Dubya's OMB director, Josh Bolten, says:

Let me place this year's budget in historical perspective. The most relevant number in measuring deficits is not the nominal figure. It's the deficit as a percentage of the economy, or what I just referred to as gross domestic product.

Paul Krugman says:

Right now the U.S. government is running deficits bigger, as a share of G.D.P., than those that plunged Argentina into crisis. The reason we don't face a comparable crisis is that markets, extrapolating from our responsible past, trust us to get our house in order.

Krugman also notes that

Some point out that Ronald Reagan ran even bigger deficits as a share of G.D.P. But they hope people won't remember that in the face of those deficits, Mr. Reagan raised taxes, reversing part of his initial tax cut.

Will Bolten et al. follow suit? In the briefing I quoted above, he's still talking up more tax cuts. And he testified before the House budget committee that

I think the art and science of economics has not yet advanced to the stage where we can really properly capture all the positive effects the tax cuts do have on the economy.

So, that's Krugman's problem. As a mere expert in the art and science of economics, he's not qualified to evaluate the benefits of tax cuts, as he lacks the further enlightenment that Bolten got from -- what?

Update: corrected typo in Bolten's name...

In the comments on Making Light, Charlie Stross explains it all for you:

Graydon earlier suggested that the current administration are nincompoops, bunglers, and asset-strippers.

I resent this imputation of incompetence to the glorious leaders of the free world. No mere bungling could have created such a mess. No; there has to be a conspiracy behind it all.

We learn that many neoconservative ideologues are former 1960's and 1970's trotskyites who saw the light of the radiant future of capitalism and were saved, converts to the cause of righteousness.

At least, they say they were saved. Me, I say they're still trotskyites, carrying out a black plan to cause the final crisis of capitalism by subjecting it to imperial overstretch. After all, if their old enemy wouldn't die on its own, why not cause it to choke by biting off more than it could swallow?

It's all so clear, now. Rove, Rumsfeld, et al are all working for Vladimir Putin, former KGB staffer and friend of the White House and the only world leader whose economy has had double-digit growth since 9/11. (Coincidence or conspiracy, you judge!) Dick Cheney is probably a Fellow Traveller. They meet in the White House basement every week to read Mao's little red book, discuss Hegelian dialectic, and place a long-distance trunk call to their mentor, eminence grise Ken MacLeod who confessed this all in his 1996 novel of spectacular trotskyite infiltration, "The Star Fraction", if only we'd had the eyes to understand what we were reading.

(Where'd I put my chlorpromazine? Ah, that's better ...)

Honestly, what puzzles me most about this century is that it makes much more sense if you view it as a conspiracy of insane proportions and crazy intent rather than simply the emergent consequences of a collision between religious bigots, asset-stripping sharks, and incompetent machine politicians.

Good heavens! Vladimir Putin is a Communist?

Quoth Alan Greenspan yesterday:

On the asset side of the balance sheet, the decline in longer-term interest rates and diminished perceptions of credit risk in recent months have provided a substantial lift to the market value of nearly all major categories of household assets. Most notably, historically low mortgage interest rates have helped to propel a solid advance in the value of the owner-occupied housing stock.

In other words, the rise in housing prices, and hence the housing boom itself, was due to some considerable extent to the Fed's own action of lowering interest rates through the historical floor.

And the lowered rate at which investors discount future business earnings has contributed to the substantial appreciation in broad equity price indexes this year, reversing a portion of their previous declines.

In addition, reflecting growing confidence, households have been shifting the composition of their portfolios in favor of riskier assets. In recent months, equity mutual funds attracted sizable inflows following the redemptions recorded over much of the last year. Moreover, strong inflows to corporate bond funds, particularly those specializing in speculative-grade securities, have provided further evidence of a renewed appetite for risk-taking among retail investors.

In other words, the low interest rates are also the main reason that stock prices are going back up. It's not that people think that prospects for earnings have improved (nor does Greenspan, as we'll see), it's just that saving accounts are looking even worse.

He goes on to praise refinancing, which has given homeowners a shot of discretionary cash by letting them pull equity out of their homes, pay off their other loans, and reduce their payments. To a point:

We expect both equity extraction and lower debt service to continue to provide support for household spending in the period ahead, though the strength of this support is likely to diminish over time.

In other words, to the extent people are spending more, it's because of the lowered interest rates at least as much as they're earning more. And we can't keep on lowering them forever.

In the meantime, how is business responding to the favorable interest rates?

In the past, such reductions in private yields and in the cost of capital faced by firms have been associated with rising capital spending. But as yet there is little evidence that the more accommodative financial environment has materially improved the willingness of top executives to increase capital investment. Corporate executives and boards of directors are seemingly unclear, in the wake of the recent intense focus on corporate behavior, about how an increase in risk-taking on their part would be viewed by shareholders and regulators.

As a result, business leaders have been quite circumspect about embarking on major new investment projects. Moreover, still-ample capacity in some sectors and lingering uncertainty about the strength of prospective final sales have added to the reluctance to expand capital outlays. But should firms begin to perceive that the pickup in demand is durable, they doubtless would be more inclined to increase hiring and production, replenish depleted inventories, and bring new capital on line. These actions in turn would tend to further boost incomes and output.

Isn't that precious? Business activity is going nowhere. But business leaders might change that if they perceive a long-term pickup in demand. And that might, at long last, improve jobs and incomes in America -- unless they do their hiring in China. But his best evidence that businesses might actually ramp up domestic production in the coming months, if you read the full speech, is that "industrial output has stablized" -- that is, that actual business production has (momentarily) ceased to drop.

In summary: by lowering interest rates through the floor, the Fed has gotten people to spend money now, and pump up stock prices to a semblance of their former levels. But that cash infusion won't last forever, and business isn't picking up in the meantime.

The speech had a few more lines like the one I quoted, suggesting that if business decides to give more people jobs (the way they haven't been), then more people will have jobs. It was generally covered as providing a bright, optimistic outlook.

From the Washington Post today:

Defending the broader decision to go to war with Iraq, the president said the decision was made after he gave Saddam Hussein "a chance to allow the inspectors in, and he wouldn't let them in."

The Post notes that Dubya "appeared to contradict the events leading up to war this spring", but did not solicit comment from Hans Blix.

This isn't his first whopper, by the way. About a month ago, he told the troops in Qatar that there had been no running water in Basra before they invaded. I said at the time that he's either convinced that he won't get caught, or he just doesn't care. But the longer this goes on, the more you have to consider the possibility that he just doesn't know.

In any case, it's a kind of benchmark on the soundness of our politics that if something like this had shown up five months ago in the Onion, it would have seemed beneath them -- crude, unfunny, and just in bad taste...

For conservatives who were a bit unclear on the concept last February: when a hostile country decides to throw off international monitors and initiate a full-bore nuclear program, posing a nearly immediate threat to vital strategic interests of the United States, it looks like this.

Update: More, from Billmon.

If any SF author was going to be granting interviews posthumously, you knew it would have to be Philip K Dick.

via Slashdot.

Well, criticism of Dubya's crew's stinting attitude toward preservation of archaeological sites in Iraq may have been overstated after all. They're just adopting the same attitude they have towards preservation of archaeological sites in their own country:

The Bush administration is considering privatizing archaeological oversight of hundreds of national parks and landmarks and firing the National Park Service archaeologists who for decades have been charged with protecting their historic value and cultural heritage.

The administration says turning over the archaeology jobs to private contractors could save money, but critics charge that contractors are ill-equipped to cope with an array of endemic challenges, including influential outsiders trying to dictate Park policy, chronic congressional underfunding and serious personnel shortages that Park Service archaeologists mitigate by using thousands of volunteers -- an option not open to a private company.

The park service archaeologists say, in their own defense, that they've been underfunded for so many years that they've just learned to make do with less. But we all know what government employees are really like. Just look at this batch at the EPA, who have been sitting around ever since Dubya entered office, not doing their jobs:

In the last several months, the Environmental Protection Agency has delayed or refused to do analyses on proposals that conflict with the president's air pollution agenda, say members of Congress, their aides, environmental advocates and agency employees.

Agency employees say they have been told either not to analyze or not to release information about mercury, carbon dioxide and other air pollutants. This has prompted inquiries and complaints from environmental groups, as well as Democrats and Republicans in Congress.

Some people might see politics here, but an EPA spokesman said that "politics played no role in these decisions" -- and much as we might view government employees as lazy bums, who could possibly think that they'd actually lie?

via The Agonist.

Well, with the continued fracas over the State of the Union address, it's now clear that Dubya's crew isn't terribly big on absorbing news that they don't want to hear. Even, it seems, from other factions within the administration:

The brief term of retired Gen. Jay Garner, the administration's first director of reconstruction in Iraq, was dominated by the incessant feud between State Department diplomats and Defense Department hawks. Garner, a close friend of Defense Secretary Donald Rumsfeld's, felt obliged to ignore reports that had been prepared by Iraqi exiles at the State Department's request -- and the lack of that knowledge did not help the reconstruction effort. [Emphasis added.]

And the non-communication went the other way as well. Defense, expecting the Iraqi army to surrender en masse, had planned to put them to work afterwards as a reconstruction corps. When Bremer, from State, got in, he instead formally disbanded the army, flooding the country in a stroke with young men with guns, no institutional restraints, no jobs, and no means of support. This has subsequently been acknowledged by just about everyone as an incredibly dumb move.

But getting back to Defense, let's remember that Rummy's neocon faction had its own Iraqi exiles -- the group headed by Ahmed Chalabi. And as this Knight-Ridder report recounts, their only real plan for postwar government of Iraq was to install Chalabi into power, and let him sort things out:

The Pentagon planners were convinced that Iraqis would warmly welcome the American-led coalition and that Chalabi, who boasted of having a secret network inside and outside the regime, and his supporters would replace Saddam and impose order.

In fact, the neocons were so wedded to the siren song of Chalabi -- who was, let us not forget, convicted in absentia for fraud in Jordan and is currently on the lam from a ten-year sentence -- that Richard Perle still thinks that the only thing we really did wrong was not to put him in charge:

Referring to the Chalabi scenario, Perle said: "The Department of Defense proposed a plan that would have resulted in a substantial number of Iraqis available to assist in the immediate postwar period." Had it been accepted, "we'd be in much better shape today," he said.

And indeed, the otherwise incoherent statements coming out of the American government in the postwar environment -- simultaneously talking about the quick transfer of power to an Iraqi government and discussing the policies that government would follow in some detail -- suddenly start to make sense if you understand them as referring to (their expectations of) Chalabi's policies after the groundswell of support orchestrated by his (fictitious) "secret network [of supporters] inside and outside the regime" smoothed his inevitable (not) accession to power. As Knight-Ridder makes plain, this is how they could be so sure that a future Iraqi government would be, say, friendly to Israel -- they'd been talking to Chalabi for years...

But, as the Knight-Ridder article makes plain, there were plenty of reasona to doubt Chalabi would deliver even if he got into power:

The Chalabi scheme was dealt another major blow in February, a month before the war started, when U.S. intelligence agencies monitored him conferring with hard-line Islamic leaders in Tehran, Iran, a State Department official said. About the same time, an Iraqi Shiite militia that was based in Iran and known as the Badr Brigade began moving into northern Iraq, setting off alarm bells in Washington.

At the State Department, officials drafted a memo, titled "The Perfect Storm," warning of a confluence of catastrophic developments that would endanger the goals of the coming U.S. invasion.

Cheney, once a strong Chalabi backer, ordered the Pentagon to curb its support for the exiles, the official said.

But he sent the troops in anyway, pursuing a postwar plan that had already fallen apart.

Lastly, it isn't really fair to attribute all this nonsense to "Defense". The Army War College, after all, predicted pretty much the current scenario before the war, in some detail. It's the small crew at the top, who believed Chalabi had given them the Truth, and wouldn't let anyone else bother them with mere facts.

(Links via The Agonist and comments at The Daily Kos).

So, it's been "discovered" for the umpteenth time that Bob Dylan pinches elements of his songs from other sources -- sometimes with a nod and a wink to the originals, sometimes not. This was briefly a serious controversy in the 1960s. Now it's well known enough to anyone who could conceivably care that it's no big deal; after all, the folk music tradition that Dylan works in has worked like this, with elements of old songs being adapated and rearranged for new ones, for centuries. Or so I would have thought -- but there it is again in the New York Times.

So what makes this worthy of comment? When the "copyright industries" (publishing and recording) are lobbying Congress for yet another extension of copyright, they are in the habit of trotting out famous and well regarded artists to make their pitch, including Bob Dylan. And among the chief beneficiaries of these extensions is Disney -- which jealously guards its properties, including not just whole works, but elements like characters and tunes -- from exactly this sort of folk-art repurposing.

Dylan's a great artist, but I'm not sure anyone claims he's much of a lawyer. Perhaps he hasn't thought this entirely through...