Friday, June 19, 2009

BOB HERBERT A Threat We Can’t Ignore


Even with the murders that have already occurred, Americans are not paying enough attention to the frightening connection between the right-wing hate-mongers who continue to slither among us and the gun crazies who believe a well-aimed bullet is the ticket to all their dreams.

I hope I’m wrong, but I can’t help feeling as if the murder at the United States Holocaust Memorial Museum in Washington and the assassination of the abortion doctor in Wichita, Kan., and the slaying of three police officers in Pittsburgh — all of them right-wing, hate-driven attacks — were just the beginning and that worse is to come.

As if the wackos weren’t dangerous enough to begin with, the fuel to further inflame them is available in the over-the-top rhetoric of the National Rifle Association, which has relentlessly pounded the bogus theme that Barack Obama is planning to take away people’s guns. The group’s anti-Obama Web site is called

While the N.R.A. is not advocating violence, it shouldn’t take more than a glance at the newspapers to understand why this is a message that the country could do without. James von Brunn, the man accused of using a rifle to shoot a guard to death at the Holocaust museum last week, was described by relatives, associates and the police as a virulent racist and anti-Semite.

Investigators said they found a note that had been signed by von Brunn in the car that he double-parked outside the museum. The note said, “You want my weapons — this is how you’ll get them.”

Richard Poplawski, who, according to authorities, used a high-powered rifle to kill three Pittsburgh police officers in April, reportedly believed that Zionists were running the world and that, yes, Obama was planning to crack down on gun ownership. A friend said of Poplawski, he “feared the Obama gun ban that’s on the way.”

There is no Obama gun ban on the way. Gun control advocates are, frankly, disappointed in the president’s unwillingness to move ahead on even the mildest of gun control measures.

What’s important to grasp here is that this madness has nothing to do with hunting, which the politicians always claim to be defending, and everything to do with the use of firearms to resist policies and lawful government actions that some gun owners don’t like.

In a speech in February to the Conservative Political Action Conference, the executive vice president of the N.R.A., Wayne LaPierre, said: “Our founding fathers understood that the guys with the guns make the rules.”

A new book by Dennis Henigan, a vice president at the Brady Center to Prevent Gun Violence, goes into detail on this point. In “Lethal Logic: Exploding the Myths That Paralyze American Gun Policy,” Mr. Henigan refers to a Harvard Law Journal article written by an N.R.A. lawyer titled, “The Second Amendment Ain’t About Hunting.” In the article, the lawyer makes it clear that for the N.R.A., the right to bear arms is “directed at maintaining an armed citizenry. ... to protect against the tyranny of our own government.”

There was a wave of right-wing craziness along those lines during the Clinton administration. Four federal agents were killed and 16 others wounded in 1993 during an attempt to serve a search warrant at the Branch Davidian compound near Waco, Tex., where a stockpile of illegal machine guns had been amassed. The subsequent siege ended disastrously with a raging fire in which scores of people were killed.

In the aftermath of Waco, the N.R.A. did its typically hysterical, fear-mongering thing. In a fund-raising letter in the spring of 1995, LaPierre wrote: “Jack-booted government thugs [have] more power to take away our Constitutional rights, break in our doors, seize our guns, destroy our property, and even injure or kill us. ...”

Whatever the N.R.A. may intend by its rhetoric, there is always the danger that those inclined toward violence will incorporate it into their twisted worldview, and will find in the rhetoric a justification for murder. On the second anniversary of the Branch Davidian fire, less than a week after LaPierre’s inflammatory fund-raising letter went out, Timothy McVeigh blew up the Alfred P. Murrah Federal Building in Oklahoma City.

You cannot blame the N.R.A. for McVeigh’s actions. But you can sure blame it for ignoring the tragic lessons of history and continuing to spray gasoline into an environment that we have seen explode time and again.

The Southern Poverty Law Center has reported a resurgence of right-wing hate groups in the U.S. since Mr. Obama was elected president. Gun craziness of all kinds, including the passage of local laws making it easier to own and conceal weapons, is on the rise. Hate-filled Web sites are calling attention to the fact that the U.S. has a black president and that his chief of staff is Jewish.

It might be wise to pay closer attention than we’ve been paying. The first step should be to bring additional gun control back into the policy mix.

On Health Care, Obama Tries to Seize the Moment


In their heart of hearts, few in the Obama administration would have predicted late last year that they would be this well positioned by June to achieve a major victory on health care. As the economy faltered, and attention focused on Wall Street and Detroit, it seemed unthinkable that Congress would be ready to devote the summer of 2009 to the costly proposition of providing health coverage for all, a goal that has eluded presidents since Theodore Roosevelt.

But five months after the inauguration, health care dominates the domestic agenda on both ends of Pennsylvania Avenue. Any package that emerges will preserve the country’s private insurance system, at least for now. It could nonetheless bring sweeping changes, requiring that everyone be insured, creating a government health plan to compete with commercial carriers and perhaps taxing employer-provided health benefits.

One Senate committee began the formal drafting of its overhaul plan in a contentious session this week, while a second — the influential Finance Committee — delayed the release of its proposal until after the Fourth of July because of emerging concerns about its cost. In the House, hearings on a draft proposal are scheduled for next week. Both chambers are striving to vote on bills before the August recess so that a conference committee can negotiate a compromise and send it to President Obama by October.

Mr. Obama now rarely lets a day pass without pushing the case for broad-based change. His cool-headed analysis is increasingly sprinkled with impassioned rhetoric. “If we do not fix our health care system,” he told the American Medical Association on Monday, “America may go the way of G.M.”

That politics and economics have converged to spark such momentum “is remarkable,” said Peter R. Orszag, the White House budget director. “You have industry groups that are cognizant of the need to make changes, members of Congress who have been preparing for this moment and a president quite committed to doing it. It is a rare alignment of forces.”

And yet, students of history in the White House and Congress realize they are only now entering the riskiest phase, when real details begin to generate real opposition. To date, a fragile coalition of stakeholders has been kept at the table by presidential leadership and fiscal realpolitik. But it may not take much for the guiding principle of “shared responsibility” to fracture into shards of self-interest.

On Monday, the American Hospital Association expressed deep disappointment in Mr. Obama’s weekend proposal to help pay for expanded coverage by cutting Medicare payments to hospitals. The next day, the United States Chamber of Commerce announced it would oppose a bill that included any one of three central elements: a new government insurance option, a requirement that businesses provide health coverage to workers or pay a fine, and the creation of a federal board to set insurance benefits. By midweek, the release of higher-than-expected cost estimates by the Congressional Budget Office had emboldened Republicans to step up their criticism, and forced the Senate Finance Committee back to the drawing board.

Kathleen Sebelius, the secretary of health and human services, said the administration was prepared for the undulations of the legislative process. “There will be a lot of times when it appears that everything is falling apart,” Ms. Sebelius said. “Anytime specific legislative language is crafted, there’s something to hate about it.”

But Ms. Sebelius said she had been impressed by the dedication of Congressional leaders, and by Mr. Obama’s “absolute focus on the fact that this is a moment — we’re not going to lose this moment.”

The moment arises from a confluence of factors: Democratic control of the White House and Congress; the exasperation of big business and consumers with uncontrollable health costs; heightened economic insecurity during the recession; the Massachusetts model for achieving near universal coverage; Mr. Obama’s determination that health care is central to economic recovery; the presence of health care enthusiasts at the helm of key Congressional committees; and even Senator Edward M. Kennedy’s battle against brain cancer.

Mr. Obama, among others, has observed that if a deal is not concluded this year, when his popularity is high and lawmakers are not running for re-election, it is not likely to happen at all.

What separates this year’s initiative from past health care expansions is that it would try to address the system’s shortcomings in cost, access and quality all at once. It would do so with intricately interlocking components intended to make health care affordable, end discriminatory insurance practices and redirect treatment toward prevention.

Whether any individual piece will produce its intended savings or improvements is impossible to tell; when judging how they might work in concert, the uncertainty is compounded.

Seeking broad popular support, the president and Congressional leaders have played between the 40-yard lines of the health policy spectrum. Those who favor a single-payer, government-run insurance system have been marginalized, along with those who would unleash the system to the free market.

Mr. Obama and the Democrats began by using the stimulus package to direct new money toward the computerization of health records and research on the effectiveness of medical procedures. In the legislation now being considered, there is broad Democratic consensus on mandating that almost all Americans have coverage, expanding eligibility for Medicaid, subsidizing insurance for the working poor, establishing an insurance marketing exchange and requiring insurers to cover those with pre-existing conditions.

But there are profound disagreements on other proposals, including the Medicare cuts, tax increases to pay for the subsidies, and the public-plan option, which insurers regard as a threat to their existence. The chairman of the Senate Finance Committee, Max Baucus, Democrat of Montana, has been searching for a compromise that might attract Republican support.

Although the Democrats may be able to pass bills without Republican votes, bipartisanship is important to Mr. Obama because it would set the tone for the rest of his term. The essential tension of the coming few weeks will revolve around whether the Democrats can maintain momentum while working to satisfy Republican concerns. Mr. Obama is leaving the details to Congress while pronouncing that he is “open to” particular compromises, like substituting member-owned insurance cooperatives for the public plan.

At a comparable stage of the Clinton health care push of 1993, “it seemed that health care reform was unstoppable,” former Senator Tom Daschle has written. The Clinton administration’s subsequent tactical failures have become the antimatter of Mr. Obama’s strategy, persuading him to move quickly, stay out of the weeds and share ownership with Congress.

In addressing the doctors this week, Mr. Obama argued that whatever the cost of revamping the system, “the cost of inaction is greater.” But he also made clear that he understood the most enduring lesson from past efforts.

“As clear as it is that our system badly needs reform,” he said, “reform is not inevitable.”

Out of the Shadows Paul Krugman

NY Times:

Would the Obama administration’s plan for financial reform do what has to be done? Yes and no.

Yes, the plan would plug some big holes in regulation. But as described, it wouldn’t end the skewed incentives that made the current crisis inevitable.

Let’s start with the good news.

Our current system of financial regulation dates back to a time when everything that functioned as a bank looked like a bank. As long as you regulated big marble buildings with rows of tellers, you pretty much had things nailed down.

But today you don’t have to look like a bank to be a bank. As Tim Geithner, the Treasury secretary, put it in a widely cited speech last summer, banking is anything that involves financing “long-term risky and relatively illiquid assets” with “very short-term liabilities.” Cases in point: Bear Stearns and Lehman, both of which financed large investments in risky securities primarily with short-term borrowing.

And as Mr. Geithner pointed out, by 2007 more than half of America’s banking, in this sense, was being handled by a “parallel financial system” — others call it “shadow banking” — of largely unregulated institutions. These non-bank banks, he ruefully noted, were “vulnerable to a classic type of run, but without the protections such as deposit insurance that the banking system has in place to reduce such risks.”

When Lehman fell, we learned just how vulnerable shadow banking was: a global run on the system brought the world economy to its knees.

One thing financial reform must do, then, is bring non-bank banking out of the shadows.

The Obama plan does this by giving the Federal Reserve the power to regulate any large financial institution it deems “systemically important” — that is, able to create havoc if it fails — whether or not that institution is a traditional bank. Such institutions would be required to hold relatively large amounts of capital to cover possible losses, relatively large amounts of cash to cover possible demands from creditors, and so on.

And the government would have the authority to seize such institutions if they appear insolvent — the kind of power that the Federal Deposit Insurance Corporation already has with regard to traditional banks, but that has been lacking with regard to institutions like Lehman or A.I.G.

Good stuff. But what about the broader problem of financial excess?

President Obama’s speech outlining the financial plan described the underlying problem very well. Wall Street developed a “culture of irresponsibility,” the president said. Lenders didn’t hold on to their loans, but instead sold them off to be repackaged into securities, which in turn were sold to investors who didn’t understand what they were buying. “Meanwhile,” he said, “executive compensation — unmoored from long-term performance or even reality — rewarded recklessness rather than responsibility.”

Unfortunately, the plan as released doesn’t live up to the diagnosis.

True, the proposed new Consumer Financial Protection Agency would help control abusive lending. And the proposal that lenders be required to hold on to 5 percent of their loans, rather than selling everything off to be repackaged, would provide some incentive to lend responsibly.

But 5 percent isn’t enough to deter much risky lending, given the huge rewards to financial executives who book short-term profits. So what should be done about those rewards?

Tellingly, the administration’s executive summary of its proposals highlights “compensation practices” as a key cause of the crisis, but then fails to say anything about addressing those practices. The long-form version says more, but what it says — “Federal regulators should issue standards and guidelines to better align executive compensation practices of financial firms with long-term shareholder value” — is a description of what should happen, rather than a plan to make it happen.

Furthermore, the plan says very little of substance about reforming the rating agencies, whose willingness to give a seal of approval to dubious securities played an important role in creating the mess we’re in.

In short, Mr. Obama has a clear vision of what went wrong, but aside from regulating shadow banking — no small thing, to be sure — his plan basically punts on the question of how to keep it from happening all over again, pushing the hard decisions off to future regulators.

I’m aware of the political realities: getting financial reform through Congress won’t be easy. And even as it stands the Obama plan would be a lot better than nothing.

But to live up to its own analysis, the Obama administration needs to come down harder on the rating agencies and, even more important, get much more specific about reforming the way bankers are paid.