Thursday, May 16, 2013

What the decrease in the deficit is all about






Keith Hennessey's blog
 

CBO's new deficit estimate

15 May 2013

CBO released their updated economic and budget baseline today, in advance of their estimate of the President’s budget due out later this week. At first the headline sounds like good news: the deficit for this year will be “only” $642 B, 4% of GDP. That’s about $200 B smaller than CBO projected for this year in their January baseline document. Should we celebrate?
No, not unless you like the “fiscal cliff” tax rate increases and you like the government owning Fannie Mae and Freddie Mac. Those are the reasons why the deficit projection declined.
Deficits and Debt
You should know three benchmarks when thinking about federal budget deficits, each measured in % of GDP:
  1. A roughly 3% deficit will hold debt/GDP constant; 
  2. The historic average deficit (pre-2008 crisis) is about 2% of GDP; and 
  3. Of course, a balanced budget is zero deficit. 
Any time you hear a deficit number, compare it to zero, two and three, and you’ll have a good feel for where we are. A 4 percent deficit for this year is not good: it’s almost twice as high as the historic average, and it’s high enough that our debt will continue to increase faster than our economy will grow.
You will hear “But that 4 percent projection is much lower than the 5.4% projected in January. Surely that’s good news. It is certainly an improvement over where we thought we were this year.”
This is where we need to review levels, rates of change, and expectations. This is tricky so I’ll break it down into small steps.
  • The level of our debt/GDP is quite high: 73% at the end of last year. That’s bad, and there’s a debate about just how bad it is. 
  • The deficit is the change in our debt for this year. A deficit means our debt is increasing, and a deficit greater than 3% of GDP means our debt is increasing relative to our economy. So our level is high (bad), and because our 4% deficit is greater than the 3% benchmark, our level is increasing (getting worse). 
  • But it’s getting worse much more slowly than it was getting worse a few years ago. In 2009 the deficit was 10% of GDP. With a 4% deficit this year, our situation (level, debt/GDP) is getting worse much more slowly than it was four years ago. 
  • That does not, of course, mean we’re in a better position (debt level) than four years ago. Our debt/GDP at the end of 2008 was 41%. At the end of last year it was 73%, and CBO projects it will increase to 75% at the end of this year. That our debt is growing much more slowly this year than it was four years ago is hardly cause for celebration. 
  • Looking for a silver lining, our projected deficit (4%) is significantly smaller than was projected just four months ago (5.4%, projected in January). It is therefore a better (less bad, really) number than priorexpectations. 
I know that’s probably more complicated than you want. Sorry, best I can do.
Why did the projection change so much?
CBO was not particularly surprised by this change. Their estimate changed mostly because they are required to project current law, even when they are pretty sure it will change.
They did their January baseline estimates before tax laws changed on January 2nd, so that baseline does not incorporate the effects of the “fiscal cliff” tax increases. CBO did not change their economic forecast, and other than tiny tweaks to Social Security and Medicare, they didn’t change their spending forecasts much either. Their new deficit estimate for this year came down by $203 B, and $200 B of that is from more money coming into the government:
The payroll tax credit expired;
Tax rates on income, dividends and capital gains all increased for “the rich”;
In anticipation of those rate increases, some individuals realized income in late 2012 rather than 2013, shifting tax collections on that income into this year’s column on the government ledger;
Corporate tax receipts are recovering a bit faster than CBO had previously estimated;
and Fannie Mae and Freddie Mac, now quite profitable, are making big dividend payments to the Treasury. These payments show up on the outlay side of the federal budget ledger, but they are in effect receipts of the U.S. government.
The other big consequence of the nature of these changes is that they are mostly one-time bumps. So the 2013 numbers improved quite a bit, but the numbers for following years don’t increase nearly as much.
Enough already! How should I feel about this?
If you supported the tax rate increases then this is marginally good news. But don’t celebrate; our fiscal picture is still grim.
If, like me, you hate tax rate increases on anyone and detest having the government own two massive mortgage finance companies, then you should feel no comfort from today’s deficit news, which is almost entirely the result of those policies. I’d happily return to a 5.4% deficit if you let me repeal the tax rate increases and replace Fannie & Freddie with a private mortgage securitization market.
And then I’d cut government spending. A lot.
-kbh USA flag

Wednesday, May 15, 2013

Government versus tyranny

This is a useful history of tyranny from National Review,followed by a friendly qualification by Jonah Goldberg.  Both these writers are right.

In Praise of Paranoia
Just because you’re paranoid doesn’t mean they aren’t after you.
By  Charles C. W. Cooke

Tuesday, May 14, 2013

Why the Fed's current policy will fail


For those of us who subscribe to the Austrian School of economics, then current policy of the Federal Reserve is going to create major problems for the economy sooner or later.  The following explanation of why is a chapter out of von Mises's treatise.


Stable Prices, Unstable Markets

According to European Central Bank Governing Council member Ewald Nowotny, Federal Reserve Chairman Ben Bernanke sees no risk of inflation in the United States. According to Nowotny, Bernanke had given a “very optimistic” portrayal of the US outlook.
“They see absolutely no danger of an expansion in inflation,” Nowotny said. Bernanke had said US inflation should be 1.3 percent this year.
Fed forecasts put inflation by the end of this year in a range of 1.3 to 1.7 percent. The yearly rate of growth of the consumer price index (CPI) stood at 1.5 percent in March against 2 percent in February and 2.7 percent in March last year.
Also the growth momentum of the core CPI (the CPI less food and energy) has eased in March from the month before. Year-on-year the rate of growth has softened to 1.9 percent from 2 percent in February and 2.3 percent in March last year.
For Bernanke and most experts, the key factor that sets the foundation for healthy economic fundamentals is a stable price level as depicted by the consumer price index.
According to this way of thinking, a stable price level doesn’t obscure the visibility of the relative changes in the prices of goods and services, but enables businesses to see clearly market signals that are conveyed by the relative changes in the prices of goods and services. Consequently, it is held, this leads to the efficient use of the economy’s scarce resources and hence results in better economic fundamentals.
For instance, let us say that a relative strengthening in people’s demand for potatoes versus tomatoes took place. This relative strengthening, it is held, is going to be depicted by the relative increase in the prices of potatoes versus tomatoes.
Now in a free market, businesses pay attention to consumer wishes as manifested by changes in the relative prices of goods and services. Failing to abide by consumer wishes will lead to the wrong production mix of goods and services and will lead to losses.
Hence in our case businesses, by paying attention to relative changes in prices, are likely to increase the production of potatoes versus tomatoes.
According to this way of thinking, if the price level is not stable, then the visibility of the relative price changes becomes blurred and consequently, businesses cannot ascertain the relative changes in the demand for goods and services and make correct production decisions.
This leads to a misallocation of resources and to the weakening of economic fundamentals. In short, unstable changes in the price level obscure changes in the relative prices of goods and services. Consequently, businesses will find it difficult to recognize a change in relative prices when the price level is unstable.
Based on this way of thinking it is not surprising that the mandate of the central bank is to pursue policies that will bring price stability, i.e., a stable price level.
By means of various quantitative methods, the Fed’s economists have established that at present, policy makers must aim at keeping price inflation at 2 percent. Any significant deviation from this figure constitutes deviation from the growth path of price stability (or at least stability in the rate of price-level increase).
Observe that Fed policy makers are telling us that they have to stabilize the price level in order to allow the efficient functioning of the market economy. Obviously this is a contradiction in terms, since any attempt to manipulate the so-called price level implies interference with markets, and hence leads to false signals as conveyed by changes in relative prices.
By means of setting targets to interest rates and by means of monetary pumping it is not possible to strengthen economic fundamentals, but on the contrary it only makes things much worse. Here is why.

Policy of price stability leads to more instability

Let us say that the so-called price level is starting to exhibit a visible decline in growth momentum. To prevent this decline, the Fed starts to aggressively push money into the banking system.
As a result of this policy, after a time lag the price level has stabilized. Should we regard this as a successful monetary policy action? The answer is categorically no.
Given that monetary pumping sets in motion the diversion of wealth from wealth generating activities to non-wealth generating activities, obviously this leads to the weakening of the wealth generation process and to economic impoverishment.
Note that the economic impoverishment has taken place despite price level stability. Also, note that in order to achieve price stability, the Fed had to allow an increase in the growth momentum of its balance sheet and consequently in the growth momentum of the money supply.
It is the fluctuations in the balance sheet and the subsequent fluctuations in the growth momentum of the money supply that matter here. It is this that sets in motion the menace of the boom-bust cycle, regardless of whether the price level is stable or not.
While increases in the money supply are likely to be revealed in general price increases, this need not always be the case. Prices are determined by both real and monetary factors.
Consequently, it can occur that if the real factors are pulling things in an opposite direction to monetary factors, no visible change in prices might take place.
In other words, while money growth is buoyant, prices might display low increases.
Clearly, if we were to pay attention to the so-called price level, and disregard increases in the money supply, we would reach misleading conclusions regarding the state of the economy.
On this, Rothbard wrote,
“The fact that general prices were more or less stable during the 1920s told most economists that there was no inflationary threat, and therefore the events of the great depression caught them completely unaware” (America’s Great Depression, Mises Institute, 2001 [1963], p. 153).
From 1926 to 1929, the alleged stability of the price level caused most economic experts, including the famous American economist Irving Fisher, to conclude that US economic fundamentals were doing fine and that there was no threat of an economic bust.
The yearly rate of growth of the CPI displayed stability during 1926 to 1929 (see chart). Most experts have ignored the fact that the yearly rate of growth of the US central bank balance sheet jumped to 42 percent by June 1928 from minus 14 percent in February 1927.
The sharp fall in the growth momentum of the Fed’s balance sheet after June 1928 (see chart) set in motion an economic bust and the Great Depression.
At present, the Fed continues to push money aggressively into the banking system with its balance sheet standing at $3.3 trillion at the end of April against $0.9trillion in January 2008. We suggest however that a fall in the growth momentum of AMS since October 2011 raises the likelihood of a bust in the months ahead.
If one adds to all this the possibility that the process of real wealth generation has been badly damaged by the Fed’s loose policies, it shouldn’t surprise us that we could enter a severe slump in the months ahead.

Summary and conclusion

For most economists, the key to healthy economic fundamentals is price stability. A stable price level, it is held, leads to the efficient use of the economy’s scarce resources and hence results in better economic fundamentals. It is not surprising that the mandate of the Federal Reserve is to pursue policies that will generate price stability. We suggest that by means of monetary policies that aim at stabilizing the price level the Fed actually undermines economic fundamentals.

Frank Shostak is an adjunct scholar of the Mises Institute and a frequent contributor to Mises.org. His consulting firm, Applied Austrian School Economics, provides in-depth assessments and reports of financial markets and global economies. See Frank Shostak's article archives.
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Monday, May 13, 2013

The Saul Alinsky legacy

The Alinskyites are in full flower and command at Swarthmore College, one of the country's foremost small liberal arts colleges.  It is worth remembering that Saul Alinsky was the subject of Hillary Clinton's senior theses while she attended Radcliffe.  The ascendency of this movement coincides with the rise of Barak Obama and all the other radicals now running the country.


Swarthmore Spinning Out of Control (With Videos) | National Review Online

What happens when Saul Alinsky goes to college? Intimidation, polarization, and an end to the free inquiry and exchange that are the hallmarks of liberal education. That’s what’s happening at Swarthmore, a prestigious liberal-arts college outside of Philadelphia, where fossil-fuel-divestment activists schooled in techniques of “direct-action protest” have allied with a range of leftist groups to seize control of the college from an administration unwilling to stop them.
Swarthmore is the epicenter of the national campaign to have college endowments sell off stock in fossil-fuel companies. Swarthmore’s activists came up with the divestment idea well before environmentalist Bill McKibben spread it across the country, and the national divestment movement recently convened at Swarthmore to plot strategy. The goal of fossil-fuel divestment is not only to stigmatize America’s energy companies and penalize them with stock sell-offs, but to build a political movement powerful enough to tax conventional energy producers out of existence – all in the name of fighting global warming.
As it’s spread like wildfire across America’s campuses, the divestment movement has allied with anti-capitalists such as Occupy Wall Street, as well as with advocates for “marginalized sexualities” and various other grievance groups. In effect, the campus fossil-fuel-divestment movement has become the beating heart of a newly revitalized campus hard Left.
Swarthmore’s activists signaled a radicalization of their movement on May 4 when they forcibly seized control of an open Board of Managers meeting, issued demands and ejected conservative students, while Swarthmore’s president Rebecca Chopp stood by and did nothing. Video of this ugly incident has been passed around the Internet as if it’s something to brag about.
As this sad tale unfolds, you will see videos, and you will hear President Chopp’s revealing responses to my questions. You will also see Orwellian attempts by Swarthmore’s administration to obfuscate and sanitize news of the accelerating campus meltdown. And you will hear from Swarthmore students who responded to my queries with e-mails detailing their concerns about the state of their school.
The divestment movement’s rise has been Swarthmore’s fall. President Chopp’s continued refusal to rein in demonstrators who hold her school’s traditions of respectful dialogue in open contempt has spawned an increasingly brazen series of protests, each of which has left the campus more chaotic and divided, and conservative students ever-more abandoned by an institution that not only acquiesces in their ostracism but, increasingly, directly facilitates it.
“F*** Your Constructive Dialogue.” That is the headline (no asterisks in the original) of an essay posted last week at a popular Swarthmore leftist website by Kate Aronoff, a leading member of Swarthmore’s pro-divestment group, Mountain Justice, and a national spokesperson for the campus fossil-fuel-divestment movement. In January, Aronoff defended divestment as a tactic in an online opinion piece published by the New York Times. There, like other members of Mountain Justice, Aronoff had little to say about ideology. Her recent, less public piece is more revealing. In it, Aronoff rejects Swarthmore’s classically liberal tradition of civil discourse in favor of a stern and intolerant radicalism.
Tolerance at Swarthmore, says Aronoff, “can only be reactionary, a shield to hide behind when the terms of debate become too threatening.” Students at Swarthmore ought not to tolerate their classmates who choose to go on to work for large Wall Street banks and brokerage houses, for example, or who pursue conventional careers in international relations. Not only Swarthmore’s tradition of tolerance, but the entire “liberal project” must be junked, says Aronoff, in favor of a program of radical “liberation.”
This thinking was on display nine days ago, when about 100 protesters led by Mountain Justice marched into a meeting of Swarthmore’s Board of Managers, surrounded the speakers, and seized control of the room. (See the videohere.) The protesters’ collective statement expressed determination to transform Swarthmore from a liberal institution into one that was “radical and emancipatory.”
The sheer deviousness of the protesters was impressive. Mountain Justice had repeatedly called on Swarthmore’s Board of Managers to set aside their usual practice of private meetings to hold an open forum. Having lured the Board to a public meeting under false pretenses, Mountain Justice sprang their trap and marched in. The Board’s expert on the economics of fossil-fuel divestment managed to get through about a minute of his talk before he was stopped by protesters.
Campus opponents of divestment, led by members of Swarthmore’s Conservative Society, were likewise deceived. Once Mountain Justice commandeered the administration’s microphone, conservatives were told they’d have to wait until all the protesters had made speeches before addressing the Board. When one of the conservatives, Danielle Charette, called for a return to the agreed-upon order, the protesters deployed a carefully rehearsed tactic for silencing opposition – they “clapped her down.”
You can see Charette in this brief but chilling video (wearing green) as she complains that protesters have hijacked the meeting and broken the agreed-upon order of participation. When another conservative student leaps to her defense, the protesters begin to clap in unison at an ever-quickening pace until Charette and her defenders are drowned out. Board members and administrators would have been clapped down as well if they’d had the guts to object the takeover. Then, when an audience member tells the protesters, “You have to stop with these intimidation tactics,” a protester launches into a tirade at the podium.
At this point, Charette calls on the “Quaker moderator” (with white hair), who was supposed to be chairing the meeting, to retake control. When the moderator refuses, Charette turns to President Chopp (in red) to plead for a restoration of order. According to Charette, Chopp then agreed that the takeover was “outrageous,” but shrugged and said there was nothing she could do. (You can see her shrug in the video.) After another fruitless plea for a restoration of order to Dean of Students Elizabeth Braun (off camera), Charette and the other conservatives left the meeting, silenced.
Here, in a two-minute video, is the story of Swarthmore today: feckless administrators abandoning the principles of classic liberalism – and the conservative students those principles protect – to hand the campus over to a bullying minority of leftist protesters. Would that this were an isolated incident.
A bit of background on Mountain Justice will illustrate the larger problem: Swarthmore Mountain Justice members receive training from hardball environmentalist organizers engaged in “direct action” campaigns against Appalachian coal mining. A couple years ago, Swarthmore Mountain Justice led a local bank-lobby takeover, a classic Alinskyite move, until police ordered them out. This year, however, perhaps emboldened by a December 2012 front-pageNew York Times article glamorizing the divestment movement and focusing on Swarthmore, activists from Mountain Justice have turned the college itself into their prime target.
Swarthmore made national news in April when one of the school’s most illustrious alumni, Robert Zoellick, a deputy secretary of state in George W. Bush’s administration, a Bush-nominated World Bank president and U.S. trade representative, and a veteran of private-sector work at Goldman Sachs and Fannie Mae, declined to accept an honorary degree and deliver a commencement speech.
Leftist students had dredged up one bogus reason after another to disinvite him, shifting claims as each successive attack was refuted by Zoellick’s defenders. The real goal, of course, was to deny conservatives legitimacy at Swarthmore. Zoellick’s most prominent critic, Will Lawrence, was the Mountain Justice organizer who’d led that bank-takeover a couple years before.
When rumors that Zoellick’s graduation speech would be hit by protests began to fly, he withdrew, saying he didn’t want to disrupt the ceremony. President Chopp said nothing in defense of Zoellick until after he’d withdrawn. To their credit, Swarthmore’s liberals were mortified by the manifest intolerance of the anti-Zoellick campaign. Mountain Justice and its radical allies, of course, were delighted with their victory, and with so clear an indication that the administration would do nothing to stand in their way. As for conservatives, it was yet another sign that they were unwelcome at Swarthmore.
That message came through again a bit later in April when Bob Weinberg, acting chairman of Swarthmore’s Department of History, writing on behalf of his entire department, endorsed Mountain Justice’s divestment campaign in the Swarthmore Daily Gazette. Weinberg stopped just short of declaring that leftist social activism, as exemplified by fossil-fuel divestment, was the only legitimate outcome of a Swarthmore history education. Yet it’s tough for a reader to draw any other conclusion from the piece, especially since Weinberg made no effort to reassure moderates, libertarians, or conservatives that their views would be respected by the department. A Swarthmore freshman, Nicholas Zahorodny, wrote me that the decision of the history faculty to endorse divestment as a department, rather than as individuals, contributed “to a lock-down of discussion on campus,” intimidating and alienating prospective history majors who may not have supported divestment.
Like many campuses, Swarthmore has institutionalized the pursuit of “sustainability,” a vague term that smuggles a leftist political agenda into the official mission of colleges under the guise of fighting global warming. In the current issue of the Swarthmore College Bulletin, President Chopp offers an openly political interpretation of sustainability, which she argues needs to be incorporated into everyone’s “political practices.” The school’s “Sustainability Action Plan,” “The Greening of Swarthmore,” insists that “radical changes” must come “in all sectors of society” if sustainability is to be properly realized. What happens to free debate when a college lends its official imprimatur to a political program of the Left?
If you’re a stellar student, don’t mind ad hominem attacks, and know how to avoid courses taught by intolerant professors, you just might get along at Swarthmore as a conservative. But even then, you’ll find not a single conservative professors to study with. James Kurth, a social conservative who’s taught foreign and defense policy and has served as a mentor to Swarthmore’s conservatives for decades is now emeritus (although still supervising independent-study courses). Maybe that’s why there are conservative students at Swarthmore who stay “closeted to keep from getting picked on.” So writes openly conservative freshman Savannah Saunders, who adds, “I find it so sad hearing conservatives hide their views out of fear.” Kate Aronoff, of Mountain Justice, notes in the course of her attack on Swarthmore’s tradition of tolerance that conservatives at the school are “ostracized.”
So the ejection of conservatives and the inaction of President Chopp at the board takeover were simply the culmination of a longer history. And in the days since the board takeover, conditions at Swarthmore have deteriorated.
In response to the Board takeover, the administration planned to hold open-ended “community discussions” led by students with contrasting viewpoints, so as not to “exclude or marginalize” any group. That program was quickly dismantled when radicals showed up at a planning meeting, many of them uninvited, to insist on holding “teach-ins” where their demands for transforming Swarthmore would be discussed. Student attendance must be mandatory, said the radicals. Administrators knuckled under without resistance, again leaving conservatives “excluded and marginalized.”
The radicals are demanding a massive expansion of Swarthmore’s politicized “studies” programs, with a new Latino Studies major specifically dedicated to Latinos in the United States, and mandatory classes for all Swarthmore students in ethnic studies and gender and sexuality studies. To further this process of naked political indoctrination, many radicals are calling on Swarthmore to pare back its international-relations courses, which are charged with “reinforcing Western hegemony.” The radicals also want all claims of sexual assault to be made public, thereby naming the accused before a trial even begins.
Think of these proposals as a real-time example of the story laid out by the recentreport on Bowdoin College published by the National Association of Scholars. That report describes a massive expansion of Bowdoin’s politicized “studies” programs at the expense of more traditional courses, which have been turned into isolated islands at the school. At Swarthmore, the remaining traditionalist and non-politicized islands may soon be swallowed up.
At its official website, Swarthmore’s administration played these “teach-ins” as earnest good-faith conversations, rather than what they were: mandatory re-education sessions held at the insistence of the radicals in defiance of the administration’s plans, not to mention the wishes of conservative students. The radicals themselves were furious at the dissembling. They wanted credit for having forced their demands on the school. Swarthmore quickly blocked all comments on the online article describing post-takeover events at the school, an effective way of preventing parents from finding out what was actually happening on campus.
Last week I e-mailed President Chopp a series of questions about the board takeover and subsequent events. (I’ll provide full text of my questions and her replies in a follow-up post.) I asked Chopp why she’d done nothing to restore order during or since the board takeover, and wondered if she was concerned about the effects of her inaction on students who do not share the views of the protesters.
In reply, Chopp invoked Swarthmore’s Quaker tradition of tolerance and insisted that she’s simply been allowing all students to have their say. While she acknowledged that sometimes this approach fails, Chopp expressed faith that tolerant dialogue would eventually be restored at Swarthmore. “We are going to listen and talk to one another, even if it takes many times and many meetings to learn from one another and to decide the way forward,” she said.
This seems to me to be thoroughly wrongheaded. In effect, Chopp’s reply gives Swarthmore’s radicals a green light for further disruptions. She offers no indication of behavioral lines that cannot be crossed, nor any recognition that we are dealing with intimidation by radical students, not dialogue. Chopp seems unable or unwilling to recognize that Swarthmore’s radicals have consistently answered her displays of fecklessness masquerading as tolerance with various iterations of “F*** your constructive dialogue.” She claims to be listening to all voices, when in fact she has collaborated in the forceful silencing of conservative students. She confuses Quaker tolerance and nonviolence with inaction and the surrender of core liberal principle. She has abandoned her students and her school to the tender mercies of an Alinskyite mob. Swarthmore is spinning out of control, and it is Rebecca Chopp’s responsibility to put a stop to it.

The sham ARB investigation and Ben Rhodes' role


Victoria Toensing is a highly regarded former Justice Department lawyer currently representing the whistleblowers testifying about Benghazi before congressional committees. It is painfully clear that the ARB investigating commission established by Hillary Clinton to report of the "failures" in security that occurred in Benghazi was a whitewashing body designed to clear her of all culpability in the fiasco.  Republicans must expose this sham and continue to highlight her responsibility for this matter, otherwise this harridan could become the next POTUS after the loser currently occupying that office.

Administration Relying on Shoddy Benghazi Report to Absolve Itself of Blame

The White House has touted the Accountability Review Board (ARB) investigation of the Benghazi massacre as a review “led by two men of unimpeachable expertise and credibility that oversaw a process that was rigorous and unsparing.” In fact, the report was purposefully incomplete and willfully misleading.
State Department
The two men in charge of the ARB, Ambassador Thomas Pickering and Admiral Michael Mullen, a diplomat and military man respectively, have no meaningful investigative experience. Instead of letting the facts lead the direction of the investigation, the report appears designed to protect the interests of Hillary Clinton, the State Department higher ups, and the president.
A most obvious question is: why was Secretary Clinton never interviewed for the investigation?  She is mentioned only once in the report, as the person who convened the Board. If, as Clinton herself has said, she took full responsibility for what happened in Benghazi, her decisions and decision-making process are materially relevant for investigating what happened before and during the night of September 11, 2012, and preventing what went wrong from ever happening again.
Other relevant questions the report does not answer are: How often did Clinton and President Obama speak during the attack? What decisions did the president make, and what orders did he give? What was the hour by hour participation of the president during the attack?
My husband, Joseph diGenova, and I represented two State Department whistleblowers for the House Oversight and Reform Committee hearings held last week, on May 8.  Mark Thompson, my husband’s client, testified that he asked twice to be interviewed by the ARB and was not.  Mr. Thompson was the deputy assistant secretary in charge of coordinating the deployment of a multi-agency team for hostage taking and terrorism attacks.  Yet, he was excluded from all decisions, communications, and meetings on September 11 and 12, 2012. Why? Others asked to be interviewed and were not. Until they see how my client, Gregory Hicks, former chargé and deputy chief of mission (DCM) in Libya, and Mr. Thompson fare after their testimony, they will not step forward.
In addition, the ARB used procedures no seasoned investigator would ever follow. More significantly, the process was unfair to the witnesses. For example, no stenographer was present. So there is no verbatim transcript of testimony from each witness. The ARB used note takers. Mr. Hicks was not allowed to review the note taker’s document that supposedly reflects what he said, but is limited to what the note taker thought he heard and decided to record. Mr. Hicks was not permitted to review the draft ARB report to suggest corrections or point out any omissions. He has never been allowed to read the classified report.
The unfair process, in fact, has become even more troubling since I received calls from reporters after last week’s hearing telling me that unnamed State Department persons are whispering that Mr. Hicks’s statements to the ARB are “inconsistent” with his congressional testimony. The congressional testimony is more expansive because both Democratic and Republican staff interviewed Mr. Hicks, and others, for nearly five hours. By contrast, the ARB questioned Mr. Hicks for only two hours, despite the fact that he was the highest-ranking State Department official in Tripoli the night of the attack. Inconsistent? No! And how would anyone disprove that false claim without a transcript?
The ARB report has at least one significant discrepancy, inconsistent with what Mr. Hicks told the Board. He specifically stated, with Pickering present, that the reason Ambassador Christopher Stevens went to Benghazi was to establish a permanent constituent post, an assignment received directly from Clinton in May 2012 when he was sworn in as ambassador. Soon after, Stevens told Mr. Hicks about this assignment over lunch when they discussed the procedures for getting the task done. When Mr. Hicks arrived in Tripoli in July 2012 they revisited the needs related to making Benghazi a permanent post.  At the time, Stevens had out of country commitments and could not go to Benghazi until September. The trip was scheduled for mid-September because the report about building structures and security had to be submitted before the end of the fiscal year: September 30.
When Mr. Hicks told the ARB the reason for the trip, Pickering visibly flinched and said: “Does the 7th floor know about this?” (The office of the Secretary of State is on the 7th floor.)
Page 2 of 2
This relevant information was omitted in the ARB’s unclassified report. Worse, it was concealed by a false statement: “The Board found that Ambassador Stevens made the decision to travel to Benghazi independently of Washington, per standard practice.  Timing for his trip was driven in part by commitments in Tripoli, as well as a staffing gap … in Benghazi.” Mr. Hicks testified in the hearing that Washington was well aware prior to the trip that Stevens was going to Benghazi.
Many observers have deplored the ARB's conclusion assigning responsibility to lower-level career officials at State for all mistakes, while clearing the political appointees above the assistant secretary of any missteps. It is a convenient finding—at least, for the State Department higher-ups. But the ARB's shoddy report is an insult to the memory of four dead Americans. The truth, even or especially at this point, does make a difference.
Victoria Toensing, former chief counsel for the Senate Intelligence Committee and deputy assistant attorney general, is founding partner of diGenova & Toensing, a Washington, D.C. law firm.


Ben Rhodes: Obama's Fixer behind the Benghazi Cover-Up

By Ed Lasky
Barack Obama's "Tower of Fabrications," as Peter Wehner describes the Benghazi scandal, is beginning to crack. And that crack will soon reveal a central figure behind the cover-up, a man close to Barack Obama for years but generally unknown to the public: Ben Rhodes.
Rhodes has risen from being an obscure and failed fiction writer to formulating foreign and national security policy for Obama precisely because he is willing to his superiors' bidding regardless of facts. He has a history of using whatever talents he has with the pen to do so.
A few years ago he had drafted the Iraq Study Group report on the causes and mishaps of the Iraq War to focus on Israel -- despite the fact that Israel was not part of the scope of the mission the Baker-Hamilton Iraq Study Group was given. Witnesses and experts called by the Committee were appalled.  Why did Rhodes distort the record? He seemingly was doing the bidding of his masters who have a history of animus towards Israel.  Rhodes had attended Rice University, where the James A. Baker III Institute for Public Policy is housed; it was headed by Edward Djerejian. Both Baker and his friend Djerejian (a former Ambassador to Syria) have pro-Arab records; criticism of and pressure towards Israel have been hallmarks of their careers.  Both Baker and Djerejian played key roles in choosing whom to hire for the Iraq Study Group and how the work was done.
Rhodes may also just be indulging his own pro-Muslim sympathies. He wrote Obama's infamous Cairo Speech. That paean to the Muslim world was filled with fulsome praise of Islam that were factually incorrect (Rhodes' post-graduate education, after all, was in fiction-writing and under Obama he seems to have finally found someone who will pay him for writing fiction).  The speech avoided references to radical Islam and was filled with platitudes about Islam. The speech highlighted a tougher line towards Israel and "credited" that nation's founding as due to European guilt over the Holocaust (ignoring 5000 years of history).
Rhodes has gone from writing reports and drafting speeches to playing a key role in formulating foreign and national security policy, according to the New York Times. His closeness to Obama -- a man known for his aloofness ("he doesn't like people" says a former aide) has become well-known.
There is a reason Rhodes is close to Obama.
Everyone in power needs a fixer and, according to the latest revelations, Ben Rhodes is Obama's fixer.
Rhodes seems to be proud of his role. Patrick Howley of the Daily Caller notes that Rhodes "identifies himself first and foremost as a strategist and mouthpiece for the president's agenda" whose, quoting Rhodes, "main job, which has always been my job, is to be the person who represents the president's view on these issues"
When State Department spokeswoman Victoria Nuland requested changes to the original CIA talking points to eliminate reports regarding warnings of the upcoming attacks who responded positively to her wishes? Ben Rhodes.
Stephen Hayes writes at the Weekly Standard (The Benghazi Scandal Grows:
The CIA's talking points, the ones that went out that Friday evening, were distributed via email to a group of top Obama administration officials. Forty-five minutes after receiving them, State Department spokeswoman Victoria Nuland expressed concerns about their contents, particularly the likelihood that members of Congress would criticize the State Department for "not paying attention to Agency warnings." CIA officials responded with a new draft, stripped of all references to Ansar al Sharia.
In an email a short time later, Nuland wrote that the changes did not "resolve all my issues or those of my building leadership." She did not specify whom she meant by State Department "building leadership." Ben Rhodes, a top Obama foreign policy and national security adviser, responded to the group, explaining that Nuland had raised valid concerns and advising that the issues would be resolved at a meeting of the National Security Council's Deputies Committee the following morning.
As Charles Krauthammer noted, Rhodes had written in an email he wanted the revisions to reflect all the "equities" of the various departments involved in the Benghazi story -- not reflect the truth but the "equities" (a Washington euphemism for reputations). Truth ended up on the cutting room floor.
This report was backed up by other journalists.
As Kevin Robillard wrote at Politico,"Terror References removed from Benghazi talking points":
Nuland was backed up by Deputy National Security Adviser Ben Rhodes.
"We must make sure that the talking points reflect all agency equities, including those of the State Department, and we don't want to undermine the FBI investigation," Rhodes wrote. "We thus will work through the talking points tomorrow morning at the Deputies Committee meeting."
After the meeting Rhodes mentioned, all references to Al Qaeda were deleted.
Hayes outlines what happened next:
Mike Morell, deputy director of the CIA, agreed to work with Jake Sullivan and Rhodes to edit the talking points. At the time, Sullivan was deputy chief of staff to Secretary of State Hillary Clinton and the State Department's director of policy planning; he is now the top national security adviser to Vice President Joe Biden.
It is highly doubtful that Morell, the deputy director of the CIA, a career official (not an Obama appointee), found this work comfortable or rewarding.  
After all, he was being "asked" to distort the CIA's original report -- to eliminate references to Islamic terrorism, to delete warnings of an organized attack to come, to shield the Obama administration and cover-up the Benghazi disaster, a problem that would have plagued Barack Obama in the run-up to the election.
Then CIA-director David Petraeus was reportedly appalled at the revisions forced upon them by Team Obama (recall the constant references during the Bush era about the "politicizing of intelligence"?). He was particularly frustrated over the deleted references to terrorism.
So who pushed for such a radical alteration of the CIA talking points, who has a history of writing reports, drafting speeches, doing his bosses bidding regardless of ethics and fealty to facts, and who has a record of indulging in pro-Islam messaging? None other than Ben Rhodes.
Journalists have just begun to focus on his role.
James Rosen, the Fox News Washington correspondent, reported Friday night on the Bret Baier show, that the Deputy National Security Adviser Ben Rhodes at the White House was an early participant in the process of rewriting the CIA talking points and he lined up with State Department spokeswoman Victoria Nuland in a "way that served to accelerate the scrubbing of the talking points".
Coincidentally (or not) Ben Rhodes's brother, David Rhodes, is the head of CBS News. One of the most dogged journalists trying to peel away the covers behind the Benghazi scandal has been CBS journalist Sharyl Atkinson. She has had to endure pressure from liberal journalistic colleagues to stop digging. Politico reports that "network sources" say that she "can't get some of her stories on the air."
The coercion may be going into overdrive as the investigations gets closer to fingering Ben Rhodes as the key player behind the Benghazi cover-up.  According to Patrick Howley of the Daily Caller, CBS News may be on the verge of firing Atkinson.
Furthermore, Ben Rhodes is married to Ann Norris, senior foreign and defense advisor to Senator Barbara Boxer (D-California). One might with some justification expect Sen. Boxer to run interference for Ben Rhodes should investigations begin to focus on his role in the Benghazi scandal.
Congress, or rather the Republican-held House since Harry Reid would never permit any truth-finding by the Democrat Senate, needs to step up the pace of their investigations, issue subpoenas, and call witnesses. America (and the wounded and dead victims and the family and friends who survive them) deserves to know the truth behind Benghazi.
And among those witnesses should be Ben Rhodes. Perhaps being forced to swear he will tell the truth will finally cause him to abandon fiction.