Hope & Change Becomes Attack & Blame

Obamaland
Squandering hope, channeling Nixon.
by Gary Andres
10/29/2009 12:00:00 AM

In his book Nixonland: The Rise of a President and the Fracturing of America, historian Rick Perlstein argues the seeds of today's polarized politics were sown during the 1960s and 1970s. He traces the fault lines of contemporary controversies such as marriage, abortion, the environment, the role of government and even the very terms of our national self-image, back to this earlier period.
President Nixon stepped into those stormy times and helped define a language of politics still used today--a "silent majority" of middle-class, conservative-leaning, middle-American "people of faith," versus a more cosmopolitan, secular, and liberal-leaning "live and let live" crowd.
Perlstein's formulation may be oversimplified, but President Barack Obama pledged to end it. He promised "change" and to stop the polarized politics of the past. He asserted America was on the brink of death by division. We needed to come together. But now President Obama stands at the edge of the same abyss. And many believe he has fallen into the same swamp of bitterness and polarization he promised to end. Recent poll trends support this conclusion.
Last week Senator Lamar Alexander of Tennessee beckoned the president to step back from the precipice. In a Senate floor speech, he urged Obama to cool it when it comes to assailing those who disagree with the White House. Alexander, not known as a vituperative partisan, warned the president risked squandering an opportunity to "work together on the truly presidential issues--creating jobs, reducing health care costs, reducing the debt, creating clean
energy." Alexander lamented that Mr. Obama's growing list of public spats with banking executives, the insurance industry, the Chamber of Commerce, and Fox News reminded him of the Nixon Administration (Alexander worked there until 1970), where White House Counsel John Dean and his colleagues schemed about ways to "use the available Federal machinery to screw our political enemies."
The senator sees troubling parallels between Nixonland and Obamaland: "I have an uneasy feeling only 10 months into this new administration that we are beginning to see the symptoms of this same kind of animus developing in the Obama administration."
The transition from campaigning to governing has not been kind to President Obama. As a candidate he spoke of hope, change and ending the polarization of the past; he promised to bring people together; he pledged a new style of civil political engagement; he sought to lift us as a people above surly partisan warfare.
As president, he sucked the veracity from these hopes. Maybe this was the plan all along. Politicians often say one thing and do another. Or perhaps, he succumbed to inexorable forces and patterns that swallow every idealistic elected official trying to navigate the Washington swamp. Whatever the reason, Obama has fallen short of those lofty aspirations.
After ten months in office a clear pattern has emerged. Instead of hope and change, it's blame and attack. Obama rarely gives a speech about a pressing national problem--the economy, health care, the budget deficit--without blaming Republicans or former president George W. Bush. For many Americans it's getting old. It makes the president look small and petty. Does he want America's respect or its pity?

Attack is the other side of this strategy. Playing Chicago-style politics comes naturally to this White House, populated with a cadre of former Obama for president staffers and others steeped in the tactics of the permanent campaign. And they don't merely assault an enemies list. "We routinely hear about phone calls from the president's staff to congressional Democrats expressing White House dissatisfaction if someone says anything out of line with Obama's policies," a senior congressional aide told me.
The gap between the president's campaign rhetoric compared to his governing style creates a harsh cognitive dissonance and a toll in the polls. Gallup reported last week that Obama suffered the largest decline in approval numbers from the second to third quarter of his first year of any president in modern history. And the slide will likely persist as the White House continues to force its vision of change on a country that lacks consensus in many areas.
Perlstein ends his book with a question: How did Nixonland end? His answer: "It has not ended yet." Life in Obamaland supports his thesis.

Gary Andres is vice chairman of research at Dutko Worldwide in Washington, D.C., and a regular contributor to THE WEEKLY STANDARD Online.

Dismantling America: Part II

By Thomas Sowell

Many years ago, at a certain academic institution, there was an experimental program that the faculty had to vote on as to whether or not it should be made permanent.
I rose at the faculty meeting to say that I knew practically nothing about whether the program was good or bad, and that the information that had been supplied to us was too vague for us to have any basis for voting, one way or the other. My suggestion was that we get more concrete information before having a vote.

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The director of that program rose immediately and responded indignantly and sarcastically to what I had just said-- and the faculty gave him a standing ovation.
After the faculty meeting was over, I told a colleague that I was stunned and baffled by the faculty's fierce response to my simply saying that we needed more information before voting.
"Tom, you don't understand," he said. "Those people need to believe in that man. They have invested so much hope and trust in him that they cannot let you stir up any doubts."
Years later, and hundreds of miles away, I learned that my worst misgivings about that program did not begin to approach the reality, which included organized criminal activity.
The memory of that long-ago episode has come back more than once while observing both the actions of the Obama administration and the fierce reactions of its supporters to any questioning or criticism.
Almost never do these reactions include factual or logical arguments against the administration's critics. Instead, there is indignation, accusations of bad faith and even charges of racism.
Here too, it seems as if so many people have invested so much hope and trust in Barack Obama that it is intolerable that anyone should come along and stir up any doubts that could threaten their house of cards.
Among the most pathetic letters and e-mails I receive are those from people who ask why I don't write more "positively" about Obama or "give him the benefit of the doubt."
No one-- not even the President of the United States-- has an entitlement to a "positive" response to his actions. The entitlement mentality has eroded the once common belief that you earned things, including respect, instead of being given them.
As for the benefit of the doubt, no one-- especially not the President of the United States-- is entitled to that, when his actions can jeopardize the rights of 300 million Americans domestically and the security of the nation in an international jungle, where nuclear weapons may soon be in the hands of people with suicidal fanaticism. Will it take a mushroom cloud over an American city to make that clear? Was 9/11 not enough?
When a President of the United States has begun the process of dismantling America from within, and exposing us to dangerous enemies outside, the time is long past for being concerned about his public image. He has his own press agents for that.
Internationally, Barack Obama has made every mistake that was made by the Western democracies in the 1930s, mistakes that put Hitler in a position to start World War II-- and come dangerously close to winning it.
At the heart of those mistakes was trying to mollify your enemies by throwing your friends to the wolves. The Obama administration has already done that by reneging on this country's commitment to put a missile defense shield in Eastern Europe and by its lackadaisical foot-dragging on doing anything serious to stop Iran from getting nuclear weapons. That means, for all practical purposes, throwing Israel to the wolves as well.
Countries around the world that have to look out for their own national survival, above all, are not going to ignore how much Obama has downgraded the reliability of America's commitments.
Iraq, for example, knows that Iran is going to be next door forever while Americans may be gone in a few years. South Korea likewise knows that North Korea is permanently next door but who knows when the Obama administration will get a bright idea to pull out? Countries in South America know that Hugo Chavez is allying Venezuela with Iran. Dare they ally themselves with an unreliable U.S.A.? Or should they join our enemies to work against us?
This issue is too serious for squeamish silence.

We're Governed by Callous Children

Americans feel increasingly disheartened, and our leaders don't even notice.

The new economic statistics put growth at a healthy 3.5% for the third quarter. We should be dancing in the streets. No one is, because no one has any faith in these numbers. Waves of money are sloshing through the system, creating a false rising tide that lifts all boats for the moment. The tide will recede. The boats aren't rising, they're bobbing, and will settle. No one believes the bad time is over. No one thinks we're entering a new age of abundance. No one thinks it will ever be the same as before 2008. Economists, statisticians, forecasters and market specialists will argue about what the new numbers mean, but no one believes them, either. Among the things swept away in 2008 was public confidence in the experts. The experts missed the crash. They'll miss the meaning of this moment, too.
The biggest threat to America right now is not government spending, huge deficits, foreign ownership of our debt, world terrorism, two wars, potential epidemics or nuts with nukes. The biggest long-term threat is that people are becoming and have become disheartened, that this condition is reaching critical mass, and that it afflicts most broadly and deeply those members of the American leadership class who are not in Washington, most especially those in business.
It is a story in two parts. The first: "They do not think they can make it better."
I talked this week with a guy from Big Pharma, which we used to call "the drug companies" until we decided that didn't sound menacing enough. He is middle-aged, works in a significant position, and our conversation turned to the last great recession, in the late mid- to late 1970s and early '80s. We talked about how, in terms of numbers, that recession was in some ways worse than the one we're experiencing now. Interest rates were over 20%, and inflation and unemployment hit double digits. America was in what might be called a functional depression, yet there was still a prevalent feeling of hope. Here's why. Everyone thought they could figure a way through. We knew we could find a path through the mess. In 1982 there were people saying, "If only we get rid of this guy Reagan, we can make it better!" Others said, "If we follow Reagan, he'll squeeze out inflation and lower taxes and we'll be America again, we'll be acting like Americans again." Everyone had a path through.
Now they don't. The most sophisticated Americans, experienced in how the country works on the ground, can't figure a way out. Have you heard, "If only we follow Obama and the Democrats, it will all get better"? Or, "If only we follow the Republicans, they'll make it all work again"? I bet you haven't, or not much.
This is historic. This is something new in modern political history, and I'm not sure we're fully noticing it. Americans are starting to think the problems we are facing cannot be solved.
Part of the reason is that the problems—debt, spending, war—seem too big. But a larger part is that our federal government, from the White House through Congress, and so many state and local governments, seems to be demonstrating every day that they cannot make things better. They are not offering a new path, they are only offering old paths—spend more, regulate more, tax more in an attempt to make us more healthy locally and nationally. And in the long term everyone—well, not those in government, but most everyone else—seems to know that won't work. It's not a way out. It's not a path through.
And so the disheartenedness of the leadership class, of those in business, of those who have something. This week the New York Post carried a report that 1.5 million people had left high-tax New York state between 2000 and 2008, more than a million of them from even higher-tax New York City. They took their tax dollars with them—in 2006 alone more than $4 billion.
You know what New York, both state and city, will do to make up for the lost money. They'll raise taxes.
I talked with an executive this week with what we still call "the insurance companies" and will no doubt soon be calling Big Insura. (Take it away, Democratic National Committee.) He was thoughtful, reflective about the big picture. He talked about all the new proposed regulations on the industry. Rep. Barney Frank had just said on some cable show that the Democrats of the White House and Congress "are trying on every front to increase the role of government in the regulatory area." The executive said of Washington: "They don't understand that people can just stop, get out. I have friends and colleagues who've said to me 'I'm done.' " He spoke of his own increasing tax burden and said, "They don't understand that if they start to tax me so that I'm paying 60%, 55%, I'll stop."
He felt government doesn't understand that business in America is run by people, by human beings. Mr. Frank must believe America is populated by high-achieving robots who will obey whatever command he and his friends issue. But of course they're human, and they can become disheartened. They can pack it in, go elsewhere, quit what used to be called the rat race and might as well be called that again since the government seems to think they're all rats. (That would be you, Chamber of Commerce.)

***

And here is the second part of the story. While Americans feel increasingly disheartened, their leaders evince a mindless . . . one almost calls it optimism, but it is not that.
It is a curious thing that those who feel most mistily affectionate toward America, and most protective toward it, are the most aware of its vulnerabilities, the most aware that it can be harmed. They don't see it as all-powerful, impregnable, unharmable. The loving have a sense of its limits.

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When I see those in government, both locally and in Washington, spend and tax and come up each day with new ways to spend and tax—health care, cap and trade, etc.—I think: Why aren't they worried about the impact of what they're doing? Why do they think America is so strong it can take endless abuse?
I think I know part of the answer. It is that they've never seen things go dark. They came of age during the great abundance, circa 1980-2008 (or 1950-2008, take your pick), and they don't have the habit of worry. They talk about their "concerns"—they're big on that word. But they're not really concerned. They think America is the goose that lays the golden egg. Why not? She laid it in their laps. She laid it in grandpa's lap.
They don't feel anxious, because they never had anything to be anxious about. They grew up in an America surrounded by phrases—"strongest nation in the world," "indispensable nation," "unipolar power," "highest standard of living"—and are not bright enough, or serious enough, to imagine that they can damage that, hurt it, even fatally.
We are governed at all levels by America's luckiest children, sons and daughters of the abundance, and they call themselves optimists but they're not optimists—they're unimaginative. They don't have faith, they've just never been foreclosed on. They are stupid and they are callous, and they don't mind it when people become disheartened. They don't even notice.

 

Obama's Bush Blame Game

By Charles Krauthammer

WASHINGTON -- Old Soviet joke:
Moscow, 1953. Stalin calls in Khrushchev.
"Niki, I'm dying. Don't have much to leave you. Just three envelopes. Open them, one at a time, when you get into big trouble."
A few years later, first crisis. Khrushchev opens envelope 1: "Blame everything on me. Uncle Joe."
A few years later, a really big crisis. Opens envelope 2: "Blame everything on me. Again. Good luck, Uncle Joe."
Third crisis. Opens envelope 3: "Prepare three envelopes."
In the Barack Obama version, there are 50 or so such blame-Bush free passes before the gig is up. By my calculation, Obama has already burned through a good 49. Is there anything he hasn't blamed George W. Bush for? The economy, global warming, the credit crisis, Middle East stalemate, the deficit, anti-Americanism abroad -- everything but swine flu.
It's as if Obama's presidency hasn't really started. He's still taking inventory of the Bush years. Just this Monday, he referred to "long years of drift" in Afghanistan in order to, I suppose, explain away his own, well, yearlong drift on Afghanistan.
This compulsion to attack his predecessor is as stale as it is unseemly. Obama was elected a year ago. He became commander in chief two months later. He then solemnly announced his own "comprehensive new strategy" for Afghanistan seven months ago. And it was not an off-the-cuff decision. "My administration has heard from our military commanders, as well as our diplomats," the president assured us. "We've consulted with the Afghan and Pakistani governments, with our partners and our NATO allies, and with other donors and international organizations" and "with members of Congress. "
Obama is obviously unhappy with the path he himself chose in March. Fine. He has every right -- indeed duty -- to reconsider. But what Obama is reacting to is the failure of his own strategy.
There is nothing new here. The history of both the Afghanistan and Iraq wars is a considered readjustment of policies that have failed. In each war, quick initial low-casualty campaigns toppled enemy governments. In the subsequent occupation stage, two policy choices presented themselves: the light or heavy "footprint."
In both Iraq and Afghanistan, we initially chose the light footprint. For obvious reasons: less risk and fewer losses for our troops, while reducing the intrusiveness of the occupation and thus the chances of creating an anti-foreigner backlash that would fan an insurgency.
This was the considered judgment of our commanders at the time, most especially Centcom commander (2003-2007) Gen. John Abizaid. And Abizaid was no stranger to the territory. He speaks Arabic and is a scholar of the region. The overriding idea was that the light footprint would minimize local opposition.
It was a perfectly reasonable assumption, but it proved wrong. The strategy failed. Not just because the enemy proved highly resilient but because the allegiance of the population turned out to hinge far less on resentment of foreign intrusiveness (in fact the locals came to hate the insurgents -- al-Qaeda in Iraq, the Taliban in Afghanistan -- far more than us) than on physical insecurity, which made them side with the insurgents out of sheer fear.
What they needed, argued Gen. David Petraeus against much Pentagon brass opposition, was population protection, i.e., a heavy footprint.
In Iraq, the heavy footprint -- also known as the surge -- dramatically reversed the fortunes of war. In Afghanistan, where it took longer for the Taliban to regroup, the failure of the light footprint did not become evident until more recently when an uneasy stalemate began to deteriorate into steady Taliban advances.
That's where we are now in Afghanistan. The logic of a true counterinsurgency strategy there is that whatever resentment a troop surge might occasion pales in comparison with the continued demoralization of any potential anti-Taliban elements unless they receive serious and immediate protection from U.S.-NATO forces.
In other words, Obama is facing the same decision on Afghanistan that Bush faced in late 2006 in deciding to surge in Iraq.
In both places, the deterioration of the military situation was not the result of "drift," but of considered policies that seemed reasonable, cautious and culturally sensitive at the time, but ultimately turned out to be wrong.
Which is evidently what Obama now thinks of the policy choice he made on March 27.
He is to be commended for reconsidering. But it is time he acted like a president and decided. Afghanistan is his. He's used up his envelopes.

letters@charleskrauthammer.com

Obama and the Old Hat People

People thought something small, agile and smart was coming to government, but so far it's turning out to be just big-box politics. 

If you're an elected Democrat anywhere to the right of Barney Frank, and trying to defend a competitive seat next November, you've got to be starting to sweat.
You wake up in the morning and just like every other morning as far as the eye can see the only thing in the news is the president's health-care reform. It's starting to look like Harry Reid and Nancy Pelosi are leading the Donner Party, the snowbound emigrants who bogged down in the Sierra Nevada winter in the 1840s and resorted to cannibalism to survive.

Daniel Henninger discusses how Democrats are out of sync with the spirit of the age.

The betting is that with raw political muscle and procedural magic, the Congressional Democrats will pass something, call it reform and hand Barack Obama a "victory." Maybe, but I think what we are seeing with this massive legislation is that the Democrats in Washington have a bigger problem: Their party is looking so yesterday. 
In a world defined by nearly 100,000 iPhone apps, a world of seemingly limitless, self-defined choice, the Democrats are pushing the biggest, fattest, one-size-fits all legislation since 1965. And they brag this will complete the dream Franklin D. Roosevelt had in 1939.
The culture still believes the U.S. has a hipster for president. But the Obama health-care bill, and maybe this whole administration, is starting to look totally out of sync with the new zeitgeist, the spirit of the age.
Everything about the health-care exercise is looking very old hat, starting with the old guys working on it. Max Baucus, Patrick Leahy, Pete Stark—all were elected to Congress in the 1970s, and live on as the immortals in Washington's Forever Land. But it's more than the fact that Congress looks old. The health-care bill is big, complex, incomprehensible and coercive—all the things people hate nowadays.
It's easy to make jokes about how insubstantial the millions of people seem to be who are constantly using technologies like Twitter. But these new digital and Web-based technologies, which have decentralized virtually everything, now occupy most of the average person's waking hours at work or at home. Mass media is struggling to stay massive in a world whose people want to break up into many discrete markets.
The one lump that won't change is government. Government in our time is looking out of it. It'd be one thing if government were almost cool in an old-fashioned way, but it's not. When everyone else's job gets measured by performance, its hallmark is malperformance—whether in Congress, California or New York.
We define the past 25 years in terms of entrepreneurs and visionaries in places like Silicon Valley who took a small idea and ran with it. Congress does the opposite. It take something already big . . . and make it bigger.

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Associated Press

Sens. Schumer, Reid and Leahy talk health care last week.

We've got Medicare for the elderly, with spending claims out to Mars, so let's create Medicare for All! One of the least noticed parts of the health-care legislation is its intention to make Medicaid even bigger, when Medicaid's cost is arguably the main thing destroying California.

There was a time when contributing to the common good meant joining something relatively small like the Peace Corps or Teach for America. Now it means being willing to just fall into line behind some huge piece of legislation.
Read Mr. Obama's speech last week at MIT on climate change: "The folks who pretend that this is not an issue, they are being marginalized." This, ironically, sounds a lot like the 2007 antiHillary "Big Brother" TV commercial. Its message was that Hillary represented something big and ominously coercive. Boot up that ad now and put Obama's face where Hillary's is.
The larger point here isn't necessarily partisan. It's a description of the way people live their lives in a 21st century world, and how disconnected politics has become from that world.
If we were really living in the world of leading-edge politics that many people thought they were getting with Barack Obama, he would have proposed an iPhone for health care—a flexible system for which all sorts of users could create or choose health-care apps that suited their needs. Over time, with trial and error, a better system would emerge.
No chance of that. Our outdated political software can't recognize trial and error. What ObamaCare is doing with health care—the "public option"—may be fine with the activist left, but I suspect it's starting to strike many younger Americans as at odds with their lives, as not somewhere they want to go. Wait until EPA's ghost busters start enforcing cap-and-trade.
People thought something small, agile and smart was coming to government, but so far it's turning out to be just big-box politics.
None of this is to suggest the Republicans are any better. They do, however, have a better chance of breaking out of the ancient political castle. So long as the Democratic Party is the party of the Old Hat People, dependent on public-sector unions with Orwellian names like the Service Employees International Union, it will remain yoked to a pre-iPhone political model that will increasingly strike average everyday American voters as weird and alien to their world.
Write to henninger@wsj.com

 

Do Something

President Obama must show leadership over Afghanistan, and soon. His delay in announcing his plans looks less like deliberation and more like dithering.

 

A remarkable headline on an opinion piece about Afghanistan in The New York Times, following an interview with David Miliband: “Britain resolves, US wavers”. If the American press can look to policy on Afghanistan on this side of the Atlantic and see relative determination, vision and clarity of purpose, then things in Washington must be dire indeed.
It is now two months since General Stanley McCrystal, the commander of US and allied forces in Afghanistan, told President Obama that a surge of at least 40,000 troops was required for the international mission in that country to succeed. Mr Obama is not obliged to follow his recommendation, but he is obliged to do something other than sit on his own hands. “I will never rush the solemn decision of sending you into harm’s way,” Mr Obama told the military, in a speech this week. This is not an unattractive sentiment. There is deliberation, nonetheless, and then there is dragging one’s feet.
Now is not a time for a president to dither. Yesterday, a Taleban suicide squad stormed a United Nations guesthouse in Kabul, leaving six international staff dead and nine injured. The Taleban do not carry out such attacks at random. They understand well the context in which they act, and do so in order to sway a decision that they believe can be swayed.
Some hesitation has been understandable. In the wake of August’s disputed election, Mr Obama rightly made it clear that he would not commit troops in support of an illegitimate Afghan government. More than a week has now passed since President Karzai gave the go-ahead for a second round of voting between himself and Abdullah Abdullah, his main challenger. There was an expectation that some American decision would follow, swiftly. It has not.
Mr Obama has done well at reaching out to governments who may, traditionally, be hostile. But America has allies, too, and they are growing edgy. This is something that his former presidential campaign rival John McCain understands, if Mr Obama does not. “We’re not operating in a vacuum,” Mr McCain told CBS television. “The President of the United States needs to make this decision and soon. Our allies are nervous and our military leadership is becoming frustrated.”
At home, committing more troops to Afghanistan may hurt Mr Obama, but procrastinating is not doing him any favours either. An ABC/ Washington Post poll has indicated that 63 per cent of Americans do not believe their President has a clear plan for dealing with Afghanistan. As the days pass, it looks as though they may be right.
It may sound perverse to trumpet Iraq as any sort of success story days after Baghdad’s largest bomb in two years killed 155. There is a reason, nonetheless, why such things became rare. The surge of troops into that country in 2007 showed that decisive action can make a huge difference for the better in a conflict, just as the chaotic, meandering, wasted time beforehand showed the bloody toll of inaction and delay.
In war, morale matters. Coalition troops must risk death every day, without knowing what their ultimate purpose is, whether that purpose will change, or even if they have one at all. The resignation in September, but revealed this week, of Matthew Hoh, a senior US official, is a sympton of drift and despair. Mr Hoh is a former Marine captain, and was cited for “uncommon bravery” in Iraq. “My resignation is based not on how we are pursuing this war,” he said, “but why, and to what end.” Only Mr Obama can answer that question, and he must do so soon.
Until he does so, people will continue to die without knowing why. The President must show at least as much resolve as his British allies. It does not seem a lot to ask.

'The Last Gasp of the Dinosaurs'

Publisher and flat-tax Republican Steve Forbes on 1930s-style economic policies, the news industry, and the future of the GOP

Matt Welch from the November 2009 issue

In the April 1996 edition of reason, then-Editor Virginia Postrel wrote a column arguing that “Steve Forbes is a serious candidate” for president. “Not because he’s a rousing speaker,” Postrel observed, “but because he believes in the open-ended future, in the creativity of free people, and in the importance of clear, simple, limited rules within which individuals can shape their own decisions.”
Of those “clear, simple, limited rules,” the most famous  was a flat and reduced personal and corporate income tax, an idea that, while never coming close to adoption at the federal level, nonetheless propelled a long-shot magazine publisher with no political experience into a third-place finish in the Republican primaries, including wins in Arizona and Delaware. In 2000 a flat tax song and social conservative dance helped Forbes whisk into second-place at the Iowa caucus, but he quickly dropped out after finishing third in New Hampshire and Delaware. In 2008 Forbes was a strong backer of the doomed Rudolph Giuliani.
Malcolm Stevenson Forbes Jr., 62, is the third Forbes to publish the successful business title of the same name. Founded in 1917, Forbes has gleefully billed itself as the “Capitalist Tool,” lionizing the entrepreneurs who make the world a richer place. In addition to producing its signature lists of the country’s (and globe’s) richest capitalists and companies, the 900,000-circulation magazine has been a staunch opponent of antitrust enforcement, an aggressive supporter of anti-totalitarian movements abroad, and a stubborn purveyor of a sunny, market-based optimism. Last November, at the height of political panic over the financial crisis, Forbes put Forbes himself on the cover, explaining “How Capitalism Will Save Us.”
In July, Editor in Chief Matt Welch interviewed Steve Forbes at the annual FreedomFest conference in Las Vegas.
reason: People know you as Steve Forbes, flat taxer and presidential candidate, but you’re also publisher of Forbes magazine in an era when magazines are struggling. How is Forbes responding to the economic crisis, the publishing crisis, and the transformation of the print industry?
Steve Forbes: When you have a severe recession and you have something transformational as we now see un-folding with the Web, you have to do two things. One, you have to address the immediate circumstances, which means belt tightening, which we did—and we did after 2001, when the economy also went temporarily off of the cliff. But at the same time, you have to invest for the future. And thankfully, 12 years ago, when we went online as did everyone else, we did not make the mistake that many print publishers made, and that was to think you take the printed page, throw it online, and have your electronic publishing. When Thomas Edison invented movies, some people thought you’d film a stage play and that was a feature film. No. It’s an entirely different medium.
We’ve always focused on entrepreneurs, on investors—on capitalist people who want to get ahead, people who want to do things in business. So we saw the website as another platform to reach the same constituency. Our value added is information, insights, and analyses, plus our profound belief in the moral basis of capitalism, which is meeting the needs and wants of other people. If you have that, you don’t get hung up on what the particular platform is.
reason: David Carr had a piece about you guys in The New York Times—a little snarky, but it was interesting. One thing he posited is that in 2009 this whole “Capitalist Tool” stuff is out of fashion; it’s out of step with the times. What’s your broad response to the notion that your stance or ethos is out of step and anachronistic?
Forbes: Well, capitalism—entrepreneurial capitalism, democratic capitalism—always goes through phases where it’s, quote, “out of fashion.” And it’s usually because of catastrophic mistakes made by government. The victim is blamed for it. 
But you don’t abandon your mission or your core values because a crisis has put capitalism under a cloud. We went through it in the ’30s, we went through it in the ’70s, the greedy decade of the ’80s. These things do happen. But I think what’s happening in Wash-ington is the last gasp of the dinosaurs of the 1930s. It’s Jurassic Park statism. Oh! Franklin Roosevelt again! Wow! But it’s not working. It didn’t work in the ’30s.
So here we are today, and what’s the response? More spending, more taxes, and the economy is not responding the way it should. But while we’re getting assaulted now, it’s also a chance to regroup and hit these people back, because they are going against human nature, they are going against the impulses that come out of true entrepreneurial capitalism. While they seem to have the commanding heights at the moment, it’s only temporary.
reason: Do you see, to borrow a phrase, some green shoots, not necessarily in the economy, but in the citizen response to Washington economics right now? 
Forbes: You see it with the tea parties, and you saw it in the state of Illinois, where the governor proposed tax increases, but the Democratic legislature ended up defeating them. The most amazing thing is now unfolding in California, where they’re seriously considering a flat tax because they’re beginning to realize—the Democrats!—that a highly progressive system doesn’t produce the revenue they need for their progressive programs.
reason: Have you seen an uptick in interest in the flat tax idea? Have people been knocking on your door and saying, “Oh yeah, about that thing.…”
Forbes: It’s not so much knocking on the door as people asking, when you face a severe crisis, what do you do? That’s one contrast between the political world and the commercial world. In the commercial world, failure happens all the time. It’s part and parcel of the system. You try something; it works or doesn’t work. In politics, you often have to go to the cliff before something is done. California’s at the edge of a cliff. They can’t print money. IOUs are not quite the same as legal tender. And so that’s why they’re considering something like the flat tax. Both [Gov. Arnold] Schwarzenegger and now Democrats in the legislature are starting to brood about the idea in sort of sheer desperation. It’s a version of what Ronald Reagan said: You don’t change minds on Capitol Hill through sweet reason; you do it through the heat of public opinion.
reason: Do you see a reawakening of those values, a reawakening in the Republican Party specifically, after eight years of a presidency when government was expanded hysterically, regulation was expanded hysterically? Do you see Republicans rediscovering their limited-government roots?
Forbes: I think it’s beginning to happen. Certainly among the newer, younger members. Or ones such as Paul Ryan from Wisconsin, who gets it on monetary policy, gets it on what’s happening with entitlements. Because, clearly, trying to be a Democrat Lite is not the way to perpetual power. Power does corrupt, and the GOP began to believe that pork will buy you happiness. It didn’t. And in fact, it demoralized the base of the party.
So now we have pork squared with the Obama administration, and it’s an opportunity for the Republicans to quickly regroup and find their voice again. The Obama administration is making a classic mistake of leadership: They feel they have to do it now, but they’re trying to do too much too quickly. It’s going to blow back on them.
reason: Looking at the 2012 Republican presidential hopefuls, especially after Mark Sanford started flying to Argentina a bit too much, do you see any individuals out there who look promising? Are you still considering yourself a candidate? Will you run again?
Forbes: I’m an agitator now, so I’ll leave the running to others. I’ll watch them exercise. But I think in 2010 we’ll get a very clear picture of the field. Right now there’s just too much going on. Too much ferment. If you look at a poll, probably Mitt Romney would be at the top, just because of name recognition. But whoever would have thought three years ago that Barack Obama would beat the Clintons at their own game and win the presidency? So it’s idle speculation. 
But there are some names out there—[Louisiana Gov. Bobby] Jindal, Romney, who knows what [Mike] Huckabee might do, maybe [Minnesota Gov. Tim] Pawlenty will get a little more conservative and make a move for it. So who knows, maybe Paul Ryan might emerge, maybe somebody else from the House might emerge. 
The key thing is don’t depend on one person. Have many Reagans out there, doing it on the state level, on the local level, and we’ll be OK.
reason: Talking of the “Democrat Lite” characters out there, [New York Mayor Michael] Bloomberg is a favorite of mine. He just announced an eight-point proposal to create or save media jobs on the island of Manhattan. You see a lot of proposals to have the government become involved with bailing out or somehow giving new assistance to legacy print media companies on the theory that they are fundamental to our democracy. What do you think about these initiatives and the ideas behind them?
Forbes: To really survive, newspapers, each one in each city, have to figure out what is their true value added. And it’s not going to be one blueprint for all. They’re each going to have to do it differently. You mentioned David Carr, who wrote a piece a couple months ago about this crazy paper in Boston that is doing very well focusing totally on local events in an iconoclastic way. People read it, whereas traditional newspapers are withering. So you’re going to see not one-size-fits-all but each one trying to pick out the particularities that can enable it to survive. 
But nostalgia is a very strong human emotion. And so, you know, canals are preserved, and they’re wonderful tourist things now, even though they’re not real arteries for commerce the way that the railroads became and then highways became or air travel became. So it’s a natural reaction, but at the end of the day, it ain’t gonna get very far, because the world’s not going to stand still. Museums are very nice, but they’re not the way to a vibrant economy.
reason: Someone made the argument that the moment any industry becomes politically engaged, and starts lobbying a lot and starts getting targeted legislation, is not the moment that it becomes powerful but the signal that it’s stopped being powerful.
Forbes: Well it’s a peculiarity of the United States that it’s a sign that you’ve become successful that the government and the politicos go after you. And it does far more harm than any possible good. 
You see it time and time again—G.M. in the ’50s and ’60s deliberately kept their market share below 50 percent for fear they’d get an antitrust suit and have to spin off Chevrolet. IBM got an antitrust suit in ’68 and 20 years later was on the verge of bankruptcy. Microsoft is not the feared Darth Vader that it was 10 years ago when the government went after them. One of the things that this administration doesn’t get is that the best antitrust policy is a vibrant marketplace. When profit gives you a message that something is lucrative, others will enter into it. They’re not just going to let you—“Oh, Matt’s doing very well, making a billion dollars on this thing. Good old Matt.” They’re going to say, “How do I get that?” And they’ll plunge in. 
reason: What’s your assessment of Obama’s health care package?
Forbes: Well, let’s take the president’s word that health care should be universal and affordable. How is it best achieved? We know government achieves it by rationing. And the markets achieve it by creating more of it, and finding cheaper and better ways to deliver it. What people don’t fully grasp is we don’t have free enterprise in health care today in the United States. It is a hybrid system, because it’s third party. So you have a disconnect between providers and consumers. And what kind of market is it where the consumer doesn’t know what the thing costs? Anything else, you do. What is my hamburger going to cost? What is my car going to cost? But if you go to a hospital and ask what a procedure’s going to cost, they assume either you’re a lunatic or you must not have insurance. Why else would you want to know what the price is? How weird. How unusual. Why? Somebody else is paying.
So the system doesn’t work. And you don’t get the kind of productivity you get everywhere else. We use phones and emails for everything now. Do you do consultation with your physician or nurse by phone or email? Rarely. Or hospitals giving warranties, like you have everywhere else, where if they don’t scope your knee right, you go back and don’t have to pay for it again. Why wouldn’t that be their dime? Because it’s not real competition. They know you’re not writing the checks, so therefore they don’t have to please you; they just have to make sure they get a bureaucratic insurance company to approve it.
But we see from Lasik what happens when you get a real market. It costs a third less than it did 10 years ago. Cosmetic surgery hasn’t had inflation, like you have in the rest of health care, even though demand has increased sixfold in the last 15 years and even though there have been enormous technological innovations. Why? Because you pay for it.
reason: So what do you do? This is such a labyrinthine complexity that creates the sort of mixed market which you describe. Are there simple things that can be done to break the logjam?
Forbes: Yes. Equalize tax treatment. You’re going to give employers a tax deduction, why not individuals? And how about allowing you to shop across state lines for health insurance? Illegal now. If you live in California, want to buy a policy in Seattle, illegal. Interstate Commerce Clause, hello! You don’t need a government insurance company. Just get cross-state competition.
Allowing businesses to pull together. Why not remove barriers to that? 
In terms of health savings accounts, if you want a higher deductible than X, you can’t get it. I forget what the number is now for a family plan; you can only go up so high. Remove those limits or substantially raise the caps on those. 
If you want to set up a clinic or hospital, in a lot of states you have to get a certificate of need. Well, do you need a certificate of need to open up a grocery store if you want to go against Wal-Mart or Whole Foods? No. You just go and do it. See what happens. But because it’s all third-party paying, well, this is inefficient; it’s sort of a cartel system. Get rid of those kinds of things. 
reason: Are you surprised by President Obama since he’s come into office? Anything about his comportment, his policy, the reaction to it?
Forbes: I was hoping he would defy my expectations and turn out to be what a lot of people thought—he’s smart, he’s moderate, he’ll do the right thing—instead of being what he has been so far, which is very much an ideologue. On the left, it’s all 1930s. You spend, you tax, you have government running things because we can do it more efficiently.
reason: I find it interesting that he still gives lip service—and gets away with giving lip service—to limited-government principles, saying things like, “Of course we don’t want the government running automobile companies.” And then in the same paragraph, he’ll say “but they need to consolidate their brands” and get very hyper-specific. He still says, “We don’t want to be in the banking sector; I’d rather be doing X, Y, and Z.” It’s as if he senses these things are unpopular out there.
Forbes: That’s why they have to do this by stealth, or semi-stealth. They know the American people are not in a mood for France North America or Germany North America. So they want to use the crisis to ram this stuff through before anybody realizes. Then you’re dependent and therefore, “Oh, they want to take this away from you”; it’s a fait accompli, it’s a coup. But thankfully the Founders devised a system where this stuff just bloody takes time. They didn’t confuse efficiency in the commercial sector with efficiency in government. We don’t want an efficient government in terms of making laws.
They feared passion. They saw what the wars of religion did to Europe and the bloodshed that engendered. They wanted a system where things could cool off before you did something.
reason: You have a new book out about historical figures and lessons that can be learned from them. What are some historical figures or moments of note that can apply to present-day circumstances? 
Forbes: Take Alexander the Great. When Aristotle taught him as a young man, one of the things Aristotle tried to hammer home was you must learn to conquer yourself, i.e., control your passions. Alexander did not. He seemed to think that he was actually a living god, and he destroyed himself. He was immensely talented, but it all collapsed when he died. And that’s what I think may be happening with President Obama today. Putting aside what you think of his policies, he may end up getting very little.
For example, he didn’t realize with the stimulus package that Nancy Pelosi may have run up the limit on one of his credit cards. That $800 billion would have been very helpful from their point of view on trying to finance health care. But no, they spent that. It was overreach. No sense of what the real world is like. 
reason: There’s been a lot of talk about the scattered state of the modern GOP, and a lot of discussion specifically about the big tent of Ronald Reagan with evangelical Christians and limited-government people. Is that a marriage that has run its course?
Forbes: No. There are two kinds of big tents. One is when you have mush, and so people come in because there’s nothing there. Another one is recognizing that one of the peculiarities of American politics is, because we are a heterogeneous nation, you have to put together coalitions of people who may not like each other much, and they have their own particular agendas and priorities, but you have to keep this thing together and maybe you can get some things done. 
And so you’re always going to have tensions; it’s never going to be smooth. One tendency for parties is to just soften everything to oblivion. Another is where you have priorities, as Reagan did, and use a coalition where there are some basic shared values, but there are always going to be fights and tensions. That’s normal.
What helps keep the country together is that you’re not going to succeed by just being a narrow-based candidate, either geographically or ideologically. You’re always going to have to persuade. Like with a family. Families never agree on anything. Well, we’re like a family. And we have those kinds of disagreements. So be it.

Flu Shot Shortage Shows Government Incompetence

By DICK MORRIS & EILEEN MCGANN

How can the government pretend that it can manage, overhaul, streamline, and reform the health care system in the United States when it can't even deliver enough flu shots to prevent a pandemic?

We have seen the H1N1 virus coming for over a year.  It is no surprise that much of America needs vaccination.  It was no secret that the flu season was approaching.  But, now that it is upon us, we find ourselves pathetically short of shots.


It should be a fairly simple task to produce and distribute a vaccine - as we do with regular flu shots each and every year.  But it was apparently beyond the capacity of the Obama Administration to manage such a routine feat.

If it can't run the epidemiological equivalent of a two-car funeral, how can Obama promise that the government will do an adequate job of managing the nation's health care system? (To say nothing of two car companies and a trove of banks and insurance firms?)

In the debate over health care, the implicit assumption has been that the government can act with competence and timeliness.  The discussion has largely centered on what powers to give the government - not on whether it had the ability to wield this new authority.  The bill making its way through Congress empowers the federal government to decide on protocols of health care, penalize excessive costs, and moderate reimbursement fees.  These are all difficult and delicate tasks and involve decision which must be made promptly and wisely for the system to have a chance of working.  Otherwise, endless delays, bottlenecks, and snafus can eventuate.  And these failures can have drastic consequences for the health of all Americans.

Do we really have confidence in government's ability to make these decisions?  Does its manifest inability to protect us from the Swine Flu do anything to inspire such confidence?

Not so far!

Steve Forbes' Plan to Defeat Obama's Reckless Spending

Democrats Taking from the Poor?!

As political pressure has reduced the price tag of expanding coverage to below $1 trillion over ten years, many observers assumed Democrats would react by trimming financial assistance for the middle class--that is, people making between twice and four times the poverty line, or between $44,000 to $88,000 for a family of four.
The assumption was that if Democrats had to make tough choices about what to cut, they'd protect the the poor and most vulnerable. After all, they're Democrats.
But now it appears that assumption may be wrong--or, at least, not entirely right.
As recent work from the Center on the Budget and Policy Priorites has shown, the bill that the Senate Finance Committee approved actually offers substantially less protection for people making less than twice the poverty line. If the bill were to pass, the result could be significant financial hardship for people least equipped to deal with it:

The greatest concern relates to people with incomes below 200 percent of the poverty line (below $36,620 for a family of three in 2009). The amounts that families between 133 percent of the poverty line (where Medicaid eligibility generally would end) and 200 percent of poverty would have to pay for insurance purchased through the health insurance exchanges would be as much as two to four times higher as under the Senate HELP Committee or House bills and would constitute a substantial burden for many of these households.

The good news is that the bill from the Senate Health, Education, Labor, and Pensions Committee (HELP) is considerably more generous. And the Senate leadership must combine the two. (In fact, that process is supposed to wrap up today.)
But providing assistance to the poor and middle class that's on a part with the Senate HELP bill would likely require allocating more money than the Finance bill sets aside. And that's something Senate leadership is already struggling to do, since much of the Democratic caucus seems more interested in scaling back the revenue measures already on the table, starting with the tax on high-benefit insurance plans.
Indeed, the really scary part of this story is that, under pressure to make more out of less, the Senate Finance Committee has apparently put on the table a proposal that would scale back subsidies for the poor even farther.
I say "apparently" because one reliable source, close to the process, tells me the idea isn't really under consideration. But two other sources (also very reliable) swear the proposal is very much in the mix. In fact, they say, the Finance Committee has actually sent the measure to the Congressional Budget Office for an estimate of how it will affect reform's bottom line.
It seems to be serious enough that Center on Budget--which has gotten wind of this story, as well--has studied what the proposal would mean in practice.

A family of three earning $27,465 a year before taxes — that is, at 150 percent of the poverty line--would have to pay $1,318 a year for health coverage under a proposal that Senate negotiators are considering for a merged health reform bill that they would bring to the Senate floor. This is more than such a family would pay under either the Senate Finance Committee health bill or the bill that the Senate Health, Labor, Education, and Pensions (HELP) Committee approved, and represents a large amount for families that often have difficulty paying the rent and utilities and putting food on the table.

This $1,318 premium charge, which would represent 4.8 percent of the family’s income, is nearly five times the $275 that the family would pay under the Senate HELP bill and $82 more than the $1,236 it would pay under the Finance bill.

Those amounts may not seem like a lot of money, but keep in mind those are only the premiums. Co-payments and such are separate. More important, when you're supporting a family of four on $29,000, a few extra hundred dollars makes a huge difference.
To be clear, the apparent purpose of this latest shift is to boost assistance for the middle class, in order to make sure people sign up for the insurance. That's a worthy goal--and a necessary one, most likely, with the Senate simultaneously reducing the penalties for people who don't comply with the requirement to get insurance.
But the way to help the middle class is to allocate more money for reform--not to take money away from the poor. Democrats don't do that. Or, at least, they shouldn't.

A public angry at Washington

From NBC's Mark Murray
Here's another set of numbers we're releasing from today's upcoming NBC/WSJ poll, which comes out later tonight: Only 23% say they trust government “just about always” or “most of the time,” which is the lowest number on this question in 12 years. 

What’s more, nearly half of respondents (46%) support building an independent political party to compete with the Republicans and Democrats.

And nearly six in 10 (57%) blame both Republicans and Democrats for the partisanship in Washington; 24% blame the Republicans only, while 17% point their finger at the Democrats.

Obama Says No Rush on Afghanistan. There Should Be.

By Iain Martin

General Stanley McChrystal earlier this month in Kandahar, Afghanistan. The General wants a “surge” of 40,000 troops. Photograph: Getty Images

It was the worst day for American forces in Afghanistan in four years yesterday, with 14 lives lost, all in helicopter crashes.
Speaking during a visit to Naval Air Station Jacksonville on the same day, the president said: “While I will never hesitate to use force to protect the American people or our vital interests, I also promise you this — and this is very important as we consider our next steps in Afghanistan: I will never rush the solemn decision of sending you into harm’s way. I won’t risk your lives unless it is absolutely necessary.”
His audience approved and for entirely understandable reasons. They are in uniform and may have to deal with the practical consequences when “armchair generals” and civilian hawks sitting at home demand they be sent into action. But while it sounds considered and eminently reasonable, I’m not sure that the “no rush” approach on the next stage of this campaign does anyone - the U.S. military, America’s allies such as Britain or the Afghan people - much good.
I do not mean to suggest that Monday’s tragic deaths would have been avoided if there were more forces on the ground. However, there is a sense that we - the West - are in limbo in the war against the Taliban. Great sacrifices are being made by our forces while our leaders cannot work out whether or not to commit fully to backing them in getting the job done.
The president appears to be hedging. He has recommendations on his desk from Gen. Stanley McChrystal, his senior Afghan commander, that there should be a surge of 40,000 troops. But the suggestion is that he may listen instead to Sen. John Kerry, chairman of the Senate Foreign Affairs Committee, who says McChrystal wants to go “too far, too fast.” In this way, the president may opt for half-measures, or a semisurge, so fearful is he of being sucked into a Vietnam scenario in the manner of LBJ.
This vacillation is in contrast to the decision taken by George W. Bush late in his presidency. It is unfashionable to give him credit for anything, but Bush did agree to the surge in Iraq and it had an extraordinarily positive impact.
The problem is that speed, which Obama expressly says he wants to avoid, should be of the essence in Afghanistan. The West has been there for eight years, two years longer already than the entire second world war. The cost in men and material has been immense while the resulting disruption caused to the Islamo-fascists considerable.
But we cannot go on like this indefinitely - making some progress but never winning, especially when money is so tight. We need to either commit more troops and firepower, get a move on, surge troop numbers, take the fight anew to the Taliban and aim for victory. Or if we don’t fancy that, we can slim down our presence dramatically, fund the anti-Taliban forces and back them up with special forces support and airpower.
The worst option appears to be staying in limboland and sacrificing lives for years with no prospect of eventual victory. The choice is for President Obama. Contrary to there being no need to rush, it’s decision time.
Update: Eight American troops were killed in multiple bomb attacks Tuesday in southern Afghanistan, making October the deadliest month of the war for U.S. forces since it began in 2001.

Pro-Market Populism Is GOP's Out

By LUIGI ZINGALESPosted 10/26/2009 06:49 PM ET

For 30 years, the Republican Party dominated American political life, winning five of the seven presidential elections before 2008. But the GOP has taken its lumps of late, culminating in its loss of Congress in 2006 and the White House last November.
The party's future direction is unclear.
But as America struggles to emerge from a financial crisis, any renewal of the right will require Republicans to rethink their approach to the economy. An agenda focused chiefly on tax cuts, as the Republicans' has been since Ronald Reagan's presidency, is no longer enough.
In 1980, Reagan won the election by attracting a substantial portion of Democrats with three simple ideas.
First was the fight against the Soviet Union.
Second, the battle against the excesses of the state: "Government is the problem, not the solution," Reagan famously said.
Third, and most relevant to this discussion, was faith in economic growth.
Growth improves everyone's well-being, lifting the underprivileged from poverty and eliminating the need for costly fiscal redistribution. With growth as the objective, a deep cut in tax rates for higher-income people was justifiable and necessary because it would increase the incentive to work and foster productivity.
Lower taxes became a winning political weapon for the Republican Party. In 1980, when the highest marginal income-tax rate stood at 70%, this economic platform was extremely attractive, as were Reagan's other key ideas. The country had just seen a decade of low growth and high inflation, defeat in Vietnam, the Soviet invasion of Afghanistan and the humiliation of the American hostages in Tehran. It was ready for change.
An entire generation adhered to the Republican Party, forming a majority so solid that it lifted George W. Bush to the presidency 20 years later. A golden era of economic growth began in the early '80s and continued, aside from a few minor recessionary interludes, until 2007 — a quarter-century of unparalleled prosperity.
Yet today the Republican brand, so successful for over two decades, has lost some of its luster. In part, it's simply the curse of success. The war against the evil empire has been won. Taxes were substantially reduced. The battle for deregulation has achieved many of its main objectives.
In part, too, Reagan's platform lost its appeal because the Republican Party frequently betrayed it. The size of government increased by 33% during W's first term, the largest increase in federal spending since Lyndon Johnson. Bush's last Treasury secretary, Hank Paulson, orchestrated the most massive state intervention in a Western economy since Francois Mitterrand's nationalization of French banks.
The situation of Americans has changed, too. Though American GDP has doubled in real terms the past 25 years, median real income has grown by only 17%. While the richest 1% of the population has tripled its real income, with the richest 0.01% finding its real income quintupled, the bottom 10% has increased its income by only 12%.
Now the financial crisis has created significant discontent. In a survey taken last December, 60% of Americans declared themselves "angry" or "very angry" about the economic situation.
If Republicans ignore this popular anger, as the party establishment did last autumn, they leave a powerful and potentially disruptive force in the hands of Democrats. The Democrats could channel popular anger into protectionism, 90% tax rates and onerous new market constraints.
In Republican hands, populism could become a strong force for positive change.
The Republican Party has to move from a pro-business strategy that defends the interests of existing companies to a pro- market strategy that fosters open competition and freedom of entry.
While the two agendas sometimes coincide, they are often at odds. Established firms are threatened by competition and frequently use their political muscle to restrict new entries into their industry, strengthening their positions but putting their customers at a disadvantage.
A pro-market strategy aims to encourage the best conditions for doing business, for everyone. Large banks benefit from trading derivatives (such as credit default swaps) over the counter, rather than in an organized exchange.
They can charge wider spreads that way, and they can afford to post less collateral by using their credit ratings.
For this reason, they oppose moving such trades to organized exchanges, where transactions would be conducted with greater transparency, liquidity and collateralization — and so with greater financial stability. This is where a pro-market party needs the courage to take on the financial industry on behalf of everyone else.
A pro-market strategy rejects subsidies because they're a waste of taxpayers' money and because they prop up inefficient firms, delaying the entry of new and more efficient competitors.
And a pro-market approach holds companies financially accountable for their mistakes — an essential policy if free markets are to produce sound decisions.
A pro-market party will fight tirelessly against letting firms become so big that they cannot be allowed to fail, since such firms may take risks that ordinary companies would never dream of.
A pro-market party should favor a robust safety net — for people, not companies. Of course, this safety net should be run on market principles as much as possible. Unemployment insurance should retain incentives for people to look for work, and the health-insurance industry should be opened up to competition. But defenders of markets cannot ignore the importance of providing such security for citizens.
They also cannot ignore the nation's growing income inequality and the widespread loss of confidence that the future will be better than the past. The knee-jerk Democratic reaction is to give these poorer citizens entitlements disguised as rights.
The Republican response should focus on providing opportunities. Parents should have access to good schools for their kids, regardless of their financial means or where they live. The best way to deliver on that promise is through a voucher system.
Students should have better access to loans to finance their education because everyone gains from a better-educated work force. The unemployed should have access to retraining, which can also be designed through a voucher system.
Health care should be available in the marketplace. The current system, in which only employers get a tax deduction for health insurance, reduces labor mobility and increases the cost of becoming unemployed.
The U.S. has been the inspiration for all who believe in freedom, both political and economic. Its identity, however, is predicated on maintaining a political consensus that supports market values.
Growing income inequality, the financial crisis and the perceived unfairness of the market system are undermining this consensus. If Republicans don't stand up for markets, who will?
• Zingales is the Robert C. McCormack professor of entrepreneurship and finance at the University of Chicago Booth School of Business and the co-author of "Saving Capitalism From the Capitalists." This column is adapted from the autumn issue of City Journal.

America Moving from Kingdom of Cash to Socialism Slowly but Surely

Obama’s decision not to build the Missile Defense System in Poland and the Czech Republic and his Noble Prize have not yet been comprehended from a philosophical viewpoint. It’s time to do it.

Power of Money against Power of Spirit

The last turning point similar to the current one happened approximately 400 years ago. The Western European society discovered a new hierarchy of values. Feudalism that valued service and chivalry was replaced with capitalism. Wealth became the measure of success, and everyone was to care about his own pocket only. The cult of money replaced all other values, including religious.

Capitalism turned everything upside down and made people more excited about stuffing their bank accounts than anything else. This system turned out to be extremely efficient in terms of production of goods, services, and comfort. America benefited from the system the most, and decided that the rest of the world has to adopt it as well. If some underdeveloped countries are unable to appreciate the benefits of capitalism, they should be forced to do it.

Collapse of the Illusion

Meanwhile, philosophers says that capitalism is driven not by hard cash, but rather, striving for hard cash. It’s driven not by the production of goods, but rather, striving for consumption of these goods.

If everyone had these values, the “dog-eat-dog” principal would be the major principal in the world history. But America failed to do it. There are plenty of “underdeveloped” people in the world who continue to cherish spiritual values. There are not that many chances left to force them into worshiping money since these “underdeveloped” people adopt western technology and become stronger. The appeal to adopt American values doesn’t work either. Why would we adopt the system if the system is in crisis? Pragmatic America realized that billions of people are not willing to live in the kingdom of hard cash and decided that it would be better off leaving this kingdom itself. Now the USA is talking about introducing elements of socialism.

What does Obama’s decision not to build the Eastern European Missile Defense System have to do with all of this? Well, it means that it’s not capitalism that’s undergoing the crisis, but the belief in its high efficiency. And this, in turn, means that America, the bulwark of capitalism, is no longer the boss of the world. And if it’s not the boss any more, it has to be friends with everybody, including Russia. And it’s America’s turn to offer Russia to push the reset button. Or maybe it’s just tired of imposing its rules on others and felt that friendship is more valuable than money and power? If this is the case, we will soon witness another turning point in the world history.

Arguments and Facts

Russia Today: Oasis of socialism where cows listen to Tchaikosvky

Government by Holiday Inn Express

By Mona Charen
You've seen those commercials in which an airline pilot, or surgeon, or nuclear engineer is giving expert advice only to acknowledge eventually to this nonplussed listeners that while he is not actually a fill-in-the-blank, he did stay at a Holiday Inn Express last night. Do you ever get the feeling that we are getting Holiday Inn Express government?
Does anything they say make basic economic sense? President Obama and the Democratic Party propose to save money (or what they call "bend the cost curve") on health care spending. They will spend less, they say, but also cover more people -- the 47 million or 30 million uninsured (Obama has used both numbers). This will be accomplished without reducing care for anyone and without raising taxes on anyone except the rich. In fact, care will be improved.

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Sounds great. But do these people know what they're doing? They mouth the words "choice" and "competition" but only, ironically, in praise of a "public option." The concept of encouraging choice and competition in the health insurance market -- say by permitting interstate sales -- is off the table.
The Wall Street Journal provided a handy chart of "Uncle Sam's Cost Overruns." In 1965, when Medicaid was enacted, the House Ways and Means Committee estimated that first year costs would amount to about $238 million. The actual price was $1 billion. The program now costs $251 billion annually and is climbing fast. The record is similar for Medicare. In 1965, Congress predicted that by 1990, Medicare would be costing $12 billion. The actual cost -- $90 billion. As Peter Orszag, director of the Office of Management and Budget has admitted, "If costs per enrollee in Medicare and Medicaid grow at the same rate over the next four decades as they have over the past four, those two programs will increase from 5 percent of GDP today to 20 percent by 2050."
So the same people who brought you cost spirals in Medicare and Medicaid now propose to introduce another government health program. Don't worry, they assure us, we know how to provide efficiencies. It's not necessary to dwell on the risible claim that they will cut half a trillion in waste from the Medicare budget. If they know where that waste is, why aren't they cutting it now? Where, on the books, are the federal waste-cutting initiatives?
The administration has also highlighted two other ideas that will supposedly provide tremendous cost savings. Both have been in the news lately.
Starting during the campaign, President Obama touted digital medical records to reduce errors, improve care, and cut costs. More than $19 billion of stimulus funds were earmarked for it. But when the Washington Post examined the matter, they discovered that digital records not only fail to produce the promised benefits, they actually reduce efficiency and cause errors. The digital systems currently available give physicians too much information. Pages upon pages of digital information document every conceivable ailment a patient might have. Doctors have difficulty wading through all of the unnecessary data to reach the critical information. One emergency room physician at a hospital that had adopted a digital system complained, "It's been a complete nightmare. I can't see my patients because I'm at a screen entering data . ... Physician productivity and satisfaction have fallen off a cliff." Some hospitals have adopted digital systems only to abandon them.
Another silver bullet the administration has peddled is preventive care. Everyone knows that a timely PSA test will detect prostate cancer at an early and treatable phase thus saving the patient's life and saving money, right? Not exactly. The test is obviously worthwhile for that individual. But testing all men for prostate cancer -- an overwhelming majority of whom will never get the disease -- is expensive. If more and more of us are tested for more and more diseases -- even accounting for some illnesses found early -- health spending will rise, not fall. Further complicating the picture, the National Cancer Society has announced that the benefits of cancer screenings, particularly for breast and prostate cancers, have been oversold. They aren't saving very many lives, but they are causing needless tests and surgeries.
The Baucus bill -- even before being melded with House versions -- weighed in at 1,502 pages of new taxes, fees, and mandates. Every single page proclaims something that is dubious -- that the Democrats know what they are doing.

Dismantling America

Will the country wake up before it’s too late?

By Thomas Sowell

Just one year ago, would you have believed that an unelected government official, not even a cabinet member confirmed by the Senate but simply one of the many “czars” appointed by the president, could arbitrarily cut the pay of executives in private businesses by 50 percent or 90 percent?


Did you think that another “czar” would be talking about restricting talk radio? That there would be plans afloat to subsidize newspapers — that is, to create a situation where some newspapers’ survival would depend on the government’s liking what they publish?

Did you imagine that anyone would even be talking about having a panel of so-called “experts” deciding who could and could not get life-saving medical treatments?

Scary as that is from a medical standpoint, it is also chilling from the standpoint of freedom. If you have a mother who needs a heart operation or a child with some dire medical condition, how free would you feel to speak out against an administration that has the power to make life-and-death decisions about your loved ones?


Does any of this sound like America?

How about a federal agency giving school children material to enlist them on the side of the president? Merely being assigned to sing his praises in class is apparently not enough.

How much of America would be left if the federal government continued on this path? President Obama has already floated the idea of a national police force, something we have done without for more than two centuries.

We already have local police forces all across the country and military forces for national defense, as well as the FBI for federal crimes and the National Guard for local emergencies. What would be the role of a national police force created by Barack Obama, with all its leaders appointed by him? It would seem more like the brownshirts of dictators than like anything American.

How far the president will go depends of course on how much resistance he meets. But the direction in which he is trying to go tells us more than all his rhetoric or media spin.

Barack Obama has not only said that he is out to “change the United States of America,” the people he has been associated with for years have expressed in words and deeds their hostility to the values, the principles, and the people of this country.

Jeremiah Wright said it with words: “G** damn America!” Bill Ayers said it with bombs that he planted. Community-activist goons have said it with their contempt for the rights of other people.

Among the people appointed as czars by President Obama have been people who have praised enemy dictators like Mao, who have seen the public schools as places to promote sexual practices contrary to the values of most Americans to a captive audience of children.

Those who say that the Obama administration should have investigated those people more thoroughly before appointing them are missing the point completely. Why should we assume that Barack Obama didn’t know what such people were like, when he had associated with precisely these kinds of people for decades before he reached the White House?

Nothing is more consistent with his lifelong patterns than putting such people in government — people who reject American values, resent Americans in general and successful Americans in particular, and resent America’s influence in the world.

Any miscalculation on his part would be in not thinking that others would discover what these stealth appointees were like. Had it not been for the Fox News Channel, these stealth appointees might have remained unexposed. Fox News is now high on the administration’s enemies list.

Nothing so epitomizes President Obama’s own contempt for American values and traditions as trying to ram two bills through Congress in his first year — each bill more than a thousand pages long — too fast for either of them to be read, much less discussed. That he succeeded only the first time says that some people are starting to wake up. Whether enough people will wake up in time to keep America from being dismantled, piece by piece, is another question — and the biggest question for this generation.

— Thomas Sowell is a senior fellow at the Hoover Institution. © 2009 Creators Syndicate, Inc.