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A spokesman for the American Coalition for Clean Coal Electricity, the coal-industry group on whose behalf those forged letters were sent, has called the episode an "isolated incident."

But it looks like that's -- how to put it? -- a lie. Because the group fought an earlier effort on climate change by making deceptive phone calls to voters, in which at least one caller falsely denied, when asked, that utilities interests were behind the calls. And when it got caught, ACCCE blamed the incident on an individual staffer.

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It now looks like the forged "Kenyan" Obama birth certificate that was briefly promoted by the Birthers -- actually an altered copy of a decades-old South Australian birth certificate -- was deliberately designed as a prank on the Birther movement itself, Dave Weigel reports.

An anonymous person has put up an Internet posting showing photos of the document, against a bedsheet background that matches the photo promoted by Orly Taitz. One of the photos shows a crumpled up certificate with the following message written on it: "YOU'VE BEEN PUNK'D!"

The forgery was apparently created using fine cotton business paper, an inkjet printer, an old manual typewriter, and a fountain pen. The supposed government seal is actually an imprint made with an old two-shilling coin. (Pre-decimal British money can easily be purchased from souvenir vendors or on eBay.)

As the anonymous poster says: "Punkin' the Birthers: Priceless."

Christina D. Romer, the chair of the Council of Economic Advisers, spoke today about the stimulus act at the Economic Club of Washington, D.C. Romer is the latest administration official -- following President Obama, Vice President Biden and others -- to defend the Recovery Act this week.

Her full remarks as prepared for delivery are below:

A couple of weeks ago, we hit the five-month anniversary of the American Recovery and Reinvestment Act. The Recovery Act provided $787 billion of tax cuts and government spending, or roughly 5 percent of GDP, making it the boldest countercyclical fiscal stimulus in American history. It was a central piece of the Administration's wide-ranging program to rescue the American economy from the worst recession since the Great Depression, and to build a foundation for a stronger, more durable prosperity. Over the spring and summer, there has been a lot of chatter about what the Recovery Act was doing and how well it was working. I would like to spend some time this morning presenting a clear-eyed assessment of what it has accomplished and what we can expect going forward. This week is a natural time for such an assessment, coming on the heels of the last Friday's GDP report. This report gave us our first look at overall economic performance in the second quarter of this year, and a clearer sense of the depth of the recession over the previous five quarters. In an unusually whimsical moment, I sent in as the title of my talk, "So, Is It Working?" Though it may destroy some of the suspense, I thought that given the provocative title, I should probably get straight to the answer: Absolutely. The Recovery Act, together with the actions taken by the Treasury and the Federal Reserve to stabilize financial markets and the housing 2 sector, is helping to slow the decline and change the trajectory of the economy. It is providing a crucial lift to aggregate demand at a time when the economy needs it most. And, we anticipate that the effects will build through the end of this year and the beginning of the next. WHAT WE DID AND WHY WE DID IT Let me begin by discussing the motivation for the fiscal stimulus and the logic behind its design. History of the Crisis. The U.S. economy slipped into a recession in December 2007. The initial downturn was relatively mild. Real GDP declined at an annual rate of just 0.7 percent in the first quarter of 2008, and job loss was about 100,000 per month. Indeed, a well-timed temporary tax rebate that began going out in late April 2008 contributed to positive GDP growth in the second quarter of last year. Unfortunately, worsening declines in house and stock prices late last summer led to a fall in consumer spending and sent shock waves through our financial system. The collapse of Lehman Brothers last September set off a genuine financial panic, and led to a devastating freezing up of our financial system and a collapse of lending. By the time President Obama announced his economic team just before Thanksgiving, it was clear that the economy was deteriorating rapidly. Just how sick the economy would prove to be and how fast it would fall were still unclear. New data on U.S. and world economic conditions were coming in each day. But, there was no question in our minds that the economy was in its most precarious position since the Great Depression. At a meeting in Chicago in mid-December, we urged the President-Elect to hit the financial crisis and the burgeoning recession with as much force as possible. 3 Motivation for Fiscal Stimulus. The cornerstone of our suggested response was a bold fiscal stimulus. Our reasoning was simple. The Federal Reserve had done a great deal to stimulate demand and help ease the credit crisis following Lehman's collapse. But, by mid- December the Fed was running low on ammunition: the federal funds rate was near zero, and the Fed had created a multitude of special lending facilities. With the dramatic fall in household wealth and the rapid spread of the downturn to our key trading partners, there was no realistic prospect that the private sector would generate a turnaround in demand any time soon. Thus, although stabilizing the financial system and helping distressed homeowners was essential, it would not be enough. We needed to bring in the other main tool that a government has to counteract a cataclysmic decline in aggregate demand: fiscal stimulus. In the past few months, some have tried to portray fiscal stimulus as an exotic tool with a questionable pedigree. In fact, it is a tried and true remedy widely supported by economists across the political spectrum. To use a medical analogy, fiscal stimulus is a well-tested antibiotic, not some new-fangled gene therapy. The economic theory of how tax cuts and increases in government spending can help counteract a recession is almost as widely accepted as any in economics - practically up there with supply and demand or the quantity theory of money. It is standard fare in both introductory textbooks and more sophisticated modern theoretical models. Fiscal stimulus has been used to help weak economies by presidents of both parties. Franklin Roosevelt increased public works spending greatly as part of the New Deal. Dwight Eisenhower expanded the interstate highway program and accelerated other types of spending to try to counteract the 1958 recession. And both Gerald Ford (in 1975) and George W. Bush (in 2001) used tax cuts to help end recessions. 4 There is also ample evidence that fiscal stimulus works. Many studies have been done over the years to try to measure the effects of stimulus.1 These studies show strong impacts of both tax cuts and changes in government spending. A study that David Romer and I completed just shortly before my nomination looked specifically at the tax side of stimulus.2 We found that fiscal expansions have an even larger positive effect on output in the short and medium run than previously believed. This sense that fiscal stimulus is the obvious step to take when the economy is in decline and conventional monetary policy has been exhausted is borne out by the actions of other countries. This figure shows the size of fiscal expansions in a number of countries in 2009.3 2009 Discretionary Fiscal Stimulus around the Globe Country Percent of GDP Country Percent of GDP Argentina 1.4 Korea 3.7 Australia 2.2 Mexico 1.4 Brazil 0.5 New Zealand 2.0 Canada 1.7 Norway 1.2 China 2.6 Poland 0.8 Czech Republic 1.6 Russia 2.9 France 0.6 South Africa 2.2 Germany 1.5 Sweden 1.4 India 0.6 Switzerland 0.6 Indonesia 1.4 United Kingdom 1.5 Italy 0.1 United States 2.0 Japan 2.4 Virtually every major country has enacted fiscal expansions during the current crisis. They have done so ... because it works. American Recovery and Reinvestment Act. The fiscal stimulus that the Administration worked with Congress to create was not only bold, but well-conceived. The President aimed for a package that was large and got good employment bang for the fiscal buck. It was designed to provide lift for at least two years, because we knew the economy was likely to be facing an extended period of weakness. And, the President insisted that the spending be genuinely useful. 5 At a time when the budget deficit was already large, we could not afford to create jobs by digging ditches and filling them in. Government spending had to satisfy genuine needs and leave us with useful public investments. The final legislation was very well-diversified. Many of our critics seem to have missed the fact that roughly a third of the $787 billion took the form of tax cuts for American families and businesses. Another third was aid to state governments to help them keep workers employed and not raise taxes, and aid to people directly hurt by the recession through programs such as extended unemployment insurance. As state budgets have swung into extreme deficit and unemployment rates have risen sharply, both of these types of spending look even more crucial than they did back in December and January. Finally, roughly one-third of the stimulus package was for public investments. Much of this spending was for conventional infrastructure - roads, bridges, and water projects. But some was more uniquely twenty-first century: investments in R and D, health information technology, and a smarter electrical grid. IMPLEMENTATION OF THE RECOVERY ACT So far, I have reminded you of why we took the actions that we did - why we worked so hard to pass the Recovery Act. Let me turn to the question I started with: So, is it working? Spend-out Rates. The first thing to say is that the money is absolutely going out the door quickly. As of the end of June, more than $100 billion had been spent.4 Those numbers are rising each week, and we are on track to have spent 70 percent of the total by the end of the next fiscal year. Accountability and Transparency. I know that some believe that the government can never do things well. But this program really is a model of efficiency and transparency. The 6 website provides an honest and thorough accounting of what is getting done. The biggest problem so far occurred when a blogger misinterpreted an entry and reported that we had spent a million dollars for two pounds of ham. It turns out it was for 760,000 pounds of ham (in two-pound packages) that went to food banks and soup kitchens - a pretty good value at about $1.50 a pound. I can tell you that the Vice President is a man on a mission and is determined that every dollar will go out quickly and to the high-value projects it was designed for. And, the program is working. Millions of unemployed workers have seen an extra $25 a week in their unemployment insurance checks. 95 percent of American households saw a tax cut in their paychecks starting April 1st. My father (and other Social Security recipients and veterans) got a $250 stimulus check in May. State and local government employees, including teachers, firefighters, and police officers who were scheduled to be laid off, are still working because of the increase in Federal payments to the states. 2500 road construction projects are underway. Soon, the Recovery Act signs we see popping up will be as ubiquitous as NRA blue eagles once were in the 1930s. TIME-SERIES EVIDENCE ON THE MACROECONOMIC EFFECTS Even if the Recovery Act is clearly working in the concrete, on-the-ground sense, there is still the question of whether we can see it in the overall performance of the economy. Common Critique. Here, I can't resist pointing out the fallacy in a common critique. Throughout the spring, I frequently heard people say: "The unemployment rate is even higher than you all predicted without stimulus. That means the policy isn't working and may actually be making things worse." Even leaving aside the fact that we were always very clear that there was tremendous uncertainty about what would happen to the economy, that argument is - to 7 quote a recent New York Times editorial - just plain "silly."5 To understand why, let me give you an analogy. Suppose you go to your doctor for a strep throat and he or she prescribes an antibiotic. Sometime after you get the prescription, and maybe even after you take the first pill, your fever spikes. Do you decide that the medicine is useless? Do you conclude the antibiotic caused the infection to get worse? Surely not. You probably conclude that the illness was more serious than you and the doctor thought, and are very glad you saw the doctor and started taking the medicine when you did. That was exactly the situation with the economy. It is true that the U.S. and world economies went down much faster last fall and winter than we, and almost all other forecasters, expected. The revised GDP statistics show that the actual decline in GDP growth in the third and fourth quarters of last year was about twice as large as the preliminary estimates we had at the time indicated.6 And, the rise in the unemployment rate has been exceptionally large, even given the large fall in GDP that we now know occurred.7 The fact that the economy deteriorated between January when we were doing our forecast and the end of March simply reinforces how crucial it was that we took action when we did. Behavior of GDP and Employment. Now, having gotten that off my chest, let me return to my question: A little more than five months after the recovery act was passed, can we see the effects on the macroeconomy? Again, the answer is yes. This graph shows the growth rate of real GDP.8 8 1.2 3.2 3.6 2.1 -0.7 1.5 -2.7 -5.4 -6.4 -1.0 -8 -6 -4 -2 0 2 4 6 2007:Q12007:Q22007:Q32007:Q42008:Q12008:Q22008:Q32008:Q42009:Q12009:Q2 Real GDP Growth Quarterly percent change, seasonally adjusted annual rate After falling considerably and, indeed, progressively more deeply in each of the three quarters before the most recent one, the fall in GDP moderated substantially. After declining at an annual rate of 6.4% in the first quarter of 2009, it fell at a rate of 1% in the second quarter. To be sure, the economy is far from healthy, and we obviously have a tremendous distance to go. Real GDP, after all, is still declining. But economies don't switch from rapid decline to robust growth all at once. Given what we now know about the frightening momentum of economic decline in the first quarter, it would have been hard for the economy to stabilize much faster than it has. This graph shows the change in the growth rate of real GDP for the last 25 years.9 9 -12 -8 -4 0 4 8 84:Q1 86:Q1 88:Q1 90:Q1 92:Q1 94:Q1 96:Q1 98:Q1 00:Q1 02:Q1 04:Q1 06:Q1 08:Q1 Changes in Quarterly Real GDP Growth Percentage points The rise in GDP growth from the first quarter to the second was the largest in almost a decade, and the second largest in the past quarter century. This picture shows the change in payroll employment over the recession.10 133 82 2 167 -113 -153 -208 -553 -691 -436 -800 -400 0 400 2007:Q12007:Q22007:Q32007:Q42008:Q12008:Q22008:Q32008:Q42009:Q12009:Q2 Payroll Employment Growth Average monthly change from end of quarter to end of quarter, thousands A key indicator of just how brutal this recession has been is the fact that in the first quarter of this year, we lost nearly 700,000 jobs per month. In the second quarter, we lost an average of 436,000 jobs per month. This rate of job loss is horrendous. But the change does suggest that 10 we are on the right trajectory. This figure shows the change in the change in employment.11 -400 -200 0 200 400 84:Q186:Q1 88:Q190:Q1 92:Q194:Q1 96:Q1 98:Q100:Q1 02:Q104:Q1 06:Q1 08:Q1 Changes in Payroll Employment Growth Thousands The movement in job loss from the first quarter to the second was the largest in almost 30 years. In other words, after we administered the medicine, an economy that was in free fall has stabilized substantially, and now looks as though it could begin to recover in the second half of the year. The timing and strength of this change is highly suggestive that the stimulus has been important. Comparison to Baseline Forecasts. Of course, identifying the effects of the Recovery Act from the behavior of just a few data points is inherently difficult. We don't observe what would have happened in the absence of the fiscal stimulus. One way to try to add rigor to the analysis of the behavior of key indicators is to do a more formal econometric forecasting exercise. There are various ways to do such an exercise, but let me discuss the results of a typical one. We forecast the usual behavior of GDP and employment jointly, using data from 1990 to 2007. We then forecast GDP growth and average job loss in the second quarter of 2009 using actual data up through the first quarter of the year.12 11 This figure shows the forecast of employment change using this procedure. -113 -153 -208 -553 -691 -597 -800 -600 -400 -200 0 2008:Q1 2008:Q2 2008:Q3 2008:Q4 2009:Q1 2009:Q2 Payroll Employment: Recent and Projected Changes Average monthly change from end of quarter to end of quarter, thousands Projection Actual The baseline forecast implies further substantial job loss in the second quarter. Indeed, the implied average monthly decline is nearly 600,000 jobs. What you see is that actual job loss (the dark blue bar) came in substantially lower. -800 -600 -400 -200 0 2008:Q1 2008:Q2 2008:Q3 2008:Q4 2009:Q1 2009:Q2 Projection Actual Payroll Employment: Recent and Projected Changes Average monthly change from end of quarter to end of quarter, thousands These calculations imply that employment is now about 485,000 jobs above what it otherwise would have been during the second quarter of 2009. This number is very similar to 12 Mark Zandi's estimate that stimulus added roughly half a million jobs over the second quarter, relative to what otherwise would have occurred.13 I do, however, want to be very cautious. The approach we used is one of a number of sensible ways of predicting what would have happened in the absence of stimulus. Other methods could lead to somewhat different estimates of the jobs impact of the program in its first full quarter of operation. But the clear implication is, the program is working. The results of this forecasting exercise for real GDP are shown in this figure. 13,367 13,415 13,325 13,142 12,925 12,816 12,500 12,750 13,000 13,250 13,500 2008:Q1 2008:Q2 2008:Q3 2008:Q4 2009:Q1 2009:Q2 Real GDP: Recent and Projected Levels Billions of 2005 dollars, seasonally adjusted annual rate Projection Actual Past history predicts that real GDP would continue to decline at a substantial rate in the second quarter. The projected decline (at an annual rate) is 3.3%, substantially worse than the actual decline of 1%. 13 12,500 12,750 13,000 13,250 13,500 2008:Q1 2008:Q2 2008:Q3 2008:Q4 2009:Q1 2009:Q2 Actual Projection Real GDP: Recent and Projected Levels Billions of 2005 dollars, seasonally adjusted annual rate This way of specifying the baseline confirms that something unusual happened in the second quarter: GDP growth was 2.3 percentage points higher than the usual time-series behavior of GDP would lead one to expect. Private forecasters across the political and methodological spectrum attribute much of the unusual behavior of real GDP to the Recovery Act. This table shows that analysts estimate that fiscal stimulus added between 2 and 3 percentage points to real GDP growth in the second quarter.14 Estimate (percentage points) Goldman Sachs 2.2 3 Macroeconomic Advisers 2 Contribution of the ARRA to GDP Growth in 2009:Q2 Forecaster Components of GDP and ARRA. If you look at the different pieces of GDP, you see telltale signs of the Recovery Act's role in stabilizing the economy. This figure shows the 14 contributions of each of the main components of GDP to overall growth in the first and second quarters of this year.15 0.44 -5.29 -1.33 -2.36 -0.19 -0.33 2.64 -0.88 -0.94 -0.88 -0.83 0.30 0.82 1.38 -6 -4 -2 0 2 4 6 2009:Q1 2009:Q2 Contributions to Real GDP Growth Personal Consumption Expenditures Nonresidential Fixed Investment Other Fixed Investment Inventory Investment State and Local Gov't Spending Federal Gov't Spending Net Exports Percentage points The role of the Recovery Act is clearest in state and local spending. Sharp falls in revenues and balanced budget requirements have been forcing state and local governments to tighten their belts significantly. But, state and local government spending actually rose at a healthy 2.4% annual rate in the second quarter of 2009. This followed two consecutive quarters of decline, and was the highest growth rate in two years. No one can doubt that the $33 billion of state fiscal relief that has already gone out thanks to the Recovery Act is a key source of this increase. Another area where the role of the Recovery Act seems clear is in business fixed investment - firms' purchases of everything from machines to software to structures. A key source of the more modest decline in GDP is that this type of investment, which fell at a mind- boggling 39% annual rate in the first quarter, fell at a much more moderate 9% rate in the second quarter. One important component of the Recovery Act was investment incentives, such as 15 bonus depreciation. Businesses received about $14 billion of tax relief in the second quarter, and this may have contributed to slower investment decline. For the personal consumption component of GDP, the picture is more nuanced. Consumption fell sharply in the second half of last year, but has largely stabilized despite rising unemployment and falling GDP. The Making Work Pay tax cut and the improvements in confidence as a result of the Recovery Act and the Administration's other actions surely contributed to that stabilization.16 At the same time, the fact that consumption fell slightly in the second quarter after rising slightly in the first quarter could be a sign that households are initially using the tax cut mainly to increase their saving and pay off debt. We will obviously be monitoring the behavior of consumers closely as we move forward. CROSS-SECTION EVIDENCE OF MACROECONOMIC EFFECTS Because the evidence from the path of the economy over time can't settle the issue of what the effects of the Recovery Act have been, it's helpful to also look at other types of data. In particular, I want to mention two types of comparative evidence. Comparisons across Countries. The first involves comparisons across countries. Countries' responses to the crisis have varied substantially. One can therefore ask whether countries that have responded more aggressively seem to be recovering more quickly. To get evidence about this, we started with a set of forecasts of growth in the second quarter of this year that were made last November - after the crisis had hit, but before countries had formulated their policy response. We then collected analysts' recent best guesses for what second-quarter growth will be in those countries.17 This figure shows the relationship between how countries' second- quarter growth prospects have changed from what was expected back in November, and the 16 countries' discretionary fiscal stimulus in 2009. Argentina Australia Brazil Canada China Czech Republic France Germany India Indonesia Italy Japan Korea Mexico New Zealand Norway Poland Russia South Africa Sweden Switzerland United Kingdom United States -5 0 5 10 0 1 2 3 4 Discretionary Stimulus in 2009 (percent of GDP) Change in Q2 GDP growth from November forecast (percentage points) Stimulus around the Globe The fact that the observations lie along an upward-sloping line shows that, on average, things have improved more in countries that adopted bigger stimulus packages. And, the relationship is sizable: on average, a country with stimulus that's larger by 1% of GDP has expected real GDP growth in the second quarter that's about 2 percentage points higher relative to the November forecast. This correlation is in some ways surprising, because there's an obvious element of reverse causation that's pushing it the other way: countries that got worse news around the turn of the year probably adopted more aggressive stimulus packages. Also, to the extent that analysts back in November could foresee countries' likely actions and take them into account in making their forecasts, this would cause the relationship to understate the effect of stimulus. But despite these factors tending to bias the estimates down, the relationship is highly statistically significant, large, and robust to changes in the sample and in the measure of forecasted growth.18 Comparisons across States. The second comparison we examine involves individual 17 states in the U.S. The largest portion of aid to the states under the Recovery Act so far has taken the form of additional matching funds for state Medicaid spending. This figure shows the correlation between employment growth from February to June in a state and the size of those extra matching funds (per capita).19 What you see is that, on average, states that received more funds lost fewer jobs. -1.5 -1 -.5 0 .5 1 0 50 100 150 ARRA Medicaid payouts per capita ($) Employment change (percent of state population) Employment Change and ARRA Medicaid Spending by State Again, there's an obvious element of reverse causation that's pushing this relationship the other way: states whose economies are weaker tend to get more of these funds. Preliminary analysis by my staff addresses this issue by focusing on a subset of the spending that isn't a response to states' economic conditions. They also check that other things aren't driving the correlation. They find that the results hold up well. More spending is associated with less job loss. Obviously, this is a very preliminary analysis of the data across countries and states, and it does not account for all of the factors that may be at work. But, our first look at these numbers provides further evidence that stimulus spurs recovery. 18 WHAT CAN WE EXPECT GOING FORWARD? So much of what I have discussed has focused on the role of the Recovery Act in moderating the GDP decline and saving jobs in the second quarter of 2009. The obvious next question is, what can we expect going forward? Effects will Increase over Time. First, the impact of the Recovery Act will almost certainly increase over the next several quarters. We expect the fiscal stimulus to be roughly $100 billion in each of the next five quarters. The impact of this steady stimulus, however, will increase over time because the multiplier effect tends to rise for a substantial period before beginning to wane. Also, the composition of the stimulus will be changing toward components with larger short-run effects. The early stimulus was weighted more heavily toward tax changes and state fiscal relief, whereas going forward there will be more direct government investments. These direct investments have short-run effects roughly 60 percent larger than tax cuts. Forecasts. Second, because of the Recovery Act, other rescue measures we have taken, and the economy's natural resilience, most forecasters are now predicting that GDP growth is likely to turn positive by the end of the year.20 Federal Reserve Chairman Ben Bernanke seconded this opinion in recent Congressional testimony.21 This view is supported by the fact that a number of leading indicators, including initial claims for unemployment insurance, building permits, and consumer confidence, have improved substantially over the past few months. However, as is always the case, especially around a turning point, there is substantial uncertainty to this forecast. There is even greater uncertainty about how strong the recovery is likely to be. The strength will depend on a range of factors, including how fast the economies of our trading partners recover; whether American consumers decide to increase their savings rate 19 even more than they already have; and how quickly financial markets and business confidence return to normal levels. Continued Job Loss. Third, it is important to realize that job growth will almost certainly lag the turnaround in real GDP growth. The consensus forecast is for the employment statistics we get tomorrow to show that the U.S. economy continued to lose hundreds of thousands of jobs in July. Given that GDP growth was still negative in the second quarter, this is all but inevitable. And, it is unacceptable. Unfortunately, even once GDP begins to grow, it will likely take still longer for employment to stop falling and begin to rise. Recovery Will Take Time. Fourth, and crucially, given how far the economy has declined, recovery will be a long, hard process. Even if GDP growth is relatively robust going forward, it will take a substantial time to restore employment to normal and bring the unemployment rate back down to usual levels. But, the President is committed to job creation, and that is and has been a focal part of our efforts. The bottom line is that we are no doubt in for more turbulent times. The actions we have taken, particularly the American Recovery and Reinvestment Act, have clearly changed the trajectory we are on. They are doing what the President always said needed to be our top priority - rescuing an economy on the edge of a second Great Depression. And, I firmly believe that when the history of this period is written, the Recovery Act will be seen as the beginning of the end of this terrible economic crisis. Rebuilding. The focus of my talk this morning has been on the Recovery Act as a lifesaver. It is a central part of our strategy to rescue the economy - complementing our efforts to stabilize the financial system, restart lending, and help homeowners in distress. But, the President has always made clear that rescue is not enough. The U.S. economy had problems 20 even before the current crisis. For this reason, the Administration is working with Congress to help rebuild the economy better. It is as if, when you went to the doctor for that strep throat, he discovered you had high blood pressure as well. The antibiotic was great for the infection, but he prescribed other medicine, a better diet, and a good dose of exercise for the blood pressure. That is what the President is trying to do for the economy. He is urging health care reform to slow the growth rate of spending, tame the budget deficit, and provide all Americans with the secure health insurance coverage. We are working with Congress to pass financial regulatory reform to make sure that we never again walk as close to the edge of a cliff as we did last September. And we are committed to comprehensive energy and climate legislation to stimulate the move to renewable energy and combat climate change. In short, we are urging serious medicine for serious economic problems. If we can accomplish these important changes, we will not only come through the current crisis, we will emerge even stronger and healthier than before. 21 ENDNOTES 1 See, for example, Valerie A. Ramey and Matthew D. Shapiro, "Costly Capital Reallocation and the Effects of Government Spending," Carnegie-Rochester Conference Series on Public Policy 48 (June 1998): 145-194; Olivier Blanchard and Roberto Perotti, "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," Quarterly Journal of Economics 117 (November 2002): 1329-1368; Craig Burnside, Martin Eichenbaum, and Jonas D.M. Fisher, "Fiscal Shocks and Their Consequences," Journal of Economic Theory 115 (March 2004): 89-117; and Valerie A. Ramey, "Identifying Government Spending Shocks: It's All in the Timing," University of California, San Diego working paper, June 2008. 2 Christina D. Romer and David H. Romer, "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks," American Economic Review, forthcoming. 3 The stimulus numbers are taken as an average of three reported measures of stimulus. The three sources are: International Monetary Fund, "Global Economic Prospects and Effectiveness of Policy Response," prepared for meeting of G-20 deputies, June 27, 2009, Table 2, p. 27,; Organization for Economic Co-operation and Development, OECD Economic Outlook No. 85, June 2009, Table 1.7, p. 63,; Brookings Institution, "Assessing the G-20 Economic Stimulus Plans: A Deeper Look," prepared by Eswar Prasad and Isaac Sorkin, stimulus_prasad.pdf. 4 These numbers reflect outlays through July 3, 2009 from website and internal calculations from the Department of Treasury through June 24, 2009. 5 "Trying to Recover," New York Times, August 1, 2009. 6 The January 29, 2009 GDP release reported that real GDP declined at an annual rate of 0.5% in 2008:Q3 and 3.8% in 2008:Q4. The recently revised estimates show that the declines were 2.7% and 5.4%, respectively. 7 We estimate that the unemployment rate has increased about 1½ percentage points more than one would have predicted based on the usual relationship between unemployment and real GDP. We derive this estimate as follows. Standard estimates of the Okun's Law relationship suggest that for every percent that real GDP falls relative to its normal trend, the unemployment rate will rise about four-tenths of a percentage point. Our estimates suggest that real GDP growth has fallen 7.5 percent relative its normal trend since the business cycle peak in 2007:Q4 (where the gap is measured using the difference in logarithms). Therefore, unemployment would be predicted to have increased 3.0 percentage points so far during the recession. This is roughly 1½ percentage points below its actual 4.6 percentage point increase from December 2007 to June 2009. 8 These data are from the Bureau of Economic Analysis, National Income Product Accounts, Table 1.1.1. 9 NBER recession quarters are shown in grey. 10 These data are from the U.S. Department of Labor, Bureau of Labor Statistics, Current Employment Statistics survey, "Employment, Hours, and Earnings - National." 22 11 These figures are for the change from the previous quarter in the average monthly change in employment. NBER recession quarters are shown in grey. 12 These forecasts are based on a vector autoregression using the logarithms of real GDP (in billions of chained 2005 dollars) and employment (in thousands, in the final month of the quarter) estimated over the period 1990:Q1-2007:Q4. There are four lags, and the estimates are used to make projections beginning in 2009:Q2. Changes in the specification, such as using fewer lags and extending the sample through 2009:Q1, generally lead to projections of even slower recoveries of GDP and employment growth. 13 Moody's Précis: U.S. Macro, July 2009, p. 6. 14 The estimate from Macroeconomic Advisers is from their Outlook Commentary, April 2, 2009, p. 6. The estimate from is from Précis: U.S. Macro, July 2009, p. 6. The estimate from Goldman Sachs is from US Daily: Fiscal Stimulus: A Little Less in Q2, A Little More Later, August 4, 2009, p. 2. 15 These data are from the Bureau of Economic Analysis, National Income Product Accounts, Table 1.1.2. 16 The University of Michigan consumer survey shows a sharp increase in approval of government economic policy. See Reuters/University of Michigan Surveys of Consumers, Press Release for April 2009, "Obama's Policies Prompt Increase in Economic Confidence," 17 These recent forecasts are based on a substantial amount of second quarter data. In three cases, preliminary estimates are available for second quarter GDP growth. They are quite close to the forecasts made in July. Using the preliminary estimates for these three countries does not change the results. The November 2008 and current forecasts are from J.P. Morgan, Global Data Watch, "Global Economic Outlook Summary," November 7, 2008, p. 5; and Global Data Watch, "Global Economic Outlook Summary," July 17, 2009, p. 5. The sample was determined by data availability for G-20 and other large OECD countries. Discretionary stimulus is measured as the average of estimates from the OECD, the IMF, and the Brookings Institution of discretionary fiscal stimulus in 2009 as a percent of GDP (see note 3 for details). 18 The estimated regression is: 2009:Q2 GDP growth expected as of July minus the expectation as of November = -4.4 + 2.1*discretionary stimulus. The t-statistic on the stimulus variable is 2.9. Excluding non-OECD countries increases the magnitude and statistical significance of the coefficient. Replacing the JP Morgan forecast with forecasts from an autoregression for each country using four lags of quarterly GDP growth estimated over the period 1990- 2008 has little effect on the results. These findings are consistent with earlier work finding that fiscal expansions have mitigated the effects of past banking and financial crises (see International Monetary Fund, World Economic Outlook 2009, Chapter 3, 19 The state employment data come from the U.S. Department of Labor, Bureau of Labor Statistics, Current Employment Statistics survey, "Employment, Hours, and Earnings - State and Metro Area." The statistics on government spending on Medicaid reflect outlays through July 3, 2009 from website. Note: sizes of circles are proportional to 2008 state populations. 23 20 See, for example, the Blue Chip Economic Indicators, July 10, 2009. 21 Ben S. Bernanke, "Semiannual Monetary Policy Report to the Congress," Before the Committee on Financial Services, U.S. House of Representatives, July 21, 2009,

Wow, it's looking like even big-time Birthers don't buy the forged "Kenyan" birth certificate. Check out this new report from World Net Daily -- written up by Jerome Corsi, one of the most prolific Obama conspiracy theorists, no less:

NEW YORK - The Kenyan birth document released by California attorney Orly Taitz is probably not authentic, according to WND's investigative operatives in Africa, though officials in Nairobi do not rule out the possibility President Obama may indeed have been born in their country.

WND obtained several samples of Kenyan birth certificates in use around Aug. 4, 1961, the date of Obama's birth, showing differences from the Taitz document.

Apparently, it turns out that early 1960's Kenyan birth certificates don't look even remotely like birth certificates from Adelaide, Australia.

John Brennan, assistant to President Obama for homeland security and counterterrorism, spoke today about the president's strategy for keeping Americans safe from terrorism. Brennan spoke this morning at the Center for Strategic and International Studies in Washington, D.C. Here are his remarks, as prepared for delivery:

Thank you, Steve, for your kind introduction, and thank you all for the opportunity to speak with you today. The Center for Strategic and International Studies has long provided some of the most insightful analysis and innovative ideas for strengthening our national security. So this is a very fitting forum for the subject I want to address today--the new thinking and new approach that President Obama brings to the task of safeguarding the American people from violent extremism and terrorist attacks.

President Obama has now been in office for over six months. In that time, he has rightly focused on urgent domestic challenges, including the Nation's economic recovery and reforming health insurance and reducing the cost of healthcare for the American people. At the same time, he has never lost sight of what he has called his "single most important responsibility as President"--keeping the American people safe.

To this end, he and Secretary of State Clinton have renewed America's commitment to diplomacy: rebuilding old alliances; strengthening critical partnerships with nations such as Russia and China; and naming special envoys and representatives to focus on some of most pressing international challenges, from Middle East peace, to Afghanistan and Pakistan, to climate change, to the crisis in Darfur. He has launched a new era of engagement with the world, including committing the United States to a new partnership with Muslims around the world--a partnership based on mutual interests and mutual respect.

To confront the transnational threats of the 21st Century, he has launched new initiatives: strengthening the global non-proliferation regime; promoting food security that fights world hunger and lifts people around the world out of poverty; and bolstering the nation's digital defense against cyber attacks.

And to refocus the fight against those who attacked our embassies in Africa eleven years ago tomorrow and our homeland eight years ago next month, the President is proceeding with his plan to end the war in Iraq and to defeat al Qaeda and its allies in Afghanistan and Pakistan. And to ensure that our counterterrorism efforts strengthen our national security--and not undermine it--he banned the use of enhanced interrogation techniques, is proceeding with a new plan to swiftly and certainly deal with detainees, and will close the prison at Guantanamo Bay.

Most recently, key members of the President's national security team have laid out how their departments and organizations are implementing these new strategies. Secretary of State Clinton outlined how American diplomacy will advance American interests by building new partnerships, promoting universal values, and heeding the power of our examples. Secretary of Defense Gates is reforming how we acquire weapons and reorienting our armed forces for the unconventional, irregular conflicts of today and the future.

Last week, Secretary of Homeland Security Napolitano highlighted the local, state, federal and international partnerships that will be required to keep the homeland secure from terrorist attack. FBI Director Mueller has been tireless in his efforts over the past eight years forging similarly strong partnerships with a wide array of law enforcement organizations at home and abroad. And General Jones, the President's National Security Advisor, earlier this year addressed how the Administration will more effectively address transnational challenges through a newly integrated National Security Staff at the White House.

Today--as the President's principal advisor on counterterrorism--I want to outline the President's efforts to safeguard the American people from the transnational challenge that poses one of the greatest threats to our national security--the scourge of violent extremists who would use terrorism to slaughter Americans abroad and at home.

I want to note at the outset that my professional and personal experience has greatly shaped my perspective on how best to confront the challenges we face. During a 25-year career in government, I saw first-hand the mayhem and destruction that terrorists wreak. I have seen close friends and fellow intelligence officers--good, courageous, heroic Americans--injured, maimed, and killed in terrorist attacks. Eight years ago this morning I read warnings that Osama bin Laden was determined to strike inside the U.S., but our government was unable to prevent the worst terrorist attack in American history that would occur on 9/11.

In the years since, I have seen the significant progress made in safeguarding the American people--unprecedented coordination and information sharing between federal agencies and with state and local governments; improved security at our borders and ports of entry; disruption of terrorist recruitment and financing; and a degradation of al Qaeda's ability to plan and execute attacks. And credit for much of this progress belongs to our armed forces, diplomats, intelligence officers, and law enforcement personnel at every level. They risk their lives. Many have given their lives. And this Nation owes them an enormous debt of gratitude.

At the same time, I have seen--we all have seen--how our fight against terrorists sometimes led us to stray from our ideals as a nation. Tactics such as waterboarding were not in keeping with our values as Americans, and these practices have been rightly terminated and should not, and will not, happen again.

I believe President Obama is absolutely correct: such practices not only fail to advance our counterterrorism efforts, they actually set back our efforts. They are a recruitment bonanza for terrorists, increase the determination of our enemies, and decrease the willingness of other nations to cooperate with us. In short, they undermine our national security.

A deep appreciation for our Nation's unique example and relationships with the world has always informed my service. This includes our ties with Muslim communities. While in college in the mid 1970s, I spent a summer traveling through Indonesia, where, like President Obama, I came to see the beauty and diversity of Islam. In the decades since, I studied as an undergraduate at the American University of Cairo, I worked as a State Department political officer in Saudi Arabia, and I served as a CIA station chief in the region. And, in that time, I saw how Arab and Muslim attitudes toward the U.S. hardened, often into hatred.

It was these collective experiences--and the worldview they shaped--that led me to an extended discussion with President-elect Obama last November. He, too, was deeply concerned with how the United States was viewed in the world and how these attitudes were fueling the flames of hatred and violence. He showed a clear understanding of the historical forces and conditions shaping the world and the unique role and responsibility of the United States at this moment in history. And so I decided to return to public service, as the President's senior advisor for Homeland Security and Counterterrorism.

But since my return to public service, I have been deeply troubled by the inflammatory rhetoric, hyperbole, and intellectual narrowness that has often characterized the debate over the President's national security policies, particularly those relating to the fight against terrorists. Some like to claim that the President's policies somehow represent a wholesale dismantling of counterterrorism policies and practices adopted by his predecessor. Others claim that the President's policies constitute a wholesale retention of his predecessor's policies. Well, they can't both be right. In fact, both are wrong.

As he has said, the President rejects an absolutist approach or the imposition of a rigid ideology on our problems. Like the world itself, his views are nuanced, not simplistic; practical, not ideological. He understands the complexities and many dimensions of the challenges presented by violent extremism. He understands that preventing terrorists from slaughtering the innocent sometimes requires making very difficult decisions--deployment of military forces, authorization of sensitive intelligence activities, the handling and disposition of terrorists that we capture and detain; and the policies we make and the measures we take to protect our homeland. And so, as he has said on many occasions, he rejects the false choice between ensuring our national security and upholding civil liberties. The United States of America has done both for centuries--and must do so again.

As we move ahead, the President feels strongly that we maintain a robust dialogue with the American people, indeed with the world, about the full range of our efforts to prevent terrorist attacks. With that in mind, I want to sketch out how the President sees this challenge and how the administration is confronting it. And I want to distinguish between two related but very distinct challenges: the immediate, near-term challenge of destroying Al Qaeda and its allies--those ready and willing to kill innocent civilians--and the longer-term challenge of confronting violent extremism generally.

First, the immediate challenge--the persistent and evolving threat from al Qaeda and its allies. President Obama is under no illusions about the imminence and severity of this threat. Indeed, he has repeatedly and forcefully challenged those who suggest that this threat has passed. To Americans who ask why our forces still fight and die in Afghanistan, he has made it clear that al Qaeda is actively plotting to attack us again and that he will not tolerate Afghanistan--or any other country--being a base for terrorists determined to kill Americans. To those abroad who doubt al Qaeda's motives or murderous history, he said in Cairo "these are not opinions to be debated; these are facts to be dealt with."

So here are the facts.

Al Qaeda and its affiliates are under tremendous pressure. After years of U.S. counterterrorism operations, and in partnership with other nations, al Qaeda has been seriously damaged and forced to replace many of its top-tier leadership with less experienced and less capable individuals. It is being forced to work harder and harder to raise money, to move its operatives around the world, and to plan attacks.

Nevertheless, Al Qaeda has proven to be adaptive and highly resilient and remains the most serious terrorist threat we face as a Nation. The group's intent to carry out attacks against the United States and U.S. interests around the world--with weapons of mass destruction if possible--remains undiminished, and another attack on the U.S. homeland remains the top priority for the al Qaeda senior leadership.

From its safe haven in Pakistan's Federally Administered Tribal Areas, the so-called FATA, al Qaeda continues to recruit and train fighters--including extremists from Western nations--and to plot attacks. Finally, Al Qaeda's own capabilities are further leveraged by the web of relationships the group maintains with other locally run terrorist organizations around the world, from Iraq to the Arabian Peninsula, from East Africa to the Sahel and Maghreb regions of North Africa.

In short, we continue to face a dynamic and evolving threat.

Faced with this clear threat, President Obama has articulated a clear policy--to disrupt, dismantle, and defeat al Qaeda and its allies. That is our mission, and the President described it in no uncertain terms in his Inaugural when he said, "Our nation is at war against a far-reaching network of violence and hatred." And to win this war against al Qaeda, the administration continues to be unrelenting, using every tool in our toolbox and every arrow in our quiver.

As part of the President's new strategy in Afghanistan and Pakistan, U.S. forces are pushing the Taliban out of key population areas in Afghanistan so we can prevent the return of al Qaeda to that country.

In partnership with Pakistan--which, in the face of unrelenting brutality from al Qaeda and its allies, has shown new resolve in this fight--we are confronting al Qaeda directly, inflicting significant losses to the Taliban and al Qaeda.

In East Africa and the Trans-Sahel region, we are sharing intelligence with partner nations and building the capacity of their security forces to deny al Qaeda safe havens.

We are actively working with and through the international banking community to deny resources and funding to the al Qaeda network and the businesses that support them.

And through strong law enforcement investigations and successful prosecutions of terrorists and their supporters, we and our allies are disrupting and deterring future terrorist attacks here and abroad.

I would add one personal observation. Over the past six months we have presented President Obama with a number of actions and initiatives against al Qaeda and other terrorist groups. Not only has he approved these operations, he has encouraged us to be even more aggressive, even more proactive, and even more innovative, to seek out new ways and new opportunities for taking down these terrorists before they can kill more innocent men, women, and children.

To this end, the President is devoting new resources, investing in new capabilities, approving new actions, and adapting our policies across the board.

He is confronting what he has identified as the most immediate and extreme threat to global security--the possibility that terrorists will obtain and use a nuclear weapon. That is why he has taken a number of critical steps: leading the effort for a stronger global nonproliferation regime; launching an international effort to secure the world's vulnerable nuclear material in four years; and hosting a Global Nuclear Summit next year. The risk of just one terrorist with just one nuclear weapon is a risk we simply cannot afford to take.

To ensure our military has the new capabilities and technologies its needs for this fight, he accelerated the increase in the size of the Army and the Marines, has approved another increase in the size of the Army, is expanding our Special Forces, and is increasing the intelligence, surveillance, and reconnaissance assets our troops need in Afghanistan.

To ensure we have the timely and accurate intelligence that prevents terrorist attacks and saves lives, we are continuing to adapt and strengthen the intelligence community by expanding human intelligence; strengthening operations; enhancing the workforce with improved linguistic and cultural skills; filling intelligence gaps; improving collaboration across the intelligence community; and promoting greater coordination with foreign intelligence partners.

And to better secure the homeland from attack, we're taking the steps Secretary Napolitano described last week: enhancing information sharing arrangements with our allies and partners; strengthening partnerships with state and local officials, law enforcement, and first responders; and improving the security of our critical infrastructure, borders, ports, and airports.

Our homeland security efforts include working aggressively to prevent and prepare for bio-terrorism, which is why the President's budget makes major investments in our public health infrastructure, including new technologies to detect attacks and new vaccines to respond in a crisis. And I would note that our coordinated response to the H1N1 virus--across the federal government, with state and local governments, and with the private sector and the public--and our extensive preparations for the coming flu season will ensure that we are better prepared for any future bio-terrorist attack.

So there should be no doubt. As the President has told us privately and as he has said publicly, this administration "will do everything in our power to keep the American people safe...with certainty that we can defeat al Qaeda."

At the same time, the President understands that military power, intelligence operations, and law enforcement alone will never solve the second, longer-term challenge we face: the threat of violent extremism generally, including the political, economic, and social factors that help put so many individuals on the path to violence. And here is where I believe President Obama is bringing a fundamentally new and more effective approach to the long-term obligation of safeguarding the American people. This new approach has five key elements.

First, and perhaps most significantly, the fight against terrorists and violent extremists has been returned to its right and proper place: no longer defining--indeed, distorting--our entire national security and foreign policy, but rather serving as a vital part of those larger policies. President Obama has made it clear that the United States will not be defined simply by what we are against, but by what we are for--the opportunity, liberties, prosperity, and common aspirations we share with the world.

Rather than looking at allies and other nations through the narrow prism of terrorism--whether they are with us or against us--the administration is now engaging other countries and peoples across a broader range of areas. Rather than treating so many of our foreign affairs programs--foreign assistance, development, democracy promotion--as simply extensions of the fight against terrorists, we will do these things--promote economic growth, good governance, transparency and accountability--because they serve our common interests and common security; not just in regions gripped by violent extremism, but around the world.

We see this new approach most vividly in the President's personal engagement with the world--his trips, his speeches, his town halls with foreign audiences--where he addresses terrorism directly and forcefully. At the same time, terrorism is recognized as one of the many transnational challenges the world will face in the 21st Century. We saw this in his speech in Cairo, where he spoke of a "broader engagement" with the world's Muslims, including the issues important to them: education, public health, economic development, responsive governance, and women's rights.

Indeed, it was telling that the President was actually criticized in certain quarters in this country for not using words like "terror," "terrorism" or "terrorist" in that speech. This goes to the heart of his new approach. Why should a great and powerful nation like the United States allow its relationship with more than a billion Muslims around the world be defined by the narrow hatred and nihilistic actions of an exceptionally small minority of Muslims? After all, this is precisely what Osama bin Laden intended with the Sept. 11 attacks: to use al Qaeda to foment a clash of civilizations in which the United States and Islam are seen as distinct identities that are in conflict. In his approach to the world and in his approach to safeguarding the American people, President Obama is determined not to validate al Qaeda's twisted worldview.

This leads directly to the second element of the President's approach--a clear, more precise definition of this challenge. This is critically important. How you define a problem shapes how you address it. As many have noted, the President does not describe this as a "war on terrorism." That is because "terrorism" is but a tactic--a means to an end, which in al Qaeda's case is global domination by an Islamic caliphate. Confusing ends and means is dangerous, because by focusing on the tactic, we risk floundering among the terrorist trees while missing the growth of the extremist forest. And ultimately, confusing ends and means is self-defeating, because you can never fully defeat a tactic like terrorism any more than you can defeat the tactic of war itself.

Likewise, the President does not describe this as a "global war." Yes, al Qaeda and other terrorists groups operate in many corners of the world and continue to launch attacks in different nations, as we saw most recently in Jakarta. And yes, the United States will confront al Qaeda aggressively wherever it exists so that it enjoys no safe haven. But describing our efforts as a "global war" only plays into the warped narrative that al Qaeda propagates. It plays into the misleading and dangerous notion that the U.S. is somehow in conflict with the rest of the world. It risks setting our Nation apart from the world, rather than emphasizing the interests we share. And perhaps most dangerously, portraying this as a "global" war risks reinforcing the very image that al Qaeda seeks to project of itself--that it is a highly organized, global entity capable of replacing sovereign nations with a global caliphate. And nothing could be further from the truth.

Nor does President Obama see this challenge as a fight against "jihadists." Describing terrorists in this way--using a legitimate term, "jihad," meaning to purify oneself or to wage a holy struggle for a moral goal--risks giving these murderers the religious legitimacy they desperately seek but in no way deserve. Worse, it risks reinforcing the idea that the United States is somehow at war with Islam itself. And this is why President Obama has confronted this perception directly and forcefully in his speeches to Muslim audiences, declaring that America is not and never will be at war with Islam.

Instead, as the President has made clear, we are at war with al Qaeda, which attacked us on 9/11 and killed 3,000 people. We are at war with its violent extremist allies who seek to carry on al Qaeda's murderous agenda. These are the terrorists we will destroy. These are the extremists we will defeat.

Even as the President takes a more focused view of the threat, his approach includes a third element: a broader, more accurate understanding of the causes and conditions that help fuel violent extremism, be they in Pakistan and Afghanistan or Somalia and Yemen.

The President has been very clear on this. Poverty does not cause violence and terrorism. Lack of education does not cause terrorism. But just as there is no excuse for the wanton slaughter of innocents, there is no denying that when children have no hope for an education, when young people have no hope for a job and feel disconnected from the modern world, when governments fail to provide for the basic needs of their people, then people become more susceptible to ideologies of violence and death. Extremist violence and terrorist attacks are therefore often the final murderous manifestation of a long process rooted in hopelessness, humiliation, and hatred.

Therefore, any comprehensive approach has to also address the upstream factors--the conditions that help fuel violent extremism. Indeed, the counterinsurgency lessons learned in Iraq and Afghanistan apply equally to the broader fight against extremism: we cannot shoot ourselves out of this challenge. We can take out all the terrorists we want--their leadership and their foot soldiers. But if we fail to confront the broader political, economic, and social conditions in which extremists thrive, then there will always be another recruit in the pipeline, another attack coming downstream. Indeed, our failure to address these conditions also plays into the extremists' hands--allowing them to make the false claim that the United States actually wants to keep people impoverished and unempowered.

It is important to note that these factors not only help fuel violent extremism but also contribute to a wide range of national security threats - from other types of organized violence and sociopolitical instability to resource competition. And addressing these factors will help the United States deal with a wide range of threats, including violent extremism.

This is why the President's approach includes a critical fourth element--the recognition that addressing these upstream factors is ultimately not a military operation but a political, economic, and social campaign to meet the basic needs and legitimate grievances of ordinary people: security for their communities, education for children, a job and income for parents, and a sense of dignity and worth.

The extremists know this; wherever governments are unable to provide for the legitimate needs of their people, these groups step into the void. It is why they offer free education to impoverished Pakistani children, where they can recruit and indoctrinate the next generation. It is why Hezbollah in Lebanon and Hamas in Gaza provide so many social services to the poor even as they commit heinous acts of terror. It is why the terrorist warlord in Somalia can so easily recruit a destitute teenager who sees nothing but a future of poverty and despair.

President Obama understands that successfully defeating these extremists over the long term requires breaking this bond--exposing al Qaeda as nothing but the death cult that it is and isolating extremists from the people they pretend to serve. Often, the extremists do this themselves. Time and again, their barbarism, brutality, and beheadings have provoked backlashes among ordinary people, from Afghanistan under the Taliban to al Qaeda in Iraq and increasingly in Pakistan today.

Going forward, people must come to see that it is the likes of al Qaeda and the Taliban, Hezbollah, and Hamas--not the United States--that is holding their aspirations hostage; that of all those al Qaeda has killed, most have been Muslims; that the murder of innocent civilians, as the President said in Cairo, is not how moral authority is claimed, but how it is surrendered; that the future offered by extremists is not one of peace but violence, not of hope and opportunity but poverty and despair.

Indeed, it is people in these countries, not the United States, who ultimately will isolate these extremists: governments that provide for the basic security and needs of their people; strong and transparent institutions free from corruption; mainstream clerics and scholars who teach that Islam promotes peace, not extremism; and ordinary people who are ready to choose a future free from violence and fear. Still, the United States can and must play its part. For even as we condemn and oppose the illegitimate tactics used by terrorists, we need to acknowledge and address the legitimate needs and grievances of the ordinary people those terrorists claim to represent.

Which leads to the fifth and final part of the President's approach--integrating every element of American power to ensure that those "upstream" factors discourage rather than encourage violent extremism. After all, the most effective long-term strategy for safeguarding the American people is one that promotes a future where a young man or woman never even considers joining an extremist group in the first place; where they reject out of hand the idea of picking up that gun or strapping on that suicide vest; where they have faith in the political process and confidence in the rule of law; where they realize that they can build, not simply destroy--and that the United States is a real partner in opportunity, prosperity, dignity, and peace.

That is why President Obama is committed to using every element of our national power to address the underlying causes and conditions that fuel so many national security threats, including violent extremism. We will take a multidimensional, multi-departmental, multi-national approach.

We will use our military power, not only to take down al Qaeda and its allies, but to train and build up the capacity of foreign militaries and security forces--as we are doing from Iraq to Afghanistan to Africa--because if these militaries and security forces can uphold the rule of law, if these countries can take responsibility for their own security, then militias, warlords, and terrorists will find it harder to win sympathizers and recruits with the false promise of security and stability. So the President has increased funding to help build the capacity of foreign law enforcement, border security, and judiciaries.

We will use our power to demonstrate that seemingly intractable problems and legitimate grievances can be resolved through diplomacy, dialogue, and the democratic process. That is why we are supporting national elections in Afghanistan and helping to protect the rights of all Afghans. That is why the President has made clear that our relationship with Pakistan is grounded in support for Pakistan's democratic institutions and the Pakistani people. That is why we support an Iraqi government that promotes national unity and is nonsectarian. And that is why the administration is aggressively pursuing negotiations to achieve the goal of two states, Israel and Palestine, living side by side in peace and security.

We will also use our economic power to promote opportunity and prosperity. This will help restore people's hope in the political process and in legitimate institutions. In Afghanistan, this means a dramatic increase in our development efforts--working with the government to end corruption, improve the delivery of basic services and build an economy that isn't dominated by drugs. In Pakistan, it means a billion and a half dollars in direct support to the Pakistani people every year for education, health care, and infrastructure, as well as opportunity zones to spark development in the border regions. And we are harnessing our economic power to make substantial increases in foreign assistance generally--including poverty reduction, global health, and food security--not as a crutch for societies in need, but as a catalyst for development, good governance, and long-term prosperity.

Finally, as I described, we will harness perhaps our greatest asset of all--the power of America's moral example. Even as we aggressively pursue terrorists and extremists, we will uphold the values of justice, liberty, dignity and rule of law that make people want to work with us and other governments want to partner with us.

Taken together, the policies and priorities I've described constitute the contours of a new strategic approach--a new way of seeing this challenge and a new way of confronting it in a more comprehensive manner. The President understands that for the fanatical few, no amount of outreach and engagement will ever dissuade them from violence and murder. So faced with that persistent and evolving terrorist threat, President Obama and his administration will be unrelenting, unwavering, and unyielding in its efforts to defeat, disrupt, and dismantle al Qaeda and its allies.

At the same time, the United States will pursue a more effective and comprehensive approach against the longer-term threat of violent extremism in the five key areas I described.

And at home, we know that we can rely on the extraordinary capabilities of the American people to be fully engaged in our shared effort to protect ourselves. We will not live our lives in fear, but rather in confidence, as we strengthen our ability to prevent attacks and reduce our vulnerabilities wherever they exist. So, just as we work to disrupt, dismantle, and defeat terrorism with a wide range of efforts abroad, we will also strengthen our efforts here at home to create strong and resilient communities prepared to stand together and let the terrorists know that they will never succeed in shaking our will.

In less than four weeks, America and the world will again mark the anniversary of that terrible day in September when so many innocents were ruthlessly murdered as they went about their daily lives. The U.S. government was unable to prevent that attack. But the American people should know: we are doing everything in our power to prevent another one. And eight years on, that mission demands nothing less than the new thinking that President Obama brings to this challenge and the new approach that this administration will pursue in the years ahead as we fulfill our single most important responsibility--ensuring the safety and security of the American people.

Thank you very much.

It's become very clear that the Birthers simply aren't going to stop -- ever. In fact, their craziness and ineptitude is now starting to spread over the whole globe in some pretty funny ways.

The Birthers dragged a complete bystander from yet another country, David Bomford of Adelaide, Australia, into this whole mess. And now, it appears, their ringleader is saying that he's the phony. It really is worth thinking about what has happened here.

After Orly Taitz released the quickly-debunked forged Kenyan birth certificate, it was discovered that the document was altered from a source document that didn't even come from Kenya, but was taken from Bomford's family genealogy site.

Bomford himself chimed in, and told the Australian Broadcasting Corporation that he would be taking his birth certificate off the family genealogy Web site, after security experts said he'd left himself open to identity theft. But he did seem a bit entertained about the whole experience: "I'm not particularly worried about it because no-one would honestly believe that anyone like me would be involved in it - just a grey-haired old guy sitting in a corner in quiet old Adelaide."

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Rep. Frank Pallone (D-N.J.) has added his voice to those of Sierra Club and by calling for a criminal investigation of the forged letters sent by a lobbying firm on behalf of the coal industry.

It happened last night during an interview with MSNBC's Rachel Maddow. Toward the end of a segment that offered a good rundown of the story so far -- and particularly the crucial point that both Bonner and their coal industry client knew about the forgeries before the House vote on the energy bill, but didn't inform the affected lawmakers until after the vote -- Maddow asked Pallone whether the issue of the forged letters was something that "could potentially be a criminal matter."

Pallone replied:

I think it's possible, and I'm sure they will, and they certainly should investigate. Because, you know, we rely, and I think our democracy relies, on a certain amount of truth -- that when people are writing to you, that they are what they purport to be. And I think it is a form of fraud that should be investigated.

Congress is already probing the issue. Rep. Ed Markey has sent letters to Bonner and Associates and to the coal industry group on whose behalf Bonner was working, asking detailed questions about the episode.

FreedomWorks, an industry-funded group that helps fund and organize tea parties and other protests, has released an "August Recess Action Kit" to urge health care reform opponents to attend town hall meetings and "turn up the heat" on their representatives.

The kit includes postcards that read, "House Speaker Nancy Pelosi said that she's 'not afraid of August,' but she should be." The cards, which you can send to friends and neighbors, also has space for the place and time of the next local town hall.

And there's a letter that says Senate Majority Leader Harry Reid and President Obama should also be afraid.

It may be true that August is just a month, but it's also true that the longer we have to expose the real intentions and the economic ramifications of the Cap and Tax and health care reform legislation on the table, the more afraid Ms. Pelosi, Senator Reid, and President Obama should be.

FreedomWorks also includes a helpful Google Map of upcoming town halls, and encourages supporters to email pictures and videos of the events they attend.