Jesus set a high bar for Christians.

We ARE our brother’s keeper.

I believe that you can make a strong moral argument for universal healthcare that should transend cost. The right thing to do is offer care to all who need it whether they can afford it or not.

Fortunately, it also makes economic sense.

The cost for subsidies to help the those who aren’t covered by private or government plans has been estimated at $1T over ten years .

So the simple question is what is the economic impact of spending an additional $100B a year to provide health care coverage for everyone?

Unlike oil, that money stays in this country. Domestically, it’s a wash. The $100B can be viewed as another economic stimulus program generating increased employment and taxes from the health care sector of the economy.

Is it a productive use of our resources? Again the answer is yes because under the current system, the cost of providing care to the uninsured and underinsured through expensive emergency room visits adds $1000 a year to every private insurance policy. Universal coverage will give the underserved access to much cheaper preventative care delivered through physician offices. The $1000 savings will end up going back into the pockets of the insured just like a tax cut. From this perspective, the $100B/yr is way less than the annual cost of the Bush tax cuts and delivers more money to the middle class.

Finally, there is the big issue of how this affects the deficit and our government’s ability to borrow money. Fortunately the answer is simple here too. According to the CBO, the greatest threat to our solvency is not recent stimulus funding or the current deficit but projected increases in Medicare and Medicaid costs. Those increases are driven by the current inefficient health care system, an aging underserved population, and the failure to provide the sort of early intervention which can reduce the incidence of chronic conditions like diabetes and heart disease.

So if you are a fiscal conservative, you should be for healthcare reform. If we fail to address this issue, it will only reinforce the international perception that our political system is incapable of resolving our largest, most difficult fiscal problem.

Taking on the burden of caring for all of our citizens will not only make us a healthier country physically, and a better country morally, but will also make us a stronger country financially. It’s nice how that works out.

I’ve had some comments lately that I’m spending too much time on looking backward and not enough time looking forward, so I thought I would spend a little time responding.

First, if you read the title of this blog, it is about a progressive point of view.

In other words, I support what the current administration is doing and want it to succeed. I believe that there is a role for government to play. I believe that success can’t come at the expense of another, in other words it can’t be a zero-sum game. It has to be an expanding-pie game. We individually succeed when we collectively succeed. I also believe that the best economic growth comes when those who have the least gain the most.

The best long-term hope for that sort of transformation for the poor comes from education. As I’ve posted before, a college degree virtually erases any economic disadvantage the parents of that graduate may have experienced. The problem is that a child’s educational success is intimately tied to where they live and the ability of their parents to be involved in their education. When those parents are struggling to keep food on the table and a roof over their heads, they aren’t often able to be as involved as the need to be.

So how does government help?

Since it is not a level playing field for all members of our society, I believe those who have enjoyed success have responsibility to help those who are struggling. Government does this through a tax policy by taxing people according to their ability to pay.

Some people are poor because they were born to poor parents and never had an opportunity to escape. Some are poor because they are physically or mentally challenged and simply can’t support themselves. Some are poor because they have made bad choices, turned to crime, or became addicted to drugs.

Jesus didn’t distinguish. He said that we give to all poor people because they are our brothers. Jesus was a “needs-based” healer. He didn’t ask how you came to be in need. He didn’t withhold his help from those who were in need because of the bad choices they made. He only asked if you were ready to be healed.

So if we follow the Bible, the next question is how do we use the money to help the poor, because they’re ready!

Well the Bible is helpful here too. We have to make sure that they have something to eat, clothes to wear, and a safe place to sleep. We also are obligated to help them escape from poverty by teaching them how to support themselves.

So how does that translate to today?

A lot of the stimulus package is going to the poor and working poor. Hopefully that will translate into the immediate needs of food, clothing, and shelter. Many economists have said that the fastest way to get money into the economy is to give it to poor people because they will spend it. The challenge with the current package is going to be getting into the hands of those who need it fast enough.

We need more jobs and the stimulus package is designed to do that too, though the majority of the construction jobs are short term. The real transformative jobs will come as energy and healthcare reforms kick in. Something as simple as reversing the stem cell research ban is going to spark our economy here in Michigan with high paying research jobs. Those jobs will allow graduates from our top universities to stay in the state, buy homes, and start businesses and families. It’s this sort of progress on a local and regional level that helps us as a country to climb back out of the hole that we have dug for ourselves.

Finally, we need good schools. That was cut out of the stimulus package, but the current administration has that on their agenda as well.

This is a challenging time, but it is also a time a great promise. What I find interesting is the same people who criticize the Obama administration for too little change on the political front, are apoplectic over the sweeping social and economic changes and the pace with which he is implemeting them. In fact, he isn’t making any of this stuff up. He is doing a great job of keeping the promises that he made to those who elected him.

One of the great things about our democracy is that old friends can have fundamental differences about things like economic policy, and yet the country still moves forward. That’s because every four years we all get to vote.

The last eight years President Bush earned the opportunity to test trillion dollar tax-cuts, unrestrained capitalism, and cowboy foreign policy. The results of that experiment pretty much speak for themselves.

The American voters had a clear choice in November. Republicans didn’t offer many new ideas. Instead they chose to attack the guy I liked. They called him inexperienced, a socialist, a friend of terrorists, a baby killer, and a Muslim. A majority of voters saw through that. Now my guy has earned the opportunity to take us in a different direction.

Because of the problems President Obama inherited, that direction includes massive short-term government spending. In the near future it may also include taking over failing financial institutions (like the infamous socialist Reagan did during the S&L crisis) and restructuring mortgages.

I didn’t like much of what the Bush administration did the last eight years. I suspect those who supported McCain and Bush won’t find much they like in the Obama administration.

The facts, however, are hard to avoid. The Bush administration added $5T to the national debt, started two wars, and left the country in the worst financial condition since Herbert Hoover. But when Democrats propose $800B to accelerate the recovery, Republicans call it “generational theft” and followed that up with a proposal for a $2.5T tax cut.

Rather than ideas, Republicans only have tired rhetoric – “tax-cuts are good” and “liberal/socialist spending is bad”. Their only plan for success requires President Obama to fail. Given the serious challenges facing this country that is a sad commentary.

A number of people in print and on the Internet seem to be in denial about the November election. They seem to feel that if they continue bringing up the same old issues, the American people will somehow change their minds.

Here’s a message to those unhappy 30%.

We get it. You don’t like the current President and you are going to continue to accuse him of killing everything from babies to capitalism. If you are determined to hold your breath until things change, I hope that shade of blue looks good on you.

For everyone else, we’ve got a big problem that is going to require big changes.

Capitalism is broken and the only viable solution is for the government to spend money to get it going again. It may be tough medicine for those who have this ideological view that capitalism is the cure for all evils. The reality is that this is a time when government has to take the lead. It doesn’t matter whether you call it socialism or not. All that matters is getting our capitalist engine started again, because right now it is broken down by the side of the road.

This is not something that can be fixed with tax breaks alone. That’s because tax breaks only help those who have taxable income. They do no good for the person who is out of a job. They do no good for the company that is losing money. In fact one of the better things we can do is to give poor people more money because they are the ones most likely to spend it right away.

This is also not something that increased productivity can fix. The problem is not a lack of productivity. The problem is excess capacity. We have resources in the form of people and infrastructure that are not being used because there isn’t enough demand.

This is also not something that will fix itself. If we do nothing, it will get much worse before it gets better. That’s because we are already in a downward spiral where we are shedding jobs and eroding asset value. Both loses constrict what the economy needs to grow – credit.

Credit is tight because the banks don’t really know what their outstanding loans are worth because they don’t know what the assets backing those loans are worth. What they do know is that every month, the value of those assets DECREASES. So they are holding on for dear life to the cash they have because they are concerned about their own survival.

Every contraction throws more people out of work. Those folks run out of cash, are underwater on their mortgages, and have to declare bankruptcy. Unsold houses put more downward pressure on the real estate market and banks take the hit in terms of defaulted loans and houses they can’t sell.

The government (local, state, and federal) have to spend money quickly and massively to create demand across all sectors of the economy, get people back to work, and stop the deflationary spiral. If we can do that wisely, that’s a plus. But even if we spend foolishly, the sooner those dollars get into the economy the better.

As long as the money stays in this country, it will do good. It is best if it directly creates jobs, but even if some of it ends up in banks or paying down debt, it’s good. This is a massive amount of money. The challenge is going to be spending it fast enough.

The numbers can be challenging for some to comprehend, but in the context of a $1T spend, a $100M expenditure is .0001%. In other words, as bizarre as it sounds, it is not worth arguing about – yet that is what some would want us to do. Republicans want to delay this bill to because of $150M for endangered honeybees (which is a problem), $50M for the arts, $198 million to keep a broken promise to Filipino WWII vets, $15B for college scholarships, and $700M to buy fuel efficient government cars from US car makers. If you add up all of it, it is less than 2% of the total.

This is insanity.

Our home is on fire. Now is not the time to argue about how much water it’s going to take to put out the fire. Now is the time to open the hydrant wide and point the hose in the general direction of the fire. The water will do the rest.

In the last gasp of a desperate campaign, Senator McCain and Governor Palin have decided that their best strategy is to frighten the American voter by labeling their opponent a socialist. This was the result of a sound bite from a conversation that Senator Obama had with the now famous Joe Wurzelbacher. Joe asked Senator Obama to defend his plan to repeal the Bush tax cuts for the top tier of wage earners while preserving those cuts for the rest of the population. As part of that discussion Senator Obama said that he believed that taxing the wealthy who have seen their income grow over the last eight years in order to provide a break for everyone else who have seen their income shrink over the same period of time, is good economic policy. He use the phrase “spread the wealth around”. That has become the touchstone for this attack.

I think that there are a couple of ways to respond to this claim.

The first is to take Joe the Plumber head on. He appears to object to the concept of a progressive tax system – the more you make the more you get taxed. The usual conservative objection to a progressive tax system is that it punishes success, and as a result, discourages the effort to be successful. Using that logic, the Bush administration aggressively cut the tax rates of the most successful. Their expectation was that this would encourage the wealthy to make more of the sort of investments that made them successful in the first place which will result in growing the economy for everyone else. The problem is that it doesn’t work.

The facts support a much different picture. Democratic administrations where policies favor the middle class have historically done better for both the middle class and the wealthy than Republican administrations. This has held true for the past 80 years.

Economists explain this by pointing out that a robust middle class is the best driver of our economy. When the middle class is doing well, everyone does well. I heard it expressed by CEO Victor Hammel, “I would rather pay a little higher tax on a higher profit than a lower tax rate on lower profits.”

The second is to dive into this claim of socialism.

First a quick definition. Socialism is the opposite of capitalism. In a socialist society there is no private ownership. The government owns everything presumably for the benefit of the people. It’s that last part that gets people confused because Socialists talk a lot about the equitable distribution of wealth.

The McCain campaign has been tossing the word socialism around much in the same way that the Bush administration turned liberal into a dirty word. What bothers me about it is that it is hypocritical and cynical.

It is cynical because the Bush tax cut plan is set to expire on January 1, 2009 anyway. So how does refusing to renew a tax cut, that didn’t have the desired result anyway, somehow suddenly become a socialist act? Those tax cuts were scheduled to expire BECAUSE so many people (including John McCain) were skeptical of their promised effect. Even if this weren’t an election year, I suspect that the Bush administration would have had a difficult time getting them renewed.

What is hypocritical is that we HAVE in fact taken a huge step toward socialism with the various financial bailout plans which both John McCain and Barack Obama voted for. In this case the government has in effect nationalized portions of the financial system (any maybe soon the auto companies) for the benefit of the people.

Finally a moral argument.

No less an authority than Jesus suggested that one our our two great responsibilities was to love our brother. The love he proposed was not just a philosophical concept. He proposed a practical redistribution of wealth from those who had it to those who needed it. He said that this benefited, not only the receiver, but also the giver. Part of the benefit to the giver was the realization that wealth if anything was an impediment to salvation. A prime example was the rich man Jesus spoke of in the quote at the top of this post. When faced with the choice of salvation or wealth, he chose wealth. I wonder what those who are calling Senator Obama a socialist would do today if they were given the same choice by Jesus.  I hope they would chose more wisely than than the wealthy man.

So what is the kingdom of God’s promise? My understanding is that it is everything that we need to grow in our understanding of ourselves and him.

My sense of this moment in time is that the kingdom is going to be a new social paradigm.

For those who have been following some of my previous posts, the crisis that we are facing bears and eerie resemblance to the Fourth Turning predicted by some generational historians. If their theories are accurate, we will have to create a new social order to survive this crisis – the kingdom.

What is fascinating about this whole financial scenario is that it ultimately is the death knoll for the concept of self-regulating markets. What we are going to see now is whole new global regulatory structure which will enforce more conservative investment practices and prevent institutions from getting into the upside down position that they found themselves earlier this year.

The US will have less influence in this system than it had in the past because, among other things, we were the ones who promoted the strength of the unregulated market. Asia, Russia, and the Middle East have a bigger role in this new system because they are the winners in the current global economy.

The other casualty is the conservative fantasy of small government. The election this fall will only serve as evidence of something that most thoughtful people already know.

The era of conservative influence is over. When the conservatives running the government were staring down the barrel of the gun of global financial collapse, they abandoned their principles and embraced the biggest package of government socialism that we’ve ever seen. Our government has adopted a policy of nationalization of a significant portion of our financial infrastructure.

So when you begin to unravel this conservative fantasy, it leaves a lot exposed. The conservative/libertarian ethos is that an individual should be completely accountable for their own actions. They are solely responsible for their own success or failure. So by extension, if government just left everyone alone, defended the borders, and kept the peace – the marketplace would sort everything else out by rewarding the just and punishing the unjust.

What this crisis (and really the last eight years) has proven is that this philosophy no longer works in a globally connected economy. We are interconnected and co-dependent. Our attempt to go it alone, in one great last grasp for conservative greatness, has left us battered and weak.

The more cynical in the audience might take this a step further and suggest that those in power only used conservative principles to gain power. When it served their purposes, they were conservatives. When it was their own money on the line, they suddenly morphed almost overnight into liberals advocating big government socialism.

So where do we go from here?

What the Four Turnings researchers predict is that a new leader will emerge to help define this new social order. The old divisions will evaporate as we all realize that our collective survival requires a new identity.

My sense is that we need leadership which can embrace a new global role for both government and citizens. Our opportunity is to become leaders of this a new emerging globalism because our interdependencies and our problems can no longer be defined by our borders or our old ideologies.

Financial markets, global warning, stateless terrorism, nuclear proliferation, and continued conflicts in Afghanistan and Iraq all require multi-national solutions. Our ability to be a leader in those solutions will depend on our ability to put our own internal differences aside and embrace this new globalism ourselves.

Our opportunity is to become a leader in forging new alliances to marginalize stateless terrorism by addressing the root causes that give it life.

Our opportunity is to become leader in building a new carbon-neutral economy.

Our opportunity is to embrace the real promise of the American dream for all those who are willing to work for it regardless of color, creed, birthplace, or sexual orientation.

We are going to need everyone in the boat pulling on the oars to raise our country out of the problems it is currently confronting. The good news is that we have a generation of young people eager to take on that role. The bad news is that in order to accept the kingdom that our Father is poised to provide to us, we have to be willing to give up our previous closely held beliefs about what it might look like.

When you vote in November, spend a little time evaluating which of the two men running has the vision to lead us to this new social order.

This is how the BC Jews tried to reason their way through hard times. They ultimately figured that they must have done something to make God mad at them. They looked for scape goats, but ultimately realized that it was likely that they were all to blame because they were all interconnected.

We find ourselves in a similar situation today with our economy.

What happened as best anyone can figure is that financial institutions lost confidence in the financial system as the value of mortgage-backed securities was questioned.

I’ve already posted some things on why mortgage-backed securities failed, but here’s the best summary I can come up with. It was a huge pool of global cash chasing the percieved safety of the American mortgage market. Irresistible demand combined with a philosophy of deregulation resulted in a supply of increasingly risky loans that were passed off as high quality investments.

The important question is what we do to move forward. In order to talk about the solution, we first have to dig a little deeper into the problem.

We are no longer an independent economy. Our economy is intimately linked to every other world economy through a shared global financial system of interdependent hierarchical lending institutions. All of these institutions to one degree or another hold mortgage-backed assets. When the value of those assets began to erode, the most highly leveraged and least regulated of those institutions, the investment banks, quickly collapsed because they didn’t have other assets to cover the loses they were experiencing in their mortgage portfolio.

By this time every financial institution that held mortgages in one form or another began internal audits to determine what those assets were really worth. As they discovered the extent to which they had been overstating their net worth, they realized that they were overextended. They also realized that if they had to, they probably could not raise enough cash from selling those assets to pay off all of their outstanding loans. Their natural reaction was to retain more cash to make up for the loss in their asset value. The way they did this is was as their outstanding loans were repaid, they initiated fewer new loans. The way they did that is tightened up their new loan requirements which resulted in fewer qualified loans. One of the loans that quickly fell out of favor were those to other banks. That’s because every bank assumed that every other bank shared the same problem they did.

It quickly got to the point where all banks were holding on to virtually all of their funds. This is not a viable long-term position because banks depend on loans for their income. It is an entirely understandable short-term position, however, because the survival instinct is much stronger than the profit motive.

And so the problem.

Unlike in days past when we could barter for goods and services, our economy runs on the principle of deliver today and I’ll pay you tomorrow. In other words, borrowing against future earnings. So the reason why the plumber can leave you a bill rather than insist on a cash payment is because he is able to take that bill to the bank who, for a small fee, will loan him $ .80 for every the dollar of your bill. The bank is willing to do that because the plumber can show a history that you and your neighbors do all pay your bills. The plumber can then pay his bills even though you might take a month to pay yours.

So when the banks stopped lending because they didn’t have enough value in their pool of assets to support their outstanding portfolio of loans, the plumber could no longer leave a bill and started asking for cash. The builder had to shut down his project because he couldn’t get the loan against the future value of that project which would allow him to pay the plumber in cash. The truck dealership had to cancel the sale of a new truck to the builder because the builder couldn’t get the bank to finance the purchase and didn’t have the cash to buy the truck. The truck manufacturer had to close a plant because they weren’t selling enough trucks. The factory worker couldn’t get his faucet fixed because he didn’t have the cash to pay the plumber.

Basically you get the idea. Legal commerce pretty much grinds to a halt and the only people who have cash are drug dealers and illegal immigrants, and only because they don’t use the banking system.

The next interesting thing that happened is that the US Treasury proposed a vague $700B bailout plan where the US would buy assets from banks, only to see the British trump it with a direct investment of government funds into their banks. The rest of the world had to follow suit because if they didn’t, money would quickly move into British banks and out of the banks of the countries who didn’t provide similar guarantees to their banks.

So what is happening now is that each of the major industrial nations is guaranteeing that their banks now have sufficient cash to cover any loses they may experience from the mortgages they hold as assets. The hope is that this will prove sufficient to cause banks to loosen their lending rules and begin to put some of their money at risk again in the market.

Next post will speculate on what this means for the future.

In the meantime for those so inclinded, here’s little bit of scripture to think about in scary times.

“Fear not, little flock; for it is your Father’s good pleasure to give you the kingdom.” Luke 12:32

Seems like we spend a lot of time in this country and in this culture trying to figure out who to blame when things don’t go the way that we would like them to go.

I’ve read a lot about the causes of the current financial crisis and heard even more.

Those who haven’t bothered to do much research want to blame it on the greed and irresponsibility of the financial community. There is some truth to that, but only in the context of the philosophy that the free market should be able to govern itself.

Instead this claim sets up a sort of convenient us against them, except in this case it is the Republicans encouraging us to bite the hand that feeds them.

The problem with the simple explanation that this was just wall street running amok is that it fails to place the blame where is should be, on all of us.

First a little history of this bubble.

Many have said it began with a bill intended to stop a discriminatory lending practice called red-lining. The bill was called the Community Redevelopment Act. Banks were required to make a portion of their loans in the neighborhoods in which they took deposits. This whole process worked well from 70’s through the 90’s.

The Bush administration is actually where things began to jump the tracks. There was a law in 2000 that made sure that credit swaps were unregulated. The criminal penalties for falsifying a loan application were removed and the SEC in 2004 allowed the largest brokerage firms to borrow up to 30 times their assets.

All of these things ended up marginalizing the Community Redevelopment Act because unregulated mortgage brokers offered the poor much better deals than banks were able to offer under even the weakened CRA provisions during the Bush years.

There have been attempts by conservative papers like the Investor’s Business Daily to fix blame on the democrats, and there were certainly prominent democrats who supported the effort, but most all of the damage was done during the period of time when the republican party controlled both houses of Congress, all of the committees, and President Bush didn’t use his veto once.

Now a little talk about real blame.

Wall Street for doing what we ask them to do, make as much money for themselves and us as they can.

President Bush and the Republican congress for doing what we elected them to do, systematically get government out of the business sector, reduce regulations, reduce taxes, reduce interest rates, and expect that the free market will usher in a new age of prosperity and conservative dominance.

All of us for flipping houses, taking out equity loans to finance our lifestyle, living on credit cards, and letting our government run up debts that our children will have to pay off.

It is unclear when this financial crisis will sort itself out. Right now everyone is very afraid and as a result the ready cash which had been financing our growth is suddenly hard to come by.

The most disappointing aspect of this crisis, however, is that we are in the middle of a choosing the person who will lead us for at least the next four years, and we are spending our time talking about bogus character issues. We should be holding both candidates accountable for an honest evaluation of how they plan to lead us out of this problem. I haven’t heard it yet.

What I have heard, though, is Jesus’ advice. If you want to be the children of your Father, you have to start by loving the just and those that we think are unjust. I’m working on it.

John the Baptist fulfilled the prophecy of Isaiah by preparing the way for the Christ.  He also gave us a archetypical character of the person out of step with society, but consumed by his quest.  Just like Cervantes’ Quixote that came after him, John had a notion of what was to come, but he didn’t have enough of the vision to become a disciple.  Instead he got wrapped up in local politics and it eventually cost him his life.

 There is a similar interesting character in Congress. 

Tom Coburn is a republican senator from Oklahoma.  He is a medical doctor specializing in obstetrics.  He served as a deacon in the Southern Baptist Church.  He was elected to the House in 1995 as part of the conservative “Contract with America” Republicans.  He was regarded as one of the most conservative members of Congress at the time, opposing abortion, gay rights, the v-chip, and increases in federal spending.  He made a name for himself early on by trying to hold Newt Gingrich accountable for his failure to deliver on the Contract with America that got them all elected. 

The picture that you are getting about this guy at this point should be fairly accurate. The reality, however, is that this is a sincere deep thinker who feels that the problem is not Democrats or Republicans.  The problem is career politicians who profess to be working for the people, but in fact are just working for themselves.  He summarized his deep concern regarding how our government really runs in a book he wrote in 2003 called Breach of Trust: How Washington Turns Outsiders into Insiders. In 2004 he was elected to the Senate and has carried on his fight there. 

Here are some of his recent activities that you might find interesting. 

He called the high level of federal spending our biggest challenge telling reporters, “The greatest moral issue of our time isn’t abortion, it’s robbing our next generation of opportunity.” He added, “You’re going to save a child from being aborted so they can be born into a debtor’s prison?” 

Coburn blamed the GOP’s loss of their majority status in Congress on voter’s dissatisfaction with Republican spending hypocrisy saying, “It’s not a bad thing power changed last year.”  He feels that voters should hold their representatives accountable.  What a concept! 

The conservative senator also challenged his colleagues to examine why public opinion on Congress has reached historic lows. “If we have only 11 percent support, are we a legitimate government?” he asked.  He added, “The 11 percent who have confidence in us, what hole are they in?”   What a refreshingly honest admission that the right to govern is ultimately one granted by the people and those who have the privilege to serve should do so only with the approval of those they are serving.  If this were a parliamentary style government, the Bush administration would have already lost a vote of confidence in 2006 and we would have new leadership in place with a new foreign and domestic agenda rather than the current government still acting as if they have a mandate. 

During the debate on whether or not the United States could afford to extend the children’s health care insurance bill, Senator Coburn offered up an amendment which would have blocked over $500M in special “earmarked” spending already on the books until Congress figured out how to pay for the $10M in additional insurance that was in the healthcare insurance bill.   “This is going to speak volumes to the American public about our priorities, it is either going to be kids or it is going to be us.” 

He took the Small Business Administration to task because they have a $15B loan program with absolutely no measurements on whether or not the loans are successful or even needed. 

Senator Coburn appears to have inherited the mantle of fiscal watchdog from the late William Proxmire who created the Golden Fleece Awards for foolish federal spending.  Even though I don’t share many of the conservative views of Senator Coburn, I very much admire his willingness to stand on principle and fight the good fight for responsible government.  Let’s just hope that this wilderness voice doesn’t also lose his head.

The Bible is filled with stories about those who lost their way and succumb to the temptations of material wealth.

We have a modern example in Watergate. Woodward and Bernstein were able to unravel the threads of the Watergate cover-up by following the money. That remains good advice today. Regardless of what people say, how they spend their money is one of the most reliable indicators of what people are really thinking.

There is a wonderful cognitive dissonance in this country between the material and the spiritual. Though we idolize the rich, we hold our government to a higher standard. We expect our government to operate for the good of all the people, not just the rich. We punish those elected officials who use their office for personal gain. The majority of Americans, for example, would have rejected a plan to invade Iraq for oil regardless of how much money it could have saved us at the pumps. Unfortunately as all other excuses fall away, oil remains the one consistent element in the Iraq story.

Just so that we are all on the same page, our current stated strategy in Iraq is to use our military to suppress the insurgency long enough for the Iraq government to build the sorts of coalitions necessary to effectively govern the country. One of the key benchmarks of that coalition is an oil revenue sharing agreement. The main oil producing regions are in the south (Shia) and the north (Kurds).

Last week Paul Krugman published a column describing how Hunt Oil just signed an oil deal directly with the regional Kurdish government in the north of Iraq rather than the national government in Baghdad.

The implications are obvious. It is a clear signal to the Kurd and Shia factions in Iraq that they don’t have to make a deal with the Sunni’s in Baghdad. They can make their deals directly and not have to give up anything to any other region or ethic group.

When asked about that deal, President Bush appeared a little flustered and said it was news to him.

Now on the surface you might take the President at his word. Some rogue entrepreneur must be out there putting his own interests ahead of US policy. Actually nothing could be further from the truth. The person who signed this deal with Kurdistan is Ray Hunt. Mr. Hunt has been a significant financial supporter and close political ally of George Bush. He joined the Halliburton board when Dick Cheney was CEO. In 2001 President Bush appointed Mr. Hunt to the President’s Foreign Intelligence Advisory Board where he had access to most all of the same briefings and classified intelligence as the President and Congress.

It is still hard to believe. Here is a person that Bush brought into the government. He knows what the government strategy is and what his role is in that strategy. He knew what he was doing. He is not interested in embarrassing Mr. Bush. He also probably required at least some level of government approval, if not also government assistance, before the deal could be signed. Do you think for a moment that Ray Hunt would even consider this move without first talking it over with Mr. Bush and getting his approval too? I don’t think so either.

What this deal says is that the Iraqis are not the only ones preparing for partitioning the country. If you follow the money, all the talk about staying until the mission is done and victory as the only plan is just that – talk. The smart money is clearly being placed on the country being partitioned, the Kurds emerging as the most stable of those regions, AND the Americans protecting the Kurds from any attack from any of its neighbors.

Former Fed Chairman and staunch Republican Alan Greenspan just published a book that said the real reason we invaded Iraq was oil. He lobbied for the war because of his fear that Iraq under Saddam would seek to control a vital waterway through which much of the Middle East’s oil flows.

The documented neocon plan for remaking Iraq in our image and likeness was all about securing a cheap friendly source for Mideast Oil. They even told us that oil revenue would finance Iraq reconstruction. In the wake of that failed plan, when you follow the money today, it is says loud and clear that it is still all about oil even as we prepare to leave.

Fortunately those who sow deceit always eventually reap what they sow.