In a new book, former Secretary of Homeland Security Tom Ridge reveals new details on politicization under President Bush, reports US News & World Report’s Paul Bedard. Among other things, Ridge admits that he was pressured to raise the terror alert to help Bush win re-election in 2004.

HUFFINGTON POST

The Pentagon has developed a taste for unrivaled power and unequaled access to the treasury that won’t be easily undone by future administrations.

A full-fledged cottage industry is already focused on those who eagerly await the end of the Bush administration, offering calendars, magnets, and t-shirts for sale as well as counters and graphics to download onto blogs and websites. But when the countdown ends and George W. Bush vacates the Oval Office, he will leave a legacy to contend with. Certainly, he wills to his successor a world marred by war and battered by deprivation, but perhaps his most enduring legacy is now deeply embedded in Washington-area politics — a Pentagon metastasized almost beyond recognition.

The Pentagon’s massive bulk-up these last seven years will not be easily unbuilt, no matter who dons the presidential mantle on January 19, 2009. “The Pentagon” is now so much more than a five-sided building across the Potomac from Washington or even the seat of the Department of Defense. In many ways, it defies description or labeling.

Who, today, even remembers the debate at the end of the Cold War aboutå what role U.S. military power should play in a “unipolar” world? Was U.S. supremacy so well established, pundits were then asking, that Washington could rely on softer economic and cultural power, with military power no more than a backup (and a domestic “peace dividend” thrown into the bargain)? Or was the U.S. to strap on the six-guns of a global sheriff and police the world as the fountainhead of “humanitarian interventions”? Or was it the moment to boldly declare ourselves the world’s sole superpower and wield a high-tech military comparable to none, actively discouraging any other power or power bloc from even considering future rivalry?

The attacks of September 11, 2001 decisively ended that debate. The Bush administration promptly declared total war on every front — against peoples, ideologies, and, above all, “terrorism” (a tactic of the weak). That very September, administration officials proudly leaked the information that they were ready to “target” up to 60 other nations and the terrorist movements within them.

The Pentagon’s “footprint” was to be firmly planted, military base by military base, across the planet, with a special emphasis on its energy heartlands. Top administration officials began preparing the Pentagon to go anywhere and do anything, while rewriting, shredding, or ignoring whatever laws, national or international, stood in the way. In 2002, Defense Secretary Donald Rumsfeld officially articulated a new U.S. military posture that, in conception, was little short of revolutionary. It was called — in classic Pentagon shorthand — the 1-4-2-1 Defense Strategy (replacing the Clinton administration’s already none-too-modest plan to be prepared to fight two major wars — in the Middle East and Northeast Asia — simultaneously).

Theoretically, this strategy meant that the Pentagon was to prepare to defend the United States, while building forces capable of deterring aggression and coercion in four “critical regions” (Europe, Northeast Asia, East Asia, and the Middle East). It would be able to defeat aggression in two of these regions simultaneously and “win decisively” in one of those conflicts “at a time and place of our choosing.” Hence 1-4-2-1.

And that was just going to be the beginning. We had, by then, already entered the new age of the Mega-Pentagon. Almost six years later, the scale of that institution’s expansion has yet to be fully grasped, so let’s look at just seven of the major ways in which the Pentagon has experienced mission creep — and leap — dwarfing other institutions of government in the process.

(Continue reading: AlterNet)

In a minimally rational world, this extraordinary passage, from the new book by Scott McClellan, would forever slay the single most ludicrous myth in our political culture: The “Liberal Media”:

If anything, the national press corps was probably too deferential to the White House and to the administration in regard to the most important decision facing the nation during my years in Washington, the choice over whether to go to war in Iraq.The collapse of the administration’s rationales for war, which became apparent months after our invasion, should never have come as such a surprise. . . . In this case, the “liberal media” didn’t live up to its reputation. If it had, the country would have been better served.

Just consider how remarkable that is. George Bush’s own Press Secretary criticizes the American media for being “too deferential” to the Government. He lays the blame for Bush’s ability to propagandize the nation on the media’s uncritical dissemination of the Republican administration’s falsehoods. And most notably of all, McClellan actually uses cynical scare quotes when invoking the phrase which, in conventional political discourse, is deemed the most unassailable truth of all: The Liberal Media.

How much longer can this preposterous myth be sustained when even the White House Spokesman not only mocks the phrase but derides the media for being “too deferential” to the right-wing Government “in regard to the most important decision facing the nation during [his] years in Washington”? If one were to set about with the goal of debunking the “Liberal Media” myth — as Eric Alterman specifically did four years ago and other media critics have more generally done before that — one couldn’t dream up evidence more conclusive than McClellan’s admissions.

Blindingly conclusive evidence which would — for any rational person — forever negate the “Liberal Media” myth has been piling up for years. The extraordinary (though woefully incomplete) 2004 mea culpa from The New York Times acknowledged that not just Judy Miller, but the paper as a whole, re-printed pro-war government claims that were “allowed to stand unchallenged.” The Washington Post’s own media critic, Howard Kurtz, documented that anti-war views were systematically buried at that paper. The NYT recently exposed that network and cable news shows for years continuously allowed Pentagon-controlled operatives to masquerade as “independent analysts” spouting the pro-government line with virtually no challenge. And the media’s pathological fixation on the Clinton sex scandals — which led to his impeachment — stood in stark contrast to the widespread indifference among the citizenry.

Beyond all that, are there any reporters left who deny that the campaign-covering media in 2000 was gushingly enamored of George Bush and oozing with contempt for Al Gore? Identically, their intense affection for John McCain is something they openly proclaim; as they shamelessly acknowledge, they’re his “base.” And while some journalists undoubtedly harbor admiration for Barack Obama, the non-stop coverage of one anti-Obama narrative after the next — Jeremiah Wright, lapel pins, patriotism “questions,” “Bittergate,” “problems” with Jewish and white voters — simply has no parallel in any coverage of McCain.

(Continue reading: Glen Greenwald-Salon.com)

We are not engaged in a religious conflict with Jews; this is a political struggle to free ourselves from occupation and oppression

As the Palestinian people prepare to commemorate the 60th anniversary of the Nakba (“catastrophe”) – the dispossession and expulsion of most of our people from our land – those remaining in Palestine face escalating aggression, killings, imprisonment, ethnic cleansing and siege. But instead of support and solidarity from the western media, we face frequent attempts to defend the indefensible or turn fire on the Palestinians themselves.

One recent approach, which seems to be part of the wider attempt to isolate the elected Palestinian leadership, is to portray Hamas and the population of the Gaza strip as motivated by anti-Jewish sentiment, rather than a hostility to Zionist occupation and domination of our land. A recent front page article in the International Herald Tribune followed this line, as did an article for Cif about an item broadcast on the al-Aqsa satellite TV channnel about the Nazi Holocaust.

In fact, the al-Aqsa Channel is an independent media institution that often does not express the views of the Palestinian government headed by Ismail Haniyeh or of the Hamas movement. The channel regularly gives Palestinians of different convictions the chance to express views that are not shared by the Palestinian government or the Hamas movement. In the case of the opinion expressed on al-Aqsa TV by Amin Dabbur, it is his alone and he is solely responsible for it.

It is rather surprising to us that so little attention, if any, is given by the western media to what is regularly broadcast or written in the Israeli media by politicians and writers demanding the total uprooting or “transfer” of the Palestinian people from their land.

The Israeli media and pro-Israel western press are full of views that deny or seek to excuse well-established facts of history including the Nakba of 1948 and the massacres perpetrated then by the Haganah, the Irgun and LEHI with the objective of forcing a mass dispossession of the Palestinians.

But it should be made clear that neither Hamas nor the Palestinian government in Gaza denies the Nazi Holocaust. The Holocaust was not only a crime against humanity but one of the most abhorrent crimes in modern history. We condemn it as we condemn every abuse of humanity and all forms of discrimination on the basis of religion, race, gender or nationality.

(Continue reading: The Guardian)

n the spring of 2007, a retired senior official in the U.S. Justice Department sat before Congress and told a story so odd and ominous, it could have sprung from the pages of a pulp political thriller. It was about a principled bureaucrat struggling to protect his country from a highly classified program with sinister implications. Rife with high drama, it included a car chase through the streets of Washington, D.C., and a tense meeting at the White House, where the president’s henchmen made the bureaucrat so nervous that he demanded a neutral witness be present. 

The bureaucrat was James Comey, John Ashcroft’s second-in-command at the Department of Justice during Bush’s first term. Comey had been a loyal political foot soldier of the Republican Party for many years. Yet in his testimony before the Senate Judiciary Committee, he described how he had grown increasingly uneasy reviewing the Bush administration’s various domestic surveillance and spying programs. Much of his testimony centered on an operation so clandestine he wasn’t allowed to name it or even describe what it did. He did say, however, that he and Ashcroft had discussed the program in March 2004, trying to decide whether it was legal under federal statutes. Shortly before the certification deadline, Ashcroft fell ill with pancreatitis, making Comey acting attorney general, and Comey opted not to certify the program. When he communicated his decision to the White House, Bush’s men told him, in so many words, to take his concerns and stuff them in an undisclosed location.

Comey refused to knuckle under, and the dispute came to a head on the cold night of March 10, 2004, hours before the program’s authorization was to expire. At the time, Ashcroft was in intensive care at George Washington Hospital following emergency surgery. Apparently, at the behest of President Bush himself, the White House tried, in Comey’s words, “to take advantage of a very sick man,” sending Chief of Staff Andrew Card and then–White House counsel Alberto Gonzales on a mission to Ashcroft’s sickroom to persuade the heavily doped attorney general to override his deputy. Apprised of their mission, Comey, accompanied by a full security detail, jumped in his car, raced through the streets of the capital, lights blazing, and “literally ran” up the hospital stairs to beat them there.

Minutes later, Gonzales and Card arrived with an envelope filled with the requisite forms. Ashcroft, even in his stupor, did not fall for their heavy-handed ploy. “I’m not the attorney general,” Ashcroft told Bush’s men. “There”—he pointed weakly to Comey—”is the attorney general.” Gonzales and Card were furious, departing without even acknowledging Comey’s presence in the room. The following day, the classified domestic spying program that Comey found so disturbing went forward at the demand of the White House—”without a signature from the Department of Justice attesting as to its legality,” he testified.

What was the mysterious program that had so alarmed Comey? Political blogs buzzed for weeks with speculation. Though Comey testified that the program was subsequently readjusted to satisfy his concerns, one can’t help wondering whether the unspecified alteration would satisfy constitutional experts, or even average citizens. Faced with push-back from his bosses at the White House, did he simply relent and accept a token concession? Two months after Comey’s testimony to Congress, the New York Times reported a tantalizing detail: The program that prompted him “to threaten resignation involved computer searches through massive electronic databases.” The larger mystery remained intact, however. “It is not known precisely why searching the databases, or data mining, raised such a furious legal debate,” the article conceded.

Another clue came from a rather unexpected source: President Bush himself. Addressing the nation from the Oval Office in 2005 after the first disclosures of the NSA’s warrantless electronic surveillance became public, Bush insisted that the spying program in question was reviewed “every 45 days” as part of planning to assess threats to “the continuity of our government.” 

Few Americans—professional journalists included—know anything about so-called Continuity of Government (COG) programs, so it’s no surprise that the president’s passing reference received almost no attention. COG resides in a nebulous legal realm, encompassing national emergency plans that would trigger the takeover of the country by extra-constitutional forces—and effectively suspend the republic. In short, it’s a road map for martial law.

While Comey, who left the Department of Justice in 2005, has steadfastly refused to comment further on the matter, a number of former government employees and intelligence sources with independent knowledge of domestic surveillance operations claim the program that caused the flap between Comey and the White House was related to a database of Americans who might be considered potential threats in the event of a national emergency. Sources familiar with the program say that the government’s data gathering has been overzealous and probably conducted in violation of federal law and the protection from unreasonable search and seizure guaranteed by the Fourth Amendment.

According to a senior government official who served with high-level security clearances in five administrations, “There exists a database of Americans, who, often for the slightest and most trivial reason, are considered unfriendly, and who, in a time of panic, might be incarcerated. The database can identify and locate perceived ‘enemies of the state’ almost instantaneously.” He and other sources tell Radar that the database is sometimes referred to by the code name Main Core. One knowledgeable source claims that 8 million Americans are now listed in Main Core as potentially suspect. In the event of a national emergency, these people could be subject to everything from heightened surveillance and tracking to direct questioning and possibly even detention. 

(Continue reading: Radar Online)

Audio of luncheon with media military analysts posted on Newsvine

The blogosphere has been abuzz about the Internet posting of audio of a luncheon former Secretary of State Donald Rumsfeld held with media military analysts that provides insight into the relationship between those analysts and the Pentagon.

The Pentagon released the audio in response to requests filed by The New York Times under the Freedom of Information Act.

On April 20, The Times published “Behind TV Analysts, Pentagon’s Hidden Hand,” in which reporter David Barstow detailed a “Pentagon information apparatus that has used those analysts in a campaign to generate favorable news coverage of the administration’s wartime performance.”

The government released the audio, which lasts nearly an hour, on May 8. Jack Gillis, a 55-year-old self-described news junkie, downloaded it over the past weekend and analyzed it.

His findings, which he posted Monday on his Newsvine account (MSNBC is the owner of Newsvine), include a review of eight clips totaling nearly 10 minutes. Gillis, an adjunct professor of composition and rhetoric at a community college, also provides a link to the full audio.

The luncheon was held in December 2006, a month after Rumsfeld resigned as defense secretary.

(Continue reading: MSNBC)

On the fifth anniversary of George W. Bush’s infamous stroll across the flight deck of the USS Abraham Lincoln, The New York Times asked a group of “experts” how they would accomplish the mission in Iraq. Unfortunately, the newspaper turned to some of the same geniuses who thought the war was a good idea in the first place.

(Continue reading: Truthdig)

Pentagon Wary Of Tehran’s Expanding Nuclear Program And Support Of Iraqi Insurgents

A second American aircraft carrier steamed into the Persian Gulf on Tuesday as the Pentagon ordered military commanders to develop new options for attacking Iran. CBS News national security correspondent David Martin reports that the planning is being driven by what one officer called the “increasingly hostile role” Iran is playing in Iraq – smuggling weapons into Iraq for use against American troops.

“What the Iranians are doing is killing American servicemen and -women inside Iraq,” said Secretary of Defense Robert Gates.

U.S. officials are also concerned by Iranian harassment of U.S. ships in the Persian Gulf as well as Iran’s still growing nuclear program. New pictures of Iran’s uranium enrichment plant show the country’s defense minister in the background, as if deliberately mocking a recent finding by U.S. intelligence that Iran had ceased work on a nuclear weapon.

No attacks are imminent and the last thing the Pentagon wants is another war, but Chairman of the Joint Chiefs of Staff Mike Mullen has warned Iran not to assume the U.S. military can’t strike.

“I have reserve capability, in particular our Navy and our Air Force so it would be a mistake to think that we are out of combat capability,” Mullen said.

Targets would include everything from the plants where weapons are made to the headquarters of the organization known as the Quds Force which directs operations in Iraq. Later this week Iraqi Prime Minister Nouri al-Maliki is expected to confront the Iranians with evidence of their meddling and demand a halt.

If that doesn’t produce results, the State Department has begun drafting an ultimatum that would tell the Iranians to knock it off – or else.

(CBS News)

The President’s Executioner

The title of this article –The President’s Executioner –is a play on words. It refers to professor John Yoo, who teaches law at Boalt Hall, University of California, Berkeley. But this man –mild-mannered by all appearances –is not what he seems.

He is the man who was, more often than nearly any other, behind the White House decisions to violate the international laws of war. He was the one who told the White House how to get away with committing war crimes. While he may have been a henchman for others who instructed him to make the arguments he did, he repeatedly refused to reverse himself, both while he worked in the Department of Justice and after he left that office and returned to academia.

But it was also during this time period, as we now know, that the Department of Justice became “politicized.” Instead of executing the laws as it should have been doing, the Justice Department became an instrument of President Bush, executing his wishes. And John Yoo executed White House wishes to twist the law into something it was not and was not meant to be.

Yoo, however, did more than execute orders. The so-called “Torture Memos,” in the writing of which Yoo was an active and primary participant, opened the door to such abuse of the laws that some detainees were actually murdered. For all practical purposes, they were executed, without a trial or guilty verdict.

Thus, the President’s Executioner.

(Continue reading: CounterPunch)

Ever since Americans learned that American soldiers and intelligence agents were torturing prisoners, there has been a disturbing question: How high up did the decision go to ignore United States law, international treaties, the Geneva Conventions and basic morality?

The answer, we have learned recently, is that — with President Bush’s clear knowledge and support — some of the very highest officials in the land not only approved the abuse of prisoners, but participated in the detailed planning of harsh interrogations and helped to create a legal structure to shield from justice those who followed the orders.

We have long known that the Justice Department tortured the law to give its Orwellian blessing to torturing people, and that Defense Secretary Donald Rumsfeld approved a list of ways to abuse prisoners. But recent accounts by ABC News and The Associated Press said that all of the president’s top national security advisers at the time participated in creating the interrogation policy: Vice President Dick Cheney; Mr. Rumsfeld; Condoleezza Rice, the national security adviser; Colin Powell, the secretary of state; John Ashcroft, the attorney general; and George Tenet, the director of central intelligence.

(Continue reading: New York Times)

John Yoo, the former Bush Administration lawyer who now teaches at UC Berkeley’s law school, authored the torture memo that cleared the way for the U.S. military to begin torturing suspected Al Qaeda members in Guantanamo and black site prisons, as well as Iraqis in Abu Ghraib. 

Perhaps less well known is that Yoo also wrote a legal opinion blessing the president’s targeting of American citizens for wiretapping, a memo that even members of Congress have not seen.

There have been clues before in the administration’s defense of its wiretapping program. For instance, the Justice Department said (.pdf) the Authorization to Use Military Force and the president’s war making powers in the Constitution.

But in the Yoo torture memo (.pdf) which was just released and declassified yesterday, Yoo himself seems to clue us in:

Citing cases that prevented companies from suing the U.S. government for losses they sustained overseas during wartime, You writes “These cases and the untenable consequences for the President’s conduct of a war that would result from the application of the Due Process Cluse demonstrate its inapplicability during wartime–whether to the conduct of interrogations or the detention of enemy aliens.”

Lest it not be clear enough that Yoo is arguing the President is King in wartime, thanks to the Constitution’s Article II powers, two footnotes surrounding the former sentence make it clear.

In footnote 10, Yoo writes “our Office recently concluded that the Fourth Amendment had no application todomestic military operations.”

Remember that Bush said the wiretapping program was part of his war on terrorism.

And there it is. In the war on terrorism, the bill of rights does not apply.

Footnote 11 adds to it: “We conclude that the restrictions outlined in the Fifth Amendment simply do not address actions the Executive takes in conducting a military campaign against the Nation’s enemies.”

Congress still hasn’t seen this memo, and yet they are prepared to hand over more wiretapping powers to this Administration.

And John Yoo teaches at UC-Berkeley.

Meanwhile not a single Congressional committee will let AT&T whistle blower Mark Klein testify.

via/ Threat Level

But Washington, Wall Street, and ethanol and oil and gas companies want you to think there is, says automotive expert Ed Wallace

by Ed Wallace

“They see speculation in the market, I see decline in global inventories. I don’t think this is a big surprise, that we’ve had a jump in price when there has been a decrease in crude inventories.”—Energy Secretary Sam Bodman, Bloomberg News, Mar. 5, 2008

“It should be obvious to you all that the [gasoline] demand is outstripping supply, which causes prices to go up.” — President George W. Bush, Associated Press, Mar. 5, 2008

One wonders if verifiable facts ever get in the way of this administration’s statements on issues that are critical to the average American’s wellbeing. After all, last time I checked, when politicians are elected to public office, or appointed, as is Energy Secretary Samuel W. Bodman, they must take an oath to the American people before assuming their new positions. How can they forget a sacred oath so quickly? Were they daydreaming when they took it, so it never meant anything to begin with? Maybe it’s just another promise you have to make to get into office: When you’re securely incumbent you can ignore even solemn oaths you took.

Obviously, the two quotes that led this article came from discussions concerning the current high price for oil on the futures market. Bodman appears to be protecting the speculators in oil, as opposed to looking after the interests of all Americans. President Bush, apparently, has never talked to the Energy Dept.’s Energy Information Agency to see whether gasoline demand is actually up. More troubling, the writer of that particular Associated Press article obviously didn’t look up the EIA’s numbers to verify the President’s assertions. They weren’t accurate.

1. There Is No Shortage

Gasoline reserves on hand are at the highest levels since the early 1990s, which is remarkable considering the nation’s refineries have been cutting back on the production of gasoline because their margins have declined. In fact, average gasoline reserves on hand have risen since this past October, while oil reserves in this country have gone up virtually every week this year—and only fog in the Houston Ship Channel that kept oil tankers from unloading their crude one week kept it from being every week.

In the same Bloomberg article that quotes from Bodman’s CNBC appearance on Mar. 4, he also said that it was thanks to ethanol that the gasoline problem isn’t even worse. He then added that the fact that making ethanol is forcing up prices of other farm commodities, including hog and chicken feed, is “nowhere near as important as trying to relieve pressure on [gasoline] supplies.”

Of course, there is no pressure on gasoline supplies in this country as of today, but Bodman’s statement must have made eyes roll among the executives at Pilgrim’s Pride PPC; the Pittsburg, (Tex.) poultry producer announced 1,100 layoffs on Mar. 13, closing one processing plant and 6 of their 13 distribution centers because their company’s outlay for chicken feed went up $600 million last fiscal year and was on track to increase by another $700 million this year.

Here’s the scorecard, in case you missed it. There’s no shortage of gasoline or oil in the U.S. today, and we have near-record reserves on hand. Meanwhile the Congressional mandate for ethanol has jacked up the price of chicken feed for Pilgrim’s Pride, which is the U.S.’s largest processor of chickens and turkeys—by $1.3 billion. And that’s for just one company processing chicken. This is what passes for acceptable to our Energy Secretary?

2. Demand Is DOWN, Yet Prices Are UP

Just so we can all get on the same page, here are the verifiable facts on oil supplies, production, and gasoline demand.

In January of this year, the U.S. used 4% less petroleum than we did a year ago. (Oil demand was down 3.2% in February.) Furthermore, demand has been falling slowly since July of last year. Ronald Bailey of Reason Online has pointed out that worldwide production of oil has risen 2.5% in the first quarter, while worldwide demand has grown by only 2%. Production is expected to increase by 3.3% in the second quarter, and by as much as 4.1% by the third quarter. The net result is that the U.S. daily buffer for oil production against demand, which was a paltry 1.5 million barrels as recently as 2005, is now up to 3 million barrels in excess capacity today.

So what is going on here? Why would our Energy Secretary say there’s a supply and demand problem when none exists? Why would he say that speculators have little or nothing to do with the incredibly high price of oil and gasoline, when it’s clear they do? President Bush—a former oilman—gives the ever-growing demand for gasoline as the primary reason prices are so high, yet that notion can be dispelled with one minute of research. That’s the problem with rhetoric; it rarely matches the facts.

3. Speculation is Up, and the Dollar Is Down

On the same day the President and our Energy Secretary made those foolish comments, no less an authority than ExxonMobil (XOM) Chief Executive Officer Rex Tillerson was quoted by Marketwatch as saying, “The record run in oil prices is related more to speculation and a weakening dollar than supply and demand in the market.” He added, “In terms of fundamentals, fear of supply reliability is overblown.”

As for the speculators, in 2000 approximately $9 billion was invested in oil futures, while today that number has gone up to $250 billion. Now, if any publicly traded company had an additional $241 billion put into its stock in the same period, its stock would rise out of sight too—even if the company was not worth anywhere near that amount of market capitalization.

Moving on to the weak U.S. dollar as a primary cause for skyrocketing oil prices—there is “some” truth in that statement. But consider this: The dollar has depreciated 30% against the world’s currencies since 2002, while the price of oil has gone up 500%. So is it the weak dollar that has caused a 500% increase in the price of oil, or is it the extra $241 billion worth of speculation? You can make the call on that one.

Possibly just to ensure oil prices don’t respond to real-world market conditions, Goldman Sachs (GS) forecast on Mar. 7 that turbulence in the oil market could cause oil to spike as high as $200 a barrel. This flies in the face of all known information—but then again, Goldman Sachs is the world’s biggest trader of energy derivatives, and its Goldman Sachs Commodities Index is a widely watched barometer of energy and commodities prices.

What Is Washington Thinking?

Rounding out the list of experts discussing our oil and gasoline situation is Bill Klesse, head of San Antonio (Tex.) Valero Energy (VLO). He spoke in San Diego a week after those comments from Goldman Sachs, the President, and Secretary Bodman. Believe it or not, Klesse said poor margins may cause Valero to sell one-third of its refinery operations; he stated that poor margins in recent months had caused planned refinery expansions—which would have produced 500,000 more barrels per day—to be canceled. Moreover, according to a report from Reuters on Mar. 11, 2008, Klesse recently released the information that gasoline production has been curtailed in response to slowing demand.

Imagine that: Refiners cut gasoline production, yet gasoline reserves have grown to their largest since late 1992. So much for “surging demand.”

Klesse also called for the government to start imposing a tariff on imported gasoline to protect U.S. refiners’ profits. Protectionism? As famed economist John Kenneth Galbraith correctly said, “In America, the only respectable form of socialism is socialism for the rich.”

Which takes us back to the original question: Why is Washington doing everything it can to convince us there is a shortage when there isn’t one? After all, the only people they’re protecting are those heavily invested in oil futures—and that’s to the detriment of all other Americans.

We’re Paying for What?

When it became undeniable that poor decision-making by company executives had put a respected 85-year-old U.S. institution in financial peril, why did the Federal Reserve rush in to save investment bank Bear Stearns (BSC)? Of course, we need to restore confidence in our financial institutions, but why protect the personal assets of those who were responsible for the mess? Both the corporation’s officers and its board members should contribute their personal assets toward saving the bank they put in the ditch—the bank all of us are going to pay to bail out.

Instead, the Bush administration is protecting those responsible for creating yet another speculative bubble in oil futures, and is protecting investors in the ethanol industry—much to the detriment of food-processing companies such as Pilgrim’s Pride. And the net result of all this is that the prices of crude and gasoline rise ever higher thanks to a “shortage” that does not exist, while food costs are soaring thanks in part to the ethanol mandate.

The Federal Reserve lowers interest rates, but the cost of mortgages goes up six weeks in a row—and last month Bank of America (BAC) credit-card holders started being charged more than 24% interest on new purchases.

This is what they call “Republican Prosperity?” Ronald Reagan was both right and wrong when he said, “Government is not the solution, government is the problem.” And government is still the problem. Instead of a fair and open market they gave us a free-for-all marketplace with no regulations at all, which lately these “bubble boys” have sent south for all of us.

One would guess that Washington missed the obvious: Protect all U.S. consumers and you’re also protecting business expansion.

Ed Wallace holds a Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA. His column heads the Sunday Drive section of the Fort Worth Star-Telegram, and he is a member of the American Historical Society. The automotive expert for KDFW Fox 4 in Dallas, Wallace hosts the top-rated talk show Wheels, Saturdays from 8 a.m. to 1 p.m. on 570 KLIF AM in Dallas.

//businessweek//

WASHINGTON — A plan announced Friday would give the U.S. Federal Reserve more authority to monitor financial markets and intervene when stability is threatened.

The Treasury Department is to introduce the detailed proposal Monday. It would need approval from Congress.

The summary plan avoids suggestions of increased regulation of financial markets and institutions. The proposal includes no new rules for hedging and risk swaps, which currently have little regulation.

The Securities and Exchange Commission would become less prominent, merged with the Commodity Futures Trading Commission. The Treasury Department suggests that stock exchanges should have more power to regulate themselves.

The department began work on plans to revise regulation last year, under orders from Treasury Secretary Henry Paulson Jr.
The report, which recommends more power for the Federal Reserve, also proposes combining the Office of Comptroller of the Currency — which dates back to the Civil War — and the Office of Thrift Supervision into a single banking overseer. In addition, the draft, which was circulated to government agencies this week and obtained by Bloomberg News, calls for the merging of the Securities and Exchange Commission and the Commodity Futures Trading Commission.

New Authorities

The Securities Industry and Financial Markets Association, Wall Street’s biggest lobbying group, praised Paulson’s proposals.

The plans would replace a regulatory framework that was “born of Depression-era events and is not well-suited for today’s environment where billions of dollars race across the globe with a click of a mouse,” Sifma President Timothy Ryan said in a statement late yesterday.

The executive summary of Paulson’s draft report calls for legislation that creates “uniform minimum licensing qualification standards for state mortgage market participants.” The authority to draft mortgage regulations would remain at the Fed.

President’s Working Group

The report breaks down its proposals into short-, intermediate- and long-term recommendations. Under short-term suggestions, Treasury proposes turning the President’s Working Group on Financial Markets, which has advised the president since 1987, into a government-chartered “interagency body” to coordinate financial regulatory policy.

The group’s focus should be “broadened to include the entire financial sector, rather than solely financial markets,” the draft said. The President’s Working Group is chaired by the Treasury Secretary and includes the heads of the Fed, the SEC and the CFTC. The report recommends expanding the body to include the heads of the OCC, the FDIC, and the OTS.

Hal Scott, a professor at Harvard Law School who heads the Committee on Capital Markets Regulation, a group of executives and academics whose efforts Paulson has endorsed, said it will be “very hard” to implement any of the recommendations.

“The political reality is that the merits will get lost in the argument,” Scott said. “They recognize it won’t be done soon.”

The draft calls for the merger of the SEC, which regulates investment banks, securities and stock exchanges, and the CFTC, which oversees about $4.2 trillion of daily trades in products ranging from orange juice to foreign currencies.

Greater Fed Role

The study envisions the Fed with broader oversight powers, especially in the area of market stability, and possibly less powers for bank supervision. The study suggests that the FDIC could take on the role of supervising state-chartered banks.

In other areas, the Fed gathers more power. The study proposes that the Fed become a “market stability” regulator, with powers over insurance companies and securities firms with federal charters.

The study also suggests a distinction be made between the Fed’s “normal” lender-of-last resort discount window to help banks meet short-term funding needs and “market stability” lending to help stave off severe funding shortages and panics. In that function, the loans could be extended to federally chartered insurance companies and financial institutions, the study says.

//upi/+/bloomberg//