Military Industrial Complex, and a complex story of corruption

That may, or may not, be behind the resignation of CIA Chief Porter Goss.

The earlier part of the story is the conviction of congressman Randy "Duke Cunninghamn for taking bribes from defense contractors

Cunningham resigned from Congress after pleading guilty last November to accepting $2.4 million in bribes from four co-conspirators, including Wilkes and Wade. The former lawmaker was sentenced to eight years and four months in prison. Wade pleaded guilty to his part in the scheme in February and is cooperating with investigators. Wilkes has not been charged.

Reported today:

But another former official theorized that Goss' departure could be connected to persistent rumors that CIA officials and prominent lawmakers-past and present-could be implicated in a ring of contracting and bribery scandals tied to former congressman Randy "Duke" Cunningham, R-Calif. Unsubstantiated reports have suggested that the FBI's probe of Cunningham would extend to current and former members of the congressional defense and intelligence committees.

Bribery not enough to pique your interest? how about prostitution?

In late April, the story above reported, Prostitution Alleged In Cunningham Case Investigators Focus on Limo Company.

Economic Policy Making, continued

We talked about the goal of stabel gorwth: too much gorwth can lead to market collapse, whether for beanie babies, Tickle Me Elmo, PS2 or housing. So the Fed pays close attention to inflation: boy, does the fed hate inflation.

While Voters might think economic growth in the form of higher wages is good, economists fear it --"what if this contributes to inflation".

Case in point: Friday's Washington Post: In Demand and in Command : The Job Market's Latest Seesaw Pays Off for Applicants

While the headline sounds good, consider this:

The data speak to one of the big questions looming over the economy. If the tight labor market leads to wage growth at roughly the same pace as the nation's output rises, it would be welcome news for workers who have seen scant raises in recent years, would support consumer spending and help continue the economic expansion. But if wages grow too fast, it would create inflation, leading the Federal Reserve to try to put the brakes on the economy in a potentially painful manner by raising interest rates aggressively, slowing the economy.

Yes, economists worry about you having too much money.

Economic Policy Making

There is a wonderful story in today's New York Times about the politics of the Gas Tax Rebate: $100 Rebate: Rise and Fall of G.O.P. Idea. In language of chapter 14, how did the agenda get set? how was the policy formulated? why not adopted?

Agenda Setting:

Senate Republicans were frantic. Returning from a two-week recess that had been dominated by a spike in gasoline prices — and heading into a midterm election looking increasingly good for Democrats — they began scrambling for ways to calm angry voters.

Remember Wedge-islation:

Senate Republicans, fearing they would be forced into the uncomfortable position of voting against the Democratic amendments, began pushing Mr. Frist to come up with an alternative

In a nutshell:

The rise and fall of the Republican $100 rebate offers a window on how Washington sometimes works in a slapdash way, featuring in this case Congressional aides who misread the political climate and lawmakers desperate to hang onto their jobs. It is a story, as well, of how concepts and plans can be reduced to sound bites that make them seem absurd.

Foreign and Defense Policy

We mentioned several newstories in class on Wednesday: diplomacy over Sudan, diplomacy over Iran, and the role of free trade. And in defense policy, the story about our desire to build a laser to zap satellites of other countries.

The NY Tikes also reports Taliban Threat Is Said to Grow in Afghan South -- while the US is withdrawing troops from Afghanistan, to be replaced by NATO peacekeepers:

The fact that American troops are pulling out of southern Afghanistan in the coming months, and handing matters over to NATO peacekeepers, who have repeatedly stated that they are not going to fight terrorists, has given a lift to the insurgents, and increased the fears of Afghans.

The article makes clear this is a crucial moment in the life of the Afghan government:

The arrival of large numbers of Taliban in the villages, flush with money and weapons, has dealt a blow to public confidence in the Afghan government, already undermined by lack of tangible progress and frustration with corrupt and ineffective leaders.... [One] resident, who asked not to be named for fear of reprisals, said the Taliban['s]... brazenness and the failure of the United States-led coalition to deter them is turning public opinion about the effectiveness of the government.

Starve the Beast

when we discussed tax policy, I introduced the concept of "Starve the Beast."

Remember the basic budget problem: we like our government programs, but we do not like taxes. For conservatives, the calculus is different: they do not like our government programs (think Reagan Dime); they also do not like taxes. But since Americans punish politicians who propose cutting programs, how to shrink government?

By starving the beast: defund government, through tax cuts, so we get it to the size it can be drowned in a bathtub' (paraphrasing power broker Grover Norquist: see Hacker and Pierson, xxx)

Conservative economist William Niskanen reports that this does not work:

Again looking at 1981 to 2005, Niskanen then asked at what level taxes neither increase nor decrease spending. The answer: about 19 percent of the GDP. In other words, taxation above that level shrinks government, and taxation below it makes government grow. Thanks to the Bush tax cuts, revenues have been well below 19 percent since 2002 (17.8 percent last year). Perhaps not surprisingly, government spending has risen under Bush.

Tax cuts work in symbolic politics, but they alone they do not add up to sound economic policy.

Health Care in US

We started this section of the course talking about our varied health care plans. One argument against single payer system commonly offered is that the care is worse. I presented a study that challenges that -- we spend 50% more of GDP, have problems with access and errors.

Today's Washington Post reports a Journal of the American Medical Association study with the headline, Study Shows Americans Sicker Than English

Middle-aged, white Americans are much sicker than their counterparts in England, startling new research shows, despite U.S. health care spending per person that's more than double what England spends.

A higher rate of Americans tested positive for diabetes and heart disease than the English. Americans also self-reported more diabetes, heart attacks, strokes, lung disease and cancer.

The gap between the countries holds true for educated and uneducated, rich and poor.

"At every point in the social hierarchy there is more illness in the United States than in England and the differences are really dramatic," said study co-author Dr. Michael Marmot, an epidemiologist at University College London in England.

The study, appearing in Wednesday's Journal of the American Medical Association, adds context to the already-known fact that the United States spends more on health care than any other industrialized nation, yet trails in rankings of life expectancy.

The United States spends about $5,200 per person on health care while England spends about half that in adjusted dollars.

"Everybody should be discussing it: Why isn't the richest country in the world the healthiest country in the world?" Marmot said.

There may be dimensions along which we can call our system the best, but some of the more obvious ones seem to not be borne out.

Congress members and Pork

Anice article in USA Today on why efforts to eliminate earmarking, or pork, are not much short of futile:

Lawmakers deal with voter anger over 'pork'
Posted 5/2/2006 4:53 AM ET
WASHINGTON (AP) — Strange things are happening in Congress.

The playground bully in the Senate — the Appropriations Committee — actually took a loss last week at the hands of senators determined to strip so-called pork barrel projects from a bill that's supposed to be devoted to the war in Iraq and hurricane relief.

And the House this week will vote on requiring members to attach their names to "earmarks" — those hometown projects slipped into spending bills. The idea is that the sunshine of public scrutiny will mean fewer wasteful, silly sounding projects like $500,000 for a teapot museum in Sparta, S.C.

Lawmakers say voters are getting sick of all this pork; there's even a recent poll that says reforming earmarks is the most important issue facing Congress. Could it be that politicians are losing their appetite for the other white meat?

Hardly.

The House Appropriations Committee reports it has received 21,863 project requests from lawmakers. That's about 50 each for 435 members and a few non-voting delegates. Still, it's progress. Last year, the panel got 34,687 requests.