Morning News - The Rising Dragon Edition
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Hillary Clinton got the huge win in West Virginia she wanted – thumping Obama by 41 points – but most analysts are calling it a symbolic victory. The Clinton camp is disputing that, saying Obama ran an aggressive campaign in the Mountain state, outspending her on advertising, staff, and campaign offices and receiving more high level endorsements. Clinton cut Obama’s delegate lead by just nine. In a sobering sign for the eventual nominee, exit polls confirmed a growing rift in the party: only 38% of Obama supporters said they would be satisfied if Clinton won, and only 25% of Clinton backers said they'd be satisfied if Obama won. Clinton said she is more determined than ever to press forward with her campaign.
The Republicans got some sobering news of their own – they lost a highly touted special election in northern Mississippi for a seat that’s been in GOP hands since 1994. Although yesterday’s winner will have to stand for reelection again in November, the contest was widely viewed as a bellwether for the 2008 congressional elections. NRCC Chairman Tom Cole issued an unusually downbeat statement following the loss, saying: “Republicans must undertake bold efforts to define a forward looking agenda that offers the kind of positive change voters are looking for. This is something we can do in cooperation with our Presidential nominee, but time is short."
The Senate voted 97-1 yesterday to stop filling the Strategic Petroleum Reserve for six months in an effort to bring gas prices down, a move President Bush opposes. Estimates for how much it will save consumers on a gallon of gas range from a few pennies to as high as 25 cents. The U.S. Energy Information Administration predicts gas prices would fall 4 to 5 cents a gallon. The Senate rejected a separate Republican amendment to increase drilling in Alaska and off the U.S. coast.
Meanwhile, House Democrats are proposing a tax surcharge on millionaires to pay for a big increase in education benefits for veterans of the war in Iraq. The plan, if accepted by rank-and-file Democrats, would clear the way for a vote tomorrow on a long-stalled war funding bill.
Ben Bernanke said yesterday that turmoil in financial markets has eased somewhat, but the situation is still "far from normal." Bernanke said even the most carefully crafted regulations cannot ensure that liquidity crises will not happen again. But, if moral hazard is mitigated and if financial institutions and investors tighten up risk-management practices, "the frequency and the severity of future crises should be significantly reduced," he said.
In a move that could significantly bolster international investments in airlines and lead to further consolidation, the U.S. government plans to propose relaxing world-wide rules restricting the ownership of air carriers. The United States plans to present the proposal to EU negotiators at meetings on aviation deregulation in Slovenia tomorrow. The U.S. will propose the EU jointly invite dozens of countries throughout the world to scrap restrictions dating back to 1944 that hamper cross-border investments in airlines. The U.S. proposal wouldn't address ownership limits that many countries impose specifically on airlines through national legislation. Instead, it would reduce restrictions based on nationality that today thwart deals.
Mark Helprin, a senior fellow at the Claremont Institute, delivered a speech recently saying Americans would be foolish to take their economic and military superiority for granted, especially given China’s rising prominence in those two areas. Helprin says China has a vast internal market newly unified by modern transport and communications; a rapidly flowering technology; an irritable but highly capable workforce that, as long as its standard of living improves, is unlikely to push the country into paralyzing unrest; and a wider world, now freely accessible, that will buy anything it can make. It is not threatened by any of its neighbors. Unlike the U.S., which governs itself almost unconsciously, reactively, and primarily for the short term, China has plotted a long course, in which with great deliberation it joins economic growth to military power. As we content ourselves with the fallacy that never again shall we have to fight large, technological opponents, China is transforming its forces into a full-spectrum military capable of major operations and remote power projection. But, Helprin says,
“We can, in fact, compete with China economically, deter it from a range of military options, protect our allies, and maintain a balance of power favorable to us. We must revive our understanding of deterrence, the balance of power, and the military balance … If we are wise, [we will meet the Chinese threat] not with 280 ships but a thousand; not eleven carriers, or nine, but 40, not 183 F-22s, but a thousand; and so on. That is, the levels of military potential that traditional peacetime expenditures of GNP have provided, without strain, throughout most of our lives. As opposed either to ignominious defeat without war, or war with a rising power emboldened by our weakness and retirement, this would be infinitely cheaper. And yet what candidate is alert to this? Who asserts that our sinews are still intact? That we can meet any challenge, especially when it can be answered with our historical strengths? That beneath a roiled surface is a power limitless yet fair, supple yet restrained? Who will speak of these things in time, and who will dare to awaken them?”