Letter to Congress

-- We should let the Bush tax cuts expire,

-- In the short term, stimulus spending is more important than cutting the debt,

-- The intelligence community needs to be downsized, as revealed by the recent "Washington Post" series,

-- Obama should appoint Elizabeth Warren to head the consumer protection agency,

-- We should continue to fund the Afghan war.

At least two billionaires have died in 2010 while estate or "death" taxes are zero: George Steinbrenner, worth about $1.3 billion, and Dan Duncan, worth about $9 billion. If their estates had been taxed at the old rate, before the Bush tax cuts, of about 55%, this would have increased the government's receipts by about $5 billion, or about one-sixth of the $30 billion cost of the recent extension of unemployment benefits that the Republicans opposed because they were not offset by other revenues or spending cuts. Two rich people could have paid for one-sixth of the cost of keeping food on the tables of over two million unemployed people! Instead, their billions will go to buy private jets, yachts, huge houses, A-Rod, and other extravagances.

The US economy is not yet out of the woods. It is important to continue to try to create jobs and provide a safety net (unemployment compensation, food stamps, etc.) for those suffering the most. It's sad that the fat cats on Wall Street created this financial crisis, but they have come out with bigger paychecks, while workers in America's heartland are paying the price for the fat cats' driving the economy off a cliff. However, we can't run deficits forever. Within a year or two, depending on how things go, we have got to start paying off the debt. We should start by letting the Bush tax cuts expire, then look into cutting some programs -- the wars in Iraq and Afghanistan look like good places to start -- and then start looking at new taxes and cuts.

As an Army veteran of the Vietnam War and a retired Foreign Service officer I am particularly unhappy with the increasing use of contractors to provide government services. It's more expensive than using government employees, and I suspect that they are less loyal. I did not approve of officers and political appointees leaving the Foreign Service to lobby for foreign governments of countries where they had served. I think your first loyalty should be the United States. I worry that many who go to the private sector believe their first loyalty is to the bottom line of the company they work for. This was most recently illustrated in the series of articles by the "Washington Post" about the US intelligence community. I had two assignments in the State Department Bureau of Intelligence and Research during my career, and I think its outstanding expertise despite its small size shows that quality is more important than quantity. At State, I was usually closer to the CIA than other intelligence agencies. The CIA's collection and analysis was better than the other agencies'. I think part of the current problem is that the CIA was too independent for the Bush White House and therefore Bush and Cheney created the new position of Director of National Intelligence to bring the CIA to heel and to promote the more jingoist military intelligence agencies, like NSA and DIA. NSA's electronic intelligence is important, but CIA's human intelligence is even more important.

I believe that Elizabeth Warren would fight for average people, like me. To some extent the consumer protection agency was her idea. I think she would be a good person to lead it.

The Afghan war is a mess, but we have American troops fighting there. We must stand behind them and not expose them to additional danger by capriciously reducing funding for the war. If we are going to change our position on the war, make the policy decisions first, and then withdraw the troops in an orderly manner, rather than suddenly cutting off funding and placing them in a precarious situation.

Israeli Arrow Missile

When I was working on missile proliferation at State under the George H. W. Bush administration, around 1990 the US began cooperating with Israel on the Arrow anti-missile missile. At that time the US was still a party to the Anti-Ballistic Missile Treaty, which prevented the US from working on strategic ABMs. In theory the Arrow was exempted because it was intended for defense against smaller, shorter-range missiles. However, there was concern that the US was using the Israelis to do research on ABMs that would have been prohibited for the US to do under the ABM treaty. Now that George W. Bush has abrogated US adherence to the ABM treaty in 2001, the ABM treaty is no longer an issue. Hopefully the US gets something out of this cooperation with Israel and it is not just a one way street with all the technology flowing from the US to Israel. Israel is so advanced technologically they definitely could contribute, if they are willing to.

Financial Times Austerity Debate

The Financial Times is publishing an important series on the austerity debate: Do we currently need more stimulus, or do we need to start paying off national debts?

I believe we need more stimulus for the moment. The debt is bad, but we need to get out of the hole before we start filling it in. Somebody had an interesting point this morning: Europe doesn't need to provide stimulus, because it can count on the US and China to do so, and their imports will increase exports by Europe and thus provide the stimulus that Europe would have to provide itself. I'm not sure that's correct, but it sounds reasonable. I could be one reason why Europe is much less interested in stimulus than the US.

At some point we do need to start paying down the debt, and it will be painful. But the rich bankers in New York ran the world economy off the cliff, and they have benefited more than anybody from the bailout. The government needs to help the little guys who got clobbered by the bankers, meanwhile trying to keep the bankers under control. Once the middle and lower classes begin to share some of the government largess that has been bestowed on the New York bankers, then we can begin to start paying down the debt.

Somebody had the interesting idea of encouraging Americans to buy US government debt, rather than depending on the Chinese to do it. Americans did this during World War II, and the current debacle is not unlike the stresses we when through then, although it was created by Americans who were willing to destroy America to enrich themselves. This crisis stands on its head the old idea that business is what makes America strong. Business, in particular the banking business almost destroyed America; it certainly made it much weaker. But a handful of people became obscenely rich in the process.

The fact that labor is taxed so much more heavily than capital is a huge problem. The Republicans complain about the high taxes on the rich, but by historical measures they are low, unless you go back to the days before income tax. The rich may pay the lion's share of taxes, but they earn an even larger lion's share of income. In addition, they don't pay the tax rate they should on much of their income. For workers, gross income is usually pretty close to net income on which they pay taxes. The rich hide their gross income and then have huge reductions on the gross income that they grudgingly report. They hide their wealth in corporations, in off-shore accounts, with various tax loopholes, etc. They pay lawyers and accountants millions of dollars to reduce the taxes they pay by many more millions. One of the most egregious examples was the recent death of billionaire George Steinbrenner, whose estate paid no estate ("death') taxes. This is taking food out of the mouths of the unemployed and giving it to the filthy rich.

Republicans Made a Mess

The Washington Post story on the intelligence community shows that the community is a mess. But this is what the Republicans wanted. After 9/11, Bush and Cheney wanted somebody to blame, and they wanted intelligence to support their desire to go to war with Iraq, although Iraq had nothing to do with 9/11. The CIA, which was the leading intelligence agency, with good reason, was vulnerable on both counts. It did not predict 9/11, although it did produce the famous President's Daily Brief article warning of a similar attack, and it warned of the danger from Osama bin Laden and al Qaeda and other terrorist organizations, which Richard Clark said were ignored. In addition, it did not have intel supporting going to war with Iraq, although when Colin Powell made his infamous speech to the UN, it scraped the bottom of the barrel and found intel to support him, although most of it turned out to be wrong. So Bush and Cheney set out to destroy the CIA, on the one hand by replacing the professional leadership with political hacks, and on the other by taking away CIA's leadership role and giving it to someone isolated from intelligence collection and, except for Negroponte, someone who tended to support the military over civilian intelligence.

So now we have this huge intelligence apparatus that no doubt pays a fortune to political hacks of all persuasions, but mainly Republicans, because Bush and Cheney had more time to get their guys in. No doubt there are still some well educated, skilled intelligence professionals in the ranks, but they are lost among the mediocre. I would guess that particularly the private companies, the loves of Republicans, are more willing to say whatever the bosses want them to say than career professionals, , who have some cover except in extreme cases, for example when Bush and Cheney ran a vendetta against them.

The good news is that the terrorist threat is not great, nothing like a more historical threat by another nation against the US. By and large these terrorists are poorly funded, not well trained, and poorly led. They may have access to hundreds of millions of dollars, but what is the US defense budget, something like a trillion dollars. It's non-conventional warfare, and in the eighteenth and nineteenth centuries, the Indians inflicted some serious defeats on the white soldiers, but in the end the whites won easily.

Currently, the economic threat from China is much more serious. And if China ever decides to pose a military threat to the US, it will dwarf the terrorist threat from Muslims.