Creative destruction

Political expenses scandal

The great shaming of Parliament

It has taken an almighty crisis for MPs to start cleaning up their act

POLITICIANS who were dreading the day when their exploitation of Parliament’s lax expenses regime would be exposed may have consoled themselves that at least it would all be over in one go. Hundreds of thousands of mortifying pages detailing their claims since 2004 were scheduled for official publication this summer, despite the tenacious resistance of parliamentary authorities in the courts.

In the end, though, the revelations came in agonising stages. The Daily Telegraph obtained the leaked data and, on May 8th, began to publish it. The first to be exposed were ministers. Another batch of Labour politicians followed before the spotlight shone on front- and backbenchers of the Conservative Party. By the time the Liberal Democrats’ turn came round on May 13th, Parliament was on its knees.

The purchases dubiously claimed by MPs ranged from dog food and toilet brushes to thousands of pounds’ worth of home improvements. Much of the nest-feathering took place under the so-called second-homes allowance, worth up to £24,000 ($36,000) a year to MPs who require accommodation in both London and their constituencies. Some “flipped” the designation of their first and second homes in order to be reimbursed for work done on both. A few profited by sprucing up a second home on expenses before reclassifying it as their main residence to avoid capital-gains tax when they sold it.

The reaction of politicians to the great exposure has only slowly and fitfully begun to match public outrage. Gordon Brown apologised for the entire political class on May 11th. David Cameron, the Tory leader, and the Lib Dems’ Nick Clegg followed suit, declaring that colleagues would pay back unjustified claims. Andrew MacKay, Mr Cameron’s parliamentary aide, has resigned over claims his party deemed “unacceptable”; some MPs are returning money; pressure on Michael Martin, accused of an indulgent line on expenses as speaker of the House of Commons, is growing; and reform of the system is now inevitable. An inquiry by the independent Committee on Standards in Public Life, launched after previous scandals, is due to report this year.

But all this came after days of mealy-mouthed denial and obfuscation. Some MPs blamed the media (the Telegraph is said to have paid for what could be regarded as stolen information). Others insisted the controversial claims were technically within the rules, as if those rules were not made by Parliament itself, and as if their spirit did not matter as much as their letter.

Voters, forced by recession to live more leanly, are irate. A Populus poll conducted as the Labour and Tory revelations were being published showed the two parties down by four percentage points each, while the Lib Dems, yet to be exposed, were up by four. And 86% of respondents thought all the parties equally bad on expenses. Britain’s anti-politics mood did not need the boost that the expenses scandal has given it. In April a YouGov poll showed that a third of voters trusted no politician to tell the truth (Mr Brown and Mr Cameron were trusted by only 12% and 21%, respectively, of respondents).

Yet the perverse result of all parties being tainted may be that no party really is. The incumbents are culpable for letting a bad system fester for so long, and Mr Cameron produced a better and bolder response than Mr Brown. But the spectacle of wealthy grandees having their country homes renovated at taxpayers’ expense has done the Tory brand no favours. And the Lib Dems cannot afford to lose their unique selling point as Westminster’s nice guys. Labour, one of whose MPs is responsible for what is perhaps the gravest offence (Elliot Morley claimed £16,000 for a mortgage he had already paid and was suspended from the Parliamentary Labour Party on May 14th), looks the worst, by a bit. But just as the sleaze that racked the last Tory government only amplified the defeat they were already due to suffer in 1997, so this scandal only reinforces the likely outcome of the next election: a loss for Labour, and grudging approval for the Tories.

Amid the din of recrimination, some MPs’ plaintive wails deserve to be heard. British politicians are neither corrupt nor lavishly remunerated by international standards. The revelations were less shocking than many observers expected. Some MPs have shown Cromwellian rectitude; the cynic’s mantra that they are all bad is nonsense. And while much of Britain’s anti-political mood is a justified response to a scandal for which MPs must do penance, some reflects a basic nihilism they can do little about. A popular television satire, “The Thick of It” (and its recent film adaptation, “In the Loop”, with its prescient gag about a politician expensing porn films), is funny viewing but its central conceit that everyone in politics is stupid and malign is all too widely held.

The expenses scandal was born of two traits often found in British public life: a preference for “muddling through” over rational design, and a reluctance to ditch a flawed system until it falls apart in a crisis. As MPs’ earnings fell over time behind those of bankers and family doctors, and as their role changed to include constituency work better done by local councillors, they could have debated, openly and from first principles, the issue of pay and expenses. But rather than risk honest analysis of what MPs are for and what they are worth, they improvised a solution by treating expenses as a way of topping up their income. And instead of abandoning this approach when its flaws came to light—mini-sleaze stories have abounded in recent years—they procrastinated until a crushing torrent of revelations pushed them into action. The failure to act sooner will damage their reputations for years.

Creative destruction

Banyan

Creative destruction

The need for change in Japan is pressing, but the callow opposition hardly seems up to the job

THERE is no revolution at the barricades, and on an early-summer Sunday the homeless in Tokyo’s Yoyogi park form a polite long queue for the bento (packed lunch) boxes being handed out by a schoolgirl from a local church: the deepest bows come from those at the back who go away empty-handed. Yet as far as the problems of a rich country go, it is hard to exaggerate Japan’s.

The global slump has hit the economy far harder than the famous bursting of its bubble did two decades ago. Government debt stands at twice the economy’s annual output, dwarfing even Italy’s. The export-led growth which drove a six-year recovery after 2002 has proved a chimera. Now, as Japan’s 127m-strong population is set to fall, some predict, by more than a third over the next few decades, the working-age population will fall fastest, before a way has been found to pay for all the grey heads. Yet, under a nutty-sounding new policy the government is quietly bribing South American immigrants of Japanese extraction to return home for good. Other solutions to the crisis proposed by members of the ruling Liberal Democratic Party (LDP) include creating a brand-new currency, with which to flood the economy. Much else about the LDP is either crackpot or forlorn, suggesting that Japan’s problems are political at root. And now, for the first time in Japan’s post-war history, an opposition offers a feasible alternative to the LDP, which has run Japan for all but ten months since 1955.

Until this week, however, which brought the resignation of Ichiro Ozawa, imperious leader of the opposition Democratic Party of Japan (DPJ), that feasibility had once again been in doubt. Victory in the general election, which the prime minister, Taro Aso, is bound to call by September, was the DPJ’s to lose. Mr Ozawa seemed determined to lose it. Not for nothing is he known as “the Destroyer”. This spring he was implicated in a fund-raising scandal, in which an aide was indicted for receiving illegal donations from a construction company. That went down poorly with voters, underscoring how much Mr Ozawa’s politics were still rooted in the murk of back rooms.

The 66-year-old Mr Ozawa had started out in the LDP, where his rise was as astounding as the quantities of enemies he made. Earlier than any politician, he had articulated the need for political reform and for Japan to come out from under its pacifist constitution to chart a more “normal” course in foreign affairs, shouldering more of the burden of its own defence. He defected from the LDP in 1993 and, as the DPJ’s head, has turned the party into a national force not just among the urban middle classes but in rural regions too. The strategy paid off in 2007, when the party won control of the upper house of the Diet (parliament), throwing the LDP into disarray. It is on its third prime minister since.

The latest scandal, however, had turned Mr Ozawa into an electoral liability for the DPJ. Stepping down may prove to be a rare constructive act in the Destroyer’s career. His successor will present a fresh start in promoting a reformist agenda of fixing the pension and health systems, providing jobs and making government and bureaucracy more accountable.

“Fresh”, however, is hardly the apt term for the two contenders for the leadership, to be decided on May 16th. One, Yukio Hatoyama, the secretary-general, is closely associated with the former leader and will be backed by Mr Ozawa’s henchmen. Mr Ozawa himself may expect to wield more power from behind the throne than on it. The other, Katsuya Okada, led the DPJ to a crushing defeat in 2005 by the LDP under its former prime minister, Junichiro Koizumi. Fatally, he opposed Mr Koizumi’s popular plans to privatise the postal-savings system. Both DPJ contenders are charisma-light insiders. But at least Mr Okada, who has admitted his 2005 electoral blunder, has hit a nerve in promising to campaign against the practice, common among LDP political families, of treating Diet seats as heritable sinecures. Over half Mr Aso’s cabinet are the offspring of former politicians.

Searching for the new

Even so, the DPJ hardly offers a clean break with the sordid past. Like its predecessor as pretender to the LDP’s crown, the Socialist Party, it has tended to be a rather tame opposition. Many of its members, indeed, are ex-Socialists. Others, Mr Hatoyama and Mr Okada included, are from the LDP. Mr Hatoyama has a brother in the cabinet. His grandfather, Ichiro Hatoyama, was an LDP founding father and arch-rival to Japan’s most notable prime minister after the war, Shigeru Yoshida. Mr Yoshida, as it happens, was Mr Aso’s grandfather, so this summer’s election may play out as family rivalry. Further, the political careers of both Mr Hatoyama and Mr Okada have been bankrolled by immense family fortunes, just like those of many in the LDP. Plus ça change.

With Mr Ozawa gone, establishment meddlers, such as retired prime ministers and media magnates, will redouble efforts to get the LDP to propose a post-election “grand coalition” with the DPJ. After all, many have long viewed it as merely an errant LDP faction. Elsewhere, modernisers within the LDP are pondering defecting to the DPJ. Given the DPJ’s inexperience—one reason why it depended so on Mr Ozawa—they might be welcome.

So the big test facing the DPJ is to dispel the suspicion that politics in Japan, more than any other rich democracy, is a top-down business arranged by a self-selecting elite, which rarely informs the public of its actions, much less consults them. Voters, of course, have in part themselves to blame for this. To date, they have too readily accepted what they are given, even when the political bento boxes prove empty. When they line up at the ballot boxes this summer, a resounding vote for the DPJ would show Japanese politicians they are accountable after all, and offer a chance to see if the DPJ can keep its promises. It might even elicit an explanation as to how the party is to pay for them.

The ungovernable state

California

The ungovernable state

As California ceases to function like a sensible state, a new constitution looks both necessary and likely

ON MAY 19th Californians will go to the polls to vote on six ballot measures that are as important as they are confusing. If these measures fail, America’s biggest state will enter a full-blown financial crisis that will require excruciating cuts in public services. If the measures succeed, the crisis will be only a little less acute. Recent polls suggest that voters are planning to vote most of them down.

The occasion has thus become an ugly summary of all that is wrong with California’s governance, and that list is long. This special election, the sixth in 36 years, came about because the state’s elected politicians once again—for the system virtually assures as much—could not agree on a budget in time and had to cobble together a compromise in February to fill a $42 billion gap between revenue and spending. But that compromise required extending some temporary taxes, shifting spending around and borrowing against future lottery profits. These are among the steps that voters must now approve, thanks to California’s brand of direct democracy, which is unique in extent, complexity and misuse.

A good outcome is no longer possible. California now has the worst bond rating among the 50 states. Income-tax receipts are coming in far below expectations. On May 11th Arnold Schwarzenegger, the governor, sent a letter to the legislature warning it that, by his latest estimates, the state will face a budget gap of $15.4 billion if the ballot measures pass, $21.3 billion if they fail. Prisoners will have to be released, firefighters fired, and other services cut or eliminated. One way or the other, on May 20th Californians will have to begin discussing how to fix their broken state.

California has a unique combination of features which, individually, are shared by other states but collectively cause dysfunction. These begin with the requirement that any budget pass both houses of the legislature with a two-thirds majority. Two other states, Rhode Island and Arkansas, have such a law. But California, where taxation and budgets are determined separately, also requires two-thirds majorities for any tax increase. Twelve other states demand this. Only California, however, has both requirements.

If its representative democracy functioned well, that might not be so debilitating. But it does not. Only a minority of Californians bother to vote, and those voters tend to be older, whiter and richer than the state’s younger, browner and poorer population, says Steven Hill at the New America Foundation, a think-tank that is analysing the options for reform.

Those voters, moreover, have over time “self-sorted” themselves into highly partisan districts: loony left in Berkeley or Santa Monica, for instance; rabid right in Orange County or parts of the Central Valley. Politicians have done the rest by gerrymandering bizarre boundaries around their supporters. The result is that elections are won during the Republican or Democratic primaries, rather than in run-offs between the two parties. This makes for a state legislature full of mad-eyed extremists in a state that otherwise has surprising numbers of reasonable citizens.

And that is why sensible and timely budgets have become almost impossible, says Jim Wunderman, president of the Bay Area Council, an association of corporate bosses. Because the Republicans are in a minority in the legislature, they have no sway until budget time, when they suddenly hold veto power thanks to the two-thirds requirement. Because in the primaries they have run on extremist platforms against other Republicans, they have no incentive to be pragmatic or moderate, and tend simply to balk.

What was unusual about this year’s deadlock was only its “record lateness”, says Mr Wunderman, which amounted to an “anti-stimulus” that negated much of the economic-recovery plan coming from Washington, DC. “No real conversation is possible on anything that matters,” he says, whether it be California’s fraught water supply, its barbaric prison conditions or its teetering public education.

Representative democracy is only one half of California’s peculiar governance system. The other half, direct democracy, fails just as badly. California is one of 24 states that allow referendums, recalls and voter initiatives. But it is the only state that does not allow its legislature to override successful initiatives (called “propositions”) and has no sunset clauses that let them expire. It also uses initiatives far more, and more irresponsibly, than any other state.

Direct democracy in America originated, largely in the Western states, during the Populist and then Progressive eras of the late 19th and early 20th century. It came to California in 1911, when Governor Hiram Johnson introduced it. At first, it made sense. The Southern Pacific Railroad dominated politics, society and the courts in the young frontier state, and direct democracy would be a welcome check and balance. The state in 1910 had only 2.4m residents, and 95% of them were white. (Today it has about 37m residents, and less than half are white.) A small, homogenous and informed electorate was to make sparing and disciplined use of the ballot to keep the legislature honest, rather as in Switzerland.

Citizen-power gone mad

Sparing and disciplined it stayed until the 1970s. But then came a decade of polarisation and voter mistrust. In 1978 Californians sparked a nationwide “tax revolt” by passing Proposition 13, which drastically limited property taxes and placed a permanent straitjacket on state revenues. That launched an entire industry of signature-gatherers and marketing strategists that now puts an average of ten initiatives a year on the ballot, as Mark Baldassare, the boss of the non-partisan Public Policy Institute of California, has calculated. In 2003 direct democracy reached a new zenith—or nadir, some might say—when Californians “recalled” their elected and sitting governor, Gray Davis, and replaced him with Mr Schwarzenegger.

The minority of eligible Californians who vote not only send extremists to Sacramento, but also circumscribe what those representatives can do by deciding many policies directly. It is the voters who decide, for instance, to limit legislators’ terms in office, to mandate prison terms for criminals, to withdraw benefits from undocumented immigrants, to spend money on trains or sewers, or to let Indian tribes run casinos.

Through such “ballot-box budgeting”, a large share of the state’s revenues is spoken for before budget negotiations even begin. “The voters get mad when they vote to spend a ton of money and the legislature can’t then find the money,” says Jean Ross of the California Budget Project, a research outfit in Sacramento. Indeed, voters being mad is the one constant; the only proposition that appears certain to pass on May 19th would punish legislators with pay freezes in budget-deficit years.

More than half of the initiatives don’t pass, and some that do are sensible. But much of the system has been perverted into the opposite of what Hiram Johnson intended. It is not ordinary citizens but rich tycoons from Hollywood or Silicon Valley, or special interests such as unions for prison guards, teachers or nurses, that bankroll most initiatives onto the ballots.

Then comes a barrage of television commercials, junk mail and robo-calls that leave no Californian home unmolested and the great majority confused. Propositions tend to be badly worded, with double negatives that leave some voters thinking they voted for something when they really voted against. One eloquent English teacher in Los Angeles recently called a radio show complaining that, after extensive study, she could not understand the ballot measures on grounds of syntax.

The broken budget mechanism and the twin failures in California’s representative and direct democracy are enough to guarantee dysfunction. The sheer complexity of the state exacerbates it. Peter Schrag, the author of “California: America’s High-Stakes Experiment”, has counted about 7,000 overlapping jurisdictions, from counties and cities to school and water districts, fire and park commissions, utility and mosquito-abatement boards, many with their own elected officials. The surprise is that anything works at all.

As a result, there is now a consensus among the political elite that California’s governance is “fundamentally broken” and that the state is “ungovernable, unless we make tough choices”, as Antonio Villaraigosa, the mayor of Los Angeles and a likely candidate for governor next year, puts it. What are those choices?

Incremental reform, says one set of analysts. Darrell Steinberg, a thoughtful Democrat who is the current leader of the state Senate, says that the dysfunction is often overstated, since the system was deliberately designed “to ensure that change occurs slowly”. He believes that several piecemeal reforms already slated will fix most of the problem.

So does California Forward, a bipartisan think-tank supported by several of the state’s éminences grises. A change to districting rules should end gerrymandering, starting next year. And there is talk of open primaries in which people vote irrespective of their party affiliation, and then elect a candidate in a run-off between the top two vote-getters, whether from the same party or not. Together, these two steps would make the state’s representative politics more moderate, says James Mayer, California Forward’s director. Representatives should also have longer terms in office, he thinks, to reduce the permanent turnover that pits greenhorn legislators against savvy and entrenched lobbyists.

Founding fathers wanted

Many others, however, now believe that California needs to start from scratch, with a fully-fledged constitutional convention. California’s current constitution rivals India’s and Alabama’s for being the longest and most convoluted in the world, and is several times longer than America’s. It has been amended or revised more than 500 times and now, with the cumulative dross of past voter initiatives incorporated, is a document that assures chaos.

Calls for a new constitution have resurfaced throughout the past century, but never went far. That changed last August, as the budget negotiations were once again going off the rails, when Mr Wunderman of the Bay Area Council renewed the call for a convention and received an astonishing outpouring of support. Mr Schwarzenegger has called a constitutional convention “a brilliant idea” and thinks it is “the right way to go”. (The new constitution would take effect well after he leaves office.) Most encouragingly, says Mr Wunderman, nobody, not even the so-called special interests, has yet come out against a convention.

To the extent that there is scepticism at all, it is not about the idea of a new and cleaner constitution but about the process that might lead to it. If a convention set out to rewrite the entire constitution, it would end in the usual war over hot-button social issues such as gay marriage or the perennial Californian fight over water. And there is concern that “the nutwings are the ones who will show up, not the soccer moms,” as Ms Ross of the California Budget Project puts it. The same partisan extremists bickering about the same controversies would lead nowhere.

To address these concerns, the Bay Area Council, which has become the driving force behind the scheme, has put forth two ideas. First, delegates to the convention should be chosen through the general jury pool to ensure that the whole population, as opposed to partisans or voters, is represented. Second, the scope of the constitutional convention would be explicitly limited to governance issues and the budget mechanism and would exclude all others.

This should enable reform in the most vital and interconnected areas. These are: reducing the two-thirds requirement for budgets and taxes; mandating two-year as opposed to annual budgets; giving local governments more access to local revenues; creating less partisan districts and primary elections; disciplining the process of direct democracy with new rules about signature collection; and introducing a “sunset” commission, as Texas has, that would gradually retire overlapping jurisdictions and offices to achieve something more manageable.

The plan is to introduce voter initiatives in next year’s ballot calling for a constitutional convention, to have the convention the following year, and to put the new constitution on a ballot in 2012, when it would take effect. In the meantime both the incrementalists, such as California Forward, and the wholesale reformers, such as the Bay Area Council, are backing the propositions on next week’s ballot. Even if they succeed, this would only temporarily reduce the urgency for radical reform; failure would cause intolerable pain.

India's election

India's election

Congress comes back

India’s ruling party wins an unexpectedly thumping victory

REVERSING decades of decline, the Congress party has won India’s month-long general election by a bigger margin than its most optimistic followers had dared dream of. As results were counted on Saturday May 16th it looked likely to win around 200 of 543 available seats, which would represent the biggest win by any party for 18 years.

Under the prime ministership of Manmohan Singh, Congress will return to power at the helm of a simpler and, it is expected, more stable coalition than it has presided over for the past five years. Its United Progressive Alliance was projected to win around 260 seats. For additinal support, Congress will be able to choose from an eager host of independents and small regional parties, including several recently jettisoned allies.

India’s Communist parties, which provided support and endless headaches to the outgoing government for most of its tenure, will not be among them. The leftists were projected to do unprecedentedly badly, winning around 24 seats—down from their 2004 tally of 62. A new Congress ally in West Bengal, the Trinamul Congress, is the main beneficiary. It was set to win 20 of 42 seats in West Bengal, a state the Communists have ruled for three decades.

Confounding most predictions, another Congress ally, the Dravida Munnetra Kazhagam party, has clung on to win around half of 39 seats in Tamil Nadu, a state it swept in 2004. Yet it was Congress’s performance that was most remarkable. In the absence of any obvious national issue, or enthusiasm for Mr Singh and his patron, the party’s leader, Sonia Gandhi, it trounced its main rival, the Bharatiya Janata Party (BJP), which looked likely to win around 120 seats. In Rajasthan, which the Hindu nationalists swept in 2004, Congress was expected to win 21 of a possible 25 seats. It was also set to win ten seats in Gujarat, which is known for Hindu-Muslim violence and was considered solidly for the BJP.

Perhaps most significantly, Congress may have more than doubled its former account in Uttar Pradesh (UP), with 21 of 80 seats. That would probably make it the second-biggest party in India’s most populous state, behind the Samajwadi party, a low-caste Hindu outfit and sometime Congress ally, which was expected to win 23 seats. The Bahujan Samaj Party (BSP), which is dedicated to dalits (former “untouchables”) and rules UP, looked set to win 20 seats—half the tally its ambitious leader, Mayawati, had counted on.

At first glance, this looked to vindicate Congress’s decision to contest solo in UP, a giant state it once dominated and has long talked of recapturing. Congress’s decision to stand alone in Bihar, where it looked set to win only two out of 40 seats, was less fruitful—though given the collapse of its erstwhile ally there, the Rashtriya Janata Dal party, from 22 seats in 2004 to perhaps three, it may not have been costly.

Both decisions were attributed to Rahul Gandhi, Mrs Gandhi’s 38-year-old son. His father, Rajiv Gandhi, grandmother, Indira Gandhi, and great-grandfather, Jawaharlal Nehru, were all prime ministers of India. Mr Singh, a 76-year-old economist, is set to be the first Indian prime minister since Nehru to return to the office after serving a five-year term. But many expect that Mr Gandhi, who was re-elected to his safe seat in UP, will take over the job within a year or two.

Appearing alongside Mrs Gandhi on Saturday, Mr Singh, who has recently undergone heart-bypass surgery and campaigned little during the election, said he hoped Mr Gandhi, who entered politics in 2004, would agree to join his next cabinet. Commenting on her party’s victory, Mrs Gandhi, the enigmatic Italian-born widow of Rajiv, said: “Eventually the people of India know what’s good for them and they always make the right choice.”

That an unexpected multitude of the 714m voters registered for this election plumped for Congress is undeniable. Early figures suggest Congress increased its vote-share from 26.7% in 2004 to around 29%. And its leaders can congratulate themselves on this. Ruling in a coalition for the first time, Congress has delivered steadier government than many expected. It can also lay claim to unprecedented economic growth for its first four years in power—even if this was largely founded on economic reforms introduced by its predecessors and unusually clement global economic conditions.

Congress also seems to have benefitted from voters’ rising distaste for its rivals. At a time of relative calm between Hindus and Muslims, the BJP used its Hindu-supremacist rhetoric sparingly, and struggled for a convincing alternative. It also seems to have been worse affected than Congress by the traditional anti-incumbency urge of Indian voters, having until recently run state-level governments in several of its northern strongholds, including Rajasthan.

Excited by their success, some in Congress detect a deeper trend—a shrinkage in the appeal of regional parties, such as the BSP, whose rise has constituted the main trend in Indian politics for two decades. That would be good, giving hope for less chaotic and corrupt central governments than Indians are sadly accustomed too. Alas, Congress’s small success in UP is too little evidence for this claim. But Indians can at least expect their new government to be less fractious than its predecessor. And considering the remarkably messy coalition that might have been, if the vote had been as divided as predicted, that is a major blessing.

Another Bubble Bursts

What's Elevated, Health-Care Provider?

What's Elevated, Health-Care Provider?

Economy of language would be good for the economy.

• By PEGGY NOONAN

The indecipherable language of government has actually become dangerous to the well-being of the nation. As the federal government claims ever greater powers, its language has become vague to the point of meaningless and meaningless to the point of menacing.

Martin Kozlowski

The other day I was watching "Morning Joe" on MSNBC, and Kathleen Sebelius, the secretary of health and human services, came on from Washington to talk about health care. A reporter on the set, Andrew Ross Sorkin of the New York Times, asked a few clear and direct questions: What is President Obama's health-care plan, how would it work, what would it look like? I leaned forward. Finally I will understand. Ms. Sebelius began to answer in that dead and deadening governmental language that does not reveal or clarify but instead wraps legitimate queries in clouds of words and sends them on their way. I think I heard "accessing affordable quality health care," "single payer plan vis-à-vis private multiparty insurers" and "key component of quality improvement." In any case, she didn't answer the question, which was a disappointment but not a surprise. No one answers the question anymore.

As she spoke, I attempted a sort of simultaneous translation, which is what most of us do now when we hear our political figures, translate from their language to ours. "Access health care" must mean "go to the doctor." But I gave up. Then a thought crossed my mind: Maybe we're supposed to give up! Maybe we're supposed to be struck dumb, hypnotized by words and phrases that are aimed not at making things clearer but making them more obscure and impenetrable. Maybe we're not supposed to understand.

I shouldn't pick too hard on Ms. Sebelius specifically. Most people in the administration, and many in government, speak as she speaks, and have for many years. In her case there's reason to believe it's a quirk. A New York Times profile recently had her recalling with self-deprecating charm the time her child ran a high fever and she caused a bit of confusion by forgetting to say, "We have to go to the hospital!" and announcing instead, "This unsustainable increase in body temperature requires immediate access to a local quality health-care facility!" I made that up, but it was believable, wasn't it?

New Class gobbledygook, which is more prevalent than ever, is also more destructive than ever because the government itself is doing more than ever. The Journal this week had a front page story reporting that the Obama administration is attempting to come up with ways, including federal regulations and "moral suasion," to change the way employees and executives are paid in the financial services industry "including at companies that did not receive federal bailout money." This is rather stunning, and is just one very small area of the new activism.

But back to language. Lately it is as if the American government, having decided in its programs, assumptions and philosophy to become more European, has at the same time decided it would be amusing to speak to the American people only in French.

Which would give rise to a simple and wholly understandable suspicion that the government doesn't speak clearly about what it's doing for the reason that they know that if people fully understood they would say, "Oh that's not a good idea," or, "The cost of that will kill us."

I think there are two major but not fully formed or fully articulated fears among thinking Americans right now, and the deliberate obscurity of official language only intensifies those fears.

The first is that Mr. Obama's government, in all its flurry of activism, may kill the goose that laid the golden egg. This is as dreadful and obvious a cliché as they come, but too bad, it's what people fear. They see the spending plans and tax plans, the regulation and reform hunger, the energy proposals and health-care ambitions, and they—we—wonder if the men and women doing all this, working in their separate and discrete areas, are being overseen by anyone saying, "By the way, don't kill the goose."

The goose of course is the big, messy, spirited, inspiring, and sometimes in some respects damaging but on the whole brilliant and productive wealth-generator known as the free-market capitalist system. People do want things cleaned up and needed regulations instituted, and they don't mind at all if the very wealthy are more heavily taxed, but they greatly fear a goose killing. Economic freedom in all its chaos and disorder has kept us rich for 200 years, and allowed us as a nation to be generous and strong at home and in the world. But the goose can be killed—by carelessness, hostility, incrementalism, paralysis, and by no one saying, "Don't kill the goose."

Complicating all this is the fact that so many of the Obama people seem to be extremely bright and pleasant academic types with no particular and personal knowledge of business in America. They are not messy businessmen with a love for the system that lifted them. Mr. Obama himself, like John McCain, has shown no particular interest in making money in his life, with the latter preferring military and then political glory, and the former preferring political power.

The second great fear is that the balance between those who pay taxes and those who need benefits will be left, after the great flurry, all out of whack. When this balance is deeply disturbed or distorted, when the number of those who need to take truly overwhelms those who need to make, a tipping point occurs. People become disheartened. Generations become resigned. Tiredness steps in. We will miss irrational exuberance.

Is anyone in the Obama administration watching this? If they are, they're not saying, certainly not clearly. I continue to be astounded by how much Mr. Obama reminds me in his first few months of George W. Bush in his first few years. There is a sense with both men that they always pushed too hard, were always revolutionizing and doing "the work of generations," as Mr. Bush put it. They appear to share an insensitivity to the delicacy of even so great a nation as ours, an inability to see limits, and to know at a certain point that what you do with a nation becomes what you do to it.

Do members of the administration speak obscurely because they can't help themselves, or do they speak the way they speak because they really aren't all that keen to have people understand them? Maybe they calculate that lack of clarity ensures maximum ability to maneuver. But maybe they should think less about maneuvering. They're not helping the prevailing sense of national anxiety by speaking in a special lingo all their own. After all, it's not their health-care system they're reforming, it is America's. It would be nice if America were allowed to know what exactly the plan is, and how it would work, and who would pay, and how.

As for the Republicans, the administration is giving them an opening. There could be gain in becoming the party that speaks with concrete honesty, and in a known human language, on the great issues of the day. The GOP could become the party that doesn't make you translate, and doesn't leave you giving up. I wonder if the party right now, for all the battering it's experienced the past few years, is still quick enough to see an opening like this.

'Torture' Memos

Critics Still Haven't Read the 'Torture' Memos

The CIA proposed the methods. The Justice Department gave its advice.

VICTORIA TOENSING

Sen. Patrick Leahy wants an independent commission to investigate them. Rep. John Conyers wants the Obama Justice Department to prosecute them. Liberal lawyers want to disbar them, and the media maligns them.

What did the Justice Department attorneys at George W. Bush's Office of Legal Counsel (OLC) -- John Yoo and Jay Bybee -- do to garner such scorn? They analyzed a 1994 criminal statute prohibiting torture when the CIA asked for legal guidance on interrogation techniques for a high-level al Qaeda detainee (Abu Zubaydah).

In the mid-1980s, when I supervised the legality of apprehending terrorists to stand trial, I relied on a decades-old Supreme Court standard: Our capture and treatment could not "shock the conscience" of the court. The OLC lawyers, however, were not asked what treatment was legal to preserve a prosecution. They were asked what treatment was legal for a detainee who they were told had knowledge of future attacks on Americans.

The 1994 law was passed pursuant to an international treaty, the United Nations Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment. The law's definition of torture is circular. Torture under that law means "severe physical or mental pain or suffering," which in turn means "prolonged mental harm," which must be caused by one of four prohibited acts. The only relevant one to the CIA inquiry was threatening or inflicting "severe physical pain or suffering." What is "prolonged mental suffering"? The term appears nowhere else in the U.S. Code.

Congress required, in order for there to be a violation of the law, that an interrogator specifically intend that the detainee suffer prolonged physical or mental suffering as a result of the prohibited conduct. Just knowing a person could be injured from the interrogation method is not a violation under Supreme Court rulings interpreting "specific intent" in other criminal statutes.

In the summer of 2002, the CIA outlined 10 interrogation methods that would be used only on Abu Zubaydah, who it told the lawyers was "one of the highest ranking members of" al Qaeda, serving as "Usama Bin Laden's senior lieutenant." According to the CIA, Zubaydah had "been involved in every major" al Qaeda terrorist operation including 9/11, and was "planning future terrorist attacks" against U.S. interests.

Most importantly, the lawyers were told that Zubaydah -- who was well-versed in American interrogation techniques, having written al Qaeda's manual on the subject -- "displays no signs of willingness" to provide information and "has come to expect that no physical harm will be done to him." When the usual interrogation methods were used, he had maintained his "unabated desire to kill Americans and Jews."

The CIA and Department of Justice lawyers had two options: continue questioning Zubaydah by a process that had not worked or escalate the interrogation techniques in compliance with U.S. law. They chose the latter.

The Justice Department lawyers wrote two opinions totaling 54 pages. One went to White House Counsel Alberto Gonzales, the other to the CIA general counsel.

Both memos noted that the legislative history of the 1994 torture statute was "scant." Neither house of Congress had hearings, debates or amendments, or provided clarification about terms such as "severe" or "prolonged mental harm." There is no record of Rep. Jerrold Nadler -- who now calls for impeachment and a criminal investigation of the lawyers -- trying to make any act (e.g., waterboarding) illegal, or attempting to lessen the specific intent standard.

The Gonzales memo analyzed "torture" under American and international law. It noted that our courts, under a civil statute, have interpreted "severe" physical or mental pain or suffering to require extreme acts: The person had to be shot, beaten or raped, threatened with death or removal of extremities, or denied medical care. One federal court distinguished between torture and acts that were "cruel, inhuman, or degrading treatment." So have international courts. The European Court of Human Rights in the case of Ireland v. United Kingdom (1978) specifically found that wall standing (to produce muscle fatigue), hooding, and sleep and food deprivation were not torture.

The U.N. treaty defined torture as "severe pain and suffering." The Justice Department witness for the Senate treaty hearings testified that "[t]orture is understood to be barbaric cruelty . . . the mere mention of which sends chills down one's spine." He gave examples of "the needle under the fingernail, the application of electrical shock to the genital area, the piercing of eyeballs. . . ." Mental torture was an act "designed to damage and destroy the human personality."

The treaty had a specific provision stating that nothing, not even war, justifies torture. Congress removed that provision when drafting the 1994 law against torture, thereby permitting someone accused of violating the statute to invoke the long-established defense of necessity.

The memo to the CIA discussed 10 requested interrogation techniques and how each should be limited so as not to violate the statute. The lawyers warned that no procedure could be used that "interferes with the proper healing of Zubaydah's wound," which he incurred during capture. They observed that all the techniques, including waterboarding, were used on our military trainees, and that the CIA had conducted an "extensive inquiry" with experts and psychologists.

But now, safe in ivory towers eight years removed from 9/11, critics demand criminalization of the techniques and the prosecution or disbarment of the lawyers who advised the CIA. Contrary to columnist Frank Rich's uninformed accusation in the New York Times that the lawyers "proposed using" the techniques, they did no such thing. They were asked to provide legal guidance on whether the CIA's proposed methods violated the law.

Then there is Washington Post columnist Eugene Robinson, who declared that "waterboarding will almost certainly be deemed illegal if put under judicial scrutiny," depending on which "of several possibly applicable legal standards" apply. Does he know the Senate rejected a bill in 2006 to make waterboarding illegal? That fact alone negates criminalization of the act. So quick to condemn, Mr. Robinson later replied to a TV interview question that he did not know how long sleep deprivation could go before it was "immoral." It is "a nuance," he said.

Yet the CIA asked those OLC lawyers to figure out exactly where that nuance stopped in the context of preventing another attack. There should be a rule that all persons proposing investigation, prosecution or disbarment must read the two memos and all underlying documents and then draft a dissenting analysis.

Ms. Toensing was chief counsel for the Senate Intelligence Committee and deputy assistant attorney general in the Reagan administration.

Panetta's Pelosi Smackdown

Panetta's Pelosi Smackdown

A truth too hot to handle.

Our guess is that Nancy Pelosi will come to regret her accusation on Thursday that CIA officials lied to her about their interrogation of terrorists. It took only a day for the agency to fire back, in the form of a statement from Director Leon Panetta, a Democrat, an Obama appointee and a long-time California Congressional colleague of the House Speaker.

"CIA officers briefed truthfully on the interrogation of Abu Zubaydah," Mr. Panetta wrote in a memo to agency employees. "It is not our policy or practice to mislead Congress. That is against our laws and our values." A day earlier, Mrs. Pelosi had claimed that CIA officials had "misled" her at a September 4, 2002 briefing on enhanced interrogation techniques, including waterboarding of the likes of Zubaydah.

Mr. Panetta had little choice but to publicly defend an agency whose morale he is now responsible for maintaining. However, on the merits, it seems highly implausible that the CIA would have lied to Mrs. Pelosi. Briefings are attended by more than one agency official, and a legislative liaison typically writes up a summary memo describing significant exchanges. Agency careerists hardly loved the Bush Administration after the Iraq WMD fiasco, and the controversy over "torture" has raged for years. If the CIA had misled Congress on a matter that was so politicized, surely someone in the agency would have leaked it long before now, if only to deflect blame onto the unpopular (and soon to depart) Republicans.

Mrs. Pelosi is now caught in a humiliation of her own design that will only escalate if she insists on an interrogation "truth commission." To adapt a famous phrase, we're not sure her reputation can handle the truth.

Another California Tax Revolt?

Another California Tax Revolt?

State voters may say no next week to various spending initiatives.

STEVEN GREENHUT

Santa Ana, Calif.

'I think it's going to be a tough summer, and I'm not sure of the solutions yet." So said California Republican Assembly leader Mike Villines last week as he announced that he was stepping down from his leadership post.

California Republicans have been adrift in recent years, and this quote is one indication why. The state is facing a massive deficit, talk of bankruptcy is in the air, and polls indicate that on Tuesday voters will reject the legislature's Band-Aid budget fixes. GOP leaders aren't able to challenge the Democrats who run the state legislature by offering viable solutions.

The drift, however, may be coming to an end. Mr. Villines is the second GOP legislative leader to fall this year. State Senate Republicans ousted their leader, Dave Cogdill, in February after he negotiated a budget deal that raised taxes. Something is brewing in California, and it looks a lot like the mix of politics that led to the recall of Democratic Gov. Gray Davis in 2003.

The driving issue is a budget deficit that won't go away. Several months ago, lawmakers were forced to tackle a $42 billion deficit that stems from a 35% general fund spending increase since Republican Arnold Schwarzenegger replaced Mr. Davis. The deficit is $4 billion larger than the one that helped end Mr. Davis's political career. After wrangling over what to do, the governor and legislature struck a deal that raises income and sales taxes as well as car-registration fees. In all, the tax increases will cost Californians some $13 billion over the next three years.

The lawmakers punted the decision to enact much of the budget deal to voters in six ballot initiatives -- most of which are behind in the polls by nine percentage points or more. According to a recent Field Poll, 72% of voters agreed that rejecting the measures "would send a message to the governor and the state legislature that voters are tired of more government spending and higher taxes."

Voters are upset at the budget games lawmakers have played: One trick employed this year to balance the books was to send taxpayers IOUs instead of tax refunds they were owed. In an editorial, the San Diego Union Tribune captured the consensus on the budget deal by calling it "a sham, an utter sham."

With the GOP's grass-roots ablaze in anger over taxes, Republican leaders are being forced to either come out against the initiatives or be driven from positions of power. Mr. Villines is lucky he only lost his leadership post. There are four recall efforts underway aimed at wayward Republicans. Assemblyman Anthony Adams is being targeted because he voted for the budget despite taking a no-tax pledge. Assemblymen Jim Silva and Jeff Miller are facing a recall effort because they refused to go along with an earlier coup attempt against Mr. Villines. And recall petitioners are taking aim at state Sen. Bob Huff because he voted to put one of the initiatives on the ballot.

Even Democratic activists are keeping the tax hikes on the ballot at arm's length. At the state's Democratic Party convention last month, delegates voted against endorsing several of the initiatives, notwithstanding pressure from party leaders to get in line behind the budget deal. Commentators of all political stripes are mocking the measures as buck-passing frauds.

The core initiative is Proposition 1A, which would extend by two years the tax increase passed in the budget deal. State officials know that voters would never approve direct tax increases, so they dressed them up as a budget-control measure that increases the size of the state's rainy day fund and imposes spending caps.

But those caps are a "fantasy," as Jon Coupal points out. He's the president of the Howard Jarvis Taxpayers Association, a watchdog group founded three decades ago as part of the state's last major tax revolt. The caps, he points out, allow spending to go up with state tax revenues, and they also allow the rainy-day fund to be raided on the say-so of the governor.

The remaining measures include a $9 billion earmark to the public schools that the Los Angeles Times calls a payoff to the California Teachers Association. Other initiatives propose to divert funds from previously passed state initiatives dealing with children's health services and mental health into the general fund. Another would expand the state's lottery enterprise. The only initiative that's ahead in the polls would deny pay raises to legislators and state constitutional officers in years when the state is running a deficit. That initiative is meant to gin up support for the others by convincing voters that the initiative package really means business.

But voters are smarter and have longer memories than politicians give them credit for. They seem ready to approve the last one and say "no thanks" to the others in part because there is a general feeling that taxpayers have been taken one too many times.

After all, voters gave Mr. Schwarzenegger approval to borrow $15 billion back in 2004. He promised then that the new debt and accompanying reforms would permanently solve Sacramento's fiscal problems. He said he was taking the state's "credit cards, cutting them up and throwing them away." He's now campaigning for the initiatives using scare tactics. This week, he threatened large state layoffs, budget cuts, and a sell-off of state-owned properties if the initiatives come up short.

Fiscally irresponsible legislators will likely blame "irresponsible" voters for the mess that's left after the budget initiatives get rebuked. But California has a history of tax revolts that remake the state's political landscape. Thirty-one years ago, the state's voters ignored a scare campaign and voted for Proposition 13, which placed strict limits on property taxes and helped ignite a nationwide tax revolt.

That antitax movement played a role in electing Ronald Reagan, a former governor of California, president in 1980. Some politicians may not know what to do in a fiscal crisis, but California voters often do.

Mr. Greenhut is a columnist for The Orange County Register in Santa Ana, Calif.

From Moore's Law to Barrett's Rules

From Moore's Law to Barrett's Rules

Intel's chairman on antitrust silliness and the secrets of high-tech success.

MICHAEL S. MALONE

Craig Barrett is spending the last days of his tenure as Intel chairman the same way he spent his previous 35 years at the corporation: moving at a superhuman pace that leaves exhausted subordinates in his wake.

Ken Fallin

Mr. Barrett has maintained this lifestyle since he replaced Andrew Grove as CEO of Intel in 1998. "Was it hard to follow a legend?" he asks himself in his typical blunt way, adding, "What do you think?" Mr. Barrett barely broke pace when he became chairman in 2005, and shows no sign of slowing even now, at age 69, as he faces retirement.

A big man with a big presence, he barely seems to fit in his tiny work cubicle -- an Intel tradition for senior executives dating back to the company's earliest days. We head for a tiny, windowless meeting room. He strides like a man accustomed to hiking over the Bitterroot Mountains, all the while talking about elk and mule deer. And when he sits down, he folds his big, calloused hands -- the hands of a rancher, not of the chairman of a $40 billion corporation -- leans forward, and nods at each question with infinite gravity. He doesn't hesitate to reply with "Oh come on" or "Do you really believe that?"

The latest thing that has him animated is the record $1.45 billion antitrust fine levied against Intel by the European Union this week. Mr. Barrett shakes his head and says, "The antitrust rules and regulations seem designed for a different era. When you look at high-tech companies, with the high R&D budgets, specialization and market creation they need to hold their big market shares, it's so very different from the old world of oil companies and auto makers that the antitrust regulations were designed for. They are out of sync with reality.

"And how do you reconcile European regulators, who don't believe that any company should have more than 50% market share -- even a market that company created -- with the way we operate here? Of course, now it seems as if our Justice Department is preparing to march in lock-step behind Europe. In the end, all they are going to do is create barriers to companies growing, entering into new markets, and bringing new technologies into those markets. And when we stop being the land of opportunity, all of those smart immigrant kids getting their Ph.D.s here are going to start heading home after they graduate. Then watch what happens to our competitiveness."

Mr. Barrett is legendary for a working week that begins at the Intel facility near Phoenix, where he has lived for a quarter-century ("I haven't been home for five days in a row in 20 years," he says) and moves Tuesday mornings to Santa Clara, Calif., and Intel headquarters -- with stops around the world (30 nations per year on average) in between. It's back to Phoenix on Thursday night and then off to Montana to hunt and fish at his celebrated Three Rivers resort. He returns to Phoenix late Sunday night.

After this interview, he will participate in his last Intel analyst meeting -- he retires on May 20 -- and then he will meet to discuss the company's response to the EU fine.

It hasn't always been this way. Mr. Barrett, one of the few leaders of Silicon Valley to have been born here (in San Carlos, just south of San Francisco), spent his early career as an academic close to home. "I only traveled seven miles to go to college at Stanford," he says. He earned his Ph.D. there, then joined the faculty as a professor of materials science and engineering. Mr. Barrett would go on to write more than over 40 technical papers dealing with the influence of microstructure on the properties of materials as well as a classic textbook in the field.

But Intel came calling in 1974 and he jumped to the corporate world, beginning as a manufacturing manager. His leadership skills and deep understanding of how chips were made proved vital to the struggling company during the years of vicious competition with Japan. Within a decade, Mr. Barrett was promoted to vice president. He was named executive vice president in 1990.

As Mr. Barrett himself admits, from the beginning he knew his career would be spent "in the shadow of the guys who preceded me" -- the legendary troika of integrated circuit co-inventor Robert Noyce; Gordon Moore, whose name is attached to the fundamental law of the digital age; and the celebrated business executive Andrew "Only the Paranoid Survive" Grove. Just as frustrating, Mr. Barrett began his career at Intel during a market crash, led the company during the dot-com crash, and now finds himself retiring during yet another market crash.

He waves his hand in a sine wave through the air, "That's how it is in this business. The endless boom-bust cycle -- I've been through eight of them. You just deal with what you're given . . . and develop a thick skin."

Still, if no catchphrase or law is likely to attach to Craig Barrett's name, his tenure at Intel, leaving the semiconductor industry's leading company even more dominant that when he arrived, offers a collection of important lessons. Call them Barrett's Rules.

- The business is bigger than the business. Mr. Barrett has long recognized that, with a company as large and influential as Intel, governments and cultural forces loom as large as any competitor. That's why, when Intel was being battered by Japanese competitors in the early 1980s, he took his fellow managers to Japan to visit everything from manufacturing plants to corner markets to show them how to build in quality.

For the same reason, Mr. Barrett has made education his personal crusade, from backing Intel's global science fairs to giving (with his wife Barbara, the former U.S. ambassador to Finland) $10 million to Arizona State to create an honors college. He brings his usual bluntness to this work as well, recently saying that America's second-rate educational system will lead to "the decline and fall of the United States as an economic power."

By the same token, like most Silicon Valley executives, he's been a strong proponent of investment in basic research. He notes with no little irony that he may be getting his wish in the most unlikely way: "After all of these years of asking for an increase in the National Science Foundation budget and how do we finally get it? With an investment banking crisis!"

- Don't mess with Moore's Law. This metronome of the digital age, says Mr. Barrett, isn't really a law, but "a social contract, a road map, a sign post. It's something to hang in front of the bright, bushy-tailed new young graduates and tell them: 'We've kept this thing going for 40 years now, so don't screw it up' -- and by God, they don't."

Inevitably, Mr. Barrett says, every few years "some company will say, 'What's with the pell mell rush to improve our technology every two years? Let's slow down to say, four years, and only have to invest half as much capital.' It always sounds like a cool idea, and it always ends up with that company losing market share."

Mr. Barrett has personal experience. Early in this decade, Intel hung on to the Pentium IV microprocessor too long and watched smaller competitor Advanced Micro Devices (AMD) gobble up half the market. Mr. Barrett sent out a blistering, all-hands memo that still makes employees shudder. "We won't let that happen again," he says, with finality.

- Invest during hard time s. The two most controversial decisions Mr. Barrett made as Intel CEO were: 1) to take the company, largely by acquisition, into the communications business; and 2) to maintain the company's traditional level of capital investment right through the darkest days of the dot-com bust. Of the former, he just shrugs, "I bought high and sold low. But at least money was cheap in those days." But history has shown that the latter decision -- for which Mr. Barrett took a lot of flak (he uses an earthier term) -- may have been the most brilliant of his career. Intel not only came out of the downturn faster and stronger than its competitors but still had a capacity shortage, which could have been devastating had Mr. Barrett not made the investment.

- Consensus is good -- except when it isn't . "I remember being in a meeting at one of our plants with 21 of our manufacturing managers. We started talking about changing our factory model and one of the veteran managers -- one of those guys who kind of ran his own little kingdom like a prince, said, 'Are we going to discuss this? Are we going to get a vote on this?' And I said, 'Yeah, we'll vote -- the only problem for you is that I get 22 votes.' In other words, there's a time to let everyone twist the knobs and a time to make a decision."

- Follow the business, not Wall Street . "The job of the CEO is not to reward the short-term speculator of your stock," Mr. Barrett says, "but to do a good job long-term for your shareholders, employees and customers. You don't invest for 'let's have a 20% lay-off tomorrow to prop up our stock' or 'let's cut R&D to get a positive response from Wall Street.' Thank God for Moore's Law, because it won't let us think like that; because if we do we get hammered."

- When something works, don't re-invent it, reproduce it . Perhaps Mr. Barrett's greatest contribution to the semiconductor industry was the concept of "Copy Exactly," the absolutely exact reproduction of successful existing practices and facilities in other locations. Copy Exactly has been the key to Intel and other chip companies actually improving yield rates (the ratio of chips that actually work) even as the products themselves have become thousands of times more complex and miniaturized and fabricated by the millions. The decision not to reinvent the wheel every time was, in fact, the subject of that contentious meeting where Mr. Barrett outvoted his managers. "I got the idea from McDonald's," he says. "I asked myself why McDonald's french fries tasted the same wherever I went. That's what I told my guys, "We're going to be the McDonald's of semiconductors."

- It pays to have good competitors. Despite AMD's victory with the EU, Mr. Barrett has nothing but praise for Intel's competitors, which have ranged over the years from Motorola to NEC to Samsung to, always, AMD. "It's like athletes: To be a great company you need great competitors," he says. "It's what keeps you alive and keeps you honest."

Mr. Barrett hops up from his chair. He needs to get to the analysts meeting in another building. But before he leaves, he pulls out a photograph, saying, "Hey, look at this." It shows a grinning Barrett cradling a gigantic trout he has just caught while fly fishing in South America, "Lemme tell ya," he says, gesturing like he's working the fly pole, "That guy was so close I had to let him swim away before I could set the fly down in front of him." Then Craig Barrett is gone, striding purposely down the long hallway.

Mr. Malone's new book, "The Future Arrived Yesterday," will be out next week from Crown Business.

Military Tribunals

Obama's Military Tribunals

Another Friday, another bow to Bush's antiterror legacy.

President Obama's endorsements of Bush-Cheney antiterror policies are by now routine: for example, opposing the release of prisoner abuse photographs and support for indefinite detention for some detainees, and that's just this week. More remarkable is White House creativity in portraying these U-turns as epic change. Witness yesterday's announcement endorsing military commissions.

AP

White House officials insist that their tribunals will be kinder and gentler, stressing additional due-process safeguards for terrorists on trial for war crimes. But the debate that has convulsed the political system since 9/11 isn't about procedural nuances. It has been over core principles, with Democrats decrying a "shadow justice system" and claiming that "Our Constitution and our Uniform Code of Military Justice provide a framework for dealing with the terrorists."

The latter quote is from a speech by Senator Obama in 2007 denouncing "a legal framework that does not work." He also referred to the civilian criminal justice system and courts martial that Democrats then claimed, and many still claim, are the right venues for antiterror prosecutions. After the Supreme Court's Boumediene decision gave terrorists habeas rights, Mr. Obama again laid into the Bush Administration's "legal black hole" and "dangerously flawed legal approach," which "undermines the very values we are fighting to defend."

At least some people in the White House must now be embarrassed by their boss's switcheroo, though you can't tell from Friday's declaration. Part of the tribunal face-lift is that "the accused will have greater latitude in selecting their counsel." Say what? Enemy combatants already have better access to attorneys -- white shoe and pro bono, no less -- than nearly every criminal defendant in America. Perhaps this means Khalid Sheikh Mohammed, 90 Yemenis and the rest will now be able to choose lawyers from both Shearman & Sterling and Covington & Burling, instead of one or the other.

Another red herring is supposedly tightening the admissibility of hearsay evidence. Tribunal judges already have discretion to limit such evidence, and the current rules are nearly indistinguishable from those of the International Criminal Court. The sensible exceptions involve evidence obtained under combat conditions or from foreign intelligence services, which are left untouched by Mr. Obama's nips and tucks.

In any event, Mr. Obama deserves credit for accepting that the civilian courts are largely unsuited for the realities of the war on terror. He has now decided to preserve a tribunal process that will be identical in every material way to the one favored by Dick Cheney -- and which, contrary to the narrative that Democrats promulgated for years, will be the fairest and most open war-crimes trials in U.S. history. Meanwhile, friends should keep certain newspaper editors away from sharp objects. Their champion has repudiated them once again.

Friday, May 15, 2009

Peter Schiff Vlog Report 15 May 2009

Ink-stained Politicians

Ink-stained Politicians

Newspapers shouldn't get—or want—a government bailout.

President Obama deserves credit for finally identifying an industry he doesn't want to rescue -- ours. Pressed about a bailout for struggling newspapers, White House Press Secretary Robert Gibbs said last week that while it's sad for cities to lose their daily papers, any public assistance "might be a tricky area to get into." He added, "I don't know what, in all honesty, government can do about it."

AP

That wisdom apparently doesn't extend to Massachusetts Senator John Kerry, who held a hearing on the future of newspapers -- and how the federal government can help. "If we take seriously this notion that the press is the fourth estate, or the fourth branch of government," Mr. Kerry said in a prepared statement, it's time we consider its importance to democracy. Talk about a Freudian slip. Newspapers becoming the "fourth branch of government" is exactly what people most fear from any hand extended to save an independent press.

Mr. Kerry is especially worried about the Boston Globe, which admires him greatly and was recently threatened with closure in a showdown between unions and its owner the New York Times Co. In its most recent endorsement of Mr. Kerry last October, the Globe enthused that "The case for reelecting John Kerry would be strong under any circumstances . . . [but] the country needs his voice more than ever."

Meanwhile, Maryland Senator Benjamin Cardin has introduced legislation to allow newspapers to convert into nonprofits. Under his Newspaper Revitalization Act, advertising and subscription revenue would get tax-exempt status, making the papers akin to public broadcasters. Writing in the Washington Post in March, Mr. Cardin was cautious to note that this deal "is targeted at local newspapers serving communities, not large newspaper conglomerates." But the plan's details could handicap local papers in making judgments on politicians.

Newspapers that took the deal would be able to continue with news reporting as well as editorial and opinion pieces, but they would no longer be able to endorse candidates for office. In other words, the federal subsidy is combustible enough to jeopardize the integrity of political endorsements, but not enough to endanger critical reporting pieces. Of course, a publication or network's reporting can play favorites whether or not the owner endorses any candidate. Think National Public Radio, which was built by government subsidies and whose reporting tends to favor the cause of bigger government.

Mr. Kerry called newspapers an "endangered species," and everyone knows the newspaper business model has to change. But other times in history have also seen waves of newspaper closures, without calls for a federal rescue. Papers closed in the 1960s as people began to get their post-work update from the nightly TV news. The Boston Post, which folded in 1956, was once one of the largest papers in the country, with more than one million readers.

Among those who appeared at Mr. Kerry's hearing hat-in-hand were Dallas Morning News publisher and executive vice president of A.H. Belo, James M. Moroney III. He endorsed a proposal by Montana Democrat Max Baucus and Maine Republican Olympia Snowe that would allow newspapers and other businesses to offset their net operating losses over five years instead of two, as well as greater antitrust flexibility for the industry.

After that, Mr. Moroney suggested, Congress should consider establishing a "consent for content" principle to get online sources to pay "fair compensation" for content they pick up and then sell advertising on. So, although most newspapers are giving away their content free online, the feds should guarantee them a stipend from anyone who gets someone to pay for it. There's a winning business model.

The larger story here is that newspapers are enduring the familiar process of economic "creative destruction," in this case brought on by the Internet. Advertisers are fleeing to search engines, while barriers to entry in publishing have crashed. Despite the pain this causes to certain companies, this is not much different than any other industry buffeted by new technology or business strategies. The shipping industry changed radically with the advent of containerization. Wal-Mart's state-of-the-art inventory management transformed retailing. Apple's iTunes has revolutionized the music industry.

Some new business model will emerge for journalism, if not for all newspapers, and in the meantime the business of reporting the news isn't vanishing. It is taking new forms and adapting, with newspapers growing their audiences online even as the sources of their revenue shift. The industry is currently debating how to charge customers for content, and no doubt many experiments will be tried. No matter who emerges victorious, the journalism business will be stronger and more credible if it avoids the government's embrace.

Now, about those bailouts for insurers, auto makers, Goldman Sachs . . .

Specter Suggests Changes

Specter Suggests Changes to Union Bill

KRIS MAHER

Sen. Arlen Specter is floating two compromise proposals on a contentious union-organizing bill to gauge the business community's willingness to accept the changes and find a middle ground on the bill, according to people familiar with the discussions.

Associated Press

Pennsylvania Sen. Arlen Specter has suggested two possible compromises on the Employee Free Choice Act.

Business groups were quick to shoot down his proposals, in a sign of how difficult it will be to reach agreement on legislation that makes it easier to organize workers. "We continue to stand in support of the right of workers to have a secret ballot and the right to vote on contracts without interference from government bureaucrats," said Katie Packer, executive director of the Workforce Fairness Institute, a business-backed nonprofit that opposes the Employee Free Choice Act, also known as "card check."

Under a potential compromise on the contentious subject of secret-ballot elections, workers could mail in ballots during union elections instead of the bill's current provision in which workers would sign cards collected by union organizers. The compromise approach would theoretically preserve privacy and reduce opportunities for coercion by union organizers and employers.

The second change would restrict the use of arbitrators in contract negotiations to situations in which the two sides fail to reach agreement on their last and best offer. The current version of the bill calls for automatic arbitration after 120 days.

A spokeswoman for Sen. Specter's office said the Pennsylvania senator has had discussions with labor leaders and business groups, including the Pennsylvania Chamber of Commerce, about a compromise but declined to give specifics. Sen. Specter is working closely with Sen. Tom Harkin (D., Iowa), the bill's lead sponsor in the Senate, and Sen. Dianne Feinstein (D., Calif.), the staffer said.

Sen. Specter has played a bigger role in formulating a compromise since he switched to the Democratic Party this month. In March, the senator said he opposed the Employee Free Choice Act as proposed, but he added that workers needed a better chance to form unions and bargain collectively.

Under the National Labor Relations Act, which currently governs union organizing, employers can insist that workers vote on unions through a secret-ballot election. Gene Barr, vice president of government affairs at the Pennsylvania Chamber of Commerce, said "the private ballot is the cornerstone of democracy and arbitration costs jobs."

Unions argue that the labor-relations law needs to be amended because employers violate the law during union-organizing campaigns and face few penalties for intimidating workers. Andy Stern, president of the Service Employees International Union, said he needs more details on mail-in ballots, but would support the arbitration proposal, "assuming there is a way for workers in a reasonable period of time to get a contract."