate risks. Now weÂ’re beginning to feel the effects of some of those policy choices.

These are just a few of the problems Middle Class Americans are facing in trying to get ahead in the 21st Century. But to put it simply, the gap between the rich and poor is growing into a chasm.This is not a liberal/progressive vs. "centrist" or even strictly a Democratic issue: this is an issue of basic economic fairness that effects hundreds of millions of people.

So back to the EPI report--how does the US, with the largest economy in the world--stack up with other countries?

To quote from the report:

While the United States is, on average, a very wealthy country, it also has a large variance in incomes between those at
the top and the bottom of the income scale. Large variances in incomes make it difficult for economic growth to reach those at the bottom. Therefore, while it is true that many people in the United States are well-off, many are not. In fact, inequality is greater in the United States than in any of the other OECD countries. Moreover, inequality in the United States (along with the United Kingdom) has shown a strong tendency to rise, even as inequality was relatively stable or declining in most of the other OECD countries. Poverty and child poverty rates are the highest in the United States, as is the infant mortality rate. The de-emphasis on redistributive social policies only exacerbates the high levels of poverty and income inequality in the United States.

Second, many OECD countries with strong unions, worker protections, and higher taxes have caught up with, and in many cases, surpassed U.S. productivity while achieving lower unemployment rates. It is telling that so many European countries have been successful and productive within the more "rigid” European economic models. It is not a given that economies that have strong welfare states and labor protections are necessarily less productive and/or inferior to the economic model that characterizes the United States.

This is only a brief summary from the first two pages of the chapter; of course the findings are much more nuanced than this. But you get the point--the US economy continues to grow, but income inequality continues to grow much faster here than in most OECD countries. Additionally, the fact that poverty, child poverty and infant mortality rates are higher in the US than in countries with much smaller GDPs and GDP growth raises the obvious point that economic policymakers here don't seem to have the right priorities in place.

Also, for some historical background on the trend of rising income inequalities, see here, here and here. And read this great article from The Atlantic Monthly (subscription required) which traces the history of the Middle Class in America , explains why it is disappearing and offers up some sensible policies for saving it from extinction.

(Another great organization, which focuses more on government budget issues, is the Center for Budget Priorities and Policies. I am a big fan of their work as well, especially when they conduct research in conjunction with EPI.)

IDF hits Red Cross ambulance and UN building in Lebanon

I promised I would report on the horrible things that happened on both sides of this conflict, and today has seen some examples of this--in abundance--for the IDF.

The San Francisco Chronicle reports that IDF aircraft struck a Red Cross abulance in Lebanon. And Reuters reports that "an Israeli air raid in south Lebanon killed four U.N. military observers on Tuesday in an attack which United Nations Secretary General Kofi Annan described as "apparently deliberate.

Of course investigations will be conducted, but ultimately, whose investigation will you believe? The UN's? The Red Cross's? The IDF? Someone else? Again, this is a situation in which no one at this point knows whether either of these tragic cases were the result of a deliberate targeting. Frankly, I think Kofi Annan's immediate rush to judgement that the UN deaths were the result of a purposeful assault by Israel is irresponsible and simply nt substantiated by any evidence on the ground. I'm sure many on the left whose default position is to hate Israel will immediately assume the worst, and reject any investigation findings which contradict Annan's knee-jerk conclusions.

Update: From Haaretz, Israel's ambassador to the UN Dan Gillerman apologized for the deaths of UN peacekeepers calling them an accident; he also made the claim that Hezbollah has been using UN peaeckeepers as a "cover" presumably to launch cross-border attacks from. He also stated that Israel refused to conduct a joint Israel-UN investigation on the bombing, arguing that no other country in a similar circumstance would have agreed to a joint investigation either.

Speaking of anti-Israel hatred on the left, Commondreams, a website where I get leads for a lot of articles I end up posting about, decided to publish Cecelia Lucas' "Love Poem for Hizbullah from a Non-Violence Lover". Think the title is misleading? You be the judge:

I Don’t Want to Love You, But I Do

You were born out of death to a life in a cage
Where bombs are not the only reason people die
Fed by the violence of hunger and homelessness
Raised by colonialism
Your heart and your will still grew strong

You scare me
Not just because they tell me to be scared
Not just because they repeat, repeat, repeat
The story of 1983
Begging me to understand
Americans are worth more than Lebanese

Why do they never tell me about Jihad al Bina
That you have created so much
Saved so many lives
Improved so many more

It scares me
When I admit to myself
That I would be more scared without you
If I still took the time to see

To see the violence that does not just fall from the skies
that exists in hunger and homelessness
in colonialism

It scares me
That my hope is tangled up
In actions I would never want to commit

But I don’t sleep much these days
And I’ve tried hard
But I haven’t found
Anything
to give me hope that they will listen

They repeat, repeat, repeat
The story of Gaza withdrawal
Hoping we won’t see
The violence that continues
That kills in so many ways
Hoping we will now support it
Or at least stop looking

They insist talk does not work
When there is no one to talk to
It is hard to find an interlocutor
When you’re not willing to listen
To see
To feel

How do you keep faith that talk will work
When even they are insisting it won’t?

I am learning to have hope in you
I am learning to see you as so much more
Than those actions I would never want to commit

You amaze me.
Born out of death to a life in a cage
Raised by colonialism
You did not accept imprisonment as natural
You did not accept hunger as justice
You did not accept
the ceaseless killing in so many ways
Of those next to you
Or those farther away

I love you
But I will never be yours
I don’t want you inside me
You are too male for me

And I cannot, gratefully, fully silence the voice that insists:
Some deaths you did accept
Including of some who were listening

That is why the full statement that the question-marks pry me with reads:
It is sad, but I’m learning to have hope in Hizbulla

Maybe it is the naivety
of one whose life has never been directly threatened
I still believe:
Be the change you want to see in the world

I'm sorry, but this is just the most offensive, disgusting thing I have ever read on a website I have blogrolled. Hezbollah is dedicated to the wholesale destruction of the state of Israel as well as Jews worldwide and is indiscriminately firing rockets into areas heavily populated by civilians in Israel. Perhaps the author of this screed should recognize that her hatred of all things Israel has pushed her into support (which she seems to want to justiify as being somewhat "conflicted") of a brutal terrorist organization bent on genocide.

If liberals/leftists want to have any credibility in the areas of humanitarian and or international law, they ought to renounce evil and terrorism wherever it stands. And Commondreams should be ashamed of themselves for their hypocrisy in publishing editorials which express support for terrorist organizations.

To get a sense of IDF's game plan going forward, check out this interesting article by Yossi Melman in Haaretz (h/t War and Piece).

(7/26): William Arkin at The Washington Post recaps the current situation.

Update: Josh Marshall discusses the tragedy at Qana, where dozens of Lebanese civilians were killed by IDF airstrikes. While the attack is certainly to be condemned for its human toll, it's also important to keep in mind that Hezbollah has been mounting missile attacks against Israel from the village, or at least the IDF claims as much. If the IDF's purported evidence of this is not forthcoming, it may be impossible to justify such a clear violation of the Geneva Conventions by Israel. If such evidence is presented, however, then this airstrike could possibly be considered a defensive action on behalf of Israeli towns being showered with thousands of missiles by the terrorist group.

FDA to limit industry influence on drug approval?

Well, according to the New York Times, the answer is yes and no. The FDA is expected to announce on Monday that it will create new "guidelines" for determining how much influence its board members with industry ties will be able to have in advising whether a drug gets regulatory approval or not.

The positive news is, according to the FDA these new rules would make it "all but impossible" for experts who directly receive from drug makers marketing departments to serve on advisory committees. But the federal agency --responsible for actually regulating the pharma industry in the public interest (not just the financial interest of big pharma manufacturers), isn't going to let a little public pressure force it into actually limiting industry influence on the regulatory process.

As the NYT reports, [e]xperts whose ties to a drug maker involve only a grant made to their university may not need to get a waiver...indeed, agency officials said they had no intention of excluding all advisers with ties to drug makers."

The rationale? "There are very few academic experts engaged in research who don't have some ties to industry,said Dr. Scott Gottlieb, deputy commissioner for medical and scientific affairs at the F.D.A." Ah, the same argument as to why the Pentagon just had to give Halliburton all those no-bid contracts, and why Cheney's secret energy task force had to let CEOs from big oil companies draft this nation's energy policy. Of course experts have ties to industry!

Fortunately, you don't have to take Dr. Gottlieb and the Bush administration's FDA at its word. It seems that public interest group Public Citizen actually did some research by looking at some relevant numbers and data (shocking, I know.)

According to Sidney Wolf, a director at Public Citizen: "[T]he waiver process had nothing to do with excluding capable experts." As reported by the NYT, he pointed out that a study by his group published in April in a medical journal found that the F.D.A. barred advisory board members with conflicts of interest from attending meetings only 1 percent of the time. Twenty-eight percent of advisory board members disclosed a financial conflict, the study found. He concluded: "The F.D.A. abuses its discretion by failing to disqualify members with significant conflicts of interest.”

Is changing the criteria for determining which experts with industry ties should be excluded a purely academic exercise with no real-world consequences. The answer, simply, is no.

Again, from the NYT article: "An article last year in The New York Times reported that a vote by a crucial advisory committee on whether to remove a popular painkiller from the market would have turned out differently had experts with industry ties been excluded."

So who do you trust, physicians who, due to their ties to drug manufacturers stand to reap a financial windfall by having certain drugs approved, that claim they can be fair and impartial arbiters of a given drug's safety and efficacy? Or experts who are financially disinterested in the outcomes of their approval decisions? I guess it depends on whether or not you believe there are any qualified medical experts out there that don't have ties to the industries they are supposed to be serving as a watchdog over. After revelations from a high-level whistleblower of the FDA's inadequate regulatory oversight in the Vioxx scandal, I'd rather be safe than take the FDA at its word.

Little-noticed "Commercial Cooperation Agreement" for Iraq

Steve Clemons, blogger at The Washington Note, links to an interesting article from the AP (scroll down) regarding the signing of a Commercial Cooperation Agreement between the US and iraq to "move [Iraq] toward a market economy after decades of state planning."

Clemons is properly cynical and even outraged by this push for "free" trade in the country we invaded:

"I can't quite believe that anyone thinks that there are conditions in Iraq where a "market economy" is ready to displace a planned one -- particularly when most Iraqis continue to live in darkness and inconsistent electric power provision and when the daily kill rate in Iraq is on average more than 100 people a day.

Figuring that Iraq has a little less than 10% of the U.S. population, the proportional death rate of something like 9/11 is ocurring ON AVERAGE every three days in Iraq. The only ones who benefit from the kinds of gushing free market and privatization schemes during times of such obvious calamity and systemic breakdowns are corrupt thugs, well-organized gangs, and robber barons among the elite power circles in that country. If we turn over Iraq to these kinds of Chalabi-like self-dealers, then we will have even more to be ashamed of than we do now."

Exactly right.

I highly recommend Antonia Juhasz's magesterial work on the very topic of military conquest and neoliberalism ""The Bush Agenda" as well as this article she wrote for Alternet last year. I wrote about the book awhile back here and here.

Also, for more background on US plans for "liberalization" and privatization of the Iraqi economy, see this article by Naomi Klein, published by The Nation here. A key excerpt:

So far, the press debate over the reconstruction of Iraq has focused on fair play: It is "exceptionally maladroit," in the words of the European Union's Commissioner for External Relations, Chris Patten, for the United States to keep all the juicy contracts for itself. It has to learn to share: ExxonMobil should invite France's TotalFinaElf to the most lucrative oilfields; Bechtel should give Britain's Thames Water a shot at the sewer contracts.

But while Patten may find US unilateralism galling and Tony Blair may be calling for UN oversight, on this matter it's beside the point. Who cares which multinationals get the best deals in Iraq's post-Saddam, pre-democracy liquidation sale? What does it matter if the privatizing is done unilaterally by Washington or multilaterally by the United States, Europe, Russia and China?

Entirely absent from this debate are the Iraqi people, who might--who knows?--want to hold on to a few of their assets. Iraq will be owed massive reparations after the bombing stops, but without any real democratic process, what is being planned is not reparations, reconstruction or rehabilitation. It is robbery: mass theft disguised as charity; privatization without representation.

A people, starved and sickened by sanctions, then pulverized by war, is going to emerge from this trauma to find that their country has been sold out from under them. They will also discover that their newfound "freedom"--for which so many of their loved ones perished--comes pre-shackled with irreversible economic decisions that were made in boardrooms while the bombs were still falling.

Joshua Holland, writing at Alternet argues:

Iraqis have been brutalized not only by bombs and bullets; they've also been the victims of economic violence in the form of the free market "shock therapy" cooked up by a firm in Virginia on a $250 million no-bid contract before the U.S. invasion. Tranforming Iraq's economy overnight was a matter of ideology trumping commonsense, and it's killed thousands of innocent Iraqis and shattered a way of life for hundreds of thousands more.

That the radical restructuring of Iraq's political economy has received so little critical attention -- even as Iraq's nascent government threatens to crash and burn -- is a testament to how deeply indoctrinated we are --especially our media -- in the narrative of what "American-style" capitalism is. It was taken as a given that after knocking off Saddam, we'd rapidly privatize huge swaths of Iraq's national companies, get rid of hundreds of thousands of civil servants, completely restructure the country's tax and finance laws and throw Iraq's economy wide open for foreign multinationals. File it under bringing "democracy and capitalism" to the poor, backward Arabs.

The reality is that the economic policies we imposed on Iraq were not some generic form of "capitalism"; they included the most radical business-state rules imaginable -- policies that developing countries have vehemently resisted for over a decade. What's more, imposing them at the point of a gun appears to have violated both international and U.S. laws. There's nothing "normal" about it.

And while "democratization" and "free markets" supposedly go hand-in-hand, the truth is that Iraq's economic transformation was mutually exclusive with the goal of forming a legitimate government, and the Bush administration knew it well in advance of the occupation.

(Holland has another piece that's well worth reading, also published by Alternet, called "Iraq 's Reconstruction a Boondoggle By Design".)

Finally, check out this article from April 2004 in the Christian Science Monitor entitled "Seeing Iraq Through the Globalization Lens".

More on the unfolding disaster in Iraq from Glenn Greenwald (with links to Billmon and Andrew Sullivan).

The real problem behind the Israel-Lebanon war

It is clear that the IDF is currently engaged in an illegal military operation in Lebanon, at least as far as the Fourth Geneva Convention is concerned. It is also true that in a technical sense, the damage being inflicted on the Lebanese is "disproportionate" to that which Hezbollah is inflicting on Israeli civilians (although this is more a matter of circumstance than intention on the part of Hezbollah). But there are several things I think critics of Israel's current engagement need to keep firmly in mind before entirely blaming them--both sides are causing problems which make a resolution to all the violence extremely difficult, if not impossible.

First of all, I think all reasonable parties would agree with the proposition that Hezbollah’s military capabilities, specifically its ability to launch thousands of missiles at major Israeli cities and kill and severely injure scores of civilians as well as destroy homes, needs to be neutralized. Further, Israel has no choice but to destroy Hezbollah itself--after all, this is an organization that defines itself as Israel's sworn enemy and exists to hasten the county's destruction. If an organization, say al Qaeda, similarly declared itself dedicated to the US's destruction and proved it possessed both the will and capability to do significant harm to the country, surely the US would be justified in relentlessly pursuing al Qaeda's destruction. So, despite what many on the left seem to believe, I think Israel’s current assault on Lebanon is directed toward that goal, a goal that is necessary for the government to successfully reach in order to protect its civilians from attacks.

Of course, it is deplorable, and I think that all reasonable observers would agree with this as well, that hundreds of Lebanese are being killed (the number of civilians versus military/Hezbollah casualties is unclear) by IDF raids. It is debatable whether these attacks represent “collective punishment” for all Lebanese for their support of Hezbollah or whether these attacks are necessary to destroy a guerilla organization that survives by hiding in the midst of civilian populations.

This gets to the core problem with the Lebanon engagement, and the Hamas engagement in the West Bank (and to a lesser extent, Gaza) as well. If the civilian populations of the areas being decimated by Israeli air strikes would finally say “Enough is enough, these guerilla attacks by Hezbollah/Hamas are hurting us more than they are helping us” and end their support for these terrorist groups’ activities, these terror groups would be degraded in a way Israel’s military will never be able to accomplish. It is a basic principle of guerilla war that the asymmetric advantages enjoyed by insurgents vanish when popular support for their cause is withdrawn. They are no longer able to hide among the civilian groups, and thus make much more obvious targets for the IDF.

It is understandable to an extent as to why both Hezbollah and Hamas maintain such a high degree of popularity in their respective homelands. Both groups provide critical humanitarian aid, such as funding and operating hospitals, schools and other core social development purposes. Also, both groups have capitalized on the horrendous living conditions and bleak future prospects of their people and succeeded in casting the blame for its problems squarely on Israel and the West.

But what is truly fascinating is that even though the civilian populations realize that the terrorist attacks make their lives worse than they were before, and that the attacks will never succeed in leading to the elimination of Israel as a Jewish state, they still prefer to suffer the inevitable repercussions rather than have their suffering remain ignored by the rest of the world: In their minds, at least Hezbollah/Hamas attacks put the Palestinians on the front page of the news.

As long as these terrorist groups (as classified by the US, EU, etc) continue to have support from the civilian population, the civilian populations will continue to suffer greatly from Israel’s reprisals (whether they can be justified as an act of self-defense or not). This is an incontrovertible fact. And as long as the terrorist groups continue to be sheltered and supported by civilians and can hide in their midst, it will remain pretty much impossible for them to be dismantled, just as the Iraqi insurgency has succeeded in blending into the countryside and regain their strength after each US-led assault. It’s why the US badly lost the war in Vietnam—because the guerillas maintained support from not only the North Vietnamese communists but from civilians in the south as well.

So is it right for Israel to destroy critical civilian infrastructure, like bridges, power plants and television stations, and strike dense civilian neighborhoods? Of course not, these are literally violations of humanitarian law and possibly crimes against humanity. But if Israel is intent in removing Hezbollah/Hamas (which make up a relatively small percentage of the Lebanese/Palestinian overall populations) and their capability to wantonly kill Israeli civilians in order to drum up media coverage for their causes, an intention for self-preservation any legitimate sovereign government would undoubtedly share, then what choice does Israel have but to attack these civilian areas the guerillas continue to use as a human shield? If the only way to defeat the terrorists is to attack the civilians they purposefully surround themselves with, then that is what Israel must and will do—while making every attempt to minimize civilian casualties as much as possible. If it can be demonstrated that these attacks on civilians and non-military infrastructure are not directly tied to destroying the terrorist groups but rather as part of a psychological war to drain civilian support from the terrorist causes as well as collectively punish everyone for the violent actions of a few, however, then these IDF attacks would be completely illegitimate and would constitute war crimes. As with most coverage of the Middle East in general and the Israel/Arab conflict in particular, views are extremely polarized and no one except the IDF generals and Olmert know for sure which is true. The first casualty of war is truth, and this is particularly apt in this case.

To conclude, I would argue that the people who have the greatest opportunity and responsibility to protect the lives and improve the prospects of the Palestinian and Lebanese civilians are these civilians themselves. They must overcome their legitimate fears of retribution and withdraw their support and protection from the terrorist groups which claim to be operating on their behalf, and instead support a campaign of nonviolent civil disobedience to protest Israel’s unfair treatment of those living under occupation. Doing so, they could have the potential to actually make their lives and the lives of their children better. Equally important, no matter how strongly or sincerely held the sentiment might be, the idea that through terrorist attacks Israel can be intimidated or pressured into returning land to Palestinians needs to be extinguished. It will never work, as history has proven time and again. These attacks might assuage Palestinians’ frustration at their powerlessness under Israeli military occupation, but it will only hurt them, not help them in either the short or long-term.

So in the end, the ball is not really in the IDF's court or Hezbollah's court, or the US's court or Syria or Iran's court. The key to Israel's Arab neighbors' future is really the decisions they make--to continue to condone terrorist attacks on Israel or embracing civil disobedience as an avenue for change. Despite Israel's military might, this is a decision that can not be imposed on them from without, they need to take on responsibility for their future. And supporting the existance of militant groups sworn to the destruction of Israel will only make their plight worse.

Update: Alan Dershowitz touches on the issue of civilian culpability in this Los Angeles Times editorial. Although I agree with the substance of his argument, I don't see how his proposals for qualifying the innocence of various parties can be objectively implemented by a notoriously subjective and self-serving international media.

Unfortunately, I think Stephen Zunes is right in his editorial that Israel's current offensive in Lebanon, while it may be necessary, will probably only serve to strengthen the influence of radical Islam and boost the popularity of Hezbollah. He notes:

"Not only is Israel's offensive against Lebanon illegal and immoral, it does not increase Israel's security or curb the threat of Islamic radicalism. In fact, it does the opposite. Hezbollah gained popular support in the Shiite community in recent decades largely as a result of the failure of the central government to protect the population from Israeli air and naval attacks and the mass kidnapping and imprisonment of thousands of young men. Israel's current offensive will only strengthen Hezbollah's appeal and undermine Lebanon's pro-Western government. This is not about Israel's legitimate right to self-defense. As with the U.S. invasion and occupation of Iraq, it will create far more terrorists than it destroys." Also of note is that Hezbollah was created during the Israeli occupation if Lebanon back in 1982.

Zunes is not your typical left-wing intellectual who criticizes Israel and justifies Arab/Muslim terrorism as a sort of knee-jerk reaction; I think he's a legitimate and moral authority on Middle East politics even though I disagree with some of the points he makes in the editorial. Particularly this paragraph:

"Most of the targets of the Israeli air strikes have nothing to do with Hezbollah, which does not control the Lebanese government and is only a minority party in the Lebanese parliament. Israel has bombed the Beirut International Airport, the main seaport of Juniyah and even the historic lighthouse on the Beirut esplanade, none of which is controlled by Hezbollah. Israel has also bombed bridges, power stations, civilian neighborhoods and villages miles from any Hezbollah militia. And, despite insisting that the Lebanese army take stronger action against the Hezbollah militia, the Israelis have bombed Lebanese army facilities as well."

And as this Washington Post article makes clear, Hezbollah may not be able to be defeated militarily--with the most Israel may be able to accomplish is disarming the group but leaving its politically viable. So even if Israel continues its justifiable military campaign in Lebanon, can it eventually lead to the defeat of the terrorist group? Right now, US and Israeli experts seem to think the answer to that question is "no".

Dr. Zunes, unfortunately, does not consider the reality that Hezbollah hides their guerillas and weapons in civilian areas, instead assuming that any Israeli assault on a civilian site means it is attacking targets "that have nothing to do with Hezbollah."

More commentary from Mort Zuckerman in USNews & World Report. And I highly recommend this excellent article from the San Francisco Chronicle which discusses Israel's military strategy in this campaign, which began to be developed after the IDF pulled out of Lebanon in 2004. And Ze'ev Maoz writes in Haaretz that Israelis are fooling themselves by claiming they have the moral high ground in this conflict, and that it does not qualify as a "just war".

Consequences from pharma patent protection: Inefficiency and corruption

Dean Baker:

In econ 101, we teach that when the government intervenes in a market to keep prices above marginal costs, it will encourage all sorts of undesirable and harmful rent-seeking behavior. This is one reason that all right-thinking economists are strong opponents of tariffs and quotas that can raise the price of things like shoes, shorts, and steel by 20-30 percent above the competitive market price.

Given what we teach in econ 101, it is very difficult to explain why economists are not more concerned about things like patent protection for prescription drugs. This form of protectionism raises the price of drugs by several hundred percent, or even several thousand percent, above the marginal cost of production. Drugs that would sell for $20-$30 a prescription in a competitive market often sell for $300-$500 per prescription when they have patent protection.

When the government creates this sort of opportunity for large rents, economic theory tells us to expect corruption. The NYT gives an interesting account of one way such corruption occurs. A New York doctor was arrested in March for promoting “off label” uses of a prescription drug.

The basic point here is that drug companies have to get the FDA to approve their drugs for specific uses. The FDA assesses the effectiveness and safety of the drug for the purposes that the company wants it to be prescribed. Drug companies can then promote their drug, subject to required warnings, only for the uses that the FDA approves. However, doctors are free to use their judgment to prescribe a drug for other “off label” purposes, if they believe it is appropriate for these purposes.

This is the problem. Drug companies make enormous profits when they sell more drugs at huge mark-ups. While they cannot legally promote their drug for any purpose other those explicitly allowed by the FDA, they can of course dispense information about new research on their drug. Hence the story of the doctor being arrested for promoting off label uses. He was getting large fees from a drug company to give talks about the off label use of its drug.

I know nothing about the issues in this case other than what appears in the NYT article. But, as a believer in the market, when it comes to government bureaucrats trying to restrict such health endangering practices, versus the pharmaceutical companies that stand to make billions, my money is on the pharmaceutical companies. Of course, if economics were an honest profession, there would be many more economists yelling about the inefficiency and corruption that result from patent protection in the pharmaceutical industry, than the losses from a 10 percent tariff on textiles.

Interesting.

Paying the price for being poor

This weekend, I plan on reading an eye-opening new report written by Matt Fellowes at the Brookings Institution entitled "From Poverty, Opportunity: Putting the Market to Work for Lower Income Families". According to what I've read so far of the report, "4.2 million lower income homeowners that earn less than $30,000 a year pay higher than average prices for their mortgages. About 4.5 million lower income households pay higher than average prices for auto loans. At least 1.6 million lower income adults pay excessive fees for furniture, appliances, and electronics. And, countless more pay high prices for other necessities, such as basic financial services, groceries, and insurance. Together, these extra costs add up to hundreds, sometimes thousands, of dollars unnecessarily spent by lower income families every year."

The culprit? "A combination of real and perceived market risks, market abuses, and uneven consumer access to market information contribute to these additional costs incurred by lower income consumers." This follows directly from what I learned in the Development Economics and Microfinance course I took in the Spring: because the poor have little or no credit history, they end up paying more for loans, insurance and a host of other necessities, leading to the inevitable Catch-22 of them not being able to save and invest meaningful amounts of money from their paycheck. Additionally, the high concentration of businesses that opportunistically sell high priced products and services in lower income neighborhoods create a structural limitation to the choices of poorer consumers.

While I studied these market failures and their solutions within the context of "Developing" countries, sadly these same problems are present even in the wealthiest country in the world.

According to the authors, three types of reform need to be instituted.

1. Public and private leaders need to encourage mainstream businesses to serve lower income markets, where there remains great demand for services and products.

2. Public and private leaders need to crack down on alternative, high-priced businesses that have blossomed in lower income neighborhoods.

3. Public and private leaders need to promote consumer responsibility and empower lower income consumers with better market information.

One of the primary goals in achieving these ends is essentialy creating improved market opportunities in lower income neighborhoods, something for-profits, not-for-profits and governmental organizations can work together on to accomplish. This includes everything from promoting mainstream basic financial services, helping enroll low-income individuals (and consumers) into savings accounts, promoting lower-cost insurance companies and even streamlining and reforming zoning codes to encourage neighborhood economic development.

Another part of the puzzle is taking steps to curb predatory business practices like high interest rate "payday lending".

The full report (in .pdf) is 73 pages long, and I probably won't be able to finish it until Sunday, but I think this is an incredibly important issue I want to learn more about. Because the free market Laissez-Faire system of capitalism we have and love so much can lead to market failures that make it even harder for low-income individuals to get ahead than it should be. And if we are a society that is serious about creating opportunities for all Americans to achieve a Middle Class lifestyle, we need to stop paying lip service to these notions and actually begin to figure out how to make markets work for people as opposed to the other way around.

Dean Baker takes serious issue with the report, criticizing it's "serious lack of imagination" as far as the aforementioned policy remedies for the problem. He favors a more market-based (microfinance?) approach, which I have no problem with. Nevertheless, Baker says he thinks the report is worth reading, and he also links to a New York Times article about its findings.

On a related topic, the general economic picture continues to disappoint. For instance, the Economic Policy Institute reported two weeks ago that despite recording higher tax revenues than expected, the Bush economy, now in its fifth year, continues to struggle to create jobs. For the third month in a row, employers hired fewer workers than analysts expected. During the second quarter of the year, payrolls grew by 108,000 per month, well off the previous quarter's monthly rate of 176,000, and the slowest quarter since the Third Quarter in 2003--when the economy managed to pull out of the jobless recovery. According to a July 7 Bureau of Labor Statistics report, the private sector added only 90,000 jobs in June—or 86,000 per month over the quarter.

Over the past year, wages are up 3.9% hourly, the fastest growth rate since June 2001. But even with this somewhat impressive annualied increase, the BLS figures point out a weak wage picture for the Second Quarter. According to the government agency, "median weekly earnings of the nation's 105.9 million full-time wage and salary workers were $659 in the second quarter of 2006," 2.5 percent higher than a year earlier, compared with a gain of 4.0 percent in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period.

As Ian Welsh from The Blogging of the President blog points out, after inflation the median worker is earning 1.5% less than the same time last year.. He adds: "[W]hen you consider that this is the boom period of this business cycle and that people have been taking on debt to increase spending and to pay the interest on loans, suddenly it doesn't look so good."

EPI economist Jared Bernstein sums up the jobs picture:

"June's employment report added yet another month to a trend toward slower job growth that began earlier this year. The slowdown appears rooted in the same growth-dampening forces found in the overall economy, and in that sense, this cooling is likely to persist. While wages have accelerated of late, they are only now catching up to recent inflation rates, meaning workers' purchasing power is up only slightly (and still well below productivity growth). Moreover, the inherent lags in the employment/wage relationship suggest that, if the current slowdown in job growth continues, wage growth will also slow in coming months."

Finally, for your reading pleasure, the Center for Economic and Policy Research Center has a long report on an interesting topic: Do "protective labor market institutions" like labor unions, unemployment benefits entitlements and employment protection laws (all good things) really lead to increases in unemployment rates? CEPR's research finds that despite traditional economic theory that these type of worker protections lead to "rigidity" in the labor market, the actual empirical evidence examined is in fact quite weak and far from conclusive. And don't worry, it's only 75 pages long.

UN Report: 14,000 Iraqis killed so far in 2006

CNN provides a chilling report on the ever-growing Iraqi bodycount resulting from our illegal invasion of that country.

More than 14,000 civilians have been killed in Iraq in the first half of this year, an ominous figure reflecting the fact that "killings, kidnappings and torture remain widespread" in the war-torn country, a United Nations report says.

Killings of civilians are on "an upward trend," with more than 5,800 deaths and more than 5,700 injuries reported in May and June alone.

The report, a bimonthly document produced by the U.N. Assistance Mission for Iraq, covers May and June, and includes chilling casualty figures and ugly anecdotes from the insurgent and sectarian warfare that continues to rage despite the establishment of a national unity government and a security crackdown in Baghdad.

The report lists examples of bloody suicide bombs aimed at mosques, attacks on laborers, the recovery of slain bodies, the assassinations of judges, the killings of prisoners, the targeting of clergy -- all incidents dutifully reported by media over these three-plus years of chaos in the streets.

In late June, the [Iraqi] Ministry of Health "acknowledged information stating that since 2003 at least 50,000 persons have been killed in violence and stated the number of deaths are probably under-reported." the report says.

"The Baghdad morgue reportedly received 30,204 bodies from 2003 to mid-2006. Deaths numbering 18,933 occurred from 'military clashes' and 'terrorist attacks'" between April 5, 2004, and June 1, 2006.

Iraq is beyond a disaster. Our presence there is not making anyone safer, is defusing sectarian tensions or making the Middle East a more stable, democratic region. Is the death of over 50,000 people worth the neocon's noble-sounding but utterly naive experiment in nation-building and democracy promotion? The American people favor a timetable to begin withdrawing our troops from Iraq, but politicans from Bush to Bill Clinton reject the notion out of hand.

The Middle East is a powder keg on the verge of exploding, with Iraqis condemning Israel's military campaign in Lebanon, the West Bank and the Gaza Strip and threatening retaliatory strikes. The price of gas is soaring and we seem to have completely forgotten about Afghanistan, al Qaeda and the resurgent Taliban. The Department of Defense appears to have long-term plans to build permanent military bases in Iraq. The situation on the ground increasingly looks like the beginnings of a civil war.And every day more and more Iraqi civilians and US troops are being senselessly killed. But quite possibly the greatest tragedy of all is that no one in a position of power seems interested in or able to bring about an end to what has become my generation's Vietnam any time in the near future.

In a typically blunt and well thought out essay in American Prospect, Robert Kuttner argues that while withdrawal may be the best worst option, it really is not a viable or realistic alternative. He notes: "[T]he intermittent anarchy [that would result from a withdrawal] would probably become open civil war. Iraq would become a haven for every known terrorist faction. It would likely end with a Sunni or Shi'ite dictator, perhaps as ruthless as Saddam Hussein."

Of course, he makes a good point that I fully agree with. But does that mean that we are stuck as the constables of Iraq until the sectarian violence and mass terrorism abates? What if our presence there is actually enflaming the situation? What if the ethnic/religious makeup of Iraq in it's current for is too unstable to function without being ruled by the iron fist of a dictator. No easy answers, but the bottom line I would still argue is that we are going to need to pull out eventually and we ought to statt figuring out what conditions would allow for an orderly pullout, even if such plans are being made in private.

Is Al Gore for real?

The liberal blogosphere has been getting all misty-eyed lately over the seemingly new and improved Al Gore. Gone is the wooden, poll-tested, consultant-driven politician who seems to have been replaced by a truly progressive, charismatic and earnestly principled populist. His movie and book An Inconvenient Truth has sparked a good deal of interest in the topic of global warming and put an important issue front and center on the agenda. His appearance a few months ago on Saturday Night Live was the sharpest, funniest and most "genuine" I've ever seen the former Vice President. And despite his claims to the contrary, many observers suspect he is gearing up for another presidential run in 2008.

Only problem with all of this is Gore's track record as a politician, which I think pretty much sucks. Also, he ran a truly god awful campaign in 2000--the fact that he only beat Bush in the electoral college by a small margin is truly pathetic given the strong approval rating Clinton left office with and the complete lack of qualifications Bush had for the job to lead the free world. He can only be seen as having promoted rather conservative (and stupid) budgetary policies during his 2000 campaign, and he hasn't said much to give the impression he as suddenly become more responsible in his views. Like George W. Bush, Robert rubin and Newt Gingrich, he is a proud member of the Party of Davos.

I've been arguing with friends, co-workers and anyone else who will listen to that while Gore seems like he has been (to quote the movie Full Metal Jacket) "born again hard", I am still very concerned that if or when push comes to shove he will turn back to his old DLC self. Can a leopard ever change its spots?

It turns out I'm not alone in my fears. Jeff Cohen has written a short editorial called "Can Al Gore Be Trusted?" which addresses the concerns I and many others continue to have over a potential Gore candidacy. Cohen highlights Gore's strong support in 1994 for passing the NAFTA "free" trade agreement (detailed in damning detail by Jeff Faux's brilliant and indispensible book "The Global Class War") as well as the horrendous 1996 Telecommunications Reform Act (which led to an increase in media ownership consolidation) among other poor policies.

Don't get me wrong--if Gore were to win the Democratic nomination for president in 2008, I'd sooner vote for him than any Republican or Third Party candidate. I just think it's a true shame that so many people, including liberals, have already written off a Russ Feingold candidacy two years out. I think he is by far the ideal candidate for the Democrats to run against the GOP. I'm also a big fan of John Edwards; his new PAC OneAmerica Committee is drawing a lot of attention to poverty and middle class economic concerns and framing them in populist terms. Unfortunately, many Democrats (and even liberals) seem to think his candidacy is doomed because he used to be--GASP-- a trial lawyer.

It's still a ways out before the 2008 campaign for the White House begins to kick into high gear, but I'm personally hoping that neither Gore nor Howard Dean become the party favorites. Edwards and Feingold are both truly exceptional leaders and are exactly what this country needs after eight years of GOP misrule.

Still crazy after all these years. . .

Bill Kristol, neocon extraordinaire and editor of the Weekly Standard is claiming that if we attacked Iran now, the people of that country would embrace the attack and accept a glorious regime change with open arms.

Because that strategy worked so well in Iraq, right Bill?

Here's the transcript of Bill Kristol's interview on Fox News, courtesy of Think Progress:

KRISTOL: We have to be ready to use military force against Iran, if it comes to that. Think what this crisis would be like given what we now know about the Islamic Republic of Iran, its regime, its recklessness, its close, close ties to terrorist groups. Think what the world wore would be like with an Iran with nuclear weapons. This is a very interesting moment in that respect. You know? We are in a way lucky that Iran has revealed its aggression, its recklessness, its terror ties before they succeeded in becoming a nuclear power. We have to stop them from getting nuclear weapons. We can try diplomacy. I am not hopeful about that. We have to be ready to use force.

QUESTION: You know, the down side, though, you know very well, to all of that being that we’re involved in Iraq and Afganistan. Also that Iran is much different than Iraq. It’s huge and more formidable.

KRISTOL: It is, but also the Iranian people dislike their regime. I think they would be – the right use of targeted military force — but especially if political pressure before we use military force – could cause them to reconsider whether they really want to have this regime in power. There are even moderates – they are not wonderful people — but people in the government itself who are probably nervous about Ahmadinejad’s recklessness.

This is why standing up to Iran right now is so important. They’re overreached. They and Hezbollah have recklessly overreached. They got cocky. This is the moment to set them back. I think a setback to Hezbollah could trigger changes in Iran. People can say, wait a second, what is Ahmadinejad doing to us. We’re alone. The Arab world is even against us. The Muslim world is against us. Let’s reconsider this reckless path that we’re on.

The only things missing are the "sweets and flowers" the Iranians will surely shower upon our soldiers after we "set back" their country with an unprovoked bombing campaign.

For more laughs, check out this Tom Tomorrow cartoon from 2003, which pretty much makes the same point by pointing out the sheer ridiculousness of this thinking given recent history.

Update: For more background on the neocons' plans for regional war in the Middle East, which seem to be getting dusted off after years of sitting on the shelf, see this article by Joseph Cirincione.

Mideast roundup 7/19/06

The New York Times reports that about 310 people from Lebanon (mostly civilians) have now been killed as a result of Israel's airstrikes. Today, new air and artillery strikes killed 55 people, the highest toll in the conflict so far. CNN reports that 500,000 Lebanese civilians have been displaced as a result of the conflict. Two children were killed in the northern Israeli city of Nazareth, whoch raised the civilian death toll there to 15. Additionally, at least 12 Israeli troops have also been killed since Hezbollah launched a cross-border raid a week ago.

According to the Jerusalem Post, Israel has closed off the Gaza Strip and West Bank as the IDF continues to fight Hamas terrorists. According to the article: "Defense Minister Amir Peretz ordered a general closure imposed on the West Bank and Gaza Strip due to intelligence alerts indicating that many suicide attacks were being planned against Israeli civilians. The closure was ordered until Saturday night."

In another article, the Post states that "[A] massive [Israeli] ground operation into southern Lebanon appeared to possibly draw a step closer as the IDF admitted it was having difficulty stopping the Katyusha rocket fire through incessant air strikes on guerilla targets over the past eight days of fighting."

The >AP reports that Israel has literally destroyed an entire village in Lebanon: "Israeli strikes thundered down on two villages after Hezbollah fired rockets from the area, said residents. And it was residents who were hit in retaliation. The Najdeh neighborhood in the village of Srifa was flattened into a heap of rubble - with the rooftop of a single house sticking out of the pile."

These rocket attacks are showing no signs of letting up. Hezbollah launched about 120 rockets into Israel today, firing "constant waves" of Katyushas and various rockets against Northern Israel towns, including Haifa, Kiriyat-Shmona, Tiberias, and Carmiel.

For those keeping track of such things, Amnesty International and Human Rights Watch list the mounting list of possible war crimes being committed by both Hezbollah and Israel. For background on the relevant parts of the Geneva Convention being violated by both sides, see here. It's quite ironic that any organization, especially those as well-respected as these, would think their criticism of a terrorist group like Hezbollah would have any impact. Unfortunately, it is very unlikely that Israel, which is fully justified in taking steps to eliminate Hezbollah so as to defend their country from missile attacks, will pay any heed to calls for it to stop targeting civilian populations outside of South Lebanon (like Beirut), which doesn't seem to serve any purpose other than to increase hatred of Israel. Of course, media reports of "indiscriminate bombings" from Lebanese civilians will only add fuel to the fire.

The Wall Street Journal analyzes the US's diplomatic efforts to resolve the crisis--or lack thereof. According to the article: "Emphasizing fundamental change over short-term peace and stability, President Bush and his top diplomat, Secretary of State Condoleezza Rice, have no intention of launching a similar round of diplomacy to end the current fighting. Visiting Damascus is out of the question. And a cease-fire isn't their most pressing aim, they say. Instead, when Ms. Rice ventures to the region as early as this weekend, administration officials say that her mission will be to build support for the effective crippling of Hezbollah, which has two ministers in the country's government and popular backing across southern Lebanon. They also hope the crisis will end up limiting the influence of Hezbollah's chief sponsors, Syria and Iran."

While I can't argue that the destruction of Hezbollah is a necessary pre-condition to a cease-fire as well as the security of Israeli civilians in the northern part of the country, I don't understand why Bush can't do a full-court press on Olmert and get him to limit his attacks to military targets as opposed to high-density civilian populations and civilian infrastructure. Maybe there is some strategic/tactical significance to these campaigns that are killing hundreds of civilians are setting Lebanon's cities back twenty years, and if someone can explain it I'd be appreciative. (This Washington Post">article doesn't do a particularly good job in either describing or justifying the strategy of these "precision" strikes.) But right now, it appears completely outrageous in my admittedly inexpert judgement.

The Wall Street Journal article notes rather ominously:

"Administration officials say their strategy is to see Hezbollah militarily weakened through the current wave of clashes, and then to have Ms. Rice use her Middle East trip to win support in the region for a real move to implement the 2004 United Nations resolution, 1559, calling for the disarmament of Hezbollah and the deployment of the Lebanese army into Southern Lebanon. "She will go only to push for an enduring solution," one official said of Ms. Rice.

But even with added room to maneuver, it's highly unlikely that Israel will be able to achieve its stated military goal of wiping out both Hezbollah and Hamas. In both Lebanon and Gaza, these are highly popular, deeply entrenched movements that run enormous social-service networks. In hundreds of Lebanese and Palestinian towns, the two groups have taken control of the local governments via popular elections. In the West Bank and Gaza, Hamas now runs the Palestinian Authority after winning an outright majority in the January parliamentary election.

What's more, previous military confrontations with both Hezbollah and Hamas have only added to those groups' prestige and in many cases bolstered recruiting to their military wings, Israeli officials acknowledge. One example: Amid Israel's military campaign in Gaza, a new all-female Palestinian group that calls itself the "Army of Suicide Bombers" was formed this week.

Israel's aim of crippling Hezbollah could also leave the two sides locked in an ever-escalating battle that eventually spills into a regional war."

In other words, this is likely to develop into a war in which there are no winners, only losers and hundreds of more dead civilians. Many Israeli and US military experts believe that Hezbollah cannot be defeated by an Israeli military campaign of air strikes and bombardments, no matter how morally justifiable such a effort might be. If analysts are correct, Hezbollah may in fact be capable of a sustained missile campaign, making it unclear how long it would take Israel to neutralize the threat.

Update (7/20): Israel is now warning Lebanese civilians living in the south of a possible full-scale invasion. Also, writing in Haaretz, Amos Harel analyzes the current dynamics and argues that Israel has in fct "maneuvered itself into a trap".

"A Rising Tide Lifts All Yachts"

I wrote a post a few years ago about the shamefully dishonest lies conservatives have been telling about the benefits of Bush's tax cuts. This week, David Sirota has a post up on his blog analyzing the truly dismal record of the Bush tax cuts and economic policy to improve the lives of everyday citizens. He cites a recent article in the Wall Street Journal which explains the reality: While tax revenue is growing far faster than the Bush administration forecast in its budget projections in February, the nation’s overall economy actually isn’t.

What is going on, according to the article, is that the share of national income going to corporations and the wealthiest individuals, already large, has expanded, while the share going to typical wage earners has by necessity decreased. And “because corporations and the wealthy generally pay income tax at higher rates than does the typical wage earner, that shift benefits the federal Treasury.”

Sirota breaks it all down:

"So, in other words, the reason government revenues increased was because the Bush tax policy is siphoning more of the nation’s wealth up the income ladder where income is still - for now - taxed at a higher rate. I stress “for now” because let’s not forget that conservatives close to and inside the Bush administration are still talking about eliminating the progressive income tax structure and replacing it with a flat tax. . .[which] means a massive tax cut for the super-wealthy paid for by a massive tax increase for most citizens. "

Former Nuremberg prosecutor outlines Bush war crimes

Alternet staff writer Jan Frel has a very provocative article entitled “Could Bush Be Prosecuted for War Crimes?”, and I think it’s well worth a read even if the proposition leaves you skeptical. After taking a course in the spring on International Law and Human Rights, I am fully aware that because the US did not sign on to the International Criminal Court (ICC) basically makes prosecution a pipe dream. Nevertheless, the article, which interviews former Nuremberg chief prosecutor Benjamin Ferenccz, makes a compelling case that Bush should be tried for war crimes and that in an ideal world where the rule of law was paramount, he could very likely be found guilty due to the US’s 2003 invasion of Iraq.

The case is as logical as it is straightforward. According to Ferenccz, who was responsible for successfully prosecuting and convicting 22 Nazis for their role in facilitating the operation of death camps, an unprovoked or “aggressive” war” is the highest crime against humanity. He notes that it was the invasion of Iraq that made possible the crimes against humanity committed in Abu Graib, the mass murder in Fallujah and Ramadi,the tens of thousands of Iraqi deaths and the civilian massacres in Haditha, to name just a few atrocities.

According to Frel, Ferenccz believes that a “prima facie case can be that the United States is guilty of the supreme crime against humanity, that being an illegal war of aggression against a sovereign nation.”

Here is the relevant part of the interview:

"The United Nations charter has a provision which was agreed to by the United States formulated by the United States in fact, after World War II. It says that from now on, no nation can use armed force without the permission of the U.N. Security Council. They can use force in connection with self-defense, but a country can't use force in anticipation of self-defense. Regarding Iraq, the last Security Council resolution essentially said, 'Look, send the weapons inspectors out to Iraq, have them come back and tell us what they've found -- then we'll figure out what we're going to do. The U.S. was impatient, and decided to invade Iraq -- which was all pre-arranged of course. So, the United States went to war, in violation of the charter."

The only problem with all this is that international law essentially has no teeth when it comes to prosecuting US officials for alleged war crimes. In fact, the US went so far as to threaten Belgium with political sanctions against the country unless it instituted changes to its universal jurisdiction legislation—making it much harder to prosecute war crimes in the country. (Previously, any war crime could be prosecuted in Belgium, after the change in legislation only cases in which a Belgian national was involved was considered to have jurisdiction.)

It’s pretty clear why the US has gone so far out of its way to de-legitimize the ICC by refusing to recognize it. It simply refuses to be held to the same standards of international law as the rest of the world. Because the US is the most powerful country in the world, it seems to believe that it shouldn’t have to play by the same rules as everyone else. Michael Ratner, a professor of law at Columbia, laid out a pretty impressive case back in 1992 for prosecuting the George HW Bush administration for crimes committed during the Persian Gulf war, including the purposeful destruction of infrastructure and mass civilian casualties. The case went nowhere, despite the clearly outlined violations of the Geneva Convention, because the US refused to allow its administration officials to be tried. And because the ICC doesn’t have the military or financial resources to compel them to submit to justice, it was purely an academic exercise (in futility).

WSJ reports on suspicious timing of 2001 stock option grants

The Wall Street Journal (subscription-only), in yet another piece of first-rate investigative journalism, reports this weekend that "some companies rushed, amid the post-9/11 stock-market decline, to give executives especially valuable options. A review of Standard & Poor's ExecuComp data for 1,800 leading companies indicates that from Sept. 17, 2001, through the end of the month, 511 top executives at 186 of these companies got stock-option grants. The number who received grants was 2.6 times as many as in the same stretch of September in 2000, and more than twice as many as in the like period in any other year between 1999 and 2003. [. . .]

Ninety-one companies that didn't regularly grant stock options in September did so in the first two weeks of trading after the terror attack. The 91 companies included such corporate icons as Home Depot Inc., Black & Decker Corp. and UnitedHealth Group Inc. It included two companies directly touched by the tragedy. Merrill Lynch & Co., across the street from the Twin Towers, lost three employees. On Sept. 24, Merrill granted its president options to buy more than 750,000 shares, at a price 15% below the pre-attack level."

Of course, the companies that issued the options at historically low share price valuations, which of course greatly benefits recipients when the share price recovers, either claim that 1) they rushed to issue the grants to provide "motivation" to demoralized executives, 2) the timing was completely coincidental or 3) they "don't remember" the circumstances behind the larger-than-normal stock option grants.

Typical of the defenses offered by some of these corporations is this response by Merril Lynch's director Robert Luciano, who then headed that committee: He was "emphatic that Merrill hadn't timed its option grants to hit lows in the stock price. "Attempting to do so, he said, would undermine the purpose of options: motivating employees to improve a company's performance. "It's a locked-in gain. It makes no sense," Mr. Luciano said. "That's why I think it is unconscionable."

Also typical of the "thou doth protest too much" defensiveness on offer from corporate spokesman is Merrill Lynch spokeman's statement: "We had dead employees and people spread out over three states," said the spokesman, Jason Wright. "The last thing he was thinking about was getting paid. He had other things to do."

The authors note that:

There's nothing illegal about granting options after the market plunges. But acting so quickly after a national tragedy drove down stocks shows the eagerness of some companies to increase their executives' potential wealth. These grants also offer important new fodder for an already fractious debate over what constitutes the proper use of options in executive compensation.

Dozens of companies are under investigation for possibly backdating option grants to a day when the stock was lower, a practice that could mean the companies have made false disclosures and perhaps reported financial results incorrectly. Other companies are being investigated on suspicion of timing options grants ahead of good corporate news.

The multiple options grants after 9/11 raise a different question: Did companies take unseemly advantage of a national tragedy?

The story raises some troubling aspects of the current corporate governance practices of some of America's largest and most profitable corporations. For example, it again highlights the seriousness of the SEC's ongoing probe of companies' backdating and "springboarding" of option grants. If, for example, the grants were offered in 2002, after the share prices of these companies had recovered from their historic lows after the 9/11 attacks, it would be providing a huge windfall to these executive. In fact, as the article notes, "[a]t least six of the companies that granted options dated after the attack are under investigation in the wider options-timing probe. That raises the question of whether some grants that appear to have been granted in the post-attack period were actually made later, then backdated." And this is not a victimless crime; these wealth transfers would have come at the expense of investors and employees.

Another extremely important revelation, which is mentioned almost in passing in the article is this little nugget:

In some cases, executives appear to have been instrumental in picking their own post-9/11 grant dates.

At Teradyne, Chairman and CEO George Chamillard received 602,589 options on Sept. 24, 2001, after the terror attack and business woes had driven Teradyne's stock price down by nearly one-fourth. That was four times the number he received the prior year. A spokesman for the maker of electronic test equipment said the grants followed the company's normal process: The chairman calls compensation-committee members and suggests it would be a good time to issue stock options. If the committee agrees, it approves them.

In a later securities filing, Teradyne said part of Mr. Chamillard's grant was a one-time award of 300,000 options "in recognition of his additional responsibilities as Chairman since May 2000."

Additionally, at the Stryker Corporation, post-9/11 stock-option grants to several executives appear to have been initiated by the chairman and CEO at the time, John W. Brown. Again, we see the CEO influencing the committee that should be determining his compensation, as flagrant a violation of acceptable corporate governance practices as I've ever seen. The Journal reports that they were dated Sept. 20, 2001, at the bottom of a sharp "V" pattern in the share price. The CEO would "periodically tell the compensation committee "if he thought the stock was attractive," and then the board would decide whether to award options.

Laughably, a cororate mouthpiece offered this ridiculous vague response: "We didn't just sit down after Sept. 11th and say, 'Gee, how can we take advantage of this?' "Besides, he added, "no one could have known whether the stock would rebound immediately or continue to slide."

According to a member of Apollo Corporation's compenstion committee: it is smply untrue that right after the World Trade Center, when the world went to hell, the company issued stock options on the low that enriched people in a manner that could be suspect. The kicker? He actually told the Journal: "I don't know why we issued those at that particular time." This is not even laughable, it should actually make investors and employees at that particular company angry as hell that the board of directors can't bother to explain its suspicious executive compensation practices.

Beside clearly demonstrating the need for public corporations to separate out the CEO and Board Chairman responsibilities to two separate individuals (with the Chair preferrably being "independent" of management), it casts serious doubt on the coincidence of the timing in at least this case.

While many of the executives who received these outsized share grants after 9/11 have made millions of dollars in profit beyond what they would have, it is clear the corporate spokesman will say the most unbelievable or outrageous things to justify what clearly smells like a crass opportunism on the part of corporate boards to do the bidding of the executives they are charged with overseeing, as opposed to fulfilling their legal obligation to maximize shareholder returns.

All of this begs the question: What is Bush's SEC appointee Chris Cox going do about all of this?

Mideast crisis deepens

Civilians in Lebanon and Israel continue to be murdered as both sides escalate their all-out war. Beirut and Haifa are under sustained military assault.

AP reports that Hezbollah rockets have killed eight Israeli civilians in Haifa today, striking a train station there. Seven more were injured. Israeli authorities are putting residents across the north and in the central city of Tel Aviv on heightened alert. This Haifa attack has raised Israel's death toll in the fighting to at least 24, half of them civilians and has caused the highest number of casualties in a single rocket strike by Hezbollah in more than two decades of firing rockets.

Rockets fired by Lebanese militants have also struck Acco, Nahariya and several other northern towns, and residents of the region were told to head to bomb shelters. Israeli rescue teams said 20 people were wounded in Haifa and Acco, four of them seriously.

Meanwhile, the IDF has reduced Beirut apartment buildings to rubble and knocked out electricity in many areas of the city. So far, AP reports that at least 130 people have been killed by Israeli airstrikes in Lebanon, most of them civilian.

Haaretz reports that an IAF air strike on a building today killed at least 16 civilians and wounded scores in Lebanon's southern port city of Tyre, witnesses said. More were feared trapped under the rubble, an official source said.

The New York Times reports that the Israeli military are pointing to Iran's role in the crisis: a missile, which was fired from the Lebanese coast at a Israeli warship yesterday was "part of a system that required direct training from Iran."

Israel is also claiming that "dozens" of Iranian fighters are currently in Lebanon, have been working with Hezbollah for more than two decades and providing a "large part" of the group’s financing and weaponry.

This editorial in Haaretz cites "well-placed Israeli sources" as claiming that not only does Tehran have an extensive role in sparking this new conflict, but that they also timed it purposefully to "divert international attention from the pressure on Tehran to cease its uranium enrichment program, a matter that is likely to be brought before the UN Security Council in the future."

According to neoconservative nutjob Bill Kristol, writing in The Weekly Standard, the solution to the crisis is for the US to start a war with Iran. But thats Kristol's solution for everything, so we shouldn't be all that suprised, should we?

Finally, Juan Cole (via Alternet's blog "The Mix" notes that Israel's "irrelevant" targets are likely aimed at forcing the Lebanese to turn against Hezbollah, who are becoming more and more powerful. Unfortunately, the brutality and civilian nature of the targets are even turning anti-Hezbollah politicians and citizens against Israel, perhaps undoing Lebanon's whole "Cedar Revolution" in the process.

Update: The New York Times reports from Haifa, "a scene of death and destruction". Absolutely heartbreaking.

Iraq contines descent into utter chaos

I'm not going to even bother quoting or paraphrasing Cenk Uygur's latest article at AlterNet. It's called "War on Iraq: The Civil War Has Begun", and it is a incredibly somber reflection on just how bad conditions on the ground currently are. He argues that the only solution is to partition the country into three different regions (by ethnicity), which I personally don't think will help matters.

Read the article, that is, if you want to ruin what may be left of your weekend.

Israel and Hezbullah in all-out war

Beirut and Haifa are both under attack, and civilians have been killed and injured on both sides (over sixty killed in Lebanon and at least twelve Israelis) from bombs, missiles and mayhem raining down on them. Some 220,000 Israeli civilians in northern towns hunkered down in bomb shelters, and today a woman and her five year old grandson were killed in a Katyusha rocket attack in Meron . Besides having an arsenal of some 10,000 missiles, Hezbollah apparently has unmanned aircraft manned with explosives.

Also, according to Israel's army chief, Lt. Gen. Dan Halutz, Hezbollah has rockets that can reach as far as 43.5 miles or more, which would bring more Israeli cities, such as Hadera, within range.

Inter Press Service reports that 15,000 people are said to have crossed the Lebanese border into Syria, seeking refuge from the widespread bombing campaign. From CNN:

"We are ready for it -- war, war on every level," said [leader of Hezbullah] Nasrallah, soon after Israel's military reportedly hit his home and destroyed Hezbollah's headquarters in southern Beirut. [. . .]

[Lenabese Prime Minister] Siniora called on President Bush and other world leaders to press Israel to halt the attacks.

White House spokesman Tony Snow said Friday that Bush declined Siniora's request, adding: "The president is not going to make military decisions for Israel," Reuters reported.

Bush "believes the Israelis have the right to protect themselves and that in doing that they should limit as much as possible so-called collateral damage not only to facilities but also to human lives," Snow said, according to Reuters.

[Israeli Prime Minister] Olmert said Israel would not halt its offensive until Hezbollah was disarmed, AP reported. He made the comment in a telephone conversation with U.N. Secretary-General Kofi Annan, Israeli government officials said."

With Israel launching its biggest military offensive in 25 years, the Middle East looks like it is headed for a regional war, with Iran and Syria's proxies fighting against Israel, which is involved in a battle on another front against Hamas. According to the Jerusalem Post, the IDF has already called up its reserves. and is threatening to "turn Lebanon back 20 years by striking its vital infrastructure," if its soldiers being held hostage are not returned in "good shape".

Like Hamas, Hezbollah is sworn to the destruction of the state of Israel and it was only a matter of time before Israel had to engage them in a full out military battle. The shelling of Israeli cities and kidnapping of IDF soldiers were clear provacations meant to start a battle at the same time Israel was already involved in striking Hamas in Gaza.

The BBC is reporting that over 60 Lebanese have been killed in the offensive, and that Hezbollah launched 70 missiles at Israel just today. Four Israeli civilians have been killed from attacks in the last two days. Israel destroyed Hizbollah's headquarters and has also targeted strategic sites like main roads, bridges and Beirut's international airport.

It doesn't look like there is going to be any sort of diplomatic breakthrough any time soon, with both sides sticking to their demands:

Mr Olmert said he would agree to a ceasefire if Hezbollah returned the two captured soldiers and stopped firing rockets at northern Israel, and Lebanon implemented UN Security Council resolution 1559, calling for the disarmament of the militant group.

Hezbollah has said the captured soldiers will not be returned without a release deal for Palestinian, Lebanese and other Arab prisoners held in Israeli jails.

Meanwhile in Baghdad, thousands of angry Shiites were on the march today, praising the leader of Lebanon's Hizbullah group and denouncing Israel and the United States for attacks against Lebanon. Additionally, protesters said they were ready to "fight the Israelis" according to the Associated Press.

I plan on covering this conflict as closely as I can, and will report and comment critically on the actions of both sides. I plan on reading from as many different sources as possible, as one of the biggest challenges is the partisan coverage of events by different publications based on their allegiences.