Broder’s ‘Iran War=Votes’ Column Originated With Daniel Pipes, Via Sarah Palin And Elliott Abrams

November 1, 2010 · Posted in The Capitol · Comment 

David Broder’s column yesterday, in which the once-respected journalist suggested that, “as tensions rise and we accelerate preparations for war [with Iran], the economy will improve,” has already come under a hail of criticism, on a number of counts.

In regard to Broder’s economic claims, Rudy DeLeon, Senior Vice President of National Security and International Policy at the Center for American Progress, and who has many years of experience on defense issues both at the Pentagon and on Capitol Hill, offers this correction:

Defense spending can’t generate an economic recovery. When FDR mobilized the country to become the great “arsenal of democracy,” he was starting from the bottom. There was little shipbuilding, aircraft, or combat vehicle production in place. FDR’s economic mobilization was from the bottom up.

Obama inherits a budget already at $ 700 billion in actual spending for defense. It only supports the jobs already in place. So Broder’s claim about a defense budget bonanza is just wrong.

Broder’s misconceptions about the salutary economic effects of mobilizing for war aside, there’s also his troubling suggestion that President Obama prepare to attack Iran for the political benefits he might realize.

Marc Lynch tracks the path of this argument back to Elliott Abrams. Responding in August to Jeffrey Goldberg’s long piece about the possibility of an Israeli attack on Iran, Abrams wrote:

The political side of all this is equally plain. Obama will, by all accounts, suffer a tremendous setback in November and may well be defeated in 2012. Should Iran acquire the Bomb in the next two years — the timetable Jeffrey suggests — Republicans will have an even stronger case that Obama has weakened our national security. The Obama who had struck Iran and destroyed its nuclear program would be a far stronger candidate, and perhaps an unbeatable one.

While Abrams’ piece may represent the moment when the neocon “bomb Iran for votes” argument entered the “serious” foreign policy conversation, however, the trail doesn’t end there.

Back in February, speaking to Fox News’ Chris Wallace, Sarah Palin similarly suggested that President Obama could impress people like Sarah Palin if he “decided to declare war on Iran“:

WALLACE: How hard do you think President Obama will be to defeat in 2012?

PALIN: It depends on a few things. Say he played — and I got this from Buchanan, reading one of his columns the other day — say he played the war card. Say he decided to declare war on Iran or decided really [to] come out and do whatever he could to support Israel, which I would like him to do, but — that changes the dynamics in what we can assume is going to happen between now and three years

WALLACE: But you’re not suggesting that he would cynically play the war card?

PALIN: I’m not suggesting that. I’m saying if he did, things would dramatically change. If he decided to toughen up and do all that he can to secure our nation and our allies, I think people would, perhaps, shift their thinking a little bit and decide, “Well, maybe he’s tougher than we think he’s — than he is today,” and there wouldn’t be as much passion to make sure that he doesn’t serve another four years.

Typically, Palin was fudging the truth here. She didn’t get the idea from Buchanan, as his piece condemned the idea, which originated, as far as I can tell, with neocon activist Daniel Pipes.

Five days before Palin’s interview, Pipes had written:

Just as 9/11 caused voters to forget George W. Bush’s meandering early months, a strike on Iranian facilities would dispatch Obama’s feckless first year down the memory hole and transform the domestic political scene. It would sideline health care, prompt Republicans to work with Democrats, make netroots squeal, independents reconsider, and conservatives swoon.

After Palin’s interview, Pipes immediately claimed credit, noting “It’s nice to have a major political figure endorse my idea.”

And now it’s been endorsed by “the dean of the Washington press corps.”

Wonk Room

AP’s Elliott Claims ‘One Nation’ Event ‘Tapping Into the Same Anger’ as Tea Party, But Eventually Notes Smaller Crowd

October 3, 2010 · Posted in The Capitol · Comment 

MSNBConeNationAPheadline100210At about 3 p.m. Saturday, one version of the reportage from the Associated Press’s Philip Elliott concerning the "One Nation" rally in Washington opened as follows (saved here at host for future reference, fair use and discussion purposes; bold is mine):

Tapping into the same anger that fuels the tea party movement, a coalition of progressive and civil rights groups marched Saturday on the Lincoln Memorial and pledged to support Democrats struggling to keep power on Capitol Hill.

Elliott must have realized he had gone way over the top with that one, as he watered it down a bit an hour later (also saved at host): "Tapping into anger as the tea party movement has done …"

Even then, Phil, you’ve got to be kidding me.

This first iteration, which appeared at roughly 3 p.m., was the one used by MSNBC (also saved at host; HT Confederate Yankee), with a bit of sloppiness in the sub-headline, as seen at the top right. MSNBC’s choice to carry this version is not surprising, considering that it didn’t have anything to say about the event’s crowd size, while almost all others did.

But even that version, in referring to the "Restoring Honor" rally held at the same site in late August, contained this little curveball:

Beck and former Alaska Gov. Sarah Palin gathered near the Lincoln Memorial on the anniversary of Martin Luther King Jr.’s "I Have a Dream" speech to urge a vast crowd to embrace traditional values. Though also billed as nonpolitical, the rally was widely viewed as a protest against the policies of President Barack Obama and congressional Democrats.

I didn’t come across any AP references to Saturday’s crowd as "vast."

Elliott’s 4 p.m. rendition added this inconvenient verbiage:

Organizers claimed they had as many participants as Beck’s rally. But Saturday’s crowds were less dense and didn’t reach as far to the edges as they did during Beck’s rally. The National Park Service stopped providing official crowd estimates in the 1990s.

Too bad Phil Elliott isn’t as good at observing different types of anger as he is at noticing different crowd sizes. Geez, just for starters, one group is upset that statist health care was enacted; the other is furious that it isn’t going to be instant single-payer — not exactly "the same anger."

Cross-posted at - Exposing Liberal Media Bias

AP’s Elliott Looks for Post-Delaware Primary ‘Expert’ Commentary From Lincoln Chafee

September 26, 2010 · Posted in The Capitol · Comment ChafeeThis goes back eleven days, but the entertainment value is too good to let it slide by without notice.

On the Thursday after Christine O’Donnell defeated Mike Castle in the GOP primary for Delaware’s open U.S. Senate seat, the Associated Press’s Philip Elliott apparently felt the need to seek out an one-time Republican (or at least that’s what he said) — one of only a very few Republicans whose positions were or have been to the left of Castle’s.

That would of course be former Rhode Island senator Lincoln Chafee (pictured at top right). To pick just one example to demonstrate Chafee’s liberalism, during 2006 and 2005, his final two years as a Senator, his grades from the Club for Growth came in at 27% and 26%, respectively. Castle’s grades in the House during those same two years were 48% and 43%.

Gosh, Phil, was there any doubt over how Chafee would feel about Castle’s defeat and O’Donnell’s win? Is this news?

Here are a few paragraphs from Elliott’s brief report:

Former Sen. Lincoln Chafee, a one-time Republican, says GOP Rep. Mike Castle should have seen the tea party challenge to his Senate bid coming.

Chafee, running for Rhode Island governor as an independent, said his former party’s leaders have been forced to the right and have scared moderates out of the GOP. He pointed to Castle’s loss Tuesday as the latest example of a competent lawmaker losing his seat in an unrealistic purity test.

"These primaries, they’re destructive beasts," Chafee said in an interview with The Associated Press at his campaign headquarters. "If those people are going to control the Republican Party, good luck. You’ll have a tough time getting into the majority. Ever."

It’s still early of course, but Real Clear Politics is showing the House races at 206-191 in favor of the GOP, with 38 races undecided. If the "sure" count holds, Republicans would have to win less than a third of the still-undecided races to gain a majority (a shaky one to be sure, but Chafee was talking about any majority — "Ever").

RCP’s take on the Senate is that it is at 50-46 in favor of Democrats, but that counts New York’s Kirsten Gillebrand and California’s Barbara Boxer as "Leans Dem," which given recent polls is open to some dispute.

It would appear that Chafee’s predictive abilities might be about as reliable as his vote for sensible conservative bills and initiatives while he served in the U.S. Senate.

Surely Philip Elliott could have found a more informed interview subject somewhere else. But does anyone believe that his was really his goal?

Cross-posted at - Exposing Liberal Media Bias

Douglas Elliott on Basel III: ‘I am happy, and yes, you should be pleased.’

September 13, 2010 · Posted in The Capitol · Comment 

Since nothing juices traffic quite like blanket coverage of the capital requirements coming out of the Basel III negotiations, here’s one more for you: Douglas Elliott, the current director of Brookings’ Center on Federal Financial Institutions and a former investment banker with JP Morgan, has been following the proceedings for the past year, and was kind enough to talk me through today’s release. Here’s a lightly edited transcript. If you want more background, read the previous interview I did with Elliott.

Ezra Klein: So, should I be pleased about the outcome of Basel III? Upset? Confused?

Douglas Elliott: I am happy, and yes, you should be pleased. There are things I would do differently, and they did water things down. But broadly speaking, this is a big step forward. It’s several times as much common equity behind these banks as we do today.

Why should we care about common equity?

Common equity is important because we want someone we don’t care about to take the losses if the banks run into trouble. Common shareholders bought shares of the banks expecting a share of future profits as their reward. We don’t care if they lose money. If depositors to the bank, or the suppliers of funds to the bank, lose money, we do care. If you look at the crisis we just went through, there were rescues to help creditors and depositors, but shareholders took huge losses. And no one other than them was terribly worried about that.

As I understand it, this common equity test performed pretty well in the financial crisis. One of the best ways to predict who would survive and who would fail was to simply look at their common equity, right?

That’s exactly right. You want capital to be strong. There was a belief a few years back that while common equity was the strongest form of capital, there were other things that were almost as good. What we found out in the financial crisis was that that wasn’t true. You really want common equity to be the backbone of your capital base. This would’ve helped the last crisis a lot.

Now, the common-equity requirements are as a percentage of “risk-adjusted assets.” That concerns me more, as we weren’t terribly good at figuring out how risky different assets were.

It’s definitely something to be concerned about. It’s one reason why we want, as a safety net, to have a straight leverage test that looks at total capital to total assets without doing any adjustment. It’s simplistic, but using it in conjunction with the main tests helps you make sure that you’re not seeing everyone load up on one type of asset that they’re saying isn’t risky but actually is. There is a test like that in the plan, though it only requires 3 percent of capital against non-adjusted assets, which is a bit low.

So what happens next? Banks have to raise this equity. Do they begin selling shares?

In practice, the big banks, which dominate the system, already have enough capital without taking any extraordinary measures, as they’ve already been bulking up. The ones who aren’t there yet will just have to keep holding onto the money they earn until they get there. The important thing, however, is that they’ll also have to keep this capital 10 or 15 years from now.

But will they? What force does Basel III have? My understanding is that America didn’t even implement Basel II. So what’s to stop us from just ignoring it in 15 years?

No, we didn’t, in the U.S., implement Basel II. We might have eventually. Part of the problem was we were pretty relaxed about risk [in 2004, when Basel II was released]. But once you get something enshrined in international agreements and then put into national regulations, it’s a lot harder to wear it away. That can still happen, of course. We could do something stupid 20 years from now. All you can do is set up the structure, make clear why you’ve set it up that way, and underline its importance.

And so that’s what happens next: The regulators actually write this down in their big book o’ regulations, and so it’s actually in writing in the regulatory books of the different countries? This isn’t just a white paper, right?

Absolutely. We do it by acts of the regulators who will go through and formally make it active. In many other parts of the world, they put it into law rather than into the regulations.

Which do you prefer?

There are pros and cons. If you put it into law, it’s harder to tinker with. If it’s in regulation, it’s easier to tinker with.

These new regulations will have an eight-year phase-in period. Some people say that’s too long, but you say that, in most cases, the banks already have the capital. Meanwhile, there are concerns that just as the banks weren’t holding enough capital before the crisis, they’re holding too much now, and that’s slowing their lending and thus our recovery. So how do we balance, on the one hand, the need to have a safer banking system with, on the other, the need to get the banking system moving again?

The capital requirements are by no means the main reason they’re not lending, but we also don’t want to give them a disincentive to making good loans. They have an eight-year transition period, which is more than long enough to get past this recession. If anything, it’s probably a little too long. We do have to recognize that adding margins will slow the economy a bit during good times. But we’re getting a lot more safety for that cost. We don’t want the world economy to blow up every 20 or 30 years. That creates tremendous problems. It’s worth being a little slower in the good years to avoid the really bad years.

You said that the capital requirements aren’t why the banks aren’t lending. In your view, what is?

One, they’re scared. Two, a lot of businesses aren’t looking to borrow money, because they’re scared. Even consumers are cutting back in order to build savings back up. At this point, demand is very weak. And the day-to-day regulatory supervision is full of examiners pushing them to be more careful, not to go out and lend a lot. If you’re a workaday bureaucrat and you’re not tough on lending right now and the bank you’re overseeing blows up, you’re in trouble.

There’s some tension there between the people at the top of the economic-policymaking pyramid and the regulators, right? You hear the top people demanding that the banks stop sitting on all this money, while the regulators are being pretty strict about who they can loan to.

It’s almost unavoidable as a matter of organizational behavior. Bernanke and the others may be saying ‘don’t be too tough on lending,’ but Bernanke isn’t going to come down to your review and say, ‘Don’t worry, I know one of your banks went under, but you were doing what we told you.’

Bank - Capital requirement - Basel III - Stock - Ezra Klein
Ezra Klein

Larry Anderson, Scott Elliott, Dan Riehl, and Stephen Green on Moran’s show

August 24, 2010 · Posted in The Capitol · Comment 

All the hot political stories from today will be discussed.
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