Steve Clemons

Speaking at Offutt Air Base, Nebraska -- Secretary of Defense Leon Panetta has disconcertingly started his tenure fear-mongering about al Qaeda as a justification not to go beyond the President's proposed $400 billion cuts to the Defense Department over ten years. 

From a report in the Omaha World-Herald:

The military can handle this week's debt ceiling deal that slices nearly $400 billion from projected defense spending over the next decade, Panetta told the crowd.

What the military can't handle, he said, is $600 billion in additional defense cuts that would be spread out over the next decade. Those cuts could be automatically triggered as part of the debt ceiling deal if a congressional "super committee" deadlocks on the way to further cut spending or raise revenues.

Those cuts would "seriously weaken the defense of this country," Panetta said. "That's the last thing we need to do."

The report went on to say about Panetta's comments:

He ticked off a list of potential dangers to the United States, beginning with al-Qaida.

The terrorist network is weakened, Panetta told the crowd, and lacks its longtime leader after the Central Intelligence Agency -- then led by Panetta -- helped locate and kill Osama bin Laden in May.

Panetta called the joint military operation that killed bin Laden, "one of the proudest moments I've had" but warned that the group bin Laden founded is still bent on harming Americans.

It seems that one week, al Qaeda is on the run and "near collapse" and the next, al Qaeda remains the reason why the US needs to continue to spend hundreds of billions of dollars on a Pentagon designed to fight the wrong wars.

This is irresponsible hyping of a threat to justify massive defense spending during a period of real fiscal stress. 

Leon Panetta needs to get to work transforming the Pentagon and needs to elevate his game -- learning how to talk about vital national security deliverables in terms of deeds done and future strategy rather than trying to convince increasingly skeptical Americans that national security is purely a function of the dollars spent.

Image credit: Reuters

Just grabbed this vid off the The Atlantic's new "Video Channel".  It's just 90 seconds long and depicts a 1947 weightlessness experiment with cats and pigeons.

Would be fun to try this out on a few politicians -- perhaps Boehner, Cantor, Reid and McConnell next time the debt ceiling debate surfaces. 

Or better yet, Glenn Beck!

Convicted spy Jonathan Pollard has numerous advocates close to President Obama advocating his release from a life sentence.  Pollard betrayed his fellow US citizens and should only be released if he can be used as bargaining chip to move US interests forward -- meaning a real deal on an Israel-Palestine two state arrangement.


Ammar Awad / Reuters

Former Florida Congressman Robert Wexler, a confidante to President Barack Obama, on Middle East matters has written to the President asking that convicted Israel spy Jonathan Pollard be released. Wexler, whom I respect, joins some other progressives like former Reagan administration defense official and Center for American Progress Senior Fellow Lawrence Korb in calling for a pardon of Pollard.

As I've written before, I think Pollard is a first class traitor to the United States -- someone whose betrayal is worse because he worked for an ally.  That's a worse breach of trust than if Pollard had been working for Cuba or China or Iran.

Wexler, who serves as President of the S. Daniel Abraham Center for Middle East Peace, should know that the only way to get Pollard released is to treat him as pawn in the chess match over Israel's future relations with Palestine and the Arab region. 

In my book, Pollard should die in prison for his deeds that betrayed his fellow citizens and only be released if he became a bargaining chip in a scheme moving forward America's strategic interests.  That means if folks want Pollard out of prison, then Prime Minister Netanyahu and his associates like Bob Wexler can 'do much more' to engineer a close to the ulcerous, toxic mess of the Israel-Palestine peace negotiations standoff. 

Israel sets the temperature in the region -- and continues to engage in settlement expansion undermining any trust in its long term intentions to negotiate a two state deal.  The Palestinian territories are occupied and divided; the region is fragile -- and Israel is doing little other than aggravating a very bad situation.  In this circumstance, the release of Pollard for 'nothing in return' from the Israelis in improving the climate in their neighborhood would be a further betrayal of US national interests.

Leave Pollard in prison until the Israel government comes to understand that its passive aggressive behavior on settlements and peace negotiations is undermining its long term national security interests and undermining the health of its long term relations with the United States and Europe. 

If Israel genuinely changes course, then Obama should take a page out of Cold War spy exchanges.  Obama would, if Netanyahu brought along his government, have more latitude to trade the traitor for a systemic shift by Israel towards a genuine two state deal ending the Palestinian conflict.

Kenneth Cole nails it. 

The White House announced yesterday that Vice President Joe Biden will travel to China, Mongolia and Japan starting the 16th of August.

What he will find in Japan is a nation completely, entirely disgusted by its government. 

I've just arrived in Tokyo and have hear earfuls on:

. . .the 872 radioactive cows (from Fukushima Prefecture) -- fed contaminated rice straw that government bureaucrats allowed to escape destruction --  that have been slaughtered for market and sent to prefectures all over Japan.

. . .a hapless Prime Minister who took three months to appoint a minister to manage reconstruction after the tsunami and earthquake only to see him resign right away for remarkably insensitive comments about what he expected in the content of rebuilding proposals

. . .an email scandal in which employees of the Kyushi Electric Power Company were asked by a prefectural governor to send in pro-nuclear power comments in a public forum hosted by the Ministry of Economy, Trade & Industry -- thus stacking the deck significantly in favor of nuclear power generation by many with a direct stake.  The emails have now been publicly exposed.

. . .a well-respected Japanese nuclear energy expert and professor -- who after being goaded by Japanese Diet Members suggesting that things in Fukushima may not be all that bad -- exploded back at them loudly yelling at them in a riveting oratory that the politicians were unbelievably negligent if they didn't take the nuclear disaster in Fukushima far more seriously

. . .restaurants throughout Tokyo with posters calling for the residents of the greater area around Fukushima who are still too near the hot site to be evacuated further

Fukushima may eventually be contained, though in the last few days, those managing the site have found many previously unnoticed pipes that have severely high levels of radiation that are exposed outside the plant. But bottom line is that a huge container facility will eventually be built around the entire site.

Eventually, the victims of Fukushima who have lost their homes will either be relocated and compensated in some way -- or allowed back.

But what has really collapsed in Japan is any sense of trust by citizens in their central government. Perhaps it has been that way in years past, but the cynicism about everyone in government today is higher than I've ever seen in Japan.

Jewish Telegraphic Agency Bureau Chief Ron Kampeas and others grill the Washington Post's Jennifer Rubin for using a Sabbath time stamp excuse for her reporting on Norway terrorism.

The Washington Post's Jennifer Rubin is typically unrelenting in her ad hominem, edgy attacks on those with whom she disagrees -- and now many are as equally committed to not giving her any space to recover for sloppy work she did reporting on the Norwegian, platinum blonde, right wing, fanatical Christian in Norway.

In reporting on the murders, allegedly committed by Anders Behring Breivik, Rubin assumed as did many others that some quadrant of al Qaeda-affiliated violent extremism was involved.  Colleagues of mine including Jeffrey Goldberg and Max Fisher at The Atlantic made similar assumptions -- but for the most part everyone included a responsible placeholder in his or her comments that we couldn't yet be sure (at the time) who was behind the attacks.

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In August 2005, because of growing US political resistance on national security grounds, the China National Oil Company (CNOC) withdrew its bid to purchase the US oil company, UNOCAL. In 2006, Dubai Port World dropped plans to acquire the Port of Miami because of similar fears in the Congress about national security vulnerabilities if the agents of an Arab state operated a major US transport hub.

But the walls that have protected US and European national security prizes, particularly some strategic assets and sensitive technologies, may be eroding given the desperate hunger for cash that so many deficit-plagued nations have today.  The US has the "2007 Foreign Investment and National Security Act" in place as a tool to help drive Chinese investment into financing US debt rather than acquiring high-priced but national security-sensitive assets.
But Europe is another case -- and may be the back door through which China gets the opportunity to exploit the fragility of the Euro zone and buy things that would have been kept out of China's reach just a few years ago.

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Just a quick note to let folks know that I'm getting out of the Beltway a bit.  Some of you think that this it's vital to escape DC now and then.  I disagree as I know I'll be homesick quickly for the contrived, false, high stakes debates we love to concoct in Washington.

Seriously though, I'm off to do so Asia-watching in Japan and will be reporting back as soon as I land.

A number of correspondents checked in with America's biggest financier, the People's Republic of China, after President Obama signed the debt ceiling deal passed by the Senate and House of Representatives.

Xinhua reports that China was generally satisfied that a deal went through -- but China Central Bank Governor Zhou Xiaochuan also promised that China would diversify further its foreign exchange reserves.

From the Xinhua report:

"China hopes the U.S. administration and Congress would take responsible policy measures to handle its debt issue in light with the interests of the whole world including those of the United States," Zhou added.

"China would continue to seek diversification in the management of reserve assets, strengthen risk management, and minimize the negative impacts of the fluctuations in the international financial market on the Chinese economy," Zhou said.

China needing a hedge against the dollar means that the distressed Euro is ultimately safe. 

The yen is strong and stable -- perhaps too strong given the sluggish Japanese economy; its triple disaster of earthquake, tsunami and nuclear calamity; and a declining population -- but the Euro gives China the only other global currency of quality and scale to acquire.

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The debt deal struck by House and Senate Republican and Democratic leaders with the White House last night has key constituents around the country screaming.

Paul Krugman has said that if he had the privilege, he would vote No.  Senator Lindsey Graham will vote No. 

MoveOn has said that it's 5 million members are overwhelmingly opposed to the compromise debt deal package.  The Club for Growth has also reported that it opposes the deal.  Nancy Pelosi's office says she is undecided. 

Mitt Romney, Tim Pawlenty, and Rep. Michele Bachmann have also stated their opposition to the deal.  At least thus far, Senator Jim DeMint (R-SC) -- who I think is the key force of Congressoinal opposition behind the scenes -- has kept his powder dry and not indicated whether he is in the deal or out of it.

The leaders may think that they have the votes in hand to pass this debt ceiling deal and send to the President -- but there is a lot of opposition.  Much could still happen to undermine the appearance of progress announced by President Obama last night.

This may not be over.

Obama may then still get a chance to show that he is a real, FDR-style leader and invoke the Fourteenth Amendment of the Constitution protecting the commitment of the country to resolve past debts and then do so on his own terms -- which should include not throwing the jobless of this country under the bus.

Anne-Marie Slaughter has put out some interesting tidbits from a recent Singapore-based conference foray focused on China's future.

Slaughter, who just left her perch as Director of Policy Planning at the State Department, and is now back teaching at Princeton University, has joined The Atlantic as a correspondent.

The part that I found of most interest was this:

Instead of describing the Chinese political system as an "autocracy," some at the conference argued that we should think of it as a system of "internal pluralism," where the checks and balances are all inside the party and government structure. The Communist Party has 80 million members -- with a collective leadership of nine members, growing local power, and calls for internal party democracy, there is far more pluralism in the Chinese system than first meets the eye. This view of Chinese politics may well be overly sanguine, but it's an interesting perspective.

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Senator Jim DeMint was not one of the major political players whose every move we watched this weekend, but he was the animator of much of the high stakes drama over raising the debt ceiling and cutting the national debt.  DeMint has been the driver of the 'never give up, never surrender' drum beat of the largely freshman class of Tea Party conservatives in both the Senate and the House.  DeMint provided muscle and counsel to Republican Majority Leader Eric Cantor in his posturing during this debate.

House Speaker John Boehner, Senate Republican Majority Leader Mitch McConnell, Senate Majority Leader Harry Reid, and President Obama and Vice President Biden have essentially been negotiating with the DeMint camp through proxies -- making DeMint, for the moment anyway, the most powerful, albeit behind the scenes, political figure in the country next to the President.

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The standoff over the debt ceiling continues.  Back and forth.  Tit for tat.  No progress.  Paralysis.  Stuff is happening in the world -- but there is absolutely no bandwidth for anything other than the debt ceiling debate.

So, I've been scrounging around for off beat social commentary -- and the "Alex & Liam Walmart Experience" is the very best thing to get one's mind off of Boehner and Cantor.

This video captures everything wrong and right about America in about 3 minutes -- not quite de Tocqueville, but you'll get the point.

When the sub-prime loan crisis triggered a global financial meltdown, two issues became very clear.


The first was that America had a serious structural corruption problem with co-mingled interests among the financial sector, regulators and politicians.  The US had tilted its economy towards Wall Street and had undermined Main Street in the process.

The other issue was that America had become a nation whose growth flowed from over-consumption and the piling up of debt.  China, on the reverse side and quickly becoming a consequential economic heavyweight, was underconsuming and piling up cash reserves. 

'Global economic rebalancing' became the term of the times -- and Treasury Secretary Tim Geithner and others began talking in earnest about the importance to the global economy of China growing more through its own domestic consumption rather than through exports -- and of the US cutting debt and saving and investing more.

But addiction to consumption is hard to stop.  One way to quickly adjust consumption patterns in the US and to force a different behavior is to default on America's sovereign debt. 

There are huge and nasty consequences that lie ahead if the government does default.  Former National Economic Advisor to President Clinton, Laura Tyson, has estimated that just a 50 basis point rise in basic interest rates will result in about 600,000 Americans losing their jobs.  Some economists, on the far end of the scale, have said that default could trigger a 200 basis point rise in rates.

The key point is that a default will drive up rates and end America's role as a safe bedrock for the most conservative investments.  The US dollar will continue as the reserve currency, but other nations will build bigger hedges against the dollar.  The 'gravity switch' will be turned on -- and the financial sector will have less of a tilt in its benefit vs. the other real parts of the economy.

If default occurs, Americans will have to work harder to overcome the new hurdle put in front of them; they will have to invest more in the economy, will have to save more and grow the economy through a savings and investment strategy that we haven't seen in a long time.  The financial sector will be hit very hard, but America's export-oriented economy will get a boost as a cheaper dollar will put a tail wind behind the rest of the world buying less expensive American products.

I'm not endorsing a default.  I think it would be a terrible blow to American interests.  But there are some potential upsides if we do go into default that should be considered. 

As part of the sub-prime debacle, the US managed to export toxic financial products to the rest of the world -- and failed to protect the interests of its citizens as the financial sector blew up.  That was the point at which the rating agencies should have been moving to cut America's gold-plated investment rating. 

What we are seeing unfold in the debt ceiling crisis and the irresponsible actions of many  legislators is simply the second act of a play on America's decline that began some time ago.  The upside of America shredding its international reputation and responsibilities is that it ultimately will be forced to finally get its own domestic economic house in order.

I realize, of course, that Rupert Murdoch is still very much around. 

In fact, I dined last night with two prominent front-benchers of the British Labor Party who hope Rupert Murdoch is around for a very long time.  One of them called Prime Minister David Cameron "a dead man walking" and said that betting circles placing wagers on whether he will be the next government minister to leave office has narrowed from 50:1 to 4:1.

But going through a pile of notes, I found my scribbles listening to Rupert Murdoch at Richard Attias' excellent New York Forum last year. 

Pumping the political fortunes of Sarah Palin then, Murdoch said:

We didn't buy Alaska to save the moose.

I'm not going to offer an interpretation.  Just a Murdoch-ian line to remember when remembrances of the lead protagonist in his own Shakespearian tragedy are eventually offered.

After the slaughter of scores of innocents by a deranged, self-proclaimed anti-Muslim, pro-Israel (though I view him as anti-Israel) Christian right winger Anders Behring Breivik in Norway, the timing of this news at JTA is just weird, though I realize unintended:

The Israel Chamber Orchestra plans to perform a composition by Richard Wagner in Germany, breaking an Israel taboo against playing the anti-Semitic composer's music.

The ensemble will play "Siegfried's Idyll" in the Bavarian town of Bayreuth at an annual festival devoted to Wagner's work. Wagner, who lived from 1813 to 1883, is buried in Bayreuth, where festivals celebrating his operas have long been held.

Since its founding, Israel has had an unofficial ban against playing music by Wagner, whose anti-Semitism was public. His music and writings were long admired by Hitler and featured in Nazi propaganda.

Back to the future.

(h/t Jim Lobe)

Not surprisingly, Dean Baker -- the economist who loudly and accurately warned of an impending housing asset crash -- has critiqued President Obama's debt ceiling remarks last night, proclaiming that the President doesn't get what actually caused America's massive budget deficit and thus is prescribing the wrong measures -- like Medicare and Social Security cuts -- to fix it.

Baker quotes the President's remarks:

For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation's credit card.

As a result, the deficit was on track to top $1 trillion the year I took office.

Baker then points out that Obama's version of history is wrong.  He reminds that the Congressional Budget Office projections in early 2008 projected a deficit of $198 billion in 2009, when Obama took office.  The country was not then on track to have a trillion dollar deficit.

What caused the deficit, according to Baker, were the policies responding to the economic downturn triggered by the collapse of housing prices -- not entitlement program spending, or the wars, or tax cuts.

Paul Krugman seems to have laid the track for Obama's argument in an essay in May of this year arguing that there were three drivers that undermined America's economic solvency thus wiping out the budget surplus of 2000. 

Krugman writes:

What happened to the budget surplus the federal government had in 2000?

The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.

The unpaid for wars.  The 'temporary' Bush tax cuts for the rich.  And the subprime-triggered global financial crisis and recession.

I understand that the downturn in receipts to the government triggered by the housing bubble-triggered recession and the massive spending in response were a huge contributor to America's fiscal hole at the moment.  Baker is right about that.

But I think Baker is too quick to discount the impact of unpaid for wars -- and of the significant revenue impact of the 'not so temporary' Bush tax cuts.

When the economic crisis hit -- these other factors compounded the deficit hole-digging that the country has been in.  One wonders then why President Obama hasn't been more aggressive in drawing down excessive defense spending on challenges that were not at the forefront of America's most serious strategic problems.

Furthermore, the Congressional Budget Office has been wildly inaccurate in recent years in its projections. Former Congressman and Verizon government affairs chief Tom Tauke has been doing some interesting blogging of late about the CBO's rose-colored glasses and that legislators need to compensate for the consistently mistaken projections of the budget forecast unit. 

Dean Baker's assessments always deserve careful consideration -- and I imagine that he will stick to his guns on this latest argument.  But the debate here is not between Obama and Baker, it's really between Paul Krugman and Dean Baker.

I agree with Krugman that the financial crisis, unpaid for wars, and reckless tax cuts undermined the budget surplus of 2000 and left the country ill-prepared to deal with a fiscal shock.  I also agree with Dean Baker, however, that the White House has been seduced into a battle over entitlement spending and cuts that has little to do with America's economic morass -- and this is a serious problem.

President Obama should get back to explaining to the country what the drivers of our fiscal condition are -- and not only blow holes in the arguments being made by his political rivals about large scale entitlement cuts but also explain why he and his team have been as slow as they have been to extract themselves from costly, low strategic return wars as well as unable to end the corrosive effects and socio-economic stress caused by the Bush tax cuts for America's richest citizens.

Friends who have been battling a series of really bad fires that forced evacuations from homes in central Colorado -- near Westcliffe, Colorado -- have been sending me pictures of what has been going on as I have some land in the Rockies near them.

The picture above is of a beautiful, young, wild Arabian horse that is just hanging out in a meadow next to and around my property.  I'm guessing it was displaced in the fires.

I don't know horses at all -- but this one looks to me like quite a great creature.  I hope she does well and continues to like our neighborhood.

President Obama, who turns 50 on August 4th, has said that he will skip a big ticket birthday party fundraiser if the debt ceiling deal doesn't go through.  That's the only reasonable, smart move.

What is not a smart move are the nearly daily emails I am getting from various Democratic Party institutions asking for donations of just $5.00, or today from DCCC Chairman Steve Israel groveling for $3.00 if people are outraged by Republican intransigence on the debt ceiling talks.

Sorry -- this is just too important an issue to exploit for party fundraising.  It cheapens the seriousness of this standoff.

Here is Steve Israel's fundraising appeal:

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