Wednesday, September 17, 2008

In Candidates, 2 Approaches to Wall Street

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The crisis on Wall Street will leave the next president facing tough choices about how best to regulate the financial system, and although neither Senator Barack Obama nor Senator John McCain has yet offered a detailed plan, their records and the principles they have set out so far suggest they could come at the issue in very different ways.

On the campaign trail on Monday, Mr. McCain, the Republican presidential nominee, struck a populist tone. Speaking in Florida, he said that the economy’s underlying fundamentals remained strong but were being threatened “because of the greed by some based in Wall Street and we have got to fix it.”

But his record on the issue, and the views of those he has always cited as his most influential advisers, suggest that he has never departed in any major way from his party’s embrace of deregulation and relying more on market forces than on the government to exert discipline.

While Mr. McCain has cited the need for additional oversight when it comes to specific situations, like the mortgage problems behind the current shocks on Wall Street, he has consistently characterized himself as fundamentally a deregulator and he has no history prior to the presidential campaign of advocating steps to tighten standards on investment firms.

He has often taken his lead on financial issues from two outspoken advocates of free market approaches, former Senator Phil Gramm and Alan Greenspan, the former Federal Reserve chairman. Individuals associated with Merrill Lynch, which sold itself to Bank of America in the market upheaval of the past weekend, have given his presidential campaign nearly $300,000, making them Mr. McCain’s largest contributor, collectively.

Mr. Obama sought Monday to attribute the financial upheaval to lax regulation during the Bush years, and in turn to link Mr. McCain to that approach.

“I certainly don’t fault Senator McCain for these problems, but I do fault the economic philosophy he subscribes to,” Mr. Obama told several hundred people who gathered for an outdoor rally in Grand Junction, Colo.

Mr. Obama set out his general approach to financial regulation in March, calling for regulating investment banks, mortgage brokers and hedge funds much as commercial banks are. And he would streamline the overlapping regulatory agencies and create a commission to monitor threats to the financial system and report to the White House and Congress.

On Wall Street’s Republican-friendly turf, Mr. Obama has outraised Mr. McCain. He has received $9.9 million from individuals associated with the securities and investment industry, $3 million more than Mr. McCain, according to the Center for Responsive Politics, a watchdog group. His advisers include Wall Street heavyweights, including Robert E. Rubin, the former treasury secretary who is now a senior adviser at Citigroup, another firm being buffeted by the financial crisis.

If many voters are fuzzy on the events that over the weekend forced Lehman Brothers Holdings Inc. into bankruptcy and Merrill Lynch & Company to be swallowed by the Bank of America Corporation, the continuing chaos among the most venerable names in American finance — coming on top of the recent government seizure of mortgage giants Fannie Mae and Freddie Mac and the demise of the Bear Stearns Companies — has stoked their anxiety for the economy, the foremost issue on voters’ minds.

So it was that first Mr. Obama and then Mr. McCain rushed out their statements on Monday morning before most Americans had reached their workplaces.

To the extent that travails on Wall Street and Main Street have both corporations and homeowners looking to Washington for a hand, that helps Mr. Obama and his fellow Democrats who see government as a force for good and business regulation as essential. Yet Mr. McCain has sold himself to many voters as an agent for change, despite his party’s unpopularity after years of dominating in Washington, and despite his own antiregulation stances of past years.

Mr. McCain was quick on Monday to issue a statement calling for “major reform” to “replace the outdated and ineffective patchwork quilt of regulatory oversight in Washington and bring transparency and accountability to Wall Street.” Later his campaign unveiled a television advertisement called “Crisis,” that began: “Our economy in crisis. Only proven reformers John McCain and Sarah Palin can fix it. Tougher rules on Wall Street to protect your life savings.”

Mr. McCain’s reaction suggests how the pendulum has swung to cast government regulation in a more favorable political light as the economy has suffered additional blows and how he is scrambling to adjust. While he has few footprints on economic issues in more than a quarter century in Congress, Mr. McCain has always been in his party’s mainstream on the issue.

In early 1995, after Republicans had taken control of Congress, Mr. McCain promoted a moratorium on federal regulations of all kinds. He was quoted as saying that excessive regulations were “destroying the American family, the American dream” and voters “want these regulations stopped.” The moratorium measure was unsuccessful.

“I’m always for less regulation,” he told The Wall Street Journal last March, “but I am aware of the view that there is a need for government oversight” in situations like the subprime lending crisis, the problem that has cascaded through Wall Street this year. He concluded, “but I am fundamentally a deregulator.”

Later that month, he gave a speech on the housing crisis in which he called for less regulation, saying, “Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.”

Yet Mr. McCain has at times in the presidential campaign exhibited a less ideological streak. As he did on Monday, he from time to time speaks in populist tones about big corporations and financial institutions and presents himself as a Theodore Roosevelt-style reformer. He supported the Bush administration’s decision to seize Fannie Mae and Freddie Mac, the mortgage giants, and he has backed as unavoidable the promise of taxpayer money to help contain the financial crisis.

Other than Mr. Gramm, who as chairman of the Senate Banking Committee before his leaving Congress in 2002 worked to block efforts to tighten financial regulation, Mr. McCain’s closest adviser on matters of Wall Street is John Thain, the chief executive of Merrill Lynch, who has raised about $500,000 for Mr. McCain. Unlike Mr. Gramm, Mr. Thain has a reputation as a pragmatic, nonideological, moderate Republican. That the men are Mr. McCain’s touchstones is typical of his small and eclectic mix of advisers, making it hard to generalize about how Mr. McCain would act as president.

A prominent McCain supporter, Gov. Tim Pawlenty of Minnesota, signaled how Mr. McCain would try to make his antiregulation record fit the proregulation times that the next president will inherit. Mr. Pawlenty suggested in an interview on Fox News that, given the danger that “any future administration” would go too far, Mr. McCain would be the safer bet to protect against “excessive government intervention or excessive government regulation.”

Mr. Obama also does not have much of a record on financial regulation. As a first-term senator, he has not been around for the major debates of recent years, and his eight years in the Illinois Senate afforded little opportunity to weigh in on the issues.

In March 2007, however, he warned of the coming housing crisis, and a year later in a speech in Manhattan he outlined six principles for overhauling financial regulation.

On Monday, he said the nation was facing “the most serious financial crisis since the Great Depression,” and attributed it on the hands-off policies of the Republican White House that, he says, Mr. McCain would continue. Seeking to showcase Mr. Obama’s concerns, his campaign said Mr. Obama led a conference call on the crisis early Monday that included Paul A. Volcker, the former chairman of the Federal Reserve; Mr. Rubin; and his successor as treasury secretary, Lawrence H. Summers.

Later, citing Mr. McCain’s remarks about the economy’s strong fundamentals, he told a Colorado crowd that Mr. McCain “doesn’t get what’s happening between the mountain in Sedona where he lives and the corridors of power where he works.”

One reason for both men’s sketchy records on financial issues is that neither has been a member of the Senate Banking Committee, which has oversight of the industry and its regulators. Under both parties’ leadership, the committee often has been a graveyard for proposals opposed by lobbyists for financial institutions, including Fannie Mae and Freddie Mac, which last week were forced into government conservatorships.

Industry lobbyists’ success in killing such regulations meant senators outside the banking panel did not have to take a stand on them.

So, the President May Kill Anybody He Pleases, Right?

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By Robert Higgs

Among the many cock-and-bull stories set afoot by the Bush administration during the lead-up to its attack on Iraq was the one about the now-infamous drones of death. Later, it became sufficiently clear that this alleged threat had no more substance than the others the administration and the lapdog mainstream media had served up to a credulous public.

Although the ludicrously primitive Iraqi drones had no capacity whatsoever to harm the American public, the lethality of U.S. drones is another matter. Predator drones equipped with Hellfire missiles now provide the U.S. government with a means of flying over territory that U.S. ground troops dare not penetrate, observing activities on the ground, and killing people there with, shall we say, a minimum of due process.

In November 2002, for example, BBC News reported: "America’s Central Intelligence Agency (CIA) carried out an attack in Yemen that killed six suspected members of Osama Bin Laden’s al-Qaeda network, according to US officials. The men died when the jeep they were travelling in was hit by a missile fired from an unmanned CIA plane – believed to be a Predator drone, the US sources said."

U.S. forces have also used the Predator actively in Afghanistan and, most recently, in the Waziristan region of Pakistan. Today, I read an account of a drone attack near the town of Miramshah in North Waziristan that is reported to have "killed at least 14 people and injured 12 others," including "at least six women and children."

In Afghanistan, such aerial attacks, not always by drones, of course, have created a ticklish dilemma for the Karzai government as it pretends to be a real government, rather than the U.S. puppet it actually is. Official protests have become increasingly vociferous, though I have seen no evidence that the U.S. forces intend to change their operations in response.

What an awesome power the president and, with his authorization, his subordinate officers possess: they can kill people at will, including those persons’ wives and children, with no risk whatever of receiving return fire or other retribution. Surely this is the long-sought culmination of the Republican’s quest to establish "law and order."

What leads me to remark on this matter, however, is not its technological nuts and bolts or its connection with master-puppet relations in southwest Asia, but rather the complete insouciance with which the American public greets reports of deaths by drone. I do not exaggerate if I say that the general reaction is "ho-hum." Well, the average American says, that disposes nicely of another "bad guy." The gratuitous murder of the bad guy’s family members, neighbors, and other innocent persons in the vicinity appears to create no blip on the average American’s moral radar screen. Perhaps Americans do not consider Yemenis, Afghanis, and Pakistanis to be real human beings whose right to life we are obliged to respect?

Is death by drone simply another occasion when the president, having labeled a set of actions as a "war," believes and acts as though he has carte blanche to dish out death and destruction willy nilly?

Of course, reports of drone attacks usually refer to militants, Taliban forces, or al Qaeda members. To this information, we might well respond: yeah, who says? If we are content to assume that U.S. intelligence agents, who nearly always get their information from collaborators in the target territories, really know whom they are targeting, then we are certainly easily satisfied. One does not have to make an extensive survey of U.S. government claims about Iraq, Afghanistan, Pakistan, and other places in southwest Asia over the past seven years to see that for the most part the U.S. commanders, from the Commander in Chief on down to the sweatiest noncom on patrol, are either more or less clueless or the biggest liars on the planet. I do not rule out that they are both.

The upshot is that the people who cooperate in getting to the point at which someone pushes the button to send the Hellfire toward its selected target may in fact not know for sure whom they are about the kill, or how many others will be killed along with this ostensible "enemy" or who those others are.

Without launching into a massive geopolitical inquiry, we might well pause from time to time to ask, What are U.S. forces doing in Afghanistan and Pakistan anyhow? Surely they are not there to capture or kill the persons responsible for the crimes of 9/11, because they have already proved beyond all doubt that they are incapable of doing so (as Osama bin Laden’s videos periodically remind us). They are, however, all too capable of diverting their energies from that objective toward unrelated goals, such as attacking and occupying Iraq.

We Americans find ourselves, then, observing with extreme moral disengagement as the president and his subordinates murder persons whose identities remain uncertain along with assorted others whose only crime is being in the same area as the targeted individuals – after all, the Hellfire, which makes a very big blast, can scarcely be described as a surgically precise killing instrument.

Moreover, the president’s use of this remote-control-execution device apparently has no geographical limits, because, as he assures us, the "war on terror" has none. Today, a dirt road in Waziristan; tomorrow, the Santa Monica Freeway. It will be interesting to see, when drone attacks are carried out in this country, whether the American public gives a damn.

A Crash Course in Economic Crashes

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By Larry Beinhart

The first time I was in a car crash, I was 6 or 7 years old.

That's a long time ago. But there are certain things about it that I remember quite vividly.

My father was driving. The road was icy. We began to slide. This was in the days before seat belts, and cars had bench seats, upholstered but not shaped for each individual bottom. My father shot out his right arm and pressed me against the seat back to keep me from flying forward if, indeed, we were going to end up hitting something.

What was most extraordinary was how long it seemed to take. How time slowed while we slid forward and sideways, heading onto the shoulder, then past it. It seemed as if we had all the time in the world, yet there was nothing we could do to get off the ice, alter the trajectory, slow down ... nothing ... until we crashed.

As I read the economics news, I'm having that exact same sensation that we're in a slow-motion crash.

Each week, sometimes daily, we slide by a new warning sign, another wreck that's already off the road.

The new one is Lehman Brothers.

Before that, Fannie Mae and Freddie Mac. Before that, Bear Stearns.

In August, "one in every 416 U.S. households entered the foreclosure process." In spite of a 2005 law that made personal bankruptcies more difficult and that allows creditors to squeeze money out of people even after they've gone bankrupt, personal bankruptcy rates are soaring. General Motors stock has been trading at 1950s prices. Like GM, Ford is laying off thousands of workers. Both of them are asking for federal assistance to survive. Pension funds are routinely failing.

Then there are my personal experiences.

Like when I go to the gas station and watch the ticker on the pump go up over $50, $60 and then $70 to fill the tank. Or when I go to the supermarket and lay down $140 for what cost me $90 a year or so back.

From time to time I run into rich people or their handlers. In February I was traveling with a lawyer from one of New York's leading law firms. He does the legal work on IPOs. He told me the firm's January 2008 business was down 90 percent from January 2007. A couple of days ago a hedge fund guy dropped in on our regular tennis doubles game. Between sets he mentioned how hard it was to get credit these days. "On a secured loan," which means 40 percent backed by assets, mostly commercial real estate -- he was talking about $120 million and up -- "the banks want 20 percent interest."

Every analyst I see or hear blames it on the "housing bubble" and the "subprime mess."

That doesn't seem right.

It doesn't explain why the dollar has lost about a third of its value against the Canadian loonie and the euro, among others, or why gold is bouncing up against the $1,000 ceiling -- both of which happened before the bubble sprang a leak.

It doesn't explain why the stock market -- as measured by the Dow Jones average -- is down (adjusted for inflation) about 15 percent from 2001. Moreover, at its peak during the Bush years, it was only 14 percent (adjusted) over the 2001 mark.

It doesn't explain why median income is down -- depending on who's reporting it -- $700, $1,000, $1,200 per person, over that same time period. Even median family income, with more people working per family, is down.

It doesn't explain why, during the so-called Bush boom, corporate profits were at an all-time high, but corporations were starved for places to invest the money.

Let us presume that government policy has an effect on the economy.

What are the policies that have produced this economy that's on an icy road, sliding in slow motion toward the cliff, or, if we're lucky, maybe just into a ditch?

The core, the very heart of Bushonomics, is cutting taxes, especially for the wealthy.

I find it impossible to figure out what George Bush's motivations for anything are. He may have that impulse because he himself, his family and his friends are all very rich and they'll save themselves millions of dollars over the years. Maybe it's political. As he once said, the super-rich are his "base." It may be a class thing, borne of the belief that rich people are rich because they're better and will do better things with the money. It may be the mystical belief that "the market" makes everything better.

Whatever the truth is, the tax cuts were sold as economic stimulus and jobs packages with the promise that they would not create deficits. This last was based on a romantic Ayn Rand vision of millionaires racing into the backwoods to build, build, build new businesses that would create jobs, "good jobs," and new taxes would be paid by the businesses and the workers, making up for the initial deficits.

Alas, none of that ever happened.

Deficits were created.

Bush went on a war spending spree. That made them bigger. Whatever boom there was did not create sufficient revenue to the government to make up for deficits.

That triggered the next event in our saga.

Deficits normally lead to inflation.

Bankers hate inflation. So do politicians.

So Alan Greenspan, everyone's favorite economic hero, stepped in. He cut the rates that the Federal Reserve charged banks to borrow from the government.

The intent was to keep inflation low.

It sort of worked for about five years. The official, and actual, rates of inflation were pretty low.

The reason I say it only sort of worked was that, in reality, it suppressed inflation. It made the dollar worth less -- as we now know, at least one third less. Oil, as it happens, is priced in dollars. Overseas suppliers of oil began to see their incomes decline -- by about a third. So they did what any sensible person with the power to do it would do: They began to raise their prices.

That does not account for the full rise in the price of oil, but it triggered it, and it's a large segment of it. Since everything in America moves on oil, it has raised the cost of everything else. It doesn't account for all the cost increases we're seeing now, but it propels a significant portion of them.

This was combined with several other impulses.

Free trade has to be number one on the list.

Free trade brought cheap consumer goods into the United States from overseas. That made shoppers very happy. It kept inflation down.

It was tough on workers. It not only put a lot people out of work directly, it put downward pressure on wages all across the board. That too, helped keep inflation down.

It was also very tough on businesses that actually make things here in the United States. The making of things, and then the support services, were outsourced, though the companies remained here, as corporate and marketing entities.

Other factors include deregulation, non-enforcement of regulations, appointing industry representatives to regulatory agencies, and union busting.

With outsourcing and domestic wages going down, corporations did, indeed, make record profits.

Three things came together to produce a great deal of loose cash.

First, the government cut taxes while it increased spending.

Second, the Federal Reserve made it cheap, artificially cheap, to borrow money.

Third, corporations made money -- largely by pushing wages and salaries down -- but had no place to put it.

But, what was there to do with all that money?

There was nothing being produced with the right kind of growth potential to pay back the loans. Working people were not making more money that could be used to create more consumption.

So the great ocean of money went, ultimately, to two places, from which it was supposed to be paid back: to real estate and to consumers (who were making less income) for personal spending on credit.

There was growth, about a 37 percent increase in the GDP in actual dollars across seven years. That's about 17 percent in inflation-adjusted dollars.

Let's go back and look at two other numbers: median income and the stock market.

They're both down.

Where was the growth?

It was in borrowing. In credit. In debt.

There's one bubble, the housing bubble, which is inside of -- or a symptom of -- a much larger bubble, the credit bubble. That bubble is so big that it represents almost the entire growth in the U.S. economy for the last seven years.

At the core of it, the seeds from which the poison fruit has grown are the tax cuts.

Do tax cuts actually stimulate the economy?

Vast sums of money have gone into creating that myth. Major intellectual industries have been created and sustained to sell that story. At the center of that claim is the Legend of Saint Ronald Retro Reagan.

Reagan cut income taxes, big time. But he raised Social Security and Medicare taxes. That meant that rich people paid less and working people paid more. The immediate result was that the economy faltered. Then Reagan raised taxes, though not by as much as he cut them. At about the same time, oil dropped from $40 a barrel to $20. The economy did grow. That is until the stock market crash of '87.

There is vastly more evidence the other way. Tax increases stimulate the economy. It may not make sense, it may be counterintuitive, but here are the facts.

What if taxes went up to over 90 percent?

According to the Reaganauts and Bushwackers, the world would collapse. Business would grind to a halt. Investors would flee. Workers would lay down their tools.

Back in World War II, taxes did go up that high.

Americans who earned as little as $500 per year paid income tax at a 23 percent rate, while those who earned more than $1 million per year paid a 94 percent rate.

The result:

The American economy expanded at an unprecedented (and unduplicated) rate between 1941 and 1945. The gross national product of the United States, as measured in constant dollars, grew from $88.6 billion in 1939 -- while the country was still suffering from the depression -- to $135 billion in 1944, according to Economic History Services.

From 1946 to 1963, the top rate fluctuated from 86 percent to 91 percent.

Average economic growth was 3.5 percent per year.

The current top income tax rate is 35 percent.

Economic growth has been, at best, 2.5 percent -- that is, if you stop counting in 2007. And don't consider the type of growth, which consisted primarily of increased debt and pyramids of borrowing.

In 1992 the top tax rate was 31 percent.

Bill Clinton increased it to 39.1 percent.

The Dow Jones average went up 360 percent. The number of jobs went up 237,000 per month (under Bush, as of 2007, it was just 72,000 per month). Median household income went up rather than down. The budget was balanced.

Both candidates are talking about tax cuts to fix the economy.

Does that make sense?

Here, in New York State, we are facing a budget crisis due to the collapse in the financial markets, which is where a lot of our tax revenue comes from.

The governor has a choice between raising taxes and cutting expenditures. He's a good, fairly liberal Democrat. But he polled the people and the Legislature, and everyone wanted to cut spending.

That means cutting the state workforce.

That means that people who had jobs and were spending money will be unemployed and spending a lot less. That means less revenue for the state and for the places that they did business with, which means the economic crisis will grow worse.

States are in a difficult position because they compete with each other for "friendly business environments," which always means, in the short term, lower taxes.

This administration, and most economists, at least as they appear in the media, want us to "consume" our way out of trouble.

But the model should be the other way. We should be producing our way out of trouble.

Is that possible in a "free trade" world?

The answer is yes -- through government spending. Through the kinds of things that the market cannot, or will not, supply.

The market will not protect our coastlines. How many Katrinas and Ikes do we have to have before we understand that it is in the common good -- and good for business and good for the economy -- that we do so?

Most of the costs of doing so cannot be outsourced. They have to, by their nature, stay here.

The same is true for wind and solar power and rebuilding our electrical grid to make such power sources work.

The market will not produce sensible, affordable health care. The market, in fact, has produced the worst cost-to-benefit ratio in the civilized world. The market has produced more bureaucracy in health care than any government agency ever could.

An affordable, national health care system would make American business more competitive.

For those of us who pay for our own health care, it would leave more money in our pockets than most of the tax cut proposals.

The market cannot and will not produce clean air and water. It will not produce an educated population.

Why did we have so much growth -- so much business growth -- when we had high taxes and when the taxes on corporate profits were actually collected?

If taxes on income (personal or corporate) are high, the impulse is not to take them, especially if they're as high as 90 percent. But there's no need to go that high to start making a meaningful adjustment.

What do companies and people do when they're making money in a high tax environment? They reinvest, in producing something. Cashing out is difficult, but the value of what they own continues to grow as the reinvestments pay off. We then have to "make money the old fashioned way ... earn it."

There is a difference between my business and "business," the wealth of the nation.

In my business, I hate regulations, unions and high taxes.

In my country, I appreciate regulations, unions and what high taxes, if intelligently spent, do for me. Then I live in a country in which business in general does better, my investments in the stock market do better, my retirement is protected, my children's health care is affordable, and I have more hope for their future.

The Most Secretive Govt Ever?

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By William Fisher

The administration of President George W. Bush continues to expand government secrecy across a broad array of agencies and actions -- and at greatly increased cost to taxpayers, according to a coalition of groups that promote greater transparency.

Dr. Patrice McDermott, director of Open the Government, a watchdog group, told IPS, "The federal government under the Bush administration has shown its commitment to secrecy by where it has put its money -- more no-bid contracts, fewer government employees processing FOIA [Freedom of Information Act] requests, less on training on classification issues, and almost 200 dollars spent on keeping secrets to every dollar allocated to open them."

"Given our growing deficit, the next administration faces difficult choices in restoring accountable government," he added.

In its "Secrecy Report Card 2008," released Sep. 9, the group concluded that the Bush administration "exercised unprecedented levels not only of restriction of access to information about federal government's policies and decisions, but also of suppression of discussion of those policies and their underpinnings and sources."

Open the Government is a Washington-based coalition of consumer and good government groups, librarians, environmentalists, labour, journalists, and others.

It says that that classification activity remains significantly higher than before 2001. In 2006, the number of original classification decisions increased to 233,639, after dropping for the two previous years.

The government spent 195 dollars maintaining the secrets already on the books for every one dollar it spent declassifying documents in 2007, a five percent increase in one year.

At the same time, fewer pages were declassified than in 2006. The nation's 16 intelligence agencies, which account for a large segment of the declassification numbers, are excluded from the total reported figures.

Classified or "black" programmes accounted for about 31.9 billion dollars, or 18 percent of the fiscal year (FY) 2008 Department of Defence (DOD) acquisition funding requested last year. Classified acquisition funding has more than doubled in real terms since FY 1995.

Almost 22 million requests were received under FOIA in 2007, an increase of almost 2 percent over the previous year. But a 2008 study revealed that, in 2007, FOIA spending at 25 key agencies fell by 7.0 million dollars, to 233.8 million dollars, and the agencies put 209 fewer people to work processing FOIA requests.

While the secretive Foreign Intelligence Surveillance Court does not reveal much about its activities, the Department of Justice reported that, in 2007, the court approved 2,371 orders -- rejecting only three and approving two left over from the previous year. Since 2000, federal surveillance activity under the jurisdiction of the court has risen for the ninth year in a row -- more than doubling during the Bush administration.

The court was established under the Foreign Intelligence Surveillance Act in 1978 after revelations of the widespread wiretapping by the administration of Richard M. Nixon to spy on political and activist groups. Recently, efforts to reform the act have been triggered by the Bush administration's admission that it had conducted secret surveillance programmes in the U.S. without warrants from the court.

In addition, more than 25 percent (worth 114.2 billion dollars) of all contracts awarded by the federal government last year were not subject to open competition -- a proportion that has remained largely unchanged for the last eight years.

Investigations by Congress and independent government agencies of the war in Iraq have revealed billions of dollars in no-bid contracts, covering everything from delivering food and water to U.S. troops to providing armed security for U.S. officials and visiting dignitaries. There have been widespread allegations of waste, fraud and abuse by contractors. Several have been convicted and prosecutions of others are pending.

During 2007, government-wide, 64 percent of meetings of the Federal Advisory Committee were closed to the public. Excluding groups advising three agencies that historically have accounted for the majority of closed meetings, 15 percent of the remainder were closed -- a 24 percent increase over the number closed in 2006. These numbers do not reflect closed meetings of subcommittees and taskforces.

The Federal Advisory Committee Act was passed in 1972 to ensure that advice by the various advisory committees formed over the years is objective and accessible to the public.

The report also found that in seven years, President Bush has issued at least 156 "signing statements", challenging over 1,000 provisions of laws passed by Congress. In 2007, eight were issued.

The so-called "state secrets privilege" -- invoked only six times between 1953 and 1976 -- has been used by the Bush administration a reported 45 times, an average of 6.4 times per year in seven years. This is more than double the average (2.46) in the previous 24 years.

The "state secrets privilege" is a legal doctrine that contends that admission of certain information into court proceedings would endanger U.S. national security. The Bush administration has frequently invoked the privilege to dismiss lawsuits that would be embarrassing to the government, and the courts have generally been deferential to the government's claims.

National Security Letter (NSL) requests continued to rise; the 2007 numbers are still classified, but the recently unclassified new number for 2006 shows a 4.7 percent increase in requests over 2005. Since enactment of the USA Patriot Act in 2001, the number of NSLs issued has seen an astronomical increase.

The NSL provision of the Patriot Act radically expanded the authority of the Federal Bureau of Investigation (FBI) to demand personal customer records from Internet Service Providers, financial institutions and credit companies without prior court approval.

Through NSLs, the FBI is authorised to compile dossiers about innocent people and obtain sensitive information such as the web sites a person visits, a list of e-mail addresses with which a person has corresponded, or even unmask the identity of a person who has posted anonymous speech on a political website.

The provision also allows the FBI to forbid or "gag" anyone who receives an NSL from telling anyone about the record demand.

Cheney Misled GOP Leaders, New Book Says

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A GOP congressional leader who was wavering on giving President Bush authority to wage war in late 2002 said Vice President Cheney misled him by saying that Iraqi President Saddam Hussein had direct personal ties to al-Qaeda terrorists and was making rapid progress toward a suitcase nuclear weapon.

That's one of the revelations in the new book, "Angler: The Cheney Vice Presidency," by The Post's Barton Gellman.

Another is the inside story about how Cheney managed the process that led to his selection as vice president. Gellman reveals that Cheney did not fill out his own questionnaire for potential running mates; that ostensible top contenders for the ticket were not actually interviewed by Cheney or Bush; that the heart surgeon who vouched for Cheney's health never met him or reviewed his medical records; and that longtime counselor Dan Bartlett warned Bush "we're getting our asses kicked in the media" because the campaign knew so little about Cheney's record.

Two former Republican governors, Frank Keating of Oklahoma and John Engler of Michigan, accuse Cheney of leaking closely held information from Keating's questionnaire in order to damage his bid for a cabinet post. "Dick Cheney coming into my life has been like a black cloud," Keating tells Gellman.

The Post published excerpts of the new book in Sunday's and Monday's editions. It expands on a Pulitzer Prize-winning series Gellman wrote with former Post investigative reporter Jo Becker in 2007.

"Angler" is based on hundreds of previously unpublished interviews with present and former Cheney advisers, senior officials in federal agencies, diplomats, judges, military officers, senators and members of Congress. Among those who spoke on the record to Gellman are Secretary of State Condoleezza Rice, National Security Adviser Stephen J. Hadley, White House Chief of Staff Joshua Bolten and his predecessor Andrew H. Card Jr., senior presidential advisers Dan Bartlett and Karl Rove, and numerous high ranking Justice Department alumni, including John Ashcroft and James B. Comey. Cheney and President Bush declined to be interviewed.

Some of the book's most significant news describes a three-month conflict between the Justice Department and the vice president's office over warrantless domestic surveillance. In addition to the excerpts published in the Post, Gellman's account of that program includes a scene in which the top White House national security lawyer begins hearing rumors of "the vice president's special program." John B. Bellinger III, who had not been informed of the operation, confronted Cheney's counsel, David S. Addington.

"I'm not going to tell you whether there is or isn't such a program," Addington replied, glowering. "But if there were such a program, you'd better go tell your little friends at the FBI and the CIA to keep their mouths shut."

Cheney's accusations about Saddam Hussein, described by former House Majority Leader Richard Armey, came in a highly classified one-on-one briefing in Room H-208, the vice president's hideaway office in the Capitol Building. The threat Cheney described went far beyond public statements that have been criticized for relying on "cherry-picked" intelligence of unknown reliability. There was no intelligence to support the vice president's private assertions, Gellman reports, and they "crossed so far beyond the known universe of fact that they were simply without foundation."
Armey had spoken out against the coming war, and his opposition gave cover to Democrats who feared the political costs of appearing to be weak. Armey reversed his position after Cheney told him, he said, that the threat from Iraq was actually "more imminent than we want to portray to the public at large."

Cheney said, according to Armey, that Iraq's "ability to miniaturize weapons of mass destruction, particularly nuclear," had been "substantially refined since the first Gulf War," and would soon result in "packages that could be moved even by ground personnel." Cheney linked that threat to Saddam's alleged personal ties to al Qaeda, Armey said, explaining that "we now know they have the ability to develop these weapons in a very portable fashion, and they have a delivery system in their relationship with organizations such as al Qaeda."

"Did Dick Cheney ... purposely tell me things he knew to be untrue?" Armey said. "I seriously feel that may be the case...Had I known or believed then what I believe now, I would have publicly opposed [the war] resolution right to the bitter end, and I believe I might have stopped it from happening."

Gellman writes that Cheney was never the shadow president alleged by critics. He describes a trajectory of power in which the vice president began the first term with "a brief so wide-ranging and autonomous that he was the nearest thing we have had to a deputy president." But after the near-meltdown at the Justice Department in March 2004, Bush "came to see disadvantages in the arrangement, and over time it changed."

Even when Cheney lost some of his influence, Gellman reports, he remained effective at slow-rolling initiatives he did not like. One senior foreign policy adviser, Aaron Friedberg, described the tactics as "rope a dope."

"Angler" recounts a meeting in the Situation Room in which the frustrated president, jamming a finger toward Defense Secretary Donald Rumsfeld, demanded the start of long-delayed criminal proceedings against terrorist suspects held at Guantanamo Bay. "We are going to have a trial," Bush said, "and the proceedings are going to start by the end of January" 2004. Cheney and Rumsfeld failed to turn up for three consecutive meetings called by Rice to carry out the president's command.

On their third no-show--a month after Bush's deadline expired--CIA Director George Tenet exploded in profanity, Gellman reports. And Rice began to cry.

For prosecution of Bush war crimes, planning begins

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By Stephen C. Webster

On Saturday morning in Andover, Massachusetts, as about 120 activists, adademics, constitutional scholars, public officials and legal experts gathered in the Wyndham hotel, the building suddenly went dark.

Electricity had been cut off just prior to the start of a landmark war crimes conference, the goal of which was to plan the prosecution of Bush Administration officials. The first of its kind conference, already featuring a laundry-list of notable speakers, was suddenly in flux ... If only for a few moments.

"We were already so effective, the government tried to shut us down," said conference organizer Lawrence Velvel, dean of the Massachusetts School of Law at Andover, in an interview with RAW STORY.

"Of course, when I said that at the conference opener, the power had been restored. I was only joking," said Velvel with a slightly nervous laugh. "A fuse box fried, but the local electric company fixed it before we even began."

The ’Bush war crimes conference,’ according to its organizers, is a "throwback to the framers of the constitution," which aims to establish "necessary organizational structures" to pursue those guilty of war crimes "to the ends of the Earth."

"The framers didn’t trust the federal government either," said Velvel. "And oddly enough, over the years and decades, a strong distrust of government was once a Republican position. It was, at least, in theory. And then Bush came along and there’s this, well, my country, love it or leave it in the GOP ... But now, you have people on the other side of the spectrum taking that very position.

"This is a conservative idea, to hold conferences and then take action to take power. Liberalism has been made fun of as mere self expression. I was very impressed by the desire in this group to take action."

"This is not a campaign event," said Professor Christopher Pyle of Mt. Holyoke College, during his speech to the conference. "It is a conference about how to restore governmental accountability in the wake of a criminal administration. It addresses the most serious crisis in our nation’s history -- the claim that the president and his secret agents can get away with torture, kidnapping, and even manslaughter."

The two day affair was divided in half: Speakers on Saturday, and planning on Sunday.

Chief among the academics, legal experts and whistle-blowers speaking in Andover was Vincent Bugliosi, best known for successfully prosecuting Charles Manson and penning the subsequent novel, Helter Skelter. His new book, The Prosecution of George W. Bush for Murder, is currently available at retail.

Watch Bugliosi’s opening statement to a July, 2008 House Judiciary Committee hearing on the limits of executive authority:

Other speakers included:

Phillippe Sands, Professor of Law and Director of the Centre of International Courts and Tribunals at University College, London. He is the author of "Torture Team: Rumsfeld’s Memo and the Betrayal of American Values" (Penguin/Palgrave Macmillan), among other works.

Jordan Paust, Professor of Law at the University of Houston and author of "Beyond The Law."

Ann Wright, a former U.S. Army colonel and U.S. Foreign Service official who holds a State Department Award for Heroism and who taught the Geneva Conventions and the Law of Land Warfare at the Special Warfare Center at Ft. Bragg, N.C. She is the coauthor of "Dissent: Voices of Conscience."

Peter Weiss, Vice President of the Center For Constitutional Rights, which was recently involved with war crimes complaints filed in Germany and France against former Defense Secretary Donald Rumsfeld and others.

Benjamin Davis, Associate Professor at the University of Toledo College of Law and former American Legal Counsel for the Secretariat of the International Court of Arbitration.

David Lindorff, journalist and co-author with Barbara Olshansky of "The Case for Impeachment: Legal Arguments for Removing President George W. Bush from Office"(St. Martin’s Press).

Colleen Costello of Human Rights USA.

Christopher Pyle, a professor at Mt. Holyoke and author of several books on international matters

"We need to revers[e] a fifty-year trend towards unaccountable secret government, which can commit crimes with impunity," said Pyle in a release. "’Sending a clear signal to future Cabinet-level officials that ours is still a government under law, and that they had better obey the criminal law, no matter what their president and his legal lackeys say,’ is a matter of overwhelming importance."

While video of the conference was broadcast live via, the footage is currently unavailable on the Internet.

Conference organizers told RAW STORY that a series of DVD’s will be offered for sale at cost to interested parties. Online footage of the conference will also be made available Friday, Sept. 19, at a Web site address yet to be announced.

"Later this week we will establish a central committee which will decide which of the many ideas we came up with are practical, and we will begin asking people to undertake particular actions," said Velvel. "Once those first steps are carried out, as I hope it will be, that will be the first major accomplishment of this conference."

The plans, which will be released in a media advisory later this week, considered:

What international and domestic crimes were committed, which facts show crimes under which laws, and what punishments are possible.

Which high level Executive officials -- and Federal judges and legislators as well, if any -- are chargeable with crimes.

Which international tribunals, foreign tribunals and domestic tribunals (if any) can be used and how to begin cases and/or obtain prosecutions before them.

The possibility of establishing a Chief Prosecutor’s Office such as the one at Nuremburg.

An examination of cases already brought and their outcomes.

Creating an umbrella Coordinating Committee with representatives from the increasing number of organizations involved in war crimes cases.

Creating a Center to keep track of and organize compilations of relevant briefs, articles, books, opinions, and facts, etc., on war crimes and prosecutions of war criminals.

Velvel told RAW STORY that several groups have been established to force some universities to hold hearings on whether faculty members should have their jobs terminated for participating in Bush Administration crimes.

"John Yoo, the author of the infamous ’torture memo’ who now works at Berkeley, comes quickly to mind," he added.

"The consensus of attendees is President Bush’s attack on Iraq is a violation of the Charter of the United Nations and that he is culpable for this as well as for torture and abuse of war prisoners held by the U.S. military and the CIA," stated a media advisory.

Other conference cell groups plan to raise up groundswells of support for district attorney candidates who would be willing to investigate or prosecute Bush Administration crimes. Conference attendees also plan to begin seeking disbarment proceedings against lawyers who assisted the administration in war crimes.

Additional measures, details of which were not immediately forthcoming, include utilizing foreign and International courts, and focused actions on state and local levels.

"The idea of using foreign and International courts is not so dissimilar to the time [Donald] Rumsfeld had to flee France to avoid arrest on war crimes charges," said Velvel. "Of course, that was a foreign court, and he just went into Germany and was fine. We were talking more about going to a true International court."

The Bush war crimes conference is in the tradition of Justice Robert H. Jackson, who prosecuted war criminals after World War II, writes Sherwood Ross.

"The common sense of mankind demands that law shall not stop with the punishment of petty crimes by little people," said Justice Jackson. "It must also reach men who possess themselves of great power and make deliberate and concerted use of it to set in motion evils which leave no home in the world untouched."

"Obviously, we want to go beyond self expression," concluded Velvel.