At the Heart of The Obama “Birth Certificate Issue” There is Racist Prejudice

[the-subtitle ]

by Paolo von Schirach

April 27, 2011

WASHINGTON– So, in the end Donald Trump’s well orchestrated inquisition, including private investigators sent to Hawaii, forced President Barack Obama to produce in public the original document that, indeed, certifies that he was actually born in Hawaii, US soil. Therefore he was and is eligible to be President. So little Barack was not born in a Kenyan hut in the middle of the savanna, delivered by a witch doctor, with lions roaring outside. No, folks, it really was Hawaii. Disappointed? Well, I am sure some really are. However, I bet that for many “birthers” the release of this document will not make a bit of difference. Prejudice is notoriously impervious to facts.

Unhappy day

But this is an unhappy day for America. We have reached a new low in the time honored practice of political smear. Donald Trump, who thinks with some reason that practicing to be a candidate for national political office is really no different that being a TV celebrity, whereby theatrics are just as relevant as policy, even said that he is proud of himself. He “forced” the birth issue out. And so now, if it will be settled because Obama finally produced the document, it is all thanks to him. A real hero, America.

Real story: disguised racism

But, beyond the theatrics, let’s not kid ourselves. The real story here is that the whole campaign alleging that Obama was not born in the US and thus, according to the US Constitution, would not be eligible to be President, is only thinly disguised racism. The totally bogus birth certificate issue was just a convenient peg to “demonstrate” that this man should not be President. And –let’s make this absolutely clear– they do not want him as President because he is Black. This is the unspoken, undisclosed real story.

The “birthers” will not be convinced

If the birth certificate issue had been raised in good faith by people who had at least some reasonable ground to be uncertain, then there should be a collective sigh of relief and all the good people would say: “Alright. This is now settled. Now we can move on”. But I doubt it. How many “birthers” will be reassured, now that the original document of Obama’s birth on US soil has been produced? I bet that many will say that the document is a forgery; that it is all a conspiracy, that the Hawaii state government has been bought, etc. In fact, the publisher of a book entirely devoted to the birth issue just stated that the documemt release by Obama changes nothing and that he expect to sell at least 500,000 copies.

Obama Muslim?

And then, of course, there is the other parallel story of those who believe that Obama is morally ineligible to be President because “he is a Muslim”. For them, the subtext runs like this: “America, you see, is a Christian nation, and so it is an abomination to have a Muslim President”. And this belief shows that the supposedly cardinal American principle of a clear separation between Church and State for many Americans applies if we postulate that Christians only may have a seat at the table. So, we cannot have a Muslim President and, as Obama is a Muslim, he is in place he does not deserve, as it is reserved “for one of us”.

Obama is not a Muslim. But, as in the birth issue, facts do not matter. In order to make the point that he should not be President, we simply claim that he is. And so we can make our point.

Fabrications allow people to claim Obama should not be President

So, two fabrications, the birth issue and the Muslim faith, provide “factual” basis for claiming that Obama should not be President. So, we can be racist without even mentioning race. We can disguise a basic prejudice without even admitting it, because ostensibly what we claim diqualifies Obama is not race.

Fate had it that Obama’s unusual background, the African father, the American mother’s international development work, his years in Indonesia and more, on top of his racial features, created the deep conviction among many Americans that “he is not one of us”.

Audience willing to believe

So, for a sizable minority of Americans it is possible to say that “he is not one us” on account of his unusual background. But the truth is that –for them–he is not one of us because he is Black. However, the problem is that they cannot say this publicly, as open profession of racism is now unacceptable. So, the easy fall back was to dig into Obama’s unusual background and “discover” damning evidence.

And so they did, finding a large audience willing to believe anything that would confirm their prejudice. But all of this reveals just one simple fact. The people who bought the whole foreign birth and Muslim faith story are not “unserious”. On the contrary, they are very seriously racist.

We thought the 2008 elections were a mile stone

For a brief moment it appeared that the 2008 election of Barack Obama, with a really large number of white voters supporting him, signaled the end of racism in America. Well, if not the end of racism, at least the beginning of a promising new chapter in which race would no longer be a lingering but unspoken divide. A divide that we would rather not talk about; but that nonetheless is still an open wound showing no sign of healing. We really thought that the 2008 elections represented a new mile stone in the American spiritual and political journey that led from slavery to the Civil War to segregation to civil rights legislation, now to Obama and who knows what else in the future.

For some Whites Blacks are not legitimate

It is clear that at least some Whites do not look at Blacks as really legitimate participants in this society. This obsession about Obama’s birth certificate and the parallel belief held by millions that he is a (dangerous?) Muslim, taken together, are evidence that a big chunk of our chequered racist past is still very much with us. Obama producing a piece of paper will not change these negative emotions held by so many. There is no additional “certificate” that President Obama can produce attesting that he is a truly legitimate American. For some he is not. Period.

This unfortunate story tells us that the day in which we shall all be able to judge a person not by race but by “the content of their character” is still quite far. Let’s hope not too far.




Standard & Poor’s Downgraded US Outlook – America in Decline Accepts “Negative” as “The New Normal”

[the-subtitle ]

by Paolo von Schirach

April 20, 2011

WASHINGTON– The US sovereign debt outlook was just downgraded from “stable” to “negative” by Standard & Poor’s; but this downgrading has been dismissed by the White House as a non event. It has been explained away as an (inappropriate) political judgement by the credit rating group on the difficulties encountered by Democrats and Republicans about reaching an agreement on spending, taxes and raising the debt limit. The White House point is that these “political issues” have nothing to do with the fundamentals driving US fiscal problems. So we are told that what politicians in charge of fiscal policy do or do not do on spending and revenue apparently does not have any impact on national accounts).

Not to worry, America

And the S&P move came in the wake of a critical International Monetary Fund, (IMF), report in which the US has been chastised for not acting promptly in order to rebalance its federal debt. Meanwhile, now it takes 1.43 dollars to buy a Euro; last year it took 1.30. So the US dollar continues to slide.

But the message from the White House? Hey, not to worry, America. The sun is shining. The US, as always, is strong and invincible. What S&P and the IMF are worried about are just minor squabbles and they will be resolved in no time, as they always are. Besides, who would ever doubt the creditworthiness of the US? After all, America is still by far the largest economy in the world.

Dangerous indirect message: debt is fine

This way to “explain” and essentially dismiss a significant grade change from “stable” to “negative”, signaling S&P’s diminished confidence in America’s ability to take care of a chronic and deteriorating fiscal crisis is another bizarre exercise in denial. (“No, I swear to you, I do not have a drinking problem. The bottle in my closet? Not mine, really”). And this denial, while politically expedient for an incumbent president Barack Obama who just embarked in his 2012 re-election campaign, reinforces the popular feeling that, more or less, things are under control.

So, here we are in the worst fiscal predicament since WWII. Our national debt outlook has just been downgraded to “negative” and we are told that all is well. Politics aside, the perverse result of all this is to convince America that high deficits and unprecedented public debt are actually fine. The implicit, insidious message is that Banana Republic finances are the “new normal” for the US.

The issue is not today’s solvency

True enough, nobody is questioning America’s solvency today. But the world is looking at a progressively deteriorating US fiscal picture, with unprecedented levels of deficits, (now 10.6% of GDP, an astounding record), and parallel national debt increases, with the national economy doing at best so-so. And, in all this, no consensus on any new policy, let alone the right policy. So: high deficit, projected explosion of entitlement programs costs, (due to the retirement of the baby boomers), and political paralysis in Washington. And S&P taking notice of the above is “political interference”?

At some point, a risk premium

At some point, although nobody knows when, assuming no substantive policy changes, the world will start questioning America’s future solvency. This will not happen all of a sudden. It will be an incremental process. Most likely, in the future, creditors will start asking for an interest rate premium as an inducement to keep buying US Treasuries. And that will be the start.

Progressive decline

But the point here is not to indulge in doomsday prognostications about a US financial catastrophe that may never happen as “an event”. Indeed, it is not foreordained that the US will go down in flames in one big epic economic disaster after which all of America will wake up destitute. It hardly ever happens this way.

The most likely route is progressive decline. Look at other countries that declined. Spain declined. France declined. Yet, they did not disappear from the face of the earth. They are there. But smaller, less relevant and relatively poorer. Likewise, Great Britain was the great world power of the XIX Century. Today it is a vastly diminished nation. But Great Britain did not sink into the North Atlantic. You can still visit London. But the UK is there as a severely downsized power, with fewer resources and a lot less leverage and influence.

Japan

And Japan? Well, similar story. After its roaring 1980s, Japan imploded. And now it coasts along, still important; but diminished. Aside from the recent terrible earthquake-tsunami tragedy, the country carries on. But it carries on with an enormous national debt overhang patiently carried by an aging, mostly risk averse, population. Bright future ahead for Japan? What do you think?

Nations get used to decline

But the real lesson to be taken from these historic examples is that decline, unlike a sudden crisis, is hardly ever understood as it is happening. And this is because it is usually incremental and so governments and people get used to it. The aberration progressively becomes normal.

Argentina had its default

And even if we look at countries that have had to face sudden financial earthquakes, this is not “the end”. Look at Argentina. It went to hell; but it came back, sort of. It had a massive public debt default. And guess what. It recovered. Sure enough, given the size of the wreckage, lots of people were hurt, badly. But the country did not disintegrate. There was no civil war. The Argentina default is no longer talked about. It is history. That said, the massive default left scars. Indeed, while the US should worry about keeping its coveted AAA credit rating, Argentina has to make do with its puny B. Financial disasters do have consequences. (And in America’s case a much milder lowering from AAA to AA would already be a disaster).

America getting used to decline

So, the real problem for America is not that “we are facing the end”. The real problem is that in this land of congenital optimism, where it used to be axiomatic to state that “tomorrow will be better than today”, we are progressively becoming comfortable with a –permanent, I would argue– diminution of our overall condition. With the complicity of national leaders, negative developments are explained away or ignored, while bad polices do not stir any outrage within American society.

The “new normal” for America

In America, the new normal is:

–A Federal Government severely in debt, year after year, not because of the stimulus plan or the TARP banking rescue measures, but because of built-in, structural increases in entitlement programs for which there is no revenue.

–For America to have a federal deficit that is 10.6% of GDP, while in France it is 7%, in Canada it is 5.5%, in Australia it is 4.6% and in Germany it is 3.3% .

–A crazy health care system driven by “fee for services”, with doctors routinely over prescribing anything, confident that the insured patient will not object to “more of everything”.

–No public outcry about the above sky rocketing health care costs that have no match in any other developed country. No policy maker saying that this is an anomaly that needs to be corrected.

–The US Congress routinely failing to approve a budget for the next fiscal year by the due date of September 30.

–A cumbersome, incomprehensible, federal tax code, with loopholes, shelters and exemptions designed to favor those with enough resources to game the system to their advantage. And just navigating the code costs billions of dollars every year.

–One of the highest corporate tax rates in the world. Maybe it is alright for large multinationals that can circumvent it; but bad for small companies, and bad for economic growth.

–An obesity epidemic that will condemn millions of Americans to be chronically ill in their maturity and old age, adding hundreds of billions to our health care costs.

–To have an unresolved illegal immigration issue whereby 12 to 14 million peope live in America with no status.

–A woefully inadequate public education system that condemns generations of young people to be marginalized, as they lack not only skills and knowledge but often basic literacy.

–National teachers unions claiming that things are fine and that any attempt to change the status quo is part of a mean spirited anti-union plot.

–No serious energy policy in a country dependent on (more and more expensive) imported oil for 60% of its consumption.

–Air traffic controllers asleep on the job and pilots landing unassisted.

–Major airlines outsourcing airplane maintenance to contractors who cut corners, do not do their inspections and use non certified parts.

–For president Obama to announce grand plans for a future network of fast rail connections in America without any serious money to fund it.

–To sell to the public the corn ethanol program, in truth just a disguised agricultural subsidy to corn growers, as a major achievement in renewable energy policy.

With the old American mind set, none of this would be tolerated

If America had retained its old public policy standards, none of this would be acceptable. But today it is, indeed, “the new normal“. Whatever the Washington loud Republicans-Democrats partisan fights, The Nation as a whole tuned ”the debates” out, while it progressively accepted that mediocrity, the consequence of all these and other policies, is alright for the US.

Sub standard is the new standard

As a result, in America, now, sub-standard is the new standard. Being heavily in debt is perfectly fine; while losing ground in the competitiveness race because we are not innovating is also an innocuous development, not deserving further discussion.

If it were not so, then there would be waves of national outrage that would translate into a dramatic change in political leadership and the unveiling of a new course.

Tea Party did not grow into a serious force

While only last year the Tea Party Movement was thought to be the signal of a major turning point, now I am not so sure. Ask the Tea Party members what they are prepared to do to re-balance the national books and you get very disappointing answers, usually focusing on eliminating outrageous but financially negligible programs. Tell the Tea Party people that we have to cut down all the entitlement programs for middle class seniors and see what applause you get. The fact is that they do not know and nobody told them that the problem in Washington is much, much bigger than “fraud, waste and abuse”.

The euphemisms of the “new normal

The truth is that the national leadership managed to create a consensus whereby the bidf mess we are in is gently toned down. For every problem there is a euphemism that will take the bite out of it. A “crisis” is renamed a “challenge”, a “failure” will be your “achievement gap”; a horrible “debt” will be a “revenue shortage”. And “illegal aliens” are now “undocumented workers”.

No outrage

Sure enough some cry out. By they are dismissed as fringes, colorful crackpots, material for sensational cable TV shows, or amiable old uncles who always complain but are really OK people, just like Erskine Bowles and Alan Simpson.

Bowles-Simpson and “The Moment of Truth”

Senior statesmen Bowles and Simpson, co-chairs of the “debt commission” created by president Obama, in December 2010 presented their serious Report –aptly titled “The Moment of Truth”– on what to do about US chronic fiscal imbalances. In an unadorned way, they plainly stated that there is a need to take immediate action on systemic imbalances, now, before it is too late. They presented to president Obama a reasonable menu of recommended policies, supported by a (small) majority of the commission members. A debatable menu, if you want, but doable.

Moment came and went, president Obama ignored it

Well, what happened to “The Moment of Truth”? Nothing. The two senior statesmen got a polite hearing, a good dosage of media attention and probing questions in some serious fora. But the president of the United States –he is the one who actually created the “debt commission” that issued the Report– vaguely nodded and did absolutely nothing. In other words, the US president used the “bully pulpit” to say nothing about the issue of deteriorating US public accounts, after his commission made recommendations for swift action.

And, with this inaction, the public got the unspoken presidential hint: “These are just a few old guys venting steam. Yes, we may have a problem on debt and revenue, but nothing we cannot handle, trust me”.

Paul ”Path to Prosperity” dismissed as “unserious”

Then a month ago came Congressman Paul Ryan and his Republican House Budget Committe proposal titled “The Path to Prosperity” for next Fiscal Year. This plan contains radical reform ideas for Medicare and Medicaid, (more radical than Bowles-Simpson), aimed at seriously transforming the US system providing health care assistance to the poor and the elderly. A radical plan, no doubt, with controversial ideas in it; but not a crazy plan.

This could have been material for debate on fiscal policies. But no; no debate. The president, afraid that he may concede the fiscal reform ground to the Republicans, counterattacked. He dismissed Ryan’s the plan as “unserious” and thus unfit for discussion, while demonizing the Republican proponents as cold hearted cynics who want to balance the national accounts on the back of the elderly, the sick and the poor, while doling out more goodies to the super rich. A balanced and fair characterization, what do you think? And so, instead of the beginning of a debate, we had another exercise in posturing, while the public is fundamentally disengaged because none of this looks serious.

General public tuned out, and no appetite for any reforms

Indeed, in the midst of all this political theatre, the real “news” is that the general public does not want to do much of anything regarding real spending cuts. Opinion polls indicate that Americans do not like the Republican deep cuts bitter medicine; but they do not like much the milder cure proposed by president Obama either. And nobody as yet managed to convince America that we are facing a serious problem.

Translation: middle America is not in this conversation, such as it is. The general public is yet to be persuaded that we have a problem with runaway public spending, most of it due to skyrocketing medical costs. Again, lacking consistent national leadership via a clear message from credible policy makers, the American anomaly of forever growing debt is now “the new normal” and most people are not clamoring for corrective action. With no consensus on a credible new policy approach, very few believe that there is a real problem out there. Americans continue to believe that we can have the welfare state more or less as is, while it is alright to pile up debt as the means to finance it.

In the “new normal” fiscal recklessness is fine

In the end, the worrisome conclusion is that –not consciously but rather unwittingly and by default– we have created a new conformism, whereby chronic fiscal recklessness is fine, while national underachievement and eventually decline is normal. The famous historian Arnold Toynbee is often quoted for having written that civilizations are not murdered; rather, they commit suicide. Meaning that “the end” is a self-inflicted wound. And this may be America’s eventual fate.

Toynbee: a sign of decline is uncritical uniformity

But Toynbee also gave us hints about signs of incipient decline: ”Civilizations in decline are consistently characterized by a tendency towards standardization and uniformity“. And this describes America today. The new intellectual uniformity is uncritical acceptance that the current mediocrity is the new standard for America.

Whatever happened to the “can-do” Frontier Spirit of the scrappy pioneers?




NATO in Libya Timid, Almost Unserious – Gaddafi Takes Notice, and so Will Others

[the-subtitle ]

by Paolo von Schirach

April 15, 2011

WASHINGTON– Welcome to the 2011 NATO-led Libya intervention, a fresh example of how a low budget, low participation, low enthusiasm war can lead to a stalemate (or worse) between the largest military alliance in the world –NATO– and Colonel Gaddafi, a third rate North African dictator. As the limited, air campaign only, intervention drags on inconclusively, the latest nugget is that NATO Supreme Allied Commander Europe, (SACEUR), US Admiral James Stavridis, recently begged NATO members to supply at least 8 more combat aircraft, so that the combined NATO air power can have a bit more punch against Gaddafi’s forces. And NATO Secretary General Anders Fogh Rasmussen also stated earlier that alliance commanders need more “high-precision” aircraft; but he has not received any firm pledges from NATO governments.

8 planes for Libya, anybody?

Please note: Admiral Stavridis did not say he needs 80 planes. He said he wants 8, and apparently he is having trouble getting any. And he and his political counter part Secretary General Rasmussen are not asking Moldova. They are asking an alliance of 28 nations, among them 4 of the G -7 members, that is to say some of the wealthiest countries in the world.

The fact that NATO top brass is down to openly begging for a truly modest contribution, while even those who are participating in the air campaign operate according to all sorts of self-imposed restrictions stemming from national rules of engagement, tells a worrisome story.

Bad signs

NATO is not just lukewarm about the Libya conflict. These are signs that the Alliance, (admittedly created on April 4 1949 for an altogether different purpose), is turning into an empty shell. The point is simple: in case of war, either you are in or you are out. If you are in, you throw in all you’ve got. NATO instead decided to get in, but timidly and not with a united front. Germany is out. A few others contribute just a little bit. This is not the way to go war.

NATO did not have to intervene

A NATO Intervention was neither mandatory nor inevitable. NATO could have decided that violence against civilians in Libya, while regrettable, does not touch the alliance core interests, and so NATO would stay out of this emerging internal conflict. Individual members states, (such as France and Britain), could have taken a different course, acting individually, with no alliance involvement.

But instead NATO proclaimed its readiness and its willingness; and then it proceeded with minimum effort and, with the exception of France and Britain, modest contributions. This is unserious and it conveys weakness, not just to Gaddafi, but to the whole world.

NATO: “No Action Talk Only”

Even in the bad old days of the Cold War, when mighty Red Army tanks were parked in East Germany, the alliance inside jokes were that “NATO” stands for “Not At The Office“, or “No Action Talk Only“. Well, the old jokes certainly apply now. The once great military alliance these days has some meaning only when the United States, by far the most powerful member, is in the lead, thus masking the political timidity and operational shortcomings of the lesser members.

Getting to be another British Commonwealth?

As we know, in the case of Libya, the US (in its wisdom) decided to make just a strong cameo appearance at the beginning of the first act. Now, America is still doing stuff, but it is not using much muscle. Which is to say that, without the US in the lead, NATO is showing promise to become something akin to the British Commonwealth, a fairly innocous talking shop, good for ceremonies and nice speeches, otherwise devoid of much substance. Unless we shall see a dramatic surge of enthusiasm and NATO members coming forward with assets and serious will to fight, this is pretty much it.

If I were Gaddafi, while I would worry about the long term viability of my regime, I would not be terrified about what may happen to me in the next few months. NATO is not going to come and get me.

Juppe: open recriminations

And, regarding its impact on prestige and credibility, this mix of halfhearted promises and retreats is coming out in the open with public accusations and recriminations. Indeed, after complaints from the Benghazi rebels about the ineffectiveness of fewer NATO strikes than they expected, we saw French Foreign Minister Alain Juppe rebuking NATO for its timidity. (He also asked the US to recommit war planes to the mission. But Washington declined).

3 leaders engaged in public relations

And this political disarray probably justified the extraordinary measure of mobilizing the top policy makers in a morale boosting, public relations effort. President Barack Obama, French president Nicolas Sarkozy and British Prime Minister David Cameron wrote a joint op-ed piece in which they tried to defend this convoluted mess. They jointly claim that all is fine. The UN mandate is only about defending civilians, and this is what they are doing. (Trying to do, with mixed results, would be closer to the truth).

Gaddafi has to go? How do you make him go?

More substantively, they also state that, no matter what is happening on the battlefield, it is impossible to envisage a post-conflict Libya with Gaddafi still in power. So, the end game is still the same: “Gaddafi has to go“. This joint restatement of the larger strategic objective is good. But what is not at all good is that, so far, with a modest NATO commitment to the war effort, this may take months, or even more. In other words, now as before there is a mismatch between strong words and puny means. And the op-ed piece by the three leaders did not indicate how this problem will be resolved.

Arm the rebels

For this whole thing to regain credibility, NATO should intensify its air strikes against Gaddafi’s forces, even though now this has become a lot more difficult, as the Libyan army is dispersed and intermingled with civilians, thus complicating targeting.

But, most importantly, NATO needs to support, directly or indirectly, all credible efforts aimed at training and arming the Benghazi Libyans. If Gaddafi has to go, and NATO troops are not going to go after him, then give tools to the only ones who would like to do this. But there is resistance to arming the rebels. The objection is that arming the Benghazi Libyans is dangerous, as there may some al Qaeda followers or other anti-western groups among them.

Objections make little sense now

But the objection is peculiar, at this stage. If this is indeed the case, if the Benghazi rebels are an unsavory bunch, then NATO should have stayed out of the whole thing from the very beginning. Whereas NATO got in. And now it wants to deny aid to the rebels? In the end, some aid will go to Benghazi. It would appear that Qatar is working on this, and some NATO countries may work through Qatar. Be that as it may, it is very late in the game. Arming and training the rebels would help hasten the end of this conflict.

President Obama: a little bit in but not all the way

As for president Barack Obama, his idea of getting in to deliver the initial strong (but not decisive) punch and then back off, was not wise. After the beginning of the operation, Obama stated that, “Going forward, the lead in enforcing the no-fly zone and protecting civilians on the ground will transition to our allies and partners, and I am fully confident that our coalition will keep the pressure on Qaddafi’s remaining forces“.

Well, his confidence was a bit exaggerated. Pressure not so strong. Gaddafi’s forces still have punch.

If Libya operation sours, America will be tainted

Beyond this, the larger point is that, once America is in any conflict, politically “it is in all the way”. Having invested its word and national prestige, America’s credibility is tied to the eventual outcome, no matter how deeply the US was involved. In war you cannot be “just a little bit pregnant”. If this NATO operation goes south, America’s prestige will be tainted, as the US is the leading member of this military alliance.

If Obama chose this course of action so that he could at the same time show resolve and bow to the anti-intervention wing of the Democratic party, this way trying to make everybody happy, I am not sure that this will work, politically and militarily.

In the meantime, will NATO SACEUR Stavridis get his additional 8 aircraft for Libya? What do you think?




Libyan Rebels, From Stalemate to Defeat? – Possible “NATO Humiliation”

[the-subtitle ]

by Paolo von Schirach

April 10, 2011

WASHINGTON – Without US leadership, the NATO-led military effort on behalf of the Libyan insurgents is turning into a botched affair, with inconclusive actions, unfortunate “friendly fire” accidents in which NATO planes mistakenly bombed the rebels they are supposed to help, and so on.

After a promising beginning with the destruction of Libyan air defenses, command and control centers and more, it looked as is the rebel offensive was gaining momentum. But this hope lasted only a few days. However diminished, the Libyan government forces are still superior. And we now can see the battle field shortcomings of improvised rebels, poorly armed, lacking discipline and proper training.

Stalemate or signs of defeat?

Given this scenario, until a few days ago, it appeared that the situation on the ground was developing into a stalemate, with a lot of inconclusive skirmishes. Well, now we are beginning to see signs that it may turn into a rout for the Benghazi Libyans. NATO bombing raids notwithstanding, the insurgents are retreating. Gaddafi’s forces are about to retake Ajdabiya, a key transit point to get to nearby Benghazi.

NATO humiliation

And this may be the end, not just for brave, yet disorganized, rebels, but for the 28 member NATO Alliance. Think about it. A group of mostly rich Western nations, with vastly superior armed forces, unable to prevail against a North African gangster that goes on the offensive with SUV’s and ”technicals”, machine guns on pick-up trucks? As the British daily The Guardian (April 10, 2011) put it:

“Nato faces humiliation if Gaddafi’s army is able to force its way through Ajdabiya again to threaten Benghazi, the city the western allies launched the first air strikes to defend”

Can Libya prevail against NATO? Possibly

“Humiliation”? But how can this be, given the vast superiority of combined NATO forces? Well, this is the outcome of an improvised intervention, with so, so coordination, all sorts of legals and political limitations, (no boots on the ground, focus on protecting civilians, no strikes that may cause collateral damage, etc.), that turns out to be inadequate under the new circumstances of urban warfare.

Existing air war tactics inadequate

NATO planes may circle overhead, but there are not that many identifiable fat targets, as Gaddafi dispersed and hid his armor and sends his troops forward in civilian clothes, making them almost indistinguishable from the rebels.

True enough, at some point one would expect that having suffered hits on logistics, fuel and supply center, and more Gaddafi’s forces will lose steam. But, if this is bound to happen in the long run, this is probably why he is trying to crush the rebels now, before the NATO strikes really take a toll on the residual mobility and fighting capacity of his forces.

If no NATO boots on the ground, then arm the rebels

This being the case, unless NATO turns around completely and allows a military invasion of Libya, something that, beyond all the political ramifications, cannot be done in a day ot two, the only available course of action is to start arming and training the rebels now. NATO is terribly late on this; but this new emergency hopefully will force action. It is sad that, once gain, we need Gaddafi’s forces at Benghazi’s gates to spur some quick thinking, but it would ne nice to see some focus, for a change, on the part of NATO Governments that are running this war in the mode of a slow moving corporate board.

Can NATO lead?

The bottom line here is very simple. Either NATO admits that helping the Benghazi Libyans, after all, was not such a good idea, withdraws in humiliation and allows the whole thing to unravel, or it has to do all it can to help them prevail. And right now we are not even talking about about “winning”; but about the capacity to regroup and resist through the injection of better weapons, equipment and know how. This is not easy; but it is possible. Can NATO (with or without the US in the lead) do this –fast? I wonder.

Political damage for America as well

And the US will also suffer politically. The fact that president Obama decided to have a small role in this intervention will not diminish the fact that America has been involved from day one. The US fully supported the whole concept of the attack and provided the initial muscle to help its success. Like it or not, a US officer, Admiral James Stavridis, is NATO SACEUR, Supreme Allied Commander Europe. Like it or not, NATO is a US-led military alliance. NATO’s humiliation, should it come to that, is also America’s humiliation.




Paul Ryan, “Path to Prosperity”, And How To Change American Bad Health Habits

WASHINGTON – Here is a riddle for you. What’s the connection between the US looming fiscal crisis, the 2011-2012 budget proposal put forward by Congressman Paul Ryan which includes drastic changes in Medicare payments, and the advice to Americans to change diet and walk at least thirty minutes every day that came from the authoritative podium of the World Health Care Congress?

Believe it or not, the connection is very strong. In a modern society certain individual costs are socialized through centralized welfare programs. So, the overall size and extent of the socialized individual needs matters a great deal. And, as the extent of these costs inevitably become a public policy and public finances issue, when they explode beyond any control –this is the case of the American health crisis– we see how millions of people who do not take care of their health as much as they could, (without major efforts on their part), originate massive medical needs that translate into massive costs, consequently creating a huge political problem.

Individual behavior, political consequences

And this is the issue before us, as different players put forward different welfare spending blueprints aimed, in large measure, at taking care of the consequences of the bad habits of millions of Americans. So, do keep in mind that what is now framed as a “political issue” at its roots has individual behavior, (life style, diet, exercise, addictions). The gigantic national medical needs that policy-makers are trying to address largely largely stem from  from this behavior.

Indeed, systems are put in place to provide health care. And they cost money. How much of these costs are socialized and what the consequences of this socialization are for public finances becomes a matter of political debate. Yet, it all starts with individual needs in large part framed by personal behavior.

How are we dealing with the consequences of personal behavior? Paul Ryan has a plan

But let’s see how this plot unfolds. House Budget Committee Chairman Paul Ryan, Republican of Wisconsin, opened the “Big Budget Debate” by presenting a broad-based plan on April 5 aimed at obtaining substantial savings that will cut the astonishingly high yearly deficits and consequently the total national debt. Compared with Obama’s budget, his “Path to Prosperity” proposal would cut an additional 6.2 trillion dollars over the next ten years.

Ryan’s plan outlines spending cuts that create a path to fiscal sanity. His assumption is also that a combination of lower government spending, plus a streamlined tax system, including lower corporate tax rates only up to 25%, will contribute to higher economic growth. This “Path to Prosperity” may actually work.

In line with an anti-government, Tea Party inspired, mood?

More broadly, one would think that these proposed drastic spending cuts should be in line with what angry voters loudly demanded in the course of the 2010 campaign that led to a stunning Democratic defeat in the House. In fact the entire Tea Party phenomenon was and is largely an “anti tax and spend” grass roots movement.

So, big green light for Ryan and the Republicans from the voters? Well, not so fast. Angry Tea Party activists and many others demanded much lower government spending during the 2010 campaign to renew the Congress and they voted for the Republicans who seemed inclined to cut. But at the time nobody cared to single out in any detail “what should be cut and by how much”.

No. People really want to have their cake and eat it too

And here we get to the real problem, namely the basic immaturity that characterized a debate long on grandstanding and posturing and short on seriousness.

People running for office on a platform that would include –say– “No more federal money for private groups that provide abortions” may have scored big with ideological voters, but these cuts do not get you far. In fact, beyond ideological posturing, from a fiscal point of view, they are meaningless.

And yet, unfortunately, the political reality is that even for the most ferociously anti-government Americans the real, if unspoken, slogan is: ”Cut, cut everything, but do not touch my programs, please“.

Translation: Symbolic cuts are good, cuts in what I get are bad.

The untouchable welfare state

And, as it turns out, all these armies of supposedly self-reliant, “do it yourself” Americans are adamantly opposed to cuts in their favorite welfare programs. And these include Medicare and Social Security.

And very few told them in unequivocal terms that any path to fiscal restoration has to include cuts in all entitlements which alone constitute about 60% of all federal spending. Until this issue is squarely and honestly put on the table, serious spending reform may remain an elusive goal.

House Budget Committee Chairman Ryan means well, and I wish him success; but I sense that America is not yet on board.

Social security reform, a bit easier

Regarding Medicare and Medicaid, both programs are essential pillars of the US welfare state. Tinkering with them without broad popular support is politically explosive, if not suicidal.

Social Security is equally important; but fixing it is likely to be much easier. Repairing Social Security is mostly about moving forward the age of full benefits eligibility, in line with changed demographics and longer life expectancy. As we all live longer, so we should get our benefits a bit later. These program modifications can be done in a gradual way, without harm for future recipients.

Medicare is a mess, as it is part of the broader health care cost explosion

But Medicare is a much bigger mess. Because Medicare is one large component of a monstrous health care system characterized by the highest cost structure in the world; it is therefore negatively affected by its crazy cost dynamics.

As currently conceived, Medicare is a subsidy, whereby enrolled senior citizens pass on to the government their medical bills. The problem is that, as the actual costs of medical care in the US keep growing well ahead of inflation, the overall Medicare financial burden for federal finances will soon be unsustainable.

The Ryan remedy

The Ryan Budget blueprint puts forward a bold reform. The US Government will stop underwriting costs. It will provide a fixed amount of money that will be used by individuals to cover insurance policy premiums that they will select from within a pool of competing insurers. Beyond that, the Government contribution will rise only with inflation.

The rational here is to introduce a system that will incentivize competition among insurers and a more judicious use of health care. This is good. But only up to a point.

If costs keep growing, limited government help will dry up quickly

Indeed, if policy makers assume that medical costs are destined to rise at the current rate indefinitely, then it is clear that a limited premium support program will not do it. Assuming sky rocketing costs, senior citizens, after having quickly utilized whatever money comes from Washington, will be left to fend for themselves, and some for sure will not have enough money to do so.

As soon as this scenario sinks in, and you can bet that the Democrats will make sure to highlight this point, this whole Medicare reform proposal will become a huge political liability.

It will be very hard to convince future recipients that they have nothing to worry about, because the new system will magically contain costs, so that they will be in line with inflation. People are unfortunately used to costs going up, and up, every year.

But why these costs in America?

And this is indeed the real core issue. Why skyrocketing medical costs in America of which Government payments is only one, albeit very large, component? No similar phenomenon is registered in comparable advanced countries. What’s so special about the US?

In truth, say the experts, there is absolutely no objective justification for this ongoing explosion of medical costs in the US.

“Fee for service”, no built-in disincentive to over prescribe, and an unhealthy population contribute to increase demand and cost

There are contributing factors, though:

–One is that medical professionals are paid on “fee for service” basis, with no limitations. Which means that the more they prescribe, the more money they make. There is abundant evidence indicating widespread include way too many unnecessary procedures, redundant tests and over prescription of medications. All this comes with a huge price tag.

–The second is that the medical insurance system places insufficient checks on this practice.

–And, third, we have a very unhealthy US population more and more afflicted by chronic diseases whose treatment creates enormous financial burdens for the whole system. The Medicare program sits in the middle of this mess. In fact, it sits on the most expensive end of the continuum, because it provides for elderly patients, by definition in greater need than the average younger individual.

My point is that, unless the health care fundamentals –mostly “fee for service” and “wellness education”– are not drastically modified, it would be hard to find a permanent and satisfactory solution for Medicare.

Can we change the underlying fundamentals that drive up costs?

But can this be done? Of course it can. But it requires a small revolution –a revolution recommended by health care professionals.

Fate has it that this new Paul Ryan Budget has been unveiled just at the same time of an event held by The World Health Care Congress. One of the speakers was George Halvorson, Chairman and CEO of Kaiser Permanente, one of the largest health care providers in America.

Enter George Halvorson of Kaiser Permanente

And what Halvorson had to say is truly astonishing. With example after example he pointed out the absurd cost disparity between what people are charged in the US and in Germany, France, Canada and other modern countries regarding practically each and every routine medical procedure.

Everything in the US costs double, triple or more. For the same procedure? With the same or comparable effort? This is completely absurd.

No justification for exorbitant US prices

Some price differences may be justified by local economic conditions, prevailing costs, wages, etc. But “everything” costing so much more? And this is not about cost of surgeries in emerging countries’ facilities where we can understand that costs can be even 1/10 of what you would pay in the US. This is not Indian hospitals we are dealing with. We are talking about advanced, wealthy nations with per capita incomes quite comparable to the USA.

Chronic illnesses absorb most of the money

And George Halvorson also pointed out that the real budget busters in the US are not the relatively few, complicated and expensive procedures for rare cancers and what not. The real problem is represented for instance by the explosion of obesity and obesity related chronic diseases, like type two diabetes.

Obesity has created an army of chronically ill patients who need constant treatment. And it is these patients who break the bank.

However, we know that obesity, with very few exceptions, has its roots in something very, very mundane: people eat too much of the wrong stuff and exercise too little. Is it possible that “overeating” has really become a national medical and now public policy problem? You bet.

And the miracle of a 30 minute daily walk

And what else? Well Halvorson talked about nutrition and exercise. (See above about obesity). And, you may find it odd, but he dedicated a fair amount of time within his presentation extolling the benefits of a 30 minute walk –every day. He provided suggestions in how this walk could be split into two 15 minutes installments and so on. He indicated that the body “really needs to move”. And that this walking is a key factor in tuning up all metabolic functions, so that “all systems” are kept in good working conditions.

Walking and the Budget

So, what’s the connection between walking or not, better or poor diet, doctors salivating when they get a new diabetes patient and Ryan’s Medicare reform plan? Well there is a huge connection.

First of all, skyrocketing medical costs do not depend on some sort of law of physics. They are driven by bad incentives that can be modified.

Secondly, aggregate national costs are driven by total demand for services. And this demand can be lowered, significantly, if people overall develop much healthier habits.

Simple changes in diet and exercise (as Halvorson recommends) by millions of people could have a rapid effect in the reduction of demand for services that end up costing hundreds of billions of dollars, becoming in the end a huge component of publicly paid health care.

And so, oddly enough, an issue originating in personal habits, multiplied by millions of individuals, becomes a public policy issue, and inevitably a political issue in the forthcoming budget battle.

Can all this be taken in as we frame the national policy debate on health care?

It would be nice if the unfolding national debate on Medicare reform would take all this into account. If, instead, medical care costs increases are treated as a given, an independent variable that cannot be modified, then the whole debate will be restricted to: “This is what it costs. Now let’s decide who pays what”.

Caricature and emotions will prevail

And the politicians will not be driven by a desire to reform; but by a desire to apportion payments so that their favorite constituents come up on top.

If this is so, then the debate will be portrayed as one between the ”mean spirited Republicans” who want to throw indigent grandma out of the hospital, and the “compassionate Democrats” who want to keep grandma in the hospital, have Uncle Sam absorb the cost and then hope to find a way to the pay the bill; in the meantime jacking up the national debt, praying that China will keep buying it when we issue more of our increasingly dubious Treasury bonds. Not a good way to frame this critical problem affecting tens of millions of citizens.

If we could only learn how to walk……




After Bowles-Simpson, House Budget Chair Paul Ryan Comes Forward With a Serious Fiscal Reform Plan

[the-subtitle ]

by Paolo von Schirach

April 4, 2011

WASHINGTON – While the silly posturing on budget cuts to non defense discretionary spending –a small fraction of Uncle Sam’s bill– drags on, (and this is about last year’s budget, not yet approved, mind you), thankfully we begin to see some signs of intelligent life in Washington.

Representative Paul Ryan, a Wisconsin Republican and Chair of the important House Budget Committee, just came forward with a budget proposal for Fiscal Year 2011-2012 that squarely deals with entitlement reform. And we all know that rapidly rising entitlement costs are at the core of our fiscal conundrum. Unless we change the entitlement parameters regarding eligibility and amounts paid out, this spending alone will kill America.

It may not work

Let’s be real. Ryan’s plan may not work out at all. The House may pass it. But the Senate controlled by the Democrats may reject it. And, even if it passed the Senate, president Obama may veto it. Still, although it comes along in a poisonous political environment, Ryan’s effort should be supported. This is an honest attempt to put the cards on the table and propose drastic actions that will make a real difference. And precisely because it will be politically unpopular, Ryan’s budget proposal should be praised. It is a real plan, as opposed to a negotiating ploy.

Bowles-Simpson started the conversation

I discussed in earlier pieces Erskine Bowles, (Democrat) and Alan Simpson, (Republican), the co-chairs of the “debt commission” who were gutsy enough and determined enough in their December 2010 Report to president Obama to lay out a serious, credible, and of course painful, taxing and spending overhaul plan. Their plan focuses on real entitlement reform, (meaning less money paid out to Americans), spending reductions across the board, including defense, and a welcome tax simplification plan, plus some tax increases.

With much regret I noted that president Obama chose not to embrace this plan and lead the policy fight on fiscal reform. Therefore, with lukewarm political backing and no White House involvement, the Bowles-Simpson plan, I thought, was as good as dead.

Enter Warner-Chambliss

But then came some hope from the Senate side with the efforts still very much underway promoted by two centrists, Senator Mark Warner, Democrat of Virgina, and Senator Saxby Chambliss, Republican of Georgia. These two law makers, (now known as the leaders of the “Gang of 6″, since others joined in), seeing a complete impasse on meaningful fiscal reform, are trying to build a bipartisan coalition that might advance politically a plan aimed at real spending reductions, based in large part on the Bowles-Simpson 2010 Report.

And now House Budget Committee Chair Paul Ryan comes along

And now we have House Budget Chair Paul Ryan salvo. Agree with him or not, I do believe that no one should question his sincerity. Mr. Ryan sees this train wreck coming –this would be America’s fiscal collapse– and at least he has put on the table a comprehensive budget proposal for 2011-2012 that rises to the occasion by addressing the real spending issues: entitlements.

Entitlement reform is the real issue

And, within entitlements, his proposal focuses on Medicare (health care for seniors), and Medicaid (health care for the poor) spending. These programs’ rates of growth outpace inflation and all other federal spending. Some of the Medicare reform provisions come from earlier work that Mr. Ryan did in conjunction with Alice Rivlin of the Brookings Institution, a Democrat and a recognized budget expert.

No reform means bankruptcy

Whatever one might say in support of the existing programs that pay for medical care for America’s seniors and for the poor, Medicare and Medicaid costs grow at a completely unsustainable rate. Within current trends, it is estimated that total federal spending on Medicare alone will double between 2002 and 2016. How do you fix that? Well, who knows what is the best approach.

A new system for Medicare

In his budget blueprint, Mr. Ryan proposes a new system, to be applied to future retirees, (those now under 55), that will provide vouchers to seniors instead of direct payments, encouraging competition among providers aimed at reducing costs. Many critics strongly disagree with this approach, claiming that the vouchers will be not be nearly enough to cover real costs, essentially leaving many seniors to pay out of pocket, something that can be ruinous for many low income people.

Will it work?

Well, who knows really; and debate is legitimate. Yet, the fact is that right now we have a system in which doctors provide and the federal government pays, even if not for everything and with limitations on what is reimbursable. Still, under the current system there is very little incentive to economize and institute even elementary checks on spending on widely proliferating unnecessary procedures and prescriptions.

Federal health programs parts of a national health care mess

The problem is that Medicare and Medicaid exist within a flawed US medical care delivery system. We have created a mess in which we deliver ”more, and more”, without any guarantee that more is also “better”, and we have no way to make sure that any reasonable cost-effectiveness criteria regarding types and cost of treatments can be created, let alone enforced.

As a result of all this, unfortunately in America we have the incongruous picture of by far the highest medical care costs in the world with mediocre health outcomes. Federally funded Medicare and Medicare are huge pieces of this gigantic spending yielding poor outcomes.

A new look for health care focusing on real prevention

Beyond federal spending, it will be very hard to reconfigure the entire health care equation, starting with “wellness education”, followed by proper nutrition and healthy life style, so that people will have an incentive to stay healthy and doctors will not have a perverse incentive to over prescribe, creating unnecessary costs that in the case of Medicare and Medicaid the taxpayers end up absorbing.

Dealing with programs designed for seniors, much more complicated

If any cost reduction plan is complicated enough as a general proposition, certainly dealing with federally subsidized health care for seniors is a lot more difficult, because the overall health conditions of many elderly people cannot be magically turned around via “wellness programs” that will make them stay healthy, thus diminishing demand and consequently cost for services.

Ryan plan or another plan, something serious needs to be done

Nonetheless, the current system is completely unsustainable. Medicare and Medicaid, along with Social Security, as currently designed, will bankrupt the Federal Government. This is a fact. I have no idea as to whether the Ryan Medicare reform proposal can do the magic of providing adequate care at the same time drastically reducing costs. But I do believe that it is high time to seriously join him in having an honest debate about entitlement reform, while keeping the promise to deliver care in the best possible way.

Ryan budget includes tax reform

There is a lot more in the Ryan budget proposal, including tax reform that would begin with simplification. Thank you! Not a moment too soon. It is indeed remarkable that America, the self-proclaimed champion of unfettered capitalism, can even survive (let alone prosper) when corporations and individuals have to walk through an essentially impenetrable maze of tax provisions, with hundreds of exceptions, loopholes, waivers, riders and ad hoc measures that have a way of changing every year.

This tax jungle is good for accountants; but bad for people, bad for businesses and bad for the economy. Those who can usually tweak their business decisions with a focus on avoiding unwanted tax liabilities, as opposed to devoting their energies to maximize growth and new employment. Tax simplification would make choices clearer and it would encourage investments and economic expansion.

Other veterans say that we have reached the limit: this is the time for serious fiscal reform

In a forum organised by The American Enterprise Institute for Public Policy, a conservative Washington think tank, former Congressmen Vic Fazio, (Democrat) and Vin Weber (Republican) agreed that the time of endless posturing on fiscal issues should be over, given the reality of the crushing federal debt burden. There was a time in which elected leaders could proclaim generic fiscal goals that sounded good, essentially do nothing to implement them, and still get away with it.

Now, say Fazio and Weber, politicians cannot keep kicking the can down the road, just hoping to survive the next elections cycle. The realities of trillion dollar plus annual deficits are sinking in, even among the most jaded who used to think that there could be a way to avoid making unpopular decisions for a little bit longer.

So, encouraging signs?

Well, we have heard it from Bowles-Simpson; and we see the efforts of Warner-Chambliss and friends. And now House Budget Committee Chair Paul Ryan comes forward. If we take all this together, the message from responsible leaders is that it is time to abandon ideological posturing and wishful thinking about transforming the basic dynamics of public spending by eliminating this or that line item, or the bad practice of congressional earmarks.

Reform the welfare state, good if president Obama would join in

While all spending cuts are useful, none of these actions would make a real difference. Entitlement reform is what we need. We all have to come to grips that America, much like other mature industrial democracies in Europe and Japan, in very different times, created a welfare state whose (then unforeseen) rising costs are now unsustainable. Unless, of course, we want to be suffocated by an avalanche of public debt that will prevent any public investments, while debt service requirements will syphon off liquidity that should otherwise used to invest in our future.

Time to start the serious talk. And, of course, it would be nice if the president of the United States who just announced his 2012 re-election campaign would care to join in.