Sunday, February 20, 2011

TURBULENCE ABROAD AND AT HOME

If you want to talk about turbulence and political disarray, it's difficult to know where to begin. In the Arab world and Iran we are witnessing revolution and/or violent street protests demanding political and economic reform. But we also have our own brand of political disarray in the form of trench warfare in Washington over cutting federal spending and, at the state level, efforts in some Republican controlled states to get even with strong public employee unions that have been traditionally strong backers of the Democratic party. First, disarray abroad.

The first thing to be said is that the outbreaks in the various countries of the Middle East and north Africa are not part of a pan-Islamic movement intent on installing fundamentalist Islamic law in countries now governed by secular leaders, many with pro-western attachments. From all reports, the revolutions/uprisings are home-grown efforts to deal with home-grown grievances against ruling regimes. In Libya the issue is somewhat akin to that of Egypt, corrupt, repressive regimes too long in power, and where there is a huge gap between a rich elite and a massive underclass of poor and near poor.

In Bahrain the same general problem exists with the added grievance of the exploitation of an impoverished Shia majority (70 percent) by a wealthy Sunni minority (30 percent) led by the king and his appointed prime minister who is also his uncle. The brutality of the royal response to the protesters is heightened by the fact that over the years the army and security forces have been manned by co-religionist Sunnis recruited from abroad, from countries such as Pakistan, Jordan, and Yemen. By contrast, the Egyptian army which eventually sided with the pro-democracy demonstrators is made up of conscripts.

If the various countries of the region are experiencing domestic upheaval, the uprisings, particularly in Bahrain, have created the same problem for President Obama and Secretary of State Clinton as occurred with the Egyptian revolution. Both Egypt and Bahrain play key roles in our policies in the Arab/Muslim world so any uprising forces the U.S. to walk a tight rope in choosing sides between the rulers whom we have supported for decades and the ruled. In Egypt, as indicated in a previous posting, we waffled on the issue. In Iran, it was easier when the anti-government protesters took to the streets last week; we came out strongly in their favor.

In Bahrain where our 5th fleet is headquartered our public pronouncements made a nod of sympathy toward the protesters, but we are avoiding giving any overt encouragement to them, unlike the support we gave to the pro-democracy demonstrators in Egypt. In Bahrain the U.S. emphasis is on urging the government to constrain the severity of its responses to the demonstrators. If constraint is needed anywhere, it is certainly in Libya where the government crackdown on protesters has been especially violent. If all of these problems aren't enough for U.S. policy in the Arab/Muslim world, we added to those woes last week by casting the only veto of a U.N. resolution aimed at halting the spread of Israeli settlements in occupied territory of the West Bank and East Jerusalem. Now to the disarray at home.

First, it should be stated that Congress has again gone home. For President's Day they take a week off. Someone once said something like this, "Congress has adjourned, the Republic is "safe." After watching the House of Boehner finally go through a hard week of work of budget cutting, maybe there is some truth in the old saying. But the real issue is now upon us.

The historic budget cuts made by the House are now kicked over to the Senate which has also gone home. When it returns it has just five days to do something before March 4 when the continuing resolution (CR) under which the federal government has been funded runs out (see previous post). There are indications that House-Senate compromise talks may be going on during the recess. It seems right now that there are two possible outcomes -- pass another CR or let the government shut down on March 5. The Democratic-controlled Senate has made it clear it will not accept the House-passed cuts so if the government shuts down it's the fault of the Republicans, who now seem to be controlled by the Tea Party and spending hawks. Boehner, on the other hand, said he will not accept another short term CR which does not include a major cut in spending for the rest of this fiscal year which ends September 30. So it's eyeball to eyeball and we have to wait to see if anyone blinks. Meanwhile, there are also significant outbreaks of discontent at the state and local levels where they're also running out of money.

At the state and local levels the customary approach to big budget shortfalls is to go where the big money is. For these governments the big bucks are in education and public safety (police and fire), and medicaid (for the states). States have sought to trim medicaid costs but they are constrained by the federal government in how much they can do since the program is funded through federal matching grants. So to meet the budget needs, school programs such as music, art, and athletics are cut or eliminated, teachers are laid off and classrooms are more crowded, and there are fewer (sometimes far fewer) police and firemen on the job. Contrast that with the federal government where politics keeps the President and Congress from going where the money is--social security, medicare, and medicaid--and instead they scratch away to make a lot of big cuts in a lot of small programs.

Now state governments, at least those controlled by Republicans, are going for another pot of money, public employees, including teachers. In Wisconsin, the Republican controlled government says it will cut the budget by limiting collective bargaining with public employee unions while also increasing employee contributions to pension and health care funds. It is not difficult to interpret this as revenge upon those public employees unions that have been strong supporters of Democratic candidates over the years. It is interesting to note that police and firefighter unions are excluded from the proposed legislation; Milwaukee police and fire unions supported the Republican governor in the election. The Wisconsin confrontation has drawn the most attention, but other states have also embarked on similar efforts to weaken public employee unions.

So much for the turbulence abroad and at home -- for now.

6 comments:

  1. It looks like a lot of states are being forced to make deep cuts to medicaid. I read a review of budget cuts in various states and it sounds like there are some pretty serious cuts taking place that will affect individuals, nursing homes, and insurancee progreams. There was a news piece that Arizona is cutting 250,000 people off medicaid and it does not look like the administration is likely to do anything about it. The serious cuts seem to be occurring now.

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  2. Jeff

    The basic rule on medicaid is that states may cut out optional services such as mental care but must keep the basic services if it wishes to continue receiving its federal share of the program. The federal share is 50 percent at minimum increasing to about 75 percent for Mississippi because it is a poorer state. The federal money comes out of the general budget, unlike medicare which is funded through a payroll tax. States can work it out with the feds to reduce the number of people receiving medicaid but it then loses that share of federal money. In Mississippi, for example, that would mean the state loses $3 for every dollar it cuts out of its own medicaid spending. The feds are aware of the high cost of medicaid to the states and the pressure it puts on state budgets so it has been agreeable with state plans that seek to reduce the program and shows flexibility so that states will retain the biggest share of the program.

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  3. Informative piece on the uprisings. I haven't kept up with the news lately and wasnt up on the latest in countries like Libya and our UN vote. I guess the Egyptians were lucky in that it was more or less a peaceful uprising and no severe retaliation. At some point I think that with all the trouble in the area we'll be seeing increased gas prices. After looking up some more info on the Libyan uprisings prompted by reading this, I saw that the uprisings are disrupting supplies.

    Sadly it really does seem like the republic is safe when congress is off. The situations in the states seem pretty desparate. It seems every time we turn around their are tax increases or rate hikes on something or other.

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  4. Sheila

    Egypt indeed has been lucky, so far. But in situations like these stick with Yogi Berra's admonition, "It ain't over 'til it's over." It seems that all of the unrest (how about that for a word of understatement) is now affecting gasoline prices. As usual, a lot of this is attributable to speculation in the oil markets. I saw a report today where Gadhafi has ordered the oil pipelines to be blown up, but at this point it is difficult to tell what is real with the guy. In any case, the biggest impact of any hitches in Libyan oil supply is in Europe which gets 85 percent of Libya's exports. The U.S. get less than 1 percent but any problems in the world oil market, real or from speculation, blows back on our gas prices.

    We probably are only seeing some early reprecussions of state budgetary and political actions. The last election put the Republicans in power in more states than previously and the spending hawks are at work. This is not at all to say that the states do not have budgetary problems. They do indeed. But what kind of actions they take will indicate how politicized the decisions become. Believe Wisconsin is a good example of how GOP action becomes anti-union--but maybe I'm just prejudiced. I saw in this morning's paper where a Republican legislator here in Tennessee is considering a bill that would shift the state's defined benefits retirement plan for state workers to a 401(k) defined contributions type plan.

    Guess one of the worst forms of tax increases comes at the local level with the property taxes. Even though home values have fallen in so many places, the taxes are still levied on the former values. Local government can't give up their biggest source of revenues so millions of homeowners are caught.

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  5. Why did the US veto the resolution against expanding Israeli settlements? And does a single veto kill the resolution?

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  6. Cosmo

    The U.S. has always (believe always) vetoed any resolution that is anti-Israel. If an anti-Israel resolution is ever proposed we try to have it watered down so we can vote for it, but this time that approach didn't work. Our vetoes are one of the reasons why the Muslim world believes we are pro-Israel beyond redemption.

    The Security Council has 15 members; five are permanent members(U.S., Britain, France, Russia,and China). The other 10 are temporary members. If any of the five permanent members casts a veto, the resolution is killed, regardless of how the rest may vote. Thus you can have 14 members supporting a resolution, but if one of the permanent members says "no", it's dead.

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