Finding Europe
Fears about Greece dropping out of the Eurozone have rattled stock markets worldwide, including in the United States. So, what does the US have to fear from events across the Atlantic. Quite a bit, as it happens. After all, this too is a country with a massive budget deficit that needs taming. Just don’t mention the word austerity.
In fact, as Amity Shlaes argues for Bloomberg View, there is much to commend in austerity — though perhaps not how it is practised in Europe. She sees spending cuts as beinf necessary to build trust with those holding government debt — a credible commitment, if you will, of a government’s willingness (and capacity) to pay back what it owes. Keep in mind that a large part of Greece’s troubles stems from the fact that it lied for so long about the true state of its finances, and since then has demonstrated an alarming propensity to squib on tough reforms.
But Shlaes also suggests a quid pro quo for curtailing spending: ‘austerity’ governments should cut taxes too, or at least outline a plan for doing so within the short to medium term. This may be a harder sell. On the face of it, if you cut both spending and taxes, the two cancel each other out — you still have a deficit. However, Shlaes argues that tax cuts provide greater economic stimulus than government spending, meaning you get better a bang for the buck. This ‘supply-side’ story suggests that tax cuts can in turn yield more, not less, tax revenue — a politically popular notion, even if the empirical evidence to justify this is contentious.
The bigger issue from Europe’s perspective is that, for some troubled economies, tax cuts may have a relatively smaller effect than you might expect. Tax evasion is rife in Greece. Lowering taxes on people who aren’t paying tax in the first place is not going to stimulate anything at all.
From the perspective of how the presidency should work, a vice president should never force the hand of a president on a sensitive, first-order issue by getting out ahead publicly. … Biden committed a governmental sin of the first order.
Ben Heineman, lawyer
Last week brought an unexpected, albeit unsurprising, declaration by US President Barack Obama. Obama confided in a hastily scheduled television interview that he had reached a personal view that gays and lesbians should be allowed to marry. In policy terms, Obama’s announcement has little impact: states have legislative authority over marriage, not the federal government. Indeed, Obama revealed his position just days after North Carolina passed a constitutional amendment to ban gay marriage. Nevertheless, the admission was historic. Obama became the first US president to publicly support gay marriage, and a darling to the gay rights movement.
It was a curious time to make such an announcement — at the start of what will be a gruelling campaign for Obama to secure a second term in the White House. But some believe Obama’s hand was forced by his vice-president, Joe Biden, who declared his own pro-gay-marriage position a week earlier. Ben Heineman is one pundit of that view. In a piece for The Atlantic, he slams Biden for jumping out of line with his boss. Heineman concludes that Obama should dump Biden, and pick a new running mate — suggesting the outgoing Secretary of State, and former sparring partner before the last election, Hillary Clinton.
Clinton would, in many regards, be a compelling choice for VP. But before getting carried away with the idea, it’s worth considering Heineman’s reason for making such a switch. He contends that Biden has effectively betrayed his boss. But it is also plausible that Biden was given the green light to air his views as a way to test the public mood in advance of Obama opening his mouth. True, Biden is known for shooting his mouth off. But its also worth noting that education secretary Arne Duncan also endorsed gay marriage before Obama did. (Indeed, Duncan opened up on his views the day after Biden.) If this alternative explanation is true, then the case for dumping Biden is fatally weakened.
That said, if Heineman is right — that Biden’s comments were not coordinated with the Oval Office, and compelled Obama to speak out prematurely — then Biden is certainly a liability for the campaign ahead. If Biden does part with Obama before November, it’ll be a good sign of what really happened this month.
Charles Dickens said of the United States that if its citizens were to be believed America “always is depressed, and always is stagnated, and always is at an alarming crisis, and never was otherwise.” On a variety of objective measures, it is in an awful mess right now. And yet America of all countries still has plenty of grounds to hope for a better future, despite its underperforming politics, and no matter who triumphs in November.
Lexington column, The Economist
Late last week, Peter David died in a car accident. His is not a name that would be widely known. But since 2009, he was the man behind the Lexington column in The Economist, focused on US political events. David had an illustrious 28-year career at the internationally esteemed newspaper, including stints in London and Brussels, before moving to the United States to become the publication’s Washington bureau chief.
In his last column, he explored the negative outlook most Americans have about their country today. It is a condition that in a highly partisan environment, politicians have exploited relentlessly. But as David wrote, the US still has much going for it, notwithstanding the rise of China. Higher education remains a strong suit for the country, as does its pro-business climate that favours entrepreneurialism and innovation. Even its political system — which many outside (and some inside) the Beltway might regard as toxic — still continues to tick over.
David did not dismiss the concerns Americans have about their country. Many are legitimate and worthy of public debate. But it is a question of perspective. The United States is not in some fundamental decline. It is imperfect, yes, but still has good stories to tell. As many of his colleagues have attested, it is sad that David will no longer be around to tell them.
This sober anniversary is a reminder that there will be no Berlin-Wall-falls moment of victory in the effort against global terrorists.
Bloomberg View, editorial
One year on from the killing of Osama bin Laden by US special forces, and it is abundantly clear that the ‘war on terror’ still has a way to go yet. Yes, Bin Laden was an important figurehead for al-Qaeda and the global jihadist movement. But in many respects his role had become a ceremonial one. Since the horrific attacks of 11 September 2001, and the invasion of Afghanistan that followed, the al-Qaeda network has become considerably more decentralised — various branches and offshoots direct their own operations.
It is also a poignant time to reflect on what the effort to combat militant Islam has achieved. It is hard to conclude the world is a measurably safer place — indeed, throughout the Middle East, Africa and parts of Asia, arguably the threat from terrorism has grown rather than receded. This is therefore a time for the United States and its allies to think about what can be achieved.
As the editors of Bloomberg View remind us, not all terrorists threaten the interests of the West. But drone strikes against high value targets will inevitably continue to feature in US policy. Given the controversy around such strikes, resources must therefore be expended on offsetting the negative publicity attached to them. Support for the Arab Spring movement is one way that the United States can restore credibility on the streets of the Muslim world. A resolution to the Israeli-Palestinian conflict would also be welcome — though a path forward remains as murky as ever. Domestically, US leaders could also offer greater transparency about how terrorists will be treated. Closing the Guantanamo Bay camp (an offshore solution on steroids) has been a key — but so far unattainable — goal of President Barack Obama. But even the military tribunal system used to try suspected terrorists could be enhanced by opening up proceedings to public view (with appropriate balances where national security matters might be genuinely compromised by such access).
[At] the presidential level, money isn’t everything. … Just as youth is wasted on the young, money is wasted on the rich. Money is least useful in contests where news coverage is most intense and opinions are most entrenched.
Ezra Klein, The Washington Post
It is received wisdom that elections in the United States (and elsewhere too) are heavily influence by money. Campaigns live or die by their ability to raise funds. Without a bucketload of money, advertising campaigns will flounder — limited runs in lower-profile slots won’t reach voters.
But Ezra Klein argues that in many ways, the influence of money is overstated — at least when it comes to presidential races. Just look at the unexpected successes achieved by Rick Santorum in the Republican primaries, proving himself to be a dogged campaigner against the very wealthy front-runner, Mitt Romney (not to mention other well-resourced candidates who couldn’t parlay dollars into votes). The 24-hour news cycle, which provides much ‘free’ advertising for (and against) candidates, no doubt helps in this regard. Against the backdrop of this rolling coverage of the key players, advertising won’t do much to change voters’ minds.
But it’s a different story in lower-profile races. Klein posits that few Americans actually have strong views one way or the other on their local congressional representatives. Many probably won’t even know who they are to begin with. These politicians aren’t likely dominating the airwaves in the same way as those vying for the top job. Here, advertising can matter a hell of a lot.
This suggests that those seeking to plough their money into their favoured side of politics would do better to invest in congressional races. And that’s precisely what some are doing. For example, Sheldon Adelson, who was a key backer of Newt Gingrich’s presidential bid (which ended this week), is now throwing millions into fundraising efforts to influence congressional elections. Rather than trying to get one candidate into office (the White House), these efforts can contribute to getting a range of candidates elected who can — in Congress — pursue an agreeable legislative agenda.
