Rossputin.com: Rational Thinking About Our World

Following is a truly fascinating in-depth analysis by Stratfor of the recent US-Iran discussions over Iraq. I hope you find it as interesting as I did. Most if not all of the links require a Stratfor membership....

Iran, the United States and Potential Iraq Deal-Spoilers

By Reva Bhalla

After 27 years of frozen relations, the United States and Iran held their first high-level direct talks in Baghdad on May 28 to negotiate a plan on how to stabilize Iraq. U.S. Ambassador to Iraq Ryan Crocker and his Iranian counterpart, Hassan Kazemi-Qomi, traded accusations about who was the bigger destabilizing force in Iraq. But by the end of the four-hour meeting, both described the negotiations as a positive first step in bringing the two sides together to stabilize Iraq. Kazemi-Qomi even said there probably would be a follow-up meeting within a month if he gets the OK from Tehran.

Iran and the United States evidently have come a long way since the spring of 2003, when Washington double-crossed Tehran on the two countries' original understanding that a pro-Iranian, Shiite-dominated Iraq would be allowed to emerge in exchange for Iran's help in effecting regime change in Baghdad. When the United States removed two hostile Sunni regimes from Iran's border -- the Taliban in Afghanistan and Saddam Hussein in Iraq -- the Iranians knew they had to check the United States on the regional chessboard so Washington understood any U.S. exit strategy from Iraq would have to come through Tehran. Only then, Tehran reasoned, could Iran use Iraq as a launchpad to extend Iranian influence in the Arab world.

Feeling a deep sense of betrayal, the Iranian government carried out a variety of deadly maneuvers that ultimately convinced Washington that neither the Iranians nor the Americans were going to succeed in gluing Iraq back together on their own. The negotiations are still marred by mutual distrust, but after four years of explosive negotiating tactics, Iran and the United States have reached a point at which both sides have acknowledged they cannot afford to avoid each other if they want to avoid their
worst-case scenarios in Iraq.

As the negotiations grow in intensity, so does the noise. The lead-up to the May 28 talks was punctuated by a series of interesting jabs as each side sought leverage against the other. While the United States sent nine warships with 17,000 troops into the Persian Gulf (which the U.S. military deliberately referred to as the Arabian Gulf in the official press release on the naval exercises) and stepped up threats of broadening sanctions against Tehran due to the latter's nuclear activities, Iran continued broadcasting its atomic advances and announced it had uncovered Western-run spy rings inside the Islamic republic. The United States is still holding onto five Iranian officials arrested in the northern Iraqi city of Arbil in January as bargaining chips in talks with Iran. Iran has responded with a series of arrests of Iranian-Americans affiliated with think tanks on allegations they are dissidents working to topple the clerical regime. These belligerent tactics are all part of the game, and will flare up even further as the negotiations grow more serious.

The Meat of the Matter

It now becomes all the more critical to cut to the meat of these talks: the negotiating terms put forth by Washington and Tehran over how each plans to fix Iraq.

Iran handed over a proposal to Crocker during a brief encounter at the May 5-6 Sharm el-Sheikh summit in Egypt, but also chose to unofficially publicize its terms for Iraq through the Saudi-owned, British-based daily Al Hayat. The Iranian Foreign Ministry likely chose Al Hayat, a major Arab news outlet, to make a back-channel broadcast of what concessions it is prepared to make to allay Sunni concerns in the region.

In sum, this Iranian proposal called for a non-rushed withdrawal and relocation of U.S. troops to bases inside Iraq, a rejection of all attempts to partition Iraq, a commitment by the Sunni bloc to root out the jihadists and acknowledgment by Washington that the Iranian nuclear file cannot be uncoupled from the Iraq negotiations. In return, Iran would rein in the armed Shiite militias, revise the de-Baathification law and Iraqi Constitution to double Sunni political representation, create a policy to allow for the fair distribution of oil revenues (particularly to the Sunnis) and use its regional influence to quell crises in areas such as Lebanon, Syria and the Palestinian territories.

The terms put forth by the Iranians are so close to the U.S. position on Iraq that, with little exception, they could have been printed on State Department stationary and no one would have noticed the difference. If these are the terms Washington and Tehran are in fact discussing, then we are witnessing an extraordinary turn in the Iraq war in which the U.S. and Iranian blueprints for Iraq are finally aligning. It does not surprise us, then, that Crocker said after his meeting in Baghdad that the Iranian position "was very close to our own" at the level of policy and principle.

The Spoilers

The prospect of Washington and Tehran warming up to each other, and of the United States potentially regaining its military bandwidth in the not-too-distant future, is enough to put a number of serious actors into a frenzy. With the exception of the jihadists, most of the actors in question see an Iranian-U.S. accommodation over Iraq as inevitable, and have little choice but to strive to shape what would otherwise be an imposed reality in the coming months -- leaving substantial room for error in these negotiations. The Iraqi Sunnis and Arab states, in particular, will not necessarily sabotage the talks, but they will be working to secure Sunni interests and contain the extent to which Iran emerges as the primary beneficiary of any deal it works out with the United States over Iraq.

Jihadists

Within Iraq, the transnational jihadists have the most immediate concerns. A political settlement in Baghdad inevitably would involve a concerted effort by Iraq's Shia and mainstream Sunnis to uproot the jihadists and deprive them of the chaotic security conditions needed for their operations. The apex leadership of al Qaeda hiding out along the Pakistan-Afghanistan border is also betting on continued bedlam in Iraq to keep the transnational jihadist movement alive, and will not be happy to see U.S. forces beefed up in the South Asia theater once a deal is sealed in Iraq. Violence aimed at heightening sectarian tensions to derail the negotiations -- particularly attacks aimed at inflaming the Shia -- will escalate substantially over the next few weeks and months in Iraq. High-value political targets also likely will be targeted for assassination in an effort to disrupt the leadership structure of the respective factions.

Iraqi Shia

The Iranians face a daunting task in whipping Iraq's Shiite bloc into shape to follow through with Tehran's commitment to quell sectarian attacks and consolidate Shiite political power in Iraq for the first time in the country's history.

Factionalism is already hardwired into the structure of the Iraqi Shiite community, whose loyalties are spread among the three largest political groups -- the (newly named) Iraqi Islamic Supreme Council, Hizb al-Dawah and the al-Sadrite bloc, as well as a number of smaller Shiite groups in southern Iraq, such as the Fadhila party. The intra-Shiite rivalries within and between these groups are enough to give anyone a headache, but Iran is well aware that violence and a good deal of oil money will be needed to bring the Iraqi Shia in line and make these negotiations work. Though the main political groups are more comfortable with the idea of working with Iran, Tehran has to play its cards carefully to ensure it does not trigger nationalist Arab sentiment among the Shiite actors, who already are deeply suspicious of Iran's intentions and have the arms and access to Iraq's southern oil fields to use as tools for stirring up trouble.

Iraqi Sunnis

Though not nearly as fractured as the Iraqi Shia, the Sunni landscape in Iraq has plenty of cracks of its own to make these negotiations troublesome. The Sunni factions in play include:

* The existing political blocs, divided between the Islamist Iraqi Accord Front and the secular-leaning Iraqi National Dialogue Front;

* The tribal groups, such as Anbar Salvation Council, that are actively fighting transnational jihadists to get a seat at the negotiating table;

* The Sunni religious establishment, led by the hard-line Association of Muslim Scholars of Iraq that has close links with the insurgent groups and has become increasingly anti-Iranian in recent weeks;

*The Sunni nationalist insurgents, who are looking for an acceptable opening into the political process, but remain distrustful of Shiite intentions.

The Iraqi Sunnis know they have to drive a hard bargain in these talks to ensure that Iraq's Sunnis are well-integrated in the state political and security apparatus to counter the Shiite majority. And they will continue to rely on explosives during the talks to make sure their demands are heard. Competing factions within the Sunni bloc and resistance from their former jihadist allies will only further complicate these negotiations, but unlike the jihadists, these Sunni groups are not opposed in principle to a deal that includes the Iranians -- they actually want negotiations.

Iraqi Kurds

By the looks of the Iranian proposal, the Kurds have plenty to worry about. Expanding Sunni political representation and changing the constitution to allow for a more "fair" distribution of oil resources leaves the Kurdish bloc in an all-too-familiar scenario in which Kurdish interests will be sacrificed by the United States to protect the interests of Iraq's neighbors.

Thus far, the Kurds have used the distraction of Sunni-Shiite bloodletting farther south to consolidate power between the two main rival Kurdish blocs (an extremely rare occurrence) and push forward with Kurdish autonomous demands to open Iraq's northern oil fields to foreign business. Once Iraq's Shiite and Sunni blocs reach some level of a political understanding in Baghdad, their attention will soon turn to their common adversary in the north, leaving the Kurds to face familiar moves by the Iraqi government to suppress Kurdish autonomy. The Kurds will need to drive a hard bargain by pushing through a Kirkuk referendum by year's end and resisting radical changes to the constitution and pending hydrocarbons legislation that threaten to put Iraq's undeveloped fields in the north under state control. The biggest threats the Kurds could make to a U.S.-Iranian deal over Iraq would involve withdrawing Kurdish support for U.S. forces or threatening to pull out of the government. But in the end, a compromise looks inevitable simply because the Kurds have nowhere else to turn.

Ultraconservatives in Washington and Tehran

There are ultraconservative factions in both Tehran and Washington that are not nearly as enthused about a U.S.-Iran rapprochement, and could use their influence to complicate the negotiations. Rumor has it that in Iran there are major disagreements brewing between the president and other senior Iranian officials, particularly on foreign policy matters. There are also growing indications that the apex of the clerical establishment is making moves to sideline Iranian President Mahmoud Ahmadinejad and weaken the influence of his ultraconservative faction as a preventative measure to ensure progress in these talks. Though Iranian Supreme Leader Ayatollah Ali Khamenei has thus far managed the deep divisions within the Iranian establishment between the ultraconservative and pragmatic conservative factions, his ability to contain these divisions is held hostage by his failing health.

Meanwhile, hard-line elements in Washington are actively spreading information in an allegedly covert campaign signed off on by U.S. President George W. Bush to topple the clerical regime. These actors are more interested in effecting a policy of regime change rather than in a rapprochement with Iran, and they view the negotiations as little more than a smoke screen for a covert campaign to rid the Islamic republic of its ruling ayatollahs. These rumors threaten to fuel even more distrust between the two sides while the negotiations are in full swing, especially as Iran's greatest fear is that it will end up being backstabbed all over again once Washington recovers from Iraq and has enough bandwidth to entertain military options.

Sunni Regional Powers

Saudi Arabia and the Gulf Arab states are extraordinarily nervous about the idea of having the United States and Iran conduct exclusive meetings over a matter that directly concerns their national security interests. As the leader of the Sunni Arabs, the Saudis believe they have every right to be part of the formal negotiating process, but they also see the inevitability of the United States and Iran working toward an Iraq settlement. With the most at stake, the Saudi government normally would be screeching in protest during these U.S.-Iranian bilateral meetings, but instead it is keeping quiet. For now, the Saudis have to rely on the United States to ensure their demands for Sunni representation and Iranian containment are heard.

Meanwhile, the Iranians evidently are working to allay Sunni Arab fears by publicizing Tehran's Iraq proposal (with considerable concessions to Iraq's Sunnis) in the mainstream Arab press and stepping up diplomatic engagements with Iran's Sunni neighbors in the Gulf. But the more the Iranians speak of arming and training the Iraqi army, the more the Saudis have to worry about. The House of Saud does not want to be looking at a scenario down the road in which U.S. troops have withdrawn from Iraq while Iran uses its militant proxies there to create an excuse to intervene militarily, putting Iranian troops within sight of Saudi Arabia's oil- and Shiite-rich Eastern province. The Saudis are also not looking forward to the day when war-hardened Saudi jihadist veterans in Iraq return home to wage attacks in the kingdom. Though the Saudis might see an Iran-U.S. deal as inevitable, they will keep their ties to the full spectrum of Sunni militants to use as their main deal-breaker should an Iraq settlement fail to address their interests.

Syria

Syrian President Bashar al Assad also probably is lying awake at night over these U.S.-Iran talks. The Alawite-Baathist regime in Syria loved the idea of its allies in Tehran expanding Shiite influence while the United States remained far too militarily occupied in Iraq to bother with Syria. The insurgency in Iraq also provided Syria with a vital pressure release valve for Sunni militants in the country. Like Riyadh, the regime in Damascus does not want to see jihadists returning home from Iraq to carry out attacks on native soil.

Despite these concerns, the Syrians are hoping their alliance with Tehran will pay off and result in serious recognition and security assurances from the United States. For this to happen, Syria has to prove it is an integral piece of this Iraq deal by showing it possesses the ability to clamp down on insurgent traffic (by funneling jihadists into Lebanon for now). While Syria offers limited cooperation over Iraq to show its powers, the al Assad regime will become further emboldened to secure its interests in Lebanon, where Syria's priorities are rooted.

Russia

But the player with perhaps the most to lose is not even located in the Middle East. That player is Russia. At first glance, Russia is an odd party to even be involved in the Iraqi imbroglio. It has no troops in country and, no matter what happens to Iraq in the long run, Baghdad has no impact on anything Russian. Certainly Moscow was friendly with the previous government, but not to the degree that Saddam Hussein's fall appreciably impacted Russian political or economic interests.

Russia does, however, have two horses in this race. The first relates to the Iranian nuclear program, which lists the Russian-built Bushehr power plant as its crown jewel. Despite Iranian protestations to the contrary, Tehran's nuclear program is largely a result of Russian technology sharing. And, should the Russians walk away, the Iranian program will have suffered a monumental setback. Similarly, so long as Russia has not finished the reactor at Bushehr, the West cannot ignore Moscow's ability to function as an interlocutor in Tehran. So long as the facility is "under construction," Russia has leverage over both parties. As soon as Russia's technicians finish, however, that leverage evaporates.

Second, and far more important: So long as the bulk of the United States' and Iran's political and military attention is absorbed in Iraq, neither has any bandwidth to deal with other issues. Iran has deep and lasting interests in Azerbaijan and Turkmenistan -- states of critical interest to Moscow -- yet Iran's preoccupation with Iraq has prevented Tehran from capitalizing on recent opportunities. Similarly, the United States has faced no foe more challenging than the Soviet Union and its Russian successor. In that vein, there is no country more desirous of challenging Russia's ongoing efforts to rewire European security arrangements in its own favor than the United States. But that requires a Washington not consumed by the black hole Iraq has become.

A Rough Road Ahead

It took four years of heavy-handed negotiating tactics to bring U.S.-Iranian dealings over Iraq out of the back channels and into the public view.

That was half the battle.

The aligning of the U.S. and Iranian proposals for Iraq marks a significant inflection point in the war, but we still question whether the three big players negotiating this deal -- Washington, Tehran and Riyadh -- can trust each other enough and carry enough sway among Iraq's state actors to get them to cooperate and actually produce results on the ground. Once you throw the spoilers into this equation, along with a centuries-old Arab-Persian rivalry centered on containing the very rise that Iran is anticipating this deal will yield, the prospect of a U.S.-Iranian accommodation over Iraq coming to fruition does not look so good. Our hopes are not completely dashed, but we do see a bumpy road ahead.

In response to my posting a week ago endorsing Bob Schaffer for Senate, I received an interesting comment which I thought deserved a serious reply regarding the actions of the Club for Growth in Colorado during the prior election cycle and the possible ramifications of that in 2008.

Here is the comment I received:

All the best to Schaffer. He will make a great Senator. If Schaffer is endorsed by the Club for Growth, how much do you think that will cost him after what the Club did in the 5th CD in 2006? The old bull and cow elephants in the 5th CD are poised to dump Lamborn and they are holding everything against the CFG and Pat Toomey in the process. The blow-back on Schaffer will be serious if he campaigns with the CFG's endorsement.

And here is my response:

Jane,

As you know, I was highly critical of the Club for Growth for endorsing Doug Lamborn. It was by far the biggest mistake the Club ever made and I can't say I fully understand the politics behind their decision, because I do believe it was at least as political as principled.

I have been involved with CFG almost since its founding, however, and despite this glaring and close-to-home error, they generally do very good and very important work. I believe that most voters, even in the 5th CD, will be able to separate the issues.

Furthermore, the issue with Lamborn was a primary versus another (better) Republican in Jeff Crank, as well as some others who were not so good. I would be quite surprised if Bob Schaffer had a primary challenger. Therefore, Club members who receive Club recommendations are not going to be looking at a Lamborn vs. Crank type of situation but rather a solid intellectual conservative (Schaffer) versus a liberal, not especially intellectual environmentalist (Mark Udall). The choice will be very clear, and there's just no way any significant number of Republicans or Independents will vote for Udall just because the Club endorsed Schaffer, no matter how angry they are with the Club for what it did in the 5th in the last election.

So, I understand that people are angry with the CFG, but I just don't see "serious blowback" against Schaffer because of it. Schaffer is too good a person and too good a candidate for Republicans in the 5th to hold the Club's endorsement against him. Beyond that, keep in mind that the Senate race is not just run in the 5th, and people outside the 5th (other than a few people like me) aren't even aware of the controversy surrounding the CFG in that election. The Club's endorsement would be a huge net positive for Bob Schaffer, not only in Colorado but to encourage out-of-state donors as well. You can be certain that the liberal 527s will be working very hard to raise out-of-state money for Udall, and the Club is the only serious competition for them.

You are probably aware how strongly I supported Jeff Crank over Doug Lamborn. To me, Crank was obviously not only the better candidate, but the better man. I am still convinced that is the case. As an active participant in the Colorado Club for Growth, I (and not just I) had some very angry conversations with the highest level of management at the national Club. But it would just be silly to hold the CFG's decision against Bob Schaffer.

I know Bob Schaffer, and I can not think of one single candidate for anything in the upcoming elections who is his equal in intellect, honesty, experience, and just being a decent guy. I couldn't care less if Pat Toomey made a mistake in a prior election as long as he does the right thing in this one. After all, this election is MUCH more important than a Republican primary (between two guys with similar positions on issues) in a strongly Republican district in the House.

With Schaffer, we're talking about probably the highest visibility and most competitive race for an open Senate seat and that's a Senate that is one vote from switching control. No matter how angry you were with Pat Toomey, if you're a Republican, or an independent voter who sees the obvious superiority of Bob Schaffer over Mark Udall (and I believe it will be very obvious to all who are not simply party-line voters once they debate each other), it simply doesn't make sense to vote for the wrong guy because you're upset with another group who endorsed the right guy.

It is very difficult to toss an incumbent, and given what a brutal campaign I expect Schaffer's to be, I would encourage Jeff Crank not to run again right now and 5th CD Republicans to focus on beating Udall rather than beating a guy who, while maybe neither the brightest bulb nor the hardest worker, is basically fine on the issues (at least as far as most 5th CD Republicans go, as he is too socially conservative for me and too emphatic that those are his most important issues.)

My view could theoretically reverse, i.e. to thinking that Jeff should run, if I come to believe that Lamborn will receive a primary challenge anyway, that he is truly vulnerable to the challenge, and that if Lamborn is the GOP candidate on the ticket, it might hurt GOP turnout and thus hurt Bob Schaffer. But, I think that combination of events is unlikely. First, I would suggest that the GOP establishment as well as other organizations that might support Jeff or be neutral if it were an open seat will line up behind Lamborn. So he is probably not as vulnerable as many (maybe including me) would wish. Second, if Jeff does challenge, and forces the GOP leadership to spend money and energy defending a conservative Republican incumbent from another conservative Republican, then if Jeff loses (and maybe even if he wins) he will probably not be able to get support from Washington for another campaign for a decade or more. In other words, if Jeff challenges and loses, it would be a major long-term setback for his political career. If he challenges and wins, he won't be particularly appreciated by Republicans outside his voter base in the 5th CD. And third, since this year will include a presidential race that will have the electorate highly energized, it isn't likely that the presence of any particular GOP Congressional candidate will cause an important difference in turnout. If Lamborn were to lose, then his voters would be disheartened just as Crank's were last time, so it's not obvious that there's an important overall gain for the GOP or difference in turnout which might come from a successful primary challenge to Lamborn, and I don't think a challenge is likely to succeed.

In summary, I think it would be a mistake for 5th CD voters to hold a CFG endorsement of Bob Schaffer against him, and I don't think more than a small handful would make that mistake in this situation. And second, I think it may be a bad use of the time, energy, and money of motivated GOP activists to try to toss Lamborn even though I'd be perfectly happy to see him lose to Jeff Crank. Instead that energy should be focused on supporting Bob Schaffer in a far more difficult and far more important race, not just for Colorado but for the nation.

-------------

Last week, the Club for Growth put out this press release:

For immediate release—March 22, 2007

Club for Growth PAC Pleased with Potential Bob Schaffer Candidacy in Colorado

Washington - The Club for Growth PAC is pleased to hear that former Representative Bob Schaffer is considering entering the race to succeed retiring Republican Colorado Senator Wayne Allard.

During his three terms in Congress from 1997-2002, Bob Schaffer was a dedicated defender of taxpayers and a strong proponent of lower taxes, limited government, and greater freedom. He even earned the nickname “Honest Bob” for fulfilling his campaign pledge not to serve more than three terms as a U.S. Representative.

The National Taxpayers Union awarded Rep. Schaffer five grades of A for 1997-2001 and a grade of B+ for his final year, ranking him number 31 out of the House of Representatives’ 435 members in 2002. The NTU scorecard is based on every vote that “significantly affects taxes, spending, debt, and regulatory burdens on consumers and taxpayers.” In the same vein, the Council for Citizens Against Government Waste gave Rep. Schaffer a lifetime rating of 85 for his six years in Congress, making him a “Taxpayer Hero.”

“I served with Bob Schaffer in the House of Representatives,” Club for Growth President Pat Toomey said, “and I speak from personal experience when I say that Bob Schaffer would be a fantastic addition to the U.S. Senate. In the House of Representatives, he was a committed supporter of free-market principles, and I have no doubt that his support would continue as strongly in the U.S. Senate.”

PAID FOR BY CLUB FOR GROWTH PAC AND NOT AUTHORIZED BY ANY CANDIDATE OR CANDIDATE'S COMMITTEE.

Don Boudreaux's letter to the Washington Post yesterday is succinct, on target, and nearly poetic:

Please, someone give me one good reason why members of Congress are given the title "Honorable".

Don
http://www.cafehayek.com/
..................

28 May 2007

Editor, Washington Post
1150 15th St., NW
Washington, DC 20071

Dear Editor:

Re Congressional Democrats' penchant for earmarks (Robert Novak, "Murtha's Friends," May 28): When pigs second in line at the trough accuse pigs first in line of being shameful gluttons, it is a dimwitted farmer indeed who fantasizes that the squealing accusers will be any less gluttonous when they gain favored access to the slopping pit.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030

In a Townhall.com article on Saturday, Phil Harris went on the attack against banking and credit card companies for a range of complaints.

I understand anger out outrageously high bank overdraft fees, credit card interest rates, and such things, but Mr. Harris' primary complaint was against higher interest rates being charged on loans to low credit quality, i.e. low income, borrowers. While higher rates for those borrowers clearly do not help them get ahead in the world, that does not mean the system is corrupt or functioning incorrectly.

I wrote a note to Mr. Harris about his article, and he took the time to respond, so below is my letter to him, followed by his response to me, and my response to his response.

------------

Mr. Harris,

While I understand your anger at the outrageously high fees charged by banks for short-term overdrafts as well as the nearly usurious rates on credit cards, your article’s primary complaint about higher loan interest rates for riskier borrowers is nonsensical and intentionally misunderstands free markets.

You argue that people with less means should be given credit at rates no worse, or even better, than rates given to more credit-worthy borrowers because somehow it is the banking system’s job to “make it ‘easier’ for people who are already struggling.”

If two people came to you asking for loans (not good enough friends that you’d simply loan them money at no interest rate), would you not consider the risk of your not being repaid when making your decision about what interest you would charge if you decided to make the loan at all? If your answer is that you would offer the same interest rate to anyone to whom you agreed to make a loan, and that you’ll agree to loan money to people with bad credit histories or more substantial likelihood of not being able to repay the loan, then you are not in a business, but instead you are a charity. Unlike you, banks have shareholders and taxpayers and other depositors to protect.

Interest rates are nothing more than the cost of money. And the higher the chance that you’ll never get something back when you loan it out, the higher the cost for the loan must be.

If 5% of loans to lower-income borrowers default versus 1% of loans to higher-income borrowers, of course the banks must charge a higher rate for the higher risk on loans to lower-income people. Not only is it logical, but it is the only way (short of refusing to make the loans, which I presume you would find even worse) of protecting depositors, shareholders and taxpayers from ending up holding the bag.

As far as ways to reduce loan risk, such as direct withdrawals from paychecks, that is fine as far as it goes, but it still does not help with the risk of someone losing his job and then not having the resources to repay a loan. So, while a program like that might be worth lowering an interest rate slightly, it will never be enough to lower the rate to that of a higher-income borrower.

Yes, there is occasionally a “distinct odor of gouging” in some areas, like certain bank and credit card fees. However, consumers know the rules of the game when they go in, and if they’re not prepared to play by them, they shouldn’t play.

More importantly, regarding your article, the primary “assault on logic” is yours: Higher loan rates for lower credit quality borrowers are not only logical, but they are necessary and appropriate.

---------------------

Phil Harris responds:

Hi Ross,

My father is long retired from a bank in a rural community after 45 years of service. I have discussed this with him in some detail, as it was his job as Exec. Vice President to manage the loan department. It is interesting to note that the policy of the bank, to set loan rates the same for all customers (2% above the rate paid for savings accounts) was harshly criticized by their larger affiliate peers in the state.

Despite the naysayers, the little bank grew to become the largest (agriculture lending bank) in the state, with several hundreds-of-millions on deposit. Not too bad for an institution serving a two-bank community of about 5,000. They were quite profitable, and enjoyed decades of prosperity through good times and bad.

In any case, the assault on logic occurs because the burden of operating in a common sense mentality is artificially placed on one side of the equation. It may be logical for consumers who have had difficulty, to voluntarily avoid (responsible budget management) taking on credit obligations. However, the same burden of logic is not placed on the lender, because the lender will in many cases agree to the transaction at the higher rate.

Where a consumer might make a poor credit decision based on their perceived need to acquire something, justifying in their mind that they will scrimp and control spending to make the payment work, lenders are making the same poor decisions and are in effect complicit in the irresponsible behavior. Lending money at a higher rate of interest, does nothing to change the ability of the consumer to meet the payment obligation, but in fact, places more negative pressure on the consumer's budget, thus making a bad outcome even more likely.

It is, in fact, possible for a lender to scrutinize a borrower's credit history, employment, income, and current debt load, to ascertain whether the loan should be made. Doing so will weed out most of the true dead-beat borrowers, who are most likely to walk away from their obligations, while revealing those who truly desire to manage their obligations.

The advent of the credit score has pulled lenders down this illogical path more than anything else. The credit score knows nothing of a borrower's circumstances, but attempts to predict outcomes based on statistics. Many consumers have been good, reliable debt customers, but for one reason or another have fallen onto difficulties along the way. Perhaps due to serious injury or illness, or an attempt at self-employment did not meet expectations, or a miscalculation on tax consequences left them in financial straights.

Even though the circumstances have been corrected, and the potential borrowers have adequate stable income and a sincere desire to meet obligations, they are now saddled with increased pressures as a result of higher loan payments. All this really accomplishes is to remove more money from the budget, which may otherwise serve to weather unforeseen events we all endure from time to time.

I am not speaking about the "stuff" people want, such as plasma screen TVs, recreational vehicles, or dream vacations to the Virgin Islands. Rather, I am concerned about reliable transportation, and home ownership. Again, if a lender were to scrutinize a borrower's current debt burden, he could know when a potential loan customer has a propensity to purchase anything and everything on a whim, versus those who have suffered a whack on the shins.

Yes, there is responsibility needed in making sound credit decisions. Unfortunately, the responsibility has been shifted entirely to the borrower, giving the lender a pass. My contention is that charging higher rates of interest based on a statistical credit score, does not constitute sound lending practice. The cost of dead-beat loans has been shifted entirely to the shoulders of otherwise responsible, hard-working borrowers, increasing the likelihood that they will suffer more setbacks due to higher debt payments for "necessary" purchases.

My beef with this is that lenders have recognized (statistically) that this practice has created an entirely new profit center, and they have embraced it as an opportunity from heaven. This, as opposed to the more logical and socially responsible practice of recognizing non-performing loans as a cost of doing business, and spreading that risk throughout the entire loan portfolio.

By the way, after briefly looking through your blog, it would seem that we agree more often than not. I knew this would be unpopular in the general conservative audience, and I certainly do not advocate for the removal of personal responsibility. I simply believe that in this area, the irresponsibility of a particular industry has been masked, and should be held to account.


Best Regards,

Phil Harris

---------------------

And now my response to his response:

Hi Phil,

Thanks for taking the time to respond.

Just a few things I'd like to comment on:

First, I believe that a bank in a relatively homogeneous rural community knows its customers much better than the average bank in downtown Chicago, LA, or NYC. It could understand the risks of any particular loan better and more quickly than most of the urban-located loans that usually generate this type of discussion. That's particularly true of a bank like your father's which (I surmise) lent primarily on one type of asset and business, i.e. farms and agriculture. So, your father's bank could probably more easily get away with policies that contained little or no differentiation among borrowers because the borrowers were already fairly similar.

Second, I think you have a valid point that a credit score alone seems a superficial, and maybe even foolish, way to determine whether to make a loan and what the loan's interest rate should be. There is clearly a lot more information to be had about a loan applicant, especially newer events which could make the loan a substantially better (or worse) risk than the credit score implies. However, you did not make this argument in your original article! You simply said that banks shouldn't charge higher rates for riskier loans, and not that the data the bank was using might cause them to erroneously conclude which loans were actually riskier.

Third, I simply don't see a place for the idea of "socially responsible" here. That's Hillary-talk. A bank is in business to make a profit for its owners/shareholders and to keep its depositors safe. If people want to make loans for social reasons, they should set up a charity to do that, or set up a bank that has that specified as their goal. I don't doubt that some people would invest or contribute, but it's simply not reasonable to demand that all business operate that way.

Bottom line, I thought you could have made more about the "gouging" from extremely high overdraft fees and credit card rates, many of which seem to suffer from a lack of competition between banks. But your main point about the loan rates wasn't very well-made, especially if you were really talking about the use of credit scores.

At the end of the day, I suppose that customers with little financial means have very little leverage whether we like it or not.

Just for the record, I don't consider myself part of the "general conservative audience". I'm much more libertarian....

Best regards,
Ross

As we honor (and not celebrate) another Memorial Day, my heart is heavy. Memorial Day, originally Decoration Day, was begun to honor Union soldiers who perished in the Civil War.

But for three years now, and forevermore for my family, Memorial Day will represent the weekend my younger brother, Cliff, died in a horrible hiking accident near Lake Tahoe.

Please take a moment with me to honor not only our gallant soldiers who have died in the service of our country, but also my little brother who was truly a wonderful person, and anyone you may have lost in your life who was taken from us sooner than he or she should have been.

My family continues to try to do the work that Cliff would do if he were still here through the Cliff Kaminsky Memorial Foundation which we started in his honor.

One of my biggest complaints about Al Gore's hysterical "documentary" is his intentional logical error of assuming that if CO2 concentrations have gone up more or less simultaneously with a global temperature increase, then 1) CO2 caused the increase, and 2) any causal relationship must be linear and maintained through any increase in CO2.

Both of these are probably wrong, but #2 is certainly wrong.

Each subsequent increase of X parts per million of CO2 in the atmosphere will have less "greenhouse" effect than the prior increase.

If a CO2 concentration increase of X ppm causes a Y degree temperature change, than the next increase of X ppm CO2 would cause a temperature change of less than Y, eventually to the point where increasing CO2 by X would have effectively zero impact on climate.

Again, there is real data showing that CO2 changes follow and don't lead temperature changes. But even if you believe CO2 causes climate change, it is absolutely wrong to believe the relationship is linear or exponential. Instead it is logarithmic, with each new molecule or ton of CO2 doing less than the prior molecule or ton.

Steve Milloy has another excellent article on this subject, in which he shreds the incorrect conclusions made about a recent study of human CO2 emissions. It's well worth a read:

Junk Science: Hot Air Study Melts Global Warming Theory, 5/24/05, by Steven Milloy for Fox News and JunkScience.com
http://www.foxnews.com/printer_friendly_story/0,3566,275267,00.html

ABC's blog "The Blotter" is reporting a new "nonlethal presidential finding" authorizing the CIA to try to destabilize the Iranian government through a "plan that reportedly includes a coordinated campaign of propaganda, disinformation and manipulation of Iran's currency and international financial transactions."

While the story is quite interesting, it is not particularly surprising. What I enjoyed even more was the many dozens of comments calling ABC News a bunch of traitors for running a story about such an important covert program.

Thinking about it a bit, I wrote the following as my thoughts on the "leak":

Although I certainly understand the gut reaction of calling ABC traitorous for running this story, and although that criticism is probably correct (along with CNN, Dan Rather, etc.), this could be an example of our government being very sneakily clever.

It would not surprise me at all if someone very high in government instructed that this presidential finding be leaked to the press.

If there is anything which might cause the Iranian leadership to actually consider taking US demands seriously, it is the thought that we may help foment a revolution in Iran.

They clearly are not afraid of sanctions or a military strike, or at least they are not showing any fear.

Just as American politicians care most about winning their next election, Iranian leaders probably care most about keeping their reins of power.

Letting them know that we may try to take that away from them (even if our potential influence is small) is a good strategy. Letting them know as an apparent unwanted leak is probably even more effective.

At a meeting of the Joint Economic Committee, Senator Chuck Schumer (D-NY), chairman of the Committee, frothed at the mouth with the sort of rhetoric which should make all American entrepreneurs shudder.

Quoting from a MarketWatch story on the hearing:

"It isn't clear that we have [don't] anything that can be remotely called competition," said Schumer, chairman of the committee. If there were competition, "wouldn't these companies be investing in new production rather than sending back the oligopolistic profits back to shareholders? He said ExxonMobil, for instance, had spent $29 billion in share repurchases last year and just $20 billion in investing in production.

While there may be a real argument about whether the refining and gasoline marketing and transportation markets are truly competitive (I believe they are almost certainly not as competitive as I'd like, but they are also not a collusive cartel), the idea of a Senator complaining about what a corporation does with its profits is outrageous.

Schumer complains that ExxonMobil does not invest enough in new production, but how do you think he would vote if someone proposed a new refinery anywhere in his state? To a degree, our refinery capacity nationwide has been hampered by over-regulation and the type of fear that has usually been reserved for nuclear power plants (another thing we need more of). In addition, our refineries have become more efficient, so that even without adding refineries, our refining capacity has increased substantially in the past couple of decades. Still, a couple more major refineries would no doubt be a good thing for the country, and a good thing for Exxon or any other major corporation to invest in if the government weren't always in the way and so likely to interfere in their business once the refinery is built.

But beyond getting into the nuts and bolts, literally speaking, of oil industry infrastructure, it is truly maddening to hear a politician argue that a company's shareholders, i.e. its owners, should not benefit from the company's profits (i.e. by dividends, or by higher stock prices due to share repurchases and lower numbers of shares outstanding.)

If it were a politically popular business or a politically popular company, can you imagine a Senator saying that the owners should not profit from its success? Can you imagine a Senator saying that a politically popular company was somehow not pulling its weight by reinvesting "only" $20 billion dollars a year in its business?

This attack goes right along with politicians' other disgusting behavior in recent years relating to oil companies: Trying to force them to renegotiate contracts because the government made a mistake, threatening Exxon if it did not stop supporting a think tank which is highly skeptical of human-caused global warming, and today's outrageous bill in the House which makes gasoline "price gouging" a crime...a crime which could only be found by Orwell's Thought Police (or today's Democratic Party). Particular amazing is that the bill passed with 2/3 of the House, meaning many Republicans signed on to it...just adding to the reasons that voters have found the GOP and the Dems fairly indistinguishable, at least when it comes to domestic policy, in recent years.

The movement by Congress to attack, threaten, and punish oil companies, their management, and effectively the tens of millions of American who own their stock is not just wrong, it is truly dangerous. It represents everything that is or can go wrong with government, and why we must keep government as far away from entrepreneurs as possible. Chuck Schumer would have made Vladimir Lenin proud yesterday.

I wrote the following in response to an article by Marc Gunther discussing Exxon's funding of organizations which are skeptical about human-caused global warming and the magnitude of the "problem".

Gunther's article is here:
Exxon Mobil: The Rest of the Story

And here is my retort:

Mr. Gunther,

If you wanted to learn about capitalism, would you ask Stalin for source material? If you were a reporter who wanted to write an at-least-nearly-objective article about Judaism, would you go to Joseph Goebbels for your lessons? If you wanted to write about gay rights or contraception, would you look to the Christian Coalition for unbiased information?

I presume the answer to these questions is no, which leads me to wonder why you would to go Greenpeace for information about the global warming debate. Greenpeace is a group that uses “climate deniers” in the way that others talk about “holocaust deniers”, implying both the scientific and historical accuracy of their opinion as well as a similar significance of the issue, all of which are false.

Greenpeace is a group which has become so radical that Patrick Moore, a founder of the organization, has abandoned it, noting that Greenpeace and other extremist organizations are anti-science, anti-trade, anti-capitalism, and generally naïve.

As for the Heartland Institute (which I served on the Board of Directors of some years ago), they get less than 5% of their income from the energy industry, unlike Greenpeace which receives millions of dollars from far left wing organizations and recently reported over $18,000,000 in gross income in their most recently published annual report. While I am no long privy to Heartland’s exact financials, I would guess that Greenpeace takes in somewhere between 5 and 10 times the money that Heartland does.

Additionally, one must remember that for global warming alarmists, their mission is some combination of a business and a religion. Anyone who disagrees, or even questions their dogma, is a heretic. It reminds me greatly of the Catholic Church of centuries past refusing to admit that they might be wrong about the sun revolving around the earth, or of others steadfastly believing that the earth is flat. I suppose the first metaphor is more appropriate since the penalty for disagreeing with their dogma was anything from censure to imprisonment to death. There is no doubt in my mind, after hearing these alarmists foam at the mouth, equating “climate change deniers” to holocaust deniers, etc., that they would muzzle and punish us skeptics if they could.

One reason that Heartland and a few other courageous groups go out of their way to deny the existence of a consensus on “global warming” is because there isn’t one. Not only are Al Gore, John McCain, Tony Blair, and the great intellectual Leonardo DiCaprio factually wrong to say that “the debate is over”, but their position is very dangerous given that their policy prescriptions amount to aiming a gun at the economic heart of the industrialized world in a quixotic chase for a fraction of a degree over a century.

Heartland, CEI, and those other groups are doing us a great favor by standing up to the enviro-extremists because if they had their way, the entire world (but especially the industrialized world) would suffer tremendously.

As for the US Climate Action Partnership, as a financial reporter you can’t possibly believe that those companies are doing what they’re doing because they believe in global warming as a real threat. No, they are doing it because they see which way the political winds are blowing. It is all about helping design the rules of the next game so they can extract as much extra profit from it as possible. Of course, any former Board member of Heartland such as myself must be a full-blooded capitalist, and I am. But capitalism is based on providing value to customers and creating a mutually beneficial voluntary exchange whereas what these companies are doing is posturing to use government to extract money from taxpayers and redirect it to them. Why do you think Lehman Brothers has jumped in so aggressively? They want to create and rig the market to their benefit, and when you have a government willing to go along with it, it’s hard to blame these companies…but I still do. No, they are not tree-huggers. They are worse than tree huggers, because tree-huggers while often wrong in their policy preferences are at least not hypocrites.

[For an interesting article about a CEO who hasn’t caved in to the political winds, see this article:
http://www.opinionjournal.com/editorial/feature.html?id=110010098
And for just one example of many about others speaking out against the widely-spreading cult of global warming alarmism, here’s a good short article from New Zealand:
http://www.stuff.co.nz//timaruherald/4064691a6571.html]

If Exxon funds skeptics in this debate, it would be because the risks to their customers and shareholders make it worth that funding. Don’t forget, Al Gore is the guy who wanted to add dollars to gasoline taxes. Greenpeace and friends hate, and I do mean hate, technology and the modern industrialized world. If making fuel so expensive that the economy grinds to a halt is what it takes to achieve their anti-capitalist goals, they are perfectly fine with that. Meanwhile, those of us who would want to buy fuel from Exxon will be paying $5 or $10 per gallon, while the guys at BP who have bought political favor by joining the cult of global warming early on will be siphoning off our tax dollars.

As for “part of the solution or part of the problem”, in this case there is a policy in search of a problem. Humans are not likely to be a substantial cause of global warming. CO2 concentrations lag temperature changes rather than leading them. The policy suggestions of Al Gore, Kyoto, the Stern Report, etc., amount to economic suicide. A business reporter should know better than to let a big business like Greenpeace manipulate you into uncritically accepting their marketing.

Mr. Gunther, you should be ashamed of letting Greenpeace use you as a propaganda tool for them. You should be ashamed of your weak attempt to tarnish Heartland’s position on climate change by talking about ties to “the tobacco industry”, as if they were somehow related. The only relevant way in which they are related is that Heartland has demonstrated an ability and willingness to stand for liberty and free markets even when they are unpopular.

Heartland and Exxon deserve our thanks, and your readers deserve better than a pro-Greenpeace editorial from someone representing himself as a reporter.

OK, so he's not a Harvard professor, but this guy from Boston understands better than most just what the proper reaction to Al Gore is.

You can watch/download the video by clicking here:
Boston Global Warming

I haven't yet written about the Senate immigration "compromise" bill, in part because I haven't read the bill yet, in part because everybody else is already writing a tremendous amount about it, and in part because our politicians make me so sick lately that I can hardly stomach even discussing them.

Since I maintain all those views, allow me to provide you with a small selection of other people's comments on the bill until I get around to putting my own thoughts to virtual paper:

First (and best), I encourage you all to read this great article by the nearly-always-great Mark Steyn:
Capitulation, from A------ to Z, May 20, 2007
http://www.suntimes.com/news/steyn/393216,CST-EDT-steyn20.article

Second, some selections from the WSJ's John Fund's thoughts on the bill:
http://www.opinionjournal.com/forms/printThis.html?id=110010103

t's understandable that the White House and its Senate negotiating partners want to rush through the compromise immigration bill they agreed to Thursday. Supporters acknowledge that the delicately balanced legislation could collapse if a single destructive amendment is attached to it. Its sponsors admit they want to minimize the political debate. "We all know this issue can be caught up in extracurricular politics unless we move forward as quickly as possible," says Sen. John McCain, a key architect of the bill.

But this is no way to debate the most sweeping change to our nation's immigration laws in two decades--especially since the last comprehensive attempt, the Immigration Reform and Control Act, failed so spectacularly. The new bill is set to pass with much less analysis in the Senate than the 1986 law, known as Simpson-Mazzoli, had. Senators did not even receive the bill draft until midnight Saturday. After a test vote scheduled for today, Majority Leader Harry Reid is planning a final vote on the bill this Thursday, only one week after the compromise was struck. Shouldn't senators have time to actually read the bill they're being asked to vote on?...

Many immigration experts say they can't know if they support the current compromise until they've absorbed the entire 1,000 page bill. They are concerned that Mr. Reid seems determined to bypass normal committee review and hearings and rush the bill to the floor. "That's like trying to eat an eight-course meal on a 15-minute lunch break," said former senator Fred Thompson on ABC Radio Friday.

Why the rush? Because, to be blunt, the senators don't trust the American people to make sound judgments on such emotional issues as family reunification and national sovereignty. But the proper response to this is to engage the public in the discussion, not to short-circuit the deliberative process. One of the reasons the American people are cynical about government is that they don't believe its officials take the time to discharge their duties properly. Now a 1,000 page immigration bill is being put before senators for a vote without anyone having the time to study its details. Many will merely be leaning on talking points prepared by their staff.

There is no doubt that the lack of deliberation will create surprises if the bill passes. Last year the Senate passed, but the House never took up, an 850-page immigration bill. Among the reasons the bill died in the House was that members were furious about last-minute Senate amendments. One required the U.S. to consult with Mexican officials before any new fence construction could take place along the border. Another allowed for discounted in-state tuition at state colleges and universities for illegal aliens who reside in those states. Legal immigrants and citizens who resided in other states would still have had to pay the full price.

The irony is that this is the Internet age. The entire immigration bill could and should be posted online in a format that would allow changes to be instantaneously added and highlighted. We pay our legislators well to represent us and evaluate legislation, but the immigration bill would probably benefit by giving constituents the ability to look over their shoulders and shine a light on provisions that might sink the bill further along in the legislative process.

Third, to add a little humor to the discussion, here's a joke I received by email today:

Texas Opinion Poll

The latest telephone poll taken by the office of the Governor of Texas asked whether people who live in Texas think illegal immigration is a serious problem:

A) 35% of respondents answered: "Yes, it is a serious problem."

B) 65% of respondents answered: "No es una problema serio."

Fourth...OK, I've talked myself into thinking I should at least give a few words about this issue, so here are my basic thoughts:

1) This issue is too important to be rushed through to score political points. But, if nothing is passed soon, there is no chance that anything will be passed until after the 2008 election. The question is whether there is the time and political ability to actually create a good piece of legislation in short order. My guess, given that this bill runs to about 1000 pages long, is no.

2) I like the idea of a point system that prioritizes visa recipients based on their skills, not just on family connections. That said, I still don't think we're going nearly far enough to increase the number of visas available in all skill classes.

3) Having a provision that requires illegals to return to their home country for a year simply means that the vast majority will never attempt to comply with this law. I am not using that as an argument to just give amnesty and let them stay. Rather I would point out that I don't like laws which are unenforceable or which in themselves contain the reasons for people to avoid compliance.

4) There is no doubt in my mind that the Democrats want this bill because they believe the newly-legal aliens will vote Democrat. And they're probably right as far as it goes...but I don't think it goes very far. First, I do not believe that the majority of Mexican and other hispanic illegal immigrants in the country have any real interest in becoming citizens. Many of them simply want to earn some money, send some money home, save up a bit, and then return home. Additionally, it's hard to imagine a low-skill worker lining up for a dozen years or more, paying thousands of dollars in fines, possibly having to go back home for a year, all for the right to be audited by the IRS.

5) While I understand the Democrats' political motivation (despite what must be a beating they'll take from their union masters whom they normally heed unquestioningly), the Republican motivation is much harder to understand. My guess is that John McCain and a few others want to be able to claim that they've tackled one of our biggest problems. But I think they're wrong in that strategy: It is more likely that the average Republican voter will believe they simply sold out, caved in, or gave up, and it will just add to the distance the GOP has put between itself and its core constituencies in recent years.

6) At the end of the day, the only way to deal with any problem of this sort is through serious penalties. Illegals, especially Mexicans, have repeatedly proven they are willing to take tremendous risk to come here. So, threats of prison for illegals would probably only have modest effect. More effective would be very substantial penalties on employers who hire illegals. However, I would not support going after employers unless and until there are at least 10 times, if not 50 times, more work visas available, whether for computer programmers or tomato pickers. Like it or not, there are "jobs Americans won't do" (at the price that many others would do them). And do not forget that forcing a farm to pay $12/hour to an American who might work for that instead of $6/hour for a Mexican who will do the same work (and probably better) is not a magical gain for America. It just means that we'll be paying a lot more for our tomatoes. And don't even think of arguing that I'm am then implying that American unemployment is a good thing, or a reasonable policy goal. Throughout these recent years of a massive influx of illegals, the unemployment rate in the US has continued to drop.

7) When push comes to shove, I hope this bill does not pass. Not because I hate all of it, but because it has not seen the light of day. Something this important should not be done in effective secrecy. My guess is that this bill will not pass. It will be both a good and bad outcome: good since this bill is probably very highly flawed, and bad since it probably means we will not have immigration reform for at least another 2 or 3 years.

The following is a comment I posted on Townhall.com in response to an article entitled "Republicans Really Are the Stupid Party". The author of the post, John Hawkins, makes a few good (although sort of obvious) points about how bad the GOP has been in recent years, but then goes on to criticize people who vote for a Libertarian or Constitution candidate, saying that is a wasted vote. I disagree.

It's true: The Libertarian Party will probably not win anything beyond maybe one seat in Congress during my lifetime, and even that is less than 50/50.

But that doesn't mean voting Libertarian is a waste for a Republican who is disgusted with the behavior of the GOP currently.

In both the Montana and Missouri Senate races (and in one House race in Indiana, I believe), the Republican lost by fewer votes than the Libertarian received.

So, if you believe that most of those votes would have gone Republican had there been no Libertarian candidate, the GOP would still have a majority in and control of the Senate.

I can't stand the Democrats' socialist and consistently unconstitutional positions on most issues. But if the Republicans are going to govern like Democrats in terms of spending and corruption, then having the GOP lose because Libertarians got votes is a very powerful lesson - much more powerful than the lesson of simply losing to a Democrat.

So while I would prefer to see Republicans win (because that really means we get Democrats, not Libertarians), it's not at any cost...not at the cost of bad government. Since the Democrats, by their very nature (anti-capitalist and owned by unions) can never be the party of good government, Republicans are going to have to take enough pain to realize that in order to win they need to return to our founding principles of liberty and limited government.

A vote for a Democrat can never send a message to the GOP that people yearn for those founding principles, but a vote for a Libertarian or Constitution Party candidate certainly can.

Therefore, I have no problem with people voting Libertarian, even if it causes Republicans to lose, until such time as the Republican Party returns to being something that Reagan and Goldwater would be proud of.

The Club for Growth has released its white paper studying Rudy Giuliani's record on issues of taxation, spending, regulation, school reform, and other issues on which the Club focuses.

Overall, it is a positive assessment...substantially more positive than their review of John McCain. Quoting Club for Growth President Pat Toomey:

Mayor Giuliani's economic record is not perfect, but he deserves credit for the remarkable nature of his accomplishments. In a city long accustomed to high taxes and ballooning budgets, Rudy Giuliani successfully cut taxes; kept spending below the growth of inflation and population; instituted sweeping welfare reform; privatized and deregulated many aspects of the city's bulky bureaucracy; and fought aggressively for school choice.

You can read the detailed report at this link:
http://www.clubforgrowth.org/2007/05/rudy_giulianis_economic_record.php

And, if you go to the Club's main page at
http://www.clubforgrowth.org/, you will see links to their other white papers which at the time of writing this note include Giuliani, McCain, Sam Brownback, and Mike Huckabee.

The Club does not like McCain's overall record, nor are they impressed with Huckabee. They have somewhat better reviews of Brownback, except for his support of the Medicare Prescription Drug Benefit and his less than stellar record of voting to control government spending.

Overall, of the 4 candidates the Club has analyzed to date, they seem to like Rudy the best.

As my regular readers know, I like Rudy best among currently declared candidates (and I have made a small contribution to his campaign) but I am waiting to see what Fred Thompson does before deciding who I think is the best candidate out there. (Although I generally like Newt Gingrich, I do not think he'll be the best candidate even if he runs even if he is the smartest and most intellectual of the bunch, which he probably is. I simply think he has too much baggage to be confident in beating Hillary, and I want to support someone whom I think is likely to win.)

I am privileged to consider among my friends Bob Schaffer, current member of the Colorado Board of Education and former three-term Congressman from Colorado's Fourth Congressional District.

I first met Bob when I participated in the Leadership Program of the Rockies, of which he is Chairman.

Throughout the course, Congressman Schaffer consistently impressed me with his commitment to liberty, his passion for history (and understanding the value of knowing it), his eloquence in defense of principle, and his very effective way of communicating and instructing others about the value of these principles.

Unlike many other elected officials who have made similar promises, Bob honored his term limits pledge and did not seek re-election after his third term in Congress. (Marilyn Musgrave now holds that seat.)

I've been very involved with Colorado politics in the past year and a half, as my regular readers know. Without getting into details of prior elections, let me simply say that I have in the past only found one candidate whom I believed to be as obviously worthy of our support (financial and otherwise) and our votes as I believe Bob Schaffer is.

As I've said and written many times, the GOP is (or at least should be) a "big tent" party. And that tent can include a variety of views on a variety of issues. But one of those issues is NOT taxes. A Republican who supports higher taxes is not adding another view to the tent; he is burning down the tent. Bob Schaffer understands this and has been a consistent friend to the taxpayer while serving in both state and federal government.

A primary reason that the GOP was so thoroughly trounced last November is that they spent like Democrats. Actually, that is fairly insulting to the Democrats. The Republicans achieved the incredibly unlikely feat of causing Americans to believe the Democrats were the party of fiscal responsibility. And who could blame Americans for thinking that after years of Bridges to Nowhere and outrageous pork barrel spending?

Bob understands the problem and is as sickened by the GOP's abandoning their fundamental commitment to limited govermnent and low taxes. He will not be what we in the options trading business used to call a "hand raiser", i.e. just doing what the leadership is doing. He will stand for the principles which he understands as well or better than anyone I've ever met. He will defend the taxpayer, defend liberty, and work to make our government something that Madison and Jefferson might recognize as the America they envisioned when writing our founding documents.

Yes, if there is a social issue that comes up for a vote, Bob is not likely to vote the way I would, but I can live with that. He understands not only the proper limits of the Federal Government in most social issues but more importantly the fact that we have much bigger fish to fry, such as out-of-control government spending, corrupt earmarks, and of course Iraq.

I look forward to hearing debates between Bob and his Democrat opponent because while Mark Udall is a nice guy, he is simply no match for Bob Schaffer when it comes to understanding issues and communicating a principled and sensible position. If people vote based on what they see and hear, rather than simply party line or because of an overall distaste for Republicans at the moment, Bob should win. But other people I thought "should win" didn't in the last election, and I take nothing for granted.

I will link to Bob's senate campaign site when I have the link. For now, you can read Bob's positions on the education-related issues which he deals with while trying to bring competition and accountability to our state's public education system:
http://www.bobschaffer.org/opinion.html

This is going to be a very tough and targeted campaign. Indeed, it will probably be the highest priority race for both parties in which there is not an incumbent candidate. I do not know whether the environment will be better, worse, or about the same for Republicans in late 2008 as it was in late 2006, but there is no doubt this race will be hard-fought by both sides.

I want to encourage all of you to contribute to Bob's campaign. Like it or not, campaigns are expensive. If you don't help and the other guy wins, you'll have yourself to blame, at least a little. If Udall wins, you'll have 6 years to wonder whether you could have made the difference as you suffer a Senator who knows little outside of environmental issues and whose economic positions would go over swimmingly in Sweden or Germany, but which are anathema to capitalism, liberty, and the spirit of entrepreneurship which has made America great.

Our current path, the path of the current Democrat leadership and the Republicans who have been corrupted by power, is the path toward lower standards of living, higher taxes, less freedom, and an America that our ancestors would not recognize. We must elect Bob Schaffer to help guide our government back toward actually honoring their pledge to protect and defend the Constitution.

I will be putting my money where my mouth is as soon as Bob tells me where to send the check. I will ask the same of you, whether you live in Colorado or not. Our country needs men like Bob Schaffer in government, and the only way to get him there is by contributing our time, money, and energy to his campaign. Especially at such a crucial time in our history, with looming problems on the home front and abroad, men like Congressman Schaffer are necessary for our nation to survive as the beacon of liberty which it has been since 1776.

I give my strongest endorsement to Bob Schaffer in his campaign for the US Senate, and urge all of you to support him any way you can.

This is a note I submitted to NPR yesterday regarding their truly horrible coverage of "global warming" in recent weeks.

I have supported NPR in the past, but this year I am withholding my contribution because I am so tired of all the junk science and junk economics coming from your reporters about global warming.

Every day I hear a story in your series where you discuss how people affect climate in which some reporter breathlessly talks about how if we don't take this or that "green" action, the world will keep getting warmer.

Despite the claims of Al Gore and friends, the science behind such fear-mongering is exceptionally weak. For example, it seems clear (but is never mentioned on NPR or any other liberal media outlet) that atmospheric CO2 concentrations increase after temperature increases, not before.

Additionally, the effect of CO2 on climate (beyond likely being much less than the current climate of fear causes many to believe) is non-linear. Further increases in CO2 concentrations will increase temperatures less, not more, than prior increases of the same proportion.

Most important is that the earth's climate changes are most likely due to natural cycles, most importantly of the sun. Human activity is probably not a substantial contributor to climate change.

On the economic front, your reporters breezily skip through the issue with barely a mention of the exceptionally high costs that global warming alarmists are implicitly suggesting we pay for a very uncertain chance of a very small benefit. It is not possible to meet anything like Kyoto targets in less than a couple of generations, if ever, and each attempt to get there sooner than technology and the marketplace are ready amounts to little more than a massive tax increase on society.

You should make your reporters offer at least a semblance of balance and of having learned something about climate from a source other than Al Gore's fictional movie. Despite what the people in the big business of scaring us about climate change want us to believe, the debate is NOT over.

I will consider renewing my financial support for NPR after you start offering some balanced reporting on the issue. I understand that many, if not most, of your listeners have drunk the same alarmist kool-aid that you have, but that is no excuse for abandoning the duties of responsible journalism.

For the record, I made a modest contribution to Ron Paul's campaign yesterday. I made it clear in my prior note that I don't think he can win, but I do think he can get people thinking about liberty and the proper role of government more effectively than anybody who has currently announced his (or her) candidacy for President.

This information from Ron Paul's web site is remarkable not only for his consistency in supporting liberty, low taxes, and limited government, but also for making you realize how shockingly rare such positions are in Washington, DC:

Brief Overview of Congressman Paul’s Record
He has never voted to raise taxes.
He has never voted for an unbalanced budget.
He has never voted for a federal restriction on gun ownership.
He has never voted to raise congressional pay.
He has never taken a government-paid junket.
He has never voted to increase the power of the executive branch.

He voted against the Patriot Act.
He voted against regulating the Internet.
He voted against the Iraq war.

He does not participate in the lucrative congressional pension program.

He returns a portion of hi