A tailor's yard for cutting megabanks to size

Ever wonder how a regulatory regime with a mandate to break up banks that are "too big to fail" would operate?  Every article I recall reading on the subject treats the question structurally -- that is, by addressing what activities a single financial entity should not be allowed to engage in simultaneously. For example, Paul Volcker recently recommended forbidding deposit-taking banks from engaging in proprietary trading. John Gapper has proposed.separating the functions of retail banks, investment banks and asset managers.

But leaving aside function-based restrictions, how would a regulator determine how big is too big -- literally, from the standpoint of creating systemic risk?  Peter Boone and Simon Johnson, posting on The Baseline Scenario, provide a legislative update, an analogy, a guideline, and a recommendation:

The Kanjorski amendment recognizes that the systemic and societal danger posed by banks can be hard to recognize, and it proposes a number of potential objective criteria that could be used by the Financial Services Oversight Council (to be created by legislation in progress) to determine when banks need to be broken up, including the “scope, scale, exposure, leverage, interconnectedness of financial activities, as well as size of the financial company.”

The Kanjorski amendment does not impose a hard size cap on banks, but lawmakers in the House are discussing amendments that would do so.

There is, of course, a strong precedent for capping the size of an individual bank: The United States already has a long-standing rule that no bank can have more than 10 percent of total national retail deposits.

A talent war in Afghanistan

This is just to note, without comment, two odd moments in the Washington Post's preview of Obama's plans for Afghanistan to be unveiled on Tuesday. The first is a window into the mind of Marine General James T. Conway as the Marines prepare to lead a renewed assault on the Taliban in Helmand after a prior effort to dislodge the Taliban in the process was put on pause in midstream for lack of troops.

"Where we have gone, goodness follows," Conway said. "But the fact is that we are not as expansive as we would like to be, and those probable additional number of Marines are going to help us to get there."

 Next, an account of what sounds like a talent war - or corporate raid:

The administration's new plans for the Afghan army and police, which will probably be a heavy focus of Tuesday's speech, call for increasing the size of the army to about 134,000 troops by next October, four years earlier than the initial goal of 2014. To meet that target, the Afghan Ministry of Defense must bring in about 5,000 new recruits a month and dramatically cut attrition in existing battalions. In November, the defense ministry missed its monthly recruiting goal by more than 2,000 troops.

Afghan soldiers and police were recently given a 40 percent pay increase, but it is too early to tell whether the extra money will fix the recruiting problem, U.S. officials said.

"The extra pay literally brought us to parity with what the Taliban are offering," a senior military official in Kabul said.

Looks like it's the American taxpayer vs. Gulf plutocrats.

Era of Obama: Flashpoints

• The credo of a community organizer
• Change, four years later
• Obama maintains hope, but not in comity
• The president who doesn't do sound bytes
• Judging Obama by his own standards
• A lover of fairy tales casts Obama as villain-in-chief
• Obama's uncertain trigger finger
• Obama: better hedge than wedge
• Liberal Reagan - not
• Where Obama's "placation" ended
• A more perfect speech draft
•  The great myth about Obama's soaring rhetoric
• Obama denounces Holocaust denial, loses Arab students
• 2029: Look back in wonder
• The gospel according to Obama
• What Will.i.am had to work with
• Killing McCain with Kindness
• We've been here before: How Obama frames our history
• Obama does it with integrity
• Obamanomics: rebalancing the national portfolio
• Breaking the commander-in-chief chokehold: Obama maps a strategy
• What Obama owes to Reagan II
• Obama praises Bill Clinton, and buries him

If Winnie met Yogi....

A sampling of two great minds that think rather similarly:

1. Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.
2. It ain't over till it's over.
3. Democracy is the worst form of government except all those other forms that have been tried from time to time.
4. It's so crowded, nobody goes there.
5. It’s not enough that we do our best; sometimes we have to do what’s required.
6. If you can't imitate him, don't copy him.

Nos. 1, 3 and 5 above are Winston Churchill; 2, 4 and 6 are Yogi Berra. Churchill, a scion of English aristocracy unhappily educated in British boarding schools, uses paradox with all the self-conscious deployment of Latin figures of speech that one would expect from a verbally gifted mind trained in that system -- though he considered the famous Latin orators overrated, insisted, "broadly speaking, short words are best, and the old words, when short, are best of all," and recalled proudly, " I got into my bones the essential structure of the ordinary British sentence, which is a noble thing."  Berra, a son of Italian immigrants who grew up in a poor section of Depression-era  St. Louis, left school after eighth grade and recalled late in life that he wasn't a good student because, "You see, I break up the English a little bit. I don't mean to do it, but it just comes out that way."

Churchill deliberately teases paradox out of counterintuitive observations that invert words' conventional connotations. Democracy seems "worst" because  its messy decision-making process is out on display; only reflection and experience reveal that more secretive and unaccountable systems produce worse follies. A motive imposed by external necessity pulls more out of us than our most earnest internally motivated striving.

Berra inadvertently uses one word or close synonyms to cover two meanings that he doesn't explicitly distinguish. The game is never effectively over  until it's literally over.  The restaurant is so crowded [with tourists, yahoos, late adopters] that nobody [cognoscenti, insiders, celebrities] goes there. 

Churchill's paradoxes call attention to themselves and their careful construction; Berra's sound as inadvertent as they are. But Berra's are none the less subtle or coherent for that.

Churchill's memo to Obama

A warning to Obama as he prepares to unveil his new Afghan strategy:

Never, never, never believe any war will be smooth and easy, or that anyone who embarks on the strange voyage can measure the tides and hurricanes he will encounter. The statesman who yields to war fever must realise that once the signal is given, he is no longer the master of policy but the slave of unforeseeable and uncontrollable events. Antiquated War Offices, weak, incompetent, or arrogant Commanders, untrustworthy allies, hostile neutrals, malignant Fortune, ugly surprises, awful miscalculations - all take their seats at the Council Board on the morrow of a declaration of war. Always remember, however sure you are that you could easily win, that there would not be a war if the other man did not think he also had a chance.
Winston Churchill, My Early Life: A Roving Commission (1930), Chapter 18 (With Buller To The Cape), p. 246 (cited in Wikiquote).

A Wrinkle in (Presidential) Time

A bit of free association below, keying off George Packer's musing about the disillusionment he's hearing on his book tour from young Obama supporters (h/t Andrew Sullivan). Packer:

The most disappointed people I meet are under thirty, the generation that made the Obama campaign a movement in its early primary months. They spent their entire adult lives under the worst President of our lifetime, they loved Obama because he was new and inspiring, and they felt that replacing the former with the latter would be a national deliverance. They weren’t wrong about that, but the ebbing of grassroots energy once the Obama campaign turned to governing suggests that some of his most enthusiastic backers saw the election as an end in itself. The Obama movement was unlike other social movements because it began and ended with a person, not an issue. And it was unlike ordinary political coalitions because it didn’t have the organizational muscle of voting blocs. The difficulty in sustaining its intensity through the inevitable ups and downs of governing shows the vulnerability in this model of twenty-first-century, Internet-based politics.

The triggered memory is of the disillusioned twelve-year heroine of the children's fantasy A Wrinkle in Time after she catches up in a far-off galaxy with her adored, longed-for, long absent father:

She had found her father and he had not made everything all right. Everything kept getting worse and worse. If the long search for her father was ended, and he wasn't able to overcome all their difficulties, there was nothing to guarantee that it would all come out right in the end. There was nothing left to hope for. She was frozen, and Charles Wallace was being devoured by IT, and her omnipotent father was doing nothing. (Ch. 10: Absolute Zero).

The party of federal debt and the path to sustainability

Lest anyone forget that Republicans have for a generation been the party of federal debt, a timely reminder from Martin Wolf:

In the case of the US, 1.8 percentage points of a 6.5 percentage point deterioration will be due to such measures. Most of the change is structural: the levels of GDP and fiscal revenue will not return to the previous path....the rise in the debt ratio is comparable to that in big wars – smaller than the second world war, but larger than in the civil war and the first world war. But this is not the first time the US has had a huge increase in its debt ratio in peacetime. The first occasion was under the Republicans between 1981 and 1992. That was when they discovered supply-side economics.

Supply-side fervor went hand-in-glove with deregulatory fervor - which, to be fair, also infected Clintonian Democrats. Hence the need for a massive course correction by the party of relative fiscal responsibility -- the Democrats.

Movin' Meat mulls Senate bill's cost controls

Ron Brownstein's roundup of expert reaction to the cost-cutting measures in the Reid health care reform bill includes this "venture capital approach" from former CBO director Robert Reischauer:

"CBO is there to score savings for which we have a high degree of confidence that they will materialize," says Reischauer, now president of the Urban Institute. "There are many promising approaches [in these reform ideas] but you...can't deposit them in the bank." In the long run, Reischauer says, it's likely "that maybe half of them, or a third of them, will prove to be successful. But that would be very important."

Seconding that reaction is a more concrete way is the ER doctor who writes the Movin' Meat blog, which offers a running practitioner's view of the health care reform process. Dr. Meat annotates Brownstein's summary of the key cost-cutting provisions; he finds some underwhelming, some of uncertain effect -- and some likely to have a powerful impact. A short sample:

David Brooks gins up another faux consensus

"It’s easy to get lost in the weeds," David Brooks warns, "when talking about health care reform." So Brooks, that genial guide, kindly leads readers off a cliff.

Declining to explain in any detail why he thinks the robust cost-control measures in the Senate health care bill would fail if enacted, Brooks relies instead on his two old stand-bys: mushy generalizations about values and recourse to faux consensus.

What a society gains in security through social welfare programs, Brooks declares without any evidence, it usually loses in vitality. There's a caveat:

Occasionally, our ancestors found themselves in a sweet spot. They could pass legislation that brought security but without a cost to vitality. But adults know that this situation is rare

Interesting to cast successful social welfare programs as the domain of our "ancestors." That projects such doings into a mythical realm, akin the age of prophecy that rabbis deemed to have ended after the post-exilic prophets. Needless to say, then, health care reform won't reach that state of grace. By enacting it, we will sap our vitality!

Perhaps in his next column Brooks can explain how dozens of wealthy countries that provide health care to all their citizens at half to two-thirds the per capita spending of the U.S. have sacrificed their "vitality." Or how subjecting tens of millions of Americans to subpar care and constant risk of financial ruin magically confers "vitality" on the U.S. -- rather than sapping it by chaining people to their current jobs, assuming they can hold them and that their employers do not scuttle or eviscerate their health plans.

According to Brooks, the great vitality drain will presumably be triggered when an enacted reform bill accelerates rather than controlling health care spending and thus redistributes wealth to the most vulnerable. To make this argument he relies on the device he used three weeks ago to prove that Obama lacked the grit to win in Afghanistan: conjuring consensus out of thin air. Here's how it works this time:

The authors of these bills have tried to foster efficiencies. The Senate bill would initiate several interesting experiments designed to make the system more effective — giving doctors incentives to collaborate, rewarding hospitals that provide quality care at lower cost. It’s possible that some of these experiments will bloom into potent systemic reforms.

But the general view among independent health care economists is that these changes will not fundamentally bend the cost curve. The system after reform will look as it does today, only bigger and more expensive.

As Jeffrey S. Flier, dean of the Harvard Medical School, wrote in The Wall Street Journal last week, “In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it.”

Now, Dr. Flier is indeed a formidable authority. Doubtless he has spoken with many colleagues and experts as he claims. But his assertion of "near unanimity" is just that -- an assertion. Brooks leverages it -- without relaying Flier's substantive argument in any detail -- into "the general view among independent health care economists."

No such "general view" exists. I don't know of any WSJ-style survey of health care economists and experts. But there's good reason to believe that consensus is closer to the opposite view, as Ronald Brownstein suggests in a widely-cited article about expert response to Reid's bill. Here's a centerpiece of the feedback Brownstein reports "from the center to the left":

In their November 17 letter to Obama, the group of economists led by Dr. Alan Garber of Stanford University, identified four pillars of fiscally-responsible health care reform. They maintained that the bill needed to include a tax on high-end "Cadillac" insurance plans; to pursue "aggressive" tests of payment reforms that will "provide incentives for physicians and hospitals to focus on quality" and provide "care that is better coordinated"; and establish an independent Medicare commission that can continuously develop and implement "new efforts to improve quality and contain costs." Finally, they said the Congressional Budget Office "must project the bill to be at least deficit neutral over the 10-year budget window and deficit reducing thereafter."

As OMB Director Peter Orszag noted in an interview, the Reid bill met all those tests.

The Garber letter is signed by 23 leading economists, including two Nobel laureates, Kenneth Arrow of Stanford and Daniel McFadden of Berkeley. A third Nobel Laureate, William F. Sharpe, asked for his name to be added to the list of signers, according to the Harvard Crimson.

Brooks does not bother with the substance of Dr. Flier's argument. That argument boils down to three points: 1) the pending health reform bills are structurally similar to the Massachusetts quasi-universal coverage bill passed in 2006; 2) the Massachusetts bill has not slowed health care inflation, and 3) Massachusetts is just now turning its attention to serious means of controlling costs. Here's where the argument gets curious:

A "Special Commission on the Health Care Payment System" recently declared that the Massachusetts health-care payment system must be changed over the next five years, most likely to one involving "capitated" payments instead of the traditional fee-for-service system. Capitation means that newly created organizations of physicians and other health-care providers will be given limited dollars per patient for all of their care, allowing for shared savings if spending is below the targets. Unfortunately, the details of this massive change—necessitated by skyrocketing costs and a desire to improve quality—are completely unspecified by the commission, although a new Massachusetts state bureaucracy clearly will be required.

Yet it's entirely unclear how such unspecified changes would impact physician practices and compensation, hospital organizations and their capacity to invest, and the ability of patients to receive the kind and quality of care they desire. Similar challenges would eventually confront the entire country on a more explosive scale if the current legislation becomes law.

Selling an uncertain and potentially unwelcome outcome such as this to the public would be a challenging task. It is easier to assert, confidently but disingenuously, that decreased costs and enhanced quality would result from the current legislation.

So: Massachusetts has not yet worked out the details of serious structural reform. Those details -- and on this point there is something approaching a consensus, which appears to include Dr. Flier -- must be worked out incrementally, by trial and error. That is precisely what the Senate bill -- in contrast to the Massachusetts bill -- aims to do from the outset. Brownstein again, on the bill's measures to seed structural reform:

The other set of Baucus proposals were intended to promote more coordination among providers. These have survived almost verbatim into the final bill. The bill encourages groups of providers to establish doctor-led "accountable care organizations" to more comprehensively manage patients' care by allowing them to share in any savings for Medicare they produce. It also establishes a voluntary national pilot of "bundled" payments that would encourage hospitals, doctors and other providers to work more closely together. Another pilot program would test coordinated home-based care for chronically ill seniors.

Dr. Flier plainly does not think much of these measures. He asserts, without any detailed enumeration or assessment of them:

Likewise, nearly all agree that the legislation would do little or nothing to improve quality or change health-care's dysfunctional delivery system. The system we have now promotes fragmented care and makes it more difficult than it should be to assess outcomes and patient satisfaction.

Nor does Dr. Flier assess the likely effects of an empowered Medicare commission or of the excise tax on expensive plans. He may have excellent reasons, based on practice experience and discussion with colleagues, to believe that the package of cost control measures won't work. But he's content to merely assert them.

Brownstein relays what appears to me a more balanced, if hardly rapturous assessment:

Former CBO director Robert Reischauer, who signed the November 17 letter, says that's not surprising. "CBO is there to score savings for which we have a high degree of confidence that they will materialize," says Reischauer, now president of the Urban Institute. "There are many promising approaches [in these reform ideas] but you...can't deposit them in the bank." In the long run, Reischauer says, it's likely "that maybe half of them, or a third of them, will prove to be successful. But that would be very important."

And from Mark McClellan, Bush's director of the Center for Medicare and Medicaid Services:

McClellan, the former Bush official and current director of the Engleberg Center for Health Care Reform at the Brookings Institution, was one of the economists who signed the November letter. McClellan has some very practical ideas for improving the Reid bill (more on those below), but generally he echoes Orszag's assessment of it. "It has got all four of those elements in it," McClellan said in an interview. "They kept a lot of the key elements of the Finance bill that I like. It would be good if more could be done, but this is the right direction to go."

Brownstein's article was published three days before Brooks' and has circulated widely. But Brooks does not engage it -- or any other of the formidable health care experts who are voicing support for the Reid bill's cost control measures. Instead, he reverts to the tiredest and most circular of Republican talking points against those measures:

Moreover, the current estimates almost certainly understate the share of the nation’s wealth that will have to be shifted. In these bills, the present Congress pledges that future Congresses will impose painful measures to cut Medicare payments and impose efficiencies. Future Congresses rarely live up to these pledges. Somebody screams “Rationing!” and there is a bipartisan rush to kill even the most tepid cost-saving measure. After all, if the current Congress, with pride of authorship, couldn’t reduce costs, why should we expect that future Congresses will?

Ezra Klein has dealt nicely (and repeatedly) with the embedded logic of such critiques:

More broadly, I'm confused by the budget hawks who that take the line: "This bill needs to cut the deficit, and I don't believe Democrats will cut the deficit, but since the actual provisions of the bill unambiguously cut the deficit, then I guess Congress won't stick to it."

People who want to cut the deficit should support this bill, and support its implementation. The alternative is no bill that cuts the deficit, and thus no hope of cutting the deficit.

Klein has internalized the argument of Harvard's Jonathan Gruber - another signatory of the Garber letter -- who put it this way when he spoke to Klein:

We know we will be closer to bending the curve with this bill than without it. But we can't promise this bill alone will bend the curve. This bill moves us towards that. First is the Cadillac tax. Then comes more research on comparative effectiveness. We need to be able to stop paying for things that don't work. This bill doesn't do that, but it sets us up to have the information to do that. Then there's MedPAC on steroids. You need someone with the political ability to set rates to controls costs. Finally, this bill has pilot programs for a lot of things that we think will control costs, but that haven't been proven. Things like accountable care organizations, bundling and all the rest. We're at the stage where we know in theory what to do. But we don't quite know how to set it up, so we're collecting that evidence.

I think this is as much as you can do politically. It's as much as you can do without sinking the whole bill, which is what happened to every other health-care reform.

Finally, one more advocate of this kind of incremental approach to change is worth listening to:

At this point, I am confident that both the House and the Senate bills will contain what we've been calling MedPAC on steroids, the idea that you continually present new ideas to change incentives, change the delivery system, understanding that because this is such a complex system we're not always going to get it exactly right the first time, and that there have to be a series of modifications over the course of a series of years, and we have to take that out of politics and make sure that an independent board of medical experts and health economists are providing packages that are continually improving the system. So I think there's general consensus that that is one of two very powerful levers to bend the cost curve.

That's a certain Barack Hussein Obama, speaking to Fred Hiatt on July 26. A man whose M.O. is always to move the battleship by a few degrees.

Water on a Stone: Fallows relays an insider's view of Obama's Chinese conversations

James Fallows has been pushing back in multiple posts against the shallow horse-race coverage of Obama's China trip. The centerpiece is his relay of an anonymous insider's view of what Obama's meetings with Chinese leadership did and did not accomplish, offered here and here. This account is nuanced and neutral enough - claiming no great triumphs, relaying both incremental moves toward cooperation and roadblocks - to come across as highly credible, nothwithstanding that it comes from an Administration member. Here's the summation:

"Discussions with the Chinese just don't offer dramatic breakthrough
moments. It's water on a stone. They don't reveal their Eurekas to you. While you're there you get fairly predictable responses. Next time you go back and get a little different treatment."Judgments will be borne out over time. Will they cooperate or not on Iran? Will they be spoilers or not on climate change? On North Korea? Rebalancing their economy? None of those is a one-day story. The only fair way of evaluating results will be over time.

And a sampling of that "water on a stone" progress, on global warming:

"We closed some of the gap but not all of the gap. The Chinese do not wish, three weeks out of Copenhagen, to be seen working hand in glove with the US to impose a "G2" solution to the G77. They have their own reservations about how far things should go. But they also don't want to be seen as the stumbling block or odd man out."We kept making the argument, We're the #1 and 2 emitters, so we have a special responsibility, a special role. We got some movement. They are taking substantial mitigating steps, which they didn't enumerate but we know
what they are. As best we can tell, they are prepared to submit those as their "target" in Copenhagen, and of course we want them to be "commitments" rather than targets. There is still a stumbling block on the issue of accountability, which is always a hard one with the Chinese. We'd like to have an independent peer review of whether doing what you said you would do. There are lots of different ways to do that... But we haven't closed that part of the gap yet.

Read the whole thing(s), parts 1-4 of Fallows' critique of media coverage of the trip.

Update: Part 5 is up, and includes a validation, from a 20-year resident of China, of my own sense of the power of Obama's core message to Chinese youth in the town hall -- his embrace of criticism of himself as a spur that "makes me a better leader because it forces me to hear opinions that I don't want to hear."

A 'beautiful bill' goes to the operating table

Before a month of Senate debates whacks all the loveliest limbs off the health care reform statue, the bill's intellectual fathers are gazing up at the pedestal with something like rapture.

Ronald Brownstein rounds up accolades for the bill's cost-control measures from "analysts from the center to the left." (And it should be noted that "the center to the left" in the U.S. healthcare debate is center-to-right in just about any other first-word democracy. Per Paul Starr, the HRC bills moving through House and Senate are a compendium of Republican ideas proposed from Congressman Nixon in the late 1940s through President Nixon in 1974 to George H.W. Bush, Bob Dole and John Chafee in the early 90s.) Brownstein:

In their November 17 letter to Obama, the group of economists led by Dr. Alan Garber of Stanford University, identified four pillars of fiscally-responsible health care reform. They maintained that the bill needed to include a tax on high-end "Cadillac" insurance plans; to pursue aggressive" tests of payment reforms that will "provide incentives for physicians and hospitals to focus on quality" and provide "care that is better coordinated"; and establish an independent Medicare commission that can continuously develop and implement "new efforts to improve quality and contain costs." Finally, they said the Congressional Budget Office "must project the bill to be at least deficit neutral over the 10-year budget window and deficit reducing thereafter."

As OMB Director Peter Orszag noted in an interview, the Reid bill met all those tests.

Positively effusive is Jonathan Gruber of MIT:

I'm sort of a known skeptic on this stuff," Gruber told me. "My summary is it's really hard to figure out how to bend the cost curve, but I can't think of a thing to try that they didn't try. They really make the best effort anyone has ever made. Everything is in here....I can't think of anything I'd do that they are not doing in the bill. You couldn't have done better than they are doing."

I find myself viewing this legislative process with what the medievals would call a "double chere" - a dual perspective. On the one hand there's the unlovely legislative process, nicely reported and themed today by Dana Milbank noting the latest concessions extracted by Blue Dog and other Democrats. Milbank spotlights the leveraging of withheld support:

After Landrieu threw in her support (she asserted that the extra Medicaid funds were "not the reason" for her vote), the lone holdout in the 60-member Democratic caucus was Sen. Blanche Lincoln of Arkansas. Like other Democratic moderates who knew a single vote could kill the bill, she took a streetcar named Opportunism, transferred to one called Wavering and made off with concessions of her own. Indeed, the all-Saturday debate, which ended with an 8 p.m. vote, occurred only because Democratic leaders had yielded to her request for more time.

Note, though, that - none of the concessions chronicled by Milbank substantively weakens the bill, and one - the Wyden amendment modestly expanding access to the exchanges - improves it. Which brings me to the second "chere": so far, the legislation is remarkably balanced, prudent, well designed to square the circle of expanding access without increasing the deficit by wringing waste out of the system and taxing in ways that won't affect productivity. If the Baucus bill's core cost-control measures substantially survive, and the final bill is leavened with more expanded access than the Baucus bill provided for, the result will look awfully like what an Obama supporter might have hoped his subtly shaping hand would have wrought.

That, of course, is a big "if." The prospect of a bill essentially like the one now brought to the Senate floor actually becoming law -- and then not being hacked to pieces by a resurgent Republican party by say 2014 -- has the giddy feel of fantasy. Certainly some pounds of flesh will be extracted -- a Stupak Amendment? a gutted public option? at least one cost-cutting pillar (excise tax?) knocked out? So breath remains bated. These are times that try one's faith that the Federal government, in the wake of a major electoral course correction, can still create legislation that improves Americans' quality of life and puts the economy on a more sustainable footing. Faith, that is, that the U.S. is still governable.

A Wolf whistle on bankers' pay

Almost two years ago, FT economics columnist Martin Wolf surprised himself (rhetorically, anyway) by seconding a proposal by Raghuram Rajan, former chief economist of the International Monetary Fund, that regulators force banks to tie bonus pay to long-term performance:

Yet individual institutions cannot change their systems of remuneration on their own, without losing talented staff to the competition. So regulators may have to step in. The idea of such official intervention is horrible, but the alternative of endlessly repeated crises is even worse.

Today, Wolf further surprises himself by calling for a windfall tax on bankers' bonuses. Here's how his case begins:

Windfall taxes are a ghastly idea. They are a sop to prejudice, a burden on risk-taking and a form of arbitrary confiscation.

So Wolf once again casts his stance as a Nixon-to-China moment. But the logic seems incontrovertible:

“Windfall” support should be matched by windfall taxes.

And in a bit more detail:

Fourth, ordinary people can accept that risk takers receive huge rewards. But such rewards for those who have been rescued by the state and bear substantial responsibility for the crisis are surely intolerable. What makes them yet more so is that the crisis has devastated the prospects of tens, if not hundreds, of millions of innocents all over the globe. The public finances will be devastated for decades: taxes will be higher and public spending lower. Meanwhile, bankers are about to reap huge rewards. This damages the legitimacy of the market economy.

Fifth, it is hard to argue in favour of exceptional interventions to bail out the financial sector at times of crisis, and also against exceptional interventions to recoup costs when the crisis is past. “Windfall” support should be matched by windfall taxes.

If a nonideological free marketer like Wolf can make this case seem watertight, there ought to be ample cover for a large Democratic majority badly in need of landing a populist blow. But then, Wolf presumably doesn't take campaign contributions.

Oxfam's survey of Afghans: their wishes are no mystery

An Oxfam poll of 704 randomly selected Afghans reveals untold suffering-- 1 in 5 say they've been tortured, three quarters have been forced to leave their homes at some point in the endless civil war, 43% have had property destroyed. The survey also has what would seem to be some moderately encouraging findings regarding the counterinsurgency: 70% see unemployment and poverty as a key driver of civil war; 48% blame the government's weakness and corruption; 36% point to the Taliban; 25% to interference by neighboring countries; just 18% to the presence of international forces; another 18% to d al Qaeda-- and another 17% to the lack of support from the international community. After 30 years of civil war, only 3% named the current conflict as the most harmful period (though the report cautions that areas where the current fighting is worst are underrepresented).

The Oxfam recommendations, channeled through selected comments of the surveyed Afghans, are not surprisingly a mirror of McChrystal's stated goals and strategies: provide not only more aid but more effective aid; root out Afghan government corruption; stop killing civilians via airstrikes; desist from invasive and violence house searches; hold coalition forces that kill or abuse the population accountable for their actions; respect the local culture.

Oxfam adds "recommendations" for the Taliban, delivered deadpan, without irony -- which in a sense produces its own irony. Most western observers are hyper-conscious by now that killing civilians undermines support; but both the survey numbers and the quoted comments make it clear that the Taliban's wanton killings make it less popular than the coalition forces or the government. Likewise, what seems a bold speculative move to some western strategists comes across as a weary necessity from Afghan civilians:

Our message to the Taliban is that they should take part in the government - Male, Herat

The Taliban should not fight; they should express their demands through dialogue - Male, Kabul

Our message to the Taliban is that if they are really Muslim, then why are they fighting against the government since the government is also an Islamic government? - Male, Baikh

One gets the impression that the Afghans have no illusions about their government, and also no illusions about the Taliban. They are more war weary than we can fathom -- and like Richard Holbrooke, they will know success -- -- any modicum of peace, justice and development -- when they see it . Or rather, they would know it if they were ever to see it. They were apparently not surveyed as to hopes.

Mea Culpa re Obama in China

In my prior post about Obama's speech and q-and-a with students in Shanghai, my usual intoxication with the intricate structure of Obama's speechmaking blinded me to the broader context in which he allowed the speech to take place -- with no broadcast to the Chinese people as a whole. To a degree Obama seems to have hit the mute button on human rights in China, failing either to raise the issues or gain the exposure that Bush and Clinton did before him. The FT's Edward Luce and Geoff Dyer portray a two-track muting:

In contrast to the last two US presidential visits to China - George W. Bush in 2002 and Bill Clinton in 1998, both of whose words were broadcast live and widely to the Chinese public - Mr Obama's 60-minute question-and-answer session in Shanghai was heavily restricted.

Only the citizens of Shanghai were able to watch it live on local broadcasts. Elsewhere, Chinese citizens were theoretically able to view the event on the White House website , although many reported huge difficulties in accessing either images or sound via the site.

The irony was hard to miss. In spite of weeks of pressure from US officials to open the event to the public the Chinese held their ground. Yet in contrast to his two most recent predecessors, who criticised China for detaining dissidents and suppressing freedom of religion in Tibet, Mr Obama studiously avoided giving his hosts any explicit cause for offence.

Furthermore, Mr Obama's dextrous attempts to avoid provoking the Chinese were heavily censored. Phoenix television, a Hong Kong-based channel with broadcasts on the mainland, carried the first few minutes of Mr Obama's speech at the start of the meeting but cut to another item before he made a relatively generic pitch for universal values.

In concert with the (apparently Hillary-driven) flip-flop on stopping Israeli settlement growth, Obama is starting to look like he can be pushed around. I do not believe that that will prove to be the case over time. But Gideon Rachman was right. On the international as well as the national stage, Obama needs to land a punch -- as I expect he will on his own sweet time, with the ground thoroughly laid. Though after the wild flailing of the Bush years, he seems to regard reassurance as the better part of strength. And again, per my prior post, there is a shining, supreme confidence, packing a wallop of its own, in a message such as "we do not seek to contain China's rise."

UPDATE 11/22: James Fallows has choreographed multiple voices to push back powerfully against the dominant media narrative that portrayed Obama's China trip as a failure. The centerpiece, a summary of the state of negotiations on mulitple interviews provided anonymously by a U.S. participant, makes it clear that U.S.-China negotiations are always "water on a stone," that it's too early to judge the effects of this first round, but that the engagement was substantive and constructive. Other informed reports relayed by Fallows indicate that Obama did reach a broad Chinese audience and may have stirred them deeply (as I assumed he would, reading the transcript) in the town hall. I do believe, and never really doubted, that this is true on substance. But as the last voice Fallows has cited in this series so far points out, the Obama team has done a poor job managing perceptions of the trip here in the U.S.

Obama pitches "The End of History" in Shanghai

By now the scene that played out in Shanghai yesterday is familiar: Obama first addressing and then fielding questions from young students in a far-off quarter of the globe.

In these forums, Obama makes a case for values every American president promotes in speeches: freedom of speech, freedom of information, equal rights for all citizens, accountable government. But for those of us who admire the basic architecture of Obama's thinking and rhetoric, these youth forums are balm after the Bush years. Obama doesn't simply promote these values; he exemplifies them, in the complexity and clarity and nuance of the way he presents them. He is an embodiment of American values, not because of the ethnic heritage he always cites, but because of the way his mind works.

In the question period in Shanghai, he was plainly aiming not so much to argue for freedom -- some have hit him for not engaging directly with Chinese human rights absues -- as to waken in his young audience a thirst for it. Here's part of his response to a "how can a student be successful like you" question:

You know, the people who I meet now that I find most inspiring who are successful I think are people who are not only willing to work very hard but are constantly trying to improve themselves and to think in new ways, and not just accept the conventional wisdom...

But I think that whatever field you go into, if you're constantly trying to improve and never satisfied with not having done your best, and constantly asking new questions -- "Are there things that I could be doing differently? Are there new approaches to problems that nobody has thought of before, whether it's in science or technology or in the arts? -- those are usually the people who I think are able to rise about the rest.

That is plainly not a mainstream message in Chinese culture. It's not an explicitly political message. But it connects back to a prior answer in which Obama referred to his own experience to make the case for open criticism of government (when asked whether Chinese should be able to use Twitter freely):

I think that the more freely information flows, the stronger the society becomes, because then citizens of countries around the world can hold their own governments accountable. They can begin to think for themselves. That generates new ideas. It encourages creativity.

And so I've always been a strong supporter of open Internet use. I'm a big supporter of non-censorship. This is part of the tradition of the United States that I discussed before, and I recognize that different countries have different traditions. I can tell you that in the United States, the fact that we have free Internet -- or unrestricted Internet access is a source of strength, and I think should be encouraged.

Now, I should tell you, I should be honest, as President of the United States, there are times where I wish information didn't flow so freely because then I wouldn't have to listen to people criticizing me all the time. I think people naturally are -- when they're in positions of power sometimes thinks, oh, how could that person say that about me, or that's irresponsible, or -- but the truth is that because in the United States information is free, and I have a lot of critics in the United States who can say all kinds of things about me, I actually think that that makes our democracy stronger and it makes me a better leader because it forces me to hear opinions that I don't want to hear. It forces me to examine what I'm doing on a day-to-day basis to see, am I really doing the very best that I could be doing for the people of the United States.

And I think the Internet has become an even more powerful tool for that kind of citizen participation. In fact, one of the reasons that I won the presidency was because we were able to mobilize young people like yourself to get involved through the Internet. Initially, nobody thought we could win because we didn't have necessarily the most wealthy supporters; we didn't have the most powerful political brokers. But through the Internet, people became excited about our campaign and they started to organize and meet and set up campaign activities and events and rallies. And it really ended up creating the kind of bottom-up movement that allowed us to do very well.

Now, that's not just true in -- for government and politics. It's also true for business. You think about a company like Google that only 20 years ago was -- less than 20 years ago was the idea of a couple of people not much older than you. It was a science project. And suddenly because of the Internet, they were able to create an industry that has revolutionized commerce all around the world. So if it had not been for the freedom and the openness that the Internet allows, Google wouldn't exist.

Th answer is multilayered. Obama asserts that he's a better President and better thinker for being severely criticized. That the forces that brought him to power are inseparable from the forces that allow him to be excoriated. And that the forces that bring such a leader to the fore also foster companies like Google. As he does more explicitly in his opening speech, Obama connects economic successs to freedom of thought.

Philip Stephens credited Obama early this year for "realising that to understand the extent of US power...a president must also map its limits." That dictum defines the way Obama makes the case for free speech, equality, accountable government. Here is the frame he placed around that advocacy in his opening remarks in Shanghai:

1. Assert mutual dependence and affirm the benefits of partnership.
2. Lay a foundation of respect for the audience's culture and history
3. Articulate the principles expressed in the United States' founding documents
4. Acknowledge American imperfection in pursuit of those principles
5. Catalog the benefits that have accrued to the U.S. by pursuing those principles
6. Acknowledge the shared pedigree of the principles; they are not merely American
7. Assert their universality
8. Connect political/intellectual freedom to free markets
9. Assert that the U.S. can/must learn from China (as well as implicitly 'teach' human rights).

Note how these factors work (and come full circle) in the heart of Obama's speech:

1. It is no coincidence that the relationship between our countries has accompanied a period of positive change. 2. China has lifted hundreds of millions of people out of poverty -- an accomplishment unparalleled in human history -- while playing a larger role in global events. 1.And the United States has seen our economy grow along with the standard of living enjoyed by our people, while bringing the Cold War to a successful conclusion.

2. There is a Chinese proverb: "Consider the past, and you shall know the future." Surely, we have known setbacks and challenges over the last 30 years. Our relationship has not been without disagreement and difficulty. 1. But the notion that we must be adversaries is not predestined -- not when we consider the past. Indeed, because of our cooperation, both the United States and China are more prosperous and more secure. We have seen what is possible when we build upon our mutual interests, and engage on the basis of mutual respect.

And yet the success of that engagement depends upon understanding -- on sustaining an open dialogue, and learning about one another and from one another. For just as that American table tennis player pointed out -- we share much in common as human beings, but our countries are different in certain ways.

I believe that each country must chart its own course. 2.China is an ancient nation, with a deeply rooted culture. The United States, by comparison, is a young nation, whose culture is determined by the many different immigrants who have come to our shores, and by the founding documents that guide our democracy.

3. Those documents put forward a simple vision of human affairs, and they enshrine several core principles -- that all men and women are created equal, and possess certain fundamental rights; that government should reflect the will of the people and respond to their wishes; that commerce should be open, information freely accessible; and that laws, and not simply men, should guarantee the administration of justice.

4. Of course, the story of our nation is not without its difficult chapters. In many ways -- over many years -- we have struggled to advance the promise of these principles to all of our people, and to forge a more perfect union. We fought a very painful civil war, and freed a portion of our population from slavery. It took time for women to be extended the right to vote, workers to win the right to organize, and for immigrants from different corners of the globe to be fully embraced. Even after they were freed, African Americans persevered through conditions that were separate and not equal, before winning full and equal rights.

5. None of this was easy. But we made progress because of our belief in those core principles, which have served as our compass through the darkest of storms. That is why Lincoln could stand up in the midst of civil war and declare it a struggle to see whether any nation, conceived in liberty, and "dedicated to the proposition that all men are created equal" could long endure. That is why Dr. Martin Luther King could stand on the steps of the Lincoln Memorial and ask that our nation live out the true meaning of its creed. That's why immigrants from China to Kenya could find a home on our shores; why opportunity is available to all who would work for it; and why someone like me, who less than 50 years ago would have had trouble voting in some parts of America, is now able to serve as its President.

6., 7. And that is why America will always speak out for these core principles around the world. We do not seek to impose any system of government on any other nation, but we also don't believe that the principles that we stand for are unique to our nation. These freedoms of expression and worship -- of access to information and political participation -- we believe are universal rights. They should be available to all people, including ethnic and religious minorities -- whether they are in the United States, China, or any nation. 8. Indeed, it is that respect for universal rights that guides America's openness to other countries; our respect for different cultures; our commitment to international law; and our faith in the future.

These are all things that you should know about America. 9. I also know that we have much to learn about China. Looking around at this magnificent city -- and looking around this room -- I do believe that our nations hold something important in common, and that is a belief in the future. Neither the United States nor China is content to rest on our achievements. For while China is an ancient nation, you are also clearly looking ahead with confidence, ambition, and a commitment to see that tomorrow's generation can do better than today's.

2. In addition to your growing economy, we admire China's extraordinary commitment to science and research -- a commitment borne out in everything from the infrastructure you build to the technology you use. China is now the world's largest Internet user -- which is why we were so pleased to include the Internet as a part of today's event. This country now has the world's largest mobile phone network, and it is investing in the new forms of energy that can both sustain growth and combat climate change -- and I'm looking forward to deepening the partnership between the United States and China in this critical area tomorrow. But above all, I see China's future in you -- young people whose talent and dedication and dreams will do so much to help shape the 21st century.

1. I've said many times that I believe that our world is now fundamentally interconnected. The jobs we do, the prosperity we build, the environment we protect, the security that we seek -- all of these things are shared. And given that interconnection, power in the 21st century is no longer a zero-sum game; one country's success need not come at the expense of another. And that is why the United States insists we do not seek to contain China's rise. 2. On the contrary, we welcome China as a strong and prosperous and successful member of the community of nations -- a China that draws on the rights, strengths, and creativity of individual Chinese like you.

To return to the proverb -- consider the past. 1.,2. We know that more is to be gained when great powers cooperate than when they collide. That is a lesson that human beings have learned time and again, and that is the example of the history between our nations. And I believe strongly that cooperation must go beyond our government. It must be rooted in our people -- in the studies we share, the business that we do, the knowledge that we gain, and even in the sports that we play. And these bridges must be built by young men and women just like you and your counterparts in America.

It may be an obvious message, but there's power in the simple assertion: "We do not seek to contain China's rise." That statement "contains" the doctrine of containment, which has been the dominant fact of geopolitics since the end of World War II. The message is that "containment" is directed at malignantly aggressive political forces, not at rival powers by simple virtue of their gaining power. It makes explicit Obama's broadest message: that democratic capitalism is not zero sum, that future prosperity must be shared prosperity, and that ultimately, only through universal acknowledgment of rights and principles of government that Obama affirms as universal can shared prosperity be triggered.

There is a Fukuyaman faith here that China's pursuit of prosperity will lead it inevitably to democracy -- not laid down as a challenge, but planted as a seed of desire in the country's young.

"No one can describe a taste" - Why?

Via Andrew Sullivan, Jonah Lehrer channels Proust to explore why smells (and tastes) are so emotionally laden:

Why is smell so sentimental? One possibility, which is supported by this recent experiment, is that the olfactory cortex has a direct neural link to the hippocampus. In contrast, all of our other senses (sight, touch and hearing) are first processed somewhere else - they go to the thalamus - and only then make their way to our memory center. This helps explain why we're so dependent on metaphors to describe taste and smell. We always describe foods by comparing them to something else, which we've tasted before. ("These madeleines taste just like my grandmother's madeleines!" Or: "These madeleines taste like the inside of a lemon poppy seed cake!") In contrast, we have a rich language of adjectives to describe what we see and hear, which allows us to define the sensory stimulus in lucid detail. As a result, we don't have to lean so heavily on simile and comparison.

C.S. Lewis, in the final Narnia chronicle The Last Battle, casually delivers a different (though not really contradictory) explanation for why we depend on metaphors to describe taste and smell. When his newly-dead protaganists taste the first fruits of paradise, Lewis writes:

What was the fruit like? Unfortunately, no one can describe a taste. All I can say is that, compared with those fruits, the freshest grapefruit you've ever eaten was dull, and the juiciest orange was dry, and the most melting pear was hard and woody, and the sweetest wild strawberry was sour (Ch. 13, my emphasis).

So according to CSL, it's not that we're less inclined to create descriptive language about taste and smell: for some reason we just can't.

Why is that? We generally describe taste and smell, as Lehrer suggests via Proust, by reference to another taste or smell. But isn't the same true of sight? Start with colors: each color name is a giant analogy -- or scientifically speaking, a classification, grouping objects the surfaces of which really do reflect light in the same range of the spectrum. In fact, re that "rich language of adjectives" we use for sight and hearing -- every adjective is a compressed or aggregated simile or analogy, a classification.

I think that we describe sights more precisely than smells and tastes not because smell and taste are more emotionally laden but because they're less precise senses than sight. (Maybe because of some processing in that trip to the thalamus that smells don't make?) You can say of a tree's appearance that it's thirty feet tall, has a spear-shaped leaf crown, reddish bark in fishlike scales, and needle foliage; all you can say about the experience of eating a grapefruit is that it tastes like a more sour orange and smells fragrant and pungent. All language is ultimately relative, comparative -- but our range of comparison is much richer with visual data.

Dogs are supposed to rely far less on sight and more on smell than humans. I have a blind dog, half beagle to boot, and I can report that although he gets along pretty well, even for a dog smell is no substitute for sight.


While he'll always find food that you toss him, he does it by elaborate, slow elimination -- and he can walk right over it, more than once, before putting his nose (and mouth) to it. Smell is time-limited: when someone runs by he gets very excited, but he has no idea where they are. His hearing actually seems like a nearer sight-substitute than his sense of smell: when he's chasing a bouncing ball you'd think he could see until the bouncing noise stops, at which point he's relatively helpless.

Smell and taste may go straight to our emotional core. But their superior impact seems part and parcel with inferior discernment.

The incredible shrinking Afghan surge

There was once a series of Peanuts comics in which Snoopy reflected on a tussle with a cat (who ripped him to shreds). In each comic, Snoopy doubled the weight of his antagonist -- that 50-pound cat, that 100-pound cat, that 200-pound cat (if memory serves...).

Something of the opposite seems to be happening in newspaper reports of Obama's "final" decision on a troop surge in Afghanistan. Two days ago, CBS News reported an "exclusive" that Obama had decided on 40,000 additional troops. The White House furiously denied it. Yesterday, the Times' Elisabeth Bumiller reported that Gates, Mullen and Clinton were "coalescing around a proposal to send 30,000 or more additional American troops." Now, this evening (Nov. 11), Bumiller and Mark Landler are out with a story claiming that Obama and team "have begun examining an option that would send relatively few troops to Afghanistan, about 10,000 to 15,000, with most designated as trainers for the Afghan security forces," prompted in some degree by reservations expressed by Karl Eikenberry, current U.S. ambassador to Afghanistan and once the top U.S. commander there.

As a complement, the Times also reports tonight something I've long suspected - that much of this angst is choreographed to put some pressure on Karzai and his government. Noting that the U.S. in one sense has precious little leverage, Helene Cooper reports:

Officials said Mr. Obama’s Afghanistan review took weeks longer than expected in part because officials were unhappy about reports of fraud in the Afghan elections, and they implied that even after the new Afghan strategy is announced, details will not be final.

“I’m not saying that we’ll be in a perpetual state of review, but the time the president has taken so far should signal to people that he will not hesitate to take a hard look at things and question assumptions if things are not moving in the right direction,” a senior White House official said.

Indeed, an AP story by Ben Feller and Anne Gearan, which claims that Obama has rejected all options presented to him in their current form, suggests a search for further leverage in the crevices of troop deployment:

But the president raised questions at a war council meeting Wednesday that could alter the dynamic of both how many additional troops are sent to Afghanistan and what the timeline would be for their presence in the war zone, according to the official, who spoke on condition of anonymity to discuss Obama's thinking.

Military officials said Obama has asked for a rewrite before and resisted what one official called a one-way highway toward war commander Gen. Stanley McChrystal's recommendations for more troops. The sense that he was being rushed and railroaded has stiffened Obama's resolve to seek information and options beyond military planning, officials said, though a substantial troop increase is still likely...

The key sticking points appear to be timelines and mounting questions about the credibility of the Afghan government. Administration officials said Wednesday that Obama wants to make it clear that the U.S. commitment in Afghanistan is not open-ended.

Leverage, leverage, leverage. Cooper's story suggests a search in other directions:

While they declined to go into many specifics, the officials, speaking on the condition of anonymity because the Afghanistan review is not complete yet, said they had a range of diplomatic, financial and economic options if the targets were not met.

One lever, they said, would be to shift money from Mr. Karzai’s central government to provincial leaders who perform better than their national counterparts. And although a complete withdrawal of American troops is not considered an option, Mr. Obama might endorse a partial withdrawal that would lead to a more limited counterinsurgency strategy initially advocated by Vice President Joseph R. Biden, Jr.

It would seem that Obama wants Karzai in a Skinner box. At the same time, he does not sound like a man preparing to disengage.

David Leonhardt tries to do Obama's job for him, part II

David Leonhardt continues to do yeoman's work explaining the stakes and outlining the means of health care cost control. Today he compares cost control measures in the House bill, which he finds wanting, with those in the Senate Finance Committee bill, which are stronger. His main theme: that the true test of the Obama Administration's leadership comes now, in the endgame, in the skill and force with which they push for the most promising cost control measures.

Perhaps the single most telling flashpoint, according to Leonhardt, will be the fate of the so-called "MedPAC on Steroids," a commission empowered to make a yearly package of Medicare cost control recommendations to Congress, which Congress would have to vote up or down as a package. Leonhardt calls a commission thus empowered a "Fed for Health" to emphasize the need for political insulation. "Whether one ends up in the final bill," he writes, "will be a good test of Mr. Obama's endgame leadership."

Obama would seem to agree with Leonhardt. Back in July, he highlighted the commission as a a potential guiding light for cost control over the course of years and decades, telling Fred Hiatt:

At this point, I am confident that both the House and the Senate bills will contain what we've been calling MedPAC on steroids, the idea that you continually present new ideas to change incentives, change the delivery system, understanding that because this is such a complex system we're not always going to get it exactly right the first time, and that there have to be a series of modifications over the course of a series of years, and we have to take that out of politics and make sure that an independent board of medical experts and health economists are providing packages that are continually improving the system. So I think there's general consensus that that is one of two very powerful levers to bend the cost curve.

As for the second "lever":

Now, the second idea, which is the one that got more attention, even though Elmendorf, I think, has emphasized the benefits of a MedPAC board, as well, was the elimination of the tax exclusion [on employer-provided health insurance]. And I've been very clear on my position that I think to add additional costs to families right now when they're already seeing their premiums doubled is not the kind of health reform that I'd like to see, but I believe that there may be ways of getting at the same principle.

For example, you could conceivably set up an index of some sort that makes sure that health care inflation -- or to make sure that the exclusion only accommodates a certain amount of health care inflation -- as opposed to 8 percent or 9 percent, or what have you -- without burdening current plans, but over time assuming -- if we're assuming that health care inflation is going to continue to be a problem, that you could get at the problem in that way.

Hiatt: A kind of cap, but one that doesn't hurt anybody --

Obama: Currently.

Hiatt: -- at the current level?

Obama: Exactly. You're also seeing, I think, some interesting discussions in the Senate Finance Committee about a variation that goes after the insurance companies, as opposed to directly taxing the benefits.

That "variation that goes after insurance companies" is in the Senate Finance Committee bill, in the form of a surtax on plans that cost more than $21k per family and $8k per individual. "Along with the Medicare commission," according to Leonhardt, "this tax is the biggest single difference between the Senate and House versions. "

So Leonhardt has highlighted the degree to which the White House is in sync with Senate Finance on cost control, and the key cost control omissions in the House bill.

On the other side of the ledger, the House bill provides more generous coverage than the Senate Finance bill. Many who embrace the basic architecture of the Democrats' health reform efforts dream of a bill that combines House coverage with Senate cost control. Deep pessimism about the way Congress works in this era leads many to supsect that we'll get the opposite. I would bet on a mixed scorecard - maybe 1-for-2 on the excise tax and MedPAC, or both surviving in weakened form, and somewhat more generous subsidies with a stiffer coverage mandate than the Finance bill provides.

If a bill passess at all. The abortion pound of flesh extracted in the House, the weak majority with which the bill passed, Lieberman's grandstanding on the public option...all have made me wonder.

See also: David Leonhardt tries to do Obama's job for him (Part I)

Obama at Fort Hood: Embracing 'The Long War'?

The President at Fort Hood today did not sound like a man planning to scale back American military commitments:

This generation of soldiers, sailors, airmen, Marines and Coast Guardsmen have volunteered in a time of certain danger. They are part of the finest fighting force that the world has ever known. They have served tour after tour of duty in distant, different and difficult places. They have stood watch in blinding deserts and on snowy mountains. They have extended the opportunity of self-government to peoples that have suffered tyranny and war. They are man and woman; white, black, and brown; of all faiths and stations – all Americans, serving together to protect our people, while giving others half a world away the chance to lead a better life.

In today's wars, there is not always a simple ceremony that signals our troops' success – no surrender papers to be signed, or capital to be claimed. But the measure of their impact is no less great – in a world of threats that know no borders, it will be marked in the safety of our cities and towns, and the security and opportunity that is extended abroad. And it will serve as testimony to the character of those who serve, and the example that you set for America and for the world.

Here, at Fort Hood, we pay tribute to thirteen men and women who were not able to escape the horror of war, even in the comfort of home. Later today, at Fort Lewis, one community will gather to remember so many in one Stryker Brigade who have fallen in Afghanistan.

Long after they are laid to rest – when the fighting has finished, and our nation has endured; when today's servicemen and women are veterans, and their children have grown – it will be said of this generation that they believed under the most trying of tests; that they persevered not just when it was easy, but when it was hard; and that they paid the price and bore the burden to secure this nation, and stood up for the values that live in the hearts of all free peoples.

There is nothing jingoistic or chauvinistic about this. But note the assertions of linked fate: to protect our people, while giving others half a world a way the chance to live a better life....But the measure of their impact is no less great – in a world of threats that know no borders, it will be marked in the safety of our cities and towns, and the security and opportunity that is extended abroad.

Note also the verb tense sequence: perfect (past leading to present moment), present continuous, and a use of the future that is thematically akin to the future perfect -- looking back at the present from a time ahead. There's a grammatical fusion of his own administration's commitments with Bush''s and perhaps with those of presidents to come.

Note too, that like Shakespeare Henry V before the battle of Agincourt, Obama pulls the commander-in-chief trick of inviting the men to envision their future satisfaction in a triumph that has yet to happen:

He that outlives this day, and comes safe home,

Will stand a tip-toe when this day is nam'd,

And rouse him at the name of Crispian...

This story shall the good man teach his son;

And Crispin Crispian shall ne'er go by,

From this day to the ending of the world,

But we in it shall be remembered-

We few, we happy few, we band of brothers...(HV IV, iii).

Perhaps Obama has absorbed Gates' concept of "the long war" -- which, Gates told West Point in April'08, "is likely to be many years of persistent, engaged combat all around the world in differing degrees of size and intensity," adding, "This generational campaign cannot be wished away or put on a timetable."

Gates moderates an expansive sense of mission with a determination to leverage allies, aid and diplomacy to leverage a minimalist use of military force. In an article outlining his strategic vision in Foreign Affairs (Jan/Feb '09, no longer available free), he wrote:

What is dubbed the war on terror is, in grim reality, a prolonged, worldwide irregular campaign -- a struggle between the forces of violent extremism and those of moderation. Direct military force will continue to play a role in the long-term effort against terrorists and other extremists. But over the long term, the United States cannot kill or capture its way to victory. Where possible, what the military calls kinetic operations should be subordinated to measures aimed at promoting better governance, economic programs that spur development, and efforts to address the grievances among the discontented, from whom the terrorists recruit. It will take the patient accumulation of quiet successes over a long time to discredit and defeat extremist movements and their ideologies.

In one sense, this mission is unexceptionable, as the U.S. will doubtless continue to attempt to foster development and democracy throughout the non-rich, nondemocratic world. The hard questions have to do with means -- with the assumption of a "prolonged, worldwide" military campagin . Rory Stewart, Afghan minimalist, wants to foster better governance and development in Afghanistan - he just wants to do it with 20,000 troops and selective, decentralized aid, rather than with 100,00 and a client state relationship. Stewart mocks maximalist assumptions like those expressed by Gates - that with the right combination of tools the U.S. can drain every failed-state swamp where terror breeds.

Obama certainly shares Gates' sense of the scope of the U.S. role in the world, as well as his predilection to "subordinate" military effort to diplomacy and aid. But is he signed up for "the long war"? It's starting to look that way.

Gates whistles past the graveyard of empires

Robert Gates does not think that sending more troops toAfghanistan will put the U.S. on course to replay the Soviet disaster. He recently told Mike Crowley:

“I heard General McChrystal when he says it’s not so much the size of the footprint as how you use those troops, and I accept that. I think that’s right.”

“It’s also important to realize that the Soviets carried out a war of terror against the Afghan people,” he continued. “I mean, they killed a million, probably made five million refugees, and no country in the world supported what they were doing. We have a completely different situation in all those categories right now. They also tried to impose an alien culture and social order on the Afghans that was completely contrary to their history and culture. So I think the important thing is, as we look at the Soviet experience, to draw the right lessons from it and not just automatically say that because they lost, everybody loses.”

Though he wouldn’t discuss his advice to Obama with me, Gates has made several public comments that suggest a belief in a large troop presence. Speaking at a CNN roundtable discussion in early October, for instance, Gates warned against ceding large swaths of territory to the Taliban, as a counterterrorism strategy may entail. “There’s no question in my mind that, if the Taliban took large--took control of significant portions of Afghanistan, that that would be added space for Al Qaeda to strengthen itself,” Gates said. Such an outcome, he added, would be “hugely empowering” for Al Qaeda’s recruitment and fund-raising.

Steve Coll has picked apart the Soviet analogy in more detail:

By comparison to the challenges facing the Soviet Union after it began to "Afghanize" its strategy around 1985 and prepare for the withdrawal of its troops, the situation facing the United States and its allies today is much more favorable. Afghan public opinion remains much more favorably disposed toward international forces and cooperation with international governments than it ever was toward the Soviet Union. The presence of international forces in Afghanistan today is recognized as legitimate and even righteous, whereas the Soviets never enjoyed such support and were unable to draw funds and credibility from international institutions. China today wants a stable Afghanistan; in the Soviet era, it armed the Islamic rebels. The Pakistani Army today is divided and uncertain in its relations with the Taliban, and beginning to turn against them; during the Soviet period, the Army was united in its effort to support Islamist rebels. And even if the number of active Taliban fighters today is on the high side of published estimates, those numbers pale in comparison to the number of Islamic guerrillas fighting the Soviet forces and their Afghan clients.

In other words, the project of an adequately stable Afghan state free from coercive Taliban rule for the indefinite future can be achieved, although there are no guarantees.

On the other hand, Coll himself has elsewhere pointed to aspect of the Soviet experience in Afghanisan that remain dauntingly relevant:

The Soviets failed in Afghanistan for many reasons, beginning with the brutality of their military campaigns and the implausibility of their political strategy. Nonetheless, by the end of the 1980s, they had constructed a durable ink spot strategy, albeit one based on a more defensive and internally ruthless political-military strategy from the one McChrystal is proposing. The Soviets were unable, however, to convert that partial territorial achievement into a broader and more durable strategic success. Partly they just ran out of time, as often happens in expeditionary wars. Their other problems included their inability to control the insurgents’ sanctuary in Pakistan; their inability to stop infiltration across the Pakistan-Afghan border; their inability to build Afghan political unity, even at the local level; their inability to develop a successful reconciliation strategy to divide the Islamist insurgents they faced; and their inability to create successful international diplomacy to reinforce a stable Afghanistan and region. Does that list of headaches sound familiar?

One more headache: today the Taliban seems as well-funded by Arab money as it was with our help in the 1980s. One current operative recently reminisced to Newsweek:

YOUNAS: After these first few attacks [by the Taliban, as their resistance to the Kabul government picked up force], God seems to have opened channels of money for us. I was told money was flowing from the Gulf to the Arabs.

The money flow; the Pakistani sanctuary; the uncertain role of the ISI; the rampant corruption and deeply compromised legitimacy of the Kabul government...the barriers to fostering an Afghan government that can maintain anything like a state monopoly on violence provide plenty of fodder for quagmire anxiety

Then, too, while Gates suggests that the U.S. is not trying to "impose an alien culture and social order on the Afghans" many critics consider a U.S.-led attempt to institute democracy, fight corruption and establish central governmental authority throughout the country as doing just that. See, e.g., Matthew Hoh...

Owens' win in NY 23: bad for Democrats, good for the country?

After basking a bit in the tea partiers' election-night shock when their insurgent darling Doug Hoffman went down in NY District 23, Frank Rich cautions:

The Democrats’ celebration was also premature: Hoffman’s defeat is potentially more harmful to them than to the Republicans....it increases the odds that the Republicans will not do Democrats the great favor of committing suicide between now and the next Election Day.

Quite so. But what may be bad for Democrats in the short term is good for the country.

The country needs the Republican party to step back from the brink. Other mature democracies have fringe parties that play primarily to voters' fears and fantasies, but those parties exist within multiparty systems. In times of stress their vote may approach or crack 20% of the total, and everyone draws a breath and notes the electorate's anger.

We have only two national parties. If one of them shrinks to attract the affiliation of less than 30% of the electorate and retreats entirely into fringe party thinking and tactics, that's dangerous. The tea partiers' lies and paranoid fantasies; their demonization of a reform effort as incremental, cautious, and indeed historically Republican in its genesis as the pending health care bills; their glorification of the willful ignorance of Palin and Bachmann and their rapt attention to transparent demagogues like Beck and Limbaugh, is all fringe party behavior. Those who equate health insurance mandates or voluntary end of life counseling with fascism are themselves potential fascists -- demonizers of opposition, rabid advocates of torture, paranoid fantasists.

If that fringe entirely captures one of our two parties, the next big shock -- a world market collapse like that predicted by Roubini, a major terrorist attack -- could push such people into power. If, meanwhile, new Republican governors in purple states go to work with even a modicum of pragmatism -as Christie at least will have to do -- that could have a powerful demonstration effect for Republican decision-makers.

A question for the data-mining maestros

Sucked in by an Organizing for America pitch for health care reform, I tripped over what seems to be a trick of fundraising art:

Amount

$25 $100 $500 $2,500 $50 $220 $1,000 Other: (USD)

Credit Card

Why do the options bump from 25-50-100 to 220? What byte of microtargeting data is at work there? Did donor patterns indicate that for people donating $100, going up another $20 or $10 might be a psychological barrier, whereas for people at the $200 level a 10% bump-up triggers no hesitation? Does this bring in an extra 3% or 5%? How prevalent is this trick? Is there some accepted wisdom that you can slip one bump-up in the menu but not more?

What does Abdullah want?

On Sunday, Abdullah said he would not participate in a runoff election that was bound to be fraudulent. He discouraged his supporters from taking to the streets in protest. In a press conference today, he insisted that he is not interested in being part of Karzai's government or in winning seats for his followers ("We are not going to deal...I am not interested") .

Today he also called the cancellation of the runoff "illegal" -- and suggested that there is no Afghan government for the U.S. and allies to credibly support:

Eight years down the road we still need more troops. In the absence of a credible, reliable, and legitimate partner, more soldiers, more resources are the only thing which will be resulted....

A government which in its formation is based on an illegal decision by a body, to hope that the second government would deliver in dealing with the corruption, issues of governance, [improving] security in this country, it sounds like an exaggeration.

Meanwhile, The Christian Science Monitor reports that northern Afghanistan, where Abdullah's power is based, is an emerging new front for the insurgency.

So what does Abdullah want at this point? And what would be his advice to Obama?

If I had to guess on little info, I'd say he wants substantial power in Karzai's government, notwithstanding his protestations --or Karzai's poor track record with regard to power sharing. But who am I to guess?