Josh Marshall

Josh Marshall is editor and publisher of TalkingPointsMemo.com.

Articles by Josh

Krugman to the rescue on the Social Security "crisis," explained simply and elegantly, as only he can.

Thank President Bush (from the FT...)

Oil exporters have sharply reduced their exposure to the US dollar over the past three years, according to data from the Bank for International Settlements.

Members of the Organisation of Petroleum Exporting Countries have cut the proportion of deposits held in dollars from 75 per cent in the third quarter of 2001 to 61.5 per cent.

Middle Eastern central banks have reportedly switched reserves from dollars to euros and sterling to avoid incurring losses as the dollar has fallen and prepare for a shift away from pricing oil exports in dollars alone.

Private Middle East investors are believed to be worried about the prospect of US-held assets being frozen as part of the war on terror, leading to accelerated dollar-selling after the re-election of President George W. Bush.

Thank you, thank you, a <$NoAd$>thousand thank yous.

Some other points to follow up <$NoAd$>on (from the LAT on July 30th ...)

A comprehensive examination of the U.S.-led agency that oversaw the rebuilding of Iraq has triggered at least 27 criminal investigations and produced evidence of millions of dollars' worth of fraud, waste and abuse, according to a report by the Coalition Provisional Authority's inspector general.


The Times has reported on several cases in which a small circle of former Republican administration officials had drawn scrutiny for their actions in Iraq, including a deputy undersecretary of Defense under investigation by the FBI in connection with a telecommunications contract. In another case, officials have said, a former senior U.S. advisor conducted negotiations with a family connected to Saddam Hussein to form a new Iraqi airline.

Former CPA officials and contracting experts said they were surprised at the number of criminal investigations described in Bowen's report. They noted that criminal corruption charges in the U.S. involving federal contracting were rare.


The report cited several criminal cases under investigation, though it provided no names and few details.

In one case, a senior U.S. advisor "manipulated" the contracting system to award a $7.2-million security contract. The contract was later voided and the money returned.

In another incident, a contractor billed $3.3 million for nonexistent personnel working on an oil pipeline repair contract. A security contractor guarding the pipeline overcharged the CPA by $20,000. Both incidents are under criminal investigation.

In another example, a military assistant to a Pentagon employee gambled away part of a $40,000 grant issued to help coach an Iraqi sports team, the report found.

"In the early days, there was no record keeping. They were flushed with money and seized assets. People just didn't follow established procedures," said Charles Krohn, a former CPA official. "You were dealing with inexperienced people who didn't understand that there's always a day of reckoning."

Besides the more than two dozen criminal cases under investigation by the inspector general, about 35 other matters have been referred to other U.S. agencies for further investigation, said James Mitchell, an inspector general spokesman.

Perhaps Kerik left because he couldn't abide how much stuff wasn't being done by the book, how much cash was going into the wrong hands?

Another clue?

When last we left our story, we were trying to find out why Bernard Kerik left Iraq after three months in the country when he was originally slated to serve from between six and eighteen months building the new Iraqi police force.

The earliest word of Kerik's departure now seems to be in the second week of August in reports in the Newsweek website and in an interview on CNBC.

But perhaps this is another clue. On November 30th of last year Britain's Daily Telegraph reported that a bounty had been placed on the head of Douglas Brand, a South Yorkshire assistant chief constable, working in Iraq on building up the Iraqi police force. According to the article, Brand came to Iraq in July and is an "expert in conflict management [who] came out to Iraq to take over the task of reforming the Iraqi police begun in May by Bernard Kerik, the former New York police commissioner."

So perhaps the plan had changed as early as mid-July, about six weeks after Kerik arrived.

The White House is now putting the first dollar signs on its plan for gradually phasing out Social Security and replacing it with a system of government-regulated private investment accounts. A few examples are included in this article out this evening from Reuters.

But an odd parity is emerging in the numbers -- even the highly optimistic ones favored by the White House.

The proponents of phasing out Social Security say we have to get rid of it because the program is "unsustainable", as Scott McClellan said today. The reason it's "unsustainable" is that the program would need more funds to get through the demographic bulge created by the baby generation.

(This in itself is a highly debatable point; but let's leave that for a later discussion.)

Just how much extra funds would be needed and whether those funds would come from borrowing or benefit cuts or new taxes is a matter of debate. But precisely those choices which make Social Security "unsustainable" in a few decades are the ones the White House is happy to make now in order to speed the process of phasing out the Social Security program.

Simply financing the 'transition costs' of phasing out Social Security will cost a good trillion or two dollars, maybe more -- by the White House's own informal estimates. And where on earth are we going to get that money? Borrow it, says the White House. Notta problem. In other words, we have to start phasing out Social Security now because if we don't we're going to face some big borrowing in a few decades. But we can avoid that horror of horrors by doing some big time borrowing now to finance abolishing Social Security we won't have to face that terrible fate a few decades from now.

Makes perfect sense, right?

We'll return with more detailed numbers and explanations in future posts. But the new numbers out from the White House only underscore the basic fact that this debate isn't about funding or lack thereof. It's all about who's in favor of the Social Security phase-out and who isn't.

More to consider ...

In prepared remarks <$NoAd$>praising the new nominee last week, President Bush ranged across the whole of Kerik's career, from his days as a beat cop in Times Square, to his hands-on work at Ground Zero on the morning of Sept. 11, 2001.

Yet the President was oddly — and utterly — silent on Kerik's work in Baghdad, and perhaps for good reason. Though Kerik presided over the hiring of thousands of recruits for the reconstituted Iraqi police force, most were hired without background checks, and many turned out to be hardened criminals. As a result, some 30,000 of them, or roughly 25 percent of the entire force, are now reportedly being let go, with the U.S. footing the bill for $60 million in severance payments.

There's also Kerik's never-fully explained role in the 1990s as head of a New York City Corrections Department foundation that was secretly funded with roughly $1 million of tobacco company rebates from departmental purchases of cigarettes using city funds. Kerik's hand-picked treasurer for the foundation, Frederick Patrick, is now serving a one-year prison sentence after admitting in court that he pilfered nearly $140,000 of the foundation's money to pay for collect-call phone sex from inmates.

And heck, that's from the New York Post ...

And the mystery deepens<$NoAd$>.

Last night we reported that the first reports of Bernard Kerik's departure from Iraq came in an August 25th piece in the Times. But one of our many eagle-eyed TPM readers (two actually, JB and TB) put us on to this August 15th piece on the CPA bubble in Newsweek in which the magazine's Christopher Dickey wrote ...

Yet L. Paul Bremer III, the American pro-consul who is, I’m told, about to go on vacation, and Bernard Kerik, the former NYC police commissioner who came, who saw, who commented, and is about to go home—these guys say things are getting better all the time.

Normally a cover date on a news weekly would be at least several days after the date the thing appeared. But this was a "web exclusive". So it seems Kerik was putting out word that he was bugging out in the second week of August.

And that is confirmed in an appearance he did on August 11th with CNBC's Maria Bartiromo in which there was this exchange ...

BARTIROMO: I believe you said when you went to Iraq back in the middle of May that you would be there between three and six months. Still true?

Mr. KERIK: I'm--I'm here three months now. You know, hope--hopefully, within the next three or four weeks, you know, I'll be able to get back home. I came here with one job in--in mind, and that was to stand up the Minister--Ministry of Interior, to reconstitute the interior. We have identified the two primary deputies. I have the first deputy in mind at this point. We've identified the Baghdad chief, the--the chief of operations. Police chiefs all over the country have been identified. I've appointed the--the new head of border enforcement and immigrations and customs. So basically, reconstituting the ministry is--is just about finished. Now it is recruiting, training, stand up. That's going to take--take time. It'll take between another year--18 months to two years to get it all intact. But for what I came to do, I'm just about there.

BARTIROMO: So when do you think you'll be able--or the US will be able to turn over security to the Iraqis?

Mr. KERIK: Well, I think it's not--you know, there's not going to be a day. There's not going to be a date. I think it's a transitionary process. The more Iraqis you stand up, the more you can work on transition and disengagement from the military, but it's going to be a while before that happens.

As we said last night, he actually said he'd be there for at least six months. So again, what happened?

In the course of his confirmation hearings, Bernard Kerik may be able to shed some unique light on decision-making in the early days of the Iraq occupation.

Here's what interests me most.

In an article in the New York Daily News on May 16th 2003, Kerik confirmed that he'd been tapped to be the American in charge of the Iraqi Interior Ministry (formally, he'd be the chief 'advisor'). Principally, that meant he'd be in charge of domestic security and specifically in charge of standing up a new Iraqi police force. This was just after Bremer had arrived on the scene. And he told the Daily News he'd be leaving for Iraq within three days. As for how long he'd be in the country, he said he'd be in Iraq "in excess of six months, but no one really knows . . . as long as it takes to get the job done."

As Kerik suggested, six months seemed optimistic. In mid-July, according to an article in the Milwaukee Journal Sentinel, Robert C. Orr, who the Pentagon had just sent as part of a fact-finding mission to Iraq, said that "former New York police commissioner, Bernard B. Kerik, is training an Iraqi police force but his work won't be completed for at least another 18 months, and the need for help is urgent and immediate (italics added)."

If you review the newspaper reportage over the next couple months you'll see Kerik quoted in various articles about security and policing in Iraq. He even showed up in walk-along columns by the Post's Jim Hoagland and the Times' Thomas Friedman.

But little more than two months into his tour, just as Iraq was slipping the first few rungs down the ladder into chaos, something happened -- something that I've never seen explained.

Remember that on August 7th, the Jordanian Embassy in Baghdad was bombed -- the first high-profile terrorist act since the war. Then on August 19th a truck bomb destroyed the UN compound in the Iraqi capital killing seventeen, including the head of the UN mission, Sérgio Vieira de Mello.

Then, only a few days later, a few press reports noted for the first time -- in most cases just in passing -- that Kerik was preparing to leave the country. The earliest of these that I'm aware of came in a Times article by Dexter Filkins in which he notes in passing that Kerik was "wrapping up his tour in Iraq" and later that Kerik's "time here is to end in a week."

[ed.note: If there are earlier references to the timing of Kerik's departure I'm not aware of them. But if you are, I'd be obliged if you could let me know.]

Then just a few days later, on August 29th, a bomb exploded outside the Imam Ali Mosque in Najaf killing upwards of a hundred people including Ayatollah Mohammad Baqir al-Hakim, head of SCIRI.

Tracking down the precise date of Kerik's departure is difficult. But he apparently left the country either two or three days later. The first word of Kerik's departure that I could find comes in a September 3rd article by John Tierney in the Times, which reported on the truck bombing of the central office on the Iraqi police in Baghdad. In that report Tierney notes that the leader of the effort to reconstitute the Iraqi police force had been "Bernard B. Kerik, a former New York City police commissioner [who] finished his three-and-a-half-month tour here this week."

The question, I suppose, pretty much asks itself: what happened? Kerik arrived in Iraq with a rather open-ended committment. By his own account, it should have carried him at least through the end of 2003. There was even some suggestion that it would keep him in the country through 2004. Yet just after the first two major terrorist attacks in Baghdad reports surfaced that he was about to leave. And only a week later, after major terrorist incidents numbers three and four, he was gone.

At the time, the Pentagon and Kerik (or rather people speaking on his behalf) made rather unconvincing claims that Kerik's departure was simply part of the original plan.

As TPM noted a week after Kerik left, the Pentagon said the Kerik was actually supposed to leave in the summer and "extended his stay to finish his ongoing projects." That was a bit hard to figure since that would have meant his entire tenure in the country would have lasted only a few weeks. Meanwhile, a spokesperson for Kerik's employer, Giuliani Partners, said the plan had always been that he'd only stay in the country for 90 days. But that of course directly contradicted Kerik's own statements.

We now know that the many of the key security-related decisions that have haunted the occupation for the last year and a half happened in those first few months. Kerik also left at a time when there seemed to be plenty of police work to go around in Iraq.

So again, what happened?