It is Europe-bashing time again. Outgoing Secretary of Defense Robert Gates is the latest in a very long string of US officials to tee off on the Europeans for not "carrying their share of the defense burden." So easy for Americans to say, such an easy escape-hatch from our own economic and fiscal problems.
The reality is everyone's defense budget is coming down. And as they come down, it is important to remember that not everyone in the world agrees with the US view that we have a God-given mission to provide global military and counter-insurgency operations in pursuit of the chimera of "global security," least of all the Europeans. For more on my views, visit the national security experts blog of the National Journal, posted today.
The ironies about the current debt ceiling fight abound. As my column from today's Roll Call shows, not only has the debt ceiling not always been linked with deficit reduction, but the GOP is trying both to deny and insist that not increasing the government's borrowing limit by August 2 will cause real damage.
It has been all Commencement, all the time, at Dartmouth for the past week. I thought he was an unusual choice, but Conan O'Brien delivered as the keynote speaker. Here's the part of his speech where he pivoted from comedy to something more:
Eleven years ago I gave an address to a graduating class at Harvard. I have not spoken at a graduation since because I thought I had nothing left to say. But then 2010 came. And now I'm here, three thousand miles from my home, because I learned a hard but profound lesson last year and I'd like to share it with you. In 2000, I told graduates "Don't be afraid to fail." Well now I'm here to tell you that, though you should not fear failure, you should do your very best to avoid it. Nietzsche famously said "Whatever doesn't kill you makes you stronger." But what he failed to stress is that it almost kills you. Disappointment stings and, for driven, successful people like yourselves it is disorienting. What Nietzsche should have said is "Whatever doesn't kill you, makes you watch a lot of Cartoon Network and drink mid-price Chardonnay at 11 in the morning."
It was hard not to notice this story by Michael Mackenzie and Aline van Duyn in yesterday's Financial Times about how Wall Street is planning to deal with the situation if the federal debt ceiling isn't raised by August 2, the date the U.S. Treasury says the federal government's cash situation will become critical.
Here's the money quote:
One strategy, which bank executives only agreed to discuss without attribution due to the political sensitivities related to discussing Treasury debt, is to have more cash on hand to put up as collateral against derivatives and other transactions, decreasing the financial system’s reliance on Treasurys.
“We’re planning to lower our reliance on the use of Treasurys in early August and have more cash on hand as a contingency measure,” said a U.S. bank chief.
I'll be on the Spitzer show tonight at 8 pm. The topic was supposed to be GOP intransigence on the budget but my guess is that Gingrich will be mentioned at least once.
The usual right-wingers like Larry Kudlow and the Wall Street Journal's editorial page are falling all over themselves to praise Tim Pawlenty for his "plan" to double the real rate of economic growth from its historical level of about 2.5% per year to 5% for 10 years. I don't want to waste much time on such an idiotic idea -- as I told a reporter, if he could actually do this he deserves not only the presidency, but the Nobel Prize in economics. The truth is that there is no substance whatsoever to Pawlenty's plan except to essentially abolish taxation for the wealthy. And doubling the growth rate is just childish wishful thinking. If there were any policies that could bring this about, every country everywhere would already be doing it.
When historians look back at our era and write about how a nation so blessed was able to squander those blessings so dramatically, they won't have to look much further than the U.S. Senate. Words, polite ones anyway, cannot really express how how absurd it is that the nomination of Peter Diamond for the Board of Governors of the Federal Reserve System has come down to this. Even without the Nobel Prize, his qualifications for the position were beyond question -- at least by anyone who could be persuaded by the answers. I continue to wonder whether our society is resilient enough to withstand many more years of this institutionalized immaturity on important policy matters.
Contrary to what the GOP has been saying, financial markets not only will react negatively to the debt ceiling fight happening on Capital Hill, but as I explain in my column from today's Roll Call, that negative reaction has already begun and it's not at all ambiguous or tepid.
