Tension Ahead of Monday EU Meeting

Reuters is reporting that Russia continues to play a heavy hand ahead of Monday's EU meeting. President Medvedev has threatened to retaliate with sanctions against any countries taking what Russia sees as "aggressive" actions.

"Russia does not want confrontation with any country. Russia does not plan to isolate itself," Medvedev said in an interview with Russia's three main television stations.

But he added: "Everyone should understand that if someone launches an aggressive sortie, he will receive a response." He said Russian law allowed the Kremlin to impose sanctions on other states, though it preferred not to go down that path.

Russia continues to contend that their invasion of Georgia was necessary to halt a genocide in South Ossetia and Abkhazia.

the Kremlin said it acted to prevent what it called genocide against the separatist regions.

If they have evidence of such action, they should bring it before the international community by filing war crimes charges against the responsible people or against the Georgian government itself. Without such action by Georgia, their charges will be interpreted as just more hot air.

Georgia called for the EU to provide monitors to replace the Russian "peacekeepers"

Georgia urged the European Union to impose sanctions against those doing business with the two separatist regions, authorize a civilian mission to monitor buffer zones around them and give Tbilisi about $2 billion to help to help repair damage.

"Europe can do a lot, starting with sending a mission of civilian monitors, which would lead to an international peacekeeping mechanism that would replace the presence of Russian troops," Prime Minister Lado Gurgenidze told Reuters in Brussels.

While the UK favors a direct response to Russian aggression in the area, many continental powers, especially France and Germany, favor a more nuanced approach.

British Prime Minister Gordon Brown said Russia's intervention in Georgia was dangerous and unacceptable.

"In the light of Russian actions, the EU should review -- root and branch -- our relationship with Russia," Brown wrote in a comment published in Britain's Observer newspaper.

The German foreign minister said Moscow deserved criticism but Europe needed cooperation with Russia.

"Europe would only be hurting itself if we were to get full of emotion and slam all the doors shut to the rooms that we will want to enter afterwards," Steinmeier said.

Russia supplies more than a quarter of Europe's gas needs. Some observers say this makes tough EU sanctions unlikely.

The AP reports that Russia has strengthened its military commitment to South Ossetia and Abkhazia:

MOSCOW - Russia's president said Sunday his country will give military aid to the two separatist regions at the center of the war with Georgia — signaling Moscow has no intention of backing down in the face of Western pressure.
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Medvedev's decision Tuesday to recognize the Georgian breakaway provinces South Ossetia and Abkhazia as independent drew condemnation from the West. Though no other countries have followed Russia's lead, Medvedev reaffirmed the decision on Sunday.

"We have made our decision, and it's irreversible," he said in a speech broadcast on Russian television.

In particular, Medvedev has signaled that he views the confrontation in the Caucasus as a way to challenge US dominance of international affairs.

Dmitry Medvedev also warned that American domination of world affairs is unacceptable, though he insisted that Russia did not want hostile relations with the United States and other Western nations.
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Medvedev said Sunday the world would be more stable if the U.S. was less dominant.

"The world must be multi-polar; domination is unacceptable," he said. "We can't accept the world order where all decisions are made by one nation, even by such serious and authoritative nation as the United States. Such a world would be unstable and prone to conflicts."

--SCC

Impact of the Candidates' Tax Proposals

The Tax Policy Center recently released an updated report estimating the deficit impacts of the Obama and McCain tax plans. Due to a lack of detailed information from either campaign, they made some reasonable assumptions about exactly what was being proposed.

The Tax Policy Center reports that:

Compared to current law, TPC estimates the Obama plan would cut taxes by $2.9 trillion over the 2009-2018 period. McCain would reduce taxes by nearly $4.2 trillion

Moreover,

Neither candidate’s plan would significantly increase economic growth unless offset by spending cuts or tax increases that the campaigns have not specified.

Because neither campaign is proposing a fiscally responsible program, I do not feel that I can endorse either candidate in this election. Our children and grandchildren should not be saddled with debts resulting from our large structural deficit. Each generation should pay its own bills.

I did stumble across an interesting calculator estimating the amount of difference that the Obama tax plan would make for a particular taxpayer:
Alchemy Today Tax Calculator

(While most people will receive a tax cut under Obama's plan, a Gallup poll shows most Americans believing that Obama's plan will result in increased taxes for their household.)

McCain's Surprise VP Choice

McCain's decision to choose Sarah Palin as his VP candidate is bound to affect his argument that Obama is not qualified to lead the country. As reported by Reuters:

Palin, the former mayor of the town of Wasilla, is virtually unknown and untested nationally. That could hurt McCain's argument that Obama, 47, a first-term senator from Illinois, is too inexperienced to handle the White House.
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"Today, John McCain put the former mayor of a town of 9,000 with zero foreign policy experience a heartbeat away from the presidency," said Obama campaign spokesman Bill Burton, adding that she would work to overturn abortion rights and continue Republican economic policies.

The lack-of-experience angle is getting traction with the press. The AP reports:

She is younger and less experienced than the first-term Illinois senator, and brings an ethical shadow to the ticket. A governor for just 20 months, she was two-term mayor of Wasilla, Alaska, a town of 6,500 where the biggest issue is controlling growth and the biggest civic worry is whether there will be enough snow for the Iditarod dog-mushing race.

"On his 72nd birthday, is this really the one-heartbeat-away he wants to put in the White House?" said Rep. Rahm Emanuel, the No. 3 Democrat in the House. "What does this say about his judgment?"
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The pick earned McCain praise Friday from evangelicals and other social conservatives who have been skeptical of him. "Conservatives will be thrilled with this pick," said Greg Mueller, a conservative GOP strategist.

The price for that support could be high. Palin's lack of experience undercuts GOP charges that Obama is not ready to be commander in chief. McCain said in April that he was determined to avoid a pick like Dan Quayle, the little-known Indiana senator whom George H.W. Bush put on his ticket in 1988. The choice proved embarrassing.

Quayle "had not been briefed and prepared for some of the questions," McCain said while discussing his vice presidential search. He was clearly aware that, as a septuagenarian, the decision he made about a running mate would be "of enhanced importance."

Four months and one birthday later, McCain's announcement of Palin made clear the paucity of her experience.

"As the head of Alaska's National Guard and as the mother of a soldier herself," the statement said, "Gov. Palin understands what it takes to lead our nation and she understands the importance of supporting our troops."

It seems pretty clear that this choice was aimed at attracting disaffected supporters of Hillary Clinton:

But she could help him appeal to disaffected supporters of Democrat Hillary Clinton, who lost a bruising primary to Obama. Palin noted the achievements of Clinton and Democrat Geraldine Ferraro, who in 1984 became the first woman vice presidential nominee of a major party.

"Hillary left 18 million cracks in the highest, hardest glass ceiling in America," she said, referring to the 18 million votes Clinton received in the primaries. "But it turns out the women of America aren't finished yet, and we can shatter that glass ceiling once and for all."

Huckabee also tried to twist the knife that many Hillary supporters seem to feel Obama inserted between their shoulder blades. From MSNBC:

Huckabee also used the Palin pick to reach out to women.

"Governor Palin ... will remind women that if they are not welcome on the Democrat's ticket, they have a place with Republicans," he said.

Palin does have a reputation as a reformer, which may help reinforce McCain's image in that area. Reuters reports:

Alaska's first women governor and the state's youngest chief executive, the 44-year-old Palin gained statewide fame as a whistle-blower calling attention to ethical violations of high-ranking Republican officials, including the chairman of the state Republican Party.

MSNBC reports that there may be some skeletons in Palin's own closet, however, when it comes to ethical issues:

But Palin’s seemingly bright future was clouded in late July when the state Legislature voted to hire an independent investigator to find out whether she tried to have a state official fire her ex-brother-in-law from his job as a state trooper.

The allegation was made by former Department of Public Safety Commissioner Walt Monegan, whom Palin fired in mid-July.

“It is a governor’s prerogative, a right, to fill that Cabinet with members whom she or he believes will do best for the people whom we are serving,” Palin told CNBC’s Larry Kudlow in an interview on Aug. 1. “So I look forward to any kind of investigation or questions being asked because I’ve got nothing to hide.”
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"A legislative panel has launched a $100,000 investigation to determine if Palin dismissed Alaska's public safety commissioner because he would not fire the trooper, Mike Wooten," the AP wrote earlier this month. "Wooten went through a messy divorce from Palin's sister. Palin has denied the commissioner's dismissal had anything to do with her former brother-in-law. And she denied orchestrating the dozens of telephone calls made by her husband and members of her administration to Wooten's bosses. Palin said she welcomes the investigation: 'Hold me accountable.'"

Although she's not linked to them, Sen. Ted Stevens and Rep. Don Young are facing legal/ethical troubles. In fact, Stevens' trial will start in late September, so the Alaska Republican Party is a mess. And Palin's trooper trouble could play into that.

It will be interesting to see which story line catches on: "Palin, the reformer/maverick", or "Palin, under investigation?"

Russia Plans to Formally Annex South Ossetia

The AP is reporting that South Ossetia has announced that it will be formally annexed by Russia:

TSKHINVALI, Georgia - Russia intends to eventually absorb Georgia's breakaway province of South Ossetia, a South Ossetian official said Friday, three days after Moscow recognized the region as independent and drew criticism from the West.
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Russian President Dmitry Medvedev and the region's leader, Eduard Kokoity, discussed the future of South Ossetia earlier this week in Moscow, South Ossetian parliamentary speaker Znaur Gassiyev said.

Russia will absorb South Ossetia "in several years" or earlier, a position was "firmly stated by both leaders," Gassiyev said.

My view is that the formal process will be nothing more than a recognition of the de facto annexation of South Ossetia and Abkhazia by Russia. Short of starting World War III, it is not clear that the West will be able to prevent this annexation.

On the other hand, I can see no good reason for the West to recognize Russia's actions. There are areas where Russia would like Western cooperation, which means that there are ways for the West to express its displeasure short of a full-scale deployment of NATO forces.

The deployment of NATO naval forces to the Black Sea is another way in which the West can present its discontent.

In Georgia, the vice speaker of parliament, Gigi Tsereteli, said the statement cannot be taken seriously.

"The separatist regimes of Abkhazia and South Ossetia and the Russian authorities are cut off from reality," he said in Tbilisi. "The world has already become different and Russia will not long be able to occupy sovereign Georgian territory."

I suppose he has to say that, but I have to respectfully disagree. I think that Russia intends to annex the two provinces, and that they will do so. I don't see that internal nationalist Russian pressures will allow Medvedev and Putin to do otherwise.

Georgia has announced that they will suspend relations with Russia as a result of the Russian announcement:

Georgia said it would cut diplomatic ties with Russia after Moscow recognized its rebel South Ossetia and Abkhazia regions. A Russian Foreign Ministry source told RIA news agency Moscow would respond by closing its embassy in Tbilisi.

Reuters is reporting that the Europeans are unwilling to impose significant sanctions on Russia for its actions:

PARIS/MOSCOW (Reuters) - A defiant Russia said on Friday that international condemnation of its actions in Georgia was "biased," while the appetite in the European Union for imposing sanctions on Moscow appeared to dwindle.
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European diplomats said they had received clear signals from the Kremlin that Russia would retaliate if the European Union imposed punitive measures over Georgia when EU leaders meet for an emergency summit next week.
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A senior diplomat for EU president France said sanctions would not be adopted at the summit. That message contradicted remarks on Thursday by French Foreign Minister Bernard Kouchner, who said sanctions were among the options on the table.

"The time to pass sanctions has certainly not come," the French diplomat said.

In particular, the Europeans are concerned about their oil and gas supplies from Russia. Of course, everyone denies that this is having any impact on how they see the situation:

European diplomats said they had received clear signals from the Kremlin that Russia would retaliate if the European Union imposed punitive measures over Georgia when EU leaders meet for an emergency summit next week.

Russian oil companies and government officials denied a British newspaper report that they were preparing to restrict oil supplies in response to sanctions.
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Western policy-makers drafting a response to the Kremlin's actions are mindful that Russia supplies more than a quarter of Europe's gas and that its support is vital to maintain pressure on Iran over its nuclear program.

European diplomats said on Friday they were expecting Russian retaliation if the EU took punitive measures.

"They've been saying loud and clear that they feel they could do whatever they want with impunity," said one diplomat.

Russian threats have gone beyond oil and gas supplies at other issues of mutual concern:

Putin also hinted Russia's cooperation with the West on issues such as trade and nuclear non-proliferation could be at stake in the row over Georgia.

In the meantime, Russian President Medvedev is trying to sell a bizarre conspiracy theory by which the US "provoked" Russian intervention as a way to promote John McCain's candidacy. I don't see this conspiracy theory selling well in the US, even among Bush's staunchest critics. According to the BBC:

Mr Putin told CNN US citizens were "in the area" during the conflict over South Ossetia and were "taking direct orders from their leaders".

He said his defence officials had told him the provocation was to benefit one of the US presidential candidates.

--SCC

Obama Appeals to Pragmatists

Obama made a definite appeal to independents and pragmatists during his acceptance speech. Time will tell how much of it he can deliver, but the approach seems like the right one. The real question is whether the party hacks will allow this sort of approach to proceed, or whether they will want to keep the same old wedge issues active to stir up party activists during the next election.

America, our work will not be easy. The challenges we face require tough choices, and Democrats as well as Republicans will need to cast off the worn-out ideas and politics of the past. For part of what has been lost these past eight years can't just be measured by lost wages or bigger trade deficits. What has also been lost is our sense of common purpose - our sense of higher purpose. And that's what we have to restore.

We may not agree on abortion, but surely we can agree on reducing the number of unwanted pregnancies in this country. The reality of gun ownership may be different for hunters in rural Ohio than for those plagued by gang-violence in Cleveland, but don't tell me we can't uphold the Second Amendment while keeping AK-47s out of the hands of criminals. I know there are differences on same-sex marriage, but surely we can agree that our gay and lesbian brothers and sisters deserve to visit the person they love in the hospital and to live lives free of discrimination. Passions fly on immigration, but I don't know anyone who benefits when a mother is separated from her infant child or an employer undercuts American wages by hiring illegal workers. This too is part of America's promise - the promise of a democracy where we can find the strength and grace to bridge divides and unite in common effort.

The Great Wealth Transfer

Paul Krugman's Rolling Stone article discusses the transfer of wealth to the wealthiest few. It appeared in 2006, but the trends he discusses have accelerated.

An important part of the article is a debunking of the different myths explaining how this happened:

MYTH #1: INEQUALITY IS MAINLY A PROBLEM OF POVERTY.
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The real divergence in fortunes is between the great majority of Americans and a very small, extremely wealthy minority
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MYTH #2: INEQUALITY IS MAINLY A PROBLEM OF EDUCATION.
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Being highly educated won't make you into a winner in today's U.S. economy. At best, it makes you somewhat less of a loser.
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MYTH #3: INEQUALITY DOESN'T REALLY MATTER.
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America actually has less social mobility than other advanced countries: These days, Horatio Alger has moved to Canada or Finland. It's easier for a poor child to make it into the upper-middle class in just about every other advanced country -- including famously class-conscious Britain -- than it is in the United States.

A lot of this has been accomplished through Republican tax policy and the associated misinformation.

the administration has engaged in a systematic campaign of disinformation about whose taxes have been cut. Indeed, one of Bush's first actions after taking office was to tell the Treasury Department to stop producing estimates of how tax cuts are distributed by income class -- that is, information on who gained how much. Instead, official reports on taxes under Bush are textbook examples of how to mislead with statistics, presenting a welter of confusing numbers that convey the false impression that the tax cuts favor middle-class families, not the wealthy.

In reality, only a few middle-class families received a significant tax cut under Bush. But every wealthy American -- especially those who live off of stock earnings or their inheritance -- got a big tax cut. To picture who gained the most, imagine the son of a very wealthy man, who expects to inherit $50 million in stock and live off the dividends. Before the Bush tax cuts, our lucky heir-to-be would have paid about $27 million in estate taxes and contributed 39.6 percent of his dividend income in taxes. Once Bush's cuts go into effect, he could inherit the whole estate tax-free and pay a tax rate of only fifteen percent on his stock earnings. Truly, this is a very good time to be one of the have mores.

Framing the Immigration Debate

The Rockridge Institute has an interesting article on how to frame the immigration debate. It makes the point that the Conservatives have succeeded in framing the debate in the most racially-polarizing way possible. The costs associated with immigration (by which we mean hispanic immigration, of course) are considered, but the benefits are not. More importantly we don't think about the complex interrelationship of issues that drive the debate. The Institute's report makes for thought-provoking reading.