McCain: Interests of Defense Contractors May Conflict with US National Interest
USA Today reports that retired military officers join the boards of directors of, or become employees of, defense contractors and take home big bags of money doing so. Not surprising. At the same time, the paper reports, lots of them are being paid by the Pentagon to be “senior mentors” of their former colleagues. Not being government employees, but rather independent contractors, these folks aren’t subject to government ethics rules. To take one example, as chairman of BAE Systems, Gen. Anthony Zinni is clearing almost a million a year, in addition to his $129,000 per year government pension. In addition to all that, the Pentagon pays him about $2,000 per day to “mentor” people at DOD.
As the article points out, information is almost invaluable to the defense contractors in these contexts. The knowledge of what’s going on at DOD is extremely useful for planners at the defense companies, and so while the retired officers are protesting that being paid nearly $2,000 per day by DOD for their work as mentors is “way below the industry average,” it increases their value to, and presumably their compensation from, their military-industrial employers. As one coordinator of the mentors program told the retired officers, “you’re getting paid in two ways–monetarily and informationally.”
This isn’t too surprising a story, but the crowning irony comes as Sen. John McCain calls for an ethics rewrite and offers his view that “the important thing is that [the involved officers] avoid the appearance of conflict.” This is a puzzling remark coming from a man whose top foreign-policy adviser was collecting hundreds of thousands of dollars from the Georgian government to lobby McCain at the same time he was being paid by McCain to advise him on foreign policy.
McCain’s thoughts about conflict of interest in that instance? He was “so proud” of his lobbyist-cum-adviser. Presumably once McCain issued his ridiculous “today we are all Georgians” fatwa it became a patriotic duty to take money from foreign governments to represent their interests. But in the case of the proposed reforms–which would attempt to institute some semblance of transparency in these mentoring deals–one can only wish the senator from Arizona the best.
Our ‘Reassured’ Allies
Justin Logan beat me to the punch, but Robert Kagan and Dan Blumenthal’s op-ed in the Washington Post warrants more than just one comment. Kagan and Blumenthal fret that the Obama administration’s policy of “strategic reassurance” is sure to fail. Aimed at encouraging Russia and China, especially, to cooperate with the United States in dealing with a number of common threats, the two predict that the policy will succeed only in making “American allies nervous.”
Maybe that wouldn’t be such a bad thing. Not that we should go around making our allies nervous just for the heck of it, but I worry that our allies have grown, well, too comfortable with the current state of affairs in which American taxpayers and American troops bear a disproportionate share of the costs of securing global peace and prosperity.
And who can blame them? From the perspective of our allies in East Asia (chiefly the Japanese and the South Koreans), and for the Europeans tucked safely within NATO, getting the Americans to pay the costs, and assume the risks, associated with policing the world is a pretty good gig.
The same Robert Kagan made this point explicitly, if somewhat crudely, in his book Of Paradise and Power, when he cast the United States in the heroic role as sheriff, while our wealthy allies were portrayed as cowardly, sniveling townspeople, or, worse, saloon keepers who benefited from the protection of the Americans while selling booze to the bad guys.
For at least two decades, we have adopted a strategy designed to comfort our allies. Our goal has been to discourage them from taking prudent steps to defend themselves. Many Americans are beginning to appreciate just how short-sighted this policy was, and is. Such military capabilities might have proved useful in Afghanistan, for example, and they might ultimately serve a purpose in checking Russian and Chinese ambitions, which would be particularly important if these two countries prove as aggressive as Kagan and Blumenthal claim.
Instead, we have a group of militarily weak and comfortable allies who spend a fraction of what Americans spend on defense, and who can muster political will with respect to foreign policy only when it entails criticizing the United States for not doing enough. In other words, we are reaping what we sowed.
Filed under: Foreign Policy and National Security; General
For Obama, Peace in the Morning, War in the Afternoon
Hours after thanking the world for the Nobel Peace Prize this morning, President Obama will gather with his war advisers to ponder sending 60,000 more troops into a country where our national security objectives are unclear at best.
Instead of embracing General McChrystal’s proposal for a substantial increase in the U.S. military presence — or even adopting a “McChrystal-Light” strategy — the Obama administration should begin a phased withdrawal of troops over the next 18 months, retaining only a small military footprint relying on special forces personnel. Otherwise, America will be entangled for years — or decades — in pursuit of unattainable goals.
We need to “define success down” in Afghanistan. That means abandoning any notion of transforming ethnically fractured, pre-industrial Afghanistan into a modern, cohesive nation state. It also means reversing the drift in Washington’s strategy over the past eight years that has gradually made the Taliban (a parochial Pashtun insurgent movement), rather than al Qaeda, America’s primary enemy in Afghanistan. A more modest and realistic strategy means even abandoning the goal of a definitive victory over al Qaeda itself.
Instead, we need to treat the terrorist threat that al Qaeda poses as a chronic, but manageable, security problem. Foreign policy, like domestic politics, is the art of the possible. Containing and weakening al Qaeda may be possible, but sustaining a large-scale, long-term occupation of Afghanistan and creating a modern, democratic country is not.
More here:
New Video: Eight Years in Afghanistan
The United States has been in Afghanistan for eight years and the end of our engagement there is not in sight. In this new video, Cato foreign policy experts tackle myths associated with the war in Afghanistan and offer solutions to American involvement there.
Ted Galen Carpenter and Malou Innocent are authors of a new paper, Escaping the Graveyard of Empires: A Strategy to Exit Afghanistan.
Wednesday Links – Afghanistan Edition
Today marks the eighth anniversary of the U.S. war in Afghanistan. Cato foreign policy experts have been following and analyzing the war since the beginning. Here’s a round up of their assessment thus far:
- Why we must narrow objectives in Afghanistan. Before implementing a new strategy, we must first define victory.
- Why the Afghanistan strategy does not require more troops.
- Once we have defined our objectives, we need to follow an exit strategy.
- In today’s podcast, foreign policy analyst Malou Innocent discusses the future of policy in the region.
On What Larger Theory Is Neoconservatism Based?
There have been some interesting writings coming out of AEI’s new Center for Defense Studies recently. On Friday, Daniel Blumenthal offered some thoughts on China. In the course of making the case that Chinese leaders should realize that we are not trying to contain China, he wrote the following:
If countries acted in accordance with rational actor theories of political science, the Chinese would be pretty well assured that we are not going to contain it. We have made clear across administrations that we welcome China’s rise as a great power and urge it to act as a responsible one.
But countries do not act in accordance with political science theories.
Later in the piece, he wrote the following:
China is not the only country that is rising. So is India. But we do not worry about India’s rise. That is because India is a democracy. Almost everything it does is transparent to us. We share liberal values with India, including the desire to strengthen the post-World War II liberal international order of open trade and investment and the general desire among democracies to settle internal and external disputes peacefully and democratically. The fact that China is not a democracy matters greatly as it rises. It makes its rise more disruptive as countries have to divine its intentions and observe the gap between its rhetorical policy of a “Peaceful Rise” and some of its actions that are inconsistent with a peaceful rise.
He closed thusly:
Wouldn’t it be nice if China got on board with all the post-modern, feel-good notions about international politics put forth by the Obama Administration? In the 21st century, says the Obama team, all countries have common interests in confronting transnational issues like climate change and proliferation. Sorry guys, those who lead China think 21st century international politics will look more or less like it did in the past. They favor good old fashioned power politics. Unfortunately for Obama, that forces us to do the same.
There’s an awful lot of interesting stuff going on here. First, Blumenthal’s claim that “countries do not act in accordance with political science theories” is strangely incoherent. As his second and third quotes above make clear, Blumenthal has a political science theory–two actually.
Another Day, Another Tranche of Afghanistan Reading Material
Item: The Coalition for a Realistic Foreign Policy, a group of concerned scholars and authors who work on international security and U.S. foreign policy, have issued an open letter to President Obama warning him not to expand U.S. involvement in that country. (Full disclosure: I was a signatory.) The list of signatories includes many of the scholars who urged President Bush not to invade Iraq. Politico was the first to run the story: see here.
Item: Via Michael Cohen, former CIA counterterrorism honcho Paul Pillar takes to the pages of the Washington Post to think through the concept of “safe havens” in Afghanistan. His conclusion?
Among the many parallels being offered between Afghanistan and the Vietnam War, one of the most disturbing concerns inadequate examination of core assumptions. The Johnson administration was just as meticulous as the Obama administration is being in examining counterinsurgent strategies and the forces required to execute them. But most American discourse about Vietnam in the early and mid-1960s took for granted the key — and flawed — assumptions underlying the whole effort: that a loss of Vietnam would mean that other Asian countries would fall like dominoes to communism, and that a retreat from the commitment to Vietnam would gravely harm U.S. credibility.
The Obama administration and other participants in the debate about expanding the counterinsurgency effort in Afghanistan can still avoid comparable error. But this would require not merely invoking Sept. 11 and taking for granted that a haven in Afghanistan would mean the difference between repeating and not repeating that horror. It would instead mean presenting a convincing case about how such a haven would significantly increase the terrorist danger to the United States. That case has not yet been made.
Item: Michael Crowley offers a piece in the New Republic that strongly implies but doesn’t quite come out and say that President Obama should ignore the skeptics and the political risks and wade deeper into Afghanistan. The piece swallows whole the conventional wisdom narrative on Iraq–that the Surge amounted not to a combination of defining down “victory” and appeasement of Sunni tribes but rather a borderline miracle whereby Gen. Petraeus loosed his wonder-working COIN doctrine on the maelstrom of violence in that country and produced a strategic victory. Crowley then uses this narrative to frame the decision before President Obama. Still, he writes
[I]f the definition of success isn’t clear to the Obama team, the definition of defeat may be. Bush argued unabashedly that Iraq had become “the central front in the war on terror” and that withdrawing before the country had stabilized would hand Al Qaeda not only a strategic but a moral victory. Current administration officials don’t publicly articulate the same rationale when discussing Afghanistan. But former CIA official Bruce Riedel, a regional expert who led the White House’s Afghanistan-Pakistan review earlier this year, cited it at the Brookings panel held in August. “The triumph of jihadism or the jihadism of Al Qaeda and the Taliban in driving NATO out of Afghanistan would resonate throughout the Islamic World. This would be a victory on par with the destruction of the Soviet Union in the 1990s,” Riedel said. “[T]he stakes are enormous.”
Obama may have one last thing in common with Bush: personal pride. Bush was determined to prevail in Iraq because he had invaded it. And, while Obama, of course, had nothing to do with the invasion of Afghanistan, he has long supported the campaign there–including during the presidential campaign as a foil for his opposition to the Iraq war. Speaking before a group of veterans last month, Obama called Afghanistan a “war of necessity”–a phrase which politically invests him deeper in the fight. “The president has boxed himself in,” says one person who has advised the administration on military strategy. “The worst possible place to be is that our justification for being in a war is that we’re in a war.”
Lots to chew on.
Filed under: Foreign Policy and National Security; General
Jervis on Afghanistan
Columbia University IR guru Robert Jervis has a smart post at Foreign Policy’s “Af-Pak” blog. For those who couldn’t get enough at yesterday’s Cato forum on Afghanistan, Jervis’ post is well worth a look:
Prof. Robert Jervis
Most discussion about Afghanistan has concentrated on whether and how we can defeat the Taliban. Less attention has been paid to the probable consequences of a withdrawal without winning, an option toward which I incline. What is most striking is not that what I take to be the majority view is wrong, but that it has not been adequately defended. This is especially important because the U.S. has embarked on a war that will require great effort with prospects that are uncertain at best. Furthermore, it appears that Obama’s commitment to Afghanistan was less the product of careful analysis than of the political need to find a “tough” pair to his attacks on the war in Iraq during the presidential campaign. It similarly appears that in the months since his election he has devoted much more attention to how to wage the war than to whether we need to wage it.
David Frum Analyzes Why ‘The Crazies’ Are Running the GOP
In a discussion on Bloggingheads, David Frum offers his thoughts on the sad state of the GOP these days:
He blames the predicament, in part, on the “conservative entertainment-industrial complex,” a term coined by Andrew Sullivan. In Frum’s telling, this complex has “distorted conservative dialogue to suit the wishes of the Fox audience.” He says that drawing on such a group, “you can get seriously rich out of that, but you can’t govern a country with that kind of voter base, it’s a tiny minority-within-a-minority.”
This is an interesting thesis. Frum was the coauthor of a seemingly successful, widely discussed foreign-policy book titled An End to Evil, which posited that terrorism posed a “threat to the survival of our nation,” and in foreign policy, “there is no middle way for Americans. It is victory or Holocaust.” Are these the sorts of carefully considered judgments on which the GOP is going to ride back into office?
It’s probably true that pushing the American nationalist button over and over from 2002 forward contributed to getting Bush reelected in 2004, but the results after then have been rather less encouraging. John Boehner colorfully remarked recently that the GOP “took it in the shorts with Bush-Cheney, the Iraq War, and by sacrificing fiscal responsibility to hold power.” I’m not sure that my preferred foreign policy is the key to political success, but I’m pretty sure that the zany world view that Frum has traded on isn’t the way forward either.
Filed under: Foreign Policy and National Security; Government and Politics
Bringing the States Back In
It’s an annoying, hackneyed trope of foreign policy types to say “if you want to understand X, you have to understand Y.” That said, let me engage in a little bit of it.
What’s going on in Afghanistan, we’re supposed to believe, is about terrorism, failed states, economic development, counterinsurgency, counterterrorism, human rights, and some other stuff. And to an extent, it is about each of those things. But to my mind, if you want to get a handle on what’s driving events over there, and on its historical status as a plaything of regional and extraregional powers, you ought to read this article in today’s Wall Street Journal.
The themes that permeate the article are familiar: States as the primary actors in international politics, their uncertainty about other states’ intentions, the fundamental zero-sumness of security competition…somebody should cook up a theory or two on this stuff.
Eventually–although in fairness, God only knows when–we’re going to leave Afghanistan. When that happens, India and Pakistan are still going to live in the neighborhood. They’d each prefer to have lots of influence in Afghanistan, and to preclude the other from having too much. Accordingly, they’re both trying to set up structures and relationships that would, in the ideal scenario, let them control Afghanistan. In a less-than-ideal scenario, they’d like enough influence to undermine the other’s control of the country. Until you grasp that nettle, you’re really just fumbling around in the dark.
Find a solution for that in your COIN manual.
Cheney’s Worldview
Former vice president Richard Cheney gave his big address on national security (pdf) over at AEI last week. He covered a lot of ground, but this passage, I think, tells us quite a bit about Cheney’s worldview:
If fine speech-making, appeals to reason, or pleas for compassion had the power to move [al-Qaeda], the terrorists would long ago have abandoned the field. And when they see the American government caught up in arguments about interrogations, or whether foreign terrorists have constitutional rights, they don’t stand back in awe of our legal system and wonder whether they had misjudged us all along. Instead the terrorists see just what they were hoping for — our unity gone, our resolve shaken, our leaders distracted. In short, they see weakness and opportunity.
So we shouldn’t let the terrorists see us get “caught up in arguments” about the wisdom of our foreign policy, about whether our country should go to war, about our country’s treaty obligations, about the parameters of government power under our Constitution? What is this former vice president thinking?
Does it matter if Charles Manson appreciates the fact that he got a trial instead of a summary execution? No. It does not matter what’s in that twisted head of his. Same thing with bin Laden. The American military should make every effort to avoid civilian casualties even if bin Laden targets civilians. Similarly, it does not matter if bin Laden scoffs at the Geneva Convention as a sign of ”weakness.” The former VP does not get it. It is about us, not the terrorists.
An obsession with the mentality of the enemy (what they see; what they hope for, etc.) can distort our military and counterterrorism strategy (pdf) as well. Cheney wants to find out what bin Laden’s objective is and then thwart it. I certainly agree that gathering intelligence about the enemy is useful, but Cheney seems so obsessed that he wants to thwart al-Qaeda’s objectives — even if some pose no threat to the USA, and even if some of al-Qaeda’s objectives are pure folly.
Filed under: Foreign Policy and National Security; Law and Civil Liberties
Haass: Defining ‘Success’ Down
Richard Haass’s op ed in today’s Post is worth a read. Sure, it amounts to a well-placed advertisement for his new book, War of Necessity, War of Choice. And it’s not like Haass, current president of the Council of Foreign Relations, and former director of policy planning at the State Department, lacks for exposure. But while I would quibble with his characterization of the first Gulf War as “necessary”, it is refreshing for a man so firmly fixed in the foreign policy establishment to focus not on the United States’ supposed capacity for refashioning the global order, but rather on the limits of our power.
He urges President Obama to resist the impulse to expand our objectives in Afghanistan, and should not dedicate far more resources to the effort if we appear to be falling short of a few modest goals. He wisely counsels that the United States is unlikely to convince Iran to forego nuclear enrichment or North Korea to give up its weapons, and we should therefore focus on the more essential and achievable tasks of intrusive inspections of Iran’s nuclear facilities and pressure on North Korea (in concert with China) to prevent material and technology from being diverted to others.
He concludes:
Some will argue that defining success down is defeatist. And certainly, one can imagine an Afghanistan or an Iraq that becomes a Jeffersonian democracy and an Iran or a North Korea that gets out of the nuclear business. But such outcomes are improbable at best and more likely fantasy. Moreover, far greater involvement and investment would still fail to bring them about.
The alternatives are outcomes that are good enough and commensurate with interests and costs. The moment calls for defining success down. The United States is stretched economically and militarily. Better partial success we can afford than expensive failures we cannot.
Les Gelb, CFR’s former president, makes similar arguments in his latest book, Power Rules.
Few people in Washington rise through the ranks by talking about what we can’t or shouldn’t do, which partly explains why the voices of restraint are almost always drowned out by the vocal few calling for action. (For more on this point, see Steve Walt’s recent commentary at FP.com and Justin Logan’s observations on this blog.)
New Study: How President Obama Can Help Restore the Pro-Trade Consensus
Since taking office, President Obama seems to have discovered that anti-trade rhetoric, while popular on the campaign trail, isn’t so useful to a sitting president whose policies will have lasting consequences, says trade analyst Daniel J. Ikenson in a new Cato study.
In “Audaciously Hopeful: How President Obama Can Help Restore the Pro-Trade Consensus,” Ikenson and international trade attorney Scott Lincicome argue that the time has come “to arrest and reverse America’s misguided and metastasizing aversion to trade,” which has “been shaped overwhelmingly by relentless political rhetoric.”
The authors’ suggestions for President Obama include:
- Establish a “trade transparency initiative,” with the goal of publishing independent findings about the effects of trade and trade barriers on the U.S. economy, without political interference.
- Reinforce for Congress the fact that a unilateralist trade policy undermines multilateral foreign policy, as well as President Obama’s personal efforts toward repairing America’s damaged image abroad.
- Craft a pragmatic, principled approach to enforcement of standing trade agreements.
- Adopt a China policy of carrots and sticks, including a continued push for China to open more of its markets while resorting to the WTO dispute settlement system only when the situation and facts support doing so.
- Craft a proactive agenda now for implementation when trade consensus re-emerges.
See more Cato research on trade policy.
Obama’s First 100 Days: Mixed Record on Foreign Policy
Cato foreign policy experts weigh in on President Obama’s record in his first 100 days:
Christopher Preble, Director Foreign Policy Studies:
President Obama deserves credit for making a few modest changes in U.S. foreign and defense policy, and he has signaled a desire to make more fundamental shifts in the future. Some of these may prove helpful, while others are likely to encounter problems. In the end, however, so long as the president is unwilling to revisit some of the core assumptions that have guided U.S grand strategy for nearly two decades — chief among these the conceit that the United States is the world’s indispensable nation, and that we must take the lead in resolving all the world’s problems — then he will be unable to effect the broad changes that are truly needed.
Ted Galen Carpenter, Vice President Defense & Foreign Policy Studies; Christopher Preble:
On the plus side, Obama moved quickly to fulfill his most important foreign policy promise: ending the war in Iraq. That said, the policy that his administration will implement is consistent with the agreement that the outgoing Bush administration negotiated with the Iraqis. Given that the war has undermined U.S. security interests, and our continuing presence there is costly and counterproductive, Obama should have proposed to remove U.S. troops on a faster timetable.
Malou Innocent, Foreign Policy Analyst:
The jury is still out on the other major, ongoing military operation, the war in Afghanistan. That mission is directly related to events in neighboring Pakistan, which is serving — and has served — as a safe haven for Taliban supporters for years. President Obama deserves credit for approaching the problem with both countries together, and also in a regional context, which includes Iran, as well as India. Still unknown is the scope and scale of the U.S. commitment. President Obama has approved a nearly 50 percent increase in the number of U.S. military personnel in Afghanistan. Some have suggested that still more troops are needed, and that these additional troop numbers might prevail for 10-15 years. That would be a mistake. The United States should be looking for ways to increase the capacity of both Afghanistan and Pakistan to confront the extremism in their countries, and should not allow either to grow dependent upon U.S. military and financial support.
Christopher Preble and Ted Galen Carpenter:
On Iran, President Obama made the right decision by agreeing to join the P5 + 1 negotiations, but that is only a first step. The two sides are far apart and President Obama has not signaled his intentions if negotiations fail to produce a definitive breakthrough. Sanctions have had a very uneven track record, and are unlikely to succeed in convincing the Iranians to permanently forego uranium enrichment. If the Iranians are intent upon acquiring nuclear weapons, military action would merely delay Iran ’s program, and would serve in the meantime to rally support for an otherwise unpopular clerical regime, and a manifestly incompetent president.
Doug Bandow, Senior Fellow; Christopher Preble:
A related problem is North Korea’s ongoing nuclear program, an area where the president and his team seem to be grasping for answers. President Obama was mistaken if he believed that that the UN Security Council would render a meaningful response to Pyongyang’s provocative missile launch. It was naive, at best, for him to believe that even a strong rebuke from the UNSC would have altered Kim Jong Il’s behavior. The president must directly engage China, the only country with any significant influence over Kim. The North’s reckless and unpredictable behavior does not serve Beijing’s interests.
Benjamin Friedman, Research Fellow; Christopher Preble:
Obama and Defense Secretary Robert Gates are correct to apply greater scrutiny to bloated Pentagon spending, and to terminating unnecessary weapon systems, but the budget will actually grow slightly, at a time when we should be looking for ways to trim spending. If President Obama decided to avoid Iraq-style occupations, we could cut our ground forces in half. If we stopped planning for near-term war with China or Russia, the Air Force and Navy could be much smaller. Unless we commit to a grand strategy of restraint, and encourage other countries to provide for their own defense, it will be impossible to make the large-scale cuts in military spending that are needed.
Jim Harper, Director of Information Policy Studies; Benjamin Friedman; Christopher Preble:
Two other quick points. President Obama has moved away from some of the overheated rhetoric surrounding counterterrorism and homeland security, including dropping the phrase ‘War on Terror”. This was the right approach. The language surrounding the fight against terrorism is as important — if not more important — than the actual fight itself. Equally useful is his pledge to close the detention facility at Guantanamo Bay and his renunciation of the use of torture and other illegal means in the first against al Qaeda. These steps send an important message to audiences outside of the United States who cooperation is essential.
Ian Vasquez, Director, Center for Global Liberty & Prosperity; Juan Carlos Hidalgo, Project Coordinator for Latin America.
President Obama has signaled a slight change on US-Cuba policy by softening some travel and financial restrictions. It is not as far as we would have liked, but it is a step in the right direction — toward greater engagement, as opposed to more isolation, which was the approach adopted by the Bush administration.
For more research, check out Cato’s foreign policy and national security page.
Springtime for U.S. Trade Policy?
In a Cato paper to be released on April 28 (here’s a link to related policy forum), Scott Lincicome and I explain how President Obama can help restore the pro-trade consensus in America. “How?” is one question, but a skeptic might also ask: Why would the president want to do that given his anti-trade campaign rhetoric and the preferences of many fellow Democrats in Congress for a moratorium on trade liberalization and a focus on enforcement?
The answer is quite simple: we believe the president understands the importance of both trade and U.S. trade leadership to the broader objectives of economic growth and good will among nations. Since he is inevitably going to alienate some of the constituencies who helped get him elected by embracing trade openness, he could be forgiven for his perceived apostasy if he can articulate his rationale convincingly.
The most comprehensive and convincing articulation would begin with the moral case for free trade: that every American has the right to transact with whomever he chooses, regardless of the nationality or location of the other party. Voluntary exchange between consenting parties is inherently fair, while government coercion in that process on behalf of some citizens at the expense of others is inherently unfair, inefficient, and subversive of the rule of law. We are not holding our breath that this president will make this principled case for free trade. But his articulation of other pro-trade arguments, after so many years of hyperbole, myth-making and fear-mongering from his colleagues on Capitol Hill, could go a long way toward correcting and reversing Americans’ artificially-induced aversion to trade.
Why are we so sure that President Obama is going to embrace trade openness? Well, we’re not so sure, but it’s more than a hunch. Here are two broad reasons:
First, like all presidents in the modern era, Obama takes a national perspective on economic matters, and not a local or regional perspective, as most members of Congress do. Unlike a candidate or a member of the opposition party in Congress who is free to criticize the incumbent administration’s policy errors without having to seriously consider the pros and cons of the alternatives, the president has to concern himself with the consequences of policy changes. It’s potentially his mess to clean up. As a senator and presidential candidate, Obama promised to aggressively pursue remedies to China’s alleged currency manipulation. As president, Obama declined to act accordingly when given the explicit opportunity, knowing that provocation in that regard would inject more uncertainty into financial markets and could spark retaliation. A protectionist measure that briefly benefits producers in Illinois (which is why a Senator Obama might support it) could have consequences that penalize an array of interests across the country (which is why a President Obama might oppose it).
Second, President Obama—like all Democratic and Republican presidents in the post-WWII era—sees trade policy as a tool of foreign policy. And from his early trips abroad, Obama has learned that to many countries around the world, U.S. trade policy is the most consequential aspect of U.S. foreign policy. So a president who appears determined to repair the damage caused by eight years of unilateralist foreign policy can only embrace trade openness.
In our paper, Scott and I present several other reasons why we are “audaciously hopeful” that the president will help restore the pro-trade consensus. But some nascent support for our audacity can be found in the following examples:
1. President Obama spoke out against the protectionist Buy American provisions in the original “stimulus” package, and Congress subsequently removed its most egregiously protectionist aspects.
2. The president has encouraged Congress to resolve the Mexican trucking ban and bring the United States into compliance with its NAFTA commitments.
3. The Obama Treasury declined to label China a currency manipulator in its first semi-annual report on the topic
4. The president informed Mexican president Calderon last week that he did not think NAFTA would need to be reopened—contrary to his campaign rhetoric.
5. The president said as much to Canadian PM Stephen Harper back in February.
6. There are increasing signs of interest and promise from the White House and Congress that the long-frozen bilateral trade agreements with Colombia, Panama, and South Korea could start moving soon.
The pro-trade environment is not certain, and it could be fleeting, but there’s a case to be made that it’s not as dire as some predicted it would be. If the president intends to facilitate a liberal trade agenda, he should start laying the groundwork with strong pro-trade arguments now.
New at Cato
Here are a few highlights from Cato Today, a daily email from the Cato Institute. You can subscribe, here.
- “Bright Lines and Bailouts: To Bail or Not To Bail, That Is the Question”: Vern McKinley and Gary Gegenheimer have a new Policy Analysis that discusses the failure of bank bailouts.
- In a new piece at National Interest (Online), Doug Bandow offers a new strategy for dealing with Kim Jong Il.
- Nat Hentoff reports on Obama’s broken promises of transparency in the Washington Times.
- Make no mistake: “Of course it was torture,” says Gene Healy in this week’s Examiner column.
- In Tuesday’s Cato Daily Podcast, foreign policy analyst Benjamin Friedman discusses the record of Defense Secretary Robert Gates under Obama.
Filed under: Cato Publications; Foreign Policy and National Security; General
Week in Review: Tax Day, Pirates and Cuba
Tax Day: The Nightmare from Which There’s No Waking Up
Cato scholars were busy exposing the burden of the American tax system on Wednesday, the deadline to file 2008 tax returns.
At CNSNews.com, tax analyst Chris Edwards argued that policymakers should give Americans the simple and low-rate tax code they deserve:
The outlook for American taxpayers is pretty grim. The federal tax code is getting more complex, the president is proposing tax hikes on high-earners, businesses, and energy consumers; and huge deficits may create pressure for further increases down the road…
The solution to all these problems is to rip out the income tax and replace it with a low-rate flat tax, as two dozen other nations have done.
At Townhall, Dan Mitchell excoriated the complexity of the current tax code:
Beginning as a simple two-page form in 1913, the Internal Revenue Code has morphed into a complex nightmare that simultaneously hinders compliance by honest people and rewards cheating by Washington insiders and other dishonest people.
But that is just the tip of the iceberg. The tax code also penalizes economic growth, distorts taxpayer behavior, undermines American competitiveness, invites corruption and promotes inefficiency.
Mitchell appeared on MSNBC, arguing that every American will soon see massive tax hikes, despite Washington rhetoric.
Don’t miss the new Cato video that highlights just how troubling the American tax code really is.
U.S. Navy Rescues Captain Held Hostage by Somali Pirates
USA Today reports that the captain of a merchant vessel that was attacked by Somali pirates was freed Monday when Navy SEAL sharpshooters killed the pirates. The episode raises a larger question: How should the United States respond to the growing threat of piracy in the region?
Writing shortly after Capt. Richard Phillips was freed, foreign policy expert Benjamin Friedman explained the reasons behind the increase in piracy:
It’s worth noting the current level of American concern about piracy is overblown. As Peter Van Doren pointed out to me the other day, the right way to think about this problem is that pirates are imposing a tax on shipping in their area. They are a bit like a pseudo-government, as Alexander the Great apparently learned. The tax amounts to $20-40 million a year, which is, as Ken Menkhaus put it in this Washington Post online forum, a “nuisance tax for global shipping.”
The reason ships are being hijacked along the Somali coast is because there are still ships sailing down the Somali coast. Piracy is evidently not a big enough problem to encourage many shippers to use alternative shipping routes. In addition, shippers apparently find it cheaper to pay ransom than to pay insurance for armed guards and deal with the added legal hassle in port. The provision of naval vessels to the region is an attempted subsidy to the shippers, and ultimately consumers of their goods, albeit one governments have traditionally paid. Whether or not that subsidy is cheaper than letting the market actors sort it out remains unclear to me.
Appearing on Russia Today, Friedman discussed the implications of the increased threat and what ships can do to avoid future incidents with Somali pirates.
Since the problems at sea are related to problems on Somali land, what can Western nations do to decrease poverty and lawlessness on the African continent? Dambisa Moyo, author of Dead Aid, argued at a Cato Policy Forum last week that the best way to combat these issues is to halt government-to-government aid, and proposed an “aid-free solution” to development based on the experience of successful African countries.
Obama Lifts Some Travel Bans on Cuba
The Washington Post reports:
President Obama is lifting some restrictions on Cuban Americans’ contact with Cuba and allowing U.S. telecom companies to operate there, opening up the communist island nation to more cellular and satellite service… The decision does not lift the trade embargo on Cuba but eases the prohibitions that have restricted Cuban Americans from visiting their relatives and has limited what they can send back home.
In the new Cato Handbook for Policymakers, Juan Carlos Hidalgo and Ian Vasquez recommend a number of policy initiatives for future relations with Cuba, including ending all trade sanctions on Cuba and allowing U.S. citizens and companies to visit and establish businesses as they see fit; and moving toward the normalization of diplomatic relations with the island nation.
While Obama’s plan is a small step in the right direction, Hidalgo argues in a Cato Daily Podcast that Obama should take further steps to lift the travel ban and open Cuba to all Americans.
Week in Review: ‘Saving’ the World, Government Control and Drug Decriminalization
G-20 Summit Agrees to International Spending Plan
The Washington Post reports, “Leaders from more than 20 major nations including the United States decided Thursday to make available an additional $1 trillion for the world economy through the International Monetary Fund and other institutions as part of a broad package of measures to overcome the global financial crisis.”
Cato scholars Richard W. Rahn, Daniel J. Ikenson and Ian Vásquez commented on the London-based meeting:
Rahn: “President Obama of the U.S. and Prime Minister Brown of the U.K. will be pressing for more so-called stimulus spending by other nations, despite the fact that the historical evidence shows that big increases in government spending are more likely to be damaging and slow down recovery than they are to promote vigorous economic expansion and job creation.”
Vásquez: “The push by some countries for massive increases in spending to address the global financial crisis smacks of political and bureaucratic opportunism. A prime example is Washington’s call to substantially increase the resources of the International Financial Institutions… There is no reason to think that massive increases of the IFIs’ funds will not worsen, rather than improve, their record or the accountability of the aid agencies and borrower governments.”
Ikenson: “Certainly it is crucial to avoid protectionist policies that clog the arteries of economic recovery and help nobody but politicians. But it is also important to keep things in perspective: the world is not on the brink of a global trade war, as some have suggested.”
Ikenson appeared on CNBC this week to push for a reduction of trade barriers in international markets.
With fears mounting over a global shift toward protectionism, Cato senior fellow Tom Palmer and the Atlas Economic Research Foundation are circulating a petition against restrictive trade measures.
Obama Administration Forces Out GM CEO
President Obama took an unprecedented step toward greater control of a private corporation after forcing General Motors CEO Rick Wagoner to leave the company. The New York Post reports “the administration threatened to withhold bailout money from the company if he didn’t.”
Writing for the Washington Post, trade analyst Dan Ikenson explained why the government is responsible for any GM failure from now on:
President Obama’s newly discovered prudence with taxpayer money and his tough-love approach to GM and Chrysler would both have more credibility if he hadn’t demanded Rick Wagoner’s resignation, as well. By imposing operational conditions normally reserved for boards of directors, the administration is now bound to the infamous “Pottery Barn” rule: you break it, you buy it. If things go further south, the government is now complicit.
Wagoner’s replacement, Fritz Henderson, said Tuesday that after receiving billions of taxpayer dollars, the company is considering bankruptcy as an option. Cato scholars recommended bankruptcy months ago:
Dan Ikenson, November 21, 2008: “Bailing out Detroit is unnecessary. After all, this is why we have the bankruptcy process. If companies in Chapter 11 can be salvaged, a bankruptcy judge will help them find the way. In the case of the Big Three, a bankruptcy process would almost certainly require them to dissolve their current union contracts. Revamping their labor structures is the single most important change that GM, Ford, and Chrysler could make — and yet it is the one change that many pro-bailout Democrats wish to ignore.”
Daniel J. Mitchell, November 13, 2008: ”Advocates oftentimes admit that bailouts are not good policy, but they invariably argue that short-term considerations should trump long-term sensible policy. Their biggest assertion is that a bailout is necessary to prevent bankruptcy, and that avoiding this result is critical to prevent catastrophe. But Chapter 11 protection may be precisely what is needed to put American auto companies back on the path to profitability. Bankruptcy laws specifically are designed to give companies an opportunity — under court supervision — to reduce costs and streamline operations.”
Dan Ikenson, December 5, 2008: “The best solution is to allow the bankruptcy process to work. It will be needed. There are going to be jobs lost, but there is really nothing policymakers can do about that without exacerbating problems elsewhere. The numbers won’t be as dire as the Big Three have been projecting.”
Cato Links
- Is Portugal an example for the future of drug policy? Cato released a new case study this week by Salon writer Glenn Greenwald entitled, “Drug Decriminalization in Portugal: Lessons for Creating Fair and Successful Drug Policies.”
- As the North Atlantic Treaty Organization celebrates its 60th birthday, there are signs of mounting trouble within the alliance and increasing reasons to doubt the organization’s relevance regarding the foreign policy challenges of the 21st century. In a new study, Cato scholar Ted Galen Carpenter argues that NATO’s time is up.
- Should immigration agents target businesses knowingly hiring illegal immigrants? Cato scholar Jim Harper weighs in on a Fox News debate.
- Cato scholar Gene Healy warns, “Beware of the Cult of Obama,” in this week’s Washington Examiner column.
- Sign up today for Cato University 2009: Economic Crisis, War, and the Rise of the State.
Friday Podcast: ‘Obama’s Afghanistan Strategy’
President Obama has unveiled his plan for the war in Afghanistan, taking a more regional approach than the U.S. has in the past.
In Friday’s Cato Daily Podcast, foreign policy analyst Malou Innocent says it’s a critical step in the right direction, but stabilizing Afghanistan and fighting an insurgency can’t be accomplished while killing the livelihoods of so many Afghan farmers by destroying opium poppy.
In the future we should take Afghanistan as it is, rather than what we want it to be. So not only does that mean having a decreased reliance on a central state government from Kabul, but also understanding that many of the farms from these rural areas rely on the opium poppy crop for their own livelihood. So we should focus our efforts to targeting those who are in cahoots with insurgent groups and not simply those who are depending on it for their livelihood.
Her forthcoming paper, “Pakistan and the Future of U.S. Policy” will be released next month.
Thursday Podcast: ‘A Failed Drug War in Mexico’
Since 2008, more than 7,000 people have been killed in violence associated with the drug war in Mexico. Secretary of State Hillary Clinton is traveling to the region this week, and said Wednesday that the United States shares the blame for the violence.
In today’s Cato Daily Podcast, Cato scholar Doug Bandow offers analysis on how the U.S. should respond to the crisis on our southern border.
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