Should you still need convincing that Wall Street salaries and bonuses have been excessive, consider this fact supplied by former newspaper reporter and Wall Street executive William D. Cohan in the New York Times: “Compensation has historically consumed half or more of every dollar of revenue generated on Wall Street.”
Wall Street tells us its reforming, that salaries and bonuses are being cut back, and Vanity Fair has recently published an article by Michael Shnayerson describing the kind of sacrifices Wall Streeters are now making. One example was a woman who “stood in her vast clothes closet not long ago, talking to her personal stylist. On shelves around her were at least 10 designer handbags that had cost her anywhere from $6,000 to $10,000 each.” She complained: “I dont know what to do. I guess Ill have to get rid of the maid.”
Displaying its own dedication to frugality, AIG has sold two of its private jets. Of course, according to the Associated Press, seven remain available to spare its executives the discomforts of air travel experienced by the rest of us. I think we can fairly say that theres still room for a little more sacrifice.
Obamas choice to head the Office of Management and Budget, Peter Orszag, is troubling, because his experience is far more on budget than management issues. Obama praised him for knowing where the bodies are buried, but the example he gave of a body was the farm subsidies wasted on millionaires. Actually, most OMB directors have been aware of that scandal, but couldnt do anything about it because of the influence special interests exert over Congress. That doesnt mean waste shouldnt be a target of the OMB, but making government work is an even more important objective. Crucial functions like those performed by the CIA, the FBI, the CDC, and the FDA need to be performed much more effectively. Indeed, there arent many agencies that dont have serious need to get better.
Its not that the OMB should manage in the sense of telling agencies what to do, but rather that it should give the president the information about what these agencies are really doing that he needs to run the government and get it to perform as it should.
In our last issue, I wrote about how in the early 1980s it seemed to me that greed was taking over as the strongest motivation of the young. A study at UCLA suggests the date was a bit later, beginning in the 1990s, when for the first time a majority of the students, when asked why they were going to college, gave “making a lot of money” as the main reason.
It must be acknowledged, however, that theres one very practical reason that students see the need to make a lot of money. It is to pay off those student loans, which now constitute a huge burden for the average graduate.
Pending the great day when the government can pay for higher education for all qualified students who cant afford it, the best solution is to immediately go to a program of direct low-interest loans from the government to the students that can be repaid in installments over whatever period of time is needed to make them bearable.
By the way, I came across the UCLA study while reading a great article on my pet peeve, overparenting, by Joan Acocella in the New Yorker. She actually urges letting a child play on his own, a thought that absolutely panics my son and daughter-in-law and practically all of todays conscientious parents. She also sees many of these parents pay the price of overparenting when their still-dependent college-graduate offspring come home to live.
The most disturbing fact about Obamas brilliant economic team is that none of them is noted for having foreseen the present financial meltdown, and several actually advocated the deregulation that turns out to have been a major culprit. Im also disturbed to hear that Timothy Geithner, the new secretary of the treasury, is said to be down on Sheila Bair, the head of the FDIC, because he regards her as not being a team player.
Bair is alone among the leaders of our present economic agencies in having seen that stopping the flood of foreclosures was the key to stopping the meltdown, while everyone else, including Geithner, was advocating the top- down approach of helping Wall Street. Recently, however, Federal Reserve Chairman Ben Bernanke has finally seen her point, according to Edmund L. Andrews of the New York Times, who reports that Bernanke is now urging “government-engineered loan modifications, and more taxpayer money to help people refinanceto keep people in their homes.”
A lot of the big shots who supported the Wall Street bailout oppose help for homeowners facing foreclosure, on the moral ground that many of them got in over their heads and should have known better. This is truly laughable when you contemplate the morality of Wall Street. Besides, helping those facing foreclosure doesnt just help them. Assuming Obama can stop the hemorrhaging of jobseven the most merciful mortgage payments are unlikely to be made by people out of workthis will stabilize real estate prices, which in turn should stabilize all the financial instruments related to mortgages.
Another argument against preventing foreclosures is that it involves overcoming complex obstacles. But that seems to me just the right challenge for all those geniuses Obama has enlisted for his financial team.
Im delighted to see both David Brooks, in his column in the New York Times, and former Monthly intern Amanda Ripley, in a cover article for Time on Michelle Rhee, challenge Barack Obama to be courageous on the issue of public school reform.
During the campaign he spoke out of both sides of his mouth, seeming to curry favor with the unions and also praise Rhee, who is fighting them for the right to fire bad teachers. A discouraging sign that Obama is wimping out came from his selection of Linda Darling-Hammond to head his transition education policy team. Fourteen years ago she condemned Teach for America, a program that has had great success in bringing bright young teachers into the public schools, as “bad policy and bad education.”
She is also a big advocate of teacher certification. The flaw in teacher certification is that it is largely based on degrees, and degrees can be, and indeed often are, granted by third-rate education schools. The result, as Joel Klein, the head of New York Citys school system, recently put it, is that “we draw teachers from the bottom quarter of our college graduates.”
The teachers unions, whose cause Darling-Hammond champions, advocate across-the-board pay raises for teachers. The trouble is that raises for everyone encourage bad teachers to stay in the system. The money for raises should go to reward good teachers and to attract talented new hires, who should be hired not on the basis of education credits, as the current system too often dictates, but on the basis of subject knowledge and teaching ability.
By sending their children to private school without even looking at public or charter schools, the Obamas are in danger of joining the Washington elite who, with their own kids safely in private schools, have for far too long neglected the plight of the public schools, because they have no personal stake in them.
If you wonder why theres been so little media criticism of the Obamas for their school choice, you have to understand that the media elite are also part of the private-school gang. For instance, the Washingtonian magazine recently disclosed that Bob Woodwards number one charity is Sidwell Friends, which is, of course, attended by his own children and now the Obamas. In addition to Woodward, Sidwell parents include “more than half a dozen parents who work at The Washington Post, including columnist E. J. Dionne,” a fact supplied by the Post itself in a story by Anne Kornblut.
It was good to hear Obama tell Barbara Walters that he wanted to keep his BlackBerry so he could reach outside the White House staff for information and advice. Clearly he knows the danger of becoming isolated in the White House bubble.
But what worries me is whether he understands the danger of the larger Washington bubble, which consists of the White House, Congress, the top levels of government agencies, and the Washington press corps. An example of this larger bubble is the ignorance of the deterioration of FEMA before Hurricane Katrina, ignorance of which not only the White House and Brownie were guilty, but also Congress and the Washington media. And recall that the great majority of reporters and congressmen joined the White House and George Tenet in failing to question the bad WMD intelligence before we invaded Iraq.
For those inside the Washington bubble, reality has been changed when a new policy is declared by the president or law enacted by Congress. They seem to assume that whatever is decided in Washington will be faithfully carried out in the field. Recall how Bill Clinton, even when his police program had barely begun to be implemented, conjured up images of a hundred thousand blue-coated officers already walking their beats, accepting apples from grateful grocers and patting the heads of smiling children as they brought peace and security to neighborhoods formerly ridden with crime.
As I wrote in Newsweek in December, for a president to succeed in puncturing the Washington bubble, he has to make sure that not just the generals but all of the troops, military and civilian, are clear about their assignments. He must be clear that the implementation of a policy is just as important as that policy being right. To do that, there is no better advice for him to follow than the advice Jack Reed gave him in Iraq (which I quoted in our last issue)to reach down and out to the people on the front lines where policy meets reality.
To follow that advice effectively, the president must have a characteristic conspicuously missing from George W. Bush: curiosity. His desire to learn must be very nearly insatiable, and it helps to have an instinct for the right question.
Does that sound like Barack Obama? One indication is supplied by my friend James Fallows, who a couple of years ago found himself standing behind Obama in a commencement line of honorary degree recipients. Obama knew about Fallowss reporting on Iraq and the Pentagon, so he didnt waste time on chitchat, but instead launched into a series of queries about how our army was doing in training the new Iraqi army, asking, among other things, “Does the incentive system in the U.S. Army offer sufficient reward for success in training Iraqi troops?”
I live on the edge of one of Washingtons wealthiest neighborhoods, Foxhall. During the fall political campaign, a luxury boutique serving the area sold jeweled McCain and Obama pins. It posted in its window a sign showing the results, so customers and passersby could see which candidate was winning. Obama led throughout, winning by a margin of almost two to one.
In other words, he did better among rich Washingtonians than he did in the nation as a whole. I believe this was true throughout the Northeast, and it leads me to conclude that there has been a major shift in the politics of the affluent, who for most of my life have been staunchly Republican but now appear to be trending to the left, at least to the moderately liberal. My best guess is that this reflects the increasingly meritocratic nature of the nations financial elite. The fellows who have the best test scores and got into the Ivy League schools not only are becoming president, but theyre getting rich as well.
Theres a danger in all this for Obama and his fellow meritocrats in the administration. They may unconsciously tend to adopt the attitudes of the rich, as many of them have already done in the case of private schools.
I share the concern about Obamas plans for a substantial troop increase for Afghanistan, expressed by MSNBCs Rachel Maddow and the New Republics Michael Crowley, among others. It seems to me that we should remember that our target is al-Qaeda, that if we let ourselves get bogged down trying to defeat the Taliban, we will find ourselves in the same quagmire as the British and Russians before us.
Certainly the Taliban is terrible, especially for Afghan women, just as Saddam Hussein was terrible for the Kurds and Shiites. So we should deplore and seek to undermine the Taliban for moral reasons. And it would be great if we could defeat them with a small Special Forcestype antiguerrilla campaign. But putting large numbers of troops through another wringer after Iraq for any reason other than our vital national interest strikes me as questionable at best.
Speaking of our troops, the Institute of Medicine has called on the Pentagon and the Veterans Administration “to confirm reports of long-term or latent effects of exposure to blasts” by veterans of the Iraq War. It seems so obvious that explosions within enclosed steel vehicles would cause brain concussions or worse that I would think every veteran who has been thus exposed should be thoroughly examined. According to the Associated Press, the Institute of Medicine estimates that 22 percent of wounded troops have brain injuries.
When I said that the FDA needed to become more effective, I was guilty of understatement. “Everywhere you go, you hear the same chorus: The agencys in trouble,” David A. Kessler, one of the better FDA commissioners, recently told Rob Stein of the Washington Post. “FDA is close to being at a tipping pointthe agency is hanging on by its fingertips in protecting us,” said William K. Hubbard, who has worked for the FDA for twenty-seven years. Another veteran FDA employee added, “Im afraid were going to see more horrible things happen if we dont get our act together on this.” The agency was already plagued by the historic problem of insufficient fundingone result of which is that “food safety tends to get short shrift,” Christopher Waldrop of the Consumer Federation of America told the Postand by a tendency to defer to pharmaceutical and medical device manufacturers because of their power to make trouble for the agency with Congress. These problems have been exacerbated by the Bush administrations bias in favor of ideology over science. “The agency needs to get back to using science as the basis for its decision-making,” says Jane E. Henney, who was FDA commissioner under Bill Clinton.
Another agency needing reform is the Department of Labor, where the Bush administration has shirked its responsibility for workplace safety with inspection failures at the Mine Safety and Health Administration and the Occupational Safety and Health Administration. “My view is that this is a deeply troubled department,” one critic told the Post. “As bad as the personnel situation may be in many departments, I think it tends to be worse in the Labor Department than it is in most places.”
In fairness to the Bush gang, some of Labors problems are longstanding. One article we did long ago on the work habits of its employees was entitled “9 to 3.” And OSHA inspections have actually been on a declining trend since 1980.
Speaking of food safety, FDA shares this responsibility with the Department of Agriculture. Sometimes it is difficult to tell who is responsible for what. Open-faced meat sandwiches with one slice of bread are inspected by Agriculture, while the FDA inspects packaged meat sandwiches with two slices of bread.
Three hundred thousand people have applied for jobs in the Obama administration, reports Neil Lewis of the New York Times. Unfortunately, he adds, there are only about 3,300 positions available for them to fill. But what about the civil service? Why not encourage the best of these people to apply for these jobs? The civil service desperately needs upgrading with fresh talent. And there should be lots of openings, because a large number of career employees are scheduled to retire soon.
The fact that applicants may have worked on the Obama campaign should not be held against them if theyre otherwise qualified. I came to Washington after working on the Kennedy campaign in 1960. It was the last time this country has seen an outburst of enthusiasm for public service until today. The agency I worked for, the Peace Corps, was the beneficiary of this enthusiasm, attracting large numbers of highly qualified applicants to serve on its staff and as volunteers. The result was the successful birth of an institution that not only has lasted, but is still doing good. Obama should seize this moment of excitement, and use it to transform the federal government and revitalize the voluntary service movement.
The announcement of a product recall by the Consumer Product Safety Commission, like the passage of a law by Congress, does not necessarily guarantee action. The manufacturer and its retailers may not remove all the products from their shelves, either because the recall order is not mandatory or out of sheer carelessness. And consumers may not hear about the recall because of inadequate publicity. The Washington Post, for example, prints recall notices in its business section, which, to put it gently, is not always a must-read for busy parents.
Douglas MacArthur has to rank as one of the more fascinating figures in American history. Was he the military genius who planned and executed the brilliant landing at Inchon, or was he the arrogant fool who ignored intelligence suggesting that Chinese Communists were sending troops into North Korea, and then wanted to use nuclear weapons to rescue his army and his reputation?
The number of people who thought of him as a hero is only matched by the number of people who felt he was a phony. Ammunition for the latter group comes from a new book, The Question of MacArthurs Reputation, by Robert H. Ferrell. It reveals that MacArthurs first award for heroism, the one that was the foundation of his reputation, was undeserved. He received the Distinguished Service Cross for “the manner in which he personally led his men” to victory in battle on the Meuse River. The only trouble is, he didnt lead his men in personhe was back at his command post behind the lines. But that didnt prevent him from believing the citation. “The time comes in every division,” a fellow officer recalled MacArthur saying about his role in the battle, “when commanders must instill the fighting spirit into their commands by personal presence and example.”
The foundation I head, Understanding Government, seeks better government through better journalism. An example of how this can work comes from my home state, West Virginia. After Ken Ward Jr. of the Charleston Gazette revealed in 2007 that the Mine Safety and Health Administration was far behind in its inspections of underground mines, MSHA commenced a “100 Percent Plan.” And Senator Robert Byrd persuaded Congress to fund more inspectors. Now, “[f]or the first time ever,” the Gazette was able to report as 2008 drew to a close, MSHA has “completed all of the quarterly inspections of underground coal mines that are required by a nearly 40-year-old federal law.”
I have a solution to the obesity epidemic. Lets reopen the cafeterias that were the most popular venue for low-cost dining when I was a boy, in the 1930s. My hometown had at least six very good ones. Washington had a great one, called Scholls, that fed low-paid Monthly workers well into the 70s. New York City had its Automats, a fascinating variation on the cafeteria. Instead of having people behind the counter who handed you the dishes you selected as you passed through the cafeteria line, you put nickels in the slot to open a window, behind which was a serving of the dish you wanted. I cant explain why, but the process was fun, even for adults.
Both the cafeterias and the Automats offered a variety of healthy dishes along with the sinful. I fell in love with the vegetable soup at one of the Charleston cafeterias, but you cant get vegetable soup at McDonalds, KFC, or Burger King.
At the Department of the Interior, selling out to oil and gas and mineral interests is a longstanding tradition that got worse under Bush. To make matters even worse, employee misconduct became a problem. The departments inspector general has accused thirteen employees of
improprieties, including, according to Dina Cappello of the Associated Press, “having sex with energy company employees, accepting lavish gifts and rigging contracts to favored firms.”
One female employee, who admitted to having a one-night stand with a Shell official, “reportedly passed out business cards for her sex-toy business, Passion Parties Inc., at work,” and “admitted selling products to several of her subordinates.”
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