Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Saturday, May 27, 2006

I Hear and Obey

Amazon says I should order Helen Thomas (2006), [Watchdogs of Democracy? The Waning Washington Press Corps and How It Has Failed the Public] (New York: Scribner).


I appear to have lost my copy of C.H. Haskins, The Rise of Universities. I last remember seeing it... in my backpack, in our rooms at Wolfson College, Cambridge, a month and a half ago...

I Am Concerned...

I am concerned: the Sixteen-Year-Old is reading Sam Tanenhaus's biography of Whittaker Chambers. I am concerned because Tanenhaus continually soft-pedals how much of a loon Whittaker Chambers is.

How big a loon? This is, after all, a man who could see no difference between Karl Marx and John Maynard Keynes: "Keynes is a dialect of Marx not too greatly different than Slovene, say, is from Russian." How big a loon? This is, after all, a man who rewrote Theodore White's dispatches from Sichuan to make them say that Chiang Kai-Shek was China's Abraham Lincoln.

How big a loon? This is, after all, a man who can write about Richard M. Nixon: "My children have caught him lovingly in a nickname. To them, he is always 'Nixie,' the kind and the good, about whom they will tolerate no nonsense." That is enough to conclude that Chambers was either mendacious or mad. Kind? Good? Nixon? Chambers is either a liar, or a most unreliable witness.

How big a loon? Whittaker Chambers thought that Khrushchev's 1956 speech denouncing Stalin was a move aimed at undermining the morale and will of the West, and at making Communism a more dangerous and ruthless beast. The possibility of the Primacy of Internal Politics--that Khrushchev was more concerned about Russia, Russia's political system, and his own guilt about the 1930s and 1940s and his personal responsibility to try to foreclose the possibility of it ever happening again than about gaining a slight advantage in the Cold War--never enters Chambers's mind:

From Whittaker Chambers (1989), Ghosts on the Roof (Washington: Regnery Gateway: 0895267659), p. 287-90. Reprinted from Life, April 30, 1956: What the new Communist strategy envisages is the mounting, on a world scale, of a vast "partisans of peace" movement. Its formations will be the popular front... [but it will go] far beyond popular fronts, which however manipulable [by the Communists], have manifest limits.... [A]ll that is necessary to change the weather is for the Communist blizzard to stop freezing men's hopes.... [T]he tactical problem for Communism... [is] that of the wind and sun... competing to make a man take off his overcoat. To make the man--the West--take off his coat [his defenses against Communism], it was only necessary for Communism to let the sun shine.... [H]itherto, Communism could not let the sun shine [because of]... the person and official mythology of Josef Stalin. He personified those memories which... scarify the mind of the West with respect to Communism....

[T]he ice is going out, the ice that froze and paralyzed the messianic spirit of Communism during the long but (in Communist terms) justifiable Stalinist nightmare. Communism is likely to become more, not less dangerous....

Communism has not changed. The dictatorship of the Communist Party will not end. (The 20th [Party] Congress has acted to strengthen it.) It is unlikely that the slave labor camps will go or even shrink much. (Slave labor plays too important a part in the Communist economy and the victims of the reverse purge, or anybody at all who resists, will soon replace such political prisoners as may be released now.) Communist aggression against the West will not end. The 20th Congress has acted to give such aggression new, subtler, massive forms whose disintegrating energies are beamed first at specific soft spots around Communism's international frontiers and far across them--at West Germany, France, Italy, Britain, India, Burma, Indonesia. Yugoslavia is already doing a "slow dissolve" back into the Soviet system--a homecoming which Moscow's official disbanding of the Cominform is intended to promote....

But above all, it is the smashing of the Stalinist big lie that will change the climate, exerting its influence far beyond orthodox Communist lines, upon the internationalist and neutralist opinion of the West. With the smashing of the dark idol of Stalin, Communism can hope to compete again for the allegiance of men's minds.... What the 20th Congress meant to do, and may well succeed in doing, was to make Communism radioactive again.

To prefer to face a Soviet Union led by Stalin to one led by Khrushchev (or even Brezhnev) is a remarkably high degree of utter lunacy.

I'm going to give the Sixteen-Year-Old Ghosts on the Roof to read after he finishes Tanenhaus.

Will Somebody Please Stop the Insanity!!!!

Over at National Review, Larry Kudlow writes:

Larry Kudlow on Enron, Morals, and Adam Smith on National Review Online: Capitalism in this country has been under assault ever since FDR's New Deal 1930s, a time when a number of alphabet agencies attempted to control America's industrial and farming sectors. The experiment soon proved a dismal failure, with unemployment running 20 to 25 percent up until WWII...

Ummm... The implication that Roosevelt's New Deal pushed the unemployment rate up is, of course, false. The U.S. unemployment rate in the Great Depression peaked at 24.9% in 1933--before any of Roosevelt's policies had time to have any impact--and was below 20% by the end of 1935. By Pearl Harbor day the unemployment rate was 9%--still very disappointingly high, but a far cry from Kudlow's "The [New Deal] experiment... dismal failure... unemployment running 20 to 25 percent up until World War II."

He goes on:

Still, the American welfare state would grow. In the 1960s and 1970s, the murderer's row of economic morons -- LBJ, Nixon, Ford, and Carter -- in allegiance with their liberal Keynesian advisors, concocted a socialist policy mix that ultimately led to wealth-destroying big-government stagflation. Providentially, Ronald Reagan changed all that in the 1980s. The Gipper slashed tax rates, deregulated industries, and rescued the dollar, unleashing the forces of entrepreneurial capitalism...

Real deregulators will tell you that the Reagan administration helped, but that the heavy lifting on deregulation was done under the Carter administration by Alfred Kahn and company. Real international economists will point out that the strong dollar of the early 1980s was driven by Paul Volcker's high interest rate policies, which Kudlow and company strongly condemned. Slashing tax rates and creating big budget deficits, that Reagan did do--with results that weren't that great, for whatever supply-side benefits were generated by lower tax rates were more than offset by the crowding-out drag imposed on investment by the Reagan deficits. Real median hourly wages rose at 2.5% per year on average under the "murderer's row of economic morons" (booming under LBJ and Nixon, and then stagnating under Ford and Carter). They then grew at 0.5% per year under Reagan, 0.2% per year under Bush I, 1.2% per year under Clinton, and now 0.2% per year again under Bush II.

As a result, for the first time since the post-Civil War period (but for the brief Coolidge-Melon period in the 1920s), the American economic system became the envy of the world...

The Reagan years (and the years since) have been great for the overclass. But it was during the period 1942-1973 that the American economy performed best for the rest of us, and was genuinely the envy of the world.

As I've said before, the country is full with lots of excellent, thoughtful right-wing economists who would love to write for National Review. But something goes very wrong--and not just on the right. We do live in a very strange world, in which Gregg Easterbrook is Slate's "Mr. Science."

Why Oh Why Can't We Have a Better Press Corps? (Slate Edition)

Duncan Black bangs his head against the wall:

Eschaton: Um, Slate, do you really have such contempt for your readers that you publish Gregg Easterbrook under the title "Ask Mr. Science"?

Gregg Easterbrook, the man who once wrote:

Intelligent design is a sophisticated theory now being argued out in the nation's top universities. And though this idea assumes existence must have some higher component, it is not religious doctrine under the 1986 Supreme Court definition. Intelligent-design thinking does not propound any specific faith or even say that the higher power is divine. It simply holds that there must be an unseen intellect imbedded in the cosmos.

The intelligent design theory may or may not be correct, but it's a rich, absorbing hypothesis--the sort of thing that is fascinating to debate, and might get students excited about biology class to boot. But most kids won't know the idea unless they are taught it, and in the aftermath of the Kansas votes, pro-evolution dogma continues to suggest that any alternative to natural selection must be kept quiet.

Can't you find a "Mr. Science" who doesn't think science="some shit we talked about drunk while I was getting my political science and journalism degrees"?

Friday, May 26, 2006

"Welcome Aboard the Black Pearl," Said Ben Bernanke

Greg Mankiw defends Ben Bernanke's view--the Taylor rule approach to monetary policy--against Ned Phelps by assigning Ben Bernanke the role of the villainous pirate Barbosa:

Greg Mankiw's Blog: Phelps on the Taylor Rule: I think Ned exaggerates the danger here, for two reasons.

  1. If the Fed overestimates the natural interest rate (essentially the constant in the Taylor rule), it will tighten monetary policy too much. The economy would respond with a lower rate of inflation, which in turn would induce the Fed to lower interest rates. In the end, overestimating the natural interest rate would mean a steady-state inflation rate below target. This is hardly a catastrophe....
  2. Ned seems to be knocking down a strawman. I don't recall hearing anyone recommend a Taylor rule as a hard and fast rule to which the Federal Reserve would commit itself. The Taylor rule is more like a rule of thumb or a guideline for monetary policymakers, like the Pirate's Code in "Pirates of the Caribbean"...

The reference is to this line by the villain Barbosa:

First, your return to shore was not part of our negotiations nor our agreement, so I must do nothin'. And secondly, you must be a pirate for the Pirate's Code to apply, and you're not. And thirdly, the Code is more what you'd call "guidelines" than actual rules. Welcome aboard the Black Pearl, Miss Turner.

I'm with Greg on this one. They are "guidelines"...

Pwogwessivity of the Tax Code Once Again

On May 8, 2006, Edward Lazear and Katherine Baicker of the Bush administration's Council of Economic Advisers wrote in an op-ed for the Wall Street Journal that: "The president's tax cuts have made the tax code more progressive, which also narrows the difference in take-home earnings." See

This excited substantial curiosity in my circles. We knew that the Bush tax cuts had not narrowed differences between classes in take-home earnings--they had widened them. We were disturbed. We genuinely like Eddie Lazear and Katherine Baicker--very smart people working hard to make this a better country and a better world. Why were they saying something that is clearly false?

I have now heard, from sources believed but not guaranteed to be reliable that have talked to people who have talked to people who claim to know, a story about how it happened.

The document was bouncing around the CEA offices, being edited, and it hit the desk of somebody who was supposed to edit it who thought that the sentence "The president's tax cuts have made the tax code more progressive," was not accessible enough to those who were not professional economists and did not have the tax-finance definition of "progressive" in the front of their brains. So this editor added the clause "which also narrows the difference in take-home earnings," in order to explain what "made the tax code more progressive" meant. And the document then bounced its way to publication, with nobody else taking a close look at this passage relatively low down in the article. A bureaucratic SNAFU.

So this editor took a word--progressive, in the tax-finance sense--and added a clause giving its meaning. Why should this cause a problem? It causes a problem because the Bush administration has decided to use a non-standard definition of progressive. The Bush administration now defines a change in tax law as "progressive" if it increases the share of taxes paid by the rich whether or not it narrows cross-class income differentials. But nobody high up where the air is thin and where this decision to use a non-standard definition of "progressive" was made ever bothered to tell the poor schmuck who wound up editing the piece.

The moral? I guess one moral is that an individual with a good memory can be a good liar, but that a bureaucracy cannot, almost by definition. If you are going to use a non-standard definition of a word in an attempt to mislead your readers, you need to make sure that everybody on your side handling the document is in on the con. If not, embarrassing things will happen, like somebody on your side taking seriously your claim that the Bush tax cuts "have made the tax code more progressive."

Further evidence that the "which also narrows..." clause was added at the very end of the editing process comes from Greg Mankiw. Greg launched a defense of Lazear and Baicker. And he appears to have done so without reading the final version of the op-ed. Greg wrote:

Greg Mankiw's Blog: Framing and Progressivity: In today's CEA op-ed, the sentence... "The president's tax cuts have made the tax code more progressive."... [T]here is no single way to gauge changes in progressivity.... Consider a simple example.... You could say the... [change is not progressive]: ... After the tax cut, the difference in take-home pay between the two guys is larger.... You could say the... [change is progressive]: ... After the tax cut, the rich guy pays a larger share of the total tax burden.

It is impossible to say on purely economic grounds which of these perspectives is better. All of these statements are mathematically correct, even if they leave the reader with very different impressions.

Greg is all geared up to agree that the Bush tax cuts widened differences in take-home earnings, but to say that Lazear and Baicker could nevertheless truly claim that the Bush tax cuts were progressive. But that's not what the op-ed said, is it? The op-ed said that the tax cuts were progressive and that they narrowed income differentials.

So a second moral: if you're going to defend the writings of the Bush White House, to avoid embarrassment read the final version of what you're defending before you push the "submit" button.

Free Trade in College Professors!

Matthew Yglesias throws down the gauntlet:

TAPPED: THE ECONOMICS OF SELF-INTEREST. I tend to agree with the consensus in the economics profession in general, and with Alex Tabarrok in particular, in the current immigration debate. But this is a bridge too far for me: "Economists are probably also more open to immigration than the typical member of the public because of their ethics -- while economists may be known for assuming self-interested behavior wherever they look, economists in their work tend not to distinguish between us and them." That's a mighty generous self-interpretation. A skeptic might think that this has less to do with "tend[ing] not to distinguish between us and them" than with the fact that economists reap benefits from high levels of Mexican immigration.

I'll believe that this is all about altruism when I see an open letter from economists demanding that we scrap the complicated H1B visa system and instead allow unrestricted immigration of foreign college professors without all these requirements about prevailing wages, work conditions, non-displacement, good-faith recruitment of natives, etc. Obviously, there are many foreign born professors in the United States, but there could be many more, wages for academics could be lower, and college tuitions could be significantly lower. If there's really no difference between "us" and "them" economists should be leading the charge to disassemble the system of employment protections they enjoy.

--Matthew Yglesias

I'll pick up the gauntlet:

I hereby call on all governments to allow free mobility of university professors. All universities and other institutions of higher education should be allowed to hire whoever they want to reside, teach, and do research at their universities, without let or hindrance by any government whatsoever.

Why Oh Why Are We Ruled by These Liars?

Karl Zinsmeister, of the American Enterprise Institute, is the new Assistant to President Bush for Domestic Policy. He will fit right in:

Questions Arising Over Quotations Of Zinsmeister: BY JOSH GERSTEIN - Staff Reporter of the Sun: A magazine editor named to a top White House policy post, Karl Zinsmeister, altered his own quotes and other text in a published newspaper profile of him posted on the Web site of the magazine he has edited for more than a decade, the American Enterprise.... The New York Sun... editor, Molly English.... "It's reprehensible, frankly," Ms. English said. "Once this is published, it's not his property. From that point in time, he can't just pick and choose."

The version of the story posted by the American Enterprise runs under Mr. Park's byline and states that it was published in the Syracuse New Times. Mr. Zinsmeister did not respond to a phone message and an e-mail seeking comment for this article.... The Sun yesterday republished a quote from the original New Times story, in which Mr. Zinsmeister, who lives and works in upstate Cazenovia, expressed his antipathy for the nation's capital and its denizens. "People in Washington are morally repugnant, cheating, shifty human beings," the Syracuse weekly quoted him as saying.

However, in the version posted on the American Enterprise site, his quote reads differently and sweeps less broadly. "I learned in Washington that there is an 'overclass' in this country stocked with cheating, shifty human beings that's just as morally repugnant as our 'underclass,'" the revised article said. In addition, what Mr. Park described as Mr. Zinsmeister's "strong distaste for the Washington elite," became, in the later version, simply, "a distaste for the Washington elite."...

The original article quoted Mr. Zinsmeister as saying, "[Bush] said, 'I'm gonna do something for history.' To say nothing of whether it was executed well or not, but it's brave and admirable. It got depressing to have to be [in the Middle East] every couple years like cicadas." The version posted by the American Enterprise omits the suggestion that the war was poorly run, drops the insect metaphor, and substitutes nobler language. "[Bush] said, 'I'm gonna do something for history.' It's a brave and admirable attempt to improve the world," the second version said.

Mr. Park also quoted the magazine editor as saying, "I can't think of one Iraqi I met that I'm confident never lied to me." Mr. Zinsmeister's version said he passed on the comment from "one officer who'd been in Iraq for a full year."

One of the changes Mr. Zinsmeister made corrected a factual error about D-Day casualties...

Impeach George W. Bush. Impeach him now.

Daniel Gross Bangs His Head Against the Wall

The New York Times has made Daniel Gross an unhappy camper:

Daniel Gross: HEART AND SOUL: The lead of Robert Pear's story on Congressional budget battles in the New York Times reads as follows:

A battle for the soul of the Republican Party flared up in Congress this week as fiscal conservatives heightened their attack on pet projects stuffed into spending bills with the consent of House leaders.

I'm sorry, but some skirmishes over miniscule earmarks doesn't a battle for the soul make. The article describes Rep. Jeff Flake's efforts "to strip out $229,000 for dairy education in Iowa, $180,000 for hydroopnic tomatoes in Ohio, $250,000 for the wine industry in California and $6.4 million for research on wood products in 10 sates." So this rabid fiscal conservative waged a battle to slash $7 million in spending, after he and his party have racked up a few trillion dollars in debt over the last few years? What's the point of trying to cut a few million dollars when you've created massive, permanent deficits on the order of several hundred billion dollars per year? Pear doesn't ask, and doesn't tell.

On fiscal matters, the battle for the soul of Republican party was over a long, long time ago. And the spending devil won.

Why oh why can't we have a better press corps?

Unhedged Hedge Funds

Brad Setser worries that many "hedge funds" will find that they have charged too little for selling insurance against volatility to other folks:

Roubini Global Economics (RGE) Monitor: I thought hedge funds were supposed to be hedged: Wasn't a key selling point of hedge funds that they could make money even when the (US) stock market was falling, unlike mutual funds?... I fully realize hedge funds do a whole lot of different things these days, and that in many ways the name "hedge fund" doesn't tell you much about what a hedge fund actually does.... Among my current worries: the temptation to make money (lots of it) by selling insurance against a more volatile world when volatility was falling may have been too great for some folks to resist. Paul McCulley:

With policy makers removing sources of volatility risk from markets, actual volatility falls, which like gravity, pulls risk premiums -- the market compensation for underwriting volatility -- lower. More specifically, P/Es rise, term premiums narrow, credit spreads tighten, and implied volatilities in options fall. As this process unfolds, the forward-looking return on risky assets falls, but their real time actual return is heady, as lower risk premiums are capitalized. This is a perfect prescription for bubbles.

Well said. The real time return -- not the forward looking compensation for taking risk -- may have come to dominate too many (financial) decisions. I am one of those curmudgeons who thinks a more unbalanced world will likely prove to be a more volatile world. We will see.

Ben Bernanke May Have an Interesting Time

Kashyap Mansouri and David Wessel both fear that this is the Year of Living Dangerously:

Angry Bear: David Wessel of the Wall Street Journal is feeling bearish this morning:

Every so often, economic forces and financial markets collide in ways that make for a tumultuous year -- the stock market crash in 1987, the Asian financial crisis and bond-market paralysis in 1998, the bursting stock bubble in 2000.

Suddenly, this year has all the ingredients of a Big One.

The dollar is sinking. Global stock markets are volatile. Bond-market interest rates are climbing. Oil prices are up. Gold is at a quarter-century high. Housing prices are softening. Protectionist pressures are intensifying. General Motors Corp. is a candidate for bankruptcy court. Iran may be on the verge of going nuclear. A nasty, partisan congressional election looms. And a new Federal Reserve chairman's inflation-fighting resolve is being tested.

Alan Greenspan certainly picked a good time to retire.

Wessel neglected to mention the fuel that the US's enormous current account balance adds to this unignited fire, but even so, he seems to have reasons enough for concern. It's not clear what the spark will be, or even whether there will be a spark at all. There may not be. But I think that Wessel is right to suggest that there is enough dry wood and kindling piled together to give 2006 the potential to generate more than a comfortable amount of heat and flames.


Well, at least things still look better than they looked in 1916... or 1926... or 1936... or 1946... or 1956... or 1966... or 1976... or 1986...

Thursday, May 25, 2006


Olivia Nelis informs me:

Poland has banned tampon advertisements on television for the duration of the Pope's visit.

Why Oh Why Are We Ruled by These Liars?

Karl Rove lies about everything department:

White House at Cross Purposes: Steven Thomma writes for Knight Ridder Newspapers: "It's not just the way he's doing his job. Americans apparently don't like President Bush personally much anymore, either."... But what about Karl Rove's insistence last week that Republican National Committee polls show Bush's personal approval rating higher than 60 percent?

Thomma writes: "The Republican National Committee wouldn't release a copy of the poll. Spokeswoman Tracey Schmitt said she couldn't explain why public polls show a decline in Bush's personal popularity except to say that, 'you can ask a poll question four different ways and get four different answers.'"

Calvin and Hobbes

Summarize-and-Link vs. Link

Mark Thoma comes down on the side of the first: summarize-and-link

One brief note. I'd just post links to stuff like most do, but if you look at outclicks, surprisingly few people click through. If it's there (and not tucked into a continuation), I think they read it (but more than 400-500 words is iffy). If they have to click through, they don't. So I try to do the summary thing even though it's more work. Only way to get some points heard I think. I think about how I read other blogs, lots of scanning, quick reading, then move on.

That's consistent with what our computer design people say - I was on the UO web page design committee - apparently getting people to click past the second level is generally fairly hard.

Me, I'm much more an extensively-quote-then-summarize-critique-and-link person myself.

The Inflow of Capital to America Is Public Sector, Not Private Sector

Brad Setser agrees with Marty Feldstein:

RGE - Martin Feldstein is right: Felstein has argued that more "competitive" dollar would contribute to reducing the US trade deficit, and at least help to slow the rise in the US current account deficit. I agree -- though I would think the case for Asian and Gulf appreciation is stronger than the case for Euro appreciation. Dollar depreciation alone isn't enough... but it is a part of the process....

Feldstein also has argued that the US data understates central bank financing of the United States. Throw in financing from the oil states' investment authorities as well. And the more I look at the data, the stronger Feldstein's argument that the US data understates official inflows looks.

For one, recorded inflows of around $220b seem low relative to global reserve accumulation (after adjusting for valuation changes, and including all Saudi foreign assets) of around $660-670b. There is no doubt that central banks bought more euros and pounds and yen in 2005 than they did in 2004. Recorded purchases of euros, yen, pounds and the like in the IMF's COFER data... leaving $350b for the dollar.... However, the IMF COFER data exludes reserves China shifted to its state banks (and a smaller currency swap), Taiwan's reserves and the increase in the Saudi-Monetary authorities non-reserve foreign assets. Add those in and global reserves grew by about $660-70b by my estimates. So even if the world's central banks bought $250b of euros, pounds and yen in 2005, that still leaves a bit over $400b for the dollar.... And the $660-70b total leaves out the Norwegian oil funds, and the oil money parked in the Kuwait investment authority, Abu Dhabi's investment authority and so on.... So I strongly suspect the US data understates official financing by at least $100b, maybe more. And that sets aside the question of what the world's banks are doing with all the dollars that central banks have placed on deposit....

I plotted the increase in global reserves against (net) debt inflows to the US -- that is foreign purchases of US debt net of US purchases of foreign debt -- and recorded official inflows to the US. It turns out that official inflows tracked global reserve growth until 2004 -- which makes sense, because all Japanese flows show up in the official US data -- but not in 2005. There is a much closer match between overall reserve growth and net foreign purchases of US debt.... It certainly seems like the US data misses some official flows.

In the part of the Treasury's Foreign Exchange report that no one reads, the Treasury argued -- based on the official data -- that private demand for US assets picked up in 2005. They are right. But they insist a bit too much.... $400b in net private flows from foreign investors to the US in 2005 is more than the $250b (if you believe the official data) or $150b (if you believe me/ the BIS and think offshore dollar deposits from central banks indirectly helped finance the US) in private financing for the US in 2004. But $400b is not enough to cover a $800b deficit. The US still needed $400b from its friends in the governments of China, Russia and the Middle East.

And all the available data suggests it will need far more in 2006.

Not, mind you, that I would be incredibly happy if the U.S. current-account deficit were financed entirely by private capital inflows. The Lawson Doctrine has a spotted history.

Waas: Rove-Novak Call Was Concern...

Well, perhaps Karl Rove will be indicted. Murray Waas reports:

NATIONAL JOURNAL: Rove-Novak Call Was Concern To Leak Investigators (05/25/2006): On September 29, 2003, three days after it became known that the CIA had asked the Justice Department to investigate who leaked the name of covert CIA officer Valerie Plame, columnist Robert Novak telephoned White House senior adviser Karl Rove to assure Rove that he would protect him from being harmed by the investigation, according to people with firsthand knowledge of the federal grand jury testimony of both men....

Sources said that Ashcroft received a special briefing on the highly sensitive issue of the September 29 conversation between Novak and Rove because of the concerns of federal investigators that a well-known journalist might have been involved in an effort to not only protect a source but also work in tandem with the president's chief political adviser to stymie the FBI.

Rove testified to the grand jury that during his telephone call with Novak, the columnist said words to the effect: "You are not going to get burned" and "I don't give up my sources," according to people familiar with his testimony. Rove had been one of the "two senior administration" officials who had been sources for the July 14, 2003, column in which Novak outed Plame as an "agency operative." Rove and Novak had talked about Plame on July 9, five days before Novak's column was published.... Asked during his grand jury appearance his reaction to the telephone call, Rove characterized it as a "curious conversation" and didn't know what to make of it, according to people familiar with his testimony....

Foremost among the reasons that federal investigators harbored suspicions about the September 29 conversation was its timing. Three days earlier, NBC broke the news that the CIA had asked the Justice Department to launch a probe into the leaking of Plame's identity. During the noon news briefing at the White House on September 29, various reporters asked spokesman Scott McClellan repeatedly whether Justice was indeed investigating the Plame leak. "If someone leaked classified information of the nature that has been reported, absolutely, the president would want it to be looked into," McClellan responded. "And the Justice Department would be the appropriate agency to do so."... A second reason that federal investigators were suspicious, sources said, is that they believed that after the September 29 call, Novak shifted his account of his July 9, 2003, conversation with Rove to show that administration officials had a passive role in leaking Plame's identity.

On July 22, 2003 -- eight days after the publication of Novak's column on Plame -- Newsday reporters Timothy Phelps and Knut Royce quoted Novak as telling them in an interview that it was White House officials who encouraged him to write about Plame. "I didn't dig it out, it was given to me," Newsday quoted Novak as saying about Plame. "They thought it was significant. They gave me the name, and I used it."... Novak did not speak publicly on the matter again until September 29.... "Nobody in the Bush administration called me to leak this. In July, I was interviewing a senior administration official on Ambassador [Joseph C.] Wilson's report [on his Niger trip], when [the official] told me the trip was inspired by his wife, a CIA employee working on weapons of mass destruction. Another senior official told me the same thing.....

In explaining the discrepancy between what he told Newsday a week after he outed Plame and everything he said later regarding Plame, Novak has said that Phelps "badly misquoted" him. Phelps, who is Newsday's Washington bureau chief, denied that, saying he took accurate notes of his interview with Novak and reported exactly what Novak told him....

A third reason that investigators are said to be concerned about a possible cover story was the grand jury testimony of both Novak and Rove about their July 9, 2003, conversation. On that day, Novak was still reporting for his July 14 column. Novak and Rove have testified that it was Novak, not Rove, who raised the subject of Plame's CIA job and Wilson's trip to Niger, according to people familiar with the testimony of both men. Rove has testified that he simply told the columnist that he had heard much the same information about Plame, which perhaps was nothing more than an unsubstantiated rumor. Novak's account of the July 9 call matched Rove's. Investigators were suspicious that, if this version was true, the columnist would have relied on Rove as one of his two sources to out Plame as an "agency operative."

Ashcroft was advised during the briefing that investigators had strong reservations about the veracity of the Novak and Rove accounts of the July 9 conversation. If Rove had simply said that he heard the same information that Novak did, investigators wondered why Novak would have relied on such an offhand comment as the basis for writing the column. Investigators also wondered why Novak had not at least asked Rove about what else he knew about Plame, sources said....

Rove and Novak, investigators suspect, might have devised a cover story to protect Rove because the grand jury testimony of both men appears to support Rove's contentions about how he learned about Plame. Rove has testified that he did not learn that Plame was a CIA operative from classified information, that he was not part of a campaign with Libby or other White House officials to discredit Wilson or out Plame, and that any information that he provided Novak and Cooper about Plame's CIA job was only unsubstantiated gossip....

As of now, it appears unlikely that Fitzgerald will bring charges related to the September 29 conversation, according to Richman and other legal experts. Even if the prosecutor and his investigative team conclude that Rove and Novak did indeed devise a cover story to protect Rove, it is simply too difficult to prove what happened in a private conversation between two people. A longtime friend of Rove, who doesn't have firsthand knowledge of the CIA leak case but who knows both Rove and Novak well, doubts that Fitzgerald could get a conviction -- "as long as neither [Novak nor Rove] breaks, and there is no reason for them to, no matter how much evidence there is. These are two people who go way back, and they are going to look out for each other."

Richman says that a grand jury could consider circumstantial evidence in weighing whether to bring charges, so long as there is also other substantial evidence, and that the prosecutor can present that evidence at trial. "It's possible that prosecutors would view their [September 29] conversation as the beginning of a conspiracy to obstruct justice, given that they had reason to believe that an investigation would soon be under way," says Richman. "It's even more likely that this conversation would help prosecutors shed light on Rove's motivations and intent when he later spoke to investigators."

Fortunately, the Evil that Harold Hitchings Burbank Did Did Not Live After Him

Huh. David Warsh has a story I did not know.

Isn't it time for Harvard to retire the Harold Hitchings Burbank Professorship of Political Economy? I can't imagine anybody today wanting to be Burbank Professor.

Brayden King reports:

Brayden King: knowledge and the inefficient market of ideas: May 25th, 2006: I've been reading David Warsh's Knowledge and the Wealth of Nations over the last few days. The book details the discovery of economic growth theory, outlining the development of the increasing returns concept. Even if you're not interested in economics, this is an interesting book for academic folks. Warsh's book helps us better understand how ideas spread and gain popularity in this strange institution of academia. As Nicolai recently mentioned, the market for ideas is anything but efficient. The historical view this book helps us to see the sources of some of these inefficiencies.

Competition for the best ideas is grounded in networks of real people who have interests that are semi-independent from the ideas themselves. In other words, academics are cliquish. These cliques often times keep good ideas from receiving the recognition they're due or they promote the durability of bad ideas that should have faded long ago. Take, for instance, the experience of Paul Samuelson - an economist now recognized as one of the all-time-greats but who experienced frustration at getting his ideas out early in his career.

Ahead lay Samuelson's various triumphs.... Behind him at Harvard [where he had recently received his PhD] erupted a series of battles that cost the great old university its leadership in economics. The resistance to mathematics continued. Although Harvard University Press was compelled by prior agreement to publish Foundation, because Samuelson's dissertation had won the economics department's prize for best thesis, Chairman Harold Burbank ordered the laboriously hand-set plates (with their thousands of equations) destroyed after a single printing of 1,500 copies. That meant no revisions were possible for the next thirty-five years. Then, too, the Veritas Society, a group of alumni dedicated to opposing Keynesian influences, waged a witch hunt against the department... (pg. 120)

Samuelson, of course, had the last laugh, but the struggle represents a common one depicted in the book: people come up with novel ideas that do not gain immediate recognition due to conflicts of agenda. As Max Planck, the physicist, once remarked, "Science advances funeral by funeral" (pg. 32).

Lay, Skilling Convicted in Enron Collapse

I could never figure out why they took this case to trial:

Lay, Skilling convicted in Enron collapse - Yahoo! News: By KRISTEN HAYS, AP Business Writer 10 minutes ago: HOUSTON - Former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling were convicted Thursday of conspiracy to commit securities and wire fraud in one of the biggest business scandals in U.S. history.

The verdict put the blame for the 2001 demise of the high-profile energy trader, once the nation's seventh-largest company, squarely on its top two executives. It came in the sixth day of deliberations following a federal criminal trial that lasted nearly four months. Lay was also convicted of bank fraud and making false statements to banks in a separate, non-jury trial before U.S. District Judge Sim Lake related to Lay's personal banking.... Enron's demise alone took with it more than $60 billion in market value, almost $2.1 billion in pension plans and 5,600 jobs.

Enron founder Lay was convicted Thursday on all six counts against him in the corporate trial. Former Chief Executive Skilling was convicted on 19 of the 28 counts, including one count of insider trading, and acquitted on the remaining nine...

Why Oh Why Can't We Have a Better Press Corps? (Washington Post Mene Mene Tekel Upharsin Edition)

The Lord knows that Hillary Rodham Clinton is not my favorite Democratic politician. She is very smart, extremely hard-working, immensely public-spirited, has her head screwed on straight, and understands what our national and global interests are. She is also not very good at telling which of the people around her are telling things straight and which are telling her pleasing lies. (Of course, George W. Bush is infinitely worse than she is along any possible dimension.

But surely she deserves better than David Broder. David Broder talks about the "two sides" of Hillary Rodham Clinton.

The first side: she knows and cares and has thought deeply and widely about public policy:

The Shadow of a Marriage: The two sides of Hillary Rodham Clinton -- the opposites that make her potential presidential candidacy such a gamble -- came into sharp focus Tuesday morning at the National Press Club. For the better part of an hour, the senator from New York held forth in a disquisition on energy policy that was as overwhelming in its detail as it was ambitious in its reach.... For the next 45 minutes, she read a wonkish text that covered every aspect of the energy situation, down to and including a description of the "geologic sequestration" potential for reducing global warming and making better use of coal....

It turns out that the senator has been thinking about energy issues for 35 years -- since she edited a fellow student's paper on OPEC at Yale Law School. And with her disciplined mind, she can fit separate pieces -- everything from mileage standards for cars to biomass and wind power -- into a rational plan that will, she says, not only move the nation substantially toward energy independence but improve living standards for almost every American.

The tone was not partisan; there were bows to Republican Sen. Richard Lugar of Indiana for his proposal to expand the Strategic Petroleum Reserve and a polite challenge to President Bush to help the U.S. auto industry meet its foreign competition.

At the end of her talk, little time remained for questions, and the first three simply asked for clarification of points in the energy plan....

The second side: David Broder and his friends like to sneak into her bedroom, go through her hamper, and sniff her underwear:

But the buzz in the room was not about her speech -- or her striking appearance in a lemon-yellow pantsuit -- but about the lengthy analysis of the state of her marriage to Bill Clinton that was on the front page of that morning's New York Times. The article, by Patrick Healy... touched only lightly on the former president's friendship with Canadian politician Belinda Stronach.... But for all the delicacy of the treatment, the very fact that the Times had sent a reporter out to interview 50 people about the state of the Clintons' marriage and placed the story on the top of Page One was a clear signal -- if any was needed -- that the drama of the Clintons' personal life would be a hot topic if she runs for president.

The Clintons, according to the Times, urged friends not to answer questions about the relationship and declined to be interviewed.... Three times in the question-and-answer session, she referred to her husband as "Bill," praising him for seeing that his library in Little Rock incorporated a lot of energy-saving features.

Other than that, the elephant in the room went unmentioned.

God forbid that David Broder should actually write about public policy. He can't, after all, listen to a 4000 word speech without finding it "overwhelming in its detail."

I'm swinging around to the view that there won't *be* a Washington Post in fifteen years. What value will it offer?

Toyota Leapfrogs GM

Mark Thoma finds a piece by Lee Hawkins and Norihiko Shirouzu about the disabilities of GM:

Economist's View: Leapfrogging: A look at the advantages a newly constructed Toyota auto assembly plant will have over an existing GM plant:

"A Tale of Two Auto Plants," by By Lee Hawkins Jr. and Norihiko Shirouzu, WSJ: For more than 50 years, General Motors Corp. has built cars and trucks here at Texas' only auto assembly plant... The sprawling factory, one of GM's best, employs 3,000 people and buys myriad parts and services from local suppliers to build the big sport utility vehicles that have been among the company's most profitable -- including "the national car of Texas," the Chevrolet Suburban.

Now, though, a rival has come deep into the heart of Texas to battle GM. At a 2,000-acre site in San Antonio, Toyota Motor Corp. is getting ready to start production later this year of the newest generation of Tundra pickup trucks in a plant that will use the Japanese car maker's most advanced machinery and methods.

Separated by 280 miles, these two factories bring into stark relief the competitive problems plaguing GM... In no small part, the world's largest auto maker's difficulties stem from the fact that its challengers can start fresh, unencumbered by old plants and old obligations that limit innovation and add ... to the cost of each vehicle...

Toyota appears to be working aggressively to make the most of its advantages. The company has been able to deploy the latest know-how to fit various manufacturing processes ... into a relatively compact space and make the plant more efficient.

On the other hand, ... GM can't maximize its success by adopting its newest, best methods... "Arlington is doing a great job for GM, but they can't have an optimal layout, and their footprint is landlocked because a world with subdivisions and expressways has grown up around it...," Mr. Robinet says...

Even so, Arlington ranked No. 1 among North American large-SUV factories last year, at 22.39 assembly labor hours per vehicle... Two decades ago, GM factories suffered from a sizable gap compared with similar Toyota factories... Recent ... surveys show that this gap has narrowed substantially. But GM's productivity gains are offset by higher hourly labor costs and the burden it carries for benefits owed to retirees.

In Arlington, GM pays union-scale wages of ... about $1,800 ... per vehicle. ... Harbour Consulting President Ron Harbour estimates Toyota's total hourly U.S. labor costs, with benefits, at about $35 an hour -- less than half of GM's rates. The brand-new plant won't have any direct retiree costs for many years. So if the San Antonio factory does no better than match the Arlington plant in productivity, it could still enjoy a labor cost advantage of about $1,000 per vehicle, a substantial sum in industry terms...

Why Oh Why Can't We Have a Better Press Corps? (David Leonhardt of the New York Times Edition)

Ah. David Leonhardt writes:

This Glass Is Half Full, Probably More - New York Times: David Leonhardt: Wages haven't been falling.... Up and down the economic spectrum, they have been higher in the last few years than they were at any point in the 1980's or 90's, according to inflation-adjusted numbers from the Economic Policy Institute. The median Kansas worker made $13.43 an hour in 2004, 11 percent more than in 1979, which might help explain why many people don't vote on bread-and-butter issues anymore.

Now, an 11 percent raise over the course of a generation -- which is similar to the national increase -- is not especially impressive. It's certainly smaller than the increase workers received in the 25 years leading up to 1979, and for the last few years, wages have not risen at all. But they did rise during the 1990's boom, and pretending otherwise does not jibe with most people's experiences....

Many luxuries of earlier generations -- owning a three-bedroom house, flying across the country, calling relatives who live overseas -- are staples of middle-class life. If all this doesn't add up to a rise in living standards, I'm not sure what the phrase means...

This will not do.

Our three-bedroom houses are further out from the center than our parents'smaller houses were. We spend a lot more time stuck in traffic. I'm higher up in the American income distribution now than my parents were when I was my children's age, but I couldn't touch their house. I certainly believe that my family is better off now than we were back then, but this is because I very much like the replacement of book-intellectual-culture by internet-intellectual-culture that has accompanied the extraordinary technological revolutions in computers and communications. Others with different preferences would think differently.

To try to balance and appropriately weight all the changes of the past generation, we construct index numbers: median national real hourly wages up $1.25--11%--since 1979; but median national real hourly wages for males down $0.50--3%--since 1979. And real hourly wages for males at the 95th percentile up by $10 an hour--30%.

Men with less than a high school diploma: down from $13.93 of today's dollars an hour in 1979 to $11.04 today. Men with just a high school diploma: down from $16.32 to $15.07. Men with some college but not a bachelor's degree: up from $16.98 to $17.03. Women with less than high school: down from $8.94 to $8.547. Women with high school: up from $10.60 to $11.87. Women with some college: up from $11.38 to $13.60.

To get an even half-complete picture of what has been happening in the middle of the income distribution, you need to know four more things:

  • First, at least as important as the (small) rise in median wages and salaries since the 1970s has been a large rise in risk: Peter Gosselin makes a convincing case that America's middle class is anxious today because it knows that its middle-class status is surprisingly fragile. See
  • Second, these real wage numbers have been calculated using the CPI--the consumer price index. Use of the CPI understates economic growth: as relative prices change, people substitute toward items that become cheaper (i.e., iPods) and away from items that become more expensive (i.e., houses with short commuting times), and so wind up better off than CPI-based measures of real income indicate. How much is this effect worth? My guess is between half a percent and a percent a year--say ten to twenty five percent since 1979. See
  • Third, to the extent that income is a relative rather than an absolute concept--and to a big extent income is a relative rather than an absolute concept--America's middle class will become discontented when the gap between them and America's rich overclass widens. The gap between America's middle class and the rich overclass has widened extraordinariy over the past generation. And this is, I think, doing a lot to mask increasing absolute living standards.
  • Fourth, America over the past generation has done a lousy job in translating the inventions of our scientists and engineers into boosts to the living standards of average Joes and Janes. Eleven percent over twenty-five years is only about one-fourth of what we would have seen, given underlying technological progress, if the relative income distribution had remained the same.

In sum, Leonhardt says that median incomes have risen by eleven percent and that this makes today "the best of times in many ways. Americans are wealthier than previous generations... enjoy a higher standard of living. The good old days simply weren't as good as the present day.... [B]y most broad measures -- wages, average life span, crime, education levels, home ownership and racial and gender equality, to name a few--life in this country has clearly improved over the last generation." It's much more complicated than that: America's middle class sees itself as insecure--a feature that doesn't show up in averages or medians but that is very important in assessing welfare. It sees itself as facing a broader gap than ever between it and the overclass--which means that the children of the overclass are starting life's race with an even bigger head start. And as for Leonhardt's belief that "up and down the economic spectrum, [wages] have been higher in the last few years than they were at any point in the 1980's or 90's," that's not quite right: you can't claim that real wages and salaries for white males without much education are any higher today than they were a generation ago.

It's not that we are in general poorer than we were a generation ago (although unskilled males probably are). It's that we've been wasting a great deal of the potential benefits that should have accrued to us from the ongoing march of science and technology.

Now Leonhardt wants to take this in a political direction:

Democratic politicians just don't seem comfortable talking about the ways that overall living standards have risen, focusing instead on the recent stagnation in wages for rank-and-file workers. "We do talk negative about the economy," Rep. Rahm Emanuel, an Illinois Democrat, told me yesterday, adding that it comes in part with being the opposition party. There is a fear that any good news will somehow help President Bush, and there is also the admirable liberal tradition of agitating for the little guy, a tradition that helped end the Depression, crush Jim Crow and open up the economy to women.

But the Democrats' approach has a downside. With Mr. Bush less popular than he has ever been, they have become even more downbeat about the economy at a time when more than half of Americans rate it as good.... A couple of weeks ago, the spokesman for one House candidate went one better, saying: "This economy is terrible. Republicans are using lies, damn lies and statistics to say otherwise." In a country founded on optimism, this is a tough sell...

But Leonhart gives no examples. Democratic politicians say stridently that George W. Bush has mismanaged the economy--as he certainly has. But John Kerry doesn't think the country was worse off than in the 1970s. Rahm Emmanuel certainly doesn't buy into Leonhardt's proposition that the country is worse off and poorer than it was back in the 1970s. And dollars will get you doughnuts that the unnamed "spokesman for one House candidate" doesn't do so either.

In fact, Leonhardt quotes only one Democratic politician at any length:

Senator Barack Obama, an Illinois Democrat, has become something of a rock star in the last two years, and I think a big reason is that he speaks eloquently about all the economic progress the country has made and all the problems it faces. When you listen to him, you have no doubt that too many people are still struggling.... But Mr. Obama doesn't confuse the new insecurity with a general decline in the quality of life, and he insists... that doing nothing about disappearing pensions and blue-collar jobs is simply not an option. "It's not how our story ends -- not in this country. America is a land of big dreamers and big hopes," he said at a college graduation last year. "And it is because our dreamers dreamed that we have emerged from each challenge more united, more prosperous and more admired than before."

I was taught in high school to be very distrustful of people who have no examples to cite: if you are going to criticize the Whig interpretation of history, you had better know something about some Whig historians.

So I emailed David Leonhardt to find out which Democratic politicians he was thinking of. His reply:

Thank you for taking the time to write. I read every e-mail that comes to this account and appreciate feedback.

If you are looking for details on research mentioned in the column, please go to I often post studies and other information on that web site.

David Leonhardt

We really deserve better than this.

Wednesday, May 24, 2006

The Family as Firing Offense: A Nice Piece by the Washington Post's Ruth Marcus

Family and medical leave. Ruth Marcus writes:

The Family as Firing Offense: The school nurse and I are on a first-name basis these days. "Hi, Ruth," she says with a practiced tone, regret blended with calm. "It's Elizabeth" -- and, because she's a pro, immediately, "Not an emergency." And then she relates the ailment du jour -- Julia with suspected strep, again; Emma with a wire poking out of her braces, again. So I sigh, pack up my papers (or, less frequently, call my husband, and he packs up his) and head over to school.

This may sound like it's going to be one of those self-pitying Mother's Day columns. It's not. I've done my fair share of agonizing in print about the implacable tensions between work and family, but I'm moved this Mother's Day to feel rather sheepish about such laments.

The reason for my embarrassment is a report by the Center for WorkLife Law at the University of California at Hastings: "One Sick Child Away From Being Fired: When Opting Out is Not an Option." With that stark title, the report punctures the entitled, self-referential perspective from which journalists tend to write about working mothers.

As the author, law professor Joan C. Williams, writes, "The media tend to cover work/family conflict as the story of professional mothers 'opting out' of fast-track careers" -- an "overly autobiographical approach" that, however unintentionally, misrepresents the full nature of the problem and skews the discussion of potential solutions.

Guilty as charged.

Williams studied almost 100 union arbitrations that, she writes, "provide a unique window into how work and family responsibilities clash in the lives of bus drivers, telephone workers, construction linemen, nurse's aides, carpenters, welders, janitors and others." Many are mothers, but this is not just a female problem. Divorced fathers, and families that patch together tag-team care, with parents working different shifts, are similarly vulnerable. Indeed, nearly everyone is a potential victim of child-care plans gone awry: Among working-class couples, only 16 percent have families in which one parent is the breadwinner and the other stays home.

The stories Williams relates are foreign to those of us lucky enough to have flexible jobs and understanding bosses -- for whom it's no big deal to step out in the middle of the day to go to the school play. A bus driver is fired when she arrives three minutes late because of her son's asthma attack; a packer loses her job for leaving work because her daughter is in the emergency room with a head injury. A police officer is suspended for failing to report for unscheduled duty; she had arranged baby-sitting for her three children for her regular 4 p.m. shift, but couldn't -- without notice -- find baby-sitting for the noon-to-4 slot she'd been ordered to work...

History Lesson: Tail-Gunner Joe, "A Conspiracy so Immense"

William F. Buckley says: "McCarthy's record is... not only much better than his critics allege, but, given his metier, extremely good.... [he] should not be remembered as the man who didn't produce 57 Communist Party cards but as the man who brought public pressure to bear on the State Department to revise its practices and to eliminate from responsible positions flagrant security risks."

Elliot Abrams says: "McCarthy did not need to show that specific employees were guilty of espionage; they needed only to show that there was some evidence that an employee was a security or loyalty risk, and that the State Department... had willfully overlooked it.... What were the charges? They ranged from accusations of actual espionage--handing secret documents over to Soviet agents--to involvement in dozens of Communist-front organizations.... Buckley and Bozell asked, 'Did McCarthy present enough evidence to raise reasonable doubt as to whether all loyalty and security risks had been removed from the State Department?' The verdict rendered here is that he did. In most of his cases McCarthy adduced persuasive evidence; the State Department's efforts stood condemned; and the screams of 'Red Scare' were efforts to occlude the truth."

Here's what Joe McCarthy says:

Tail Gunner Joe: Joe McCarthy's Senate speech of June 14, 1951:

How can we account for our present situation unless we believe that men high in this Government are concerting to deliver us to disaster? This must be the product of a great conspiracy, a conspiracy on a scale so immense as to dwarf any previous such venture in the history of man. A conspiracy of infamy so black that, when it is finally exposed, its principals shall be forever deserving of the maledictions of all honest men.

Who constitutes the highest circles of this conspiracy? About that we cannot be sure. We are convinced that Dean Acheson, who steadfastly serves the interests of nations other than his own, the friend of Alger Hiss, who supported him in his hour of retribution, who contributed to his defense fund, must be high on the roster. The President? He is their captive. I have wondered, as have you, why he did not dispense with so great a liability as Acheson to his own and his party's interests. It is now clear to me. In the relationship of master and man, did you ever hear of man firing master? Truman is a satisfactory front. He is only dimly aware of what is going on.

I do not believe that Mr. Truman is a conscious party to the great conspiracy, although it is being conducted in his name. I believe that if Mr. Truman bad the ability to associate good Americans around him, be would have behaved as a good American in this most dire of all our crises.

It is when we return to an examination of General Marshall's record since the spring of 1942 that we approach an explanation of the carefully planned retreat from victory, Let us again review the Marshall record, as I have disclosed it from all the sources available and all of them friendly. This grim and solitary man it was who, early in World War II, determined to put his impress upon our global strategy, political and military.

It was Marshall, who, amid the din for a "second front now" from every voice of Soviet inspiration, sought to compel the British to invade across the Channel in the fall of 1942 upon penalty of our quitting the war in Europe.

It was Marshall who, after North Africa had been secured, took the strategic direction of the war out of Roosevelt's hands and - who fought the British desire, shared by Mark Clark, to advance from Italy into the eastern plains of Europe ahead of the Russians.

It was a Marshall-sponsored memorandum, advising appeasement of Russia In Europe and the enticement of Russia into the far-eastern war, circulated at Quebec, which foreshadowed our whole course at Tehran, at Yalta, and until now in the Far East.

It was Marshall who, at Tehran, made common cause with Stalin on the strategy of the war in Europe and marched side by side with him thereafter.

It was Marshall who enjoined his chief of military mission in Moscow under no circumstances to "irritate" the Russians by asking them questions about their forces, their weapons, and their plans, while at the same time opening our schools, factories, and gradually our secrets to them in this count.

It was Marshall who, as Hanson Baldwin asserts, himself referring only to the "military authorities," prevented us having a corridor to Berlin. So it was with the capture and occupation of Berlin and Prague ahead of the Russians.

It was Marshall who sent Deane to Moscow to collaborate with Harriman in drafting the terms of the wholly unnecessary bribe paid to Stalin at Yalta. It was Marshall, with Hiss at his elbow and doing the physical drafting of agreements at Yalta, who ignored the contrary advice of his senior, Admiral Leahy, and of MacArtbur and Nimitz in regard to the folly of a major land invasion of Japan; who submitted intelligence reports which suppressed more truthful estimates in order to support his argument, and who finally induced Roosevelt to bring Russia into the Japanese war with a bribe that reinstated Russia in its pre-1904 imperialistic position in Manchuria-an act which, in effect, signed the death warrant of the Republic of China.

It was Marshall, with Acheson and Vincent eagerly assisting, who created the China policy which, destroying China, robbed us of a great and friendly ally, a buffer against the Soviet imperialism with which we are now at war.

It was Marshall who, after long conferences with Acheson and Vincent, went to China to execute the criminal folly of the disastrous Marshall mission.

It was Marshall who, upon returning from a diplomatic defeat for the United States at Moscow, besought the reinstatement of forty millions in lend-lease for Russia.

It was Marshall who, for 2 years suppressed General Wedemeyer's report, which is a direct and comprehensive repudiation of the Marshall policy.

It was Marshall who, disregarding Wedemeyer's advices on the urgent need for military supplies, the likelihood of China's defeat without ammunition and equipment, and our "moral obligation" to furnish them, proposed instead a relief bill bare of military support.

It was the State Department under Marshall, with the wholehearted support of Michael Lee and Remington in the Commerce Department, that sabotaged the $125,000,000 military-aid bill to China in 194S.

It was Marshall who fixed the dividing line for Korea along the thirty-eighth parallel, a line historically chosen by Russia to mark its sphere of interest in Korea.

It is Marshall's strategy for Korea which has turned that war into a pointless slaughter, reversing the dictum of Von Clausewitz and every military theorist since him that the object of a war is not merely to kill but to impose your will on the enemy.

It is Marshall-Acheson strategy for Europe to build the defense of Europe solely around the Atlantic Pact nations, excluding the two great wells of anti-Communist manpower in Western Germany and Spain and spurning the organized armies of Greece and Turkey-another case of following the Lattimore advice of "let them fall but don't let it appear that we pushed them."

It is Marshall who, advocating timidity as a policy so as not to annoy the forces of Soviet imperialism in Asia, had admittedly put a brake on the preparations to fight, rationalizing his reluctance on the ground that the people are fickle and if war does not come, will hold him to account for excessive zeal.

What can be made of this unbroken series of decisions and acts contributing to the strategy of defeat? They cannot be attributed to incompetence. If Marshall were merely stupid, the laws of probability would dictate that part of his decisions would serve this country's interest. If Marshall is innocent of guilty intention, how could he be trusted to guide the defense of this country further? We have declined so precipitously in relation to the Soviet Union in the last 6 years. How much swifter may be our fall into disaster with Marshall at the helm? Where Will all this stop? That is not a rhetorical question: Ours is not a rhetorical danger. Where next will Marshall carry us? It is useless to suppose that his nominal superior will ask him to resign. He cannot even dispense with Acheson.

What is the objective of the great conspiracy? I think it is clear from what has occurred and is now occurring: to diminish the United States in world affairs, to weaken us militarily, to confuse our spirit with talk of surrender in the Far East and to impair our will to resist evil. To what end? To the end that we shall be contained, frustrated and finally: fall victim to Soviet intrigue from within and Russian military might from without. Is that farfetched? There have been many examples in history of rich and powerful states which have been corrupted from within, enfeebled and deceived until they were unable to resist aggression. . . .

It is the great crime of the Truman administration that it has refused to undertake the job of ferreting the enemy from its ranks. I once puzzled over that refusal. The President, I said, is a loyal American; why does he not lead in this enterprise? I think that I know why he does not. The President is not master in his own house. Those who are master there not only have a desire to protect the sappers and miners - they could not do otherwise. They themselves are not free. They belong to a larger conspiracy, the world-wide web of which has been spun from Moscow. It was Moscow, for example, which decreed that the United States should execute its loyal friend, the Republic of China. The executioners were that well-identified group headed by Acheson and George Catlett Marshall.

How, if they would, can they, break these ties, how return to simple allegiance to their native land? Can men sullied by their long and dreadful record afford us leadership in the world struggle with the enemy? How can a man whose every important act for years had contributed to the prosperity of the enemy reverse himself? The reasons for his past actions are immaterial. Regardless of why he has done what be did, be has done it and the momentum of that course bears him onward. . . .

The time has come to halt this tepid, milk-and-water acquiescence which a discredited administration, ruled by disloyalty, sends down to us. The American may belong to an old culture, he may be beset by enemies here and abroad, he may be distracted by the many words of counsel that assail him by day and night, but he is nobody's fool. The time has come for us to realize that the people who sent us here expect more than time-serving from us. The American who has never known defeat in war, does not expect to be again sold down the river in Asia. He does not want that kind of betrayal. He has had betrayal enough. He has never failed to fight for his liberties since George Washington rode to Boston in 1775 to put himself at the head of a band of rebels unversed in war. He is fighting tonight, fighting gloriously in a war on a distant American frontier made inglorious by the men he can no longer trust at the head of our affairs.

The America that I know, and that other Senators know, this vast and teeming and beautiful land, this hopeful society where the poor share the table of the rich as never before in history, where men of all colors, of all faiths, are brothers as never before in history, where great deeds have been done and great deeds are yet to do, that America deserves to be led not to humiliation or defeat, but to victory.

The Congress of the United States is the people's last hope, a free and open forum of the people's representatives. We felt the pulse of the people's response to the return of MacArthur. We know what it meant. The people, no longer trusting their executive, turn to us, asking that we reassert the constitutional prerogative of the Congress to declare the policy for the United States.

The time has come to reassert that prerogative, to oversee the conduct of this war, to declare that this body must have the final word on the disposition of Formosa and Korea. They fell from the grasp of the Japanese empire through our military endeavors, pursuant to a declaration of war made by the Congress of the United States on December 8, 1941. If the Senate speaks, as is its right, the disposal of Korea and Formosa can be made only by a treaty which must be ratified by this body. Should the administration dare to defy such a declaration, the Congress has abundant recourses which I need not spell out.

Tuesday, May 23, 2006

David Rosenbaum's Last Article

The late David Rosenbaum's last article: his obituary for Lloyd Bentsen. It's good.

I would disagree with Rosenbaum's claim that Bentsen's "Senate career was not particularly distinguished." I don't believe that either the 1990 or the 1993 deficit-reduction bill would have made it off the runway without him first as Finance Committee chair and second as Treasury Secretary. That is, I think, an enormous accomplishment--albeit one that the Bushies have managed to erase.

Daniel Drezner Is Shrill!

Daniel Drezner recoils in utter fear and total dread after uncovering one of the truly scary things:

Shrillblog: Daniel Drezner Is Shrill!: the White House's belief that one can find a Treasury Secretary who would be a salesman while still commanding respect in the markets. To my knowledge, the only value-added John Snow has brought to the Treasury position has been his willingness to be the Bush administration's salesman -- and I'm pretty sure the markets don't respect him...

National Review Quotes

Jonah Goldberg has a request:

The Corner on National Review Online: NR Quotes [Jonah Goldberg]: Hello NR Readers (and people who buy NR for the pictures) -- Look over to your right. See that big quote by Rick Brookhiser? Well, we want to put up more quotes from the pages of NR, past, present and future there. We're gonna make it so that every time you refresh the page, a different quote appears from the pages of NR. We want to get so many of them that you could spend hours just hitting reload without ever seeing the same quote twice. But here's the thing: The quotations must be from the pages of NR, the magazine, not from NRO. So, if you ever read something in NR you think should be immortalized (and used as an advertising teaser), please pass it along. That goes for anything from the past as well as anything you might read in the future. Perhaps some day there will be enough to make a book of quotations or a quote-a-day calendar or something. Please send suggestions to Chaka.

I want to contribute! Here are some excellent possibilities:

It was the culmination of a weekend of demonstrations against the admission of a Negro.... [T]he nation cannot get away with feigning surprise at the fact that... the demonstration became ugly and uncontrolled. For in defiance of constitutional practice, with a total disregard of custom and tradition, the Supreme Court a year ago illegalized a whole set of deeply-rooted folkways and mores...

The statute... a law the Reconstruction Congress enacted in 1871.... [T]he President can send in troops... only when... the local authorities must have shown themselves either unable or unwilling to deal with the situation. Yet the authorities in Birmingham [police chief "Bull" Connor and Governor George Wallace] apparently did have the matter under control before Kennedy pushed the button...

[T]he legality of the 14th amendment.... The argument that it was improperly ratified is historically irrefragable...

Martin Luther King will never rouse a rabble; in fact, I doubt very much if he could keep a rabble awake... past its bedtime...

Martin Luther King... [his] lecture... delivered with all the force and fervor of the five-year-old who nightly recites: "Our Father, Who art in New Haven, Harold be Thy name"...

The central question... is whether the White community in the South is entitled to take such measures as are necessary to prevail, politically and culturally, in areas in which it does not predominate numerically? The sobering answer is Yes.... National Review believes that the South's premises are correct...

The axiom... was Universal Suffrage. Everyone in America is entitled to the vote.... That, of course, is demagogy.... The great majority of the Negroes of the South who do not vote do not care to vote, and would not know for what to vote if they could...

Bush and Rice are... wrong to insist that support for democracy... [is] support for elections. In reality, supporting democracy... means supporting democrats.... In countries where [democrats] speak for substantial numbers of their fellows as, Walesa and Havel did, it makes sense to press for elections. In countries where they are more akin to lone voices, crying in the wilderness, it does not...

NOT THAT I WANT TO OFFEND ANYBODY [Jonah Goldberg] But it would be pretty cool if Fox... repeatedly referred to the hurricane as Katrina vanden Heuvel. "The destruction from Katrina vanden Heuvel is expected to be massive." "...the poor and disabled are particularly likely to suffer from the effects of Katrina vanden Heuvel ...." "Coming up: how to explain Katrina vanden Heuvel to your children"...

Lincoln was the Caesar Lincoln claimed to be trying to prevent; and that the Caesarism we all need to fear is the contemporary [Civil Rights] movement, dedicated like Lincoln to egalitarian reforms sanctioned by mandates emanating from national majorities...

Francisco Franco was our century's most successful ruler.... [H]e outstayed all his great contemporaries, friend and enemy: Hitler, Mussolini, Stalin, Churchill, Eisenhower, de Gaulle.... Franco commanded the winning side in a ferocious civil war... held Spain aloof from World War II...

The whole concept of "fascism" for that matter has been a fraud from the beginning. Like "peaceful coexistence" and "detente," it is a tactical invention of the Soviet Agitprop, and boils down in practice to the simple definition: fascism is any regime that outlaws Communism...

[Francisco] Franco is a part, and an integral part, of Western civilization... [the] convergence of the multifarious political philosophical, religious, and cultural tendencies that have shaped Spanish history... the man to whom the Spanish people look--as the Chinese have looked to Chiang [Kaishek], for all his faults--for leadership...

The Communists, in fact, invented the term "McCarthyism," and devised most of the ideology that went with it.... The liberals, on a roaring civil rights jag... lowered their guard and the Communists closed.... "[A]nti-McCarthyism" as a movement... was a united front, the broadest and most successful the Communists have ever catalyzed in this country...

[T]he bayonets have displaced the law in Little Rock.... General Walker is in Little Rock as the commander of an army of occupation... enforcing unconditional surrender...

What Joe McCarthy was... can[not]... be judged by weighing in the balance the niceness of his discriminations or that tactical acuity of his actions.... His was not a common role. It comes to few men to play it--sometimes to a poet, sometimes to a politician sometimes to someone of no particular position.... Joe McCarthy, who bore witness against the denial of truth that is called moderation, and died for it: "He was a prophet"...

[Joe] McCarthy was in a business that permitted a certain latitude: it was politics, not physics. [Bozell and Buckley say that] "McCarthy's record is... not only much better than his critics allege, but, given his metier, extremely good." Thus he "should not be remembered as the man who didn't produce 57 Communist Party cards but as the man who brought public pressure to bear on the State Department to revise its practices and to eliminate from responsible positions flagrant security risks"...

We cannot avoid the fact that the United States is at war against international Communism, and that McCarthyism is a program of action against those in our land who help the enemy. McCarthyism is... nine parts social sanction to one part legal sanction. But that one part legal sanction is legitimate...

If McCarthy is to be censured for saying he had a list of 57 card-carrying Communists when he did not, what of his nemesis, Senator Millard Tydings, who told the Senate he had in his hand a recording of McCarthy's Wheeling speech when he did not?... What of the many violations of normal standards of procedure and indeed decency committed by the Left? These were never condemned by the Senate, nor were they ever the subject of much attention by the press...


Omnium Consensu Capax Imperii, Nisi Imperasset

Of the Emperor Galba, Tacitus wrote that he was "universally seen as capable of ruling, had he never ruled." Of Bob Zoellick, he was universally seen in the late 1990s as one of the bright lights of the next Republican administration--but then he was given high administration jobs. Universally seen as a failure as Trade Representative, most especially because of the stalling-out of the Doha Round and his failure to block the Bush steel tariff. And I can't find anyone today who will say he has done anything other than spin his wheels as Deputy Secretary of State.

Another reputational casualty of the Bush administration: / World / US - Zoellick "ready to quit" White House : By Demetri Sevastopulo, Stephanie Kirchgaessner and Caroline Daniel in Washington: Published: May 23 2006 22:02 | Last updated: May 23 2006 22:19: Robert Zoellick, the US deputy secretary of state, is preparing to leave the Bush administration and has held talks with Wall Street investment banks on job options, according to people close to the administration. Mr Zoellick, who also served as trade representative during George W. Bush’s first term as president, had hoped to replace John Snow, the Treasury secretary, whose departure has been the subject of constant speculation in Washington.

A business lobbyist with ties to the White House said Mr Zoellick was leaving the administration. A friend of Mr Zoellick said he told the White House in February of his intention to leave but that his departure was delayed because of his involvement in the Darfur peace negotiations. Two people close to the administration said Mr Zoellick had been holding discussions with investment banks, while his friend said he had talked to Merrill Lynch....

It appears that Zoellick is leaving because George W. Bush has concluded that he knows too much about policy to be Treasury Secretary:

The White House has been seeking to replace Mr Snow with someone who would command more respect on Wall Street, in international financial markets, on Capitol Hill and among the public. One influential Republican with close ties to the White House said Mr Zoellick was leaving “soon” because he was not getting the Treasury job. The Republican added that the White House wanted someone who would be a better salesman. Mr Zoellick is more widely admired for his policy knowledge. The departure of Mr Zoellick would fuel speculation that the White House had decided on a candidate to replace Mr Snow. It would also mark the latest personnel change in an administration desperately trying to shore up Mr Bush’s approval rating and reinvigorate his moribund legislative agenda before November’s congressional elections.

The Current Recovery

Paul Krugman gives his take, which I think is broadly right:

Krugman - NYT Web Journal:

Alan Gertler, Reno, Nev.: I'm a scientist, not an economist, so I'm fairly naive when it comes to what drives the economy. My question is this: Have the tax cuts stimulated the economy as claimed (which I don't believe given the past cases of Reagan and Bush senior),

or has it been the willingness of the government to continue massive spending by increasing our debt that has led to the growth of the economy?

*Paul Krugman: *It's actually neither. About the Bush tax cuts: the tax cuts of 2001 evidently didn't do the job; these days, the Bush people talk about the economy as if history began in the middle of 2003, after their SECOND wave of tax cuts.

But while the economy did start growing, finally, in 2003, the growth wasn't at all of the form you'd expect if tax cuts were responsible. The main tax cuts were on dividends and capital gains; supposedly this would make it easier for businesses to raise funds and invest. But business investment hasn't been the main driver of growth; in fact, businesses have been sitting on huge piles of earnings, reluctant to invest. Instead, the big driver was housing construction and consumer spending.

So what really happened? Low interest rates led to a housing boom that eventually turned into a housing bubble. High house prices made people feel richer, and they could borrow against the increased value of their homes, feeding consumer spending. Tax cuts had nothing to do with it.

Because Writing About Energy Policy Is *So* Boring...

Joshua Green, writing in Hotline, he says that HRC's energy speech was boring because it was substantive:

Hotline On Call: Clinton's 50 By 25....: Senator Hillary Clinton was well attuned to her audience when she paused, during her major energy speech at the Press Club this morning, to apologize for "probably a more wonkish speech than many of you had anticipated."

Fittingly so, because even the most enthusiastic wonks have a tough time digesting talk of "cellulosic ethanol" and "biomass fuels" before lunch.

Thankfully, the centerpiece of Clinton's speech was easier to grasp: her "fifty-by-twenty-five energy initiative," as she put it, would reduce America's dependence on foreign oil by fifty percent by the year 2025. Clinton compared her proposal to the Manhattan Project; given the specificity and detail with which she explained it, a nuclear engineering degree might have helped her audience.

Clinton's speech provided a sharp contrast to the Bush administration's recent cautious rhetoric about energy and gas prices, both by countering their generalities with specifics (plenty of those!) and rebutting their notion that little can be done to change things by asserting otherwise and then, in a style that would do her husband proud, backing up those assertions with detailed plans to boost everything from wind power to biofuels to a Strategic Energy Fund she hopes to create by introducing legislation today (it will be funded partially by a two-year windfall profits tax on oil companies, who she also whacked for not providing ethanol pumps at gas stations).

On a dais heavy with New York state reporters, Clinton also deftly wove in mention of some of her state's business-environmental success stories, among them the low-sulfur diesel fuel produced by Cummins and the school-bus exhaust filters made by Corning -- a traditionally Republican company that has lately swooned, Murdoch-like, for the state's junior Democratic Senator.

Why oh why can't we have a better press corps?

The Horse's Mouth Looks at the Press

Greg Sargent has a nice weblog:

The Horse's Mouth: TIMES READERS SOUND OFF ON STORY ABOUT CLINTONS' MARRIAGE. Well, it looks as if Times readers are pretty ticked off with the paper for running [Pat Healy's] 3,000 word front page story on the state of the union -- the Clintons' union, that is. Check out these reader comments about the piece on The Times's new political blog. Many readers are very, very upset, and sentiment is running overwhelmingly against the piece, though that could be a reflection of the intense blogospheric reaction.

Before the lectures about blogospheric civility and the "angry left" start, let me quote from one of the comments:

I expect front page articles in The New York Times to be well-sourced, newsworthy, and related to important national and international issues. This article, though, was a gossipy, mean-spirited hit piece that seemed to serve no purpose except as a forum for idle speculation about the state of the Clintons' marriage.

Your reporter cannot find anyone to give a quote that says that the Clintons have anything but a normal, loving, supportive marriage, but he consistently implies that this is not the case. The most glaring example is when he writes that their friends' stories about their affection for each other are a product of "eager[ness] to smooth any rough edges on the relationship." What if the stories are simply true?

Lloyd Bentsen Dies

As my boss Alicia Munnell said in 1993: "After a week working for Bentsen you understand why he is the Treasury Secretary and you are not, and you are happy that that is the way it is."

Former Democratic Sen. Lloyd Bentsen Dies - Yahoo! News: HOUSTON - Lloyd Bentsen, a courtly Texan who represented the state in Congress for 28 years and served as President Clinton's first treasury secretary, died Tuesday, his family said. He was 85....

Bentsen's distinguished political career took him from the humble beginnings of a county office in the Rio Grande Valley in the 1940s to six years in the U.S. House, 22 in the U.S. Senate and two in the Clinton Cabinet, where he was instrumental in directing the administration's economic policy.

A shrewd legislative operator, the silver-haired politician maneuvered with ease in Democratic and Republican circles alike on Capitol Hill, crafting deals behind the scenes in a dispassionate, reserved fashion.....

The scion of a wealthy Rio Grande Valley family, Bentsen first distinguished himself in World War II, where he flew 50 bomber missions over Europe. Returning home as a decorated veteran, the 25-year-old was elected Hidalgo County judge in 1946. Two years later, he moved to the House.

In his first House term, Bentsen was one of a handful of Southern congressmen voting against the poll tax, which was used to keep blacks from voting...

A better legislator and cabinet secretary than the political judgment of the American people deserves. He liked the old story about Marshall Lyautey--and said it was one of Jack Kennedy's favorite stories, too:

Marshall Lyautey, retired on his chateau, asked his gardener if the following morning he wouldstart planting a row of oak trees.

"But Mon Marechal," said the gardener, looking at the eighty-year old Lyautey. "The trees will take more than fifty years to grow."

"Oh," said the Marshal. "In that case, plant them today. We have no time to lose."

Morning Coffee Videocast: Gasoline Prices and American Politics

In which I hog Google's bandwidth, drink my morning coffee, and express my frustration at the politics of gasoline prices in America today:

Gasoline Prices and American Politics: Brad DeLong 4 min 35 sec - May 23, 2006:

Brad DeLong's Morning Coffee. It's very sad to watch both political parties abandon all shred of principle in the hope of winning political advantage by exploiting the gasoline price issue.

Why Oh Why Can't We Have a Better Press Corps? (John Tierney Edition)

John Tierney snipes at Al Gore:

Gore Pulls His Punches - New York Times: Gore isn't exactly likable in the film -- he still has that wooden preachiness and is especially hard to watch when he tries to be funny. Yet you end up admiring him for his nerdly persistence. He turned out to be right about something important: global warming is a problem worth worrying about.

But the story he tells in the movie is hardly "an inconvenient truth." It's not really true, and it's certainly not inconvenient for him or his audience....

[E]ven as propaganda, the film is ultimately unsatisfying. Gore doesn't mind frightening his audience with improbable future catastrophes, but he avoids any call to action that would cause immediate discomfort, either to filmgoers or to voters in the 2008 primaries.

He doesn't propose the quickest and most efficient way to reduce greenhouse emissions: a carbon tax on gasoline and other fossil fuels. The movie gives him a forum for talking sensibly about a topic that's taboo on Capitol Hill, but he instead sticks to long-range proposals that sound more palatable, like redesigning cities to encourage mass transit or building more efficient cars and appliances...

Would it have strained John Tierney's brain to tell his readers that Gore did propose a carbon tax back in 1993, got no backup at all from John Tierney and company, and lost? That the topic is "taboo on Capitol Hill" in large part because John Tierney and company gave Gore no backup when he tangled with the American Petroleum Institute a decade ago?

But that would undermine John Tierney's narrative, wouldn't it? John Tierney is in the business of trying to paint Gore as an unlikeable coward, isn't he?

Monday, May 22, 2006

Why Oh Why Can't We Have a Better Press Corps?

Outsourced to the Daily Howler:

A CARTOON PRESS CORPS: Only Elisabeth Bumiller could overlook the mordant humor in her presentation. At the start of this morning's "White House Letter," she describes the press corps' conduct during a recent plane ride:

BUMILLER (5/22/06): Reporters en route to Arizona on Air Force One last week opted to watch the movie ''King Kong'' in the press cabin. Not so Tony Snow, the new White House press secretary and former Fox News commentator, who told reporters that he spent the flight in the staff cabin watching Gen. Michael V. Hayden's confirmation hearings to be the new C.I.A. director--on CNN.

Got milk--and cookies? While Snow watches Hayden's confirmation hearings, the "press corps%" chooses King Kong!

Readers, let's review: It's the middle of a work day. An important hearing is under way. The press corps is stuck on a long plane ride. And they choose to watch an inane, year-old movie! Only Bumiller could offer this fact and fail to see the dark humor involved--the portrait it paints of her hapless cohort, the people who steward our discourse.

Morning Coffee Videocast: The "Ownership Society" Is Not What It's Cracked Up to Be

In which I hog Google's bandwidth, fail to drink my morning coffee, and muse on the implications of the fact that new White House press secretary Tony Snow doesn't have a 401(k) account:

Tony Snow's 401(k): The "Ownership Society" Is Not What It's Cracked Up to Be: Brad DeLong: 2 min 28 sec - May 22, 2006:

Brad DeLong's Morning Coffee. New Bush press secretary Tony Snow doesn't have a 401(k). This is very bad news for Bush's "ownership society." The "ownership society" fails if people don't act responsibly. Yet it seems that even Bush's closest aides are not certain to act responsibly.

The Washington Times Is Shrill

Bruce Bartlett points us to this shrill and unbalanced editorial by the Washington Times. Yes, John Snow has finally pushed them over the edge:

TODAY'S EDITORIAL May 22, 2006: Treasury Secretary John Snow might find his credibility rising if he would recognize that his listeners are intelligent. Testifying May 17 before the House Financial Services Committee, he noted that "real [i.e., inflation-adjusted] GDP rose an impressive 4.8 percent at an annual rate in the first quarter of this year." Moments later Mr. Snow, trying to "stress how broadly the benefits of this strong growth impact Americans," cited as example that "average hourly earnings are picking up. We learned from this month's jobs report that average hourly earnings have risen 3.8 percent over the past 12 months -- their largest increase in nearly five years."

Rep. Barney Frank asked Mr. Snow: "What's the [consumer price index] increase over the past 12 months?" Presumably referring to the Labor Department's consumer price index number for April, issued just an hour and a half before Mr. Snow began testifying, the Treasury secretary replied, "It came out recently, as you know. The headline [CPI rate] . . . " He was interrupted by Mr. Frank, who repeated his request for the consumer price index number "over 12 months," the precise period for which Mr. Snow had earlier boasted that "average hourly earnings have risen 3.8 percent." The Treasury secretary replied, lamely, "Well, about 5 [percent], I think, 5.1 [percent]."

Mr. Frank then asked Mr. Snow to "acknowledge that [the] 3.8 percent increase in wages you're talking about is nominal, not adjusted for inflation." Mr. Snow, who holds a Ph.D. in economics, nevertheless hadn't figured it out: "I'll have to go back, congressman, and check these numbers." Mr. Frank persisted. Perhaps helped by an assistant (perhaps without a Ph.D.), Mr. Snow conceded, "For the 12 months, it's nominal."... [T]he actual not-so-good news, beyond the microscopic increase in average real wages, is that America's secretary of the Treasury has no clue about the 12-month "headline" rate of inflation...