Kevin Drum

Panetta at the CIA

| Tue Jan. 6, 2009 11:45 PM PST

PANETTA AT THE CIA....Fred Kaplan asked Richard Clarke about Leon Panetta today, and Clarke mentioned that a point in Panetta's favor as CIA director is that as Bill Clinton's budget director and White House chief of staff during the 90s "he was one of a very few people who knew about all of the covert and special-access programs." That could come in handy:

These "special-access programs" — satellites, sensors, and other intelligence-gathering devices whose very existence is known only to those with compartmentalized security clearances — form a welter of costly, overlapping, ill-coordinated, and largely unsupervised projects that are run by private contractors to a greater extent than most people might imagine.

One former CIA official who is familiar with these programs (and who asked not to be identified) speculates that Panetta's main task might be to clean up not only the agency's high-profile mess — the "black ops" that have tarnished America's reputation around the world — but this budgetary-bureaucratic mess as well. Certainly, he knows where the line items are buried to a degree that few insiders can match.

But I wonder how much control Panetta would have over this stuff. Isn't most of it part of NSA, NRO, or other Pentagon outfits? Still: an interesting point. Panetta's past experience may be more relevant than people think.

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Better on the Small Screen?

| Tue Jan. 6, 2009 6:00 PM PST

BETTER ON THE SMALL SCREEN?....Last month, after emailing to taunt me about getting schooled by Ta-Nehisi Coates for my primitive esthetic sensibilities, Scott Eric Kaufman regaled me with some weird theory he had about why The Dark Knight is actually better on a TV set than on the big screen. Over the weekend he explained this theory on his blog:

Watching the film on a small screen — one on which a bug of a Batman glides between five-inch tall skyscrapers while Heath Ledger's Joker licks human-sized lips and establishes human-sized eye-contact — it's impossible to deny that this supposedly epic performance is better suited to the televisual medium.

"Impossible to deny" is a mighty strong claim, but I just rented Dark Knight on my way back from the market and plan to put this theory to the test sometime soon. Anybody else have an opinion on this vital question?

And Then What?

| Tue Jan. 6, 2009 3:58 PM PST

AND THEN WHAT?....Marc Lynch went to a lecture this morning given by Israel's Ambassador to the United States, Sallai Meridor:

It was a profoundly dismaying experience. Because if Ambassador Meridor is taken at his word, then Israel has no strategy in Gaza.

Asked three times by audience members, Meridor simply could not offer any plausible explanation as to how its military campaign in Gaza would achieve its stated goals....As to a political strategy tied to the military campaign, nothing. No guidance as to whether Israel would re-occupy Gaza, or on what terms it would accept a cease-fire. No thoughts as to whether the campaign would cause Hamas to fall from power or help the Palestinian Authority regain political power.

....In short, Meridor quite literally offered no strategy beyond hitting Gaza hard and hoping for the best. "In terms of creating damage we are certainly on the right path," noted the Ambassador. Few would disagree with that assessment, at least. But some might hope that the bloody, battered path might actually be leading somewhere.

To be honest, this seems to be true of most wars these days: hit 'em hard and hope that something shakes loose. But while that may have been a plausible strategy in colonial wars a hundred years ago, it doesn't seem to work so well anymore. I doubt very much that it's going to work for Israel this time around either.

Media Destruction Watch

| Tue Jan. 6, 2009 3:31 PM PST

MEDIA DESTRUCTION WATCH....Felix Salmon reports that the latest auction of defaulted Tribune Company bonds produced dismal results:

Much more startling is the price on the senior secured loans: just 23.75 cents on the dollar. I checked in with Nishul Saperia at Markit, and he said that it was the lowest recovery rate he'd ever seen for a secured loan....

I should imagine that today's news has been greeted with a shudder at the Chicago Tribune, the LA Times, and other Tribune properties: clearly no one on Wall Street thinks they're worth much even without the huge pile of debt that Sam Zell loaded onto their fragile shoulders. Is David Geffen still interested in buying an uneconomic trophy property? He could turn out to be many employees' final hope.

I wonder how much longer I'll be getting a newspaper delivered to my driveway each morning?

Public Service Announcement

| Tue Jan. 6, 2009 2:46 PM PST

PUBLIC SERVICE ANNOUNCEMENT....Apparently "PEBO" is the latest shorthand for "President-Elect Barack Obama." Just thought you'd like to know.

Money For Main Street

| Tue Jan. 6, 2009 1:11 PM PST

MONEY FOR MAIN STREET....Currently, businesses that lose money are allowed to use those losses to offset profits from the past two years. The result in some cases is a refund against past taxes. Part of Barack Obama's stimulus bill is a plan to increase this period to five years, which apparently would provide businesses with about $25 billion in additional tax refunds this year. Matt Yglesias isn't impressed:

As stimulus, this doesn't work. Businesses spend money based on calculations of the likely returns on spending. Insofar as it's profitable to expand operations, businesses will spend money on expanding operations. Insofar as it's not profitable to expand, businesses won't expand. Transferring lump sums of money to existing firms doesn't alter the profit-loss calculus. A firm with no expansion opportunities it sees as profitable will just pocket the lump sum and consider itself fortunate. And a firm with expansion opportunities it sees as profitable will only be very marginally impacted by an infusion of cash.

I'd be curious to hear from other folks on this. Technically, this sounds right, but I think the reality might be a little different. Lots of things in the business world are sticky, and jobs are one of them. Corporations generally don't like to lay off employees, partly for business reasons (they don't want to lose good workers that they might not be able to rehire later), partly for ordinary human reasons (most bosses really don't enjoy laying people off), and partly just because of inertia. So it's possible that a tax refund that eased the P&L a bit might prompt them to keep on more workers than pure hard-hearted economic calculations might dictate. It would probably be a fairly small effect at the margins, but it might still be noticeable. Especially if the rest of the stimulus package gives business owners hope that the downturn might be short-lived.

Besides, all this does is change the tax timing anyway. Corporations that booked big losses in 2008 will be able to carry them forward against future profits regardless, which will decrease their taxes in the future. But maybe we're better off letting them get their refunds now, rather than two years from now when the economy has picked up again?

Alternatively, this is just another big corporate giveaway. Any nice liberal economists care to weigh in on this?

UPDATE: Via Jon Cohn, Dean Baker shreds the tax write-off proposal:

The break that allows businesses to write-off losses against taxes paid 4-5 years ago (as opposed to 2 years in current law) is simply a give-away to the financial industry and homebuilders. These are likely to be the only businesses that will have losses so large that they can't fully deduct them from earnings over the last two years.

This tax cut has nothing to do with stimulus. It is difficult to imagine that this sort of tax break would even be considered if it were not for the political power of the financial industry.

More from Jon about the stimulus package here.

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Geoghegan Running for Congress

| Tue Jan. 6, 2009 12:20 PM PST

GEOGHEGAN RUNNING FOR CONGRESS....Via Jim Fallows and others, I see that Tom Geoghegan (pronounced Gay-gan) is running for the House seat vacated by Rahm Emanuel. I can't say that I've read a huge number of Geoghegan's books and essays, but I've read enough to be pretty impressed. I guess this comes from two sources:

  • He has a fascinating writing style. I don't really have the vocabulary or esthetic sensibility to describe it properly, and if I did it would almost certainly seem like it shouldn't work. But it's sort of the writing equivalent of the bumblebee: it shouldn't be able to fly, but it does. (And stings, too!) I'd kill to be able to write as effectively and idiosyncratically as Geoghegan does.

  • He's a labor lawyer who's completely dedicated to the cause, but I've always gotten the sense that his eyes are wide open. He know which side he's on, and he knows why, and he can explain it in very plain English, but he never makes the mistake of thinking that unions are beyond reproach. They're human institutions, sometimes they suck, sometimes they're shortsighted, but they're still necessary and they're still the best bet we have to counterbalance the massive influence of corporations and the rich on the political and economic process.

The basic Geoghegan bio is on his Facebook page here. Kathy G. has a more personal account here. Fallows has this to say:

The remarkable thing is that in Geoghegan's case writing has been a sideline. Day by day for several decades he has been a lawyer in a small Chicago law firm representing steel workers, truckers, nurses, and other employees whose travails are the reality covered by abstractions like "the polarization of America" and "the disappearing middle class." Geoghegan's skills as a writer and an intellectual are assets but in themselves might not recommend him for a Congressional job. His consistent and canny record of organizing, representing, and defending people who are the natural Democratic (and American) base is the relevant point.

Geoghegan is running against a gaggle of competitors, including Cook County commissioner Mike Quigley, State Representative Sara Feigenholtz, Alderman Pat O'Connor, State Representative John Fritchey, and several others. I have no idea how to handicap the race, but it should be an interesting one to watch.

UPDATE: TNR has just posted a collection of Geoghegan's writings for them here. They're all more than ten years old and I haven't read any of them, but they might be worth checking out.

Dennis Blair

| Tue Jan. 6, 2009 11:39 AM PST

DENNIS BLAIR....Last month Gary Farber noted that Adm. Dennis Blair, who is Barack Obama's choice to become our new Director of National Intelligence, has a gray spot on his record: in 1999, when he was Commander in Chief of the Pacific, he apparently cozied up with the Indonesian military at a time when they were supporting terrorist militias in East Timor — and he did it in spite of instructions to tell them it was time to shut down the militias. Here's a contemporaneous report from The Nation:

Officials say that this past April, as militia terror escalated, a top US officer was dispatched to give a message to Jakarta. Adm. Dennis Blair, the US Commander in Chief of the Pacific, leader of all US military forces in the Pacific region, was sent to meet with General Wiranto, the Indonesian armed forces commander, on April 8. Blair's mission, as one senior US official told me, was to tell Wiranto that the time had come to shut the militia operation down....But Admiral Blair, fully briefed on [a recent massacre at] Liquiça, quickly made clear at the meeting with Wiranto that he was there to reassure the TNI chief. According to a classified cable on the meeting, circulating at Pacific Command headquarters in Hawaii, Blair, rather than telling Wiranto to shut the militias down, instead offered him a series of promises of new US assistance.

Last night Gary emailed to ask why nobody seemed to care about this. My response, essentially, was "I dunno."

And I really don't. In fairness, Blair doesn't seem to have disobeyed a direct order from the president or anything. The Nation piece uses the passive voice ("was dispatched to") in its description and a later admonition to Blair came from the State Department via the U.S. embassy in Jakarta. Blair, however, apparently felt that you catch more flies with honey than with vinegar, and chose to engage with General Wiranto in hopes of gaining his trust, rather than delivering a sharp rebuke that might have seriously damaged U.S.-Indonesian relations. In an update, for example, Gary quotes a line from a Dana Priest article in the Washington Post:

Robert Gelbard, a former U.S. ambassador to Indonesia, opposed Blair's push to work with that country's military in 2000, but he endorses Blair as director of national intelligence. "We had a legitimate policy disagreement. But he has a tremendous analytic mind and commands a lot of respect in Washington. His appointment comes at a time when there needs to be a critical reassessment of what the ODNI does," Gelbard said.

These kinds of intra-government disagreements happen all the time, so it's hard to say how big a deal this really was. And Gelbard certainly doesn't seem to hold it against Blair. Still, it seems worth making sure Blair's actions in Indonesia are at least on the table. So: is this a red herring or a legitimate beef? Anyone who happens to know more about what really happened here is invited to chime in in comments.

Top Ten Bills

| Tue Jan. 6, 2009 10:53 AM PST

TOP TEN BILLS....Over at Tapped, Tim Fernholz passes along summaries of the top ten bills the Senate Democratic leadership plans to introduce this month. It starts with S.1, the stimulus bill, and runs down through troubled mortgages, healthcare, climate change, education, immigration, and a few other things. The descriptions are mostly just placeholders and don't really say much, but it's still an interesting look at Harry Reid's priorities.

Perhaps what's most interesting, though, is what's not on the list: card check, forcing hedge fund billionaires to pay ordinary taxes on their income (possibly the biggest no-brainer legislation in recent history), military procurement reform of any kind, and serious financial regulation. That's not to say this stuff won't come later. But apparently it's not part of the Top Ten.

UPDATE: A couple of commenters think card check is implied as part of S.2. Maybe so. The wording seems awfully vague if that's really their intent, but we'll see.

Bringing Us Together

| Tue Jan. 6, 2009 10:24 AM PST

BRINGING US TOGETHER....The LA Times reports on Barack Obama's attempt to get wide bipartisan support for his fiscal stimulus package:

Despite Barack Obama's decision to include as much as $100 billion in business tax breaks to his economic stimulus package to woo reluctant Republicans, obstacles to speedy, bipartisan passage remain.

...."I think he would like to have a large bipartisan vote in favor of this package. And he knows, even before we mentioned it, that the way to do that is obviously for it to have elements that are appealing to Republicans," Senate Minority Leader Mitch McConnell (R-Ky.) said after a 90-minute meeting that Obama held with Democratic and Republican congressional leaders Monday.

....At the same time, McConnell and House Minority Leader John A. Boehner (R-Ohio) said they were not ready to endorse the overall stimulus proposal....House Minority Whip Eric Cantor (R-Va.), speaking after the closed-door meeting with Obama, said, "I think there would be a lot of support" for tax cuts among the GOP rank and file. But, he added, "we cannot afford to be burdening our children and our grandchildren with an extra trillion dollars in debt."

The more I read about this, the more perplexed I get. What is Obama's goal here? He's already tossed in something like $300 billion in tax cuts to curry Republican favor, and his spending plans amount to about $200 billion per year for two years. That's a big number, but it's also only about 1-2% of GDP. It's not that big a deal, and as a response to a massive recession it ought to be a no-brainer, even for Republicans.

But they're playing the game anyway. By pretending to be skeptical, they're hoping to wring yet more concessions out of Obama. Which is exactly what you'd expect them to do. It's politics.

But what does Obama get out of this? He's got the votes to pass his package already, and it's hard to see what a bigger vote total buys him. In fact, considering what a crowd pleaser this bill is likely to be (jobs + tax cuts + aid to states = wild popularity), it's not entirely clear why Obama is working so hard to get Republican votes. Wouldn't it be better if the public saw this bill as a Democratic victory enacted over the meanspirited, neo-Hooverite obstructionism of a dying and bitter Republican Party? Besides, when push comes to shove, my guess is that plenty of Republicans will be clamoring to vote for this bill no matter what Obama does. Who wants to be left off the gravy train with elections coming up in a mere 22 months?

(And if, against all odds, the bill ends up being unpopular, or viewed as ineffective? Or the economy continues to suck no matter what? Well, all the Republican votes in the world still won't help Obama. They'll attack him viciously whether they voted for the bill or not, and he'll own the economy, for good or ill, regardless.)

I guess this all comes down to whether you really believe Obama can change the tone in Washington. He seems to genuinely believe he can, and his actions on the stimulus bill make sense if you see them as the opening move in a long-term project to dial down the bitter partisanship of the past couple of decades. The press might eat this up (or might not, since they generally dismiss this kind of talk from Democrats), but I continue to wonder what makes Obama believe he can pull this off? There's just no evidence from history to suggest that this can work, and no evidence from the recent history of the conservative movement to suggest that they're planning to adopt a more conciliatory tone over the next few years.

So I continue to wonder: What does Obama see that I don't? What does he know that I don't? I'm flummoxed.