Obama's AG Pick Supported the Patriot Act

The Nation

The Trouble With Eric Holder
posted by John Nichols on 11/18/2008 @ 8:48pm

Quick! Name the veteran Department of Justice insider who, shortly after the USA Patriot Act was signed into law and at a point when the Bush administration was proposing to further erode barriers to governmental abuses, argued that dissenters should not be tolerated?

Who invoked September 11, explicitly referencing "the World Trade Center aflame," in calling for the firing of any "petty bureaucrat" who might suggest that proper procedures be followed and that the separation of powers be respected?

John Ashcroft? No.

Alberto Gonzales? No.

It was Eric Holder, the man who has reportedly been selected by President-elect Barack Obama to serve as the next Attorney General of the United States.

Appearing on CNN in June, 2002, the former Clinton administration Justice Department aide sounded as if he had just stepped out of the Bush camp: "We're dealing with a different world now. Everybody should remember those pictures that we saw on September the 11th. The World Trade Centers aflame, the pictures of the Pentagon, and any time some petty bureaucrat decides that his or her little piece of turf is being invaded, get rid of that person. Those are the kinds of things we have to do."

If that's unsettling, consider the fact that Holder was part of the legal team that in 2005 developed strategies for securing re-authorization of the Patriot Act.

Much will be made of Holder's role as a deputy attorney general in helping former President Clinton arrange for the last-minute pardon of fugitive/Democratic campaign contributor Marc Rich. (Holder said he gave Clinton a "neutral, leaning towards favorable" opinion of the proposed pardon.) And it will also be noted that Holder, as a corporate lawyer in private practice after leaving the Clinton team, played a key role in negotiating an agreement with the Justice Department that got Chiquita Brands International executives off the hook for paying protection money to right-wing death squads in Colombia.

But the first questions for Holder should go to the issue of his attitude toward the role of the attorney general in defending the Constitution. Holder's defenders will point to some eloquent speeches he has given, including one he delivered in June to the American Constitutional Society. In that speech, the former deputy attorney general condemned the Bush administration's "disastrous course" set by the Bush administration on issues such as torture and the practice of rendition.

"Our needlessly abusive and unlawful practices in the ‘War on Terror' have diminished our standing in the world community and made us less, rather than more, safe," Holder said, correctly. "For the sake of our safety and security, and because it is the right thing to do, the next president must move immediately to reclaim America's standing in the world as a nation that cherishes and protects individual freedom and basic human rights."

That's a good message, to be sure.

But it must be juxtaposed against past statements made by Holder, such as this one: "The Attorney General is the one Cabinet member who's different from all the rest. The Attorney General serves first the people, but also serves the president. There has to be a closeness at the same time there needs to be distance."

What we need to know is this: How close would Holder, as attorney general, get to obeying his oath to defend the Constitution?

The place for that to happen is in a very serious, very aggressive confirmation process that should not simply presume that Holder will "get it" when questions about the Constitution arise.

Cancer Patients Lose Shot at Longer Life in U.K. Cuts

More proof that nationalizing medicine is not going to make health care an unlimited resource.

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Cancer Patients Lose Shot at Longer Life in U.K. Cuts

By David Altaner and Bruce Rule

Nov. 17 (Bloomberg) -- Jack Rosser's doctor says taking Pfizer Inc.'s Sutent cancer drug may keep him alive long enough to see his 1-year-old daughter, Emma, enter primary school. The U.K.'s National Health Service says that's not worth the expense.

Rosser, 57, was told the cost of Sutent, 3,140 pounds ($4,650) per treatment for his advanced kidney cancer, was too high for the NHS -- the government agency that funds the nation's health care. The resident of the town of Kingswood, in southwest England, has appealed the decision twice, and next month may find out if his second plea is successful.

``It's immoral,'' Rosser's wife, Jenny, said. ``They are sentencing him to die.''

The NHS, which provides health care to all Britons and is funded by tax revenue, is spending about 100 billion pounds this fiscal year, or more than double what it spent a decade ago, as the cost of treatments increase and the population ages. The higher costs are forcing the NHS to choose between buying expensive drugs for terminal patients and providing more services for a wider number of people.

About 800 of 3,000 cancer patients lose their appeals for regulator-approved drugs each year because of cost, Canterbury- based charity Rarer Cancers Forum said. The U.K. is considering whether to make permanent a preliminary ruling that four medicines, including Sutent, are too expensive to be part of the government-funded treatment of advanced kidney cancer.

`It's Outrageous'

``It's outrageous,'' said Kate Spall, a full-time activist who has helped about 100 patients appeal NHS denials of cancer medicines. ``We are not asking for anything new or exciting or novel. We are asking for what the rest of the western world is getting.''

To help curb expenses, the government created the National Institute for Health and Clinical Excellence, known as NICE, in 1999 to review medicines and recommend whether the NHS should fund them.

``There is a view that all treatments should be available. Unfortunately, that's not possible,'' said Peter Littlejohns, NICE's clinical and public health director. ``There is a limited pot of money.''

He said the four cancer drugs provide a ``marginal benefit at quite often an extreme cost'' and that the agency had to keep in mind that funds spent on the medicines could be used elsewhere to help others at a greater value. ``Those are the hidden patients, the ones who benefit from the things the NHS does spend money on,'' Littlejohns said.

NICE Review

NICE is reviewing its Aug. 7 preliminary recommendation that Sutent, Roche Holding AG and Genentech Inc.'s Avastin, Bayer AG and Onyx Pharmaceuticals Inc.'s Nexavar, and Wyeth's Torisel shouldn't be funded in light of their cost of 20,000 pounds to 39,000 pounds a year per patient. All four medicines have been approved by European and U.S. regulators and are sold in other countries as well. A final ruling is expected in March.

While a drug is under review, the decision whether to pay for a therapy falls to the NHS's 156 local organizations, called trusts.

Of the 3,000 applications for exceptional funding for cancer patients a year, the most-requested drug was Sutent, said the Rarer Cancers Forum, which focuses on cancer cases that fall outside the more common ones such as colon, breast, lung and prostate.

Sutent, which stops cancer cells from dividing and chokes off a tumor's blood supply, was first approved for European use in July 2006. Kidney cancer sufferers taking the drug had a median survival rate of 26.4 months, according to a study presented at the American Society of Clinical Oncology in May.

Five Years to Live

New York-based Pfizer provided NICE with Sutent cancer- survival data that were released after its review began to try to persuade the agency to reverse its decision, and has offered to make the first treatment free, company spokeswoman Emily Bone said.

On Nov. 4, the government proposed giving NICE more flexibility in approving higher-cost drugs and allowing patients to buy the medicines themselves without losing access to government-funded health care. Final recommendations on the proposals aren't due until early next year and Rosser can't wait that long for his medicine, Spall said.

Rosser, of Kingswood, England, was diagnosed with cancer four days after Emma was born in July 2007. After operations in August and March to remove a kidney, adrenal glands and bone tumors, he was told he might live two to five years. In July, he was told by doctors that Sutent would help, but the South Gloucestershire Primary Care Trust said it wouldn't pay for the treatment.

`Very Expensive'

``I read the letter and I burst into tears,'' said Rosser, who was forced to retire from his air-conditioning and sheet- metal company because of the illness.

South Gloucestershire, the trust that includes Rosser's home, accepts applications for Sutent funding only for exceptional cases, said Ann Jarvis, director of commissioning at the trust, in an e-mail. ``Unfortunately for very expensive drugs, if they are proven to only provide a small benefit we have to prioritize other treatments.''

The trust plans to review its Sutent policy at a meeting next month, spokeswoman Sue Pratt said today.

Kidney cancer patient Kathleen Devonport, a 65-year-old retired factory worker, called it ``heartbreaking'' to have to beg her local health officials to provide her with Sutent. The County Durham Primary Care Trust, in northern England, initially turned her down in March 2007, then agreed to supply the Sutent seven months later only after she responded to a cheaper medicine paid for by an anonymous donation.

Offer Vetoed

Jenny Rosser, 41, said she is looking into getting her husband into a clinical trial for Sutent, but so far she has been told that his cancer would need to advance further to qualify.

Meanwhile, he is surviving on painkillers coupled with steroids for inflammation after vetoing his wife's offer of selling the house to pay for his treatments. In late October, he had another operation to remove growths on his spine and neck.

Jenny Rosser said the policies seem aimed more at saving cash than treating people.

``It seems like a money-saving exercise,'' she said. ``If a patient dies, tough.''

To contact the reporter on this story: Bruce Rule in London at brule1@bloomberg.net; David Altaner in London at daltaner@bloomberg.net
Last Updated: November 17, 2008 08:19 EST

Democrats plot to bring back "Fairness Doctrine"

Schumer on Fox: Fairness Doctrine ‘fair and balanced’
By Bob Cusack
Posted: 11/04/08 11:30 AM [ET]

Sen. Charles Schumer (D-N.Y.) on Tuesday defended the so-called Fairness Doctrine in an interview on Fox News, saying, “I think we should all be fair and balanced, don’t you?”

Schumer’s comments echo other Democrats’ views on reviving the Fairness Doctrine, which would require radio stations to balance conservative hosts with liberal ones.

Asked if he is a supporter of telling radio stations what content they should have, Schumer used the fair and balanced line, claiming that critics of the Fairness Doctrine are being inconsistent.

“The very same people who don’t want the Fairness Doctrine want the FCC [Federal Communications Commission] to limit pornography on the air. I am for that… But you can’t say government hands off in one area to a commercial enterprise but you are allowed to intervene in another. That’s not consistent.”

In 2007, Senate Majority Whip Dick Durbin (D-Ill.), a close ally of Democratic presidential nominee Sen. Barack Obama (D-Ill.) told The Hill, “It’s time to reinstitute the Fairness Doctrine. I have this old-fashioned attitude that when Americans hear both sides of the story, they’re in a better position to make a decision.”

Senate Rules Committee Chairwoman Dianne Feinstein (D-Calif.) last year said, “I believe very strongly that the airwaves are public and people use these airwaves for profit. But there is a responsibility to see that both sides and not just one side of the big public questions of debate of the day are aired and are aired with some modicum of fairness.”

Conservatives fear that forcing stations to make equal time for liberal talk radio would cut into profits so significantly that radio executives would opt to scale back on conservative radio programming to avoid escalating costs and interference from the FCC.

They also note that conservative radio shows has been far more successful than liberal ones.

In his Fox interview, Schumer, who heads the Democratic Senatorial Campaign Committee, also weighed in on the election, predicting that Democrats will end up with between 56 and 58 seats in the Senate.

He also defended “card check” legislation, claiming there is a strong need to allow workers a private ballot to register their votes on whether to organize a union.

Schumer said “there has to be some counter” to the leverage businesses have, claiming “employers have every leg up on people who want to organize and that’s why union workers have gone down from about 25 percent to 6 percent [in the private sector].”

Business groups adamantly oppose the card check bill, which passed the House and fell short of the necessary votes to overcome a filibuster in the Senate.

Conrad Black: Ignorance and upheaval

Shocked by an ill-understood financial crisis, panicky American voters are poised to elect a staunch leftist on Tuesday to serve as their 44th president

The U.S. presidential election campaign that is now finally ending (the 2012 campaign will begin on Thursday, and will probably cost $2-billion) has been so entangled with economic, racial and ethical questions, that it has obscured the most stark ideological differences between candidates since Ronald Reagan and Jimmy Carter in 1980.

Senator Barack Obama, who has the most liberal voting record of any current U.S. senator, is well to the left, according to all polls, of most Americans. He is surging toward the feat recently achieved by Stephen Harper in Canada: Being elected although most of his countrymen are ideologically closer to his chief opponent.

The voters have been heavily distracted by the financial crisis. Mr. Obama has displayed an almost sphinx-like discretion on the subject — while John McCain has produced a daily kaleidoscope of hip-shooting responses and King Lear-like promises of vengeance on the greedy financiers and sloppy regulators.

Yet, during it all, there has not, as far as I have observed, been a single plausible explanation of what has happened to the financial system. Congress
required that mortgage giants Fannie Mae and Freddie Mac direct 52% of their backing to the homes of low-income, higher-risk, mortgagees. It did the same, though not to the same extent, with the commercial banking system. Alan Greenspan co-operated with Congress by holding the prime rate at 1% for almost a year, facilitating the issuance of trillions of dollars of low-yield, high-risk mortgages.

The financial industry bundled these together in consolidated debt obligations (CDOs), whereby investors could buy in at different rates and risk levels. The CDOs were in turn backed by default swaps, insurance policies that gave the securities a (false as it turned out) semblance of reliability. Meanwhile, investment banks were permitted to borrow up to 30 times their asset bases, three times the leverage permitted to lending banks. It was a house of cards on an open terrace on a summer day.

Early signs of a slight business downturn shook loose some of the most vulnerable mortgages, and the effects rolled through to the insurance companies. Banks marked down their asset values, and to avoid being afoul of Federal Reserve-imposed ratios (which are based on market prices), had to seek more capital at declining issue prices, diluting existing shareholders. Market shapers and astute analysts short-sold the CDOs and bank shares, (i.e., sold them without first buying them, forcing down the market price, and then covering their sales by buying at a lower price).

The process broadened and accelerated, as this kind of crash always does. Secretary of the Treasury Henry Paulson and the Federal Reserve chairman, Ben Bernanke, scrambled around like one-armed paper-hangers, saving some companies (Bear Stearns) and not others (Lehman).

Very late, they improvised an impractical plan for buying up to $700-billion of the defaulted real estate-related debt, but the CDOs are not easily divided and the federal government had no capability for negotiating such transactions. And so it was agreed that the government would, as it did in the 1930’s, buy preferred shares in the encumbered institutions at discounted prices, and let the banks work it out with their clients and debtors.

The foregoing analysis makes no pretense to economic sophistication, but I saw no evidence that either candidate is capable of giving even this minimalist description of what has panicked the country, discomfited the whole financial world and caused foreigners to resume the habit that began with the U.S. rejection of the Treaty of Versailles, and blame everything bad on America. The collapse of the United States was jubilantly announced by the international left, probably at least two centuries prematurely. As McCain flailed wildly, Obama sagely allowed the crisis to reflect badly on Republicans generally, though the Clinton administration was certainly not blameless.

Obama is essentially offering the white population of the United States, in exchange for his residency in the White House, an end to the racial guilt complex that’s formed over 145 years of quasi-segregation of African- Americans, following what Lincoln called “the bondman’s 250 years of unrequited toil.” And as a bonus, this will also be the end of the hackneyed and checkered spokesmanship for the black community of scoundrels such as Jesse Jackson, Al Sharpton, Charlie Rangel and the Obama family’s recently discharged pastor, Jeremiah Wright.

Over the last 60 years in the United States, the governing party has usually changed after two terms. The stylistic shortcomings of the second Bush administration, McCain’s blunderbuss campaign and the financial crisis have all reinforced that likelihood. Under the Mephistophelean influence of the most biased media coverage of a U.S. election since Barry Goldwater in 1964, Obama’s peculiar associations have been downplayed and McCain has been portrayed as serving up a smear-job for raising them at all.

Twenty years of listening, each Sunday, to the demented ravings of Father Jeremiah; the relationship with unrepentant former terrorist Bill Ayers, as they squandered $100-million of the late Walter Annenberg’s money teaching Marxism but not raising test scores in Chicago; Obama’s relations with the Association of Community Organizations for Reform Now (Acorn), now being investigated for extensive voter-registration fraud in 14 states; and Obama’s provenance from the roughest, crudest, political machine in the country, the Democratic Party that has ruled Chicago and its suburbs for 80 years; all have been ignored or glossed over, and have received less investigative attention than Joe the Plumber’s tax returns or Sarah Palin’s wardrobe.

In policy terms, McCain would lower taxes and spending and retain individual choice in medical care. Obama would “cut the taxes of 95% of Americans,” by which he means that the 40% of Americans who do not pay income taxes would receive “refundable tax credits” from the 60% who do, most of whom would receive tax increases. He has tried to sugar the pill of simply taking money from people who have earned it and giving it to people who haven’t by clothing it in the jolly and progressive phrase: “spreading the wealth around.” A tax increase at the start of a recession is playing Russian roulette with all chambers loaded.

Obama will also promote unionization of the work force, thus advancing that retrograde and declining cause of the departure of much of U.S. manufacturing to cheap-labour countries in the first place. If Obama takes his economic advice from Warren Buffett and Paul Volcker, catastrophe will be avoided. If he actually carries out his program, he will be the worst president since Warren Harding, and the most (inadvertently) destructive since James Buchanan brought on the Civil War.

It has been such a complicated election: A centre-right country is running some risk of a quirky and ill-starred lurch to the left under its first non-white president. Whatever else it may have become, the United States is a land of surprises.

The Age of Prosperity Is Over

About a year ago Stephen Moore, Peter Tanous and I set about writing a book about our vision for the future entitled "The End of Prosperity." Little did we know then how appropriate its release would be earlier this month.

Financial panics, if left alone, rarely cause much damage to the real economy, output, employment or production. Asset values fall sharply and wipe out those who borrowed and lent too much, thereby redistributing wealth from the foolish to the prudent. This process is the topic of Nassim Nicholas Taleb's book "Fooled by Randomness."

When markets are free, asset values are supposed to go up and down, and competition opens up opportunities for profits and losses. Profits and stock appreciation are not rights, but rewards for insight mixed with a willingness to take risk. People who buy homes and the banks who give them mortgages are no different, in principle, than investors in the stock market, commodity speculators or shop owners. Good decisions should be rewarded and bad decisions should be punished. The market does just that with its profits and losses.

No one likes to see people lose their homes when housing prices fall and they can't afford to pay their mortgages; nor does any one of us enjoy watching banks go belly-up for making subprime loans without enough equity. But the taxpayers had nothing to do with either side of the mortgage transaction. If the house's value had appreciated, believe you me the overleveraged homeowner and the overly aggressive bank would never have shared their gain with taxpayers. Housing price declines and their consequences are signals to the market to stop building so many houses, pure and simple.

But here's the rub. Now enter the government and the prospects of a kinder and gentler economy. To alleviate the obvious hardships to both homeowners and banks, the government commits to buy mortgages and inject capital into banks, which on the face of it seems like a very nice thing to do. But unfortunately in this world there is no tooth fairy. And the government doesn't create anything; it just redistributes. Whenever the government bails someone out of trouble, they always put someone into trouble, plus of course a toll for the troll. Every $100 billion in bailout requires at least $130 billion in taxes, where the $30 billion extra is the cost of getting government involved.

If you don't believe me, just watch how Congress and Barney Frank run the banks. If you thought they did a bad job running the post office, Amtrak, Fannie Mae, Freddie Mac and the military, just wait till you see what they'll do with Wall Street.

Some 14 months ago, the projected deficit for the 2008 fiscal year was about 0.6% of GDP. With the $170 billion stimulus package last March, the add-ons to housing and agriculture bills, and the slowdown in tax receipts, the deficit for 2008 actually came in at 3.2% of GDP, with the 2009 deficit projected at 3.8% of GDP. And this is just the beginning.

The net national debt in 2001 was at a 20-year low of about 35% of GDP, and today it stands at 50% of GDP. But this 50% number makes no allowance for anything resulting from the over $5.2 trillion guarantee of Fannie Mae and Freddie Mac assets, or the $700 billion Troubled Assets Relief Program (TARP). Nor does the 50% number include any of the asset swaps done by the Federal Reserve when they bailed out Bear Stearns, AIG and others.

But the government isn't finished. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid -- and yes, even Fed Chairman Ben Bernanke -- are preparing for a new $300 billion stimulus package in the next Congress. Each of these actions separately increases the tax burden on the economy and does nothing to encourage economic growth. Giving more money to people when they fail and taking more money away from people when they work doesn't increase work. And the stock market knows it.

The stock market is forward looking, reflecting the current value of future expected after-tax profits. An improving economy carries with it the prospects of enhanced profitability as well as higher employment, higher wages, more productivity and more output. Just look at the era beginning with President Reagan's tax cuts, Paul Volcker's sound money, and all the other pro-growth, supply-side policies.

Bill Clinton and Alan Greenspan added their efforts to strengthen what had begun under President Reagan. President Clinton signed into law welfare reform, so people actually have to look for a job before being eligible for welfare. He ended the "retirement test" for Social Security benefits (a huge tax cut for elderly workers), pushed the North American Free Trade Agreement through Congress against his union supporters and many of his own party members, signed the largest capital gains tax cut ever (which exempted owner-occupied homes from capital gains taxes), and finally reduced government spending as a share of GDP by an amazing three percentage points (more than the next four best presidents combined). The stock market loved Mr. Clinton as it had loved Reagan, and for good reasons.

The stock market is obviously no fan of second-term George W. Bush, Nancy Pelosi, Harry Reid, Ben Bernanke, Barack Obama or John McCain, and again for good reasons.

These issues aren't Republican or Democrat, left or right, liberal or conservative. They are simply economics, and wish as you might, bad economics will sink any economy no matter how much they believe this time things are different. They aren't.

I was on the White House staff as George Shultz's economist in the Office of Management and Budget when Richard Nixon imposed wage and price controls, the dollar was taken off gold, import surcharges were implemented, and other similar measures were enacted from a panicked decision made in August of 1971 at Camp David.

I witnessed, like everyone else, the consequences of another panicked decision to cover up the Watergate break-in. I saw up close and personal Presidents Gerald Ford and George H.W. Bush succumb to panicked decisions to raise taxes, as well as Jimmy Carter's emergency energy plan, which included wellhead price controls, excess profits taxes on oil companies, and gasoline price controls at the pump.

The consequences of these actions were disastrous. Just look at the stock market from the post-Kennedy high in early 1966 to the pre-Reagan low in August of 1982. The average annual real return for U.S. assets compounded annually was -6% per year for 16 years. That, ladies and gentlemen, is a bear market. And it is something that you may well experience again. Yikes!

Then we have this administration's panicked Sarbanes-Oxley legislation, and of course the deer-in-the-headlights Mr. Bernanke in his bungling of monetary policy.

There are many more examples, but none hold a candle to what's happening right now. Twenty-five years down the line, what this administration and Congress have done will be viewed in much the same light as what Herbert Hoover did in the years 1929 through 1932. Whenever people make decisions when they are panicked, the consequences are rarely pretty. We are now witnessing the end of prosperity.

Mr. Laffer is chairman of Laffer Associates and co-author of "The End of Prosperity: How Higher Taxes Will Doom the Economy -- If We Let it Happen," just out by Threshold.