He Did It! No, Mom, He Did It!

On Jan. 18, 2001, President Bill Clinton sat in the Oval Office and gave his farewell address to the American people. The nation had enjoyed eight years of peace and prosperity, he said proudly. The economy had created 22 million new jobs. And the fiscal health of the nation had never been stronger. As the nation looked ahead, he said, it needed to maintain its record of fiscal responsibility.

Through our last four budgets we’ve turned record deficits to record surpluses, and we’ve been able to pay down $600 billion of our national debt, on track to be debt-free by the end of the decade for the first time since 1835. Staying on that course will bring lower interest rates, greater prosperity, and the opportunity to meet our big challenges. If we choose wisely, we can pay down the debt, deal with the retirement of the baby boomers, invest more in our future, and provide tax relief.

Nine years ago, Americans were facing a very different kind of budget quandary than they are today. Budget projections indicated that surpluses would grow to $625 billion a year by the end of the decade. The big question was what to do with all the money. Cut taxes? Invest in education and the environment? Put Social Security in a “lock box”? Pay off the $5.7 billion national debt?

It was a wonderful dilemma to ponder. But it didn’t last long. Consider where we stand today.

The national debt has surged past the $12 trillion mark — double the level when Clinton gave his speech — and the Obama administration has forecast that the nation will add another $9 trillion by 2010. The Congressional Budget Office is even more pessimistic, projecting that another $11 trillion in deficits will pile up by 2010. It’s probably a good thing that the feds don’t conduct 20-year forecasts or they might spark a panic. That’s because the really big expenditures on Medicare, Medicaid and Social Security start kicking in a decade from now, pushing spending levels remorselessly higher.

Today the question isn’t whether we should pay off the national debt, it’s how long we can continue adding to it before the whole system collapses. How did we reach such a state of affairs in nine short years?

The two dominant political clans — the Hatfields and McCoys of American politics otherwise known as the Democrat and Republican Parties — would have you believe that it’s all the other’s fault. The sad truth is, there is plenty of blame for both. Since 2001, neither party has been serious about controlling the deficit.

The point may seem obvious to some, but it apparently eludes bloggers and TV’s talking heads who peddle the official party line, admitting no flaw and conceding no weakness. I dwell upon the issue because in my experience in personal conversations and as moderator of the Bacon’s Rebellion blog, an Internet forum where people of diverse perspectives actually do debate civilly, many people are more interested in exonerating their partisan favorites than fixing the problem. The sad reality is that, while balancing the budget is something that everyone says the U.S. ought to do, it isn’t at the top of anybody’s list of priorities. Given a choice, Democrats would rather jack up domestic spending and entitlements every time. Republicans would rather cut taxes and project national might overseas. As long as the elephants can pin the blame on the donkey, and vice versa, no one has to take ownership of their own actions.

We now know that the nation’s fiscal health was not as sound in January 2001 as President Clinton thought it was. Indeed, following the collapse of the dot.com bubble, the economy slipped into recession by March — only two months after Clinton’s speech. Then on September 11 the unthinkable happened: Islamic terrorists hijacked four jets and slammed two of them into the twin towers of the World Trade Center. Markets panicked and the slump deepened. Federal revenues took a dive and the surplus evaporated.

The terrorist attack also highlighted the U.S.A.’s lack of military preparedness. Following the collapse of the Soviet Union, the Clinton administration had overspent the so-called “peace dividend.” To respond to the challenge of fundamentalist Islamic terrorism, the Bush administration ramped up spending across the board on the military, homeland security and intelligence. While the invasion of Iraq was discretionary and arguably unnecessary, few disputed the necessity of spending more money to ensure that a repeat of 9/11 never reoccurred.

Finally, against the backdrop of the wobbly economy and war on terror, Congress let expire in 2002 a piece of legislation that had been crucial to holding deficit spending in check over the previous decade. Reneging on his famous vow, “Read my lips: no new taxes,” George H.W. Bush had agreed to a budget deal that included the Budget Enforcement Act of 1990. By conceding modest tax increases, he won important spending caps that helped restrain spending through the Clinton years. Unfortunately, his son, George W. Bush, had to work with a Congress that had no such institutional brake on its appetites.

Democrat spin-meisters tend to forget that Clinton had a partner in restraining spending: a Republican Congress. By putting Republicans in charge of both houses of Congress in 1994, for the first time in 40 years, voters sent a clear message that they wanted an end to fiscal business as usual. A champion of smaller government, House Speaker Newt Gingrich deserves much of the credit for pushing through welfare reform and other budget-tightening reforms. By 1996, small-government Republicans were so firmly in control of Congress that Clinton acknowledged the obvious, declaring, “The era of big government is over.”

While Republicans and Democrats alike share credit for balancing the budget in the 1990s, president George W. Bush bears much of the responsibility for letting deficits run amuck in the 2000s. Bush’s defenders could argue, like President Obama does today, that he inherited his fiscal problems. After all, the economy went into the tank two months after he stepped into office, and 9/11 took place after nine months. Had Clinton not drawn down military spending so much, Bush wouldn’t have had to ramp it back up so much. But other big fiscal decisions were his. Bush fought for tax cuts as an economic stimulus. He expended political capital to gain support for the budget-busting war in Iraq. He launched the two biggest expansions of entitlements in years, the State Childrens’ Health Insurance Program (SCHIP) and Medicare Part D, the prescription drug benefit. And he tolerated Congress’ growing predilection for pork, allowing earmarks to multiply like feral swine.

The administration’s insouciance toward deficits was captured in a famous story told by Bush’s first Treasury Secretary, Paul O’Neill. During a meeting of the Economic Policy Group O’Neill argued against the proposed tax cut. Government, he argued, needed the money to fix Social Security and Medicare, redesign the tax system and fund the ongoing war on terror. Vice President Dick Cheney disagreed. As O’Neill remembered Cheney’s retort: “When Ronald Reagan was here, he proved that deficits don’t really matter.”

Animated by Cheney’s advice, the Bush administration followed the easy fiscal path, borrowing record sums to pay for guns and butter. On the day Bush took office, the national debt stood at $5.73 trillion. On the day he left office, it had risen to $10.63 trillion — an increase of $4.9 trillion, and the most spectacular run-up since the United States mobilized for total war in 1942.

President Barack Obama rightfully criticized Bush’s fiscal recklessness during his presidential campaign, but he conveniently forgot that the Democrats, who had recaptured control of Congress in Bush’s final two years, passed the budget bills that he was now denouncing. Posturing as a fiscal hawk, Obama continued to blame his predecessor for the worsening fiscal straits when he took office. As he said during a high-level summit one month into the job:

This administration has inherited a $1.3 trillion deficit — the largest in our nation’s history, and our investments to rescue the nation’s economy will add to that deficit. We cannot and will not sustain deficits like these without end. Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to the next budget, the next administration or the next generation.

After saying all right things, Obama proceeded ignore his own advice. After signing a $797 billion stimulus package, to be paid for all with borrowed money, he employed TARP money to bail out Chrysler and General Motors, a use which Congress had never contemplated, and he made his top legislative priority the overhaul of the U.S. health care system, an initiative that would add, depending upon the particular bill in question and who was conducting the analysis, upwards of hundreds of billions of dollars to the national debt over the next 10 years. The budget shortfalls would be even bigger in the out years.

While the Congressional leadership made an effort to give the health care bills the appearance of being “budget neutral,” the debate bogged down in back-room negotiating over whose ox would be gored to cover for the cost of the initiative, variously estimated between $800 billion to $1 trillion over 10 years. The problem was, the Democrats’ version of health care reform was a zero-sum game. For every winner (someone who gained access to health care insurance), there would be a loser (someone who paid the fees and taxes marbled throughout the legislation). In the end, the debate degenerated into a classic exercise in dodgy accounting and redistribute-the-wealth politics. Other than a few promising pilot programs, none of many proposals floated by Democrats would have boosted productivity or improved patient outcomes enough to bend the long-run cost curve downward.

The Democrats may believe Obama’s rhetoric about fiscal responsibility, but the American people do not. Toward the end of 2009, public opinion polls showed flagging approval ratings for Obama generally, opposition to “ObamaCare” specifically, and a throw-the-bums-out mindset universally. Despite Obama’s lingering personal popularity, Americans disapproved in September of his handling of the federal deficit by 58% to 38%. As the year came to a close, the public mood soured even more. A Nov. 30 Rasmussen poll showed that 71% of voters said they were angry at the policies of the federal government — up five points from September — and 46% were very angry.

The American people are clearly focused on something that the political class, growing fat on unprecedented spending, would prefer to sweep under the rug: The federal government faces massive unfunded liabilities with Social Security and health care. With no credible plan for making good on the old entitlements, the nation cannot afford to be making new entitlements. The bail-out and stimulus money may be helping the Wall Street tycoons, the United Auto Workers and incumbent Democratic Congressmen, but it isn’t helping ordinary Americans. All they get is a mountain of debt that propels the nation ever faster toward Boomergeddon.

More than 200 years ago, the economist and moral philosopher Adam Smith observed that there is much ruin in a nation. The United States is a great nation. We have great strengths, not the least of which is the entrepreneurial vitality of our economy and the adaptability of our people. And it will take a lot to ruin us. But ruined we will be if we continue down the path we’re on.

There are four primary drivers of our looming budget disaster: Social Security, Medicare, Medicaid and interest payments on the national debt. The numbers are well known, and I shall not dwell on them at any length. My main purpose is to avoid mushing them all together into one big SocialSecurityandMedicareandMedicaid crisis, to borrow Ezra Klein’s phrase. By examining each one in turn, we can gain a keener appreciation of the problems we face.

In brief, here is the argument that I shall lay out. Social Security is a problem but it is not beyond redemption. Tweaks to the system made within the next few years should suffice to put the program on a firm footing that will survive the stress of Baby Boomer retirement and old age — although there is no “lockbox” to protect Social Security in the event of a total fiscal meltdown. Medicare and Medicaid, meanwhile, are disasters unfolding before our very eyes. If left on auto-pilot, they will precipitate the melt-down. End of story. The one ray of hope is that everybody agrees that a problem exists, even if no one can agree on a remedy.

Finally, there is the interest payment on the national debt. Of all the fiscal challenges facing the nation, this is the least appreciated by the American people — and the most threatening. While there is at least the theoretical possibility that runaway health care costs can be contained, by rationing if nothing else, there is no way to finesse the snow-balling size of the national debt. A debt burden that grows at an accelerating rate is a mathematical certainty.

As long as we depend upon foreigners to lend us the money, we have limited options for dealing with that debt. If American citizens were the only significant creditors, as Japanese citizens are the primary creditors to their own government, we could play the usual redistribution-of-wealth politics that allow us to rob Peter to pay Paul. But the Chinese, Japanese and Persian Gulf oil states are not subject to Congressional jurisdiction. We cannot tax them, fine them or regulate them, nor can we sneakily devalue our debt through inflation or talking down the value of the dollar. Our foreign creditors don’t even have to yank their trillions of dollars in loans to bring us to our knees. As long as we’re running trillion-dollar deficits, all they have to do is stop lending us new trillions, and it’s Boomergeddon time.


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Comments

47 responses to “He Did It! No, Mom, He Did It!”

  1. Larry G Avatar

    Excellent narrative!

    One of your longer pieces rivaling EMR tomes….

    "… This administration has inherited a $1.3 trillion deficit — the largest in our nation’s history, and our investments to rescue the nation’s economy will add to that deficit."

    so I notice you actually use the word 'investments' here…and made me wonder if you had reversed your position on this policy

    but then shortly later….

    …." After saying all right things, Obama proceeded ignore his own advice. After signing a $797 billion stimulus package, to be paid for all with borrowed money, he employed TARP money to bail out Chrysler and General Motors, a use which Congress had never contemplated"

    so which is it? Do you think the govt did need to intervene and spend money to rescue the economy or not?

    You agree that govt invention was necessary but you disagree with the specific responses?

    then you say this:

    …" and he made his top legislative priority the overhaul of the U.S. health care system, an initiative that would add, depending upon the particular bill in question and who was conducting the analysis, upwards of hundreds of billions of dollars to the national debt over the next 10 years. "

    if we do what the other industrialized countries have done, wouldn't our health costs also drop about 1/2?

    or is it that we are not allowed to use that strategy because it means our govt will then become a nanny?

    I don't get it.

    Why NOT take the nanny state if it delivers health care at 1/2 current rates and extends life expectancy ….

    Finally – virtually all the other countries not only agree with the stimulus strategy, they practiced it also AND they delt effectively with health care costs so why can't we?

  2. Anonymous Avatar
    Anonymous

    Larry says, "Finally – virtually all the other countries not only agree with the stimulus strategy, they practiced it also AND they delt effectively with health care costs so why can't we?"

    Well, first off, we aren't all the other countries … Thank God. Would you rather live in France or the UK or the USA? Like your mother use to say, just because Johnny did it, doesn't mean you have to do it too. So the fact that 'all the other countries' did it doesn't carry any water with me. We have our own problems and we will solve them in our own way.

    That said, my next points would be the taxes that are paid in 'all the other countries' and the quality of medical care. First, in my opinion, we already pay far too much in taxes, I would hate to pay what those poor souls in the UK pay. But that's just me, maybe you are fine with giving the government even more of your money to waste. Second, it's been pointed out more than once, you don't see dignitaries of our country going abroad to get medical care, but there certain has been a sting coming from abroad to this country to get medical care. Sorry, our health care is head-and-shoulders above the level in other countries, bar none (IMO).

    Sorry Larry, I'm not impressed with other countries. I am an unabashed, proud American and I'll put our country up against any other country warts and all. I'm not impressed with the medical care that I've seen in and from other countries (granted, I've never had to deal with it first hand). While our system has flaws, the Obamacare system doesn't fix the ills but does introduce more taxes, less quality and rationing (the likes of which this country has never seen before).

    In case you couldn't tell from the tone, this is …

    Accurate

  3. Groveton Avatar

    Jim:

    Good piece. I also am happy to hear that you are writing Boomergeddon. I think it's a critical area of analysis that suffers from an almost random level of public discourse. A systematic and logical view of how America's changing demographics will shape the future will be very useful.

    My only suggestion is that you consider one more factor in your analysis / book, namely globalization. I have been a first hand witness to globalization for the last 30 years. It seems clear to me that the pace of globalization is accelerating with the last 5 years perhaps equal to the preceding 25 years in level of economic impact to the United States.

    Why is this important to your book?

    Debt for any entity can only be seen as good or bad when viewed through the prism of economic growth. If I told you that Google was planning to float billions in debt to finance its expansion you might say "good for them". If I said the same thing about GM you might say, "what are they thinking?".

    The key issue is not absolute debt level. It is not even the increase or decrease in debt. It is the amount of debt and the increase or decrease in debt relative to the reasonable projections of future economic growth. And that's where globalization must be considered. America's reasonable expectation of future economic growth is decreased by globalization. While globalization is very good for a small segment of Americans it is a substantial net negative for America overall. Please note – I am not commenting as to whether globalization should (or should not) be intentionally retarded. I am simply saying that current trajectory of globalization will decrease the future growth potential of the United States while simultaneously increasing the percent of our population which will require some level of state – sponsored assistance in a globalized world. I think this trend is as important as the change in American age demographics (which can be alleviated, to some extent, by increased immigration).

    Just a thought…

  4. Anonymous Avatar
    Anonymous

    "AND they delt effectively with health care costs so why can't we?"

    Well, for one thing, they mostly rely on us to provie much of their national defense.

    If we fairly allocated their full locational costs…….

    RH

  5. Anonymous Avatar
    Anonymous

    "The key issue is not absolute debt level. It is not even the increase or decrease in debt. It is the amount of debt and the increase or decrease in debt relative to the reasonable projections of future economic growth."

    I agree, you cannot simply assume that debt is always bad.

    ———————————–

    "And that's where globalization must be considered. America's reasonable expectation of future economic growth is decreased by globalization."

    Unless we import and legalize a lot of foreigners.

    RH

  6. Anonymous Avatar
    Anonymous

    Several comments in response to a number of other thoughtful comments.

    I think Ray's point on the U.S. subsidizing the defense of much of the rest of the world is well-taken. Now answer this. Do we do so because that stance protects our interests the best? I.e., are we better off living in a more stable world than if we did nothing unless and until it hits our border? Or do we do this in large part because lobbyists for the military-industrial complex can keep Congress, regardless of party, in tow?

    Importing and legalizing a large number of foreigners. Does it matter which ones we import? Are we importing self-sustaining one? Or ones that need subsidies from taxpayers? Are we importing "spark plugs" for economic growth or poverty?

    What if we taxed the hell out of the "traders" (better word than speculators) such that the costs, taxes and risks of short-term betting were too expensive? What if we took most of the rewards from Wall Street, such that our best and brightest might work at inventing, producing, delivering better services, etc.?

    There is no way that the federal government can and will do anything with health care but make it excessively worse. The feds proposed to spend several billions to expand broadband — a reasonably good idea. But only a few grants and loans have been announced. Investors (not traders) are sitting on the sidelines waiting for the feds to pick the winners. Meanwhile I know a couple of companies that would be building networks, spending money, employing people, expanding broadband. But instead, they are sitting on the sidelines, burning cash. How much additional debt are we taking on to see companies fail because the feds cannot get their act together?

    Any health care bill will be so corrupted by sweetheart deals. Where are Senator Jim "Born Fighting" Webb and Mark "the Good Governor" Warner? Voting for a bill that forces Virginians to pay for Nebraska's Medicaid expansion costs.

    Debt — how much debt is Fairfax County, Virginia, and MWAA taking on so that a few wealthy landowners at Tysons Corner can make even more money on their property through rezoning? How does government borrowing to pay for transportation improvements that will fail well before the planned density is built spur growth? County staff have said both the expanded Beltway and an expanded Dulles Toll Road will fail once Tysons Corner reaches 84 million square feet, but the County is expected to approve well more than 120 million square feet of density. The purpose of debt is, as Groveton says, important.

    TMT

  7. R. Stanton Scott Avatar
    R. Stanton Scott

    I would challenge the assertion that the September 11, 2001 terrorist attacks "highlighted the U.S.A.'s lack of military preparedness" because Clinton had "overspent the so-called 'peace dividend.'" It's difficult to see how maintaining the cold war military that won the first gulf war in its fully funded state would have protected us from this particular attack. Arguably, these terrorists attacked successfully because the Bush Administration ignored warnings from Richard Clarke, as well as intelligence briefings, that suggested an imminent strike–not because some component of the US military, or even the intelligence community, had lost funding.

    And while I would agree that "few disputed the necessity of spending more money to ensure that a repeat of 9/11 never reoccurred," this is in fact not what happened. Most of the increase in defense spending during the Bush Administration went to buy weapons systems that could not be used to fight terrorism (e.g., F-22) or pay for wars that had more to do with settling old scores than fighting al-Qaida (see Iraq).

    Your entire essay makes me think or the typical beltway pundits Naderesque argument that both parties fundamentally get things wrong, and in the same way. The truth is that Clinton got it right, dot-com bust notwithstanding. He cut budgets, and made the prosperous pay more to finance the system they'd prospered in. He struck a better balance between guns and butter, and put together an intelligence and justice apparatus that had a pretty good handle on what international terrorism looked like (hint: it was not Iraqi). He had contained both Iraq and Iran, and normalized relations with China (without borrowing money from them). And he had freed trade to an unprecedented level, globalizing capitalism and bringing other states–including China–more deeply into the international capitalist system.

    In contrast, Bush and his Republican Congress dropped the ball on al-Qaida twice, paid the surpluses to the rich rather than paying down debt, started a costly and unnecessary war, and created the regulatory conditions that sent manufacturing on the run overseas while permitting financial companies to privatize profit while socializing risk. The people progressives said would profit from the Bush presidency–the national security state, oil companies, and Wall Street–did so.

    Whether or not Obama and the current Congress can fix this by borrowing more money and giving it to Aetna remains to be seen. But it seems unfair to give them even partial blame for it.

  8. Groveton Avatar

    TMT:

    I see Northrop Grumman possibly coming to Fairfax County (admittedly, maybe somewhere else in the DC area), Hilton Hotels in Tyson's, Volkswagen, NA out by Dulles, SAIC in McLean.

    Some will carp about the federal government being the real draw. However, I struggle to see how Hilton or VW really cared about being close to the federal government.

    Meanwhile, I see companies like Babcock & Wilcox leaving the rest of Virginia (maybe Tidewater is an exception).

    My conclusion is that the NoVA model works with regard to job creation. So, for all the questions about Tyson's landowners, etc (many of which are quite legitimate) I still think the leaders in NoVA are accomplishing the primary objective of state and local government – attracting jobs. I also see the ratings of the various school systems around the country and have to conclude that the leaders in NoVA are also accomplishing the second most important goal of state and local government – good schools.

  9. Anonymous Avatar
    Anonymous

    I think we do it because we have no real choice: we still have the most to lose with a weak defense. Also, unlike the second world war, the next war will be over before we can mobilize whatever industrial might we have left.

    Knowing that, many other companies feel comfortble with much smallaer militaries than they might have otherwise.

    Still, when our Navy is larger then the next five navies combined – and they are our allies – you have to wonder what amounts to overkill.

    I, too, would take exception to the idea that 9/11 showed us as being unprepared militarily. More like a lack of imagination, especially considering the number of times those builings were attacked previously.

    It will be curious to see if the new tallest building in Dubai becomes a similar lightning rod for hate.

    If anything 9/11 showed our predilection to, and preference for, having a society devoid of risk. The terrorists caused us enormous harm not so much because of what they did, but because of our response to it.

    We should have shrugged it off and started constructon on two (better) replacement towers the next day. Instead, to this day we have a hole in the ground and every old movie that shows the new York Skyline reminds us what is missing.

    Likewise with New Orleans. We have not fixed either of those calamaties and yet we ae off thinking we can rebuild Iraq and Afganistan.

    Not to mention Tyson's.

    RH

  10. Anonymous Avatar
    Anonymous

    Billlions of people would like to come to the U.S.

    I think we can pick and choose as we please.

    No matter how many of the "Best and Brightest" we choose, there will still be many more overseas to compete with us. And even if we can compete with a top heavy technocratic society, we will still wind up buying many everyday goods produced by low wage workers – overseas. We may as well have the benefit of sufficient low wage workers here, as well. It isn't like we haven't enough work for them to do.

    RH

  11. Anonymous Avatar
    Anonymous

    I still don't understand TMT's animosity towards short term traders.

    I'm not a commodity producer but I do read the farm magazines and I can see how the ecommodity producers depend on the traders.

    I'd suggest that the problems come not from the duration of the hoding: banks make money on overnight loans every day.

    Rather, we would be better to look at other factors, such as traders owning too much of the market, or markets that consist solely of third tier invented derivatives without any kind of underlying true market, with some kind of deliverable items that must be reconciled at some point.

    Other than that I don't see any pointin beating up on someone just because they buy and sell stuff on a quick turnaround. that's what grocery stores do, and we don;t accuse them of taking short term profits.

    RH

  12. Anonymous Avatar
    Anonymous

    With NG coming to the DC area, I think the only contenders are Bethesda and Fairfax. Don't know why people keep forgetting Bethesda is a viable contender.

    The federal govt is the real draw for the DC area Fairfax county included. Don't believe it. Take a look at a list of the Fortune 1000 companies based in the DC area, what do you notice? Take a look at the major employers in the localities in the DC area? What do you notice. Most of the Fortune 1000 companies are government contractors plus the GSEs, most of the major employers are federal government agencies or government contractors.

  13. Larry G Avatar

    " My conclusion is that the NoVA model works with regard to job creation"

    my take is that the NoVa model is exactly like the Fed's stimulus idea except in NoVa it's 365 days a year, year in and year out.

    This is not rocket science.

    this is why many smaller communities fight tooth and nail to get a military base or a manufacturer that builds DOD stuff or in Hampton Roads case, they fight for a single aircraft carrier even though they have several others home-ported there as well as dozens of other naval ships.

    I don't have any problem at all with NoVa benefiting from taxpayers money but when someone claims that NoVa's economy is the product of brilliant leadership.. well I have to snicker s a bit.

    Credit given for the schools though.

  14. Anonymous Avatar
    Anonymous

    Groveton – I'm glad both VW and Hilton are here in Fairfax County, but the reason they came was to be near the federal government. I attended a county event this last summer and representatives of both companies said that they came to be near the federal government. There's nothing wrong with that, but it is the reason why they are here. It has nothing to do with Fairfax County and its perceived magic. It probably has more to do with the left-wing governments in D.C. and Montgomery County.

    We benefit because we are relatively more sane government-wise than the other nearby places that permit companies to be near the federal government.

    But that still doesn't answer the question why one would spend billions of dollars on rail and roads only to see them fail because of over-development. how does it help businesses or employees to see their commuting time just through Tysons Corner increase by 15 minutes during perfect weather? That's what the consultant calculated would occur in Tysons and quite soon.

    Arlington has done well with employment, better than Fairfax County in terms of the percent of the real estate tax paid by businesses. But the Rosslyn Ballston corridor is not permitted to fail transportation-wise. Development is limited to what is manageable. Why should Tysons be different?

    Why can't we have good development in more parts of Fairfax County? Reston, Herndon, Annandale, Springfield, Route 1, etc.?

    Tysons is not about good development. It's about a few wellplaced individuals trying to make boatloads of money by manipulating the political process. And about foisting the associated costs on others, including business competitors. I know a few landowners in Reston that are furious about how they are being manipulated for the benefit of their Tysons competitors.

    Fairfax County is just as corrupt as New Orleans, Chicago or New Jersey. We are just more sophisticated about it.

    TMT

  15. James A. Bacon Avatar
    James A. Bacon

    TMT, I am somewhat surprised to hear that VW and Hilton want to be near the federal government. But I suppose I shouldn't be. I entitle the theme of one of my chapters "The Imperial City" and explain how the region is dominated by the political class, and even the "private" sector is largely focused on the federal government. I allowed as how there were a handful exceptions that seemingly have no connection to the political process, but apparently I was wrong. (Maybe Groveton can persuade us that his company actually in an exception.)

    What advantage could VW and Hilton have to be near the center of power? It's not like VW is angling for federal bailout funds. Either is the hotel industry. Obviously, there are considerations that don't meet the eye. I would love to know what they are. Do you remember the details?

  16. Groveton Avatar

    LarryG:

    Hilton and Volkswagen? They want to be near the Pentagon? Is the Army considering replacing Humvees with a new version of The Thing? Does Hilton hope to persuade Congressmen and Congresswomen to hold their illicit affairs in Hilton Hotels? Carfax, Comscore, WebMethods, CapitalOne, Blackboard (DC), The Carlyle Group (DC), Marriott (MD) – lots of different companies in the Washington, DC area. I know you don't like to believe that but it's true. And more coming every day – like Hilton and VW. I'll let you in on a secret:

    1. Well educated workforce composed of people willing to suffer the personal inconvenience of relocating for economic opportunity (in other words – they try hard).
    2. Good schools for the kiddies.
    3. Good airports so HQ people can get out to the field.

    That's how you get a Hilton or VW/NA to move to your city. And you can bet that Ole Timmy Kaine tried his best to convince both of those companies to locate somewhere else in Virginia (which is what I would have done too).

    In November I was driving from San Jose to San Francisco. I saw a big building. You know what it said on the top? Walmart.Com. Why didn't they just do the work in Bentonville?

    You also seem to love Europe more than life itself. Where are the European centers of commerce? France = Paris, England = London, Spain = Madrid (although the Catalonians might argue a bit about Barcelona), Italy = Rome (although the Milanese would complain about that).

    Are you beginning to see a pattern?

    What works for job creation? Capital cities and sometimes another major metropolis or two.

    What doesn't work? Small cities and large towns.

    So, it doesn't really matter how DC got to be DC (although you are hopelessly mixed up about that history). What matters is that NoVA will remain the economic growth engine of Virginia for the rest of your life. And, probably, a life or two after that.

    Tidewater in general and Virginia Beach in particular could be a contender for accelerated economic growth. They need a better airport and better schools.

    Charlottesville could be a pretty strong enclave. UVA provides a decent base. You can get to Dulles in 90 – 120 minutes. Good arts scene – particularly music.

    After that – I just don't see the potential. Maybe Richmond. I've never understood why that city kind of stagnated. As I recall Richmond once even had an ABA team. The Virginia Squires as I recall. Young man named Dr J played on the team (great to see MDs with outside interests). They played in Richmond – at least some of the time. That was hopeful. Then they couldn't pull the fans and they disbanded. I think they disbanded in 1976. The Washington Bullets won the NBA championship that year (maybe it was 1977). I guess the Bullets must had their points subsidized by the feds.

    I remember the Squires (from afar) as the high water mark in modern Richmond history. The Richmond metro area has about 1.2M people. So does Buffalo, NY. Buffalo has the Bills and the Sabres. Where's Richmond with the pro sports?

    The Richmond Rats. As long as Dan Snyder doesn't own them – I might even root for them.

  17. Larry G Avatar

    I could not agree more with Groveton on the Dan Synder deal.

  18. Groveton Avatar

    My company isn't based in Virginia. We're not even based in the United States. We have thousands of people working in Northern Virginia but that's still only a small fraction of our company's headcount. We have a strongly held bias against establishing any headquarters location. Our CEO, CFO , COO, CIO and CTO all live and work in different cities. That's just the way we roll. It's a mixed bag. On the one hand, we don't develop the bureaucracy that goes along with an HQ. We also have our leaders distributed closer to our customers and employees in the field. On the other hand, we have to work extremely hard to collaborate over distances and time zones. We have sophisticated electronic collaboration capabilities but physical travel is part of the equation too. Which is a big part of why I am on the road across the world 80% of the time.

    So, when I tell LarryG that electronic collaboration isn't going to save Virginia's small cities and large towns he should listen. If you can electronically ship a job from Manassas to Martinsville then you can ship that same job from Manassas to Mumbai.

    Richard Florida (and EMR, without the social commentary) have it right. Florida understands what it takes for a city to build a critical mass of skills that drive the economy (the so-called creative class). EMR understands that it's folly to try to have dozens of NURs spread across a state like Virginia.

    Here's the future:

    1. You live and work in the big cities (think Paris). You live in a densely populated area in an apartment. Some apartments are quite nice. Most aren't.
    2. If you make enough money you buy a vacation villa in a nice place (think Saint – Tropez). Maybe your family moves there and you commute back to the city each week to work. You take the government subsidized train to your villa on weekends and on all the holidays.
    3. When you retire you can move out to "the country" although most people don't do that because they've gotten too used to city life.

    You'll never own a home with a yard. You may, in fact, never own a home at all. The neighborhood where you live is crowded, noisy and dirty. You pay at least half of your income in taxes if you are even modestly successful. You don't really need a car. Structural unemployment is rampant but the social safety net is generous. You are either born into the ruling elite or you are not. If you want your kids to have a chance you'd better get them into the right private schools (assuming they'll accept one of your ragamuffin kids even if you can afford it). If you are not a member of the ruling elite then the government makes most of the major decisions in your life.

    That's the Euro-future. Not all bad but certainly not all good.

  19. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    Well Jim you left out the part where the average American has had it with work. It's going to be extremely hard to pay down anything when people gain the mindset of doing the least possible for a paycheck.

    Innovation? Who cares in a workplace controlled by scripts. It's not as if you will be rewarded anyway.

    Loyalty? Get the job done, manager gets a promotion, you get an AH nephew as the new boss.

    Definition of Teamwork? What happens when workers who won't even talk to each other join forces to try and hit Megamillions.

    Start your own business? Ain't gonna happen if you can't get loans.

    Nah, Groveton is right. Why bust you rear if you end up in the same place, and get the basics for free. Those that can will move to Panama. The rest will live out their lives in Ray's government subsidized poorhouses, earning a few politician bucks for the lottery pool by attending Tea Bag parties.

    Americans have been getting sick of the workplace for quite a while now. I tend to think some of this dis-satisfaction originates from Boomers who are passing down their experiences with H1B immigrants and globalization to their younger cohorts. Then there is the business model itself, where workers are just another liability.

    The stress fractures were in place, waiting. This recession and the government's response is the tectonic shock that finally killed America's spirit. The aftershocks haven't started yet. And "Boomergeddon" is just the first wave of the economic tsunami.

    http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=3820

    http://www.nypost.com/p/news/business/poll_most_in_us_don_like_their_jobs_4iRFvxrVqLk3mxtMVmCULO

  20. Groveton Avatar

    I'll give Obama his due on this one. He didn't play games, he didn't mince words:

    "This was a screw up that could have been disastrous," the president said during a meeting in the White House situation room, according to the White House media office. "We dodged a bullet but just barely. It was averted by brave individuals not because the system worked and that is not acceptable. While there will be a tendency for finger pointing, I will not tolerate it."

    Honesty. That's a big step forward in politics.

    Good for Obama.

  21. Anonymous Avatar
    Anonymous

    For years, many American corporations established their headquarters in New York because, as the financial capital, it was the seat of power in the U.S. Well, it isn't any more (or at least not for some time). Power has shifted to Washington, D.C. Political and financial power resides in this area.

    So why wouldn't companies move to this place to be near the power and the money. I would agree that the governmental and economic messes in California and Michigan certainly must have played a role in Hilton's and VW's moves respectively. And, as Groveton points out, we have good schools and an educated citizenry. But when push comes to shove, being in the Capital Area next to Congress's uncontrolled spending, the agencies' ability to harm one's competitors, etc. means come to this area. And we have a less socialistic state and local government than the competition. Hence, Fairfax and Loudoun Counties are attractive, but mainly because they are close to the federal government.

    TMT

  22. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    Intelligence analyst A sits in a cube pouring over raw reports. Across from him is Analyst B, who forwarded tidbits of Iraqi WMD intel up the chain. Next thing B knows, there is a trillion dollar war in Iraq. On the other side of B sits C, except C's not there much because he is with his defense lawyers. Analyst A looks at the other cubes, and places the raw report of an unverifiable rumor about some Nigerian in the bottom of his secure hold basket. A few weeks later, a single transcript about AQ in Yemen is locked up in Analyst D's desk safe. It's holiday vacation time and D left early to buy this week's lottery pool before heading out of town. Maybe Christmas will be a big deal this year.

  23. Anonymous Avatar
    Anonymous

    I think suggesting economic power is shifting to metro DC is a little misguided. California, New York, and Texas are essentially the major economic engines of the entire nation, and that won't change most people's lifetime. I wouldn't hold my breath waiting on DC to become more like Paris or London.

    Most of the new business moving to NoVA will be centered around the federal government. Will non government related businesses move to the DC area? Sure, but the amount of non federal goverment businesses moving to the DC are is and will continue to be small compared to government related businesses and agencies.

  24. James A. Bacon Avatar
    James A. Bacon

    R. Stanton Scott: It's nice to have a new voice in the Rebellion. However, I will have to take vigorous disagreement with you, particularly the way in which you disputed my notion that 9/11 highlighted the fact that Clinton overspent the peace dividend.

    First, I would not that it's indisputable that Clinton significantly reduced spending on defense and intelligence. And that was my main point. Cashing in the peace dividend helped him to balance the budget. Surely, you don't dispute that.

    Second, I would contend that Clinton bureaucratized and neutered the CIA, which entered the War on Terror with virtually no capability to conduct on-the-ground operations in Middle Eastern nations, and what capability it did have was ineffectual and useless. (I would cite "The Human Factor" by a former CIA agent as a reference.)

    You can accept Richard Clark's partisan and self-serving account that blames the Bush administration for failing to connect the dots on 9/11 if you choose to. But the fact remains, it took years after 9/11 for the CIA to build an on-the-ground capability to conduct operations in Iraq, Afghanistan and other hot zones in the Middle East.

    As for the rest of your comments, I give Clinton his due for balancing the budget. But only a partisan zealot would ignore the role played by Newt Gingrich in putting Clinton's feet to the fire.

  25. Larry G Avatar

    " Cashing in the peace dividend helped him to balance the budget. Surely, you don't dispute that."

    It's a nice claim but until you provide some real data to back up the assertion – it's more blather from the conservative folks.

    Especially when one considers that the percentage of the budget devoted to DOD is what? less than 25%?

    911 did not happen because we underfunded the military or intelligence.

    this is a particularly ironic statement coming from a guy who says over and over that one o the biggest problems with the Dems is their concept that anything can be made better or fixed by "throwing more money at it".

    I see now.. and proof positive with Bush/Cheney who said that when it comes to Defense "budgets don't matter" and yes indeed…"throwing more money" at it actually does "work" but only if done for the idealogical goals one's supports.

    So.. "throwing more money" at govt that Conservatives opposed is a bad thing but "throwing more money" at govt that Conservatives support is a good thing.

    there goes your credibility JB.

  26. R. Stanton Scott Avatar
    R. Stanton Scott

    Mr. Bacon,

    A careful reading of my comment reveals no claim that the Clinton Administration did not reduce the US defense and intelligence budgets, nor that these reductions did not help balance the budget. I claim only that these reductions did not materially damage counter-terrorism efforts, and did not make the September 11 attacks more likely or more damaging.

    If you don't count recruiting, training, and equipping surrogate forces in Pakistan, Uzbekistan and Afghanistan; creating the Special Collections Service (joint CIA/NSA project to infiltrate Afghanistan); signing three classified memoranda authorizing assassination of Bin Laden and his lieutenants; and signing a secret agreement with Uzbekistan in 1998 to fight the Taliban in Afghanistan, then I guess you can say that Clinton "bureaucratized and neutered the CIA" and left it with "virtually no capability to conduct on-the-ground operations in Middle Eastern nations" with a straight face.

    Clinton also sponsored legislation that would have frozen terrorist assets–and which proved important enough for Bush to push through after 9-11–but it was blocked by Republicans (e.g. Gramm) on behalf of banks.

    And all of this while the GOP worried itself not over embassy bombings or terrorism but with white stains on a blue dress.

    I'm not sure I would cite The Human Factor as a source on damage to the CIA, since this memoir includes more complaints about the author's personal treatment at the hands of his leaders than than it does suggestions for improving intelligence gathering. And in any event, a good reading of Coll's Ghost Wars suggests that even when on the ground and doing as they please CIA agents can do more harm than good.

    As for budget balancing, I would argue that the tax increases included in the 1993 budget–which Gingrich vociferously opposed–had more to do with deficit reduction than spending cuts (the ratio was about one-to-one by the way). Whether or not Gingrich influenced the final contents of the bill, including cuts, it passed without a single GOP vote, and only because Al Gore broke a party-line tie in the Senate.

    In fact, Clinton proposed huge spending cuts in February 1993, before Gingrich had a chance to grab his feet. Indeed, the spending cuts in the bill can be attributed as much to Clinton leaning on Democrats reluctant to accept them as to the Republicans who demanded more cuts and fewer taxes, and then voted for neither.

    See "The Success of the 1993 Budget Reconciliation Bill at Reducing the Federal Budget Deficit" in the December 20, 2002 issue of The Review of Policy Research for more. Though Gingrich no doubt supported any spending cuts he could get, he opposed the key piece: higher taxes on corporations, the wealthy, and energy. It is therefore disingenuous to call the budget surpluses of the nineties a joint effort, or to give the GOP or Gingrich any credit for them.

  27. Anonymous Avatar
    Anonymous

    Why can't we have good development in more parts of Fairfax County? Reston, Herndon, Annandale, Springfield, Route 1, etc.?

    Well, they are trying to re-work Columbia Pike, but I don;t think that trolley system is going to cut the mustard.

    RH

  28. Groveton Avatar

    Events that happened while Bill Clinton was president:

    Feb. 26, 1993 – First World Trade Center bombing

    Aug. 7, 1998 – Simultaneous truck bomb attacks against American Embassies at Dar es Salaam, Tanzania and Nairobi, Kenya.

    Aug 20, 1998 – Cruise missile strike ordered by Bill Clinton hits the Al-Shifa pharmaceutical factory. This factory produced approximately 1/2 of all medicine used by the people of Somalia. Despite vigorous and repeated claims by the Clinton Administration it is revealed that the Al-Shifa factory did not manufacture any type of weaponry or the ingredients for any weapons. It was, quite simply, a third world pharmaceutical plant.

    Jan. 1, 2000 – Foiled millennium attacks against targets in Kenya as well as the USS Sullivans and Los Angeles International Airport.

    Oct 12, 2000 – Attack against the USS Cole.

    Despite four successful attacks and two foiled attacks President Clinton failed to adequately strengthen America's unconventional warfare forces. He denuded the CIA and bears most of the responsibility for the sadly predictable attacks on Sept. 11, 2001.

    Bill Clinton had many strengths. National security was not one of those strengths.

  29. Groveton Avatar

    I called friends at Hilton and VW and asked them why they relocated to Fairfax County. Apparently, both companies originally intended to relocate to Fredricksburg. However, when they went to a community meeting in Fredricksburg to discuss their plans one of the residents stood up and delivered a tirade against people driving to work SOLO in SUVs and then proceeded to get spitting mad about George Bush. The guy from Hilton looked and the guy from VW and asked, "How far do you think we have to go to get away from this guy?". "At least to Fairfax County", was the answer.

    More seriously, I don't know why these companies came to Fairfax County. However, I doubt it was to be close to the federal government. That's a polite way of explaining why you didn't stay where you were or why you didn't go somewhere else. If you had to be close to Washington to lobby Washington then every pharmaceutical company, bank and telco in America would be in DC.

  30. R. Stanton Scott Avatar
    R. Stanton Scott

    Groveton,

    Listing the attacks that occurred during the Clinton Presidency does not show that he "denuded" the CIA or bears responsibility for the attacks.

    I've listed several direct actions the Clinton Administration took to fight terrorism generally and al-Qaida specifically. These and other efforts helped foil the two attacks you acknowledge he prevented.

    So where is the evidence supporting your claim? Simply saying it does not make it so.

  31. Larry G Avatar

    Groveton, I have no problem with folks in SUVs driving SOLO to work – as long as they are willing to pay their own costs and not expect other non-commuters to pay their way.

    I thought you were opposed to subsidies for commuters?

    But I am truly amazed that apparently both you and Jim Bacon are from the "let's throw more money at the problem" school … as long as it suits your own particular goals.

    and here I though you guys were true fiscal conservatives.

    and you know what.. this totally explains the Republicans last 8 years in office.

    They demonstrated quite clearly that they too believe you could throw more money at the problem AND do it OFF BUDGET by giving tax cuts to the rich at the same time they ran up billions on the national credit card to get Saddam frequent fliers miles.

  32. Anonymous Avatar
    Anonymous

    Groveton – re Hilton & VW – All I know is what I heard.

    And who knows, maybe their executives heard about some planned Stimulus Bill for the travel industry. The automobile folks — at least some of them — have already been to the trough.

    As one who has earned much of his living since the mid-1980s from federal-government-related activities, I'm not sure why anyone would come to this area, but for a need/desire to be near the federal government. The quality of life in NoVA has generally declined over time due to over-development. I'm not alone in that thought. One of my former neighbors, a developer, has told me that many times, as have a number of executives from other industries.

    Verizon has its headquarters in New York, but much of the high-level work is done from Courthouse Road in Arlington. Sprint officially moved its HQ to Kansas City, but quite a few decision-makers are still in Reston. They must be doing this for a reason.

    TMT

  33. James A. Bacon Avatar
    James A. Bacon

    Larry, regarding your comment of 5:02 p.m. I certainly do not belong to the "throw more money at the problem" school of defense and intelligence. As the U.S. lumbers towards Boomergeddon, I firmly believe that Defense, Intelligence and Homeland Security will have to absorb much of the budget cutting needed to restore the country to fiscal sustainability.

    Unfortunately, Clinton not only cut CIA funding, he did so without orchestrating the kind of restructuring of its mission and resources that would enable it to meet the threats of the emerging world order. One simple example: On 9/11, the CIA had only a handful of people who spoke Arabic, Pashtun, Farsi or other critical languages. Years of smaller terrorist incidents (listed by Groveton) did nothing to change the dysfunctional culture of the CIA.

  34. Groveton Avatar

    Mr. Scott:

    Of the two plots against American targets planned for Jan 1, 2000 – the US was generally alerted to the danger by Jordianian intelligence. Based on the heightened state of awareness border guards in the US were vigilant. They detained a man trying to enter the US and found explosives and detonators in his car. Thus, the LAX plot was thwarted. The plot against the USS Sullivans was not thwarted by anybody other than the terrorists themselves. The boat they were using was so overloaded with explosives that it sank. Nobody even knew about the plot until long afterwards. While it was difficult to say what might have happened, one can assume that the attack would have probably been successful. Why? The US Navy was then operating under rules of engagement from Bill Clinton's Pentagon. The rules forbade any sailor from firing at anyone of anything unless a) they were firing upon the vessel or b) permission was given by the ship's captain or another officer. Petty Officer Jennifer Kudrick said that if the sentries had fired on the suicide craft "we would have gotten in more trouble for shooting two foreigners than losing seventeen American sailors."

    So, in one administration we have four successful attacks, one foiled attack and one attack that, by good luck, never happened. Yet, after 8 years in office the United States was still woefully unprepared for the attacks of Sept. 11, 2001. Clinton had 7 years from the first WTC attack to get our act together. Bush had 9 months. In the 7.5 years between the Sept. 11, 2001 attacks and President Bush leaving office there were no successful attacks aginst American civilian targets. By Barack Obama's own admission only blind luck and brave passengers prevented the first successful attack against American civilian targets last Christmas Day. One can only hope that President Obama will heed this wake up call far more effectively than President heeded the five wake up calls he got while president.

    I am afraid that any reasonable analysis of history must conclude that (despite 4 successful attacks on American civilian targets) President Bill Clinton left America tragically unprepared to defend itself against what became the fifth and worst attack.

  35. Larry G Avatar

    " Clinton had 7 years from the first WTC attack to get our act together. Bush had 9 months."

    where was Bush when this was going on? in a hermetically sealed container in an undisclosed location?

    you crack me up. this is totally BOGUS.. I'm surprised at you guy.

    Is this the same CIA that told us that Sadaam had WMDs and was behind 911?

    I love the way that revisionist history is created… good entertainment.

  36. James A. Bacon Avatar
    James A. Bacon

    Larry said, "Is this the same CIA that told us that Sadaam had WMDs and was behind 911?"

    Bingo. Think about the implications of that statement. The CIA thought Saddam had WMD during the Clinton administration, and it continued to think Saddam had WMD during the Bush administration.

    As it turned out, the CIA had virtually none of its own assets inside Iraq.

    Bottom line: The CIA was a dysfunctional organization then — and still may be for all I know.

    Larry, you and our friend Mr. Scott view the world through a hyper-partisan lens. But some problems transcend political party. Washington, D.C., is inhabited by a permanent political class with which the Donkeys and Elephants must contend. The CIA is part of that permanently entrenched apparatus.

  37. Larry G Avatar

    If we think the CIA was dysfunctional.. and remained so through the Bush years then does that imply that your theory is that Clinton screwed it up but Bush did not know it was or if he did, chose not to fix it.

    Translation: if the conventional republican wisdom was that Clinton achieved a surplus by gutting the CIA and changing it's mission – if they thought that – what was their response to put the agency back together?

    Why did they use George Tenet?

    I like to see consistency in philosophy …and adherence to the facts when reporting history.

    It makes no sense to claim that Clinton screwed up the CIA, which caused harm to the US but yet the Bush folks did nothing to fix it… either through ignorance or incompetence…

    .. and still claim it's Clinton's fault.

    unless of course.. you've got to think that to have it conform to one's own idea of how he wants to view history necessary to maintain the correct partisan view.

    Mr. Bush OPPOSED the creation of the 911 commission – remember?

    Why?

    Using your logic here – Mr. Obama could screw up the next 4 years but because he inherited such a mess.. it will always be Bush's fault…

    then.. your version is ..no.. that's not it…

    that the screwups started with Clinton and Bush could not fix them, then Obama could not either.

    bizarre? yes.

  38. Larry G Avatar

    my problem here is this.

    If you want to make the case by showing specific budget cuts and specific changes that Clinton made to the agency ALONG WITH the events that you think were effected by these changes then you could make a compelling case.

    But pointing out a series of events that occurred on his watch and then claiming that the snafus were a direct result of the budget cutting and meddling – which you have not documented at all..

    well.. that's not worth much folks.

    ..no matter who does it… left or right.

    at that point.. it's just another partisan fairy tale in my view.

  39. James A. Bacon Avatar
    James A. Bacon

    Larry, you're confusing two things. Clinton cut CIA funding. End of story. He also screwed up the CIA "corporate culture" by making it more bureaucratic, legalistic, politically correct and risk averse. He also put gool-old-boy George Tenet in charge. Budget… organizational culture. Two separate issues.

    Bush increased funding for the CIA. But he also kept Tenet in charge, and gave him a presidential award. "Heckava job, George!"

    Has the CIA culture changed after eight years of the war on terror, oh, excuse me, the war on manmade disasters, or whatever the PC phrase is these days? Somewhat. At least we have CIA back in the field, as witnessed by the poor sods who got blown up by the double agent in Pakistan.

    It will be interesting to see what happens to the CIA culture during an Obama administration that seems determined to wage war on terrorists by legalist means.

    But this is a sideshow to my original post. Clinton reaped the peace dividend. You can argue whether he overspent the peace dividend, as I suggested, but the fact is, he cut defense/ intelligence spending and those cuts helped him balance the budget.

    The fact is, 9/11 occurred on Bush's watch. You can blame Bush for 9/11 if you want to, but nobody disputes that the nation then had to ramp up spending on defense, intelligence and homeland security. I seem to recall that a substantial majority of Democrats lent their support.

  40. Larry G Avatar

    I just don't see FACTS to back up the assertions here.

    how big were the budget cuts?

    what changes were made?

    what was the "peace" dividend beyond a fuzzy concept?

    if there was one – how much was it worth?

    If Clinton overspent it.. by how much did he overspend it and where did it come out of the CIA's budget hide?

    All of this is little more than unsubstantiated conjecture – colored by the various partisan views of it.

    for the record – I don't blame Bush for 911 anymore than I blame Clinton for the events that occurred on his watch.

    The CIA is an institution that we know so little about that I have my doubts that – as long as they get their classified funding – that much can be accomplished by a President short of getting with Congress to manipulate the budget to de-fund the stuff he no longer wants.

    None of this is known so how can anyone claim that changes were made unless they can provide something to back up the claims?

    I don't think it is partisan at all to ask such questions.

    The "war on terror" is a stupid concept IMHO. like the "war on poverty" or the "war on drugs".

    None of those wars are EVER going to be WON no matter how many resources you devote to that cause.

    it's a stupid concept.

    The world has ALWAYS had terrorists.

    Many countries experience terrorism in a wide variety of ways…

    This country got cold-cocked by terrorist that kicked it up to a more sophisticated level.

    We DO have to deal with it. We need to do a much better job of it.

    I'm not in the group that thinks we can "talk to the terrorists and find out the problem and fix it".

    But we have our own issue with our own people going around places like Va Tech and Columbine and Oklahoma City and committing wantonly terrorist acts also.

    It's just plain unproductive to try to make this a political issue in my view.

    why…. Clinton,Bush or Obama or their respective homeland security folks would allow anyone who sources a flight from a country that has been designated as a state-supporter of terrorism is beyond me.

    What this points out.. is what I've been telling youse guys.

    That there are things that the govt must do – but the govt can be incompetent… at the same time.

    Whether it's Medicare or HomeLand Security or the CIA folks who screwed up by being sucked in by a double agent.

    this is not Dem or Republican.

    trying to put a Dem or Republican spin on it is just not dealing with the realities in my view.

  41. Gooze Views Avatar
    Gooze Views

    Jim,
    I commend you on a good discussion of the debt and deificit threats here. To be frank, when I heard of the "Boomer geddon" book, I was afraid it would be a tedious jeremiad sort of like a fundamentalist minister wailing constantly against sin and the devil. That is indeed a trap that you seem to avoid, at least so far.
    That said, I do have a few quibbles with your explanation of recent history and grasp of global econmics.

    (1) You state toards the end of the piece:

    "As long as we depend upon foreigners to lend us the money, we have limited options for dealing with that debt. If American citizens were the only significant creditors, as Japanese citizens are the primary creditors to their own government, we could play the usual redistribution-of-wealth politics that allow us to rob Peter to pay Paul. But the Chinese, Japanese and Persian Gulf oil states are not subject to Congressional jurisdiction. We cannot tax them, fine them or regulate them, nor can we sneakily devalue our debt through inflation or talking down the value of the dollar."

    There's a certain world view here that is a bit parochial. There is absolutely nothing wrong with one country helping finance another country's debt. It has been going on for centuries in one form or the other and modern markets could not function without access to capital beyond their borders. If you believe Ricardo, this means that everyone's boat rises, not falls.
    To complain that COngress (God help us!) can't "regulate" international debt markets sounds kind of yokel-like. No national legislature could and you wouldn't want them to since they would gum up the works by taking up too muych time to make decisions or cow-tow to parochial political interests. Congress and the government can ifluence such borrowing and lending through international trade agreements and they do. Sometimes they work and sometimes they don't. The U.S., for example, has been trying for decades to get the Chinese to change their one-sided system of setting yuan rates. But in general, the pacts work and it would be sophomoric to insist they don't without ample evidence.

    (2) You also claim that Clinton "overspent the peace dividend." Huh? Mabe you mean "underspent" since you claim later that Clinton cut defense spending. True, he did do that, but it isn't quite fair to blame him for 9/11 and anti-terroist programs.
    A couple of points here. Clinton's defense cuts were in response to the dissolution of the USSR. The weapons programs cut were ones suddenly deemed redundant or unnecessary such as "symmetrical" big ticket jet fighters and bombers, ICBMs, ships, and other expensive and sophgisticated stuff. The AL Qaeda threat had not become evident and it is "asymmetrical" meaning that the terrosists armed themselves with a bunch of cell phones and other stuff from Radio Shack plus lots of bomb-making knowledge. You don't need F-22s to fight that. And Clinton did wanr "W" Bush about just such threats after the USS Coles was hit.
    (3) When you get into Chrysler and GM's problems, you go out of your way to somehow indict the United Auto Workers as if the unions are somehow responsible for management's bad decisions such as backing the Saturn model which never, ever made a profit or sticking with SUVs and largeder sedans when gas prices were spiking and customers were crying for more MPG. You can't blame the old union boses for that. You seem to always havew to through unions into the equation somehow, don't you.
    (4) I agree with Larry Gross that this post is transitional for you. I lvoed your Cheney quote about Reagan's budget busting views.
    There may be hope for you yet!

    Peter Galuszka

  42. R. Stanton Scott Avatar
    R. Stanton Scott

    I see that a couple of folks here intend to stand by the general claim that Bill Clinton cut funding for the CIA, and left the US unprepared for a terrorist attack. Though I don’t expect to change many minds, I shall continue for the benefit of others who may wander by.

    President Bill Clinton took terrorism seriously, and increased US anti-terrorism efforts. By late 1996, he had signed a bill placing sanctions on companies doing energy business with Iran or Libya. He had increased traditional counter-terrorism funding by 43 percent, and would spend $3.6 billion over the next four years on new programs to protect critical infrastructure and monitor weapons of mass destruction.

    Clinton’s 1996 Omnibus Anti-Terrorism bill included, among other things, $250 million for air passenger and cargo security improvements, $40 million in new domestic intelligence spending, $35 million for a new Counter-Terrorism Fund, $20 million for FAA security research, and almost $7 million to improve security at federal facilities.

    The Joint House-Senate inquiry into the September 11 attacks reported that while "overall [intelligence] capabilities declined," during the Nineties, “the counter-terrorism component of the overall National Foreign Intelligence Program (NFIP) at least doubled at most agencies in the decade before the September 11 attacks." (page 250). Indeed, after recognizing the threat, the Clinton administration increased funding for the NFIP, which included the CIA, to new highs by 1999. This funding stayed at record levels until Mr. Bush took office and reduced them (he only increased this funding again after 9-11; see chart on page 256).

    The claim that the Clinton Administration "denuded" the CIA, left us unprepared for terrorism, or limited the assets needed to stop the 9-11 attacks therefore has no basis in fact. Indeed, the intelligence assets Clinton left in place provided ample warnings to the Bush Administration that terrorists had planned and trained to use aircraft as weapons, as well as a specific warning which named al-Qaida a month before the attack. Sadly, the new President and his people ignored these warnings.

    Still, I wholeheartedly agree with the claim that the CIA (and the FBI, for that matter) is a "dysfunctional organization." Anyone who has read Ghost Wars, The Age of Sacred Terror, Legacy of Ashes, See No Evil, or even The Human Factor has to, on some level. What I object to is the efforts by some on the right to blame Bill Clinton for this dysfunction, or claim that President Bush did anything to fix it. The facts simply do not support this claim.

    I also object to the characterization of my discussion of these facts, and their implications, as coming through a "hyper-partisan lens." This looks like nothing more than a way to dismiss factual claims you don't like: characterize one side as liberal and the other conservative, then claim that both are biased and can be ignored. In other words, please avoid comparing a fact-based claim supported by historical fact with specious, unsupported assertions.

    Whatever my political bias, it has no bearing on whether or not these things happened. Whatever I or anyone else wants to believe the objective truth makes no difference: President Bill Clinton took concrete actions to improve US intelligence and anti-terrorism assets during his Presidency. After recognizing the threat in 1993, he increased funding for domestic security and intelligence, and left the US in position to effectively prosecute a fight against al-Qaida and other terrorists. If anyone can dispute the facts supporting this claim, or my interpretation of them, I'm all ears. Until then, whether they support liberal claims or conservative ones the facts stand on their own, partisan lens notwithstanding.

  43. James A. Bacon Avatar
    James A. Bacon

    Peter, Good point about "overspending the peace dividend." That really doesn't quite make sense.

    Moreover, I can see that the statement draws a lot of flack (from you, Larry and Mr. Scott) and distracts from my larger point, which was, simply, that Bush had to increase defense/ intelligence/ homeland defense spending in the aftermath of 9/11. Whether Clinton deserves a share of the blame for the 9/11 intelligence failures is irrelevant to the argument I'm trying to advance in Boomergeddon.

    I think the case still can be made that the Clinton administration was as blameworthy as the Bush administration (just as Obama has been blaming Bush for a full year now for budget deficits), but Mr. Scott does raise legitimate points. I think he overlooks some other equally legitimate points, but, frankly, the 9/11 blame game is yesterday's partisan slugfest. We've got better things to worry about today, such as, should we be trying al Qaeda terrorists in U.S. civilian courts, where they can hire lawyers, clam up, and be inaccessible to anyone trying to pry intelligence out of them?

  44. Larry G Avatar

    safe to say JB.. you have strayed from the Virginia scene onto national partisan soil here … I guess you have moved on …

    here we have the VA GA ginning up this session with major fish to fry on how Republican fiscal conservatism is going to work – on the ground – in a situation where cuts are virtually mandated to reach a balanced budget.

    What will we cut? Are going to cut fat only or muscle also?

    Will a Republican ultimately conclude that more revenue is really needed (and sneakily call it user fees) or will he actually do the Republicans have claimed – that we don't need to increase taxes – just cut the fat?

    And McDonnell and Virginia has national implications in terms of how he will handle the shortfalls….

    If McDonnell succeeds in Va, that could propel him onto the national scene… right?

    I mean if that rat Gilmore could claim National Credentials, I'm sure McDonnell has a shot.

  45. R. Stanton Scott Avatar
    R. Stanton Scott

    Mr. Bacon,

    If your larger point is that President Bush had to increase military and intelligence spending in the wake of the 9-11 attacks, I would like to see you support this claim.

    I have made a case (which you may not accept) that the intelligence assets Clinton left in place were mostly sufficient to prosecute a conflict with a non-state actor of the size and scope al-Qaida represented. It is not clear to me that 9-11 in itself changed the nature of that conflict, except for placing it much higher on the national security agenda and increasing the urgency to catch him. The successful attack, after all, did not make Bin Laden's group more powerful–it only focused our attention.

    To be sure, if a state protects such terrorists the US may find it necessary to use military force to compel extradition, and President Bush rightfully did so in Afghanistan. But this probably did not require substantial increases in defense spending, and it certainly did not call for programs like the F-22 or a larger Navy, as Mr. Gooze points out. And the invasion of Iraq had very little to do with the 9-11 attacks, except for their use in justifying the invasion. The need to fight terrorism did not force this spending–the Bush Administration used it as an excuse to transfer huge sums of money from taxpayers to defense contractors (which may itself fit your Boomergeddon argument, though from a different angle).

    I have not been around here very long, but if I read you correctly you plan to argue in Boomergeddon that government overspending, and the associated debt, will bankrupt the US in time to impoverish baby boomers. If this argument depends on the premise that terrorism forces the US to spend more heavily on national defense and intelligence than it did in 1998, you may want to take another look.

  46. Gooze Views Avatar
    Gooze Views

    R. Stanton Scott is right on this one, Jim.
    Peter Galuszka

  47. Anonymous Avatar
    Anonymous

    simply, that Bush had to increase defense/ intelligence/ homeland defense spending in the aftermath of 9/11.

    ——————————–

    Politically he probably had to, but he could have taken a much more pragmatic and fiscally conservative view. We lose around 3000 people every year ins swimming pool accidents but nobody seems to feel that we have to unleash hundreds of billions of dollars in new bureaucracy in order to prevent the swimming pool threat.

    Our satellites can probably inform us every time anyone in the US jumps in a pool easier than they can inform us as to the wherabouts of Bin Laden.

    I want him as much as anybody, but if there is going to be collateral damage, I'd prefer it happen in Afghanistan or Pakistan and get it over with quickly.

    The Bush approach only insures that boomers are going to foot the bill for billions in inconvenience and (mostly) wasted protection. Boomers children are going to foot the bill in blood. If I were a terrorists I would want exactly the result that Bush has provided.

    The price of eternal vigilance is that you spend money all the time, and eternally. The terrorists have only to concoct a big surprise intermittently, and at low cost.

    What might have worked a lot better and quicker would have been swift, certain, and massive retaliation with not all that much specificity. If you think you are likely to be vaporized for letting Bin Laden play soccer in your neighborhood, you are likely to become a baseball fan.

    Such action saves money because it is short in time, however, massive tit for minor tat is neither politically nor morally acceptable. Bush did what he had to, and he did a lousy job of it.

    RH

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