Carolina Journal Weekly Report

October 11, 2002

In This Issue:
Feature 1 - Waging War in Iraq

Feature 2 – Anti-Social Security

Feature 3 -  NCSU Rescues Library   

Feature 1
Waging War in Iraq
Military expert spells out possible war scenarios

Col. Andrew Finlayson, a former counterterrorism expert for the Marine Corps, says the media din about a U.S. war against Iraq fails to address one important question: How will the war be prosecuted?

“There’s a paucity of detail in the media on war plans and war details,” the Raleigh resident said at a John Locke Foundation luncheon Oct. 7.

Finlayson said the U.S. strategy in a second war against Iraq would have political, economic, and military components.

Politically, Finlayson said the United States and its allies would likely isolate Iraqi President Saddam Hussein from his military commanders. Economically, Finlayson suggested the allied forces would seek to control Iraq’s oil fields. He said Hussein’s oil resources are almost entirely located in the northeast part of the country, in two areas that “couldn’t be a worse strategic area (for Iraq).”

He said Iraq is weak militarily, with only six of Hussein’s 17 Republican Guard divisions having some ability to effectively fight back. Finlayson added, however, that several of Iraq’s military leaders may turn against Hussein.

Finlayson told the Locke audience that he foresaw four possible strategies the United States could pursue in prosecuting the war. He called the first scenario “Desert Storm II,” which would be nearly identical to the first Iraq war, and is the least risky approach.

He called a second possibility “Desert Stun,” in which the United States and its allies would rely heavily on air attacks under a “Kosovo model.” Finlayson said such a plan would require a 5,000-sortie per-day attack, going after airfields and hitting the Republican Guard divisions “hard.” He said no ground troops would enter Iraq until it gave up. Finlayson said 75,000 ground troops would be needed to secure Iraq under such a scenario.

A third approach, “Desert Slice,” would avoid Baghdad initially and use a massive air campaign followed by a ground attack in the north and south, likely requiring 100,000 troops. Under this plan the United States would seek to control Iraq’s oil fields and strangle the nation economically.

“Once you control the oil, you control Iraq,” Finlayson said.

The last possibility, called an “Inside Out” plan, would send Special Operations officers inside Baghdad to fight there first, creating a “meat grinder” inside the city. Finlayson said this would be highly risky, and unlikely.

Whatever happens, Finlayson said he supports action against Iraq. “I believe the president is correct and the intelligence services have come up with evidence that Saddam intends to use some very nasty weapons.”
Ahead of the Curve

•=A0A resolution authorizing President Bush to prosecute war against Iraq received support from most of North Carolina’s congressional delegation.

All of the state’s Republican representatives voted for the resolution, in addition to Democrats Bob Etheridge (2nd District) and Mike McIntyre (7th). Democrats Eva Clayton (1st), David Price (4th), and Mel Watt (12th) voted against the resolution.

The House passed the measure by more than a 2-to-1 ratio, after debating and rejecting two Democrat proposals. One, cosponsored by Price, would have required U.N. Security Council approval before seeking congressional authorization to attack Iraq. Etheridge spoke before the House in a “hawkish speech,” as characterized by The News & Observer: “[Hussein] must be thoroughly disarmed so he no longer poses a threat to world peace.”

Leading up to this week’s vote, N.C. Rep. Richard Burr, R-5th, was one of Bush’s key supporters in getting his message out, according to the Winston-Salem Journal. A member of the House Intelligence Committee, Burr said Hussein “has more chemical and biological (weapons) than we ever dreamed.”

• Meanwhile, keeping with his often contrary positions to the House majority, Watt voted “present” on a bill that supported keeping the words “under God” in the Pledge of Allegiance and maintained “In God We Trust” as the national motto.

Feature 2
Anti-Social Security
Program headed for bankruptcy, Cato scholar says

More than just control of Congress may be riding on North Carolina’s U.S. Senate race this year. Beltway insiders see it as a referendum on Social Security, a Cato Institute scholar says.

Many national groups, including the AARP and AFL-CIO, are pouring millions of dollars into Erskine Bowles’ campaign effort, trying to make Social Security the key issue in the race, Cato’s Michael Tanner said Tuesday at a forum in Raleigh. Tanner credited Republican candidate Elizabeth Dole for sticking with her proposals to reform Social Security.

“Most Republicans just curl up into the fetal position and beg Democrats to stop,” he said.
The forum, sponsored by Citizens for a Sound Economy and the John Locke Foundation, drew about 30 people to the North Raleigh Hilton to hear Tanner’s take on reforming Social Security, which he called the largest government program in the world.

Tanner, program director of the Cato Institute’s Project on Social Security Choice, sees a bleak future for the program in its present form. The system will begin running a deficit around 2017, when policymakers say they will use the Social Security trust fund to pay benefits until 2041.

“There’s just one little problem with that,” Tanner said. “There is no trust fund.” The current surplus in the Social Security program is lent to the federal government to pay for general expenditures. In return, the Social Security program gets special government bonds. When the time comes to pay Social Security benefits, the government will have to redeem the bonds. However, no money has been set aside for those redemptions, which means the government will have to raise taxes, Tanner said.

The problems with Social Security are not theoretical, but certainties, he said. “It is not possible to do nothing,” Tanner said. “To leave [Social Security] alone is to let it fall off a cliff.” The dilemma leaves only three options: Raising taxes by 50 percent, cutting benefits by about one-third, or allowing individuals to invest in private accounts.

Tanner also argued that Social Security is an unfair system that taxes participants equally, but distributes benefits unevenly. In certain circumstances, Social Security can give greater benefits to a wealthy, single-earner family than to a low-income, double-earner family, he said.

The inequalities of the program also cut along racial lines, where life expectancy plays an important role in Social Security distribution. Tanner said a white man statistically will receive $21,000 more in benefits over his lifetime than a black man, because the white man statistically will live two years longer than his black counterpart.

The United States is one of the few countries in the world that has not privatized its Social Security system, Tanner said. He touted Chile’s 1981 conversion to private pension accounts as an example of highly successful reform. Chileans now enjoy an 11.2 percent average rate of return on their investments.

The U.S. economy could also be a big winner if Social Security is privatized, Tanner said. The hundreds of billions of dollars invested in individual accounts could increase investment, jobs, and overall economic growth. Tanner cited the work of Harvard University economist Martin Feldstein, who estimates a national economic gain of $10 trillion to $20 trillion and a 5 percent permanent increase in the country’s GDP.

Capital Quotes

“The constitution says it’s drawn one time by the legislature. If we draw a constitutional plan, that’s our business.”

— Senate Majority Leader Tony Rand, D-Cumberland, discussing with the Winston-Salem Journal the prospects of the General Assembly returning to Raleigh after the November elections to work on redistricting. Democratic leaders, should they lose control of either the Senate or House, are considering recalling the legislature. The Assembly, still having a Democratic majority, would enact new maps in a lame duck session. Republicans said they would again challenge the plans in court.

“I feel betrayed. It’s to me almost a morally criminal act.”

— Paul Standridge, Union County commissioner, talking with The Charlotte Observer about a proposal to establish a Union County water and sewer authority with members appointed by the state. The idea was pushed by two outgoing politicians, Sen. Aaron Plyler, D-Union, and County Commissioner Larry Helms, as a means to remove local politics from water and sewer decision making. State law already gives counties the power to create a water and sewer authority. The House rejected the proposal.

“Maybe somebody higher up will look at this and see the need to make changes. This exposes a lot of the racism that’s been there for several years now.”

—Charles McAdams, commenting to The Asheville Citizen-Times on an administrative law judge’s ruling in his favor. McAdams is a Department of Motor Vehicles employee who was denied promotion last year. McAdams challenged the decision, contending he was a victim of racial discrimination. Judge James L. Conner II agreed, finding that DMV officials intentionally skewed their evaluations of interviews in favor of white candidates. Conner also ordered the department to develop better hiring and promotion practices.

Feature 3
NCSU Rescues Library
Restoration of hours, services to begin Wednesday

Hours and services will be restored to D.H. Hill Library on the campus of North Carolina State University, school officials say.

Public pressure, student activism, work between library officials and the provost’s office, and the state legislature’s joint conference committee budget report all contributed to a restoration of library services, which will be effective Wednesday.

As reported in Carolina Journal, N.C. State laid off library personnel (including all security personnel), cut back on expenditures and acquisitions, and reduced library hours, eliminating overnight and Saturday access. N.C. State was the first major library to offer full services overnight.

The changes shocked the academic community because so much had been done to build N.C. State libraries up over the past decade. With help from students, alumni, faculty, and administration, N.C. State Libraries had improved from 101st out of the 105-member libraries of the Association of Research Libraries in 1991 to 35th last year.

Also last year, the ARL awarded its first Excellence in Academic Libraries Award to N.C. State.
On Sept. 12 an estimated 500 N.C. State students participated in a “read-in” at D.H. Hill, conducted as the library’s new closing hours set in. They proceeded to the home of Chancellor Marye Anne Fox and protested the library cuts on her doorstep at 1 a.m.

According to Technician, N.C. State’s student newspaper, Fox spoke with the students. “As soon as we get a budget, it’s our first priority to restore the library hours. I can pledge that to you,” the chancellor reportedly said. Fox fielded questions from the protesting students for over an hour.

As the read-in portion of the protest extended beyond the library’s new hours of operation, students raised more than $200 to reimburse library staff members forced to continue working.

The reason for the protest, as Matthew Spence, a member of N.C. State’s student government, told Technician, is “because the library is a vital part of what we do as a research institution.”

Under a plan worked out by library staff and the provost’s office, D.H. Hill will resume overnight services Sundays through Thursdays, close at 10 p.m. Fridays and Saturdays, and have two security guards.
In announcing the restoration of services, Provost Stuart Cooper cited the “strong belief that the NCSU Libraries are a central and vital resource for our students and faculty.”

Other good news about N.C. State Libraries surfaced recently. In August the library became the recipient of a charitable remainder trust worth more than $1 million, donated anonymously by a couple in North Carolina. The trust, one of the largest gifts ever received by the libraries, will fund an unrestricted endowment for the libraries.

The libraries also received two grants, worth $175,000. One, from the National Endowment for the Humanities, worth $124,900, is for preserving and building collections in rural life and agriculture. The collections focus on documents from 1820 to 1945.

The other, from the State Library of North Carolina, worth $50,000, is for developing the history of forestry.

On The Cutting Edge

Alternative Minimum Tax

• As President Bush’s tax cuts of 2001 phase in over the next few years, the tax relief many middle- and upper-income families were anticipating will be offset by the alternative minimum tax, says a new study by the Urban Institute-Brookings Institution Tax Policy Center.

The alternative minimum tax was originally designed to assure that wealthier Americans with many deductions did not escape paying taxes of some sort, and as recently as three years ago fewer than one million Americans were subject to it. But if nothing is changed, by 2010 about 36 million taxpayers will face its complex provisions.

When the Bush cuts become fully effective, 85 percent of taxpayers with two or more children will be forced off the regular income tax and onto the minimum-tax system. It will largely affect families with incomes of $75,000 to $500,000.

Under the minumum tax, many deductions are denied — including those for children, the taxpayers themselves, and for state and local taxes. Married couples are 25 to 30 times more likely to be subjected to it than single people — which tax experts call “a nasty marriage penalty.”

The study concludes that almost any remedy to the problem will cost the Treasury hundreds of billions of dollars or require raising taxes elsewhere to compensate for the losses.

Although the White House is reportedly aware of the problem, no action is expected anytime soon.
Reported in the New York Times, Sept. 19; based on Leonard E. Burman, William G. Gale, Jeffrey Rohaly and Benjamin Harris, “The Individual AMT: Problems and Potential Solutions,” Sept.18, Urban-Brookings Tax Policy Center.

Cyber Protection

• The President’s Critical Infrastructure Protection Board released a draft of the National Strategy to Secure Cyberspace last month and is inviting comments. It is the first national blueprint to bring together businesses, government agencies, universities and individuals to make cyberspace a safer place in which to do business and communicate.

Cyber security is critical because information is the currency of today’s digital economy. There are a variety of challenges to secure cyberspace, including computer viruses, worms, and hackers. They range from minor nuisances to multibillion-dollar global attacks, and everyone is vulnerable.

Electronic Data Systems Corp. said companies lose $1 million to $3 million an hour in computer downtime and data loss. Businesses worldwide collectively spend $2 billion to $9 billion to eliminate the effects of a major virus like the I Love You/Love Bug or Code Red.

EDS alone counters 650 attempted break-ins and three new viruses every day on the servers it runs for 2,500 corporate clients and 3 million users.

The National Strategy to Secure Cyberspace encompasses all Internet users and information systems. In addition to external information sharing, the strategy recommends that corporations consider creating internal corporate security councils for cyber security coordination and planning.

EDS’s Richard Brown, chairman of the Business Roundtable’s Digital Economy Task Force, said certain steps are essential for business:

• Companies must decentralize their business so their most critical people and technologies aren’t concentrated at a few locations.

They must build redundant, physically separate systems so one system can take over if another goes down.

• Finally, companies must create emergency communications infrastructures to stabilize mission-critical systems in times of crisis or disaster.

Reported in the Dallas Morning News, 9-23-2002.

Corporate Political Giving

• Industries spend much more on lobbying than they do on political campaigns. According to a new study in the Journal of Economic Perspectives, about 80 percent of campaign contributions are from individuals.

Businesses contribute so little because they receive very little for their money, so contributing more is fruitless.

Individuals, organizations, and companies gave a total of nearly $3 billion to national campaigns in 1999 and 2000 — equivalent to 0.15 percent of annual federal spending. Contributions by individuals average about $115.

Forty percent of all Fortune 500 companies do not have a political action committee — and the average corporate PAC gives only about $1,400 to legislators, far below the legal limit.

 Organizations spend 10 times as much on lobbying as on direct campaign contributions.

The study challenges the common wisdom that corporate money runs politics. It finds that politicians’ votes depend almost entirely on their beliefs and the preferences of their voters and their party.

Contributions can help a company’s or and industry’s lobbyists gain access to legislators. The lobbyists can then make their arguments — and they often can then provide the politician with essential information.

Reported in the New York Times, Sept. 19.

Coming Up

•    R. James Woolsey, former director of the Central Intelligence Agency, will speak at a special John Locke Foundation dinner at 7 p.m. Oct. 30 at the Brownestone Hotel in Raleigh.

Woolsey is a partner in the law firm of Shea & Gardner in Washington, D.C. He returned to the firm in January 1995 after being director of the CIA for two year. He has been a member of the boards of directors of several corporations.

Woolsey has also served in the U.S. government as: ambassador to the Negotiation on Conventional Armed Forces in Europe, Vienna, 1989-1991; under secretary of the Navy, 1977-1979; general counsel to the U.S. Senate Committee on Armed Services, 1970-73; and adviser (during military service) on the U.S. Delegation to the Strategic Arms Limitation Talks (SALT I), Helsinki and Vienna, 1969-1970.
He earned a bachelor of arts degree in 1963 from Stanford University (with great distinction, Phi Beta Kappa), a master of arts degree from Oxford University, and an LL.B from Yale Law School in 1968, where he was managing editor of the Yale Law Journal.

For more information or to preregister, contact Kory Swanson or Thomas Croom at (919) 828-3876 or [email protected]



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