At The New Republic, Leon Wieseltier's Halfway House for Recovering Neo-conservatives has Sam Tanenhaus' third long elegy for conservatism as a movement and an ideology.

There is a conservative sensibility or wisdom that many liberals are the poorer for missing. But I've often asked Tanenhaus -- most tellingly here and in the Guardian, and Yale Daily News - to admit that conservatives can't reconcile their keening for an ordered, sacred liberty with their obeisance to every riptide of a capitalism that's dissolving the republic, values, and customs they claim to cherish.

At last, he admits it, and he resists his old temptation to blame liberals. Conservatives who dine out too often on liberals' follies forget how to cook for themselves, and Tanenhaus has been a bad chef at the Times, as I showed in The Nation. Let's hope his bio of William F. Buckley, Jr. matches his delicious one of Whittaker Chambers. But if you see a blogger call his New Republic elegy the "must read" of the moment, send him this account of Tanenhaus in 2007.

I have talked a lot on this blog about John Kenneth Galbraith and his seminal work The Affluent Society. Here is an early line from the book.

It will be convenient to have a name for the ideas which are esteemed at any time for their acceptability, and it should be a term that emphasizes this predictability. I shall refer to these ideas henceforth as the conventional wisdom.

I realized today that the only mistakes made in the first three weeks of the Obama Campaign have been made by the establishment apparatus that took over the transition from the campaign staff. John Podesta, former Clinton Chief of Staff embodies the "conventional wisdom".It was Podesta's admitted "screw up" that allowed the Daschle fiasco, which was so "off code" to the Obama reform brand. Podesta and his crew miss-served the President in the most profound way.

Some questioned why the president's vetting procedures missed crucial information. But the problem, aides said, was not that Obama's team was unaware of the multiple tax problems of his nominees. They knew and dismissed them, believing the public and Congress would see the national crises the nominees were expected to confront as more important.

"We knew he'd get punched around on this and that [Daschle] had made a painful mistake," said John Podesta, Obama's transition chairman. "But we believed he could be confirmed."

Barack Obama got elected President because he was not the Establishment Choice. Now is the time for Axelrod, Gibbs and the "folks that brought him to the party" to reassert that The Establishment is not going to control this administration. I am reminded of a moment almost 100 years ago as Teddy Roosevelt was sworn in as the youngest President ever.

After less than a year as Vice President, TR found himself the youngest President in American history, after President William McKinley was assassinated at the Pan-American Exposition in Buffalo, New York. As Mark Hanna, the leading Republican politician of the era lamented, "Now look -- that damn cowboy is president."

Roosevelt went on to be the greatest reformer in the history of his party and was described as a "class traitor" by the allies of J.P. Morgan and John D. Rockefeller. If President Obama has aspirations for a new progressive era, where what Teddy called "the malefactors of great wealth" are brought to heel, he will realize that the royal court of Bill Clinton--all the Rubin accolytes and the Podesta suck butts, are not prepared for that mission. Bring back Austin Goolsbee and Samantha Power into the inner circle with the rest of the campaign staff. Tim Geithner and Larry Summers need to be executing policy made by Barack, not the other way around.

Kick ass and take names.

If Martin Luther King, Jr. were alive today he may well have attended President Barack Obama's inauguration ceremony wearing a black-and-white checkered kaffiyeh and holding a sign saying, "Mr. President, stop the Gaza nightmare. No more false hopes and delayed dreams. End the Occupation NOW!" Civil rights leaders spent precious political capital to speak out against America's wrongdoings across the world, most notably the war in Vietnam. President Obama should spend domestic political capital to denounce Israel's domination of the Palestinians. Nothing would boost desperately needed international capital more.

Rev. King would have recognized that without unfettered US arms, funds and political cover, Israel would never have been able to inflict the level of brutality it 'proudly' inflicted on Gaza. Nor would it have been able to keep Palestinians in bondage so long.

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I'm procrastinating. I'm procrastinating so badly that yesterday I read Samuel Johnson's essay on procrastination in the June 29, 1751 edition of The Rambler. That leaves many more essays on this important problem to read as I gather strength and resolution for the greater work I intend to complete.

I certainly can't afford not to complete it. As I read the many richly-informed posts here at TPM, I am reminded that our desperate world can't afford my procrastination, either.

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The one real casualty of the brokered compromise on the Recovery Act was the notion of Progressive Federalism.

The biggest cut, roughly $40 billion in aid to states, was likely to spur a fierce fight in negotiations with the House over the final bill. Many states, hit hard by the recession, face wrenching cuts in services and layoffs of public employees as they struggle to comply with laws requiring them to balance their budgets.

The irony that it is the Republicans who oppose devolving power and money to the states to make their own spending decisions, shows how far from their supposed 'principles' of reduced Federal power they have moved. I have been writing about the concept of New Federalism for a couple of years and it is wonderful to see our President embrace an idea that every CEO understands--innovation happens at the edges. Hopefully during the House-Senate conference process, Republican governors like Jodi Rell of Connecticut, Jan Brewer of Arizona and Arnold Schwarzenegger of California will raise hell with the Republican Caucus to get some of that restored.

I have been perusing my friend Amos Elon's great book about the Jews of Germany, The Pity of It All, whose narrative culminated in a sorrowful look at Weimar. I confess that re-reading those later pages is not a good idea just now. 

Avigdor Lierberman's Yisrael Beiteinu Party is surging; the centrist parties are all finding ways to say they will work with him. Tonight, one of my dearest and oldest friends in Jerusalem--the owner of the Old City's most wonderful antique store, the scion of one of East Jerusalem's most admired families--told me he could not come to our home for a family celebration because he was stopped by police (with his son) at Jaffa Gate this morning and told he could not enter. "I'm afraid somebody will say something, and I'll have to answer, and that will ruin your party," he said. By the way, his old family mansion, confiscated in 1948, is a few blocks from my home, in Baqa. He has to pass it every time he comes to visit, yet he has never made me feel anything but welcome in this, his city. "I have never seen things this bad."  

Here is what Elon has to teach us about Weimar in the late 1920s, or at least what we derive from his vivid narrative:

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Let's extend our congratulations to Senators Susan Collins and Ben Nelson for having negotiated a stimulus package that will produce 500,000 fewer jobs than the one passed by the House. Who knows, if the House had its way, the unemployment rate might never cross 10 percent.

There seems to be a real problem with how the folks in the Senate think about stimulus. We have an economy in free fall right now. The data show us losing almost 600,000 jobs in January and the true picture may be even worse.

To counteract this downturn, the federal government has to create demand by spending money, lots of it. The amount of money that we want to spend is a function of the weakness of the economy, which seems to deteriorate by the day.

Trying to save money on stimulus, is like finding a short cut for your jogging route. We can do it, but it undermines the whole point of the effort.

Wall Street and its allies are in a tizzy over the Obama administration's proposed $500,000 limit on executive pay, saying it will threaten their ability to attract and retain executive talent. I do not mean to deprecate Wall Street executives when I point out that the far higher level of compensation they received in recent years has not exactly elicited talent -- at least not talent for much of anything other than the accumulation of personal wealth at the expense of millions of investors and of the economy overall. Wall Street compensation has been geared to short-term bets on high-leveraged investments, after which players quickly collect any winnings and run for cover. Many Streeters grew rich in the process but most of the rest of us are undeniably poorer. One additional pernicious side effect over the years has to lure many of America's most talented young people into prestigious MBA programs leading to jobs on the Street at starting pay higher than most Americans ever dreamed of and, with luck and hard work, subsequent shares in the firms' Ponzi-like pickings.

If one is looking for silver linings in the devastation of Wall Street it may be that this sort of talent will henceforth be less demanded and less rewarded -- not because of Obama's plan to limit pay of executives living off public bailouts but because the Street has imploded. The plan itself is a bit of a ruse. If truth be told, the $500,000 seems little more than a symbolic gesture designed to reassure the public that the large amounts about to be asked for the next stage of bank bailout -- likely far more than the $350 billion remaining in "TARP" (more on this in a moment) -- will not simply feather the nests of those who created the mess in the first place. The guidelines don't actually put a cap on total pay but only on salaries (usually a small portion of total pay), and even then apply only to firms receiving "exceptional assistance" -- presumably especially large bailouts in the tens of billions of dollar range, such as went to Citigroup and AIG -- rather than to those receiving run-of-the-mill bailouts amounting to, say, under ten billion. Most firms getting bailouts may continue to pay their executives whatever they want to pay them as long as they disclose it to their shareholders and give shareholders an opportunity to express their views about it.

So why is Wall Street so upset about the faux $500,000 limit? Precisely because of its symbolism. It's as if the administration is planning to subject executives of the banks that take the next dolop of bailout money to a kind of public shaming -- the equivalent of a scarlet G, for greed -- when the executives don't view the bailout that way at all. Few if any of them think they did anything wrong in the first place; they don't even view the bailout as a "bailout" but rather as a necessary injection of liquidity to keep credit markets going.

By the way, get ready for some really horrifying bailout numbers. Goldman Sachs -- not one to exaggerate the overall problem -- recently estimated the total value of troubled U.S. bank assets to be $5.7 trillion. Hence, do not be surprised if the next stage of the bank bailout dwarfs the cost of the stimulus package. My guess is that's reason the administration wants the stimulus bill approved before it fully unveils the price tag of the next bank bailout.

Next week's Israeli election will be viewed as delivering a blow, perhaps fatal, to the peace process. Powerful showings by both the Likud and the neo-fascist Yisrael Beteinu party will be read as indicating that Israel has decided to embrace extremist ideology with a vengeance.

That may be true. But it's really not our business. As Americans, our job is to promote policies that are best for America. And Israel, a country that values its special relationship with the United States, is in no position to ignore the American government's wishes.

That is especially true when the President is remarkably popular both in this country and throughout the world. No matter who heads Israel's next government, it is President Obama who holds 51 cards in the deck.

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All the reports I've seen about the dissenting Senators trying to gouge a hundred billion or more out of the House stimulus package talk about a "bipartisan" or "postpartisan" group. But the only Democrats named as having attended any of their meetings--which may or may not mean they support the gouge--are Nelson (NE), Bayh (IN), Udall (CO), and Begich (AK). How bipartisan is this group? Is it making decisions as a group or is it simply discussing the merits of the bill?

Another question for reporters. Dick Durbin theatrically stood up yesterday, tore one page out of the bill, and said the total savings proposed by Republicans amount to only that proportion--one page out of hundreds. Is it true? How hard would it be to do the arithmetic?

Paul Krugman's influence on American politics has become indispensible. At the same time, like most macroeconomists, he can underestimate the technological (read, entrepreneurial) revolution that's hit the real economy in recent years--you know, the business innovations whose details that other Times columnist sweats. It is clear from his work that government must (in Adam Smith's phrase) "facilitate commerce in general." But it is not always clear how. My review in The Nation of his prophetic book from 1999, The Return of Depression Economics, can be read here.

The posturing on the Stimulus by Republicans is such a Kabuki dance. The MSM has underestimated Barack's political prowess from the beginning. I looked back at a post I wrote on June 4th when the Clintonistas were hanging on by a thread but still saying Barack had to pick Hillary as VP to survive. The media totally bought in to that narrative.

I think our President is handling the Republicans like a virtuoso. The chances that they would filibuster the Recovery Act, after tomorrow's unemployment numbers are announced, are close to zero. Collins, Snowe and probably Spector will vote with the Democrats tomorrow night to approve the bill. It will then go into conference committee, where Peter Orzag will run the ship, and emerge for a vote by Thursday. The final bill will pass both houses with a small number of Republicans. We can all celebrate on President's day and then get on with the next issues.

I love our new President. That is no surprise here at TPM where I've been beating the Obama drum since 2006.

But I'm a little disappointed that he is not using his communication skills effectively to shape the debate on the jobs package. He is saying all the right things but at various times and in myriad forums. He needs to combine his efforts into several do-or-die speeches right now.

Jon Favreau should study Ronald Reagan's speeches in 1981 which were so effective that he managed to rally the American people behind Reaganomics and roll over the Democratic Congress. Reagan was an incredible writer. (He was no dummy. Unlike Bush who could barely read, Reagan wrote his speeches in long hand). They were amazing.

The country is behind Obama. He needs to mobilize it so that the GOP and the Blue Dogs quake in their boots. Forget about convincing em; scare em. That is what Reagan did.

And they will cave. After all, who have they got? Mitch McConnell, he of the sickly smile and the weakest chin in American politics? Rush Limbaugh who prays that America collapses? Eric Dweeb Cantor, the GOP's Eddie Haskell?

READ Reagan's three spring of 1981 speeches on the economy (below). Perfect. And they succeeded in selling programs that were utterly misguided....with Democratic support. How? Reagan knew how to reach over the heads of Congress. That old line about grabbing them by the testicles. If you do that, their hearts and minds will follow.

They have nobody. We've got the Champ. Send him out there. Now.

Reagan 1
Reagan 2
Reagan 3

I have long been an admirer of Andrew Bacevich. He brings a refreshing combination of scholarship, passion and wit to the discussion of U.S. foreign policy. All three qualities are on display in The Limits of Power.

I find myself agreeing with most of Bacevich's conclusions, while arriving there by a different road. Every theory critical of recent U.S. foreign policy includes an overt or implicit theory of when things went wrong. If you think that U.S. foreign policy took a wrong turn with the election of George W. Bush, then you are likely to focus on the theories and motives of the neoconservatives and other contemporary elites, and to be moderately optimistic about the chances that a different team with different ideas will change course. If, on the other hand, you agree with Gore Vidal and William Appleman Williams that the U.S. took a wrong turn after the replacement of the Articles of Confederation by the Federal Constitution of 1787 and the Whiskey Rebellion, then you are likely to see Bush as simply one more in a string of tyrants waging unnecessary wars like the Civil War--Lincoln's unnecessary folly, according to many libertarians--or World War I, Wilson's folly--or World War II--Roosevelt's folly, according to Charles Beard and Patrick Buchanan.

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Professor Smith writes in his post: "Bacevich's belief (Chapter 1) that empire pays, and that the public appreciates a payoff from it under the name of 'freedom,' does not persuade me."

The problem here is one of verb tense. What I try to argue is that empire (or at least an expansionist foreign policy) once /paid. /Indeed, if we cite the Louisiana Purchase as the beginning of serious American expansionism, then it paid quite nicely for at least the next century-and-a-half. By the time I was born after World War II, the United States had become the most powerful, the richest, and (for the white majority), the freest nation on earth. Americans liked to attribute the nation's success to Providence or their own virtues, but that was nonsense. We acquired power because we sought power. Many (by no means all) Americans then reaped the benefits of power.

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With the federal government about to transfer hundreds of billions of dollars to the states, with many of those funds going to private contractors, a broad-based, bi-partisan coalition of organizations has come together in a Coalition for an Accountable Recovery to actually track whose getting the money and whether they are creating quality, decent-paying jobs with the cash.  

The goal is to promote reforms at both the federal and state level to assure transparency in how funds are used by federal and state contractors, the number of jobs created, and the quality of jobs created-- with the results posted online in easily searchable websites for the public. A poll released yesterday by the Coalition highlights the public support for transparency (more on the flip)

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Tomorrow's job report is likely to be awful. January's job losses could easily top half a million. We're deep into the most vicious of economic cycles: Consumers are slashing their spending because they're perilously in debt and worried about keeping their jobs. But as a result, businesses are facing shrinking sales of goods and services, so they're slashing payrolls, which of course makes consumers even more anxious and further reduces their spending power. Meanwhile, businesses are cutting way back on new investments in equipment, which hurts upstream suppliers, who are now slashing their payrolls. And so it goes, downward. The gap between what the economy could produce if it were running near full capacity and what it's now producing continues to widen. The shortfall is projected to be over a trillion dollars this year.

How do we get out of this downward plunge?

Regardless of your ideological stripe, you've got to see that when consumers and businesses stop spending and investing, there's only entity left to step into the breach. It's government. Major increases in government spending are necessary, and the spending must be on a very large scale. In the last several weeks the President has put forward the outlines of a stimulus plan, and has left it to the House and Senate to fill in the details. A tiny portion of the details that made it into the House version should be stripped away because they seem like old-fashioned pork. But most spending in the bill is absolutely appropriate. My worry is there's not nearly enough of spending to fill the shortfall in overall demand.

Yet at this very moment, Senate Republicans are seeking to strip the President's stimulus package of many of its spending provisions and substitute tax cuts. Part of this is pure pander: They know tax cuts are more popular with the public than government spending, even though spending is a far more effective way to stimulate the economy (more on this in a moment). Another part is pure partisan politics: Republicans are emboldened by Obama's willingness to court Republicans (taking three Republicans into his cabinet, bringing Republican leaders into the White House for consultations, putting all those business tax cuts into the stimulus bill in order to gain Republican favor) without getting anything at all back from the GOP. House Republicans snubbed the bill entirely. So, Senate Republicans say to themselves, what's to lose?

Plenty. Millions more jobs and a full-fledged Depression, for example.

Can we get real for a moment? Take a look at this chart, which comes from calculations by Mark Zandi and his colleagues at economy.com. You see that each dollar of spending has much more impact than each dollar of tax cut.

There are three reasons for this. First, most people who receive a tax cut don't spend all of it. They use part of it to pay down their debts or they save it. Most of us did one or the other last spring with that tax rebate. From the standpoint of any particular individual, paying down debts or saving may be smart behavior -- even commendable. But what's intelligent for an individual does not necessarily translate into what's good for the economy as a whole. The only way to get businesses to create or preserve jobs is through additional spending. And unlike tax cuts used to pay down personal debt or add to savings, every dollar of government spending flows directly into the economy and adds to overall demand.

Second, even that portion of a tax cut we might actually spend doesn't necessarily go into the American economy. It goes all over the world. I have nothing against creating or preserving the jobs of Asians who assemble those flat-panel TVs you see at the mall, for example, but right now we're trying to create or preserve jobs here in America. Sure, the retail workers at the mall who sell the flat-panel TV's might benefit, but remember we're talking about how to get the biggest bang for every dollar. When government spends to repair a highway or build a school or help pay for medical services, the money and the jobs stay here in America.

Finally, those who say cutting taxes on businesses is the best way to create or preserve jobs forget about the demand side. Even with a tax cut, businesses won't hire workers unless there are customers to buy what those workers produce. A government stimulus that creates jobs is a necessary precondition.

This isn't a matter of more or less government, however much Republicans and conservatives would like to wedge it in that old ideological box. The issue is how to revive the economy. When consumers and businesses can't or won't spend enough to keep the economy going, government has to be the spender of last resort. Period.

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I'm wondering how the honeymoon ended even before the sun came up. As Steve Benen writes apropos the current stimulus blues, "the White House lost control of the debate." The Republicans are nickel-and-diming the bill, stalling, getting the microphone as if they're the sole patriotic heroes left standing, and the White House can't really explain to the country what the trouble is. Mike Tomasky thinks Obama ought to get out in public and fire people up. I think he's right. Jeanne Cummings at Politico writes shrewdly about some of the organizational problems Obama's team has faced in adjusting to the White House. But I'm guessing there's something else awry.

The trouble with post-partisanship, which is Obama's preferred style, is that we have partisanship for reasons that haven't gone away. A big one: Republicans think the market works. Obama, who scores whenever he goes public and honest (cf. Jeremiah Wright Philadelphia speech, cf. taking responsibility for "screwing up" on Daschle), seems a bit, or more than a bit adrift, reluctant to blow the whistle on their intellectual feeblness and pettiness. Since the Republican holdouts can filibuster the Senate, he's evidently trying to peel them away one at a time. What he gets in return isn't clear, though. I wish he would go public, explain what he's doing, and put the onus on Republicans who, after all, let the economy collapse "on their watch." If he wants to share a bit of the onus with some House Democrats, too, for porkifying the package, fine.

The alternative to wooing Republicans kiss by kiss is forcing them to wheel out the cots and filibuster in earnest. But evidently this isn't his style. He should fire across the Republican bow.

The Obama Administration’s rumored plan to buy “troubled assets” to rescue banks presents the government with a “thorny valuation problem,” the New York Times reports.

The article gives an example of a bond held by an unidentified “financial institution” which is “backed by 9,000 second mortgages from borrowers who put down little or no money to buy homes. Nearly a quarter of the loans are delinquent, and losses on defaulted mortgages are averaging 40 percent.”

The financial institution values the bond at 97 cents on the dollar. Standard & Poor’s values the bond at 87 cents at the current default rate, but estimates the bond’s value could go down to 53 cents if the default rate doubles. But someone actually bought one of the bonds recently. The purchase price was 38 cents.

According to the article, financial industry critics “say that the banks’ accounting for those assets cannot be trusted because they have an incentive to use optimistic assumptions.”

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Here's what we know so far about the plans for the US banking system that Tim Geithner will unveil next week.

1. The heart of the scheme will, most likely, be an insurance arrangement, in which the government (part Treasury and mostly Fed) insures a big part of large banks' portfolio of toxic assets against further loss. The devil is in the pricing of this insurance and how transparent that is - and we will put out more on this shortly - but the clear signal so far is that this will be a veiled major recapitalization of banks at taxpayer expense.


2. As announced yesterday, the government will set restrictions on the pay of executives in banks that participate. But note that, under these rules, bonuses are not restricted. Instead, they are just deferred and paid in shares. In other words, if there is cheap recapitalization through government-provided insurance, these executives are getting an incredibly good deal.

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After ignoring the growth of an $8 trillion housing bubble, fueled by junk loans issued by over-leveraged banks, the "free-trade" crew is worried that a "buy America" provision in the stimulus bill will give us a trade war leading to another Great Depression. This complaint should be put in perspective so we can all get a good laugh at their expense.

The free trade crew tells us that this Buy America provision will start a trade war. Why would our trading partners start a trade war over a bill that increases demand for their exports?

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Yehuda Ben Meir is a former Knesset member who is, by no means, far from the Israeli political mainstream. He is American-born and came to Israel in 1962.

In this piece, he argues that no war crimes were committed in Gaza. I don't know what I think about that.

I do know that the whole concept of war crimes is rather dubious if it can be applied to Israel over Gaza but not to the United States over Iraq. Before hauling Israelis to The Hague, we might want to consider the crimes of the neocon gang that lied us into war in Iraq and then proceeded to destroy that country and several hundred thousand of its people.

After all, it isn't Israel that gave us Guantanamo, extreme rendition, Abu Ghraib or weatherboarding. So if Olmert and Barak are going to the Hague, they will have to follow Douglas Feith, Bush, Cheney, Rumseld, Yoo, Addington, Abrams, Libby, Wolfowitz and the aptly named Wurmser. The latter group makes the Israelis look like Oxfam or the Mercy Corps.

But I'm not writing about war crimes here. I am writing about Ben Meir's blazing lack of sympathy for Gaza's dead, and particularly for the clear majority of the dead who were guilty of nothing (including 400 kids).

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One of the rare joys of this winter has been contemplating how miserably unhappy rightwingers are.

We loved the inauguration, the non-stop adulation of of our new President, the effusive gush from the media. God, I could watch the coverage forever.

But imagine if the recipient of all this love was Rudy Giuliani or Mitt Romney. Or even John McCain? Ok, it couldn't have happened. But imagine if it had.

We'd be screaming into the wind, tearing our hair, and overdosing on xanax.

That is how it is far the right but with a twist that, for some, makes it even worse than anything we could imagine. Obama is a liberal Dem. He won a landslide victory. And, no small thing, he's black and his paternal forbears were Muslims.

Oh the humanity.

Read Daniel Pipes with this in mind. It will make your day.

Like most readers who respond positively to Andrew Bacevich's work, I appreciate The Limits of Power as a jeremiad, a lamentation on personal and collective hubris and sanctimoniousness. Bacevich's perspective is inspired by Judeo-Christian teachings and more concretely by the writings of Reinhold Niebuhr as applied to American foreign policy. By stepping past the comparatively antiseptic concepts of international relations theories (although Bacevich is clearly in the realist tradition), the book has an emotional intensity quite appropriate for these troubled times. Pride is the deadliest of sins--a notion subscribed to by Christians, Muslims, Buddhist, Hindus and Jews--but it bears repeating, as Bacevich has done here, that this warning is especially apt for us.

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I thank Michael Hollerich and David Shorr for their comments and offer the following by way of a brief response to some of the points they raised.

Despite its present woes, the United States remains the most powerful actor in the international system. It will therefore attempt to exercise "global leadership" because that's what great powers do. Yet based on the historical record, I just don't see why at this juncture we should expect the United States to begin demonstrating (in David's phrase) "benevolent exceptionalism." Although others will read the narrative of the American past differently, I see little in that record to suggest that the United States will now suddenly manifest any particular tendency toward altruism. The best we can hope for is a bit less emphasis on ideology and a bit more emphasis on pragmatism, which may foster a greater awareness of those "points of concurrence" to which Niebuhr referred. During his first term, President Bush disdained "points of concurrence" -- it was our way or the highway. Obama and his advisers are unlikely to repeat that mistake.

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I don't envy President Obama's economic team. When it comes to fixing our banking system, there is no easy solution.

I've been sick the past few days, but someone pointed out this article in The New York Times a few days ago that has a concrete illustration of the problem: a bond that an unnamed bank is holding on its books at 97 cents, but that S&P thinks is worth 87 cents (based on current loan-default assumptions), and could fall to 53 cents under a more negative scenario . . . and that is currently trading at 38 cents. Assume for the sake of argument that all of our major banks are insolvent if they have to mark these assets down to market value. The crux of the issue is that any scheme in which the banks receive more than market value is a gift from taxpayers to bank shareholders, and any scheme in which they are forced to take market value is one that the banks will not participate in. Let's look at a few possibilities:

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Former Ambassadors Sam Lewis and Ned Walker publish an oped in today's Boston Globe which consists of recommendations to President Obama on next steps in the Middle East. They are among America's most distinguished diplomats and are writing as advisers to Israel Policy Forum, which is a mainstream pro-Israel organization and which, incidentally, employs me.

Their recommendations include: an American push for a long-term (at least ten year) armistice in Gaza which will end all attacks on Israel in exchange for an end to Israel's blockade; US support for Israeli-Syrian negotiations and the return of our ambassador to Damascus; an Obama announcement of support for Arab-Israeli negotiations under he umbrella of the Arab (Saudi) Initiative; a total settlements freeze and a crackdown on settler violence. The ambassadors also would reduce America's 3 conditions on changing our relationship with Hamas to just one: end the violence. Totally. They recognize that demanding that they recognize Israel and adopt all previous Israeli-Palestinian agreements prior to negotiations is a nonstarter.

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By all accounts, Tom Daschle was (1) an inspired choice for health-care czar, (2) partly because he was so well-connected, and (3) among other things, the sloppy beneficiary of a corrupt political-economic system. All three.

By removing himself from consideration, he spared Barack Obama what he could ill-afford: a wound to his reputation as post-partisan, post-corruption avatar of morality. A dishonest creep like George W. Bush had no standard to adhere to; Obama is right to promise something qualitatively higher.

His problem is that is he promised something exceedingly high: connectedness, a good predictor of practical results (including health care) plus transcendence of Washington insider mores. This may turn out to be squaring the circle. It has come to pass that the difficulties of passing intelligent legislation are such as to require an insider like Daschle who knows how to maneuver--to wheedle and count votes as well as to think. It's no longer good enough for a reform president to surround himself with the sort of free-standing (many of them university-based) brain-trusters to whom FDR was partial. Someone as well-connected as Daschle is very likely to be too well connected. As we have just discovered.

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Tom Daschle's surprise withdrawal today shocked most Washington insiders -- after all, Daschle had been a key figure in the Senate, was Obama's pick for a major role in the new administration, would very likely have done a superb job getting a new health-insurance system enacted, and, probably could have mustered enough votes to be confirmed. So what happened? My guess is that official Washington underestimated the public's pique at what appeared to be the old ways of Washington. Hill staffers tell me that many offices have been inundated with telephone calls, emails, letters and faxes expressing concern (to put it mildly) about Daschle -- not only his failure to pay back taxes but his relationships with major players in the health care industry and rich consulting contracts with the private sector since leaving the Senate, and even the fact that he was given a car and driver by one of them.

What's going on here? Maybe official Washington, much like most of Wall Street, is still not quite getting it.

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During the battle over John Bolton's Senate confirmation to serve as US Ambassador to the United Nations, a post that Bolton ultimately achieved through presidential recess appointment rather than by Senate vote, I noticed a peculiar difference between leading Democrats and leading Republicans.

On the Sunday morning talk shows, leading Democrats kept saying that while they weren't big John Bolton fans, ultimately the President would win the fight over the confirmation of America's leading pugnacious nationalist. At various times during the 21-month long struggle, then Senator Joseph Biden, Senator Chuck Schumer, Senator Richard Durbin, New Mexico Governor Bill Richardson, and Senator Patrick Leahy all said on political shows that Bolton would get confirmed. To his credit, Durbin actually withdrew his statement and issued a release through this blog commending those working hard to stop Bolton's confirmation.

Dems were conceding before they needed to -- and the Republicans, through the entire battle, were declaring victory even though there was dissension in their own ranks and they were losing the confirmation war.

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Andrew's book is an important corrective for the hubris that has, time and again, led American foreign policy astray. His dissection of the national security ideology that inflates American power and virtue should prompt any member of the permanent policy elite to reflect, and squirm. That said, I think the indictment is too sweeping. I have a similar qualm to Michael's: is there really no such thing as benevolent exceptionalism? Is America's role as an indispensable backbone of the international order (p. 2) truly dispensable?

According to Andrew, the high-minded global roles the United States has assigned itself have been delusions at best, or pretensions at worst. But it's one thing to face up to the presumption and sanctimony of American exceptionalism, and another to claim that US power is only a force for good when good is achieved as a side benefit of a dispassionate calculation. Which leads to some of the most interesting questions for current foreign policy: the relationship between national interests and the international greater good, the nature of interdependence, and the meaning of pragmatism.

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"After a mortar sent Andrew Spurlock hurtling off a roof in Iraq, ending his Army career in 2006, the seasoned infantryman set aside bitterness over his back injury and began to chart his life in storybook fashion: a new house, a job as a police officer and more children.

But [...] the job with the Orange County Sheriff's Office fell through after officials there told Mr. Spurlock that he needed to "decompress" after two combat tours. Scrambling, he settled for a job delivering pizzas. Mr. Spurlock's disability claim for his back injury took 18 months to process, a year longer than expected. With little choice, the couple began putting mortgage payments on credit cards. The family debt climbed to $60,000, a chunk of it for medical bills, including for his wife and child. Foreclosure seemed certain." -The New York Times

Imagine struggling to pay your mortgage, keep your job and feed your family, all while serving a year-long deployment thousands of miles away. Every American is feeling the sting of the economic downturn. But veterans of Iraq and Afghanistan are being hit especially hard. As the Senate begins to debate the economic stimulus package this week, our elected leaders must ensure that any plan to stimulate the economy fully supports the newest generation of veterans and their families.

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Bill Kristol's New York Times column was doomed the day it began on January 7, 2008. And, yes, I told you so right here. But when it comes to warning about David Brooks' brew of intellectual usury and Resentment Lite, I feel a bit like Harry Markopoulos, who tried in vain to alert the SEC to Bernard Madoff's seductive but dangerous fraudulence, only to find the feds lacking lenses or coordinates to recognize the danger.

At least I have a name for Brooks' condition: Status/Self-Esteem Disequilibrium Syndrome (SSEDS). It designates a compulsion to cheapen one's recognized talents and prerogatives with subtle, unnecessary ingratiations and resentments toward those of even higher status and/or higher self-esteem. The syndrome runs deepest in those who live well off of it: High status-seeking, driven by low self-esteem. Unfortunately, many of Brooks' editors and fans suffer from milder variations of the syndrome. No wonder he's syndicated for millions of newspaper readers and on NPR and PBS.

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First, I want to thank Andrew for the outstanding contribution he's made to discussions of foreign policy over the past decade. I've read all of his books and a number of articles, and it's easy to see why he's carved out a place for himself as a highly respected commentator with a distinct voice and point of view. His dual careers as a professional soldier and now an accomplished academic carry authority in their own right. His personal sacrifices - readers should note the dedication of The New American Militarism to his brother-in-law, the late George Blough, and of The Limits of Power to his son Andrew - give that authority even more credibility, especially in the world of the armchair theoreticians, where the moralizing can be easy and cost-free, to them anyway. On top of all that, he seems to have moved some distance - not without incurring a measure of rancor - from the conservative think tanks and publications that first sponsored his work.

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I recently wrote a TPM Cafe post about the sorry state of the Foreign Relations Committee's website threatening to create a "One Million Strong Against Senate Foreign Relations Committee Website" on Facebook unless the Committee communicated that it had a plan underway to increase the utility of what should be the best website in Congress. The Committee responded. . .

Brian Young, the new webmaster on the Senate Foreign Relations Committee staff, in the note below asks for public recommendations that could help the site planners. Please be constructive in your commentary:

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New York Senator Charles Schumer proposed handing $15,000 of Joe the Plumber's money to every person who buys a home. It is possible that someone has come up with a more foolish idea, but researchers have not yet been able to identify one that makes less sense.

In addition to the fact that taxing non-home buyers to hand a really big check to home buyers (as opposed to poor children, unemployed workers, or people needing health care) is a questionable redistribution of income (spreading the wealth around), this proposal is incredibly easy to game.

I'm going to buy my brother's house and sell it to my mother. We'll pocket $30,000. This should be great fun. We'll pay out hundreds of billions of taxpayer dollars to transfer homes among friends and families. Now that's real stimulus.

Fortunately for Mr. Schumer, national reporters have so little understanding of economics (or anything else) they apparently think this plan makes sense,

The more I hear about the Gaza war, the worse it gets. And the story is pretty much out of the news. The dead are dead, and we all move on to something else.

But some people can't just move on like Amer Shurrab from Arlington, Virginia, for instance. Amer, who graduated from Middlebury in December and is a graduate of the Seeds of Peace program in Maine, which brings Israeli and Palestinian kids together for the summer, lost two brothers in the Gaza war. Their deaths were entirely unnecessary; even after they were shot, they could easily have been saved if the IDF had any interest in saving them. But they didn't and they died. Two brothers, 18 and 28.

I truly can't comment on this other than to urge TPMers to watch this interview. It is literally sickening.

Also, see Jimmy Carter's aide, Robert Pastor, on how war could have been avoided.

Of the many compelling points made by Andrew Bacevich in 'The Limits of Power,' none, perhaps, is as relevant today as the pervasive and corrosive influence of the national security establishment--strategic analysts, retired officers, academics, advisers, and pundits who occupy senior positions in the think-tanks, policy centers, defense contractors, and graduate programs that comprise Washington's military-intellectual complex. These are the people, Bacevich, notes, who concoct the arguments for ever-increasing military spending, who devise the over-inflated estimates of enemy strength to justify
such spending, who advocate risky military interventions abroad--and who impugn the loyalty of any who might question their reasoning.

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I'm grateful for the opportunity to discuss my book as part of the TPM Café Book Club. The Limits of Power first appeared in bookstores in August. (The paperback comes out in May 2009). A month later the economy began to tank, in some respects vindicating the book's basic message: it's past time for Americans to get their house in order. The solution to the predicament we face - which is cultural and political as much as economic and military -- lies here at home, not in Central Asia or the Persian Gulf. A refusal to face that fundamental fact will exacerbate already-existing tendencies toward debt and dependency.

How far the new president will take us toward such a reorientation of priorities ranks as one of the major questions of the day. On the campaign trail, Barak Obama famously promised to "change the way Washington works." His election reflected - and greatly reinforced -- widespread expectations that he would do just that. An imperial president having made a hash of things, Americans now looked to a president-as-messiah to set things right again.

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This week at Cafe we have Andrew Bacevich with us to book club blog on his latest book The Limits of Power: The End of American Exceptionalism. The book examines the citizenry's complicity in the current economic, political, and military crisis. Bacevich is a professor of International Relations and History at Boston University and a retired army colonel. His previous books include American Empire: The Realities and Consequences of U. S. Diplomacy (2002), The Imperial Tense: Problems and Prospects of American Empire (2003) (editor), The New American Militarism: How Americans Are Seduced by War (2005), and The Long War: A New History of US National Security Policy since World War II (2007) (editor).

Joining him are Michael Hollerich, professor at the University of St. Thomas; Michael Klare, professor at Hampshire College; Michael Lind, a Whitehead Senior Fellow at the New America Foundation; Nathan Newman, the policy director for the Progressive Legislative Action Network; David Shorr, a program officer in policy analysis and dialogue at the Stanley Foundation; and Tony Smith, a professor at Tufts University.

Joe Stiglitz has added his voice to those opposing the idea of an Aggregator (or Bad) Bank.

That amounts to swapping taxpayers' "cash for trash," Stiglitz said yesterday in a panel discussion at the World Economic Forum in Davos, Switzerland. "You shouldn't chase good money after bad. We're talking about a national debt that's very hard to manage."

From the moment Paulson first proposed this idea, I called it the Toxic Trust Company of America . It was a bad idea four months ago and it's still a bad idea. The Times explains that the biggest problem is in valuing the assets to be purchased.

The wild variations on the value of many bad bank assets can be seen by looking at one mortgage-backed bond recently analyzed by a division of Standard & Poor's, the credit rating agency.

The financial institution that owns the bond calculates the value at 97 cents on the dollar, or a mere 3 percent loss. But S.& P. estimates it is worth 87 cents, based on the current loan-default rate, and could be worth 53 cents under a bleaker situation that contemplates a doubling of defaults. But even that might be optimistic, because the bond traded recently for just 38 cents on the dollar, reflecting the even gloomier outlook of investors.

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According to David Leonhardt, writing in today's New York Times magazine,

TWO WEEKS AFTER THE ELECTION, Rahm Emanuel, Obama's chief of staff, appeared before an audience of business executives and laid out an idea that Lawrence H. Summers, Obama's top economic adviser, later described to me as Rahm's Doctrine. "You never want a serious crisis to go to waste," Emanuel said. "What I mean by that is that it's an opportunity to do things you could not do before." (Links in the quote are from the on-line original.)

Leonhardt explains how this Doctrine can be applied to issues ranging from health care costs to education, and some of this is already apparent in the fiscal stimulus details currently before Congress.

Can the same approach also guide actions regarding our deeply broken and broke financial system? There are three possible answers.

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The real stimulus debate hasn't even started yet. Congress will pass President Obama's stimulus package in the next two weeks, more or less as he wants it. The House has already done its part, and the Senate appears likely to follow suit. But when the economy starts to turn up again, perhaps as early as next year, the president will have the real tough decisions to make. He'll have to choose which spending will continue -- or whether any of it will continue at all.

Sixteen years ago, Bill Clinton came to Washington with his own ambitious plans to reverse widening inequality, rebuild the nation's crumbling infrastructure, create an efficient and affordable health-care system and address the growing environmental crisis. But because of raging budget deficits and a towering national debt, he was unable to accomplish most of this. As his secretary of labor, I shared his frustration. Alan Greenspan, then Federal Reserve chairman, and most of Wall Street warned that the nation couldn't afford the risk of runaway inflation.

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