NDN Blog

While new Pakistani President Asif Ali Zardari has been complimenting Sarah Palin on her good looks in New York, Pakistani border guards have been firing on U.S. helicopters in Afghani airspace. Spencer Ackerman writes:

The situation with the Pakistanis is deteriorating by the minute. On Sunday they fired “warning shots” at U.S. helicopters in Pakistani airspace. Yesterday they may have shot down an unmanned aerial vehicle in Pakistani airspace. And now the Pentagon has just announced that the Pakistani Army fired on U.S. troops in Afghan airspace.

The details are still murky, but it appears there was probably confusion about either orders or, more likely, where exactly the border lies. As Ackerman suggests, it's no international incident, but it could become one very quickly if a warning shot finds a target.

The economy certainly deserves a prominent spot in the debate this Friday(assuming it happens...), but I hope the planned topic of the debate-- foreign policy-- doesn't get lost altogether.  America is still confronting a number of tricky situations overseas-- situations that will require the engagement and leadership of a President-- and we can see some marked differences between the candidates.

The American electorate deserves to hear the candidates discuss our relations with Pakistan. How will they work with the new Pakistani government to stamp out al Qaeda and Taliban strongholds in the Pakistani northwest? Under what circumstances might they support incursions from Afghanistan into Pakistani territory? Pakistan has been an important ally, but it's a country in flux, with internal rifts to sort out.  How Washington works with the government in Islamabad will have serious repercussions for both countries.

Barack Obama just released a minute-long ad not unlike his two-minute spot last week.  He sits down, looks you in the eye and tells you what he's going to do about the economy. 

Obama talks about keeping people in their homes, about investing in new clean energy and infrastructure, and about putting the middle class first.  It's a powerful statement:

NDN Globalization Initiative Chair Dr. Robert J. Shapiro spoke yesterday on Marketplace, the daily radio show by American Public Media.  Shapiro talked about the strain this proposed bailout will put on the agenda of the next president. The full transcript is below, as well as a link to the audio of the interview.

KAI RYSSDAL: Amid all the uncertainty about how this bailout's going to work, commentator and economist Robert Shapiro points out that $700 billion is a whole lot of money not to have.

ROBERT SHAPIRO: Whatever we do, this bailout will use up virtually all of the resources the next president needs to bring about whatever changes he's envisioning.

That's because the government will need those resources to buy up all those devalued mortgage-backed securities and their derivatives.

The direct costs of buying up all those falling securities will come over the next several months. But any revenues the Treasury eventually recoups from selling them back to the market? That won't happen for years, if ever.

And that leaves the next president facing a deficit of $600 billion to $700 billion, maybe more.

There goes the money for President Obama to expand health care coverage, or for President McCain to cut corporate taxes or extend President Bush's tax cuts for wealthy people.

And next, President Obama may have to trade off a major push on alternative fuels against those new tax cuts for the middle class.

While President McCain may have to give up extending tax relief for dividends or the funding for his educational reforms.

Both candidates also may face a version of the dilemma European leaders faced in the 1960s and 1970s, when they gave up plans to maintain strong military spending in order to elaborate their social welfare protections.

Here, this time, the next president's promises to expand the Army may well give way to new subsidies not for poor or working people, but for the financial institutions that once presided so proudly over the global economy.

Since most of the bailout's costs should come in the next two years or so, they shouldn't constrain the new president's longer-term plans for perhaps one major initiative. That is if he still has any public support left after failing to deliver on all those other promises he's making right now. 

Listen here to the audio of Shapiro's interview.

US Sen. John McCain seems to have gotten pretty tired of talking about the economy, and understandably so. After a week of losing on economics issues,  McCain's latest ad attempts to bring the discussion back to foreign policy, where he has a percieved advantage.

The ad hammers Obama for a comment he made in a primary debate, saying he would meet with Venezuelan President Hugo Chavez, among other less-than-friendly world leaders, without precondition.  Obama has since backtracked on that point

This may begin to set the stage for Friday, when the two candidates face off in a foreign policy-themed debate.

A pair of ads from the McCain campaign attempt to recover some of the losses that McCain has suffered in the polls this week after getting thrashed by the Obama campaign on the economy.

"Advice" criticizes Barack Obama for taking advice on the economy from Franklin Raines, former chairman and CEO of Fannie Mae.  You can guess why that might be a bad thing, but  the Washington Post-- the source cited in the ad's attacks on Raines-- reports that the connection between Obama and Raines is much more tenuous than the add would lead you to believe.

"Patriotic Act" goes after Joe Biden for his suggestion that paying higher taxes was a patriotic thing to do. This ad, at least, is based on something Biden actually said.

Seems to me that after landing a lot of punches last week, John McCain has been forced to backpedal all week, and is playing defense on the economy.

• The Treasury, the Federal Reserve and U.S. Congress have issued a sweeping plan to fight the current crisis and stabilize the markets.  (Wall Street Journal) (The Economist)

• Read Secretary Paulson's statement here.

• The Securities and Exchange Commission has temporarily banned short-selling of financial stocks. (New York Times) 

• The Treasury has guaranteed money market funds to ensure their solvency. (The New York Times)

• Stocks have surged on the news. (Financial Times) 

• The Financial Times has an in-depth look at what happened to Lehman Brothers.

• The Lexington team at the Financial Times says "TGIF," but concede that things could have turned out worse.

• The Economist published a special report on how we got here.

If you need a respite from the thrash and grind of electoral politics, look no further than the fall edition of Democracy: A Journal of Ideas, which came out this week. This issue takes a step back from the day-to-day campaigning, and looks at the bigger challenges that will confront our next president.

Take particular note of the feature article "The Next Globalization," written by Chair of NDN's Globalization Intitiative, Dr. Robert Shapiro. Shapiro argues that the next Administration ought not fight globalization with higher tariffs and punishment for companies that invest overseas.  Rather, our challenge is to master the inevitable changes we face. Success will come when we modify our education system, to prepare workers to operate in an economy that demands technological savvy; when we bring down health care and energy costs to globally competitive levels; and when we invest in clean, efficient infrastructure -- from light rail systems to universal broadband service.  If his article leaves you hungry for more, I'd recommend his new book: Futurecast, which looks at similar issues in greater depth.

The issue also features an article from Harvard Kennedy School Professor Joseph Nye Jr., who discusses what kind of a leader we need in our next president. Democracy co-editor and long-time NDN friend Andrei Cherny calls for a more robust debate on foreign policy. Theda Skocpol and Suzanne Mettler warn that college is becoming a force for inequality in America, and Eric Lane argues that American democracy is jeopardized by an unengaged and uninformed populace.

For the full table of contents click here.

After Lehman Brothers went belly-up, and Merrill Lynch got swallowed up, money markets ground to a standstill in the first half of this week. Oddly enough, everyone was skeptical that anybody else could pay them back.

The Federal Reserve, acting in concert with the central banks of Europe, Japan, Canada, Britain and Switzerland, made $200 billion available today for banks at low rates.

It's no long-term solution, but it's good news for now: stock markets around the world are up today, and everyone seems a little more relaxed.

U.S. Sen. Barack Obama on the economy, in two minutes:

As Simon wrote, Obama does just what he needs to do here: Sit down, look at the camera, and tell the American people how he plans to fix our economy. This is an issue on which he should be dominating, and I have a feeling he's about to pull ahead.

Both campaigns came out with new ads this morning. The feeling that comes from watching them together is that U.S. Sen. John McCain is on offense, and U.S. Sen. Barack Obama is playing defense.

Obama's ad pulls quotes from the media, accusing McCain of running a "dishonorable," "vile," "deceptive," "disgraceful," "dishonest," "sleazy"  campaign-- and yes, all those words were squeezed into a 30-second spot.

McCain, meanwhile, has already moved on to talking about the economy, and the agenda seems to be set for the week.

Last week, McCain dominated the news cycle by running the aforementioned sleazy ads. Obama promsed to fight back, and now we get this: An ad that gets the point across, but is stuck on last week's finger-pointing. The people running McCain's campaign have cleverly moved the agenda forward, focusing on what has to be this week's top story: The crumbling economy.

Obama has released a statement on the Wall Street meltdown, incisively blaming McCain's philosophy of deregulation and trickle-down economics for the current trouble. Obama has to get that criticism out, and combine it with an explanation of why his ideas are better.  And if he's lucky, McCain will keep opening his mouth and giving himself trouble:

On the campaign trail today, McCain continued his insistence that the "fundamentals of the economy are strong," displaying how out of step he is not just with the American people, but with the people making his ads, too. As NDN President Simon Rosenberg wrote last week, this is just more evidence of how far removed McCain is from reality.