Boehner-Led House Vote On Debt Only a Gesture – Senators Reid and McConnell Will Come Up With a Compromise – Serious Spending Reform Only After 2012 Elections – Meanwhile Urgent Issue of Sputtering Economy Will Not Be Addressed – Too Much Rancour in Washington

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By Paolo von Schirach

July 29, 2011

WASHINGTON – US House of Representatives Speaker John Boehner finally managed to have his debt ceiling measure passed by his reluctant, (and openly rebellious), Republican majority. This happened Friday, July 29, evening after he had to delay the vote on Thursday, as he lacked enough backers. Even after reworking done to address the angry critiques of his fellow Republicans, though, the Boehner bill passed with only 218 votes, the bare minimum. So, the Speaker is humiliated by his own troops and his Republican caucus is now openly divided. Funny thing is that this vote (damaging for Boehner) doesn’t matter anyhow, as the Democrats holding the majority in the Senate are not even going to take this proposed legislation into consideration. So, this whole thing was pure posturing. A gesture to be able to say: “Well, we did our bit. We passed legislation that addresses the problem”.

House vote is pure posturing

Yes, except that it does not. At least not in any serious way. And everybody who is not utterly insane knows this. Tying up raising the debt ceiling to a constitutional amendment requiring balanced budgets? It looks nice in theory. In practice this does not mean anything, as it is absolutely impossible to get the super majorities necessary pass a constitutional amendment in this fractured political climate. And absolutely everybody knows that.

Senate will hatch a compromise

In the end, we shall probably have some kind of compromise on raising the debt ceiling hatched in the Senate where there is a slightly more collegial spirit –even among political enemies. Expect Majority leader Harry Reid and Minority Leader Mitch McConnell to come up with something during the week-end. As I previously stated, right now the US Government should do the bare minimum and end this nonsense, (obviously believed by some to be instead a truly substantive issue worth fighting for), of trying to transform the entire structure of the US Government with one magic stroke. Imagine this TEa Party inspired fantasy: “With one vote we raise the debt ceiling, yes, but we cut trillions of future spending, this way ending fiscal irresponsibility and ushering America into a new age of thrift and probity”. Talk about dreams……

America needs entitlement reform, but not in this climate

I repeat: America seriously needs to address the staggering and growing cost of public spending, in particular the cost of large and popular entitlement programs that started decades ago under completely different assumptions regarding cost and number of beneficiaries. Social Security goes back to the Great Depression and President Franklin Delano Roosevelt. Medicare goes back to 1965 when Lyndon Johnson was President. Nobody suspected at that time that entitlement programs would grows this much and end up eating more than 60% of the entire federal budget. And, as they keep growing, unless something is done, they will ruin America financially.

Cut spending

And the rest of the US Government keeps growing as well. Contrary to popular belief, by historic standards, the defense budget, while huge in absolute terms, (about $ 700 billion), is actually smaller both as a percentage of GDP as well as a share of federal spending than it used to be. Still, under any plausible scenario, defense will have to be cut, along with entitlements and all other non defense discretionary spending, from transportation, to agriculture. All this needs to be done. But it cannot be done now. Not in this climate.

Consensus on reform?

America needs to reform its social programs in order to contain cost. But this is going to be horrendously complicated, as there are huge vested interests and deep ideological ideological divisions involved. Tea Party conservatives want to go back to a mythical, self-reliant, do- it-yourself America in which people took care of themselves without counting on any public assistance. The pioneers went West with guts and little else. They were not expecting help from Washington.

Yes, all true. Except that the Frontier is gone and the great grand children of the pioneers kind of like to have juicy programs, Social Security and Medicare. And people on the left point out that it is the humane thing to do. Left on their own, without much support from families, the elderly would end up as an impoverished lot, without precious public welfare.

Americans want a welfare state. But how big?

You see how complicated it is to transform the substance and reduce the costs of decades old programs that give a lot to people? In the end, at least one thing is clear. It is quite obvious that most Americans want some kind of welfare state. But the real issue is in agreeing how large a welfare state and how we pay for it, as running bigger and bigger deficits to make up the difference between revenue and costs is no longer an option.

Health care cost is the number one issue

And, even more fundamentally, as health care is by far the biggest problem regarding skyrocketing costs, any reform will have to look into the broader issue of the completely out of whack economics of US health care. For no good reason, America has extremely high and rising health care costs, with no appreciable superior quality of service delivery. As the Government ends up paying the bills for services priced elsewhere, it is high time to address why health cost grow so much in America.

Do this later

All this will have to be done. But it will not be done now, in the context of the debt ceiling. And most probably it will not be done between now and the end of Obama’s first term. I would expect no substantive debate and no meaningful reform of anything between now and the November 2012 elections. The well has been poisoned. The atmosphere is way too negative to even start a conversation on gigantic, complex problems like health care costs that involve the entire US population and hundreds of thousands of providers, not to mention health insurance companies and pharmaceutical corporations. An issue that absorbs now a staggering 17.5% of US GDP is complicated by definition. I pray that there will be at some point a renewed sense of national unity on this and that a workable reform that maintains service while containing cost will be found. But who knows when.

The economy is doing badly

Unfortunately, as if we did not have enough large, systemic problems, Washington is now confronted with the additional challenge of a sputtering economy. As the Congress is tied up in knots trying to figure out what to do prior to the August 2 deadline on raising the debt ceiling, we just got the very bad news that the US economy grew just a bit more than 1% in the second quarter, after a dismal performance in the first. No chance to cut down the horrible 9.2% unemployment rate with this kind of (almost no) growth. If the US economy is not revived, this dark reality may overshadow almost everything else. You may balance the Federal Budget. But if we have zero or close to zero growth what good does that do? America used to be the land of enterprise, risk takers and innovators. What happened to that spirit?

Politically, a bad economy is good news for the Republicans

But forget about bipartisanship even about reviving the economy. You see, a weak economy hurts politically the incumbent president, Barack Obama. Why on earth would the archenemy Republicans want to cooperate with the White House so that things may actually improve in the next few months and Obama gets the praise and possibly re-election? A depressed economy is bad for America. But it is politically great news for the Republicans. In fact, if it gets worse between now and the 2012 vote, even better. Sadly, this the state of US politics: you want your country to hurt, so that your political opponent gets the blame.




US Politicians More Intransigent On Spending and Taxes Because They Fear Primary Challenges – The System Now Gives Inordinate Power to Vocal Party Purists, Like Tea Party Followers – This Cannot Work; American Politics Works Only Through Compromise, As the Bowles-Simpson Plan For Deficit And Taxes Indicated

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By Paolo von Schirach

July 26, 2011

WASHINGTON – What is the connection between congressional redistricting guaranteeing “safe” districts to both Democrats and Republicans and the current impasse between the parties on the debt ceiling, spending cuts and new taxes? What? Shaping and boundaries of House districts are the root causes of the angry fighting between the two parties? Well, yes, if one attributes the uncompromising positions of both parties to the more radicalised positions of large numbers of House members. And positions are more intransigent because House members these days fear not the voters in general but angry militants within their parties who may stage a primary challenge against members who are willing to compromise with the other party.

Safe districts

It goes like this. Like it or not, redistricting is about creating “safe” districts for both parties. This has been and is a clever way to elude real democratic debate and appropriate accountability to the voters during the campaigns. By creating new boundaries designed to include mostly voters who, by significant majorities, support one party or the other, incumbents have an inherent advantage. The chances that they would lose an election, in ordinary times, are slim. And so, House members who have to run every two years can feel a bit more relaxed. As long a they deliver to their party loyalists who are also the majority of the voters in their districts, they have little to fear on elections day.

Safe districts allowed incumbents some flexibility and made them willing to compromise

At least this was the conventional wisdom until a few years ago. Clearly the emerging picture was bad for American democracy, as it essentially eliminated the need for the member to defend his record, while it made it virtually impossible for a challenger of the other party to defeat an incumbent routinely re-elected with solid 60-65% majorities. One of the advantages of “safe” districts was that incumbents, almost certain of re-election, had a certain degree of wiggle room in dealing with the other party in Congress when it came to compromises on legislation.

Now we have primary challenges

But now this comfortable set up does not work any more, especially within the Republican Party. True enough, the districts are still safe for the party. But the incumbent is now extremely vulnerable to a primary challenge from within his/her party. Activists within the party follow politics and agitate against any incumbent who appeared too eager to compromise. When this happens, and the 2010 elections illustrate this, the party activists, often inspired by the Tea Party, are quick to field a challenger running against the incumbent in the party primary.

As primaries are mostly decided by a relatively small number of party members, an organised rebellion from within, led by very few, can cost the incumbent the nomination and therefore the seat. Therefore, whatever his/her actual convictions, incumbents are ”forced” to keep the more radical “purists” on their side, even though they are not actually the majority of their voters. This translates into forced adherence to ideological orthodoxy dictated by few. House members have to adhere to the most extreme positions espoused bt the most radical rank and file party members who vote in the primaries.

Members who compromise to reach agreements face primary challenges

And, almost by definition, this ideological rigidity means that the old wiggle room for compromise with the other party in Congress disappeared. While there is much to gain for the Nation by political compromises that allow something to “get done” in the Congress, politically, a “compromiser” will probably suffer at the hands of the watchful radicals who will label him a sell out (“RINO”: Republican In Name Only), and field a challenger to run against him/her in the primary. Regrettably, politicians seem to be more sensitive to the mood of their most vocal constituents than to the needs of the Nation.

No new taxes pledge for Republicans

Case in point, in order to gain points with the fiscal conservatives among their party members, an inordinate numbers of Republicans signed a pledge whereby they would vote “no” to any legislation including tax increases. This is totally crazy. I would understand a stated preference against tax increases. But a “pledge” is pure ideological posturing that, however, ties the hands of the law makers. If they break the pledge, they are most likely toast and immediately vulnerable to attacks and retaliatory action via a primary challenge from the purists within the Republican Party.

Fear of primary challenges determines uncompromising stance

Now you can see how the shifting of the political focus from a general election in which large numbers play a role to a primary challenge decided by relatively few, organised people has bearing. Because of this, now we have an uncompromising impasse between Republicans and Democrats on the conditionalities that they want attached to a “yes” vote on raising the debt ceiling. The Republicans do not want any tax increase to be part of any package, even one with substantial spending cuts.

The Democrats, instead, citing fairness, are adamant that any agreement must include at least some additional taxes for the rich. It is quite obvious that both sides are holding fast to ideological, pre-packaged positions that are not truly substantive. Hence no compromise and continuing impasse that prevents agreement on raising the debt ceiling.

Intransigent positions

The notion that the US can quickly regain a better fiscal posture with spending cuts alone is a bit crazy. In a weak economy, a sudden contraction of public spending and employment induced by such spending is not going to do much for jobs and growth. On the other hand, by insisting that rich people have to pay more the Democrats are also posturing. You can squeeze the billionaires and the private jet owners all you want, but you are not going to get trillions in additional revenue.

America needs a “Grand Bargain” on spending reform

Ideally, America would need a “Grand Bargain” creating a credible scenario whereby it would be absolutely clear to all observers that in the medium and long term the country would start reducing its overall spending. That said, in order to achieve substantial spending cuts America would need a credible plan to reform entitlements, so that their cost trajectory would finally start going down. In all this, it would be extremely helpful to have tax reform that would include real tax simplification. It would be not only wise but economically helpful to eliminate the jungle of special provisions, exemptions and ad hoc measures that distort economic activities while protecting sectors.

No way to get anything major in this climate

While all this would be nice, anybody can see that, in order to achieve any of this, one needs political compromise on a very large scale. But in this ideologically laden environment, where even sitting down with the other side may be construed as suspect behavior, the chances of a broad, long range agreement are nihil.

So, let’s scale down our ambitions. We are not going to get a big thing out of these negotiations on raising the debt ceiling. The best that we can aspire to is some kind of a face saving deal that simply allows the Government to borrow some money for another year, or may be until the next elections in November 2012.

A clear mandate for either party in 2012?

Many hope that, with Republican and Democratic positions on spending and taxes clearly drawn, it will be up to the voters to choose which recipe they like and make a choice. This way, with a real electoral mandate, the winners will be able to legislate according to their principles. This may look good on paper. But it hardly ever happens this way. The fact that the parties offer two almost diametrically opposed philosophies of government is no predictor that the voters will overwhelmingly go for one or the other.

Current system gives too much power to vocal fringes within parties

So, bottom line is that we are stuck with a system that gives too much weight to radical organised groups within the two parties that are driven by ideology rather than old fashioned pragmatism. This is a real problem for a government system of divided powers that is predicated on compromise to get anything done. Therefore, when all is said and and done, eliminating the current system of congressional re-districting that shifts the real political fight to the primaries decided by few may help a bit in freeing up the incumbents from the primary challenges and stop the disproportionate influence of organised militant minorities on the entire political system.

Most Americans are non ideological centrists

The irony in a system dominated by party activists is that a sizable number of Americans are independents and centrists with no special ideological affiliation. The current system silences their voices, as they normally do not participate in the primary process. Political activism is good. But when it turns into a virtual hijacking of the entire political process, it is very worrisome.

Given the way the system is currently designed, right now, well organised but intransigent minorities that reject dialogue have too much influence. And, as the uncompromising positions on spending cuts demonstrates, the impact is gridlock and eventually a dysfunctional, paralysed system.




US Shale Gas Generates Jobs While Creating New Wealth – Natural Gas As Transportation Fuel Would Cut Down US Oil Imports from OPEC and Others, It Would Stimulate US Growth by Reducing the Energy Bill for American Consumers and Corporations

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By Paolo von Schirach

July 26, 2011

WASHINGTON – Many economists, including Nobel Prize winner Paul Krugman, have argued that this whole never ending, acrimonious deficit-debt ceiling-spending -taxes debate Washington is having, is really the wrong topic, reflecting a deep misunderstanding of national priorities. Yes, the debt level and future spending are important. However, massive, chronic unemployment, (now at 9.2%), is more important, as it cripples the productive capacity of the United States, while limiting growth and shrinking the tax base. So, the national debt is important; but it is not an emergency. Unemployment is an emergency.

Energy can generate new jobs

But, assuming Krugman and others are right, then what do we do to generate good jobs that help growth, while helping people? Well, new energy discoveries provide new opportunities. Remember the green economy? Well, that was a dream. At least in terms of scale and actual growth opportunities. Its day may come; but it is not here yet. So, do not count on it to mop up millions of unemployed Americans.

Shale gas

But the old fashioned natural gas industry opened new paths that increase wealth and can lead to major industrial transformations, such as natural gas powered vehicles that would create even more jobs. It is clear that American shale gas is not just a blip. The “hydraulic fracturing” technologies that allow gas trapped in rock formations to be extracted economically have proven to be transformative. So, all of a sudden, America is inundated with cheap natural gas. And it seems that we have really a lot of it. Enough to last about 100 years, according to many estimates.

Huge new investments in Pennsylvania

For an energy starved, high consumption American economy this is great news. But it is also great news for states like Pennsylvania that sit on enormous shale gas formations contained in the Marcellus shale. Consider this. Only in 2010 Pennsylvania received almost $ 18 billion fresh shale gas related investments from Shell, Chevron, Reliance and BG Group. 2,000 additional wells were drilled. By the middle of the decade the average will be 3,500 new wells a year.

The Wall Street Journal, (July 26, 2011), cited studies indicating that the new Pennsylvania gas wells generated about 72,000 new jobs in the last year and a half. The WSJ also writes that University of Wyoming professor Timothy Considine estimates that each “well generates some $ 2,8 million in direct economic benefits….$ 1,2 billion in indirect benefits from companies engaged along the supply chain, another $ 1.5 million from workers spending their wages….” Plus there are royalties paid to land owners and additional taxes paid by all to the state. So, in economically weak America gas is an economic bonanza. It drives down the cost of electricity, it creates new wealth, new revenue and plenty of high paying jobs.

Natural gas for transportation

And yet all this gas can do a lot more. But for this we would need a Washington-led public policy framework that would clearly indicate to all players that the US wants to use plentiful, cheap American natural gas as transportation fuel. The case for this switch has been convincingly made many times. T. Boone Pickens has been leading the charge, with his www.PickensPlan.com . I have supported it here in many occasions.

President Barack Obama talked about natural gas as transportation fuel in at least one major public address. But we are still missing the basic indication that this is a national priority. In other words, Washington needs to state that the US wants to convert a significant portion of its vehicles to American produced natural gas. This is eminently doable and it makes economic sense. Natural gas is plentiful, it is domestic and it is cheap. Much of, like the Marcellus shale, is located very close to tens of millions of potential end users.

Cut the oil bill, use cheaper domestic energy

You have seen above that producing gas is economically beneficial. Well, why not make it even more beneficial? If we use it for transportation, we shall import less oil. Sure enough, converting vehicles to gas is expensive. But the up front investment will be repaid by much lower fuel bills. Whereas, doing nothing means that we shall continue to be dependent on an imported, quite expensive, (around $ 100 a barrel, these days), energy source.

How complicated is this?

Consider this. Do you want to keep importing high priced oil from Africa or the Middle East, or do you want to fill your tank with natural gas from Texas or Pennsylvania at a fraction of the cost of gasoline or diesel? How complicated is this, really? Natural gas fueled trucks and cars will not solve all of our unemployment problems but they would help enormously.

We send less money abroad. We invest at home. We generate energy jobs here and we help create a new domestic motor industry that will cut down overall energy costs for millions of consumers and thousands of businesses, (not to mention emissions, as natural gas is much cleaner than gasoline). Again, how complicated is this?




US Gov CIO Vivek Kundra in a FORTUNE Interview Illustrates The Primitive State of Information Technology Systems Within the US Gov – Outmoded Practices, Poor Execution, Lack Of Accountability – America Can Do Better

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By Paolo von Schirach

July 17, 2011

WASHINGTON – US Government IT procurement and the running of IT systems is more or less a disaster in terms of value for money and improved operations. An $ 80 billion a year federal IT budget buys US taxpayers very little in terms of enhanced efficiencies. There are 24,000 US Gov websites and more than 10,000 separate IT systems. But some servers are unused 93% of the time. One specific IT project within the Department of Defense had been 12 years in the making, with a $ 1 billion tab and zero output before it was finally closed down.

Vivek Kundra, US Gov Chief Information Officer

This is the disconcerting picture emerging from a FORTUNE magazine interview (Uncle Sam’s First CIO, July 25, 2011) with Vivek Kundra, the outgoing Chief Information Officer of The United States. Indian born Kundra is the very first individual to fill this job. Credit should be given to the Obama administration in creating this position as part of its attempt to streamline and optimise a haphazard Government IT system that was sorely in need of real supervision.

That said, this interview highlights stunningly low levels of efficiency and almost primitive approaches to technology procurement and use prevailing in the US Governemnt. It looks as if when you get into the Government none of the principles that would illuminate IT related business decisions in the private sector apply any more. Efficiency and cost effectiveness are unknown parameters.

Government has to be inefficient?

Broadly speaking, it is more or less taken for granted that Government is less efficient than the private sector. But why is it so? And do we have to accept this as an immutable fact of life? Why do we have to accept that “statutorily” the Government will do thing slowly and inefficiently, with less or no care for quality of execution and cost control? In principle at least, good managers should be able to design equally good programs in the private and public sectors. But, mysteriously, it is not so.

The examples provided in the Kundra interview are stunning regarding bad planning, poor execution and almost no accountability in the purchasing of IT systems whose purpose should be to improve the running of systems and the efficient delivery of services.

Government IT procurement practices outdated

Government IT contracts are designed according to antediluvian parameters of complete “A to Z solutions” that do not take into account the standard private sector practice of availing oneself of ready made, off the shelf, solutions for standard components. In so doing Government projects are exceedingly cumbersome and much more complex that they need to be. This adds to cost and slows down execution. Besides, Government contracts are designed around billable hours and not outcomes. So, the contractors objective is to keep consultants busy “doing stuff”, irrespective of goals and outcomes that are rarely, if at all, measured.

This led to the proliferation of systems, regardless of added value. “There were 432 data centers in 1998 and there are over 2,000 today Average utilization of processing power is under 27%. Average utilization of storage is under 40%“. –Kundra says in the interview. This excessive proliferation of mostly useless systems conveys a picture of almost complete mismanagement.

To his credit, Mr. Kundra introduced reform, sometimes pushed by simple actions, like publishing the names of the various Government Agencies CIOs on the Internet, next to their projects and time lines. Publicity and transparency invite scrutiny and greater accountability.

Why is Government so far behind?

Still, the larger question remains. Why is it that the Government cannot do things properly? Mr. Kundra says that the Washington approach is mostly focused on setting policy goals, disregarding execution. It may be so. But how is it possible that this is the rule? This is the United States of America, and not poor, resource starved Niger. Someone, somewhere must have realised that poorly executed policy is useless, may be even counter productive.

Government reviews its own operations

Theoretically at least, the Government is policing itself. We have, scores of Inspector General Officers in all Agencies. And then we have the Government Accountability Office, (GAO), whose statutory function is to review US Gov programs and projects and to publish reports that are supposed to show how public money is spent. We know that some of the GAO work is remarkably good. Are we to conclude that the Congress and the Administration simply do not care of any alarm bells sounded by the GAO simply because low quality of output is the norm?

Government is studied endlessly

But if the work of Government bodies is not enough, let’s keep in mind that few things in America are scritinized and studied more than Government. In Washington DC alone there are literally hundreds of prestigious think tanks (The Brookings Institution, The American Enterprise Institute For Public Policy, The Heritage Foundation, The Center for Strategic and International Studies, The New America Foundation, The Carnegie Endowment, to name just a few), with experts who “do only policy analysis” on anything from the broadest macro-issues to the most minute sub-components of the Defense Budget. Are you telling me that no one in the vast think tank community ever noticed the disconnect between policy design and poor execution when it comes to IT systems? No expert ever figured out that Government is not equipped to take care of execution and that bad execution defeats even the most beautifully designed policy?

Or do we have to conclude that the armies of experts also do not care about quality of execution, because they themselves do not understand its value? OK. Let’s concede that. The experts somehow do not get it.

Business Schools review public policy

But then we supposedly have in America some of the best business schools in the world, schools in which every now and then at least someone might have given a look at the quality of public administration and the cost effectiveness of public policy programs. Are we to conclude that all these great academics who have invented “competitiveness” and who created the science of management consulting had nothing to say about this hopelessly outmoded public policy system? Or are we to conclude that they simply do not care, because their focus is only on the private sector?

Let’s concede that public is slower than private

Look, we can accept that the public sector may not be as nimble as the public sector when it comes to rapid adaptation to state of the art innovation. Fine. We concede that. There is no market pressure in Government. There is no stock value to preserve.

But what is not acceptable is that we take it for granted that there is an insurmountable, natural barrier between the private sector and public administration performance standards whereby the public sector is by definition a few generations behind –and that’s the way it has been and will be.

This is unacceptable. All knowledge is transferable. We may find the speed of transfer less than ideal. We may want faster pick up. But the notion that some 30 years into the IT revolution the Government has to be clueless as to best practices and project design, procurement and execution standards is unacceptable. If the bureaucracy resists change, then it is up to elected policy makers whose is job is to make Government work to kick them into action.

Progress is possible, taxpayers should demand it

US CIO Vivek Kundra made some progress in modernising the systems he was called upon to supervise. This proves that, given policy guidance and proper authority, progress is possible. Citizens should take notice and demand value for money from elected leaders. As the ghastly US Gov IT story illustrates, good design, and careful, cost effective execution is more important than bigger budgets.




The Revolution in Egypt Got Coverage – The Dogged Syrians Who Keep Protesting Against a Worse Dictator, With More Than 1300 Killed, Get Little Attention – Yet their Bravery is Immense

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By Paolo von Schirach

July 16, 2011

WASHINGTON– Why is it that the Cairo Tahrir Square protests in Egypt, eventually leading to President Mubarak’s forced resignation, attracted so much interest, while the ongoing massive protests in Syria against another dictatorhip get minimal coverage? Is it because in this case we do not have the revolution “as presented” by Anderson Cooper and the other CNN shock troopers? I suspect that this is the reason. We got Egypt and Bahrain and then Libya “live” because Western cameras, along with Al-Jazeera, were there. Syria is different. No Western media welcome. It was and is a real police state, run via Emergency Law for 5o years. So, no Western TV crews and thus much lower media profile in the news cycle.

Syrians keep fighting against all odds

And yet, think of it. The fact that the poor Syrians even dared to begin any protest back on Janurary 26 would have appeared unthinkable to any reasonable person. The fact that, faced with violent repression, they just went out for more protests beginning in March seems absolutely crazy. In a fairly well organised police state, you go out and protest and you get killed by security forces. As simple as that. And yet the truly amazing story is that they they kep going. Even though the death toll keeps rising, having passed 1,300 killed and many more wounded and arrested, the Syrians do not give up. They do not stop.

In Egypt the army turned agaisnt the regime fairly quickly

In Egypt, while it was not a done deal at the very beginning of the uprising, there was hope, (in the end realised), that a fairly popular army leadership would turn against the regime and side with the people. When that happened, a significant mile stone was reached. Hosni Mubarak and his family had to go. This was not the end of the revolt, (as recent massive protests in Cairo indicate), but it allowed the beginning of a major transition process away from dictatorship with minimal bloodshed.

No such luck in Syria. At the moment at least, we do not see cracks within the regime led by President Bashar al-Assad. The security forces are still performing their duty to protect this entrenched dictatorship by killing and arresting protesters.

Syrian protests got stronger as the repression got worse

All the more reason to be in awe of the Syrians who, confronted with massive repression, not only did not give up but redoubled their efforts. A protest that had started with some minor actions here and and which appeared destined to end quickly, given massive violence used by feared security forces, has now engulfed the entire country. People who know they are risking their lives still go out, mostly defenseless, facing police, machine guns, tanks and helicopters.

They are not relying on senior military officers taking control by arresting President Bashar al-Assad and dismantling the Alawite regime he inherited from his father. These people rely on themselves and on the hope that, by building more and more pressure around it, the regime will crack and fall. In the meantime, they go out and die in large numbers. Now, this is incredible courage.

In America we defend liberty with trained professional soldiers

In America we talk about our commitment to defend liberty around the world. Such as it is, the cause of liberty is defended, however, by the best all volunteer, professional armed forces in the world. These highly trained and well equipped troops go and do their duty in Iraq and Afghanistan. But they all signed up for this and they get paid to do it. This does not diminish their dedication and patriotism. But my point is that they have weapons, resources and back up.

Syrians: no weapons, only conviction

The Syrians instead got no training and have no weapons. They do not get to be evacuated when wounded. They get arrested, or worse. As I said, even though we do not have CNN anchors presenting their case to us, the Syrians’ bravery deserve our respect. They go out and fight for liberty with no weapons, except for their conviction. In the end, this may make all the difference.




No Common Ground Between Obama And The Republicans on Debt, Spending and Taxes

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By Paolo von Schirach

July 15, 2011

WASHINGTON – Watching President Obama today during another press conference on the negotiations that should lead to an agreement on raising the debt ceiling and spending cuts was a bit unreal. The President sounded reasonable, quite conciliatory. “Look — he almost said– this is not that difficult. We all want to see a lower debt. But we also need a bit more revenue. If the Republicans would just stop listening to their anti tax hard core ideologues, we could do this fast. Americans want this and it is our responsibility”. How very reasonable.

What about entitlements?

Except that I did not hear President Obama squarely say in that press conference that he is committed to serious entitlement reform. And, without that, the rest is literally smoke and mirrors. And he knows that. Which makes me think that this TV exercise is not about pleading for an agreement but about posturing so that when failure to get a deal becomes obvious, he can start apportioning blame from a high moral ground. “I really wanted this deal. But they just wouln’t listen to reason”.

Republicans: “No” to any and all taxes

On the other side of the fence the Republicans are equally disingenuous. Their total opposition to all “jobs killing tax hikes” is also posturing. It is all about keeping ideological purity on the part of many who got elected having made solemn pledges that they would never, never vote for a tax hike. While one could agree with House Speaker John Boehner that America has a spending problem and not a revenue problem, and while we can also agree that tax hikes in a weak economy can be counter productive, it is unwise to rule out any and all revenue increases as a matter of principle. Some revenue increases would help reducing the deficit. Most serious plans, starting with the Bowles-Simpson December 2010 debt commision report, include them.

No more borrowing

Further down the line, there are those (the Tea Party Movement vangards) who oppose raising the debt ceiling also as a matter of principle. I share their frustration. America has gotten used to over spending, followed by more borrowing, followed by more over spending. At some point, this has to stop. I agree with the principle. However, this is hardly the right time. To say that now is the moment to halt all this and deny any additional borrowing ability is insane.

Bachmann: not to worry, we have enough money left

It is plain obvious that there are just too many policies and programs in place predicated on a certain level of funding. The idea that cutting all new borrowing today is no big deal is astonishing and completely crazy. And yet I heard Congresswoman Michele Bachmann say exactly that, with conviction, in a TV interview. Washington gets money from general revenue, said presidential contender Bachmann more or less. So, you simply use this money to take care of the most important issues.

And how do you do that? Simple. Being responsible Americans, we make sure that the interest on the debt is paid, and there is money for that. Then you make sure that you pay the soldiers in Afghanistan, Iraq, etc. And, I presume, we also pay for the entire supply chain that keeps the war effort going. May be there is some more left for Social Security checks and Medicare/Medicaid payments. Fine, We do that. At that point we have finished all the money. Which means that the rest of the US Government essentially will close down. No more Departments of Agriculture, Energy, Transportation, Education. No more Securities and Exchange Commission, no more Federal Communications Commission, no more National Institutes of Health. How do you like that? But, according to Ms. Bachmann this is not an issue. And this lady wants to be President? Of what?

Sarah Palin: “you got to prioritise”

And conservative movement leader and rumored presidential candidate Sarah Palin said more or less the same in another TV interview. She repeated the same nonsense that, even with no new borrowing, Washington would still get revenue. So, she argued, the point is that, if you have less, you just have to “prioritise”. Easy, no? You keep Health and Human Services, but you cut Homeland Security by –say– 50%. You fire every other FBI agent, close down the National Security Agency and you send the Coast Guard home. Now, this is what seasoned executives like the sturdy former Alaska Governor would do. But Obama, the poor fellow, he does not know how to prioritise, you see. With less money to play with, he would get all confused.

No consensus on anything

So, let’s take it altogether. The president talks for an hour, saying that we can get an agreement that would get America out of the woods, without seriously addressing entitlement reform. The Republicans say “No” to any new taxes. A presidential contender and an anointed national conservative leader say that default is perfectly manageable, if you only know how to “prioritise”. So, you have the clever, the ideologues and the nutty in the same room. And you want an agreement? On this basis?

There was merit in a comprehensive agreement

In principle, the basic idea about having a comprehensive deal that would authorise more federal borrowing and significant spending cuts at the same time seemed good. In one move, Washington would signal that it can act to make sure that it will have enough cash to pay for its current obligations, while it would say to everybody that the era of gigantic spending increases is over and that the Federal Government is now on a serious diet. As I said, nice idea. Except that is premised on political agreement on appropriate levels of cutting and spending that is just not there. (See above).

No deal

As things stand, there may some twisted gimmick (Senator McConnell’s idea) that will allow the dreaded debt ceiling to be raised, but without the Republicans in Congress leaving any fingerprints on this dreadful action. This way America will not default, there will be more (borrowed) money to pay the bills and the big debate on taxing and spending will move on to the 2012 electoral campaigns now beginning to unfold. Fine? Not really. While it is alright in a democracy to settle big issues through a national political vote, it is by no means clear that the 2012 elections outcome will provide the needed clarity.

We need serious entitlement reform

Remember what is at stake here. All major entitlement programs, tax reform, the future of a variety of discretionary programs and myriad of subsidies: to agriculture, ethanol, renewable energy, oil and gas, you name it. Entitlements are the real big ticket item. Remember that they alone already absorb more than 60% of federal spending. The growth dynamics of Medicare indicate that, without significant changes, it will eat up most federal revenue in a few more years. The program needs serious overhaul. As currently structured, since it is a pass through for bills generated by doctors who have every interest to over prescribe, Medicare has no internal check mechanisms. And so, higher costs keep barreling ahead. And, while this is the biggest issue, it is not the only one. There is Medicaid and Social Security. Perhaps a bit less complicated, but thorny nonetheless. And then everything else.

Reform ideas are politicised

But the problem about putting on the table any serious entitlement reform plan is that it immediately turns into a carnival of shameless demagoguery. Easy to accuse any attempt at restructuring programs as a mean spirited conspiracy aimed at depriving America’s seniors of their hard earned benefits. The whole thing turns immediately political and the objective is only to score points. Any serious reform proposal that –by definition– has to entail reducing benefits is presented as a calamity to be fought against at all costs.

Americans do not get that the debt is largely about money they get

On top of that, most Americans are genuinely confused about what it would take to really cut spending, thus reducing deficits and reversing the national debt growth trend. Inordinately large numbers of Americans believe that the debt is mostly about “fraud, waste and abuse”,or “foreign aid”, or about that particularly egregious earmark. This is all fantasy.

People do not want all this debt; but they cannot yet digest the fact that most of it is due to benefits they get.

And so we have a huge disconnect here. There cannot be any serious discussion about spending reductions without a real entitlement overhaul. And yet, somehow, the elected leaders have been vague about this “detail”. And so they have no idea how to sell entitlement reform without angering too many voters.

In this atmosphere, serious debate is impossible

From the above it is obvious that a serious debate is almost impossible, as the fruitless negotiations between the White House and Congressional leaders carried out until now amply demonstrate. Lacking honest dialogue, then there are only attempts at manipulating public opinion.

Again, at its core, the issue is rather simple. America wants public services, including entitlements. Yet, all serious people know that, in order to preserve entitlement programs designed in a different era, we need fundamental changes regarding their scope and cost. And finally, we need to agree on who pays for what.

As the President smilingly said on TV, it should be simple. But it is not.




US Women Soccer Do It Again: 3-1 Against France – Abby Wambach: “We believe in Ourselves” – Listen Up America As Self-Confidence Is Key to Our Come Back

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By Paolo von Schirach

July 13, 2011

WASHINGTON – The US women soccer team did it again. After the amazing victory against Brazil, they won against France with a 3-1 score. Now they are in the final. Abby Wambach scored one of the three goals for America.

“These wins, we can’t do it alone. We know a whole nation is cheering us on,” Wambach said. “We believe in ourselves and we’re in the final. I couldn’t be happier.”

“We believe in ourselves”

Please allow me to moralise a bit more. Note what Wambach said: “We believe in ourselves”. Belief in one self may not get you very far, if it is not grounded on any substance, any real talent or capability. But when you have talent and training, belief in yourself may be the extra ingredient that gets you over the top. The US women may or may not make it. They may not win the final, after all. The others may be better. Who knows. But we have confidence that they will give it their best, enthusiastic shot. And this is all that matters.

US Marines: “I can do it, you can do it”

A running song of the US Marines says cheerfully: “I can do it. You can do it. No sweat” . Another one says that if the Marine will die in the combat zone, “Tell my girl I did my best”. And to do indeed one’s best, one has to believe that “one can do it”. Just as Abby Wanbach said and jut as the US women soccer team demonstrated.

There is still a great reservoir of the old “I Can do it “spirit in America. If we only figure out how to tap it and release it, we may surprise ourselves as to how good we are.