Short of Money, Egypt Sees Crisis on Fuel and Food - United States officials warn of disaster unless Egypt soon carries out a package of tax increases and subsidy cuts tied to a $4.8 billion loan from the International Monetary Fund. “They are operating on the notion that Egypt is too big to be allowed to fail, that the U.S. and the West will step in.”

From The New York Times:

Egypt is running out of the hard currency it needs for fuel imports. The shortage is raising questions about Egypt’s ability to keep importing wheat that is essential to subsidized bread supplies, stirring fears of an economic catastrophe at a time when the government is already struggling to quell violent protests by its political rivals.

United States officials warn of disaster unless Egypt soon carries out a package of tax increases and subsidy cuts tied to a $4.8 billion loan from the International Monetary Fund. That would persuade other lenders that Egypt was creditworthy enough to obtain billions more in additional loans needed to meet its yawning deficit. But fearful of a public reaction at a time when the streets are already near boiling, the government of President Mohamed Morsi has so far resisted an I.M.F. deal, insisting that Egypt can wait.

Independent analysts say that the growing shortage of fuel and the fear about wheat imports now pose the gravest threats to Egypt’s fragile stability. “It has the potential to make things very, very bad,” said Yasser el-Shimy, an analyst for the International Crisis Group.

Egypt has held two years of unsuccessful talks with the I.M.F., and the current government is still balking at the politically painful package of overhauls — even as rising prices and unemployment make those measures more difficult with each passing day.

“They are operating on the notion that Egypt is too big to be allowed to fail, that the U.S. and the West will step in,” Mr. Shimy said. “They think Egypt has a right to get the loan, and I think they will probably keep pushing all the way.”

 

Energy subsidies make up as much as 30 percent of Egypt’s government spending, said Ragui Assaad, of the Economic Research Forum here. The country imports much of its fuel, and for the first time last year it was forced to import some of the natural gas used to generate electricity — the reason for the recent blackouts. Egypt also imports about 75 percent of its wheat, mixing the superior foreign wheat with lower-quality domestic supplies to improve its subsidized bread.

 

[T]he two years of mayhem in the streets since the ouster of Mr. Mubarak have decimated tourism and foreign investment, crippling the economy. The government’s reserve of hard currency has fallen to about $13 billion from $36 billion two years ago.

Use of Food Stamps Swells Even as Economy Improves - Congress will have to revisit SNAP later this year when a bill authorizing USDA expenditures expires. Republicans have promised to push for changes, seeking new limits on who can receive benefits and ending the ability of states to ease asset and income limits.

From The Wall Street Journal:

The financial crisis is over and the recession ended in 2009. But one of the federal government's biggest social welfare programs, which expanded when the economy convulsed, isn't shrinking back alongside the recovery.

Enrollment in the Supplemental Nutrition Assistance Program, as the modern-day food-stamp benefit is known, has soared 70% since 2008 to a record 47.8 million as of December 2012. Congressional budget analysts think participation will rise again this year and dip only slightly in coming years.

The biggest factor behind the upward march of food stamps is a sluggish job market and a rising poverty rate. At the same time, many states have pushed to get more people to apply for SNAP, a program where the federal government picks up the tab.

But there is another driver, which has its origins in President Bill Clinton's 1996 welfare overhaul. In recent years, the law has enabled states to ease asset and income tests for would-be participants, with the encouragement of the Obama administration, allowing into the program people with relatively higher incomes as well as savings.

The new rules were designed to encourage people to take advantage of the program before they became destitute. By expanding the pool of potential applicants, they are redrawing the landscape of government assistance. It is one reason why SNAP appears to have evolved from a program that rose and fell with the unemployment rate to a more permanent feature of the landscape.

At 12:07 a.m. on a recent morning, Syrises Myers, 34 years old, moved $70.18 in groceries including milk and ketchup through a scanner at Dominick's grocery store near Chicago. The mother of two, the sole breadwinner for her family, knew the store closed at midnight. But she had to wait a few extra minutes for the federal government to transfer her monthly food-assistance benefits onto the purple debit-style card issued by the state of Illinois.

"If I want to be sure my kids can eat, especially when food is low in the house, I have to go at midnight when the food stamps turn on," said Ms. Myers, a receptionist who earns $11 an hour.

While getting assistance from the program, Ms. Myers has been able to save $5,600 and recently put a $300 down payment on a car. Under older rules, the savings probably would have disqualified her from the program. Under the new, looser tests, that isn't the case.

The food-stamp rolls have swollen since 2008 and are projected to stay that way for years. In 2008, SNAP enrollment was 28.2 million. Unemployment peaked in October 2009 at 10% and was at 7.7% as of February, but SNAP kept growing.

The Congressional Budget Office predicts unemployment will drop to 5.6% by 2017 but that SNAP enrollment will drop slightly to 43.3 million people, down 4.5 million from the current level.

That makes it very different from the other big federal support program, unemployment insurance, which shrinks as the economy improves. Continued jobless claims dropped to 3.1 million in February after peaking at 6.6 million in May 2009.

Kevin Concannon, undersecretary for food, nutrition and consumer services at the Department of Agriculture, said SNAP is working as designed, expanding to extend benefits to more Americans as poverty levels increase. He said USDA officials expect the program to soon begin contracting as the economy improves.

"While the perception may be different, the actual raw numbers, almost 50 million people [under the federal poverty level], is certainly one of the principal reasons why we see the enrollment increases in the SNAP program," he said. A more aggressive effort to get people on the rolls and changes in the eligibility standards were also factors, he said.

The government spent a record $74.6 billion on SNAP benefits last year, roughly equivalent to the combined budgets of the Department of Homeland Security, the Justice Department and the Department of the Interior. Roughly 45% of recipients are children. In 2007, the government spent $30.4 billion on the program.

A version of the food-stamp program was used briefly in the 1930s and 1940s. It was made permanent in the 1960s to tackle poverty, part of an expansion of state and federal social welfare programs including Medicaid.

By 1975, 8% of all Americans received government-paid food assistance. The level hovered between 8% and 11% until 2009. The financial crisis, coupled with the ensuing spike in poverty levels and a number of policy changes, pushed the program to unprecedented levels. Now, 15% of Americans are on SNAP.

The average monthly benefit per person was $133 last year, which can be used to buy household staples such as cereal, meats, fruits and milk.

For an able-bodied American without children, SNAP benefits are usually only offered for a few months. The federal government has waived these rules for most states in recent years because of high unemployment and will likely rescind the waivers when unemployment falls, program experts say.

"Food stamps have actually saved my life, really," said Diane Hendricks, 43, who worked for 12 years at a human-resources agency before losing her job in 2009. She and her husband divorced last year, and she filed for SNAP to help buy groceries for her two children, ages 10 and 5. She now lives with a friend and receives $380 a month in SNAP.

In late February, Ms. Hendricks began working 20 hours a week at a local food pantry, earning $10 an hour. She hopes to stop using SNAP in three months. "The benefits helped me get back on my feet," she said. "It was one less thing to worry about so I was able to look for work."

Food stamps have proven polarizing in Washington, with proponents saying low-income Americans need this kind of taxpayer-funded assistance, and critics warning that programs foster dependence on government support.

House Budget Committee Chairman Paul Ryan (R., Wis.), the former GOP vice-presidential candidate, has proposed turning SNAP into a block-grant program that would give states more control over the program, likely leading to cuts.

At a recent event hosted by The Wall Street Journal, Mr. Ryan said when it comes to anti-poverty programs, policy makers should be asking the questions: "Do we have an economic policy of social mobility, of upward mobility? Are we attacking poverty at the root causes, or are we simply merely treating the symptoms of poverty to make it, you know, easier to tolerate and therefore perpetuate?"

In 2011, as the U.S. unemployment rate began to recede from its 2009 peak of 10%, the number of Americans living below the poverty line remained elevated as people burned through their savings and replaced full-time jobs with part-time work. As of 2011, some 48.5 million people were living in poverty, up from 37.3 million in 2007. But that growth only accounts for roughly half the change in SNAP enrollment.

The newest factor in the program's growth, one that hasn't been tested in past boom-and-bust cycles, stems from policy changes that began almost two decades ago. The 1996 welfare overhaul, coupled with a rule change crafted four years later by the Clinton administration, allowed states to make it easier for residents to qualify for benefits.

In 2001 and 2002, six states adopted rules that eased income and asset requirements for SNAP applicants, making it easier for someone to qualify for the program if they had a low-wage job or some savings. Previously, applicants could be disqualified if they had $5,000 in the bank, or earned slightly more than the poverty threshold.

The goal was to help Americans with government aid before their savings were wiped out. Policy makers wanted to allow newly poor families, such as those where the breadwinner was temporarily unemployed, to have enough money to put gas in the cars and pay phone bills—two necessities for finding and retaining jobs. To qualify for this easier screening process, Americans had to do little more than prove their income levels were low enough to meet certain thresholds.

The change didn't attract much attention until the financial crisis hit. After that, states began aggressively implementing the laxer standards, which allowed cash-strapped states to funnel more federal aid to their residents. The 2009 stimulus law further expanded the program, allowing people to keep the benefits longer than normal and boosting the total level of benefits that a recipient can receive. The expanded benefits expire Oct. 31.

In 2009, with the encouragement of Obama administration officials, 17 states and U.S. territories eased their eligibility requirements, in some cases waiving any policy that restricted the assets a family could retain.

"We believe that increasing the number of states that implement [eased] eligibility will benefit families hurt by the economic crisis, promote savings among low income households, and simplify state policies," Jessica Shahin, a top USDA official, wrote to other federal program overseers in 2009. "Please encourage your States to adopt [the looser rules] to improve SNAP operations in your States."

Eleven more states eased rules in 2010. Today, 43 U.S. states and territories have such expanded eligibility policies. The White House estimates that reversing the eased standards would cause between two million and three million people to lose benefits.

"We decided to adopt [easier] standards in order to prevent [people] from having to spend all of their life savings," said Richard Berry, a GOP-appointed director of the agency that screens applicants in Mississippi, where one out of every three children receive benefits. "We didn't want people to have to become destitute in order to get help."

The resulting change in the program's structure has been profound. In 2006, 18.7% of SNAP households qualified through an easier screening process. In 2011, that number reached 65.8%. The change didn't mean the majority of SNAP beneficiaries had large savings accounts. Rather, it meant that states were no longer checking, according to state guidelines and program officials.

The financial crisis hit North Carolina particularly hard, wiping out thousands of manufacturing and financial-sector jobs. The state's unemployment rate spiked from 4.6% in March 2007 to 11.3% in February 2010. It remained at 9.5% in January. The number of households seeking SNAP benefits in North Carolina also soared, averaging 785,072 in the fiscal year that ended Sept. 30, up 87% from 2008.

The state broadened eligibility rules in 2010, waiving asset limits and allowing households to qualify if their gross income was as much as 200% of the federal poverty level, up from the 130% threshold that had been in place before. Under the change, a family of four with income of $3,842 a month would now qualify, compared with $2,498 previously.

With more entering the program, social service groups began recommending it as an option for struggling families that previously hadn't applied.

That is what happened to Basem Eljauni, a 55-year-old cashier at a Sam's Club in Greensboro, N.C., who lost his two businesses—a grocery store and a gas station—and his $250,000 in savings and investments. The father of six says he now makes around $1,000 a month if he is lucky and supplements his income with about $800 in government-paid food assistance and handouts from charities.

"It's hard to see yourself stuck on food stamps," said Mr. Eljauni. "Amazing—I never thought I was going to be stuck in the system."

Congress will have to revisit SNAP later this year when a bill authorizing USDA expenditures expires. Republicans have promised to push for changes, seeking new limits on who can receive benefits and ending the ability of states to ease asset and income limits.

The Congressional Budget Office said reinstating eligibility limits would save around $4.5 billion over 10 years, a fraction of the program's total cost over that time.

Budget experts believe the program will start contracting next year, but only slowly. It will depend, in part, on whether people like Ms. Myers, the Chicago receptionist, will shift off the program in the coming months, something she said hopes will happen. "I am always looking for a better job," she said. "I do not want to be on food stamps forever."

Syria: This is the problem from hell. Sometimes the necessary and desirable are impossible, which is why I commend the president on his caution, up to now.

Tom Friedman writes in The New York Times:

 

There are mounting reports that the U.S. is getting more deeply involved in supporting the Syrian rebels trying to topple President Bashar al-Assad. There is a strong argument for everyone doing more to end the Syrian civil war before the Syrian state totally collapses and before its sectarian venom and refugees further destabilize Lebanon, Iraq and Jordan. But I hope that before President Obama gets more deeply involved in Syria, he gets satisfactory answers to the following questions:

 

The uprising against Assad began on March 15, 2011. His downfall has been predicted every month since. Why has he been able to hold on so long? Russian and Iranian military aid certainly help, but so does the support he still enjoys in key communities. Assad’s Alawite minority sect, which has been ruling since 1970 and constitutes 12 percent of Syria’s 22 million population, believes that either they rule or they die at the hands of the country’s Sunni Muslim majority (74 percent). The Syrian Christians, who are 10 percent, and some secular Sunni Muslims, particularly merchants, have also thrown in their lot with Assad, because they believe that either he rules or chaos does. None of them believe the rebels can or will build a stable, secular, multisectarian democracy in Assad’s wake. Why do we think they are wrong?

What are Qatar’s and Saudi Arabia’s goals? Are we to believe that these two archrival Wahhabi fundamentalist monarchies, the two main funders and arms suppliers of the Syrian uprising, are really both interested in creating a multisectarian, multiparty democracy in Syria, which they would not tolerate in their own countries?

Syria’s rebels fall into three groups: those democrats who want to be free to be citizens in a country where everyone has the same rights; those who want to be free to be more Islamic; and those who want to be free to be more sectarian — to see Syria’s Sunni majority oust the ruling Alawite minority. Last week, Moaz al-Khatib, the president of the main Syrian opposition coalition, resigned. Khatib had pushed for talks with the Syrian regime, which many rebels reject. Who can reassure the Syrian Alawites or Christians that they will have a place in a post-Assad Syria, if the rebels can’t get along with one another?

The Lebanese civil war burned for 14 years. It was finally settled with the 1989 Taif peace accord, based on the principle “no victor, no vanquished.” It allowed Lebanon’s Christian minority to be “overrepresented” to reassure them that their interests would be protected in a future Lebanon. Although the Christians made up probably 35 percent of the population, they were given a 50-50 split with Lebanese Muslims in the Parliament. One cannot expect Syria’s Sunni majority, tens of thousands of whom have been slaughtered by Assad, to reach out overnight to the Alawites. In time, though, can we expect the rebels to guarantee a future for Alawites and Christians in Syria, which is the only way the state can remain intact? Or are we fine with the Alawites carving out their own homeland in Syria, the Sunnis taking the rest and the Christians moving to Canada?

The lesson of Iraq, Egypt, Tunisia and Libya is that the sooner you re-establish security, the more people are ready to think and act like citizens rather than sects or tribes. After Assad falls, who will mediate between the communities and militias inside Syria to bring order? Do we really believe that a post-Assad Syria, which doesn’t seem to have a Nelson Mandela, will be able on its own to build a multisectarian government to rule the whole country without a well-armed, boots-on-the-ground international force, blessed by the U.N. or Arab League, to act as a referee? And who in the Milky Way Galaxy wants that job?

My bottom line: We know what kind of Syria we’d like to see emerge, and we have a good idea of the terrible costs of not achieving that and the war continuing. But I don’t see a consensus inside Syria — or even inside the opposition — for the kind of multisectarian, democratic Syria to which we aspire. In this kind of situation, there are three basic options: We and some global coalition can invade Syria, as we did Iraq, sit on the parties and forge the kind of Syria we want. But that hasn’t succeeded in Iraq yet, at huge cost, and there is zero support for that in America. Forget it. We can try to contain the conflict by hardening Turkey, Jordan, Lebanon and Israel, wait for the Syrian parties to get exhausted and then try to forge a cease-fire/power-sharing deal. Or we can let the war take its course with the certainty of more terrible killings, the likelihood of its spreading to neighboring states and the possibility of its leading to the fracturing of Syria into Sunni, Alawite and Kurdish mini-states.

I’m dubious that just arming “nice” rebels will produce the Syria we want; it could, though, drag us in in ways we might not want. But if someone can make the case that arming the secular-nationalist rebels increases the chances of forcing Assad and the Russians into a settlement, and defeating the Islamists rebels after Assad falls, I’m ready to listen.

This is the problem from hell. Sometimes the necessary and desirable are impossible, which is why I commend the president on his caution, up to now.

Provocative on Roe v. Wade: “They thought they were resolving a contentious issue by taking it out of the political process but ended up perpetuating it, When you are moving beyond the clear command of the Constitution, you should be very hesitant about shutting down a political debate.” - Even supporters of abortion rights believe the 1973 Supreme Court ruling went too far, too fast, a lesson opponents of same-sex marriage hope the court, hearing two cases, will take to heart.

From The New York Times:

When the Supreme Court hears a pair of cases on same-sex marriage on Tuesday and Wednesday, the justices will be working in the shadow of a 40-year-old decision on another subject entirely: Roe v. Wade, the 1973 ruling that established a constitutional right to abortion.

Judges, lawyers and scholars have drawn varying lessons from that decision, with some saying that it was needlessly rash and created a culture war.
 

Justice Ruth Bader Ginsburg, a liberal and a champion of women’s rights, has long harbored doubts about the ruling.
 

“It’s not that the judgment was wrong, but it moved too far, too fast,” she said last year at Columbia Law School.
 

Briefs from opponents of same-sex marriage, including one from 17 states, are studded with references to the aftermath of the abortion decision and to Justice Ginsburg’s critiques of it. They say the lesson from the Roe decision is that states should be allowed to work out delicate matters like abortion and same-sex marriage for themselves.
 

“They thought they were resolving a contentious issue by taking it out of the political process but ended up perpetuating it,” John C. Eastman, the chairman of the National Organization for Marriage and a law professor at Chapman University, said of the justices who decided the abortion case. “The lesson they should draw is that when you are moving beyond the clear command of the Constitution, you should be very hesitant about shutting down a political debate.”
 

Justice Ginsburg has suggested that the Supreme Court in 1973 should have struck down only the restrictive Texas abortion law before it and left broader questions for another day. The analogous approach four decades later would be to strike down California’s ban on same-sex marriage but leave in place prohibitions in about 40 other states.
 

But Theodore J. Boutrous Jr., a lawyer for the two couples challenging California’s ban, said the Roe ruling was a different case on a different subject and arose in a different political and social context. The decision was “a bolt out of the blue,” he said, and it had not been “subject to exhaustive public discussion, debate and support, including by the president and other high-ranking government officials from both parties.”
 

“Roe was written in a way that allowed its critics to argue that the court was creating out of whole cloth a brand new constitutional right,” Mr. Boutrous said. “But recognition of the fundamental constitutional right to marry dates back over a century, and the Supreme Court has already paved the way for marriage equality by deciding two landmark decisions protecting gay citizens from discrimination.”
 

The author of the majority opinions in those two cases, Justice Anthony M. Kennedy, seemed to address the new ones in wary terms in remarks this month in Sacramento.
 

“A democracy should not be dependent for its major decisions on what nine unelected people from a narrow legal background have to say,” he said.
 

In Justice Ginsburg’s account, set out in public remarks and law review articles, the broad ruling in the abortion case froze activity in state legislatures, created venomous polarization and damaged the authority of the court.
 

“The legislatures all over the United States were moving on this question,” Justice Ginsburg said at Princeton in 2008. “The law was in a state of flux.”
 

“The Supreme Court’s decision was a perfect rallying point for people who disagreed with the notion that it should be a woman’s choice,” she added. “They could, instead of fighting in the trenches legislature by legislature, go after this decision by unelected judges.”
 

That general view is widely accepted across the political spectrum, and it might counsel caution at a moment when same-sex marriage is allowed in nine states and the District of Columbia and seems likely, judging from polls, to make further gains around the nation.
 

“Intervening at this stage of a social reform movement would be somewhat analogous to Roe v. Wade, where the court essentially took the laws deregulating abortion in four states and turned them into a constitutional command for the other 46,” Michael J. Klarman, a law professor at Harvard, wrote in a recent book, “From the Closet to the Altar: Courts, Backlash and the Struggle for Same-Sex Marriage.” Mr. Klarman was a law clerk to Justice Ginsburg when she served on the federal appeals court in Washington.
 

But an article that will appear in Discourse, an online legal journal published by The UCLA Law Review, proposes a different account. “The Roe-centered backlash narrative, it seems, is the trump card in many discussions of the marriage cases,” wrote Linda Greenhouse, a former New York Times reporter who covered the court and now teaches at Yale Law School, and Reva B. Siegel, a law professor there.

 

“Before Roe,” they wrote, “despite broad popular support, liberalization of abortion law had all but come to a halt in the face of concerted opposition by a Catholic-led minority. It was, in other words, decidedly not the case that abortion reform was on an inevitable march forward if only the Supreme Court had stayed its hand.”

 

After the decision, they added, “political realignment better explains the timing and shape of political polarization around abortion than does a court-centered story of backlash.”
 

In an interview, Professor Siegel said court decisions concerning same-sex marriage had played a valuable role.
 

“It is nearly two decades since courts in Hawaii, Massachusetts and other states began a national conversation about marriage,” she said. “There has been over the course of this long period a dramatic, revolutionary change in popular understanding of marriage equality. Courts can inspire resistance but also can teach.”
 

Professor Klarman said it was not clear that a decision requiring same-sex marriage throughout the nation would give rise to the kind of sharp opposition that followed the abortion ruling.
 

“For abortion opponents, abortion is murder, which means the intensity of their commitment to resisting Roe was considerable,” he said in an interview. “For the gay marriage opponent in, say, Mississippi, how will their lives change if the openly gay couple living down the street can now obtain a marriage license?”
 

There is a range of possible outcomes in the case on California’s ban on same sex marriage, Hollingsworth v. Perry, No. 12-144. The court could uphold the ban; reject it on grounds that apply only to California or only to eight states; or establish a nationwide right to marriage equality. Or the court could say it is powerless to render a decision on the merits.
 

That last option would follow from the odd path the case took through the courts. After a trial judge struck down the California ban, from the voter initiative Proposition 8, and entered judgment against state officials, the officials declined to appeal. Supporters of Proposition 8 did appeal, but it is not clear that they have suffered an injury direct enough to give them standing to appeal.
 

The trial court’s judgment came in 2010 from Judge Vaughn R. Walker of the Federal District Court in San Francisco. During closing arguments in the case, Judge Walker made it clear that he, too, was working in the shadow of the abortion ruling. He said the Roe case “has plagued our politics for 30 years” because “the Supreme Court has ultimately constitutionalized something that touches upon highly sensitive social issues.”
 

“Isn’t the danger,” Judge Walker asked Theodore B. Olson, a lawyer for the two couples challenging the ban, “not that you are going to lose this case, either here or at the court of appeals or at the Supreme Court, but that you might win it?”

Praise the Lord. This is so big! - With Obama as Broker, Israelis and Turkey End Dispute

From The New York Times:

Under persistent prodding from President Obama, Israel and Turkey resolved a bitter three-year dispute on Friday with a diplomatic thaw that will help a fragile region confront Syria’s civil war, while handing the president a solid accomplishment as he closed out his visit to the Middle East.

The breakthrough took place in the most improbable of surroundings: a trailer parked on the tarmac of Ben-Gurion International Airport. Moments before Mr. Obama left for Jordan, Prime Minister Benjamin Netanyahu telephoned the Turkish prime minister, Recep Tayyip Erdogan, and apologized for deadly errors in Israel’s 2010 raid on a Turkish ship that was trying to bring aid to Palestinians in Gaza.

After years of angrily demanding an apology, Mr. Erdogan accepted Mr. Netanyahu’s gesture, and both sides agreed to dispatch envoys to each other’s nations, having recalled them in 2011.

 

Turkey and Israel, along with Jordan, have also been three pillars of stability for the United States as it confronts a civil war in Syria that threatens to spill beyond its borders and destabilize the broader region.

Henry Kissinger said recently that he had in his lifetime seen America enthusiastically enter four wars and struggle in the end to end each of them.

Peggy Noonan writes in The Wall Street Journal:

I had questions about an invasion until Colin Powell testified before the U.N. in February 2003. In a column soon after: "From the early days of the debate I listened to the secretary of state closely and with respect. I was glad to see a relative dove in the administration. It needed a dove. Mr. Powell's war-hawk foes seemed to me both bullying and unrealistic. Why not go slowly to war? A great nation should show a proper respect for the opinion of mankind, it should go to the world with evidence and argument, it should attempt to win allies. A lot of people tracked Mr. Powell's journey, and in a way took it with him. Looking back I think I did too."

Mr. Powell told the U.N. Saddam Hussein must be stopped and asserted that Iraq had developed and was developing weapons of mass destruction. That turned out not to be true.

Henry Kissinger said recently that he had in his lifetime seen America enthusiastically enter four wars and struggle in the end to end each of them.

What'd we expect? A free lunch. - Health Insurers Warn on Premiums

From The Wall Street Journal:

Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation's biggest firm projecting that rates could more than double for some consumers buying their own plans.

The projections, made in sessions with brokers and agents, provide some of the most concrete evidence yet of how much insurance companies might increase prices when major provisions of the law kick in next year—a subject of rigorous debate.

The projected increases are at odds with what the Obama Administration says consumers should be expecting overall in terms of cost. The Department of Health and Human Services says that the law will "make health-care coverage more affordable and accessible," pointing to a 2009 analysis by the Congressional Budget Office that says average individual premiums, on an apples-to-apples basis, would be lower.

The gulf between the pricing talk from some insurers and the government projections suggests how complicated the law's effects will be. Carriers will be filing proposed prices with regulators over the next few months.

Part of the murkiness stems from the role of government subsidies. Federal subsidies under the health law will help lower-income consumers defray costs, but they are generally not included in insurers' premium projections. Many consumers will be getting more generous plans because of new requirements in the law. The effects of the law will vary widely, and insurers and other analysts agree that some consumers and small businesses will likely see premiums go down.

Starting next year, the law will block insurers from refusing to sell coverage or setting premiums based on people's health histories, and will reduce their ability to set rates based on age. That can raise coverage prices for younger, healthier consumers, while reining them in for older, sicker ones. The rules can also affect small businesses, which sometimes pay premiums tied to employees' health status and claims history.

The law's 2014 effect on larger companies is likely to be more limited. Many of the big changes coming next year won't touch them as directly as individual consumers and small businesses, though some will have to grapple with the cost of covering more workers or paying a penalty.

Subsidies will be available on a sliding scale for people with incomes of up to four times the federal poverty level—currently $45,960 for a single person and $94,200 a year for a family of four. More than half of the 35 million people expected to be in the individual market by 2016 are likely to qualify for credits. People whose incomes are around the poverty level could see almost all of the cost of their insurance subsidized, while people at the upper end will get only a small discount toward their premiums.

Democrat Seeks Panel on Bolstering Social Security

From The Wall Street Journal:

Illinois Sen. Dick Durbin, the Senate's No. 2 Democrat, said Wednesday he would ask lawmakers to create a commission to recommend ways to shore up the finances of Social Security.

A commission would remove negotiations over the retirement program from the broader discussion in Congress of what changes to taxes, entitlement programs and other federal spending should be enacted to reduce the deficit. Separating Social Security from those emerging discussions could prove to be a contentious idea.

Mr. Durbin envisions an 18-member commission, with six people appointed by President Barack Obama and the remaining 12 divided equally between House and Senate lawmakers. The task force would have to come up with 14 votes for Congress to consider the plan.

A Social Security commission in the early 1980s led by Alan Greenspan, who later went on to be Federal Reserve chairman, proposed benefit cuts and other changes that were credited with placing the system on firmer footing. But recent panels charged with solving fiscal problems have failed. The 2010 Simpson-Bowles deficit panel failed to advance a sweeping debt-reduction plan. Now, Mr. Durbin is trying to line up co-sponsors to test whether a panel with a narrower mandate could succeed.

Mr. Durbin was a first-term lawmaker when the Greenspan commission's recommendations were put to a vote. New to Congress in 1983, Mr. Durbin said he was in a "cold-sweat panic" when he found out he would have to vote to increase the retirement age to 67 from 65. He voted for it—and was re-elected.

One lesson, he said, is to move forward on tough changes with support from both parties. "There wasn't anyone who lost the election over that issue. Why? It was bipartisan," he said.

What America Learned in Iraq

From The New York Times:

THE costs of the second Iraq war, which began 10 years ago this week, are staggering: nearly 4,500 Americans killed and more than 30,000 wounded, many grievously; tens of thousands of innocent Iraqis wounded or killed; more than $2 trillion in direct government expenditures; and the significant weakening of the major regional counterweight to Iran and consequent strengthening of that country’s position and ambitions. Great powers rarely make national decisions that explode so quickly and completely in their face.

It may seem folly to seek a silver lining among these thunderclouds. But there are three flickers of light that offer some hope that the enormous price was not paid entirely in vain. These coins offer a meager return on our enormous investment, but not collecting them would be an insult to the memory of all that we have lost.

The first lesson is for America’s politicians, from both parties, who pushed our country into a war that we did not need to fight for dubious reasons that were eventually proved false.

Iraq was not, as we were repeatedly told, developing weapons of mass destruction; even if it had been, there was no reason deterrence, which prevented war with a nuclear-armed Soviet Union, could not have worked against a nuclear Iraq. There was no link between Al Qaeda and Saddam Hussein, and no Qaeda presence in Iraq until the American invasion, which caused social order to collapse and provided the terrorist group with a powerful recruiting message and a dangerous new base from which to attack.

The invasion of Iraq and its bitter aftermath should remind politicians for generations of the high cost and unpredictable results for those who roll what Otto von Bismarck called “the iron dice” and should forever discredit the notion of “preventive war.” The first Iraq war, in which I led a tank platoon, was necessary; this one was not.

Reluctance to send American ground troops to intervene in Libya and Syria, while providing different levels of political and military support, gives some hope that the country will think more than twice before fighting another unnecessary war. Good intentions do not always lead to favorable outcomes.

The second lesson is for the American military, justly proud of its renaissance after the debacle of Vietnam and subsequent triumph in the cold war but grievously unprepared for the wars of this century.

The British historian Michael Howard noted that it was impossible to perfectly prepare military forces for the next war; what is important is to make sure that you have not gotten the preparations so wrong that the military cannot quickly adapt when it is next needed.

The Department of Defense failed that test. It ignored preparations for counterinsurgency operations and neglected the need for a deep understanding of languages and cultures, which played a critical role in the Sunni Awakening that eventually changed the course of the Iraq conflict.

These are old lessons — they were in fact codified in the Marine Corps Small Wars Manual of 1940 and had to be painfully relearned over the past decade. They cannot be forgotten now that the wars in Iraq and Afghanistan are finally drawing down. Recognizing that post-invasion stability operations, including counterinsurgency, are core military tasks for which the Pentagon must prepare is an important first step.

It would also be wise to make further investments in remotely piloted vehicles, Special Operations Forces and the capacity to train and advise foreign militaries, all of which will bear much of the burden of the most likely conflicts of this century. Of course, given the spending constraints now being imposed by Congress and the subsequent painful trade-offs those constraints bring, it remains to be seen whether these lessons have really been learned.

Finally, the experience of the Iraq war offers a breath of hope for the American people at large. In the wake of Vietnam, the United States began its grand experiment of an all-volunteer military. And it was most certainly an experiment: there was no expectation that the system would hold together in a major war, and for two generations young men have been required to register with the Selective Service in case general conflict erupted.

But there have been two such wars over the past decade, and the all-volunteer force has come through these crucibles of blood and fire with enormous distinction.

Tempered by the Great Depression, the Greatest Generation of World War II fame helped defeat fascism on two continents and save civilization. As loudly as their contributions resound in history, two-thirds of them were drafted. This new greatest generation has fought longer if not harder than its grandparents did, and all have been volunteers.

My own tank task force lost 22 fine young men during the second Iraq war, including a West Point captain and five lieutenants, and earned well over 100 Purple Hearts. The nation owes such service members a depth of gratitude it can never fully repay.

But it can begin by ensuring that we care for those who have borne the battle, and for their spouses and their orphans, to paraphrase Abraham Lincoln, America’s greatest wartime president. The traumatic brain injury and post-traumatic stress disorder that are the signature wounds of these wars are invisible and hard to heal; as many as a fourth of those who fought in Iraq will suffer the ravages of these injuries for decades to come.

This is not a compelling list of gains when balanced against the unbearable losses America has endured in Iraq. But it would devalue the sacrifices of the many who have suffered if we were not to read these lessons written in blood, if our politicians did not approach future interventions with greater humility, if our military did not prepare for all possible wars rather than only the ones that it wants to fight.

We must hope that from such peril and toil this great young generation, tempered by war and hardened by what its members have seen and done, will build a better future for a wiser and chastened America.

The Progressive Shift

David Brooks writes in The New York Times:
 

There is a statue outside the Department of Labor of a powerful, rambunctious horse being reined in by an extremely muscular man. This used to be a metaphor for liberalism. The horse was capitalism. The man was government, which was needed sometimes to restrain capitalism’s excesses.

 

Today, liberalism seems to have changed. Today, many progressives seem to believe that government is the horse, the source of growth, job creation and prosperity. Capitalism is just a feeding trough that government can use to fuel its expansion.

For an example of this new worldview, look at the budget produced by the Congressional Progressive Caucus last week. These Democrats try to boost economic growth with a gigantic $2.1 trillion increase in government spending — including a $450 billion public works initiative, a similar-size infrastructure program and $179 billion so states, too, can hire more government workers.

Now, of course, liberals have always believed in Keynesian countercyclical deficit spending. But that was borrowing to brake against a downturn when certain conditions prevail: when the economy is shrinking; when debt levels are low; when there are plenty of shovel-ready projects waiting to be enacted; when there is a large and growing gap between the economy’s current output and what it is capable of producing.

Today, House progressives are calling for a huge increase in government taxing and spending when none of those conditions apply. Today, progressives are calling on government to be the growth engine in all circumstances. In this phase of the recovery, just as the economy is finally beginning to take off, these Democrats want to take an astounding $4.2 trillion out of the private sector and put it into government where they believe it can be used more efficiently.

How do the House Democrats want to get this money? The top tax rate would shoot up to 49 percent. There’d be new taxes on investment, inheritance, corporate income, financial transactions, banking activity and on and on.

Now, of course, there have been times, like, say, the Eisenhower administration, when top tax rates were very high. But the total tax burden was lower since so few people paid the top rate and there were so many ways to avoid it. Government was smaller.

Today, especially after the recent tax increases, the total tax burden is already at historic highs. If you combine federal, state, sales and other taxes, rich people in places like California and New York are seeing the government take 60 cents or more out of their last dollar earned.

Democrats would make that weighty tax burden much, much heavier. In fact, the entire Democratic governing vision, from President Obama on down, is based on the notion that we can have a growing welfare state and pay for it by taxing the top 2 percent.

The first problem, of course, is that there aren’t enough rich people to cover even the current spending plans. As an analysis by the group Third Way demonstrated, even if we threw every semiplausible tax increase at the rich, the national debt would still double over the next three decades.

The second problem is that if you set the tax burden at astronomical levels you really do begin to change behavior and wind up with a very different country. You don’t have to be a rabid supply-sider to believe that when you start taking away 80 percent or 90 percent of somebody’s top marginal earnings, you are going to get some pretty screwy effects.

Higher taxes will produce long-term changes in social norms, behavior and growth. Edward Prescott, a winner of the Nobel Memorial Prize in economics, found that, in the 1950s when their taxes were low, Europeans worked more hours per capita than Americans. Then their taxes went up, reducing the incentives to work and increasing the incentives to relax. Over the next decades, Europe saw a nearly 30 percent decline in work hours.

The rich tend to be more sensitive to tax-rate changes because they’ve got advisers who are paid to be. Martin Feldstein, an economics professor at Harvard, looked into tax changes in the 1980s and concluded that raising rates causes people to shift compensations to untaxed fringe benefits and otherwise suppresses their economic activity. A study last year by the economists Michael Keane and Richard Rogerson found that tax rates can have a surprisingly large influence on how much people invest in education, how likely they are to create businesses and which professions they go into.

The progressive budget in the House seems to have been written by people hermetically sealed in the house of government. They work in government. They represent public-sector workers. They seem to have had little contact with private-sector job creators and no idea about what factors might play in their thinking. It’s a reminder that while Republicans may embarrass on a daily basis, many progressives have lost touch with what actually produces growth and prosperity.

Blunt Report Says G.O.P. Needs to Regroup for ’16

From The New York Times:

Republican leaders on Monday offered a sweeping self-critique of a party they said was in an “ideological cul-de-sac” and needed better outreach and a new brand of conservatism to appeal to younger voters, ethnic minorities and women.

But the call for change in preparation for the 2016 presidential election faces a Republican establishment in Washington that has so far shown little interest in altering its political trajectory in the party’s continuing battles with President Obama and Democrats.

In a sign of that reluctance to change, the 100-page assessment immediately drew fire from conservative activists and pundits who derided it as a retreat from fundamental principles. Rush Limbaugh, the radio talk show host, accused Republicans of being “totally bamboozled” and lacking in confidence.

Conducted by the Republican National Committee after the 2012 election defeat, the report is searing in its bluntness. Still, one of the main solutions it offered was new logistics rather than new policies: It called for fewer presidential debates and a shortened primary season, with the Republican National Convention to be held sometime before its traditional date in August or September.

The party’s stated goal with a shortened political calendar is to settle on a presidential nominee sooner in the process, which would allow the candidate earlier access to general election funds. But Tea Party members said Monday that the abbreviated calendar was an attempt by the Republican National Committee to tamp down debate.

The document also urges all members of the party to “smartly change course” in what appears to be in part a marketing campaign to persuade voters that Republicans are not narrow-minded and out of touch. The report says that the “federal wing” of the party, unlike the nation’s Republican governors, is increasingly marginalizing itself.

“We have become expert in how to provide ideological reinforcement to like-minded people,” the report says. “But devastatingly, we have lost the ability to be persuasive with, or welcoming to, those who do not agree with us on every issue.”

Representative Greg Walden of Oregon, the chairman of the National Republican Congressional Committee, responded with one word: “Ouch.”

But he added, “The last thing Republicans should become is Democrat Lite.” He said that his party needs to better articulate what it is for “without ever retreating from our principles.”

The report acknowledges a new willingness to overhaul the nation’s immigration system, saying that the alternative is a party whose appeal “continues to shrink to its core constituencies only.” Already, Republicans are working with Democrats on legislation that many in the party believe will be crucial to attracting the support of Hispanics and other minorities in future elections.

But on other issues — taxes, gun control, same-sex marriage and health care — the report is largely mute. In Washington, an openness to change among some Republicans is overshadowed by a party leadership that has repeatedly declared its intention to adhere to the party’s fundamental principles.

Over all, Tea Party activists reacted with dismay to the report. “Americans and those in the Tea Party movement don’t need an ‘autopsy’ report from R.N.C. to know they failed to promote our principles, and lost because of it,” Jenny Beth Martin, a co-founder of the Tea Party Patriots, said in a statement.

Days of Promise Fade for Ethanol

From The New York Times:

Five years ago, rural America was giddy for ethanol.

 

Backed by government subsidies and mandates, hundreds of ethanol plants rose among the golden fields of the Corn Belt, bringing jobs and business to small towns, providing farmers with a new market for their crops and generating billions of dollars in revenue for the producers of this corn-based fuel blend.

 

Those days of promise and prosperity are vanishing.

 

Nearly 10 percent of the nation’s ethanol plants have stopped production over the past year, in part because the drought that has ravaged much of the nation’s crops pushed commodity prices so high that ethanol has become too expensive to produce.

 

A dip in gasoline consumption has compounded the industry’s problem by reducing the demand for ethanol.

 

The situation has left the fate of dozens of ethanol plants hanging in the balance and has unsettled communities that once prospered from this biofuel.

 

Thousands of barrels of ethanol now sit in storage because there is not enough gasoline in the market to blend it with — and blends calling for a higher percentage of ethanol have yet to catch on widely in the marketplace. Advanced biofuels from waste like corn stalks and wood chips have also yet to reach commercial-level production as some had predicted they would by now.

 

Congress set out to create an ethanol industry that would produce enough to make up 10 percent of every gallon of gas pumped into a car, but the lawmakers assumed that demand for fuel would grow. Instead, it has shrunk to 8.7 million barrels a day from 9.7 million in 2007, said Larry Goldstein, an economist and a director of the Energy Policy Research Foundation. And with corporate average fuel economy rules now in place to double the number of miles that the average car gets per gallon by 2025, “you know we’re on a trend,” he added.

New Apartments Will Complicate Jerusalem Issue - With President Obama scheduled to visit this week, the government has postponed action on several East Jerusalem projects, to make sure there are no awkward events like when Vice President Joseph R. Biden Jr. arrived in 2010 and was greeted by an announcement of 1,600 new units.

From The New York Times:

The Muslim call to prayer resounds through the traffic circle in the Palestinian enclave of Ras al-Amud, through the taxi stand where waiting drivers sip sweet coffee and the vegetable market where boys help their fathers after school. It can also be heard down the street in Maalot David, where a few Jewish families have quietly taken up residence in newly renovated apartments with prime views of Jerusalem’s Old City.

Maalot David is not a typical Israeli settlement, a planned community in the hills, surrounded by gates and guards, where Jews live separate and apart from nearby Palestinian villages. It is a new apartment block sandwiched into the very fabric of Arab East Jerusalem, a construction many say fundamentally undermines the idea that the area could ever serve as the capital of a Palestinian state.

Israel’s building of Jewish neighborhoods in East Jerusalem and West Bank territories seized during the 1967 war has been a longstanding friction point between Jerusalem and Washington.

With President Obama scheduled to visit this week, the government has postponed action on several East Jerusalem projects, to make sure there are no awkward events like when Vice President Joseph R. Biden Jr. arrived in 2010 and was greeted by an announcement of 1,600 new units.

Those more traditional, government-financed settlements may be delayed, but The Jerusalem Post has for weeks been running advertisements promoting Maalot David and another new apartment block, Beit Orot — both privately owned and developed — as a “dream come true” for their proximity to the Old City and the 3,000-year-old Jewish cemetery on the Mount of Olives.

While most experts on the Israeli-Palestinian conflict have long imagined Jerusalem as ultimately being divided, with Jewish neighborhoods remaining part of Israel and Arab ones joining Palestine, these new buildings make such a plan more complicated if not impossible — which may be exactly the point.

“The world is talking about dividing Jerusalem — it’s in many ways churning water,” said Daniel Luria, executive director of Ateret Cohanim, an organization that is not involved in these two projects but that has led many other efforts to establish Jewish beachheads in the area. “What has happened since 1967 in the Old City and around the Old City has made any discussion of dividing Jerusalem the way the Arabs see it irrelevant, because on the ground it ain’t going to happen.”

Palestinian leaders say that Maalot David and Beit Orot are part of an insidious ring of Israeli activity around the so-called Holy Basin of sites sacred to Jews, Christians and Muslims, which includes a vast national park and a planned military academy.

“It is all part of the plan, part of the scheme, to undermine the two-state solution and East Jerusalem being the capital,” said Saeb Erekat, the chief Palestinian negotiator, on Thursday during a tour for foreign diplomats intended to highlight the issue ahead of Mr. Obama’s visit.

On a similar outing last month, the Palestinian Authority’s governor of Jerusalem, Adnan Husseini, declared, “This phase of colonization is very dangerous, because it disintegrates inside the Palestinian neighborhoods — now they want to disfigure the core itself.”

Prime Minister Benjamin Netanyahu and most of the leaders in his new coalition, as well as the mayor of Jerusalem, have steadfastly maintained Israel’s right to build anywhere in the city, though its 1967 annexation of the Arab areas has not gained international acceptance.

Daniel Seidemann, a lawyer and settlement opponent who documents Israeli building in East Jerusalem, estimates there are 196,000 Jews living in such areas. The vast majority are in large, established neighborhoods like French Hill, near Hebrew University, or Har Homa, at the city’s southern edge, and are not seen by most Israelis as settlers.

About 2,200, according to Mr. Seidemann, are scattered in Palestinian enclaves in and around the Old City — many of them ultra-Orthodox extremists who took it as a religious and political mission to seize individual homes and raise Israeli flags on them.

Beit Orot and Maalot David represent a different approach: modern, comfortable apartments tucked into existing Palestinian neighborhoods. (It is not unprecedented: About 90 Jewish families live in Maale Hazeitim, across the street from Maalot David, and a similar number in Nof Zion, which opened several years ago in nearby Jebel Mukaber.)

But these projects come at an especially anxious time — with the peace process long stalled, confidence between the parties all but absent, and international condemnation of settlements generally intensifying. Heightening concerns of settlement critics, the new Israeli government finalized on Friday named as minister of housing and construction a former leader of the settlers’ council, whose Jewish Home Party opposes the establishment of a Palestinian state.

Beit Orot, on the edge of the Palestinian neighborhoods of Al Sawana and A-Tur, includes 24 units in four, four-story buildings next to a yeshiva by the same name whose property was bought by Irving I. Moskowitz, a wealthy Miami doctor who has financed many East Jerusalem projects. There are three-, four- and five-bedroom apartments with large porches and parking spaces, starting around $350,000.

Maalot David, a former police compound used by Jordan when it controlled the area from 1948 to 1967 and then by Israel, has 20 units, three of them small houses. The asking price for its 2,500-square-foot penthouse, with views of the Dome of the Rock out the 14 windows in the open kitchen-living area, is near $1 million.

Harel Basel, the real estate broker handling sales, said buyers so far had been religious but not ultra-Othodox families, some from West Bank settlements, drawn by both location and relative affordability. Similar apartments in prime West Jerusalem, he said, go for two or even four times as much.

“Something that is more than just an apartment in Jerusalem,” Mr. Basel. “Something for the soul, something with a goal, a vision, not just a house.”

Nechama Meir, who moved into Maalot David six months ago, said that she is no pioneer and that her address is “not a geopolitical question.”

A 33-year-old mother of six, ages 6 months to 11 years, Ms. Meir said she wanted more space (860 square feet, compared with 600 in the old place) and a yard (they planted their own grass). She also yearned to be closer to the Old City, where the children go to school, and to the Mount of Olives, where her husband’s great-grandfather is buried, along with generations of great rabbis.

A few weeks ago, the family visited a site believed to be where the red heifer was sacrificed, during biblical times, in a purification ritual.

“It’s a very holy place,” said Ms. Meir, who grew up in Neve Yaakov, a settlement of about 20,000 people in the northern reaches of East Jerusalem, and sells natural cosmetics. “You go out, you feel connected to all the generations of the nation. It’s just special to live in a place that you feel connected to your roots.”

Her children ride their bikes in the parking lot, behind Maalot David’s iron gates and tall fences; the streets outside are deemed too dangerous. They are not allowed to walk alone to the Old City: the Ras al-Amud traffic circle is notorious for Palestinian youths throwing stones at Israeli soldiers, settlers and visitors.

The parents do sometimes shop at the produce stand down the street. And when some Palestinian young men accidentally tossed their keys over the fence one recent afternoon, the couple said, they spent an hour searching in the bushes, though they would not risk letting the neighbors in to hunt for themselves.

Muhammad Zaghal, an optometrist who grew up in Ras al-Amud, has watched tensions swell as first Maale Hazeitim and then Maalot David opened their doors.

After Gilad Shalit, an Israeli soldier kidnapped in the Gaza Strip, was released in late 2011 in exchange for 1,000 Palestinian prisoners, Mr. Zaghal said, some Jews threw stones and water at people celebrating in the street, and made a big sign declaring, “One Jew is Worth 1,000 Arabs.”

“Everyone knows they don’t love us and we don’t love them,” Mr. Zaghal, 32, said. “They think that this is their place and this is their land, but this is not the case. We are here and we are staying here, but they won’t. There are people here who won’t let them.”

Benjamin Rhodes - Worldly at 35, and Shaping Obama’s Voice (tough issue on Syria)

From The New York Times:

As President Obama prepares to visit Israel next week, he is turning, as he often does, to Benjamin J. Rhodes, a 35-year-old deputy national security adviser with a soft voice, strong opinions and a reputation around the White House as the man who channels Mr. Obama on foreign policy.

Mr. Rhodes is drafting the address to the Israeli people the president plans to give in Jerusalem, but his influence extends beyond what either his title or speechwriting duties suggest. Drawing on personal ties and a philosophical kinship with Mr. Obama that go back to the 2008 campaign, Mr. Rhodes helped prod his boss to take a more activist policy toward Egypt and Libya when those countries erupted in 2011.

 

Now that influence is being put to the test again on the issue of Syria, where the president has so far resisted more than modest American involvement. After two years of civil war that has left 70,000 people dead. Mr. Rhodes, his friends and colleagues said, is deeply frustrated by a policy that is not working, and has become a strong advocate for more aggressive efforts to support the Syrian opposition.

 

Administration officials note that Mr. Rhodes is not alone in his frustration over Syria, pointing out that Mr. Obama, too, is searching for an American response that ends the humanitarian tragedy, while not enmeshing the United States in a sectarian conflict that many in the White House say bears unsettling similarities to Iraq. Three former officials of the administration — Hillary Rodham Clinton, Robert Gates and David Petraeus — favored arming the opposition, a position Mr. Rhodes did not initially support.

 

Employers Blast Fees From New Health Law .

From The Wall Street Journal:

Employers are bracing for a little-noticed fee in the federal health-care law that will charge them $63 for each person they insure next year, one of the clearest cost increases companies face when the law takes full effect.

Companies and other plan providers will together pay $25 billion over three years to create a fund for insurance companies to offset the cost of covering people with high medical bills.

Insurance companies, which helped put the fee in the law, say the fee is essential to prevent rates from skyrocketing when insurers get an influx of unhealthy customers next year. The fee is part of a new insurance landscape created by the health law that will forbid insurers from denying coverage to people with pre-existing conditions.

Tom Friedman on Mr. Obama Goes to Israel - While the unresolved Israeli-Palestinian conflict emotionally resonates across the Arab-Muslim world, and solving it is necessary for regional stability, it is clearly not sufficient. The most destabilizing conflict in the region is the civil war between Shiites and Sunnis that is rocking Lebanon, Syria, Iraq, Kuwait, Bahrain and Yemen.

Tom Friedman writes in The New York Times:

In case you haven’t heard, President Obama leaves for Israel next week. It is possible, though, that you haven’t heard because it is hard for me to recall a less-anticipated trip to Israel by an American president. But there is a message in that empty bottle: Little is expected from this trip — not only because little is possible, but because, from a narrow U.S. point of view, little is necessary. Quietly, with nobody announcing it, the Israeli-Palestinian conflict has shifted from a necessity to a hobby for American diplomats. Like any hobby — building model airplanes or knitting sweaters — some days you work on it, some days you don’t. It depends on your mood, but it doesn’t usually matter when that sweater gets finished. Obama worked on this hobby early in his first term. He got stuck as both parties rebuffed him, and, therefore, he adopted, quite rationally in my view, an attitude of benign neglect. It was barely noticed.

The shift in the Israeli-Palestinian conflict from necessity to hobby for the U.S. is driven by a number of structural changes, beginning with the end of the cold war. There was a time when it was truly feared that an Arab-Israeli war could trigger a wider superpower conflict. During the October 1973 war, President Nixon raised America’s military readiness to Defcon 3 to signal the Soviets to stay away. That is not likely to happen today, given the muted superpower conflict over the Middle East. Moreover, the discovery of massive amounts of oil and gas in the U.S., Canada and Mexico is making North America the new Saudi Arabia. So who needs the old one?

Of course, oil and gas are global commodities, and any disruption of flows from the Middle East would drive up prices. But though America still imports some oil from the Middle East, we will never again be threatened with gas lines by another Arab oil embargo sparked by anger over Palestine. For China and India, that is another matter. For them, the Middle East has gone from a hobby to a necessity. They are both hugely dependent on Middle East oil and gas. If anyone should be advancing Arab-Israeli (and Sunni-Shiite) peace diplomacy today it is the foreign ministers of India and China.

Writing in Foreign Policy magazine last week, Robin M. Mills, the head of consulting at Manaar Energy, noted that “according to preliminary figures reported this week, China has overtaken the United States as the world’s largest net oil importer.” Mills described this as a “shift as momentous as the U.S. eclipse of Britain’s Royal Navy or the American economy’s surpassing of the British economy in the late 19th century. ... The United States is set to become the world’s biggest oil producer by 2017.”

At the same time, while the unresolved Israeli-Palestinian conflict emotionally resonates across the Arab-Muslim world, and solving it is necessary for regional stability, it is clearly not sufficient. The most destabilizing conflict in the region is the civil war between Shiites and Sunnis that is rocking Lebanon, Syria, Iraq, Kuwait, Bahrain and Yemen. While it would be a good thing to erect a Palestinian state at peace with Israel, the issue today is will there be anymore a Syrian state, a Libyan state and an Egyptian state.

Finally, while America’s need to forge Israeli-Palestinian peace has never been lower, the obstacles have never been higher: Israel has now implanted 300,000 settlers in the West Bank, and the Hamas rocket attacks on Israel from Gaza have seriously eroded the appetite of the Israeli silent majority to withdraw from the West Bank, since one puny rocket alone from there could close Israel’s international airport in Lod.

For all these reasons, Obama could be the first sitting American president to visit Israel as a tourist.

Good news for Israel, right? Wrong. While there may be fewer reasons for the U.S. to take risks to resolve the Israeli-Palestinian conflict, there is still a powerful reason for Israel to do so. The status quo today may be tolerable for Israel, but it is not healthy. And more status quo means continued Israeli settlements in, and tacit annexation of, the West Bank. That’s why I think the most important thing Obama could do on his trip is to publicly and privately ask every Israeli official he meets these questions:

“Please tell me how your relentless settlement drive in the West Bank does not end up with Israel embedded there — forever ruling over 2.5 million Palestinians with a colonial-like administration that can only undermine Israel as a Jewish democracy and delegitimize Israel in the world community? I understand why Palestinian dysfunction and the Arab awakening make you wary, but still. Shouldn’t you be constantly testing and testing whether there is a Palestinian partner for a secure peace? After all, you have a huge interest in trying to midwife a decent West Bank Palestinian state that is modern, multireligious and pro-Western — a totally different model from the Muslim Brotherhood variants around you. Everyone is focused on me and what will I do. But, as a friend, I just want to know one thing: What is your long-term strategy? Do you even have one?”

By 2020, the United States will overtake Saudi Arabia as the world’s largest oil producer, according to the International Energy Agency. The U.S. has already overtaken Russia as the world’s leading gas producer. Fuel has become America’s largest export item.

David Brooks writes in The New York Times:

[T]he anonymous drudges at American farming corporations are exporting $135 billion worth of products every year and transforming the American Midwest. The unfashionable executive at petrochemical companies have been uprooting plants from places like Chile, relocating them to places like Louisiana, transforming economic prospects in the Southeast. Most important of all, the boring old oil and gas engineers have transformed the global balance of power.

By 2020, the United States will overtake Saudi Arabia as the world’s largest oil producer, according to the International Energy Agency. The U.S. has already overtaken Russia as the world’s leading gas producer. Fuel has become America’s largest export item. Within five years, according to a study by Citigroup, North America could be energy independent. “OPEC will find it challenging to survive another 60 years, let alone another decade,” Edward Morse, Citigroup’s researcher, told CNBC.

Joel Kotkin identified America’s epicenters of economic dynamism in a study for the Manhattan Institute. It is like a giant arc of unfashionableness. You start at the Dakotas where unemployment rates are at microscopic levels. You drop straight down through the energy belts of the Great Plains until you hit Texas. Occasionally, you turn to touch the spots where fertilizer output and other manufacturing plants are on the rebound, like the Third Coast areas in Louisiana, Mississippi and Northern Florida.

Vanity Fair still ranks the tech and media moguls and calls it The New Establishment, but, as Kotkin notes, the big winners in the current economy are the “Material Boys” — the people who grow grain, drill for fuel and lay pipeline. The growing parts of the world, meanwhile, are often the commodity belts, resource-rich places with good rule of law like Canada, Norway and Australia.

Daniel Yergin, an energy guru, noted in Congressional testimony last month that the revolution in oil and gas extraction has led to 1.7 million new jobs in the United States alone, a number that could rise to three million by 2020. The shale revolution added $62 billion to federal revenues in 2012. At the same time, carbon-dioxide emissions are down 13 percent since 2007, as gas is used instead of coal to generate electricity.

Most of us have grown up in a world in which we assumed that energy was scarce, or even running out. We could now be entering a world of relatively cheap energy abundance.

Most of us have grown up in a world in which oil states in the Middle East could throw their weight around because of their grip on the economy’s life source. But the power of petro-states is on the wane. Yergin argues that the oil sanctions against Iran may not have been sustainable if not for the new alternate sources of supply.

We’ve grown accustomed to despotic regimes in Russia and Venezuela that live off oil and gas wealth. But those regimes are facing hard times, too. Gazprom is already offering roughly 10 percent discounts on existing contracts. The Nigerians and Venezuelans may find it hard to compete. People in China and elsewhere are wondering if the fracking revolution means that the 21st century will be another North American century, just like the last one.

In President’s Outreach to G.O.P., Past Failures Loom

From The New York Times:

For all the attention to President Obama’s new campaign of outreach to Republicans, it was four months ago — on the eve of bipartisan budget talks — that he secretly invited five of them to the White House for a movie screening with the stars of “Lincoln,” the film about that president’s courtship of Congress to pass a significant measure.

None accepted.

The president’s associates, busy lately fielding questions of what took so long, readily acknowledge that Mr. Obama could have done more over the past divisive four years to wine, dine and simply engage the other side to reach bipartisan deals on a range of issues. They give multiple reasons for his reserve — personality, family commitments (6:30 dinner is said to be “sacrosanct” most nights) and too little appreciation for the aura of the presidency.

But now that he is trying harder — on Tuesday Mr. Obama makes the first of four visits to the Capitol over three consecutive days — Democrats say that his effort will put to the test, or at least expose, what they call the biggest factor of all: Republicans’ resistance to what overtures Mr. Obama does make, whether social or legislative, given the political danger of appearing too close to a president so unpopular with the conservative base.

What spurred Mr. Obama to reach out to rank-and-file Republicans with a flurry of phone calls, meals and now Capitol visits were the recent announcements by their leaders — Speaker John A. Boehner and Senator Mitch McConnell of Kentucky — that they will no longer negotiate with Mr. Obama on budget policy as long as he keeps demanding more tax revenues as the condition for Democrats’ support of reduced spending on Medicare and other entitlement programs.

Both leaders face political risks from deal-making with the president — Mr. Boehner the potential loss of his leadership job; Mr. McConnell the danger of a Tea Party challenge as he faces re-election next year. The record is full of examples of Republicans who have paid a price for appearing too cozy with Mr. Obama.

Mr. Obama’s promise to end Washington’s wars was a big part of his appeal in the 2008 campaign, and to buttress that vow he pointed to his bipartisanship as a state senator. In Springfield, Ill., he was known for weekly poker games with Republicans and Democrats as well as legislating with them.

Aides say Mr. Obama will continue his outreach even if the phone calls and other overtures can “feel fake to him,” in the words of one associate. The president signaled as much in his January news conference.

“Now that my girls are getting older, they don’t want to spend that much time with me anyway,” Mr. Obama said. “So,” he added, “maybe a whole bunch of members of the House Republican caucus want to come over and socialize more.”

Cuts Give Obama Path to Create Leaner Military

From The New York Times:

At a time when $46 billion in mandatory budget cuts are causing anxiety at the Pentagon, administration officials see one potential benefit: there may be an opening to argue for deep reductions in programs long in President Obama’s sights, and long resisted by Congress.

 

On the list are not only base closings but also an additional reduction in deployed nuclear weapons and stockpiles and a restructuring of the military medical insurance program that costs more than America spends on all of its diplomacy and foreign aid around the world. Also being considered is yet another scaling back in next-generation warplanes, starting with the F-35, the most expensive weapons program in United States history.

None of those programs would go away. But inside the Pentagon, even some senior officers are saying that the reductions, if done smartly, could easily exceed those mandated by sequestration, as the cuts are called, and leave room for the areas where the administration believes more money will be required.

These include building drones, developing offensive and defensive cyberweapons and focusing on Special Operations forces.

When Mr. Obama took office four years ago, with the Iraq and Afghanistan wars raging, deep cuts in the defense budget seemed unthinkable. He forced the Pentagon to cut nearly $50 billion a year, which was regarded by many as huge.

But today, deficit hawks outnumber defense hawks on Capitol Hill, and the possibility of $100 billion or more in additional annual cuts does not seem outrageous — if only agreement were possible on which programs should shrink fastest.

In Search of Debt Deal, Obama Walks a Narrow Path

From The New York Times:

President Obama will go to Capitol Hill this week to try to salvage a big deficit-reduction deal, battling not only Republican resistance but also complaints from Democrats that he mishandled his last attempt.

 

The president’s outreach to rank-and-file lawmakers, like the discontent of liberal Democrats, is the result of Republicans’ refusal to accept any additional tax increases to avert the automatic spending cuts that are beginning to affect the government and the economy. It could meet the same failure as Mr. Obama’s earlier bids to work privately through Congressional leaders and then to apply public pressure.

Hopes now rest on finding a narrow path through the ideological and political imperatives of both parties. White House aides have not ruled out some money-saving structural reforms to Medicare that Republicans favor, notably an idea promoted by the House majority leader, Eric Cantor, to combine the program’s doctor and hospital components with a single deductible for beneficiaries. Using savings from entitlement shifts like that to replace sequestration, as the automatic cuts are called, would meet Republicans’ demands not to use tax increases for that purpose.

At the same time, some Republican senators and aides, publicly and privately, have expressed an openness to accepting revenue increases as part of a loophole-closing overhaul of the tax code. Rolling together budget and tax agreements along those lines would allow Mr. Obama to complete the “grand bargain” that he has sought to tackle the nation’s long-term budget imbalances as the baby boom generation retires.

 

Mr. Obama has signaled a willingness to reduce cost-of-living increases for Social Security by using a less-generous measure of inflation. He has indicated openness to imposing means-testing on Medicare beneficiaries so that high-income retirees would pay more for their medical care, and he has put on the table $400 billion of cuts in Medicare over the next decade.

 

But Mr. Cantor raised an idea last month that had been endorsed by the Bowles-Simpson deficit-reduction commission: merging Medicare’s hospital and doctor coverage into one program in a way that could generate savings. Some Democrats also see that kind of proposal — in which Medicare is left fundamentally intact but is overhauled to become more efficient and which could potentially charge the affluent elderly more — as the basis for negotiation.

With all the familiar obstacles looming, however, Democrats are increasingly looking at the previous round of negotiations — at the end of 2012, as the Bush-era tax cuts were scheduled to expire — and concluding that Mr. Obama flinched, leaving tax revenue on the table that would have ended the budget standoff on more favorable terms to Democrats.

 

But Mr. Cantor raised an idea last month that had been endorsed by the Bowles-Simpson deficit-reduction commission: merging Medicare’s hospital and doctor coverage into one program in a way that could generate savings. Some Democrats also see that kind of proposal — in which Medicare is left fundamentally intact but is overhauled to become more efficient and which could potentially charge the affluent elderly more — as the basis for negotiation.

With all the familiar obstacles looming, however, Democrats are increasingly looking at the previous round of negotiations — at the end of 2012, as the Bush-era tax cuts were scheduled to expire — and concluding that Mr. Obama flinched, leaving tax revenue on the table that would have ended the budget standoff on more favorable terms to Democrats.

 

Moreover, White House officials said their negotiating position had been undercut by calls at earlier points from prominent Democrats like Representative Nancy Pelosi, the House minority leader, and Senator Charles E. Schumer, the No. 3 Democrat in the Senate, for tax increases that would affect only families with incomes of at least $500,000, rather than Mr. Obama’s preferred $250,000 threshold. (The deal raised the top rate on income over $450,000 for couples and $400,000 for single people). And had they failed to reach a quick deal, White House officials said, they could have lost the opportunity for progress on the rest of the president’s second-term agenda.

Some former members of Mr. Obama’s economic team said the White House could have gotten more. Jared Bernstein, a former adviser to Vice President Joseph R. Biden Jr., faulted the administration for agreeing to extend the bulk of the Bush-era tax cuts rather than raising more tax revenue that could be used to pay for other priorities.

Peter R. Orszag, who was Mr. Obama’s first budget director, said, “By making the middle-class tax cuts permanent, we’ve unfortunately locked into a revenue base that is inadequate.”