October 31, 2005 | 12:28 PM ET

Scooter Libby was indicted, and has resigned.  Meanwhile, President Bush has nominated Judge Samuel L. Alito of the Third Circuit Court of Appeals to the Supreme Court.

The Libby case seems to have delivered less than many Democrats hoped, at least so far, and I agree with Howard Kurtz that the pre-indictment hype actually served to reduce its impact on Bush:

So when Rove was not indicted in the CIA leak case Friday, it almost seemed like a victory for the White House.  But it was clearly not a victory for the reporters and commentators who climbed far out on the limb of handicapping what a special prosecutor operating in secret might do.

I was on Kurtz's "Reliable Sources" show yesterday talking about the Libby indictment (you can see the video online here) and I don't have much to add to what I said there except for this:  What was the CIA thinking sending Joseph Wilson on a secret mission to look into nuclear weapons matters without swearing him to secrecy?  It's almost as if the Agency -- whose director, George Tenet, had told President Bush that the case for WMD was a "slam dunk" -- actually wanted the mission to produce a hostile Op-Ed in the New York Times.  Either that or they're just idiots, but either way it seems that some people at the CIA should be losing their jobs.

Meanwhile, Alito's nomination is filling the news.  Some people say that lawyers are calling him "Scalito" for his resemblance to Supreme Court Justice Antonin Scalia, though in fact that term seems to have been invented by a journalist, Shannon Duffy of the Legal Intelligencer.

Either way, the resemblance that many people are noting is to John Roberts — "Bush decided that there was something to the whole 'qualifications' thing after all," is the take.  Law Professor Ann Althouse, who started out supporting Harriet Miers because of her apparent pro-choice views but became convinced that she simply wasn't qualified for the Court, looks at Alito and pronounces him " a stronger choice than John Roberts."  It remains to be seen whether the Senate will agree.

October 27, 2005 | 11:20 PM ET

Return of the swarm

I'm not crediting the blogosphere for the Harriet Miers decision, even though, as I've mentioned before , the White House could have saved itself some trouble by reading blogs.

But there's more news in the IIPM (Indian Institute of Planning and Management) story that I mentioned last week .  A story in the Online Journalism Review by Mark Glaser says that it was a breakout moment for the Indian blogosphere:

IIPM has never explained discrepancies with its ads and the information unearthed by journalists and bloggers.  Instead, IIPM has served legal notices, and a plethora of nameless blogs, allegedly by IIPM alumni, have sprouted up overnight defending IIPM and smearing the bloggers.

"None of this does IIPM the slightest bit of credit, nor does it enhance its reputation," wrote Kanika Datta in Business Standard, India's leading business daily.  "If it wants to defend itself with dignity and credibility, the institution would do well to set up a blog of its own rebutting the facts in the JAM piece and publicly dissociating itself from the more injudicious comments of its enthusiastic alumni.  The Net is increasingly becoming a pain point for corporations, especially large multinationals in controversial businesses.  If there is a larger lesson for them in this incident, it is how not to deal with negative stories."
Instead, the scrutiny of bloggers helped get the notice of mainstream media, who then piled on with their own reporting.  CNBC-TV18 -- a joint venture of CNBC and Indian TV18 -- ran a story on Oct. 24 stating that IIPM did not have approval from the Indian government's University Grants Commission (UGC) to offer an MBA.
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Sabnis, the blogger who quit his IBM job, told me he is weighing various new job offers. He said that IIPM has made a few changes to their ads since the JAM story.

"I expect them to keep making changes because now there is literally an army of bloggers exposing lies of IIPM," Sabnis said.

Or maybe an Army of Davids.

Meanwhile, former Senate Majority Leader Trent Lott says, " I'll never read a blog."  That's probably what the IIPM people are saying, too.

October 27, 2005 | 12:41 PM ET

Miers retires

Harriet Miers has withdrawn her name from consideration for Justice Sandra Day O'Connor's Supreme Court seat.  This was a noble and necessary thing to do, given that the nomination was a dreadful mistake from the beginning .  In fact, if the White House had been reading blogs it might not have been blindsided.

Then again, after doing such a masterful job with the Roberts nomination, the White House shouldn't have needed to read the blogs to get it right.  Why they went with Miers is a mystery to me.  As I've said elsewhere, when you nominate someone who's, well, a crony, you should be locked-and-loaded to repond to charges of cronyism.  Instead, the White House was caught flat-footed.

This is just the latest in a series of missteps by the White House (such as not supporting the Coburn Amendment and -- incredibly -- reinstating Davis-Bacon Act rules on Katrina relief projects) that make me wonder who's minding the store these days.  People used to look at the hapless John Kerry campaign and wonder if Karl Rove had moles in the operation.  If the Bush Administration keeps up this string of missteps, we'll hear mole-talk of a different variety.

Administrations always have problems in their second terms, of course, as personnel turn over and people get tired.  And the Bush Administration, having lived through a lot more history than most Administrations, has to be tired.  But they've got three years left, and neither they, nor the country, can afford more dropped balls.

October 25, 2005 | 10:09 PM ET

On pork, where's the White House?

I've been justifiably hard on Congress where pork and the budget are concerned.  But it's not as if the Bush Administration has been doing anything to hold down spending.  That's got a lot of people complaining, too.  CNBCs Larry Kudlow writes:

The White House is still nowhere to be found on the budget.

Where are John Snow and Josh Bolten? What are they doing? Where is the new list of budget cuts? Where are the rescissions? Where are the comments on pro-growth tax reform?
...
Instead of offering direction, the players on the Bush team are still watching from the sidelines. No wonder the most recent Gallup poll shows a whopping 72 percent of Americans lacking confidence in the economy, and only 31 percent satisfied with the state of the country.

This is not the time for wallflowers.

We need leadership.

He's right.  It's true that we're at war, but it's also true that the war isn't the source of our spending problems -- we're spending too much across the board.  Over at the Wall Street Journal, Pete DuPont is calling for a constitutional amendment to force fiscal discipline:

The real annual growth rate of federal government outlays is nearly at its highest modern percentage.  Under President Clinton it was only 1.5%, under Ronald Reagan 2.6% and under Lyndon Johnson 5.7%.  Spending has grown 5.6% a year since George W. Bush took office, and it seems likely to keep rising.  Of course the war in Iraq is a part of it, but the current administration's domestic spending increase is 7.1% a year, the highest since the 1960s.

Nor has the Republican Congress been of any help. When Bill Clinton was president and the GOP controlled the House, congressionally approved nondefense spending was $57 billion less than the president requested; under Mr. Bush the Republican Congress has spent a total of $91 billion more than he requested.
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The president could help by vetoing a spending bill or two to get the message to Congress that he intends to reduce the substantial growth in spending that he has put in motion over the past four years. Add a $50 billion recession submission to the Congress--President Reagan's was $43 billion--and the right message will be coming from the White House to the legislative branch of government.

But the better solution to the huge increase in federal spending would be a constitutional amendment to hold the growth of federal spending to specific percentages of revenue unless there is a supermajority override by both houses of Congress. It is not a new idea--Delaware, for example, passed a constitutional amendment in 1980, when I was governor, to limit state government spending to 98% of revenue unless there is a three-fifths vote of each legislative house to spend more. The extra 2% goes into a Rainy Day Fund--the kind of fund that could be used for relief in Katrina-type national catastrophes. The amendment has produced 25 consecutive years of balanced Delaware budgets, a fiscal discipline that the federal government needs even more that state governments do.

Another approach is the Taxpayers Bill of Rights, or Tabor, which Colorado put into place via a constitutional amendment in 1992. It limits annual state government spending to inflation plus population growth, with any extra revenue going back to the taxpayers. From 1995 to 2000 Colorado ranked first in the nation in GDP growth and second in personal income growth. Its success has generated a furious effort to allow more spending that will be on the 2006 ballot.

I think we'll be hearing more along these lines between now and the 2006 -- and especially the 2008 -- elections.

October 24, 2005 | 12:39 PM ET

Squealing in the Senate

I wrote last week on the PorkBusters project, and on blogger efforts to bring federal spending under control, targeting wasteful projects like Alaska's "bridge to nowhere" in order to fund Katrina relief.  The New Orleans Times Picayune has picked up on the story:

What hath Katrina wrought?  Could the worst natural disaster to strike the United States, a storm that permanently altered the geography of the Gulf Coast, be so powerful it changes the spending habits of the U.S. government?

That's the hope of opinion-mongers on both sides of the blogosphere, and they were in full-throated uproar last week.  Electronic pundits on the left and the right briefly joined forces behind a movement dubbed "Porkbusters" and an amendment in the Senate that would trim alleged fat from government projects and use the money for reconstruction in Louisiana and Mississippi.

You want to funnel millions to Louisiana?  OK, how much are you willing to deny North Dakota?

The initial proposals failed in Washington, suggesting that though Katrina may have swamped a major American city and killed more than 1,000 people, it lacked the punch needed to make elected officials give up pet projects. Nevertheless, supporters vowed that the synergy unleashed by the hurricanes that battered the Gulf Coast this year and a bloated federal budget that both liberals and conservatives bemoan for differing reasons could produce a watershed moment in fiscal management.

Read the whole thing, which has the delightful subtitle "Senators squeal as pork is targeted." Meanwhile, here's more on the squealing, from the Washington Post:

One of the Alaska bridges, dubbed the "Bridge to Nowhere" by its critics, would connect one small town to a tiny island. It received $223 million in the highway bill that Congress passed this summer. The second bridge, named "Don Young's Way" in honor of its patron, House Transportation and Infrastructure Committee Chairman Don Young (R-Alaska), received about $230 million -- but that is just a down payment on a cost that could hit $1.5 billion.

Coburn had wanted to shift all the money to the I-10 rebuilding project, which is expected to cost $500 million to $600 million. Because of restrictions in the way highway dollars are distributed, Coburn's amendment would have redirected $75 million to the Pontchartrain bridge while unfunding the two Alaska bridges.

"I believe that we should spend taxpayer dollars where they are most needed," Coburn wrote fellow senators asking for support.

The amendment became a cause celebre on the left and the right, with watchdog and conservative groups reporting updates on their Web sites throughout the day. The Club for Growth alerted readers early yesterday on its Web log, or blog: "As of last night, the opposition is putting up a big fight. They sense this amendment, if successful, as establishing a precedent. A precedent where all pork is vulnerable and no lawmaker is safe."

The vote failed, unfortunately, but the reverberations are still echoing.  It's made clear that -- regardless of party affiliation -- elected officials aren't interested in restraining wasteful spending, preferring instead to buy votes with the voters' own tax dollars.  (The old slogan: "We cheat the other guy, and pass the savings on to you!" comes to mind.)

I think the country is getting ready for another wave of anti-Washington, anti-spending sentiment, like what we saw in the 1990s.  The last time that happened it hurt the Democrats, because the Republicans were in a position to take advantage of it.  This time around, they're not very well positioned.  We may see a bipartisan move to throw the bums out, and more support for structural changes like term limits and a balanced budget amendment.  Last time around, the argument against these structural remedies was that voters could just vote out big spenders and vote in people who promised to do better.  Trouble is, they did that and it didn't help.  That means that such arguments will carry much less weight this time around.

Interestingly, even voters in districts that receive pork don't seem to want it all that much.  As the Post article linked above notes:

And, there is a curious twist to the story: Many residents of Alaska appear to support forfeiting the bridge money for hurricane relief.  "This money, a gift from the people of Alaska, will represent more than just material aid; it will be a symbol for our beleaguered democracy," reads a typical letter to the Anchorage Daily News.

Young, who made sure his state was one of the top recipients in the highway bill, was asked by an Alaska reporter what he made of the public support for redirecting the bridge money. "They can kiss my ear! That is the dumbest thing I've ever heard," he replied.

Out-of-touch big spenders in office -- just the sort of thing that political challengers love.  The next couple of elections could be interesting.

October 20, 2005 | 11:53 PM ET

Protecting pork in the Senate

Senator Tom Coburn introduced an amendment to reduce federal spending on pork.  (You can see the amendment here, and read Coburn's "Dear Colleague" letter here.)  Coburn's amendment would have taken money from pork projects -- like Alaska's $315 million "bridge to nowhere" -- and diverted it to Katrina relief spending.  It failed.

But it put a scare into the Senate establishment, which doesn't want its power to pass out pork threatened.  In fact, some Senators responded with threats of their own.  Senator Patty Murray threatened supporters of Coburn's amendment with the loss of federal money in their own states.  Coburn, at least wasn't intimidated, responding in an interview with Jed Babbin on Hugh Hewitt's show:

JB: Well, does that bother you, Senator?  I mean, are you worried so much about Oklahoma projects?

TC: No. I don't ask for any projects.  I ran on a platform of saying the biggest problem we face in our country is financial and economic, and cultural in Washington, that if we don't change that, I promised you I will not earmark a thing until the budget is in surplus.

JB: Wow.

TC: So I don't have any earmarks.  So I don't have any...you know, there's no power over me to withhold earmarks, because I have none.

JB: Well, how tough is it going to be, though, to undo this culture of pork?  I mean, the porksters are all around you.  I mean, we're not naming names, but you're outnumbered there pretty solidly, so...

TC: Look, when the American people want things to change, they will change.  Just as like in 1994, they changed?

In 1994, the voters threw out a Democratic majority that they thought was growing complacent and corrupt.  The Republican majority should worry about comparisons to 1994.

On the other hand, as angry Democratic blog Daily Kos noted, Democrats aren't covering themselves with glory:

It's embarrassing that Feingold was the only Democrat voting for it.  What a great way to show the country that Democrats are the party of fiscal responsibility.  Sheez... This is becoming a gross failure by both parties and the institution of government.

He's right, and the voters may demand the kind of structural reforms that they wanted in the angry 1990s:  Term Limits and a Balanced Budget Amendment.  The '06 and '08 elections just got more interesting.

October 19, 2005 | 1:42 AM ET

The swarm
Why it's not safe to pick on the little guy any more

Okay, so in my forthcoming book I talk about how technology is empowering ordinary people against big institutions.  Well, that's certainly happening in India, where a big institution -- the Indian Institute of Planning and Management -- has tangled with a blogger, and had a regrettable experience.  In response to a critical story about IIPM, IIPM managed to force a blogger out of his job.  The result, however, was only to make the story bigger:

Sabnis told fellow blogger Amit Varma: "You know, we bloggers are always writing about principles, about freedom of speech, about standing up for what we believe in, for the truth. It's very easy to write all that. But I'm being tested on those principles in real life. If I don't stand by those principles now, I will lose all respect for myself." Varma posted this on his blog.

From that moment on, IIPM is now virtually the only topic on Indian blogs.
...
Bloggers have discovered in a week more than what a mainstream reporter may have in a month. They called up IIPM's Toronto office and found it was not an IIPM office at all. Even Chaudhuri's educational qualifications, along with IIPM's sister concerns are under the scanner. Bloggers also dug out a scanned page of an affidavit on submitted by Malay Chaudhuri, IIPM founder and father of Arindam, as a Lok Sabha candidate from Balasore in Orissa in 2004 claiming.he did his MSc, PhD and DSc from Berlin School of Economics from 1962-1970. They found that the institute was founded in 1971!

As Varma, says, "Blogging is public regulation at its best. Both government and private enterprises should know they will be held accountable for any lies they tell, and will not be able to get away with deception."

Well, at the very least they've learned that heavy-handedness is likely to backfire: A search of the Technorati blog search engine shows nearly 900 posts on IIPM, and the topic was the number-one listing on Technorati for most of a week.  The blogosphere is like a hornets' nest -- whack it at your peril.  But this is just a special case of a more general phenomenon.  There was a time when slogans like "you can't fight City Hall" captured the power imbalance between big institutions and ordinary individuals.  Thanks to technology, things aren't that way any more.  The Goliaths are still figuring it out, but there's an army of Davids out there, slings at the ready.

October 17, 2005 | 1:20 PM ET

I've written here before about GM's problems, and Thomas Bray notes that it's a case of the bankruptcy of the industrial welfare state.  He's right, and the problem isn't limited to GM. Enterprises based on similar models -- bloated pension costs, lots of perks for managers, little concern with competition or delivering value to the alleged customer -- are failing all over.  In fact, the serious structural problems facing the Western European nations, as their huge pension and healthcare liabilities, and their political inability to do much about those, sap budgets and lead to crushing levels of taxation, are just another example of the same problem, as are the problems of the other two Big Three automakers.

Writing on this, Michael Barone observes:

In his book, The New Industrial State, economist John Kenneth Galbraith argued that companies like the Big Three could stimulate, through advertising, as much demand for their products as they wanted and that high capital costs protected them against competition. That was arguably true in 1967, when Galbraith's book was published. It ceased to be true, at least for the Big Three, shortly afterward.
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Most of the leaders of the UAW and the Big Three companies who negotiated these generous contracts were very smart men, and they thought that the costs could be passed along to consumers. For the two decades immediately after World War II, they were, because the Big Three auto companies had no effective competition. Then sales of imported cars started rising. The Big Three executives can be criticized for not responding to this challenge. They, like the UAW, sought to wall themselves off from competition by getting the government to limit imports or to require certain percentages of "domestic content" in autos sold in the United States.

That didn't work.  Barone's conclusion:  "In a dynamic economy, it's a bad idea for individuals to depend entirely on one large corporation.  Large corporations can get smaller."

That's certainly true.  Fortunately -- as I note in my forthcoming book, An Army of Davids : How Markets and Technology Empower Ordinary People to Beat Big Media, Big Government, and Other Goliaths, right about the time that Galbraith was delivering his pronouncements, Gordon Moore was propounding what later came to be known as Moore's Law, regarding the exponential increase of computing power over time.  While Galbraith's pronouncement quickly failed of its promise, Moore's Law has remained true to this date.  And that has produced dramatic economic changes and opportunities, such as eBay's threatening to overtake WalMart as America's biggest employer (and offering health insurance to boot!).  Making a living from eBay has its drawbacks, but you can't be laid off.  And, unlike the Big Three, eBay's market is expanding.

Which suggests that we should be modeling our policies around dynamic approaches rather than trying to save Old Economy behemoths that were never very good at competing.  (Indeed, the notion that we could help the "working man" at GM do well by making sure that other workers paid too much for inadequate cars was always a bit iffy, wasn't it?  That's not expanding the pie, just taking a bigger share for some at the expense of others.)

I certainly don't mean to suggest that there's no role for government -- things like more health-insurance portability, for example, would go a long way toward facilitating the growth of small businesses -- but I do think that we should be looking at things differently.  In a dynamic economy, we should probably be trying to embrace dynamism, rather than -- as the UAW and auto executives did with notable lack of success -- trying to stop change.

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