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August 12, 2010


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Our involvement in Afghanistan is becoming so linked to Pakistan that it may become very difficult to leave. It seems that Obama who spent much of the campaign declaring that bush was too focused on the Taliban and Iraq rather than on Al Queda is now doing the same thing. Two reasons:

1. The Taliban are a threat to take control of Pakistan. While the poppy fields of Afghanistan are one thing the nuclear weapons of Pakistan are another level of terror to fear. And, with the disclosure of the intel documents we are getting a closer look at just how fragile the Pakistan government is. With 60 % or more of the population not supporting the US this country represents amajor danger of getting nukes in the hands of the Al Queda operatives.

2. The governement of Pakistan is woefully weak in responding to the floods destroying the lives of 20 Million of it's citizens. World help seems to be invisible and only the US seems to be responding. Perhaps this will be a PR blessing to help our image there. But more likely the lack of response by the government to help their own people will weaken the government popularity with the people and make it more vulnerable to the Taliban intrusions.

Not a pretty situation for Obama and his war efforts against the Taliban and Al Queda. It will be very hard to withdraw and leave a weak Pakistan government to face them alone.

The flaw with all this is idea that tax cuts, if deep enough, will produce increased income to the government (supply side economics). This has become a Rep mantra since Reagan. Unfortunately the real world does not work like that. Even Greg Mankiw (Chairman of the Council of Economic Advisers under GW Bush) has said "I do not find such a claim credible".

History shows this:
Ratio of federal debt to GDP
Reagan 33%
GH Bush 64%
Clinton 57%
GW Bush 69%

These figures do not show any benefit to tax cuts. Instead, greater deficits resulted.

I am far from wanting any tax hikes, but we need to be truthful about what works and what doesn't.

For what it is worth, my preference would be first let the Bush tax cuts expire, and then subject each major area of expenditure to cuts in their budgets of 5 to 10%, military included.

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