Tilting at Windmills

Senator Carl Levin recently added his voice to those demanding the removal of Nouri al-Maliki as Iraq’s prime minister. This worries me, because Levin is one of the most respected Democrats in the Senate, and he has set a trap for himself. If al-Maliki is replaced, Levin will have to give the new leadership a fair chance to produce. This will mean extending American involvement in the war. The problem is that there is no Iraqi leader in sight who is clearly more likely than al-Maliki to bring about the needed reforms. The only chance I see of these reforms is an American pullout schedule that will scare the Iraqi parliament into getting off the dime. Regardless of what we do, Iraq is more likely than not to face a chaotic next few years. So the only sensible course for us is to keep more of our soldiers from being killed or maimed.

Those of us old enough to remember will recall the one plausible excuse after another offered by the Johnson and Nixon administrations for staying in Vietnam: give the new government a chance; give new military tactics a chance; provide time for the South Vietnamese army to get up to speed. And all this accomplished was to prolong the misery for our troops.

You probably have heard by now about how executives of “private equity” firms like Blackstone and the Fortress Investment Group have been getting away with paying just 15 percent of their earnings in taxes instead of the 35 percent paid by others of similar income. Since there is no justification for the tax break, with some members of Congress proposing to end it and even a conservative like Ben Stein finding himself unable to defend it, you would think the private equity executives would admit that they should pay what other people pay.

After all, as Stein points out in his New York Times column, “What possible difference can it make to Steven Schwartzman, the chief executive at Blackstone, if he makes $400 million or, say, $350 million a year?”

Such reasoning has, however, failed to commend itself to the private equity profiteers. Just one firm, Blackstone, has paid $3.74 million to the lobbying firm Ogilvy Government Relations to save the break. And that’s just in the first six months of this year, which, according to the Washington Post‘s Jeffrey Birnbaum, makes it “the heftiest six-month payment to any lobbyist ever reported.”

Ironically, you will recall that Peter Peterson, one of the eminences of Blackstone, made his reputation as a deficit hawk. His take, when Blackstone went public last year, was $1.88 billion. My former coll eague Michael Kinsley observes in Time: “Here was an opportunity for statesmanship that you would have thought Peterson would be unable to resist. Like Warren Buffet and Bill Gates Sr., he could be the rich man who speaks truth to the other rich folks about the need to pay their taxes.”

Thus far, Peterson has found himself able to resist the mantle of statesmanship. Remember that the next time you see him pontificating about the deficit.

An interesting point is made in the new book Deluxe. Its author, Diane Thomas, explains how the distaste for luxury that had been a product of the cultural revolution of the 1960s had ended by the 1980s. Among the factors she mentions are the obvious ones of the growth of disposable income and the increasingly easy adjustment to credit card debtand a not so obvious one. It is that “a new and financially powerful demographic, the unmarried female executive, emerged in the 1980s.” Anyone who watched Sex and the City, as I’m embarrassed to admit I did regularly, knows that Thomas is onto something.

The thrust of her book is a different matter, however. It is hinted at by the subtitle, “How Luxury Lost Its Luster.” Her lament is that the quality and craftsmanship of luxury goods has been compromised and cheapened by the pursuit of a mass market composed of folks who “used to know their place” but now have “a craving for the goods but not enough dough for the genuine thing.” It’s almost as if she is complaining that the participation in the mass market of all those sweaty people means that it’s not just for us anymore.

My lament is that I hated to see Carrie, the leading character in Sex and the City, trivialized by her fixation on Manolo Blahniks and her being besotted with the rich guy riding around in his limousine. The problem is that the taste for luxury means that you must acquire a lot of moneyin other words, that you’re in danger of becoming greedy. I’ve always subscribed to a lesson taught by Jack Kerouac: your chances of having a good life are considerably enhanced if you keep your overhead low.

Not long ago I saw a column by Steven Stark of the Boston Phoenix cautioning Barack Obama about coming across as an elitist and urging him to show that he enjoys a beer with the guys. Then, while channel hopping, I happened to turn to an MSNBC interview of Obama by Tim Russert. During a discussion of the sacrifices campaigning required of parents and their children, Obama remarked, “I hate to miss one of their ballet recitals or soccer games.”

As the D.C. schools prepared to open, the big question was whether the textbooks would arrive on time. The official responsible is Donald Winstead.

A couple of matters of interest. He is the entire staff of the school’s textbook department. One person. You have to wonder why the textbook department is so understaffed, especially when to call the total D.C. school bureaucracy “bloated” is to venture to the far shores of understatement.

Then there is the question of how those who gave Winstead his daunting responsibility determined that he had the necessary aptitude. They must have been seeking to plow new ground in the realm of personnel management, because they gave Winstead the assignment even though he failed at the same task several years ago. He had actually been manager of the textbook department before, from July 1998 to July 2000, according to Greg Emerling of the Washington Times.

My friend, the Washington Post‘s Colbert King, recently wrote something about this bureaucracyits official title is the central office of the D.C. public schoolsthat is so dead-on I must give it to you verbatim:

Through the years the central office has done terrifying deeds to public education. It has kept schools from opening on time, swallowed repair orders by the thousands, made teachers’ paychecks disappear, consumed tax dollars by the millions without producing any discernible results, and ultimately acquired a well-deserved reputation for treating schoolchildren as if they are nuisances. But the central office’s chief enemy, for whom its most hostile behavior is reserved, is the reform-minded superintendent. In the battle against change, the central office … remains undefeated.

Lest the reader too quickly dismiss the central office as just another example of the incompetence that has been the hallmark of the D.C. city government for many years, I hasten to remind him that the same tendencies, if not carried to such ridiculous lengths, are common to all bureaucracies, which is why they must always be scrutinized by the press and the public.

What happens is that bureaucracies gradually tend to turn from initial dedication to the performance of their mission to a dedication to their own comfort, meaning a preoccupation with job security, promotions, and pay raises, and the avoidance of accountability of any kind. Similarly, private corporations tend to change from an early excitement about the new product or service they offer, to concern about enriching their executives regardless of the cost to public health and safety, fair competition, and their obligation to pay taxes.

So whenever anyone offers either a blanket defense or a blanket condemnation of the government or the market, be skeptical, and point out that both can be good, but you better keep your eye on them.

A recent example of the need to scrutinize both the corporations and the government comes from Crandall Canyon, Utah, where three miners were killed while searching for six of their trapped comrades, who themselves are now deemed lost. Their employer, Murray Energy, had sought and received approval from the Mine Health and Safety Administration to do a kind of mining that was, to put it simply, too dangerous.

The Murray mine had been abandoned by its previous owner, who had concluded that all the coal that could be safely removed had been mined. But Murray decided it could still get coal from the “pillars” that held up the roof of the mine and the “barriers” that separated its sections.

This method, called “retreat mining,” can be done prudently if the mine is near the surface. But in this case Murray was seeking to extract coal from 1,500 feet under a mountain of rock. It was a reckless project that Murray was wrong to undertake, and MHSA was wrong to approve.

Another Bush concession to the coal industry was predicted by John Broder of the New York Times as we were going to press. It will allow mountaintop removal not only to continue but to expand.

Mountaintop removal is not always bad. My hometown of Charleston, West Virginia, would not have an airport without it. But far too often, it results in barren landscapes and streams filled with debris. It should not be done without careful regulation, with tough penalties for companies that fail to protect the environment. Interestingly enough, one of the original sponsors of Bush’s loosening of the restrictions on mountaintop removal was none other than J. Steven Griles, who earlier this summer was sentenced to prison for his role in the Abramoff corruption scandal. Griles previously was a lobbyist foryou’ll never guessthe coal industry.

The Wall Street Journal has done a good job of nailing Wall Street’s role in the sub-prime scandal. Last month I mentioned its article about Lehman Brothers’ involvement. Now comes “How Rating Firms’ Calls Fueled the Sub Prime Mess,” by Aaron Lucchetti and Serena Ng, which reveals that respected organizations like Moody’s Investor Service and Fitch Ratings “gave top ratings to many securities built on the questionable loans.”

Perhaps most shocking of all, the article tells about a crucial bad call by Standard & Poor’s in 2000. It declared that a piggyback mortgage was “no more likely to default” than a standard mortgage. In case you do not know what a piggyback mortgage is, it is a mortgage on top of a mortgage in which the borrower receives not only a regular loan for his house but a loan to cover the down payment as well. It doesn’t take much common sense to realize that S&P forgot, in the midst of the sub-prime frenzy, that the ability to make a reasonable down payment is a good sign that a borrower will be able to repay the loan. The reverse is even more truethat the inability to make the down payment should inspire doubt about the borrower’s ability to repay.

One lesson I love to teach is to people who profess scorn for government regulation. It’s best taught to the fellow sitting next to you on the plane who wants to get the government off his back. I like to ask, “Would you really like to have a government less concerned with airline safety? Wouldn’t that increase the chances that this plane will crash and we will die a fiery death instead of going home to our families in a few hours?” Now, thanks to Daniel Michaels of the Wall Street Journal, I have a dandy statistic to cite to my fellow passenger. In Africa, where there is little or no regulation, the death rate in air crashes is more than eighteen times that in North America, where the skies are regulated.

“Surely, they’ll realize that it doesn’t make sense to invade Iraq,” I kept saying to myself throughout 2002. That’s why I worry now when I read reports that the Bush administration might attack Iran. It seems so crazy, so improbable, that reasonable people dismiss the possibility out of hand.

But now come the same reporters who warned us in 2002 about the administration’s plans for Iraq to tell us that we should worry about Iran: Warren Strobbel, John Walcott, and Nancy Yusef of McClatchy’s Washington bureau (formerly Knight Ridder). They say that Cheney is again leading the hawks while Rice and Gates are advocating restraint. For now, Cheney is only urging an attack on the Iranian forces he says are in Iraq. The risk is that such an attack could produce a dangerous reaction by the Iranians, like sinking one of our aircraft carriers in the Persian Gulf.

What I suspect is really happening is that Bush is pumping up concern about Iran’s coming into Iraq in order to justify our staying. His concern seems to be supported by threats from Ahmad inejad. But my answer to Ahmadinejad is “Welcome to Baghdad and the mess you will inherit.” Nothing is more likely to sink him.

You may have heard that according to the CIA inspector general, fifty to sixty CIA officials were aware of intelligence indicating that two of the 9/11 hijackers might have arrived in this country, and that they were suspected terrorists. Yet not one of the CIA officials thought to notify the FBI, which of course was the agency that would have been responsible for keeping an eye on them.

If you think this behavior is atypical of the CIA, you must read Legacy of Ashes, by Pulitzer-winning author Tim Weiner. He does a masterful job of detailing the continuing series of foul-ups that has constituted too much of the agency’s history. The foul-ups have been accompanied by successes like the role the agency played in Afghanistan in 2001. But the sad fact is that the significant successes do not eclipse the significant failures.

The one failure that seemed most disturbing to me, however, gets less than a page. It was the agency’s total surprise when India exploded its first nuclear bomb. India was not an impenetrable police statefar from it, India was an open democracy whose government had said it wanted a nuclear weapon. But as one was being built, and right up until the day after it was tested, there was not a word from the agency’s New Delhi station.

When you read all the moaning from editorial writers at the New York Times and the Washington Post about the impact of the alternative minimum tax, you should ask them to tell you the extent to which their personal problem with the tax is that it deprives them of the benefit of the Bush tax cuts, which, you will recall, they condemned as irresponsible.

One thing to watch as the AMT “reform” movement growsand grow it will, as it now threatens many elite journalistsis that Max Baucus, the Democratic senator leading the movement, is not known for his immunity to the importunings of lobbyists, and is unlikely to support replacing the lost revenue through other taxes.

“British Criticize U.S. Air Attacks in Afghan Region-Civilian Toll Is Cited,” was a recent headline in the New York Times. Of course, the reason for our excessive reliance on air attacks is that, beginning way back in 2002, Bush shortchanged the Afghan front of ground troops in order to prepare and carry out his insane invasion of Iraq. We gave our real enemiesOsama bin Laden and the Taliban that protected himtime to recover and come back to threaten Afghanistan, and us, again. And because we don’t have enough ground troops, we have to rely too much on bombing, with its inevitable civilian casualties that only create new recruits for the bad guys.

I’ve often fretted about the failure of private plane owners to pay their share of the cost of airport and airline safety. Now, thanks to Nelson Schwarz of the New York Times, I have some interesting statistics to support my case. Private planes “account for 16 percent of the air traffic control system’s overhead but contribute only 3 percent of the fees earmarked to run the system.” And when you’re stacked up over New York, fuming about the hot date or crucial business appointment you’re in danger of missing, remember that “on a typical day in the airspace over New York roughly 20 to 30 percent of the air traffic comes from corporate jets.”

Just to make sure you understand, I want Obama to have a beer with the guys because I want him to win. Ruth Marcus of the Washington Post recently reminded me of another reason to favor him. It is that he not only helped pass a “far-reaching ethics and campaign finance bill in the Illinois state senate,” but has, since he came to the U.S. Senate, supported an independent commission to review Senate ethics complaints, a reform to which senators with something to hide have been dedicated in their opposition. He also coauthored the lobbying reform bill that has passed both houses of Congress that “to the dismay of some colleagues[includes] provisions requiring lawmakers to report the names of their lobbyist-bundlers,” the fellows who put together bunches of contributions for their favorite candidates. Along with John Edwards, Obama is refusing to take lobbyist and PAC contributions. And, unlike both Clinton and Edwards, he has made his income tax returns public.

“I want to know why I’m planning a funeral while George Bush is planning a wedding,” asked the mother of a young female soldier who had just been killed in Iraq. She is making the same point that I tried to make in our last issue. In essence, it is this: Would George W. Bush be so willing to continue sending soldiers to die in Iraq if his daughter were among them? And would he have, as he did recently, complained about our leaving Vietnam, if he had, instead of hiding in the then-draft-proof National Guard, actually endured the horrors of fighting in the jungle?

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Charles Peters

Charles Peters is the founding editor of the Washington Monthly.