"Apres Moi, Le Deluge"

November 28, 2004
Bush's Social Security Plan Is Said to Require Vast Borrowing
By RICHARD W. STEVENSON

WASHINGTON, Nov. 27 - The White House and Republicans in Congress are all but certain to embrace large-scale government borrowing to help finance President Bush's plan to create personal investment accounts in Social Security, according to administration officials, members of Congress and independent analysts.

The White House says it has made no decisions about how to pay for establishing the accounts, and among Republicans on Capitol Hill there are divergent opinions about how much borrowing would be prudent at a time when the government is running large budget deficits. Many Democrats say that the costs associated with setting up personal accounts just make Social Security's financial problems worse, and that the United States can scarcely afford to add to its rapidly growing national debt.

But proponents of Mr. Bush's effort to make investment accounts the centerpiece of an overhaul of the retirement system said there were no realistic alternatives to some increases in borrowing, a requirement the White House is beginning to acknowledge.

"The administration hasn't settled on any particular Social Security reform plan," Joshua B. Bolten, the director of the White House's Office of Management and Budget, said in an e-mail message in response to questions about overhauling the system.

"The president does support personal accounts, which need not add over all to the cost of the program but could in the short run require additional borrowing to finance the transition," Mr. Bolten said. "I believe there's a strong case that this approach not only makes sense as a matter of savings policy, but is also fiscally prudent."

Proponents say the necessary amount of borrowing could vary widely, from hundreds of billions to trillions of dollars over a decade, depending on how much money people are permitted to contribute to the accounts and whether the changes to Social Security include benefit cuts and tax increases.

Borrowing by the government could be necessary to establish the personal accounts because of the way Social Security pays for benefits. Under the current system, the payroll tax levied on workers goes to benefits for people who are already retired. Personal accounts would be paid for out of the same pool of money; they would allow workers to divert a portion of their payroll taxes into accounts invested in mutual funds or other investments.

The money going into the accounts would therefore no longer be available to pay benefits to current retirees. The shortfall would have to be made up somehow to preserve benefits for people who are already retired during the transition from one system to the other, and by nearly all estimates there is no way to make it up without relying at least in part on government borrowing.

Mr. Bush and Republicans in Congress have paid little political price in the last four years for the swing from budget surpluses to deficits. But some polls show that Americans consider reducing the deficit to be a higher priority than many other goals, including cutting taxes, and embracing a new round of borrowing could pose political as well as economic risks.

A reasonable amount of borrowing now, the proponents say, would avert a much bigger financial obligation decades later. They say personal accounts would yield higher returns for individuals than the current system and could be a catalyst to broader changes that would bring the benefits promised by Social Security into line with what the system, which is also about to come under intense financial strain from the aging of the baby boom generation and the increase in life expectancies, can afford to pay.

Mr. Bush has vowed to push hard to remake Social Security. Republicans in Congress say the White House has signaled to them that Mr. Bush will put the issue at the top of his domestic agenda in the coming year.

But the White House has never answered fundamental questions about Mr. Bush's plan. In particular, it has not explained how it would deal with the financial quandary created by its call for personal accounts.

Some conservative analysts and Republicans in Congress say a portion of the temporary financial gap that would be created by personal accounts could be closed through measures like holding down the growth in overall government spending. But nearly everyone involved in the debate over Social Security agrees that some borrowing will be necessary.

The main Republican players in Congress on the issue say they expect to endorse an increase in borrowing to finance the transition to a new system. But they remain split over whether to back plans that would include larger investment accounts and few painful trade-offs like benefit cuts and tax increases - and therefore require more borrowing - or to limit borrowing and include more steps that would be politically unpopular.

"Anybody who thinks borrowing money for the transition to personal accounts is going to solve the problem of the long-term solvency of Social Security doesn't understand the size of the problem," said Senator Charles E. Grassley, Republican of Iowa, the chairman of the Senate Finance Committee, which has jurisdiction over the retirement system.

Mr. Grassley said Congress would also have to put benefit reductions and tax increases on the table, in part to hold down the need for borrowing and in part to assure that any changes restore Social Security's long-term financial stability.

Under current projections used by Social Security's trustees, the government will have to begin drawing on general tax revenue to pay benefits to retirees in 2018, the first year in which scheduled benefit payments will exceed revenues from the payroll tax dedicated to the retirement system. By 2042, the government will have exhausted the Social Security trust fund - its legal obligation to pay back to the retirement system the temporary surplus in payroll tax revenues it has borrowed over the last several decades to subsidize the rest of the budget - and after that Social Security would be able to pay only about three-quarters of promised benefits.

Opponents of Mr. Bush's approach say that Social Security's financial problems can be dealt with more easily without the addition of personal accounts, and that any large-scale borrowing would erase the presumed economic advantage of establishing the accounts: spurring more national savings, a goal that nearly all economists agree is worthy and important. Any increase in private, individual savings, they say, would be partly or wholly offset by an increase in public debt. National savings are what is left after counting up everything the nation spends. This pool of money goes to investing in the expansion and modernization of business. It is a vital component of economic health.

"To the extent that the transition is debt-financed, the ostensible macroeconomic benefits from individual accounts are undermined," said Peter Orszag, an economist at the Brookings Institution who has been critical of personal account plans. "In particular, you do not get an increase in national savings. It's engaging effectively in accounting gimmicks to make it look as if you're doing something when you're not."

In an effort to pressure the White House to acknowledge some of the financial trade-offs in its approach, Democratic leaders in Congress this week asked Mr. Bush to include in his next budget an accounting of the money that would be needed for his Social Security plan.

Only by including such figures in the budget, the Democrats said in a letter to Mr. Bush, "will Congress and the American people be able to weigh the difficult trade-offs between large-scale borrowing, Social Security benefit cuts, tax increases, and other spending reductions that may be required to fund your Social Security private accounts proposal. "

The White House, which has promised to cut the deficit in half while making Mr. Bush's tax cuts permanent, has signaled that it does not intend to include the figures in its budget, since the administration has not endorsed a detailed plan.

The budget deficit in the year ended Sept. 30 was $413 billion. The total national debt is about $7.5 trillion, including $3 trillion owed by the government to itself, much of it in the form of the Social Security trust fund. Rising debt forces the government to pay out more of its revenue in interest payments, and can put upward pressure on the interest rates paid by businesses and consumers.

Some Republicans in Congress are concerned that too much borrowing would carry large economic and political costs. Senator Judd Gregg, the New Hampshire Republican who will be chairman of the Senate Budget Committee next year, said he would support borrowing money for Social Security if it was part of a plan that also included modest benefit cuts and tax increases.

But he said the additional debt might have to be accounted for on the government's books in a way that would not technically show an increase in the budget deficit in coming years.

"You've got to look at this as a very significant long-term fiscal policy decision where you're going to have a loss in the first 10 to 15 years and a significant move toward solvency in the last 20 to 30 years," Mr. Gregg said. "That mitigates against doing it in the context of a typical budget resolution."

To critics of personal accounts, Mr. Gregg's suggestion amounts to relying on budget gimmickry to hide the true costs. But supporters of the accounts say borrowing even a few trillion dollars now would be worthwhile, because it would help wipe out the retirement system's long-term unfunded liability - the difference between what it will owe retirees under current law and the amount it will take in - of around $11 trillion.

Senator John E. Sununu of New Hampshire and Representative Paul D. Ryan of Wisconsin, both Republicans, have sponsored legislation that would allow workers to contribute more to their personal accounts than most other plans proposed by members of Congress and outside groups and would not require tax increases or benefit cuts. But by some estimates it would require nearly $2 trillion in borrowing - and, in the view of its critics, much more - and even then would rely on the idea that the new system would create so much more economic growth that it would partly pay for itself by generating additional tax revenues for the government.

Representative Jim Kolbe, Republican of Arizona, said the government could probably keep new borrowing to $800 billion over 10 years, but only if Congress and the administration are willing to back tax increases and benefit cuts as part of a broad overhaul of the retirement system.

"People do not understand that tough choices need to be made," Mr. Kolbe said.



Copyright 2004 The New York Times Company |

Pssst...wanna buy a Dollar...Cheap?

November 27, 2004
Foreign Interest Appears to Flag as Dollar Falls
By EDMUND L. ANDREWS

SLASHINGTON, Nov. 26 - Investors and market analysts are increasingly worried that the last big source of support for the American dollar - heavy buying by foreign central banks - is fading.

The anxiety was on full display Friday, when the dollar abruptly slid to a record low against the euro after a report suggesting that the Chinese central bank might start to reduce its holdings in the American currency.

Though Chinese officials later denied the report, and the dollar recovered, analysts say the broader trend is that foreign governments are becoming less willing to finance the growing debt of the United States government.

On Tuesday, a top official with the Russian central bank said his government had become worried about the sinking value of the dollar and might switch some foreign reserves to euros.

A day later, India's central bank hinted that it was worried about the same issue and might shift some reserves into other currencies.

Japan and China, which together have amassed nearly $900 billion in United States Treasury securities, have both slowed their buying sharply from the frenetic pace in February and March.

"There is an emerging consensus that banks around the world are moving to expand their reserves of euros at the expense of dollars," said Laidi Ashraf, chief currency analyst at MG Financial Group in New York.

The Bush administration has essentially condoned the dollar's decline. At meetings with foreign ministers last week, the Treasury secretary, John W. Snow, repeated the American mantra of support for a "strong dollar" but also for letting "market forces" determine exchange rates.

A continued decline of the dollar would be good for American manufacturers, because it would make exports cheaper in foreign markets and push up the cost of imports.

But a diminished foreign appetite for dollars could push up interest rates. The Federal Reserve has already raised short-term rates four times this year, but the shift in the sentiment of foreign investors may soon seriously affect long-term rates that influence the cost of home mortgages.

"Sell U.S., buy Europe," summed up Richard Berner, chief United States economist at Morgan Stanley, in a report last week. Mr. Berner noted that investors have begun demanding higher yields for 10-year Treasury securities than for comparable European bonds, and he predicted that the spread would widen.

Recent data from the Treasury Department indicated that foreign governments had sharply slowed their purchases of Treasury securities. The question is whether those purchases will continue to slow or start to increase again as countries try to shore up the American currency to help maintain their own industries' competitiveness.

Japanese purchases of Treasury securities, which ballooned by about $100 billion from October 2003 to March of this year, have slowed sharply and actually declined slightly in September.

Largely as a result, the dollar has sunk to its lowest level against the Japanese yen, about 102.5 yen to the dollar on Friday, in four and a half years.

Chinese purchases of Treasury securities slowed to a crawl, increasing just $2 billion in September, to $174 billion.

On Friday, a top Chinese central bank official denied reports in a Chinese newspaper that the government planned to reduce its holdings of Treasury bonds.

But Chinese officials, under prodding from the Bush administration, have repeatedly said they want to gradually relax their 10-year-old policy of locking its currency, the yuan, at a fixed exchange rate to the dollar. Any move to a more flexible exchange rate for China would probably cause the dollar to drop in value and allow the Chinese central bank to stop buying United States debt securities.

America's current account deficit, the broadest measure of its indebtedness to other countries, is on track to exceed $600 billion next year, about 6 percent of its gross domestic product. The United States needs to attract about $2 billion a day to keep its spending at current levels.

The nation attracted enormous sums of foreign money in the late 1990's as well, but the character of that money has changed. Back then, a big part of the inflow was through foreign direct investment and purchases of American stocks.

This year, by contrast, foreigners have been net sellers of stocks. The big growth has been in foreign purchases of Treasury securities, and the big buyers have been foreign central banks that wanted to prevent their own currencies from rising too much against the dollar.

Tony Norfield, currency strategist for ABN Amro in London, said he was convinced that central banks were trying to scale back their purchase of dollar assets, a move that could push the euro, already up about 30 percent in the last years, even higher.

"You do not need the central banks to sell Treasuries for the dollar to go down," Mr. Norfield said. "All they have to do is buy less and the dollar is going to be in trouble."

The euro hit a new high of $1.3329 on Friday in light trading, before settling back about a half-penny.

European leaders are alarmed about the potential damage of a sinking dollar to their exports.

"Recent moves on exchange markets of the dollar versus the euro are unwelcome," said Jean-Claude Trichet, president of the European Central Bank, at a banking seminar on Friday in Rio de Janeiro.

"I want to underline the importance of recent statements by the Treasury secretary of the United States on his determination to pursue a strong dollar policy," Mr. Trichet added.

But Mr. Snow and Alan Greenspan, the chairman of the Federal Reserve, offered no hint that they would intervene in currency markets to prop up the dollar.

"The market for U.S. Treasury securities is deep and liquid and continues to be attractive to a broad and diverse pool of investors," a spokesman for Mr. Snow, Robert Nichols, said.

That remains to be seen. According to the most recent Treasury data, the biggest source of growth in securities came not from China, Japan or Europe but from Caribbean banking centers.



Copyright 2004 The New York Times Company |

Electronic Voting...James Fallows

November 28, 2004
TECHNO FILES
Electronic Voting 1.0, and No Time to Upgrade
By JAMES FALLOWS

I TRUST computers. When I first used A.T.M.'s, nearly 30 years ago, I carefully saved receipts in a folder and matched them with the bank's monthly statement. Now I sometimes stuff the receipts in my wallet, but I almost never look at them again. The only banking error I've encountered in all those years was when a human teller left a final zero off a deposit I had made.

I still pore over credit card statements, but mainly to see whether some person, not some machine, has issued the proper refund credit or made an improper charge. I've sent e-mail messages to the wrong people by mistyping an address or hitting the oh-so-dangerous "Reply All" button, but never because the system routes it where it shouldn't go. When I travel, I assume that the e-ticket I booked through my computer will be valid and that frequent-flier miles will show up in my account.

Yet when I went to my polling place in Washington on Election Day, I waited an extra half-hour in line to cast a paper ballot, instead of using the computerized touch-screen voting machine. Am I irrational? Perhaps, but this would not be the evidence.

A columnist in The Washington Post recently suggested that nostalgia for paper ballots, in today's reliably computerized world, must reflect a Luddite disdain for technology in general or an Oliver Stone-style paranoia about the schemings of the political world.

Not at all. It can also arise from a clear understanding of how computers work - and don't. The more you know about the operations of today's widely trusted commercial computer networks, the more concerned you become about most electronic-voting systems.

The phenomenal reliability of the systems we trust for banking, communication, and everything else rests on two bedrock principles. One is the universal understanding in the technology world that nothing works right the first time, and maybe not the first 50 times.

When I worked briefly on a product design team at Microsoft, I was sobered to learn that fully one-fourth of the company's typical two-year "product cycle time" was devoted to testing. Programmers spend 18 months designing and debugging a system. Then testers spend the next six months finding the problems they missed. It is no secret that even then, the "final" software from Microsoft, or any other company, is far from perfect.

Today's mature systems work as well as they do only because they are exposed to nonstop, high-stakes torture testing. EBay lists nearly four million new items each day. If a problem affects even a tiny fraction of its users, eBay will be swamped with reports immediately.

Millions of data packets are being routed across the Internet every second. If servers, domain-name directories or other components cannot handle the volume, the problem will become apparent quickly. Years ago, bank or airline computers would often be "down" because of unforeseen problems. Now they're mostly "up," because they've had so long for flaws to become exposed.

The second crucial element in making reliable systems is accountability. Users can trust today's systems precisely because they don't have to take them on trust. Some important computer systems run on open-source software, like Linux, in which the code itself can be examined by outsiders.

Virtually all systems provide some sort of confirmation of transactions. You have the slip from the A.T.M., the receipt for your credit card charge, the printout of your e-ticket reservation. If your e-mail message doesn't go through, there is still the copy in your "Sent" folder. This is the technology world's counterpart to the check-and-balance principle in the United States government. The first concept, robust testing, protects against unintended flaws. The second, accountability, guards against purposeful distortions.

Which brings us back to electronic voting. On the available evidence, I don't believe that voting-machine irregularities, or other problems on Election Day, determined who would be the next president. The apparent margins for President Bush were too large, in Ohio and nationwide. But if the race had been any closer, we could not have said for sure that the machines hadn't made the difference. That is because many electronic systems violate the two basic rules of trustworthy computing.

By definition, they have barely been exposed to real-world testing. The kind of thorough workout that Visa's or Google's systems receive every hour happens for voting machines on only a few special days a year. By commercial standards, the systems are necessarily still in "beta version" - theoretically debugged, but not yet vetted by extensive, unpredictable experience - when voters show up to choose a president.

Four years ago, about one-eighth of all votes for president were cast electronically. This year, nearly a third were. How the system would handle that large increase in scale could not have been tested until the presidency was at stake. Worse, most of the electronic systems are not accountable. When I voted this year, I fed my paper ballot through an optical scanner and into a storage box. In a recount, those ballots could have been pulled out and run through the scanner again. If I had used the touch screen, I would have had no tangible evidence that the vote counted or was recountable.

Is that a problem because the chief executive of Diebold, the largest maker of such systems, is a prominent Republican partisan? No. It's a problem because it defies the check-and-balance logic built into every other electronic transaction.

AN inherently untrustworthy voting system might not be the worst distortion in modern politics. My nominee for that honor would be the structure of the United States Senate, where each state has two votes. When it was set up, there was a nine-to-one imbalance in voting population between the largest state, Virginia, and the smallest, Delaware. (Counting slaves, Virginia's edge increased to 12 to 1.) Now it's nearly 70 to 1 (California versus Wyoming), making the Senate our own equivalent of the United Nations General Assembly as a forum for overrepresented small states.

But the spread of voting systems that further erode Americans' faith in their democracy is serious enough. And while the Senate isn't going to change anytime soon, electronic systems can change - and, for the sake of credible democracy, must change - before we choose another president. Extensive discussions are under way at sites like VerifiedVoting.org, CalVoter.org, and the "news for nerds" forum Slashdot.org about inexpensive, practical ways to make automated voting as reliable as, say, buying books online. Their recommendations make sense. But you don't have to trust my opinion. Read them and see.



James Fallows is a national correspondent for The Atlantic Monthly. E-mail: tfiles@nytimes.com.



Copyright 2004 The New York Times Company

A "CIVIL" WAR?

'Unusual Weapons' Used in Fallujah
By Dahr Jamail
Inter Press Service

Friday 26 November 2004

Baghdad - The U.S. military has used poison gas and other non-conventional weapons against civilians in Fallujah, eyewitnesses report..

"Poisonous gases have been used in Fallujah," 35-year-old trader from Fallujah Abu Hammad told IPS. "They used everything -- tanks, artillery, infantry, poison gas. Fallujah has been bombed to the ground."

Hammad is from the Julan district of Fallujah where some of the heaviest fighting occurred. Other residents of that area report the use of illegal weapons.

"They used these weird bombs that put up smoke like a mushroom cloud," Abu Sabah, another Fallujah refugee from the Julan area told IPS. "Then small pieces fall from the air with long tails of smoke behind them."

He said pieces of these bombs exploded into large fires that burnt the skin even when water was thrown on the burns. Phosphorous weapons as well as napalm are known to cause such effects. "People suffered so much from these," he said.

Macabre accounts of killing of civilians are emerging through the cordon U.S. forces are still maintaining around Fallujah.

"Doctors in Fallujah are reporting to me that there are patients in the hospital there who were forced out by the Americans," said Mehdi Abdulla, a 33-year-old ambulance driver at a hospital in Baghdad. "Some doctors there told me they had a major operation going, but the soldiers took the doctors away and left the patient to die."

Kassem Mohammed Ahmed who escaped from Fallujah a little over a week ago told IPS he witnessed many atrocities committed by U.S. soldiers in the city.

"I watched them roll over wounded people in the street with tanks," he said. "This happened so many times."

Abdul Razaq Ismail who escaped from Fallujah two weeks back said soldiers had used tanks to pull bodies to the soccer stadium to be buried. "I saw dead bodies on the ground and nobody could bury them because of the American snipers," he said. "The Americans were dropping some of the bodies into the Euphrates near Fallujah."

Abu Hammad said he saw people attempt to swim across the Euphrates to escape the siege. "The Americans shot them with rifles from the shore," he said. "Even if some of them were holding a white flag or white clothes over their heads to show they are not fighters, they were all shot…"

Hammad said he had seen elderly women carrying white flags shot by U.S. soldiers. "Even the wounded people were killed. The Americans made announcements for people to come to one mosque if they wanted to leave Fallujah, and even the people who went there carrying white flags were killed."

Another Fallujah resident Khalil (40) told IPS he saw civilians shot as they held up makeshift white flags. "They shot women and old men in the streets," he said. "Then they shot anyone who tried to get their bodies … Fallujah is suffering too much, it is almost gone now."

Refugees had moved to another kind of misery now, he said. "It's a disaster living here at this camp," Khalil said. "We are living like dogs and the kids do not have enough clothes."

Spokesman for the Iraqi Red Crescent in Baghdad Abdel Hamid Salim told IPS that none of their relief teams had been allowed into Fallujah, and that the military had said it would be at least two more weeks before any refugees would be allowed back into the city.

"There is still heavy fighting in Fallujah," said Salim. "And the Americans won't let us in so we can help people."

In many camps around Fallujah and throughout Baghdad, refugees are living without enough food, clothing and shelter. Relief groups estimate there are at least 15,000 refugee families in temporary shelters outside Fallujah.

The MORAL MAJORITY?

November 28, 2004
FRANK RICH
The Great Indecency Hoax

OH, the poor, suffering little children.

If we are to believe the outcry of the past two weeks, America's youth have been defiled en masse - again. This time the dirty deed was done by the actress Nicollette Sheridan, who dropped her towel in the cheesy promotional spot for the runaway hit "Desperate Housewives" that kicked off "Monday Night Football" on ABC. "I wonder if Walt Disney would be proud," said Michael Powell, the Federal Communications Commission chairman who increasingly fashions himself a commissar of all things cultural, from nipple rings to "Son of Flubber."

It's beginning to look a lot like "Groundhog Day." Ever since 22 percent of the country's voters said on Nov. 2 that they cared most about "moral values," opportunistic ayatollahs on the right have been working overtime to inflate this nonmandate into a landslide by ginning up cultural controversies that might induce censorship by a compliant F.C.C. and, failing that, self-censorship by TV networks. Seizing on a single overhyped poll result, they exaggerate their clout, hoping to grab power over the culture.

The mainstream press, itself in love with the "moral values" story line and traumatized by the visual exaggerations of the red-blue map, is too cowed to challenge the likes of the American Family Association. So are politicians of both parties. It took a British publication, The Economist, to point out that the percentage of American voters citing moral and ethical values as their prime concern is actually down from 2000 (35 percent) and 1996 (40 percent).

To see how the hucksters of the right work their scam, there could be no more illustrative example than the "Monday Night Football" episode in which Ms. Sheridan leaped into the arms of the Philadelphia Eagles wide receiver Terrell Owens in order to give the declining weekly game (viewership is down 3 percent from 2003) a shot of Viagra. From the get-go, it was a manufactured scandal, as over-the-top as a dinner theater production of "The Crucible."

Rush Limbaugh, taking a break from the legal deliberations of his drug rap and third divorce, set the hysterical tone. "I was stunned!" he told his listeners. "I literally could not believe what I had seen. ... At various places on the Net you can see the video of this, and she's buck naked, folks. I mean when they dropped the towel she's naked. You see enough of her back and rear end to know that she was naked. There's no frontal nudity in the thing, but I mean you don't need that. ...I mean, there are some guys with their kids that sit down to watch 'Monday Night Football.' "

Yes, there are - some, anyway - but you wonder how many of them were as upset as Mr. Limbaugh, whose imagination led him to mistake a lower back for a rear end. (He also said that the Sheridan-Owens encounter reminded him of the Kobe Bryant case; let's not even go there.) The evidence suggests that Mr. Limbaugh's prurient mind is the exception, not the rule. Though seen nationwide, and as early as 6 p.m. on the West Coast, the spot initially caused so little stir that the next morning only two newspapers in the country, both in Philadelphia, reported on it. ABC's switchboards were not swamped by shocked viewers on Monday night. A spokesman for ABC Sports told The Philadelphia Inquirer that he hadn't received a single phone call or e-mail in the immediate aftermath of the broadcast.

Even the stunned Mr. Limbaugh, curiously enough, didn't get around to mounting his own diatribe until Wednesday. Mr. Owens's agent, David Joseph, says that the flood of complaints at his office and Mr. Owens's Web site also didn't start until more than 24 hours after the incident - late Tuesday and early Wednesday. Were any of these complainants actual victims (or even viewers) of "Monday Night Football" or were they just a mob assembled after the fact by "family" groups, emboldened by their triumph in smiting "Saving Private Ryan" from 66 ABC stations the week before? Though the F.C.C. said on Wednesday that it had received 50,000 complaints about the N.F.L. affair, it couldn't determine how many of them were duplicates - the kind generated by e-mail campaigns run by political organizations posting form letters ready to be clicked into cyberspace ad infinitum by anyone who has an index finger and two seconds of idle time.

Like the Janet Jackson video before it, the new N.F.L. sex tape was now being rebroadcast around the clock so we could revel incessantly in the shock of it all. "People were so outraged they had to see it 10 times," joked Aaron Brown of CNN, which was no slacker in filling that need in the marketplace. And yet when I spoke to an F.C.C. enforcement spokesman after more than two days of such replays, the agency had not yet received a single complaint about the spot's constant recycling on other TV shows, among them the highly rated talk show "The View," where Ms. Sheridan's bare back had been merrily paraded at the child-friendly hour of 11 a.m.

The hypocrisy embedded in this tale is becoming a national running gag. As in the Super Bowl brouhaha, in which the N.F.L. maintained it had no idea that MTV might produce a racy halftime show, the league has denied any prior inkling of the salaciousness on tap this time - even though the spot featured the actress playing the sluttiest character in prime time's most libidinous series and was shot with the full permission of one of the league's teams in its own locker room. Again as in the Jackson case, we are also asked to believe that pro football is what Pat Buchanan calls "the family entertainment, the family sports show" rather than what it actually is: a Boschian jamboree of bumping-and-grinding cheerleaders, erectile-dysfunction pageantry and, as Don Imus puts it, "wife-beating drug addicts slamming the hell out of each other" on the field.

But there's another, more insidious game being played as well. The F.C.C. and the family values crusaders alike are cooking their numbers. The first empirical evidence was provided this month by Jeff Jarvis, a former TV Guide critic turned blogger. He had the ingenious idea of filing a Freedom of Information Act request to see the actual viewer complaints that drove the F.C.C. to threaten Fox and its affiliates with the largest indecency fine to date - $1.2 million for the sins of a now-defunct reality program called "Married by America." Though the F.C.C. had cited 159 public complaints in its legal case against Fox, the documents obtained by Mr. Jarvis showed that there were actually only 90 complaints, written by 23 individuals. Of those 23, all but 2 were identical repetitions of a form letter posted by the Parents Television Council. In other words, the total of actual, discrete complaints about "Married by America" was 3.

Such letter-writing factories as the American Family Association's OneMillionMoms.com also exaggerate their clout in intimidating advertisers. They brag, for instance, that the retail chain Lowe's dropped its commercials on "Desperate Housewives" in response to their protests. But Lowe's was not an advertiser on the show; the advertiser who actually bought the commercial was Whirlpool, which plugged Lowe's as a retail outlet for its products under a co-branding arrangement. Another advertiser that the family-values mafia takes credit for chasing away, Tyson Foods, had only bought in for one episode of "Desperate Housewives" in the first place. It had long since been replaced by such Fortune 500 advertisers as Ford and McDonald's, each clamoring to pay three times as much for a 30-second spot ($450,000) as those early advertisers who bought time before the show had its debut and became an instant smash.

But perhaps the most revealing barometer of the real state of play in American culture in 2004 is "Desperate Housewives" itself. Conceived by Marc Cherry, who is described by Newsweek as a "somewhat conservative, gay Republican," it is a campy, well-made soap opera presenting suburban American family life as a fugue of dysfunction, malice and sex. It's not for nothing that its characters are seen running off to Alfred Hitchcock and Billy Wilder retrospectives or that some of the episodes are named after Stephen Sondheim songs like "Who's That Woman?" and "Pretty Little Picture."

The children of Mr. Cherry's Wisteria Lane can be as poisonous as that small-town brat in Hitchcock's "Shadow of a Doubt": one preadolescent girl is an extortionist and one teenage daughter all but pimps for her divorced mother. The career-driven husbands are as soulless as the office rats of Wilder's "Apartment," and their wives are, yes, as desperate as those in the Manhattan high-rises of Sondheim's "Company." Whatever else is to be said about "Desperate Housewives" - and I haven't missed an episode - it is not to be confused with the kind of entertainment that the Traditional Values Coalition wants to impose on the airwaves. It not only emulates HBO Sunday night hits like "Sex and the City" and "Six Feet Under" in its cheeky, sardonic tone but brushes right up against them in language and action.

In one recent show the most oversexed character on screen, a 17-year-old jock having an affair with a married woman, is revealed to be a member of his high school's "abstinence club." (Surely it was a coincidence that this revelation butted right up against a commercial for Ortho Tri-Cyclen, a prescription contraceptive.) In another, a wife collapsing under the burden of stay-at-home motherhood slugs her spouse when he contemplates not using a condom. Then there was the dinner party where another of the wives tries to humiliate her husband by telling the assembled that he "cries after he ejaculates."

"Desperate Housewives" is hardly a blue-state phenomenon. A hit everywhere, it is even a bigger hit in Oklahoma City than it is in Los Angeles, bigger in Kansas City than it is in New York. All those public moralists who wail about all the kids watching Ms. Sheridan on "Monday Night Football" would probably have apoplexy if they actually watched what Ms. Sheridan was up to in her own series - and then looked closely at its Nielsen numbers. Though children ages 2 to 11 make up a small percentage of the audience of either show, there are actually more in that age group tuning into Mr. Cherry's marital brawls (870,000) than into the N.F.L.'s fisticuffs (540,000). "Desperate Housewives" also ranks No. 5 among all prime-time shows for ages 12-17. ("Monday Night Football" is No. 18.) This may explain in part why its current advertisers include products like Fisher-Price toys, the DVD of "Elf" and the forthcoming Tim Allen holiday vehicle, "Christmas With the Kranks."

Those who cherish the First Amendment can only hope that the Traditional Values Coalition, OneMillionMoms.com, OneMillionDads .com and all the rest send every e-mail they can to the F.C.C. demanding punitive action against the stations that broadcast "Desperate Housewives." A "moral values" crusade that stands between a TV show this popular and its audience will quickly learn the limits of its power in a country where entertainment is god.



Copyright 2004 The New York Times Company

More Money Matters, In Brief

Economic 'Armageddon' Predicted
By Brett Arends
The Boston Herald

Tuesday 23 November 2004

Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish.

But you should hear what he's saying in private.

Roach met select groups of fund managers downtown last week, including a group at Fidelity.

His prediction: America has no better than a 10 percent chance of avoiding economic "Armageddon."

Press were not allowed into the meetings. But the Herald has obtained a copy of Roach's presentation. A stunned source who was at one meeting said, "it struck me how extreme he was - much more, it seemed to me, than in public."

Roach sees a 30 percent chance of a slump soon and a 60 percent chance that "we'll muddle through for a while and delay the eventual Armageddon."

The chance we'll get through OK: one in 10. Maybe.

In a nutshell, Roach's argument is that America's record trade deficit means the dollar will keep falling. To keep foreigners buying T-bills and prevent a resulting rise in inflation, Federal Reserve Chairman Alan Greenspan will be forced to raise interest rates further and faster than he wants.

The result: U.S. consumers, who are in debt up to their eyeballs, will get pounded.

Less a case of "Armageddon," maybe, than of a "Perfect Storm."

Roach marshalled alarming facts to support his argument.

To finance its current account deficit with the rest of the world, he said, America has to import $2.6 billion in cash. Every working day.

That is an amazing 80 percent of the entire world's net savings.

Sustainable? Hardly.

Meanwhile, he notes that household debt is at record levels.

Twenty years ago the total debt of U.S. households was equal to half the size of the economy.

Today the figure is 85 percent.

Nearly half of new mortgage borrowing is at flexible interest rates, leaving borrowers much more vulnerable to rate hikes.

Americans are already spending a record share of disposable income paying their interest bills. And interest rates haven't even risen much yet.

You don't have to ask a Wall Street economist to know this, of course. Watch people wielding their credit cards this Christmas.

Roach's analysis isn't entirely new. But recent events give it extra force.

The dollar is hitting fresh lows against currencies from the yen to the euro.

Its parachute failed to open over the weekend, when a meeting of the world's top finance ministers produced no promise of concerted intervention.

It has farther to fall, especially against Asian currencies, analysts agree.

The Fed chairman was drawn to warn on the dollar, and interest rates, on Friday.

Roach could not be reached for comment yesterday. A source who heard the presentation concluded that a "spectacular wave of bankruptcies" is possible.

Smart people downtown agree with much of the analysis. It is undeniable that America is living in a "debt bubble" of record proportions.

But they argue there may be an alternative scenario to Roach's. Greenspan might instead deliberately allow the dollar to slump and inflation to rise, whittling away at the value of today's consumer debts in real terms.

Inflation of 7 percent a year halves "real" values in a decade.

It may be the only way out of the trap.

Higher interest rates, or higher inflation: Either way, the biggest losers will be long-term lenders at fixed interest rates.

You wouldn't want to hold 30-year Treasuries, which today yield just 4.83 percent.



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