Larry Beinhart

'Wag the Dog' author: Trump is too dishonest to win re-election by attacking Iran

If Donald Trump is convinced that he will lose his bid for re-election or if he is convinced that an investigation is getting too close, would he go to war with Iran? Or Venezuela? Or some other player to be named later?

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3 Things You Have to Know About the Bogus 'Fiscal Cliff'

Obama won. Romney lost. That is a crisis averted and a very good thing.

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Myth Romney's Big Propaganda About Taxes

Here’s an actual fact.

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Corporations Are Working to Destroy One of the Few Tools We Have to Stop Their Abusive Behavior

Everyone has heard of the woman who spilled coffee on herself and won $3 million from McDonald’s. Perhaps you recall an editorial similar to the one that ran in the San Diego Union Tribune: “A winning lottery ticket…absurd… a stunning illustration of what’s wrong with America’s civil justice system.”

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The Astonishing Stupidity of Not Raising Taxes on the Rich When Budgets Are Tight

The current economy is routinely and universally referred to as the worst recession since the Great Depression.

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How Can the Richest 1 Percent Be Winning This Brutal Class War Against 99% of Us?

Who are they? The richest 1 percent. And maybe the next 9 percent.

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Tax Cuts Simply Do Not Create Jobs

MYTH #1: Tax cuts create jobs. Tax increases cost jobs.

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The Right's Jack Bauer Fantasy: 'Clip the Electrodes to His Balls and Turn on the Juice'

Credit where credit is due. The TV show "24" is probably the most significant piece of political drama in the last decade.

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Why Do People Believe in God?

We're doing that because if we start with the idea that if God does exist, then we have to explain why there are so many versions of Him (her or it) and why we can't figure out the right one. Historically, that's a dead end, stuck in the same battle as Saladin and Richard the Lionheart in the Crusades.

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Why You Should Be Screaming for Higher Taxes

US economic growth has been strongest when our taxes have been high. During World War II, then under Truman, Eisenhower, and Kennedy, our upper marginal tax rates were between 88-92%. Read those numbers again. They are astonishingly high. Those were our strongest growth years.

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Why Belief Isn't That Different for Atheists or Religious People

Editor’s note: Religion is among the most volatile and divisive issues in the world today. Yet there’s little serious investigation into why people believe, or why some will kill and die for their faith. Larry Beinhart, in his new novel, Salvation Boulevard -- and this series of articles -- is hoping to start a conversation about these issues. This is the third in the series; the first two can be read here and here.

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Why Atheism May Be the Best Way to Understand God

Editor’s note: Religion is among the most volatile and divisive issues in the world today. Yet there’s little serious investigation into why people believe, or why some will kill and die for their faith. Larry Beinhart, in his new novel, Salvation Boulevard -- and this series of articles -- is hoping to start a conversation about these issues. This is the second in the series, the introduction can be read here.

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We're Witnessing the Return of Religion as a Principle Cause of Warfare

"Religious faith will be of the same significance to the 21st century as political ideology was to the 20th century." -- Tony Blair

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Why the Economy Grows Like Crazy Amid High Taxes

The real-world effects of tax policy are counterintuitive.

They run exactly opposite the conventional wisdom. They defy what the Heritage Foundation calls common sense and what the American Enterprise Institute calls logic.

Reality laughs at the Laffer curve, calls Ronald Reagan wrong and says George W. Bush is a loon.

High marginal tax rates correlate with economic growth.

Examples include World War II and the Truman-Eisenhower years, when it was around 90 percent, and the Clinton years, when it was high relative to the preceding and following administrations.

Tax rate increases are followed by real economic growth.

Examples include Hoover in 1932, Roosevelt in 1936 and 1940, Bush the Elder in 1991 and Clinton in1993.

Moderate tax cuts are followed by a flat economy.

This is a generalization from one example: Johnson in 1964.

Large tax cuts are followed by a boom, a bubble and a crash.

1929, 1987 and 2008 are examples.

These are covered in more detail in the first part of the article "Tax Cuts: The B.S. and the Facts."

Why do high taxes create a stronger economy?

I used to run a small business -- a commercial film production company.

Every time we took a dollar out as personal income, it instantly turned into 50 cents.

If we didn't really need the money, that was an incentive to keep it in the company and to find ways to spend it that took it out of the taxable profit column but increased the value of the company.

High taxes create an incentive to reinvest profits into long-term growth.

With high taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business -- in plants, equipment, staff, research and development, new products and all the rest.

The higher taxes are (and from 1940 to 1964 the top rates were around 90 percent), the more this is true.

This creates a bias toward long-term planning.

If a business is planning for the long term, it wants a happy, stable work force. It becomes worthwhile to pay good wages and offer decent benefits.

Low taxes create an incentive for profit taking.

It is easy to confuse profitability with wealth creation.

They are not the same.

President Eisenhower built the interstate highway system. There is no doubt that this gave the country an asset of great value, one that was very productive. It created great "wealth." But, aside from the construction companies that contracted the work, it was not profitable.

Selling subprime mortgages, trading in derivatives, packaging mortgage-backed securities and "flipping" condos were all very profitable but did not create wealth.

The theory is that if the rich can keep their money, they will invest in businesses that create jobs, more businesses, more tax revenue and greater "wealth" for the nation.

That sounds like logic and common sense. But is it, in practice, what happened?

Once tax cutting began, the culture of business changed.

It was no longer enough for a business to be a reasonably good business, making steady, reliable profits.

Indeed, that became a very bad condition for a business to be in. It made it a target for takeovers by people who were willing to milk them of their profits.

Among the ways you can get more profit out of a going business are:
  • Cutting the workforce -- possibly sacrificing long-term productivity
  • Cutting salaries -- who cares if the employees are unhappy? The balance sheet improves.
  • Selling off assets -- who cares what happens in 10 years? We can take the money now.
  • Outsourcing -- which sends the "wealth" somewhere else.

A whole host of devices were developed to do all of the above: junk bonds, leveraged buyouts, hostile takeovers, greenmail and the like.

Lots of money could be made that way -- for a small number of individuals. But it doesn't produce "wealth."

An environment in which profit-taking is cheap creates the conditions for a bubble.

Once you've taken your profit, and you have the cash in hand, you look for a place where you can get profits quickly, then again and again. Instead of examining how sound a company is, how well it's run, its debt load and its long-term prospects, other things become important -- such as the speed at which you can profit and the ease of entry.

Instead of investing in business -- which is difficult, slow and complicated -- investors go into markets.

They look for sectors that are hot. When investors find such an area, they flock to it. It heats up even more. People are seen making money, quickly and easily, simply by buying and selling, and they don't want to miss out.

Then there's a bubble -- which is followed by a crash.

Proponents of tax cuts take the position that taxes take money out of the economy.

That's flat out not true.

Governments don't keep the money they collect; they spend it. It goes right back in. It just takes a different route. It goes to different places.

The places that government puts money are important. More to the point, they are important for business.

All infrastructure is an invisible subsidy for all business.

It's easy to understand this when we're talking about roads.

It doesn't matter if your business doesn't ship anything by truck or even by bicycle. The fact that you can get to your office quickly and easily, that your mailperson can get to you without traveling on the back of a mule, is a subsidy of your business.

It's a little harder to see that when we're talking about soft infrastructure.

Laws, regulations and their enforcement. Social Security, unemployment insurance, public health and welfare. Education, research, support of sports, arts and culture. Parks and playgrounds. All of them create a society that is safer, more stable, and more able to produce and consume. They produce a better place in which to do business.

Tax cutters also claim -- and I paraphrase the essence of the argument -- that the money government gets disappears in wasteful stupidities.

There's some truth in that.

They might point out all sorts of cultural and scientific projects, like a museum for the Woodstock Festival, counting the fish in Waldon Pond or studying the sex life of prairie dogs. I would point to the Star Wars missile defense shield, farm subsidies, the ethanol program, the privatized non-reconstruction of Iraq and all of Halliburton's contracts.

But it is also true that businesses spend money on all sorts of wasteful stupidities.

I am sitting here wondering how anyone -- in fact, a succession of people -- could run a company with the power and resources of General Motors into the ground.

In the mythological marketplace, they should fail and suffer for their faults. In the real world, the arrogant fools who ran the place will walk away with millions, and the hundreds of thousands of people who worked for them and their suppliers, who offered services and goods to those in turn, will be the ones who suffer.

The point is that relying on the magic of the marketplace is like relying on any other kind of magic.

There are things that are necessarily done for the common good.

Clean water, sewer systems, garbage collection and public health initiatives create a healthy population, able to work and consume. Take those away, and we return to the plague years. Imagine what that does to business.

Polluted air, toxins in the groundwater, viruses and bacteria jump the borders of even the wealthiest communities.

Bad health created by lack of care for the common good becomes an economic drain on society.

This is not to say that a full-out, state-run economy is better than capitalism. It's not.

That produces different problems that are even worse.

It is not even meant to imply that all "sound" investments in "real" businesses stopped with tax cuts. They didn't. Start-up money and venture capital were relatively easy to come by. Lots of new and good businesses were built in low-tax environments.

But low taxes produced great excesses of negative activity as well. There is a propensity in business, and as a nation, to hollow out our businesses, and mortgage and sell off our assets, in order to grab short-term profits.

A sound economy is based on a mix of market and government actions -- and a host of other factors as well.

These explanations are speculative, a search to explain what is observed in nature, if you will.

What is certain is that tax cuts on the top brackets, and in particular on unearned income, do not produce healthy economic growth. Contrary to all expectations, tax hikes seem to produce the desired growth. All the explanations in the world, funded by all the right-wing anti-tax think tanks in the world, won't change that reality. If these explanations don't suit you, then supply a better one that will.

Tax Cuts: The B.S. and the Facts

The Myth

Do tax cuts stimulate the economy?

Yes. Tax cuts allow people to keep more of their own money. Therefore, they have more to invest and spend into the economy, and they have more money to start business and create jobs, therefore also helping to stimulate the economy. -- Yahoo Answers

I think when people take a look back at this moment in our economic history, they'll recognize tax cuts work. They have made a difference. -- George W. Bush

The Realities

The brute facts are these:

  • Large income tax cuts are followed by a bubble and then a crash.

  • High income taxes correlate with economic growth.

  • Income tax increases are followed by economic growth.

  • Moderate income tax cuts are followed by a flat economy.

  • All of this is especially true as applied to the top tax rates, the amount paid on income that exceeds the highest bracket.

The Three Great Tax Cuts: Boom, Bubble, Crash

1. Hoover

During World War I, the top marginal tax rate went up to 73 percent -- not the highest ever, but pretty high.

In 1922, a series of rate cuts began. Down to 56 percent, 46 percent, and finally, in 1925, it went down to 25 percent.

The stock market took off. There was a boom. But the boom was a bubble.

It was followed by the Great Crash of 1929.

There were bank failures and the Great Depression.

2. Reagan

From Franklin Roosevelt's second term all the way through to Jimmy Carter -- from 1936 until 1982 -- the top rate was in the 70 to 92 percent range.

Then along came Reagan in 1981. In 1982, he cut that down to 50 percent.

The economy went into "the worst recession since the Great Depression."

His supporters argued that it was all Carter's fault and that the new policies would take time to work. The tax cuts stayed in place. In 1987, there was another round of tax cuts. They took the top rate down to 38.5 percent. It would stimulate the economy!

There was a boom. But it was a bubble.

Then, in October 1987, there was a crash -- the worst since '29. It was called Black Monday.

Much of the bubble money had gone into -- ohmigod! -- real estate.

Suddenly there were bank failures! More than during the Great Depression. There was a Savings & Loan crisis! There had to be a bailout.

3. Bush II

George Bush came into office with the healthiest, post powerful economy in American history.

He immediately cut taxes. The top marginal rate went down from 39 percent to 35 percent. He also cut capital gains taxes and inheritance taxes. A recession immediately ensued. But he persisted.

Eventually, the economy began to grow.

Employment didn't grow very much. Median income went down. The stock market was pretty flat. But the financial sector -- and only the sector -- grew.

Which should have made it obvious to someone, that it was … a bubble.

There was a crash.

Bank failures. A bailout.

The three worst economic disasters in American history follow the exact same pattern: tax cuts, boom, bubble, crash.

High Taxes Correlate with Strong Economic Growth

The four periods of greatest economic growth in American history, by pretty much any measure, are:

  • World War II (1941-45): top tax rate varied from 88 to 94 percent

  • Post-war under Truman and Eisenhower: top rate bounced around from 81 to 92 percent

  • Clinton years: Clinton raised Bush's top rate of 31 percent to 37 percent and then to 39 percent

  • First two Roosevelt administrations (1933-40). When Roosevelt came into office, Hoover had already raised the tax rate in 1932 from 25 percent to 63 percent. Roosevelt raised it again in 1936 to 79 percent.

A lot of ink, sweat and ranting have gone into proving that the New Deal did not end the Great Depression. Nonetheless, the economy grew 58 percent from the time Roosevelt came into office and when the United States entered the war.

Some of that anti-New Deal rhetoric also claims that the recovery began under Hoover. Perhaps, but to say so is also to say that it began with tax hikes.

Likewise, many right-wing critics insist that the Clinton boom actually started under Bush the First. It is necessary to remember that Bush the First also raised taxes (from 28 percent to 31 percent) and was soundly thrashed by the conservatives for doing so. Stephen Moore of the Cato Institute called it "The Crime of the Century" and explained at length how it had brought ruin to America.

Tax Increases Are Followed by Economic Growth

Three of the four high-growth periods cited above followed significant tax hikes.

The fourth, the Truman-Eisenhower years, began with a top tax rate of 91 percent -- it couldn't get much higher.

Moderate Tax Increases Are Followed by Flat Growth

John F. Kennedy is generally credited with starting the tax cut craze.

He proposed it, but, as with all his ideas, it was Lyndon Johnson who actually got it enacted. The top rate was cut from 91 percent to 77 percent, then to 70 percent, on all income over $200,000 for a single person and over $400,000 for a married couple.

That's where it stayed, through Nixon, Ford and Carter.

The Dow Jones average was pretty much the same when that period ended as when it began. Median personal income stayed roughly the same.

These are the brute facts.

I call them that because there doesn't appear to be any theory to explain them.

A noted conservative (a sane one, not William Kristol) recently wrote to me in a private e-mail exchange on this subject:

"I am unaware of any (or many) respectable economists (maybe I've missed some) who have suggested that higher taxes have proved to be a formula for better economic growth."

Actually, I am too.

Even now, in the midst of the Bush disaster, I constantly see and hear tax cuts, particularly at the top, described as "pro-growth." So I went and looked at the numbers -- tax rates, tax cuts and tax hikes -- and placed them alongside job growth, the Dow Jones, growth in the GDP and median income.

The brute facts say the opposite of the myth.

The belief in tax cuts is a subset of the belief in Free Markets, with a capital F & M, which is a theological belief.

How do we distinguish a theological idea from a scientific (or rational) one?

According to Karl Popper, the great thinkers in the philosophy of science, a scientific idea has to be capable of being refuted. There has to be some theoretical test that could come out the wrong way, which would then say the theory is wrong.

On that basis, Popper rejected Marxism and Freudianism, along with religious theology, because no matter how many times they didn't work, there was always some explanation that said that the theory was right and if you just looked at the facts in some other way; you could make up some story that said your theory was still right.

The quintessence of theological thinking goes like this. The preacher says, "The world will end next Saturday night! The Bible says it must be so." Everyone in the congregation wakes up safe and sound on Sunday morning. They head off to church and believe whatever he says in that sermon, too.

In science, we come up with a hypothesis. Then we set up an experiment. We see what happens.

Economics is complex. It takes place in the real world where many factors are at play and we can't control for them all. Still, none of the major tax cuts since 1913 have led to significant, sustained growth. Two them were followed by instant recessions (Reagan and Bush), and three of them, when they were sustained, were followed by bubbles which were then followed by the three worst crashes and sets of bank failures in modern times.

It's time to throw out the theory, accept the facts, and come up with new ideas.

Coming: Part II: Why High Taxes Create a Healthier Economy and Low Taxes Don't

Thanks to Sarah Palin, We Get to See the Cruelness of the GOP as It Really Is

It was Jesus Christ, if Matthew is to be believed, who said, "Love thine enemy." It is in that spirit that I write this belated valentine to Sarah Palin.

Sarah, I love you for having revealed unto the media the snarling heart of the beast that is the base (and the soul) of the Republican Party. Yes, you have the lipstick and the heels, not to mention the calves and bosoms, that send Republican men into swoons, but you have more; the pit-bull snarl that rouses your supporters to cry out, "Traitor!" against Obama, and "Kill him!"

George Bush kept those folks in their kennels, ran as a "compassionate conservative," and always masked his most heinous plans in double speak. Bush the Elder, Ronald Reagan, and even Richard Nixon never explicitly ran on hate and fear of "the other." They used words that were coded enough that it was possible to pretend that they were true.

But now the beast is loose.

The Republican Party likes to remember Abraham Lincoln. And so they should. It's a nice memory and brings credit to them. As does the accidental ascension of Teddy Roosevelt, environmentalist and basher of corporations. Back in the 1950s and '60s, their party included such figures as Dwight Eisenhower -- whose reputation grows ever better in retrospect -- Nelson Rockefeller, who built New York's state university system, and New York City mayor John Lindsey.

But there is another strand that runs through their history.

Back in the 1840s, there was a group called the Know Nothings. They were against immigrants and for real Americans. ("Real American" did not then, as it does not now, refer to Indians; it refers to descendants of English immigrants.) The movement was based on fear. Irish and German Catholics were going to take over. They would take orders from the Pope-in-Rome (one word). Their values were not "our values." They drank. Their nunneries were virtual brothels and when the nuns had babies they practiced infanticide.

The Know Nothings started with secret societies like the Order of the Star Spangled Banner, associated with William Poole, better known as Bill the Butcher, depicted by Daniel Day Lewis in Gangs of New York. Their public political face was the American Republican Party, which became the Native American Party, and finally the American Party.

Their platform was:

Severe limits on immigration, especially from Catholic countries.
Restricting political office to "native-born" Americans.
Mandating a wait of 21 years before an immigrant could gain citizenship.
Restricting public school teaching to Protestants.
Mandating daily Bible readings in public schools (from the Protestant version of the Bible).
Restricting the sale of liquor.

For a brief time, the American Party was wildly popular. In 1854 party membership swelled from 50,000 to over a million in a matter of months. It elected mayors in Philadelphia, Boston, Washington, DC, San Francisco, and Chicago, and won the state legislature and governorship of Massachusetts.

But there were other things going on: the Mexican War, slavery, secession, and the Civil War. The movement didn't last long and was soon absorbed by the Republican Party.

Fair is fair. Things morph and change. The Republican Party freed the slaves and tried to create an interracial democratic South during Reconstruction. The Democratic Party became the party of segregation in the South and the second home of the Klu Klux Klan. To be Republican is not to be necessarily narrow-minded and in dread fear of foreigners. To be Democratic is not necessarily to be liberal, progressive and open-minded.

But enough of being fair.

The Great Depression demonstrated that the principles of the Republican Party were bankrupt. Like most of the country. The Democrats became the progressive party, representing social justice and programs that would protect capitalism from its own worst tendencies, moving toward a vision of a perfectable world. The Republicans became -- in a very literal sense -- a reactionary party, reacting against whatever the Democrats were doing, engaged in a 60-year-long war against the New Deal.

Lyndon Johnson is the pivotal figure, both heroic and deeply tragic. The Democratic Party's dirty public secret was that its political hegemony rested on the Solid South, still refusing to vote Republican out of hatred of Lincoln. Johnson knew that if he pushed through the Civil Rights Act his party would lose the South for a generation. Or more. His heroism is that he did anyway. No, he did not end the race issue, but he broke the back of segregation.

The Republicans saw their opportunity. They pursued the Southern Strategy, wooing resentful whites with great success.

But two things happened.

Racism became less and less tenable. The generation that cherished it has grown old. That pillar of the Republican Party is crumbling.

And then along came Bush-Cheney. Like Herbert Hoover, in the process of leading the country to bankruptcy they demonstrated that the Republican Party's ideas were also bankrupt. They made government bigger, not smaller -- and more intrusive, too. They didn't oppose special interests, they were the special interests. They didn't oppose lobbyists, they forced lobbyists to join their party at fiscal gunpoint. They were militaristic on parade, but could not run a war. They could not protect the country nor punish the people who actually attacked us. Their policies demonstrated that free markets are a fiction, and real markets need more supervision than a grade-school playground.

Along came John McCain. He looked out, from sea to shining sea, from the mountains, to the prairies, in search of voters who would vote for him. All he could find were the new Know Nothings. People who, frightened of the way things are changing, want to change back to that white, Protestant place it was, oh, sometime back before 1840. America Firsters. Anti-immigrant. Anti-foreigner. Anti-elite. Anti-intelligence.

Not quite capable of running as a true Know Nothing himself, he chose someone who could: Sarah Palin. She does it well, and in so doing, shows us, clearly and simply, who they really are.

Let's Keep Religion Away from the Ballot Box

The Constitution, Article VI, Section 3, states "no religious test shall ever be required as a qualification to any office or public trust under the United States."

James Madison, the primary author of the Constitution, said, "An alliance or coalition between Government and religion cannot be too carefully guarded against."

Here's Theodore Roosevelt: "If there is one thing for which we stand in this country, it is for complete religious freedom, and it is an emphatic negation of this right to cross- examine a man on his religion before being willing to support him for office."

Yet we have now instituted such tests. We line up the presidential candidates and cross-examine them about their faith. They respond with Sunday school sagas about how they met God and pander to us with stories about how prayer will help them lead. How did this come about?

In 1979, four conservative activists, Paul Weyrich, Terry Dolan, Richard Viguerie (all Catholics) and Howard Phillips (a Jew who'd become an evangelical Christian) were looking for wedge issues to break up the Democratic Party. Right-wing economics and foreign policies had no popular appeal. So they came up with abortion, opposition to gay rights and (thinly disguised) racism, concerns that could be found clustered among religious conservatives. They recruited a minister, Jerry Falwell, funded him with corporate money and started the Moral Majority.

It succeeded beyond their wildest dreams. The Religious Right became the base of the Republican Party, and the GOP gained control of federal government for the first time since the Great Depression.

Democrats were slow to respond. But politics is a business of learning what voters want to hear and then finding sincere ways to say it. Now, they've joined the choir. Meanwhile, sincerely religious liberals who hate the way faith became identified with right-wing politics were politicized in response.

Is faith a good guide to how someone will perform in office? George W. Bush, a born again Christian, claimed that God contacted him and said, "George," (they're on a first-name basis) "invade Afghanistan." So he did.

Although George failed to apprehend Osama bin Laden, God was apparently delighted, called back and said, "George, liberate Iraq."

Bush had a lot of support in all of this. Many people felt that he had been chosen by God to lead America in this moment of crisis and told him so. Here we are, a trillion dollars later, missions not accomplished, our armed forces too used up to respond to a new threat and our nation on the verge of bankruptcy.

If we accept it as true that God chose George and gave him specific instructions, and then look at the results, we have to form a very poor judgment of God, indeed, both as a human resources administrator and as a military strategist. Or, we might say that faith is not a good guide to competence in office.

I liked Jimmy Carter. Many did not. They felt that he was too goody-goody and too slow to resort to force -- the very qualities that came out of his version of born again Christianity. American presidents of little or no faith include Thomas Jefferson, Abraham Lincoln (though he could use biblical language to great effect), John Adams and George Washington. Yes, George Washington.

Washington did go to church, five or 10 times a year. But when people tried to box him into making a religious stand, he deftly evaded them. He gave moral advice to his adopted children, but, so far as we know, never urged religion on them.

He wrote: "Of all the animosities which have existed among mankind, those which are caused by difference of sentiments in religion appear to be the most inveterate and distressing, and ought most to be deprecated.

So if you are judging candidates by their religious stands, perhaps we should look to the model of the old George, the one who kept whatever faith he had to himself, and be more than a little worried about the candidate who more closely resembles our George. The one who gets bad guidance from God.

A Crash Course in Economic Crashes

The first time I was in a car crash, I was 6 or 7 years old.

That's a long time ago. But there are certain things about it that I remember quite vividly.

My father was driving. The road was icy. We began to slide. This was in the days before seat belts, and cars had bench seats, upholstered but not shaped for each individual bottom. My father shot out his right arm and pressed me against the seat back to keep me from flying forward if, indeed, we were going to end up hitting something.

What was most extraordinary was how long it seemed to take. How time slowed while we slid forward and sideways, heading onto the shoulder, then past it. It seemed as if we had all the time in the world, yet there was nothing we could do to get off the ice, alter the trajectory, slow down ... nothing ... until we crashed.

As I read the economics news, I'm having that exact same sensation that we're in a slow-motion crash.

Each week, sometimes daily, we slide by a new warning sign, another wreck that's already off the road.

The new one is Lehman Brothers.

Before that, Fannie Mae and Freddie Mac. Before that, Bear Stearns.

In August, "one in every 416 U.S. households entered the foreclosure process." In spite of a 2005 law that made personal bankruptcies more difficult and that allows creditors to squeeze money out of people even after they've gone bankrupt, personal bankruptcy rates are soaring. General Motors stock has been trading at 1950s prices. Like GM, Ford is laying off thousands of workers. Both of them are asking for federal assistance to survive. Pension funds are routinely failing.

Then there are my personal experiences.

Like when I go to the gas station and watch the ticker on the pump go up over $50, $60 and then $70 to fill the tank. Or when I go to the supermarket and lay down $140 for what cost me $90 a year or so back.

From time to time I run into rich people or their handlers. In February I was traveling with a lawyer from one of New York's leading law firms. He does the legal work on IPOs. He told me the firm's January 2008 business was down 90 percent from January 2007. A couple of days ago a hedge fund guy dropped in on our regular tennis doubles game. Between sets he mentioned how hard it was to get credit these days. "On a secured loan," which means 40 percent backed by assets, mostly commercial real estate -- he was talking about $120 million and up -- "the banks want 20 percent interest."

Every analyst I see or hear blames it on the "housing bubble" and the "subprime mess."

That doesn't seem right.

It doesn't explain why the dollar has lost about a third of its value against the Canadian loonie and the euro, among others, or why gold is bouncing up against the $1,000 ceiling -- both of which happened before the bubble sprang a leak.

It doesn't explain why the stock market -- as measured by the Dow Jones average -- is down (adjusted for inflation) about 15 percent from 2001. Moreover, at its peak during the Bush years, it was only 14 percent (adjusted) over the 2001 mark.

It doesn't explain why median income is down -- depending on who's reporting it -- $700, $1,000, $1,200 per person, over that same time period. Even median family income, with more people working per family, is down.

It doesn't explain why, during the so-called Bush boom, corporate profits were at an all-time high, but corporations were starved for places to invest the money.

Let us presume that government policy has an effect on the economy.

What are the policies that have produced this economy that's on an icy road, sliding in slow motion toward the cliff, or, if we're lucky, maybe just into a ditch?

The core, the very heart of Bushonomics, is cutting taxes, especially for the wealthy.

I find it impossible to figure out what George Bush's motivations for anything are. He may have that impulse because he himself, his family and his friends are all very rich and they'll save themselves millions of dollars over the years. Maybe it's political. As he once said, the super-rich are his "base." It may be a class thing, borne of the belief that rich people are rich because they're better and will do better things with the money. It may be the mystical belief that "the market" makes everything better.

Whatever the truth is, the tax cuts were sold as economic stimulus and jobs packages with the promise that they would not create deficits. This last was based on a romantic Ayn Rand vision of millionaires racing into the backwoods to build, build, build new businesses that would create jobs, "good jobs," and new taxes would be paid by the businesses and the workers, making up for the initial deficits.

Alas, none of that ever happened.

Deficits were created.

Bush went on a war spending spree. That made them bigger. Whatever boom there was did not create sufficient revenue to the government to make up for deficits.

That triggered the next event in our saga.

Deficits normally lead to inflation.

Bankers hate inflation. So do politicians.

So Alan Greenspan, everyone's favorite economic hero, stepped in. He cut the rates that the Federal Reserve charged banks to borrow from the government.

The intent was to keep inflation low.

It sort of worked for about five years. The official, and actual, rates of inflation were pretty low.

The reason I say it only sort of worked was that, in reality, it suppressed inflation. It made the dollar worth less -- as we now know, at least one third less. Oil, as it happens, is priced in dollars. Overseas suppliers of oil began to see their incomes decline -- by about a third. So they did what any sensible person with the power to do it would do: They began to raise their prices.

That does not account for the full rise in the price of oil, but it triggered it, and it's a large segment of it. Since everything in America moves on oil, it has raised the cost of everything else. It doesn't account for all the cost increases we're seeing now, but it propels a significant portion of them.

This was combined with several other impulses.

Free trade has to be number one on the list.

Free trade brought cheap consumer goods into the United States from overseas. That made shoppers very happy. It kept inflation down.

It was tough on workers. It not only put a lot people out of work directly, it put downward pressure on wages all across the board. That too, helped keep inflation down.

It was also very tough on businesses that actually make things here in the United States. The making of things, and then the support services, were outsourced, though the companies remained here, as corporate and marketing entities.

Other factors include deregulation, non-enforcement of regulations, appointing industry representatives to regulatory agencies, and union busting.

With outsourcing and domestic wages going down, corporations did, indeed, make record profits.

Three things came together to produce a great deal of loose cash.

First, the government cut taxes while it increased spending.

Second, the Federal Reserve made it cheap, artificially cheap, to borrow money.

Third, corporations made money -- largely by pushing wages and salaries down -- but had no place to put it.

But, what was there to do with all that money?

There was nothing being produced with the right kind of growth potential to pay back the loans. Working people were not making more money that could be used to create more consumption.

So the great ocean of money went, ultimately, to two places, from which it was supposed to be paid back: to real estate and to consumers (who were making less income) for personal spending on credit.

There was growth, about a 37 percent increase in the GDP in actual dollars across seven years. That's about 17 percent in inflation-adjusted dollars.

Let's go back and look at two other numbers: median income and the stock market.

They're both down.

Where was the growth?

It was in borrowing. In credit. In debt.

There's one bubble, the housing bubble, which is inside of -- or a symptom of -- a much larger bubble, the credit bubble. That bubble is so big that it represents almost the entire growth in the U.S. economy for the last seven years.

At the core of it, the seeds from which the poison fruit has grown are the tax cuts.

Do tax cuts actually stimulate the economy?

Vast sums of money have gone into creating that myth. Major intellectual industries have been created and sustained to sell that story. At the center of that claim is the Legend of Saint Ronald Retro Reagan.

Reagan cut income taxes, big time. But he raised Social Security and Medicare taxes. That meant that rich people paid less and working people paid more. The immediate result was that the economy faltered. Then Reagan raised taxes, though not by as much as he cut them. At about the same time, oil dropped from $40 a barrel to $20. The economy did grow. That is until the stock market crash of '87.

There is vastly more evidence the other way. Tax increases stimulate the economy. It may not make sense, it may be counterintuitive, but here are the facts.

What if taxes went up to over 90 percent?

According to the Reaganauts and Bushwackers, the world would collapse. Business would grind to a halt. Investors would flee. Workers would lay down their tools.

Back in World War II, taxes did go up that high.

Americans who earned as little as $500 per year paid income tax at a 23 percent rate, while those who earned more than $1 million per year paid a 94 percent rate.

The result:

The American economy expanded at an unprecedented (and unduplicated) rate between 1941 and 1945. The gross national product of the United States, as measured in constant dollars, grew from $88.6 billion in 1939 -- while the country was still suffering from the depression -- to $135 billion in 1944, according to Economic History Services.

From 1946 to 1963, the top rate fluctuated from 86 percent to 91 percent.

Average economic growth was 3.5 percent per year.

The current top income tax rate is 35 percent.

Economic growth has been, at best, 2.5 percent -- that is, if you stop counting in 2007. And don't consider the type of growth, which consisted primarily of increased debt and pyramids of borrowing.

In 1992 the top tax rate was 31 percent.

Bill Clinton increased it to 39.1 percent.

The Dow Jones average went up 360 percent. The number of jobs went up 237,000 per month (under Bush, as of 2007, it was just 72,000 per month). Median household income went up rather than down. The budget was balanced.

Both candidates are talking about tax cuts to fix the economy.

Does that make sense?

Here, in New York State, we are facing a budget crisis due to the collapse in the financial markets, which is where a lot of our tax revenue comes from.

The governor has a choice between raising taxes and cutting expenditures. He's a good, fairly liberal Democrat. But he polled the people and the Legislature, and everyone wanted to cut spending.

That means cutting the state workforce.

That means that people who had jobs and were spending money will be unemployed and spending a lot less. That means less revenue for the state and for the places that they did business with, which means the economic crisis will grow worse.

States are in a difficult position because they compete with each other for "friendly business environments," which always means, in the short term, lower taxes.

This administration, and most economists, at least as they appear in the media, want us to "consume" our way out of trouble.

But the model should be the other way. We should be producing our way out of trouble.

Is that possible in a "free trade" world?

The answer is yes -- through government spending. Through the kinds of things that the market cannot, or will not, supply.

The market will not protect our coastlines. How many Katrinas and Ikes do we have to have before we understand that it is in the common good -- and good for business and good for the economy -- that we do so?

Most of the costs of doing so cannot be outsourced. They have to, by their nature, stay here.

The same is true for wind and solar power and rebuilding our electrical grid to make such power sources work.

The market will not produce sensible, affordable health care. The market, in fact, has produced the worst cost-to-benefit ratio in the civilized world. The market has produced more bureaucracy in health care than any government agency ever could.

An affordable, national health care system would make American business more competitive.

For those of us who pay for our own health care, it would leave more money in our pockets than most of the tax cut proposals.

The market cannot and will not produce clean air and water. It will not produce an educated population.

Why did we have so much growth -- so much business growth -- when we had high taxes and when the taxes on corporate profits were actually collected?

If taxes on income (personal or corporate) are high, the impulse is not to take them, especially if they're as high as 90 percent. But there's no need to go that high to start making a meaningful adjustment.

What do companies and people do when they're making money in a high tax environment? They reinvest, in producing something. Cashing out is difficult, but the value of what they own continues to grow as the reinvestments pay off. We then have to "make money the old fashioned way ... earn it."

There is a difference between my business and "business," the wealth of the nation.

In my business, I hate regulations, unions and high taxes.

In my country, I appreciate regulations, unions and what high taxes, if intelligently spent, do for me. Then I live in a country in which business in general does better, my investments in the stock market do better, my retirement is protected, my children's health care is affordable, and I have more hope for their future.

New York Times Perpetuates the Myth that George Bush Won the 2000 Election

"In 2001 painstaking postmortems of the Florida count, one by the New York Times and another by a consortium of newspapers, concluded that Mr. Bush would have come out slightly ahead, even if all the votes counted throughout the state had been retallied." Alessandra Stanley, New York Times, May 23, 2008, in a review of the HBO television movie, "Recount"

That's not true.

The New York Times did not do its own recount. It did participate in a consortium. Here's what the consortium actually said: "If all the ballots had been reviewed under any of seven single standards, and combined with the results of an examination of overvotes, Mr. Gore would have won, by a very narrow margin." Ford Fessenden and John M. Broder, New York Times, Nov. 12, 2001.

Why did Ms. Stanley make such an important and fundamental error?

It is not a trivial matter. It is a common piece of misinformation. Many, many people believe it. Now a few more do, as a result of Ms. Stanley's review. It is not a trivial matter. Because that misinformation was created by one of the most bizarre, and still completely unexplained, journalistic events in modern times.

Here's what happened.

George Bush appeared to have won Florida, and therefore the presidency.

The law in Florida was actually quite simple and direct:

Keep reading... Show less

A Jew's Eye View of Iran

I was the designated Jew on our visit to the synagogue.

We were there on a mission for peace. I kid you not. Though every time I say it, I feel like John Belushi as a Blues Brother in dark sunglasses, "You don't understand, we're on a mission from God."

I had wanted to go to Iran for a long time.

It was a combination of two things.

One was the revolution. The sudden emergence of a theocratic state at the end of the 20th century. It was as if mankind had been swirled backwards by a demented djinn into an epic dream, a thousand years old, from the time when Islamic warriors swept East and West, spreading the caliphate across half the world, while armored knights clanked out of the forests of Europe with maddened peasant mobs alongside them, to meet in convulsive blood-lettings at the borders of their faiths.

The other was the Persian fellow, Ali Reza Sheikholeslami.

Reza was the holder of the Soudavar Chair in Persian Studies at the Oriental Institute, Oxford University, and a fellow at Wadham College, at the same time that I was there as the Raymond Chandler/Fulbright Fellow. Each was a wonderful endowment. I can't say what Reza actually did for his, but as for me, I played squash for my college and dined at high table.

Reza, who was among my best friends at the college, seemed to embody all that was the other side of Iran. He was sophisticated, urbane, international, genial and sensual, with a succession of entrancing wives. In the brief period I knew him, there were two, Sharee and Sheherizad, both quite beautiful, both with those communicative, distinctly Persian eyes.

This was in the mid-'90s, when many of the excesses of Islam were shocking the Western media, in particular, executions of women for adultery, sometimes by beheading and sometimes by stoning, as called for in the Koran.

After the public execution of a Saudi princess, Reza said to me, "We are really not so uncivilized as we appear. The law is that there must be four eyewitnesses to the adultery, and they must endeavor to pass a golden thread between the two parties, and only if it does not pass between them, can they be found guilty." Which is a perfectly Persian solution to an onerous and outrageous law against human nature: accept it, since it comes from God, or God's spokespeople, or whomever is running things at the moment, but make enforcement sufficiently impossible that it doesn't matter all that much.

It's a genial and elegant way to cope with the world, but insufficient when the fanatics are in charge.

There was something about those two warring impulses -- God's law vs. humanism, Iran's revolutionary fervor vs. 2,000 years of Persian live and let live -- that I felt was worthy of a novel. I decided I wanted to visit the world's first Islamic republic and went down to London to apply for a visa. My application was shipped off to Tehran and never came back. Why? No one can say.

My interest, and desire to go, remained. I continued to try to imagine the book I would write about a place that had emerged from Scheherazade's 1001 Nights to become the fierce, dour, black-clothed and bearded land of the Ayatollahs.

It continued to be difficult for Americans to get visas to Iran. To get a journalist's visa you usually have to be with a major media outlet. Even then, they are granted or rejected in fairly arbitrary ways. To get a tourist visa, it's necessary to book a tour with an Iranian tourist agency. I read about them and immediately nicknamed them KGB tours. They're like visiting the Soviet Union in the bad old days: you see the seven selected sites, you have to stay with your group and you presume that your guides are employed by the state security services.

I was in the midst of contemplating such a tour.

Then, at our Tuesday night poker game, Jeff Cohen, (founder of FAIR, Donohue producer, and author of Cable News Confidential: My Misadventures in Corporate Media), said, "Hey, I'm going to Iran with Scott Ritter."

I said, "Awesome. Can I go too?"

He was set to travel with an organization called Fellowship for Reconciliation. He figured that it was too late for me to go along, but he could help set me up for the next one, in February. I figured that only real danger in going to Iran would be if the United States started bombing the place. I was relatively certain that an attack would be scheduled for its impact on our domestic elections. Mid-winter seemed well within the window of safety. I said that would be perfect.

As it turned out, he and Scott never went -- because the Iranians wouldn't give Scott a visa -- but I did.
By the way, you can too. Put on your dark glasses, practice saying, "We're on a mission for peace," and contact

So there I was, in Shiraz.

The FOR tour was two weeks long. It was organized in cooperation with an Iranian government agency, the Center for Interreligious Dialogue, a part of the Organization for Islamic Culture and Relations, which made it the standard KGB Tour Plus. In addition to Persepolis, the great square of Esfahan, and an authentic Iranian meal at an authentic Persian restaurant, we had official meetings with mullahs, ayatollahs, the Armenian Christian prelate, and an official stop with a group of Iranian Jews.

Shiraz is known as a place of poets. The tomb of Hafez, which is very like a religious shrine, with pilgrims who treat his poems as sacred prayers, and the tomb of Saadi, are both there. It is a place of sunshine, famous for its gardens, its orchards, and intermittently, between Islamic prohibitions, for its wine.

We spent a pleasant day there.

Then, at night, we went out to meet the Jews.

We got in two small vans. I have no idea where we traveled, but it was outside of the center, and we entered a poor people's country, low and dusty. Not miserable and full of beggars and cripples, not hopeless, but certainly poor, a place where people worked hard, at two jobs or more, for their $200 a month.

We parked alongside an alley.

We walked down the alley. It had high walls on both sides, and no lights. Then we entered a door in the wall on our left.

We walked into a courtyard. There was a giant poster of the Ayatollah Khomeini, with graphics that quoted him as saying, "Iran is a country of all races, and monotheism is a religion shared by all, and we are one nation."

The condition of the Jews in Iran is a matter of political significance. If they are oppressed and threatened, it is fodder for the pro-war lobby. If the Jews are safe and well-treated, it makes Iran almost civilized, a country that might be negotiated with.

Jews have been in Iran since at least the Babylonian exile in the 6th century BC.

When the Persians conquered the Babylonian Empire, Cyrus the Great allowed the Jews to return to Israel and ordered the rebuilding of the temple. Darius the Great ordered its completion.

Zoroastrianism, the religion of Persia at the time, transformed Judaism and became the foundation for Christian concepts of good against evil, God against Satan, an afterlife and judgment day.

But just to show that nothing goes totally well for God's chosen people, soon there was a plot in Persia to exterminate them. It was foiled by Queen Esther, a story vividly reported in the Old Testament, celebrated by the Jews as the feast of Purim, and always featured in Bible story books for children.

In any case, many Jews remained. Over the centuries, over the millennia, they were sometimes full citizens, sometimes second-class citizens, sometimes prosecuted and murdered.

In 1925, Reza Shah, who rose from stable boy to gunnery sergeant and to general, overthrew the old Qajar dynasty with the help of the British and began Iran's modern era. He was a "strong man," a military modernizer in the style of Kamal Attaturk, who was transforming Turkey at the same time.

At first that was good for the Jews.

However, the trick for any ruler of Iran in those days was to play off Britain, their primary exploiters, against Russia, their greatest threat. When Britain and Russia became allies, Reza Shah became pro-German.

Things got bad for the Jews ...

The Americans and the British kicked Reza Shah out in 1941 and replaced him with his son, Mohammed Reza Shah.

Things got better again.

In 1945, at the end of the Second World War, there were about 150,000 Jews in Iran.
When the State of Israel was established in 1948, about 40 percent of them left.

Under Mohammed Reza Shah -- especially after 1953, when he was briefly pushed out of power by a democratic parliament, then restored to the throne by a CIA coup -- things were quite good for the Jews. Iran was even close to Israel.

Then, in 1979, came the Islamic Revolution.

At that point, there were about 80,000 Jews in Iran. Some 20,000 left immediately and more thereafter. Today, there are about 40,000 Jews in Iran.

Their status, like everything else in the Islamic Republic, is complex and ambiguous.

The tour was somewhat disorganized. Plans would be made, then fall through, and new ones would pop up. This was one of those last moments. We left the community center and we were led around the corner to a synagogue.

Twelve of the 14 members of our group were Christians.

Indeed, many of them were very Christian, of the liberal, idealist, Jesus was the Prince of Peace persuasion. One of our leaders was an Episcopal nun who had gone on to also become a priest, once such a thing was permitted. Our other leader was a Mennonite who'd worked for their missions for years and was now working for the Quakers. We had a minister who looked remarkably like Charlton Heston, but was for gun control and peace.

Sister Ellen approached me and asked if I would be willing to be introduced as the group's Jew. She felt that their group would be much more comfortable if our group had one.

My own relationship to being Jewish is this.

My father was an atheist. His older brother was a moderate believer. His older sister never mentioned religion that I can recall. Neither of them said anything, at least not to me, when I wasn't bar mitzvahed. My mother was an atheist. I never met her parents, but reportedly, they were too. Their attitude was that religion was old-world superstition, and we were lucky to have come to America where we could get away from it, along with all the other forms of oppression.

At the same time, we knew we were Jews. The holocaust was not far away. The whole history of the Jewish people was not far away. The way I thought of it, as a kid, and explained it to others who asked me about it was, "I'm not Jewish. Until they come to kill us again. Then I am."

I grew up in Brooklyn. A patchwork quilt of people of different races and heritages. It was clear from my daily experience that there was such a thing as ethnic identity and that it affected how people thought, acted and lived. When I lived and traveled in Europe, where Jews are often in the closet, I would find myself connecting with certain people in a special way, to be surprised, years later, when I found out that they were Jews. Which told me that this cultural or ethnic thing, whatever it was, was deep and subtle and traveled around the globe and through the centuries.

These were, for the most part, amused observations. The kinds of things that a travel writer takes note of. Not a business of passion, politics and war.

So I said to Sister Helen, "Sure, I'll be happy to our Jew."

Once again, we entered a walled courtyard.

It was winter, so the trees were bare. Past their trunks and branches, there was a two-story building. There were large windows along the entire side that faced out toward us. Inside, there was a Jewish service taking place.

Then a remarkable thing happened to me.

I was overcome with emotion. If I had been alone, I would have wept. But I was in public, and I'm a guy, and mentally I have my John Belushi shades on, so I don't cry in public. I moved into the shadows while I fought to control the tears that welled up inside, that wanted to pour forth and go wailing down my cheeks. These were my people. Here. Surrounded by these millions of others. My people, willing to publicly declare who they were, what their faith was and what group they belonged to. Though they were surrounded by all these others. Who sometimes tolerated them, sometimes were their friends and sometimes were not. This was not America. Where it was safe to be a Jew. Where it was fun to be a Jew. Where it was easy to be a Jew. Officially, as Khomeini's poster said, Jews are supposed to be a protected people in Islam.

When Mohammed came along, he saw himself -- or was told by the Angel Gabriel, who was "on a mission from God" to transmit his message -- that monotheism was the thing. There was a tradition from the Jews to the Christians, that had now come to him, to receive the accurate and authoritative words, cleaning up any mistakes and corruptions in the old texts, to get it right one final time.

The polytheists were the enemy and not to be tolerated. Christians and Jews were OK because they were monotheists. But not totally OK, because they didn't get that the new and improved version was the really true version. So those other peoples of the book could be citizens, but pay an extra tax and be barred from a few things.

In the 1,400 years that followed, that standard has been followed in widely varying degrees. Certainly, there was a period in which Jews normally fared better in Islamic countries than in European Christian countries. That lasted about 1,350 years. It has been mainly (though not exclusively) in the last 50 years that the reverse has come to be true.

Islam is different in different countries, as well as in different historical periods.

The Islamic Republic of Iran has the largest Jewish community in the Middle East, outside of Israel. There used to be a big Iraqi Jewish community. But they were almost entirely driven out after 1948. There are no Jews in Jordan. There are virtually no Jews in the Arabian Peninsula, and except for Bahrain, they are not welcome there. The once large Jewish populations in Egypt was almost entirely driven out. The Jews of Lebanon are mostly gone.

Turkey is a separate case, as it's officially, and sometimes adamantly, a secular country, part of NATO, and has good relations with Israel. Still, many of the Turkish Jews were driven out, first in 1941, then in 1955. About 26,000 remain and live freely.

In Iran, Jews are officially recognized. They have a seat reserved for them in parliament. Like the Armenian Christians, they are allowed to have wine for their services, though alcohol is otherwise illegal in the IRR. My immediate thought upon hearing this information was that it would have put them in an advantageous position to be Iran's bootleggers. But that doesn't appear to be the case. Turks, Azerbaijanis and Turkmens bring the booze in from the secular countries to the north and northeast.

The Jews in the synagogue stared out at us through the windows. Quite as much as we were staring at them. But whereas we were watching them like visitors to a museum staring in at a diaroma, they were wary and a little bit edgy.

It was not the sort of synagogue that shows up in tourist brochures or even web stories, jeweled and polished. This was little more than a warehouse, with benches. It was orthodox. The women were seated separately, upstairs. Just as Islamic women must sit separately from the men in the mosques. We went inside.

Someone from our group, or our guides, had told people in the congregation who we were, and although the services were going on, recitations and responses, we were stared at as speculation and rumors about our identity rippled up and down the rows and back and forth.

Finally an announcement was made. Our identity was officially and clearly established.

The congregation mostly settled down and went on with the business of worship. But in what seemed to me a distinctly casual, Jewish way. People still chatted openly with each other, looked around, and kids went back and forth.

When the service was done, we were introduced.

Someone immediately asked, did our group have a Jew?

There I was. People came over, to look at me, to speak to me. I moved into a clump of men, and found someone, a young fellow, who spoke English.

"Are you really a Jew?" he asked.

I thought about it, about what to say, how to answer, how controversial I was willing to be. Finally I said, "Yes, but a nonpracticing one."

"What is that?" he said, as if he'd never heard of, never imagined, such a thing.

"Being a Jew is two things," I said. "It's a religion, and being part of people, a culture, a tradition. Well, I'm not religious, I don't believe, but I'm part of the people."

He smiled. That was fine. That was OK. A little incomprehensible, but it was okay.

I asked what they were. Jews come in four flavors, reform, conservative, orthodox and sects, like the Hasids. All the Jews in Iran, he told me, were orthodox, wearing yamulkas, observing the traditions, keeping kosher and keeping the women up in the balcony.

I asked Jewish questions. How's business? How are the schools? Then, how is it to live in Iran?
An older man spoke up. "We are free." He was joined by a couple of others. They said, "It is good. We are Iranian. We are perfectly free. Free to practice our religion."

It seemed too adamant, as if they been told or urged to tell us that, but at the same time, it didn't sound false either. It sounded Iranian, complex and ambiguous.

With the service over, we all moved outside.

There was a crowd around me. A memory drifted through my mind, something my father told me. He'd been in the infantry in the Second World War, fought in Italy and in France. In the liberated territories, some few Jews came out of hiding, and when they met my father, they were thrilled to see, probably for the first time in their lives, "A Jew with a gun."

I was nothing so profound as that. But I was from America, a land where Jews don't have to be uneasy, don't have to look over their shoulders, and wonder how long the truce will last. I continued to be overwhelmed by a sense of being with "my people" to a degree that embarrassed me, and I kept it hidden.

Another member of our group, Carah Ong, from the Center for Arms Control, came over to me. She'd been upstairs, with the women. They were less sanguine about life in Iran. Among other things, they said, their rabbi had been arrested as an Israeli spy and sent to prison for seven years.

Armed with that bit of information, and wanting to speak to him, I asked, "Where's your rabbi?"

"He went to California," someone said, like he'd gone around the corner for a cup of tea. "Five years ago."

"So what do you do for a rabbi?" I asked.

"We take care of things ourselves," was the answer.

"Oh," I said, a question in my voice.

"If we have a question," the man said, explaining how it worked, "We call him on the telephone. Then the questioning turned back at me. This thing about being a nonpracticing Jew still didn't seem quite right. "Do you go to temple?"

"No, not really," I said.

"Not even on Yom Kippur?"

Well, my shiksa wife believes in traditions and rituals. She felt our children should know what Jews do. So, yes, on the high holy days the four of us would to our local temple. That is, until one year we got there and found that the front row seats -- mind you these were folding chairs in a tent -- were reserved for contributors and official members of the congregation, and after that we never went back.

The honest answer was, therefore, "Sometimes."

"Ah," he smiled, pleased and satisfied.

As the group was breaking up, he sidled up to me. He asked a question. It included a phrase that back in America I'd only heard as a punch line for a joke, but here it was very serious indeed.

"This group," he said, meaning the people I was with, "is it good for the Jews?"

The Myths and Harsh Effects of Bush's Economic Class War

George Bush came into office. There was a recession almost immediately. Officially it began in March of 2001 and, officially, it ended eight months later.

The causes of that recession are vague and amorphous, generally credited to the "business cycle."

There is, in addition, a minor Republican industry dedicated to backdating the onset by five months, to November 2000, in order to make it a Clinton recession. Or, to inadvertently say that the very election of George Bush screwed up the economy; he didn't even have to come to power.

Bush came in with a plan for tax cuts. Originally, that was based on the government having a surplus, and it was packaged as giving people their own money back. When the surplus disappeared, due to the recession and the tax cuts, he kept pushing the tax cuts as a jobs and stimulus package. The economy went into "recovery" by 2003.

The administration claimed that the recovery was due to the tax cuts. It was an odd and rather limp recovery. Indeed, it was a mysterious one and the mystery was that the United States was still losing jobs. This was considered inexplicable.

The administration claimed that the weakness in the economy was due to 9/11 and being in a war. The very same people who used that story would have been the first to say that Roosevelt and the New Deal did not bring the United States out of the Depression, it was World War II that did it. Historically, wars have produced booms. But their war was somehow different.

Nonetheless, the five years from 2003 to 2007 are now routinely described as having been a "boom," a time of "robust" growth, low inflation, and low unemployment. Now we are in, or facing, a recession.

This recession was brought about by a specific overexpansion, the "subprime lending bubble."

This has caused turmoil in the credit markets.

The cure is a "stimulus package." It consists of two parts. Low interest rates and giving cash out to every American, in the hopes that we will "consume" our way out of trouble. It's hard to tell how much anyone believes this will work, but Republicans and Democrats have all signed on, no one is saying it's nonsense or pointing out the obvious -- that's the horse that brought us here. Here's the reality.

The recession of 2001 never ended.

At least not for ordinary Americans.

Ordinary Americans found that their income was declining. From 2001 to 2007, median family income declined -- depending on where you get your figures from -- by somewhere between $500 and $1,000. Median individual income went down by at least $1,000.

The yearly average number of new private sector jobs created from 2001-2008 was just 369,000, not even keeping up with the growth in population. It should be compared to the average number of new private sector jobs created from '92 to 2,000: 1,760,000 per year.

The number of people in manufacturing jobs decreased by over 3 million.

The number who got healthcare at work went down, from 64.2 million to 59.7 million. The number of people without healthcare went up from 38.4 to 46.9 million.

The number of people in poverty increased from 31.6 million to 36.5 million.

The value of America's businesses, at least as measured by the stock market, did not go up. An astonishing thing in what was called a boom. Meantime, the cost of living went up.

Home heating oil went up about 150 percent. Gas at the pump at least doubled. The cost of health insurance went up about 50 percent. The cost of college went up about 30 percent. Now food is going up. How can the myth and the reality be so different?

Part of it is the standard theology and story telling about free markets and America always being No. 1 and the envy of the world. Add to that the great grasp of media manipulation on the part of the administration, the herd mentality in politics, the media even, and especially among economists.

The key fact is this: During the Bush administration the U.S. economy "grew" by 37 percent. Give or take, plus or minus, but something around there

What has been ignored is what that growth consists of. And even more, what it cost.

The middle class has shrunk and is less well off. So the growth isn't there.

The stock market is flat, so it's not in business. Manufacturing jobs have been dramatically reduced, so it's not there.

The "growth" in the U.S. economy is a bubble. It consists entirely of debt. Can it be true that the growth in the U.S. economy in the last seven years, such as it is, consists entirely of debt?

Here are the numbers:

The U.S. economy grew by about $4 trillion.

-- The national debt in Jan. 2008: $9.2 trillion
-- The national debt in 2001: $5.7 trillion
An increase of $3.5 trillion

-- Total consumer credit debt in 2008: $12.8 trillion
-- Total consumer credit debt in 2001: $7.65 trillion
An increase of $5.25 trillion

In the course of achieving growth of $4 trillion, we took on $8.75 trillion in debt, combining what we owe as a nation and as individuals.

Since we have nothing to show for it, it's the worst single investment in world history. Is debt innately evil?


There are lots of good reasons to take on debt. But the national choices should be made on roughly the same basis as taking on personal debt. If you can pay as you go, it's cheaper.

But sometimes there are emergencies. If something is vital, like saving your child's life, even when you don't have health insurance, you will hock whatever you can. When the nation is attacked, we normally spend what we have, plus what we can raise with taxes, and then borrow more, for the national defense.

It also makes sense to borrow to do something profitable -- start, expand or improve a business. The government equivalent is building infrastructure. Roads, education, communications, criminal justice and court systems, all facilitate commerce and generate more business, which ultimately creates new tax revenue.

Sometime you borrow to buy something that's worth the extra cost of paying interest, either because of it's utility, like a car, or because you expect it to appreciate more than the interest you pay, like a house.

Nowadays, governments routinely borrow to jump-start or stimulate economies.

That idea started during the Great Depression. It's generally credited to John Maynard Keynes and is exemplified in many of the New Deal experiments. As originally conceived, it was trickle up, or ideally, multiply up economics. If you put the unemployed to work, they would spend their income on housing, food and other necessities. That would go to shopkeepers, service people, property owners, farmers and the manufacturers of the goods they all bought. At each step there would be tax revenue so the deficits would ultimately pay for themselves.

Then along came the trickle-down people.

They believed that if rich people had more money, they would invest it in businesses, creating more employment that would produce more things, that people would flock to buy, which would, likewise, create more tax revenue.

The problem is that it doesn't work. If there was a real shortage of investment capital, it might work, but in a generally balanced economy it doesn't. It didn't work under Reagan or Bush the Elder. They each saw it fail and retreated from it.

It doesn't work because rich people with extra money do not say, "Ah hah! I have an extra hundred grand, I'll open a grocery store!" They toss it in whatever market is handy or buy a second, third or fourth home.

On the other hand, if there are lots of working people with some extra money, because they have good jobs, or because they have any jobs at all, you can bet your social security that someone will come along to sell them something. And the more they have, the more businesspeople will pop up to seize the opportunity, no matter how much they have to pay in taxes to do so. They will bribe, smuggle, go into war zones to make a profit.

Here's what happened in Bush the Lesser's experiment.

The government pumped out lots of money by increased spending, much of it going to the military-industrial complex, the pharmaceutical and insurance industry, and, of course, a special big chunk on the wars.

It also cut taxes. Mostly for the very rich. So rich people suddenly had lots of money on hand. They didn't go out and open new businesses, they simply sold the money. That is, they put it in "the financial sector," banks, investment companies, brokerages, insurance companies, real estate funds, hedge funds and the like.

The financial sector suddenly had an influx of money. So it went out and sold it. That is, it went out aggressively to make loans, both to businesses and consumers. The government was hand in glove with it, keeping interest rates low and deregulating or signoring regulations.

There was a real estate bubble. That should have been a warning sign. Real estate is a passive investment. It is a signal that there is a lot of money around with no productive place to go. No businesses expanding. No hot new industries. No genuine growth.

The real estate bubble is now routinely described as the root of our current economic problems.

That's not true. It's merely a symptom.

The problem is that the government, the nation and the individuals in our country have all taken on massive amounts of new debt. Without investing it in anything productive. Even our conquests of Afghanistan and Iraq are not profitable (except for specific war profiteers); they are drains, endlessly creating more debts. Debts that are, bizarrely, kept off the books, the way Enron used to do it, or more pertinently, the way George Bush used to do it when he was at Harken Energy.

This is quite accurately reflected in the fall of the dollar against such currencies as the Euro. The dollar is now worth one-third less than it was in 2001, pretty much the size of the bubble, one third of the economy.

It is also the primary cause of half of the increase in the price of oil. Since oil is priced in dollars, oil producers have had to raise their prices by 50 percent just to keep even. As our energy policy has been to just keep using oil, that makes the problem self-perpetuating, sending more and more money out of the country.

Here's another statistic to make things scarier still: Amount more Americans earned than spent in 2001: +2.3 percent Amount less Americans are earning than spending in 2008: -0.5 percent ("State of the Union 2008: By the Numbers," Reuters, 1/28/2008, the source of many of the statistics included here.) The beat goes on.

The solutions that have been proposed so far are more of what has created the problem.

A check sent to every American, paid for by ... debt. Support for failing financial institutions and for defaulting mortgage holders, paid for by ... debt. Artificially low interest rates, so there will be more lending, creating more debt. All to keep the big bubble from bursting. All in the service of denying the big bubble is actually a bubble.

If America is going to get out of this, we will probably have to do it the old fashioned way, work for it. The way to encourage work, is to make doing business -- making things, inventing things, providing services -- more attractive and profitable than simply lending money.

Credit that's too easy to get encourages careless and wasteful choices among consumers, bankers and business people. Just as it results in subprime mortgages, it results in the sort of corporate takeovers, financed by hedge funds and big banks, that require downsizing, selling off the assets, snatching the profits and leaving a bankrupt wasteland behind.

Fixing it requires raising taxes to pay off the government debts. Cutting military spending, the bloated excesses in the name of the War on Terror and ending the war in Iraq, will help immensely. But good luck in getting that done. Until, as Osama bin Laden planned, we go bankrupt from those wars just as the Soviet Union did from its Afghan war.

It also requires sensible investment by the government, in the sort of infrastructure that will create business that takes place here, in the United States.

More than any of that, it requires a new intellectual and moral standard. One that raises up reality at least to the status of the myths.

Four Myths Government and Media Use to Scare Us About 'Dictators'

We have a basic mythology: Appeasement of dictators leads to war. The historical basis for this narrative is the "appeasement" of Hitler at Munich. It encouraged him to believe the democracies -- and the Soviets -- were weak and would not oppose him. That led him to attempt more conquests and engulfed us all in the Second World War.

If the other countries had stood up to him right away, the theory goes, he would have backed down. If he hadn't, they would have gone to war and nipped him in the bud, thereby preventing WWII, the Holocaust, the deaths of 60 million and all the rest of the horrors.

Now we are floating the story that Mahmoud Ahmenajad is a dictator (the new, new Hitler, after Saddam Hussein). If we "appease" him, it will only encourage him and that will engulf us in World War Three.

If we accept the myth as a gospel truth that should guide our political and military lives, and accept that description as true, it makes good sense -- it is even necessary -- to start another preventive war, like the one in Iraq, to stop him now! Let us examine the facts.

Fog Fact No. 1: The president of Iran is not a dictator.

He is not even the most powerful person in Iran.

The position of president used to be a figurehead, but recently it was combined with that of prime minister and now has much real power. However, he does not control the army and the intelligence and security services. He does not have the power to go to war.

The president is elected by direct popular vote. There have been five so far. None has served more than two terms. Ahmenajad is in his first term. His previous office was as mayor of Tehran. He is a loud mouth, jingoistic conservative, rather like -- dare we say it? -- the current incarnation of Rudolph Giuliani in his run for U.S. president.

The best way to grasp how Iran is governed is to take its name quite literally: The Islamic Republic of Iran. It is a theocracy, but within the bounds of that -- which are fairly strict bounds -- it is run by elected officials.

The man at the top is called the supreme leader. His constitutional title is "Leader of the Revolution."

The supreme leader is commander-in-chief, with control of the army and the intelligence and security services. He can make the decision to go to war. He has a great many additional powers, including control of the state radio and television networks.

The supreme leader is elected -- and can be dismissed -- by the Assembly of Experts. This is an 86-member congress. They, in turn, are directly elected by popular vote, but must be Mujtahids, Islamic scholars qualified to practice Islamic law.

The way all this is kept under proper Islamic Revolutionary control is that all candidates for everything have to be approved before they can get on the ballot by the Council of Guardians.

There are 12 members. Half are appointed by the supreme leader. The other half are elected by the Iranian parliament from a list supplied by the head of judiciary (who is named by the supreme leader). They are all clerics and scholars of Islamic law. In sum, it is a republic, with many checks and balances, and real elections within theocratic limits. Everybody in government has to be a respectably devout Muslim, with the exception that of the 290 members of parliament there are five representatives from the recognized minority religions (two Armenian Christian, one Chaldean/Assyrian Catholic, one Jewish, one Zoroastrian).

An Iranian, or some other opponent of the United States, might claim that the cost of running for office here creates a de facto council of the wealthy that vets all candidates, excluding anyone who would work against their interests. They might also note that the elected members of the U.S. federal government are 93 percent Christian (including Catholics and Mormons), 7 percent Jewish, with a single Muslim, no pantheists and no atheists, almost a religious mirror image, of the makeup of the Iranian political class.

Fog Fact No. 2: The "appeasement" in the myth is very specific and rather narrow.

It refers to one country taking over the territory -- or the whole -- of another country. Then the world allowing that to stand. In 1938, Germany under Hitler annexed Austria. Hitler had already remilitarized the Rhineland -- which was supposed to be a demilitarized zone protecting France -- and taken over the Saar, a small area rich with coal and iron. Then he took over the Sudetenland, a part of Czechoslovakia. Its population, which was over 80 percent ethnically German, desired the annexation. However, it contained most of Czechoslovakia's defenses against Germany, which meant that if Germany wanted to take the rest, it would be able to so at will.

England, France and the Soviet Union had treaties with Czechoslovakia that obligated them to come to its defense. But they all wanted to avoid, or at least delay, war. So they came to an agreement -- the Munich Agreement -- which allowed Hitler to keep the Sudetenland. In 1939 Hitler took the rest of Czechoslovakia.

It does not refer to "allowing" one country to posture, threaten, arm or rearm.

Generally, since WWII, when one country has invaded another country, they've either fought to a stalemate (Iraq -- Iran, China -- India, China -- Vietnam, India -- Pakistan), or the invaders put in a friendly regime and then left (Vietnam -- Cambodia, United States -- Panama, Grenada, Dominican Republic) or, with international approval, the invader was kicked out (Iraq -- Kuwait, North Korea -- South Korea.)

But there are some very significant exceptions:

Fog Fact No. 3: Sometimes "appeasement" works well; it was American policy for 50 years.

After the Second World War the Soviet Union annexed the Baltic states, Latvia, Lithuania and Estonia, part of East Prussia and part of Slovakia. Then, mostly through rigged elections, it turned Poland, Czechoslovakia, Hungary, Romania and Bulgaria into puppet states and used military force, when necessary, to maintain that status.

Neither the United States -- nor anyone else -- seriously challenged any of that.

Basically, we accepted that anything that happened inside the Iron Curtain -- formed by the positions where the Red Army stopped at the end of the war -- was inside its sphere of influence.

What Truman did do was adopt an active policy of containment. It opposed any attempt of the Soviets to go beyond those lines.

The Soviets did more or less the same. They accepted American hegemony where the American armies had stopped. They vigorously contested any efforts to go beyond that, especially anything that encroached on their sphere of influence. Anything outside those lines -- the Third World and the colonies that the Europeans had reoccupied -- was up for grabs, and all sorts of proxy wars were fought. But the Big One, a Third World War, was averted.

Under Nixon this had the formal name of "détente." There is no doubt that Iran is a "revolutionary" state, as it declares itself to be, and has "revolutionary" dreams, as the Communists used to. It believes that the whole world should eagerly throw off its secular chains and embrace the higher, holier order of Islam.

It wants things that we would prefer not to see happen.

It is also aware of its own physical and military limitations and don't appear to be suicidal.

So while it is prepared to use influence, money and propaganda, and to support violent people who believe as it does, or close to what it does, a reasonable prediction is that there are limits. It proceeds with caution.

It also has multiple interests and are flexible. At one point it offered to trade Al Qaeda terrorists that it was holding to the United States in return for anti-Iranian terrorists that America was holding in Iraq. The Bush administration never got around to replying.

Fog Fact No. 4: Nobody is speaking of what happens after a war with Iran.

The ultimate goal of the strategy of war is the shape of the peace that follows.

This is especially true of a war of choice. If someone attacks you, you fight back, and the goal is to stop them and be safe. But if it's a preemptive or preventive war, then a great deal of thought must be given to what happens after the attack. Will it make us safer? Stronger? More prosperous? How? And for how long?

It is clear that this administration did not give enough thought to that before the invasion of Iraq. There were plenty of dreams about the best-case scenario, but no plans for the worst, and the worst is what happened.

Now we are creating a new fog of mythologies -- about a "dictator" who isn't one, about "appeasement" that is completely inapplicable, about nuclear weapons that don't exist, about a country that is "evil" -- that make it seem like we must do something.

But what will the consequences of military action be? If we've learned but one single thing from the current war in Iraq it's that after we panic ourselves with descriptions of the worst that will happen if we don't act, we had better consider the worst that will happen if we do. And be ready for it.

That's a fact.

What Is Iraq Costing You?

The War in Iraq has cost about $453,000,000,000 (four hundred and fifty-three billion dollars) to date.

That's pretty hard to grasp. Especially on my income and probably on yours. Let's bring that home and make it a little more understandable.

I live in Ulster County, New York. Our share of that is $372,000,000 (three hundred and seventy-two million dollars).

If you live in Los Angeles, your bill is $4,823,000,000 (four billion, eight hundred twenty-three million). Savannah, Georgia, $144,000,000. Little Rock, Arkansas, $339,000,000. That's how much you're putting in so far. It keeps ticking away at two billion dollars a week. If you live somewhere else and want to know how much it's costing your city or county, go to

You might also want to do what they suggest. Imagine what could have been done with that much money. The schools, bridges, medical care, playgrounds.

What did we get for our money?

The original deal -- as presented to us -- was to disarm Saddam Hussein for $50 billion. If we didn't do it right away, the smoking gun would be a mushroom cloud.

Bizarre, but true, that was actually accomplished. And for far less. It wasn't difficult, since Saddam was already disarmed. But by massing our troops and demanding UN resolutions, Saddam was forced to let the inspectors in so that we got to see it for ourselves.

But the administration was set on war! We're not actually sure why. Perhaps they aren't either. So they told us that the inspectors were associated with the UN. They were Swiss or French or some other foreigners, and therefore, unlike Americans, they were easily conned. Their failure to find WMDs didn't mean there weren't any. It really meant that Saddam was super tricky as well as super evil.

So the goal slipped from disarming Saddam to removing Saddam.

Removing Saddam was going to be a magic moment. It was going to be like a Disney animated feature. When the ogre was slain, the entire kingdom would break out with flowers and the flowers would dance and sing. And welcome the Americans as liberators!

That's not all we were going to get for our investment. We were going to get much, much more!

We would strike a blow in the war on terror! Keep (non-existent) weapons of mass destructions out of the hands of a dictator who might give them to terrorists. Establish a democracy in the Middle East. Bring stability to the region and hope to other people under evil dictators. Make Israel safer.

Most of all it would be a demonstration!

We would smite our foe like the Lord God Almighty, throwing thunderbolts and parting the very seas, so that all who saw would quake in fear and tremble before us. That's the colorful, theological version, but it is, in fact, what the administration expected.

We were a beneficent power, too. We were going to rebuild Iraq. George Bush said it was going to be "The greatest financial commitment of it's kind since the Marshall Plan!"

Was that going to cost us more?

No. "We are dealing with a country that can really finance its own reconstruction, and relatively soon," said the ever astute Paul Wolfowitz, deeply knowledgeable about third world countries, war and finance. 'What a deal,' as they used to say, throwing in a second pair of pants and a genuine silk tie, when you bought your Bar Mitzvah suit down on Orchard Street.

But it wasn't a Disney movie. The commander-in-chief and his crew were wrong in their assumptions and incompetent in execution.

If they stop, they will have to admit that we got nothing for our money. If they go forward, it's not their money. Or their bodies. While it's not be in our interests, its in their interests to turn the war into the Energizer Bunny, endlessly, mindlessly, going and going and going.

One question that should be asked, but hasn't been, is where did the money actually go?

The answer is that nobody really knows.

To give you some idea of how bad the book keeping is, the Congressional Budget Office reported that from 2001 to 2006 we had spent 290 billion dollars on the war in Iraq. But the Congressional Records Office had the number at $318.5 billion dollars. A gap of 28.5 billion.

The Government Accounting Office said that because of the way the Department of Defense handles its money, "neither DOD nor the Congress reliably know how much the war is costing and how appropriated funds are being used."

We don't even know how many troops are deployed to Iraq. One Defense Department system says 260,000, another says 207,000, and the DFAS, who does their payrolls, says 202,000. A difference of as much as 58,000 troops.

The Armed Forces have been so privatized that General Patraeus is not guarded by soldiers, but by private contractors.

When we pass a bill for billions to 'support the troops,' we have no way of knowing how many troops we're supporting or how much money is supporting them. It would be at least as accurate to say it's a bill to support Halliburton, Blackwater and the General's private security guards.

George Bush's version of the Marshall Plan, the reconstruction, is even worse. Paul Bremer III burned through -- an estimated -- forty billion dollars. Billions were handed out in cash. People were playing football with shrink wrapped bricks of $100 bills.

Nobody knows where the money went.

Nor has there been much reconstruction. There is less electrical service than before the war. There are fewer functioning schools, hospitals and medical facilities. There is no one to staff them if they had been built, since so many of the people with skills have been killed or driven out of the country. Water and waste treatment is so inadequate that a cholera epidemic is appearing.

A cost-benefit analysis would say that what we have achieved is in the minus column. That we spent forty billion dollars to get deconstruction.

Alright, there was waste, corruption and profiteering on a grand scale. Alright, the Iraqis didn't get anything for money, except hundreds of murderous, petty tyrants to replace one, grand, bloody dictator. But what did we get for our money?

We didn't get rid of the WMDs, because they weren't there.

We got rid of Saddam Hussein. He was replaced by a nominal democracy, but an actual chaos. Murder, rape, gang violence, civil war, revenge killings, semi-tribal war, have become the norm.

Al Qaeda not only survived, it got stronger.

The Middle East is less stable.

Israel looks more vulnerable.

Iran has been strengthened.

Instead of being a demonstration of irresistible power, the war exposed the limits of American power.

Iraq has become the textbook on how an insurgency can defeat a major power.

George Bush said this was a war for civilization. In the course of it, we have rejected the Geneva Conventions, the Nuremberg Principles, and the rule of law. We have embraced torture, failed to protect and provide for civilians in a country under our occupation and allowed the monuments and treasures of an ancient civilization to be looted and destroyed. Who is it that's fighting for civilization?

Has anyone benefited from this war? Yes.

Before the war Halliburton was facing bankruptcy. Now they're doing very well, along with a host of other military contractors.

The really big winners are Iran and Al Qaeda.

Osama bin Laden was a murderous madman, an outlaw hiding the caves of Tora Bora. Now Al Qaeda has a new base in Iraq and controls at least one province. His goal was to get America into a war like the one the Soviets fought, and lost, in Afghanistan. Which he did. He also wanted an actual world wide conflict between Islam and the West. He got that too.

Iran wanted Saddam Hussein gone. To have Shia'a groups, with ties to Iran, come to power afterward. For America to be weakened and to have its forces tied down so they could pursue their nuclear ambitions. They got all that.

As I wrote this, I heard a story on the radio about a kid from Saugerties -- which is the next little town over from Woodstock, NY -- who got both legs blown off in Iraq. I didn't catch his name. I'm sorry. He's one of the 25,830 that the DOD reported as officially wounded. Along with 3500 US dead. The 650,000 Iraqi dead. No one counts their wounded. Millions driven into exile.

Those are some of the costs. Now you know who benefited.

Petraeus: A Failure by His Own Standards

Fog Facts are facts that are known. They've been published and are easily accessible. They are important enough that they ought to define the political dialogue. Yet somehow they are as unrecognized as if they were top secret. They're lost in the fog.

Gen. Petraeus, for example, arrives with an amazing fog. There are facts in the militaristic mist all around him, that if noticed, should have even Republicans scheduling flights out of Baghdad.

Let's start with his track record.

Our basic Iraq policy has been and continues to be: "We'll stand down when they stand up." That is, when Iraq has an army and a police force that functions and can maintain order on its own.

The American occupation, run by Paul Bremer III under the aegis of the Coalition Provisional Authority (CPA) disbanded the Iraqi army and, through de-Baathification, took apart the police. As a result, there was no security at the same time that several hundred thousand armed men of military age, with no jobs, were unleashed on the country. Chaos ensued. The occupation, though legally and ethically required to maintain order, and the only people around able to do so, decided not to. It was then that the insurgents arose, forming militias and gangs, to step into the vacuum.

The occupation set out to rebuild the Iraqi Army and Police. So they could stand up and we could stand down.

The man who was given the job was that rising star, Gen. David Petraeus.

He failed.

The Iraqi Army cannot resist the insurgency. The Iraqi police cannot keep order. Indeed, it's far worse than that. Both forces are infiltrated. Some divisions are actually filled with militia members, insurgents and gangsters, dressed up in uniforms. With access to intelligence, arms and equipment. They have engaged in murder, torture and intimidation.

How can we expect the man who failed at doing just part of the job -- training those forces -- to succeed now that he has the whole job?

Nonetheless, Petraeus has a great reputation. US News & World Report said he is "one of the most fascinating people in the United States Army. With a Ph.D. from Princeton University, he is often referred to as the military's warrior-scholar." That's pretty much how everyone talks about him.

After he was sent back to the States from Iraq, he updated the U.S. Army's counterinsurgency manual. It's a public document.

It is well-written. Both the prose and the thinking are clear. It ranges widely through time and cites a variety of sources, including Mao and Clausewitz. It's thoughtful and fairly objective. It is the perfect yardstick to evaluate what is going on Iraq and -- by using Gen. Petraeus' own standards, the U.S. military's official standard -- figure how well we can expect what we're doing to work.

Fog Fact: The counterinsurgency manual recommends a force ratio of between 20 and 25 troops per 1,000 in the population.

The math is very simple. The current estimated population of Iraq is 27,500,000.

The proper size of a counterinsurgency force is therefore a minimum of 550,000, more comfortable at 687,500.

Right now, at the peak of the surge, there are about 169,000 coalition troops (92 percent U.S.) in Iraq. That's 381,000 short of the minimum. Or 506,000 short of the more ideal ratio.

Let us emphasize that this is from a public document. It is official army doctrine. It's available on the Net. Why haven't we seen these numbers on CNN or in the New York Times? Why has no one asked Petraeus about the discrepancy between his own theory and the reality?

Alright, so we're 400,000 or so troops short of a full deck. Does that mean the war can't be "won?"

Fog Fact: How a counterinsurgency war (COIN) is won. Patreaus writes in the manual:

COIN is fought among the populace. Counterinsurgents take upon themselves responsibility for the people's well-being in all its manifestations. These include the following:

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Bush's "Magic" Economic Formula: The Rich Get Richer; Regular People Lose Ground

Supposedly we are in a sustained economic recovery and have been since 2002.

Part of this is Bush hot air and the Republican Noise Machine, which the media quotes verbatim.

By a certain measure, however, it's real.

The economy has grown. Corporate profits are at an all-time high. Average income is up. There's lots of money around.

But the recovery has some really strange features. Oddities never before seen in a recovery.

Jobs: During Bush's first term the US actually lost private-sector jobs.

It finally improved in 2005, and now job creation is almost keeping pace with the increase in population. Still, over all, it's the worst record since Hoover, the fellow who presided over the onset of the Great Depression.

How do you have a recovery without creating jobs?

Income: Yes, average income is up during the tenure of the current administration.

The joke about average income is: Bill Gates walks into a bar. The average income of every person in the room immediately goes up 10,000 percent.

But median income, the amount that people in the middle of the group earn, barely budges. So let's look at that figure. Median income is down. The average person makes less now than when Bush came into office.

Not only that, the downward pressure on wages is no longer just a blue-collar issue, it's moved up to white-collar workers, the educated classes, even doctors.

How do you have a recovery when people are making less than before the recovery?

Cost of living: Key factors of the cost of living are much higher than they were six years ago.

In particular, fuel is up 100 percent, higher education costs are up about 44 percent, health care premiums are up 80 percent, and affordable housing is scarce.

Normally, when the cost of living goes up, we have inflation. But we've had low inflation during the Bush years.

How can the cost of living go up while the cost of money stays low?

Here's the most peculiar statistic of all: the Dow Jones index

You may have been hearing that the Dow Jones Index is at an all-time high. It's true. However, it is only 16 percent higher than the day George Bush came into office. By comparison, when Clinton left office the Dow was 320 percent higher than when he came into office.

It's a very rough measure of course, and there are many others. But by that measure, during the Clinton years investment in America's leading business had grown more than three times over. Under Bush it's only grown 16 percent in six years. Since the consumer price index is up 18 percent over the same period, when the new all-time high is adjusted for inflation, growth is effectively below zero.

How can there be a "recovery" in which not even businesses grow?

When a government wants an economy to grow, it throws money at it.

The administration did that with spending on pharmaceuticals, homeland security, and a couple of wars. But their most important weapon of choice was tax cuts for the rich, especially on unearned income, capital gains, inheritance, dividends, and interest.

This was sold, and accepted, on the myth that the rich -- the investing class -- are the most creative and daring members of our society. Just unleash them and they will march off into the wilderness -- actual, urban, or cyber -- with sacks of cash over their shoulders and they will build things!

Factories! Airlines! Housing! Toys! Computers! Undreamed wonders! Entire new civilizations! With jobs! jobs! jobs! Like an Ayn Rand novel!

But that's not what happened.

Because a shortage of cash was not the problem. The country, the world, is awash with cash.

The good, old, risk for rewards version of capitalism -- the burghers invest in a daring sea captain sailing to the Indies -- still exists. In recent years, it's given us FedEx, Wal-Mart, Apple, Microsoft, and Google.

But alongside it, over the last 50 years, the economy of credit has grown up.

In vastly oversimplified terms the credit economy works like this:

You own a house. It's worth $100,000.

Someone buys the house, no money down. They borrow that money. Let's say it's a straight-line 8 percent, 30-year mortgage. Forget closing costs, points, and any other complications -- that's a $220,000 debt. It goes on the bank's books as an asset.

Now you have $100,000. The bank has $220,000 (on paper). The buyer has a house worth $100,000. The bank has a lien on it, but the buyer will be gaining equity, plus he can get a second mortgage and home-improvement and other loans on it.

Again, this is a vast oversimplification, but that transaction has "created" something like $420,000 that is now "in play," as part of the economy.

No "thing" has been created -- no new business, no product, no jobs, no idea, no intellectual property, no entertainment.

But money has been created.

If you buy a dress on your Visa card or organize a consortium to buy a company, the same thing happens -- debt creates money. In every transaction, there's profit to be taken off the top.

A perfect example of the transformation of our society into a credit economy is the change in the way we finance higher education. States, and even cities, used to be in the business of building universities that were free, or nearly so. These were financed, up front, with tax money as an investment in our human infrastructure. Then, in 1965, the student loan program was invented. This changed the higher education business into a debt creation business and created a whole new creditor class, college graduates, who, were handed, along with their diploma, debts of ten to fifty thousand dollars or more.

The number one industry in America today is the money business -- debt swapping. In a closed economy, that might have a positive effect, as people look for something to do with their money.

Not, perhaps, as a general rule, but in an economy like ours, handing out money to rich people is the least effective way to make a healthier, stronger economy that benefits society as a whole. There are two reasons.

The first is that the Ayn Rand fantasy is a fantasy. For the most part, when people with millions of dollars get an extra hundred thousand, or several hundreds of thousands, or even millions, they invest it passively, in financial instruments and real estate.

So we get, for example, a real estate bubble. Which is worse that a bubble because a bubble is symptomatic of the excitement of investing in new, high risk, but high reward enterprises that are producing new things. A housing bubble is symptomatic of lots of money floating around with nowhere productive to go. The other reason is that insofar as investment does go into business, in terms of our society, there's a hole in the bucket. The hole is called globalization.

I'm writing this on a Mac. When I bought it, the money went through American Express (which took a few points) to Apple's headquarters in Cupertino, California, where Steve Jobs dipped in his ladle, then the rest poured out though the hole in the bottom to China, where it was actually made.

That's the economy that the statistics describe.

Lots of money is moving. As it passes through the company, the company profits. The company isn't going to build anything, so profits are spent on executive compensation. The actual work is outsourced (the money flows out), and no jobs are created. Nor does the actual business grow very much either, except as a middle man, taking American money and passing it on to foreign businesses (and oil producers).

At the same time, this creates downward pressure on normal working people.

Remember those old movies, with 200 men at the factory gate? A foreman inside with three jobs to give out, saying, "You. You. And you. The rest of you, go home." Those three lucky stiffs didn't demand health insurance, pensions, or job security.

Now it's India, Bangladesh, Malaysia, the Philippines, Mexico, Honduras, China, Korea, and many others at the gate. American companies tell their workers they have to be competitive. Not only do wages go down, but benefits begin to disappear.

This is combined strong anti-union and anti-worker efforts by government, supporting the anti-union and anti-worker efforts of major corporations.

This may be bad for America as a society, but the people in the money business love it.

Indeed, it is the trick that makes Bushenomics work for people in the money business. That includes anyone who invests in financial instruments. The problem with pumping out money -- printing money -- is that it can create inflation. Money lenders hate inflation. If I loan out money at 8% and by the time the creditor pays it back, inflation is up 8%, then my profit is zero. The profit margin in lending is -- in a significant part -- the difference between the rate of the loan and the rate of inflation.

Really high inflation, and worse, runaway inflation, is, of course, a threat to everyone. But moderate inflation, with rising wages, favors debtors and hurts creditors.

So how can you pump out money while keeping inflation down?

In Bushenomics you do it by keeping a lid on earned income. Even driving it down. Millions upon millions of people earning a little bit less take away from the pressure of a few people earning millions upon millions more.

That, along with, the flood of low cost goods from low wage countries, helps balance out the inflationary pressure of rising costs in certain particular industries, like oil, health care and higher education.

It's not a question of conservatism vs. liberalism. Of government vs. free markets. All economies are, of necessity, mixed. All governments are concerned with the wealth of their nation. Government decisions will always effect how business operates. The question is, does the way government spends and invests create a sounder and healthier society? Or does it merely make certain sectors and classes rich, while hollowing out our economy?

If we are to invest public funds -- through government borrowing or spending or through simply spending tax revenues -- we have to be aware that rich people running around with bags of money won't necessarily do what is good for the wealth of our nation. They may run us into bankruptcy, the way the smartest guys in the room ran Enron into bankruptcy.

Wiretapping Wouldn't Have Prevented 9/11

The Republican senator tossed Gen. Michael Hayden a big, fat softball of a question: "Do you think that if you had this program [of wiretaps without warrants] in place before Sept. 11th you might have prevented it?"

Gen. Hayden jumped right on it. He said that yes, if he had his secret powers then that he has today, he could have stopped al Qaida's plot.

Then he said, there were two guys in San Diego …

He was referring to Nawaf al Hazmi and Khalid al Mihdhar. George Bush also talks about them when he wants to justify wiretaps without warrants. The truth is that Nawaf al Hazmi and Khalid al Mihdhar are the poster boys for missed opportunities. If the NSA, the CIA, the FBI and the White House had not screwed up so royally, mostly by cherishing their secrets, they would have had al Hasmi and al Mihdhar several times over. Here are the facts.

Both of them were in the NSA and CIA files. They'd fought in Bosnia. They'd been to Afghanistan. They had friends and relatives who were jihadists and who were in Al Qaida and they had associations with bin Laden.

In December, 1999 the NSA picked up several names in relation to an upcoming meeting in Kuala Lumpur, the capitol of Malaysia. They got al Mihdhar's full name but only al Hazmi's first name, Nawaf. They could have figured out who he was if they had checked their own database. But they didn't.

The CIA tracked al Mihdhar when he traveled from Yemen to the meeting in Kuala Lumpur, arriving on Jan. 5, 2000. The CIA had the event under surveillance. Al Mihdhar was photographed there. The team noted that some of the terrorists, including al Mihdhar and al Hazmi, flew to Bangkok on Jan. 8, where they lost track of them. Also in January, the CIA found out that al Mihdhar had a U.S. passport.

The top people in the CIA and the FBI, including its director, Louis Freeh, were briefed by the Counterterrorism Center (CTC) on the meeting.

In March, the CIA's Bangkok office reported that al Hazmi had left Thailand on Jan. 15 and flown to Los Angeles. He was accompanied by al Mihdhar, though that did not show up on the flight report. Here is what had not happened.

The CIA did not put either al Hazmi or al Mihdhar on the State Department TIPOFF watch list. So they were not picked up when they entered the United States. Al Mihdrar later left the United States and went to Yemen, because he missed his family. Then he returned to participate in the 9/11 attacks. He was not picked up leaving or returning.

The CIA did not give their names to the FBI, so they were not tracked when they entered the United States. They spent two months in Los Angeles. Then they went to San Diego. In both places they associated with radical Muslims and made radical mosques the center of their lives.

They also lived with an FBI informant. Al Hazmi got picked up for speeding in Oklahoma. His license was in his real name. When the trooper ran it, nothing came back. Remember, that at this point, he was known as a terrorist associated with Osama bin Laden, and bin Laden was known to be trying to organize an attack on the United States.

Al Hazmi and Al Mihdhar both bought their tickets over the internet using credit cards in their real names.

Then came Sept. 11, 2001, and this is what happened on that day:

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Excerpt: The Fog That Cloaks Hypocrisy

One often hears that someone represents a "real Horatio Alger Story." Horatio Alger was a master of the dime novel in the mid-19th century. He churned out dozens of almost identical storylines: a young, poverty-stricken churl is alone in the big, cold city. He works harder than the other shoe-shine or news boys and puts every cent away, while the other boys gamble and drink and waste their money on trivial goods. Along comes a wealthy businessman. He takes note of the young lad's ethic -- and the sparkle of intelligence in his crusty eye -- and takes him under his wing. Soon the boy is a wealthy man of responsibility and high station.

Embedded in Horatio Alger's work is the Protestant work ethic, the pull-yourself-up-by-the-bootstraps American creed. The mythology of upward mobility in America is central to modern conservative thinking, and much of it can be credited to Horatio Alger and his adoring fans. But who was he?

In this excerpt from "Fog Facts", author Larry Beinhart does some digging, and what he finds would come as a surprise to many a conservative Alger fan:

Horatio Alger (1834-1899) wrote about 130 short novels. Like the Hardy Boys and Nancy Drew, which I read at the same age, they are all the same, yet all quite readable. Alger had a great gift for narrative. For some reason or other, I happened to pick one up as an adult. I was quite surprised at what I was reading. Then I read several more to see if that was an aberration. No, that part of my memory, at least, was correct; they are all exactly the same.

They feature a boy just at, or on the verge of, puberty, from the country or the slums. He comes to the center of the big city. He does work, but he doesn't work astonishingly hard, certainly not as compared to the majority of other working children in the days of legal child labor. He doesn't start his own business or invent a better mousetrap or find the Northwest Passage.

What really happens is he meets a rich older man who takes quite a fancy to him and sets him up with money and educates him and teaches him how to dress and conduct himself. There is, indeed, a "meet cute" in which the boy does something that draws that nice rich man's attention. It's usually something heroic, like stopping a team of galloping horses that's dragging a coach that is carrying the rich man's daughter.

This action is referred to in the books themselves and by people like those at the Horatio Alger Society as a sign of character. It is also a chance for the older man to notice how this boy stands out from the other boys. He has that forthright, noble-boy quality. Which is very, very attractive. Eager, earnest, shining. It's what draws priests to alter boys. In addition to the convenience, of course.

I do not understand how an adult can read Alger's stories and not realize that these were homosexual pedophile fantasies. Actually, it's a single fantasy repeated over and over again.

So I looked him up. And there it was. He had started out as a minister in Brewster, Massachusetts. He was having sex with boys in his congregation. Two of them told their parents. He admitted to a certain "practice." He resigned and moved to New York City. There he became a writer and began churning out these fantasies as dime novels.

We have two distinct ideas of what happened when he went to New York. Jessica Amanda Salmonson, a critic, antiquarian bookseller, and gay activist, has written: "Alger continued his 'practice' although thereafter most often against types of boys nobody cared about, thus avoiding further trouble with authorities. The newsboys Alger glamorized in his fiction were in reality homeless child laborers who spent their nights in alleys or slum-squats .... Their plight included sexual exploitation ranging from outright rape to 'willing' prostitution."

Stefan Kanfer, writing in the City Journal, a publication of the Manhattan Institute, a neoconservative propaganda mill, has a very different tale to tell: "The fugitive repaired to New York City in the spring of 1866. Though never to wear the cloth again, he resolved to live out the Christian ideal, expiating his sin by saving others." Upon seeing the slum children of New York, "an idea came to him .... He had sinned against youths; now he would rescue them and in the process save himself. He would do it as a novelist."

In this version, Alger never had sex with a young boy again (nor anyone, presumably, as there is no reference to marriages, mistresses, or an adult male companion). Kanfer describes also how Alger did many good works, works that kept him close to the youngsters he was trying to save, and how he helped many of them and found them places with his friends.

So, two distinct interpretations of Alger's reality.

On the one hand we have the gay activist saying, in essence, "Let's get real. Alger was a sexual predator, and sexual predators stay sexual predators. Going to the big cities was the sexual tourism of the day. There were plenty of young girls and boys with no means of support and you could buy what you can buy in Bangkok today."

Kanfer comes out fighting for hypocrisy.

Elsewhere, George Bush, in a series of private conversations that were taped by a friend, explained the reasoning for hypocrisy over honesty as a policy choice:

Mr. Bush said [to Mr. Wead]: "'I wouldn't answer the marijuana questions. You know why? Because I don't want some little kid doing what I tried.'" He mocked Vice President Al Gore for acknowledging marijuana use. "Baby boomers have got to grow up and say, yeah, I may have done drugs, but instead of admitting it, say to kids, don't do them," he said.

Joe Conason, in the New York Observer wrote, "For many American parents of a certain age, that self-serving yet poignant response must strike an empathetic chord. Concern that children will mimic parental misbehavior is universal, and so is the impulse to conceal embarrassing truths."

Hypocrisy of this type, though not labeled as such, is part of the Republican Party's program and has a great deal do with its appeal.

In the constellation of Republicanism, conservatism, and Christianity, the source of order is authority. A choice, a statement, or a rule is not made valid by logic or proof or evidence. It comes from the authority of the source. A godly man gets it from the ministers of God, who get it from the Bible, which is the word of God himself.

If there is no "authority," then there will be no order. To preserve order, therefore, we need to believe that each link in the chain is unbroken. To do so requires an effort not to know certain things.

In the matter of Horatio Alger's novels, this is probably trivial. But when it applies to abstinence-only sex education, it leads to unwanted teen pregnancies and increased transmission of STDs, and it brings misery and death. When it applies to not doing stem cell research, it perpetuates disease, pain, and early death.

Once we accept and sanction hypocrisy in matters of sexual morality, drinking, and doing drugs, the act of saying one thing and doing another becomes the norm in all things. The president wanted to take out Saddam Hussein because he was evil. It's good to oppose evil. In order to convince the world to go along, it was necessary to make a specific claim. So he said that Saddam had weapons of mass destruction and he was linked to terrorism and that's linked to Al Qaeda. When those specific claims turn out to be false, that's alright, because the hypocritical form -- say what is necessary to do God's will and oppose evil, true or not -- is the accepted form.

Here was a fog. The myth of Horatio Alger.

To get to the facts, we did something relatively simple. We ignored the rhetoric and looked at the events. Which is sort of funny, since, in this case, they're both fiction. Still, if we stripped the rhetoric off the facts and they stood naked, we saw them for what they were.

Then we looked outside. In this case, to the author's life. There was a correspondence. He was, in real life, the character who appears in every book, under different names and in different guises, the outwardly reputable older man -- a pastor, no less -- who is very fond of young boys.

This is, intellectually, relatively easy to do.

It is socially and psychologically difficult. Our social and psychological methods of sorting out the world will generally trump our strictly intellectual ones. There are certain automatics that exist in almost any situation. We automatically give credence to what people tell us. We give additional respect to the words of people in authority. We tend to go with the group. We compartmentalize. We let our preachers preach, our leaders lead and Click and Clack, the Tappet Brothers, fix our cars. These things are neither good nor bad. They are efficient and they bring personal and social benefits.

Here, there were additional factors.

Alger's rhetoric creates fog. There are clean and noble boys and there are adult men, whose motives are good and pure, who help such boys. Teachers and coaches and librarians and Scout leaders and even priests do reach out to young people and enter into asexual mentor-protégé relationships without groping them, and help them find their way. That's good and it is necessary and it is a significant part of social life.

So there could be truth in it. Certainly there ought to be truth in it.

The preaching about being good and godly and all the rest in Alger's novels sounds sincere. So does his poem, Friar Anselmo's Sin, which is taken to be autobiographical, is full of regret and repentance and is about the promise of redemption through good deeds:

"Courage, Anselmo, though thy sin be great, God grants thee life that thou may'st expiate.
Thy guilty stains shall be washed white again, By noble service done thy fellow-men."

Alger reportedly did do good deeds and helped out many a young man.

This last is only marred by our suspicion that pedophiles who choose to work in positions that keep them in contact with youngsters, have ulterior motives, or, at the very least are placing themselves nearer to temptation than they ought to.

Alger's sincerity and his confiscation of the sort of truths that we are fond of confuse us. At the very least, if he is sincere, then he is not a liar. To be a liar requires intentionality. To accuse someone of being a liar means that we are saying that they are aware of the difference between reality and the things they say and that they are making a choice to deceive.

This mix -- predatory desires cloaked in the rhetoric of goodness, sincerity so sincere, we can't believe it's not genuine, statements that could be real, even should be real, but aren't, untruths that we are hard-pressed to call lies -- can exist in other, completely nonsexual contexts.

We don't have words for that. We don't have a label that describes the sort of people who speak such untruths with such sincerity from within such delusions.

The name of the New York chapter of NAMBLA, the North American Man Boy Love Association, is the Horatio Alger Chapter.