Clive Crook

Is Obama Carter--or Hoover? Walter Russell Mead, American Interest. A president subsides.

Robert Gates's speech on the future of Nato. DoD. "[I]f current trends in the decline of European defense capabilities are not halted and reversed, future US political leaders-those for whom the Cold War was not the formative experience that it was for me-may not consider the return on America's investment in NATO worth the cost." Why Syria will get away with it. Gideon Rachman, FT. Syria is a better guide to the future of western intervention than Libya.

Michael Sandel's "Justice" is big in China. Tom Friedman, NYT. Touching something deep in Boston and Beijing.

A new column for the Financial Times on US fiscal incompetence--or should that be paralysis, or recklessness, or dishonesty...? The prospects for getting it right (by which I mean maintaining or increasing fiscal expansion the near term, while moving now to lock in fiscal retrenchment later) look slim. The political problem can be simply stated:

Democrats have no fiscal plan, and Republicans have a fiscal plan that not even they like and whose details they would rather not discuss.

The New Hampshire GOP debate was, as Carl Cannon writes, a surprisingly friendly affair.

Now that was more like it. Seven Republican presidential candidates showed up Monday night to debate one another at New Hampshire's Saint Anselm College, where they looked -- if not entirely presidential -- then at least poised, collegial and in command of their talking points.

All seven managed to express their differences on public policy without being uncivil to one another, or even disagreeing directly with their fellow candidates. This was made easier by the their shared antipathy for the Obama administration -- and because their differences are pretty nuanced: In case there was any remaining doubt, Monday's session underscored just how conservative the modern Republican Party has become, whether one hails from Ron Paul's libertarian wing, Michele Bachmann's Tea Party Caucus, or the mainstream establishment of Mitt Romney and Tim Pawlenty.

Of course, the format almost ruled out any possibility of actual debate, with its quick-march question-and-sorry-to-cut-you-off approach. But the tone of mutual respect was still unexpected and, as everybody has pointed out, it certainly helped Romney.

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I'm not with those who admired the views, or the macho bluster, of the pre-scandal Anthony Weiner, and I'm certainly not with those who find what he did inoffensive. (Andrew Sullivan called it "on-line flirting." How sad.) Weiner showed such lack of judgement I even wonder about his mental health. I think he should resign for the reason Joshua Green and Jim Fallows say: he has let his allies and his constituents down. As Josh puts it:

Weiner had so little regard for his office, his constituents, and his duty as a member of Congress that he apparently thought nothing of tweeting pictures of his genitals to random women. Does the analysis really need to go any further than that?

Only in this respect: the leering sanctimony of the US media is worth noting and deploring. Writing about the DSK scandal, the economic historian Harold James said in passing that the US is a country both more prudish and more prurient than France. Yes, I thought at the time, like Britain, only worse. Weinergate has carried this to a new extreme.

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I want to take Republicans seriously, but they do make it hard. The moment I say something kind about Mitt Romney ("He is in many ways a capable and effective candidate") he criticizes Obama for throwing Israel under the bus by uttering the phrase "1967 borders" in the course of reaffirming long-standing US policy. That learned me. Now Tim Pawlenty soars to far greater heights of nonsense with his proposals on the economy.

Let's start with a big, positive goal. Let's grow the economy by 5%, instead of the anemic 2% currently envisioned. Such a national economic growth target will set our sights on a positive future. And inspire the actions needed to reach it. By the way, 5% growth is not some pie-in-the-sky number. We've done it before. And with the right policies, we can do it again.

Between 1983 and 1987, the Reagan recovery grew at 4.9%. Between 1996 and 1999, under President Bill Clinton and a Republican Congress the economy grew at more than 4.7%. In each case millions of new jobs were created, incomes rose and unemployment fell to historic lows. The same can happen again.

Growing at 5% a year, rather than the current level of 1.8%, would net us millions of new jobs. Trillions of dollars in new wealth. Put us on a path to saving our entitlement programs. And balance the federal budget...

5% economic growth over 10 years would generate 3.8 trillion dollars in new tax revenues.

I'm wondering why nobody thought of this before. Just grow at 5% a year. Job done.

Drop-down image credit: Reuters

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Peter Diamond's decision to withdraw from contention for a seat on the Fed board is a very low moment in US politics. Diamond is an indisputably brilliant economist with no ideological baggage and highly relevant expertise--contrary to what his GOP critics say, and as he explains in his NYT article.  It ought to be shocking, but it no longer is, that a man of his distinction could not get confirmed to the position. At times the US seems a country hell-bent on its own failure.

It's enough to make Paul Krugman regret the "polarisation of our politics". Not something you see every day. Or am I misreading him?

The thing is, the Fed was supposed to be above and aside from the partisan brawl. It never was, completely -- but that was an ideal to be striven for. No more.

Was that really an ideal to be striven for until just now? On the view that one side in US politics is irredeemably evil and the other basically right about everything--on Krugman's view, I mean--why would one want the Fed to avoid taking sides? That's the kind of thing you'd expect a feeble centrist to say. You know the type.

I expect Paul is expressing nostalgia for a long-vanished past. In that case, though, he can hardly criticise the GOP for today's partisan brawling. That's what Washington is for nowadays, is it not--a fight to the finish by any means necessary? It is the one thing the two tribes seem to agree about.

God help the country.

And if it is, what do we do about it? My column this week for the FT says: look to housing-market  policy (better late than never) and to the Fed.

The stalling recovery, and the evident incapacity of Congress and the administration to respond, should silence talk of a rapid exit from QE2 and put QE3 back on the table. The case for additional easing is strong. A responsible central bank is always mindful of the risk of inflation - but with wages showing no sign of responding to the blip in prices, this danger is hardly imminent. True, exiting from an even larger programme of easing will pose problems, but again this should be weighed against the much greater costs of a failing recovery.

The economy is faltering and the government - if not actually making things worse - is flailing uselessly. The Fed is all there is.

Roger Pielke Jnr, author of The Climate Fix, the best book I've read on the politics of climate change, offers some comments on the new German energy policy.

Given Merkel's penchant for blowing with the political winds and the German public's Wutbürger politics, we should expect German energy policies to continue to be anything but stable.  Germany's energy policies have gone from potentially world-leading to incoherent in the blink of an eye. But perhaps part of the problem here is the tendency for analysts, me included, to see short-term change without fully appreciating the larger context. German democracy may presently be incapable of implementing a sensible energy policy. Regardless of Germany's domestic politics, its efforts to rapidly ramp up renewables -- if they actually stick as policies -- will nonetheless provide a worthwhile laboratory for what is technologically possible, and thus bears close watching.

Looking at the big picture, the question now I suppose is how long must we wait until the next German energy policy U-turn?

Alain Enthoven, pioneer of "managed competition" and esteemed authority on health-care economics, has an excellent column on Ryan's premium support plan (What Paul Ryan's critics don't know about health economics). Echoing arguments made by Alice Rivlin and Henry Aaron, he argues that the premium support approach would encourage the spread of accountable care organisations, and that these could make a big contribution to improving efficiency and lowering costs. Ryan's indexation formula is too severe, Enthoven says, but the basic idea is sound.

At the root of the waste and excess is Medicare's open-ended fee-for-service system, which pays health-care providers for doing more and more costly services, whether or not they're in the patients' best interests. Last year's health-care reform legislation acknowledged that fundamental change is needed from the traditional fee-for-service model to a system in which doctors and hospitals team up to offer coordinated care and are held accountable for per-capita cost and quality. Hospitals and suppliers may participate in this Shared Savings Program by creating or joining an Accountable Care Organization (ACO).

Unfortunately, the incentives to form ACOs and to dramatically cut costs are far too weak and the regulations far too complicated...

A better way to encourage accountable care is the "premium-support" model proposed by House Budget Committee Chairman Paul Ryan, among others. This is a managed competition model in which government would make a defined contribution and beneficiaries would have a choice from a variety of health plans with no discrimination based on health status. Standard coverage contracts would make comparisons possible for ordinary people. Competition would drive health plans to innovate in ways that cut waste and improve quality. And the use of exchanges would drastically reduce marketing costs, so insurance companies would not be taking 20% off the top, as is currently the norm.

This is not "the end of Medicare," as some would have you believe.

One thing I don't understand is why Enthoven, like Ryan, takes such exception to the use of the term "voucher" in describing the premium support approach. Premium support is, to all intents and purposes, a voucher. What's wrong with calling it that?

Germany's government says it will shut down its nuclear power industry by 2022. It  promises to reduce carbon emissions at the same time. To keep both promises through a combination of increased domestic output from renewable sources and lower demand for energy looks just about impossible. Most likely, Germany will have to import more energy--generated from nuclear and/or fossil-fuel sources. Quite what that achieves in terms of reducing the risk of nuclear accidents and diminishing global emissions of greenhouse gases would be hard to say.

Good editorials on the subject in the Washington Post (German's nuclear energy blunder) and FT (The nuclear option).

In Madrid on Monday I moderated a discussion on global finance organized by the Aspen Institute Espana. The speakers were Paul Volcker, Agustin Carstens (head of the central bank of Mexico, and a candidate to succeed Strauss-Kahn at the IMF), and Henrique Meirelles (until recently head of the central bank of Brazil, now in charge of preparations for the Rio Olympics). In due course I might be able to post a link to a recording. Meanwhile, three things struck me as notable.

First, none of the speakers had much time for the idea that Greece's debt would have to be restructured. Paul Volcker's impatience with this idea especially surprised me. He is usually willing to be outspoken and has no particular reason (unlike Carstens, for instance, a serving rather than former central bank chief) to avoid controversy and choose his words carefully. He usually says what he means. His point was that a modest restructuring would make no great difference to Greece's fiscal problem--it has to get to a primary budget surplus regardless--and so was probably not worth the risk. Yes, I suggested, but who said anything about a modest restructuring? An immodest restructuring, together with "internal devaluation" (lower wages) and further fiscal tightening, still seems to me the least bad of the terrible alternatives that Greece and the EU are now contemplating. The central bankers weren't having it.

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My column for the Financial Times this week is on the complaint that the National Labor Relations Board has brought against Boeing. The aircraft maker is accused of trying to punish and intimidate the machinists' union by opening a new factory in South Carolina, a right-to-work state. The rationale for the complaint seems very muddled. The law lets Boeing put new plants where it likes, and the firm can cite lower labor costs as a reason--but, according to the complaint, the company can't say that strikes like the ones it has faced in Washington figured in its reasoning. That would be "retaliation". Boeing has hired workers and built a factory in South Carolina. No jobs, it says, have been shed in Washington. Nonetheless the NLRB wants the work moved to Washington.

If absurdist comedy is to your taste, the board's fact sheet on the case is worth reading. "The Board has repeatedly held that an employer violates [the National Labor Relations Act of 1935] by threatening that employees will lose their jobs if they join a strike, or by predicting a loss of business and jobs because of unionisation or strike disruptions without any factual basis. In contrast, the Board has found that employers may lawfully relate concerns raised by customers. They may also reference the possibility that unionisation, including strikes, might harm relationships with consumers, as opposed to predicting 'unavoidable consequences' [emphasis in original]."

Got that? Employers may "reference the possibility" that strikes will harm the business. But if they declare that this will happen - if they judge it to be unavoidable, and dare to say so - they have broken the law. You may wish to reference the possibility that, if the NLRB is interpreting it correctly, the law in this instance is an ass.

What am I missing? This intervention seems crazy.

Why a European, even a talented one, should not lead the IMF. The Economist. Well said. Also:

Let there be a real contest. FT editorial.

Background on the succession. Alan Beattie, FT.

Stan Fischer may run. Bob Davis, WSJ.

Who pays the taxes in the US? Chuck Marr and Brian Highsmith, Center on Budget and Policy Priorities. The income tax falls lightly on the less well-off, but the tax system as a whole does not. "When all federal, state, and local taxes are taken into account, the bottom fifth of households paid 16.3 percent of their incomes in taxes, on average, in 2010. The second-poorest fifth paid 20.7 percent."

Is World War II still "the good war"? Adam Kirsch, NYT. "[A] necessary but terrible war is simplified into a 'good war', and we start to feel shy or guilty at any reminder of the moral compromises and outright betrayals that are inseparable from every combat."

Martin Feldstein argues that Greece must (a) default and (b) take a leave of absence from the euro. Neither will be easy to arrange, but it is difficult to say what the second course even means.

The design of the debt restructuring that everybody thinks is coming will be important. Angelo Baglioni argues for a "leveraged buyback". This would involve Greece buying back its debt using money borrowed from European Financial Stability Facility--with the crucial proviso that this loan would be senior to Greece's existing bonds. This would keep Greek bonds cheap as it bought them back, thus transferring more wealth from  creditors and letting Greece lower its debt burden more effectively. Baglioni says a buyback done this way would mitigate the knock-on effects of a conventional default (partial repayment or stretching out of maturities) through global financial markets. Looks right to me.

Jeffrey Frankel's blog has a couple of good posts on learning from the Europe's mistakes over Greece: where the ECB went wrong, and what to do about it next time.

Incarceration is the great American exception. The rest of the world contemplates the US prison system with disgust; here, it arouses surprisingly little controversy.

You would expect American progressives to be far more exercised about it than they are. They are properly concerned about prolonged detention of terrorist suspects and the treatment of leakers of official secrets such as Bradley Manning, but apparently not much worried about criminal-justice issues that are quantitatively far more significant: questionable court practices (including default recourse to the plea bargain, which has made trial by jury a comparative rarity); extended periods of remand in custody; astonishingly long sentences (including for non-violent offenders); the erosion of judicial discretion in sentencing; outrageous "three strikes" laws; and often deplorable prison conditions. These things affect literally millions of US citizens. Waterboarding rightly shocks the progressive conscience; rape in prison is permissible material for chat-show comic monologues.

Even criminals have rights. Yet for every liberal I've heard complain about conditions in US prisons, I've heard ten say it's a disgrace that white-collar (ie, non-violent) offenders get off with short sentences at "Club Fed".

Good for the Supreme Court, therefore, in voting 5-to-4 to require California, whose prisons are especially notorious, to reduce its prison population and curb overcrowding. The judgment included photos of inmates crammed together, and tiny cages in which some are confined. It is a shame that the order was necessary--the courts should not have to make prison policy this way--but what was the alternative? As an FT editorial put it:

It is indeed a desperate and unsatisfactory measure - yet warranted under the circumstances, which are extreme.

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Democrats are reading a lot into their unexpected win in the New York special election. The election was about Medicare reform, they say: voters roundly rejected the House Republican plan. Republicans are dismissing the defeat, citing special factors such as the split in their vote caused by a phony Tea Party candidate. After allowing for special factors, argues Michael Barone, the GOP still did worse than it should have, and the Medicare issue was one reason why. The GOP started this fight, but is not winning it. See also Dan Balz:

Democrats should not read too much into Tuesday's results. But it is the Republicans who have the most to learn from what happened there.

Republican leaders believe in their agenda and are not likely to back away from it just because they lost one House seat, particularly one that they could very well win back in 2012. But they have not yet won the argument over how best to deal with the country's fiscal problems. They have accepted the responsibility to propose. Now they will need to learn how to persuade.

The next head of the IMF is expected to be Christine Lagarde. Europe's leaders are converging on this appointment and if the US goes along the deal will be as good as done. Lagarde is a reasonably well-qualified candidate but this choice, guided by the desire to perpetuate the arrangement under which a European heads the Fund and an American the World Bank, is a mistake.

Moises Naim powerfully makes the case against an outrageous dispensation. He detects the stench of colonialism and I agree.

Even the leaders of the Group of 20, the assembly of nations that accounts for more than 80 percent of the world's economy and two-thirds of its population, recognize that leadership selection at these institutions must change. When they met in early 2009 in London on the heels of the financial crisis, the G-20 leaders asserted that "the heads and senior leadership of the international financial institutions should be appointed through an open, transparent and merit-based selection process."

That this is not already the standard is outrageous. No more outrageous, of course, than how European countries are offering countless excuses for why Strauss-Kahn's replacement must carry a European passport.

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Deference to the politically powerful is a hideous trait, not least when it leads to a code of silence (de facto or de jure) about improper conduct. I can see why Americans are pleased that Strauss-Kahn has been denied the privileges of rank that France would no doubt have accorded him. On the other hand, you have to wonder what the presumption of innocence is worth in a case like this in the United States. Press and television are tirelessly laying out evidence for the prosecution--untested facts, leaks of dubious provenance, and assorted rumour and innuendo--before a salacious and semi-attentive public. In Britain and Europe much of this would be contempt of court. And so it should be, if the presumption of innocence means anything.

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Philip Stephens is right.

Junking the myths and emotional baggage wrapped up in the idea of a uniquely special bond between London and Washington is long overdue.

The US and Britain have a natural alliance based on a close alignment of interests and values. But that is all it is. Neither side should expect any more or any less. The British preoccupation with the "special relationship" is embarrassing--and it is worse than merely embarrassing, when decisions not in Britain's interests flow from a desire to prop up the conceit.

The Queen in Ireland: A sovereign's debt. David Gardner and John Murray Brown, FT. A better case for the monarchy than royal weddings or funerals. Obama of Moneygall. Mark Landler, NYT. Is there anywhere the president does not have roots?

Obama gets real on Israel. Daniel Levy, American Prospect. Obama is trying to help Netanyahu, but is Netanyahu interested? Obama at AIPAC. "There was nothing particularly original in my proposal... What I did on Thursday was to say publicly what has long been acknowledged privately." The Syrian Problem. Steve Coll, New Yorker. "The time for hopeful bargaining with Assad has passed."