New America Voices
This article originally appeared on Wired Magazine's Danger Room blog.
In 1964, Secretary of the Navy Paul Nitze had to check himself into the hospital for a bleeding ulcer. Friends visited, and asked how Nitze could have become so stressed that he literally busted his gut. "I've never said this before and I'll never say it again," replied Nitze. "But the answer is McNamara." As in Robert McNamara, his boss and the Secretary of Defense at the time.
McNamara died Monday at age 93. And his habit of causing maximum stress is one of many things I learned about the former Pentagon chief, while researching my soon-to-be-released book on Nitze and George Kennan, The Hawk and the Dove.
Nitze had run the Pentagon's department of International Security Affairs under McNamara in the Kennedy administration, but he and his boss had never quite bonded. The two were technocratic wizards, but McNamara more so. Nine years younger, the Secretary of Defense had a reputation for being even smarter. He could crunch any set of numbers. He was the man, everyone said, that the computers try to imitate.
By Daniel Levy
President Obama almost certainly has emerged from the Cairo speech with new global leverage, accumulating additional capital rather than expending it.
Today marks the debut of Border Crossings -- a New America Foundation/BloggingHeads.tv collaboration to bring experts from throughout the Middle East together for extended, substantive conversations via video. This first installment features Daniel Levy,director of New America's Middle East Task Force, and the SETA Foundation's Nuh Yilmaz discussing President Obama's trip to Turkey and that nation's pivotal role in the region.
On January 20, like more than a million of my fellow citizens, I journeyed to the core of Washington, DC to witness the inauguration of President Barack Obama. Unfortunately, the color of my ticket meant I would spend that frigid morning on a massive line in the Third Street Tunnel of I-395 -- the now-infamous "Purple Tunnel of Doom."
The crowd's initial excitement and esprit gave way to anxiety and confusion as the historic hour approached. 9 o'clock... 10 o'clock... 10:30... the time ticked by, and the line barely budged. Finally, a once-orderly double- or triple-file queue became a mass of people streaming toward daylight-only to find that the Purple Gate had apparently been closed for hours, shutting out thousands of ticketed spectators.
I still do not know what exactly went wrong that day. Unmistakable, however, were the looks of disappointment and dismay on the faces that streaked by as I ran to catch Obama's speech on TV in a nearby bar. Although the occupants of the tunnel were a diverse lot, many were young people who had worked and volunteered for the Obama campaign and were therefore especially eager to witness the fruits of their labor. It was sadly ironic that these Millennials -- the rising under-25 generation that proved so integral to Obama's electoral success and the groundbreaking nature of his campaign-were the ones being shut out.
Housing Starts Decline to Record Low
Calculated Risk, http://calculatedrisk.blogspot.com/, 16 December 2008
Total housing starts were at 625 thousand (SAAR) in November, by far the lowest level since the Census Bureau began tracking housing starts in 1959.
President-elect Obama's call for enormous new investment in national instructure has the potential, as Steve Coll recently noted, to both stimulate the economy in the short run and strengthen it for the long haul. But as the situation in California illustrates, the economy cannot get the full benefit of that infrastructure package unless the stimulus package also includes a large dose of direct aid to state budgets.
In every respect but one, California is ideally positioned to take advantage of Obama's infrastructure plans. With its congested freeways, crumbling levees, and burgeoning population, it has boundless infrastructure needs. It has existing voter authorization to issue tens of billions worth of state bonds to cover the state's share of cost for projects. It has a bountiful supply of workers, now idled by the collapse of housing construction, to retrofit buildings for energy efficiency or to repair schools and public buildings. It has a vigorous corps of entrepreneurs and venture capitalists to spur a wave of green infrastructure investments, contributing new ideas and technologies to the effort.
It has everything to carry out an infrastructure stimulus program except cash.
With state revenues in free fall, governors are banging on the door of Congress, calling on lawmakers to put assistance to the states at the top of the list in the next economic stimulus package. In the ubiquitous media shorthand, the states want a “bailout.”
This shorthand, however, muddies the issue and the stakes here.
One of the prime uses of the California initiative process is budget theft: a special interest, unhappy with its cut of state spending, passes a ballot measure to increase or fence off its budget. But sometimes the loot doesn’t stay stolen.
Just ask the road lobby. Alarmed by reports that Republican legislators want to grab dollars from transportation accounts to paper over the state’s budget deficit, it has launched a radio ad campaign to defend its booty.
The loot at issue is the portion of the state’s sales tax revenue derived from the sale of gasoline.
Until this decade, the state, for tax purposes, treated gasoline like any other purchased good. California levied the normal state sales tax on sales at the gas pump and put the money into the general fund, along with the revenue from sales of surfboards, Steely Dan records, and other goods. This money helped pay for schools, health care, and prisons. (The sales tax should not be confused with the separate 18-cents-a-gallon state excise tax on motor fuels, a levy on road users exclusively dedicated to fund road maintenance and improvement.)
Like generals who are always fighting the last war, California's pundits are still fighting their way out of the last budget crisis. Latest case in point: George Skelton of the Los Angeles Times, who recently complained again that California's income tax "depends too heavily on the wealthy." In Skelton's world, the wealthy are just like those men mothers always warn their daughters about: they'll show you a good time, and then disappear, leaving you heartbroken. "Their incomes rise and fall steeply with the economy," he writes, "and therefore so do state budget deficits."
Except that's not why California has a budget crisis. As the state controller reported on May 9, personal income tax collections for the first nine months of the current budget year are $1.4 billion over the estimate in Gov. Schwarzenegger's January budget and within a whisker of the amount budgeted last summer. Through the first nine months California revenues are up 1.2 percent over a year ago, thanks entirely to the income tax, which has more than made up for the decline in sales tax revenues caused by the housing crash.
As usual, California faces a budget crisis. And just as predictably, Californians are mired in budget confusion.
How big is the crisis? a conscientious citizen might ask. The answer is: As big as you want it to be. Just take your pick. An "$8 billion budget shortfall," reports the San Jose Mercury News. "A $10 billion gap," says the Sacramento Bee. Gov. Arnold Schwarzenegger uses a more technical description: "$20 billion out of whack," he recently said.
This cacophony of numbers and nouns is a big piece of California's budget problem. Not only does California routinely fail to balance its budget, it can't even talk straight about its finances.
In normal accounting and common understanding, a budget is balanced when spending doesn't exceed revenues in a budget year. If revenues are greater than spending, the difference is a surplus; if spending exceeds revenues, the difference is a deficit. Revenues are the proceeds of taxes, fees, and interest on investments.