How to lose the future

Taken as a percentage of GDP, investment in research by the United States is at the lowest level in decades.  Other nations such as Finland and Israel, known for their innovative and entrepreneurial economies, spend far more than the United States.  Cuts in research spending won't hurt us now - they will hurt us in a decade or two.  The time lag between benefit and cost makes such cuts a tempting political target. Enter the Ryan plan, which plans to cut "non-defense" research spending to trim our budget.

We're in a tough time economically, and our deficit is absolutely out of control.  If someone was making the case to me that we just can't afford to increase R&D spending until our fiscal future is secure, I don't think I would find that argument unreasonable, although I wouldn't agree with it. What I do find to be unreasonable is the Republican insistence that the military needs to be spared all forms of spending cuts.  It is the epitome of short sighted to cut general research spending in order to maintain our high current levels of military spending.

Mitt Romney plan will cut research spending, but he has promised to increase military spending (for what threat are our current forces insufficient, I wonder).  Barack Obama has stated he will not spare the military from a greater plan to fix our budgetary crisis, but has nevertheless urged increased spending on research and development.  Americans have been given a choice this election.  They can think about the present, or they can think about the future.  The central theme of pretty much every history book I've read ever, is that great national powers which maintain high levels of military spending to the detriment of other areas of the economy quickly cease to be great powers. 

Does Obama hate Israel?

Here are some quotes from Obama's speech that pertain to Israel.
------------------------------------------
"Antagonism towards Israel became the only acceptable outlet for political expression [in repressive Middle Eastern nations]."

This is implicitly a defense of Israel. There is no doubt that in general the people in the Middle East don't like Israel. The question is why. Pro-Israeli people believe that is because Israel has been used relentlessly as a scapegoat by autocratic dictators to focus their peoples' anger elsewhere. Anti-Israeli people believe it is Israeli policies that create the resentment among its neighbors. Obviously there is an element of truth to both, but extremists tend to believe one or the other. I believe it is primarily the former, and apparently so does Obama, which is implicitly a pro-Israeli stance.

"Standing up for Israel's security...we will continue to do these things."

That doesn't sound very anti-Semitic to me.

"Efforts to delegitimize Israel will end in failure."

Opponents of Israel are pursuing a strategy that results in the destruction of Israel not by military means, but by political and economic means. This is what Obama means by "delegitimize". The strategy in a nutshell is to isolate Israel in the same way that South Africa was isolated because of apartheid. Obama is aware of this strategy, which means he no doubt thinks like I do: that Israel shouldn't play right into the hands of the people who are using it. This means striking a balance between deterrence and use of force, and it means not deliberately provoking Muslims for no reason (IE expanding settlements).

"Symbolic actions in September won't create an independent state."

In September, the PA is going to submit to the UN assembly a vote that would create a Palestinian state. I'm not sure how the rules of the UN work so I'm not sure if they can legally do this or not. I'm not sure if the US can even veto this. We couldn't stop the PRC from taking the ROC's seat in the security council in the 1970's so we may not be able to stop this. It would be a major blow to Israel if it happens. It is a part of the delegitimization strategy that anti-Israeli activists have been pursuing.

"Palestinian leaders will not achieve peace or prosperity if Hamas insists on a path of violence and rejection...Palestinians will never realize their independence by denying Israel's right to exist."

Obama reaffirms that Hamas must renounce violence, recognize Israel's right to exist, and honor previous agreements. This is all very standard stuff.

"Our committment to Israel's security is unshakable, and we will stand against attempts to single it out for criticism in international forums."

In other words, the US has and will veto UN resolutions that condemn Israel for this or that while allowing other nations to perpetrate far worse crimes with no mention.

"Israel must be able to defend itself, by itself, against any threat."

IE the US will continue to support the Israeli military.

"[Palestine should be a] sovereign, non-militarized state."

One of the sticky parts of establishing a Palestinian state is whether or not it gets to develop a military. Obviously the Israelis might be uncomfortable with that. Obama here is coming down squarely on Israel's side of the issue.

-------------------------------------------

There is lots of room for criticism over how Obama approached the Israeli-Palestinian question. The speech was decidedly unambitious and did not budge the status quo even a single iota. Everything in the speech was very standard, widely accepted stuff. Everyone* agrees that peace will come with a two-state solution. Everyone* agrees that the 1967 boundaries are the basis for the future borders. Everyone* agrees that Israel isn't going to take down their West Bank settlements, and so land-swaps are necessary. On the issues that people aren't sure about, such as over the status of Jerusalem or right-of-return for Palestinians, Obama just punted.

What there isn't any room for is criticism that Obama is anti-Israeli. And yet, the only thing I see plastered all over the front page of Fox News is precisely that. This is being echoed all over the conservative blogosphere. And you know what? I get it. I get why the Republicans are jumping all over this big lie. Their attempt at following through to the promises they made in the 2010 elections have been absolutely pathetic. They have been outfoxed by Obama and the Democrats at every turn. Boehner's 38 billion in "cuts" actually ended up increasing the deficit by 3 billion. Paul Ryan has been thrown under the bus by half of his party. The GOP will vote for the debt ceiling increase, but they will only get token cuts for it IF Obama is feeling generous. The GOP presidential candidates are all awful, save one or two who probably can't win a primary.

So like I said, I get it. We're going to hear over the next few weeks how Obama is a vicious anti-Semite, which fits in perfectly with accusation that Obama is also a secret anti-colonialist Muslim America-hater. Netanyahu is of course going to play along, just as a spoiled child will manipulate their divorced parents, and will cement himself in history as one of the most short-sighted Israeli leaders ever. But yea, anything to distract from the train wreck that has been the GOP agenda; I can't say I blame them for wanting something else to talk about. Whether or not there is any truth to what they are saying is irrelevant.

*When I say "everyone", what I mean is "reasonable people who we might listen to". There are lots of people who don't agree on a two-state solution, 1967 boundaries as a basis for that, and land swaps. These people are unreasonable, and should all be ignored. This includes, but is not limited to: Hamas and Islamic extremists, the international far-left extremists, ultra-right wing orthodox Jewish settlers in Israel, ultra-right wing evangelical Christians in the US. To name a few. None of these groups think there should be a compromise, just endless war until their side wins and the other side is dead.

The Ethanol Gridlock, and Orwellian Obama

The Economist had a good article a few weeks ago highlighting an anomaly: a case of "conservatives" like Grover Norquist (Americans for Tax Reform) defending big government. Every year, the United States spends billions of dollars to prop up the local ethanol industry with subsidies. At the same time, we impose a tariff on imported ethanol. The imported ethanol would mostly come from our Brazilian friends, who produce ethanol from sugarcane. In fact, Brazilian ethanol is at least 4 times more efficient than our corn-based stuff. That is why local ethanol producers need both help, in the form of subsidies, and hindrances on the competition, in the form of tariffs, to stay competitive at all.

These policies make Americans worse off in general, because we have to pay more for our ethanol (although that cost is hidden among government spending as a whole). Furthermore, corn prices are going up to never before seen levels, since we're converting so much of it to ethanol. The consequence has been devastating to people around the world, especially in nations poorer than our own. This is classic big government at its worst, and yet some of its most staunch defenders are conservatives. That such a no-brainer issue has been such a challenge to deal with is a discouraging foreshadowing of the spending battles to come. Big props to Republican Tom Coburn for fighting back against pseudo conservatives like Norquist, and trying to get this wasteful spending eliminated.

Ethanol subsidies are a form of tax expenditure, and eliminating these would save the federal government literally hundreds of billions of dollars. President Obama mentioned this as a goal in his budget speech the other night. Obama used the phrase "spending reductions in the tax code", in other words, reducing tax expenditures. Jon Stewart was making fun of Obama for using what he thought was Orwellian language to mask a call for tax increases in general, but Stewart misinterpreted what Obama was saying. Tax expenditures are just government spending by another name. Faux conservatives will try to obfuscate this point. They will accuse President Obama of trying to raise taxes, but he is really trying to eliminate big government subsidies. He is going to need all the help he can get, especially from honest Republicans like Tom Coburn.

The Republican Debt Ceiling Bluff

Last fall, Obama compromised with Republicans to extend the Bush tax cuts for another two years. He was roundly criticized by the left for caving in to Republican demands. I actually thought Obama got a great deal when you consider how weak his negotiating position really was. An outcome of failed compromise was more tolerable to the GOP than it was to Obama, for various reasons, so he really couldn't force their hand on anything. Obama recognized his weak bargaining position, and took what he could get. It may not have been satisfying but it was the right move.

Fast forward to several weeks from now, when Republicans will apparently be "demanding fundamental changes in policy on health care, the environment, abortion rights and more, as the price of their support for raising the debt ceiling." This is code for Republican intent to defund planned parenthood and strip the EPA of regulatory authority. Contentious issues, no doubt, but they are also issues that don't really affect government spending. They are a partisan distraction.

In the coming battle over the debt ceiling, I don't think Republicans realize how weak their bargaining position actually will be. The fundamental problem for the GOP is that they control one house of congress, but not the other. Since they control the House, it is absolutely a foregone conclusion that the House GOP will, at some point, vote to raise the debt ceiling. Concessions by democrats or no, forcing the US government to default would be most intolerable to the GOP's powerful backers. Obama himself is shielded from the process because any bill will have to make it through the Democrat-controlled senate; a bill with lots of partisan riders won't pass. Even if the GOP managed to buy off some of the few remaining centrist democrats, there will be at least 41 liberal Democrats who would filibuster an intolerable GOP-sponsored bill.

In the context of failed negotiations, the end-game is this: the GOP-led house passes a bill with severe cuts and partisan riders while the Democrat-led senate passes a modest bill with a few token spending cuts. At that point it is a game of chicken to see who jumps first. Who fears a US government default more, the Republican Party or the 41 most liberal Democrats in the senate? Is it plausible that banks, corporations, and other business interests will tolerate a US government default over a petty battle about say planned parenthood? As the default deadline approached, the Republicans would be forced to pass the senate bill by overwhelming pressure from their powerful backers.

Conservatives, now more than ever, need to start looking for the pragmatic voices in the Republican Party to lead in these negotiations. I absolutely believe that if Republicans put partisan battles aside, Democrats would join them and real progress on spending could be made. There are tons of low-hanging fruits that could be plucked to get real reductions in government spending. I am not confident that the GOP can yet be led by pragmatists. I anticipate they will insist on continuing to fight distracting partisan battles. If Republicans charge into this looking to win a political fight, they may be dealt a defeat of staggering proportions when the Democrats call their bluff.

In Libya, we send a message to the militaries of autocracies.

The debate over Obama's actions in Libya have been hopelessly muddled by what happened in two other recent situations: what George W. Bush did in Iraq, and what Bill Clinton let happen in Rwanda. We must remember that there is a middle ground between "send 150,000 troops to occupy and nation build" and "let millions of people get massacred while the world watches". While Obama attempts to find that middle ground, critics are hysterical on both sides with claims that he is doing too much ("just like George Bush!") or not enough.

The truth is, our intervention in Libya is likely to be inconsequential more than anything. Our help may come too late to save the rebels. Even if they do hold out, they may not be able to finish the drive to the capitol to remove Qaddafi. Thats OK though, because the consequences of our intervention are similarly modest. We have a UN resolution and support from the Arab league. We aren't sending ground troops. Meanwhile, the Libyan military poses zero threat to us or our allies around the world. At best, we allow a revolution to drive out a dictator; at worst, our actions won't change anything.

There is another very good reason to intervene that I don't see many people talking about. This is an extremely important time in world history, with more revolutions in the Middle East almost certain to come. Our actions in Libya are very important, as they provide a very stark contrast for other militaries to consider. When a dictator in the future orders his military to attack civilians, what should the military do? They can take the example of the Egyptian military, and ignore their dictator's orders to shoot, thereby winning the adoration of their people, the support of the world, and the favors of America. Alternatively, they can follow the example of Libyan military, which followed Qaddafi's evil orders and ended up a smoldering, flaming wreckage as a consequence.

The threat of force won't deter everyone. For geopolitical reasons, we can't intervene in Iran, Syria, Bahrain, or some other potential hot spots. Still, this season of revolution is certain to be unpredictable. The single most important factor for the success of peaceful revolution is whether or not the military attacks the people. The last thing we want to do is send a message that it is OK for an air force or military to start attacking civilians. We would almost be inviting massacres. Even though it would be nice if some other country could deal with things for once, Obama is doing the right thing.

Something Americans should be proud of

Support for Mubarak aside, our military has played a large role in educating and training the Egyptian military. Now as Mubarak is on the verge of collapse, he is almost certainly trying to order the military to crack down. The Egyptian military has refused to turn its guns on the civilians (thus far).

It would be nice if not massacring civilians was a given, but we've seen that very thing happen time and time again in dictatorships. The professionalism of the Egyptian military reflects well on the US military and the excellent job it has done in training the leaders of Egypt's armies.

The real question is whether or not the civilian leadership will successfully push for free and fair elections. My suspicion is that President Obama will do the right thing and reject the installment of another strongman to replace Mubarak. The Egyptian people need to finally have a chance to attempt to build a democracy.

Obama's tax cut cave/compromise

The left is fully up in arms about Obama's compromise with Republicans regarding the extension of the Bush tax cuts. There are talks of Democrat Senators filibustering the bill, of primary challenges to Obama in 2012, and all other sorts of nonsense. I wish I had some insight into Obama's decision making process, because from our perspective it is very difficult to distinguish between Obama being spineless / indecisive and Obama having extraordinary strategic insight, a knack for predicting the outcome of political battles, and reacting appropriately.

I'm not a huge fan of Paul Krugman, because he is such a partisan. For months his NY Times opinion column has called for more fiscal stimulus and expansionary monetary policies in order to get the economy moving. I agree with him on the need for those programs! However, in the current political climate there is no way Obama is going to get another stimulus bill. There is no way he is going to get the GOP to go along with all sorts of other reasonable proposals that would improve the economic situation. The only remotely stimulating policy that Obama can get in the short term is an extension of the Bush tax cuts, and furthermore there is no way the GOP will let the cuts for the top 1% get decoupled from the rest. And yet Krugman has blasted Obama's compromise on these cuts as a policy sell out.

Every time the North Koreans do something provocative, there will inevitably be a bunch of loud people who puff up their chests and say its time to take a stand and "do something" about the DPRK. The South isn't afraid to fight, but the consequences of that fight are too great. Even if the ROK could conquer the DPRK in a week, the DPRK could still level Seoul in hours and kill tens of thousands of people. Obama, like the South Koreans, knows that it is stupid and rash to escalate a situation if unprepared for the consequences of escalation. That is why the South Koreans don't "stand up" to the North - because if the North calls the bluff, the South looks even worse. Likewise, the left is furious that Obama isn't "standing up" to the GOP. But what if he did, and the GOP called, and taxes went up for everyone? Obama would then have to either back down, and look far worse, or accept the damage to the economy and the middle class. And as he put it in his address to the nation the other night, Obama is not willing to let the middle class get hurt as a consequence of political theater in Washington.

Four more related tidbits:

1. I read that Obama and Pelosi pushed Reid to bring up the issue of the Bush tax cuts before the 2010 election and Reid refused b/c two Dem senators didn't want to be on record voting for tax increases before the election. This revelation makes all of this self-righteous indignation coming from Democratic congressmen about the issue even more humorous, since they are the reason the issue was punted in the first place.

2. In the 2008 election, everyone projected their own values onto Obama with regards to his message of "change", and of course he was willing to let everyone do that for political reasons. For many on the left, that meant a shift to left-wing progressive politics. It never meant that for me. "Change" never meant going from partisan and divisive right-wing politics to partisan and divisive left-wing politics. It meant going away from partisan and divisive politics. This tax cut compromise is vindicating my interpretation of what Obama actually based his presidential campaign on.

3. Who wins politically here? Certainly, Barack Obama. The long game on this issue is in the Democrats' favor anyway because they can just vote down or filibuster tax extensions for the wealthy in 2012, when the economy is stronger and Obama isn't up for re-election. Meanwhile, the Republicans just compromised with this supposedly radical left wing socialist president and greatly legitimized him in the process. When this goes through, the American people are going to recognize that Republicans were willing to hurt the economy to protect the wealthy and the Democrats were willing to hurt the economy to grandstand about the middle class. Meanwhile, Obama made a politically challenging decision that will benefit the American people.

4. The issue on which I remain the most torn is whether Obama is actually a strategic thinker or an indecisive leader. Clearly he has been naive at some points, but that doesn't really strengthen or weaken either scenario. Regarding health care reform, geopolitical dealings with Iran, and this tax cut compromise he has looked like a great strategic planner who figured out how to get the most he could given nontrivial political constraints. On other issues, especially with dealings with Israel and the Palestinians, he has looked incompetent, unprepared, and weak. The jury is still out for me.

Obama and BP

One thing I'd like to point out in light of all of the GOP attacks on the way Obama treated BP. Republicans have asserted that the 20 billion dollar escrow fund is a "shakedown" and that it is unlawful. Granted, they all backed off because they realized that it was politically a bad position to be in - but was there any merit to their position? I would argue no.

I agree that it would be illegal if Obama was trying to force BP into putting 20 billion into escrow, since damages claims should go through the tort system. But from what I know, Obama simply asked BP to do it, and BP complied instead. This is a subtle difference, but a relevant one.

If someone was to rear end me on the road, I could ask them to give me a few hundred dollars in cash. It would be convenient for both of us, after all. That way, I wouldn't have to deal with the courts, I wouldn't have to call the police. The person who hits be benefits as well, since their insurance won't find out and they end up paying less in the long run. That being said, if the person who hit me refused to give me a few hundred bucks cash, theres no way I could force them to do it. Instead, I would have to use the court system, and would probably try to get more than just a few hundred bucks in damages for my inconvenience.

Obama wanted BP to put 20 billion in escrow because it will result in very rapid payments to people who are injured financially by this oil spill. Obama benefits from this because it is going to be good politics - people will see that he made action on the issue, that people are going to get paid, and that BP is punished. Yet, BP stands to gain as well and I have no doubt that this is one of the reasons they complied with Obama's request. BP knows that using the tort system, they would have had to paid out huge sums of money anyways. Furthermore, not being seen by the American people, investors, the world as cooperating would probably injure their long-term bottom line by damaging their reputation.

Besides Obama and BP, I think the people on the gulf coast are going to benefit from this as well. It took decades for the Exxon Valdez oil spill damages to get paid out to some of the claimants. The tort system is a slow and cumbersome beast. It obviously is the judicator of last resort, but there is nothing illegal about avoiding the tort system if all parties agree.