Just So You Know: the Real Economic Situation Once Again

So, speaking of the stimulus, let's try and take one more level set of how things actually worked out when it turned out we weren't going to become the USSA. The UL graphic on the impacts of the stimulus is taken from a recent column by Leonhardt in the NYT (review by Menzies Chin) but consistent with what Menzie, I and many others have been saying for over a year. The bottom line is that it saved us but, in the UR graphic, we're a long way from being out of the woods. As bad as it was it'll take a long time to recover the lost jobs. Especially with the LR corner that tells us (btw that one's from Goldman Sachs!) how weak this recovery is and will be. The LL corner puts it all in strategic context - the question is how we keep things from tipping back over, move onto a self-sustaining basis, re-establish growth and then, the hardest challenge if we get, re-establish a new long-term path back toward prosperity. There's the rub, as they say!

 Let the Real Deficit/Debt Problem Standup: Realities vs. Hypocrisies

Sadly the stimulus package is not the only thing that the Rips have been disingenuously hypocritical about, both when they created it and in their partisan posturing now. The good news is twofold however but let's start with re-viewing history and structure. Basically we spent the post-WW2 period paying it down until Reagan's supply side started growing it again but Clinton was able to return it to surplus (partly by drawing down defense). But the real albatross around our neck is what BushII did to us. This wouldn't even be an issue without war, tax cuts and unfunded Medicare spending increases. The first peace of good news is that the Administration is being fiscally responsible and writing down what it created and we'll be on an uncomfortable but manageable path - at least until mandatory spending metastasizes (all of which we dug into last post).

The really good news, of sorts, is in the LL corner on sources. Which are primarily the revenue shortfalls from the Great Recession and the Bush Tax Cuts. Just as a sensible business borrows to invest in future capacity by borrowing to fund the stimulus we return the economy to higher growth faster. In fact without a return to growth the deficit would be much worse. The higher the growth the better of course. Which means the current partisanship that may force a pre-mature tightening will do more damage in the intermediate- and long-runs than help. It's the long-run we need to be worried about. The really good news is that by restoring the tax rates we had under Clinton it would appear we could largely eliminate a major source of long-term structural deficits. Of course that'd still leave the Meditwins, the need to control HC costs and social security problems. The latter is also fixable as well thru some simple mechanical changes - like matching relative retirement ages to current lifespans (when it was passed benefits were very limited, and expected lifetimes were 68 or so. An equivalent would be to extend the retirement age to, say 72 or 75. Given life expectancies around 80+ that's still a major gain. Which leaves HC. Interestingly Rep. Paul Ryan has put forward a very intellectually honest Roadmap for America that proposes to shift Meditwin funding to vouchers and cap them around $5500/year. Far below where the current cost/benefit trends are taking us rapidly but more in line with world costs. It's a non-starter politically of course but does tell us that it is possible. If we could cap costs between $5-7K/year we'd really have a major leg up.

Real Spending: There Aren't Any Magic Cost Cuts

When you ask the American people what we spend on Foreign Aid you get answers around 50% or so. The actual number is about 1%. The general grasp of what really goes into the on- and off-budget numbers is vanishingly small. It might be time to start telling some plain 'ol home-truths to people. And presenting them with some choices. The NYT put up a wonderful interactive graphic we've been wanting to draw your attention to (trouble clicking thru try this: http://www.nytimes.com/interactive/2010/02/01/us/budget.html?scp=1&sq=interactive%20budget&st=cse) that tells you what money goes to what program. A topic we've covered several times before but this is particularly crisp and clear.

Our room to maneuver is in discretionary non-defense spending, the UR and LR corners. Not much of the whole is it? Between retirement and medical costs, not to mention Health (& Human Services) you chew up most of the pie (about 50% now and projected to grow to 60% or so in the next decade if HC$ keep climbing; NB - because of the recession government is already 50% of total healthcare spending!). So unless we're willing to tackle those mandatory (i.e. structurally forced) areas we're deep in the dodo. There's not much room to cut where all the welfare queens (and farmers and education and... and) hang out. We doesn't get us away from a need to increase taxes as well. But the bottomline is that we can, and must, do this. The real question is does the political will exist? And that's not just a question of breaking the dysfunctional logjams of Washington politics. It's more fundamentally a question of the American public coming to grips with our grasshopperian bread and circuses mentalities. Cut spending but not my program!

Popular Attitudes vs. Long-term Realities

That indeed is THE fundamental question. What are you willing to give up to get the country back to health? Giving up something is not a choice BtW. It's either decide rationally now or have it forced on us willy-nilly. And on current course and speed not in 2-3 decades but beginning in ten years and metastasizing from there.

And there's where we have a fundamental disconnect in the popular psyche. The American Heritage Foundation, almost as conservative a group as there is and not be on the wingnut extreme, did an interesting report a while back that was very revealing. In general and in the abstract everybody's for smaller government and reduced public spending.

But when we get to specifics everybody thinks we should be doing a whole lot more for a whole lot of programs from Education to Energy to Retirement to Healthcare. In fact over the timeframes covered here the support for increase HC spending has grown enormously. Sorry, those circles can't be squared. Not unless we change the way things operate. Again we come full circle back to needing to change the structure and mechanisms of government but again it's possible. Feasibility and workability are very different questions however.

What the Future May Hold?

 Like we've said before reality is staring us in the face and the time for partisan posturing and public ignorance should be past, but is not. More importantly though we've argued that the majority of the legislative agenda we really need is in place. While the push for HC is continuing we'd even consider putting it on hold, semi-wellcrafted as it is, and focusing more on communicating with, educating and motivating the public.

The key is Oliphant's "Sleeping Giant" - though the sad lack of respect for legitimate fears caused by that lack of understanding and communications needs a little more compassion IOHO.

We'd still get Financial Reform passed for lots of reasons, not least of which is we can't afford to have it fade away and the Finance Industry is proving it's not learned anything at all (Finance Industry Futures: Performance, Governance, Reform & Politics, Goldmine Sacking Vampire Squid: PBS Takes Down the Goldfellas). And if we can get HC, fine. It may be a political necessity for the Dims. But the thing the Administration really needs to concentrate on is threefold: 1) what it can do, 2) communication, and 3) simplification and motivation. We need to spend the next year KISSing it do death. Fortunately that appears to be exactly what they're doing. And to be fair with serial life-threatening crisis on their hands there was hardly scope and opportunity. Now it's a necessity. We think you might find it particularly worthwhile to review a previous post that went into more detail: America At Hard Choices Crossroads: Policies, Politics & Partisans.

READINGS

Defining a Baseline: Economic Outlook vs. Governance

The Lean Years Financial crises stink. In their wake, public debt explodes. Nations default. Economic growth falters. Taxes rise. Unemployment lingers. The current financial crisis is no different. The U.S. will have to produce 10 million new jobs just to get back to the unemployment levels of 2007. There’s no sign that that is going to happen soon, so we’re looking at an extended period of above 8 percent unemployment. It’s pretty easy to take these economic facts and draw stark cultural consequences. Long-term unemployment is one of the most devastating experiences a person can endure, equal, according to some measures, to the death of a spouse. Men who are unemployed for a significant amount of time are more likely to drink more, abuse their children more and suffer debilitating blows to their identity. Unemployed men are not exactly the most eligible mates. So in areas of high unemployment, marriage rates can crumble — while childbearing rates out of wedlock do not. Recessions test social capital. If social bonds are strong, nations can be surprisingly resilient. If they are weak, things are terrible. The U.S. endured the Great Depression reasonably well because family bonds and social trust were high. Russia, on the other hand, was decimated by the post-Soviet economic turmoil because social trust was nonexistent. This recession has exposed America’s social weak spots. For decades, men have adapted poorly to the shifting demands of the service economy. Now they are paying the price. For decades, the working-class social fabric has been fraying. Now the working class is in danger of descending into underclass-style dysfunction. For decades, young people have been living in a loose, under-institutionalized world. Now they are moving back home in droves. The economic response to the crisis is everywhere debated, but the social response is unformed.

• We Need a Second Stimulus Now, Says Nobel Laureate Stiglitz, or Americans Will Be Unemployed for Years
• We're "Absolutely" Headed for Another Crisis Without Reform, Economist Stiglitz Says
• STIMULUS WATCH: Unemployment eclipses fiscal jolt

Happy Birthday, Dear Stimulus! The stimulus has also been quite successful on a political level—even if the polls don't necessarily show it. Consider that it was essentially a Democratic undertaking. Every Republican member of the House and all but three Republican members of the Senate voted against it. And since its passage there have been continued calls for ending it. In the wake of the bill's passage, Republicans as one stood up to say that the stimulus must fail (at least the non-tax-cut part of it) because it was axiomatic that government spending could not create any jobs—never did, can't, won't. As Michael Steele put it: "Let's get this notion out of our heads that the government create jobs. Not in the history of mankind has the government ever created a job." That argument was wrong in theory—and now it is also clearly wrong in practice. And the very Republicans who voted no on the stimulus are clamoring to take credit for stimulus spending. And many of the Republicans who voted against the stimulus (on the grounds that it couldn't create jobs) have since petitioned government agencies on behalf of their states and districts to get stimulus funds—on the grounds that it would create jobs. (Rachel Maddow of MSNBC had a particularly good listing of the culprits here.) So in the year since the stimulus bill was passed, it's become more and more difficult for opponents to make the case against it. And that opposition will get tougher still, because the stimulus has barely kicked into gear. The package was designed to be rolled out over a three-year period, in part because of logistics (it's tough to approve tens of billions of dollars of loan guarantees to wind-energy farms and solar power arrays in a few months) and in part because of politics. Recovery.gov shows that only about one-third of what has been budgeted for tax breaks, new spending, and entitlements has been spent. While Congress' horizon extends only as far as November 2010, the Obama administration is looking ahead to November 2012. Congressional Democrats would have preferred a frontloaded stimulus that spent everything in 2010; the White House isn't particularly troubled that large chunks of the stimulus won't hit the economy until 2011. Thanks to the stimulus bill, there's still $515 billion worth of tax cuts, contracts and loans, and aids to entitlement programs set to enter the economy in the next two years. That will contribute powerfully to growth in 2010 and 2011.

• We Need a Second Stimulus Now, Says Nobel Laureate Stiglitz, or Americans Will Be Unemployed for Years
• Stiglitz: Washington Should Stop Worrying, U.S. Has "No Problem" Paying Off Its Debts

Deficit panel can be candid: Budget cuts will hurt President Barack Obama's new deficit commission might give Americans a slap in the face about the sacrifices needed to avoid bankrupting future generations -- maybe working until age 70, paying higher taxes and spending more of their own money for doctors' visits and prescriptions. Obama certainly won't be talking about that harsh medicine, nor will the lawmakers on Capitol Hill, nor the candidates trying to replace them next November. In a poisonous election-year atmosphere, almost no one is willing to go on the record with solutions like raising the Social Security retirement age, ordering broad-based tax increases or increasing copays and deductibles for Medicare -- ideas far too politically explosive for one party to take on alone. That's where Obama's National Commission on Fiscal Responsibility and Reform -- created Thursday with fanfare -- comes in. With the total federal debt next year expected to exceed $14 trillion -- about $47,000 for every U.S. resident -- the 18-member commission is charged with coming up with a plan by Dec. 1 to reduce the government's annual deficits to 3 percent of the national economy by 2015.

What Is Government Waste? The new ABC/Washington Post poll will undoubtedly get a lot of attention for its findings about health care, Sarah Palin, the Tea Partiers, and whether or not Americans think Republicans should obstruct President Obama's agenda. But there's a little nugget in there--see question #28--that reflects a common and very durable finding about Americans' attitudes toward government spending: They believe that more than half of what the government spends--53 cents was the average answer--is "wasted." More than half! I don't know about randomly-selected Americans, but I do know that undergraduates in my POLI 100 classes tend to think the government spends more on defense than it does and less on Medicare and Social Security than it does. In surveys, the median American thinks that we spend about 20 percent of the federal budget on foreign aid, and would like that amount reduced to about 10 percent--when, in fact, actual spending amounts to less than one percent. This may explain why some Americans foolishly believe that tort reform will solve our health care cost problem or that eliminating earmarks will eliminate our deficit problem, even though they will not. I know I'm going to sound like an elitist, but the fact of the matter is that most Americans have a very weak grasp of how the government raises revenues and what it spends those monies on. So where's all the "waste" in a federal budget that, in regular economic times, is about two-thirds comprised of Social Security, Medicare, defense and interest payments? I'd really like to know how Americans do the math on that 53 cents. Or maybe, on the other hand, I'm afraid to find out.

Paul Krugman: Republicans and Medicare Furious denunciations of any effort to seek cost savings in Medicare — death panels! — have been central to Republican efforts to demonize health reform. What’s amazing, however, is that they’re getting away with it.Why is this amazing? It’s not just the fact that Republicans are now posing as staunch defenders of a program they have hated ever since the days when Ronald Reagan warned that Medicare would destroy America’s freedom. Nor is it even the fact that, as House speaker, Mr. Gingrich personally tried to ram through deep cuts in Medicare — and, in 1995, went so far as to shut down the federal government in an attempt to bully Bill Clinton into accepting those cuts. After all, you could explain this about-face by supposing that Republicans have had a change of heart, that they have finally realized just how much good Medicare does. And if you believe that, I’ve got some mortgage-backed securities you might want to buy. No, what’s truly mind-boggling is this: Even as Republicans denounce modest proposals to rein in Medicare’s rising costs, they are, themselves, seeking to dismantle the whole program. And the process of dismantling would begin with spending cuts of about $650 billion over the next decade. Math is hard, but I do believe that’s more than the roughly $400 billion (not $500 billion) in Medicare savings projected for the Democratic health bills. What I’m talking about here is the “Roadmap for America’s Future,” the budget plan recently released by Representative Paul Ryan, the ranking Republican member of the House Budget Committee. Other leading Republicans have been bobbing and weaving on the official status of this proposal, but it’s pretty clear that Mr. Ryan’s vision does, in fact, represent what the G.O.P. would try to do if it returns to power. The broad picture that emerges from the “roadmap” is of an economic agenda that hasn’t changed one iota in response to the economic failures of the Bush years. In particular, Mr. Ryan offers a plan for Social Security privatization that is basically identical to the Bush proposals of five years ago. But what’s really worth noting, given the way the G.O.P. has campaigned against health care reform, is what Mr. Ryan proposes doing with and to Medicare.

Will Ryan's Budget Plan Get Tea Party Endorsement? For a long time I have maintained that a significant tax increase will be necessary if we are to avoid the fate of Greece, which is in the midst of a fiscal meltdown. If the bankruptcy of a little country like that can cause world financial markets to tank, imagine what a potential U.S. bankruptcy would do to your 401(k). Whenever I make this point people always complain that I haven't considered the option of cutting spending. The reason I haven't is that the magnitude of spending cuts that would be required to prevent the need for higher revenues would be politically impossible to achieve. We saw proof of this when Barack Obama proposed cutting Medicare spending by a small amount to fund health coverage for the uninsured, and the Republican Party's official position was to oppose any cut for any reason. We saw more proof in how quickly Republican leaders distanced themselves from a detailed budget plan recently put forward by Rep. Paul Ryan of Wisconsin, ranking Republican on the House Budget Committee. Many polls show that the vast majority of Americans have no idea of the true composition of federal spending. According to a recent Rasmussen survey, just 35% of Americans know that Social Security, Medicare and national defense spending constitute more than 50% of the federal budget. Polls consistently show that most people grossly overstate the percentage of foreign aid in the budget. A 2001 poll showed that half of all Americans thought foreign aid comprised at least 20% of the budget, and the average response was 25%. In fact, foreign aid is less than 1% of the budget and has been for decades. Consequently, most people tend to think that balancing the budget is a relatively easy task just requiring political will, something that would not affect them personally. Even members of Congress often give the impression that all we have to do is eliminate earmarks and pork barrel spending and that would be enough. In fact, according to Citizens Against Government Waste, a watchdog group, there was only $19.6 billion of pork in the budget last year, less than 1% of federal spending. The truth is that the big money is in two federal programs: Social Security and Medicare. However, it is extremely rare to hear any of those concerned about federal spending target these programs for cuts. In my opinion, support for the Ryan plan must be the minimum requirement for anyone who considers themselves members of the tea party brigade and any politician seeking its endorsement. If those like former Alaska governor Sarah Palin, the current darling of the tea party crowd, are unwilling to immediately and unequivocally endorse the Ryan plan or put forward something equally serious and comprehensive, then in my opinion they have no credibility on the budget and no right to oppose the sorts of tax increases that I believe are unavoidable. I think it is irresponsible to say, as almost all tea party goers do, that they are unalterably opposed to tax increases without specifying spending cuts--large cuts in popular programs that go far beyond foreign aid, earmarks and even a budget freeze. And if they are serious they must admit that coming anywhere close to budget balance cannot be done without slashing Social Security and Medicare benefits. There's no way around that and anyone who says so is either ignorant or a fool.

Are We Governable? We certainly aren't acting like it. It's time to reflect when good people -- well liked on both sides of the aisle and certain to be reelected -- bow out. Senator Evan Bayh's (D-IN) retirement announcement today was a shocker. Read his statement. I would lift up: "After all these years, my passion for service to my fellow citizens is undiminished, but my desire to do so by serving in Congress has waned. For some time, I have had a growing conviction that Congress is not operating as it should. There is too much partisanship and not enough progress -- too much narrow ideology and not enough practical problem-solving. Even at a time of enormous challenge, the peoples’ business is not being done." He cited the failure to pass the bipartisan deficit reduction commission and the failure to pass the jobs bill as evidence. He's fed up and has decided he can be more effective elsewhere. No matter what happens in November, the Senate is likely to fail to do the people's business. Action is desperately needed on a wide range of issues. Here's my short list of Senate actions required by the end of April:

1. Jobs bill
2. Deficit Reduction Commission
3. Already expired:
1. Estate Tax, currently repealed, but jumping to 2001 law in 2011
2. 71 other expired tax provisions, including the R&D tax credit.
4. About to expire:
1. Highway authorization
2. flood insurance
3. postponement of the 21% cut in Medicare physician reimbursement rates
5. Defense supplemental to fund the Iraq and Afghanistan wars
6. Budget resolution
7. Confirm non-controversial judges and other presidential appointees on "hold" for reasons having nothing to do with their qualifications.

We also desperately need financial reform and health reform this year, or else we risk another AIG and skyrocketing health insurance premiums. Unfortunately, we're going to test the theory that no action is better than action that confers partisan advantage.

Resetting the Mechanisms

Obama Starts Over After a tough first year, the President's economic agenda and standing will be challenged again in 2010 by soaring joblessness, ugly budget deficits, and Obama fatigue among independent voters. Welcome to year two, Mr. President. It won't require the same high-wire act as year one, when Depression 2.0 was staved off with a jumbo stimulus package, massive cash injections into the battered banking system, and bailouts of the auto industry. Instead, as he prepares to deliver his State of the Union address on Jan. 27 and his budget on Feb. 1, Obama has to clean up the damage done by the now-ended Great Recession: the budget deficits on the government's books and the sliding job market his aides were arguing over. Only after that will he be able to turn his full attention to his long-term "change" agenda. For Obama, 2010 will be a year of finding 10% solutions. Last year's $1.4 trillion budget deficit is nearly 10% of the economy, and the unemployment rate is also stuck at 10%. And here's the dilemma: Cut the budget deficit by raising taxes or reducing spending and you risk slowing down the economy and pushing up unemployment. Spur job creation through tax credits for new hires or infrastructure spending and you blow out the budget. "He's got a needle to thread," says John Podesta, an Obama confidant and head of the Center for American Progress, a Washington think tank. "He wants to try to get as much as he can done in 2010 on the economy while paying attention to the long-term debt problems of the country."

Senate Woes Flag Wider Disease On this much, just about everybody agrees: The U.S. Senate isn't well. Things don't get done there. People can't agree on much. Legislation goes to the Senate to die. Just last week, an $85 billion jobs bill—supposedly Washington's highest current priority—shrank to a $15 billion bill in a matter of hours, simply because the Senate's malfunctioning body parts couldn't come together to handle more than that. Democratic Indiana Sen. Evan Bayh said precisely that Monday in announcing his surprise decision to retire, citing "a growing conviction that Congress is not operating as it should." However, let's not misdiagnose the disease. The Senate isn't the problem. The Senate is merely a symptom of the U.S. political system's larger dysfunction. The Senate is worth examining because it is like a giant X-ray machine, allowing us to peer into the broader body politic to examine its broken pieces. The common explanation for why the Senate doesn't work better is that 60 has become the new 50. It takes 60 votes, rather than a simple majority of 50 plus one, to break the nonstop debate of a filibuster and move to a vote on a bill. And it has now become routine for the Senate's minority party—the Republicans today—to stop any meaningful legislation by threatening a filibuster. Thus, it isn't enough for a party to have a majority, as the Democrats do now. Leaders must muster a super-majority to accomplish anything. There's no doubt that the filibuster, a tool once used sparingly and only on matters of great import, has become an everyday device used to block action. The best way to see that is to track the rise of so-called cloture votes, which are those taken to try to end a filibuster. In the Congress that sat in the years 1957 and 1958, there wasn't a single cloture vote taken in the Senate. A decade later, there were six, and another decade later the total had risen to 13. Then the explosion began. In the Senate of 1987-1988, the total was up to 43, and in 1997-1998 there were 53 cloture votes. That number doubled in the next decade, reaching 112 in 2007-2008. The current Congress is on track to top that record. Yet the real issue here isn't the number of filibusters and cloture votes needed to stop them, but that there is so little common ground between the parties that the tactic is so easily employed. And that's precisely the environment the nation—not just the Senate—has right now. This loss of common ground in the center is why filibusters matter. There are multiple reasons for this evolution. The first is how senators view themselves. Veterans will tell you that there was a time when lawmakers thought of themselves as members of the Senate first, as representatives of a region of the country second, and only third as members of a party. Today, the last has become first. The two parties' more-sophisticated machinery, the 24-7 news cycle and the blogosphere all combine to make lawmakers national party figures first, legislators second.

• Bayh criticism stirs controversy
• Listen to Bayh's reason for retiring
• Senate wake-up call

Democrats to push Republicans to go on record President Obama has reached out to Republicans in recent weeks, acknowledging that he needs bipartisan support to effectively govern the country. But the White House and congressional Democrats are also hedging their bets with a plan to make a campaign issue of what they say is Republican intransigence. The emerging strategy seeks to take advantage of the partisan stalemate in Congress over Obama's nominees and major policy initiatives, and to turn the page on a year when the White House failed to secure passage of complicated health-care and energy legislation. The idea is to make Republicans either vote for a series of more modest bills identified as popular with the public or explain to constituents this fall why they opposed them. The decision by Senate Majority Leader Harry M. Reid (D-Nev.) to offer a pared-down jobs-creation bill and dare the GOP to oppose it is the most visible sign of the plan so far. White House officials and congressional staff members say it will be followed in coming weeks by a House vote to lift the antitrust exemption for insurance companies, measures to assist small businesses and extend unemployment benefits, and a proposal to levy fees on Wall Street banks that received bailout money. One senior White House official called the strategy an attempt "to force progress," at a time when polls show that the public wants bipartisan cooperation.

• Tea Party Lights Fuse for Rebellion on Right

Democrats Go After Stimulus Critics  Democrats, stung by criticism of their $787 billion economic-stimulus plan, are targeting Republicans who have attacked the program and then lobbied to get money for their districts. More than a dozen Republican lawmakers supported stimulus-funding requests submitted to the Department of Labor, the Environmental Protection Agency and the Forest Service, in letters obtained by The Wall Street Journal through the Freedom of Information Act. The stimulus package passed last February with no Republican votes in the House of Representatives. In the Senate, just three Republicans supported it: Olympia Snowe and Susan Collins of Maine and Arlen Specter of Pennsylvania, who later switched to the Democratic Party. Lawmakers routinely send letters in support of federal funding for projects in their constituencies; some Republican lawmakers have deliberately avoided sending requests for stimulus dollars because of their opposition to the bill. Rep. Paul Ryan, a Wisconsin Republican who called the stimulus a "wasteful spending spree" that "misses the mark on all counts," wrote to Labor Secretary Hilda Solis in October in support of a grant application from a group in his district which, he said, "intends to place 1,000 workers in green jobs." A spokeswoman for Mr. Ryan said the congressman felt it was his job to provide "the basic constituent service of lending his assistance for federal grant requests." Republican Reps. Sue Myrick of North Carolina and Jean Schmidt of Ohio sent letters in October asking for consideration of funding requests from local organizations training workers for energy-efficiency projects. In November, Ms. Schmidt said in a statement, "It is time to recall the stimulus funds that have not been spent before the Chinese start charging us interest." Aides to the congresswomen said they had always supported local organizations in their requests for federal funding. None of the projects requested by the three House members received awards in funding decisions announced in January. The Environmental Protection Agency received two letters from Sen. John Cornyn of Texas asking for consideration of grants for clean diesel projects in San Antonio and Houston. Mr. Cornyn is the chairman of the National Republican Senatorial Committee.

An escalating war on K Street President Obama is escalating his war on K Street, proposing a series of tough restrictions a year after he first issued policies aimed at tamping down the influence of lobbyists. But changing the way business is done in Washington is slow and difficult, underscored by the fact that spending on lobbying reached record levels last year despite the president's reforms and a down economy. The U.S. Chamber of Commerce spent $144 million on its lobbying efforts -- a 60 percent increase over 2008's expenditure -- leading industry opposition to health-care reform, financial regulations and climate legislation. Although White House supporters say the number of registered lobbyists has declined, some public interest groups say that power has shifted to other Washington insiders and business executives, who do not have to register their activity. Another blow to Obama's efforts came last month in a Supreme Court ruling that allows corporations and unions to spend unlimited funds on political campaigns, a decision likely to elevate the role of corporate lobbyists as shadow fundraisers, experts say. The success of Obama's efforts are a subject of debate, with both sides pulling out evidence to make their case.

Obama Making Plans to Use Executive Power With much of his legislative agenda stalled in Congress, President Obama and his team are preparing an array of actions using his executive power to advance energy, environmental, fiscal and other domestic policy priorities. Mr. Obama has not given up hope of progress on Capitol Hill, aides said, and has scheduled a session with Republican leaders on health care later this month. But in the aftermath of a special election in Massachusetts that cost Democrats unilateral control of the Senate, the White House is getting ready to act on its own in the face of partisan gridlock heading into the midterm campaign. Any president has vast authority to influence policy even without legislation, through executive orders, agency rule-making and administrative fiat. And Mr. Obama’s success this week in pressuring the Senate to confirm 27 nominations by threatening to use his recess appointment power demonstrated that executive authority can also be leveraged to force action by Congress. Mr. Obama has already decided to create a bipartisan budget commission under his own authority after Congress refused to do so.

• Alan Simpson, Erskine Bowles to lead budget panel

Where To From Here

Obama Defies Critics by Holding to Radical Center: Albert Hunt  President Barack Obama sees an irony in his relations with the U.S. business community. “On the left, we are perceived as being in the pockets of big business,” he said in an Oval Office interview this past week. “On the business side, we are perceived as being anti- business.” The criticism from the left, he realizes, goes with the territory; from Franklin Roosevelt to Barack Obama, Democratic presidents always disappoint their party’s left wing. The business criticism frustrates him. The U.S. Chamber of Commerce and some corporate chieftains have portrayed this administration as government-loving, free enterprise-hating radicals. This depiction isn’t reflected either in Obama’s record or the 35-minute interview with Bloomberg BusinessWeek. He professes to be a “fierce advocate” for a pro-growth, dynamic free market. This was more than just trying to appeal to a business audience, as he stresses the need to temper these views with protection for consumers and investors. “There have to be some rules of the road in place in the financial sector that will create an even playing field,” Obama says, noting a need to “restore a sense of balance to the compact between business, government and employees.” That isn’t an anti-business attitude. Articulating a coherent economic policy remains elusive. In the BusinessWeek interview the president was asked to distill his economic message. He spoke about sustainable economic growth that requires innovation, smart energy policy, health care and an educational system that generates the most productive workers. The parts are fine; there isn’t a unifying theme. It should all be about jobs. The president believes this; too often he doesn’t convey it.

• White House retools messaging
• Obama's Corporate Messaging In a wide-ranging Oval Office interview, President Barack Obama takes aim at the perception that he and his Administration are anti-business.
• The Washington Power Grid, The Business of Politics

It's past time for some leadership It's a rotten time in Washington, and I'm not just talking about the snow. Health-care reform, financial regulation, the jobs bill, the long-term budget deficit, energy and climate change -- everywhere you turn, there's political stalemate. Poll numbers are plummeting, and many good people either have been reduced to shameless pandering (John McCain) or are simply giving up and going home (Byron Dorgan, Evan Bayh, Billy Tauzin). While we're passing out the blame, however, let's not forget a heaping helping for the public. I can genuflect with the best of them before "the basic decency and wisdom of the American people," but the truth is that on many issues these days, the American people are badly confused. They want Wall Street to be reined in, but they're dead set against more regulation. They want everyone to have access to affordable health insurance, but they're wary of expanding the role of government. They want the government to do something to create jobs, but not if it involves spending more money. They want the federal deficit brought under control, but not if it means cutting entitlement spending or raising taxes.

They want to do something about global warming, but not if it raises energy prices. We think we know how the public feels about these issues because of the number of e-mails that arrive on Capitol Hill, the temperature of the comments on cable television or talk radio, and the results of recent polls. But in reality, these are not the definitive political judgments of the American people, nor will they dictate voting behavior in November. Believe it or not, outside Washington, Americans don't spend much time debating whether there ought to be a public option in the health insurance market, or whether consumer protection should be separated from bank supervision, or whether terrorists ought to be tried in criminal courts or by military tribunals. They expect that such issues will be decided by elected officials who understand their sometimes conflicting values and desires and use good judgment in resolving them. Viewed in that context, the current political disarray need not be an insurmountable problem for President Obama, but rather could represent a golden opportunity to demonstrate the leadership the country needs and craves. He will not demonstrate that leadership by running around to carefully staged events in which he tells ordinary voters what he thinks they want to hear. Nor will he demonstrate it by redoubling efforts of his PR war room to respond to every attack or piece of Republican disinformation with overwhelming rhetorical force. Rather, the real challenge is whether the president can strengthen the bond of trust between himself and the American people by having the courage to tell the hard truths and make the hard decisions, irrespective of short-term political consequences and the tut-tutting of the commentariat. The irony is that only by doing that which may be unpopular and unpolitic can the president revive his longer-run political fortunes.

David Brooks: What’s Next, Mr. President? By 2008, Americans were disgusted with their government. They were sick of partisan gridlock and general incompetence. Along came Barack Obama offering to usher in a new era. It was time, he said, to put away childish things. The country has reacted harshly to the course the administration ended up embracing. Obama is still admired personally, but every major proposal — from the stimulus to health care — is quite unpopular. Independent voters have swung against the administration. Voters are not reacting to the particulars of each bill. They are reacting against the total activist onslaught. A president can’t lead a social transformation without a visceral bond with the center of the electorate and without being in step with the rhythm of the times. Obama is lacking these things. As a result, the original Obama project, the third Democratic wave, is dead. The next challenge is to find a new project, a new one-sentence description of what this administration hopes to achieve. It is obvious: President Obama will show that this nation is governable once again. He should return to the other element in his original campaign. That would mean first leading a campaign of brazen honesty with the American people. He could lay out the fiscal realities and explain that voters cannot continue to demand programs they are unwilling to pay for. Second, he could propose some incremental changes in a range of areas and prove Washington can at least take small steps. Senator Lamar Alexander has been arguing that, given the climate of distrust, this is not a good period to push big, comprehensive reforms. He’s right. We can spend the next few years engaging in kabuki bipartisanship, in which each party puts on pseudo-events to show that the other party is rigid and rotten, or somebody can break the mold. We can spend the next three or seven years squabbling about the shrinking puddle of discretionary spending, or somebody can break out of the fiscal vise. It would be an incredible legacy: Barack Obama restored America’s faith in its own institutions.

Stiffening Political Backbones for Fiscal Discipline SPINELESS and shortsighted. That’s the complaint you hear around this time of year, every year, about politicians and their failure to confront the mushrooming federal deficit. Elected officials only care about what will get them through the next election, pundits say, not what is good for the country. But really, can you blame the politicians? Like bankers, politicians respond to incentives. Our political system encourages fiscal myopia, and will continue to do so even after the recovery solidifies. So long as politicians see fiscal profligacy as a prerequisite for re-election, the argument goes, they will postpone the hard decisions about tax hikes and spending cuts, and continue to overfish the revenue pool. So, rather than obsessing over Washington’s rubbery backbones, perhaps we should find ways to align the interests of the country with those of the politicians who are guiding it. Put another way, how can we get politicians elected on a short-term basis to think about the long-term good of the country?

Party Gridlock in Washington Feeds Fear of a Debt Crisis “I used to think it would take a global financial crisis to get both parties to the table, but we just had one,” said G. William Hoagland, who was a fiscal policy adviser to Senate Republican leaders and a witness to past bipartisan budget summits. “These days I wonder if this country is even governable.” Sensing political advantage, Republicans are resisting President Obama’s call for a bipartisan commission to cut the debt, although recent studies have implicated the tax cuts and spending policies of the years after 2000 when they controlled Congress and the White House. Even seven Republican senators who had co-sponsored a bill to create a commission nonetheless voted against it recently. The president is not giving up. On Thursday, administration officials say, he will sign an executive order establishing the 18-member National Commission on Fiscal Responsibility and Reform. He also will name as co-chairmen Alan K. Simpson, a former Republican Senate leader from Wyoming, and Erskine Bowles, a moderate Democrat from North Carolina who, as President Bill Clinton’s White House chief of staff, brokered a 1997 balanced budget agreement with Congressional Republicans. “There isn’t a single sitting member of Congress — not one — that doesn’t know exactly where we’re headed,” Mr. Simpson said in a telephone interview Tuesday just before word of his role got out. “And to use the politics of fear and division and hate on each other — we are at a point right now where it doesn’t make a damn whether you’re a Democrat or a Republican if you’ve forgotten you’re an American.”While he criticized some liberal Democrats’ refusal to reduce entitlement benefits, Mr. Simpson also dismissed Republicans’ antitax arguments that deficits could be controlled with spending cuts alone. “But they don’t cut spending,” he said, referring to the years Republicans governed with President George W. Bush. In the latest New York Times/CBS News poll, Americans by a two-to-one ratio say Mr. Obama is trying to work with Republicans, while by more than two-to-one they say Republicans are not reciprocating. As for the deficit, 41 percent say the Bush administration is most to blame, 24 percent say Congress and 7 percent say Mr. Obama.

• Getting Today’s Politicians to Think About Tomorrow’s Problems

Poll Finds Edge for Obama Over G.O.P. Among the Public At a time of deepening political disaffection and intensified distress about the economy, President Obama enjoys an edge over Republicans in the battle for public support, according to the latest New York Times/CBS News poll. Americans appear hungry for an end to partisan infighting in Washington, so much so that half of respondents said the Senate should change the filibuster rules that Republicans have used to block Mr. Obama’s agenda. Almost 60 percent said both Mr. Obama and Congressional Republicans should compromise in the interest of consensus. But Mr. Obama is seen as making more of an effort to do that: 62 percent said Mr. Obama was trying to work with Congressional Republicans, while the same percentage said that Republicans were not trying to work with Mr. Obama. “Obama is certainly trying,” said Bonnie Ewasiuk, 60, of Woodbridge, Va. “I’m a Republican so I don’t like to go against the party, but Obama has reached out and had meetings and I don’t think the Republicans are going to be responsive. All you see from them is negativity.”

• Document Reader: Complete Poll Results

Defining the Baseline: Crisis and Reactions

Let's start by defining the baseline of what happened, in somewhat simplified terms, using charts drawn (as they all are almost) directly from the Report. The details are more complicated of course but here's the gist. In the UL corner you see Housing prices stretching back to 1900. Just by inspection you can see the "mother of all bubbles". Housing prices will always go up indeed - talk about complacent self-delusion. Or that the smartest people in the world couldn't read simple charts! When the bubble began unraveling it took the credit markets down, largely because of leverage and coss-linkages. In the UR you see the spread between 3Mo Treasury bonds and commercial ones (TED) and the BAA-AAA spread between higher risk and low risk commercial paper. Normally the TED spread is infinitesimal. When it goes up people are worried and when it goes to far the money doesn't flow - no car loans, no working loans for businesses, credit cards and money markets are frozen, business and the ordinary business of life STOPs! You can how it got increasingly scary thru 2008 until it blew up into a life-threatening situation. Fortunately the Fed and Treasury have brought things back down into more normal ranges, the the BAA-AAA spreads are still elevated, but at least the markets are alive if not working well.

That's not the end of the story because the financial crisis leaked into the real economy and turned an already weak and accelerating slowdown into a major economic downturn greater than anything since the 1930s. Which you can see in the huge drops in Employment in the LR corner, which while still bad, are coming back as the result of stimulus and other policy actions. In fact in the LL corner you can see the differences in GDP with and without the policy interventions. Despite everything you've heard the stimulus worked, was the largest peacetime effort, was well constructed - especially when you allow for the speed with which it was put together and an act of real political courage and skill. Without it we'd have had Stalingrad instead of Pearl Harbor.

Collapse of the World Economy

This was a coordinated worldwide downturn, in both the real and financial economies. Something without precedent. It was the concerted action of the major world economies that kept a terrible situation from being worse, though this one was bad. And, again btw, it was US leadership of the G-20 was shepherded that coordinated action into place and coached it. Without US action we'd have had uncoordinated policies that weren't as effective and quite likely would have seen the kind of beggar-thy-neighbor policies that made the GD so much worse and set the table for WW2. In the UL corner you can see the collapse of world trade and investment flows brought about by the crisis. In the UL corner you can see the differential impact on different countries. The horizontal axis shows the importance of trade in each country and the vertical the the impacts on their trade activities. The US in fact was one of the least impacted. But trade is an important of all domestic economies, some more tan others. The US and the UK were in fact the least impact (LR corner) while continental Europe was badly hurt, since they are more heavily dependent on trade while Japan, which is utterly dependent on trade, was devastated. Turning the world's weakest developed economy into more of a basket case. In the LL corner you can see that China and India managed to hold up very well indeed, though China in particular did so at the expense of the other Asian exporters and Europe, storing up major trade war problems for the future. Mexico, heavily dependent on the US was badly hurt, while Brazil even more so. Yet because Brazil's economy is the most balanced of the BRICs they have come thru this in better shape than any of them.

Disaster in the Marking: Long-term Structural Weaknesses

Sadly and unfortunately a key reason this bubble collapse was so painful and will be so debilitating for the next decade is that we headed into the disaster already weakened by self-inflicted flaws. The first of which is that we've been turning ourselves into a nation of spenders instead of being a nation of savers. Consumption as a % of GDP soared after financial deregulation in the early 1980s (and those events are related). What makes an economy grow is Savings that are turned into productive Investments. When you spend instead of Invest you hamstring your economy. The result is what you see in the UR corner - Median Family income is about the same as it was 12 years ago, the worst performance in the post-WW2 period.

The causes and consequences, which will be political and social as well as economic and financial, show up in the bottom two charts. Total workers compensation net of healthcare costs, went nowhere for a decade. Worse yet, as healthcare costs continue to rise, OMB is projecting there will be little or no improvement for the next three decades. Really stop and think about that for a minute. Nobody on the average will improve their well-being for the next thirty years for one thing. For another though labor costs burdens on American business and the economy in general are about to go from terrible to unspeakable. The LL corner illustrates a cause and consequence. What made the American history of socionomic progress over the last two centuries work was our commitment to and investment in world leading public education. From 1900-1970 there was spectactular improvement - the beating heart of the American social contract and the American Dream. From 1970 to 2000 the rate of progress slowed and since 2000 it has stagnated. Poor productivity, bad wages and stagnant growth are NOT independent of a labor force no longer qualified for the higher value jobs needed to be competitive in the new world economy. America has lost one of its distinctive advantages thru its own fecklessness, short-termism and consumerism.

Welcome to the Land of Debt & Leverage

What fuels the engine of economic growth is credit - or even better, credit is like the oxygen in your bloodstream. Vital and important but embedded in the rest of you total system and a working part of it. It's the Banking and Finance system that turns the savings of consumers and the profits of businesses into productive investment. The problem is when too much of artificial debt is piled on and worse yet when much of that debt is used inside the finance system to support artificial instead of real investment. Both happened in this case. Beginning in the early '80s with De-regulation there was an explosion of debt that funded the explosion of Consumption. Those trends continued and accelerated in the '90s an became more and more concentrated in financial speculation using financial engineering and leverage until in the '00s it metastasized. It's not an accident that the Housing bubble was fueled by all those weird sounding acronymic whatever they were (MBS, CDOs, derivatives, etc. etc.).

It's one thing to loan somebody money for a House or a Car when your banker knows you, what kind of job you have and how capable you are of paying it back. It's another when when your mortgage broker helps you find a nothing down ARM mortgage and then sells it to the next guy in the chain. Now instead of making their money on good judgment about the likelihood of earning a return they make their money on how many suckers can be pushed thru the pipeline. It gets ever worse when the banker who buys that paper combines your note with thousands of others, stirs the pot and then slices the whole bowl of dough into slices which they resell to some Hedge Fund. Who has btw borrowed to buy it. By the time you wash, rinse and repeat that chain and come to the end of it the original pool of loans (whether houses, cars, business loans, commercial real estate, student loans, buyout bonds, whatever) has been leveraged up from a 1:10 ratio of original money to borrowed to 1:30 or 1:70. At those rates if Housing (or other) prices go down just a little bit the whole of the tiny little slice of investor's money (the equity share) is wiped out and the whole house of cards works in reverse and collapses. Which is exactly the vicious cycle which almost destroyed us.

Public Finance Futures: Two Wars, Two Tax Cuts & Healthcare

If you take a look at this next chart you can see the history and projected future of US public debt. Basically we spend the period from the end of WW2 paying off those debts and then further shrinking it until 1980. Then under the auspices of Reagan and supply side mythologies it began climbing rapidly. But Clinton discovered the most powerful political influence in the world the bond markets and drew it down rather rapidly until we were in surplus when he left office. In the UR corner you see the long-term projections for FY2001 (which would have been Clinton's last) and FY2009 (Bush's last). What happened to start loading us back up with debt was two wars (which you can argue about necessity on of course), two tax cuts that were unfunded (Dick Cheney: "deficits don't matter") and the largest increase in Medicare spending since its beginning for the prescription drug benefit.

Of course healthcare is it's own special problem and we've covered the proportion of future spending that will go to the Meditwins. So suffice it to say that if medical costs keep on rising (and studies release last week by independent organizations show the rate accelerating) they will bankrupt us and really destroy the economy in the not to distant future. Talk about some hard choices! The catch is that almost all of that increase is due to cost increases and not increased demands for care.

The other special case and a major problem for lots of reasons were the Bush tax cuts. Those were sold, if you recall, as emergency stimulus measures to help recovery from the Tech Bust. But they were some of the most ideologically crafted tax cuts - even disingenuously so - in modern history. For one thing they were very badly crafted as stimulus since they didn't go to the folks most likely to spend, the lower income groups, but the topest of the top income groups. Oddly enough if we return average tax rates to where they were under Clinton, a period when the economy grew, deficits were turned into surpluses and family incomes increased, a big dent in the long-term debt problem would result. Make no mistake - we're going to have to increase taxes. Cuts in discretionary spending won't begin to touch. We're also going to have to cut mandatory spending on Social Security and the Meditwins, at least to the extent of reducing their growth rates.

The Future of US Society

These may appear to be just dry tables but in actual fact they tell us, on current course and speed, what the future of US society will be. And trust on this one - you really won't like it. The opportunities for the Middle Class are going away, the ability to move up the ladder (the American Dream) will disappear and we will become an increasingly stratified and rigid society where the what few benefits of economic growth (what little there is) go increasingly to a smaller and smaller minority of the population. At least until the Dream is so shattered that the whole thing comes apart. If you wonder why the Tea Partiers are so angry and willing to consider a Second American Revolution that's it. You see this has been going on for almost three decades so far - and there have been plenty of warnings along the way. If you know what you're looking at that all falls out of these charts, though the Report doesn't say it that way.

Like we said healthcare costs are in the process of metastasizing out of control. Which doesn't mean we'll pay them - it means that more and more people will be pushed out of coverage and those who have coverage will pay more and more while getting less and less until only the very wealthy can afford decent care. Meanwhile in the worst downturn in 80 years we've got the biggest and longest-running increase in long-term Unemployment, which is really telling us we're in danger of creating a permanent underclass that might be as large as 30% of the population. And that the middle 40-50% will be facing a lifetime, if not generations, of stagnant or declining income. Both of which are implied by the bottom two charts. Since we turned into non-savers and saddled ourselves with debt growth has slowed and then stagnated so that opportunities are disappearing for normal folks. Meanwhile we're falling farther and farther behind in the ability to have a population and labor force suited to the brave new world. And the rest of the world is both catching up and already past us.

Those then are the challenges we face over the next decade or more: fix Healthcare, repair our public finances, figure out how to get the Economy growing again and make sure we can grow it so that jobs are created for the majority of the population, who will need to up their games as well. Now the question is are we up to it? Or should we all start buying guns, ammo and food for our cabins in the woods?

Now we love this song and wholeheartedly admire and agree with the sentiments but there has to be more than mere sentiment here. After you've hopefully re-listened to this new version we'll remind you that the results of the original were some money but no lasting change. And it may be entirely revealing that the Compassion that's so central to the heart of the song, a compassion that ask you to see the Other as an I and then a Thou is sadly a little short-shrifted by the performers who keep checking out their appearances on camera or considering the amount of time the credits take. No matter, let's talk substance - the heart of I and Thou! (Frontline Lessons Brought Home: Others, Selfs and Manners).

The Task of Our Time: Restoring Compassion

The adjacent clip is Karen's recent short speech to the TED audience thanking them but more importantly discussing the role and importance of compassion. Why it's so important to restore the central tenet of every single major religion AND make it active and constructive in the world. Restoring it from the dustbin as it were.

It is rather short but telling but it might be interesting and more important to listen to her original TED Prize Wish speech in which she discusses the nature and role of compassion and why she thinks it's so important. Her's a women who's ended up as one of the most respected thinkers on Religion in the modern world who got there by accident. She was a Catholic nun but left the church to become a literature professor. After some trials and troubles she got involved with the BBC and stumbled into reporting on religion and in the process learned more about Judaism and Islam than she ever had before, either as nun or professor. And found that, at their hearts, the all had similar, almost identical, tenets. There's a certain great irony here wouldn't you say? A women of great faith but a faith of orthodoxy and dogmatic practice leaving and then slowly re-discovering the real roots  that lay behind all the facades.

The Non-Zero World and Mutuality

In the reading you'll find several other clips from the TED-related launch of the Charter for Compassion, as well as a few clips from other TED sessions (Billy Graham, Rick Warren and Daniel Dennett. NB: we include Dennett out of fairness and because we think he gets it so wrong, insisting on his own ideology over others. A negative example therefore). We won't put up all the clips but are goint to leap to perhaps the most difficult, that of Robert Wright. He focuses on the roots of compassion in human nature, evolutionary biology and sheer survival. We Are the World may tug at your heart strings, despite the caveats, but compassion is more than maudlin sentiment by far. It is in fact the glue by which we hold society together and where by helping the other we help ourselves. Our version of that, which underlies much of our thinking and posting, is "we are each better off when we are all better off and we are all better off when we are each better off." Our argument is that the more people who realize that, not just intellectually but deeply, and put it into practice the better our chances are for building a better world. And meeting the challenges that we can no longer dodge.

Doing Well and Doing Good

Just to make a point and illustrate some of the wider implications let's take a pass at this rather interesting and well done ad from IBM, part of its "Smarter Plant" campaign, that talks about how congestion pricing in Stockholm reduced congestion, lowered pollution and saved energy. A case where there was a win-win-win by being smart and practical about what's all too often treated as yet another do-good exercise.

The basic problem is that too many people wanted to be in the same part of the city at the same time leading to the kind of traffic jams we all know and loath. The concept was to set prices for access based on demand and usage patterns - congestion pricing. But much easier said than done. Where this comes full circle though is that Automobiles are a major consumer of oil, creators of pollution and have other large negative effects on our lives and well-being. By finding a workable solution IBM is doing well for itself but also doing good for Stockholm and, setting a pattern, perhaps a lot of other cities and nations. If you'll cast your mind back over the last several posts talking about the ugly partisan politics that are stopping us from dealing with our problems in the Economy, Healthcare, Education or Energy you have to ask isn't there a better, smarter way to find workable solutions to problems we must solve? And isn't part of the search for workable solutions a willingness to tolerate the Other and find workable compromises? It would seem the Christian thing to do - ahem!

Allah the Compassionating: the Battle of I and Thou

Let's turn to one of the other Charter speakers, Imam Faisal Abdul Rauf, who speaks here about compassion in Islam. Despite all the headlines the heart of the Quaranic teachings is in fact compassion. Or as several of the speakers pointed out, channeling Rabii Hillel who told a pagan the core of Judaism standing on one foot, "the heart is treat others as you want to be treated, all the rest is mere commentary". Similar messages are at the heart of all religions, one of Armstrong's central thesis but not one she stumbled on alone. In fact perhaps the single best exegesis of the role of the search for meaning and values and workable rules of life is the magisterial work of Joseph Campbell. Many of us learned about Campbell via the PBS special "The Power of Myth" but if you really want to understand how man has wrestled throughout his history with these questions and how his responses have evolved the books to read are his four volume series, "The Masks of God".

There's a head fake here though - and the reason we chose to put up the Imam's clip. Over the last several years in numerous attempts to persuade several of my friends that Islam is not inherently violent and uncompassionate we've gone round and round with no discernible progress. Asking for the benefit of the doubt would seem to be consistent with the tenets of their own Christian or Jewish faiths but it wasn't extended. More importantly Islam is as much about these ideals as any of the other Abrahamic or Dharmic religions. It seems rather odd, not to mention a tad hypocritical to maintain the opposite when one is a child of the Civilization who's history for the last two thousand years is the most endemically violent or the one that brought the worst wars and manmade disasters in history down on us all. All that aside we will admit that Rabi Jackie Tabick's story about the Hands of God, where a rich man's gifts to God where an act of compassionate charity that saved a poor man and his family, were our favorite.

Edgeworth Boxes, the Gains From Fair Exchange & the Golden Eye

Years ago when I first took introductory economics the excitement was too much and the campus Councilor, who was also the water polo coach and an ordained minister as well as psychologist, and I were discussing the latest eye-opener. Prattling along about how free exchange freely made made both folks better off and that that was the heart of economic theory he spun it around on me. Something like, mis-quoting and paraphrasing, "so when we help the other guy we help ourselves, we're both better off? Sounds like Christianity to me!". Well at the height of my new found intellectual superiority that seemed like silly moralizing about a straight-forward concept. Years later it occurred to me that he was righter than right. Remember, we are each better off....?

Let's consider the simple world of Hubert, the fat fraternity slob and Isabelle, the pretty sorority sister from Spain and a world of pizza and beer. Now Hubert really likes beer and can never get enough while Isabelle has developed a real liking for American pizza. If Izzie has more beer than she wants while Hubert's willing to give up some of his fresh hot pizza in exchange aren't they both better off? Back in the late 19thC an English economist named Francis Ysidro Edgeworth did the first analysis of this Edgeworth Box. In this world each person has a tradeoff curve between pizza and beer. Any time they can swap inside the "golden eye" they can each make the other off. Off course Hubert is about 3X Izzie's size so we want to make sure this exchange is fair and free, not her giving up her beer to protect her virtue. That's what the Dorm Mother is for - to make sure that the rules are enforced. Another key lesson - you need rules and some way of making them stake. Given that everybody's better off the closer the get to the Golden Eye. The farther outside it the worse off everybody is collectively; there by the way is the explanation for every bandit and robber baron in history (cf. Magnificant Seven, which we can consider a field experiment in fair trade enforcement).

Political Economy Is Moral Philosophy: Searching For a Moral Capitalism

When we scale up the Golden Eye world to many people dealing with many things, in the millions and millions, it gets incredibly complicated but the principles remain the same. But the ways and means of developing, enforcing and adjusting the rules to make sure as many fair exchanges occur in the Golden Eye and not outside need more than the a Dorm Mother. That's why we police, law courts and government; and so on and so forth. But at the end of the day we come back to our fundamental conclusions. Efficient and free exchange makes everybody better off while forced exchange hurts somebody some way or another. In other words an efficient and effective political economy requires a sense of values and ethics to function properly as well as a supporting institutional infrastructure to sustain it. Or as we title it Political Economy is Moral Philosophy.

We spent the last century field testing various alternative ideologies and it costs us millions of lives and $trillions of money and other resources gone and lost forever. It's too bad we couldn't have figured this all out sooner. Oh wait, we did. Remember Ysidro was from the late 19thC. More importantly the Ur-Father of all this sort of thinking was Adam Smith and he arrived at these conclusions in the late 18thC! And published THE seminal work in political economy in 1776! Interesting coincidence, don't you think? Mr. Smith is often taken as the patron saint of unfettered competition but in fact he was nothing of the sort. In fact his most famous misquote is almost always taken utterly out of context. The sentence that includes "It is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest" is immediately preceded by "Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of".

Charter for Compassion Clips

People want to be religious, says scholar Karen Armstrong; we should act to help make religion a force for harmony. She asks the TED community to help her build a Charter for Compassion -- to help restore the Golden Rule as the central global religious do. http://www.ted.com/talks/view/id/234

Weeks from the Charter for Compassion launch, Karen Armstrong looks at religion's role in the 21st century: Will its dogmas divide us? Or will it unite us for common good? She reviews the catalysts that can drive the world's faiths to rediscover the Golden Rule.http://www.ted.com/talks/karen_armstrong_let_s_revive_the_golden_rule.html

It’s hard to always show compassion -- even to the people we love, but Robert Thurman asks that we develop compassion for our enemies. He prescribes a seven-step meditation exercise to extend compassion beyond our inner circle. http://www.ted.com/talks/robert_thurman_on_compassion.html

Imam Faisal Abdul Rauf combines the teachings of the Qur’an, the stories of Rumi, and the examples of Muhammad and Jesus, to demonstrate that only one obstacle stands between each of us and absolute compassion -- ourselves.http://www.ted.com/talks/imam_feisal_abdul_rauf.html

Swami Dayananda Saraswati unravels the parallel paths of personal development and attaining true compassion. He walks us through each step of self-realization, from helpless infancy to the fearless act of caring for others.http://www.ted.com/talks/swami_dayananda_saraswati.html

Join Rev. James Forbes at the dinner table of his Southern childhood, where his mother and father taught him what compassion really means day to day -- sharing with those who need love. http://www.ted.com/talks/james_forbes.html

While we all agree that compassion is a great idea, Rabbi Tabick acknowledges there are challenges to its execution. She explains how a careful balance of compassion and justice allows us to do good deeds, and keep our sanity. http://www.ted.com/talks/jackie_tabick.html

It’s hard to always show compassion -- even to the people we love, but Robert Thurman asks that we develop compassion for our enemies. He prescribes a seven-step meditation exercise to extend compassion beyond our inner circle. http://www.ted.com/talks/robert_thurman_on_compassion.html

Robert Wright uses evolutionary biology and game theory to explain why we appreciate the Golden Rule ("Do unto others..."), why we sometimes ignore it and why there’s hope that, in the near future, we might all have the compassion to follow it. http://www.ted.com/talks/robert_wright_the_evolution_of_compassion.html

Related Religious Thinkers

Speaking at TED in 1998, Rev. Billy Graham marvels at technology's power to improve lives and change the world -- but says the end of evil, suffering and death will come only after the world accepts Christ. A legendary talk from TED's archives. http://www.ted.com/index.php/talks/billy_graham_on_technology_faith_and_suffering.html

In our hyperlinked world, we can know anything, anytime. And this mass enlightenment, says Buddhist scholar Bob Thurman, is our first step toward Buddha nature. http://www.ted.com/index.php/talks/view/id/130

Rick Warren on a life of purpose: Pastor Rick Warren, author of The Purpose-Driven Life, reflects on his own crisis of purpose in the wake of his book's wild success. He explains his belief that God's intention is for each of us to use our talents and influence to do good. http://www.ted.com/index.php/talks/view/id/71

Philosopher Dan Dennett calls for religion -- all religion -- to be taught in schools, so we can understand its nature as a natural phenomenon. Then he takes on The Purpose-Driven Life, disputing its claim that, to be moral, one must deny evolution. http://www.ted.com/index.php/talks/dan_dennett_s_response_to_rick_warren.html

Other Resources

The Charter for Compassion The principle of compassion lies at the heart of all religious, ethical and spiritual traditions, calling us always to treat all others as we wish to be treated ourselves. Compassion impels us to work tirelessly to alleviate the suffering of our fellow creatures, to dethrone ourselves from the centre of our world and put another there, and to honour the inviolable sanctity of every single human being, treating everybody, without exception, with absolute justice, equity and respect. We therefore call upon all men and women ~ to restore compassion to the centre of morality and religion ~ to return to the ancient principle that any interpretation of scripture that breeds violence, hatred or disdain is illegitimate ~ to ensure that youth are given accurate and respectful information about other traditions, religions and cultures ~ to encourage a positive appreciation of cultural and religious diversity ~ to cultivate an informed empathy with the suffering of all human beings—even those regarded as enemies.We urgently need to make compassion a clear, luminous and dynamic force in our polarized world. Rooted in a principled determination to transcend selfishness, compassion can break down political, dogmatic, ideological and religious boundaries. Born of our deep interdependence, compassion is essential to human relationships and to a fulfilled humanity. It is the path to enlightenment, and indispensible to the creation of a just economy and a peaceful global community.

Faith and Reason: Moyers’ PBS Special  "There are two ways to slide easily through life," the noted linguist and mathematician Alfred Korzybski once said. "To believe everything or to doubt everything. Both ways save us from thinking." Those two paths-unquestioning belief and unyielding disbelief, fundamentalist faith and radical skepticism-have for years polarized the debate over religion. In its starkest equation, the polemic pits those who view reason as wholly antithetical to their beliefs, against those whose rationalism leaves no room for the mysteries of faith. But is there some middle ground? FAITH & REASON asked writers, philosophers, and scientists to discuss that perpetual tension. Atheists like Salman Rushdie and Colin McGinn, agnostics like Margaret Atwood and Martin Amis, and believers like Mary Gordon and Sir John Houghton offered their views on religion, God, and reason, putting forward their thoughts and their visions for future understanding. "People will probably never agree about the large questions of life," says philosopher Colin McGinn. "What's important, I think, is that they hold their beliefs with the right kind of doubt and qualifications and they're aware that other people have different beliefs which they also believe in to the same degree." "Most of my life is spent among non-believers, which is the way I like it," says author and practicing Catholic Mary Gordon. "I wouldn't like to be in a world where everybody was a believer and we all sort of fell back into this comfort zone of agreeing with each other all the time. I think there are many more good reasons for not believing than believing. [Religion] is a very strange thing, a very mysterious thing to believe."

Joseph Campbell and the Power of Myth is essential viewing for anyone old enough to appreciate its vital teachings. One of the greatest interviews ever recorded, this six-part, six-hour encounter between teacher- mythologist Campbell and student-journalist Bill Moyers (recorded in the two years preceding Campbell's death in 1988) covers a galaxy of topics related to Campbell's central themes: Mythology is humanity's universal method of seeking the transcendental, and "follow your bliss" is the timeless formula for spiritual satisfaction. Campbell himself is the embodiment of these themes, an erudite scholar and quintessential storyteller, recalling a wide spectrum of myths from throughout history (Japanese, Native American, Egyptian, Mayan, and many more) to illustrate humankind's eternal quest to grasp the mysteries of creation. Historical artifacts and illustrations bring these timeless stories to life. An astute interviewer, Moyers is an acolyte in perfect harmony with Campbell-as- mentor, wording questions with penetrating perfection as their intellectual dance reaches exhilarating heights of meaning and fascination. Moyers also finds the perfect hook for a global audience, examining Campbell's admiration of George Lucas's Star Wars saga as a popular tapestry of ancient myths, and Lucas himself is interviewed in a DVD bonus segment ("I'm not creating a new myth," he says, "but telling old myths in a new way"). Campbell's seemingly endless well of knowledge reaches a simple conclusion: we need myths to survive like we need oxygen to breathe, as a life force with which to understand our existence--past, present, and future.

• The Power of Myth by Joseph Campbell and Bill Moyers

The Masks of God, Vol. 1: Primitive Mythology Along with "The Hero With a Thousand Faces," this is Campbell's greatest work. Campbell was a loving student of Native American cultures, and this book's historical achievement is to evaluate and compare all world mythologies as co-equal, including cogent and detailed examples from Native American mythology. Campbell's core belief was that all humanity has a common origin, and that the study of mythology exposes this core identity amongst all peoples. By traversing the plains of time back to the very first artifacts of human behavior, he draws a compelling conclusion that we are all born of the same stock, from the same mythopoetic and spiritual origin, and destined to share the same future. The student of humanity will find this study particularly compelling because Campbell identifies several mythological themes that span the globe. Among them are the virgin birth of a savior, the trial of the hero at the hands of evildoers, and the resurrection of the savior/hero from the dead. To my mind, these timeless echos of Christian beliefs place Western thought in an ancient and endlessly rewarding intellectual context. Campbell's higher purpose of showing that all humanity is united through its most fundamental ideas about the cosmos and our place in it is brilliantly synthesized in his discussion of the origin of agriculture at the outset of the Neolithic. In the same way that all philosophy is "footnotes to Plato," all of history is "footnotes" to the Neolithic Revolution. Campbell handles this insight with a genius that must be read and re-read to truly appreciate.

• The Masks of God, Vol. 2: Oriental Mythology
• The Masks of God, Vol. 3: Occidental Mythology

The Masks of God, Vol. 4: Creative Mythology What set this one ("Vol. IV: Creative Mythology") apart from the other three to me, is that Campbell presents ideas which can be directly applied to your everyday life and looks towards the future of mythology (which we are all a part of!) rather than strictly recounting a history of the world's mythological past. There is plenty of mythological history in, "Creative Mythology," but it is all presented as background for looking towards the future... As far as Campbell's own written work is concerned, to date I've read his other three, "Masks of God" books and of course his, "Hero with a Thousand Faces." I've actually read, "Hero..." a few times over and it remains my favorite of his books so far, but, "Creative Mythology" is now a close second. The entire, "Masks of God" series is well worth reading, but unlike, "Hero...," they are all big, dense books that take quite sometime to get through. If you're only going to pick one in the series, my recommendation would be to make it, "Vol. IV: Creative Mythology." It's exciting and inspiring and a real tour-de-force.

The Varieties Of Religious Experience: A Study In Human Nature by William James When William James went to the University of Edinburgh in 1901 to deliver a series of lectures on "natural religion," he defined religion as "the feelings, acts, and experiences of individual men in their solitude, so far as they apprehend themselves to stand in relation to whatever they may consider the divine." Considering religion, then, not as it is defined by--or takes place in--the churches, but as it is felt in everyday life, he undertook a project that, upon completion, stands not only as one of the most important texts on psychology ever written, not only as a vitally serious contemplation of spirituality, but for many critics one of the best works of nonfiction written in the 20th century. Reading The Varieties of Religious Experience, it is easy to see why. Applying his analytic clarity to religious accounts from a variety of sources, James elaborates a pluralistic framework in which "the divine can mean no single quality, it must mean a group of qualities, by being champions of which in alternation, different men may all find worthy missions." It's an intellectual call for serious religious tolerance--indeed, respect--the vitality of which has not diminished through the subsequent decades.

The Theory of Moral Sentiments (Penguin Classics) Adam Smith's Theory of Moral Sentiments (1759) lays the foundation for a general system of morals, and is a text of central importance in the history of moral and political thought. By means of the idea of sympathy and the mental construct of an impartial spectator, Smith formulated highly original theories of conscience, moral judgment and the virtues. This volume offers a new edition of the text with helpful notes for the student reader, together with a substantial introduction that sets the work in its philosophical and historical context.

Related Readings on Governance & Political Economy

Good Government for a Stable World Good government is essential to a healthy society and one of the most difficult problems. In history eras of prosperity exist when there is the rule of law, justice and honest public decision-making. Now we face the problem of understanding what good government is, how to develop it consciously and how to support its evolution on a worldwide basis because, as 911 showed us, it is in everyone's interests that we have a prosperous, peaceful, stable world composed of a plurality of responsible stakeholders.

Crisis in the Public Square: Thinking About Futures, Policy and Politics We in the United States are facing an existential crisis across many fronts that was created by neglect, willful ignorance and partisan self-interest over the last three decades. Yet we can address and solve these challenges with pragmatic, workable and affordable policies and good citizenship if we so choose. Demagoguery, of either the Right or the Left, will not help however. What is required is “Civitas” – or acting not just in your own interests but as a responsible contributor to the well-being of society as a whole. Which is also, in the long-run our own self-interest.This collection of blog posts and some related readings looks at the current situation of the US and examines each of the major areas of the Agora (Economy, Foreign Affairs, Domestic Affairs) and Public Values to assess where we’re at, how current policies work and what they are likely to lead to and the challenges and barriers each face. In each section we try and lay out a framework and explain that particular topic by testing it against the framework as well as provide the URL address for the blog posting that provides extensive backup reading excerpts and suggestions. One consequence is that the arguments and conclusions we offer up are drawn from the best, most reasoned and reasonable and pragmatic sources and synthesized here. Nonetheless you may not find yourselves agreeing with much, if any of our arguments or conclusions.

• Heroes, Leaders and Public Morality: Values and a Healthy Public Square
• Standing Tall in the Public Square: Citizens, the Public Square and a Healthy Society
• Inside the Sausage Factory: Policy, Politics, Interests and Realities of the Public Square

The Parable of the Stray

In some ways what brings such events home even more than terrible images is heartfelt words and here we look to the words of Haitian ex-pat poet Michele Voltaire Marcelin who's lament for the lost children of Haiti will bring it home. Equally she laments the deep fissures and breakdowns in Haitian society and governance, the legacy of centuries of malfeasance, and applauds the resilience and spirit of the Haitian people.

Were you ever walking down the street when a stray dog came up to you wagging their tail? Hoping for a handout but really looking for a friendly pat on the head and some sense of security and future. How many times did you reach down in pity and sadness to do the feelgood thing? 50%, 75%, 90%, all the time? One of our great epiphanies was the realization that the after petting the dog we'd have to chase them away. In fact the only person in this exchange who'd end up feeling good was ourselves, not the dog. Unless we were prepared to take them home, take care of them and nurture them for a long time. Instead most of us had our "moment" and walked on. Stop and think about that for moment or three. Our hearts may be moved to pity, we may write a check or we may text a contribution but are we really prepared to do for Haiti what needs to be done? In the long run?

Haiti in the Long-run: Head-pats vs. Sustainable Commitment

The international humanitarian community, governments, private enterprises and citizens from around the world have been responding enthusiastically and generously to the crisis. So much so that they are getting in each other's way, sniping about who's plane gets to land or writing WSJ oped pieces about how terrible everything is. Let's get some things straight - this is the worst natural disaster in the Western Hemisphere and the first in modern history in a built-up urban area. It took out the buildings, the streets, the urban infrastructure, the government, the civil service, the NGO's and almost everything else. Couldn't have happened at a worse place - or in some ways worse time since last year Haiti had four major hurricanes that dropped it's GDP by 15%. All that after a democratic regime, so-to-speak was only first installed for the first time in history in the mid-80s and saw the elected President run out in the mid-90s. In fact Haiti has only received semi-serious attention from a legion of do-gooders in the last ten years or so. Most of whom, just as they have in the current disaster, want to parachute in, "pet the dog" and leave feeling good about themselves but not having made any long-lasting contribution. As an example Royal Caribbean was heavily criticized for continuing to stop at its Haitian stopovers. What should they have done instead - not continued? And thrown thousands more Haitians out of work, or not brought in the tons of relief supplies? The really sad thing is that the assistance programs trying to make substantive long term changes, bring in private investment, develop new foundations for the economy and improve governance were actually starting to work before this disaster. The vidclip is a special session on Haiti from Davos and if you don't have time to listen to the entire thing scroll on to the last 5-10 minutes where President Clinton is summarizing things and talking about how to move beyond feelgood gestures to real commitment.

Governance and Civil Society

One of the interesting things we've noticed is a rather old post of ours has attracted a lot of attention this week (Citizenship, Civitas & Stability) - it's a short comment on the role of good government and civil behavior, what we call Civitas, in nurturing society, prosperity and human well-being. In it we quoted a statement of Adam Smith's, who was far less the free-market purist and more the moral philosopher, economic statesman and champion of good government than his more recent ideological followers know or are inclined to accept. He got it exactly right:

"Little else is required to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice."

 The Haiti clip is one of several from the Davos meetings that we've collected in the readings, concentrating on the overview sessions and those that bear directly on the general questions of governance and civil society, including in Afghanistan, Africa and Haiti, as well as on the broader questions of rethinking, redesigning and rebuilding global governance for the challenges of this century. (A slightly fuller review is The Cusp Point is Here: Lessons From Davos).

But let's not get to proud of ourselves for our excellent governance, which was not lightly developed, has a long and bloody history, is replete with many transgressions and sins and that we take all too lightly for granted. In addition to the Davos sessions the Readings section has pointers to two white papers on the nature of good government and an engaged foreign policy built around those principles plus several examples of where they are severely challenged. Including the Congo where the death toll is now larger than the Holocaust but even more widely ignored, the fragile situation in Yemen, and that classic English example - the Wars of the Roses. In case you're not familiar with the history after rising to be the greatest power in Europe the English provoked decades of fratricidal Civil War among the nobility as they competed for place and power. And almost destroyed England in the process. Also included among the examples is the gang rape in Richmond, Ca. last fall of a young girl watched, witnessed and photographed by dozens of bystanders. Good government is not a free gift from on high, it's something you have to work at. Yet it's something all people in all places strive and struggle for. Most of us just happen to be fortunate enough to live in places where we inherit centuries, even millenia, of the slow and painful accumulation of rules, procedures, attitudes and values. Things that can vanish overnight as the Lord of the Flies (here in a clip from the 90s remake) reminds us ( Lord of the Flies (Trailer 1990)).

Re-visiting Good Government: Legitimacy vs. Performance

Defining good government, analyzing its structure and character and evaluating its impacts on social performance is something we've done a lot of. In fact it's been one of our central concerns on this blog and you'll find the two key white papers on the theory and practice below (Good Government for a Stable World). Just to make the point here's the example of the application to Iraq from almost two years ago. There are several key points to make here: 1) good government can take several forms depending on circumstances, 2) it depends critically on the support of the populace, i.e. it must be legitimate in that people know it's doing its best to solve their problems and represent their interests fairly and honestly, 3) it must be effective and efficient in the sense that resources collected must be re-invested in the betterment of society and not squandered on the private pleasures of the governors, 4) you can't magically leap to a new level but must necessarily move along a trajectory from where you're at to where you would like to go but 5) at the end of the day the return is everybody being better off than they would be otherwise (NB: Iraq is enormously better off than it's been for decades. Other examples include China and Russia while the general framework lays out the rules).

Henry VIII, Sir Thomas More and the Rule of Law

The victor of the last great battle of the Wars of the Roses was the Earl of Richmond, who founded the Tudor dynasty. And eventually his greatest direct descendant, Elizabeth I, mothered a golden age for England that was the birthplace of much of the modern world as we know it from culture to policy to the first stirrings of a modern economy and explorations of the world. Along the way her father H8 went thru multiple wives looking for a male heir (ironic isn't it that in the last 1,000 years the greatest English rulers have all been women?). That wasn't only pride and vanity though. For ten millenia the greatest challenge of human government is the transition from one regime to another. When the King was succeeded by a legitimate and competent successor private citizens could have confidence in the long-term prospects of the country...which is when they felt safe in making long-term investments in farms, equipment, roads and new ventures. 

Long-lived, stable and good government is the single most important factor in history in human prosperity. So when Henry couldn't get an heir all that threatened to come crashing down. Perhaps the best illustration of the political manuverings surrounding this little problem was the great movie, "A Man for All Seasons". (NB: the best depictions of the chaos that preceded the Tudors is Richard III).

Of all the many find, marvelous and educational moments in that astonishing movie the one that brings home our key point more than any other, is Sir Thomas More's defense of the Rule of Law. Especially in contrast to the appeals of his wannabe clerk who would sell his soul or anything else to further himself... or his son-in-law who would sell his for ideology. A just, effective and prosperous government doesn't result from private interests gone wild or ideologies riding roughshod over all obstacles. It results from respect for ideals, values and institutions and the very essence of civil society, tolerance and respect. Along with this clip you might "enjoy" this one where Cardinal Wolsey, then Henry's Chancellor, complains of More's "moral squint". Or these, where More, now Chancellor in his own right, confronts the King and is stripped of his office, or the end of his trial.

The governance we enjoy was purchased for as at great and painful cost over centuries by the payments of many unsung true patriots like Sir Thomas More, who built the society and civilization we now live in. And which we need to extend, at least in adapted form, to meet the challenges of this century. So say we all - let's have an Amen please!

UPDATE:

David Warsh of Economic Principals has done us the great favor of tackling Haiti by channeling a recent volume (Natural Experiments of History) edited by Jared Diamond of Guns, Germs & Steel fame. (which if you haven't read is one of the Ur-texts of our methodology). Here are some brief excerpts from What Can Be Done for Haiti:

"Thus climatic and environmental differences were greatly amplified by social histories. After 1930, political differences became even more important. Dictator Rafael Trujillo took control of the Dominican and operated the nation as a family business, emphasizing exports and encouraging tourism, hiring expert foresters from Sweden and Puerto Rico and protecting large tracts of timber from being harvested by others. In Haiti, “Papa Doc” Duvalier ruled from 1957 until 1971 (and his son “Baby Doc” until 1985) without contributing much of anything to the island’s development – least of all forest management. .... The fact about Haiti that stands out above all others in this telling is the marooning of an African population on a Caribbean island, the uniquely violent war of independence that followed, and its legacy of retribution and mutual mistrust – two centuries of near-isolation and estrangement.... And that is the real point of this column. Rebuilding Haiti’s housing stock and physical infrastructure is important. Building its human capital is even more important."

READINGS

Good Government for a Stable World Good government is essential to a healthy society and one of the most difficult problems. In history eras of prosperity exist when there is the rule of law, justice and honest public decision-making. Now we face the problem of understanding what good government is, how to develop it consciously and how to support its evolution on a worldwide basis because, as 911 showed us, it is in everyone's interests that we have a prosperous, peaceful, stable world composed of a plurality of responsible stakeholders.

Brave New World: Constructive Engagement and US Foreign Policy An essay collection sketching a new approach to a constructive US foreign policy for a non-zero sum world where the US is constructively engaged, encourages responsible stakeholder participation, supports the development of good government and a stable, progressive international system. We are all best served by a policy that recognizes that the old international paradigm of “winner take all” was harmful to the well-being of the system, the participants and even the so-called winners. Instead what we should be seeking is an international system that provides a stable and secure framework for states to continue to pursue the domestic development agendas. In other words in the millennia old debates between the relative advantages of trade vs. raid we come down heavily on the side of trade. The data over the last 20-30 years bear this because we’ve seen more progress in human prosperity for more people than at any time in history. At the same time this view is not pollyannish but explicitly recognizes that any system of governance is based on the use of force to create and sustain the necessary institutional framework for a stable and progressive world order. It also explicitly recognizes, and analyzes, the critical role that good government within each state plays in benefiting itself and the system as a whole.

When Governance Breaks

Why Susie Krabacher Sold the Sushi Bar To Buy an Orphanage Last week, as gunmen murdered people on the streets and foreigners scrambled to get out of the country, Susie Scott Krabacher flew in from Aspen, Colo. Negotiating barricades of burning tires in her platform boots and ankle-length white skirt, she headed straight for a summit meeting with powerful gang leaders in the meanest slum in the poorest country in the Americas.Sitting in the cavernous gloom of a church, Mrs. Krabacher, 40 years old and Playboy's Miss May of 1983, worked her charm on a taciturn, heavyset gang leader known only by his first name, Amaral. Peering into his eyes, and lightly touching his knee, Mrs. Krabacher told Amaral that she has great plans for his sector of this squalid slum called Cité Soleil -- a basketball court, a free clinic and a better school -- but only if Haiti's political chaos subsides. "We are worried what will happen if this country goes crazy," Mrs. Krabacher told Amaral. Last week, as armed rebels marched toward the capital vowing to overthrow President Aristide, Mrs. Krabacher's route to Cité Soleil was littered with the carcasses of stripped and burned automobiles. Merchant women squatted selling sticks of sugar cane, ends sharpened to points, next to paper bags of charcoal. A cloud of foul smoke rose from mounds of smoldering garbage. Pigs rooted through piles of trash and waded through open sewers filled with slime the bright green color of antifreeze. The body of a man recently killed was sprawled in the road. Next to the corpse, hard men glared at passersby. At the hospital children's unit she runs, pillows and medicines are regularly stolen. Thieves even got the unit's first oven and refrigerator, and broke up a cabinet for the wood. Last week, an employee fired for stealing from one of the orphanages paid a gang leader to show up with half a dozen armed men threatening to kill everybody inside if the employee wasn't reinstated. "You need strength and faith to do this in Haiti," said Stanley Joseph, Mrs. Krabacher's right-hand man. "The country is made to stop you."

• Wikipedia Profile of Haiti

Understanding Haiti's Catastrophe through a Poet's Eyes Michele Voltaire Marcelin, an artist, poet, spoken word performer and teacher, was born in Port-au-Prince, Haiti. Since the earthquake struck that country last month, she has been struggling to make sense of the destruction. Haitians have this incredible solidarity with each other, which makes it possible for them to -- to survive this, those who have survived. But it's been there for as long as I can remember. I don't think this island could have stood without it. I wrote a few lines that came to me after the earthquake, which I think were very important to me, because, before the earthquake, we had been talking so much about how we were divided as a people, and how we needed to be together. "Underneath the beauty was a rift. In the heart of the land was a rift. And the rift in the land reached the rift in our hearts. And we lost our people and the land." It is so sad when I go back and read the poems that I wrote. There was a major hurricane called Hurricane Jeanne which hit the city of Gonaives, which left 5,000 dead, houses engulfed in mud, children dead. And I wrote this poem. And, after the earthquake, I went back and looked at it, and I said, my God, if I changed just the words water to the words cement or earth, it will have been the same. "Life is split at the seams. No one knows the exact number of the dead. They were ours. They were yours and mine. Yet, we let them die. So, I will write a poem, and you will write a letter, and he will send some money, and she will say a prayer, but we will forget, as we have forgotten before. We closed our eyes, covered ourselves up, when this island without secrets, this island caught upside-down, spread open by the great storm, went belly-up, exposing memories and guts. Disaster on disaster, mud on mud. Life is split at the seams."

The Dechoukaj This Time Dechoukaj could rip apart cement and exhume the dead, but it could never quite uproot Duvalierism. Duvalierism, it turned out, was a political state of mind, not a phenomenon arising from a single figure. In a land utterly impoverished by its historical and geopolitical heritage, no dechoukaj could fully uproot the longstanding political culture: the desire for a strong leader to make things better single-handedly; the reflexive populist recourse to a cult of personality; the autocratic tendencies of the political class.

• Addicted to Haiti But if Haiti is to be rebuilt, or not merely rebuilt but transformed, then drug trafficking needs to be recognized for what it is, a primary force — arguably, the dominant force — in Haitian political life for the past 25 years.

Gang rape raises questions about bystanders' role For more than two hours on a dark Saturday night, as many as 20 people watched or took part as a 15-year-old California girl was allegedly gang raped and beaten outside a high school homecoming dance, authorities said. As hundreds of students gathered in the school gym, outside in a dimly lit alley where the victim was allegedly raped, police say witnesses took photos. Others laughed. "As people announced over time that this was going on, more people came to see, and some actually participated," Lt. Mark Gagan of the Richmond Police Department told CNN. The witnesses failed to report the crime to law enforcement, Gagan said. The victim remained hospitalized in stable condition. Police arrested five suspects and more arrests were expected. So why didn't anyone come forward?

Teen's Rape Leaves California Community Stunned It wasn't just the horrific gang rape that drew attention; it was all the witnesses who did nothing. Rhonda James is director of the local Community Violence Solutions and the Rape Crisis Center. RHONDA JAMES, executive director, Community Violence Solutions: This attack went on for two-and-a-half-hours -- two-and-a-half-hours. There was an opportunity, there were hundreds of opportunities to stop it. The participants and the so-called bystanders were not interested in stopping it. People were actually jeering, filming, participating from the sidelines.

Richmond Gang Rape Prompts City's Reflection The ingredients for tragedy all were present, experts say. A bunch of men. A vulnerable young woman. Alcohol. What happened next, authorities say, degenerated into a two-hour-long gang rape by as many as 10 males. Another 20 people allegedly watched as the victim was assaulted, beaten bloody and robbed of her jewelry but they did not stop it or call police. The incident late last month led to six arrests, captured nationwide headlines and put this community of 103,000 on the eastern San Francisco Bay shoreline through spasms of self examination. Hundreds attended support rallies for the victim. Some saw the crime as an outgrowth of Richmond's street violence and poverty. But experts say gang rapes happen in all segments of society – white and minority, rich and poor. And they say the attackers often are bonded males ranging from gang members and neighborhood pals to teammates and fraternity brothers. School officials and authorities said the victim felt betrayed because she knew a few of her alleged attackers and considered one a trusted friend. "She is a young girl who's impressionable and, I think, wonders if this is what the world is really like," said Richmond police Sgt. Lori Curran, a lead investigator. The victim has since been flooded with gifts and letters of support. In a letter read by her family pastor during a vigil, she urged the community to remain calm and "let that anger cause change." As the investigation continues, disturbing questions hang over the tragedy: Why didn't anyone stop the attack or tell the dance's 10 chaperones, four police officers among them? "Where were our neighbors, our fellow country-people who witness such a horrific crime and are afraid to call 911?" asked Terry O'Neill, president of the National Organization for Women.

Postcard From Yemen Sana is not Kabul, and Yemen is not Afghanistan — not yet. Yemenis have the resources to save themselves, but they need to be mobilized by better governance. Fortunately, though, I found that Sana is not Kabul, and Yemen is not Afghanistan — not yet. The Walled Old City of Sana, a U.N. World Heritage site with its mud-brick buildings adorned with geometric shapes, was bustling with coffee shops at night and vendors by day. Walking through its streets with a Yemeni friend, we came upon four bearded, elderly Yemeni men — traditional daggers tucked into their belts — discussing a poster taped to a stone wall urging “fathers and mothers” to send their girls to school. When I asked what they thought of that idea, the oldest said he was “ready to give up part of a meal each day so that my girls can learn to read.” Moreover, he added, the poster had just fallen down and he had just taped it back up for others to see. Not what I expected. Nor did I expect to find civil society organizations here staffed with young American volunteers — and, in the case of The Yemen Observer, an English-language newspaper, a whole newsroom full of them. All I could do was look around at these American college students and wonder: “Do your parents know you’re here?” They just laughed. Al Qaeda is like a virus. When it appears en masse, it indicates something is wrong with a country’s immune system. And something is wrong with Yemen’s. A weak central government in Sana rules over a patchwork of rural tribes, using an ad hoc system of patronage, co-optation, corruption and force. Vast areas of the countryside remain outside government control, particularly in the south and east, where 300 to 500 Qaeda fighters have found sanctuary. This “Yemeni Way” has managed to hold the country together and glacially nudge it forward, despite separatist movements in the North and the South. But that old way and pace of doing things can no longer keep pace with the negative trends.

The World Capital of Killing Congo has become the world capital of rape, torture and mutilation in ways that sear the survivors of a war that appears to have claimed more lives than the Holocaust. It’s easy to wonder how world leaders, journalists, religious figures and ordinary citizens looked the other way while six million Jews were killed in the Holocaust. And it’s even easier to assume that we’d do better. But so far the brutal war here in eastern Congo has not only lasted longer than the Holocaust but also appears to have claimed more lives. A peer- reviewed study put the Congo war’s death toll at 5.4 million as of April 2007 and rising at 45,000 a month. That would leave the total today, after a dozen years, at 6.9 million. What those numbers don’t capture is the way Congo has become the world capital of rape, torture and mutilation, in ways that sear survivors like Jeanne Mukuninwa, a beautiful, cheerful young woman of 19 who somehow musters the courage to giggle. Her parents disappeared in the fighting when she had just turned 14 — perhaps they were massacred, but their bodies never turned up — so she moved in with her uncle. A few months later, the extremist Hutu militia invaded the home. She remembers that it was the day of her very first menstrual period — the only one she has ever had.“First, they tied up my uncle,” Jeanne said. “They cut off his hands, gouged out his eyes, cut off his feet, cut off his sex organs, and left him like that. He was still alive. “His wife and his son were also there. Then they took all of us into the forest.” That militia is known for kidnapping people and enslaving them for months, even years. Men are turned into porters, and girls into sex slaves. Jeanne and other girls were regularly tied spread-eagle and gang-raped, and she soon became pregnant. The rapes continued, sometimes with sticks that tore apart her insides and left her dribbling wastes constantly. Somehow the fetus survived, but her pelvis was too immature to deliver the baby.

The Wars of the Roses were a series of dynastic civil wars between supporters of the rival houses of Lancaster and York, for the throne of England. They are generally accepted to have been fought in several spasmodic episodes between 1455 and 1485 (although there was related fighting both before and after this period). The war ended with the victory for the Earl of Richmond, Henry Tudor, who founded the House of Tudor, which subsequently ruled England and Wales for 117 years. Although historians still debate the true extent of the conflict's impact on medieval English life, there is little doubt that the Wars of the Roses resulted in political upheaval and changes to the established balance of power. The most obvious effect was the collapse of the Plantagenet dynasty and its replacement with the new Tudor rulers who changed England dramatically over the following years. In the following Henrician and post-Henrician times, the remnant Plantagenet factions with no direct line to the throne were disabused of their independent positions, as monarchs continually played them against each other.  The war was disastrous for England's already declining influence in France, and by the end of the struggle none of the gains made over the course of the Hundred Years' War remained, apart from Calais which eventually fell during the reign of Mary I. Although later English rulers continued to campaign on the continent, England's territories were never reclaimed. Indeed, various duchies and kingdoms in Europe played a pivotal role in the outcome of the war; in particular the kings of France and the dukes of Burgundy played the two factions off against each other, pledging military and financial aid and offering asylum to defeated nobles and pretenders, to prevent a strong and unified England making war on them. The post-war period was also the death knell for the large standing baronial armies, which had helped fuel the conflict. Henry VII, wary of any further fighting, kept the barons on a very tight leash, removing their right to raise, arm, and supply armies of retainers so that they could not make war on each other or the king. As a result the military power of individual barons declined, and the Tudor court became a place where baronial squabbles were decided with the influence of the monarch.

• Wars of the Roses, Henry IV, Part I. Royal Shakespeare Company on YouTube
• Richard III with Ian McKellen
• The Wars of the Roses by Alison Weir
• The Wars of the Roses by J. R. Lander
• Lancaster Against York: The Wars of the Roses and the Foundation of Modern Britain by Trevor Royle

Davos Sessions

 Welcoming Remarks by Doris Leuthard, President of the Swiss Confederation and Federal Councillor of Economic Affairs Klaus Schwab, Founder and Executive Chairman, World Economic Forum Davos Annual Meeting 2010 - Nicolas Sarkozy Opening Address by Nicolas Sarkozy, President of France Chaired by Klaus Schwab, Founder and Executive Chairman, World Economic Forum

Rethinking Values in the Post-Crisis World Values are considered important and enduring principles, which are correct and desirable in life, shared by members of a community.What values need rethinking in the wake of the "Great Recession"? Speakers:
Yvan Allaire, Thomas H. Glocer, Yasuchika Hasegawa, Hartmut Ostrowski, Jim Wallis, Muhammad Yunus, James H. Quigley

Special Session on Haiti The devastating earthquake on 12 January reminds us of the common humanity that we all share. Join this session on how business can help Haiti over the long term Speakers: Celso Amorim, William Jefferson Clinton, Helen Clark, Denis O'Brien, Klaus Schwab.

• Haiti: First Responders back from the Front-Line

Davos Kick-off of the 2010 FIFA World Cup in South Africa Share in the "spirit of Davos" to support this historic event of Africa and the global community. Speakers: Mark Fish, Lucas Radebe, Klaus Schwab, Zuma

Rebuilding Peace and Stability in Afghanistan More than eight years after the UN authorized military action in Afghanistan, the 43-nation coalition intends to increase troop levels to provide fresh impetus to efforts to bring peace and stability to the country.What is needed from Afghanistan, the region and the international community to achieve success? Speakers: Bernard Kouchner, Radoslaw Tomasz Sikorski, Guido Westerwelle, Anwar M. Gargash, Thomas Friedman, Ashraf Ghani, David Milliband, Ashraf Ghani

"Yes We Can?" US President and Nobel Peace Laureate Barack Obama awoke high expectations with his slogan "Yes, we can!" After one year of presidency, it can be seen where President Obama has introduced political innovation and where he has not. To what extent has the impact of the financial and economic crisis been curbed in the US? Speakers: Susan M. Collins, Riz Khan, Sir Martin Sorrell, Christine Maier, Kenneth Roth, Ulrike Lunacek

State Leadership: An Opportunity for Global Action Globalization has signified the expansion and interconnection of world markets, but paradoxically stronger and more effective national action is essential to achieve global cooperation. How can global cooperation be advanced as nation states become more interdependent? Speakers: Samir Al Rifai, Michael Froman, H.R.H. Haakon of Norway, Indra Nooyi, George Yeo Yong-Boon, Lord Malloch-Brown

A Roadmap for a Sustainable Recovery The Annual Meeting Co-Chairs examine what industry and government should do to lead the global economy on a path of sustainability and job growth in 2010. Speakers: Azim H. Premji, Peter Sands, Ronald A. Williams, Patricia A. Woertz, Josef Ackermann, Michael Oreskes, Klaus Schwab

The Global Agenda 2010: The View from Davos Join experts from over 70 Global Agenda Councils in a brainstorming session to map the critical global issues that emerged from the World Economic Forum Annual Meeting 2010 Speakers: Brainstorming session with Nik Gowing

Being Responsible for the Future Speakers: Rowan D. Williams, Joao Rafael Brites, Tshepiso Gower, Sarah Jameel, Carmina Mancenon, Mousa Musa, Nishin Nathwani

Those multiple fields are built on shock, fear, distortion by partisans, sound byte presentations by the punditocracy and sheer dismay at the magnitude of the challenges, the difficulties of solving them and the raw ugliness of the political process. Welcome to the real world. In some ways these times remind me of the Oxford Debating Union's anti-war resolutions in the late 30's where the peace now and at any cost sorts found themselves a short while later on the beaches at Dunkerque or in Spitfires over Britain or sinking ships or burning tanks in the Mediterranean a few short years later. The general sense of things, defining a baseline if you will, is pretty done by this recent Daily Show episode with Doris Kearns Goodwin.

And the Great Debate we're having is what is the form of government that best suits us? We spent blood and treasure settling the ideological wars of the 20thC. Now we need to decide how to govern a market economy - how to balance commercial interests with the requirements of guardianship. Neither functions well in the long-run without the other and we still haven't figured that out or accepted it. Nor have we figured out how to get there. That will be THE challenge of THIS century!

"The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall our selves, and then we shall save our country. Fellow-citizens, we cannot escape history. We of this Congress and this administration, will be remembered in spite of ourselves. No personal significance, or insignificance, can spare one or another of us. The fiery trial through which we pass, will light us down, in honor or dishonor, to the latest generation."

Annual Message to Congress (1 December 1862) – A. Lincoln

Let's Let the Real SOTU Stand Up

Now we've been facing an immense barrage of very difficult problems, the biggest agenda (all of it negative instead of positive opportunities) that we've faced in a long time. Below in the readings (intended to be a short collection but instead the opposite) we provide the SOTU and Friday's discussion with the Republicans, background context on the last two decade's political devolution that's our biggest obstacle, a short survey of the real policy results of the last year, a survey of the pundits reactions, another follow-on of post-game and not much more thoughtful survey and some going forward context setting on the real issue. That being can we govern ourselves - can we reinvent the machinery of government and governance and will our leadership AND citizens rise to these challenges? Or will we, like those long ago privileged undergraduates have to pay a terrible price to the Piper?

On the whole, given the problems and the environment there are two sets of criteria we'd love to have seen used to do the post-game analysis. The first was on the Speech itself, on style and substance, both of which are important. Schematically what that might look like is (Tone, Content, Structure, Theme) <==> (Policy, Persuasion, Enactment, Implementation). On the whole we found the speech to be eloquent and elegant. Eloquent in tone and attitude and Elegant in how carefully linked together the arguments were in both emotional and substantive terms. Where it failed was in setting out any over-arching organizing principles for the public to hang onto and in taking a few key policy areas and presenting their core arguments. Grading on a curve it might be a B+/A-, measured absolutely against game-changing standards and the difficulties of the time we'd grade it a C. On the whole and allowing for the scope and circumstances we'll go with a B/B+.

What we would like to have heard, somewhere in the media or punditocracy, is a summary of key points, the arguments behind them, the context of those arguments, the subtext linkages to issues and players and what it might setup as next steps on the path forward. What we got was a lot of tone, attitude, talking points, biased interpretations (depending on your source) from people who largely have no experience in doing things, or analyzing them, don't know the issues and aren't recognizing the depth and barriers of the problems. In our small way we've spent some small amount of time parsing and summarzing the speech and trying to wrap a bit more subtance around it to give you a foundation for evaluation (please applaud all you want). It's not a be-all, end-all but a start so if you consider this important take it as the Cliff Notes for when you listen to the actual speech or read the text.

The Economy as Example, Exemplar and Central Issue

There's an enormous amount of accepted wisdom and narrative that's built up over the last year including the consensus that nothing's been done, that what's been done is liberal-leftist and too much was tackled. Well if you've been here/hear before we've been running the same architecture on recommended policy actions since we started blogging to evaluate things based on work dating back 6-9 years and reflecting the best synthesis of the best thinkers over the last thirty. By and large the policies implemented are smack in the middle of what we'd recommend and have received widespread recognition from competent analysts (depending on how you feel about Kissinger, Zandi, et.al. and etc.). Norman Orenstein of the American Enterprise Institute is one such expert from a very conservative think tank and his inventory of the last year's amazing legislative successes is excerpted below in the readings. We suggest you at least skim it. This year started with worse problems than we've faced in decades and saw more and more constructive legislation under worse pressures than we've seen since FDR's first term. Moreover much of that legislation actually worked as promised and intended. Let's consider the example of the multi-dimentional economic and financial policies.

Another factor, and this is a twofold failure, but the President has been so busy saving the country that he's let the opposition define him in pejorative terms and not explained himself on each major issues well enough. But that looks to be changing, in both the SOTU and, even more interestingly, in the follow-on meetings with the Republican leadership on Friday. If you listen to anything listen to that session and the follow-on Q&A. All of the questions were of the "have you quit beating your wife" sort and the President called them on. Heralding an entirely new tone where adamant opposition disguised as fact-based disagreement will no longer pass; and long over-due IOHO!

Consider the accompanying graphic. He inherited the worst economy we've seen in eight decades and a financial system still on the verge of collapse that if allowed to fail would have driven Unemployment to at least 20% if not the 30% of the GD. To save the Republic from the fecklessness of the financial community it was necessary to save the system AND pass a stimulus package. A package that the Rips tell us didn't work, despite Friday's 5.7% GDP number, and is creating untold future risks with rising deficits. As the President pointed out in the SOTU budgeting sets next year's spending; in other words the budget of record for 2009 was the last Bush budget. When Obama took office we'd already lost almost 2 million jobs in Dec08 thru Feb09 of the eventual total of 7 million. Which is estimated to be two million better than it would have been without the stimulus - a package btw composed 1/3 of tax cuts, 1/3 of direct transfers to state and local governments and 1/3 of direct spending, mostly on infrastructure. Almost all of which the Republicans say the support but in fact adamantly opposed and have since lizard-labeled as a failure. Worse their posture on deficits and debt is both disingenuous and irresponsible. Of the $9T debt we're now facing $8T was inherited from two tax cuts, a Medicare drug subsidy that was unfunded and two large-scale multi-$T wars plus automatic stabilization programs. When you "adjust" the deficits by origin (Bush vs. Obama) according to Daniel Mitchell of the Cato Institute (a rabidly conservative free-market think tank). The adjusted deficit charts are his as well. If you go thru some of the other major legislation like Healthcare or Foreign Policy you'll find that, again, they are largely centrist, pragmatic, workable and honest attempt to wrestle with difficult and complex problems. Instead of simple soundbyte talking points, unlike every solution that the Rips claim to have put forward. In fact on every major line of initiative where the Republicans put forward workable ideas you'll find them incorporated into the legislation! Despite all that they've voted down very one on straight party-line votes. That's a willingness to work together, compromise and act in the best interests of the country?

Changing Messages and Tone: Re-positioning and Re-selling

If there's two major things we've faulted the President on repeatedly it's on being to elegant and eloquent and not down to earth enough. Now in a political climate where the loyal opposition wasn't so intent on winning every fight by demonizing these efforts for their own partisan advantage that wouldn't matter as much. Not only haven't we gotten bipartisanship we've gotten the exact opposite - taking a trend that was created by Next Gingrich deliberately in '93, has been escalating exponentially since then and has now metastasized into a threat to the well-being of the Republic. The President has several alternatives - the one we naturally gravitate toward is to meet them head on and start the battle of the pejorations (pejorative, perjurous and distortionate) sound-bytes. The President is a wiser, more controlled and disciplined person than we are. What he appears to be starting to do, having laid almost all of the foundations for major legislation as well as saving the economy, is no longer get away with it. Nor is he apparently going to focus on managing the sausage-making machinery as much. Instead when the Opposition presents distortions he's going to call them on, make them take their stand AND he, we very much hope, is going to go the public on key initiatives and boil it down to simpler terms.

In our conceptual diagram as the Rips have retreated away from governance, admittedly their best short-term political strategy but not necessarily the best long-term strategy for many reasons, the President had moved down to more of a pure governance position, focused on substance. We're arguing here that he's moving back into selling mode and re-positioning himself and his policies. Now he could do the Clinton thing and back off on the big items but that would leave them festering and metastasizing. Or could swing back to pure politics and mirror-image the Rips. Instead he's found a third way forward. Time will tell whether a) that's what he's doing, b) whether it was a conscious decision that will result in sustained and focused efforts and c) whether or not it works. But you will find this sort of structural analysis in NO other place we've been able to find, reflecting as it does a synthesis of policy, implementation, politics and social psychology.

Wrapping It Up Simply: Crisis, Policy and Political Dysfunctions

Let's try and boil all this down to one simple conceptual chart to try and render our analysis down to the core arguments. It's been one of our toughest years in many decades with the natural result that people were scared and, when magic answers didn't appears while the "powers and thrones" appeared to be getting the best of it they became justifiably angry. That anger was stoked by partisan political posturing and now threatens the viability of constructive policy making. The two bad alternatives were make the fight worse or give up on the necessary agenda - which is what all the pundits expected. Instead we appear to be staying the course (subliminal and painful puns intended), continue to try and mend a still fragile economy and then lay the groundwork for renewing the structural foundations of our economy and society while coping with equally deep structural changes in the world around us (in which we are still the indispensable leader no matter what they're saying in other capitals). The hinge point of success will be whether or not the President is able to establish a workable climate of opinion and whether or not the American people wake up in time before they cut off their own noses to make their lizardbrains happier.

Promises of the Future

The sad fact is that in fact it doesn't have to be this way. At the end of the readings section you'll find two video clips from this last weeks Davos sessions. Ironically despite the rise of everybody else these two sessions were focused on US policy and the legislative agenda. Think about that for a minute. Yes, Asia is rising but it'll be the middle of the century at best before they reach semi-equal weight and at the end of the century the US will still be a major world power, its principal supporter and architect and one of the leaders. Instead of the only one. And if we can keep the wheels on the wagon it'll be a better world for all of us.

But the really important thing is the session of US legislators which includes both Republicans and Democrats, albeit ones with positions and track records as moderates. Those are the kind of folks you should be sending to Congress. At the end of the day whether we end up with a brave new world or its opposite is utterly dependent on the outcomes of that decision.

The SOTU and the Follow-On

Pres. Obama State of the Union Address Pres. Obama delivered his first State of the Union address to a join session of Congress. The President outlined his priorities for the economy with a focus on jobs.

• SOTU Transcript, State of the Union: Breaking It Down
• Brooks and Shields post SOTU assessments, As Obama Resets Message, Success May Hinge on Economy

Obama rumbles with House GOP President Barack Obama on Friday accused Republicans of portraying health care reform as a "Bolshevik plot" and telling their constituents that he’s "doing all kinds of crazy stuff that's going to destroy America." Speaking to House Republicans at their annual policy retreat here, Obama said that over-the-top GOP attacks on him and his agenda have made it virtually impossible for Republicans to address the nation’s problems in a bipartisan way. “What happens is that you guys don’t have a lot of room to negotiate with me,” Obama said. "The fact of the matter is, many of you, if you voted with the administration on something, are politically vulnerable with your own base, with your own party because what you've been telling your constituents is, ‘This guy's doing all kinds of crazy stuff that's going to destroy America.' '' Obama’s comments came in the midst of an extraordinary back-and-forth with Republican House members — a scene straight out of the House of Commons that played out live on cable TV. Republicans invited Obama to appear at their annual conference; the president accepted — and then surprised them by asking that cameras and reporters be allowed into the room. Republicans immediately agreed to the request, but they may be regretting it now. Again and again, Obama turned the Republicans questions against them — accusing them of obstructing legislation for political purposes and offering solutions that won’t work. "I've read your legislation. I take a look at this stuff. And the good ideas we take," Obama said. "It can't be all or nothing, one way or the other … If we put together a stimulus package in which a third of it is tax cuts that normally you guys would support, and support for states and the unemployed and helping people stay on COBRA, that certainly your governors would support … and maybe there are some things in there, with respect to infrastructure, that you don't like … If there's uniform opposition because the Republican caucus doesn't get 100 percent or 80 percent of what you want, then it's going to be difficult to get a deal done, because that's not how democracy works."

Better Solutions (PDF) - A compilation of GOP policy alternatives presented to President Barack Obama by Republican Leader John Boehner (R-OH) on January 29, 2010.

President Speaks at GOP Retreat Pres. Obama today spoke to House Republicans at their two-day retreat in Baltimore, MD. He repeated his State of the Union address plea for bipartisanship on health care and other economic issues. GOP leaders will comment later, following shortly after a question-and-answer session with the President.

• Q&A With President at GOP Retreat, GOP Leadership Reactions, Transcript: Obama's Q&A with House Republicans
• President engages in spirited debate with GOP, Obama, GOP exchange barbs, ideas in rare encounter
• Off Script, Obama and the G.O.P. Vent Politely, Obama urges GOP to work with Dems
• Obama, House GOP hold a wide-open exchange, Obama's new strategy: direct engagement
• Shields and Brooks on the Search for Bipartisanship

Background Context: Political Devolution

'Language: A Key Mechanism of Control' Since winning control of Congress, Rep. Newt Gingrich (R.-Ga.) has constantly complained about "destructive" and "negative" coverage from the "liberal elite media." For example, when asked on Nightline (11/29/94) about his reference to the Clintons as "counter-culture McGoverniks," he first insisted that he had been misquoted--"I used the term McGovernite, not McGovernik--it was one of those things that the Times picked up and therefore it's now history" (actually, at least four different newspapers--including the New York Times--quoted Gingrich in their November 10 editions as calling the Clintons "counter-culture McGoverniks")--and then blamed the media for selective reporting: I didn't say that to attack the president, I was asked an analytic question. But because I am now the next speaker, I am learning that everything I say has to be worded carefully and thought through at a level that I've never experienced before in my life. In fact, the new speaker of the House--who once described his goal as "reshaping the entire nation through the news media" (New York Times, 12/14/94)--has given a great deal of thought to the media and how to manipulate them. One Newtonian axiom is "fights make news" (Boston Globe, 11/20/94). Another skill he has taught to Republican candidates through his political organization, GOPAC, is how to create a "shield issue" to deflect criticism:

• Newt Gingrich's 1996 GOPAC memo 

Opposition Strategy 101 In any case, I think it is actually wise--as a general rule, and specifically to healthcare--for the GOP to vote against reform. Mind you, this has nothing to do with my opinions about the bill or its significance; I'm speaking here solely about political calculus. To demonstrate my point, consider the opposition party's situation as a simple game with two possibilities for the quality of legislation the majority passes--a generally "popular" bill or a generally "unpopular" one--and two options for how minority party members can vote on those bills, either voting with the majority or against. Presumably, legislators have some notion of how popular the legislation will be, but their information is incomplete. I don't suggest that this game and my hypothetical payouts apply at all times and everywhere. But I do think as a general rule, or at least the default strategy, minority parties should vote unanimously in opposition to majorities. Why? Because if you vote along with them, you get little credit and are used for political cover when things go wrong, making it a break-even/lose situation. And if you vote against you usually pay little to no price if things go well, but stand to reap huge windfalls if things go awry, making that a break-even/win situation. Applying all of this specifically to the healthcare legislation, there really is no reason for any Republican to vote for it. There are a lot of specific reasons why this is so: the GOP coalition is older and whiter and thus will benefit less; conservative voters reflexively oppose expansions of government of any type; etc. But even if the ideological and demographic reasons are held aside, it makes sense to vote "nay."

The party of No  Republicans are riding a wave of resentment. Only 37% of Americans think the country is on the right track, against 58% who think it is on the wrong one. In November 2008 all the buzz in American politics was concentrated in the campaign to elect Mr Obama. Now it has passed to the tea-party movement, a sprawling grassroots campaign against big government and fiscal irresponsibility. Democrats at first dismissed the tea-partiers either as cranks (because a few placard-waving lunatics attend each big protest) or as “Astroturf” (because they assumed the protests were fake, and being organised by the Republican Party). They were wrong on both counts. The temptation for Republicans is to keep saying “no” to everything the Democrats propose. That would please the tea-partiers and leave Democrats with no successes to boast of before the mid-term elections in November. Of course, Republican leaders deny that they intend to do anything of the sort. “If [President Obama] wants to meet us in the middle of the political spectrum, we’ll be there to help him,” said Mitch McConnell, the top Republican in the Senate, on January 24th. But when it comes to specifics, he hardly sounds bipartisan. He would love to work with Democrats on health reform, he says, so long as they tear up the current bills and knife their trial-lawyer friends. He favours a bipartisan commission to balance the budget, so long as it looks only at ways to cut spending, not to raise taxes. Democrats will not agree to either proposal, and he knows it. The only important and controversial policy of Mr Obama’s for which Republican support is assured is his troop surge in Afghanistan. The Republican Party’s strategists reckon that relentless opposition will pay electoral dividends. It is easy to caricature Democratic ideas and then take credit for stopping them. Also, when Republicans vote “no” in unison, every Democratic vote becomes crucial, and every Democratic senator can demand to be bribed. Ben Nelson of Nebraska, for example, voted for Obamacare only after being promised that other states would pay Nebraska’s extra Medicaid costs for ever. Such skulduggery repels voters. Forcing Mr Obama to bow to his party’s grubbiest elements makes him look sordid, and therefore helps Republicans. But this strategy is as risky as it is irresponsible. A Republican Party purged of moderates will struggle to attract moderate voters. And an opposition that never compromises dooms the nation to gridlock. Right now, nearly half of Americans are angry at both parties, according to a CNN poll. Only one in ten is angry only at Democrats. Republicans should bear that in mind.

Obama's Biggest Mistake? I think Obama's real problem is that he is fundamentally a moderate--what we in Washington call a "goo-goo," a good government person, a pragmatist who deals with problems as they arise without seeing them as part of pattern of failure and without any preconceived idea of what should be done about them based on ideology or political philosophy. There's nothing wrong with that, but it places a special burden on those who see the world this way to explain themselves and what they are doing clearly and unambiguously to both their supporters and their enemies, and to be willing to do so over and over again. Obama obviously has the rhetorical skill to do what has to be done. But he seems oddly reluctant to use it. He seems to feel that once he has explained himself there is no need to keep doing so. In this respect, he should take a lesson from Reagan, a former actor who had the ability to deliver a line the hundredth time with the same empathy and enthusiasm as he did the first time. He also understood that ideas had to be repeated many times before they penetrated peoples' consciousness, which is the cornerstone of advertising and modern public relations. It's not too late for Obama. His polls will turn up when the economy does, just as Reagan's did. But he has already lost a lot of time to define himself and his philosophy, which has emboldened his enemies. If he hopes to avoid being a one-termer he needs to sharpen his focus, be more willing to fight for what he believes and find a narrative that ties it all together.

What Killed Obama's Approval Numbers? Unfortunately, I'm not going to be able to give you any one incredibly satisfying answer here. The most basic reason for the decline in Obama's numbers, almost certainly, is that people's expectations for what he ought to have been able to accomplish on the economy have accelerated faster than his ability to do so. But beyond that, things are a little murky. The periods that represent the steepest declines in Obama's approval ratings are only loosely related to the periods that provided the most disappointing economic news. Meanwhile, while I'm sure that the health care bill hasn't helped Obama any, the trajectory of that debate isn't a great fit for the trajectory of his approval numbers. Finally, factors like the nomination of Sonia Sotomayor and the seating of Al Franken may not have been terribly impactful unto themselves, but may have given rise to unhelpful narratives for Obama and the Democrats that contributed to their problems. One takeaway here, I suppose, is that the deterioration of Barack Obama's political fortunes is not quite so easy to diagnose, even in retrospect. It sort of crept up on us -- until suddenly it became obvious with Scott Brown's victory in Massachusetts last week. There's a role for Monday morning quarterbacking, and it's certainly fun to think about how the Democrats have become so unraveled and whether there's anything they might have done to prevent it. But many things that seem obvious now certainly weren't that way at the time.

Real Policy Results

The best Congress you'll ever hate There seems to be little to endear citizens to their legislature or to the president trying to influence it. It's too bad, because even with the wrench thrown in by Republican Scott Brown's election in Massachusetts, this Congress is on a path to become one of the most productive since the Great Society 89th Congress in 1965-66, and Obama already has the most legislative success of any modern president -- and that includes Ronald Reagan and Lyndon Johnson. The deep dysfunction of our politics may have produced public disdain, but it has also delivered record accomplishment. The productivity began with the stimulus package, which was far more than an injection of $787 billion in government spending to jump-start the ailing economy. More than one-third of it -- $288 billion -- came in the form of tax cuts, making it one of the largest tax cuts in history, with sizable credits for energy conservation and renewable-energy production as well as home-buying and college tuition. The stimulus also promised $19 billion for the critical policy arena of health-information technology, and more than $1 billion to advance research on the effectiveness of health-care treatments. Any Congress that passed all these items separately would be considered enormously productive. Instead, this Congress did it in one bill. Lawmakers then added to their record by expanding children's health insurance and providing stiff oversight of the TARP funds allocated by the previous Congress. Other accomplishments included a law to allow the FDA to regulate tobacco, the largest land conservation law in nearly two decades, a credit card holders' bill of rights, defense procurement reform among other initiatives. The House, of course, did much more, including approving a historic cap-and-trade bill and sweeping financial regulatory changes. And both chambers passed their versions of a health-care overhaul. Financial regulation is working its way through the Senate, and even in this political environment it is on track for enactment in the first half of this year. It is likely that the package of job-creation programs the president showcased on Wednesday, most of which got through the House last year, will be signed into law early on as well. Most of this has been accomplished without any support from Republicans in either the House or the Senate -- an especially striking fact, since many of the initiatives of the New Deal and the Great Society, including Social Security and Medicare, attracted significant backing from the minority Republicans.

• Does The Economy Need -- And Can We Afford -- Another Jolt of Stimulus?

Party of Irresponsibility Last week the opposition party wrote a startling new entry in the Annals of Obstruction: Republicans were so determined to deny President Obama an achievement that a group of them voted against their own proposal. A month ago, a bipartisan group of senators asked Obama for his "strong support" for a commission to solve the national debt crisis. "We don't recommend this special process lightly," they wrote, calling it "the best way to reach a lasting bipartisan solution that will put our nation back on a sound long-term fiscal path." One of the signatories, Sen. Mike Crapo (R-Idaho), issued a news release trumpeting his sponsorship of the legislation. "Now is the time," he proclaimed. On second thought, maybe not. Obama heeded the letter writers' advice and backed the commission. But when the proposal came to a vote on the Senate floor Tuesday, four of the Republican signers -- Crapo, Kay Bailey Hutchison (Tex.), Jim Inhofe (Okla.) and Robert Bennett (Utah) -- voted no. So did three other Republican senators who had also been co-sponsors of the legislation -- 2008 presidential nominee John McCain (Ariz.), Sam Brownback (Kan.) and John Ensign (Nev.). An eighth co-sponsor, Sen. Lisa Murkowski (R-Alaska), didn't vote. Thanks to these defections, the commission legislation fell seven votes short -- and with it went any hope of tackling the debt crisis anytime soon. Even by recent standards, this may be a new level of legislative fecklessness.

• The Rise of Republican Nihilism
• Republican Rigidity
• Republican Deficit Hypocrisy
• GOP Doesn't Do Fiscal Responsibility

Surviving to Fight Another Day In colonial America, suspected witches were dumped in vats of water until they drowned or confessed, in which case they were hanged. Today, we have congressional hearings. On Wednesday, the accused witch was Treasury Secretary Timothy Geithner, formerly president of the Federal Reserve Bank of New York. He survived, but may yet face the political equivalent of a hanging. The scene was a House oversight committee hearing called to inquire into the terms of federal aid to insurer-cum-casino American International Group in 2008. The basic narrative was conveyed by Edolphus Towns, the New York Democrat who heads the panel: "The taxpayers were propping up the hollow shell of AIG by stuffing it with money and the rest of Wall Street came by and looted the corpse."  More precisely, committee Republicans and Democrats, and a lot of other Americans, are somewhere between baffled and outraged that two months after their initial $85-billion transfusion of AIG, the Fed and Treasury used taxpayer money to pay off big banks that had placed bets with AIG (at one hundred cents on the dollar, instead of forcing them to settle for less.) Mr. Geithner's defense boiled down to this: "There were no better alternatives."

• Geithner Defends AIG Bailout at Fiery Hearing Under fire from lawmakers Wednesday, Treasury Secretary Timothy Geithner defended the bailout of insurance giant AIG as "in the best interests of the American people."

That’s How Budgeting Works One of the most memorable parts of the State of the Union was when the President had to remind certain jeering members of congress that taking budgetary steps this fiscal year that don’t take effect until next fiscal year is “how budgeting works.” It looks to me like Ed Lazaer could use a tutorial in this point:

Since 2008, the ratio of federal spending-to-GDP has risen by about 14%. From 2008 to 2009 we saw the greatest annual increase in spending in the last 30 years. In the name of stimulating job growth, the share of federal spending is now 24% of the economy, up from 21% in the last year of the Bush administration.

As Peter Orszag observes, the Obama administration wasn’t in power when most of the relevant decisions were made:

On January 7, 2009, the Congressional Budget Office issued its Economic and Budget Outlook for Fiscal Years 2009-2019. In that document, CBO projected that government spending would rise from 20.9 percent of GDP in fiscal year 2008 to 24.9 percent of GDP in fiscal year 2009. (Just for the record, that CBO projection was issued 2 weeks before the current Administration took office.)

This week, CBO issued its updated Economic and Budget Outlook for Fiscal Years 2010-2020. That document shows that government spending in fiscal year 2009 turned out to be 24.7 percent—roughly the same as what CBO had initially projected.

That’s how budgeting works! But what’s particularly weird is that Ed Lazaer was chairman of the Council of Economic Advisors from 2006 up until Barack Obama’s inauguration in 2009. He knows perfectly well that the Fiscal Year 2009 Budget Proposal was written by the Bush administration. You can even download the 2009 Economic Report of the President (PDF) and see that it has Lazaer’s signature on it and everything. It’s right there on page 11. The Cato Institute’s Daniel Mitchell did a good piece on this flim-flam back in December. You have to ask yourself what it says about the tea party crowd that they didn’t seem even slightly bothered by federal spending or large deficits until Obama took office.

• May a Thousand Job Tax Credit Proposals Bloom
• Obama Budget Freezes Much Domestic Spending

No Such Thing as ‘Simple’ Health Reform Although the current reform bills undoubtedly are burdened with many tangential items, one can easily underestimate how quickly any kind of health reform will become complex. To illustrate, in her “The Risk of Catastrophic Victory,” Peggy Noonan, the doyenne of American punditry who presumes to know what the American people need and want and what presidents should do about it, opines as follows:

In a way Mr. Obama made the same mistake President Bush did on immigration, producing a big, mammoth, comprehensive bill when the public mood was for small, discrete steps in what might reasonably seem the right direction.

The public in 2009 would have been happy to see a simple bill that mandated insurance companies offer coverage without respect to previous medical conditions. The administration could have had that — and the victory of it — last winter.

In the eyes of people unfamiliar with economics, the step she (like others before her) proposes may seem small.She seems completely unaware that, to be implemented, that step has to be accompanied by (1) a mandate to be insured or, at the least, very powerful financial incentives to be insured. And if government imposes such a mandate on citizens, it must be ready (2) to subsidize low-income families in the acquisition of the mandated insurance. Already we have a bill requiring many pages. In this connection, it is illuminating to note what one of the sharpest critics of the current health reform bills proposes for the health insurance market, Senator Tom Coburn, a Republican from Oklahoma. In his comprehensive summary of an alternative health bill he proposed we find the following stipulation on page 5: The European systems Mr. Coburn has in mind are the Swiss and Dutch health systems, because we are referred to a paper on these systems. It should be noted that the Dutch and especially the Swiss systems are subject to heavy government regulation — far heavier than is foreseen in the Senate health reform bill passed in late December. For example, health insurance is mandatory in both countries. Both countries prescribe purely community-rated insurance premiums which, unlike the Senate bill, cannot take the age of the insured into account. And both countries extend sizable public subsidies toward the purchase of private health insurance. In short, as Senator Coburn’s bill illustrates, “simply” to pass a bill that imposes community rating on health insurers, as Ms. Noonan suggests, is anything but simple.

China Leading Global Race to Make Clean Energy China vaulted past competitors in Denmark, Germany, Spain and the United States last year to become the world’s largest maker of wind turbines, and is poised to expand even further this year. China has also leapfrogged the West in the last two years to emerge as the world’s largest manufacturer of solar panels. And the country is pushing equally hard to build nuclear reactors and the most efficient types of coal power plants. These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China. “Most of the energy equipment will carry a brass plate, ‘Made in China,’ ” said K. K. Chan, the chief executive of Nature Elements Capital, a private equity fund in Beijing that focuses on renewable energy. President Obama, in his State of the Union speech last week, sounded an alarm that the United States was falling behind other countries, especially China, on energy. “I do not accept a future where the jobs and industries of tomorrow take root beyond our borders — and I know you don’t either,” he told Congress.

• Leaders in Davos Admit Drop in Trust

New Security Vision in State of the Union  One key thing President Barack Obama’s State of the Union address will be remembered for is the much sharper focus it placed on dealing with domestic challenges. In order to remain a leader in the world, America needs to be stronger at home. Keeping the important national security issues high on the list of America’s public policy debates may be challenging in the coming year—but national security is not likely to fade away. Progressives should remain vigilant to debate the full range of national security questions, even as they engage more deeply in domestic policy debates. As I mentioned in my initial reaction to the speech at Democracy Arsenal, President Obama spent only about 15 percent of his 2010 State of the Union address discussing traditional national security issues. This is down significantly from the nearly 50 percent that his predecessor President George W. Bush spent on these subjects in his 2008 State of the Union. But Obama’s speech was no retreat to isolationism. In fact, much of the rationale President Obama presented for his domestic program—economy, education, and energy investments—was presented in the context of making sure America remains strong abroad. Still, national security remains an important issue despite the tall agenda at home. President Obama, multi-tasker-in-chief, proved to be an effective and engaged commander-in-chief in year one. While dealing with all of the troubles left behind by the Bush administration, President Obama outlined an ambitious national security agenda in more than eight major speeches. He also spent more time overseas and visited more countries in his first year than any other president in the country's history.

Leadins to the State of the Union

Obama will reset his agenda in State of the Union speech When President Obama appears before Congress and the nation on Wednesday night to deliver his State of the Union speech, his goals will be to reset his agenda, assure his demoralized party that he has not given up on key priorities and try to convince a skeptical public that he can still change Washington. The White House provided new details late Tuesday about a proposed three-year spending freeze aimed at controlling the deficit while protecting key programs that Democrats in Congress view as sacrosanct, including education. Obama will announce what administration officials described as the largest single-year request for federal funding for elementary and secondary schools, making education one of the few areas to grow in an otherwise austere budget. The president will call for a 6.2 percent increase in education spending over last year, including up to $4 billion as part of an effort to revamp the George W. Bush-era programs that expanded testing to measure student progress, aides to the president said Tuesday. Senior aides said Obama will link the increase in education funding to his calls for school reform. They said his proposals fit into a broader effort by the White House to focus scarce resources on the nation's long-term economic health. After the speech, Obama plans to take his newly energized populist message on the road in the coming days, pledging to voters in Florida and New Hampshire -- both 2010 battleground states -- that he will fight for them. Democrats and Obama have yet to agree on how to tackle the year ahead, and a big part of the president's challenge Wednesday will be to begin to clear away the doubt, despair and division that have settled over his party after losing a Senate seat in Massachusetts last week.

What Obama Shouldn't Learn from Steve Jobs  What Obama needs tonight, therefore, is a re-branding. He needs to create a new set of expectations, one which he can more easily fulfill. This is different from lowering expectations, or meeting them in a half-assed way. He can't promise an iPad, for instance, and roll out a Kindle. And it's also different from completely giving up on his original message. Successful re-brandings achieve the right alchemy of the virtues of the original brand and the changes that are needed to adapt to the new marketplace. It is not easy; for every Dunkin' Donuts (a company which successfully leveraged its reputation for convenient and unpretentious service and managed to make itself hip again), there are five Blockbuster Videos, companies which flail hopelessly and give up on any hope of differentiation as the world evolves around them. The extent to which I'll look favorably on Obama's State of the Union address tonight is the extent to which it surprises me. When you have great brand, like Apple does now or as Obama once did, some well-choreographed boilerplate usually does the trick. But Obama needs to think differently about the country -- and motivate the country to think differently about him.

• Shields and Brooks: Obama Must Aim for 'Consistency' Columnists Mark Shields and David Brooks speak with Jim Lehrer about the mood of the nation ahead of President Obama's first State of the Union

The State of the Union speech Obama would give in a more honest world My fellow Americans, the state of our union is . . . well, quite wretched at the moment. As president, I owe you that honesty and candor. It would be bad enough that we're stuck in an endless war against vicious terrorists or that we've just been through a financial crisis that wiped out a quarter of our wealth and left one in six adults without a job or underemployed, to say nothing of the fact that our planet is on the brink of an environmental calamity. What's truly depressing, however, is that as a country we seem to have completely lost the will and the capacity to collectively confront these challenges. Our union has been torn asunder by a clash of ideologies and special interests and brigades of power-hungry partisans that has resulted in a paralyzing political stalemate. In response, our citizens have become angry, cynical, distrustful and dispirited. Economists have long recognized that what distinguishes successful and wealthy countries from those that are poor and failing is not their natural endowments or even their level of human capital, but rather the quality of their institutions. By institutions, economists refer not only to governmental, business, educational and civic entities, but also the formal rules and informal protocols by which decisions are made, disputes are resolved, commerce is conducted and people interact. It was the quality of its institutions that led our country to become the richest, most powerful and most admired on the planet. Now the deterioration of those institutions threatens our standing in the world. Hardly a day passes now that doesn't bring further evidence of this institutional deterioration.

State of the Union Reactions

'We were sent here to serve our citizens' President Obama delivered an urgent plea for unity on Wednesday night during his first State of the Union address, seeking to recapture the energy that propelled him into office and to reverse his party's trajectory after a series of recent setbacks. A year after entering the White House with a broad mandate, Obama reframed his agenda around a single, central mission: continuing the nation's delicate economic recovery. He focused on jobs, casting himself as the advocate of average citizens, and acknowledged that his administration had "some political setbacks this year, and some of them were deserved." Obama did not use the occasion to build momentum for far-reaching new policies, instead calling for Congress to complete the tasks already at hand, including "another look" at health-care reform, funding more education programs, imposing stiffer regulations on Wall Street and pursuing a more ambitious energy policy. He reiterated his demand for a three-year freeze on discretionary government spending, threatening to use his veto to achieve it, and walked through a series of steps his administration hopes to take to aid middle-class families. Proposing initiatives that contrasted the needs of Wall Street and average citizens -- such as taking $30 billion repaid by big financial firms and turning it over to community banks -- Obama compared, in a populist flourish, the earlier bank bailout to a root canal. But much of the speech was familiar, and more modest in scope than his addresses over the past year. His most powerful words came at the end as he demanded that Democrats stand firm in defense of their policies despite a recent defeat in a Senate election in Massachusetts.

• State of the Union Address Transcript, Wordle: SofU Word Frequencies
• Viewer Reaction, Congressional Reaction
• Liveblogging Obama's State of Union, Did the Speech Work?
• Embattled Obama declares in speech, 'I don't quit', Obama Seeks to Restart 'Change' Agenda
• Analysis: Humbled Obama checks boxes, Topic A: Experts respond
• Obama's 2010 State of the Union address fact-checked, FACT CHECK: Obama and a toothless commission

Taking on Washington President Obama used his first State of the Union address to reset his relationship with the American middle class. But it was the politics of Washington, rather than any specific policy, that the president spoke about with the most passion after a year when the change he pledged proved elusive. His goal was to connect the disparate elements of his legislative agenda, which have come across to much of America as overly ambitious and chaotic in the hands of a recalcitrant Congress, into a coherent agenda focused on the economic plight of the middle class. He has attempted to clarify his ambitions before, but never at such a politically treacherous moment for his administration and party. Obama resurrected the language of his campaign to criticize Washington's partisan dysfunction. His emphasis on the partisanship that he said defines Washington rather than his setbacks struck a populist tone for what could be a volatile midterm election year for his party. Standing before the packed House chamber, Obama warned lawmakers, many of whom will face election in the fall, that "we face more than a deficit of dollars right now. We face a deficit of trust." He said the public's anger was rooted in "deep and corrosive doubts about how Washington works," and he called for less partisanship and more action to "give people the government they deserve."

• Republicans say nation can't afford Dem policies
• Stromberg: GOP pulls all the stops
• GOP Faces a Tough Balancing Act
• Gerson: Obama's reality problem
• Obama urges nervous Dems to fight for his agenda

Hard year, harder tone One year had taken him from a self-professed unifier to a historically divisive president; from the man selected to solve the country's problems to the person often disparaged as their cause. He squinted against the lights and stared hard at the audience for his first State of the Union address, looking a little grayer, a little older than when he assessed the country in the same venue last February. A circus of cameras and power brokers stirred around him, yet he stood alone at a single microphone, quieting the crowd with a series of somber nods. It had been, Obama told the audience, "one of the most difficult years in our history" -- and it had been one of his most difficult years, too. The president had plenty of reasons to be frustrated Wednesday night, and he channeled all of them during his 71 minutes at the podium. The poker player so often lauded for his evenness was instead pleading and persistent, frank and angry. His words as much as his body language suggested a shift, that this was the time not only to address the populist aggravation but to make it his own. He pressed his forefinger against his thumb and made jabs at the air to accentuate his points. He told the crowd that he "hated" the bank bailout, that he wanted the government to match the public's "decency," that he was tired of "the numbing weight of our politics." "How long should we wait?" he asked. "How long should America put its future on hold?" It was the 487th time Obama delivered public remarks as president, but this one felt unique. When Obama took office, his advisers vowed to take advantage of his gifts as an orator, so in his first year he spoke in 30 states and 21 countries, at factories, fundraisers and funerals. But none of his speeches, aides said, had been so meticulously prepared as the one he delivered Wednesday night.

• A polite State of the Union

Rough, tough and undaunted Americans watch the State of the Union speech largely to check out the state of the president. And the state of Barack Obama appears to be rough, tough and undaunted, though it would be going too far to say it's now "No more Mr. Nice Guy." The president came on strong, breathing fire before the assembled members of the House and Senate. "We don't quit, I don't quit," Obama said of Americans and himself during the stirring final moments of the speech, which took 71 minutes to deliver from the House chamber -- and which was carried live on broadcast and news networks. "I never suggested that change would be easy or that I could do it alone," said Obama, which was as close as he came to apologizing. Indeed, it seemed unusual for him to bring up his own campaign slogan -- "Change we can believe in" -- after a year in office when many people had disregarded it. "He was very assertive tonight," said Bob Schieffer of CBS News. On ABC, George Stephanopoulos found both speech and president to be "unapologetic." Obama did concede that the year ended with goals unmet and some mistakes made by his administration, but he refused to whimper or express regret. There was humility but no remorse in Obama's words or the way in which he delivered them. He hailed and commended American values and seemed also to personify some of them -- directness, candor, neighborliness. At moments he was less the man in the White House than the guy next door. Once or twice during the speech, the pool director cut to a visually thrilling overhead shot of the entire chamber -- but the shot wasn't on the screen for very long. Maybe it was thought that the stunning visual threatened to distract the audience from the speech and the man giving it -- but really, they could have had a live shot of purple people-eaters watching from Mars and not upstaged Obama. As a persuasive political speaker, he's got no serious competition.

A conciliator -- willing to fight It was also obvious that he realizes his administration lost two critical battles last year: to define his stimulus plan and his health-care proposal. Polls show that Republicans' negative claims have stuck with voters, while the administration's arguments for the merits of both plans have not. Obama made the case for his ideas again, but he also challenged Republicans to do more than criticize. "We cannot wage a perpetual campaign where the only goal is to see who can get the most embarrassing headlines about their opponent -- a belief that if you lose, I win," Obama said. "Neither party should delay or obstruct every single bill just because they can." And Obama underscored the Democrats' determination to highlight the GOP's role in creating Washington's sour atmosphere. "Just saying no to everything may be good short-term politics," he said, "but it's not leadership." Barack Obama had once hoped to be a conciliatory president who understood his philosophical adversaries. He is still that man, and much of his speech described ideas, especially in education and energy, that could well win support across ideological lines.But it was clear that the Obama who addressed the nation on Wednesday also understood that he confronts a Republican Party that sees unflinching opposition as blazing a path to victory. And he offered himself as a president ready to do battle. "We don't quit," he said. "I don't quit."

• Obama Invites Republicans to Share Burden of Fixing U.S.
• Obama's State of the Union Address: How's It Playing?

Meyerson: Jumbled message, perfect pitch Thematically, President Obama’s State of the Union address Wednesday night was a bit of a jumbled pudding, with left, right and centrist ideas all packed together. Tonally, however, it was a masterpiece. Obama made clear he understood the gravity of the nation’s problems, took a fair share of the responsibility for the failures of the past year, and, having established himself as the most sober man in the room, proceeded to chastise much of the rest of our political and governmental elite for backing off the efforts to solve our problems and, by so doing, eroding Americans’ faith in their government.He confronted the conservative members of the Supreme Court, seated directly in front of him, for granting corporations more control over our political process than they’ve ever enjoyed. Associate Justice Samuel Alito could be seen shaking his head in disagreement, but when a justice signs on to a decision so corrosive of democracy itself, he should be prepared for some push back.Obama cautioned a Republican Party united in opposition to his every move that if it persisted in subjecting every issue to a 60-vote senatorial threshold, then it, too, had to assume the responsibility for governing. And without specifying what, exactly, he wants in and what he wants out of health-care reform legislation, Obama made clear to the most craven members of his own party -- Sens. Evan Bayh (Ind.), Ben Nelson (Neb.), Mary Landrieu (La.), the whole spineless bunch -- that they still have large majorities in both houses of Congress, and that, “people expect us to solve some problems, not run for the hills.” He became the tribune of our collective exasperation.

• Cohen: Obama plays grownup It was all so commonsensical. It was all so mature. For those moments, Obama seemed the only adult in the room, the one talking for all the American people, pleading not for this bill or that program but for decorum and civility. This is what a president should do.

Robinson: Pundits were wrong The conventional wisdom was wrong, as usual. Some in the punditocracy expected President Obama to tack toward the center, others expected him to run to the bosom of the Democratic Party’s liberal base. He did neither. By the end of his State of the Union address, when he summed up the whole speech in three words -- “I don’t quit” -- you had to take him at his word.The president’s message was simple: He’s not going to zig or zag to boost his poll numbers. He knows the financial bailout was unpopular, but it was necessary. He knows many people didn’t like the stimulus bill, but it was necessary. He knows his own party won’t cheer a three-year spending freeze, but he sees it as the right thing to do. He knows health-care reform ran into a political “buzzsaw,” but he demands that Congress push ahead. There were no fall-off-your-chair surprises in Obama’s speech, but many people might have been surprised by the style in which he delivered it. Obama didn’t sound like a president buffeted and beleaguered by the political fates. He sounded determined, patient, forceful, good-humored, at times even mischievous. He looked relaxed and in control. For the first few minutes, the applause was strictly partisan -- Democrats rising to clap, Republicans sitting on their hands. Toward the end, Republicans were often springing to thei