Saturday, July 3, 2010

The Polarization of the Supreme Court

By David Paul Kuhn

The Supreme Court has gradually come to act more like a political institution. The share of one-vote majority rulings has risen more than four-fold in the past six decades, compared to the half-century prior, based on a RealClearPolitics analysis of rulings from 1801 to the present.

John Roberts has presided over a slightly larger share of one-vote majority opinions (22 percent) than any chief justice before him, despite a decline in divided rulings in the most recent term. The previous record, under William Rehnquist, was a percentage point lower than the Roberts Court.

We have become accustomed to "minimum winning coalitions" in recent decades. But throughout the 19th century, a one-vote majority decided only 1 percent of cases on average. Between 1900 and 1950, that average rose to 4 percent. Since 1951, the average rate is 17 percent.

One-vote majority rulings carry the same legal weight as all majority opinions. Yet they lack the symbolic power of decisions by a more united court. Experts consider these 5-to-4 decisions to be more expressly political than others, representing a threat to the court's moral authority.

In effect, that means the rise in hyper-partisanship in recent decades--visible from Congress to cable television--extends to the one branch designed to be above partisan politics.

Elena Kagan's confirmation hearings this week served as a fresh reminder of that fact. Kagan spoke of the court in idealized tones. She venerated the high court's "evenhandedness and impartiality." But the perception of the high court, at least within the political class, is increasingly the opposite. South Carolina Republican Sen. Lindsey Graham dispensed with the illusion Wednesday. "It is okay, as an advocate, to have an agenda," Graham said. "I think Alito and Roberts had an agenda."

That's not the impression Roberts hoped to convey in 2005. "I have no agenda," Roberts said during his confirmation hearing. A judge's job, he explained, "is to call balls and strikes, and not to pitch or bat." But under Roberts, the high court has continued to resemble a contest between two fiercely divided teams.

The 5-to-4 blocks are more likely to be "rigid" and "politically ordered," where "liberals line up with liberals and conservatives line up with conservatives," said Stefanie Lindquist, a law professor at the University of Texas at Austin and an expert in judicial behavior.

The high court has struggled to appear less political since the 2000 Bush v. Gore decision. Until the Roberts Court, the most divisive year in the high court's history was 2000 (fully 30 percent of rulings were 5-to-4 decisions).

The Roberts Court set new records in both the 2006 and 2008 terms; about one in three decisions were by one-vote majorities those terms. The trend lessened with the recently completed 2009 term, to 18 percent, slightly above the 2007 rate. (See related chart for more details on the study.)

Until World War II, the average number of one-vote majority decisions never exceeded 4 percent under any chief justice. That rate rose as the court increasingly took up the nation's most divisive social issues, from civil rights to abortion. The Stone Court, which began in 1941, averaged 11 percent. The rate continued to climb for a period, only to diminish with the Warren Court. By 1969, the year the Burger Court began, 18 percent of rulings were decided by one-vote majorities.

"The court reflects the country, and after World War II the court became deeply divided socially," said University of Oklahoma constitutional law professor Joseph Thai, who clerked for John Paul Stevens in 2000.

The Roberts Court has been defined by these divisions despite having less strong-liberal voices on its bench, compared to more recent high courts. "The court's deep polarization today is not between the left and the right, but right and middle left," as Thai put it.

Conservative appellate judge Richard Posner, along with his University of Chicago law school colleague William Landes, underscored this point in a 2009 study. They ranked all 43 Supreme Court justices from 1937 to 2006 by ideology. None of the current liberal judges ranked among the five most liberal members of the court. Only Ruth Bader Ginsburg ranked among the top ten most liberal justices. By comparison, four of the five most conservative judges are currently on the court. Anthony Kennedy, traditionally considered the swing vote on today's court, was ranked as the tenth most conservative judge.

The same study found that ideology also "matters more in the Supreme Court than in the court of appeals." In other words, the nations highest court is more political than courts below it.

Kagan is unlikely to change the broad makeup of the court. She will--all sides expect her to be confirmed--replace Stevens, a liberal. But if she proves more liberal than Stevens, that could lead to even more 5-to-4 decisions. The Posner study found that the greater the ideological range on the high court, from right to left, the greater the number of cases decided by one vote.

The Roberts Court has relied on 5-to-4 majorities to pass many of its headline decisions: from this weeks ruling that the Second Amendment guarantees an individual's right to gun ownership to the Lilly Ledbetter case, limiting an employee's ability to file a pay discrimination claim, to the Citizens United decision, which allowed unlimited corporate and union spending in elections.

The strong-conservative coalition has tilted most landmark rulings to conservative's favor in recent years. Precisely for this reason, the rising rate of fragile high court decisions should especially concern conservatives. Studies show that 5-to-4 decisions are the most likely rulings to be overturned by later Supreme Courts.

But the deeper issue transcends any one case or court. The "supreme" authority of the high court rests on its legitimacy. The more absent consensus is from the high court, the more diminished its legitimacy and the more each decision will come to be viewed through a political lens.

David Paul Kuhn is the Chief Political Correspondent for RealClearPolitics and the author of The Neglected Voter: White Men and the Democratic Dilemma. He can be reached at and his writing followed via RSS.

Obama’s Apogee in His Rearview Mirror

Obama’s Apogee in His Rearview Mirror

After two wave elections, Democrats at risk.

For reasons related to normal rhythms of American politics and to Barack Obama’s abnormal lurch to the left, his presidency probably has passed its apogee.

If Obama has a second term, it probably will be, as most are, more difficult than the first, during which his party’s brand has been badly damaged in just 17 months. The 22nd Amendment renders reelected presidents instant lame ducks. Public boredom is induced by the incontinent talkativeness of those who occupy the modern rhetorical presidency. And power seeps from reelected presidents as attention turns to selecting their successors.The remainder of Obama’s first term will be complicated by this November’s elections. Turnout in this nonpresidential year will be significantly smaller than in 2008. The largest declines will be among young and minority voters who were energized by Obama being on the ballot. So this year’s turnout will be older, whiter—and more conservative.

Many conservatives were too dispirited to vote in 2008. Not now. Gallup reports a four-poll average of 59 percent of Republicans and Republican-leaning independents saying that this year they are unusually enthusiastic about voting, the highest number Gallup has recorded for a midterm election since the earthquake year of 1994, when Republicans gained 54 House seats. In Gallup’s June poll, 53 percent of Republicans said they were unusually enthusiastic, 39 percent said they were less; 35 percent of Democrats said they were unusually enthusiastic, 56 percent said they were less. The Republicans’ net of plus 14 more enthusiastic compared with the Democrats’ negative 21 is the largest party advantage Gallup has ever recorded for a midterm election.

This 111th Congress may leave Washington in December after a post-election lame-duck session in which defeated legislators with nothing to lose might vote for measures the unpopularity of which is, to progressives, evidence of how progressive the measures are. How many dead legislators walking might there be in December? Political analyst Charles Cook notes that in July 1994, four months before the Republican House landslide, Congress’s job approval was 53 percent. In October 2006, percent of Americans approved of the job Congress was doing—and a month later Republicans lost control of both chambers. In recent polls, approval of Congress has ranged from 19 to 26 percent.

Americans usually exempt their particular representative from their normal disparagement of Congress. Today, however, with 62 percent saying the country is on the wrong track, the Wall Street Journal/NBC poll shows 57 percent want to elect a new representative, the highest total in 18 years. Peter Hart, a Democrat who helps conduct this poll, says voters “are just looking for change.” Change they can believe in?

A “wave” election is defined as one in which a party gains at least 20 House seats. The 2006 and 2008 elections were the first two consecutive waves since 1980–82. (There have not been three in a row since 1948, 1950, 1952.) Waves wash legislators into seats that, when normality is restored, are inhospitable to their occupants. Liberal waves give moderate Democrats tenuous holds on essentially Republican districts. Because most Democratic losses will be among the least liberal Democrats, next year Speaker Pelosi’s caucus will be even more at odds with an increasingly center-right country.

In May, Gallup found that 20 percent of registered voters identified themselves as liberals; 42 percent said they were conservatives. The 49 percent of Americans who say the Democratic Party is “too liberal” is just one point below the 50 percent who said that after administering to the party the 1994 shellacking. The 50 percent was the highest number recorded in the 18 years Gallup has asked the question.

The 2012 and 2014 election cycles will be even more hazardous for Democrats because of their party’s exposure in Senate races. This year, Republicans are expected to gain at least five seats, even though they and the Democrats are defending 18 seats. But because of the 2006 and 2008 waves, in 2012 Democrats will be defending 23 Senate seats, Republicans only 10, and in 2014, Democrats will be defending 20, Republicans 13. The Democrats’ exposure in these two cycles (43) will be almost twice the Republicans’ (23). If Senate GOP leader Mitch McConnell has even 44 in his caucus next year, as he probably will, he will almost always be able to muster 41 votes to block bills. Which is another reason Obama’s apogee is in his rearview mirror.

Hot Dog, Anyone?

The Nation's Pulse

The Nation's Pulse

Hot Dog, Anyone?

The United States of America reaches its 234th birthday this weekend with a people divided, an economy in shambles, one of its largest environmental messes growing roughly as rapidly as the national debt, two hot wars simmering and one cold one showing signs of warming.

Hot dog, anyone?

The United States has faced far greater challenges than this. The president might be rhetorically at war with the people, not to mention the Constitution, but Texas Gov. Rick Perry's bluster notwithstanding, no state has taken up arms against the federal government. Nor are racist Eurogoons mustering at the Rhine with hopes to goose-step their way across the Atlantic while racist Asian imperialists forge new navies. (We have a different kind of fanatic imperialist to worry about, but apparently they've found even our lax and inept border enforcement too challenging to handle lately.)

And yet the challenges we confront today, as World War II veterans fade into history all around us, seem monumentally complex and difficult. Only 65 years ago the United States could find the resources and resolve to defeat Hitler and Hirohito simultaneously, and do it in only four years, but now we can't find the courage to trim even a few percentage points from the growth rates of our entitlement programs. Our grandparents gave their lives to liberate Europe and crush Imperial Japan, and we can't sacrifice the National Endowment for the Arts to save our own country from financial collapse.

This is a great and complex nation. This weekend our first black president attends the funeral of our longest-serving senator, who as a young man was a leader of his local Ku Klux Klan chapter, and who as a middle-aged man filibustered the Civil Rights Act. We make progress quickly here. When Robert Byrd was elected to Congress, the South was segregated and lynchings still happened. When he died, our president, our most trusted celebrity (James Earl Jones) and our richest and most powerful celebrity (Oprah) were all black. Byrd was first elected to Congress just four years after Jackie Robinson became a Dodger. This year, 38 percent of Major League Baseball players are Hispanic, black or Asian.

But as we sit together in sports stadiums and movie theaters, crowds as multi-colored, if not more so, than the teams or casts we watch (or the politicians we vote for), we are fragmenting along political lines as our government pits groups of us against one another.

In some ways America is more united than it ever has been. By and large, we no longer tolerate racism, and we do tolerate more differences in our friends, neighbors and co-workers than ever before -- except when it comes to politics. There, it's a nasty, bitter, divided world. Democrats demonize Republicans, and vice versa. No one on the other side is allowed to have good motives. Battles are winner-take-all and take-no-prisoners affairs. Obtaining and keeping power is the goal, all else -- including national unity and future prosperity -- be damned.

The United States is a self-correcting country. An enterprising people, we fix our own problems. We don't gaze across the Atlantic or Pacific and hope to be helped up. At least, with the exception of Yorktown, we never have. One wonders, though, whether we have exhausted ourselves trying to fix the rest of the world's problems. Is there any energy, any will, to do the hard work necessary to fix our own this time?

I think the answer is "yes." I see the spirited defense of American liberty that arose spontaneously to confront the current administration's systematic effort to seize control of the economy, and I see hope for this country. The Tea Party movement made it OK to oppose this president, this Congress, and their agenda to reshape the United States in Europe's mold. The left dismissed it as anti-tax, but like its namesake it was organized to oppose rapidly encroaching government power, not taxes. And it has had a profound effect.

A year ago, Obama was popular and the left was on the ascent. Today, nearly half of independents (45 percent) prefer Republicans to Democrats heading into this fall's mid-term elections, according to Gallup. Only 35 percent prefer Democrats. The Tea Party movement does not account for all of the country's shift away from Obama and his policies -- Obama himself accounts for most of it -- but it had a profound effect.

The 20th century saw a big shift toward European-style statism in the United States. Obama hoped to complete what FDR and LBJ could not. He might yet. But I see reasons to expect he will fail. The American people understand that the Greeks turned what was once the greatest nation in the world into a failed welfare state, and they don't want to suffer the same fate. They get that we are headed in that direction if we don't change course. So they are preparing to change course.

In doing so, they begin the correction that will, if divine providence allows, enable this great nation to see another 234 birthdays. Doubtful? Maybe. But a few birthdays ago, so was the idea that a ragtag group of militiamen could defeat the world's greatest military power.

July Fourth Celebrates America's and the West's Core Values

July Fourth Celebrates America's and the West's Core Values

Reason, Rights, and Science Are What Made America Great


Why should we celebrate the Fourth of July? Because America -- as the greatest product of Western civilization -- is the greatest country in the world. But it cannot remain great unless we understand the causes of its greatness.

In this age of diversity-worship, it is considered axiomatic that all cultures and countries are equal. Western culture, it is declared, is in no way superior to that of any other, not even to tribes of cannibals. To deny the equality of all cultures, claim the intellectuals, is to be guilty of the most heinous of intellectual sins: "ethnocentrism." It is to flout the "sacred" (and false) principle of cultural relativism. I disagree with the relativists -- absolutely.

There are three fundamental respects in which Western culture is objectively the best. The core values and achievements of Western civilization -- the values that made America great -- are:

1. Reason. The Greeks were the first to identify philosophically that knowledge is gained through reason and logic as opposed to mysticism (faith, tradition, revelation, dogma). It would take two millennia, including a Dark Ages and a Renaissance, before the full implications of Greek thought would be realized. The rule of reason reached its zenith in the West in the 18th century -- the Age of Enlightenment. "For the first time in modern history," writes one philosopher, "an authentic respect for reason became the mark of an entire culture." America is the epitome of Enlightenment thought.

2. Individual Rights. An indispensable achievement leading to the Enlightenment was the recognition of the concept of individual rights. John Locke demonstrated that individuals do not exist to serve governments, but rather that governments exist to protect individuals. The individual, said Locke, has an inalienable right to life, liberty, and the pursuit of his own happiness. This was the founding philosophy of America. (America made a disastrous error by tolerating slavery, which originated elsewhere, but it was too incongruent with America's core principles of reason and rights to endure and was corrected in the name of those principles.)

3. Science and Technology. The triumph of reason and rights made possible the full development and application of science and technology and ultimately modern industrial society. Once man's mind was freed from the tyranny of religious dogma, and man's productive capacity was freed from the tyranny of state control, scientific and technological progress followed in several interdependent steps. Men began to understand the laws of nature. They invented machinery. They engaged in large-scale production, that is, the creation of wealth. This wealth, in turn, financed and motivated further invention and production. As a result, horse-and-buggies were replaced by automobiles, wagon tracks by steel rails, and candles by electricity. At last, after millennia of struggle, man became the master of his environment.

The result of these core achievements was an increase in freedom, wealth, health, comfort, and life expectancy unprecedented in the history of the world. These Western achievements were greatest in the country where the principles of reason and rights were implemented most consistently -- the United States of America. In contrast, it was precisely in those (third-world) countries which did not embrace reason, rights, and technology where people suffered (and still suffer) most from both natural and man-made disasters (famine, poverty, illness, dictatorship) and where life-expectancy was (and is) lowest. It is said that primitives live "in harmony with nature," but in reality they are simply victims of the vicissitudes of nature -- if some dictator does not kill them first.

The greatness of America is not an "ethnocentric" prejudice; it is an objective fact. This assessment is based on the only proper standard for judging a culture or a society: the degree to which its core values are pro- or anti-life. Pro-life cultures acknowledge and respect man's nature as a rational being who must discover and create the conditions which his survival and happiness require -- which means that they advocate reason, rights (freedom), and technological progress.

Despite its undeniable triumphs, America is by no means secure. Its core principles are under attack from every direction -- by religious zealots who want to undermine the separation of church and state, and by its own intellectuals, who are denouncing reason in the name of skepticism, rights in the name of special entitlements, and progress in the name of environmentalism. We are heading rapidly toward the destruction of our core values and the dead end of nihilism. The core values and achievements of the West and of America must be asserted proudly and defended to the death. Our lives depend on them.

A Peace Plan for The Middle East

A Peace Plan for The Middle East

Israel defeats its enemies.

My peace plan is simple: Israel defeats its enemies.

Victory uniquely creates circumstances conducive to peace. Wars end, the historical record confirms, when one side concedes defeat and the other wins. This makes intuitive sense, for so long as both sides aspire to achieve their ambitions, fighting continues or it potentially can resume.

The goal of victory is not exactly something novel. Sun Tzu, the ancient Chinese strategist, advised that in war, "Let your great object be victory." Raimondo Montecuccoli, a seventeenth-century Austrian, said that "The objective in war is victory." Carl von Clausewitz, a nineteenth-century Prussian, added that "War is an act of violence to compel the enemy to fulfill our will." Winston Churchill told the British people: "You ask: what is our aim? I can answer in one word: Victory - victory - at all costs, victory, in spite of all terror, victory, however long and hard the road may be." Dwight D. Eisenhower observed that "In war, there is no substitute for victory." These insights from prior eras still hold, for however much weaponry changes, human nature remains the same.

Victory means imposing one's will on the enemy, compelling him to abandon his war goals. Germans, forced to surrender in World War I, retained the goal of dominating Europe and a few years later looked to Hitler to achieve this goal. Signed pieces of paper matter only if one side has cried "Uncle": The Vietnam War ostensibly concluded through diplomacy in 1973 but both sides continued to seek their war aims until the North won ultimate victory in 1975.

Willpower is the key: shooting down planes, destroying tanks, exhausting munitions, making soldiers flee, and seizing land are not decisive in themselves but must be accompanied by a psychological collapse. North Korea's loss in 1953, Saddam Hussein's in 1991, and the Iraqi Sunni loss in 2003 did not translate into despair. Conversely, the French gave up in Algeria in 1962, despite out-manning and out-gunning their foes, as did the Americans in Vietnam in 1975 and the Soviets in Afghanistan in 1989. The Cold War ended without a fatality. In all these cases, the losers maintained large arsenals, armies, and functioning economies. But they ran out of will.

Likewise, the Arab-Israeli conflict will be resolved only when one side gives up.

Until now, through round after round of war, both sides have retained their goals. Israel fights to win acceptance by its enemies, while those enemies fight to eliminate Israel. Those goals are raw, unchanging, and mutually contradictory. Israel's acceptance or elimination are the only states of peace. Each observer must opt for one solution or the other. A civilized person will want Israel to win, for its goal is defensive, to protect an existing and flourishing country. Its enemies' goal of destruction amounts to pure barbarism.

For nearly 60 years, Arab rejectionists, now joined by Iranian and leftist counterparts, have tried to eliminate Israel through multiple strategies: they work to undermine its legitimacy intellectually, overwhelm it demographically, isolate it economically, restrain its defenses diplomatically, fight it conventionally, demoralize it with terror, and threaten to destroy it with WMDs. While the enemies of Israel have pursued their goals with energy and will, they have met few successes.

Ironically, Israelis over time responded to the incessant assault on their country by losing sight of the need to win. The right developed schemes to finesse victory, the center experimented with appeasement and unilateralism, and the left wallowed in guilt and self-recrimination. Exceedingly few Israelis understand the unfinished business of victory, of crushing the enemy's will and getting him to accept the permanence of the Jewish state.

Fortunately for Israel, it need only defeat the Palestinians, and not the entire Arab or Muslim population, which eventually will follow the Palestinian lead in accepting Israel. Fortunately too, although the Palestinians have built an awesome reputation for endurance, they can be beaten. If the Germans and Japanese could be forced to give up in 1945 and the Americans in 1975, how can Palestinians be exempt from defeat?

Of course, Israel faces obstacles in achieving victory. The country is hemmed in generally by international expectations (from the United Nations Security Council, for example) and specifically by the policies of its main ally, the U.S. government. Therefore, if Jerusalem is to win, that starts with a change in policy in the United States and in other Western countries. Those governments should urge Israel to seek victory by convincing the Palestinians that they have lost.

This means undoing the perceptions of Israel's weakness that grew during the Oslo process (1993-2000) and then the twin withdrawals from Lebanon and Gaza (2000-05). Jerusalem appeared back on track during Ariel Sharon's first three years as prime minister, 2001-03 and his tough stance then marked real progress in Israel's war effort. Only when it became clear in late 2004 that Sharon really did plan to withdraw unilaterally from Gaza did the Palestinian mood revive and Israel stopped winning. Ehud Olmert's debilitating prime ministry has been only partially remedied by Binyamin Netanyahu over the past year.

Ironically, an Israeli victory would bring yet greater benefits to the Palestinians than to Israel. Israelis would benefit by being rid of an atavistic war, to be sure, but their country is a functioning, modern society. For Palestinians, in contrast, abandoning the fetid irredentist dream of eliminating their neighbor would finally offer them a chance to tend their own misbegotten garden, to develop their deeply deficient polity, economy, society, and culture.

Thus does my peace plan both end the war and bring unique benefits to all directly involved.

It Depends on What the Definition of ‘Austerity’ Is

It Depends on What the Definition of ‘Austerity’ Is

Paul Krugman says we are in a 'new era of austerity.' When will government spending be enough?

In a recent column, economist Paul Krugman explained how the United States has entered a new era of austerity as evidenced by the Senate’s failure to pass a bill that would have sent more money to the states to fill their budget gaps: "Suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere, including the United States, where 52 senators voted against extending aid to the unemployed despite the highest rate of long-term joblessness since the 1930s. Many economists, myself included, regard this turn to austerity as a huge mistake."

Austerity, as Krugman defines here, equals Congress’s onetime refusal to spend even more money above the $4 trillion that the federal government is already spending this year (as the nation runs a $1.4 trillion deficit, with $7.5 trillion in debt held by the public and $50 trillion in unfunded entitlement spending).

When will government spending be enough? Using Bureau of Labor Statistics data, the chart below compares recent changes in government expenditures—or federal, state, and local government purchases of labor, goods, and services—and private domestic investment.

deRugy 6.30.10

As we see, changes in the size of government and in the private sector have generally moved together over the last decade. However, with the exception of 2004 and 2005, government consumption and investment has grown more quickly than private expenditures and investment every year this decade. In the last ten years, the private sector has, on average, grown 1.2 percent annually, while the government has, on average, grown 3.5 percent annually.

What’s more, while the private sector contracted in three of the past ten years, the government has continued to grow throughout the period. The government grows, regardless of changes in the economy.

In other words, if there is austerity, it’s not in government.

Veronique de Rugy is a senior research fellow at The Mercatus Center at George Mason University.

Tax to the Max?

Tax to the Max?

Should we lift the payroll-tax ceiling to fix Social Security?

Over at ThinkProgress, Matt Yglesias argues that a sensible solution to Social Security’s long-term funding shortfalls would be to eliminate the so-called “tax max,” the $106,800 maximum earnings on which Social Security’s 12.4 percent tax is levied and upon which benefits are calculated. In other words, individuals would pay taxes and earn benefits based on their total earnings, no matter how high. According to the Social Security Administration’s (SSA’s) Office of the Actuary, this step—if implemented immediately—would eliminate around 95 percent of the long-term “actuarial deficit.” Yglesias calls eliminating the tax max “a very reasonable response to the fact that over the past thirty years the share of national income accruing to very high income individuals has gone up dramatically.”

Here are two thoughts, dealing with the effects of eliminating the payroll tax ceiling on Social Security’s financing and on marginal tax rates.

First, while eliminating the payroll tax ceiling would solve most of the 75-year actuarial deficit, bear in mind that this is a trust fund-based measure. Most economists and government analysts view government trust funds as accounting mechanisms, but not a vehicle that truly saves and transfers resources over time. For instance, the Congressional Budget Office’s Long-Term Budget Outlook, released Wednesday, states with reference to the Medicare trust fund that

Although the HI trust fund has important legal meaning, in that its balances are a measure of the amounts that government has the legal authority to spend under current law, it has little economic significance.

The economic consensus appears to be that Social Security surpluses effectively subsidize current consumption in the rest of the budget, not to improve the overall budget balance or raise national saving. That’s a really important point in this context, since eliminating the payroll-tax ceiling would produce large short-term payroll-tax surpluses, which would be credited to the trust fund and then “drawn down” to pay benefits in the future.

This chart, from SSA data, shows the program’s net cash flows (taxes minus benefits) under current law and for a no tax-max scenario. Eliminating the tax cap does improve Social Security’s long-term cash flows, reducing annual deficits by around half. But the big improvement to the system’s actuarial balance hinges on a large trust fund buildup in the short term, as higher taxes produce a bubble of payroll tax surpluses. If these surpluses aren’t truly saved—and there’s very good reason to believe they won’t be—then Social Security’s financing will be improved more on paper than in reality. It would cut annual deficits in half—which is great, but a far cry from eliminating them.

Biggs 7.1.10

Second, raising or eliminating the payroll-tax ceiling would constitute a significant increase in marginal taxes for many people with middle-class standards of living. Consider a person earning $107,000 annually, which is just above the current tax ceiling. That person pays a marginal federal income tax rate of 28 percent, a combined Medicare tax rate of 2.9 percent, and a state income tax rate that averages around 5 percent. In total, that person pays the government almost 36 cents of each additional dollar he or she earns.

If the payroll tax ceiling were eliminated, that same person would pay an additional tax of 12.4 percent (nominally split between employer and employee, but almost universally believed to be fully borne by the worker through reduced wages). The worker would receive additional benefits in exchange for higher Social Security taxes, but these are tiny at the margin due the progressivity of the benefit formula. I believe his net tax rate (the payroll tax rate minus benefits earned) would approach 11 percent. This would put this worker’s marginal tax rate at around 47 percent of his or her income.

And note that a) in many urban areas around the country $107,000 is a middle-class income, so these aren’t the super-rich; and b) these would be the marginal tax rates paid before we’d fixed even a penny of Medicare and Medicaid’s multi-trillion-dollar deficits, which—as the Left likes to remind us—are so much bigger than Social Security’s.

It’s pretty much accepted, even among policy folks well to the left-of-center, that the trust fund isn’t real savings and that marginal tax rates do matter. Given this, I don’t think a straight-elimination of the payroll tax ceiling really passes muster as a practical solution to Social Security’s funding problems. Philosophically and emotionally, a lot of liberals want to do it, but I suspect many of them know that eliminating the payroll-tax ceiling also presents some significant practical problems.

Andrew G. Biggs is a resident scholar at the American Enterprise Institute. From 2008 to 2009 he served as principal deputy commissioner of the Social Security Administration and as secretary of the Social Security Board of Trustees.

The Spirit of Independence

The Spirit of Independence: The Social Psychology of Freedom

Intellectuals routinely give undue weight to people’s ideas. They tend to believe that ideas cause attitudes, though it is far more often the other way around. Consider the natural libertarians.

Several years ago, while attending a street festival in the small town of Tucker, Georgia, I came across a booth sponsored by the local libertarian society. At the time, I did not realize that my encounter would generate my next book. I only remember being struck by the question asked of everyone who visited the booth that day: “So who owns you?”

Like any good carnival barker, the young libertarian who asked this knew from experience that it was an effective opener. It catches you off-guard. It forces you to stop and think. The correct answer, as I soon discovered, was that we own ourselves. We are not owned by the state, the church, or even by God. We are our own property, to dispose of as we wish, in any way we want. We can throw ourselves off a cliff. We can move to Nepal. We can stand at street corners and beg. It is all up to us, because we all own ourselves.

The “correct” answer did not sit well with me. I told the young libertarian that, as a human being, I was not the kind of thing that anyone could own, including myself. Tables and chairs could be owned. Chevrolets and BMWs could be owned. But not human beings. After all, if I owned myself, then I had the right to sell myself, the right to deprive myself of my rights. But if liberty was my inalienable right, as the great libertarian Thomas Jefferson had asserted in the Declaration of Independence, then how could I alienate it by selling myself into slavery?

I only remember being struck by the question asked of everyone who visited the booth that day: ‘So who owns you?’

Perhaps my objection was overly subtle, because I noticed that my reservations did not bother anyone else who wandered into the libertarian booth that day. To most of them, the question “So who owns you?” seemed to come with the force of a revelation, and they responded with a decided and often emphatic, “Nobody owns me.” Which is to say, someone may own other people, but certainly does not own me.

In retrospect, their answers were more profound than mine. My answer came from the head; theirs from the heart. Many of those who responded from the heart probably knew very little about the philosophy behind libertarianism. Perhaps some had read John Locke or John Stuart Mill back in college, but most of them might best be considered natural libertarians. They knew they couldn’t stand the idea of someone else owning them, someone else telling them what to do or how to think, of someone else bossing them around. They all felt competent to manage their own lives and deeply resented any attempt by other people, including the government, to manage their lives for them. Rightly or wrongly, natural libertarians are firmly convinced that no one else can know their best interests more than they do. They insist on remaining in charge of their own destinies and bristle whenever other people seem intent on taking charge of their lives. Because natural libertarians respect their own independence, they respect the independence of others. They do not aspire to control other people’s lives, but when other people aspire to control theirs, they will resist tooth and nail. The natural libertarian will behave this way not because of an ideology, but because of his or her distinctive attitude towards life.

The High Cost of Not Rebelling

Intellectuals routinely give undue weight to people’s ideas. They tend to believe that ideas cause attitudes, though it is far more often the other way around. The discipline known as social psychology recognizes attitude’s primacy. Furthermore, as its name implies, social psychology focuses on attitudes that groups of individuals share: the group can be small, like an office, or quite large, like an entire culture. The work of two American social psychologists, Julian Rotter and Martin Seligman, offers perhaps the best introduction to unraveling the social psychology of the natural libertarian.

Because natural libertarians respect their own independence, they respect the independence of others. They do not aspire to control other people’s lives, but when other people aspire to control theirs, they will resist tooth and nail.

In 1966, American psychologist Julian Rotter published a paper that introduced the concept known as locus of control. Human beings, according to Rotter, could be divided into two basic groups: those who believed their locus of control was within themselves, and those who see themselves as under the control of forces located outside themselves, such as luck, or fate, or other people whose will cannot be resisted. The first group, called internals, believe that they are the masters of their own destiny; they tend to be high-achievers, optimistic about their ability to improve their lot, and to discard bad habits. They believe in willpower and positive thinking. They are determined to control their own lives, for better or worse. Members of the second group are called externals. They look on themselves as victims of circumstances, the playthings of fate. If they go to bed drunk, light up a cigarette, and burn their house down, they explain the disaster as another instance of their bad luck, and not their poor judgment, much less their bad habits. On the other hand, if a drunk driver hits an internal, the internal will scold himself that he should have been more alert at the wheel, he should have seen the drunk coming and swerved in time to avoid him.

Rotter discovered that certain groups tended to be dense with internals, while others tend to display the social psychology of the external. Jews, for example, tend to be internals. Rotter himself came from a family of Jewish immigrants, and was a classic high-achiever who believed that by hard work and study he could improve his lot and rise in the world. He was a classic self-made man. But, then, Rotter’s success story was certainly not unique among Jewish immigrants to America—or indeed, other immigrants to America. Immigrants, after all, demonstrates the belief that they are in charge of their own destiny by electing to leave their homeland, in search of a new home that will permit them to exercise greater control over their own life. On the other hand, experiments have shown that the Japanese are more external than Americans. These cultural differences suggest that locus of control may be passed on as part of a culture’s tradition, both consciously and unconsciously.

In order to encourage a population rich in internals—i.e., natural libertarians—a society needs cultural traditions that emphasize the value of independence and ethical agency. It must teach the young that they are responsible for their own actions, and to never regard themselves as victims of circumstance. Anthropologists who have studied the huge variety of human cultures have encountered quite primitive societies, such as the Nuer of the Sudan, which raise children to be feisty and independent. They are taught from an early age to resist being bullied by others and to fight back at the first attempt at dominating them. But wherever it may be found, at the heart of the tradition of independence lives a set of imperatives. Be self-reliant. Don’t take other people’s word for something; think for yourself. Never become anyone’s follower. Bow down before no one. Stand up for your rights. Don’t let bullies intimidate you. Don’t permit yourself to become the slave of an addiction and thereby forfeit your all-important self-control. And do whatever you can to make sure that other members of your community uphold and cherish the same tradition of independence.

In order to encourage a population rich in internals—i.e., natural libertarians—a society needs cultural traditions that emphasize the value of independence and ethical agency.

Of no less importance to the tradition of independence is the seemingly paranoid fear that power will fall into the wrong hands. The great nineteenth-century champion of liberty, Lord Acton, coined the famous maxim: “All power corrupts, and absolute power corrupts absolutely.” This obsessive fear of power is key to understanding why natural libertarians will automatically rebel when some overbearing elite threatens to rob them of their cherished tradition of independence. They rebel because they instinctively understand the high cost of not rebelling.

According to the American psychologist Martin Seligman, the cost of not rebelling is a pathological condition that he called “learned helplessness.” Seligman developed this concept after performing a set of experiments in which he exposed various lab animals, such as dogs, to painful stimuli. Some of the dogs could escape the pain by pressing against a button; other dogs, when they pressed their button, failed to receive any relief from the pain. The dogs with the opportunity of acting to control the painful stimuli suffered no adverse long-term effects. The dogs with no control over the painful stimuli simply gave up trying to control their situation, and afterward suffered from clinical depression. Worse, in other tests, those dogs that had learned that they were helpless in one environment behaved equally helpless in a second environment, even when the second environment was one in which they could have escaped the painful stimulus by jumping over a low barrier into safety. Convinced that nothing they did could change their wretched situation, the dogs simply lay down and cried. They had learned to be helpless.

Trained Helplessness

But Seligman’s conclusion can be put in another way: the dogs had been trained to be helpless. The tradition of independence trains us to struggle against adversity, in the belief that we are ultimately in charge of our own destinies. But a multitude of traditions instill the opposite lesson. These traditions invariably preach the same message: You must submit to the inevitable. You are the victim of fate, so that any resistance is pointless and frequently counterproductive. It is folly to rebel against those with power, since they will inevitably use their superior power to crush you beneath their heels. Resign yourself to what lowly lot has been assigned you. Accept your utter helplessness, for that is the way of wisdom.

Natural libertarians rebel because they instinctively understand the high cost of not rebelling.

Under systems of slavery and servitude, those intended to become human chattel will be raised by a tradition that will encourage learned helplessness. Their young will likely listen to stories like Aesop’s fable of the oak and the reeds—it is better to submit to force majeure than to try to stand up defiantly against it. If you are a reed, bend and survive. If you are an oak, refuse to bow and be broken. Yet, miraculously, there have always been some shining examples of men and women who, despite their servile status, have broken free of mental servitude.

In nineteenth-century America, Frederick Douglass escaped from slavery, and was determined to not only to remain free from chains, but to achieve the genuine independence that can only come from self-reliance and self-mastery. He succeeded, and instead of moaning that he was the victim of an unjust social system, Douglass set out, with immense courage and strength of will, to topple the unjust system under which he had suffered but never surrendered. Similarly, Seligman in his experiment on lab dogs found that not all the dogs reacted to the uncontrollable pain stimulus by learning to be helpless. Roughly one-third of the dogs did not respond this way, and kept attempting to escape the pain by whatever means they could. They continued to rebel against their harsh condition, despite the fact that they could not change it. To an outside observer, their rebellion might seem utterly pointless, yet it kept the irrationally rebellious dogs from a fate much worse than mere physical pain—namely, the fate of the majority of dogs who simply gave up, thereby resigning themselves forever to the misery of their hopeless situation.

Insidious Benevolence

The condition of learned helplessness can be induced by pain, but many kinder, gentler ways can achieve the same insidious results. When today’s natural libertarians express their alarm at the inroads of “the nanny state,” they are recognizing this fact. A good nanny’s duty is to protect from harm the children she watches. But it is all too easy for the nanny, despite her best intentions, to overprotect her wards. If they act independently of her wishes, they might hurt themselves. To prevent this, a nanny might require her wards to ask permission before they do anything. Her message is: “Come to nanny first. Let her decide what is best for you.” If the kids obey, they will imperceptibly become dependent on nanny to make decisions for them—indeed, they may become alarmed at the very idea of having to make decisions for themselves. By this point, the children have entered a state of learned helplessness, but one brought about by the most benevolent intentions.

The road from serfdom is far less frequently traveled than the road to serfdom.

In this example, we are assuming that the nanny means well, and that she is not deliberately aiming to crush her ward’s independence. But some with a taste for power recognize there exists no better way of acquiring it than by making other people codependent on them. The nineteenth-century German politician Otto von Bismarck was hardly anyone’s idea of a nanny, but he constructed the world’s first nanny state for the sole purpose of making German citizens so codependent on the German Reich that they would never think of rebelling against it. By offering Germans a prototype of the modern welfare state, Bismarck’s goal was not improving the common man’s lot—it was his way of inducing the common man, when faced with personal difficulties, to expect the state to look after him, instead of relying on himself to deal with his own problems.

Ironically, Bismarck launched the first welfare state because he feared the influence of Karl Marx on the German working class. Marx opposed the welfare state precisely because he recognized that it would create a population codependent on the ruling elite in charge of the German Reich. It would tend to make them more docile and helpless, less self-reliant and rebellious. Today’s European socialists, along with America’s welfare statists, are not the descendants of Marx; they are the great-grandchildren of Bismarck.

A Kinder, Gentler Serfdom

Yet there is something even worse than creating codependency on either nanny or the welfare state. This occurs whenever a deliberate campaign encourages people to think of themselves as victims. Victims are not in charge of their own lives and destinies. They show the same attitude toward the world that Rotter’s externals display. Our condition is not our fault, and we can do nothing about it ourselves. We must depend on others, since we obviously cannot depend on ourselves. We are helpless to help ourselves; therefore, others must help us.

Today in the United States, far too many in the political class willingly help the victims of social injustice, but only so long as they agree to play the victim role and to keep playing it so long as politicians need their votes. It is terrible to have been a victim of social injustice, but to condemn victims to remain perpetual victims simply to keep them voting a party line is the most heartless kind of political opportunism of all.

Human beings, according to Rotter, could be divided into two basic groups: those who believed their locus of control was within themselves, and those who see themselves as under the control of forces located outside themselves, such as luck, or fate, or other people whose will cannot be resisted.

Yet this same opportunism has guided the leadership of the various liberation movements that emerged during the ’60s. In order to keep their positions of influence and command, this leadership has done everything in its power to make their followers think of themselves as victims, and indeed to find new and unexpected modes of victimization. This is not liberation; it is training people into the attitude of Rotter’s externals, who do not see themselves as masters of their own destinies, but as the tragic victims of circumstances beyond their control.

In the radio interviews I did after the publication of my new book, its alarming title, The Next American Civil War, received much attention. Some interviewers thought it was simply wacko. Others were more sympathetic, but argued that I really meant a war of ideas. But this is not what I really meant. I was referring to the clash between two radically incompatible attitudes towards life—a far more serious clash than mere intellectual debate. Ideas can be changed much more easily than our fundamental attitude. In fact, few things are more difficult to change.

On one side of the clash are the people like those who visited the libertarian booth in Tucker, Georgia, and whose attitude was: “Hell, no, nobody owns me.” Perhaps some of these people have joined the Tea Party movement, but I suspect most have not. Yet they still remain natural libertarians, who instinctively place their locus of control within themselves. Like Rotter’s internals, they resist any effort by others to manage and control their lives.

On the other side of the clash are those who stand to benefit from encouraging others to rely on them instead of relying on themselves. Those who seek to exercise power and influence over others will naturally be hostile to the independent attitude of the natural libertarian, simply because this attitude is ultimately the one thing that stands in the way of achieving their own ambitions to rule, manage, and govern others. Today, far too many people in governmental circles, in our universities, and among the custodians of mass culture all share the goal of encouraging ordinary men and women to stop being self-reliant, cease to think for themselves, embrace their status as victims of circumstances, and to blame others for their own misfortunes instead of rousing themselves to overcome difficulties, as Frederick Douglass did.

Ideas can be changed much more easily than our fundamental attitude. In fact, few things are more difficult to change.

The stakes in this clash are enormous. Natural libertarians find themselves in a desperate struggle to keep alive the traditions of independence that have shaped and molded their attitudes. They see themselves battling forces that seek to create a state of helpless codependency among their fellow citizens. Often, like the natural libertarians of the past—for example, our own revolutionary ancestors and the seventeenth-century English parliamentarians who resisted Charles the First—today’s natural libertarians display a paranoid tendency to imagine that wicked men are conspiring to rob them of their liberty. Now, as in the past, the rhetoric of the natural libertarian will sound overwrought. But this must not confuse us. For the natural libertarian is always correct in his or her assumption that those with a hunger for power and influence will seek to crush, for their own interest, the spirit of rebellious independence that is the fundamental habit of the heart shared by all natural libertarians of every epoch and culture. Even under the worst of circumstances, when it would be easy to accept victim status, natural libertarians continue to struggle heroically against impossible odds, just as a third of the dogs in Seligman’s experiments continued to try to escape their inescapable bondage. Was this folly or the noblest form of heroism, namely heroism for a cause you know is already lost?

The Roadblock to Serfdom

If the cause of the natural libertarian is lost, then the cause of liberty is also lost. Those with power prefer their subjects to behave like the majority of dogs in Seligman’s experiment—to lay down and give up, to hand over the control of their fate to those who possess the power. In the aftermath of World War II, when Joseph Stalin needed money to spend on armaments and pursuing nuclear weaponry, he knew exactly whom to tax: the Russian peasants. True, they were already on the verge of starvation, but Stalin knew that the peasants had been so beat down over centuries that they had completely lost the will to resist even the most outrageous demands upon their slender means. They paid and did not even moan—at least, not very loudly.

If the cause of the natural libertarian is lost, then the cause of liberty is also lost.

The road from serfdom is far less frequently traveled than the road to serfdom. Forget the ideology by which human beings have been reduced to serfs through the ages, including our own. The ideology only creates a pretext for acquiring and retaining power. It attempts to legitimate the monopoly of power that is the ultimate objective of every ruling class throughout history. The powers that be always seek to convince, first themselves and then others, that they are the powers that should be. Their rule is providential, right, and necessary. They want to make the serfs think to themselves: How lucky we are to be the serfs of such excellent masters!

Today’s natural libertarians are the greatest roadblock on the road back to serfdom—a kinder and gentler serfdom, it is true, just as there are kinder, gentler ways of inducing a state of learned helplessness than the methods Seligman employed. The techniques by which human beings are induced into a sense of dependent helplessness may vary considerably, from the most coarse and brutal to the most ingeniously seductive, sophisticated, and subliminal. But they all equally accomplish their intended goal: to crush out, once and for all, the spirit of independence natural libertarians champion. As Seligman’s experiment demonstrates, once you induce a state of learned helplessness, it does not seem possible to unlearn it. The dogs who have given up in the initial experiment, from which they could not escape, immediately gave up in the second experiment, from which they could easily have escaped. The spark of independence had been extinguished in them forever, as it had been extinguished in the Russian peasants whom Stalin bled dry. They became the passive victims of a cruel and uncaring universe.

Ironically, Otto von Bismarck launched the first welfare state because he feared the influence of Karl Marx on the German working class.

The ease in which so much of humanity has been reduced to serfdom is at the root of the natural libertarian’s zealous passion to preserve his or her own independence. Because they have the attitude of Rotter’s internals, they fear those externals who willingly hand over control of their own lives to other people. A society composed mainly of externals will too quickly relinquish their claim to decide their own affairs, thereby permitting the power-hungry to boss and bully them at will. Under such circumstances, internals will inevitably find themselves fighting a losing battle, although they may still refuse to lay down and die. This explains why internals must always stay on their guard. It explains why they abhor any ideology that seeks to convince people they are helpless victims of fate. It explains why they resist, at its first appearance, any effort to seize control not only over their own lives, but over the lives of the other members of his community. It explains why they insist on keeping alive and passing down from generation to generation the maxims at the heart of the spirit of independence, teaching their children to take responsibility for their own actions and to accept blame for misbehavior. Lastly, it explains why they will stick to those religious and cultural traditions that have cultivated their own exceptional attitude. The remarkable survival and success of the Jewish people, and of the Hebrew religion, must surely relate to the fact that their ancestors instilled the same message in generation and generation: Thou shalt keep alive the attitude of the internal. Never let others manage your affairs, and when they try to interfere, resist and rebel against them.

We are in the midst not of a war of ideas, or even a cultural war, taken in its usual superficial sense. We are fighting an old battle all over again. On the one side stand the natural libertarians, Rotter’s internals, furiously insistent on defending their integrity as ethical agents. On the other side stand those in power who naturally find such people troublesome nuisances, and who would prefer to rule a society made up of individuals who have been properly educated to know they were really incompetent to manage their own affairs, and to regard themselves as the victims of circumstances.

To natural libertarians, there can be no more existential conflict than the one they face today. Are they destined to perish from the earth along with their cherished cultural and religious traditions, pushed aside by those who claim to champion progress but who in fact promote learned helplessness in the general population, however benevolent their intentions? Will the natural libertarians’ roadblock to serfdom simply be brushed aside without a fight? Or will these roadblocks turn into barricades, to be manned by those who are willing to make the last sacrifice to preserve their spirit of independence? These questions only time can answer.

Lee Harris is the author of The Next American Civil War, as well as Civilization and Its Enemies and The Suicide of Reason.

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Alleged Russian Agent Claimed.......

Alleged Russian Agent Claimed Official Was His Firm's Adviser

[fuerth0702] Constance Flavell Pratt/Associated Press

In this courtroom sketch, Tracey Lee Ann Foley, left, and her husband, Donald Heathfield, third from left, are depicted with Mr. Heathfield's attorney Peter Krupp, second from left, at a bail hearing in federal court in Boston, Thursday.

The alleged Russian secret agent who posed as a Canadian entrepreneur named Donald Heathfield claimed a former Clinton administration national-security official was an adviser to his company.

A federal criminal complaint by the U.S. attorney's office in Manhattan filed Monday charged 11 people, including Mr. Heathfield, with being Russian secret agents sent to the U.S. to infiltrate policy-making circles and to help the Russian spy agency SVR cultivate intelligence targets.

A 2008 version of the website for Mr. Heathfield's company, Future Map, lists Leon Fuerth, former Vice President Al Gore's top national-security aide, as an adviser.

Mr. Fuerth, in an email to The Wall Street Journal, denied he was ever an adviser to Future Map. Mr. Fuerth said he met Mr. Heathfield after delivering a speech and that Mr. Heathfield once proposed a partnership on a research grant.

"Heathfield introduced himself to me after a speech I gave, and described himself as having similar interests in the subject of long-range foresight as a means for making better decisions," Mr. Fuerth said. "I was (still am) teaching the subject, and he represented that he was dealing with it as a business subject. Eventually, he proposed that we look for a way to partner on a research grant—but the idea didn't appeal to me. Once he understood that I was not interested, he stopped communicating."

Mr. Fuerth, on vacation in Asia, said he plans to provide details of his contact with Mr. Heathfield to U.S. authorities as soon as possible. "I have never been an advisor to his business," he said.

In a 2005 message to his alleged spymaster handlers in Moscow, Mr. Heathfield reported that he had "established contact" with a "former high-ranking U.S. national security official," prosecutors said in their complaint. The official is unnamed in the complaint.

The complaint doesn't allege that the former national-security adviser was aware of efforts by SVR to connect with him.

The criminal complaint against Mr. Heathfield notes that SVR handlers told him to keep his cover cautiously, suggesting the official was an unwitting target.

Officials familiar with the matter said that most of the people targeted were similarly unaware they were being used as sources for Russian intelligence.

The Justice Department in Washington declined to comment.

Mr. Heathfield and the woman the FBI alleges was posing as his wife, Tracey Lee Ann Foley, who worked as a real-estate agent, lived in Cambridge, Mass., blocks from the Harvard University campus.

Russia's 11?

Read more about the spy suspects and allegations against them in the complaints.

Mr. Heathfield listed himself as chief executive of the four-year old company Future Map on his Linked-in professional-networking page. He described the company as developing software to help predict the future.

The current Future Map website has password-protected links that prevent viewing details about the company. Older versions of the company's website, including the one from August 2008 that lists Mr. Fuerth, are available via the Internet archive site known as the Wayback Machine.

Mr. Fuerth's university biography, which is replicated on the Future Map 2008 site, lists his time as Mr. Gore's national-security adviser during both Clinton terms. He was the senior administration official responsible for the operation of binational commissions with Russia, Ukraine, Kazakhstan, Egypt and South Africa.

According to U.S. prosecutors in the complaint, Mr. Heathfield worked for more than a decade as an undercover Russian agent tasked with infiltrating U.S. policy-making circles, allegedly focusing on Harvard's Kennedy School of Government. Mr. Heathfield graduated in 2000 from the Kennedy school, where he would have had access to multiple major figures in U.S. policy. The school is a top choice for students who plan to pursue careers in Washington, including many who join the Central Intelligence Agency and other national-security agencies. His graduating class included Mexican President Felipe Calderón.

The couple moved to the U.S. in 1999, according to the complaint, and part of their mission was to gather information on U.S. assessment of Russian foreign policy, U.S. policy on Central Asia and U.S. data on use of the Internet by terrorists.

Federal Bureau of Investigation agents in July 2006 secretly searched the Cambridge townhouse where Mr. Heathfield and Ms. Foley lived at the time and copied computer disks, according to prosecutors. FBI investigators recovered electronic data that prosecutors said were drafts of messages the couple sent to Moscow. The couple allegedly used Steganography software, which embeds messages in images placed on publicly available websites. FBI investigators were able to decode the messages, prosecutors allege.

Mr. Heathfield reported to Moscow in December 2004, according to prosecutors, that he had attended a seminar and made contact with a U.S. government official who worked on nuclear-weapons development at a government research facility. They discussed U.S. "bunker-buster" warheads, he told Moscow handlers, according to the complaint from U.S. prosecutors.

In a separate September 2005 message, he reported contact with a high-level former national-security official, drawing interest from Moscow handlers who encouraged Mr. Heathfield to continue the relationship, according to prosecutors, citing Mr. Heathfield's messages.

Another listed Future Map adviser, William Halal, also a George Washington University professor, like Mr. Fuerth, said he and Mr. Heathfield "had business relationships over the past decade. We met in my office at George Washington University at least 2-3 times. I allowed him to use our TechCast forecasts on his company's site, Future Map, and he was listed as one of our partners at"

Mr. Halal said was shocked by the arrest but, in retrospect, the government's allegations against Mr. Heathfield explain questions that always nagged him.

"I never suspected he was a Russian spy," Mr. Halal said. "I did wonder how he supported a family in Boston on what did not seem to be prosperous business. In retrospect, I marvel at how well he and [his] Russian associates infiltrated the normal activities of life in Washington policy circles. I would bump into him at meetings of Federal agencies, think tanks, and the World Future Society.

"I have no information that's of any security value," Mr. Halal said. "Everything I gave Don was published widely and readily available on the Internet."

Oil dips after U.S. employment data

Oil dips after U.S. employment data

A taxi driver re-fuels his taxi at a Shell petrol station in   London March 16, 2010. REUTERS/Luke MacGregor

A taxi driver re-fuels his taxi at a Shell petrol station in London March 16, 2010.


LONDON (Reuters) - Crude oil futures dipped on Friday, reversing gains made after the market interpreted U.S. employment data as slightly more positive for economic growth than expected.

The U.S. Labor Department said non-farm payrolls dropped 125,000, the largest decline since October. But the unemployment rate in the world's top economy and energy consumer fell to 9.5 percent, the lowest level since July.

By 1402 GMT, U.S. crude oil futures was down 32 cents to $72.63 a barrel. Prices briefly turned positive immediately after the jobs data, then slipped by more than $1 to $71.70.

ICE Brent crude oil futures were 26 cents down at $72.04.

Financial markets had expected employment to fall 110,000 last month, with the jobless rate edging up to 9.8 percent from 9.7 percent in May. "The jobs numbers were pretty much factored in," Olivier Jakob with PetromatrixJakob said. "But that is not enough to turn the market around."

Prompt U.S. crude had fallen every day this week and is on course for a slide of more than 7 percent on the week, its biggest weekly drop in percentage terms since early May, when the European debt crisis hit markets and prompted a 13 percent drop.

The dollar fell against the euro on concerns about the U.S. economy, but Wall Street opened slightly higher in a mixed reaction to the employment data.

Wall Street flat

Wall Street flat after 4-day slide and payrolls data

Related Video

A trader works on the floor of the New York Stock Exchange in New   York, June 30, 2010. REUTERS/Shannon Stapleton

NEW YORK | Fri Jul 2, 2010 10:24am EDT

NEW YORK (Reuters) - Wall Street indexes were trading around the break-even point on Friday after government data showed employment in the United States fell in June for the first time this year but not as much as some had expected.

Non-farm payrolls dropped by 125,000, the largest decline since October, largely because temporary government jobs for the census decreased by 225,000, the Labor Department said.

With fears of a double-dip recession mounting after a flurry of weak data recently, the report was closely watched to assess the strength of the economic recovery. Some analysts said that while the numbers were grim, they were not as weak as the most pessimistic forecasts.

"There were probably fears in the back of some people's minds that the private payrolls could even be worse," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

"Clearly this is telling us we've lost momentum and growth is slowing. (But) Has it slowed so much to drive us into a double dip? I think probably not."

Also, the unemployment rate fell to 9.5 percent, the lowest level since July, though this was because people left the labor force.

The Dow Jones industrial average .DJI was up 5.64 points, or 0.06 percent, at 9,738.17. The Standard & Poor's 500 Index .SPX was up 1.30 points, or 0.13 percent, at 1,028.67. The Nasdaq Composite Index .IXIC was up 2.81 points, or 0.13 percent, at 2,104.17.

Another drag on the market was data showing U.S. factory orders dropped more than expected in May, falling 1.4 percent versus a gain of 1.2 percent in the previous month. Analysts in a Reuters survey expected a drop of 0.5 percent.

In Europe, stocks had received a lift from news that Australia ended a damaging dispute with global miners by dumping its "super profits" tax for a lower resources rent tax backed by big miners. Mining shares such as Rio Tinto (RIO.L) and Xstrata (XTA.L) were one of the top gainers.

Biotech shares will be in the spotlight. French drugmaker Sanofi-Aventis SA (SASY.PA) is preparing an acquisition in the United States that may be worth $20 billion or more, Bloomberg reported on Thursday, citing people familiar with the matter. A Sanofi-Aventis spokesman declined to comment.

British power supply systems maker Chloride (CHLD.L) has recommended a $1.5 billion takeover by U.S. conglomerate Emerson Electric (EMR.N), bringing to an end a long-running bid battle. Emerson Electric shares rose 0.4 percent to $43.85.

Shares of Wilshire Bancorp (WIBC.O) fell 9 percent to $7.75 after the company on Thursday forecast a second-quarter loss.

Major indexes closed lower for a fourth straight day on Thursday after suffering their worst quarter since late 2008.

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