The crisis in Iraq is over, for the time being, and the result is an astonishing U.S. defeat. Saddam Hussein tossed the United Nations’ weapons inspectors out of his country and suffered no punishment at all. To the contrary, he profited
immeasurably by his act.

First, he gained three weeks free from scrutiny to cover up his illegal weapons experiments. Many observers think the inspectors were tossed out because they were on the verge of discovering videotaped records of Saddam’s scientists’ poisoning of human subjects — records that would jolt the world into taking action against him. But whether it was videotapes or something else they were getting close to, we can be certain they are much farther away from it now.

Second, Saddam received an explicit commitment from the Russians that they would try to persuade the UN to lift the sanctions against his regime. The Russians brokered last week’s deal. The promise that they would endeavor to bring the sanctions to an end was the clincher. That means two of the five permanent members of the Security Council
— Russia and China – are now taking the pro-Saddam position. (Judging by last week’s disturbance at the University of Toronto ceremony honoring former U.S. president George Bush, so do 30 of our local profs. Fortunately, they don’t carry a lot of diplomatic weight.)

Third, Saddam seems to have obtained some sort of promise from the U.S. that it, too, will acquiesce in the ending of sanctions within a short period. The Clinton administration denies any promise has been made, but official spokesmen have said the administration would not be averse to lightening the sanctions later on. We don’t know yet whether any promises have been made. But even if there is nothing more to this than meets the eye, Saddam has been told that defiance of President Bill Clinton results not in punishment, but in at least potential rewards.

Fourth, Saddam has weakened the UN inspection effort. It seems the UN teams will be altered to include a higher
proportion of non-Americans. This is alarming because criminals should not have the right to tell the police which officers to assign to their cases, and also because the home governments of several of the policemen (not just Russia, but also France and Germany) take a worrisomely soft line on Iraq, in hopes of winning the dictator’s goodwill for future export sales to post-sanctions Iraq.

Fifth, Saddam has shown the Arab world that Clinton is afraid to fight him. What was most remarkable about the standoff of the past three weeks was Clinton’s extreme reluctance to risk a conflict with Saddam. When the U.S. inspectors were threatened and harassed, he could have parachuted 15,000 marines into Iraq to protect and escort them. When they were booted out, he could have bombed Iraq within 24 hours. Thanks to the tanks and guns pre-positioned in Kuwait, he could have landed army troops, based in the U.S., in the Middle East in two weeks. He flinched from all those things. Saddam’s Arab neighbors noticed. Last week, they took the measure of Clinton and learned — this is not a man to count on. Which means next week, they will be eagerly seeking to ingratiate themselves with the toughest man on the Gulf.

And what have the Americans got out of three weeks of frantic diplomacy? Only this: a postponement of the inevitable fight with Saddam Hussein. It probably isn’t a very lengthy delay, perhaps as little as two or three years. Some might say war later is better than war sooner. That view is not without merit. But this postponement shoves the coming conflict forward to a time when the U.S. will be weaker than now (as the reduction in U.S. military forces post-1990 continues) and when Saddam might well have become vastly stronger (if his research into chemical and biological warfare pays off). If Saddam ever develops the ability he seeks to poison thousands — or millions — of U.S. soldiers and civilians, rest assured, he will start the war himself. Isn’t it better to fight now, while the U.S. could still easily crush him?

War is always horrible. But peace can be costly too. And this peace is being purchased by gambling with the safety and security of the Western world and the pro-Western states in the Gulf. That is too high a price to pay to spare a weak-willed man from the necessity of, for once in his presidency, making a tough decision.

Originally published in The Financial Post

So the Iraq crisis has been defused. Or has it? Saddam Hussein got three weeks free from scrutiny to hide his germ weapons. He seems to have won other U.S. concessions as well, including an increase in the amount of oil he’s allowed to sell. Meanwhile the civilized world has gained only one thing from this crisis: another frightening reminder of the fecklessness of the Clinton administration.

Again and again, the U.S. has stumbled into confrontations with Iraq by sending signals of weakness. In 1990, Saddam made clear to U.S. Ambassador April Glaspie his aggressive intentions toward Kuwait. Glaspie, who was well-known within the Foreign Service for her strong pro-Arab sympathies, emitted only the tiniest protest. We will never know whether a clear warning from Glaspie might have deterred Saddam, but her weak message – coming as it did after years of covert support for Iraq in the Iran-Iraq war – must surely have emboldened him.

This time, President Bill Clinton has out-Glaspied Glaspie. The Iraqis have been harassing UN weapons inspectors for more than two years. Saddam obtained a ceasefire in 1991 by promising to submit to weapons inspections. Clinton
should long ago have said, ‘The inspections were one of the conditions on which Iraq obtained the ceasefire it begged for. If Iraq interferes with the inspections, it will violate the ceasefire and the war will resume.’

Saddam is a man of violence; force is the only thing he respects. But Clinton is afraid to use force. When he sent aircraft carriers to the Gulf, he ordered them to sail as slowly as possible — to postpone the moment at which he would have to decide whether to order air strikes. Worse, it’s not clear how effective the U.S. military remains. Since the Gulf War, U.S.
military spending has plunged by one-third, adjusted for inflation, from US$ 273 billion (in 1987 dollars) in fiscal 1990 to $ 180 billion (1987 dollars) in the current fiscal year. Clinton often boasts that fewer people work for the federal government today than at any time since the Kennedy administration. That’s true. What he fails to point out is that all the net reductions in federal employment are due to the shrinkage of the military.

Not only has the military shrunk, but it’s been hobbled. People often accuse Clinton of ignoring the military. That’s not true. If he’d ignored it, it would now be in much better shape. Instead, he and his appointees have labored hard and long to transform the military from a mean, male-dominated institution meant to fight wars into a caring, feminist institution whose main job seems to be babysitting the children of military moms. (The U.S. Army is the single-largest
daycare provider in the U.S. – its programs have been cited by Hillary Rodham Clinton as a model the whole country should emulate. I’m sure Saddam just quivers with terror when he hears that.)

Today, the U.S. military is almost completely sex-integrated. True, women are technically barred from infantry combat units and service aboard submarines. To the noisy disgust of Clinton’s Pentagon appointees, the Marines still adhere to their tough, ancient ways. Otherwise, however, the U.S. army is one to which war-fighting has become a secondary preoccupation.

The irony of all of this is that Clinton’s horror of shedding blood is causing much more suffering among Iraq’s
civilians than a renewed war would. You don’t have to buy the Iraqi government’s incredible appraisals of the suffering economic sanctions have caused its people to believe that six years of starvation is not the best way to deal with a dictator determined to obtain nuclear and biological arms. He’s not going hungry, and he is managing to sell enough oil to finance his palaces, his army and his weapons research. And the people who are hungry don’t control him; he controls them.

Weakness in a great power is never humane. Over six years in office, Clinton has repeatedly dodged his foreign-policy duties. He has inflicted dreadful damage on the military that, whether they admit it or not, almost every country
in the world relies on to keep the peace. Confronted by open defiance from a criminal regime, he blinked by removing his inspectors and then blinked again by cutting an apparently unfavorable deal with Iraq. Clinton’s extreme personal
unfitness for the job of president has until recently seemed merely comic. Now it has become a menace to the security of the planet.

Originally published in The Financial Post

President Clinton is said to fret about his legacy. Will anyone remember him after he is gone? He’s being too hard on himself. There is one large group of Americans who will always look back with fondness on the Clinton years: the country’s accountants and tax lawyers. With five tax brackets and a dizzying array of new tax credits, professional tax advice has since 1993 moved from being a luxury to an absolute necessity. And the thousands of accountants now getting ready for their winter trips to Anguilla and Boca Raton are surely grateful.

Give the president credit for this: He’s settled the old argument over whether tax credits and deductions should be considered a form of government spending. When the Kowalskis, who earn $40,000 a year and have two kids in the army, must pay substantially more tax than the Gonzalezes next door, who earn exactly the same amount of money but have two kids enrolled in community college (and, thanks to the president, they will), how is it possible to deny that one family is being subsidized at the expense of the other?

As a graduate student in political science, Christopher Howard became interested in the — as he calls it — “invisible” tax side of American social policy. You could bury a small town under the weight of all the books and articles published about public housing. But the home mortgage interest deduction — which, at $50 billion a year, costs more than all other federal housing outlays combined — is shrouded in obscurity, unstudied and (except by the hearty brotherhood of flat taxers) undebated.

In “The Hidden Welfare State” (Princeton University Press, 250 pages, $39.50) Mr. Howard, now a professor at William and Mary, provides a quick aerial overview of tax expenditures as a group. Altogether, he estimates, they reduce federal revenues by about $350 billion from what they would have been if the federal tax code contained no exceptions to its general rules — that’s a sum roughly equivalent to the cost of Social Security. He then presents case studies of four particular tax expenditures: the home mortgage deduction, the nontaxability of employer-provided pension benefits, the earned income tax credit and the targeted jobs tax credit. Mr. Howard debunks the image of the tax credit as a corporate loophole. Unquestionably, the corporate income tax code is riddled with favors to big donors. But the bulk of the benefit of tax expenditures goes to the middle class.

One of Mr. Howard’s insights might have been borrowed from a Steve Forbes speech. Defenders of tax expenditures often argue that tax credits involve fewer administrative headaches than spending programs. Mr. Howard observes that this is untrue — all that has happened is that the burden of administering the program has been shifted from the federal bureaucracy to the individual taxpayer who seeks to qualify for it.

Mr. Howard certainly did not intend his book as a brief for the flat tax. His own preference is for a tax code even more punitively redistributionist than the present one. Still, two powerful indictments of the present income tax system emerge from this book. The first is that tax expenditures are much more cavalierly created than social programs. Employer-created health and pension benefits have gone untaxed for 70 years. This 1920s decision has reshaped American life, both for good (high levels of health coverage without a state-controlled health insurance system) and evil (employers, not patients, have become the real decision-makers in the health marketplace). And nobody seems to have given the decision more than the most casual thought before it became impossible to alter.

Second, tax expenditures blunt taxpayer resentment of high rates. Americans are a tax-averse people; they begin to mutiny whenever a peacetime government asks them for much more than a quarter of their income in taxes. But while it makes little difference to the individual taxpayer whether he pays a quarter of his income because he’s in a 50% bracket with large deductions or because he’s paying a flat 25%, it makes an immense difference to the economy — and to the integrity of American political culture.

Over the years, the Republican Party has more often than not sought to beat back Democratic tax schemes less by holding the line on tax rates than by seeking to carve out special exemptions. The tactic has exacted a heavy moral price, as Americans who seek tax relief are encouraged not to demand lower rates across the board but to beg this or that special favor from Congress — and then to show their gratitude once they receive it.

Mr. Howard’s book is not meant for the reader with a casual interest in his subject. But those willing to tough out some dry passages will find it stimulates all sorts of radical thoughts — some of them perhaps more radical than the author intended.

Originally published in The Wall Street Journal

If you were a politician and wanted to enact a law forbidding private citizens to criticize you, what would you call it? If you possessed any flair for publicity at all, you’d do what nearly half the Senate and almost all of the media have done: You’d call it ”campaign-finance reform.” Proponents of campaign-finance reform nearly always declare that they’re trying to protect ordinary citizens from the dangerous influence of Big Money in politics. But it would be closer to the truth to say that they’re trying to protect ordinary citizens from the even more dangerous influence of ordinary citizens in politics. The campaign-finance legislation now temporarily blocked in the Senate — the so-called McCain-Feingold bill — imposes startling new restrictions on the right of private citizens to speak up during an election.

Defenders of campaign-finance reform justify these restrictions by promising voters that government supervision of political speech will result in a healthier democracy. The National Right to Life Committee — one of the organizations that would be shut up by McCain-Feingold– observed a remarkable bit of reasoning by a prominent advocate of campaign-finance reform, Burt Neuborne, legal director of the Brennan Center for Justice.

At a February 27 hearing before the Constitution subcommittee of the House Judiciary Committee, Neuborne commended the panel’s chairman, Charles Canady of Florida, ”for the disciplined way the hearing has been run, and how carefully you maintained the ground rules that allowed real free speech to come out here. And I’m really saying that the same idea has to be thought of in the electoral process. . . . In a courtroom, speech is controlled. In this room, speech is controlled, and the net result is good speech.”

Is it really? If you look just across the border, you’ll see a version of McCain-Feingold in operation in Canada. (Canada is to American liberalism what Cuba is to the American automobile industry: a place where broken-down old jalopies
are kept running decades after they should have been scrapped.) Is it promoting free speech and democracy?

Consider the case of Garry Nixon of British Columbia. In the summer of 1996, the socialist government of British Columbia called an election. It argued it deserved to be returned to office because it had balanced the province’s budget without harsh cuts in social services. Mr. Nixon, a civic-minded accountant, believed that the government was fudging its figures. He dug into his own pocket and paid $ 6,300 Canadian (about $ 4,500) for a series of small newspaper and local radio ads denouncing the province’s budget as a sham.

The socialists won the election. But it turned out that Mr. Nixon had been right: The province was running a big deficit, and the government had been manipulating the numbers to get itself reelected. Unfortunately being right has not done him any good. The chief electoral officer of the province has hit him with a $13,000 fine – without trial — for violating the campaign- finance law by speaking up. He got off lightly. A British Columbian advocacy group, the B.C. Fisheries Survival Coalition, bought ads in the same election accusing the socialist government of mismanaging the province’s fish stocks. They have been hit, again without a trial, with a $220,000 Canadian fine.

By Canadian standards, British Columbia runs a fairly tolerant regime. Private citizens are allowed to spend up to $5,000 Canadian of their own money to express themselves during a campaign. That pays for a few minutes of radio or a few square inches of newspaper. In the province of Quebec, by contrast, citizen speech has been virtually outlawed: Until the Canadian Supreme Court struck down Quebec’s law in  October, Quebeckers were permitted to spend no more than $600. What that meant was that Quebeckers dissatisfied with the left-leaning policies of the province’s two main parties were forbidden to use any technological device invented after 1400 to communicate their unhappiness with
the choices on offer: no newspaper ads, no radio, no television, no meeting halls large enough to require a microphone, no Web pages, pretty much nothing except quiet muttering over the back fence.

The Canadian federal government has been attempting to impose a gag law like British Columbia’s and Quebec’s
since 1983, with the support of the three old-line parties: the Liberals, the Conservatives and the socialists. It’s lost twice in the intermediate-level courts, but the Supreme Court decision that struck down Quebec’s $600 limit indicated pretty strongly that a slightly higher limit — the court proposed the figure of $1,000 — would be constitutional for both federal and provincial governments. For politicians who believe, with Neuborne and senators McCain and Feingold, that controlled speech is good speech, it was a welcome green light.

Canadian governments so disdain the right of private citizens to have a say in the elections that choose their rulers that they have invented a marvelous phrase for those who try. The law calls them “third-party intervenors.” The political parties, you see, are the principals. Private citizens who try to have an influence on their own with any device more sophisticated than a graffiti spraycan or a sandwich board are interlopers, “third parties,” meddling where they do not belong. This is the path down which American campaign reformers would take the United States – a path toward a two-class political system. At the top would be the politicians and the media, who may say whatever they please. At the bottom would be everyone else, whose rights to comment on their electoral choices would be regulated and circumscribed.

Over the years, the right of free speech has taken on a strange and even rococo shape in the United States. But at the very same time that it has been twisted and stretched to cover activities that are only remotely speech-like, its core value — the right of citizens to make their voices heard when it’s time to decide who will govern them — has come under assault. What kind of free speech right can be understood as guaranteeing government money for smearing your naked body with chocolate on stage, but not your right to take out an ad in the newspaper saying “Joe Smith says he loves the
environment but he voted to pave Yellowstone”?

The senators who support McCain-Feingold profess to care about free speech. They say they are protecting it. But the law they’ve written frankly jettisons the right to speak during an election, in order to make workable the law’s otherwise ramshackle and futile latticework of restrictions, regulations, and general bossiness. If McCain-Feingold should ever pass, the right of Americans to speak their minds about the governance of their country, a bedrock right if there ever was one, will depend on the forbearance and good sense of the regulators of electoral speech. And as Gary Nixon can tell you, that’s not a position the citizens of a democracy should ever find themselves in.

Originally published in The Weekly Standard

Every president loses a few votes in Congress and no one loss usually matters very much. Usually. But U.S. President Bill Clinton’s latest defeat is no ordinary loss. He had asked Congress to renew the authority granted to every other president to negotiate trade treaties. In the early hours of Monday morning, he was forced to withdraw the request, as it became clear Congress would refuse if it came to a vote.

For any president, a loss on a trade vote would be a humiliating disaster: No president has lost an important trade vote since the Second World War. But for Clinton, the loss cut even deeper. This was a defeat handed him by his own party. Almost three-quarters of the Republicans in the House of Representatives were willing to entrust him with treaty-negotiating power. More than three-quarters of the members of his own Democratic party would not trust him.

In 1992, Clinton took on the job of transforming the out-of-date, sure-loser Democratic party of the 1980s into a modern political force. He wanted to liberate the Democrats from their thrall to reactionary trade union bosses and the ideological left, to save it from disaster by rebuilding it as a modern, outward-looking, middle-class political party. Clinton’s staunch support for free trade — anathema to both the unions and the left – symbolized his determination to reinvent his party.

But after five years of Clinton, the Democratic party is more abjectly dependent on union money and support than at any time in the past 50 years. Bill Clinton won the 1996 election, in part, by ignoring U.S. campaign finance law. That helped him then. Now, as one scandal after another explodes around him, it has become incredibly difficult for Democrats to raise money. Who wants to give to a party notorious for being funded by hustlers, fugitives from justice and foreign gangsters? Failed fund-raising, the return of illegal campaign contributions and the cost of lawyers’ fees have plunged the Democratic National Committee US$ 15 million in debt.

The shortage of money was one important reason for the terrible drumming the Democrats took in last Tuesday’s
off-cycle elections. There were four important contests — and they lost all four: the New York City mayor’s race, the New Jersey governor’s race, a special election to fill a Staten Island congressional vacancy, and the Virginia gubernatorial and state assembly election.

With the national committee broke and business donors refusing to return phone calls, and the 1998 elections only 12 months away, the average congressional Democrat is discovering the only source of funding he can still count on has become the unions. In the 1990s, union membership in the U.S. continues to shrink, but despite the dwindling of their followers, the union leaders are spending more money than ever on elections — at least US$ 40 million in 1996 and quite possibly more, a huge sum even by the gigantic standards of U.S. politics. Plus, the unions can turn out volunteers to run phone banks, stuff envelopes and perform other services that would otherwise have to be paid for.
The president’s scandals, in short, have delivered his party entirely into the hands of the union bosses. They pay the Democratic piper and so they can call the party’s tune. And the tune they are calling is a protectionist one.

The bad news for the Democrats is while the unions are protectionist, the country is not. Since the early 1980s, a phalanx of politicians have convinced themselves that there might be political gains to be had from promising to drive imports off the U.S. market: Walter Mondale in 1984, Richard Gephardt, Michael Dukakis and Pat Robertson in 1988, Ross Perot, Pat Buchanan and Paul Tsongas in 1992, Ross Perot and Pat Buchanan in 1996. They all lost. Protectionism has aptly been called the ’fool’s gold’ of U.S. politics.

By swallowing the protectionist poison, the congressional Democrats of the 1990s are dooming themselves in exactly the same way the presidential Democrats of the 1980s doomed themselves. It was Clinton’s aspiration to save his party from the union mossbacks, modernize it and make it an equal competitor to the Republicans. Monday’s decision is the proof of how utterly he has failed — and how much his own wrong doing is to blame.

Originally published in The Financial Post

Chinese President Jiang Zemin is in Washington this week, and Americans are bitterly debating how he should be treated. On one side is the Establishment: foreign policy experts, corporate chieftains, the prestige press. The Establishment says China, the world’s fastest-growing economy, is a country the U.S. should try to stay friendly with. On the other side is a motley collection of protesters outraged by China’s persecution of Christians, its enslavement of Tibet and its increasingly bellicose attitude toward its neighbors. They want the U.S. to reduce its trade with China, to denounce China’s human rights abuses and commit itself to a tougher military line against China.

It’s almost always true in disputes like this that the Establishment is wrong and the motley protesters are right. But every rule must admit of exceptions. This one time, the Establishment is right.

The people who want to avoid confrontation with China know as well as anyone the oppressiveness and corruption of the present Chinese regime. But they know two other things as well.

First, in order to enrich their country, the Chinese Communists have accepted an immense reduction in the power of the central government. Compare China today and China 20 years ago. Back in 1977, the government dictated the costume that every Chinese must wear, decided where every Chinese must live, assigned everyone a job, controlled everyone’s income, prohibited all private accumulation of wealth. Today, China still curbs political rights. But in the non-political world, totalitarian control has given way to considerable personal freedom.

Richard Bernstein of the New York Times, a veteran China watcher, tells the following story. When he was in China in the late 1970s, he became friends with a political dissident. For that contact with the West, the dissident was thrown into a prison camp. Twenty years later, Bernstein returned to China. His old friend picked him up at his hotel in an enormous Mercedes limousine and drove him to one of the chain of clothes stores he now ran. The police still followed him, the former dissident said, gesturing behind him to a crummy little Chinese-made car tailing the Mercedes. And his phone was tapped. But so long as he kept quiet, he was permitted to enjoy his property in peace.

Bernstein is actually an advocate of confrontation with China. But I think his story has a different moral. Over the long haul a country cannot sustain economic growth if businessmen cannot trust the courts to enforce contracts fairly, if they cannot get accurate information, if their property is not respected. Which means eventually China will have to choose. If the leadership wants wealth and national greatness, it will have to concede an independent judiciary, an at least partially free press, and secure property rights. If it withholds those liberties, China will remain poor and weak. Which means trade with China, by strengthening and enriching its business class, will be, over the long haul, a force for liberalization.

Second, say those who want to avoid confrontation, it’s well to remember one reason the U.S. prevailed against the Soviet Union was that Soviet aggression united almost the whole world against it. The U.S  faced the Soviet Union at the head of an alliance that included almost all Western Europe plus Japan,Canada, Australia and so on.

If China turns aggressive in the next century, it, too, will create an overwhelming coalition against it: not just the U.S., but also Japan, Taiwan, India and the united, democratic Korea of the future. If the U.S. tries to mobilize those countries against China now, it will probably fail. As yet they see no danger. Would it not be wiser to wait until such time (if ever) as China has actually provoked its neighbors into desiring U.S. help — rather than resenting and resisting it, as they would surely do now?

History, a teacher of mine used to say, never repeats itself: it only seems to, to those who don’t pay attention to the details. This is not 1946 and China is not the Soviet Union. It may someday become dangerous. But for now it ought to be treated with wary respect.

Originally published in the Financial Post.