Entries from March 2008

Beware Of Pandering Politicians

David Frum March 29th, 2008 at 12:00 am Comments Off

Across the U.S., mortgages are being foreclosed. Banks are writing off bad loans. One investment bank has already failed, with who knows how many more to come. So is it a recession yet?

Oddly, the news from the overall American economy remains surprisingly better than expected.

On Friday, the U.S. government released a spate of important economic numbers.

They show consumer incomes continuing to rise, if very slowly. Consumer spending has flattened, but has not declined. Employers are adding new jobs only very slowly, but they are not yet cutting very severely, either.

In fact, new claims for unemployment insurance actually dropped slightly in the week ending March 28 as compared to the week before.

Nobody would describe the U.S. economy as booming. But it is not shrinking either, not according to the available numbers.

Yet, if the economic facts continue to be bearable, the American economic mood is blackening. Consumer confidence has plunged to the lowest level since the recession of 1992. Talk to financial professionals and you hear anxiety at best, outright panic at worst.

Here’s what worries the pessimists: In 1992 and 2001, the Federal Reserve jolted the U.S. economy out of recession with big, bold cuts in interest rates.

But the Federal Reserve will not find it so easy to cut rates in 2008. The dollar is already anemically weak: More rate cuts could send the U.S. currency tumbling — and a lower dollar will in turn lead to higher prices for energy, food, metals and imported products generally. For the first time since the 1970s, Americans are confronting the risk of stagflation. In a stagflating economy, interest rate cuts yield higher prices, not stronger growth.

Fearing stagflation, the Fed may not dare to cut rates further. What then?

Then the U.S. government might try cutting taxes or raising spending — “fiscal stimulus” as the economists call it. There’s just one problem: Fiscal stimulus does not usually work very well. It arrives too late, or it costs too much relative to the good it does, or consumers (rationally) use it to repay debt rather than to boost their consumption.

Congress has already voted for just such a plan: $168-billion in tax rebates that will arrive sometime in the second half of 2008– too late to help with today’s crisis, and just in time to add to a swelling federal budget deficit next year.

Meanwhile, the Democratic candidates for president are spending their days frightening markets with reckless talk. Hillary Clinton has proposed a federal freeze in mortgage interest rates, a moratorium on foreclosures of houses that do not pay their debts and a large federal bailout of mortgage lenders. Barack Obama’s plan is marginally less irresponsible — but that greater prudence probably reflects Obama’s lead in the Democratic delegate count rather than any better economic sense.

And yet some good may come of this crisis, if it wakes American voters up to this all-important political fact: Today’s Democratic Party is no longer the Democratic Party of Bob Rubin, no longer a party of careful economic management and middle-of-the-road practical sense.

Obama and Clinton are competing to sound more protectionist, more interventionist, more regulatory, more reckless. Perhaps they personally know better. That’s the message Barack Obama aide Austan Goolsbee whispered to the Canadian consul-general in Chicago, and it may even be true.

But what politicians publicly say matters as much as what they privately think. Promiscuous pandering promises harden into inescapable commitments. A politician like Hillary Clinton or Barack Obama may seek only to exploit a financial crisis. They end by stoking it.

John McCain’s challenge and opportunity is to rise above this kind of crass self-seeking, and to articulate a financial and economic message that can actually do some good — beginning by refraining from doing harm.

A Noble Project, Badly Managed

David Frum March 22nd, 2008 at 12:00 am 2 Comments

Five years later, the debate over the Iraq war rages as hot as when it began. We have never ceased looking over our shoulders. We have attempted to fight our way forward with our eyes fixed backward.

Mired in these old arguments, it becomes impossible to see anything new.

Just last week for example, the Pentagon released a study of 600,000 captured Iraqi documents. These documents detailed Saddam Hussein’s long history of support for Islamic terrorist groups, including Egyptian Islamic Jihad — which merged into al-Qaeda in 1998.

Yet this study was almost universally shrugged off: The debate is frozen and cannot accept fresh evidence.

Likewise, it becomes impossible to absorb the success of the new American tactics in Iraq. Iraqi civilian casualties have fallen to the lowest level since the liberation of Baghdad, down by more than three-quarters since November, 2007. U.S. casualties are down, Iraqi police casualties are down, car bombings are down, the flow of refugees is down. Some 80,000 previously unemployed Iraqi men now draw salaries to serve in the pro-government militia. Iraq oil exports rose 9% in 2007 over 2006, and have risen in January and February over their levels in 2007.

We slight the improving internal politics of Iraq. Iraq’s Sunni parties have ended their boycott of the parliament. Evidence accumulates that young Iraqis are turning away from religious extremism: the firebrand cleric Moqtada al-Sadr in particular draws much smaller crowds at his rallies.

Even direct statements by the Iraqi insurgents receive little attention. On Feb. 12, 2008, a newspaper in Qatar published a lengthy interview with Abu-Turab al-Jaza’iri, the al-Qaeda commander in northern Iraq. As translated by Memri.org, al-Jaza’iri acknowledged: “It is true that we have lost several cities and have been forced to withdraw from others, after a large number of [Sunni] tribal leaders betrayed Islam and when their tribe members joined forces against us.” He described al-Qaeda’s position as “very difficult,” and acknowledged that in certain regions, there was even “paralysis.”

In Memri’s dry summation: “Asked about possible reasons for the decrease in al-Qaeda’s popularity, Al-Jaza’iri said that indiscriminately murdering civilians had been a mistake that had “harmed the organization’s reputation.” You don’t say.

It is never safe to make predictions about Iraq. The optimistic early projections of those like me who supported the war have proven disastrously wrong: I admit that. But equally wrong have been the dire predictions of 2006 and 2007, before the surge, when not exactly impartial observers such as former Clinton secretary of state Madeleine Albright were damning the war as “the worst foreign policy disaster in American history.”

The Iraq war has been frustrating, protracted, costly and bloody. But it has also achieved large and important goals, of immense benefit both to the West and to the Arab Middle East:

-The war removed from power an aggressive and dangerous dictator who did support terrorism on a very large scale, who did run nuclear and biological weapons programs in the 1980s and 1990s, who did use genocidal tactics against his country’s Kurdish minority and who did start two wars against his neighbours Iran and Kuwait.

-The war has produced an elected government in Iraq, and put an Arab army into the field against an al-Qaeda insurgency. Television audiences across the Middle East have had to watch Islamic terrorism murder not just Westerners, Indians and Jews, but fellow Arabs and fellow Muslims.

-The war has mobilized an Arab coalition against Iranian adventurism. Countries such as Qatar, Bahrain and Saudi Arabia, which had played a double game on extremism and terrorism in the 1990s, have been forced into a much less ambiguous alliance with the United States.

-Al-Qaeda is on the verge of suffering an emphatic and discrediting military defeat, brought on by its own fanaticism, incompetence and bloodthirstiness. Al-Qaeda gunmen have chopped the fingers off Iraqis caught smoking cigarettes, attacked the families of prominent tribal leaders — even on one occasion forbidden merchants to display cucumbers and tomatoes in the same vegetable stall. (Traditional Islam does not require the separation of vegetables, but the sex-obsessed Islamists regard cucumbers as too phallic and tomatoes as too breast-like to be allowed near one another.)

These are real gains, and they point the way to a very different verdict on Iraq from that most often heard.

Iraq remains, of course, a very unpopular war, inside the United States and around the world. Yet the politics of Iraq are nothing like those of America’s previous unpopular war, Vietnam. This week, antiwar groups called for giant demonstrations to protest the war’s anniversary. Only about 1,000 people showed up in Washington, with comparably small numbers in other major cities.

While millions of Americans regard Iraq as a mistake, only a fanatical few dare to suggest that it was somehow morally wrong to topple the murderous dictator Saddam. What offends Americans about Iraq is lack of success. The negative public judgment on the war is a judgment on the war’s management –and better management will lead to a more favourable public judgment.

No excuses can be made for the war’s bad management, and especially for the unconscionable delay in correcting early mistakes. It was plain by the summer of 2003 that things were going wrong — yet not until the summer of 2007 did President Bush change course.

The President has received harsh criticism for this stubbornness, and deservedly so. Yet at the same time, a less stubborn man would probably have folded up in Iraq in the dark days of 2006 and 2007. Had, for example, John Kerry won the 2004 election, the United States likely would have fled Iraq at the low point, accepting humiliating defeat for itself and bequeathing chaos and theocracy to Iraqis.

Instead, at this five-year anniversary we see better grounds for hope than at any time in a long time. The surge will end this summer. U.S. troops will begin to withdraw. If Iraq remains stable, more troops will soon follow, and the U.S. and coalition role inside Iraq can then shrink.

In the end, the struggle in Iraq is the Iraqis’ struggle. But the West can provide decisive aid. Thanks to the heroic sacrifices of American service men and women — and also, I should add, to a new battle-plan devised in large part by my colleagues at the American Enterprise Institute — that aid has achieved more and better results in the past few months than at any time since the war began.

Does this mean success is at last in sight in Iraq? No — but it means that for the first time in a long time, success looks like a realistic goal.

If anything deserves commemoration this week, it is not some arbitrary anniversary, but instead that astonishing turnaround, rich with hope for Iraq and the wider world.

Legal Fairness: No. Poetic Justice: Yes

David Frum March 15th, 2008 at 12:00 am Comments Off

As the media revel in all the lurid details of the Eliot Spitzer scandal, ask yourself this question: How is it that we know any of this stuff?

The short answer: U.S. federal prosecutors leaked it. The court documents referred only to a mysterious “Client Number Nine” — reflecting the usual rule that individuals who are not accused of a crime should not be publicly embarrassed.

Having shared these documents with the media, prosecutors then verbally disclosed that Client Number Nine was the Governor of the State of New York.

This was really a shocking and wrong thing to do.

Prosecutors exist to enforce laws. You may be cruel, you may be arrogant, you may be faithless — but until you can be proven to have committed a crime, your misdeeds are no business of the law enforcement authorities.

Yet in Spitzer’s case, prosecutors have smashed his career and his life without so much as filing an indictment, let alone proving guilt beyond a reasonable doubt. Appalling! Or is it?

Leaking Spitzer’s name was improper, abusive, harshly vindictive — and completely understandable.

For throughout his own previous career, Eliot Spitzer had showed himself one of the most vicious abusers of prosecutorial powers in recent American history.

First as an officer of the U.S. Attorney’s Office for the Southern District of New York, then as New York’s Attorney-General, Spitzer had used leaks and publicity as a weapon to destroy others and advance his own ambitions –ambitions that apparently aimed no lower than the presidency of the United States.

One notorious example: In the spring of 2005, Spitzer’s office was investigating transactions at the American International Group (AIG), one of the world’s leading insurance companies.

Without filing any charges, Spitzer publicly accused Maurice “Hank” Greenberg of accounting fraud and other serious crimes. Under pressure from Spitzer, AIG’s board forced Greenberg to resign.

Not for months did Spitzer get around to bringing a case against Greenberg. He did to Greenberg exactly what loose-lipped prosecutors have now done to him: Attacked his reputation and destroyed his career without affording him the opportunity to defend himself in a court of law.

When Spitzer did finally lodge criminal charges against Greenberg, every single one of them had to be dropped for lack of evidence: The case never went to trial. Spitzer then brought a civil action against Greenberg. Civil actions require lower standards of proof than criminal charges. Yet that civil case has also largely collapsed.

Not all of Spitzer’s prosecutions ended so dismally. Some of his cases had real merit, especially his investigations of abuses at the research arms of financial firms. Others — like the campaign against Dick Grasso, former head of the New York Stock Exchange–had less.

In good cases and bad, though, Spitzer vilified his targets without waiting for judge or jury. Weeks before the trial, he appeared on a popular Sunday morning TV show to call Greenberg a liar and a crook: “That company [AIG] was a black box, run with an iron fist by a CEO who did not tell the public the truth.” Greenberg remains a rich man and can afford to fight for his vindication. The same is true for Dick Grasso. In time, Spitzer’s unproven allegations will lose their power to harm.

But that’s not good enough, is it? Officials armed with the enormous powers of legal prosecution are supposed to exercise enormous restraint.

Equipped with the power of the search warrant, they have access to the most intimate documents of the people they investigate. For that reason, they are supposed to respect the confidentiality of what they read until they are ready to go to trial.

Entrusted with the power to humiliate society’s most respected leaders by accusing them of crimes, they are expected to remain silent about their suspicions until they have amassed enough evidence to file an indictment.

Spitzer never honoured those fundamental ethical rules. He leaked and defamed and abused, treating his personal hunches as the equivalent of a guilty verdict, all for his own political advancement. Now he has been felled by exactly the same ugly methods to which he owed his rise.

That’s not the right standard for American law. But it certainly is poetic justice.

Nobody’s Fault But Obama’s

David Frum March 8th, 2008 at 12:00 am Comments Off

Is it the responsibility of the government of Canada to assist Democratic presidential candidates in telling lies?

Apparently the answer is “yes” — at least according to the opposition parties in Ottawa.

The opposition parties are slamming the Harper government for inadvertently leaking a memo that revealed Barack Obama’s anti-NAFTA posture to be a fake. While Obama was trying to win union votes in Ohio by slamming the North American Free Trade Agreement, Obama’s top economic advisor was quietly assuring the Canadian government that the candidate’s words were just “positioning,” not “policy.”

For Obama, this revelation was deeply damaging. Obama presents himself as a new kind of politician. He regularly promises to tell voters “not what they want to hear — but the truths they need to hear.” On the evidence of the memo, however, Obama is actually a shiftier politician than Hillary Clinton. The Clintons are legendary for misleading voters with phrases that contain hidden escape hatches. On NAFTA, however, Obama left himself no such leeway. He is pretending to condemn something that he does not in fact condemn. Now he has been caught.

Some want to fix the blame for Obama’s troubles not on Obama’s own double-talk, but on the Harper government. Yet if anything, it is the Harper government that was victimized here. In Ohio, Obama indirectly made Canada and Canadian trade the villain of his campaign narrative. Then, after whipping Canada and Canadian trade, Obama thrust an uninvited secret on the Canadian government. When the truth emerged, as it always does, Obama’s supporters denounced Ottawa for not doing more to protect his lie.

But why is it Canada’s job to shield an American political candidate from the predictable consequences of his own amateurish duplicity?

It’s important to understand that the Canadian role in this story was purely accidental and purely incidental.

Accidental, because Ian Brodie’s obvious motivation in mentioning the memo was not to undermine Obama, but to reassure reporters about Canada’s economic prospects.

Remember that Brodie — Stephen Harper’s Chief of Staff — was talking to reporters about the federal budget. The federal budget rests on certain economic assumptions. If the United States were to tear up NAFTA, those budget assumptions would obviously be rendered instantly obsolete. So if Brodie had information suggesting that the Canadian economy was less at risk than the headlines from Ohio suggested, it’s understandable that he would want to communicate that. How far his intention was from harming Obama is underscored by his scrambling all the details: He told reporters that it was Hillary Clinton who was sending out the reassuring messages!

More important, the Canadian role is almost entirely incidental.

Ask yourself this: Is it probable that Obama’s chief economic advisor, Austan Goolsbee, told the Canadian Consul General in Chicago — and absolutely nobody else — that the campaign did not mean what it said about NAFTA?

What about Obama’s big backers on Wall Street? In the month of January, Obama raised more money from employees of Lehman Brothers than from any other company in America. Goldman Sachs ranked third, JP Morgan fourth, Citigroup fifth, Morgan Stanley sixth. Don’t you think these investment bankers might also have asked for some reassurances that Obama was not turning into some trade-bashing troglodyte?

And what about the government of Mexico? They have a consul general in Chicago too — do you suppose he maybe also asked for clarification from the Obama campaign?

In 2007, the United States as a whole did more than US$560-billion of trade with Canada, and almost US$350-billion of trade with Mexico. Close to a trillion dollars in total. Obama’s own state of Illinois does more business with Canada than with its next five trading partners combined. This is a big, big set of relationships that govern the prosperity of tens of millions of people.

Was Austan Goolsbee free-lancing when he whispered his reassurances to the Canadian Consul General? Or was he executing a campaign organization request? If the latter, Goolsbee was the perfect man for the job. He is no campaign hack. He is a very distinguished academic economist, a professor at the University of Chicago. He is likely to serve as chairman of the council of economic advisors in an Obama administration, and perhaps ultimately at a senior level in the Treasury. Goolsbee’s words would carry weight.

On the other hand, Goolsbee’s words were inevitably bound to spread. As it happened, his words spread from Canada. Very likely, however, they could just as easily have spread from Mexico City or from Goldman Sachs or from Continental Grain or from General Motors.

Or from all of them at the same time.

The Obama campaign played a risky game of deception in Ohio. The risk backfired on them. That’s nobody’s fault but their own.

Friends With Those He Fought

David Frum March 1st, 2008 at 12:00 am Comments Off

Of all the writings of Bill Buckley, none were finer than his short obituaries. He wrote nearly 500 of them — for world rulers, political opponents and intimate friends; and, in many cases, for people who combined all three roles into one. Here, for example, is an extract from his obituary for William Sloane Coffin, the legendarily militant left-wing chaplain of Yale University, who died in April, 2006.

Buckley is telling the story of his last meeting with Coffin, a final debate between the two legendary talkers:

“I climbed the steps at the Yale Law School Auditorium to extend a hand to Bill Coffin– who brushed it aside and embraced me with both arms. This was a dramatic act. It was testimony not only to Coffin’s wide Christian gateway to the unfaithful, but also to his extraordinary histrionic skills. I’d have lost the argument anyway. I have defended my political faith as often as Coffin did his own, but you cannot, in the end, win an argument against someone who is offering free health care and an end to nuclear bombs. But there was never any hope for survival after his public embrace ?

“Our disagreements were heated, and it is through the exercise of much restraint that I forbear doing more than merely recording that they were — heated; on my way, heatedly, to recording that Bill Coffin was a bird of paradise, and to extending my sympathy to all who, however thoughtlessly, lament his failure to bring the world around to his views.”

In Buckley’s later years, these obituaries appeared more and more often, as, one by one, his many, many friends passed from the scene. Each was graceful, generous and imbued with a deep awareness that our common humanity unites us more than political differences can ever divide us.

As I read them, I often found myself thinking: Who will speak so finely about Buckley himself, when his time comes?

I need not have worried. In the hours since Bill Buckley’s death on Feb. 27, at the age of 82, a surge of tributes has filled the airwaves, newspapers and internet. Over Buckley’s long lifetime, the public mind had somehow apprehended and appreciated the great soul of the man.

This appreciation is not easy, since many of Buckley’s finest actions were done in secret. I think, for example, of a conservative journalist threatened with prison because he had failed for years to file a tax return. Buckley hired his lawyer, negotiated with the IRS and paid his back taxes. Or of the disgraced congressman, caught in a sex scandal, abandoned by everyone he knew — almost everyone, that is, until he found in the mail a large, unsolicited cheque from Buckley.

If Buckley’s charities were often unknown, his wit, his style and his unstinting support for younger people were all legendary. He won the love of his friends and the admiration of his enemies. The historian Rick Perlstein, a savage critic of American conservatism, paid this final tribute to Buckley:

“He did the honour of respecting his ideological adversaries, without covering up the adversarial nature of the relationship in false bonhommie ? He was friends with those he fought. He fought with friends. These are the highest civic ideals to which an American patriot can aspire.”

That is exactly right. The irenic later Buckley (“irenic” was one of Buckley’s many pet linguistic obscurities; it means “peaceful” — but who would have to go look up the word “peaceful”?) should not be allowed to displace the fiercer younger Buckley in our memories.

Asked why Senator Bobby Kennedy would not appear on Buckley’s TV show, Firing Line, Buckley answered, “Why does baloney avoid the grinder?” Interviewing the socialist and pacifist Norman Thomas, Buckley sneered at those who went “weak in the knees” if the U.S. dropped napalm on the Viet Cong.

More than a TV personality, more than a writer, Buckley was a political man. He lived long enough to see the triumph of his politics in 1980 and again in 1994.

Then he lived longer still. The conservatism Buckley epitomized has now passed its zenith. The movement he created has become, in many ways, decadent, even obsolete. And we who follow in Buckley’s footsteps are left with a question, without Buckley’s wisdom to help us answer him: If we would be true to his magnanimous spirit, should we continue after his departure to say what he said? Or should we instead do what he did, and adapt enduring truths to new circumstances?

One of the writers Buckley most admired, G.K. Chesterton, warned a century ago against conservatives who “want to conserve everything — except their reasons for conserving anything.” It would be the most mocking of tributes to a great man and great political innovator if we tried to honor Buckley’s memory by mummifying Buckley’s movement against the need for change.