Brown Wins Massachusetts Senate Seat, Potentially Upending Obama Agenda

By GREG HITT and PETER WALLSTEN

BOSTON—A little-known Republican shook up the balance of power in Washington by winning a U.S. Senate seat in Massachusetts, a result that imperils President Barack Obama's top legislative priorities and augurs trouble for his party in this year's elections.
With 75% of the vote counted, Republican Scott Brown was leading his opponent, Massachusetts' Democratic Attorney General Martha Coakley 52.7% to 46.3%, according to the Associated Press, which declared Mr. Brown the winner.
The Brown victory forces the White House and congressional leaders to decide how—or whether—to salvage their long-sought health-care overhaul. Rushing the bill after losing Massachusetts carries political risks. So does letting it collapse.

The News Hub takes a look at a special election that threatens to tip the Senate's balance of power and undermine President Barack Obama's policy agenda. MarketWatch's Robert Powell reports from Massachusetts with more.

House Democrats Tuesday opened the door to passing the Senate version of the legislation, which the president could then sign into law. The White House has floated that idea, but it will be a hard sell. The Senate bill contains abortion, immigration and tax provisions opposed by many House members.
Anticipating rough sledding for the bill, the S&P health-care sector stock index surged by more than 2% Tuesday, leading all other industry sectors, with managed-care stocks posting strong gains.
Inside the Park Plaza hotel in Boston, thousands packed the second-floor ballroom. Waiting for Mr. Brown to appear, the crowd chanted, "John Kerry's next, John Kerry's next." Later the chant went up, "Yes we did, Yes we did," a tweak at Mr. Obama's 2008 signature line.
At Coakley headquarters, the mood grew somber as it became clear a loss was at hand, and some started dissecting where the campaign went wrong. In her concession speech, Ms. Coakley said she received a call from Mr. Obama who told her, "We can't win them all." Ms. Coakley thanked Mr. Obama and the Kennedy family. "Though our campaign ends tonight we know our mission goes on," she said.
Other Democratic priorities are now also uncertain. Although they still hold substantial majorities in both chambers, nervous Democrats with an eye on November midterm elections could start to keep their distance from the White House. Senate Banking Committee Chairman Christopher Dodd (D., Conn.) will be under increasing pressure to negotiate with Republicans who oppose the administration's overhaul of financial regulation, another centerpiece bill, congressional aides said.

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Associated Press

Residents in Seekonk, Mass., cast their votes in a special election to fill Sen. Ted's Kennedy senate seat on Tuesday.

As recently as a couple of weeks ago, few gave the 50-year-old Mr. Brown, a state senator, a chance to win the special election prompted by the death of liberal icon Sen. Edward Kennedy. A Republican last held a Senate seat here in 1979. Yet polls showed Mr. Brown benefited from antigovernment sentiment, a sour economy and discontent with Mr. Obama's agenda.
Mr. Brown will become the 41st Republican in the Senate, breaking the Democratic Party's 60-vote majority, and ensuring the minority has enough votes to block legislation.

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See a timeline of the Massachusetts Senate race.

The election results signal challenges for Democratic prospects in mid-term elections this fall, when the party will try to protect its majorities in the House and Senate. A handful of Democrats facing competitive races have announced plans to retire, and party officials are trying to prevent more following suit. Republicans, too, face challenges as the party navigates internal strife between anti-establishment activists and the party's Washington leadership, which remains unpopular.
Independents, who appeared to swing for Mr. Brown in Massachusetts, tend to be more anti-incumbent than anti-Democrat. A new Wall Street Journal/NBC poll shows nearly six in 10 independent voters think it's time to "give a new person a chance" rather than reelect their representatives. About half of all voters feel that way.
In Littleton, Mass., Alex Olsen, a professor at the University of Massachusetts and an independent, said he's fed up with Mr. Obama and Democratic majority. He voiced strong discontent with efforts to push the health bill through the Senate. "They're just trying to ram things down our throats," said Mr. Olsen, 65.
Democratic officials were already assessing their plans for this year's elections. Strategists said Tuesday that for the rest of the year the party must downplay health care and focus on addressing voter concerns about the economy. "You've got to focus on jobs. Nothing is more important in this economy than jobs," said Delaware Gov. Jack Markell, chairman of the Democratic Governors Association.

Journal Community

• Discuss: What will the outcome mean for the Obama administration?

A faster recovery could soothe the national angst. Presidents Reagan and Clinton suffered big reversals in their first two years in office, only to rebound along with the economy.
Coming almost a year to the day of his inauguration, Tuesday's result is a blow to Mr. Obama, who was elected with heavy support from independents. He flew to Boston Sunday to stump for Ms. Coakley.
Even before Mr. Brown's win, Democrats engaged in a round of finger-pointing, with some blaming Ms. Coakley for running an ineffective campaign and others arguing that the party's national leadership and its focus on health care helped turn swing voters against the candidate.
White House officials declined to take responsibility for Ms. Coakley's defeat, saying the president and his policies remain popular in Massachusetts. White House press secretary Robert Gibbs released a statement saying only that Mr. Obama had spoken to both candidates and congratulated Mr. Brown.
On the campaign trail, Mr. Brown sounded like a member of the Republicans caucus in Washington, calling for tax and spending cuts, as well as opposing the current health-care bill. He touted himself as the "41st" Republican senator, reinforcing the threat he poses to the Obama agenda.

More on Massachusetts

• ROLLING UPDATES: News and analysis from Washington Wire
• Democrats Set Plan to Pass Health Bill
• What Happens When the Vote Count Is Done?
• Capital Journal: How the Tables Turned
• Kennedy Death Upsets Status Quo
• Massachusetts Race Key to Health Bill
• Agenda on the Line, Obama Stumps for Coakley
• Fearing Loss, Democrats Weigh Health Options
• Massachusetts Republican Taps Into Voter Unease

Not all of his stances are clearly conservative. On social issues, he supports some abortion rights, although he opposes partial-birth abortion and supported efforts to overturn Massachusetts's same-sex marriage law. In one bill he sponsored, Mr. Brown took aim at auto emissions, a goal more commonly associated with Democrats.
"I'm Scott Brown from Wrentham," he said on the campaign trail over the weekend, skirting questions about whether he's a conservative.
In a recent interview, State Sen. Brian A. Joyce, a Coakley supporter, described Mr. Brown as a "moderate" along the lines of most Massachusetts Republicans. Mr. Joyce said Mr. Brown was once considered a "sacrificial lamb," running a presumably losing effort to catapult himself into higher state office. "I guess he didn't get the memo," Mr. Joyce said.

More Video

• News Hub: Senate Seat in Limbo
• A Hotly-Contested Election
• GOP Underdog Rises in Senate Race
• News Hub: White House Frets

From the start, Mr. Brown was the more aggressive candidate. He moved in late December to shape the race, airing one ad that featured President John F. Kennedy and highlighted his support for tax cuts, and another that portrayed him as a regular guy driving a pickup.
By the second week of January, polls suggested he could pose a serious challenge. In the final days, Democrats tried to make the election about health care and abortion rights. Ms. Coakley seemed to gain momentum, especially over the weekend, as she condemned Wall Street's latest round of bonuses.
One intangible effect on voters has been Mr. Brown's easygoing way on the trail, in contrast with Ms. Coakley, who sometimes seemed uncomfortable. In the stretch run, Mr. Brown tried to turn Democratic attacks to his advantage, mustering mock anger after Mr. Obama and others derided his pickup truck. "When you start talking about my truck, that's where I draw the line," he said.
"He's given Massachusetts voters a voice for change," said Kelly Marie, a homemaker from North Andover. She's an independent who leans toward Republicans, and has been frustrated by the Democratic lock on the state's Senate seats. "I've felt disenfranchised for a lot of years," she said.
Tamara Audi contributed to this article.
Write to Greg Hitt at greg.hitt@wsj.com and Peter Wallsten at peter.wallsten@wsj.com

Healthcare and Progressivism

By Rep. Paul Ryan

Remarks presented at the Hillsdale College and Allan P. Kirby, Jr. Center for Constitutional Studies and Citizenship Forum on Health Care Reform and the American Character
Someone has said that before there was the New Deal, there was the "Wisconsin Deal." In Wisconsin, where I come from, the politics of Progressivism still runs strong. It was imported through the University of Wisconsin where they read their Hegel, Max Weber, and other powerful German minds. These thinkers taught the American Progressives to make a sharp distinction between "administration" and "politics." These philosophers and their American disciples wanted to remodel society on the basis not of opinions or "values" but according to ‘rational calculation.'

The best known Wisconsin Progressive in American politics was Robert LaFollette. "Fighting Bob" was a Republican, as was that other early Progressive, Theodore Roosevelt. Progressivism has always been a powerful strain in the Republican bloodstream, as we saw in the presidential election last year.
The Progressives, like the American Founders, saw self-government in a large nation-state as a challenge. Can a modern democracy be both free and well governed?
These thinkers, particularly Weber, were not blind to the problem of how untrained average citizens were supposed to preserve freedom in a society administered by bureaucratic ‘specialists without soul.' But popular resistance to their agenda made the Progressives more and more elitist.
Theodore Roosevelt and Woodrow Wilson brought the Progressive movement to Washington, sowing the seeds for the paramount political problem of our time: centralized administration.
Progressivism came in on two great waves: the 1930s New Deal and the Great Society of the 1960s. President Obama often invokes Progressivism and plans to generate its third, and greatest, wave. American businesses large and small must be brought under centralized direction. Contracts, the very core of personal and social freedom, are scrapped or rewritten by the administration as decades old bankruptcy laws are cast aside in the reorganization of the auto makers. The compensation which employers pay to secure the services of executive employees is now reviewed and second-guessed by a presidential "pay czar." Marriage and family life, church and voluntary organizations are all being weakened mostly by nonrepresentative government agencies. First wave Progressives demanded the popular referendum. Third wave Progressives do everything possible to stop local and state referenda which citizens would use to end this assault on the pillars of free society.
Health Care reform is a prime example of Progressivism in action.
The delivery of health care services has grown costly, leaving many without coverage. But survey after survey shows that 75 or 80 percent of Americans or more are personally satisfied with the quality of their own health care.
The Democratic leaderships' brazen attempts to rush through a health care reform with little public debate and deliberation have disgraced the annals of government by consent. They frantically scribble thousand-page laws behind closed doors and demand midnight votes from members who are given no opportunity to read the legislation they are voting about. This farcical process flunks the Constitution's "due process of law" test.
The Framers saw every individual as having a "right of personal security" which includes being protected against acts that may harm personal health. This right is integral to the natural right to life which it is government's purpose to secure. But the personal right to protection of health does not imply that government must provide health care, any more than the right to food in order to live requires government to own the farms and raise the crops. Government's obligation is normally met by establishing conditions for free markets to thrive. Societies with economic freedom almost always have a growing abundance of goods and services at affordable cost for the largest number. When free markets seem to be failing to meet this goal - and I'd argue today's health care delivery is an example - government should not supply the need itself but look in the mirror, correct its own interventions, and unleash competition and choice.
Washington DC is no place to run health care services for the nation. Thus the Framers left public health decentralized. But if there were any doubt, the history of Medicare and Medicaid is the proof. Real cost control has become a national nightmare. Fraud has proliferated despite every effort to stop it. Program costs are always underestimated. In 1966 the cost of Medicare to the taxpayers was about $3 billion. The House Ways and Means Committee estimated that Medicare would cost taxpayers only about $12 billion by 1990 (adjusted for inflation). The actual cost? Nearly nine times as high - $107 billion. By 2006 Medicare reached $401 billion while Medicaid added another $309 billion for a total of $710 billion.
The health care programs Democratic leaders are pushing are outrageously expensive and fiscally irresponsible. The federal Health Care takeover will subsume about one-sixth of our national economy. Combined with current federal, state, and local spending, government will control about 50 percent of total national production. At this point the goal of centralized administration will be in sight, with less than half of our once free economy to be brought under government control.
There are essentially three models for health care delivery available to us. First, today's broken model in which bureaucratized insurance companies monopolize the field in each state - this is the "business-government partnership" model, the "crony capitalism" that corrupts our economy. Second, the Progressives' model where centrally administered government takes over the field and government bureaucrats decide which services you are allowed to have. Third, the only true American model in my view, a free market in which health care services compete, and individuals - the consumer-patients and their doctors - are in control.
Bureaucratized health care is not and cannot be "compassionate" health care. Government agents don't make decisions about how to treat the sick according to personalized need ... they ration health care resources according to a dollar-driven social calculus. This isn't a flaw in their plan. It is their plan.
Dr. Ezekiel Emanuel, the Obama Administration's point man on health care issues, advocates what he calls a "whole life system," a comprehensive formula for health care rationing. Under this system, government makes treatment decisions for individual persons using a statistical formula based on average life expectancy and "social usefulness." In other words, socially "useful" patients deserve more care than "useless" persons. Consider the legislation's new Medicare board of unelected specialists whose job is to determine the program's treatment protocols as a method of limiting costs. We already have a new comparative effectiveness research bureaucracy whose sole mission is make government determinations about which health procedures it deems are most cost effective and will be allowed by health care bureaucrats. The whole purpose of this heartless calculus is to eliminate compassionate personal care by loved ones under free markets with a diversity of health resources at proportional costs.
The idea that the government should make decisions about how long people should live and who should be denied medical healing is morally repugnant and deeply offensive. The supply of every service or product that exists is limited, but it is a mistake to conclude that government must ration them. This is what free markets do: finite amounts of goods and services, including health care, are rationed by each purchaser ordering his unique needs and allocating his resources among competing producers. Government rationing denies personal and natural rights. And our sick, special needs patients, and seniors - those most at risk when the government involves itself in these tough decisions - deserve better. Once government-run health care is a fait accompli, government rationing must be the necessary and logical outcome.
Government-monopolized health service conflicts with the American character as a free people. It conflicts with moral truth, with market freedom, with democracy, and with the health care excellence that has always drawn patients from socialist utopias to this country for medical treatment.
An authentic solution to the problem of affordability should be guided by the sure principles of moral and political freedom. It should respect doctor and patient privacy, restrain spending, and channel the energy of our free market system, not dry it up. Contrary to the false claim of Democratic leaders, there is no lack of sensible alternative solutions proposed by Republicans to put patients first. Last year in May, Senators Coburn and Burr, and Congressman Nunes and I offered one, the Patients Choice Act. It would eliminate government-driven market distortions that exclude many from affordable health care delivery. It would cover more uninsured Americans by spending current dollars wisely and efficiently than by throwing trillions more dollars at the problem. Our health care delivery alternative is guided by moral and political principles that respect the dignity of the person. It reflects America's commitment to compassion, family choice, and individual freedom, together with responsibility for the nation's economic well-being.
But the struggle over federal health care reform, the Democratic leaders' signature program, goes beyond the problem of national health. This debate encapsulates the defining issue of our generation: should we reform and strengthen America's free market democracy, or should we abandon it for a European-style social welfare state, the dream of third wave Progressives? Ultimately this is about an ideological crusade.
If we follow the Progressive path down which our current leaders plan to take us, creating entitlement after entitlement, promising benefits which can never be provided, the American Union will become something like the European Union: a welfare state society where the majority of people pay little or no taxes but become dependent on government benefits; where tax reduction is impossible because more people have a stake in the welfare state than in free enterprise; where permanent high unemployment is a way of life, and the spirit of risk-taking is smothered by a thick web of regulations from all-providing centralized government.
The US is already perilously close to this "tipping point." While exact and precise measures cannot be made, the Budget Committee minority staff have developed the warning indicators. In 2004, by our measure, 20% of US households were getting about 75% of their income from the federal government and have already become government dependents. Another 20 percent were receiving almost 40 percent of their income from federal programs, and are certainly already reliant on government for their livelihood.
All in all, about 60% of US households were receiving more government benefits and services (in dollar value) than they were paying back in taxes. We estimate that President Obama's first budget alone raises this "net government inflow" from 60% to 70%.
In my view, the Health Care reform plan is the vanguard of the Democratic leaders' crusade against the American idea. That's a harsh charge, but I can see only two possibilities: either they are ignorant of the consequences of their own programs - or they know and intend them.
In a TV interview in mid-December, President Obama said: "If we don't pass it...the federal government will go bankrupt, because Medicare and Medicaid are on a trajectory that are [sic] unsustainable....if we don't do this, nobody argues with the fact that health care costs are going to consume the entire federal budget."
The Democratic leaders' "credibility gap" has reached Grand Canyon proportions! You stop the nation from going broke by enacting a program costing $800 billion or more in the first decade? The President knows this will only accelerate the bankruptcy. If he means what he said, there is only one way to achieve that goal under the design of this plan: the government must ration health care, deeply and comprehensively.
The national health care exchange created by this legislation, together with its massive subsidies for middle income earners, will be the greatest expansion of the welfare state in a generation and possibly in history. Some health care experts estimate as many as 110 million citizens could claim this new entitlement within a few years of its implementation. According to our analysis, the new bill will provide subsidies that average a little less than 20% of the income of persons earning between zero and 400% of the Federal Poverty Level. As income rises, of course, the health care subsidies phase out. This in effect imposes a huge marginal tax penalty acting as a massive disincentive on work, entrapping in greater dependency precisely those who need more incentive to escape.
American citizens once took pride in being responsible for their individual well-being and for governing themselves in freedom. They are now to become passive subjects of government leaders, wheedling for hand-outs, more concerned about their security than their liberty. Isn't it wiser to suppose that those who promote this program are smart enough to know what they are doing? When we reach their intended goal, those who still cherish human freedom will be reduced to near-silence. Whatever you call the post-American regime they would impose on this land, it will be no democracy.
The Progressives and the Founders both saw popular government as a problem, but their solutions were nearly opposite. Progressivism argues that there are no timeless ideas of right or wrong. Everything is "relative to history," and history keeps changing. Progressivism says the US needs a "living constitution" that keeps up with the "change." Their practical solution is to centralize government and direct society through all the turns of history. The political, representative bodies, such as Congress, should enact laws that propose goals - for example, "America should have clean air, pure water, better health care..." - and then let trained specialists issue the detailed regulations to achieve these goals. These experts, selected by merit, should be protected from public accountability for their directives. The Progressives say that popular control over bureaucracy can be maintained by legislative oversight and the budget process. But how can the people hold legislators accountable if they have no professional training or responsibility for the regulations? So the centralized administrative state finds itself in a perpetual blame game between bureaucrats and elected officials when things go wrong, as we have seen.
In the current economic crisis there has been no lack of greed, envy, ambition, and plain ignorance in corporate boardrooms, financial markets, and government hallways. The capital sins are always with us. But the foundations for this crisis were laid by Progressivism itself, above all by encouraging "crony capitalism." The Democratic leadership is trying to cure the diseases of "crony capitalism" with more "crony capitalism." What we really need is a new engagement with the principles Progressives repudiate, the principles that founded this land of freedom.
This nation was based on the self-evident truth that unalienable rights were granted to human beings not by government but by "nature and nature's God." The truths of the American founding cannot become "obsolete" because they are not temporal. They are eternal. "The laws of Nature and of Nature's God" are the sure touchstones of right and wrong for individuals and societies, for all time. They are the most inclusive ideas ever embodied in a government. If all human beings have equal natural rights, that is final. "All" means "all."
The Founders taught us that when government goes beyond the high mission of securing these God-given rights of all - even if the intent is benevolent - the results will weaken freedom, reduce prosperity, undermine authority, and make government intrusive and arrogant. They tried to make sure that self-government remained free by writing a constitution that recognized and enforced those timeless principles. The Constitution would embody popular consent by being ratified by the people. In particular, the words spelled out the limits of federal power and left the rest to the people.
A government that expands beyond its high but limited constitutional mission of securing equal rights is not "progressive," it's reactionary. It privileges some at the expense of others. The American Revolution was fought to abolish artificial distinctions that confiscated the wealth of some and gave it to others. The promise of keeping the earnings of your work is central to justice, freedom, and the hope to better your life.
President Obama famously said that he wants to "spread the wealth around." Democratic Party leaders hanker for those Old World notions of rule by the patronage of bureaucrats and judges. The chair of the House Financial Services Committee, Barney Frank recently said as much: Democrats "are trying on every front to increase the role of government." I appreciate his candor but I can't help hearing an echo of George III excusing "taxation without representation." We swore off rule by the "better classes" a long time ago.
These leaders underestimate the American people. They have broken faith with independents, Republicans, and their own rank-and-file. They have walked away from the foundational truths that made America the wonder and envy of the world. And the price of their infidelity will be high.
The Health Care delivery problem can be solved without social welfare models. As Republicans present the nation with an alternative in 2010, our message on health care cannot be: "we can fix and reform this bill." Our message must be: "we will repeal and replace this government takeover, masked as Health Care reform." My party must insist on a serious public debate over the two different paths before us-calmly, honestly, and openly.
The Congressional elections this year will not be one of those normal local politics affairs. 2010 will be a national watershed, in every state and congressional district. A realignment of political parties is underway. But which way? Will we tolerate the replacement of the American idea with the social welfare state, or will we begin to reclaim and reapply the principles that gave America its greatness? We have had major political realignments before. In 2008 we just finished one: the Reagan revolution. In a strange way, the left is helping by making this moment crystal clear for the American people to see it.
Americans will sacrifice lives and treasure when they are called on to secure our safety and our freedom. But we will not endure the choice for decline - economic decline, global decline, or the decline of family and all we hold dear. We have always risen up against threats to our freedom, however disguised as benevolence by bureaucrats of big government or big business. Americans put country above party and will repudiate partisan leaders who try under cover of night to impose regime change on America. A new day is coming - time for a rebirth of democratic prosperity from the principles that still make America an exceptional nation and a providential gift to freedom's seekers in every land!

Paul Ryan represents Wisconsin's First Congressional District. He serves as ranking member of the House Budget Committee and senior member of the House Ways and Means Committee.

To Help Haiti, End Foreign Aid

For Haitians, just about every conceivable aid scheme beyond immediate humanitarian relief will lead to more poverty, more corruption and less institutional capacity.

It's been a week since Port-au-Prince was destroyed by an earthquake. In the days ahead, Haitians will undergo another trauma as rescue efforts struggle, and often fail, to keep pace with unfolding emergencies. After that—and most disastrously of all—will be the arrival of the soldiers of do-goodness, each with his brilliant plan to save Haitians from themselves.
"Haiti needs a new version of the Marshall Plan—now," writes Andres Oppenheimer in the Miami Herald, by way of complaining that the hundreds of millions currently being pledged are miserly. Economist Jeffrey Sachs proposes to spend between $10 and $15 billion dollars on a five-year development program. "The obvious way for Washington to cover this new funding," he writes, "is by introducing special taxes on Wall Street bonuses." In a New York Times op-ed, former presidents Bill Clinton and George W. Bush profess to want to help Haiti "become its best." Some job they did of that when they were actually in office.

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Associated Press

Kindness comes to Haiti, but too much kindness can kill.

All this works to salve the consciences of people whose dimly benign intention is to "do something." It's a potential bonanza for the misery professionals of aid agencies and NGOs, never mind that their livelihoods depend on the very poverty whose end they claim to seek. And it allows the Jeff Sachses of the world to preen as latter-day saints.

For actual Haitians, however, just about every conceivable aid scheme beyond immediate humanitarian relief will lead to more poverty, more corruption and less institutional capacity. It will benefit the well-connected at the expense of the truly needy, divert resources from where they are needed most, and crowd out local enterprise. And it will foster the very culture of dependence the country so desperately needs to break.
How do I know this? It helps to read a 2006 report from the National Academy of Public Administration, usefully titled "Why Foreign Aid to Haiti Failed." The report summarizes a mass of documents from various aid agencies describing their lengthy records of non-accomplishment in the country.
Here, for example, is the World Bank—now about to throw another $100 million at Haiti—on what it achieved in the country between 1986 and 2002: "The outcome of World Bank assistance programs is rated unsatisfactory (if not highly so), the institutional development impact, negligible, and the sustainability of the few benefits that have accrued, unlikely."
Why was that? The Bank noted that "Haiti has dysfunctional budgetary, financial or procurement systems, making financial and aid management impossible." It observed that "the government did not exhibit ownership by taking the initiative for formulating and implementing [its] assistance program." Tellingly, it also acknowledged the "total mismatch between levels of foreign aid and government capacity to absorb it," another way of saying that the more foreign donors spent on Haiti, the more the funds went astray.
But this still fails to get at the real problem of aid to Haiti, which has less to do with Haiti than it does with the effects of aid itself. "The countries that have collected the most development aid are also the ones that are in the worst shape," James Shikwati, a Kenyan economist, told Der Spiegel in 2005. "For God's sake, please just stop."
Take something as seemingly straightforward as food aid. "At some point," Mr. Shikwati explains, "this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unscrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the U.N.'s World Food Program."
Mr. Sachs has blasted these arguments as "shockingly misguided." Then again, Mr. Shikwati and others like Kenya's John Githongo and Zambia's Dambisa Moyo have had the benefit of seeing first hand how the aid industry wrecked their countries. That the industry typically does so in connivance with the same local governments that have led their people to ruin only serves to help keep those elites in power, perpetuating the toxic circle of dependence and misrule that's been the bane of countries like Haiti for generations.
A better approach recognizes the real humanity of Haitians by treating them—once the immediate and essential tasks of rescue are over—as people capable of making responsible choices. Haiti has some of the weakest property protections in the world, as well as some of the most burdensome business regulations. In 2007, it received 10 times as much in aid ($701 million) as it did in foreign investment.
Reversing those figures is a task for Haitians alone, which the outside world can help by desisting from trying to kill them with kindness. Anything short of that and the hell that has now been visited on this sad country will come to seem like merely its first circle.
Write to bstephens@wsj.com

 

The Underlying Tragedy

David Brooks
By DAVID BROOKS
Published: January 14, 2010

On Oct. 17, 1989, a major earthquake with a magnitude of 7.0 struck the Bay Area in Northern California. Sixty-three people were killed. This week, a major earthquake, also measuring a magnitude of 7.0, struck near Port-au-Prince, Haiti. The Red Cross estimates that between 45,000 and 50,000 people have died.

This is not a natural disaster story. This is a poverty story. It’s a story about poorly constructed buildings, bad infrastructure and terrible public services. On Thursday, President Obama told the people of Haiti: “You will not be forsaken; you will not be forgotten.” If he is going to remain faithful to that vow then he is going to have to use this tragedy as an occasion to rethink our approach to global poverty. He’s going to have to acknowledge a few difficult truths.

The first of those truths is that we don’t know how to use aid to reduce poverty. Over the past few decades, the world has spent trillions of dollars to generate growth in the developing world. The countries that have not received much aid, like China, have seen tremendous growth and tremendous poverty reductions. The countries that have received aid, like Haiti, have not.

In the recent anthology “What Works in Development?,” a group of economists try to sort out what we’ve learned. The picture is grim. There are no policy levers that consistently correlate to increased growth. There is nearly zero correlation between how a developing economy does one decade and how it does the next. There is no consistently proven way to reduce corruption. Even improving governing institutions doesn’t seem to produce the expected results.

The chastened tone of these essays is captured by the economist Abhijit Banerjee: “It is not clear to us that the best way to get growth is to do growth policy of any form. Perhaps making growth happen is ultimately beyond our control.”

The second hard truth is that micro-aid is vital but insufficient. Given the failures of macrodevelopment, aid organizations often focus on microprojects. More than 10,000 organizations perform missions of this sort in Haiti. By some estimates, Haiti has more nongovernmental organizations per capita than any other place on earth. They are doing the Lord’s work, especially these days, but even a blizzard of these efforts does not seem to add up to comprehensive change.

Third, it is time to put the thorny issue of culture at the center of efforts to tackle global poverty. Why is Haiti so poor? Well, it has a history of oppression, slavery and colonialism. But so does Barbados, and Barbados is doing pretty well. Haiti has endured ruthless dictators, corruption and foreign invasions. But so has the Dominican Republic, and the D.R. is in much better shape. Haiti and the Dominican Republic share the same island and the same basic environment, yet the border between the two societies offers one of the starkest contrasts on earth — with trees and progress on one side, and deforestation and poverty and early death on the other.

As Lawrence E. Harrison explained in his book “The Central Liberal Truth,” Haiti, like most of the world’s poorest nations, suffers from a complex web of progress-resistant cultural influences. There is the influence of the voodoo religion, which spreads the message that life is capricious and planning futile. There are high levels of social mistrust. Responsibility is often not internalized. Child-rearing practices often involve neglect in the early years and harsh retribution when kids hit 9 or 10.

We’re all supposed to politely respect each other’s cultures. But some cultures are more progress-resistant than others, and a horrible tragedy was just exacerbated by one of them.

Fourth, it’s time to promote locally led paternalism. In this country, we first tried to tackle poverty by throwing money at it, just as we did abroad. Then we tried microcommunity efforts, just as we did abroad. But the programs that really work involve intrusive paternalism.

These programs, like the Harlem Children’s Zone and the No Excuses schools, are led by people who figure they don’t understand all the factors that have contributed to poverty, but they don’t care. They are going to replace parts of the local culture with a highly demanding, highly intensive culture of achievement — involving everything from new child-rearing practices to stricter schools to better job performance.

It’s time to take that approach abroad, too. It’s time to find self-confident local leaders who will create No Excuses countercultures in places like Haiti, surrounding people — maybe just in a neighborhood or a school — with middle-class assumptions, an achievement ethos and tough, measurable demands.

The late political scientist Samuel P. Huntington used to acknowledge that cultural change is hard, but cultures do change after major traumas. This earthquake is certainly a trauma. The only question is whether the outside world continues with the same old, same old.

The Next Meltdown

The man who predicted the real-estate crash says to buy gold.


 

By Stephen Spruiell

Bob Wiedemer is explaining to a roomful of hedge-fund investors that the end of America as we know it won’t be as bad as they think. Wiedemer is co-author of the new book Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown. Sound overblown? That’s what they said about his first book, America’s Bubble Economy, in which Wiedemer and his co-authors, his Ph.D. brother David and writer Cindy Spitzer, predicted that the U.S. residential real-estate market was overvalued and due for a crash. That was in 2006, months before the crash actually occurred. Now Wiedemer is warning people that another bubble is about to collapse: America itself.

More specifically, it is Wiedemer’s view that the U.S. dollar will be the next bubble to burst. The government’s fiscal position, he explains, is unsustainable. America owes six times what it collects in tax revenues each year, and that ratio is projected to explode with the retirement of the baby boomers. On top of that, nearly 40 percent of U.S. debt must be refinanced each year, leaving the government highly vulnerable to rising interest rates. The Fed’s printing presses have been working overtime throughout the crisis, buying Treasuries and other securities to keep the economy afloat. This is a recipe for hyperinflation, and the New York Hedge Fund Roundtable has invited Wiedemer to this small conference room overlooking Park Avenue to tell investors how they can protect themselves from the fallout. His advice in one word: “Gold.”


Of late, it has become fashionable for the cool kids in the American media to mock conservative talkers for endorsing gold. For one thing, gold offers up a bountiful supply of admittedly hilarious punchlines involving pirates, Bond villains, and video games. (As Stephen Colbert quipped, “Did you know that if you collect 100 gold coins, you get an extra life?”) For another, some people really are “buggy” about gold. (That is, they hold some questionable beliefs about gold’s superiority over other forms of money.)

Wiedemer acknowledges that a few years ago, mentioning gold was the quickest way to lose credibility in a room full of investors, and for good reason: It doesn’t generate income, and it is not the invulnerable store of value its most fervent backers claim. But Wiedemer maintains that it is a good investment right now because its price tends to go up in response to fear, and in a hyperinflationary environment, there will be plenty of that to go around.

Wiedemer doesn’t fit into the thesis, so popular on MSNBC these days, that conservative talkers such as Glenn Beck dreamed up the gold racket as a profitable sideline to their main business of selling fear to people who “cling to guns and religion” (in Obama’s infamous formulation). He is a donor to Democratic politicians and causes, and his book contains asides on global warming and gun control that will leave liberals nodding. But he tells investors to check politics at the door and focus on the fundamentals of America’s fiscal situation. Fear will be a consequence of the popping of the dollar bubble, he says. But it won’t be the nightmarish apocalypse that some predict.

“The post-dollar bubble world is quite real and that is what makes it so bad,” he and his co-authors write in Aftershock. “It is real and we will have to deal with it. It’s a lot like going bankrupt — really terrible, but hardly the end of the world.” To the hedge-funders, he compares it to Pearl Harbor (and the war that followed): a terrible shock that inflicts a lot of damage, but one that forces the U.S. finally to confront a growing menace to its way of life and leaves it stronger. And it won’t be as bad as the Great Depression: America will fall farther, but only because it rose so high during the bubble years.

Wiedemer could be wrong, and some muttering in the elevator after the talk suggests that many people aren’t ready to believe him. But he is not alone. He notes that famed investors like John Paulson and David Einhorn have made gold “respectable” again — meaning that lots of smart money is on his being right. It’s a depressing thought. But when one considers the total disconnect from reality we are witnessing in Washington — new and costly health-care entitlements, endless rounds of “stimulus,” and trillion-dollar deficits projected for ten years or more — it is hard to come to any other conclusion. We have met the bubble, and it is us.

— Stephen Spruiell is an NRO staff reporter.

The President's Bait-and-Switch Operation

Which campaign promises has he kept?

By KARL ROVE

Americans learned last year that President Obama discards campaign promises like most people discard used Kleenex. Among the pledges he cast aside were reducing the deficit, reining in federal spending, not allowing lobbyists to work in his administration, increasing taxes only on those who make more than $250,000, and opposing "government-run health care" because it is "extreme."
This year, Mr. Obama is picking up where he left off.
Consider presidential signing statements. Since Andrew Jackson, presidents of both parties have told Congress that while they are signing a bill into law, they intend to ignore specific provisions because they involve unconstitutional restrictions on the executive branch or are otherwise problematic. A president's power to do this springs from his oath of office, through which each new chief executive promises to "preserve, protect and defend the Constitution."
Because of Washington's hyperpartisan atmosphere, President George W. Bush drew heated criticism from Democrats for his signing statements. Among his toughest critics was Barack Obama, who in a questionnaire for the Boston Globe in 2007 accused Mr. Bush of "clear abuse" in using signing statements "to avoid enforcing certain provisions . . . the President does not like." He promised not to use signing statements to "nullify or undermine congressional instructions as enacted into law."

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Reuters 

 

Yet Mr. Obama started issuing signing statements shortly after taking office. Democratic Reps. Barney Frank and David Obey called him out on it in a letter to the White House complaining that they were "chagrined" that Mr. Obama was issuing signing statements.

Recently, the Obama administration admitted that after receiving the letter from Messrs. Frank and Obey, it stopped the practice. But the president still has aides examine each bill to identify provisions the administration will disregard. It's just that Team Obama isn't telling Congress which provisions it is ignoring. It's right for him to defend the office of the presidency. The problem is that he is doing it in a way that violates his own standards of transparency and accountability.
This hypocrisy has not gotten much attention. But another act of duplicity has. During his campaign, Mr. Obama pledged that any negotiations on health-care legislation would be broadcast on C-SPAN, "so the American people can see what the choices are," and not conducted behind closed doors. "Such public negotiations," he said, were "the antidote" to "overcoming the special interests and the lobbyists who . . . will resist anything that we try to do."
Internet publisher Andrew Breitbart collected videotape of Mr. Obama making the same promise eight different times in 2007 and 2008—evidence that this was not a hasty or ill-considered pledge. It was supposed to epitomize the "change" that was at the core of the Obama campaign.
Now, however, the final negotiations on health-care reform are being conducted behind closed doors and there's no formal legislative conference between the House and Senate, which would guarantee Republicans at least a few seats at the table. This bill is not only being written in secrecy, it is being written by an anonymous group of Democrats. We can therefore throw Mr. Obama's commitment to bipartisanship onto his mountain of broken promises.
Instead, he's practicing hardball politics, aiming for a health-care bill that gets just enough Democrats to jam it through Congress with lighting speed before the American people's justified anger gets even hotter than it already is. This is dangerous, both for the country which gets saddled with a lousy piece of legislation and for Democrats, who will bear sole responsibility for the bill's deep cuts in Medicare, rising insurance premiums, increased taxes, and decline in the quality and availability of health care.

About Karl Rove

Karl Rove served as Senior Advisor to President George W. Bush from 2000–2007 and Deputy Chief of Staff from 2004–2007. At the White House he oversaw the Offices of Strategic Initiatives, Political Affairs, Public Liaison, and Intergovernmental Affairs and was Deputy Chief of Staff for Policy, coordinating the White House policy-making process.
Before Karl became known as "The Architect" of President Bush's 2000 and 2004 campaigns, he was president of Karl Rove + Company, an Austin-based public affairs firm that worked for Republican candidates, nonpartisan causes, and nonprofit groups. His clients included over 75 Republican U.S. Senate, Congressional and gubernatorial candidates in 24 states, as well as the Moderate Party of Sweden.
Karl writes a weekly op-ed for the Wall Street Journal, is a Newsweek columnist and is the author of the forthcoming book "Courage and Consequence" (Threshold Editions).
Email the author atKarl@Rove.comor visit him on the web atRove.com. Or, you can send a Tweet to @karlrove.

Maybe it was naïve for Mr. Obama to make the C-SPAN promise. But it was his pledge to do business in a different way, and it likely helped him win over swing voters. Mr. Obama even talked this week about "changing the way Washington works." But we can see that Mr. Obama's preferred style is backroom legislative drafting and what that style produces—sweetheart deals like Nebraska Sen. Ben Nelson's "Cornhusker Kickback" and dozens of other special-interest provisions that benefit one state or a group at the expense of good policy. Mr. Obama should insist that every last payoff be removed from whatever bill is cobbled together.
This all plays into a broader narrative: Mr. Obama is not the centrist or new-style bipartisan leader he presented himself to be. On many of the most basic issues raised in the campaign, and in describing the kind of leadership he would practice, Mr. Obama misled voters. Americans will overlook a lot of things when it comes to politicians—but being on the receiving end of a giant bait-and-switch game isn't one of them.
Mr. Rove, the former senior adviser and deputy chief of staff to President George W. Bush, is the author of the forthcoming book "Courage and Consequence" (Threshold Editions).

 

Open Letter to Democratic Pols...

Need a Reason to Vote Republican in 2010? Nancy Can Give You 14 Paragraphs Worth...

Progress for U.S. Families, Businesses

Nancy Pelosi outlines the goals of the 111th Congress. Photo: AP

At the halfway mark in this Congress, our priorities are clear: strengthening the security of the American people and building a new economy that offers our families lasting prosperity. These priorities are the new direction the American people demanded in 2008 — with the historic election of President Barack Obama and the 111th Congress. In the days since, this Congress has responded with an agenda focused on rebuilding, reforming and restoring the promise of progress and prosperity to America’s families and businesses.

A record of achievement

To address the worst economic crisis since the Great Depression, Congress passed the American Recovery and Reinvestment Act — an unprecedented measure that has created or saved as many as 1.6 million jobs so far, invested in infrastructure and clean energy, cut taxes for 95 percent of American households and kept teachers in our classrooms. The result: Job losses are reversing course, and our economy has swung from downturn to growth.

We built on this recovery with the popular Cash for Clunkers program, giving a critical boost to our automakers, a break for families and an incentive to reduce carbon pollution, which causes climate change.

We then laid out a long-term economic plan for America — a budget blueprint founded on three pillars of our prosperity: a highly educated work force, a clean energy economy and quality, affordable health care for every American. This framework reduces the deficit, restoring critical fiscal restraint as our economy recovers.

The 111th Congress has acted to restore accountability to government, and we acted on the promise of some of our deepest values: service, equality and fairness for all. We upheld our pledge to never leave any veteran behind, securing timely and reliable funding for the Department of Veterans Affairs, building on this country’s largest investment in veterans’ health care and ensuring our men and women in uniform get a fair pay raise. The Edward M. Kennedy Serve America Act will expand service opportunities for our youth and restore a sense of common purpose and shared sacrifice among our next generation.

The expansion of the State Children’s Health Insurance Program means affordable, accessible medical care for 11 million kids — and Food and Drug Administration regulation of tobacco finally offers children some protection from the No. 1 cause of preventable death in America. The Lily Ledbetter Fair Pay Act will ensure that workers who face pay discrimination can seek justice in our courts. And the Credit Cardholders’ Bill of Rights will protect consumers from the predatory practices, unfair fees and fine print of the financial industry.

The way forward

This record of results responded to the call for change. But we know our work is far from over. While some try to use partisan politics to slow our efforts to create jobs and make America stronger, Congress will stay focused on our top priorities: putting Americans back to work and boosting the paychecks of America’s households.

Essential to our economic strength is realizing the century-old dream of affordable health care for all Americans — reform that cuts costs and reduces our deficit. Today, we stand at the doorstep of history, preparing to send a bill to the president’s desk that achieves affordability for the middle class, accountability for insurance companies and access for millions more Americans.

Working with the Senate, we will pass a broadly based jobs initiative that continues the work of the Recovery Act and helps Americans emerge stronger from this economic storm.

Working with the Senate — and building on the bill passed by the House last spring — we must address the greatest challenge of our time: climate change. In doing so, we can build a clean energy economy that creates millions of new jobs and reduces our dependence on foreign oil.

Working with the Senate, we will send the president the Student Aid and Fiscal Responsibility Act — the largest investment in higher education in American history, passed by the House last year.

Working with the Senate, the Wall Street Reform and Consumer Protection Act will become law. The most sweeping reform of the financial industry since the Great Depression will protect Main Street from the worst of Wall Street and rein in the excesses that put Americans’ homes, retirements and college savings at risk. And it will restore transparency, accountability and strong enforcement to our financial sector.

Making change a reality

Years of inaction on our toughest challenges will take time to reverse. But we have answered the call for a different approach. We’ve taken swift action to restore accountability to Washington and opportunity for the middle class, to create good-paying jobs for our workers, to use innovation to power America in a global economy and build a strong and smart national defense. Together, America’s leaders will work to make the promise of change a reality for all Americans.

Rep. Nancy Pelosi (D-Calif.) is speaker of the House.

 

Union workers would be exempt from Dem health care tax

 

By: Susan Ferrechio
Chief Congressional Correspondent
June 23, 2009

The best chance for compromise legislation on health care may be a plan under construction in the Senate Finance Committee that would pay for a public plan in part by taxing some worker health benefits.
But the union workers who helped Democrats win Congress and the White House and whose support will be key in getting a health bill signed into law would not pay the tax.
With cost estimates already as high as $1.6 trillion, Senate Finance Committee Chairman Max Baucus, D-Mont., has proposed paying for the bill in part by taxing health care benefits for workers who earn more than $100,000, or $200,000 for married couples, according to those familiar with the discussions.
Baucus is also weighing a tax based on the value of health care benefits that exceed a yet-to-be determined cap. A tax on benefits that exceed the cap by a mere $3,000 could amount to $750 in taxes annually for a worker who earns as little as $34,000, say experts.
But those union members serving under collective bargaining agreements would not be subjected to the tax, according to proposals under discussion.
Union workers enjoy some of the most extensive and costliest health benefits, and union officials complained their members would be unfairly burdened by a health care tax because their contracts cannot be changed quickly enough to avoid it.
Union members also represent one of the biggest and most powerful Democratic constituencies and their support of any health care reform proposal is viewed as essential to getting a bill passed in Congress.
Baucus has proposed the tax threshold on health care benefits be set higher than the cost of policies available to federal employees and he has proposed exempting until 2013 those plans negotiated as part of union contracts.
“It’s a means of making sure that unions are foursquare behind any reform bill that comes out,” said Henry Aaron, a health care policy expert at Brookings Institution, a Washington think tank.
Critics of the Baucus proposal to exempt unions from a health care benefits tax said the exclusion could be used to lure into unions employees who are anxious to avoid the benefits tax.
Paul Fronstin, a senior research associate with the nonpartisan Employee Benefit Research Institute, said excluding union benefits is also practical.
“The reality is, unions are in the position where they are going to get hit the hardest on that tax, and they just can’t change it on a dime like everyone else,” Fronstin said.
Baucus is said to be considering a delay for everyone, not just unions.
“And there is precedent for that,” Fronstin said. “When the Clinton health plan was put on the table in 1993, the effective date was 1998. It was giving the industry time to implement whatever adjustments they needed to make.”

Read more at the Washington Examiner: http://www.washingtonexaminer.com/politics/Union-workers-would-be-exempt-from-Dem-health-care-tax_06_23-48810402.html#ixzz0cSPryh6z

The Trouble with Harry

Reid's racial comments aren't his worst rhetorical offense.

We can think of several reasons for Harry Reid to resign as Senate Majority Leader, though the flap over his obtuse racial comments isn't one of them. The uproar is nonetheless instructive about the perils of identity politics.
Mr. Reid is apologizing to all and sundry for saying in private in 2008 that Barack Obama should run for President because he was "light-skinned" and spoke with "no Negro dialect, unless he wanted to have one." Republicans are calling for Mr. Reid to resign, on grounds of the Trent Lott precedent.
When the Republican leader in 2002 joked at a birthday party for Strom Thurmond that America might have been better off had the one-time Dixiecrat won his 1948 Presidential campaign, Democrats demanded Mr. Lott's resignation. An Illinois state senator with a big political future went so far as to suggest at the time that Republicans needed to "drive out" Mr. Lott in order to "stand for something." Mr. Lott resigned, notwithstanding his profuse apologies.

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European Pressphoto Agency

Senate Majority Leader Harry Reid

In contrast, Mr. Obama and various black Democrats have rushed to Mr. Reid's defense. The President said he accepted Mr. Reid's apology because "I've known him for years, I've seen the passionate leadership he's shown on issues of social justice and I know what's in his heart."

We've never peered into Mr. Reid's heart, but here's hoping the President will be equally quick to absolve the next Republican who says something stupid about race. Not every racial malaprop merits political banishment, and it would be edifying to the American public to hear this President say so on behalf of someone who isn't a partisan ally.
Some Americans, white and black, might be more insulted by Mr. Reid's implication that most Americans—45 years after the Civil Rights Act of 1964—are still so residually racist that they would only vote for a black candidate who isn't really . . . black. In reality, we saw in November 2008 that Americans were more than ready to elect a black politician who campaigned to be President of all Americans, in contrast to previous candidates who ran expressly and principally as candidates of black America. Democrats like Mr. Reid still see the American electorate through the prism of identity politics, which leads them to such condescending conclusions.
The irony is that Democrats are increasingly the victims of this kind of racial politicking. Bill Clinton's dismissal of Mr. Obama as a Jesse Jackson-style "black candidate" hurt his wife's candidacy in 2008. Democratic Congressman Artur Davis, vying to become the first black governor of Alabama, has been declared a traitor to his race for having voted against Nancy Pelosi's health bill.
Mr. Reid's allies are even now responding to critics by playing the race card. Democrats are pointing to the NAACP's voting assessments of Republicans who have called on him to resign. "Senator Reid's record provides a stark contrast to actions of Republicans to block legislation that would benefit poor and minority communities—most recently reflected in Republican opposition to the health bill," says Congressional Black Caucus leader Barbara Lee (D., Calif.). Thus do Mr. Reid's ill-chosen words morph into the accusation that Republicans are racist for opposing government health care.
In any event, this is hardly Mr. Reid's worst rhetorical offense. That prize goes to his all too public comments in April 2007 that "the war is lost" in Iraq, even as the surge was finally making victory possible. That was a betrayal of American soldiers risking their lives in Iraq, and to the extent it emboldened the enemy, it may have cost American lives.
If Mr. Reid has apologized for that defeatism, we don't recall it. That's reason enough to resign.