The Deep State (25 page)

Thomas Drake's case makes nonsense of the claims by Edward Snowden's critics that he should have brought evidence of the NSA's abuse to his superiors, or informed Congress. Drake and many other whistle-blowers have found themselves ostracized, fired, bankrupted, or even criminalized for going through appropriate channels.

Hayden had a softer landing. After leaving the NSA in 2005, he became principal deputy director of national intelligence and then CIA director, where he developed quite an enthusiasm for waterboarding. He is currently a principal at the Chertoff Group, a security consultancy cofounded by former homeland security secretary Michael Chertoff, who is also chairman of the board of BAE Systems, Inc.
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Hayden is a frequent guest of news programs, where he advocates for mass surveillance. On Fox News, he opined that Senator Dianne Feinstein's revelation of the CIA's intimidation of her staff was “emotional”: as if serious legal and constitutional issues should be dismissed with a patriarchal wave of the hand.

It must be conceded that no one has accused Hayden of leaking or mishandling classified information, however objectionable his favoritism toward the contractors responsible for the gold-plated Trailblazer. But that cannot be said of all the exalted members of the nomenklatura. David Petraeus, the most celebrated general of the last decade, ended his career on a note that was not only ignominious but potentially criminal. His adulterous relationship with his biographer, Paula Broadwell, drew so much attention that the Obama administration saw fit to seek his resignation. Less well known was the fact that he had shared highly classified “code word” documents with her so that she could write the book.

Lesser persons accused of such crimes have faced jail time and
forfeiture of their pensions. John Kiriakou, a CIA employee who revealed the existence of his agency's torture program (a program violating U.S. law, the Constitution, and the Geneva Convention), was not hailed as an exposer of government wrongdoing—he received a sentence of two and a half years in federal prison. Petraeus, by contrast, got off with a suspended sentence and a fine that was derisory in light of his seven-figure compensation at KKR on top of his four-star general's pension of approximately $250,000 a year. As they say in the military, different spanks for different ranks.

The Deep State as Bizarro World

There are so many cases of virtue unrewarded—or even punished—while bungling, incompetence, and grandiose dishonesty are richly compensated with promotion and money, that one is almost tempted to believe that the Deep State operates on some inverted principle, like Superman's Bizarro World. Occasionally, though, hubris encounters nemesis exactly as it is supposed to.

I first heard of Richard Fuld sometime in 2001. My old boss, Congressman John Kasich, who had rounded out his congressional career as chairman of the House Budget Committee, retired at the end of 2000 to seek his fortune elsewhere. He ended up at Lehman Brothers on Wall Street, in keeping with the trend of public servants going into lobbying or banking. Shortly after landing the job, Kasich offered a journalist a flattering picture of Fuld, Lehman's CEO, that would have made Caesar blush: “Fuld is an awesome guy. He is the kind of guy you want to go into battle with. He is a great leader. I like people who are really smart and who are great leaders.”
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Fuld sounded like a name to conjure with, I thought, whereupon I promptly forgot about him for the next seven years.

As everyone now knows, things didn't turn out to be quite so awesome after all. The collapse of Lehman Brothers on September 15, 2008, tipped an already sliding economy into the abyss. Bear Stearns, Merrill Lynch, and other financial institutions at least avoided bankruptcy through shotgun marriages forced by the Treasury and the Fed. Lehman
was different—the biggest corporate collapse in U.S. history led to the worst international liquidity crisis of the last eighty years within a week of the bankruptcy.

Why didn't Lehman get bailed out? For one thing, Fuld was blinkered, narrow, and lacked a sense of proportion, like so many senior operatives in and out of government. He saw Lehman as his personal mission, and he would not sell the wildly overleveraged firm when he had a chance to do so. Like Rumsfeld or Bremer, he believed in staying the course, even when the course was leading to disaster. Once the financial dominoes started falling, from the desert McMansions of Victorville, California, to the vaults of the New York Federal Reserve Bank, Fuld's opportunity to rescue his firm was gone.

Even in the Wall Street domain of cutthroat egomaniacs, Fuld was singular. Known as “the gorilla,” he once informed an audience about his strategy for dealing with short-sellers: “I am soft, I'm lovable but what I really want to do is reach in, rip out their heart and eat it before they die.” Fuld's sociopathic reputation was such that his retrospective claim that Treasury Secretary Paulson, an old rival from Goldman Sachs, declined to bail out Lehman because of personal animosity may have a glimmer of truth, however self-serving it might be. If there was only limited room in the Treasury's lifeboat and someone had to drown, that guy was going to be Fuld.

Lehman went down, and the Dow Jones average fell over five hundred points that same day. That same week, investor panic threatened to cause an unprecedented run on money-market funds as liquidity dried up. I could grasp something of the urgency of the situation at the time because the Senate Budget Committee gave me the ad hoc assignment to monitor and report on the Treasury's effort to shore up the market by using its Exchange Stabilization Fund, a little-known facility established during the New Deal, to insure money-market mutual fund accounts.

While Jamie Dimon of JPMorgan Chase, Lloyd Blankfein of Goldman Sachs, and other titans of Wall Street came out of the catastrophe with their positions and fortunes largely intact, Fuld became the Jesse Livermore of the 2008 crash, albeit without his grisly finale. He did
manage to win
Condé Nast Portfolio
's number-one ranking on their “Worst American CEOs of All Time” list. Not only did he forfeit his lucrative position on Wall Street; he lost his securities license and wound up as a defendant in more than fifty lawsuits.

The exalted do sometimes come down with a thump, although that is the exception rather than the rule, even in Lehman Brothers' case. Kasich was an executive at Lehman until the collapse, and, according to the
Columbus Dispatch,
he “tried to persuade two state pension funds in 2002 to invest with Lehman Brothers while he was the managing director of the investment banking house's Columbus office.” According to an April 2, 2010, Associated Press story, after the Lehman Brothers implosion, Ohio pensions took a $480 million hit as a result of having Lehman investments in their portfolio.

When running for the Ohio governorship in 2010, Kasich successfully fended off charges that he had anything to do with the management of the fallen investment house. Whenever disaster strikes an institution, its leading executives, for once, minimize their importance in their organization's pecking order, and such was his strategy: “Blaming me for Lehman Brothers is like blaming a car dealer in Zanesville for the collapse of General Motors.”
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As a native Ohioan, I might have predicted what forgiving natures and short memories my fellow Buckeyes possessed: Kasich was duly elected governor and is now a contender for the Republican presidential ticket in 2016. On the eve of his entering the presidential campaign, Kasich gave an interview to CNBC in which he defended the lack of prosecutions on Wall Street, saying, in the face of all evidence, “It's not like the system was rigged.”
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All of which proves very little, other than that elected officials, for the most part, are the carnival barkers whose job it is to bring the rubes into the big top.

The Psychopaths Next Door

Numerous psychological studies have revealed a significantly higher quotient of psychopathy in corporate CEOs than in the population at large, and give us a further clue beyond mere hubristic incompetence to explain why these operatives engage in risk seeking and even reckless behavior and have an inability to internalize social norms.
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Psychopaths can be visibly antisocial in their behavior: when Donald Rumsfeld was appointed secretary of defense the first time in 1975, his immediate Pentagon staff presented him with a bouquet of flowers. Rumsfeld instantly threw the gift in the trash can in front of the staff in order to humiliate them and show them who was boss.
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Psychopaths can also be obsessively organized and give the appearance of being normal in their social relationships, often forming mutually dependent or parasitic relations with peers or superiors; this is known in Washington as “networking.” Such people feel little empathy for the less fortunate or remorse for the people they have harmed, and they can never feel genuinely contrite about the messes they make. This trait explains why, rather than having the decency to shut their mouths, many of the authors of the Iraq disaster of 2003 took to the airwaves and op-ed pages in June 2014, when Iraq's security deteriorated, to justify their prior actions by advocating the expenditure of even more American blood while often insinuating that holders of other views were unpatriotic. John Bolton (Fox News), Dick Cheney (Fox News, ABC News, and the
Wall Street Journal
), L. Paul Bremer (CNN), and convicted Iran-Contra conspirator Elliott Abrams (
Politico
) all held forth before a largely supine and complicit media.

Likewise, after the collapse of the housing market in 2008, Angelo Mozillo, the Countywide Financial CEO whose greedy machinations played a significant role in creating the preconditions for the financial crash, blamed unions and the media for demonizing brilliant entrepreneurs like himself. It was as if Wrong Way Corrigan had come to the microphone to explain aerial navigation.

Did ambitious psychos like Rumsfeld and Mozillo scramble to the top of the heap against the will of the American people? To some extent they did. The political game is so rigged, and corporate malfeasance so inadequately policed, that their rise within the system was to a degree foreordained. But what about the system itself? Just as Americans console themselves with the belief that Washington is not the real America when it is only a distillation of all the best and worst qualities of any American town, so do people routinely condemn politicians and big shots of all stripes without noticing an uncomfortable resemblance.

It is one thing for pundits to denounce Dick Cheney and his henchmen for authorizing torture as if they were somehow disembodied from society at large, but it is more painful to reflect upon the results of a 2014 Amnesty International poll, which found that 45 percent of Americans believed that torture can be justified on public safety grounds, a significantly higher percentage than in any other country in what used to be called the civilized world.
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By contrast, respondents in countries like Chile, Argentina, and Greece, where public knowledge of torture was much more up close and personal, gave sharply lower affirmative responses to the question than Americans did. The snarling face of Dick Cheney, some Americans would be shocked to find, is a grotesque reflection of their own countenance, distorted as in a funhouse mirror.

The family which takes its mauve and cerise, air-conditioned, power-steered and power-braked automobile out for a tour passes through cities that are badly paved, made hideous by litter, blighted buildings, billboards, and posts for wires that should long since have been put underground . . . may reflect vaguely on the curious unevenness of their blessings.

—John Kenneth Galbraith,
The Affluent Society
, 1958

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.

—President Dwight D. Eisenhower, farewell address, January 17, 1961

Is America a Poor Country?

On February 26, 2014, during the Obama administration's presentation of its budget proposal for the upcoming fiscal year, Secretary of State John Kerry made an unintentionally illuminating statement. Decrying the slight decline in his department's planned budget resulting from a bipartisan congressional budget deal reached the previous December, Kerry launched into a ritual denunciation of one of the Beltway's favorite villains: “isolationism.” Since the days of Kerry's cold war predecessor Dean Acheson, secretaries of state have dutifully knocked down this straw man every time the public has grown tired of military interventions and the endless entanglements that follow in their wake. That is
predictable fare from Foggy Bottom. But Kerry's next comment was more original: “We are beginning to behave like a poor nation.”
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Yes, John, you might think so. A 2011 study by the Bertelsmann Foundation concluded that in measures of economic equality, social mobility, and poverty prevention, the United States ranks twenty-seventh out of the thirty-one advanced industrial nations belonging to the Organization for Economic Cooperation and Development.
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The U.S. ranked ahead of only Turkey, Chile, and Mexico.
The Economist
Intelligence Unit's 2013 quality-of-life index, using different criteria, rates the United States a bit better but still only in sixteenth place. While Kerry's statement was an argument for more spending on foreign aid, meaning, among other things, the payment of baksheesh to compliant foreign despots, kleptocrats, and warlords, he inadvertently put his finger on the fact that by many measures, the United States really
is
becoming a poor country.

The result of the economic inequality that has become a predominant feature of the American social structure over the last three decades is not simply a forced choice between sirloin and ground chuck. An international health study has found that maternal mortality rates in the United States are not only falling behind improvements made in other countries; they are rising in absolute terms. In 1990, the U.S. maternal death rate was 12.4 per 100,000 cases; and by 2013, it had risen to 18.5. Other countries showing a similar rise include Afghanistan, Belize, and El Salvador. One of the authors of the study says that the sinking state of U.S. maternal care probably reflects “the performance of the health system as a whole.”
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The overall national rate masks even greater disparities in some regions of the United States: in Texas, the maternal mortality rate quadrupled over the last fifteen years to almost 25 out of 100,000 births, according to data from the state's Department of State Health Services.
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This is comparable to a country like Lebanon and roughly five times the rate in Japan.

Such disparities can be found in other international metrics of health and well-being as well. According to the World Health Organization, the
United States ranks thirty-fifth among nations in life expectancy at birth. Easier and cheaper access to first-class health care is one of the major factors in lengthening life expectancy. In much of Western Europe, where such health care access is the norm, people live longer than Americans.

According to the World Health Organization, average life expectancy in the United States is 79 years compared to 83 in Switzerland; 82 in Italy, Sweden, France, Spain, Iceland, and Luxembourg; 81 in Norway, Austria, the Netherlands, Germany, Finland, and the Republic of Ireland; and 80 in Malta, the U.K., Belgium, Portugal, and Slovenia. In the impoverished areas of the United States, life expectancy is well below that. A 2013 study by the Institute of Health Metrics and Evaluation at the University of Washington discovered that in McDowell County, West Virginia, life expectancy for males was only 63.9 years. This is comparable to male life spans in such beacons of social advancement as Kazakhstan and Papua New Guinea.

This subpar performance in perhaps the most basic measures of national well-being underlines the political choices that our leaders have made for us: in 2014, the U.S. government gave $3.1 billion in direct grants and $3.8 billion in taxpayer-guaranteed loans to Israel—a country whose inhabitants have a greater life expectancy at birth than the donor country.
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The NSA's grants to British intelligence organizations subsidize a country whose population lives longer on average than Americans.
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The United States is taking halting steps at redressing its health and longevity deficit. The Affordable Care Act of 2010 aims at getting every American insured, but as we have seen, the Supreme Court has already struck down key provisions in the law. This circumstance points to the fact that the absence of universal health care in the United States is not a question of resources—we certainly have enough money to wage expensive and futile wars, and can afford to equip our domestic police with armored behemoths—or of technical difficulty, but one of ideology. Even if Obamacare were to be implemented completely as written, it would still be too expensive, with its bribes to the pharmaceutical industry and subsidies to insurers. Every country in Western Europe has some form of
universal health care, which might be implemented in different ways. The United Kingdom and Spain have single-payer systems, while Germany, with an employer-based, regulated, and fee-for-service approach, looks superficially similar to the American system, but it distinguishes itself from American health care by being significantly cheaper.

The Rutted Road to Ruin

As with longevity and health, so with transportation infrastructure. One wag was quoted in the
Washington Post
as saying that Amtrak has “Russian quality at Swiss prices. It is the shame of the developed world.” But it turns out that the comment was a little too charitable: rail travel in Switzerland, a high-wage, high-cost country whose currency is above parity with the dollar, is more affordable than Amtrak. A round trip between Geneva and Zurich costs about 53 cents per mile. A round-trip ticket from Washington, D.C., to New York will cost nearly double that, at 98 cents per mile. And Amtrak is on time on only 72 percent of trips.
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This lamentable record is not entirely Amtrak's fault. Ever since the Reagan administration, Republicans have starved the system of capital funding, resulting in antique, worn-out rail infrastructure and high operating costs. Travel on the Northeast Corridor, where the
Post
made the cost comparison, is also expensive because operations there effectively help subsidize routes in places where passenger train travel is uneconomical, but where Congress forces Amtrak to operate (as with the U.S. Postal Service, congressional Republicans maintain a weird relationship with Amtrak—they hate it on ideological principles, but fight to maintain service in their
own
districts, and the health of the system as a whole be damned). When one of Amtrak's trains derailed at high speed in May 2015, causing eight deaths, many safety experts said the crash could have been averted had the system had the funds to install automatic train control technology to supplement the seventy-year-old signaling system of the Northeast Corridor. But the very day after the tragedy, Republicans on the House Appropriations Committee, on a party-line vote,
cut Amtrak's budget request, which included such safety upgrades, by 18 percent.

As good a metaphor as any for the legislative gridlock and policy paralysis that have beset Washington can be found in a rail tunnel that skirts the southern edge of Capitol Hill. The tunnel carries the main north-south freight rail corridor on the densely populated East Coast, yet it is only a single-track tunnel built 110 years ago. It is also too low to accommodate the double-stacked containers on flatcars that are standard in most of the country. The old D.C. tunnel bottlenecks freight shipments between Maine and Florida; with luck, it may be replaced by a double-tracked, high-clearance tunnel by 2020. The contractors had better hurry, because the present tunnel is in terrible shape: already in 1985, a three-hundred-foot section of it collapsed.

The American Society of Civil Engineers, in its 2013 “report card” on the state of American infrastructure, rated it overall as a D+. Decades of boutique wars costing trillions and money wasted on reckless pork barrel projects or siphoned off into overseas tax havens appear to have taken their toll: in some places, money is no longer available even to maintain properly paved roads. Reversing a century-long trend in developed countries, many rural jurisdictions in Ohio, Michigan, North Dakota, and other states are grinding up their rutted and dilapidated paved roads and reusing the ground-up asphalt as a gravel-like surface. John Habermann of Purdue University's College of Engineering has called it “back to the stone age.”
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Brian J. O'Malley, a former counsel with the Michigan legislature's Joint Special Committee on Pollutants and Contaminants, pointed out to me that gravel roads need maintenance, too, and entail additional costs. “The gravel wears out. When the stone is not replaced it grinds down to dust which sends up a choking cloud with each passing vehicle. Then ruts and permanent holes appear which fill with water, which breeds mosquitoes, and potentially malaria and yellow fever. The state of Michigan was oiling gravel roads to keep down dust and kill mosquitoes in stagnant pools well into the 1970s at the insistence of the Department of Public
Health, overruling the concerns of the Department of Natural Resources about polluted groundwater runoff. The gravel dust itself was considered a health hazard similar to mesothelioma. It was also an ideal refuge surface for diseases like tuberculosis, given the rapid airborne propagation of the dust. State health officials told me about bronchial illnesses in people who lived near gravel roads. To go back to gravel roads now reminds me of how you can trace the decline of the Roman empire by the increasing decrepitude of its land communications.”
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I talked to O'Malley about America's failure to invest in infrastructure a few days after President Obama had requested $500 million to arm and train rebels attempting to overthrow the Syrian regime. This time, Obama assured us, we would be able to distinguish good insurgents from bad insurgents. At the same time as the president made this extraordinary request, the House and the Senate gridlocked on a long-term reauthorization of domestic surface transportation programs that would contain a mechanism to replenish the rapidly depleting Highway Trust Fund.

The expiration of a domestic authorization like the highway bill is an entirely predictable event. One merely requires knowledge of the calendar to enact a new authorization in a timely fashion. Yet Congress is incapable of doing more than passing temporary extensions of the current authorization, a stopgap that leaves the question of perennial underfunding unaddressed. The present federal gasoline tax, which has not been increased since 1993, is inadequate to cover costs anymore due to the increasing fuel efficiency of motor vehicles. Raising the tax appears to be out of the question because Republicans—the self-described party of personal responsibility—have a phobia about asking their electoral base to pay for the roads they drive on. Thus does the Appian Way begin to crumble even as the empire embroils itself in yet another messy conflict beyond its borders.

America First?

Congress's present slug-like lassitude is not always in evidence; as we have seen with the bank bailout, the institution can act expeditiously, even
precipitately, at the behest of Deep State interests. When the stars align, Congress can even act decisively on its own initiative: within days after yet another resumption of the decades-long Israel-Palestine conflict during the summer of 2014, the Senate Defense Appropriations Subcommittee doubled U.S. funds for the Israeli Iron Dome missile defense system. There are disputes about the system's combat effectiveness,
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but there is no dispute over Congress's speed in stepping into an intractable foreign conflict with even more money than the executive branch has thus far lavished upon it.

The chairman of the subcommittee, Senator Richard Durbin of Illinois, won some notoriety as a moderately candid truth teller in 2009 when he said of the Senate that the banks “frankly own the place.” Apparently, the senator was not averse to fostering a similar relationship with the American lobbying affiliates of the Likud Party. Among some factions of the Deep State (being chairman of a defense subcommittee confers ex officio membership), the intensity of that relationship is considered a touchstone of good old American patriotism.

As the bill containing the Iron Dome provision proceeded to debate in the full Senate, other business intervened. A bill to address the Central American migration crisis, which had churned domestic politics during the summer of 2014, failed. So did a bill to extend a large number of popular tax provisions: it garnered 96 out of 100 Senate votes on a motion to proceed, but nevertheless fell to a Republican filibuster when majority leader Harry Reid refused to allow a vote on an amendment to repeal the medical device tax provision contained in the Affordable Care Act. The Iron Dome measure, however, miraculously survived when the otherwise terminally dysfunctional Senate considered it. Acting in lockstep, senators rolled over the lone objector, Senator Tom Coburn (R-OK), who protested that the $225 million for Iron Dome was not offset by spending reductions elsewhere. The bill cleared the chamber by unanimous consent. Senators were ecstatic, according to
Politico:
“Reid [D-NV], [Senator Mitch] McConnell [R-KY] and Sens. Lindsey Graham (R-S.C.) and John McCain (R-Ariz.) all shook hands after the Iron Dome money finally passed—an uncommon kumbaya moment in a bitterly divided Capitol.”
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