The great economic debate of the past couple years has been the Federal Reserve's attempts to prop up the economy as Congress has gone AWOL. Now, after priming the pump as much as possible, the Fed is offering a cautious vote of confidence in a recovering economy, declaring that the era of quantitive easing will begin to come to an end. Tapering is in. Tampering is out.
The markets are not swooning. Stocks were up on Wednesday as the Dow jumped nearly three hundred points. Instead, they have probably already priced in the move. Bonds remain strong. The dollar is relatively robust, though it has been dropping against the British pound.
But larger and more fundamental questions continue to loom over the country: Is the American dream coming to a close? Who's getting the benefits of the recovery? Can the political system recover from the polarization it's been experiencing?
In the Wall Street Journal, William Galston, who has been writing a column for the paper in recent months, offers a highly insightful look at the problems America faces. Galson notes that America really faces a crisis of confidence. Americans are not confident about many things. A recent Bloomberg survey, he notes, indicated that "individuals do not have an equal chance of getting ahead." His own organization, No Labels, has conducted a poll that indicates that only 38 percent of Americans think the country's best days are ahead of it: "Only 26% believe that the next generation of Americans will be better off than this generation and fully 62% believe the coming generation will be worse off."
These are not sentiments or numbers that can be easily dismissed. President Obama's response has been to focus on inequality without offering a satisfactory plan for how to ameliorate it. Simply further taxing the wealthy is not going to restore prosperity. It will inhibit it. At the same time, the congressional sequester is crimping growth. The Congressional Budget Office estimates that growth would be 1.5 percent higher this year absent the tax hikes demanded by Obama and the budget cuts insisted upon by the GOP.
What's more, warnings of the Federal Reserve's monetary easing policy (which is intended to counter the fiscal drag created by budget cuts) leading to higher inflation have proven false, at least so far. As the Wall Street Journal reported Wednesday, the major worry for the world's central banks is the threat, not of inflation, but its opposite—deflation. Neither America nor Europe wants to end up in the position of Japan, which has battled for over a decade to stymie falling prices and a listless economy.
It is Japan, not Greece, that may be the model that everyone should really fear. Both America and Europe, confronted with aging populations and increasingly onerous entitlement programs (Germany's Angela Merkel has backtracked, or at least wavered, on economic reforms, including lowering the retirement age from 65 to 63 for employees who have paid into social security programs for 45 years), face political choices in coming decades that no politician is even eager to think about facing. For now, a form of intergenerational theft is taking place, in which the elderly displace the young economically. Small wonder that confidence about the economic prospects of future generations is low.
Galston notes that a sense of malaise also prevails when it comes to America's status abroad. Polls, he says, depict a "worried, risk-averse people." This should hardly come as a surprise after the misadventures in Afghanistan and Iraq, where Washington expended great efforts to upend those societies, only to see both remain mired in tribal warfare.
Still, there are several reasons to suspect that even if America's best days are behind it—which is always subject to debate—better ones do loom. Galston himself says that we need leaders who "are able not just to artuclate a vision of a better future, but also to offer a credible strategy for reaching it in this ear of polarized politics." But perhaps the inherent strengths of the American economy will also play as big, if not even a bigger, role than any individual. The prospect of energy independence is one sign of a reviving economy. Technological advances could also play a key role. The biggest boost, however, would be if both political parties began to think harder about stimulating economic growth. Perhaps the very pessimism about America's future will stimulate the country to embark upon a new era of prosperity. There's no reason, after all, not to start dreaming about it.
Image: Flickr/Ivan McClellan. CC BY 2.0.
Don't look now, but the GOP isn't the only party to be assailed by internal divisions. Democrats are facing a similar divide even if it isn't quite as heated as in the GOP. The division is between mainstream, establishment Democrats, who are close to Wall Street (Charles Schumer, the Clintons) and populist ones who are not (Elizabeth Warren).
The most telling evidence of a split among the ranks of Democrats comes in the form of a battle between members of the centrist Washington think-tank Third Way and progressive groups. Third Way has ignited what the Washington Post is calling an "ugly feud" by publishing an op-ed in the Wall Street Journal that attacked the new avatar of the left, Elizabeth Warren, and the idea of embracing economic populism. "Nothing," wrote Jon Cowan and Jim Kessler," would be more disastrous for Democrats." Their point is simple: the notion that Social Security and other entitlement programs can be expanded without harming the economy or exacerbating the national debt problem is bunkum.
On the same day that Bill de Blasio won in New York City, a referendum to raise taxes on high-income Coloradans to fund public education and universal pre-K failed in a landslide. This is the type of state that Democrats captured in 2008 to realign the national electoral map, and they did so through offering a vision of pragmatic progressive government, not fantasy-based blue-state populism. Before Democrats follow Sen. Warren and Mayor-elect de Blasio over the populist cliff, they should consider Colorado as the true 2013 Election Day harbinger of American liberalism.
Essentially, what the Thrid Way types represent is a continuation of the Democratic Leadership Council's (DLC) program, which reinvented the Democratic Party in the 1980s and helped to promote the careers of Bill Clinton and Al Gore. Now there is clearly strong sentiment in the ranks of the Democratic party to return toward a more traditional conception of liberalism, based on the conviction that Barack Obama has been much too tepid and timorous in taking on the political right. Politically, this battle is playing out as a potential showdown between Hillary Clinton and Warren. Warren has issued a letter demanding that big financial institutions reveal their contributions to Third Way, the Post reports.
But are these ructions necessarily bad news for the Democrats? Not really. These disputations are part and parcel of a democracy. It can be healthy for parties to reexamine their principles and stands even if the process can be rather messy, analogous to Bismarck's remark about the process of producing legislation being akin to making sausages. It does reveal that the powerful discontent among Americans on either the left and right, whether it comes from Occupy Wall Street or the Tea Party, against corporations and Wall Street is not going away any time soon.
But the notion that discontent is a basis for governing is another matter. Just because these sentiments are passionately and genuinely held does not mean that they are practical or even beneficial economically or politically. The fact is that Third Way has performed a valuable service by calling out the Democratic left. Its criticisms of proposals to expand Social Security and Medicare benefits as half-baked are eminently sensible. There is no cogent reason that the Democratic party should allow itself to be dragged back into the morass it floundered around in during the 1980s before the DLC helped to resuscitate it. To their credit, Third Way's leaders show no sign of being cowed by the campaign of intimidation being waged against them by their detractors. Still, given the levels of hostility being displayed toward business, it won't be easy to overcome them. But if Cowan and Kessler succeed in mobilizing centrist Democrats, they can show that where there is a will there's a way.
Image: Flickr - Mdfriendofhillary.
Maurice R. Greenberg, the chairman of the Center for the National Interest and chairman and CEO of STARR Companies, spoke with National Interest editor Jacob Heilbrunn about President Obama's deal with Iran. Greenberg, who fought in World War II and helped liberate Dachau concentration camp near Munich, focuses on the Iranian regime's history of belligerent rhetoric and actions.
JH: How should the memory of the Holocaust influence our view of Iran and its leadership?
MG: I had a special run in with then-President Mahmoud Ahmadinejad who spoke at the United Nations General Assembly in Spetember 2006. He agreed to meet with several members of the Council on Foreign Relations. David Rockefeller was there. Peter Peterson was there. Myself. And three or four other senior members of the Council. The topic came up about the Holocaust. He repeated what he had always been saying. He didn't believe it took place. I challenged him. I happened to be at Dachau. Don't tell me it didn't take place. He didn't challenge me directly. He asked, "How old are you?" As though I was too young to have been there. Fast forward: We're negotiating with them clandestinely. How do you negotiate with a nation that has two objectives that have not been reversed: a) the Holocaust did not take place. b) We should wipe Israel off the map. The new president Hassan Rouhani made some oblique statements, not unequivocal, about the Holocaust.
JH: So should we deal with Iran?
MG: Why would you negotiate until that statement has been disavowed at the highest level? If it was a policy and a lie, the supreme leader has to say "that is not our policy." How can you have a negotiation if that's still out there? They have a new president that made some comments that the Holocaust would have been a crime. A crime! You've incinerated millions of people, and he says "I'm not a historian." You have to be a moron to figure that the Holocaust did not take place. In my view, there should be a public statement that all can see.
JH: Has Obama backstabbed Israel?
MG: He has made it difficult for the U.S. to take a position. Who's going to believe him? I wouldn't rely on his word. He's negotiating clandestinely with the Iranians, knowing what they said as a policy matter. They have no penalties, get some of their pent-up assets from overseas. As I understand the terms, they can reduce and build it back in a week. How do you know what they have going on in any part of the country that we haven't identified yet? How do you trust them? How can we rely on their word?
JH: Should the administration have refused to sign?
MG: I wouldn't have signed the deal.
JH: The precondition for a final deal is recognizing the Holocaust?
JH: Should Israel be ready to attack? Is the likelihood higher?
MG: If Israeli intelligence turns up evidence that there are things going on that can affect their survival, do what you have to do.
No, it isn't only neocons who are worried about President Obama's six month deal with Iran. Senators Charles Schumer and Robert Mendendez, among others, are also expressing their apprehensions. But for sheer panic it is almost impossible to surpass the alarms being sounded by the neocons.
Former UN ambassador John Bolton is calling the agreement an "abject surrender." William Kristol is decrying it. But the most outlandish criticism appears today in the Wall Street Journal by the redoubtable Bret Stephens. It seems safe to say that neocons such as Stephens have long been guilty of trivializing the Nazi menace by deeming any contemporary agreement with an American adversary a new "Munich." But now Stephens does it explicitly. He declares that Obama's deal isn't as bad as Munich. It's worse.
To accomplish this he has to rehabilitate a version of history that began to percolate in the 1960s in England, when scholars began arguing that Neville Chamberlain had gotten a bum rap. Instead of selling out British interests, Chamberlain defended them. He cut the best deal he could. Britain had few air defenses. The public wouldn't have supported a war. Why not hand over Czechoslovakia to Hitler? Stephens observes, "'Peace for our time' it was not, but at least appeasement bought the West a year to rearm."
Not so fast. It also ended up handing the Skoda arms works to the Fuhrer. A plot by the Germany army to depose him was also in the works. Going to war with the Czechs might well have turned into a disaster for the Nazi leadership. Nor does Stephens explain how he would reconcile his complacent view of Munich with his veneration of Winston Churchill, who forthrightly denounced the agreement.
Stephens' column doesn't really reveal much about Munich. But it is revealing about the lengths he will go to in order to scuttle the prospect of any agreement with Iran. For the neocons the Iran deal isn't Munich. It could be their own very personal Dunkirk.
Absent a war with Iran—which seemed increasingly likely absent a deal—the neocons will be deprived of their raison d'etre. Yes, they can rail about China, which is making dangerously provocative moves against Japan this week. But the Middle East is where the real action is for the neocons. Iran has been a crucial enemy, the central threat against Israel. As its rhetoric continues to indicate, Iran remains a vicious foe of Israel. But in coming months, it is Iran's actions that will be under the most minute scrutiny. The worst nightmare for the neocons will be if Iran does in fact adhere to the agreement with Obama (though they may increase their own visibility in the GOP, though for how long would be an open question). It would deprive the neocons of a valued enemy and diminish their own importance.
If he succeeds, Obama may not only neutralize Iran, but also the neocons.
Image: Bundesarchiv, Bild 183-H12478 / CC-BY-SA 3.0.
The elimination of the filibuster by a 52-48 vote is the political equivalent of the starting pistol for the 2014 midterm elections. Any lingering hopes that both parties would reach a compromise on the debt or other legislation pretty much went up in smoke. Still, there is an upside, at least politically. Both sides can potentially benefit. Each political party can whip up its base with the filibuster issue.
For Senate minority leader Mitch McConnell, who didn't wage much of a fight to stave off the demise of the filibuster, it provides a great opportunity to warn the Republican base that 2014 will be a decisive election. It will determine whether President Obama can govern as an uncrowned monarch—ramming through administrative decisions that Congress is unwilling to approve. Getting the Democrats to take the hit for ending the filibuster, at least for judicial nominations, also is a nice bonus for McConnell—if he becomes majority leader, then he gets to reap the fruits of Sen. Harry Reid's decision to go nuclear. There is no reason to suppose that McConnell would reinstitute the filibuster should he become majority leader in 2014. Quite the contrary. As Ezra Klein observes, Republicans may well profit from Reid's manuever:
The electoral map, the demographics of midterm elections, and the political problems bedeviling Democrats make it very likely that Mitch McConnell will be majority leader come 2015, and then he will be able to take advantage of a weakened filibuster. And, finally, if and when Republicans recapture the White House and decide to do away with the filibuster altogether, Democrats won't have much of an argument when they try to stop them.
But how great will the fallout be? Does a nuclear winter loom for the Democrats? Until 2014, they will have a relatively free hand in appointing judges and officials to Obama administration posts. The Democratic base will see this as an instance of Obama and Reid finally standing up to the obstructionist Republicans.
In truth the end of the filibuster may not be as big a deal as it's being painted by both sides.
For one thing, it will make Senate votes more, not less, important since the threshold will now be a bare majority rather than sixty votes. Blue Dog Democrats and moderate Republicans will come under more scrutiny, which means that extreme candidates nominated by presidents would put them in something of a pickle. It's also the case that the fact that the Senate can vote up or down on candidates means that the consequences of these votes will be more directly apparent to voters. Another potential reason for circumspection.
The mourning for the filibuster is misplaced. Both political parties have largely dodged governing responsiblities in holding up candidates for the judiciary. The Wall Street Journal notes that Democrats demanded sixty votes for Miguel Estrada, Priscilla Owens, and a host of other nominees. Well, yes. But that era has had to come to an end. The only other choice is interminable trench warfare.
What's more, the notion that the filibuster could be restored to the genteel traditions of the past is improbable. Once unsheathed, the filibuster has proven a weapon that is impossible for politicians in either party to jettison. Instead, they have used it with increasing abandon. No longer. The filibuster will now figure as a campaign weapon for the GOP in its battle to dislodge Democratic control of the Senate. Now that Reid has raised political tempers even futher with his audacious move, Lenin's old dictum—Who, whom?—is starting to look increasingly applicable to America. Buckle up for a fast and furious 2014 campaign, which will serve as a referendum on Obama's last two years in office.
It won't go away. It's uncomfortable, clammy, damp, noxious. Two events this past week testified to the lingering hold that memories of Nazism have in modern Germany. The further distant it seems, the more it resurfaces.
The first is the discovery that Adolf Eichmann's superior is apparently buried in a Jewish cemetery in the former East Berlin. East Germany, which prided itself as an "anti-fascist" redoubt facing down the revanchist West Germany, never sought to face up to the Nazi past. Instead, it tried to claim that it had nothing in common with the Nazis. So perhaps it should not be surprising that it never really tried to explore what happened to Gestapo chief Heinrich Muller, who participated in the Wannsee Conference which formally authorized the destruction of European Jewry in January 1942. Now Professor Johannes Tuchel, who heads the German Resistance Center in Berlin, says that Muller's corpse was thrown into a mass grave in the Jewish cemetery in 1945.
The second is another discovery. It's that hundreds of priceless paintings seized by the Nazis, often as "degenerate art,"--Hitler staged an entire exhibition of it in 1939 in Munich, only to discover to his consternation that the public actually flocked to see it out of interest rather than contempt--have been residing for decades in the apartment of the son of a Nazi era art dealer. Art was central to the self-conception of of Hitler. Much of Nazism, as Frederic Spotts has suggested in Hitler and the Power of Aesthetics, was a form of stagecraft with Hitler as the impresario of an entire country--the emphasis on Wagner, the torchlight parades, the tours of Weimar, the city of Goethe and Schiller, for German troops, the planned art museum in Linz. The Fuhrer spent much time fussing with his pet architect Albert Speer over their plans for Linz even as the net of doom came ever closer. The failed Viennese painter was convinced that he could purify the German race and conceived of himself as a political artist. Thomas Mann even called him "Brother Hitler."
But the Nazis were also running a criminal enterprise. Looting was a core principle of Nazism. So they stole from the Jews anything they could, down to the gold in their teeth. After the war much of it went missing. Now it appears that the elderly Cornelius Gurlitt had about 1,400 pieces stashed that he had inherited, if that is the appropriate word, from his father. The German government seems to have kept the find secret for over a year until Focus magazine broke the story. So far, the German government is hanging tough in the face of calls to restore the art to the Jewish families or descendants who originally possessed it. Why did it keep mum about the discovery? Protests are mounting inside Germany:
'Transparency and a swift procedure are important here,' Dieter Graumann, president of the Central Council of Jews in Germany, told German regional newspaper the Passauer Neue Presse.
'We are talking about the stolen inheritance of Jewish collectors, who could now experience delayed justice in (getting) belongings of their families ... returned to their rightful owners,' Graumann said.
Presumably, international pressure will be intense enough to force the German government to back down. Or will it? Germany, the paymaster of Europe, as it is known, is feeling somewhat emboldened these days. Piqued at American spying and proud of its economic prowess, Berlin could remain defiant. For now, it's simply engaging in foot-dragging, which has all along been the German response, by and large, to revelations about Nazi era crimes, at least when it comes to making restitution for them. But the two revelations of the past week are unlikely to be the last ones from a tenebrous era that continues to shadow Germany.
Image: Creative Commons/Wikicommons
Poor Secretary of State John Kerry. He's been traipsing around the Middle East, trying to revive—when, incidentally, is it not trying to be revived?—the peace process and assuage ruffled feathers among the Saudis and other American allies. At the same time, the Israeli right, as the Washington Post observes today, is getting more restive, openly denouncing the idea of a two-state solution and calling for the annexation of much, if not all, of the West Bank. Meanwhile, it's unclear whether Syria really is cooperating fully to dispose of its chemical weapons. The Middle East, in other words, remains a hotbed of political conundrums that defy easy resolution.
Now, thanks to the diligent efforts of Swiss scientists, who have been engaging in forensic examinations since November 2012, comes the news that Yasser Arafat, the longtime Palestinian leader who, at least officially, died of a stroke in 2004, may have been poisoned with the radioactive substance polonium-210 (though Russian scientists say they found no such evidence). Polonium is a nasty substance, it almost goes without saying, that can apparently terminate even hardiest soul with great dispatch. (Recall that the former KGB officer Alexander Litvinenko expired quickly in Novembert 2006 after he ingested polonium that had been secretly poured into a cup of tea.) The amounts in his ribs, pelvis, and, as the Guardian delicately puts it, "soil that absorbed his bodily fluids," appear to have been 18 times the normal level.
Should anyone care?
Well, Palestinians probably do. A lot. Arafat's wife Suha, for example, is calling it "the crime of the century," which is a pretty big claim given that the century is in its infancy. Many think the Israelis—or, to put it more precisely, the Mossad—did it, which Jerusalem denies. This would redound to the Mossad's credit in terms of its reputation for being almost omnipotent. But there was no great reason for the Israeli government to authorize such an operation other than to exact revenge for Arafat's past depredations.
Who else might be a culprit? Arafat had plenty of enemies inside his own camp. But suspicions about Israeli involvement remain rife. The Guardian notes,
Danny Rubinstein, a journalist and author of a book about Arafat, had a different memory of events. In the weeks and months before Arafat's death, he said, people in Sharon's inner circle talked constantly about how to get rid of him. 'For me, it was very clear from the beginning. Every day this was the topic—should we expel him, or kill him, or bomb the Muqata [Arafat's HQ]. It was obvious to me that they would find a way.'
There is an upside to this story, at least from the perspective of the Middle East. It provides fresh fodder for conspiracy theories, something the region has never been short on. It can now be safely assumed that Arafat's legend will take on a new dimension. The martyred hero, the resolute fighter who never capitulated to the Israelis. For Kerry, however, it is another boulder in the path of a Middle East peace. If Palestinians believe, as many do, that Israel is responsible, they will be even less receptive to any leader seeking to reach a peace treaty.
Image: Flickr/JBrazito. CC BY 2.0.
Winston Churchill returned to Washington, DC yesterday. The former British Prime Minister was the star of the show at the Capitol's National Statuary Hall, where a bust dedicated to him was unveiled before worshipful legislators, including House Speaker John Boehner and Senate Majority leader Harry Reid. Even Roger Daltrey of the Who was summoned to sing a dedication—"Won't Get Fooled Again"—to Churchill.
It was a rare moment of comity for Congress. Everyone could agree that the old boy was a great man who had sealed Britain's friendship with America at a time of crisis. Boehner called him "the best friend America ever had." Of course America was also the only major friend he had—Churchill was desperate to persuade Franklin D. Roosevelt to assist an embattled England in 1940, when the Nazi empire was at the apogee of its power. Later on, Roosevelt would snub Churchill at the Big Three Conferences—staying at the Soviet embassy in Tehran in 1943 (where he his suite was of course bugged) and trying to cozy up to "Uncle Joe," as he called him, at Yalta in 1945.
FDR was no fan of the British empire. In fact, he saw it as an obstacle to peace after the war was concluded. It was Harry S Truman who probably had more in common with Churchill, at least when it came to dealing with the Soviet Union. Eventually, the Washington, under Dwight Eisenhower, became even more hawkish than the British prime minister who wanted to see if a detente could be reached with Moscow after Stalin died.
Since then, Churchill has become the statesman that American politicians routinely invoke. George W. Bush stuck his bust in the White House. Barack Obama got into a bit of hot water when he removed it—insufficient piety. John Kerry recently announced that facing down Syria on chemical weapons was a "Churchill moment." Neoconservatives routinely use his name to invoke a new Munich—whenever and wherever possible. Whether Churchill would recognize himself in all the fulsome tributes is somewhat questionable. His career was a failure—or would have been seen as one—had the Second World War not occurred. He had switched from Tory to Liberal back to Tory and was widely viewed as unreliable and unstable.
But in Washington, Churchill has become a vital strut in the belief that American is an exceptional nation, destined to bring democracy abroad. Secretary Kerry announced at the dedication,
With so many challenges all across the world today, struggles to be won, pandemics to be defeated, history yet to be defined, Churchill can be heard once again with this bust, asking all of us to define our time here not in shutdowns or showdowns, but in a manner befitting of a country that still stands, as he said then, at the pinnacle of power.
Boehner added that the area around the bust will now be known as the "Freedom Foyer." It's a remarkable tribute to a leader who commands more reverence in America than he does in England itself. At a moment of polarization, he is the one thing its politicians seem able to agree on. He has literally become an idol. In this regard, he has, to borrow the title from his great series of books about World War II, created a new grand alliance.
In the novelist Heinrich Boll's The Safety Net, which appeared in 1979, Fritz Tolm, elected to become the main representative of German business interests, feel suffocated by the intrusive security measures undertaken by the state to protect him from harm. His private life is upended. Everywhere he is spied upon. Tolm ends up chucking it all and moving into a vacant vicarage.
It is not clear whether German chancellor Angela Merkel has read Boll's novel and, coming off a fresh election triumph, she does not appear to be tiring of her post. But she is herself familiar enough with the dangers of an omnicompetent state that seeks to spy on its citizens. She grew up in East Germany, where the Stasi gathered so much information about its subjects that it drowned itself in a flood of official records. Now Merkel has once again been spied upon by her putative American ally. The latest revelation in the German weekly Der Spiegel—courtesy of Edward Snowden who remains holed up in Russia (doesn't Obama realize that it would be better to reach an agreement with him and extract him before he does further damage?)—that the National Security Agency has been tapping her personal phone—as well as those of numerous other world leaders—has triggered an uproar.
Together Brazil and Germany are pushing for the United Nations to pass a general resolution in support of internet privacy. Next week Germany and the European Union are planning to send delegations to Washington to institute further inquiries and to meet with the Obama administration. Gerhard Schindler, head of the Federal Intelligence Service, is said to be part of the planned delegation. If they are met with stonewalling, as the Europeans have in the past, relations will fray further. Trade talks with Europe are already being jeopardized.
The scandal has a number of other effects that are prejudicial to America's reputation abroad. President Obama's campaign in 2008 was partly based on the proposition that he restore America's luster after George W. Bush had harmed it. But now it is Obama who is starting to appear as a heinous, or at least mendacious, figure. His administration stated that it was not currently spying on Merkel, but did not dispute that it might have taken in the place, which is another way of saying that it did. Another peculiarity of the spying is that it most likely pointless. What information did American intelligence expect to glean from Merkel's cell phone that would have justified the risks of discovery? What the affair smacks of is a bureaucracy running amok, claiming perks and prerogatives and powers for itself that do not promote national security. Instead, they have harmed it. Merkel herself has termed the snooping a "grave breach."
It's not hard to see why. Germans are becoming increasingly restive with Washington's treament of them as vassals. The cold war is over. The Berlin Wall fell in 1989. But American intelligence services appear to be more active than ever in spying on our closest allies. Interior Minister Hans-Peter Friedrich as well as Merkel have tried to sweep the scandal under the rug in recent months. No longer. Friedrich looks as though he has been taken in by the Americans, at least in the eyes of the German public. The Social Democratic Party, which Merkel hopes to entice into a grand coalition, is taking swipes at her for trying to declare the spying affair over in the past. It clearly isn't. What further revelations might emanate from Snowden?
Whether cooperation between Germany and America will be seriously damaged on intelligence sharing is an open question. But that profound damage has been done to America's image is not. Obama, who entered office as the savior of America's reputation, is harming it as badly as did George W. Bush.
Image: White House Flickr
The Republican party is becoming too interesting for its own good. While the Democrats savor their victory over the GOP, Republicans themselves are going to war—against each other. A case in point is the growing disaffection of the business community with the Republican party.
It was no accident that the U.S. Chamber of Commerce and the National Association of Manufacturers both warned legislators against crashing through the debt ceiling. The consequences might well have been cataclysmic. In 2008 Lehmann Brothers wasn't seen as critical to the global economy. But when Treasury Secretary Hank Paulson decided to let it go under, investors panicked. When they do, a Great Recession or even a Great Depression results. Confidence is a lot easier to lose than to gain. So a rerun was more than likely this past week. Interest rates would have soared. The value of the dollar would have plummeted. The stock market would have plunged. So would consumer confidence. Around the globe America would have been vilified for tanking the prospects of an economic recovery.
Now corporate America is talking about opposing Tea Party candidates with more moderate ones. This is a fundamental rift over the true identity of the Republican party. William Galston of the Brookings Institution observes supporters of the Tea Party are not outsiders but, rather, form "a dissident reform movement within the party, determined to move it back toward true conservatism after what they see as the apostasies of the Bush years and the outrages of the Obama administration." But now big business wants to stage a counter-reformation—a showdown between what the Dallas Morning News calls limited government, on the one hand, and anti-government conservatives, on the other. It reports that Jim Oberwetter, former ambassador to Saudi Arabia and head of the Dallas regional chamber of commerce, says: "When a populist point of view becomes so prominent, people in the business community need to voice their views just as loudly.”
The U.S. Chamber of Commerce is apparently examining which centrist Republican candidates it should support next year. The Wall Street Journal reports,
Hal Sirkin, a senior partner with the Boston Consulting Group, said his conversations with executives in a range of industries suggest widespread frustration with the Republican party. The budget battle "is giving them pause to reconsider everything that they believed" about conservative support for business, he said. Some executives have told him they plan to pull back their support for the party "as a message to say, this is not acceptable. You can't trash the business community," he added.
Actually, you can. But it's a foolish tack to adopt. Until recently, it's been Occupy Wall Street that had enjoyed the patent on bashing corporate America. It would be extraordinarily reckless for the GOP to turn its back on its most powerful and wealthy sponsor. The Republican party has traditionally been the home of business interests. But a fixation with short-term deficit-cutting is threatening to obscure the importance of immediate economic growth. The message of the GOP has been long on Scrooge McDuck and short on Horatio Alger. Which is to say that a Reaganesque message of growth, prosperity and initiative has been notably absent.
What continues to hold the Republican coalition together in the House is speaker John Boehner. For all the complaints from the right about Boehner, it's not clear who could succeed him. Furthermore, the Washington Post notes that Boehner's close relationship with the business community is key:
Ultimately, Boehner had to rely on bipartisan support to avoid a likely default on the debt. But instead of this nail-biting episode causing a split between business lobbyists and their GOP allies, it might have drawn them even closer as they seek to limit the influence of tea party candidates who have little regard for corporate interests. After helping to vault Boehner into the speaker role following the 2010 elections, these lobbyists are eager to keep him in charge of the House.
Right now, Boehner may be able to broker an uneasy truce between the two sides whose mutual hostility has become undisguised. But guerrilla warfare and sniping between the two sides is sure to reemerge as the 2014 election begins to loom large. This is good for the media and bad for the party because it means that the GOP will likely remain a fascinating subject of observation.
Image: Flickr/Eric Molina. CC BY 2.0.