Sunday, October 31, 2010

Plug-In Hybrid Vehicle Costs Likely To Remain High, Benefits Modest For Decades

Date: Dec. 14, 2009

Contacts: Rebecca Alvania, Media Relations Officer

Alison Burnette, Media Relations Assistant

Office of News and Public Information

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Plug-In Hybrid Vehicle Costs Likely to Remain High, Benefits Modest for Decades

WASHINGTON -- Costs of plug-in hybrid electric cars are high -- largely due to their lithium-ion batteries -- and unlikely to drastically decrease in the near future, says a new report from the National Research Council. Costs to manufacture plug-in hybrid electric vehicles in 2010 are estimated to be as much as $18,000 more than for an equivalent conventional vehicle. Although a mile driven on electricity is cheaper than one driven on gasoline, it will likely take several decades before the upfront costs decline enough to be offset by lifetime fuel savings. Subsidies in the tens to hundreds of billions of dollars over that period will be needed if plug-ins are to achieve rapid penetration of the U.S. automotive market. Even with these efforts, plug-in hybrid electric vehicles are not expected to significantly impact oil consumption or carbon emissions before 2030.

The report looks at plug-in hybrid electric vehicles that can operate on electricity for 10 or 40 miles. The PHEV-10 is similar to the Toyota Prius but with a larger battery. The PHEV-40 is similar to the Chevrolet Volt; it has a larger motor and a much larger battery than the PHEV-10. The lithium-ion battery technology used to run these vehicles is the key determinant of their cost and range on electric power. Battery technology has been developing rapidly, but steep declines in cost do not appear likely over the next couple of decades because lithium-ion batteries are already produced in large quantities for cell phones and laptop computers. In the first generation of production, the PHEV-10 battery pack is estimated to cost about $3,300, and the PHEV-40 battery pack about $14,000. While these costs will come down, a fundamental breakthrough in battery technology, unforeseen at present, would be needed to make plug-ins widely affordable in the near future.

According to the committee that wrote the report, the maximum number of plug-in electric vehicles that could be on the road by 2030 is 40 million, assuming rapid technological progress in the field, increased government support, and consumer acceptance of these vehicles. However, factors such as high cost, limited availability of places to plug in, and market competition suggest that 13 million is a more realistic number, the report says. Even this more modest estimate assumes that current levels of government support will continue for several decades.

Most of the electricity used to power these cars will be supplied from the nation's power grid. If charged at night when the demand for electricity is lowest, the grid would be able to handle the additional demand for millions of plug-in hybrid electric vehicles, the report says. However, if drivers charge their vehicles at times of high demand, such as when they get home from work, the additional load could be difficult to meet unless new capacity is added. Smart meters, which bill customers based on time of use, may be necessary in order to encourage nighttime charging. In addition, some homes would require electrical system upgrades to charge their vehicle, which could cost more than $1,000.

Relative to hybrid vehicles, plug-in hybrid electric vehicles will have little impact on U.S. oil consumption before 2030, especially if fuel economy for conventional vehicles and hybrids continues to increase past 2020. PHEV-10s save only about 20 percent of the gasoline an equivalent hybrid vehicle would use, the report says. If 40 million PHEV-10s are operating in 2030, they would save about 0.2 million barrels of oil per day relative to less expensive hybrids, approximately 2 percent of current U.S. daily light-duty vehicle oil consumption. More substantial savings could be seen by 2050. PHEV-40s, which consume 55 percent less gasoline than hybrids, could have a greater impact on oil consumption.

Plug-in hybrid electric vehicles emit less carbon dioxide than equivalent conventional vehicles, but not less than hybrids after accounting for emissions at generating stations supplying their electrical power, the report says. Beyond 2030, assuming consumer acceptance, plug-in hybrid electric vehicles could account for significant reductions in U.S. carbon dioxide emissions, if electricity generation plants fired by fossil fuels were equipped with carbon capture and storage systems or replaced with renewable energy or nuclear-powered plants.

According to the report, a portfolio approach toward reducing U.S. dependence on oil is necessary for long-term success. This should include increasing the fuel efficiency of conventional vehicles and pursuing research, development, and demonstration into alternative strategies, including the use of biofuels, electric vehicles, and hydrogen fuel cell vehicles.

This study was sponsored by the U.S. Department of Energy. The National Academy of Sciences, National Academy of Engineering, Institute of Medicine, and National Research Council make up the National Academies. They are private, nonprofit institutions that provide science, technology, and health policy advice under a congressional charter. The Research Council is the principal operating agency of the National Academy of Sciences and the National Academy of Engineering. A committee roster follows.

Copies of Transitions to Alternative Transportation Technologies -- Plug-in Hybrid Electric Vehicles are available from the National Academies Press; at Reporters may obtain a copy from the Office of News and Public Information (contacts listed above).

Charles Lane - Obama's electric-car cult

Obama's electric-car cult

By Charles Lane
Saturday, October 30, 2010; 12:00 AM

General Motors' Chevy Volt is finally here, heralded by a new TV ad. "This is America, man," the narrator purrs, as the sun rises over a solitary Volt tooling along a country road. "So doesn't it make sense that we build an electric car that goes far, really far?"

The pitch is lyrical, almost religious. It asks consumers to make an economic and technological leap of faith - just as both GM and the firm's biggest backer, the Obama administration, have invested, financially, politically and psychologically, in plug-in hybrids and other electric vehicles.

How else to explain the fact that both Washington and Detroit persist in their costly electric-car project despite mounting evidence that the vehicles serve no particular purpose, environmental or economic?

Maybe it was karma, but the Volt's launch coincided with publication of a 72-page report by J.D. Power and Associates that confirmed, in devastating detail, what many other experts have found: Electric cars still cost too much, even with substantial federal subsidies for both manufacturers and consumers, to attract more than a handful of wealthy buyers - and this will be true for at least another decade.

What little gasoline savings the vehicles achieve could be had through cheaper alternative means. And electrics don't reliably reduce greenhouse gas emissions, since, as often as not, the electricity to charge their batteries will come from coal-fired plants.

The Obama Energy Department has suggested that, with the help of federal money, manufacturers can ramp up mass production and bring the price of electric-car battery packs down 70 percent by 2014 - thus rendering the cars more affordable.

But J.D. Power is skeptical. "Declines of any real significance are not anticipated during the next 5 years," the report notes, adding that "the disposal of depleted battery packs presents yet another environmental challenge."

Nor are industry and government close to resolving the lack of a nationwide recharging infrastructure - or the vehicles' poor performance in cold weather or on hilly terrain.

Fine print on the Volt ad promises just "25-50 miles of electric driving in moderate conditions." Translation: Much of the time the car will be running on gas, just like ones that cost far, far less than the four-seat Volt's price of $33,500 (after a $7,500 federal tax credit).

In short, the Obama administration's commitment of $5 billion in loans and grants for electric cars is the biggest taxpayer rip-off since corn-based ethanol. It benefits no one but a few well-to-do car buyers and politically connected companies. Any "green" jobs these rent-seeking firms create will vanish when consumers reject their products and/or the subsidies cease.

The administration's objectives - reducing carbon emissions and U.S. dependence on foreign oil - are legitimate. But $5 billion wasted on electrics is $5 billion that cannot be used to meet these goals. And then there's the private capital that Obama's policy is attracting to this losing proposition.

J.D. Power suggests, sensibly: "Rather than rushing to commercialize [battery-electric vehicles], the industry might be better served to pursue continued fuel economy improvements in [internal combustion engines] and the mass production of [conventional hybrids]."

For a president who claims to make policy based on "facts and science and argument," lavishing subsidies on electric cars is an intellectual scandal. The J.D. Power study is hardly an outlier. It jibes with similar work by Deloitte Touche, Boston Consulting Group, Roland Berger Strategy Consultants, professor Henry Lee of Harvard's Belfer Center for Science and International Affairs, and the Massachusetts Institute of Technology's Energy Initiative.

Last year the National Academy of Sciences' National Research Council concluded: "Subsidies in the tens to hundreds of billions of dollars. . .will be needed if plug-ins are to achieve rapid penetration of the U.S. automotive market. Even with these efforts, plug-in hybrid electric vehicles are not expected to significantly impact oil consumption or carbon emissions before 2030."

Yet, like a rural voter clinging to his guns, the Obama administration brushes aside the experts because - well, who knows why? Perhaps subsidizing electric cars helps a Democratic administration make corporate welfare and tax breaks for the wealthy seem progressive. It's possible President Obama feels bound by his grandiose campaign promise to put a million plug-in hybrid electric vehicles on the road by 2015.

Or maybe Republicans aren't the only ones susceptible to ideological obstinacy and magical thinking after all.

The writer is a member of the editorial page staff. His e-mail address is

Friday, October 29, 2010

Send Biden back to history class

Send Biden back to history class
Examiner Editorial
October 28, 2010
(AP Photo/Matt Rourke)

Vice President Biden has regularly delivered impromptu comments of dubious logic and questionable relevance since assuming the second highest office in the land. His remarks are usually harmless, though calling Obamacare "a big deal" was both crass and embarrassing. Now Biden has made a statement that exposes an apparent ignorance of American history that is genuinely disturbing coming from the man who is one heartbeat away from the presidency.

Speaking on a campaign swing in New York on Wednesday, Biden offered this gem about the role of government: "Every single great idea that has marked the 21st century, the 20th century and the 19th century has required government vision and government incentive. In the middle of the Civil War, you had a guy named Lincoln paying people $16,000 for every 40 miles of track they laid across the continental United States. ... No private enterprise would have done that for another 35 years." Biden's words are perfectly suitable as a liberal Democrat's expression of blind faith in the good intentions of politicians and bureaucrats, but they also reflect a fantasy version of American history.

As the Cato Institute's Tad DeHaven pointed out, private enterprise, not government, built America's railroads. To that end, DeHaven quotes Cato transportation expert Randall O'Toole: "Early American railroads were built almost entirely with private funds. These railroads provided such superior transportation that by 1850 they had put most toll roads and canals out of business. Individual states still competed with one another for business -- and may have offered various favors to the railroads serving those states. ... For the most part, however, no federal and few state subsidies went to railroads in the eastern United States."

As for President Lincoln and the Transcontinental Railroad, DeHaven points us to Jim Powell, another Cato scholar, who notes that the federal subsidies reflected the fact that there was no market then for such a railroad line. Ultimately, the federal government's effort to spend the grandiose scheme into being succeeded in building a transcontinental rail line, but along the way it also inspired Credit Mobilier, one of the worst government corruption scandals in American history.

Powell explains why Credit Mobilier was especially rotten: "Thomas Durant, Oakes Ames, and other officers of the Union Pacific Railroad, which went a thousand miles west from Council Bluffs, Iowa, started the Credit Mobilier company in 1867 and retained it to do the construction. Credit Mobilier distributed to shareholders profits estimated at between $7 million and $23 million, depleting the Union Pacific's resources. In an effort to stop congressional investigations, the officers bribed Speaker of the House James G. Blaine and other congressmen with Credit Mobilier stock. ... The Union Pacific Railroad fell deep into debt, without enough revenue from passengers or shippers, and went bankrupt in 1893."

President Reagan was right: "The problem with our liberal friends is that they know so many things that just aren't true."

Obama Is An Intellectual – Really He Is!

Obama Is An Intellectual – Really He Is!

From where else but the New York Times:

In Writings of Obama, a Philosophy Is Unearthed

October 27, 2010

When the Harvard historian James T. Kloppenberg decided to write about the influences that shaped President Obama’s view of the world, he interviewed the president’s former professors and classmates, combed through his books, essays, and speeches, and even read every article published during the three years Mr. Obama was involved with the Harvard Law Review (“a superb cure for insomnia,” Mr. Kloppenberg said). What he did not do was speak to President Obama.

“He would have had to deny every word,” Mr. Kloppenberg said with a smile. The reason, he explained, is his conclusion that President Obama is a true intellectual — a word that is frequently considered an epithet among populists with a robust suspicion of Ivy League elites.

In New York City last week to give a standing-room-only lecture about his forthcoming intellectual biography, “Reading Obama: Dreams, Hopes, and the American Political Tradition,” Mr. Kloppenberg explained that he sees Mr. Obama as a kind of philosopher president, a rare breed that can be found only a handful of times in American history.

“There’s John Adams, Thomas Jefferson, James Madison and John Quincy Adams, then Abraham Lincoln and in the 20th century just Woodrow Wilson,” he said.

To Mr. Kloppenberg the philosophy that has guided President Obama most consistently is pragmatism, a uniquely American system of thought developed at the end of the 19th century by William James, John Dewey and Charles Sanders Peirce. It is a philosophy that grew up after Darwin published his theory of evolution and the Civil War reached its bloody end. More and more people were coming to believe that chance rather than providence guided human affairs, and that dogged certainty led to violence.

Pragmatism maintains that people are constantly devising and updating ideas to navigate the world in which they live; it embraces open-minded experimentation and continuing debate. “It is a philosophy for skeptics, not true believers,” Mr. Kloppenberg said.

And yet Mr. Obama has proved himself to be probably the most closed minded thinker and least compromising and most thoroughly dogmatic political figure we have ever seen on the American stage.

Those who heard Mr. Kloppenberg present his argument at a conference on intellectual history at the City University of New York’s Graduate Center responded with prolonged applause. “The way he traced Obama’s intellectual influences was fascinating for us, given that Obama’s academic background seems so similar to ours,” said Andrew Hartman, a historian at Illinois State University who helped organize the conference.

Mr. Kloppenberg’s interest in the education of Barack Obama began from a distance. He spent 2008, the election year, at the University of Cambridge in England and found himself in lecture halls and at dinner tables trying to explain who this man was.

Did Mr. Kloppenberg ever get to see Mr. Obama’s transcripts? (Just kidding.)

By the way, we can’t help but notice what an aptly soundly name Kloppenberg is. (It reminds us of the line from the famous British symphony conductor, Thomas Beecham once said about a notorious atonal modern composer: "Stockhausen? Stockhausen? I think I may have stepped in some once.")

Race, temperament and family history are all crucial to understanding the White House’s current occupant, but Mr. Kloppenberg said he chose to focus on one slice of the president’s makeup: his ideas.

In the professor’s analysis the president’s worldview is the product of the country’s long history of extending democracy to disenfranchised groups, as well as the specific ideological upheavals that struck campuses in the 1980s and 1990s. He mentions, for example, that Mr. Obama was at Harvard during “the greatest intellectual ferment in law schools in the 20th century,” when competing theories about race, feminism, realism and constitutional original intent were all battling for ground.

"Ferment" is precisely the right word, too.

Mr. Obama was ultimately drawn to a cluster of ideas known as civic republicanism or deliberative democracy, Mr. Kloppenberg argues in the book, which Princeton University Press will publish on Sunday. In this view the founding fathers cared as much about continuing a discussion over how to advance the common good as they did about ensuring freedom.

They just never bothered to write any of their feelings along these lines down. But with the right amount of imagination, one can easily make up all most anything.

Taking his cue from Madison, Mr. Obama writes in his 2006 book “The Audacity of Hope” that the constitutional framework is “designed to force us into a conversation,” that it offers “a way by which we argue about our future.” This notion of a living document is directly at odds with the conception of Justice Antonin Scalia of the Supreme Court, who has spoken of “the good, old dead Constitution.”

Mr. Kloppenberg’s entire argument appears to be entirely based on a few paragraphs from Mr. Obama’s second autobiography, ‘The Audacity Of Hope,’ which we have appended below.

Mr. Kloppenberg compiled a long list of people who he said helped shape Mr. Obama’s thinking and writing, including Weber and Nietzsche, Thoreau and Emerson, Langston Hughes and Ralph Ellison.

Sorry, but it is simply laughable to put the poet Langston Hughes and the novelist Ralph Ellison on any list with the others. Mr. Kloppenberg would appear to be a pea brain, to put it nicely.

Contemporary scholars like the historian Gordon Wood, the philosophers John Rawls and Hilary Putnam, the anthropologist Clifford Geertz and the legal theorists Martha Minow and Cass Sunstein (who is now working at the White House) also have a place.

Despite the detailed examination, Mr. Kloppenberg concedes that President Obama remains something of a mystery.

“To critics on the left he seems a tragic failure, a man with so much potential who has not fulfilled the promise of change that partisans predicted for his presidency,” he said. “To the right he is a frightening success, a man who has transformed the federal government and ruined the economy.”

Where did they ever get such a crazy idea?

He finds both assessments flawed. Conservatives who argue that Mr. Obama is a socialist or an anti-colonialist (as Dinesh D’Souza does in his book “The Roots of Obama’s Rage”) are far off the mark, he said.

“Adams and Jefferson were the only anti-colonialists whom Obama has been affected by,” he told the audience in New York. “He has a profound love of America.”

He sure has an odd way of showing it. Still, Mr. Kloppenberg has made his pronouncement. And we must all bow down.

In fact, any casual reading of Audacity, which is the only place where Obama even bothers to mention the founding fathers, reveals that Obama has a "Cliff Notes" understanding of the framers at best.

And his opposition to inequality stems from Puritan preachers and the social gospel rather than socialism.

Mr. Obama never met a preacher or read about the "social gospel" — whatever that is — until he met Reverend Wright as a full grown adult and long after he had fully embraced socialism.

Besides, as we have oft noted, Mr. Wright’s so-called "Christianity" has very little to do with religion and everything to do with Marxist ‘Black Liberation Theology.’

As for liberal critics, Mr. Kloppenberg took pains to differentiate the president’s philosophical pragmatism, which assumes that change emerges over decades, from the kind of “vulgar pragmatism” practiced by politicians looking only for expedient compromise. (He gave former President Bill Clinton’s strategy of “triangulation” as an example.)

In other words, Obama’s is a kind of pragmatism which brooks no compromise. Isn’t it funny that even Mr. Kloppenberg has figured out that.

Not all of the disappointed liberals who attended the lecture in New York were convinced that that distinction can be made so easily. T. J. Jackson Lears, a historian at Rutgers University, wrote in an e-mail that by “showing that Obama comes out of a tradition of philosophical pragmatism, he actually provided a basis for criticizing Obama’s slide into vulgar pragmatism.”

And despite Mr. Kloppenberg’s focus on the president’s intellectual evolution, most listeners wanted to talk about his political record.

“There seemed to be skepticism regarding whether Obama’s intellectual background actually translated into policies that the mostly left-leaning audience could get behind,” Mr. Hartman said. “Several audience members, myself included, probably view Obama the president as a centrist like Clinton rather than a progressive intellectual as painted by Kloppenberg.”

Oh, he’s a "centrist," all right. A "centrist" of the Hugo Chavez school.

Still, what an amusing article. Naturally, Mr. Kloppenberg is the chairman of history department at Harvard University. Only a professor could stack ‘Stockhausen’ that high.

Of course, the truly sad thing is that Mr. Obama can’t even fake being an intellectual. After all, how many "intellectuals" wouldn’t know how to pronounce the word "corps"? How many would commit the thousand of other gaffes he has been prone to?

But we must continue the pretense that all conservatives are stupid and all liberals are geniuses. Otherwise, there just wouldn’t be any explanation as to why they are always so obviously wrong and laughably out of touch.

For the record, here is aforementioned excerpt from Mr. Obama’s second autobiography, ‘The Audacity Of Hope,’ pp 55-56:

The answer I settle on—which is by no means original to me—requires a shift in metaphors, one that sees our democracy not as a house to be built, but as a conversation to be had. According to this conception, the genius of Madison’s design is not that it provides us a fixed blueprint for action, the way a draftsman plots a building’s construction. It provides us with a framework and with rules, but fidelity to these rules will not guarantee a just society or assure agreement on what’s right. It won’t tell us whether abortion is good or bad, a decision for a woman to make or a decision for a legislature. Nor will it tell us whether school prayer is better than no prayer at all.

What the framework of our Constitution can do is organize the way by which we argue about our future. All of its elaborate machinery—its separation of powers and checks and balances and federalist principles and Bill of Rights—are designed to force us into a conversation, a “deliberative democracy” in which all citizens are required to engage in a process of testing their ideas against an external reality, persuading others of their point of view, and building shifting alliances of consent. Because power in our government is so diffuse, the process of making law in America compels us to entertain the possibility that we are not always right and to sometimes change our minds; it challenges us to examine our motives and our interests constantly, and suggests that both our individual and collective judgments are at once legitimate and highly fallible.

The historical record supports such a view. After all, if there was one impulse shared by all the Founders, it was a rejection of all forms of absolute authority, whether the king, the theocrat, the general, the oligarch, the dictator, the majority, or anyone else who claims to make choices for us. George Washington declined Caesar’s crown because of this impulse, and stepped down after two terms. Hamilton’s plans for leading a New Army foundered and Adams’s reputation after the Alien and Sedition Acts suffered for failing to abide by this impulse. It was Jefferson, not some liberal judge in the sixties, who called for a wall between church and state—and if we have declined to heed Jefferson’s advice to engage in a revolution every two or three generations, it’s only because the Constitution itself proved a sufficient defense against tyranny.

It’s not just absolute power that the Founders sought to prevent. Implicit in its structure, in the very idea of ordered liberty, was a rejection of absolute truth, the infallibility of any idea or ideology or theology or “ism,” any tyrannical consistency that might lock future generations into a single, unalterable course, or drive both majorities and minorities into the cruelties of the Inquisition, the pogrom, the gulag, or the jihad. The Founders may have trusted in God, but true to the Enlightenment spirit, they also trusted in the minds and senses that God had given them. They were suspicious of abstraction and liked asking questions, which is why at every turn in our early history theory yielded to fact and necessity. Jefferson helped consolidate the power of the national government even as he claimed to deplore and reject such power. Adams’s ideal of a politics grounded solely in the public interest—a politics without politics—was proven obsolete the moment Washington stepped down from office. It may be the vision of the Founders that inspires us, but it was their realism, their practicality and flexibility and curiosity, that ensured the Union’s survival.

You see, the Constitution is a ‘living document’!

What an amazingly original thought from such a towering intellect.

Thursday, October 28, 2010

Philip Bredesen: ObamaCare's Incentive to Drop Insurance -

ObamaCare's Incentive to Drop Insurance
My state of Tennessee could reduce costs by over $146 million using the legislated mechanics of health reform to transfer coverage to the federal government.


One of the principles of game theory is that you should view the game through your opponent's eyes, not just your own.

This past spring, the Patient Protection and Affordable Care Act (President Obama's health reform) created a system of extensive federal subsidies for the purchase of health insurance through new organizations called "exchanges." The details of these subsidies were painstakingly worked out by members of my own political party to reflect their values: They decided who was to benefit from the subsidies and what was to be purchased with them. They paid a lot of attention to their own strategies, but what I believe they failed to consider properly were the possible strategies of others.

Our federal deficit is already at unsustainable levels, and most Americans understand that we can ill afford another entitlement program that adds substantially to it. But our recent health reform has created a situation where there are strong economic incentives for employers to drop health coverage altogether. The consequence will be to drive many more people than projected—and with them, much greater cost—into the reform's federally subsidized system. This will happen because the subsidies that become available to people purchasing insurance through exchanges are extraordinarily attractive.

In 2014, when these exchanges come into operation, a typical family of four with an annual income of $90,000 and a 45-year-old policy holder qualifies for a federal subsidy of 40% of their health-insurance cost. For that same family with an income of $50,000 (close to the median family income in America), the subsidy is 76% of the cost.

One implication of the magnitude of these subsidies seems clear: For a person starting a business in 2014, it will be logical and responsible simply to plan from the outset never to offer health benefits. Employees, thanks to the exchanges, can easily purchase excellent, fairly priced insurance, without pre-existing condition limitations, through the exchanges. As it grows, the business can avoid a great deal of cost because the federal government will now pay much of what the business would have incurred for its share of health insurance. The small business tax credits included in health reform are limited and short-term, and the eventual penalty for not providing coverage, of $2,000 per employee, is still far less than the cost of insurance it replaces.

For an entrepreneur wanting a lean, employee-oriented company, it's a natural position to take: "We don't provide company housing, we don't provide company cars, we don't provide company insurance. Our approach is to put your compensation in your paycheck and let you decide how to spend it."

But while health reform may alter the landscape for small business in unexpected ways, it also opens the door to what is a potentially far larger effect on the Treasury.

The authors of health reform primarily targeted the uninsured and those now buying expensive individual policies. But there's a very large third group that can also enter and that may have been grossly underestimated: the 170 million Americans who currently have employer-sponsored group insurance. Because of the magnitude of the new subsidies created by Congress, the economics become compelling for many employers to simply drop coverage and help their employees obtain replacement coverage through an exchange.

Let's do a thought experiment. We'll use my own state of Tennessee and our state employees for our data. The year is 2014 and the Affordable Care Act is now in full operation. We're a large employer, with about 40,000 direct employees who participate in our health plan. In our thought experiment, let's exit the health-benefits business this year and help our employees use an exchange to purchase their own.

First of all, we need to keep our employees financially whole. With our current plan, they contribute 20% of the total cost of their health insurance, and that contribution in 2014 will total about $86 million. If all these employees now buy their insurance through an exchange, that personal share will increase by another $38 million. We'll adjust our employees' compensation in some rough fashion so that no employee is paying more for insurance as a result of our action. Taking into account the new taxes that would be incurred, the change in employee eligibility for subsidies, and allowing for inefficiency in how we distribute this new compensation, we'll triple our budget for this to $114 million.

Editorial Writer Joe Rago on GOP plans for health-care reform.

Now that we've protected our employees, we'll also have to pay a federal penalty of $2,000 for each employee because we no longer offer health insurance; that's another $86 million. The total state cost is now about $200 million.

But if we keep our existing insurance plan, our cost will be $346 million. We can reduce our annual costs by over $146 million using the legislated mechanics of health reform to transfer them to the federal government.

That's just for our core employees. We also have 30,000 retirees under the age of 65, 128,000 employees in our local school systems, and 110,000 employees in local government, all of which presents strategies even more economically attractive than the thought experiment we just performed. Local governments will find eliminating all coverage particularly attractive, as many of them are small and will thus incur minor or no penalties; many have health plans that will not meet the minimum benefit threshold, and so they'll see a substantial and unavoidable increase in cost if they continue providing benefits under the new federal rules.

Our thought experiment shows how the economics of dropping existing coverage is about to become very attractive to many employers, both public and private. By 2014, there will be a mini-industry of consultants knocking on employers' doors to explain the new opportunity. And in the years after 2014, the economics just keep getting better.

The consequence of these generous subsidies will be that America's health reform may well drive many more people than projected out of employer-sponsored insurance and into the heavily subsidized federal system. Perhaps this is a miscalculation by the Congress, perhaps not. One principle of game theory is to think like your opponent; another is that there's always a larger game.

Mr. Bredesen, a Democrat, is the governor of Tennessee and the author of "Fresh Medicine: How to Fix Reform and Build a Sustainable Health Care System," just out by Atlantic Monthly Press.

TN Governor Finds Way To Flip Table On Feds

TN Governor Finds Way To Flip Table On Feds

by Peter Fotos
on October 28, 2010

I realize that I’m a little late in commenting on this story, but it seems like no one is talking about it. In last week’s Wall Street Journal, Tennessee Gov. Philip Bredesen submitted a shocking analysis of Obamacare by giving an example of how employers can and will drop coverage for their employees.

Amazingly, Gov. Bredesen notes that Tennessee could drop coverage for its state employees, pay the $2,000 per employee tax to the federal government, give their workers cash raises to compensate for the loss in health benefits, and still come out at least $146 million per year ahead. He writes:

With our current plan, they [state employees] contribute 20% of the total cost of their health insurance, and that contribution in 2014 will total about $86 million. If all these employees now buy their insurance through an exchange, that personal share will increase by another $38 million. We’ll adjust our employees’ compensation in some rough fashion so that no employee is paying more for insurance as a result of our action. Taking into account the new taxes that would be incurred, the change in employee eligibility for subsidies, and allowing for inefficiency in how we distribute this new compensation, we’ll triple our budget for this to $114 million.

Now that we’ve protected our employees, we’ll also have to pay a federal penalty of $2,000 for each employee because we no longer offer health insurance; that’s another $86 million. The total state cost is now about $200 million.

But if we keep our existing insurance plan, our cost will be $346 million. We can reduce our annual costs by over $146 million using the legislated mechanics of health reform to transfer them to the federal government.

Of course, while Tennessee will “save” $146 million, the federal taxpayer will be on the hook for the same amount when it comes time to put those state employees on the federal health insurance exchange or Medicaid.

Imagine if all states mimic the scenario Gov. Bredesen has laid out. Former Congressional Budget Office Director Doug Holtz-Eakin published a report indicating that the cost of federal insurance subsidies could be triple official projections, because many businesses would choose to drop coverage for their workers instead of offering insurance coverage. The result would be a fiscal implosion of immense proportion and the taxpayers will pay for it for generations to come.

In a way, Gov. Bredesen has figured out a way for states to get back at Washington for decades of fiscal abuse at the hands of the Medicaid program. States already dedicate nearly one-fifth of their budgets to Medicaid spending before any federal match, and that number will only increase as more and more Americans are forced to enroll in the program due to the new law.

The federal government has been forcing unfunded mandates on states for years, and now Governor Bredesen has presented a plan for payback. In chess, that’s called “checkmate.”

American Thinker: The Democrats' Final Recourse: Massive Vote Fraud

October 28, 2010
The Democrats' Final Recourse: Massive Vote Fraud
By Selwyn Duke
The reports are rolling in from all over the country. A Craven County, NC resident attempts to vote a straight Republican ticket but his choices come up straight Democrat four times, despite receiving assistance from poll workers. In NC's Lenoir County, registered Democrat Ervin Norville also tries to vote straight Republican but finds that his ballot has the names of several Democrat candidates selected. Boulder City, NV resident Joyce Ferrara says that when she and several others went to vote for Sharon Angle, they found that Senator Harry Reid's name was already checked off. In Dallas County, TX' congressional district 30, Democrat Eddie Bernice Johnson's name was the only one on the ballot in a few locations (no, she isn't running unopposed). And some states have been late in mailing out military absentee ballots, whose recipients, interestingly, are known for their Republican leanings.

These happenings are generally referred to as "mistakes" and "glitches," but if that's all they are, then we're witnessing a truly historic anomaly. Because either the mainstream media is now suppressing stories of mistakes and glitches benefitting Republicans, or the laws of probability have suddenly been rescinded and tossed coins are coming up donkey tails every time. Welcome to American elections, Venezuelan style.

I have long said that this election would see vote fraud of unprecedented magnitude. And it does seem that a perfect storm of such criminality is brewing. The Ninth Circuit Court of Appeals just struck down an Arizona law requiring proof of citizenship to vote, a treasonous act that facilitates vote fraud. Of course, some liberals are more forthcoming about their intentions; in Portland, ME and New York City, there is a push to allow non-citizens to vote. Not to be outdone, San Francisco seeks to allow even illegal aliens to cast ballots in school elections. Hey, why not? They're not illegals - they're undocumented Democrats.

Then there is the matter of the fox guarding the polling house. It has now been learned that the technicians who work on the Nevada voting machines that have been checking off Harry Reid's name are members of the Service Employees International Union (SEIU), a leftist organization that has given tens of millions of dollars to Democrats. (By the way, do you remember all the complaints about "antiquated" paper ballots after the 2000 election? I knew that all the talk about "hanging chads" and the need for modern technology would lead to vote fraud. After all, now elections can be swayed by a well-placed, skilled hacker and there's no paper trail.)

Add to this the fact that the left is more brazen than ever. For one thing, laymen liberals, like their judges, are very influenced by precedent. And the liberal delusion that George W. Bush stole the 2000 election - thus drawing first blood - gives leftists a handy rationalization for actually stealing elections. Second, Barack Obama's DOJ's refusal to prosecute the Philadelphia Black Panthers - despite videotape evidence of their voter intimidation - sends the message that the left has almost carte blanche to sway elections by any means necessary.

Most of all, though, we have to remember that leftists are, well, leftists. They are simply much more corrupt than those on the right. I know, this sounds like blind partisanship, so I'll explain.

I'll introduce this with a point once made by former military-intelligence man Ralph Peters about how you could understand the Taliban: You have to view them as aliens. His point was that most people have trouble conceiving of mindsets radically different from their own and, consequently, often mistakenly assume that others operate by the same principles they do. Even liberals recognize this phenomenon - when they warn of "ethnocentrism." I, however, am more concerned about conservocentrism.

If you're an average bright-eyed conservative and you really want to understand leftists, begin by viewing them as aliens. Because they really aren't like you, and the difference isn't simply ideology, either. They truly are far more dishonest, deceitful and manipulative than conservatives.

In explaining why this is so, I'll again draw an analogy to Islamists. Many have pointed out that Western and Islamic thought dictate very different things with respect to honesty. While the West's formative religion, Christianity, teaches that lying is a sin, period, Islam states that lying to an infidel for the glory of Allah is a good. In other words, Christians can lie, but they must commit what they consider a sin to do so. Muslims can do so with what they view as divine approval.

Another difference is that Islamic thought includes a concept known as "dual truth," which basically states, writes American Thinker's Patrick Poole, "that what may be true in the realm of religion may be contrary to what is true in nature." Thus, even if an action is forbidden in Islamic texts, Muslims may be able to take it in the "real world." It's always convenient when you have more than one "truth" with which to justify behavior.

This brings us to liberals. Like Islamists, they have more than one "truth" from which to choose, something they readily admit to with pronouncements such as "That is your truth; someone else's might be different." To be precise, however, they use the word "truth" loosely, as a synonym for taste, and don't actually believe in Truth, properly defined (i.e., divinely ordained morality). They are moral relativists.

What does this mean? It means the sky - or perhaps I should say the netherworld - is the limit for behavior restrictions. Unlike Islamists, they don't have to find their justifications in medieval texts or complex philosophical contortions, as their credo is simple: "If it feels good, do it." Without belief in anything that transcends man to use as a yardstick for behavior, they ultimately have nothing left to use but the "god within," which is just a gussied-up name for emotion. And their emotion-driven ends really do justify their means. If they feel conservatives are "evil," conservatives must be. And if they feel that any tactic necessary to vanquish that evil is fair game, it must be. Understand that beneath the light of their deified feelings, lying, cheating or stealing to win elections is not merely justifiable - it is a "good," and one they do with the only approval they need: self-approval. They are aliens from a planet much like the Hell described by the Devil in an old comic strip (in The New Yorker, I think) when he said, "There's no right or wrong down here. It's whatever works for you." It is a place where there is a wall of separation between man and Truth.

And the truth is that in this election, as in every one, some races will be close enough so that vote fraud can be a factor. So how should we proceed once results are in? First, conservatives need an attitude adjustment: They have to understand the nature of their enemy (as outlined above) and become warriors. We mustn't for a moment entertain the notion that the best thing for the nation after a suspicious loss is to concede the race graciously. Rather, the best thing for the nation is to oust the alien vote-snatchers from power by any moral means necessary.

Second, we must recognize that razor-close races almost always go Democrat for a reason (think: Al Franken in Minnesota) and view every such loss as a probable vote-fraud scenario. Then we must analyze exit polling - which has become a very precise science - for discrepancies between its findings and election results. And when they are found, the matter must be sifted to the very bottom.

Alien vote-snatchers are worse than murderers. They not only steal votes but also our future; they undermine the rule of law and threaten the republic itself. In a saner time, they would probably be hanged. And if it becomes apparent that the government - the Eric Holder DOJ, judges and others - has become so corrupt that it will preserve its power by negating the votes of the people, then we should consider our Founding Fathers' words: "whenever any Form of Government becomes destructive of these ends [life, liberty and the pursuit of happiness], it is the Right of the People to alter or to abolish it...."

Let's see if the attempt at alteration works this November 2.

Radical in the White House - National Review Online

Radical in the White House
Stanley Kurtz didn’t have to go to Kenya to figure out who Barack Obama really is.

Stanley Kurtz hit an Organizing for America nerve during Barack Obama’s campaign for president. Stanley, a Harvard-educated social anthropologist, is a senior fellow at the Ethics and Public Policy Center and has written for National Review and National Review Online for over a decade. When he started not only asking questions but digging into Barack Obama’s academic and activist past, the campaign tried to shut him down — literally, organizing a phone slamdown on Chicago radio.

Well, this still is America. And so Stanley has done what he is trained to do — research and present evidence to present a complete picture, in this case of the man who is currently president of the United States. The fruit of that project is a gripping, meticulous new book, Radical-in-Chief: Barack Obama and the Untold Story of American Socialism, which he discusses with me here.

KATHRYN JEAN LOPEZ: What is so bad about being a Radical-in-Chief?

STANLEY KURTZ: There are two key problems. First, Obama’s slow-motion socialism undercuts liberty and prosperity on behalf of a highly questionable view of fairness. Second, and at least as disturbing, Obama’s practice of disguising his ideological views is bad for democracy, which depends upon informed public choice.

LOPEZ: “Community organizing is a largely socialist profession.” How does one back that up? A lot of faith-based types could be described as community organizers, couldn’t they? And they’re not necessarily socialists. They certainly needn’t be.

KURTZ: If you define community organizing very broadly, you could include even conservative groups under its banner. From some perspectives, the Tea Party is a form of community organizing. But the community organizing I discuss in the book is a self-consciously radical tradition that flows from the early achievements of Saul Alinsky, along with the work of Students for a Democratic Society and the National Welfare Rights Organization in the early-to-mid 1960s. The leadership of these groups was largely socialist, and remained so as they moved into community organizing in the 1970s and beyond. More to the point, the community organizers who trained and worked with Obama were largely socialist, although they made a point of not advertising that fact. Even the Catholic Campaign for Human Development, a faith-based group that has done much to support community organizing (including Obama’s own early work), is an effectively socialist group, although it doesn’t say so directly. My book carefully unpacks a great deal of archival evidence to substantiate these claims.

LOPEZ: You wrote, “When I began my post-campaign research for this book, my inclination was to downplay or dismiss evidence of explicit socialism in Obama’s background. I thought the socialism issue was an unprovable and unnecessary distraction from the broader question of Obama’s ultra-liberal inclinations. I was wrong. Evidence that suggests Obama is a socialist, I am now convinced, is real, important, and profoundly relevant to the present.” Explain.

KURTZ: It takes a whole book to explicate that statement. But to be brief, when I first found programs from the Socialist Scholars Conferences Obama attended in New York in the 1980s, I saw a number of people who were later part of his political circle. I was particularly struck by the name James Cone, who was Jeremiah Wright’s theological mentor and the founder of black liberation theology. There were other talks on black liberation theology at those conferences as well. That meant Obama would very likely have known about Wright’s theology even before he met Wright, and would have recognized its socialist content. Following this trail, I discovered that many of Obama’s organizing mentors and colleagues in Chicago were prominent socialists, with ties to the group that had sponsored those early socialist conferences. The policy preferences, tactics, and strategies of these socialist organizers are recognizable in the administration’s conduct today. In fact, the Obama administration continues to coordinate its grassroots support through many of the same socialist organizers he worked with in previous years.

LOPEZ: Why was the 1983 Socialist Scholars Conference “so formative an influence on Obama’s political career”?

KURTZ: I argue that it was Obama’s attendance at that first Socialist Scholars Conference in 1983 that made him decide to become a community organizer. At that point, I maintain, Obama was already a socialist. But that 1983 conference exposed him for the first time to the socialist world’s newfound emphasis on community organizing as part of a long-term political strategy to realign the parties along class lines. The goal was to inch the country toward socialism through multicultural “rainbow” coalitions led by minority politicians on the model of Chicago’s Harold Washington, who became Obama’s political idol. This gave Obama a solution to his identity crisis and drove him off the path to a career in international relations, which is where he’d been up till then. My argument for all this unfolds a bit like a detective story in the second chapter of the book.

LOPEZ: What actual evidence do you have that Obama attended the annual Socialist Scholars Conferences in New York between 1983 and 1985?

KURTZ: Obama tells us himself in Dreams from My Father that he attended socialist conferences at the Cooper Union. Detailed evidence from socialist archives shows that there was only one socialist conference at the Cooper Union, and that was the Socialist Scholars Conference of 1983. Obama’s name also appears on a list of pre-registrants for the 1984 Socialist Scholars Conference. There is less evidence that he attended the Socialist Scholars Conference of 1985, although I think it’s likely that he did. Not only did Obama attend the previous two conferences, evidence indicates that in 1985 he was studying the writings of Harry Boyte, an important theorist of community organizing who spoke at the 1985 conference. Boyte, by the way, advised Obama’s 2008 presidential campaign. I carefully dissect the evidence for Obama’s conference attendance in the book.

LOPEZ: What is socialism? What is socialism to Barack Obama? How has that changed since 1983? How has it stayed the same?

KURTZ: These are the big questions. In the 1980s, the failure of Sixties and Seventies radicalism and the ascent of Ronald Reagan forced America’s socialists to take another tack. They de-emphasized strategies of nationalization and focused instead on local organizing as the way to move the country toward socialism. Now, instead of nationalizing a company, the idea was to get community organizers onto boards of directors, or to force banks to run loans through groups like ACORN. This was socialism “from below,” and it is the strategy that captivated Obama.

Obama’s socialist community-organizing colleagues followed French Marxist theorist André Gorz. Gorz advocated a strategy he called “non-reformist reforms,” proposing a series of seemingly minor tweaks to the system that were in fact designed to undermine capitalism and usher in socialism over time. This led Obama’s socialist mentors to devise an early version of the “public option,” although at the time they applied the idea to the energy sector, not health care. The socialism of Obama’s mentors was incremental and intentionally disguised. In the book, I argue that Obama follows many of his socialist mentors’ ideas to this day.

LOPEZ: How important is black liberation theology to understanding Barack Obama? And where does Jeremiah Wright fit in here?

KURTZ: The important thing about black liberation theology for Obama at the beginning was that its practitioners had just struck up an alliance with the Democratic Socialists of America. That gave Obama a way of bringing together his leftist political inclinations with his quest for an African-American identity. Obama surely disagreed with Reverend Wright’s crazier ideas, like the absurd notion that the AIDS virus is the product of a racist plot against blacks. Obama put up with Wright’s extremism because they shared a socialist outlook. Obama very much hoped to use radical preachers like Wright to help build a leftist political movement. In the book, I present a great deal of new evidence on Obama’s relationship with Wright, and on Wright’s own fascinating political history.

LOPEZ: Was Bill Ayers his mentor or not?

KURTZ: Ayers certainly gave Obama a leg up when he helped elevate Obama to the head of a foundation Ayers created, the Chicago Annenberg Challenge. But I’d prefer to call the relationship an extended political partnership. In the book, I show that Obama eventually returned the favor and brought Ayers onto the board of the Woods Fund, which no one has pointed out until now. Obama also helped fund the work of Ayers’s wife, former Weather Underground leader Bernardine Dohrn. I’ve discovered that Obama even had longstanding ties to Bill’s brother, John Ayers. But the big picture is that Ayers and Dohrn were just a part of Chicago’s larger socialist world. Obama was also deeply immersed in that world, and it just so happens that, in 2008, the infamy of Ayers and Dohrn gave us a tiny peek into Obama’s larger radical political environment.

LOPEZ: How important is ACORN to understanding Barack Obama and the Democratic party today? Is ACORN still a factor?

KURTZ: I present a great deal of new documentary evidence detailing Obama’s longstanding relationship with ACORN. When you compare all this new material with Obama’s statements in 2008, it’s obvious that he lied about his relationship with ACORN. That’s important because it calls into question Obama’s credibility on the matter of his radical beliefs and associations. To this day, Obama and the Democrats blame the financial crisis exclusively on deregulation. The contribution of ACORN and the Democrats to the origins of the subprime-lending crisis is not as widely known as it should be. The book uncovers archival documents that allow us to recover ACORN’s extensive role in the origins of the financial crisis. Fascinating documents with ACORN’s inside account of its meetings with President Clinton and his officials tell us everything about the financial crisis that Obama and the Democrats don’t want us to hear. The mentality that got us into the crisis is still at play, with both Obama and the Democrats. That is the big lesson. But ACORN itself hasn’t disappeared. ACORN is a kind of giant organizational shell game, and the recent change of name is just another move in that game.

LOPEZ: Barack Obama wrote in Dreams from My Father: “Political discussions, the kind that at Occidental had once seemed so intense and purposeful, came to take on the flavor of the socialist conferences I sometimes attended at Cooper Union or the African cultural fairs that took place in Harlem and Brooklyn during the summers — a few of the many diversions New York had to offer, like going to a foreign film or ice-skating at Rockefeller Center.” You read a lot into “diversions.” How? Why? Is he really that smart?

KURTZ: If all we had was Dreams from My Father, we couldn’t make much of those conferences. But after a painstaking reconstruction of what actually happened at those socialist conferences, the outlines of Obama’s entire political career emerge. It’s amazing how careful organizers are about both disguising and, on rare occasions, revealing their socialism. This goes back to Alinsky, but in the book I show socialists explaining to other socialists that the group Obama worked with, the Midwest Academy, was quietly socialist. Midwest Academy organizers made a practice of thinking through every little signal they gave about their socialist views with enormous care. Obama learned his craft from them.

LOPEZ: If Obama is so smart, why are the Democrats going to lose big on Tuesday?

KURTZ: Most people don’t realize that community organizers fail a lot more often than they succeed. That’s not because they’re dumb, but because, fundamentally, they are trying to manipulate people into following the organizer’s own political path. It isn’t easy to get people to travel down a political path that is not truly their own, but that is what community organizers try to do. Smarts alone can only get you so far along that road. Having said that, I argue in the book that Obama isn’t in quite as hopeless a position as he may seem to be right now. Obama has adopted a high-risk strategy. His long-term goal is to polarize the parties along class lines, thereby driving the country substantially to the left. He’s taking big chances to get there, but there is a plausible long-term scenario for success. I go into this in some detail in the final chapter.

LOPEZ: So is Saul Alinsky really, truly important to understanding our president?

KURTZ: He is, but in the book I focus on Alinsky’s method as adapted and transformed by an extraordinary community-organizer-training institute called the Midwest Academy. Barack and Michelle Obama both had close ties to the Academy, and it is the Midwest Academy’s version of organizing — and of socialism — that deeply stamped Obama, I believe. I would call Obama, a “Midwest Academy socialist,” and one way to read the book is as a long explanation of exactly what Midwest Academy socialism is.

LOPEZ: What does the Midwest Academy have to do with the milestone health-care legislation the president signed this March?

KURTZ: The Midwest Academy virtually invented the “public option” idea, although in those days they wanted a public energy corporation to “compete” with private oil and gas companies (in the unspoken hope of driving them out of business). I believe that Obama’s support for a public option and his willingness to trade it away were both based on the Midwest Academy’s strategies of gradualism and “non-reformist reforms.” Even without the public option, the health-care bill as written is designed to drive the system toward single-payer over time. The president’s way of selling health-care reform, chiefly as a pragmatic fix rather than a matter of principle, also goes back to Alinskyite techniques as filtered through the Midwest Academy.

LOPEZ: You write about a “strategic patience” in Barack Obama’s socialism. He doesn’t sound patient, though. He sounds shrill and out of patience, especially with his condescending, dismissive Slurpee lines.

KURTZ: I agree that the president is losing a bit of his cool under pressure. More broadly, I think Obama was ready to move more incrementally before the financial crisis gave him a large Democratic majority in Congress. At that point, Obama decided to take advantage of what seemed at the time like a unique opportunity to grasp for a great deal of “change” at once. Even so, from the perspective of many on the left, Obama has gone slowly, say, by giving up the public option. I also think Obama is ready for slow trench warfare with a Republican Congress. To prepare for that, he first needed to get in place programs the Republicans would try to repeal. Out of that polarizing battle, Obama hopes to jump-start a movement of have-nots angry about efforts to peel back their new entitlements. He may fail, but that is his long-term play. And it follows a well-worn community-organizing model, as I show in the book.

LOPEZ: Do you have insights into what exactly Barack Obama makes of the abortion debate and where that fits into a full picture of him? Despite a radicalism there, he’s been stealth about it, somewhat consistently, in his national career.

KURTZ: Midwest Academy founder Heather Booth began as a socialist feminist with an intense interest in abortion. Yet she ultimately downplayed that issue in an effort to assemble a populist anti-business coalition that united culturally conservative blue-collar workers with the descendants of the Sixties left. Midwest Academy strategy is to downplay cultural issues and foreign policy in order to avoid dividing a broad-based, economically focused, populist coalition of the Left. I think Obama follows this program. He’s a leftist on cultural issues, but he doesn’t want to emphasize it any more than he absolutely has to, because that will split his coalition on economic issues, which is what he really cares about.

KURTZ: Do you think there is anything to the Dinesh D’Souza thesis about Obama?

LOPEZ: I’ve read his Forbes article, not the book, so my reaction has to be provisional. I think D’Souza takes kernels of truth and overloads them with significance. Was Obama attracted to postcolonial theory? Yes, he tells us so himself. Were Obama’s socialist inclinations inspired, in part, by his father’s socialism? They very likely were. But none of that substitutes for a careful attempt to reconstruct Obama’s adult political career. That is what I have tried to do. D’Souza is squeezing all the controversy he can out of the public record. But the heretofore hidden history I recover is ultimately more interesting and important.

LOPEZ: Why is this important now? I know many of the policies are harmful to the country, and I want to see his party’s power depleted come January and someone else in the White House after the next presidential election. Why should I care what he wrote in Dreams from My Father and what conferences he attended in the Eighties?

KURTZ: The final chapter of the book shows how deeply Obama’s past still influences his present. More broadly, electing and reelecting a president is, in substantial measure, a matter of trust. Obama has misrepresented who he was and is, both during the 2008 election and since. In that sense, he has broken trust with the public. Only if the American people know the truth about their president’s political beliefs can they make an informed decision about his reelection. That is how democracy works. The mind of the president means a great deal. The health-care and financial-reform bills are largely unfinished projects. What they will become depends on how the massive regulatory apparatus of each is shaped by the administration. A number of Obama’s supporters still believe his claims of post-partisan pragmatism. Showing that this is not the true picture could have a very significant effect on whether the country decides to throw in its lot with Obama or his Republican opponent two years from now.

LOPEZ: Beyond this Tuesday, how can those who want to defeat Obama and his agenda make use of your book?

KURTZ: I do think the book makes Obama’s strategic moves more understandable, and therefore easier to counter. But simply exposing the president’s lack of frankness about his political past and present could do more than anything to deplete his public appeal. Setting the socialism question aside for a moment, just knowing that Obama’s colleagues and mentors made a regular practice of disguising their real political views is going to disturb a lot of voters.

LOPEZ: Why do you think your argument is compelling? Why would you urge those who don’t already think Obama is radical to read your book?

KURTZ: The whole socialism argument kicked off by Obama’s candidacy and presidency has been off-base. It is grounded in ignorance of what modern American socialism really is. Agree or disagree with my argument about Obama, my book shows what much of contemporary socialism has become. It proves that stealth socialism is a real phenomenon, whether you think Obama embraces that view or not. It gives readers access to an important but almost totally unknown political world. It is a world Obama lived in for years. All that may not resolve our arguments about the president’s political views, but it puts the debate itself on an entirely new footing.

LOPEZ: What did you learn that most surprised you during the course of your research?

KURTZ: During campaign 2008, I debated a prominent community organizer and Obama advisor named Harry Boyte. He presented himself during that debate as a slightly left-leaning cousin of communitarian conservatives. When I learned that he was a prominent and powerful socialist, I was shocked. When I discovered that he had been the leader of a socialist faction that believed in using the word “communitarian” to disguise its socialist convictions, I was amazed. When I realized that Boyte had been the leading thinker of the faction of socialist organizers who trained Obama, I was stunned.

LOPEZ: Have you been surprised about various reactions to your book?

KURTZ: People are sometimes taken aback (in a good way) when they interview me and realize that I have a whole new approach to the socialism argument. A number of people who are just now moving through the book are writing to tell me it’s gripping in the way a murder mystery is. The book is scholarly, but the process of peeling back Obama’s self-presentation and unearthing the hidden story beneath it is exciting.

LOPEZ: If there’s one thing you could drive home to Americans about the president, what would it be?

KURTZ: He hasn’t been telling us the truth about his political convictions.

LOPEZ: What does it mean for American history that we have a socialist as president right now?

KURTZ: The liberalizing changes of the Sixties have borne fruit in a new generation, yet they have been incomplete. The Democrats have moved left, but resistance to those changes has driven Republicans to the right. The government sector is so large now that the fundamental character of the American system is at stake. We will either move incrementally over the line toward European-style socialism, or pull substantially back. The battle will be fought out over the next two years, with the coming presidential election determining the winner. A Republican victory next week does not decide the question. It only sets up the larger battle Obama has been planning all along. We don’t yet know who will win.

— Kathryn Jean Lopez is an editor-at-large of National Review Online.

Wednesday, October 27, 2010

Judging the cyber war terrorist threat : The New Yorker

The Online Threat
Should we be worried about a cyber war?
by Seymour M. Hersh November 1, 2010

Some experts say that the real danger lies in confusing cyber espionage with cyber war.

On April 1, 2001, an American EP-3E Aries II reconnaissance plane on an eavesdropping mission collided with a Chinese interceptor jet over the South China Sea, triggering the first international crisis of George W. Bush’s Administration. The Chinese jet crashed, and its pilot was killed, but the pilot of the American aircraft, Navy Lieutenant Shane Osborn, managed to make an emergency landing at a Chinese F-8 fighter base on Hainan Island, fifteen miles from the mainland. Osborn later published a memoir, in which he described the “incessant jackhammer vibration” as the plane fell eight thousand feet in thirty seconds, before he regained control.

The plane carried twenty-four officers and enlisted men and women attached to the Naval Security Group Command, a field component of the National Security Agency. They were repatriated after eleven days; the plane stayed behind. The Pentagon told the press that the crew had followed its protocol, which called for the use of a fire axe, and even hot coffee, to disable the plane’s equipment and software. These included an operating system created and controlled by the N.S.A., and the drivers needed to monitor encrypted Chinese radar, voice, and electronic communications. It was more than two years before the Navy acknowledged that things had not gone so well. “Compromise by the People’s Republic of China of undestroyed classified material . . . is highly probable and cannot be ruled out,” a Navy report issued in September, 2003, said.

The loss was even more devastating than the 2003 report suggested, and its dimensions have still not been fully revealed. Retired Rear Admiral Eric McVadon, who flew patrols off the coast of Russia and served as a defense attaché in Beijing, told me that the radio reports from the aircraft indicated that essential electronic gear had been dealt with. He said that the crew of the EP-3E managed to erase the hard drive—“zeroed it out”—but did not destroy the hardware, which left data retrievable: “No one took a hammer.” Worse, the electronics had recently been upgraded. “Some might think it would not turn out as badly as it did, but I sat in some meetings about the intelligence cost,” McVadon said. “It was grim.”

The Navy’s experts didn’t believe that China was capable of reverse-engineering the plane’s N.S.A.-supplied operating system, estimated at between thirty and fifty million lines of computer code, according to a former senior intelligence official. Mastering it would give China a road map for decrypting the Navy’s classified intelligence and operational data. “If the operating system was controlling what you’d expect on an intelligence aircraft, it would have a bunch of drivers to capture radar and telemetry,” Whitfield Diffie, a pioneer in the field of encryption, said. “The plane was configured for what it wants to snoop, and the Chinese would want to know what we wanted to know about them—what we could intercept and they could not.” And over the next few years the U.S. intelligence community began to “read the tells” that China had access to sensitive traffic.

The U.S. realized the extent of its exposure only in late 2008. A few weeks after Barack Obama’s election, the Chinese began flooding a group of communications links known to be monitored by the N.S.A. with a barrage of intercepts, two Bush Administration national-security officials and the former senior intelligence official told me. The intercepts included details of planned American naval movements. The Chinese were apparently showing the U.S. their hand. (“The N.S.A. would ask, ‘Can the Chinese be that good?’ ” the former official told me. “My response was that they only invented gunpowder in the tenth century and built the bomb in 1965. I’d say, ‘Can you read Chinese?’ We don’t even know the Chinese pictograph for ‘Happy hour.’ ”)

Why would the Chinese reveal that they had access to American communications? One of the Bush national-security officials told me that some of the aides then working for Vice-President Dick Cheney believed—or wanted to believe—that the barrage was meant as a welcome to President Obama. It is also possible that the Chinese simply made a mistake, given the difficulty of operating surgically in the cyber world.

Admiral Timothy J. Keating, who was then the head of the Pacific Command, convened a series of frantic meetings in Hawaii, according to a former C.I.A. official. In early 2009, Keating brought the issue to the new Obama Administration. If China had reverse-engineered the EP-3E’s operating system, all such systems in the Navy would have to be replaced, at a cost of hundreds of millions of dollars. After much discussion, several current and former officials said, this was done. (The Navy did not respond to a request for comment on the incident.)

Admiral McVadon said that the loss prompted some black humor, with one Navy program officer quoted as saying, “This is one hell of a way to go about getting a new operating system.”

The EP-3E debacle fuelled a longstanding debate within the military and in the Obama Administration. Many military leaders view the Chinese penetration as a warning about present and future vulnerabilities—about the possibility that China, or some other nation, could use its expanding cyber skills to attack America’s civilian infrastructure and military complex. On the other side are those who argue for a civilian response to the threat, focussed on a wider use of encryption. They fear that an overreliance on the military will have adverse consequences for privacy and civil liberties.

In May, after years of planning, the U.S. Cyber Command was officially activated, and took operational control of disparate cyber-security and attack units that had been scattered among the four military services. Its commander, Army General Keith Alexander, a career intelligence officer, has made it clear that he wants more access to e-mail, social networks, and the Internet to protect America and fight in what he sees as a new warfare domain—cyberspace. In the next few months, President Obama, who has publicly pledged that his Administration will protect openness and privacy on the Internet, will have to make choices that will have enormous consequences for the future of an ever-growing maze of new communication techniques: Will America’s networks be entrusted to civilians or to the military? Will cyber security be treated as a kind of war?

Even as the full story of China’s EP-3E coup remained hidden, “cyber war” was emerging as one of the nation’s most widely publicized national-security concerns. Early this year, Richard Clarke, a former White House national-security aide who warned about the threat from Al Qaeda before the September 11th attacks, published “Cyber War,” an edgy account of America’s vulnerability to hackers, both state-sponsored and individual, especially from China. “Since the late 1990s, China has systematically done all the things a nation would do if it contemplated having an offensive cyber war capability,” Clarke wrote. He forecast a world in which China might unleash havoc:

Within a quarter of an hour, 157 major metropolitan areas have been thrown into knots by a nationwide power blackout hitting during rush hour. Poison gas clouds are wafting toward Wilmington and Houston. Refineries are burning up oil supplies in several cities. Subways have crashed in New York, Oakland, Washington, and Los Angeles. . . . Aircraft are literally falling out of the sky as a result of midair collisions across the country. . . . Several thousand Americans have already died.

Retired Vice-Admiral J. Michael McConnell, Bush’s second director of National Intelligence, has issued similar warnings. “The United States is fighting a cyber war today, and we are losing,” McConnell wrote earlier this year in the Washington Post. “Our cyber-defenses are woefully lacking.” In February, in testimony before the Senate Commerce, Science, and Transportation Committee, he said, “As a consequence of not mitigating the risk, we’re going to have a catastrophic event.”

A great deal of money is at stake. Cyber security is a major growth industry, and warnings from Clarke, McConnell, and others have helped to create what has become a military-cyber complex. The federal government currently spends between six and seven billion dollars annually for unclassified cyber-security work, and, it is estimated, an equal amount on the classified portion. In July, the Washington Post published a critical assessment of the unchecked growth of government intelligence agencies and private contractors. Benjamin Powell, who served as general counsel for three directors of the Office of National Intelligence, was quoted as saying of the cyber-security sector, “Sometimes there was an unfortunate attitude of bring your knives, your guns, your fists, and be fully prepared to defend your turf. . . . Because it’s funded, it’s hot and it’s sexy.”

Clarke is the chairman of Good Harbor Consulting, a strategic-planning firm that advises governments and companies on cyber security and other issues. (He says that more than ninety per cent of his company’s revenue comes from non-cyber-related work.) McConnell is now an executive vice-president of Booz Allen Hamilton, a major defense contractor. Two months after McConnell testified before the Senate, Booz Allen Hamilton landed a thirty-four-million-dollar cyber contract. It included fourteen million dollars to build a bunker for the Pentagon’s new Cyber Command.

American intelligence and security officials for the most part agree that the Chinese military, or, for that matter, an independent hacker, is theoretically capable of creating a degree of chaos inside America. But I was told by military, technical, and intelligence experts that these fears have been exaggerated, and are based on a fundamental confusion between cyber espionage and cyber war. Cyber espionage is the science of covertly capturing e-mail traffic, text messages, other electronic communications, and corporate data for the purpose of gathering national-security or commercial intelligence. Cyber war involves the penetration of foreign networks for the purpose of disrupting or dismantling those networks, and making them inoperable. (Some of those I spoke to made the point that China had demonstrated its mastery of cyber espionage in the EP-3E incident, but it did not make overt use of it to wage cyber war.) Blurring the distinction between cyber war and cyber espionage has been profitable for defense contractors—and dispiriting for privacy advocates.

Clarke’s book, with its alarming vignettes, was praised by many reviewers. But it received much harsher treatment from writers in the technical press, who pointed out factual errors and faulty assumptions. For example, Clarke attributed a severe power outage in Brazil to a hacker; the evidence pointed to sooty insulators.

The most common cyber-war scare scenarios involve America’s electrical grid. Even the most vigorous privacy advocate would not dispute the need to improve the safety of the power infrastructure, but there is no documented case of an electrical shutdown forced by a cyber attack. And the cartoonish view that a hacker pressing a button could cause the lights to go out across the country is simply wrong. There is no national power grid in the United States. There are more than a hundred publicly and privately owned power companies that operate their own lines, with separate computer systems and separate security arrangements. The companies have formed many regional grids, which means that an electrical supplier that found itself under cyber attack would be able to avail itself of power from nearby systems. Decentralization, which alarms security experts like Clarke and many in the military, can also protect networks.

In July, there were reports that a computer worm, known as Stuxnet, had infected thousands of computers worldwide. Victims, most of whom were unharmed, were able to overcome the attacks, although it sometimes took hours or days to even notice them. Some of the computers were inside the Bushehr nuclear-energy plant, in Iran, and this led to speculation that Israel or the United States might have developed the virus. A Pentagon adviser on information warfare told me that it could have been an attempted “semantic attack,” in which the virus or worm is designed to fool its victim into thinking that its computer systems are functioning properly, when in fact they are not, and may not have been for some time. (This month, Microsoft, whose Windows operating systems were the main target of Stuxnet, completed a lengthy security fix, or patch.)

If Stuxnet was aimed specifically at Bushehr, it exhibited one of the weaknesses of cyber attacks: they are difficult to target and also to contain. India and China were both hit harder than Iran, and the virus could easily have spread in a different direction, and hit Israel itself. Again, the very openness of the Internet serves as a deterrent against the use of cyber weapons.

Bruce Schneier, a computer scientist who publishes a widely read blog on cyber security, told me that he didn’t know whether Stuxnet posed a new threat. “There’s certainly no actual evidence that the worm is targeted against Iran or anybody,” he said in an e-mail. “On the other hand, it’s very well designed and well written.” The real hazard of Stuxnet, he added, might be that it was “great for those who want to believe cyber war is here. It is going to be harder than ever to hold off the military.”

A defense contractor who is regarded as one of America’s most knowledgeable experts on Chinese military and cyber capabilities took exception to the phrase “cyber war.” “Yes, the Chinese would love to stick it to us,” the contractor told me. “They would love to transfer economic and business innovation from West to East. But cyber espionage is not cyber war.” He added, “People have been sloppy in their language. McConnell and Clarke have been pushing cyber war, but their evidentiary basis is weak.”

James Lewis, a senior fellow at the Center for Strategic and International Studies, who worked for the Departments of State and Commerce in the Clinton Administration, has written extensively on the huge economic costs due to cyber espionage from China and other countries, like Russia, whose hackers are closely linked to organized crime. Lewis, too, made a distinction between this and cyber war: “Current Chinese officials have told me that we’re not going to attack Wall Street, because we basically own it”—a reference to China’s holdings of nearly a trillion dollars in American securities—“and a cyber-war attack would do as much economic harm to us as to you.”

Nonetheless, China “is in full economic attack” inside the United States, Lewis says. “Some of it is economic espionage that we know and understand. Some of it is like the Wild West. Everybody is pirating from everybody else. The U.S.’s problem is what to do about it. I believe we have to begin by thinking about it”—the Chinese cyber threat—“as a trade issue that we have not dealt with.”

The bureaucratic battle between the military and civilian agencies over cyber security—and the budget that comes with it—has made threat assessments more problematic. General Alexander, the head of Cyber Command, is also the director of the N.S.A., a double role that has caused some apprehension, particularly on the part of privacy advocates and civil libertarians. (The N.S.A. is formally part of the Department of Defense.) One of Alexander’s first goals was to make sure that the military would take the lead role in cyber security and in determining the future shape of computer networks. (A Department of Defense spokesman, in response to a request to comment on this story, said that the department “continues to adhere to all laws, policies, directives, or regulations regarding cyberspace. The Department of Defense maintains strong commitments to protecting civil liberties and privacy.”)

The Department of Homeland Security has nominal responsibility for the safety of America’s civilian and private infrastructure, but the military leadership believes that the D.H.S. does not have the resources to protect the electrical grids and other networks. (The department intends to hire a thousand more cyber-security staff members over the next three years.) This dispute became public when, in March, 2009, Rodney Beckstrom, the director of the D.H.S.’s National Cybersecurity Center, abruptly resigned. In a letter to Secretary Janet Napolitano, Beckstrom warned that the N.S.A. was effectively controlling her department’s cyber operations: “While acknowledging the critical importance of N.S.A. to our intelligence efforts . . . the threats to our democratic processes are significant if all top level government network security and monitoring are handled by any one organization.” Beckstrom added that he had argued for civilian control of cyber security, “which interfaces with, but is not controlled by, the N.S.A.”

General Alexander has done little to reassure critics about the N.S.A.’s growing role. In the public portion of his confirmation hearing, in April, before the Senate Armed Services Committee, he complained of a “mismatch between our technical capabilities to conduct operations and the governing laws and policies.”

Alexander later addressed a controversial area: when to use conventional armed forces to respond to, or even preëmpt, a network attack. He told the senators that one problem for Cyber Command would be to formulate a response based on nothing more than a rough judgment about a hacker’s intent. “What’s his game plan? Does he have one?” he said. “These are tough issues, especially when attribution and neutrality are brought in, and when trying to figure out what’s come in.” At this point, he said, he did not have “the authority . . . to reach out into a neutral country and do an attack. And therein lies the complication. . . . What do you do to take that second step?”

Making the same argument, William J. Lynn III, the Deputy Secretary of Defense, published an essay this fall in Foreign Affairs in which he wrote of applying the N.S.A.’s “defense capabilities beyond the ‘.gov’ domain,” and asserted, “As a doctrinal matter, the Pentagon has formally recognized cyberspace as a new domain of warfare.” This definition raises questions about where the battlefield begins and where it ends. If the military is operating in “cyberspace,” does that include civilian computers in American homes?

Lynn also alluded to a previously classified incident, in 2008, in which some N.S.A. unit commanders, facing penetration of their bases’ secure networks, concluded that the break-in was caused by a disabling thumb drive; Lynn said that it had been corrupted by “a foreign intelligence agency.” (According to press reports, the program was just as likely to be the product of hackers as that of a government.) Lynn termed it a “wakeup call” and a “turning point in U.S. cyber defense strategy.” He compared the present moment to the day in 1939 when President Franklin D. Roosevelt got a letter from Albert Einstein about the possibility of atomic warfare.

But Lynn didn’t mention one key element in the commanders’ response: they ordered all ports on the computers on their bases to be sealed with liquid cement. Such a demand would be a tough sell in the civilian realm. (And a Pentagon adviser suggested that many military computer operators had simply ignored the order.)

A senior official in the Department of Homeland Security told me, “Every time the N.S.A. gets involved in domestic security, there’s a hue and cry from people in the privacy world.” He said, though, that coöperation between the military and civilians had increased. (The Department of Homeland Security recently signed a memorandum with the Pentagon that gives the military authority to operate inside the United States in case of cyber attack.) “We need the N.S.A., but the question we have is how to work with them and still say and demonstrate that we are in charge in the areas for which we are responsible.”

This official, like many I spoke to, portrayed the talk about cyber war as a bureaucratic effort “to raise the alarm” and garner support for an increased Defense Department role in the protection of private infrastructure. He said, “You hear about cyber war all over town. This”—he mentioned statements by Clarke and others—“is being done to mobilize a political effort. We always turn to war analogies to mobilize the people.”

In theory, the fight over whether the Pentagon or civilian agencies should be in charge of cyber security should be mediated by President Obama’s coördinator for cyber security, Howard Schmidt—the cyber czar. But Schmidt has done little to assert his authority. He has no independent budget control and in a crisis would be at the mercy of those with more assets, such as General Alexander. He was not the Administration’s first choice for the cyber-czar job—reportedly, several people turned it down. The Pentagon adviser on information warfare, in an e-mail that described the lack of an over-all policy and the “cyber-pillage” of intellectual property, added the sort of dismissive comment that I heard from others: “It’s ironic that all this goes on under the nose of our first cyber President. . . . Maybe he should have picked a cyber czar with more than a mail-order degree.” (Schmidt’s bachelor’s and master’s degrees are from the University of Phoenix.)

Howard Schmidt doesn’t like the term “cyber war.” “The key point is that cyber war benefits no one,” Schmidt told me in an interview at the Old Executive Office Building. “We need to focus on that fact. When people tell me that these guys or this government is going to take down the U.S. military with information warfare I say that, if you look at the history of conflicts, there’s always been the goal of intercepting the communications of combatants—whether it’s cutting down telephone poles or intercepting Morse-code signalling. We have people now who have found that warning about ‘cyber war’ has become an unlikely career path”—an obvious reference to McConnell and Clarke. “All of a sudden, they have become experts, and they get a lot of attention. ‘War’ is a big word, and the media is responsible for pushing this, too. Economic espionage on the Internet has been mischaracterized by people as cyber war.”

Schmidt served in Vietnam, worked as a police officer for several years on a SWAT team in Arizona, and then specialized in computer-related crimes at the F.B.I. and in the Air Force’s investigative division. In 1997, he joined Microsoft, where he became chief of security, leaving after the 9/11 attacks to serve in the Bush Administration as a special adviser for cyber security. When Obama hired him, he was working as the head of security for eBay. When I asked him about the ongoing military-civilian dispute, Schmidt said, “The middle way is not to give too much authority to one group or another and to make sure that we share information with each other.”

Schmidt continued, “We have to protect our infrastructure and our way of life, for sure. We do have vulnerabilities, and we do talk about worst-case scenarios” with the Pentagon and the Department of Homeland Security. “You don’t see a looming war and just wait for it to come.” But, at the same time, “we have to keep our shipping lanes open, to continue to do commerce, and to freely use the Internet.”

How should the power grid be protected? It does remain far too easy for a sophisticated hacker to break into American networks. In 2008, the computers of both the Obama and the McCain campaigns were hacked. Suspicion fell on Chinese hackers. People routinely open e-mails with infected attachments, allowing hackers to “enslave” their computers. Such machines, known as zombies, can be linked to create a “botnet,” which can flood and effectively shut down a major system. Hackers are also capable of penetrating a major server, like Gmail. Guesses about the cost of cyber crime vary widely, but one survey, cited by President Obama in a speech in May, 2009, put the price at more than eight billion dollars in 2007 and 2008 combined. Obama added, referring to corporate cyber espionage, “It’s been estimated that last year alone cyber criminals stole intellectual property from businesses worldwide worth up to one trillion dollars.”

One solution is mandated encryption: the government would compel both corporations and individuals to install the most up-to-date protection tools. This option, in some form, has broad support in the technology community and among privacy advocates. In contrast, military and intelligence eavesdroppers have resisted nationwide encryption since 1976, when the Diffie-Hellman key exchange (an encryption tool co-developed by Whitfield Diffie) was invented, for the most obvious of reasons: it would hinder their ability to intercept signals. In this sense, the N.S.A.’s interests align with those of the hackers.

John Arquilla, who has taught since 1993 at the U.S. Naval Postgraduate School in Monterey, California, writes in his book “Worst Enemies,” “We would all be far better off if virtually all civil, commercial, governmental, and military internet and web traffic were strongly encrypted.” Instead, many of those charged with security have adopted the view that “cyberspace can be defended with virtual fortifications—basically the ‘firewalls’ that everyone knows about. . . . A kind of Maginot Line mentality prevails.”

Arquilla added that America’s intelligence agencies and law-enforcement officials have consistently resisted encryption because of fears that a serious, widespread effort to secure data would interfere with their ability to electronically monitor and track would-be criminals or international terrorists. This hasn’t stopped sophisticated wrongdoers from, say, hiring hackers or encrypting files; it just leaves the public exposed, Arquilla writes. “Today drug lords still enjoy secure internet and web communications, as do many in terror networks, while most Americans don’t.”

Schmidt told me that he supports mandated encryption for the nation’s power and electrical infrastructure, though not beyond that. But, early last year, President Obama declined to support such a mandate, in part, Schmidt said, because of the costs it would entail for corporations. In addition to the setup expenses, sophisticated encryption systems involve a reliance on security cards and on constantly changing passwords, along with increased demands on employees and a ceding of control by executives to their security teams.

General Alexander, meanwhile, has continued to press for more authority, and even for a separate Internet domain—another Maginot Line, perhaps. One morning in September, he told a group of journalists that the Cyber Command needed what he called “a secure zone,” a separate space within the Internet to shelter the military and essential industries from cyber attacks. The secure zone would be kept under tight government control. He also assured the journalists, according to the Times, that “we can protect civil liberties, privacy, and still do our mission.” The General was more skeptical about his ability to please privacy advocates when he testified, a few hours later, before the House Armed Services Committee: “A lot of people bring up privacy and civil liberties. And then you say, ‘Well, what specifically are you concerned about?’ And they say, ‘Well, privacy and civil liberties.’ . . . Are you concerned that the anti-virus program that McAfee runs invades your privacy or civil liberties?’ And the answer is ‘No, no, no—but I’m worried that you would.’ ”

This summer, the Wall Street Journal reported that the N.S.A. had begun financing a secret surveillance program called Perfect Citizen to monitor attempted intrusions into the computer networks of private power companies. The program calls for the installation of government sensors in those networks to watch for unusual activity. The Journal noted that some companies expressed concerns about privacy, and said that what they needed instead was better guidance on what to do in case of a major cyber attack. The N.S.A. issued a rare public response, insisting that there was no “monitoring activity” involved: “We strictly adhere to both the spirit and the letter of U.S. laws and regulations.”

A former N.S.A. operative I spoke to said, of Perfect Citizen, “This would put the N.S.A. into the job of being able to watch over our national communications grid. If it was all dot-gov, I would have no problem with the sensors, but what if the private companies rely on Gmail or to communicate? This could put the N.S.A. into every service provider in the country.”

The N.S.A. has its own hackers. Many of them are based at a secret annex near Thurgood Marshall International Airport, outside Baltimore. (The airport used to be called Friendship Airport, and the annex is known to insiders as the FANX, for “Friendship annex.”) There teams of attackers seek to penetrate the communications of both friendly and unfriendly governments, and teams of defenders monitor penetrations and attempted penetrations of U.S. systems. The former N.S.A. operative, who served as a senior watch officer at a major covert installation, told me that the N.S.A. obtained invaluable on-the-job training in cyber espionage during the attack on Iraq in 1991. Its techniques were perfected during the struggle in Kosovo in 1999 and, later, against Al Qaeda in Iraq. “Whatever the Chinese can do to us, we can do better,” the technician said. “Our offensive cyber capabilities are far more advanced.”

Nonetheless, Marc Rotenberg, the president of the Electronic Privacy Information Center and a leading privacy advocate, argues that the N.S.A. is simply not competent enough to take a leadership role in cyber security. “Let’s put the issue of privacy of communications aside,” Rotenberg, a former Senate aide who has testified often before Congress on encryption policy and consumer protection, said. “The question is: Do you want an agency that spies with mixed success to be responsible for securing the nation’s security? If you do, that’s crazy.”

Nearly two decades ago, the Clinton Administration, under pressure from the N.S.A., said that it would permit encryption-equipped computers to be exported only if their American manufacturers agreed to install a government-approved chip, known as the Clipper Chip, in each one. It was subsequently revealed that the Clipper Chip would enable law-enforcement officials to have access to data in the computers. The ensuing privacy row embarrassed Clinton, and the encryption-equipped computers were permitted to be exported without the chip, in what amounted to a rebuke to the N.S.A.

That history may be repeating itself. The Obama Administration is now planning to seek broad new legislation that would enable national-security and law-enforcement officials to police online communications. The legislation, similar to that sought two decades ago in the Clipper Chip debate, would require manufacturers of equipment such as the BlackBerry, and all domestic and foreign purveyors of communications, such as Skype, to develop technology that would allow the federal government to intercept and decode traffic.

“The lesson of Clipper is that the N.S.A. is really not good at what it does, and its desire to eavesdrop overwhelms its ability to protect, and puts at risk U.S. security,” Rotenberg said. “The N.S.A. wants security, sure, but it also wants to get to capture as much as it can. Its view is you can get great security as long as you listen in.” Rotenberg added, “General Alexander is not interested in communication privacy. He’s not pushing for encryption. He wants to learn more about people who are on the Internet”—to get access to the original internal protocol, or I.P., addresses identifying the computers sending e-mail messages. “Alexander wants user I.D. He wants to know who you are talking to.”

Rotenberg concedes that the government has a role to play in the cyber world. “We privacy guys want strong encryption for the security of America’s infrastructure,” he said. He also supports Howard Schmidt in his willingness to mandate encryption for the few industries whose disruption could lead to chaos. “Howard is trying to provide a reasoned debate on an important issue.”

Whitfield Diffie, the encryption pioneer, offered a different note of skepticism in an e-mail to me: “It would be easy to write a rule mandating encryption but hard to do it in such a way as to get good results. To make encryption effective, someone has to manage and maintain the systems (the way N.S.A. does for D.O.D. and, to a lesser extent, other parts of government). I think that what is needed is more by way of standards, guidance, etc., that would make it easier for industry to implement encryption without making more trouble for itself than it saves.”

More broadly, Diffie wrote, “I am not convinced that lack of encryption is the primary problem. The problem with the Internet is that it is meant for communications among non-friends.”

What about China? Does it pose such a threat that, on its own, it justifies putting cyber security on a war footing? The U.S. has long viewed China as a strategic military threat, and as a potential adversary in the sixty-year dispute over Taiwan. Contingency plans dating back to the Cold War include calls for an American military response, led by a Navy carrier group, if a Chinese fleet sails into the Taiwan Strait. “They’ll want to stop our carriers from coming, and they will throw whatever they have in cyber war—everything but the kitchen sink—to blind us, or slow our fleet down,” Admiral McVadon, the retired defense attaché, said. “Our fear is that the Chinese may think that cyber war will work, but it may not. And that’s a danger because it”—a test of cyber warfare—“could lead to a bigger war.”

However, the prospect of a naval battle for Taiwan and its escalation into a cyber attack on America’s domestic infrastructure is remote. Jonathan Pollack, an expert on the Chinese military who teaches at the Naval War College in Newport, Rhode Island, said, “The fact is that the Chinese are remarkably risk-averse.” He went on, “Yes, there have been dustups, and the United States collects intelligence around China’s border, but there is an accommodation process under way today between China and Taiwan.” In June, Taiwan approved a trade agreement with China that had, as its ultimate goal, a political rapprochement. “The movement there is palpable, and, given that, somebody’s got to tell me how we are going to find ourselves in a war with China,” Pollack said.

Many long-standing allies of the United States have been deeply engaged in cyber espionage for decades. A retired four-star Navy admiral, who spent much of his career in signals intelligence, said that Russia, France, Israel, and Taiwan conduct the most cyber espionage against the U.S. “I’ve looked at the extraordinary amount of Russian and Chinese cyber activity,” he told me, “and I am hard put to it to sort out how much is planning for warfare and how much is for economic purposes.”

The admiral said that the U.S. Navy, worried about budget cuts, “needs an enemy, and it’s settled on China,” and that “using what your enemy is building to justify your budget is not a new game.”

There is surprising unanimity among cyber-security experts on one issue: that the immediate cyber threat does not come from traditional terrorist groups like Al Qaeda, at least, not for the moment. “Terrorist groups are not particularly good now in attacking our computer system,” John Arquilla told me. “They’re not that interested in it—yet. The question is: Do vulnerabilities exist inside America? And, if they do, the terrorists eventually will exploit them.” Arquilla added a disturbing thought: “The terrorists of today rely on cyberspace, and they have to be good at cyber security to protect their operations.” As terrorist groups get better at defense, they may eventually turn to offense.

Jeffrey Carr, a Seattle-based consultant on cyber issues, looked into state and non-state cyber espionage throughout the recent conflicts in Estonia and Georgia. Carr, too, said he was skeptical that China or Russia would mount a cyber-war attack against the United States. “It’s not in their interest to hurt the country that is feeding them money,” he said. “On the other hand, it does make sense for lawless groups.” He envisaged “five- or six-year-old kids in the Middle East who are working on the Internet,” and who would “become radicalized fifteen- or sixteen-year-old hackers.” Carr is an advocate of making all Internet service providers require their customers to use verifiable registration information, as a means of helping authorities reduce cyber espionage.

Earlier this year, Carr published “Inside Cyber Warfare,” an account, in part, of his research into cyber activity around the world. But he added, “I hate the term ‘cyber war.’ ” Asked why he used “cyber warfare” in the title of his book, he responded, “I don’t like hype, but hype sells.”

Why not ignore the privacy community and put cyber security on a war footing? Granting the military more access to private Internet communications, and to the Internet itself, may seem prudent to many in these days of international terrorism and growing American tensions with the Muslim world. But there are always unintended consequences of military activity—some that may take years to unravel. Ironically, the story of the EP-3E aircraft that was downed off the coast of China provides an example. The account, as relayed to me by a fully informed retired American diplomat, begins with the contested Presidential election between Vice-President Al Gore and George W. Bush the previous November. That fall, a routine military review concluded that certain reconnaissance flights off the eastern coast of the former Soviet Union—daily Air Force and Navy sorties flying out of bases in the Aleutian Islands—were redundant, and recommended that they be cut back.

“Finally, on the eve of the 2000 election, the flights were released,” the former diplomat related. “But there was nobody around with any authority to make changes, and everyone was looking for a job.” The reality is that no military commander would unilaterally give up any mission. “So the system defaulted to the next target, which was China, and the surveillance flights there went from one every two weeks or so to something like one a day,” the former diplomat continued. By early December, “the Chinese were acting aggressively toward our now increased reconnaissance flights, and we complained to our military about their complaints. But there was no one with political authority in Washington to respond, or explain.” The Chinese would not have been told that the increase in American reconnaissance had little to do with anything other than the fact that inertia was driving day-to-day policy. There was no leadership in the Defense Department, as both Democrats and Republicans waited for the Supreme Court to decide the fate of the Presidency.

The predictable result was an increase in provocative behavior by Chinese fighter pilots who were assigned to monitor and shadow the reconnaissance flights. This evolved into a pattern of harassment in which a Chinese jet would maneuver a few dozen yards in front of the slow, plodding EP-3E, and suddenly blast on its afterburners, soaring away and leaving behind a shock wave that severely rocked the American aircraft. On April 1, 2001, the Chinese pilot miscalculated the distance between his plane and the American aircraft. It was a mistake with consequences for the American debate on cyber security that have yet to be fully reckoned. ♦

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