White House Chronicle

News Analysis With a Sense of Humor

Newt Gingrich And The End Of Ideology

by 2 Comments

Newt Gingrich, a former speaker of the House and espouser of big ideas, has discovered two old political verities: our education system is broken and the nation’s infrastructure needs an overhaul. Both have been true for decades. They were true when Gingrich was forcing his tribal doctrines on Congress and when, later, he described George W. Bush as a “transformational” president.

 

For Gingrich, the trouble is he did nothing for education when he had power and he was opposed to funding infrastructural repair. While Gingrich was trumpeting Bush’s ability to change the nation, the president was bringing about change at home through neglect and change abroad through interventionist war.

 

Now, the price is to be paid–the astronomically high price. Get out your wallets, your children’s wallets and your grandchildren’s wallets.

 

Gingrich’s Republican Revolution is a tattered thing now. His “Contract with America” is never mentioned. His term limits idea is no more viable than Esperanto. The man who believes that private enterprise and the free market are the balm of hurt countries is observing the nationalization of a large chunk of the finance sector. It is hardly the kind of transformation Gingrich expected from the Bush administration.

 

Despite this litany of events that has turned Gingrich’s dreams to nightmares, we need thinkers more than ever. If Gingrich had been less wedded to the Republican orthodoxies (now crumbling) and given his ideas free rein, he might have had more enduring successes. Real ideas are more enduring than party fealty expressed though party-speak.

 

Whoever wins in November–now hard upon us–has to approach the business of government in the immediate future as a new paradigm: pragmatism first and ideology second.

 

The problem with ideology is that it inhibits ideas and produces rigidities that inhibit the natural immune systems of countries from functioning. If the Democrats had not been so ideologically wedded to the purposes of Fannie Mae and Freddie Mac, they would have sided with conservatives to control these monsters before things went hopelessly wrong. Likewise, if conservatives had not developed a pathological hatred of regulation (oversight, really), some alarms over the house of cards on Wall Street may have been noticed. As a prophylactic, regulation can only be measured in its absence. There are no bonuses for good regulation.

 

It is up to creative people, like Gingrich, to introduce House Republicans and the party’s base to this big idea: things have changed. All of those robust slogans of the 1990s are obsolete. So is the idea that good results in government will axiomatically flow from personal rectitude, including faith, family, patriotism, a love of small government, and a belief that our institutions of government are irresistible to the rest of the world.

 

In many ways, Republicans are better equipped to prepare themselves for the future than Democrats. Republicans do have leaders, like Gingrich and Rep. Roy Blunt, who are equipped to mold a new party philosophy. They also have a corps of literate thinkers on the op-ed pages, including George Will, David Brooks, Bill Kristol, Kathleen Parker and Charles Krauthammer.

 

These days the Democrats have no living heroes. The Clintons are contentious and Jimmy Carter is a liability. In both the House and the Senate

Democratic leadership is weak. Neither Nancy Pelosi nor Harry Reid can stir the emotions.

 

Most of the print liberals lag their conservative counterparts. Harold Meyerson is the most articulate; but outside of the liberal circle, he is unknown. Maureen Dowd writes well but is too shrill to be taken seriously. And Richard Cohen is read for pleasure, not ideology. Hence, the ridiculous expectations Democrats have for Rachel Maddow, the MSNBC talkmeistress.

 

But one commentator cannot turn back the dominance of broadcast commentary enjoyed by conservatives. Gingrich had a lot to do with that, too. He welcomed right-wing radio-talkers into Congress and gave them workspace.

 

They will not like what, I believe, they will hear from Newt and others next year. The page is turned.

 

 

 

 

 

 

When Peer Pressure Took the Hand of Greed

by Leave a Comment

 

I once asked the chairman of Wells Fargo how his bank had gotten sucked into dubious Third World loans. “Greed,” he responded. “Just greed.”

 

He might have added another motive: peer pressure. We think of peer pressure as the force that gets kids into trouble, but business is as subject to it as teenagers are.

 

When a lot of states deregulated their electric utilities in the 1990s, these formerly conservative companies went on an international binge. They started buying up utilities around the world with a passion—a passion often fed by the fear that they were being left out of the great global bonanza. Some believed that they would not be able to hold up their heads at the meetings of the Edison Electric Institute unless they could discuss their latest acquisition in a faraway land. From Brazil to Indonesia, American electric utilities were into globalizing and loving it.

 

Of course, most of these investments went sour. The expected profits were as often as not consumed by currency variations, confiscatory local taxes and dishonest politicians, who sought to extract bribes from the operators as soon as the ink was dry on the contracts. Many American executives did not know anything about local conditions. For example they were unaware that in much of Latin America, and parts of Asia, up to 50 percent of the electricity is stolen. Governments are powerless to stop the theft for fear of social upheaval.

 

Helping the electric utilities make their mistakes were the investment banks. Mergers and acquisitions, are the mother’s milk of investment banking. The banks often found the deals, researched them and took them to the American companies. Their reward: giant fees.

 

One of these investment houses was the now bankrupt Lehman Brothers. At the height of the madness, as the publisher of The Energy Daily, I was invited to give a lecture to Lehman clients. The audience was half Lehman executives and half newly-minted internationalists. I told them the truth about investing in other people’s infrastructure: It looks good on paper, but it does not work in practice because you will be resented as an absentee landlord. Populist politicians will run against you.

 

On the face of it, this was not what they wanted to hear. They wanted wilder music and stronger drink. One major utility executive who was also something of a king-maker in the Democratic Party told me I did not know what I was talking about. He was invested in Pakistan, and thought it was a great place to do business,

 

Yet privately, the Lehman executives were glad I had called for a reality check. One managing director told me: “We should take their passports away.”

 

As investment after investment went south, many of the utility travelers came to wish they had stayed at home. Lehman, other investment banks and their lawyers knew better, but those lovely fees were irresistible.

 

The utility madness was not earth-shaking, but it was symptomatic of how investment banks regarded money itself as the client not the fee-payers.

 

About this time the world became aware that an obscure and arcane branch of finance, derivatives, was growing and attracting not financiers, but mathematicians and physicists to slice and dice away from prying regulators, troublesome politicians and curious journalists. The linkage between collateral and loans was obscured. A change in the regulations in 2004 enabled investment banks to borrow or leverage their assets by 30-to-1 when it had been 12-to-1. No worries. The market would discipline itself, said the players.

 

Mortgages were the new financial manna. You could package them and sell them around the world. But Wall Street was not satisfied with the volume of mortgages being written in the old-fashioned way and thousands of mortgage brokers started loosening the criteria, until there was really no threshold for getting a mortgage.

 

Now the party is over and the administration of George W. Bush, a conservative, is nationalizing a large chunk of the financial markets. He is also tying the hands of the next president, and there is still no transparency. The only thing that is clear is that the taxpayer will pay.

Sarah Palin as Joan of Arc

by Leave a Comment

 

You see Sarah Palin, governor of Alaska; I see Joan of Arc, the peasant girl who vanquished the English in France and facilitated the crowning of Charles VII as King of France, thus ending English claims to the French throne.

Like Palin, Joan was an invigorator: She inspired the French to fight the English. When she failed to win over the generals and the nobles, she went over their heads to the people of France. Soon she had liberated Orleans, after a string of victories, and cleared the way for Charles’s investiture at Reims. Even before his ascent to the French throne, Charles had made the teenager co-commander of his army.

There is dispute over whether Joan actually fought or just carried the French standard in battle. No matter. She electrified the French. And although the 100 Years War dragged on for another generation, Joan had shaped the future of the French nation, giving it a sense of national identity that it had lacked:

She galvanized all levels of French society, revitalized a sick and cautious political establishment, and ignited the new feelings of nationalism in the French army and the peasantry. Essentially, what Palin has done so far for the Republicans.

Joan believed that she was the instrument of God; that she had heard voices from the age of 12, urging her to expel the English from France. Unfortunately, the voices were to be her death knell. She was captured by the English, who handed her over to the Ecclesiastical Court in Rouen, which tried her for heresy. She was convicted and burned at the stake. She was just 19, but she had changed the course of European history.

Later, the Roman Catholic Church decided that it had made a terrible mistake and denounced the trial, finding her innocent after the fact. But Joan was not canonized for another 500 years.

Look at Palin and see the “Maid of Orleans”: She has fought the Republican establishment and energized the rank and file of the party. And that is probably where the similarity ends, although she seems to be quite certain about God’s purposes.

The speculation in Washington is: When will the Palin bubble burst? So far, she has been repeating the same speech on the stump and has only granted one television interview.

The strategy of keeping Palin from the public is beginning to wear thin. And even John McCain himself seems to be hankering for the recognition that he is the nominee for the presidency not the trophy vice presidential candidate from Alaska.

Yet for McCain, it is also all about Palin. If he wins the presidency, she will be credited with attracting women and blue-collar voters to the Republican standard. If she falls apart in the next month, through a combination of hubris and ignorance, she will take down the McCain candidacy.

Also, the speculation in Washington is that Barack Obama’s forces are retooling for an assault to coincide with the one and only vice presidential debate. It is a debate fraught for both the Democratic vice presidential nominee, Joe Biden, and for Palin.

Biden is given to talking too much and he knows too much, which is sometimes a disadvantage. He will be struggling to appear neither avuncular nor condescending. Palin needs to memorize talking points on every issue and stick to them. This is a dangerous tactic, but it is her best option. And it more or less worked in her interview with Charles Gibson of ABC.

Henry “Scoop” Jackson, the late senator from Washington state, who I interviewed on many occasions, answered the question he thought you should ask not the one you asked. He did this especially on television, as I found out when I was part of a panel on NBC’s “Meet the Press.”

Palin’s strategists will probably also try to give her a disarming one-liner that she can repeat frequently, which George W. Bush did with “fuzzy math” in debating Al Gore. People tend to remember the one-liner and forget the rest of the question.

Although Charles ennobled St. Joan and her family, he resented the fact that she had done what he had failed to do against the English aggressor. History may be repeating itself with John McCain.

 

The Swamp in Washington That Awaits

by 1 Comment

 

 

Dear John, Barack, Sarah and Joe,

You have come a long way, gang, and two of you are going all the way. Congratulations. All four of you say you are going to change Washington. Here in the nation’s capital, we are not convinced.

For starters, let us take earmarks. They run in the thousands. They may be dented by a new administration, but they will not be stopped. Bringing home the pork is largely why we, as voters, send our senators and representatives to Capitol Hill. Earmarks have become a clumsy redress for the indifference of the central government to local need. They have become the palpable evidence of our tax dollars at work. We cannot sense the value of a missile shield in Eastern Europe, but we can measure the stop-and-go traffic on our way to work.

If all politics are local, so are all earmarks. The courts have said that the president is not entitled to a line-item veto. Ergo John McCain, unless you can substitute a funding initiative that Congress will agree to, or you are prepared to shut down the government often, your promises will go unfulfilled. (Check the shutting-down-the-government option with Newt Gingrich,)

Then, friends, there is the permanent alternative administration: the think tanks. These are the intellectual halfway houses where ambitious public servants park between tours of duty in government. Their influence is pervasive, subtle and continual. Every administration leans on think tanks which agree philosophically with it. And here is always a think tank which is particularly close to every administration. For Ronald Reagan, it was The Heritage Foundation; for Bill Clinton, it was The Brookings Institution; and for George W. Bush, it was the American Enterprise Institute.

The epicenter of neoconservatism, The American Enterprise Institute provided the Bush administration with ideas, personnel, moral support, and rationales for the invasion of Iraq and the formulation and promotion of the troop surge. Vice President Cheney has been especially close to AEI. His wife, Lynne, is a fellow there and many old colleagues inhabit its halls on 17th Street. They include Newt Gingrich, Richard Perle, Paul Wolfowitz, John Bolton, Lawrence Lindsey and David Frum. You have to admire the place and its initiative in seducing an entire administration.

Growing in influence on the conservative side, and waiting for a friend in the White House, is the Cato Institute, which has been strengthening its roster of libertarian/conservative thinkers.

Meanwhile, the liberal Brookings Institution is churning out policy papers on everything from education reform to Pakistan. A team of powerful liberals is ready to take Barack Obama by the hand and lead him down the path of liberal righteousness. Already Brookings experts are advising the Obama campaign, including Susan Rice, Clinton’s assistant secretary of state for African affairs. Of course Strobe Talbott, Clinton’s deputy secretary of state, is president of the think tank and the nation’s leading liberal columnist, E.J. Dionne, Jr., hangs his hat there.

The point is not that the think tanks are bad but that they are powerful, and they generate the ideas of government. Remember you may not be interested in them, but they are interested in you. The press tends to point to the lobbyists of K Street as controlling Washington. The lobbyists influence Congress, but the think tanks influence an administration.

Finally, White House hopefuls, there is the bureaucracy: permanent, entrenched and bloody-minded. The civil service approaches each new administration with skepticism and often hostility. With every administration, the bureaucracy gets a new senior management team in the form of political appointees (secretary, deputy secretary, assistant secretary, etc.). Often, the bureaucracy frustrates these appointees from the get-go. Many a cabinet secretary has had to bring in a small group of loyalists in order to wage war on the larger staff. One agency head told me that she felt she could only confide in her chauffeur and her secretary.

You two lucky victors in this presidential contest will learn that it is easier to invade a faraway country than it is to reform the Washington establishment. Orthodox or maverick, liberal or conservative, Washington is waiting for you.

 

Needed: A New Approach to Nuclear Proliferation

by Leave a Comment

The trouble with the diplomatic argument against nuclear proliferation is that it is patronizing. Simplified, it is the nuclear weapons state saying to any nuclear aspirant, “Trust us, because we do not trust you.” This unpleasant message is often amplified by race and religion. After all, the primary force in containing proliferation is the United States, backed up by its western European allies. Sure there are blandishments that can tip the scale, as happened with Libya. But by and large, proliferation is a national goal for many countries.

The surprising thing about proliferation is how slowly it has spread. For awhile, it even looked as though it was in retreat, when Argentina, Brazil and South Africa quit the race.

To understand the pressure to proliferate, we need to look at each potential proliferator and its aspirations separately.

Small countries, with a high respect for their history and a deep commitment to the well-being of their people, tend to eschew proliferation. Britain got into the club very early, but it is not likely that any British government in recent time would have elected for Britain to seek the nuclear deterrent. At times, it was hard enough to keep it. Bertrand Russell´s Committee for Nuclear Disarmament was a powerful force in British politics throughout the 1950s and 1960s.

Proliferators generally need a large land mass for concealment and testing, a defined sense of threat from outsiders, and a desire for regional dominance. Classically, Iran meets these criteria. North Korea´s motivation is more bizarre, but so is its leadership. It already has conventional weapons superiority over South Korea, but it cannot hope to be a dominant player in Asia.

Security alarmists constantly pose the proposition that a non-governmental organization, like al-Qaeda, could build a weapon in secret and introduce it into the Middle East, Europe or the United States. This is the worst of all scenarios, but it is also the least likely. Building a nuclear weapon is a huge industrial undertaking, requiring secrecy, specialized materials, skilled scientists and engineers, and an open money spigot.

True, it has gotten a little easier since it has become clear that plutonium from civilian nuclear reactors can be diverted to weapons. It is also clear that centrifuge now offers the potential for a highly enriched uranium bomb–something that was not really available with the World War II enrichment technology.

The bad news on nuclear proliferation and the intractable problems of proliferation by Iran and North Korea have come at a time when the world clearly needs an enormous increase in the amounts of civilian nuclear power deployed. Countries that have been reluctant to build new nuclear power plants are going ahead. In Europe, this has been stimulated by the growing fear of dependence on fossil fuels from Russia. In many countries, this is heading towards 50 percent of their electric generation; and when the new Baltic pipeline starts deliveries into Germany, it could be as much as 70 percent dependent on Russian gas. Super-green Finland is building a fifth reactor. And the green-leaning Labor government in Britain has sanctioned more nuclear.

In Europe, new reactors raise few hackles on the proliferation front. But what to say about King Abdullah of Jordan’s desire to build a nuclear plant? He is a firm friend of the West and a stabilizing influence in the Middle East. The question is how long will his monarchy survive? It was the United States that urged a nuclear future in Iran, and reactor construction was happily under way when the Shah was deposed by the Islamic Revolution.

Diplomacy works in 10-year cycles or less. Nuclear reactors are designed to last 30 to 50 years. Neither friends nor foes can be identified over that time horizon. Ergo, a new proliferation strategy may be needed.

The United States had the makings of a strategy before Jimmy Carter was elected president. Simply, it was that the United States would dominate all facets of the nuclear fuel cycle and encourage nuclear club members to do the same thing. When Carter suspended the reprocessing of nuclear fuel in the United States, the possibility of controlling the fuel cycle for “clients” ended.

Subsequently the policy has been diplomatic persuasion, followed by sanctions, followed by a plea for multinational talks. It may or may not be working with North Korea; and so far it has produced no results with Iran.

In the Cold War, the United States assisted the Soviets with making their weapons safer by sharing aspects of fail-safe technology and giving them the technology for insensitive high explosives. The fear was accidental detonation, and the collaboration on preventing it was impressive.

Primitive nuclear weapons are dangerous; so much so that Little Boy and Fat Man, dropped on Japan, were partially assembled on the aircraft that was delivering them. Their designers were terrified that they would blow up unintentionally.

In a world in which there are more dangerous weapons in the hands of more dangerous people, there is not much hope that ambitious states can be deterred. But by working with them on safety, the old-time nuclear states, led by the United States, might establish new diplomatic channels and get a better idea of what they have got. Candidate One for safety collaboration might be Pakistan.