Barack Obama, Mitt Romney, flip a coin. There are differences between the two to be sure. But in the end, the net dissimilarity between these two establishment politicians is going to end up being considerably less than campaign rhetoric will suggest -- or than you might hope for.

Neither is anything like a transformational figure. Both are responsible, cautious men. Both, like most presidential candidates, are flawed by their ambition. There may be differences in emphasis, of course. One is too cool, a bit of a weathervane, beholden to Wall Street, not well loved within his own party establishment, not trusted by his party's base and the other is ... well, I guess that proves my point. From foreign policy to domestic programs, you can be pretty sure the efforts they lead will look surprisingly similar.

Presidential candidates run to the middle (and winners hail from the mainstream) because the deciding votes are cast in the middle. Usually -- and there are periodic exceptions -- that is what accounts for the fact that most presidents have more in common with the men who preceded or followed them in office than they would care to acknowledge.

This is one of the reasons that there is regular refrain for third party presidential candidates. It is also one of the reasons that such undertakings are typically doomed to failure and counterproductive.

If you want to produce real change in the way the government of the United States functions, the way to do it is to focus on the Congress. And boy, does the Congress ever need changing.

The failure of the stuporcommittee (which as of this writing seems all but certain) to even seriously grapple with the issue of the deficit is one of the grossest examples of dereliction of duty in the U.S. government since, well, since the Congress approved the Bush tax cuts. As Senator Tom Coburn said when presented with the idea that the Congress had an approval rating of only 13 percent, "I want to know who those 13 percent are." The Congressional approval rating has now fallen to just 9 percent. This Congress doesn't deserve an approval rating. They don't deserve another day on the job. They could all go home tomorrow and I bet it would be six months before anyone even noticed. (That is after the celebrations had died down.)

Yet, it is in the Congress that an effective, instantly relevant third party initiative could be undertaken. What this country -- divided as it is -- needs, is a legislative third party. It needs a group of swing votes that neither the Democrats nor the Republicans could pass anything without. And given the current state of things, that means it could be a fairly small group -- a handful of senators, 10 or 20 or 30  congresspeople. And it would be possible to identify districts and states where electing a third party or sworn swing vote candidate would be possible. And it would not cost a fraction of what it would cost to win a presidential election. And the group would immediately hold the balance of power on the Hill.

Presidential campaigns capture the glamour. It's easier to connect change with a single face, a single name, a single personality. But, look at where Washington is dysfunctional today and you have to acknowledge, the problem lies at the far end of Pennsylvania Avenue from the White House. Capitol Hill has become the Boot Hill of ideas, the place initiatives go to die.

Having a third party on a hill that both sides had to work with to get anything done would change the dynamics dramatically. It would force compromise because there literally would be no way to proceed without it. You would think that was true today but the problem with the two political parties is both see compromise as capitulation to the other, it's a zero sum game. With a third party, that was open to reasonable ideas from both sides ... and couldn't succeed without one or the other...that would change things. It would also create a movement that could grow giving people an alternative to the binary choices they face today.

Clearly, something must be done. If the failure of the supercommittee does not convince you of that then you are already resigned to the irreversible decline of the United States. Because that is precisely where this kind of leadership failure will take us. That is why as important as the presidential sweepstakes are, the really important election news story of 2012 will be whether the American people vote for change in a Congress that has sold them out in every way possible. Certainly every member of the supercommittee and the leadership of both parties should be challenged on their record of failure. They should not be allowed to simply blame it on the other side. Just as the president should not be allowed to merely blame this on the Congress. This was important ... and he chose not to engage, not to take the political risk of rolling up his sleeves and working toward a solution, not to threaten and cajole and do what past presidents have done. It -- like his decision to agree to the extension of the Bush tax cuts -- are among the low points of his otherwise quite accomplished presidency. But neither he nor his potential successor will be able to fix Washington from the Oval Office (which is why whomever wins should get out of it and invite more people into it than the president has done this term). The real responsibility for change we can believe in actually resides with the American people ... and the surest sign whether or not they have accepted that challenge will come when the votes are tallied after next year's congressional balloting.

This week's reports that 20 percent of the U.S. Congress will be visiting Israel this month are stunning. Eighty-one members of Congress -- two thirds of them Republicans, 47 of them freshmen -- apparently think it is more important to be visiting Israel than it is to be at home dealing with the worst economic crisis in modern memory. America's economy is in flames and these guys are taking lobbyist-funded trips to what, watch Israelis take to the streets to protest the high-cost of living in that country?

This Jewish, Israel-supporting, foreign policy specialist says, "It's time to come home, ladies and gentlemen." While such visits are important and there is certainly a place for them in the lives of American legislators, now is not the time.

Indeed, I continue to be stupefied that in the midst of market turmoil that is directly associated with political dysfunction in Washington that no one who works in a leadership role in this city has the conscience or the awareness to recognize that this is not an August in which a recess should be taken. These folks should be back at their desks and hard at work. The president ought to take to his podium and demand they return. He ought to say he is going to provide one big new idea a day for helping to get the economy back on its feet until the Congress finally starts to take yes for an answer.

The political objectives behind these Israel trips are clear and they reveal the opportunity costs to the American people associated with campaign season. Every moment spent jumping through a hoop for a potential group of supporters is a moment spent failing to address one of the many urgent issues confronting the United States.

When will these pretenders grow up or make way for serious, committed adults who have the appetite and the spine to grapple with our current challenges? When will American voters demand better, or at least start paying attention?

A couple of years ago, in the wake of the market shocks of 2008, a colleague and I went around the world speaking to business and government leaders. In every conversation, the question was: "What's next?" We responded by saying that the answer was better described with letters than numbers.

We then drew out on a sheet of paper a few letters: a "V", an "L", a "U", a "W," and a backwards "J". The idea was that each represented a graph of the path the U.S. economy would take. A "V" was a pretty conventional path for a downturn with a fall followed by a rebound with a similar slope. An "L" was a kind of disaster scenario. It meant that, like the old woman in the television commercial, once the market had fallen, it couldn't get up. A "U" was a "V" with a longer period at the bottom, during which the economy was in a recession. A "W" was the tease and then heartbreak of the double-dip. And the backwards "J" was perhaps the most troubling of all because it also seemed the most realistic: the market would fall, be kept down for a protracted period and then, when it recovered, it would not recover to the levels it had enjoyed before. It suggested that this crisis was not just a momentary problem but a watershed and that, afterwards, America would not be the same again.

Well, our presentation would be a lot shorter today. Now, for the economy as a whole, we have two choices: a "W" or something that is a combination of the "W" and the backwards "J" -- call it an "unfinished W." Because, denials of the politicians and pedants aside, in real world terms, most Americans at least feel like they are entering the double dip, the downturn we were promised would not happen.  The only real question now is whether the recovery that comes brings us back up to past levels or whether it only gets us part of the way there to a future of protracted slower growth.

In looking for the reasons why we are where we are, we gain some insights into which of these patterns we are most likely to follow. For example, there is the old algebraic formula that has once again seemed to govern here in the U.S., even though its meaning has seemed to change over the years.

The formula is R + D = W. In it, R + D represents America's political arithmetic of Republicans plus Democrats. Interestingly, however, W is a variable that has meant different things for different eras. Initially, the W stood for the wins the U.S. was racking up economically and otherwise worldwide. Our political system in this era worked out to being a net advantage for the U.S. -- always fractious but at critical moments, from commitments to war to the New Deal to the Great Society, capable of coming together to make elevating, energizing decisions.

In a later era, during the first decade of this century, with Democrats and Republicans almost evenly divided and new media and national attitudes reducing much of the political debate into a bitter, lowest-common-denominator stew flavored with acrimony and big floating chunks of foolishness, the "W" ended up standing for the middle initial of the then-president of the United States. In that case, the "W" no longer meant a win but, rather, a president who was both fiscally and internationally reckless.

Now, the W refers to a situation in which R and D end up cancelling each other out or producing a net negative result. The political process has produced measures that either compound problems or fail to address them. And the market, sensing the problem here, and seeing similar formulas that have zeroed-out leadership, decisiveness and progress elsewhere, has slammed us back onto a vertiginous downward trajectory.

Are there other factors fueling the downturn? Macro cycles? Core economic problems? Yes, of course. But in Europe, the U.S., and Japan, one common denominator is that the current round of concerns is dominated by the economics of failed leadership. When we went around saying it wasn't numbers but letters on which people should focus, we didn't know it but we were making an important point: the point that you have to look past the simple arithmetic. It's not economics but politics that seems to be driving this current phase of the crisis.

The inability of America to come together to fund the government programs and reforms demanded by recovery, the inability of Europe to address its own structural flaws, the inability of Japan's diet to produce any consistent series of major decisions to fuel change and compensate for the country's demographic and other great challenges -- these factors have led markets to think that the growth many companies have enjoyed the past couple years, the energy seen in emerging markets, the massive amount of capital available in the world, would not enough to fuel real, serious recovery.

All that said, while it is a "W" or an "unfinished W" for the economy as a whole, for the bottom third of the population, it is a "U" or, worse, an "L." They never rebounded even slightly. They have fallen away from the top of society like the jettisoned booster of a Saturn V rocket. And partial recovery hasn't helped them a bit. For them, even the misleading uptick in the middle of a double dip would have been encouraging. But it never came, and now, wherever they look, the numbers don't add up and the letters they see spell out a bleak future. That will remain the case until, once again, adding R and D in the same equation produces the positive by product of cooperation, compromise, reason, and good faith.

Celebrating the pending debt-ceiling deal is like a cancer patient in a burning house surrounded by hostile troops celebrating finding his empty wallet. It is not only a solution to a self-created, third-order problem; it is one that is not just inadequate to addressing the really serious challenges at hand; it has almost nothing to do with them.

While criticisms of the deal that note that it barely makes a dent in the debt and buys into spurious principles about how to actually balance the debt are perfectly fair, there are three much bigger problems associated with the proposed agreement.

The first, of course, is that it reveals what a hopeless mess the U.S. political system is. It does so via the process that got us here, the problem being addressed, and the deal's reliance on numerous tell-tale standards of Washington nonsense -- such as the very long-term nature of the cuts or the reliance on yet another committee to address what couldn't be resolved. This would be worrisome in any case. But it is made more troubling because of the other two major problems with the deal.

The second problem is that the deal is more than an agreement to minimal debt cuts, a convoluted process that is more likely to invite mischief among our political class than it is to make a sensible dent in our national debt, and a concession to extremists whose values will bankrupt much of the United States while handing over even more of the national patrimony to a super-empowered elite. It's that it also carries with it an invisible unspoken rider. The rider is that, since this process was so traumatic, the likelihood that any new spending program of size or new revenue program is off the table for the next 15 months or so … despite the fact that the staggering U.S. economy needs both.

(And for those who think the president has scored a "victory" by getting an extension of the debt ceiling through the end of 2012 -- think again. First, there will be plenty of other opportunities for further standoffs in the normal budget process. Secondly, what the president gave up in exchange for this is a process in which the failure to agree on a path forward guarantees nothing but cuts to the budget … not smart ones as much as mutual punitive ones. Thirdly, the deal probably is not big enough to avoid a downgrade.)

Read on

It's a comedy. It's a tragedy. No one is sure who deserves top billing. There's a massive debate over what would constitute a happy ending. The frenzy over the edition of Cirque du So Lame headlining in Washington has turned everyone into a theater critic. Jackie Calmes, writing in the New York Times, sent the White House into a tizzy, for example, with her assertion that President Obama has in fact become a supernumerary in the current drama. 

Personally, I think the whole thing was scripted not by Boehner nor Reid nor Norquist nor even by the elusive Master Teabagger writing from his secret retreat somewhere near Black Helicopter, Montana, but by Eugene Ionesco, writing in Paris in the late 1950s. Back then, the play was called "Rhinoceros" and with it Ionesco helped introduce the public at large to the theater of the absurd in much the same way the denizens of the swamplands of the Potomac are doing for America and the world today. 

In the original version of the play, a town is gradually destroyed as each of its citizens, save one independent minded fellow with a healthy appreciation for wine and conversation, is transformed into a rhinoceros. Ionesco captured the thrust of what he was getting at in an interview for Le Monde in January of 1960 when he said:

I have been very much struck by what one might call the current of opinion, by its rapid evolution, its power of contagion, which is that of a real epidemic. People allow themselves suddenly to be invaded by a new religion, a doctrine, a fanaticism. ...  At such moments we witness a veritable mental mutation. I don't know if you have noticed it, but when people no longer share your opinions, when you can no longer make yourself understood by them, one has the impression of being confronted with monsters-rhinos, for example. They have that mixture of candour and ferocity. They would kill you with the best of consciences."

That was all half a century ago and in France both of which would in other moments make it all seem wildly alien to most Americans. But despite Ionesco's own observation that "you can only predict things after they have happened" he would see much that is painfully familiar in Washington today. Lines from "Rhinoceros" ring as true in 2011 as they did 51 years ago (when the play was seen as an allegory about the rise of extremist movements like Nazism). 

"There are many sides to reality," he wrote as if prescribing the game plane adopted by many players in the current battle over the role and size of American government, "Choose the one that's best for you."  Surely, this approach, used by everyone in this town in which the most dangerous entitlement program is the one that leaves everyone believing they are entitled to their own facts, is taking the theory of relativity to new depths, previously unimagined by science.    

Or, as the United States hurtles toward outcomes that were once unimaginable -- like debt downgrades and withering gridlock in what was once the world's most outstanding set of government institutions -- Ionesco offers the following dry acceptance of what follows when the absurd becomes the commonplace: "I can easily picture the worst, because the worst can easily happen."

In Washington today, the rhinoceroses are winning. Our extremists are not murderers like the jihadists we are at war with or Anders Breivik, but they are nonetheless at work on America's political system in a way that follows the pattern about which Ionesco warned.  They promote a doctrine that is a kind of solvent for facts-breaking them down and distorting them until they become unrecognizable.  They argue in the true absurdist tradition that somehow they offer a superior form of mathematics that involves only subtraction.  They deny history-whether it is the compromises of Reagan, the big-government spending of every recent Republican president, the debt-ceiling extensions of the past, or the culpability of failed Republican tax cuts and spending n unnecessary wars for creating the problem we face.  They view reason and compromise as weakness. And they claim they are helping those who they are irreparably hurting.

Magnificently ... from an absurdist perspective...they are combining inexperience, ignorance, intolerance and intransigence into a formula by which they are setting the rules for America.  They recognize that, as military strategist Ed Luttwak once observed to me, "In most wars, it's the dirtiest fighter...or the craziest...who sets the rules of the game." Regardless of the final outcome of the debt ceiling drama, a few things are emerging as new realities in Rhino DC:

• Until the election nothing will happen that involves a major spending increase or a major revenue increase. With these off the table, that means essentially nothing will happen. And if we get into a further economic downturn, that will leave all responsibility for getting us out with the Fed. QE3 is becoming more likely all the time.
• Even more likely is a downgrade of U.S. debt. Where that leads-small increases in borrowing costs or big ones-is uncertain. (See David Wessel's excellent WSJ piece on this.) But if we're honest with ourselves, we should not be surprised. In fact, if the going forward policy of the U.S. is that we can't incorporate increasing revenues in our efforts to balance the budget, then we deserve to be downgraded.
• The decision by President Obama to support the extension of the Bush tax cuts may go down as one of the worst of his first term. It was a bad compromise that set an unfortunate precedent for future deals and it was lousy economics.
• Obama has been thoughtful, reasonable, constructive and not terribly effective. As presidents go, it increasingly seems as though he would make a terrific Supreme Court justice. Jackie Calmes had it right in her Times piece.
• We need a new edition of "The Federalist Papers" that deals with the issue of tyranny of the minority.

It was all put into perfect perspective for me in a conversation with one of the most experienced diplomats currently resident in Washington who, after expressing deep concern over the current follies on the Hill, recounted a cartoon that had recently run an international newspaper which showed Hamid Karzai and another leader from the region reading headlines from Washington and wondering aloud whether America was ready for democracy.  Or, as Ionesco, observes in "Rhinoceros", "Lunacy is lunacy and that's all there is to it."

This week marks the premiere of the eighth installment of the most successful series in movie history. As such, it offers a useful comparison in the differences between what makes a successful summer blockbuster in Hollywood and what makes for one in Washington, DC.  Here are the top ten:

10. Too Few House Elves in Washington (Too Many House Death Eaters)
Oh Dobby, Dobby, if only there were a man in Washington of your stature. Poor Dobby who died, according to his epitaph, "a free elf" was cranky and even less photogenic than Anthony Weiner, but he had heart and courage and took risks for those he served in ways that none on Capitol Hill seem to even comprehend. Meanwhile, there are far too many Death Eaters up there on the wrong end of Pennsylvania Avenue, swirling around in service of He Whose Name Cannot Be Spoken (Grover Norquist) regardless of the pain it may bring to those who actually elected them. (Norquist may succeed with anti-tax religion in doing what the leadership of the Soviet Union could not -- bankrupting and thus breaking America.)

9. Even Hollywood Accounting is Better Than How They Do Math in DC
Hollywood is famous for skimming and double-entry book-keeping but even they know it takes both revenues and sensible spending to balance a budget. And they sure have their focused fixed securely on the bottom line on ways that would be revolutionary in DC. Meanwhile back in our nation's capital it would take a Defense Against the Dark Arts teacher with more gifts than Mad Eye Moody to combat the trickery that has in just over a decade transformed a budget surplus into a $1.6 trillion annual deficit. (Face it: Threats to downgrade U.S. debt aside, the real story is that Moody's and S&P haven't trash-canned America's Triple A rating yet. America is ... very lucky ... to still coasting on the reputation of past generations of leaders.)

Read the full list here.

Here at Les Recontres Economiques d'Aix-en-Provence we are ostensibly discussing "The States of the World" but in reality the buzz around the event is about the global economic ugly pageant. Although much of the conversation among delegates --whether at the venerable conference sites like the law school of the Universite Paul Cezanne or the local outpost of Sciences Po -- focuses on the harrowing state of the Eurozone, one can regularly hear concern expressed for the other contestants in the current perverse competition among the world's economies.

To understand the competition, you just have to understand the old joke about the group of friends whose picnic is disturbed by a hungry grizzly bear. As the friends bolt from their campsite, one stops to put on his sneakers. The others ask what he is doing, worried that he will never be able to outrun the bear if he stops. The one in the sneakers observes as he starts sprinting away, "I don't have to outrun the bear, I just have to outrun the rest of you."

So it is now with the global economic ugly pageant. While most of the major economies of the world are spluttering and the possibility of an unprecedented geoeconomic disaster remains palpably real, what money there is does have to go somewhere. That place is likely to be the least ugly of the world's economies. In other words, absent a true safe haven, capital will seek the safest haven of those available. It's one reason the dollar has done fairly well recently, for example. While the U.S. government seems to do everything in its power to screw things up economically, investors buy dollars because the managers of the world's other big currencies, the Europeans and the Japanese, are screwing things up worse.

The question now is will our "luck" remain the same going forward? How will the world's economies fare in the next round of this contest? Here's the current betting line based on my scientific eavesdropping on conversations here in Provence, appropriate discounting for self-interest and biases of the speakers and my own reading of the tea leaves that get floated as economic news in the world's newspapers. (Note: I am focusing only on national and regional economies here. Suffice it to say that almost certainly the big losers of the coming months -- whether policymakers accidentally blow up the world economy or they dodge disaster through a judicious combination of austerity and stimulus -- will be the poor. They have no voices advocating for them (as do, for example, the makers of private jets currently lobbying to keep the corporate tax breaks their purchasers receive under present U.S. law). Austerity programs will squeeze them further. Disaster will crush them. And almost certainly the biggest winners will be big corporations and the super-rich who will venue-shop and use their access to cash to buy up devalued assets including fire-sales among privatizing formerly state-owned bric a brac like roads, ports, powerplants and water rights.)

Read on

Congressman Paul Ryan, chairman of the House Budget Committee, deserves considerable credit for violating the "no leadership zone" that has seemingly been imposed on Washington without even benefit of a vote of the U.N. Security Council. His proposed 2012 budget is misguided in parts, inadequate in others, and would be laughed out of any serious discussion about getting America's fiscal house in order -- if such a discussion were actually taking place in Washington. But it's not, of course. The White House has been frustratingly passive on the subject, failing to address America's deficit in any meaningful way and treating their own deficit commission's recommendations as though they were created in the radioactive bowels of a Fukushima reactor rather than by a bipartisan panel of experts. Meanwhile, the right and the left have been engaged in their usual childish political games in which both sides are far more focused on criticizing their opponent's manifold and inarguable shortcomings than they are in addressing their own craven shallowness, pandering to their bases and inability to do simple arithmetic.

Overshadowed by this debate that makes Muammar al-Qaddafi's rants look like the crystalline rationalism of Spinoza or Descartes have been some of the details of Ryan's plan and their implications. While much of the discussion of the proposed budget has centered on potential cuts to health care for older Americans and its complete dodge on seeking new revenue or seriously looking at defense budget cuts, there has not been enough discussion of one of its most egregious -- and stunningly wrongheaded and dangerous -- components: the utter evisceration of the U.S. international affairs budget.

As White House Budget Director Jack Lew has accurately observed, a "budget is not just a collection of numbers, but an expression of our values and aspirations." Thus, Ryan's budget -- which clearly has been vetted carefully by his fellow Republican leaders -- can be seen as a manifestation of Republican views on everything from how we should treat our parents to what America's role should be in the world. I'll leave it to others to continue the debate on health care. Instead, I would just like to point out that according to the summary of the budget in today's Washington Post, Ryan is proposing spending $27 billion less than the administration's figure of $63 billion on international affairs -- the portion of the budget covering diplomacy and U.S. foreign assistance programs. That 43 percent whack is by far the most draconian of all Ryan's cuts when measured in terms of the contrast between the White House's and Ryan's 2012 proposals.

Meanwhile, on defense, Ryan is proposing spending $26 billion less than Obama … but out of a much, much larger base so the Republican proposal is just 3.5 percent less than that of the administration. What this suggests is that Ryan and company feel that in the world in which we live today, the tools of American foreign policy should almost exclusively be those of force and hard power and that we should effectively unilaterally disarm in terms of soft power and diplomacy.

At just the moment when aid is most critical on initiatives of vital national security from fighting terrorism to stabilizing the Middle East to winning support for the U.S. in regions where our rivals are spending furiously to tip the scales in their favor, Ryan would effectively shut off the lights in Foggy Bottom and say that America will now do less, be less engaged, be less influential -- right up until the point at which any issue must be resolved with force. And of course, removing the tools of diplomacy and persuasion virtually guarantees we will be required to use the military and coercive tools that are all we have left.

Think about it … this is a budget that says the developed country that spends less than any other on aid will shrink that amount dramatically while still maintaining its status as the country that spends more on defense than every other significant power in the world combined. More $9 billion dollar next-generation aircraft carriers? Check. Less aid to ensure Egypt follows through on its reforms and the Middle East is stabilized? Check. Them's our values, says Ryan: We're cutting all programs for "speaking softly" and only maintaining those for "carrying a big stick."

And, while he's at it, underscoring that this budget shows a lack of national security awareness that is as breathtaking as it is frightening, Ryan throws in a whopping $7 billion cut in proposed Energy spending levels just to help ensure the country remains dependent on foreign sources of energy from dangerous places. Tax cuts for the rich? Intact … actually, let's make them and corporate tax cuts bigger. Spending to ensure America's energy security and create jobs doing it? Cut.

Add all this up and what do you get? A powerful statement by Ryan and the Republicans that they don't understand foreign policy and that they don't want America to continue to play a leadership role in the world. Appalling as that is, it pales in comparison to the even greater threat to U.S. leadership that is posed by the fact that no one has dared to do what is sensible and required and offered up a budget that solves America's fiscal problems the only ways it can be done: by sensibly cutting both defense and entitlement spending and by increasing revenues.

While it is often ruefully noted that you can't pick your relatives, there is an expectation in life that you can pick your partners. Barack Obama is discovering that when you are president of the United States, that's just not the case.

In fact, if there is one theme that runs through every corner of the Obama presidency it is that he has been forced into partnerships that are so complex, difficult, and undependable that it must leave him yearning for the relative simplicity of good old fashioned enmities. This was illustrated yesterday as the president made the short walk across Lafayette Park to visit the U.S. Chamber of Commerce, symbolic headquarters of the U.S. business community, a group with which the president has come to realize he must work more closely going forward.

But in and amid all those complicated relationships, which are the most difficult? Naturally, there are many ways to measure this but we'll stick with one: Which among the most difficult are most likely to blow up in his face during the next two years?

Here's the verdict:

10. China
This, the most important international bilateral relationship, is both difficult and likely to be relatively stable because it is so complex. There is so much economic co-dependency here that the political issues are likely to work themselves out. Over the next two years trade and currency tensions may grow, but it is unlikely that either side will flirt with a big blow up prior to the 2012 leadership change in China or the presidential elections that same year in the U.S.

9. Russia
China is likely to be the U.S. most important international counterpart in the decade ahead but Russia remains the wildcard among the major powers. Stephen Cohen summed it up well on "Morning Joe" this morning: Russia's the biggest country in landmass, the leader in energy output and it has all those nuclear weapons. It also has a massive Muslim population, related challenges in its near abroad, memories of empire and what might politely be called a mischievous streak when it comes to international challenges. Oh, and it is undergoing a demographic meltdown and it is suffering from a divided less-than-dependably friendly political leadership. It's at the bottom of this list primarily because of the "next two years" focus of our metric.

8. Israel
Israel is the United States' most dependable friend in the Middle East and a vital ally. That said it is also facing massively unsettling changes from within and without that are creating enormous pressures on its political leaders. The Bibi-Barack marriage was never exactly made in Heaven but as the Israelis face demographic pressures at home, the Hezbollah take-over of Lebanon, instability in Jordan and Egypt, the prospect of a nuclear Iran, growing international pressure to cut a deal with the Palestinians and seeming growing inability of the Palestinians to cut a deal due to their own internal divisions ... what was difficult is going to get any easier. While many expect Netanyahu to offer his own concessions and a roadmap to progress sometime soon, there is real concern even among his supporters whether he can go far enough to break the logjam in the peace process. If he can't, pressure will build in this already fraught partnership.

7. Egypt
Egypt nudges out Israel only because it is so volatile right now and we don't know where the current unrest now heading into its third week is likely to head. One thing we do know, there are almost no circumstances in which the relationship will be easier for the United States. If there are massive reforms, a more pluralistic Egypt will be harder to deal with than an autocracy with a fairly dependable ally at the helm. If the current regime holds, they will never trust the U.S. in the same way as they did prior to this crisis.

6. Democrats in the Congress
Will Rogers said, "I'm not a member of any organized party, I'm a Democrat!" And as far as we know he never sat at a cocktail party between bickering leaders like Nancy Pelosi and Steny Hoyer or Harry Reid and Chuck Schumer. (Although, Pelosi clearly had a little celebratory sip of champagne last night to celebrate the departure of Jane Harmon, a longtime thorn in her side.) Pick an issue from fighting the deficit to rationalizing our regulatory framework to investing in energy infrastructure, you'll find both Obama's biggest supporters and some of his most difficult opponents in his own party.

Read on

Be afraid. Be very afraid. Mainstream, rock-ribbed, you-can't-make-me-flinch Republicans are. One former leader of the party I spoke with the other night said, "We've never seen anything like them. The Gingrich 'Contract with America' revolution was mild by comparison." Representative Bob Inglis, attacking the play to the lowest-common I.Q. of the base, said, "We're getting what we deserve."

America's first know-nothings were a mid-19th century collection of nativists who dreaded "foreign" influences on the American way of life. Reactionary as they were, we may someday see them as a collection of Rhodes Scholars and Nobel Prize Winners compared to their lineal political descendents who make up the current crew of Republican extremists now flexing their recently pumped up muscles in the Congress. Knowing nothing would be an improvement for this group which defiantly embraces the wrong, the indefensible, the illogical and the absurd with their only apparent criteria for taking a position being that it feels good for their adrenaline-stoked base. Facts, science, knowledge, and reality are all seen as the tools of elites, weapons against common folks who have gotten along just fine believing in foolish ideas for all these years.

The roots for the current movement could be found in the arguments of creationists against teaching the science of evolution in the schools. But today we have a new generation of fundamentalists ... climate creationists, foreign policy creationists, deficit creationists ... for whom arithmetic and history are simply the tools of the devil. They invoke the founders but sound more like their contemporaries in England who argued that the reason that British hikers were finding fish fossils in the mountains of England had nothing to do with where seas once might have been millions of years before and instead was a consequence of God putting the fossils there to trick people into doubting the literal word of the Bible.

In just the past couple of weeks since the election we have seen half a dozen examples of this next generation know-nothingism, this translation of a dumbed-down zeitgeist into a new movement that might be called Snookiism.

• On the foreign policy front we have Senator Jon Kyl of Arizona blocking prompt consideration of the new START deal with Russia -- despite the fact that without it we have no way of regaining on-the-ground inspection of Russian nuclear facilities, despite the fact that if it fails it will strengthen anti-American elements in the Russian government, despite the fact that there is broad bi-partisan support among the leadership of the policy community for the deal-because the Sarah Palin wing of his party sees foot dragging as a way to win political points and a few concessions on nuclear modernization here in the U.S. Palin has counseled against "hasty consideration" of the treaty. Sarah Palin is offering foreign policy advice? And people are taking it? Shouldn't it matter that she has no experience in this area? No credentials? No credibility?
• The battle for the House Energy and Commerce chairmanship has illustrated well how truly demented this debate has become. In order to promote his own candidacy to be chairman, Texas Representative Joe Barton has circulated a Rush Limbaugh authored commentary on the front runner for the position, Rep. Fred Upton, in which an attempt is made to discredit Upton due to the fact that he actually appears to believe in (at least some of) the science surrounding climate change. The implication: you can't be a true Republican and believe in science. This impression is only amplified in light of the argument from another contender, Rep. John Shimkus who has offered his belief in the literal interpretation of the Bible as his reason for not believing in climate change. (After the flood, God said it wouldn't happen again.) I've got nothing against the Bible, believe me. But do we really want to use it to predict the weather?
• On the economic front, we have a couple of recent examples where representatives of the political party that gave the United States the biggest budget deficits in its history are now arguing for policies that turn on a balanced blend of bad arithmetic and bad faith. For example, as Steven Pearlstein notes in yesterday's Washington Post, the argument that tax cuts ought to be preserved for those making over $250,000 because they are primarily small business owners who are busy creating jobs is "largely bogus." The fact is only a tiny percentage of small business owners make over $250,000 a year and of those most are big hedge funds and law firms. In the same vein, while Mitch McConnell undergoes a battlefield conversion to the cause of banning earmarks, few who pushed him there want to focus on the fact that earmarks account for only a fraction of one percent of the federal budget and are in fact, as issues go, not largely but totally bogus, essentially irrelevant. (The fact that Tea Party favorites from Rand Paul to Michele Bachmann can't quite give them up is indicative of how these leaders are counting on their constituents disregard of the facts to give them a free pass when it comes to bald-faced hypocrisy.)
• And back to Representative Inglis, as part of blowing off steam after his defeat he has confided in several folks that as the extremists were beating up on him, he was offered absolution of sorts by one particularly prominent champion of the religious right who told him he could regain support if only he would support the view that President Obama was actually born in another country. Inglis, to his credit, has denounced the birther nonsense and gone on to call other completely fabricated, fact-free positions like the "death panels" promoted by Half-Term Governor Palin and her flock, "just the lowest form of political leadership. It's not leadership. It's demagoguery."

Some Republicans take comfort in the fact that the Tea Party isn't really a party and had no real hierarchic organization or unified platform in the last election. They see it more as an emotional spasm, the Perot Party Version 2010, and that it will pass. But the 110 newly elected representatives on Capitol Hill who were elected with some Tea Party affiliation are now starting to coalesce into a driving force. If they can effectively form and maintain the discipline of a caucus then they have a chance at further institutionalizing and preserving their movement.

In some respects this might be seen as democracy at work. The problem is we are taking an affliction of democracy -- ignorance -- and turning it into a political movement. This may be disturbing to all those who have a passing interest in the facts, but it creates a special burden for those who must oppose the movement, because those on the other side are actually immune to rational argument, by definition allergic to it.

It now falls to the mainstream Republican leadership, especially to presumptive Speaker John Boehner, to control this group and limit its worst traits. And all spirited Americans who can read and write ought to be pulling for him. Because if he fails, America will face the threat of the spread of a strain of reckless demagoguery unprecedented in our history, a Snookidemic that threatens to effectively lobotomize the body politic.

I am moderating a conference today here in Chicago for a group of large institutional investors. Needless to say, I will report back on what I learn unless it is really valuable information, in which case I will keep the information to myself, move my chips to the right number on the roulette table and cash out.

That said, I wanted to leave you with the answer to a burning question on your minds: Who emerged from Tuesday's elections as the most important political voice in the United States?

No, it's clearly not President Shellacking. He may re-emerge, but that will take new ideas. Speaker-to-be John Boehner (R-OH)? Nope, same reason. First of all, he is a workhorse and not a show horse. That's not a bad thing. But he's no limelight-hogging Newt, nor is he a creativity engine. Mama Grizzly? Ha -- although she will probably remain an energizing force for a large cross-section of Republican voters…

Might it be Mitt Romney, who just by happenstance had an op-ed in the Washington Post Wednesday almost as if to say, "Gentlemen, start your engines…"? Could be -- Republicans tend to pick the runner-up from the last election cycle, and he has many attributes that could make him a front runner in the current environment. Congressman Paul Ryan (R-WI)? One could only hope. New York Mayor Mike Bloomberg? I light a candle every night.

No, the most important political voice in U.S. politics today is … British Prime Minister David Cameron. Listen to the new Republican agenda or at least the new Republican rhetoric -- cut entitlements, be courageous, battle the deficit, and make the hard choices. While this language has been batted around before by the party of big deficits that the GOP became as far back as the Reagan era, you see a glint in the eyes of the new leadership when they speak these words (viz. Tim Pawlenty today on "Morning Joe"… in a pretty impressive performance).

Why the glint? They have seen the blueprint and they have seen it can work. At least that's the sense that's in the air. Cameron … and to some extent French President Nicolas Sarkozy … are the new heroes of courage, and of speaking truth to special interests. This is not to deny their flaws … it is to recognize their accomplishments to date and the resonance they have.

Having said that, I must acknowledge again, misreading Cameron ranks high atop the long list of blown calls I have made here in this space … and who knows, I could be wrong about him twice. I underestimated him. And every day I must live with that -- most recently watching with admiration the one-two punch of his bravely cutting defense budgets and then, just as bravely, compensating for it in a historic way through diplomacy with an ancient enemy via the recent and innovative defense cooperation agreement with France. But it would also be a serious mistake for Democrats in the United States to underestimate the power or appeal his budget-cutting, fiscally responsible, courageous approaches might have here in this country.

It is conventional wisdom that U.S. elections seldom turn on foreign-policy issues. Armies travel on their stomachs and so do American voters. It's all about the pocketbook. But every so often the pocketbook has a foreign-policy component, which is the case this year -- and it has led to a rather extraordinary shift.

This is the first election in U.S. history in which the most important foreign-policy issue is China. It won't be the last.

Two years ago we had one of those rare elections in which foreign policy mattered. But back then, even in the midst of an historic economic crisis, the foreign-policy focus was on the Iraq War, which served as a referendum on the Bush administration's handling of the war on terror. In 2004 and 2006, the war on terror was the dominant foreign-policy issue. In 2000 foreign policy was not central, but to the extent it played a role, it was it was all about the vision for U.S. leadership in the post-Cold War era. The 1996 vote had a similar theme, plus some focus on the ongoing small wars, notably the upsets in the former Yugoslavia. The 1992 election was influenced by the end of the Cold War and the first Gulf War. During the Reagan Era Cold War issues drove the agenda. Jimmy Carter was bounced from office largely due to his impotence in the face of the Iranian hostage crisis. Prior to that Vietnam and the Cold War were central from 1964-1972.

But during this election cycle the subject of the United States' two wars hardly came up. It is in fact, a tribute to the Obama administration's handling of those wars that, despite their potential to create the formation of political fault lines, they have not. On the contrary, they are one of the few areas in which there is a seeming confluence of views between the parties.

But if you look at campaign ads and listen to campaign rhetoric, China repeatedly arose. China was cited as our top economic rival and as an unfair competitor because of its currency policy, its potential to overtake the U.S. as a global economic leader, and especially its impact on U.S. workers. The giant sucking sound is coming from across the Pacific these days. But unlike that sound in the days of wacky Ross Perot, this time the giant sucking sound is accompanied by the ominous rumblings of a rising superpower -- that many politicians running this year had no problem framing as the United States' natural enemy in the 21st Century.

Much of it was demagoguery. But there was no other foreign policy issue that competed with it for prominence … with the exception of immigration in the border states; a coincidence that reflects a broader theme of turning inward, protectionism and isolationism that threatens to alter the fundamental nature of U.S. international engagement in the long run.

Call it what you will, but this election won't be the last in which China plays such a central role. This administration is also the first, as has been noted here in the past, for which the relationship with China was paramount among all those the United States has worldwide. It was also the first during which China played a central role in an issue outside its region -- as in the case of its important role in the Iranian nuclear issue. It was also the first during which Chinese views began to play a central role driving important international discussions -- from climate, to currency, to coordinating the global economic recovery.

It looks like President Obama's first major visitor of the new year will be Chinese President Hu Jintao. That is no coincidence either.

There are big shifts afoot this election day. And despite what you may read in tomorrow's papers, they have precious little to do with how many House seats the Republicans pick up in these midterm elections.

During Thursday night's episode of 30 Rock, the first clear sign that the show was being performed live and not on tape was the telltale stark, cool video feel of the images. Alec Baldwin's Jack Donaghy commented on it saying, "Does it seem weird in here to you? Everything looks like a Mexican soap opera."

Then he added, to Tina Fey's Liz Lemon, "My God I can see every line and pore in your face. It's like a YMCA climbing wall."

I kind of feel the same way about Washington at the moment. It's the election. It's the fact for a few weeks the focus of government shifts away from the monumental settings and practiced rituals that have all been carefully designed to show off politicians in the same way good lighting and a little Vaseline on the lens shows off aging actresses -- except in the case of D.C., the goal is to make those who serve look as though they are the ones with power, those who come and go at the whim of the people as though they were the constant, enduring elements of the U.S. power structure.

But then, during the home stretch of the election cycle when candidates are actually out campaigning, the settings and the lighting change. Everything seems less predictable. Gaffes and red-herrings drive the process. Stars stumble while unknowns are thrust center stage.

Read on

I've had a heck of a hard time trying to explain the Tea Party to my friends from outside the United States. This is counterintuitive because virtually every country in the world has its wacky fringe parties and many countries have wacky parties that are absolutely mainstream -- every bit as narrow-minded, jingoistic, religion-infused, and angry as the Tea Partiers. Could it be that the rest of the world actually -- despite everything -- has higher expectations of the United States than they do for themselves? 

That seems implausible. It's more likely that the consternation about the nature of the Tea Party movement is simply associated with its newness. Either that or a double standard. I'll leave that to you to decide.

But given the ever increasing strength spinning up this storm that's sweeping across the American landscape (Tropical Storm Sarah?), the world's questions will soon be answered. Tea Partiers will inevitably be elected. Maybe a bunch of them. And soon the world will have to deal with the policy initiatives of the Tea Party Caucus in the Congress.

To help prepare for this, I offer a snapshot of what could be the 5 Top Foreign Policy Initiatives of the Tea Party once it seizes the reins of power in America. This requires a leap of imagination since the primary Tea Party foreign-policy plank seems to be little more than "leave us alone or we'll kick your ass." But come to think of it, that perfect blend of isolationism, know-nothingism and bullying actually captures the primary themes of U.S. foreign policy for most of American history.

That said, my picks for the 5 Top Foreign Policy Initiatives:

1. Putting God Back into U.S. Foreign Policy, Part I
They'll drop all pretenses of getting along with anyone other than Israel in the Middle East. This is not necessarily good news in the long run for the Israelis. Introducing the concept of theo-realism, they will argue that our national interest, narrowly defined centers on keeping Israel safe ... for the Second Coming. At that point, of course, they believe that the Israeli-Palestinian problem will ultimately be solved not through negotiation but rather via rapture, in which all good Tea Partiers will be called to a higher place, far far away from the fighting. Of course, hating Islam will also factor into the reasons behind their policy shift.

2. Putting God Back Into Foreign Policy-Part II
Naturally, Stephen Hawking's visa will be pulled and he will be placed on a new TSA watch-list designed to keep out people who pose a threat to our national "values." Hawking will be kept out due to his recent assertion that God was not necessary for the creation of the universe. That and the fact that he is a scientist. And a foreigner. Also: They will withhold U.S. support for the EU so long as it continues to support the current activities of CERN, the European particle physics research laboratory. They have seen "Angels and Demons" and they will demand that the entire facility be converted to being a retreat dedicated to "better understanding of the universe through prayer."

3. A New Global Environmental Effort
They will launch the "Global Accord on the Human Slaughter and Marketing of Exotic Species" also to be known as the Polar Bear Burger Act which will focus on the more efficient harvesting and marketing of endangered species that "God made delicious for a reason."

4. The Dome
Clearly, the wall at our border is not enough. Taking this idea to the next logical step, the Tea Party homeland security policy team will propose the building of an actual bubble over the entire U.S. It is still being debated whether it will include any entrances at all although sufficient exits will be made available for deportations. 

5. Back to Empire
Seeking to make America more sufficient, the Tea Partiers will undo what historians have called the greatest strategic error in American history and will work to annex Canada. The goal, they will argue, is to "tap into Canada's vast reserves of oil, gas, minerals, delicious endangered species, spoilable natural beauty and bland white people."

Interestingly, not only are these their top 5 foreign policy initiatives, these are their only foreign policy initiatives based on their guiding theory that "even having a foreign policy is a sign of misplaced priorities."