From Volume 5, Issue Number 32 of EIR Online, Published Aug. 8, 2006

United States News Digest

Democrats Finally Get Together on Iraq Policy

The Democratic leadership of the House and the Senate signed a letter to President Bush, on July 31, calling for an end to the Administration's policy of "staying the course" in Iraq. In it, they note that there has been no diplomatic effort to resolve sectarian differences, no regional effort to establish a broader security framework, and no attempt to revive a struggling reconstruction effort. Instead, the Bush Administration is planning to redeploy 5,000 U.S. troops into Baghdad. "Far from implementing a comprehensive 'Strategy for Victory' as you promised months ago," they write, "your Administration's strategy appears to be one of trying to avoid defeat."

Instead, the Democrats call for a new policy, based on the amendment to last year's defense authorization bill, declaring 2006 to be a year of "significant transition to full sovereignty, with Iraqi security forces taking the lead for the security of a free and sovereign Iraq, thereby creating the conditions for the phased redeployment of United States forces from Iraq." They say that such a redeployment should begin this year. They also call for taking steps toward a political settlement, including "amending the [Iraqi] constitution to achieve a fair sharing of power and resources," and an international conference "to persuade other governments to be involved, and to secure the resources necessary to finance Iraq's reconstruction."

The letter was signed by Senate Democratic leader Harry Reid (Nev), House Democratic Leader Nancy Pelosi (Calif), Senate Democratic Whip Richard Durbin (Ill), House Democratic Whip Steny Hoyer (Md), and the ranking members of the Armed Services Committees, Foreign Relations Committees, Intelligence Committees, and Defense Appropriations Subcommittees.

Estate Tax Reduction Blocked in Senate

On the evening of Aug. 3, Senate Democrats blocked consideration of the so-called "Trifecta" bill, that combines a permanent reduction in the estate tax, extension of a series of expiring tax benefits, and an increase in the minimum wage from $5.15 to $7.25 per hour. House Republicans had combined the three elements into a single package, and rammed the bill through in the dead of night, hoping that Senate Democrats would have to swallow the estate tax provision in order to get the wage increase through. All but four Democrats voted against cloture, with two Republicans joining them to block consideration of the bill on a 56 to 42 vote. Majority Leader Bill Frist (R-Tenn.) then changed his "yes" vote to a "no," so that he would still have the option of bringing the bill up again at a later point.

Frist told the Senate, on the morning preceding the vote, that the three components would be considered as one package, and charged that the Democrats didn't consider them as "matters of importance" to the American people. Frist also threatened that the bill was the last chance in the 109th Congress to give minimum-wage workers a boost.

Minority Leader Harry Reid (D-Nev.) dismissed the entire Republican ploy as a "shell game," pointing out that the GOP's cynically named "American Family Prosperity Act," would bring prosperity to only the richest 8,100 families in America. He criticized the Senate leadership for spending so much time on the estate tax, when the Senate should be addressing other urgent issues, such as the degradation of the U.S. military as a result of the Bush Administration wars. The "Trifecta" bill should instead be called the "Defecta." "We know the Republicans hate the minimum wage," Reid declared, and noted that even billionaire Warren Buffett is against the repeal of the estate tax.

Senate Passes Pension Reform Bill with Poison Pill

Shortly after refusing to pass the estate tax/minimum wage bill (see above), the Senate passed a pension reform bill by a vote of 93 to 5. However, the Republicans succeeded in slipping through a little-noticed provision with serious implications: It expands the ability of the hedge funds to manage and raid pension funds. The $1.3 trillion hedge-fund industry is already permitted to manage the funds of pension plans. But most hedge funds limit to 25% of their total assets the amount of pension-fund money they'll take.

The reason: Going above that ceiling generally requires a hedge fund to become a fiduciary—that is, a party with specific legal obligations toward workers and retirees—under the Employee Retirement Income Security Act (ERISA), the Federal law that sets standards for most private pension plans. That engenders tighter scrutiny and limits the hedge funds' flexibility and fees.

MarketWatch July 29 reported that the little-known provision in the pension reform bill would change the law and provide that hedge funds could take in and manage unlimited amount of foreign pension plans and/or public pension plans (like the California Teachers Fund, etc), and this amount would not count against the 25% ceiling. Although having nothing formally to do with pension reform, this provision would swindle hundreds of billions of dollars more into the hedge funds' windfall profits; in parallel, the wealthy families who run the hedge funds would get a $1 trillion rake-off from the repeal of the estate tax.

Military Lawyers Won't Back White House Tribunal Plan

Institutional resistance to the Bush-Cheney policies on military trials for Guantanamo prisoners is continuing, as was evident in two Senate hearings held on Aug. 2 on the future of military commissions in light of the recent Supreme Court slap-down of the administration.

There were a number of complaints, from both Republicans and Democrats, that the Administration has not yet given its draft legislation to the Congress. The Washington Post Aug. 3 reported that the reason the Administration hasn't released its draft, is because they cannot persuade the top military lawyers to accept it, even after two meetings between Attorney General Alberto Gonzales and the Judge Advocates General (JAGs) of the military services.

In Senate Armed Services Committee hearings Aug. 2, the senior Democrat, Sen. Carl Levin (Mich), said that the fact that the Administration has finally provided its draft to the military lawyers is a big improvement on what happened with the 2001 order on military commissions—when the military lawyers were totally bypassed. But this is still putting the cart before the horse, Levin said: Instead of asking the JAGs to comment on a draft proposed by a limited circle of political appointees, the Administration should have allowed them, as the experts on the subject, to prepare the initial drafts of the proposal.

Both Judiciary Committee chairman Arlen Specter (R-Pa), and Armed Services Committee chairman John Warner (R-Va), said that they will have to hold further hearings once the Administration's proposal is available.

Rumsfeld Grilled at Senate Hearing

After a protest from Sen. Hillary Clinton (D-N.Y.) Aug. 2, that Defense Secretary Donald Rumsfeld was refusing to testify to the Senate Armed Services Committee in an open hearing, there was an about-face. What was originally scheduled to be a closed-door briefing to Senators on Aug. 3, suddenly opened up, and Chairman of the Joint Chiefs of Staff Gen. Peter Pace and U.S. Central Command chief Gen. John Abizaid joined Rumsfeld to answer questions on Iraq, Afghanistan, and the war on terrorism.

Committee Democrats followed the lead laid out in the letter the Democrats sent to President Bush earlier this week, calling for a phased withdrawal from Iraq beginning before the end of this year. They also raised the issue of readiness problems of Army combat brigades caused by the wear and tear on equipment in Iraq and Afghanistan. They showed some willingness to challenge Rumsfeld on the disastrous outcomes of his policies. Clinton was especially harsh in her criticism, telling Rumsfeld that, "Under your leadership, there have been numerous errors in judgment that have led us to where we are in Iraq and Afghanistan," errors which have led to a "full-fledged insurgency and full-blown sectarian conflict in Iraq" and the resurgence of the Taliban in Afghanistan."

On the violence in Iraq, Abizaid said, under questioning from Sen. Carl Levin (D-Mich), that "I believe that the sectarian violence is probably as bad as I've seen it in Baghdad in particular, and if not stopped, it is possible that Iraq could come towards civil war."

Bush Administration Gives Israel Signals Intelligence

At the instigation of the neo-conservatives on Vice President Cheney's staff, and also of National Security Council aide Elliot Abrams, the Bush Administration is providing NSA signals intelligence to Israel, to monitor whether Syria and Iran are supplying new armaments to Hezbollah, according to an article by former Clinton Administration official Sidney Blumenthal, entitled "The Neo-Cons' Next War," posted Aug. 3 on

Without referencing EIR's "October Surprise" alert, (see InDepth: "Will 'October Surprise' Trigger World War III?" by Jeffrey Steinberg) Blumenthal says that the Cheney gang and Abrams "have discussed Syrian and Iranian supply activities as a potential pretext for Israeli bombing of both countries," adding that, "The neo-conservatives are described as enthusiastic about the possibility of using NSA intelligence as a lever to widen the conflict between Israel and Hezbollah and Hamas into a four-front war."

In order to understand what these neo-cons are up to, Blumenthal reports, senior national security professionals are circulating among themselves the 1996 "Clean Break" manifesto, whose authors included neo-cons Richard Perle, Doug Feith, and David Wurmser—the renewed circulation of which was in fact initiated by EIR in the "Children of Satan" pamphlets of 2003.

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