[T]his isn't a one-size-fits-all economy anymore; mass-production jobs are going the way of the family farm. If young people are to grow into successful adults in this new economy, they'll have to learn how to think in a variety of ways, solve new problems and become quick learners in unfamiliar situations. [But children in poorer communities aren't getting the opportunities.]

… Next year's deficit is already approaching a record $500 billion. The heart of George W. Bush's domestic policy is his $1.7 trillion in tax cuts, which, as we know by now, go mostly to wealthy families. No reputable economist believes they will stimulate the economy, for the obvious reason that rich families already spend what they want to spend. That's the very definition of being rich. The only conceivable justification for these tax cuts goes under the rubric of "supply-side economics." The theory is that the rich will invest the extra money they get from the tax cuts in new factories and equipment, thereby growing the American economy. The fallacy here is that we're in a global economy, and the money the rich save by not paying taxes is as likely to go to East Asia or Europe in search of high returns as it is to America.

… [Since the only truly American asset that is likely to stay here is our people, it] makes absolutely no sense to give tax benefits to people at the top and simultaneously fail to fund our schools. State and local budgets are tight mainly because the economy is still struggling to break out of recession, and because states and cities don't have adequate revenues. Poor districts are especially strapped because their own tax bases have shriveled. Federal funding for poor schools needs to be dramatically expanded. The No Child Left Behind Act requires a lot more money behind it.

It's a simple lesson the Bush administration and the Republican Congress should have learned by now: The real supply side lies not with financial capital but with human capital.

… The paramount issue that challenges Macon/Bibb County's future is the quality of public education in the county. SAT scores are down dramatically. Math abilities continue to decline. We have a devastating drop-out rate. The Board of Education knows this. The Chamber of Commerce knows this. The CEOs and political leaders who have formed Education First know this. … We are becoming two school systems in Bibb County, a public "urban" black system and a private "suburban" white system - which will further diminish educational opportunity and erode community support. … If 90 percent of the leadership of this county had their own children and grandchildren in integrated public schools, the schools would work. They would be made to work. When it comes to race, we are like a dysfunctional family where everyone knows what the real problem is, but nobody is allowed to name it. Instead, we blame each other.

… ''Despite much rigging of statistics, the 'trickle down' effect has not been proven. Instead, as the World Bank's own data illustrates, poor countries are lenders to the rich -- unwittingly financing opulent living standards in the U.S. and elsewhere,'' said RWEO Editor Ann Pettifor, in a press release from Dubai. … According to the report, this vacuum effect of the global economy is achieved largely by an international financial structure skewed to benefit the rich.

• The dollar-dominated global financial system means that poor and rich countries alike are obliged to continue financing the U.S. deficit, through the purchase of U.S. ''IOUs'' (treasury bills). In the absence of a global key currency standard, those treasury bills now play the part that gold once held in the global economy, the RWEO says. Poor nations "are, in effect, making very low interest rate loans to the United States, while at the same time borrowing from abroad (including from the United States, the World Bank, and the IMF) at very high rates of interest.''
• In addition, capital totalling 97.8 billion dollars departs poor countries for banks in Switzerland, Britain and, especially, the United States every year in the form of foreign direct investment (FDI), it adds. Some of this money is legal investments made by residents of developing countries, "but much of it is illegal capital that finds its way into the accounts of all too willing banks in the North".
• Remittances of multinational corporations from profits they make in developing countries also impoverish poor countries, according to the RWEO. It estimates those remittances equalled 55 billion dollars in 2001.

The end result: increased transfer of resources from poor countries, and the concentration of wealth in rich ones. ''There is a net flow of 48 billion dollars every year from the poorest people to the richest, easily outstripping annual aid grants of 32 billion dollars,'' it concludes.

On Sunday, Vice President Cheney said on NBC's "Meet the Press" that success in Iraq means "we will have struck a major blow right at the heart of the base, if you will, the geographic base of the terrorists who had us under assault now for many years, but most especially on 9/11."

In his May 1 speech announcing the end of major combat in Iraq, Bush said, "The battle of Iraq is one victory in a war on terror that began on September the 11th, 2001." He added: "With those attacks, the terrorists and their supporters declared war on the United States. And war is what they got."

America's pension funds now have a total deficit of about $400 billion — a record — and unless the rules governing pension financing are eased, many companies will have to start making large contributions to close the gap. The Senate bill would shield companies from having to do that during a slow economy, helping them conserve cash. But it would also weaken the pension funds, the government projections show.

Information provided by prosecutors helped convince Mr. O'Neal [ML's CEO] that Merrill's culture had become too reckless and its procedures too lax, a Merrill official and other people close to the firm said. …

… According to the indictment, Enron was trying desperately late in 1999 to sell a stake in the barge. [Its CFO] approached Merrill about becoming the buyer. … While Merrill agreed to pay $28 million for the barges, 75 percent of that money was provided by Enron itself. And in a secret side deal, the indictment says, Enron executives pledged that Merrill would receive back its investment plus an agreed-upon profit within six months. Consequently, the indictment says, Merrill never had any risk in the deal, and so never actually purchased anything; Enron, meanwhile, booked $12 million in bogus profits.

Besides the barge deal, today's settlement encompasses a second 1999 transaction in which Merrill and Enron engaged in back-to-back energy trades. Though the trades effectively canceled each other out, Enron was able to book income from them because of the way they were treated under accounting rules.

Under the settlement, Merrill is required to establish a Special and Structured Products Committee that will be responsible for reviewing all of its structured finance transactions with any third party. In addition, for 18 months, Merrill must retain an independent auditing firm to review the committee's procedures. And the company will have to hire a lawyer — selected by the Justice Department — to oversee the work of the auditing firm. The lawyer will issue periodic reports to the government about Merrill's compliance with the settlement. The committee will be required to reject any transaction with a third party that it believes is intended to create a misleading effect on a company's earnings, revenues or balance sheet. Undocumented side agreements like the one described in the Nigerian barge indictment will be specifically prohibited. Any transactions, like the 1999 energy trades, that cancel out any real economic effect will also be prohibited. The committee must also review any year-end transaction with a third party "where Merrill Lynch knows or believes that the third party's primary motive is to achieve" accounting outcomes that would affect reported financial results. Such transactions were widely used in corporate America before the Enron debacle, and while some accounting rules have been tightened in Enron's wake, many deals that could serve to cloud financial reports can still be done legally.

"[They] are part of the effort to recast the debate and suggest that a love of style, a fascination with style, is not morally corrupt," says Daniel Horowitz, a professor of American studies at Smith College in Northampton, Mass. "These issues raise profoundly moral questions about what is enough, and what is a good society, and does satisfaction in our lives come from ... consuming more," he says. … Protestant sermons dating back to the 17th century extolled the virtues of keeping one's focus on higher things than overt consumption, notes Professor Horowitz.

… With more people achieving affluence, perhaps aesthetics is the way they are differentiating themselves. Paradoxically, in a democratic, capitalist society, materialism is often the way distinctions are made. "I don't think that's changed," says Bernard Mergen, professor of American studies at George Washington University. "Consumerism is what allows you to express your individuality."

Stephen G. Cecchetti, an economist at Brandeis University and a former New York Federal Reserve Bank research director, analyzed the question this way: "Looking at things like the ratio of jobs to the total working-age population, we would conclude that the economy is down something like 5 million jobs since the beginning of 2001. Even a conservative estimate suggests that the economy won't be back to any sort of full employment until it has recovered at least half of these, plus generated new jobs to accommodate the natural labor force growth of about 1 percent per year."

The sponsors, including doctors, union spokesmen and advocates for patients, said the chamber's projections were exaggerated.

"Bankers who wear $3,000 suits and starched shirts are now charging interest rates that Jimmy the Leg-breaker didn't charge 25 years ago," Warren says. "Nobody sounds the alarm. The consequence is a wealth transfer of tens of billions of dollars every year from middle-class families to a handful of big banks." A new study by Demos, a nonpartisan public-policy group in New York, supports that view. In the 1990s, the report finds, the average family's credit-card debt rose by 53 percent; middle-class families saw a 75 percent increase in that debt. For very low-income families, the figure shot up to 184 percent. "Deregulation of the credit-card industry has allowed companies to take advantage of tough economic times," says Tamara Draut, coauthor of the study, "Borrowing to Make Ends Meet." The group wants Congress to rein in aggressive lending practices.

Let's get this straight: The administration wants $87 billion in new spending for Iraq, refuses to contemplate rolling back any of its tax cuts to pay for it -- and then proposes holding down new spending on child care for mothers trying to leave welfare. … The way to reach a balanced budget, Cheney insisted on "Meet the Press," was "to have fiscal discipline on the rest of the budget." That presumably includes child care. … Warning against the idea of child care as an entitlement, Sen. Rick Santorum, a Pennsylvania Republican, reassured us: "Making people struggle a little bit is not necessarily the worst thing."

… What's certain is that the administration believes that making high-income taxpayers "struggle a little bit" is definitely a bad thing. On that "Meet the Press" appearance, Cheney was asked about freezing the administration's tax cut for the top 1 percent of Americans, which, as host Tim Russert pointed out, would generate enough money to cover the $87 billion for the war in Iraq. No way, said Cheney. "I think it would be a mistake," he replied, "because you can't look at that without considering what its impact would be on the economy. An awful lot of the returns in that top bracket are small businesses, and they provide an awful lot of job growth in this economy." In a nifty move, Cheney manages to hide all of the nation's millionaires and corporate CEOs -- New York Stock Exchange Chairman Dick Grasso and his $140 million compensation package come to mind -- behind the proprietor of your local laundry or the owner of the neighborhood machine shop. I guess that struggle is a real motivator for Burger King Mom, but not for guys like Grasso.

Trade rules, notwithstanding their technical appearance, have a political and social nature, with deep and lasting consequences in the life of humanity. The Holy See, without entering into technical and specialized matters, wishes to provide some ethical guidelines inspired by the fundamental and permanent values of the international community and which ought to guide all its activities, including trade.

Peruvian economist Hernando de Soto, president of the Institute for Liberty and Democracy in Lima, argues that the major constraint on economic growth for the third world is denial of property rights and suppression of the entrepreneurial talents of ordinary people. … Iraq should distribute its oil revenues directly to its 25 million citizens, with each individual receiving $600 to $700 per year or $3,000 to $3,500 for a family of five. Beyond supporting basic human needs, much of this cash would be invested in small businesses, services, agriculture, and the other ingredients of a vibrant economy - without political strings. The enduring lesson of US history is that people should be trusted not only with the political life of the nation but with its economic life as well. The Iraqi people are entitled to the same trust.

In Pennsylvania and West Virginia, for example, two of 19 states designated by the AMA as being in a "full-blown liability crisis," the number of doctors per capita has actually increased in the past six years, according to the GAO.

In Florida, where the state medical society told congressional investigators that all the neurosurgeons in Collier and Lee counties had stopped practicing, the GAO found at least five such specialists at work in each county. Although medical groups have repeatedly warned that doctors are reluctant to come to Florida because of escalating premiums, the GAO found that the number of new medical licenses issued by the state has increased in the past two years.

A study released last week about Maryland, where medical groups have warned about a "crisis" caused by rising malpractice premiums, reached similar conclusions. … And while some groups have warned about an "exodus" of physicians, the number of doctors in the state actually increased between 1996 and 2002, according to the advocacy group.

… [Maryann Napoli, deputy director of the New York-based Center for Medical Consumers, observes:] "It's interesting that [organized medicine] always zeroes in on pregnant women every time there's a so-called crisis. … "What's often lost in this discussion is that there is much more malpractice than there are malpractice suits," Napoli noted. A 1991 study by Harvard University researchers, still regarded as the most influential of its kind, found that acts of medical negligence are eight to 10 times more common than malpractice lawsuits.

The United States and other rich nations argue that free trade has created jobs and wealth around the world, and that reducing more barriers to trade would expand that success. But poor nations argue that the rules of global trade have been tilted too heavily in favor of major industrialized nations, causing some of the world's most vulnerable people to fall deeper into poverty. … "We won't move forward unless we do something for these poor people who have so much to lose," said Ivonne Juez de Baki, a delegate from Ecuador, which is a member of a group of 22 nations -- including Brazil, China and India -- that played a key and contentious role this week in pressing the United States and the European Union for concessions.

So what were the Bush tax cuts really about? The best answer seems to be that they were about securing a key part of the Republican base. Wealthy campaign contributors have a lot to gain from lower taxes, and since they aren't very likely to depend on Medicare, Social Security or Medicaid, they won't suffer if the beast gets starved. Equally important was the support of the party's intelligentsia, nurtured by policy centers like Heritage and professionally committed to the tax-cut crusade. The original Bush tax-cut proposal was devised in late 1999 not to win votes in the national election but to fend off a primary challenge from the supply-sider Steve Forbes, the presumptive favorite of that part of the base.

According to estimates by the Tax Policy Center -- a liberal-oriented institution, but one with a reputation for scrupulous accuracy -- the 2001 tax cut, once fully phased in, will deliver 42 percent of its benefits to the top 1 percent of the income distribution. (Roughly speaking, that means families earning more than $330,000 per year.) The 2003 tax cut delivers a somewhat smaller share to the top 1 percent, 29.1 percent, but within that concentrates its benefits on the really, really rich. Families with incomes over $1 million a year -- a mere 0.13 percent of the population -- will receive 17.3 percent of this year's tax cut, more than the total received by the bottom 70 percent of American families. Indeed, the 2003 tax cut has already proved a major boon to some of America's wealthiest people: corporations in which executives or a single family hold a large fraction of stocks are suddenly paying much bigger dividends, which are now taxed at only 15 percent no matter how high the income of their recipient.

… And it is hard to deny that, on a jobs-per-dollar basis, the Bush tax cuts have been extremely ineffective. According to the Congressional Budget Office, half of this year's $400 billion budget deficit is due to Bush tax cuts. Now $200 billion is a lot of money; it is equivalent to the salaries of four million average workers. Even the administration doesn't claim its policies have created four million jobs. Surely some other policy -- aid to state and local governments, tax breaks for the poor and middle class rather than the rich, maybe even W.P.A.-style public works -- would have been more successful at getting the country back to work.

"I hesitate to say that high productivity is bad," said William C. Dudley, director of domestic economic research at Goldman Sachs. "But if it is high, then you need more demand to generate employment, and if you don't get it, then the economy stalls."

Consider what happens when demand outstrips productivity. [It results in improvements to increase production, which generates more sales revenue for wages (and profits), which encourages spending and the addition of new jobs.] That is the way recoveries worked in the past, as employment and incomes rose and people engaged in the spending they had postponed during the recession. But demand this time is not firm enough. Even an economy propped up by tax cuts, military spending and other one-time fixes is expanding lately at only a 4 percent annual rate. That is a lot by past standards, but not enough when productivity has been surging at a 4.4 percent annual rate for 18 months. As a result, the nation's private-sector employers are behaving as if they were caught in a recession, which they very well may be if they continue to act this way. Unable to sell all they can produce, they have reduced by 1.1 percent the total number of hours worked since the start of the recovery in November 2001, and they have put a lid on raises for most of the nation's 108 million jobholders. Wages are rising, but hours are disappearing and the combination leaves weekly pay barely keeping up with inflation, according to the Bureau of Labor Statistics.

[Optimists are contending that with patience, demand will inevitably increase and produce jobs.] Maybe. But the optimists aren't considering just how much demand is needed to outrun the unusual speed-up in productivity. [After the 1990-91 recession, we rebounded with job growth, but we didn't have the high level of job productivity that we now have, and that reduces the incentives to create new jobs.] As demand rises, employers hold back on hiring, squeezing more work from their existing staffs until they feel confident that the demand will last and strengthen. This time, they are holding back more than ever, still haunted by the collapse of the bubble economy and full of doubts about the sustainability of demand. Their refusal to hire or expand their operations undermines confidence, making matters worse.

But through it all, the rising productivity translates into rising sales revenue per hour worked. That revenue is being fed disproportionately into profits, which finally shot up early this summer, the Bureau of Economic Analysis reports. Therein lies the case for sustaining the recovery through a different route than job creation and rising wages. [The optimists argue that profits will yield dividends and stock values, and consequently spending by shareholders (a stimulus package for the wealthy).] As hiring resumes, wage income will grow, further increasing demand. Higher profits, in sum, will lead indirectly to job creation, completing the circuit. All this assumes, of course, that productivity will continue to rise at a healthy clip, fattening profits until job creation and demand finally take hold. That is still a shaky assumption. The startling productivity improvement may be mainly a result of squeezing workers. That is hardly solid ground for completing the trek from profits to jobs.

… The budget was upended by what economists now say were three independent forces gathering in power at once: a steep economic decline, a political consensus to slash taxes and the effects of the 2001 terrorist attacks.

… Next year's deficit was projected to be $480 billion, but the new Iraq spending will bring that to $540 billion or higher — close to the 5 percent of the gross domestic product that many experts warn is a serious danger zone for the economy.

… There is no sign yet, however, that either overall spending or tax cutting is changing course. The conservative Cato Institute noted tartly last month that Mr. Bush had never vetoed a spending bill, had advocated huge farm and Medicare programs and had presided over double-digit increases in spending each year of his term.

… The initial problem, several economists said, was that the surplus was never as large as it seemed. The economy of the late 1990's was operating beyond its capacity, Mr. Prakken said, and the stock market boom generated so much quick wealth at the highest levels that the resulting tax revenues were bound to return to earth. "The reality of the surplus projections was never really as good as it looked," Mr. Prakken said. "Because the surplus was essentially ephemeral, it declined at a much faster rate than the economy did, really breathtaking in its reversal." It was essentially a forecasting error, parallel to the "irrational exuberance" that Federal Reserve chairman Alan Greenspan saw among investors during the 1990's.

… It is hard to find an independent economist who agrees with that [Bush's] optimistic forecast [that the long term deficit will be cut in half in five years by controlling discretionary spending], barring a nearly miraculous return to extremely high growth or draconian cuts in spending. Economists at the Wall Street firm of Goldman Sachs, for example, have said all year that their forecast was far gloomier than the administration's, and issued a statement last month saying the new numbers confirmed their warnings.

Doctors say that Medicare's policies are guiding medical practice, with many making calculated decisions about whom to treat and how to care for them based on what Medicare covers, and how much it pays. "The bottom line is that the stuff that reimburses well is easier to get done," Dr. Carl Rosenkrantz, a Boca Raton radiologist, said. … "The system is broken," [internist Dr. Colton] said. "I'm not being a mean ogre, but when you give something away for free, there is nothing to keep utilization down. And as the doctor, you have nothing to gain by denying them what they want."

… [Secretary of State Colin] Powell gave interviews to French, Russian and German media in which he all but ridiculed the idea that somehow the United States was wedded to being an occupier. "Nobody wants to turn sovereignty back to the Iraqi people as fast as the United States does, President Bush does and I do," Mr. Powell told France 2, a television network. But he said that the American occupation under "can't suddenly just step aside and turn it over — to whom?" He said that "since the United States and its coalition partners have invested a great deal of political capital, as well as financial resources, as well as the lives of our young men and women — and we have a large force there now — we can't be expected to suddenly just step aside." … "We need to get out of some of the rhetorical arguments we're having," he told French television. "One I hear is that the United States believes in the logic of occupation. Nonsense. Every European should know that the United States of America has always believed in the logic of liberation."

"We reached out to get a strong agreement on patient protections, but unfortunately powerful trial lawyers had too strong a grip on some Democrats," said White House press secretary Scott McClellan. Jim Manley, a spokesman for Sen. Edward M. Kennedy (D-Mass.), countered: "When you've got a situation where Republicans control all the levers of power in Washington, and the insurance industry [is] calling the tune, it would be impossible to get a good bill through the House and the Senate."

… Since the late 1990s, most of the nation's large health plans have dropped their central practice of requiring prior approval for medical tests, hospital admissions or visits to medical specialists. Instead, plans are simply requiring patients to pay more for the care they want.

… In a parallel trend, the nation's courts have become more accepting of lawsuits against health plans by disgruntled patients. Courts had long held that managed-care plans were largely shielded from litigation as a side effect of a 1974 federal law governing employee health benefits. In recent decisions, however, the Supreme Court has ruled that patients can bring complaints over HMOs' coverage decisions in state courts; that states can adopt independent review systems to handle complaints against health plans; and that states may require managed-care companies to work with any doctor who wants to take part.

… But [Rep. Charles Norwood, who was a leading figure in the Patients' Rights movement a while back] said in a interview that the other protections remain essential. "If you get down in the trenches and talk to folks who are seeing patients every day, the bottom line is [health plans] are still paying as little as possible."

The committee also found that the government failed to reflect the level of uncertainty in the intelligence community about Iraq's ongoing production of biological and chemical weapons and ended up overestimating Iraq's current capabilities by ignoring the inhibiting effect the presence of United Nations inspectors would have had on getting arsenals up and ready for use. The committee also criticized Defense Secretary Geoff Hoon for being "unhelpful and potentially misleading" by failing to disclose in his closed-door testimony in July that some of his intelligence staff were troubled by overstated claims in a crucial intelligence dossier. … On the 45-minute claim, the committee said the matter had been presented out of context in a way that "allowed speculation as to its exact meaning" and was "unhelpful to an understanding of the issue." It said the dossier had left the impression that the arms referred to were long-range weapons of mass destruction that could reach far beyond Iraq when in fact they were battlefield chemical and biological weapons whose range was local.