Summary: An ex-FBI agent also espouses that torture doesn’t work, adding to what a military official said last week.

9/16/2006

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Sept. 16, 2006 — Amid a debate between President Bush and bipartisan members of Congress over how harshly to question terror detainees, a former FBI agent said some of the most aggressive interrogation techniques in dispute are rarely effective anyway.

“Generally speaking, those don’t work,” said Jack Cloonan, a former FBI agent and an ABC News consultant.

“I think water boarding is one we’ve all heard about, and I think the public understands what the term means,” Cloonan told Bill Weir on ABC News’ “Good Morning America Weekend.” “We sort of fake drown somebody.”

This week, President Bush felt strong backlash against his campaign to legalize aggressive interrogation procedures, even from fellow Republicans.

Having questioned many subjects himself, Cloonan knows the goals of those leading interrogations.

“They want to induce stress and they want to get information from these people very quickly,” he said.

Talking Rather Than Torture

Cloonan said there are more fruitful practices.

“Knowing the subject matter, building rapport and having that time to get that person to know you works, and I’ve done it many times,” he said.

Because those being interrogated expect to be tortured, they’re caught off guard by non-violent approaches, and often release information more easily, Cloonan said.

“In their manual it says the opposition will torture you, so they expect it,” he said. “When you don’t do it, it has the opposite effect.”

Among interrogators, Cloonan says there’s always been a moral debate about torture.

“Some people think it works, some people don’t,” he said. “The boss has made the decision, now it’s a question of giving these people protection.”

Cloonan dismissed the notion of the “ticking time-bomb” scenario in which interrogators must beat information out of someone quickly to prevent an attack.

“Let’s deal with the reality of the situation: Generally speaking, that’s not going to happen,” he said. “It doesn’t happen in the real world, so we don’t need to go to that level.”

Summary: A study ran in Harvard Magazine looks at how the direction of the country is leaning more towards super rich and poor. The middle class is getting squeezed more and more, and becoming an endangered species.

1/2006

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he Middle Class on the Precipice
Rising financial risks for American families

by Elizabeth Warren

During the past generation, the American middle-class family that once could count on hard work and fair play to keep itself financially secure has been transformed by economic risk and new realities. Now a pink slip, a bad diagnosis, or a disappearing spouse can reduce a family from solidly middle class to newly poor in a few months.

Middle-class families have been threatened on every front. Rocked by rising prices for essentials as men’s wages remained flat, both Dad and Mom have entered the workforce—a strategy that has left them working harder just to try to break even. Even with two paychecks, family finances are stretched so tightly that a very small misstep can leave them in crisis. As tough as life has become for married couples, single-parent families face even more financial obstacles in trying to carve out middle-class lives on a single paycheck. And at the same time that families are facing higher costs and increased risks, the old financial rules of credit have been rewritten by powerful corporate interests that see middle-class families as the spoils of political influence.

Raising Incomes the Two-Worker Way

In just one generation, millions of mothers have gone to work, transforming basic family economics. The typical middle-class household in the United States is no longer a one-earner family, with one parent in the workforce and one at home full-time. Instead, the majority of families with small children now have both parents rising at dawn to commute to jobs so they can both pull in paychecks.

Scholars, policymakers, and critics of all stripes have debated the social implications of these changes, but few have looked at their economic impact. Today the median income for a fully employed male is $41,670 per year (all numbers are inflation-adjusted to 2004 dollars)—nearly $800 less than his counterpart of a generation ago. The only real increase in wages for a family has come from the second paycheck earned by a working mother. With both adults in the workforce full-time, the family’s combined income is $73,770—a whopping 75 percent higher than the median household income in the early 1970s. But the gain in income has an overlooked side effect: family risk has risen as well. Today’s families have budgeted to the limits of their new two-paycheck status. As a result, they have lost the parachute they once had in times of financial setback—a back-up earner (usually Mom) who could go into the workforce if the primary earner got laid off or fell sick. This “added-worker effect” could buttress the safety net offered by unemployment insurance or disability insurance to help families weather bad times. But today, a disruption to family fortunes can no longer be made up with extra income from an otherwise-stay-at-home partner.

Income risk has shifted in other ways as well. Incomes are less dependable today. Layoffs, outsourcing, and other workplace changes have trebled the odds of a significant interruption in a single generation. The shift from one income to two doubled the risks again, as both Mom and Dad face the possibility of unemployment. Of course, with two people in the workforce, the odds of income dropping to zero are lessened. But for families where every penny of both paychecks is already fully committed to mortgage, health insurance, and other payments, the loss of either paycheck can unleash a financial tailspin. Nor are such risks solely related to unemployment. Consider health-related exposures. Two wage-earners means either Mom or Dad could be out of work from illness or injury, losing a substantial chunk of the family income. Finally, the new everyone-in-the-workforce family faces higher risks for caregiving. When there was one stay-at-home parent, a child’s serious illness or Grandma’s fall down the stairs was certainly bad news, but the main economic ramification was the medical bills. Today, someone has to take off work—or hire help—in order to provide family care. At a time when hospitals are sending people home “quicker and sicker,” more nursing care falls directly on the family—and someone has to be home to administer it.

Even the economic risks of divorce have changed. A generation ago, the end of a marriage was an economic blow, but a nonworking spouse usually took a job, bringing in new income to stay afloat. Now, whatever the two-income divorcing couple earns has to cover both their old and new expenses. Evidence mounts that post-divorce, both women and men are struggling to make ends meet as they try to support two households on the same combined income. A divorced woman with children, for example, is about three times more likely to file for bankruptcy than a man or woman, single or married, without children. And men who owe child support are about three times more likely to file for bankruptcy than men who don’t.

The news is even worse for single parents. They face all the difficulties of dual-income families—all income is budgeted, there is no one at home to work if the primary earner loses a job or gets sick, and no one to take over if a child gets sick or an elderly parent needs help—and they are trying to make it on a lot less money, competing with two-income families for housing, daycare, health insurance, and all the other goods and services. As one divorced, working mother put it, “With what my ex contributes and what I earn, I can just about match what a man can make, but I can’t match what a man and woman both working can make.” The two-parent families are struggling to swallow the risk, but their single-parent counterparts are choking.

Does this mean that middle-class women should return to the home in order to reduce their families’ risk? Before jumping to that conclusion, it is important to look at the expenses middle-class families face.

Soaring Expenses— and Risk

Why are so many moms in the workforce? Surely, some are lured by a great job, but millions more need a paycheck, plain and simple.

It would be convenient to blame the families and say that it is their lust for stuff that has gotten them into this mess. Indeed, sociologist Robert Frank claims that this country’s newfound “Luxury Fever” forces middle-class families “to finance their consumption increases largely by reduced savings and increased debt.” Others echo the theme. A book titled Affluenza (by John De Graaf, David Wann, and Thomas H. Naylor) sums it up: “The dogged pursuit for more” accounts for Americans’ “overload, debt, anxiety, and waste.” If Americans are out of money, it must be because they are over-consuming—buying junk they don’t really need.

Blaming the family supposes that we believe that families spend their money on things they don’t really need. Over-consumption is not about medical care or basic housing; it is, in the words of Juliet Schor, about “designer clothes, a microwave, restaurant meals, home and automobile air conditioning, and, of course, Michael Jordan’s ubiquitous athletic shoes, about which children and adults both display near-obsession.” And it isn’t about buying a few goodies with extra income; it is about going deep into debt to finance consumer purchases that sensible people could do without.

But is this argument true? If families really are blowing their paychecks on designer clothes and restaurant meals, then the household expenditure data should show them spending more on these frivolous items than ever before. But the numbers don’t back up the claim.

A quick summary of the data from the Bureau of Labor Statistics’ Consumer Expenditure Survey paints a very different picture of family spending. Consider what a family of four spends on clothing. Designer toddler outfits and $200 sneakers are favorite media targets, but when it is all added up, including the Tommy Hilfiger sweatshirts and Ray-Ban sunglasses, the average family of four today spends 33 percent less on clothing than a similar family did in the early 1970s. Overseas manufacturing and discount shopping mean that today’s family is spending almost $1,200 a year less than their parents spent to dress themselves.

What about food? Surely, families are eating out more and buying shopping carts full of designer water and exotic fruit? In fact, today’s family of four actually spends 23 percent less on food (at-home and restaurant eating combined) than its counterpart of a generation ago. The slimmed-down profit margins in discount supermarkets have combined with new efficiencies in farming to cut more costs for the American family.

Appliances tell the same picture. There is a lot of complaining about microwave ovens and espresso machines: Affluenza rails against appliances “that were deemed luxuries as recently as 1970, but are now found in well over half of U.S. homes, and thought of by a majority of Americans as necessities: dishwashers, clothes dryers, central heating and air conditioning, color and cable TV.” But manufacturing costs are down, and durability is up. Today’s families are spending 51 percent less on major appliances than their predecessors a generation ago.

This is not to say that middle-class families never fritter away money. A generation ago, big-screen televisions were a novelty reserved for the very rich, no one had cable, and DVD and TiVo were meaningless strings of letters. So how much more do families spend on “home entertainment,” premium channels included? They spend 23 percent more—a whopping extra $180 annually. Computers add another $300 to the annual family budget. But even that increase looks a little different in the context of other spending. The extra money spent on cable, electronics, and computers is more than offset by families’ savings on major appliances and household furnishings alone.

The same offsetting phenomena appear in other areas as well. The average family spends more on airline travel than it did a generation ago, but less on dry cleaning; more on telephone services, but less on tobacco; more on pets, but less on carpets. When we add it all up, increases in one category are offset by decreases in another.

So where did their money go? It went to the basics. The real increases in family spending are for the items that make a family middle class and keep them safe (housing, health insurance), that educate their children (pre-school and college), and that let them earn a living (transportation, childcare, and taxes).

The data can be summarized in a financial snapshot of two families, a typical one-earner family from the early 1970s compared with a typical two-earner family from the early 2000s. With an income of $42,450, the average family from the early 1970s covered their basic mortgage expenses of $5,820, health-insurance costs of $1,130 and car payments, maintenance, gas, and repairs of $5,640. Taxes claimed about 24 percent of their income, leaving them with $19,560 in discretionary funds. That means they had about $1,500 a month to cover food, clothing, utilities, and anything else they might need—just about half of their income.

By 2004, the family budget looks very different. As noted earlier, although a man is making nearly $800 less than his counterpart a generation ago, his wife’s paycheck brings the family to a combined income that is $73,770—a 75 percent increase. But higher expenses have more than eroded that apparent financial advantage. Their annual mortgage payments are more than $10,500. If they have a child in elementary school who goes to daycare after school and in the summers, the family will spend $5,660. If their second child is a pre-schooler, the cost is even higher—$6,920 a year. With both people in the workforce, the family spends more than $8,000 a year on its two vehicles. Health insurance costs the family $1,970, and taxes now take 30 percent of its money. The bottom line: today’s median-earning, median-spending middle-class family sends two people into the workforce, but at the end of the day they have about $1,500 less for discretionary spending than their one-income counterparts of a generation ago.

What happens to the family that tries to get by on a single income today? Their expenses would be a little lower because they can save on childcare and taxes, and, if they are lucky enough to live close to shopping and other services, perhaps they can get by without a second car. But if they tried to live a normal, middle-class life in other ways—buy an average home, send their younger child to preschool, purchase health insurance, and so forth—they would be left with only $5,500 a year to cover all their other expenses. They would have to find a way to buy food, clothing, utilities, life insurance, furniture, appliances, and so on with less than $500 a month. The modern single-earner family trying to keep up an average lifestyle faces a 72 percent drop in discretionary income compared with its one-income counterpart of a generation ago.

Combine changes in family income and expenses, and the biggest change of all becomes evident—on the risk front. In the early 1970s, if any calamity came along, the family devoted nearly half its income to discretionary spending. Of course, people need to eat and turn on the lights, but the other expenses—clothing, furniture, appliances, restaurant meals, vacations, entertainment, and pretty much everything else—can be drastically reduced or even cut out entirely. In other words, they didn’t need as much money if something went wrong. If the couple could find a way—through unemployment insurance, savings, or putting their stay-at-home parent to work—they could cover the basics on just half of their previous earnings. Given the option of a second paycheck, both could stay in the workforce for a few months once the crisis had passed, pulling the family out of their financial hole.

But the position today is very different. Fully 75 percent of family income is earmarked for recurrent monthly expenses. Even if they are able to trim around the edges, families are faced with a sobering truth: every one of those expensive items—mortgage, car payments, insurance, childcare—is a fixed cost. Families must pay them each and every month, through good times and bad; there is no way to cut back from one month to the next, as can be done with spending on clothing or food. Short of moving out of the house, withdrawing their children from preschool, or canceling the insurance policy altogether, they are stuck.

In other words, today’s family has no margin for error. There is no leeway to cut back if one earner’s hours are cut or if the other gets sick. There is no room in the budget if someone needs to take off work to care for a sick child or an elderly parent. Their basic situation is far riskier than that of their parents a generation earlier. The modern American family is walking a high wire without a net.

The Rules Have Changed

The one-two punch of income vulnerability and rising costs has weakened the middle class, at the same time that the revision of the rules of financing delivers a death blow to millions of families each year. Since the early 1980s, the credit industry has rewritten the rules of lending to families. Congress has turned the industry loose to charge whatever it can get and to bury tricks and traps throughout credit agreements. Credit-card contracts that were less than a page long in the early 1980s now number 30 or more pages of small-print legalese. In the details, credit-card companies lend money at one rate, but retain the right to change the interest rate whenever it suits them. They can even raise the rate after the money has been borrowed—a practice once considered too shady even for a back-alley loan shark. When they think they have been cheated, customers can be forced into arbitration in locations thousands of miles from home. Some companies claim that they can repossess anything a customer buys with a credit card.

Credit-card issuers are not alone in their boldness. Home-mortgage lenders are writing mortgages that are so one-sided that some of their products are known as “loan-to-own” because it is the mortgage company—not the buyer—who will end up with the house. Payday lenders are ringing military bases and setting up shop in working-class neighborhoods, offering instant cash that can eventually cost the customer more than a thousand percent interest.

For those who can stay out of debt, the rules of lending may not matter. But the economic pressures on the middle class are causing more families to turn to credit just to make ends meet. When something goes wrong the only place to turn is credit cards and mortgage refinancing. At that moment, the change in lending rules matters very much indeed. The family that might manage $2,000 of debt at 9 percent discovers that it cannot stay afloat when interest rates skyrocket to 29 percent. And the family that refinanced the home mortgage to pay off other debts suddenly faces escalating monthly payments and may find itself staring at foreclosure. Job losses or medical debts can put any family in a hole, but a credit industry that has rewritten the rules can keep that family from ever climbing back.

A Politics of Living on the Edge?

Every day, middle-class families carry higher risks that a job loss or a medical problem will push them over the edge. Although plenty of families make it, a growing number who worked just as hard and followed the rules just as carefully find themselves in a financial nightmare. The security of middle-class life has disappeared. The new reality is millions of families whose grip on the good life can be shaken loose in an instant.

Although my own work, on bankruptcy and credit, has focused on the specifics of families’ household finances, I cannot help but think that their changed circumstances during the past generation have larger echoes for public policy.

During the same period, families have been asked to absorb much more risk in their retirement income. In 1985, there were 112,200 defined-benefit pension plans with employers and employer groups around the country; today their number has shrunk to 29,700 such plans, and those are melting away fast. Steelworkers, airline employees, and now those in the auto industry are joining millions of families who must worry about interest rates, stock market volatility, and the harsh reality that they may outlive their retirement money. For much of the past year, President Bush campaigned to move Social Security to a savings-account model, with retirees trading much or all of their guaranteed payments for payments contingent on investment returns. For younger families, the picture is not any better. Both the absolute cost of healthcare and the share of it borne by families have risen—and newly fashionable health-savings plans are spreading from legislative halls to Wal-Mart workers, with much higher deductibles and a large new dose of investment risk for families’ future healthcare. Even demographics are working against the middle class family, as the odds of having a frail elderly parent—and all the attendant need for physical and financial assistance—have jumped eightfold in just one generation.

From the middle-class family perspective, much of this, understandably, looks far less like an opportunity to exercise more financial responsibility, and a good deal more like a frightening acceleration of the wholesale shift of financial risk onto their already overburdened shoulders. The financial fallout has begun, and the political fallout may not be far behind.

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Elizabeth Warren is Gottlieb professor of law and faculty director of the Judicial Education Program. This article is based in part on “Rewriting the Rules: Families, Money, and Risk,” a paper written for the nonprofit Social Science Research Council (see http://privatizationofrisk.ssrc.org/Warren). Warren and her daughter, Amelia Warren Tyagi, are the authors of The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke (see “The Middle-Class Trapdoor,” January-February 2004, page 10) and All Your Worth: The Ultimate Lifetime Money Plan.

Summary: Sebastian Mallaby writes on the benefits of having a more open immigration policy should help developing countries more than just lifting trade tariffs or giving them economic aid.

9/18/2006

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Migrating To Modernity

By Sebastian Mallaby
Monday, September 18, 2006; A17

After the terrorist attacks of 2001, voters understood that poor failed states could hurt them. President Bush launched a smart new foreign aid program and multiplied the U.S. commitment to fighting HIV-AIDS, and rich countries around the world boosted development spending. But our approach toward poor countries remains confined, idiotically, to the debt-aid-trade box. People don’t see that other policies in rich countries have a major impact on poor ones.

Consider immigration. Just about all rich countries are arguing about border enforcement, employer sanctions and so on, but nobody relates this stuff to the parallel arguments about development. Contemplating the noisy immigration politics in the United States, Gawain Kripke of Oxfam confesses, “we’ve been mostly bystanders in the debate, and I really regret that.”

Development charities such as Oxfam certainly should feel sorry. In ” Let Their People Come ,” a new book published by the Center for Global Development, Lant Pritchett reports that if rich countries permitted extra immigration equivalent to 3 percent of their labor force, the citizens of poor countries would gain about $300 billion a year. That’s three times more than the direct gains from abolishing all remaining trade barriers, four times more than the foreign aid given by governments and 100 times more than the value of debt relief.

It’s true that there’s a downside to immigration from poor countries. This isn’t that it depresses wages in the United States; researchers find that this effect is small or nonexistent . Rather, it’s that when doctors, nurses and other skilled people leave Africa, they hit the development process in its weak spot . A lack of trained workers is a more serious obstacle to poverty reduction than any lack of money.

Still, Pritchett’s numbers show that the development gains from migration swamp the brain-drain problem. For the migrants themselves, a ticket to the rich world is the fast track out of poverty: A laborer who moves from San Salvador to Phoenix can multiply his income without altering the type of work he does or how good he is at it. And this process benefits developing countries, too. Migrants send home remittances, which exceed aid flows and are probably more effective, since the migrants ensure that their hard-earned cash is used productively by relatives. After a few years the migrants may return home armed with savings and ideas. The brain drain becomes a brain gain.

So migration ends up as a net plus for development. But a development-friendly migration debate would sound different from the current one. Immigration advocates in the rich world feel most comfortable making the case for allowing in skilled workers. Skilled migrants, however, trigger the biggest brain-drain concerns; allowing in unskilled workers does more to reduce global poverty. Equally, immigration advocates tend to want arriving workers to assimilate. But the best way to promote development is to allow a rolling cohort of poor workers to amass savings and experience — and then return to their own countries.

Many immigration experts insist that a guest-worker program isn’t feasible: As the old saying goes, there’s nothing more permanent than a temporary worker. This is where Pritchett gets really interesting. Germany’s Turkish guest workers have put down roots, he concedes, but Singapore, Hong Kong and the Arab Gulf states have taken in vast numbers of foreign workers who leave after a few years. Perhaps this is only possible in authoritarian states? Pritchett’s answer is partly no, and partly that there are worse things than authoritarianism.

If the United States offered Mexico a million temporary work visas, it could attach conditions. It could stipulate that these workers be recruited by agencies in Mexico, which would screen candidates for criminal records, require minimal English skills — and ensure repatriation. The agencies could do that, for example, by withholding some of the migrants’ pay until they returned home. An agency that failed to bring people back could be ejected from the program.

Enforcing repatriation would still require tough government action. The United States would have to decide what to do about migrants who marry Americans, which is one obvious way in which temporary guests turn permanent. Singapore deals with this problem by denying guest workers the right to marry citizens. That is beyond the pale, you say? But if desperately poor migrants accept the no-marriage condition in exchange for a visa, who are we to second-guess them?

Pritchett is getting at a ticklish issue. Because the immigration debate is conducted without reference to development, it is couched in terms of American ideals; we don’t want to let people in and then treat them harshly, for that would offend our own self-image. But if you bring development into the picture, it’s obvious that extremely harsh poverty afflicts billions of people and that opportunities to alleviate this suffering are few and precious. An expanded temporary worker program is one such opportunity. If American ideals stand in its way, what does that say about them?

Summary: Sebastian Mallaby writes about the many myths of immigration, including that immigrants only do jobs Americans don’t want, that immigration pushes unemployment, and that the effect on wages is drastic (in reality it’s small).

5-16-2005

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mmigration Reform and Red Herrings

By Sebastian Mallaby

Monday, May 16, 2005; Page A17

Last week, in a triumph of hope over experience, Sens. John McCain and Teddy Kennedy introduced an immigration bill. This will now be engulfed by all the usual rhetoric. “America is a Land of Immigrants” vs. “the English language is at risk.” “Immigrants are criminals” vs. “forcing immigrants to remain illegal is the real source of crime.” But consider the economic question. Will letting in those foreigners harm American workers?

Start by knocking down the dumb arguments on both sides. It’s implausible to claim that poor immigrants generally do jobs that Americans won’t do. Mexicans mow all the lawns in Southern California, but it doesn’t follow that largely immigrant-free suburbs in Pennsylvania are choked with waist-high grass. According to the 2000 Census, 82 percent of New York taxi drivers are foreign-born. But there are still cabs to be hailed in Detroit and Cincinnati, where more than 90 percent of taxi drivers are U.S.-born.

Then there’s the opposite dumb argument: that immigrants push unemployment up. Setting aside swings in the business cycle, the level of unemployment in an economy is determined by the flexibility of the labor force, not by how many people are in it and certainly not by what passports they hold. Every economy has something called the NAIRU — the non-accelerating-inflation rate of unemployment — and the central bank’s job is to keep the monetary taps open until the jobless rate falls to that level. If the rate falls below the NAIRU, the shortage of workers will push wages up faster than output. The resulting inflation will force the central bank to jack up interest rates, slowing the economy and halting job growth.

So if you’re worried about unemployment, you have to worry about the NAIRU — about how you create a workforce that’s flexible and motivated, so companies can find people to hire at sustainable wages even when unemployment is quite low. A willingness to relocate, retrain and reinvent oneself makes for a lower NAIRU; the growth of temp agencies, which give firms an efficient way of finding workers, has reduced the NAIRU, too. Immigrants, who tend to be extremely motivated, probably drive down the overall sustainable unemployment rate. In theory, if their presence somehow renders native-born workers less motivated, immigrants could simultaneously increase unemployment in the native-born section of the workforce. But attempts to measure this demoralization suggest that it is minimal.

The serious economic question is not what immigration does to unemployment but what it does to wages, particularly for poor workers. According to the census of 1970, 63 percent of immigrants in the United States had been born in Europe or Canada and were generally well educated. By 2000, however, 48 percent had been born in Mexico, Central America or the Caribbean, and more than one-third of all immigrants had less than a high school education. While immigrants counted for only 13 percent of the working-age population in 2000, they made up over half of those with less than eight years of schooling.

Logic suggests that if you increase the supply of certain workers, their wages will go down. Harvard’s George Borjas, one of the nation’s top immigration economists, has found that this logic holds in practice. By grouping workers according to education and experience and measuring rates of immigration and wage trends in each category, he concludes that between 1980 and 2000 immigration reduced the average annual earnings of U.S.-born college graduates by 3.6 percent and high school graduates by 2 percent. But natives without high school education were hit harder: Their wages were reduced 7.4 percent compared to what they would have been without immigration.

That’s not the end of the story, however. Berkeley’s David Card, another top authority, employs a different statistical technique and gets the opposite result. He starts from the fact that different cities experience different rates of immigration, and then he looks to see whether cities with lots of low-skilled immigrants have lower wages for laborers. He finds no wage effect whatsoever. This could be because demand for these workers increases with the supply of them: A gardening company with five Mexican workers armed with fancy electric hedge-trimmers would just as soon hire eight workers and give them manual shears if eight workers were available.

This academic debate is not conclusive. Borjas argues that Card’s method is flawed because an influx of immigrants into one city drives U.S.-born workers to move elsewhere, so the downward pressure on wages can be captured only in nationwide numbers. This may be right for college graduates, who operate in a national labor market. But Card may have the upper hand when it comes to understanding low-wage workers. His latest paper shows that cities with high rates of unskilled immigration have reported no offsetting shrinkage in the number of native-born laborers.

What to conclude from this? Immigration does not cause unemployment; the wage effects may well be small. And if anyone can make a conclusive argument about some other consequence of immigration, Congress might as well listen. The debate over wages is not a slam-dunk for either side. It should not determine this issue.

mallabys@washpost.com

Summary: According to the National Intelligence Estimate of 2005, Iran is at least 10 years away from having the means of building a nuke. This estimate was also acknowledged by the Bush administration at the time. Keep that in mind for anyone who wants to strike up fear against Iran.

8/2/2005

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Iran Is Judged 10 Years From Nuclear Bomb
U.S. Intelligence Review Contrasts With Administration Statements

By Dafna Linzer
Washington Post Staff Writer
Tuesday, August 2, 2005; A01

A major U.S. intelligence review has projected that Iran is about a decade away from manufacturing the key ingredient for a nuclear weapon, roughly doubling the previous estimate of five years, according to government sources with firsthand knowledge of the new analysis.

The carefully hedged assessments, which represent consensus among U.S. intelligence agencies, contrast with forceful public statements by the White House. Administration officials have asserted, but have not offered proof, that Tehran is moving determinedly toward a nuclear arsenal. The new estimate could provide more time for diplomacy with Iran over its nuclear ambitions. President Bush has said that he wants the crisis resolved diplomatically but that “all options are on the table.”

The new National Intelligence Estimate includes what the intelligence community views as credible indicators that Iran’s military is conducting clandestine work. But the sources said there is no information linking those projects directly to a nuclear weapons program. What is clear is that Iran, mostly through its energy program, is acquiring and mastering technologies that could be diverted to bombmaking.

The estimate expresses uncertainty about whether Iran’s ruling clerics have made a decision to build a nuclear arsenal, three U.S. sources said. Still, a senior intelligence official familiar with the findings said that “it is the judgment of the intelligence community that, left to its own devices, Iran is determined to build nuclear weapons.”

At no time in the past three years has the White House attributed its assertions about Iran to U.S. intelligence, as it did about Iraq in the run-up to the March 2003 invasion. Instead, it has pointed to years of Iranian concealment and questioned why a country with as much oil as Iran would require a large-scale nuclear energy program.

The NIE addresses those assertions and offers alternative views supporting and challenging the assumptions they are based on. Those familiar with the new judgments, which have not been previously detailed, would discuss only limited elements of the estimate and only on the condition of anonymity, because the report is classified, as is some of the evidence on which it is based.

Top policymakers are scrutinizing the review, several administration officials said, as the White House formulates the next steps of an Iran policy long riven by infighting and competing strategies. For three years, the administration has tried, with limited success, to increase pressure on Iran by focusing attention on its nuclear program. Those efforts have been driven as much by international diplomacy as by the intelligence.

The NIE, ordered by the National Intelligence Council in January, is the first major review since 2001 of what is known and what is unknown about Iran. Additional assessments produced during Bush’s first term were narrow in scope, and some were rejected by advocates of policies that were inconsistent with the intelligence judgments.

One such paper was a 2002 review that former and current officials said was commissioned by national security adviser Stephen J. Hadley, who was then deputy adviser, to assess the possibility for “regime change” in Iran. Those findings described the Islamic republic on a slow march toward democracy and cautioned against U.S. interference in that process, said the officials, who would describe the paper’s classified findings only on the condition of anonymity.

The new estimate takes a broader approach to the question of Iran’s political future. But it is unable to answer whether the country’s ruling clerics will still be in control by the time the country is capable of producing fissile material. The administration keeps “hoping the mullahs will leave before Iran gets a nuclear weapons capability,” said an official familiar with policy discussions.

Intelligence estimates are designed to alert the president of national security developments and help guide policy. The new Iran findings were described as well documented and well written, covering such topics as military capabilities, expected population growth and the oil industry. The assessments of Iran’s nuclear program appear in a separate annex to the NIE known as a memorandum to holders.

“It’s a full look at what we know, what we don’t know and what assumptions we have,” a U.S. source said.

Until recently, Iran was judged, according to February testimony by Vice Adm. Lowell E. Jacoby, director of the Defense Intelligence Agency, to be within five years of the capability to make a nuclear weapon. Since 1995, U.S. officials have continually estimated Iran to be “within five years” from reaching that same capability. So far, it has not.

The new estimate extends the timeline, judging that Iran will be unlikely to produce a sufficient quantity of highly enriched uranium, the key ingredient for an atomic weapon, before “early to mid-next decade,” according to four sources familiar with that finding. The sources said the shift, based on a better understanding of Iran’s technical limitations, puts the timeline closer to 2015 and in line with recently revised British and Israeli figures.

The estimate is for acquisition of fissile material, but there is no firm view expressed on whether Iran would be ready by then with an implosion device, sources said.

The timeline is portrayed as a minimum designed to reflect a program moving full speed ahead without major technical obstacles. It does not take into account that Iran has suspended much of its uranium-enrichment work as part of a tenuous deal with Britain, France and Germany. Iran announced yesterday that it intends to resume some of that work if the European talks fall short of expectations.

Sources said the new timeline also reflects a fading of suspicions that Iran’s military has been running its own separate and covert enrichment effort. But there is evidence of clandestine military work on missiles and centrifuge research and development that could be linked to a nuclear program, four sources said.

Last month, U.S. officials shared some data on the missile program with U.N. nuclear inspectors, based on drawings obtained last November. The documents include design modifications for Iran’s Shahab-3 missile to make the room required for a nuclear warhead, U.S. and foreign officials said.

“If someone has a good idea for a missile program, and he has really good connections, he’ll get that program through,” said Gordon Oehler, who ran the CIA’s nonproliferation center and served as deputy director of the presidential commission on weapons of mass destruction. “But that doesn’t mean there is a master plan for a nuclear weapon.”

The commission found earlier this year that U.S. intelligence knows “disturbingly little” about Iran, and about North Korea.

Much of what is known about Tehran has been learned through analyzing communication intercepts, satellite imagery and the work of U.N. inspectors who have been investigating Iran for more than two years. Inspectors uncovered facilities for uranium conversion and enrichment, results of plutonium tests, and equipment bought illicitly from Pakistan — all of which raised serious concerns but could be explained by an energy program. Inspectors have found no proof that Iran possesses a nuclear warhead design or is conducting a nuclear weapons program.

The NIE comes more than two years after the intelligence community assessed, wrongly, in an October 2002 estimate that then-Iraqi President Saddam Hussein had weapons of mass destruction and was reconstituting his nuclear program. The judgments were declassified and made public by the Bush administration as it sought to build support for invading Iraq five months later.

At a congressional hearing last Thursday, Gen. Michael V. Hayden, deputy director of national intelligence, said that new rules recently were imposed for crafting NIEs and that there would be “a higher tolerance for ambiguity,” even if it meant producing estimates with less definitive conclusions.

The Iran NIE, sources said, includes creative analysis and alternative theories that could explain some of the suspicious activities discovered in Iran in the past three years. Iran has said its nuclear infrastructure was built for energy production, not weapons.

Assessed as plausible, but unverifiable, is Iran’s public explanation that it built the program in secret, over 18 years, because it feared attack by the United States or Israel if the work was exposed.

In January, before the review, Vice President Cheney suggested Iranian nuclear advances were so pressing that Israel may be forced to attack facilities, as it had done 23 years earlier in Iraq.

In an April 2004 speech, John R. Bolton — then the administration’s point man on weapons of mass destruction and now Bush’s temporarily appointed U.N. ambassador — said: “If we permit Iran’s deception to go on much longer, it will be too late. Iran will have nuclear weapons.”

But the level of certainty, influenced by diplomacy and intelligence, appears to have shifted.

Asked in June, after the NIE was done, whether Iran had a nuclear effort underway, Bolton’s successor, Robert G. Joseph, undersecretary of state for arms control, said: “I don’t know quite how to answer that because we don’t have perfect information or perfect understanding. But the Iranian record, plus what the Iranian leaders have said . . . lead us to conclude that we have to be highly skeptical.”

Researcher Julie Tate contributed to this report.

Summary: Typical wages for working class Americans have not grown at the proportional rate as productivity, yet the total amount paid out in salaries is also growing. The money must be going somewhere, and it’s not to the middle class. The Wall Street Journal shows that it’s going to the richer folks, mostly into their stock options.

9/18/2006

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THE OUTLOOK

How Stock Options Muddle
The Relationship Among Wages,
Corporate Profits and Inflation
By GREG IP
September 18, 2006; Page A2

Scorekeepers at the Commerce Department last month discovered that American workers were earning far more than previously estimated — and that created an economic puzzle.

The new data were out of step with other measures showing sluggish wage growth, a factor in widespread worker dissatisfaction turning up in the polls. And the increased income wasn’t matched by more production — that is, in gross domestic product — as it should have been.

Solving this puzzle is important for understanding how well American workers and companies are doing and whether rising wages pose an inflation threat.

The answer appears to be stock options, a growing part of compensation for top-end workers. Accounting for them properly has been a major source of controversy for companies. Now it is complicating the government’s economic accounting, as well.

The Commerce Department’s Bureau of Economic Analysis, which keeps the nation’s GDP books, treats profits from the exercise of options as labor income. But options aren’t counted in most other measures of wages. So the BEA reports — which are important both to markets and the Federal Reserve — may be overstating the extent of wage pressure, and, for related reasons, at least temporarily understating profits.

Here is what’s going on:

Last month, the BEA declared that labor income for all Americans in the first half was an annualized $95 billion, or 1.3%, more than it had estimated just a month earlier. This suggested Americans were flush with cash, welcome news for those worried about a slowing economy, but it also raised inflation alarm bells.

From 2001 to 2004, the productivity of American workers — the amount they produced for each hour on the job — rose enough so that companies could pay somewhat higher wages without raising prices. The new data changed that benign picture. They showed that business compensation per employee-hour soared almost 8% in the year through June. Adjusted for higher productivity, labor costs jumped 5%, a near six-year high.

But something didn’t seem right. That jump in labor costs should have squeezed profit margins, yet margins are at a 40-year high. Plus, the 8% rise in hourly compensation far outstripped better-known measures of labor costs. The Labor Department’s employment-cost index — which includes hourly wages, benefits and bonuses — rose just 3% in the same period. The weekly wage of workers at the statistical middle rose only 2.5%.

Adding to the mystery was the economic-textbook fact that Americans’ income — wages, benefits, profits, etc. — is supposed to equal the value of what they produce. But after the revisions, gross domestic income was rising much faster than GDP. The two seldom match perfectly, but the divergence was striking.

The likely explanation: stock options. The income earned when employees cash in stock options is counted in both gross domestic income and the Labor Department’s productivity-adjusted labor-cost measures, but not in most of the other wage measures.

“The stock market was strong in the first quarter, so that suggests probably quite a bit of stock-option exercise,” says Brent Moulton, associate BEA director for national economic accounts. Because higher-paid employees are more likely to have stock options, this helps explain why the advance in labor income doesn’t reflect the average worker’s experience.

Stock options also might have led the BEA to overstate profits, and thus gross domestic income. Here’s why: Corporations keep separate books for shareholders and for the Internal Revenue Service. The BEA uses the latter to measure profits.

The two treat stock options differently. When reporting profits to shareholders, companies must expense only the fair value of the option on the day it was granted. That’s usually quite low (unless the option was backdated, but that’s another story).

But when reporting profits to the IRS, the company may expense the (usually) far-higher value of the option the day it was exercised. So in periods of heavy options exercise, shareholder profits will be higher than taxable profits.

“For wages and salaries, we now have very accurate data,” Mr. Moulton says, thanks to speedier access to unemployment-insurance data, which track both regular wages and options. For corporate profits, though, the agency relies a lot on reports to shareholders. Because these generally exclude full options expense, the BEA must estimate it. The BEA must wait as long as a year for the annual reports for the details on option expense, and two years for comprehensive IRS tabulations.

“We sometimes can get quite large revisions when we get the IRS data,” Mr. Moulton says. It is “a possibility” that profits will be revised down when BEA gets the complete detail, he says.

If options expense has squeezed profits, is that a problem for inflation? Probably not. Corporations don’t think of stock-option expense as ordinary labor compensation, says Robert Willens, a tax-and-accounting expert at Lehman Brothers. Option expense is “dependent on how the stock does, which is sort of out of the company’s or the employee’s control.”

Thus, investors and the Fed are likely to discount swings in the BEA labor-cost measures once they figure out they have more to do with swings in the stock market than anything else. The bottom line: Wage increases, while accelerating, aren’t flashing a warning sign.

Summary: Reuters provides a rundown of the daily security deveolpments in Iraq. Unfortunately, it’s not going very swimmingly.

9/18/2006

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FACTBOX-Security developments in Iraq, Sept 18
18 Sep 2006 11:19:01 GMT
Source: Reuters

Sept 18 (Reuters) – Following are security and other developments in Iraq reported on Monday, as of 1100 GMT:

BAGHDAD – Fourteen bodies, tortured and with bullet holes in the head, were found in different districts of Baghdad on Monday, a Ministry of Interior source said.

NEAR KUT – Three border guards were killed and six wounded by a roadside bomb when they were searching a village near the Iraqi-Iranian border east of Kut, 170 km (105 miles) southeast of Baghdad, police said.

KERBALA – Gunmen killed four men in different incidents in the holy Shi’ite city of Kerbala, 110 km (68 miles) south of Baghdad, police said.

BAQUBA – Gunmen killed four members of a Shi’ite family and wounded five as they were leaving their homes after receiving death threats in the religiously mixed city of Baquba, 65 km (40 miles) north of Baghdad, police said.

HIBHIB – Gunmen killed two members of a Shi’ite family and wounded two others as they were leaving their home after receiving death threats in the small town of Hibhib, near Baquba, police said.

MOSUL – Police found the bullet-riddled corpses of four women in different districts of Mosul, 390 km (240 miles) north of Baghdad, police said. One of the bodies showed signs of torture, police added.

MOSUL – Three civilians were wounded when a roadside bomb went off near an Iraqi army patrol in Mosul, police said.

MOSUL – A man and a child were wounded when several mortar rounds landed in and around a police station in Mosul, police said.

MOSUL – Four policemen were killed when insurgents ambushed them in Mosul, police said.

BAGHDAD – Iraqi army killed two insurgents and arrested 36 suspected insurgents during the last 24 hours in different parts of Iraq, the Defence Ministry said.

ANBAR PROVINCE – The Iraqi army with Anbar province tribal leaders killed 27 insurgents during the last week, the Defence Ministry spokesman said on Monday.

OTHER DEVELOPMENTS

BASRA – Chanting slogans and burning a white effigy of Pope Benedict, some 150 demonstrators in the Iraqi Shi’ite city of Basra demanded a papal apology on Monday for comments that have offended many Muslims worldwide.

Summary: During a debate in Dec 2005, John Yoo basically outlines that he believes it’s perfectly fine to torture children. Actually, this isn’t limited to just children who are believed to be terrorist suspects, but this extends to children of terrorist suspects who haven’t done anything.

Cassel: If the president deems that he’s got to torture somebody, including by crushing the testicles of the person’s child, there is no law that can stop him?

Yoo: No treaty

Cassel: Also no law by Congress — that is what you wrote in the August 2002 memo…

Yoo: I think it depends on why the President thinks he needs to do that.

12/1/2005

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Update: More Goodies.  Here’s John Yoo claiming Clinton was abusing too much executive power, and here’s a rundown on the historical illiteracy of Yoo when describing the Founding Fathers’ intent (not to mention the Cold War as well).

Summary: During the previous week while the Bush administration was trying to push for passage of a bill that allowed them to use “torture light” tactics on prisoners, the LA Times ran an article with a buried section on how US military leaders don’t believe such tactics lead to good intelligence.  The intelligence gained from such abuse has little credibility, any good that comes out of it is undercut by the damage it does to the reputation of the US abroad.

9/8/2006

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CIA Can Still Get Tough on Detainees
New interrogation rules will apply only to the military. The harsh tactics remain secret.
By Julian E. Barnes, Times Staff Writer
September 8, 2006

WASHINGTON — New U.S. policies on the treatment and interrogation of terrorism suspects outlined this week by the Bush administration mean that the military no longer will resort to harsh or extreme methods to obtain information — but that the CIA could.

The new administration approach, first presented by President Bush in a speech Wednesday and detailed later by administration and military officials, followed an internal administration debate over the question of how best to extract intelligence from the most notorious suspects apprehended in the war on terrorism.

But by assigning the CIA to use tough, undefined methods on some detainees, the policy outlined by Bush may raise new questions about U.S. procedures and invite more criticism from human rights advocates and allies.

For the five years after the Sept. 11 attacks, the administration’s top leaders and senior policymakers have supported the use of harsh methods to obtain information that could head off future attacks and save lives. But military officers have insisted that such interrogation tactics are unproductive — and inevitably lead to abuse.

On Wednesday, after years of internal debates, the administration outlined a compromise meant to reconcile the position of hard-liners and military traditionalists.

The Army, morally and culturally averse to using unorthodox interrogation methods, will get out of the business of using tough tactics against detainees under the compromise. The new Army field manual authorizes only 19 interrogation techniques and bans the most controversial tactics that critics said amounted to torture — hooding prisoners, conducting mock executions, and strapping detainees to boards and using water to simulate drowning.

But the CIA will reserve the right to use the tougher tactics. Bush said such methods had been effective in getting some of the 14 top Al Qaeda suspects held by the agency to talk. Administration officials said the CIA tactics would be legal and fall well short of torture and abuse. But the president and others have pointedly refused to say what those tougher methods might be.

The compromise may satisfy the military, which can now say its soldiers will always comply with international treaties and steer well clear of torture. But it is not certain whether the new policy will satisfy those who have raised questions about American interrogation practices, including human rights advocates and members of Congress.

On Capitol Hill, lawmakers and aides have expressed frustration that they have not been told what the CIA techniques were and whether the agency would adhere to the ban on torture.

“We don’t know what the methods are; that is where the difficulty lies,” said a congressional aide who asked not to be identified because of the sensitivity of the debate. “Although the Department of Defense techniques, bar none, are articulated openly, with the CIA there is no way to judge whether those techniques satisfy the ban on cruel and degrading treatment.”

Human rights advocates applauded the military’s embrace of Geneva Convention protections and the Army’s decision to make public its interrogation tactics. But they worried that congressional approval of a CIA detention program that was secret and allowed a broad range of harsh techniques would be a step backward.

“They have decided to take the military out of the torture business and leave that to the CIA, and that is extremely problematic,” said Jumana Musa, an advocacy director for Amnesty International.

Administration officials said the new policy ensured that the toughest techniques were reserved only for the most experienced interrogators and used only on the most notorious suspects.

“The president made clear this is a small program targeting a certain category of high-level Al Qaeda members,” said a senior administration official speaking on condition of anonymity because of the deliberations involved.

Senior Pentagon officials suggested that creating separate rules for the CIA and the military represented a logical division of labor.

“Each of us has our task to do,” Stephen A. Cambone, the undersecretary of Defense for Intelligence, said in an interview Thursday.

For the uniformed military, disclosing interrogation tactics and outlining protections detainees will be afforded was vital to assuring the public that the military was doing all it could to ensure there would be no repeat of the Abu Ghraib prisoner abuse scandal.

“The military really felt it has been tarnished by events at Abu Ghraib and other detainee abuses,” said an administration official. “They want to restore a certain image, and so for them there is a greater interest in being able to speak with a great deal of transparency.”

Military leaders argued this week that they did not believe abusive tactics worked in extracting information.

Information extracted by abusive tactics was of questionable credibility, Kimmons said. Moreover, any good that came from the information would be undercut by the damage to America’s reputation once the abuse became known.

“And we can’t afford to go there,” he said.

Kimmons’ comments reflect a common refrain among instructors at the Army intelligence academy at Ft. Huachuca, Ariz. Nevertheless, many interrogators privately acknowledge that coercive methods that stop short of torture have proven effective in Afghanistan and Iraq.

In Afghanistan, for instance, interrogators who questioned prisoners early in the war complained that they had little success with straightforward approaches, and only began to get meaningful information from prisoners after embracing harsher methods, including short-term deprivation of sleep.

Over time, those harsher techniques came to include putting prisoners in “stress positions” and placing hoods on their heads — all explicitly banned by the new Army field manual.

The new manual allows 19 interrogation methods. Cambone said officers were asked if they needed more than the 19 approved techniques. They said they did not.

“They are of the view that the manual gives them what they need to do the job,” Cambone said.

Most of the Army’s methods are traditional approaches that were included in the old manual — techniques called “ego-up,” where detainees with low self-esteem are flattered into revealing information; or “fear-up,” where interrogators try to play off a pre-existing fear or anxiety of a detainee and suggest that the soldier could help the detainee.

New techniques include one called “Mutt and Jeff” — essentially a good cop, bad cop routine — and “false flag,” in which an interrogator pretends not to be a U.S. citizen.

The new manual includes one restricted technique that will only be used on so-called unlawful combatants — such as Al Qaeda suspects — not traditional prisoners of war.

That technique, called “separation,” involves segregating a detainee from other prisoners. Military officials said separation was not the equivalent of solitary confinement and was consistent with Geneva Convention protections.

A four-star general would need to approve the use of the separation tactic to ensure it was not abused, Kimmons added.

Disclosing the Army’s techniques was controversial within the Pentagon, and Kimmons acknowledged that the military had wrestled with the idea of keeping some of them secret. But he said the reality was that the interrogation techniques were not the kind of secret that could be kept forever.

“Even classified techniques, once you use them on the battlefield over time, become increasingly known to your enemies, some of whom are going to be released in due course,” Kimmons said Wednesday.

For the CIA, immersed in a culture of secrecy, the sort of disclosure the Army made this week is anathema.

Agency officials believe that talking about what methods are allowed or not allowed undercuts their ability to question terrorists.

Administration officials acknowledged Thursday that as long as the CIA did not follow the Pentagon lead and disclose its methods, questions would persist.

“The fact that they are not disclosing means there is going to be skepticism,” said an official who spoke on condition of anonymity because of government rules.

Nonetheless, the CIA is better equipped to seek intelligence from difficult suspects, others said.

“With the CIA, you are only talking about a narrow group,” the senior administration official said. “You don’t have a problem of techniques falling in the hands of an interrogator who doesn’t have a lot of training.”

But Musa, the Amnesty lawyer, said several CIA contractors had been accused of beating detainees to death, and there was little evidence that the agency’s interrogators could be trusted with tougher tactics.

“Anytime anyone has danced up to the line,” she said, “they have crossed over it.”

julian.barnes@latimes.com

Summary: Fred Barnes, through a Weekly Standard interview with President Bush, has given us a rationale on why Osama bin Laden is not a top priority with the President.  This is yet another continuing shifting and changing saga as to whether or not the administration is intent on capturing bin Laden, “dead or alive”.

9/14/2006

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