Greece, Puerto Rico – Something in common, U.S. affected

Both Greece and Puerto Rico are in financial trouble.  Each is too deeply in debt.

American taxpayers may pay some of the cost of solving each problem.  The U.S. contributes to the International Monetary Fund, where Greece has defaulted on a big loan payment.  And Congress may have to find a way to bail out Puerto Rico.

Though the two situations are different, they have something else in common.  Both are the result of weak and confused underpinnings.

How did Greece get into trouble?  It lived beyond its means, and financed excessive public spending by loans.  Lenders relied partly on what turned out to be inaccurate information provided by the Greek government about the amount of its debt.

The 18 other European countries using the same currency as Greece – the euro – want it to raise taxes and carry out tough cutbacks on pensions and other public spending before they lend it even more money to make some of its huge upcoming debt payments. 

The Europeans resist Greece’s requests, because the euro is backed only by the actions of its 19 user countries to behave themselves financially.  And few trust Greece to keep its word to carry out reforms now that it really feels the pinch.

Puerto Rico also wants to cut its debt.  It would like to reduce its lenders claims by filing for bankruptcy.  It is a U.S. territory with federal law preventing it from using bankruptcy.  It wants that law changed.  States can seek bankruptcy protection, but they don’t because of their own laws preventing too much debt.

How did Puerto Rico get into so much trouble?  U.S. law encouraged it to borrow big, by offering it lower interest payments.  This was done by making its borrowing tax exempt federally and in all states.  By contrast, bonds issued by a state like Maine are federally tax exempt, but only state tax exempt in the issuing state.  So Maine gets less encouragement than Puerto Rico.

Puerto Rico, a U.S. territory, sometimes acts as if it were an independent country and sometimes like a state.  Its residents do not pay American taxes but do receive federal benefits.  This unusual status helps explain how it had the ability to get itself into excessive debt.

The twin crises are real and deep, and they call for measures more than simply patching them over. 

Europe needs to decide if it will accept more unity to back the euro and make it a true currency.  The U.S. is faced with deciding if Puerto Rico should be put on the road to statehood or treated like an independent country that chooses to use the dollar as its currency.

Confederate flag lowered; what does it mean?

Is the Confederate battle flag merely an historical relic or a symbol of racism?  Why do people in northern states, who have no racist history, display this flag?

The recent killings in Charleston, S.C., which led to the lowering of that flag from a prime spot on the state capitol grounds in Columbia, have renewed thinking about the South’s past and race relations.   

The flag’s removal to a museum has also raised questions about symbolism in our lives.

South Carolina was the first southern state to secede from the U.S., acting soon after Lincoln’s election and before he took office.  It ignored his willingness to allow slavery in states where it already existed.  It declared that secession was about slavery, not states’ rights.

But it only put the Confederate flag on its capital grounds in 1961 to mark 100 years since the Civil War began and kept it up to express its opposition to the civil rights movement.

The flag is part of the state’s history, but a disgraceful part of that history.  While it should not be forgotten, it should not be honored, especially when it is recalls the suppression of an entire group of the state’s citizens.

The Charleston killer understood the true meaning of the battle flag and, in his view, carried on the battle.

A recently published study looks at racism in each state based on Google searches for the “N-word.”  It found that South Carolina ranked eighth.  That could be an environment comfortable with the flag.

The election of Barack Obama as president did not mean that racism had disappeared and that showing the flag was a mere nod to history.  In fact, some believe that Obama’s election increased racist sentiment. 

Clearly, the outlook for African Americans has improved.  And changing attitudes toward racially identifiable groups is taking place slowly.

Texas, a former Confederate state, rejected the display of the Confederate flag on its license plates, despite the claim it was merely historic.  The U.S. Supreme Court recently upheld its right to ban the flag plate without the state being guilty of infringing free speech.

While the Supreme Court blocked the system of federal government pre-approval of changes in the election laws of states with racist histories, it did not write those states a blank check.  The federal government is in court trying to prevent changes to North Carolina laws made following the Court’s decision, saying they are an attempt to block voting by African Americans

In the study of racism in the states, Maine ranked 32^nd, close to Vermont and New Hampshire.  This was considered to be less racist than average.  Maine has the smallest non-white population of any state.

So why do some Mainers and others across the North continue to display the Confederate battle flag?  While some may have racist attitudes, it is not likely many lament the end of slavery.

Southern soldiers in the Civil War were called “rebels,” people who were willing to fight the authority of their country to tell them or their states what to do.

The notion of being independent, rebelling against authority, still has strong appeal for many.  To some of them, especially in the North, it’s possible the flag says “rebel” more than “racist.”  But the intent matters less than the effect, so the message sent to blacks and many whites relates to the flag’s original use far more than to the beliefs of the person displaying it.

The message finally understood in South Carolina is just that: effect matters more than intent.  Even if the flag means history to some, others see it is as a racist symbol.

One of the most interesting aspects of the flag coming down in Columbia was the change in attitude among many Republican leaders.  The GOP had picked up conservative, white voters in the South after the passage of the 1964 Civil Rights Act.  It dislodged the almost total Democratic dominance in the old Confederacy.

It would have been natural for the Republicans to accept the flag as they have in recent decades.  But leaders came to support its removal.  Not only did the Charleston killings make inescapable the flag’s real meaning, but the changing American population sent the GOP a clear message.

By 2044, minorities are expected to be the majority of the American population.  The GOP dominance of southern states could erode as the change takes place.  The lowering of the old flag may have had greater political symbolism than it seemed. 

Top arms control expert: Iran agreement “a big deal”

One of the top U.S. experts on arms control says, in an exclusive interview, that the agreement by world powers with Iran to block it from acquiring nuclear weapons is “a big deal.”

John D. Holum, chief of the Arms Control and Disarmament Agency and U.S. Undersecretary of State for Arms Control under President Bill Clinton, notes there are two paths to nuclear weapons – using either enriched uranium or plutonium – and “the agreement effectively fences off both routes.”

Verification of Iran’s actions means, “there’s no element of trust involved,” he says.  Contrary to the demands of Ayatollah Khamenei, International Atomic Energy Agency “inspectors will have access to all sites, existing and suspected, including military facilities.”

“The IAEA is technically very proficient,” he reports.  It will now be equipped with better tools to carry out inspections.  Iran will be subject to these tougher safeguards.  And the U.S. and others will continue their own intelligence operations to look for violations.

In the event of a violation of its commitment by Iran, all parties, including China, Russia and Iran, have agreed sanctions will “snap back” on.  The decision to restart sanctions cannot be blocked by any or all of the three.  The U.S. and its European allies have a majority vote.  Agreement on a binding majority vote by an international body on such a major issue is quite unusual.   

Answering the claims of some critics, Holum maintains, “it’s a common misperception that after some specific limits expire all bets are off.”  Iran is bound by treaty obligations never to have nuclear weapons and “cheating in the future would be uncovered much more quickly” than in the past.  

It is possible that Iran will try to cheat, but after verifiably giving up the fuel and equipment required for a nuclear weapon, it would need a year to build one, while Holum says it would now need only two months.  “If Iran tries to cheat, we’ll know about it in plenty of time to react.”   

The new agreement gives Iran only “a very short time to get back into full compliance” with its treaty obligations.  Failure to do so brings the almost certain return of sanctions, which can cause real injury to the country’s economy.

One of the major arguments in support of the new deal is that the alternative would be worse.  While he agrees that is true, Holum sees the agreement as having value going well beyond merely maintaining sanctions while allowing Iran to proceed with nuclear weapons development.

“The deal should be implemented,” he says, “because it succeeds in the core purpose of the sanctions and the negotiations – to ensure, with confidence, that Iran will not be able to secretly develop nuclear weapons.”

He implies that trying to press Iran further in negotiations would not have produced a better result than what was already achieved in the agreement.  And as long as the multi-year negotiations continued, the new, tougher controls could not be applied.

Some critics stress that Iran supports terrorism, wants to destroy Israel and is our enemy in the Middle East, a region it would like to dominate.  Without sanctions, it would gain the resources to pursue these goals.  To these critics, the agreement does not go far enough but talks should have been pursued until Iran was disarmed and blocked from using nuclear power even for peaceful purposes.

It is worth noting that these objectives were not part of U.S. policy in dealing with the far more menacing Soviet Union or with North Korea, a country allowed to gain nuclear weapons and the means to use them against countries friendly to the U.S.

The declared purpose of the sanctions, adopted by the U.N., was to deal with Iran’s nuclear program, Holum notes.  “Any U.S. attempt to repurpose them to other issues would certainly fail.”

The announcement of an agreement brought immediate opposition as well as recognition of the accord as an historic accomplishment.  Some observers believe that Republican majorities in the House and Senate will vote to disapprove the agreement President Obama puts before them.

Obama would then veto their disapproval, and it would take two-thirds of both houses to override the veto.  That means all Republicans would have to oppose the deal and pick up a block of Democrats to have enough votes for an override

Would all Republicans want this key deal be treated as a purely partisan matter?  Would enough Democrats, fearful of offending Jewish voters, desert their president?

Holum believes the rest of the world has become so accustomed to partisan efforts in the U.S. to undermine Obama that approval by veto would not reduce confidence in the deal itself.

Right now, what’s needed is a thoughtful and thorough public review of the deal, free of preconceived positions on either side.

In foreign deals, is half a loaf acceptable?

These days, “half a loaf is better than none” seems to be the rule for major international agreements. 

The old English proverb is very much alive.  Just look at three current negotiations. 

One is on track to a conclusion.  Congress gave the president the authority to enter into trade agreements subject only to its “fast track” approval – a simple yes or no vote.  The majority Republicans and a few Democrats were willing to give the president, this one and the next, what amounts to a blank check.

Why?  The new law permits President Obama to conclude the negotiations on the Trans-Pacific Partnership, a deal involving countries all around the rim of the Pacific Ocean.  But not China.

The idea is to allow the U.S. to continue to play a dominant role in the Pacific area and not allow China, which has obvious expansion goals, to assert its leadership.  The other TPP participants are clearly worried about Chinese intentions, designed to displace the U.S., so they want the TPP.

But the TPP has some serious defects, including one by which panels of lawyers will have the power to make decisions about American trade actions instead of leaving disputes to the courts.  This approach was invented because the court systems in some countries were not reliable.  But some argue it encroaches on U.S. sovereignty.

Is it worth taking that risk in order to block China’s ambitions to dominate the Pacific region?  That was the real choice that had to be made with the result being a potentially significant sacrifice to achieve a strategic gain.

Then, there are the negotiations with Iran.  Without necessarily agreeing with Israeli Prime Minister Benjamin Netanyahu about the degree of the Iranian threat, it seems clear that Iran wants a nuclear deal, not because of a desire for Middle East peace, but to get relief from sanctions imposed on it by other countries.

A deal with Iran should produce tighter controls on its ability to develop nuclear weapons, at least for a number of years.  But its attitude during negotiations has made it obvious that it is likely to try to undercut the effects of an agreement by hidden nuclear development. 

If Iran wanted nuclear capability simply to produce electricity and not bombs, it would hardly have made the negotiations so difficult.

But a deal would make it much tougher for Iran to do what it wants, though not impossible.  The agreement would not change Iranian intentions.  It could build other threatening weapons.

Is it worth gaining significant but not total control of nuclear development in Iran, a country seeking to dominate its region, in return for lifting the crippling sanctions?  That’s the “half a loaf” trade-off.

A congressional review of the deal would almost certainly resolve itself into a debate if the risk were worth the gain.  If other countries are willing to lift their sanctions, they might force the U.S. to take half a loaf.

Then, there’s the situation in Greece in which the U.S. is not a central player.

On one side is Greece, which lived beyond its means thanks to loans from its European neighbors, piled on more debt instead of cutting it, and then resisted Europe’s demands for budget cuts that would severely damage its economy as a condition for getting more bailout money.

On the other side are the other countries using the euro, the single currency of the eurozone, a group of most members of the European Union.  They want to keep Greece in the eurozone, but they do not want to set a precedent of bailing out members in trouble, especially when a country has brought on its own problems.

Greece is gambling that the eurozone countries will settle for half a loaf.  It would adopt some cutbacks demanded by its partners, but probably not enough to satisfy their toughest demands.  The others would give in, the Greek government seems to believe, to preserve European unity even at the risk of more bailouts.

In each of these cases, the judgment about whether to take half a loaf is entirely up to the more powerful party to the deal.  It must decide if the risk of insisting on its demands is likely to produce concessions by the other side.  Or would its insistence blow a deal out of the water, resulting in unfavorable events taking place beyond its influence.

It is always easy for critics to insist on hanging tough.  They seldom bear the responsibility if things go wrong.  What’s really tough is making the “half a loaf” decision.

Vetomania: A Battle for Power between Legislature and Governor

Maine Gov. Paul LePage is adding to the constitutional changes that politicians are making to government.  He has set out the veto every bill the Legislature presents for his signature.

LePage probably does not oppose all of the proposed laws, but he seeks to require the Legislature, in which the Senate is controlled by his fellow Republicans and the House is controlled by the Democrats, to pass all bills by a veto-proof, two-thirds majority.

Above all, LePage’s vetoes highlight a battle for political power between the legislative and executive branches of government much more than a battle between the parties.

LePage is open about his intentions.  He believes his 2014 reelection means the Legislature should bend to his will.  He discounts the voters’ will in electing members of the Legislature, which is supposed to make the laws.

He says legislators have wasted his time, so he is wasting theirs by levying his vetoes.  He may also be wasting the state’s reputation and taxpayer dollars to pay for extra legislative sessions.

There are other problems with “vetomania.”  Bills that should get a second look, where LePage’s opposition may make sense, are swept into the override wave as the Legislature asserts its rights.  And bills that should be enacted, even in his view, though they fell short of a two-thirds vote on passage, may be wiped away by a failure to override.

He has tried to use the pocket veto, holding bills without his signature until ten days after the Legislature adjourns.  But he faces the problem that it has not quit for the year.  In fact, it is possible that the Legislature will keep itself in session permanently, making pocket vetoes impossible.  Will his move end up before the Supreme Court or in the legislative investigation of his actions?

LePage’s veto moves would follow GOP precedent in Congress, where President Obama is blocked from making the kind of recess appointments to office envisaged by the Constitution, by the simple means of never having a recess.

His actions parallel the increased growth in the use of the filibuster in the U.S. Senate, which blocks votes on hundreds of bills without the consent of 60 senators.  In Maine, the Democrats at one time similarly created false ends to legislative sessions to get around the customary two-thirds agreement on the state budget.

Government has always depended on understandings, written and unwritten, about how participants would behave so that it could function.  Breaking historic understandings by insisting on the unreasonable application of the federal and state constitutions could threaten the American political system. 

When political splits get that wide, can the system survive?