Secretary of State Colin L. Powell, who urged the United Nations to endorse a preemptive war to strip Iraq of its weapons of mass destruction, conceded Saturday that Saddam Hussein's government may have no longer had such munitions. One day after David Kay, the chief U.S. weapons inspector in Iraq, said he believes Hussein had not stockpiled unconventional weapons for years, Powell told reporters that his prominent Feb. 5 argument was based on "what our intelligence community believed was credible."

But the results to date are modest, in part because displaced workers are still required to spend substantial amounts of money on insurance premiums before they can get the benefits of the tax credit. … Under the existing program, tax credits will pay 65 percent of the premium for health insurance bought by a displaced worker. The individual must pay the other 35 percent, and that has proved an insurmountable hurdle for some workers. "The tax credit would help if the insurance rates were affordable, but the rates were so high that I couldn't afford it," said Gloria J. Craven, 51, of Eden, N.C. "Blue Cross and Blue Shield of North Carolina stepped forward to help the textile workers here. But when people started getting price quotes, we realized that we could not pay our share of the premiums."

The Bush administration had given the bankers almost everything they ever dreamed of: a reduction in dividend and capital-gains taxes, a phase-out of the estate tax, an overall reduction in income taxes. So they waited patiently, eager do whatever they could to ensure the president's reelection. … Unlike in 2000, when the industry hedged its bets between Bush and Vice President Al Gore, Wall Street thus far has put the bulk of its muscle behind the Republican incumbent. Through late November, employees of securities industry firms had given at least $4 million to the Bush campaign, according to the Center for Responsive Politics. That number will rise significantly -- probably to well over $7 million -- when figures for the full year are reported at the end of this month. As of late November, no Democrat had raised more than $1 million from the industry.

• Damage to forests, wetlands, ocean fisheries, and other natural areas as resources are used and pollution created.

• Higher levels of obesity, personal debt, and chronic time shortages as people work longer hours to satisfy the demand for consumer goods.

• Indications that increased consumption doesn't necessarily mean a better quality of life. In the United States, for example, average personal income more than doubled between 1957 and 2002. There now are more cars than licensed drivers, and the typical house is 38 percent bigger than it was in 1975, even though fewer people live in it. But when asked to rate how they feel about their lives, the same portion of Americans as a generation ago - only about one-third - describe themselves as "very happy."

• Growing disparities between rich and poor. More than 1 billion people still do not have reasonable access to safe drinking water. More than twice that number live without basic sanitation. (It's estimated that hunger and malnutrition could be eliminated globally for less than is spent on pet food in Europe and the US; universal literacy could be achieved for one-third of what is spent annually on perfumes.)

Under current law, AMT coverage will skyrocket. By 2010, the AMT will affect 33 million taxpayers—about one-third of all tax returns—up from 1 million in 1999. This would make the AMT almost as common as the mortgage interest deduction is today. The AMT will be the de facto tax system for households with income between $100,000 and $500,000, 93 percent of whom will face the tax. It will encroach dramatically on the middle class, affecting 37 percent of households with income between $50,000 and $75,000 and 73 percent of households with income between $75,000 and $100,000 (compared to less than 3 percent for each group in 2002). … Making the tax cuts permanent would greatly increase AMT coverage. If the tax cuts were made permanent, a projected 44 million taxpayers would face the AMT in 2014. In contrast, if the tax cuts are allowed to expire as scheduled, "only" 26 million would face the AMT in 2014.

The AMT masks the true cost of tax cuts. Making the tax cuts permanent would reduce revenue by $330 billion in 2014 if the AMT is not fixed—but in that case, 44 million people would be on the AMT. Protests from unhappy taxpayers are likely to require reform long before that. If the AMT exemption increase were extended and indexed so that only 5 million people faced the AMT in 2014 (compared to 3 million in 2003), then making the 2001 tax cuts permanent would reduce revenues by $435 billion in 2014. The combined cost of the AMT change and making the tax cuts permanent would reduce revenues by $487 billion in 2014—almost 50 percent more than the myopic estimate.

… The AMT is poorly targeted. Although originally intended to curb tax sheltering, the AMT raises less than 5 percent of its revenue from anti-sheltering provisions, such as accelerated deprecation or oil depletion allowances. In 2010, only about 1 percent of AMT taxpayers will be subject to the tax due to anti-sheltering rules. A key reason why the AMT does not target shelters very well is that the preferential treatment for capital gains—the lynchpin of most individual tax shelters—is not curtailed by the AMT.

Making the 2001, 2002, and 2003 tax cuts permanent would reduce revenues by $1.7 trillion through 2014. Including the added interest payments on the debt, the total increase in budget deficits would be $2.0 trillion. The 10-year estimate implicitly understates the long-term cost, since repealing the sunsets is a back-loaded tax cut. For example, in 2014 alone, the revenue loss from repealing the expirations would be $330 billion, or about 1.8 percent of GDP.

… Assuming a sensible AMT reform, the cost of extending the tax cuts over a 75 year period would exceed 2 percent of GDP—which is more than the actuarial deficits in the Social Security and Medicare Hospital Insurance Trust Funds over the same period. Over the next 75 years, the actuarial shortfall in the Social Security Trust Fund is 0.7 percent of GDP; the shortfall in the Medicare Hospital Insurance Trust Fund is 1.1 percent of GDP.

… The expiring tax cuts are regressive—they provide a larger percentage cut in after-tax income for high-income households than for low-income households. If the tax cuts were made permanent, filers with income above $1 million would see a 5.7 percent increase in their after-tax income, whereas filers with income below $50,000 would see just a 2.2 percent average increase in their after-tax income. (These figures do not include the estate tax repeal, which is also quite regressive.)

… T]he top 1 percent would receive 27 percent of the tax cuts provided by making the expiring provisions permanent, even though that group pays only 21 percent of federal taxes. As a second example, taxpayers with income above $1 million would receive average annual tax cuts of $107,000 (again, this does not include the estate tax). This is higher than the income of about 86 percent of tax filing units.

… Is allowing the tax cuts to expire equivalent to a legislated tax increase, as the President and others have claimed? Whatever it is called, it should be noted that this is what supporters of the 2001, 2002, and 2003 tax cuts voted for. In each case, tax cutters could have obtained smaller immediate cuts that would have been made permanent, but in each case they chose larger short-term cuts that expire.

Is extension of the expiring provisions necessary to ensure economic prosperity? In the short run, the answer is clearly no. Reducing taxes in 2014 can actually hurt the economy today because financial markets are forward-looking; larger projected deficits in 2014 can therefore raise interest rates today. In the long run, the answer is also clearly no. The tax cuts themselves may have a modest positive effect on the economy, but they also increase the budget deficit, which has a negative effect on the economy. The net effect, according to a variety of estimates noted above, is likely to be negative, not positive, in the long run.

The Administration has also claimed that the tax cuts need to be made permanent to reduce the uncertainty that taxpayers face. This argument is misleading. Making the tax cuts permanent would not help resolve the fundamental uncertainty about future tax rates or future policy. The reason is that the true underlying source of uncertainty in fiscal policy is how the fiscal gap is going to be closed—what combination of revenue increases and spending cuts will be used. Enacting another fiscally unsustainable policy (making the tax cuts permanent) on top of the already unsustainable fiscal situation does not make the situation more stable, only less so.

In principle, sunsets might be justifiable for policies that should temporary, may provide flexibility in policymaking, and may be useful in focusing policymakers' attention on fiscal issues. In practice, however, recent sunsets have been motivated by the desire to manipulate budget rules and hide the likely costs of new tax cuts. That is, in practice, the sunsets are being used to fit a larger annual tax cut within a given multi-year budget total.

Sunsets that are used to increase the underlying annual size of a tax cut put fiscal policy on an increasingly unsustainable course, and leave policymakers in the future with less flexibility than they would otherwise have, since allowing sunsets to take effect is likely more difficult than forgoing new tax cuts in the future. In addition, as sunsets have come to dominate the tax code, the official budget projections have become increasingly divorced from reality.

The single most useful policy change to prevent the removal of existing sunsets and the creation of new sunsets would be to re-instate permanently the pay-as-you-go rules that required that mandatory spending increases or tax cuts be financed by other changes in taxes or spending, while creating new budget rules to "score" proposals at their long-term cost regardless of whether the proposals officially sunset.

Thou shalt not steal, say the Ten Commandments, but it might eventually no longer apply if you are starving in Venezuela. The poor, oil-rich nation is considering decriminalizing the theft of food and medicine in cases where a thief is motivated by extreme hunger or need. … Under Fontiveros' proposal to the Supreme Court, those who take food, medicine or inexpensive goods without using violence to ease hunger caused by prolonged, extreme poverty would not be punished.

… Critics say the initiative will fuel crime in a country mired in a recession and where police last year reported an average of 25 murders a day and thousands of robberies a month. Supporters dismiss fears it will become a license to rob, saying the proposed law would apply only to nonviolent crimes.

Two thirds of Venezuela's 25 million people are poor and a third of those cannot afford their basic food needs despite the nation's huge oil wealth, according to government figures.

There is a flip side to this, however, and it gets to the mixed feelings many Iraqis have about the US presence. The rules of engagement instruct US soldiers to bring withering force to bear on positions they're attacked from, even when an insurgent ducks into a private house for cover. One sergeant in northern Iraq puts it this way: "If someone runs into a house, we're going to light it up. If civilians get killed in there, that's a tragedy, but we're going to keep doing it and people are going to get the message that they should do whatever they can to keep these people out of their neighborhoods."

There has also been a growing toll of innocent lives in mistaken attacks by US soldiers, including a series of shootings on the nation's roads by US forces that have killed men, women, and children in recent weeks.

Drug company representatives are a major presence. They sponsor Journal Club (where trainees learn to review new data and research), they pay for many of our weekly speakers and regularly offer free dinners for the residents and faculty. They enjoy free access to our mailboxes and regularly detail our trainees in their offices, hallways and in our little kitchen. This is not uncommon. Meredith Rosenthal at the Harvard School of Public Health reported in The New England Journal of Medicine that the industry spends roughly $15.7 billion annually marketing medications, with $4.8 billion dedicated to detailing individual physicians, or roughly $6,000 to $11,000 a doctor a year. Studies indicate that most physicians meet with pharmaceutical representatives four times a month.

Studies also reveal that most physicians erroneously believe the representatives do not influence prescribing habits. When doctors and trainees meet with reps, they change their prescribing habits and are far more likely to prescribe the drugs described, even when they are more expensive or have no benefit over alternatives. They are also more willing to request illogical changes to hospital guidelines that govern which drugs can be prescribed.

Estimates suggest that roughly $1 billion was spent advertising antidepressants to health professionals in 2000.

… Programs that limit contact between industry and trainees do result in changes in behavior and attitudes. … After training, when they were free to meet with whomever they chose, the McMaster trainees had less contact with company representatives and were less likely to find such contact helpful.

… If medical schools are unwilling to separate trainees from pharmaceutical company representatives, we risk the appearance of being "bought and sold." This is sure to lead to governmental regulation and greater erosion of independence. And it should.

Ms. Gun, 29, was working at Britain's top-secret Government Communications Headquarters last year when she learned of an American plan to spy on at least a half-dozen U.N. delegations as part of the U.S. effort to win Security Council support for an invasion of Iraq. The plans, which included e-mail surveillance and taps on home and office telephones, was outlined in a highly classified National Security Agency memo. The agency, which was seeking British assistance in the project, was interested in "the whole gamut of information that could give U.S. policymakers an edge in obtaining results favorable to U.S. goals." Countries specifically targeted were Angola, Cameroon, Chile, Bulgaria, Guinea and Pakistan. The primary goal was a Security Council resolution that would give the U.S. and Britain the go-ahead for the war.

Ms. Gun felt passionately that an invasion of Iraq was wrong — morally wrong and illegal. In a move that deeply embarrassed the American and British governments, the memo was leaked to The London Observer. … Ms. Gun was fired from her job as a translator and arrested for violating the act. If convicted, she will face up to two years in prison.

"Our report illustrates clearly what most people already intuitively know," says Public Campaign’s senior analyst Micah Sifry. "In America, a rich man and a poor man are equally free to make a $200 contribution. It’s just that the rich are disproportionately overrepresented in the political system and the poor are underrepresented."

…Unless and until we can take big money out of politics, our democracy will continue to be polluted. On the morrow of this November’s election, no matter who takes the White House, the No. 1 rule of American politics will still be in charge. We, indeed, do have two parties with one major difference. One ably represents Rolls-Royce owners. The other is more beholden to aficionados of Lexus and Saab.

Campaign money—not votes—is now the currency of our democracy, determining who is able to run a viable campaign for office, who usually wins, and who has the ear of elected officials. This study examines federal contribution data for the 2002 and 2000 election cycles by zip code, side-by-side with 2000 U.S. Census data on race and ethnicity. The unfortunate conclusion is that, in a political system in which you have to pay to play, people of color are largely excluded from the game. … [CONCLUSIONS:]

- Neighborhoods comprised mostly of people of color are severely underrepresented in the campaign finance system. Given that money typically determines who wins political races, this means that these neighborhoods are effectively disenfranchised. …

- Nearly ninety percent of the more than $2 billion contributed by individuals in the two recent federal elections comes from zip codes that are majority non-Hispanic white. In comparison, just 1.8% of campaign funds come from predominantly Latino zip codes, 2.8% from predominantly African American zip codes, and .6% from predominantly Asian Pacific American neighborhoods.

… - The neighborhoods supplying most of the money for federal campaigns in this country are also among the nation's wealthiest. Nearly one out of two federal individual campaign dollars ($200+)—$991 million—comes from a person living in a wealthy zip code, although just 12% of the adult population lives in these neighborhoods. Meanwhile, just 5.9% of individual campaign dollars—$118.8 million—comes from poor neighborhoods, although nearly 9% of adult Americans live in these communities. Another way to look at it: individuals living in wealthy neighborhoods supply eight dollars for every one dollar that people living in poor communities give to federal campaigns.

A broker last week drew my attention to an example of the increasingly common practice of relying on warning signs as a cheap substitute for more effective risk management measures.

The object of his scorn? The "Danger-Falling Ice" signs posted throughout urban landscapes as buildings collect and then shed their claddings of ice and snow when winter temperatures fluctuate. Faced with a potential hazard to people entering and exiting buildings, property owners throw these signs out as a deterrent to lawyers cruising up and down the city streets looking for potential torts.

What if people truly heeded these warnings? [He envisions people stuck in the building until Spring.] We all know that would never happen, though, because no one at risk really pays attention to these signs. And, despite the signage, some people do get hurt each winter by falling chunks or sheets of ice. … If building owners really wanted to minimize the risk, rather than engaging in a lame attempt to cover their posteriors, the broker suggests, they could take a number of simple steps. For example, they could steer people to alternative exits. Or they could provide a covered canopy at exits. Such measures would go a lot further toward minimizing the risk of injury, keeping businesses operating at full steam, and ensuring that the dregs of holiday Chex mix last well into spring.

"The cost of the tort system is the equivalent of taxation without representation at its most basic level," said Ronald Pressman, president of GE Insurance and chairman, president and CEO of GE Employers Reinsurance Corporation, attributing a large part of the increase in health care costs to abuses of the medical malpractice system.

Jay Fishman, chairman, president and CEO of The St. Paul Companies, warned that fear of liability could have dire consequences for society. Because corporations are afraid of being sued, the country has fewer manufacturers of essential products that help keep people safe and protected. "There are now only three vaccine manufacturers left in this country," he said. "Last year, we could not come to an agreement on smallpox vaccinations because of liability concerns."

"If you have investments already, and if you have a job already, the last 12 to 18 months have been very nice to you," said Gary Burtless, a labor economist at the Brookings Institution. "The stock market has done well. You can refinance your mortgage. You can finance your new cars at very favorable rates, and prices haven't been rising. "But if you are looking for a new job or had the misfortune of losing a job, for those folks, life is much, much tougher. It's just so damned hard to get employment."

The Dow Jones industrial average rose 25 percent in 2003, a boon to those with investments. At the same time, consumer debt such as credit cards and auto loans hit a record $1.98 trillion in October, $18,700 per household, the Federal Reserve reported this month. The number of past-due credit card accounts rose to an all-time high of 4.09 percent from July through September, according to the American Bankers Association. The number of personal bankruptcies during the 12 months ending Sept. 30, 2003, rose to 1.66 million, up 7.4 percent from the 1.54 million filings in fiscal year 2002 and another record.

The economy grew at a remarkable 8.3 percent annual rate in the third quarter of 2003, but by October, there were 2.8 unemployed people for every job opening, up from 2.51 a year earlier and 2.25 in 2001, according to the Economic Policy Institute. Unemployment rates for managers and professionals stayed steady last year, at just under 3 percent.

Lack of health insurance causes roughly 18,000 unnecessary deaths every year in the United States. Although America leads the world in spending on health care, it is the only wealthy, industrialized nation that does not ensure that all citizens have coverage. To help policy-makers, elected officials, and others judge and compare proposals to extend coverage to the nation's 43 million uninsured, the Institute of Medicine of the National Academies offers a set of guiding principles and a checklist in a new report, Insuring America's Health: Principles and Recommendations. … The principles for guiding the debate and evaluating various strategies are:

Health care coverage should be universal.

Health care coverage should be continuous.

Health care coverage should be affordable to individuals and families.

The health insurance strategy should be affordable and sustainable for society.

Health insurance should enhance health and well-being by promoting access to high-quality care that is effective, efficient, safe, timely, patient-centered, and equitable.

In all, the PBGC has recorded about $14.7 billion in losses from completed and probable terminations during its past two fiscal years, including $5.4 billion last year. The PBGC also racked up $4.3 billion in losses last year due to declining interest rates, which inflate the value of plans’ liabilities.

And additional big losses appear likely. As of Sept. 30, 2003, the close of the PBGCs’ fiscal year, the agency faced a “reasonably possible” exposure of $85.5 billion, which represents the amount of unfunded benefits in plans sponsored by employers with a below-investment-grade rating. That estimated exposure, which is heavily concentrated among employers in the financially distressed airline, primary metals and fabricated metal products industries, is nearly two-and-a-half times higher than the PBGC’s $35.4 billion estimate in 2002.

Twenty percent of the more than 400 large employers participating in a Kaiser Family Foundation-Hewitt Associates Inc. survey said they are very or somewhat likely within the next three years to terminate coverage for future retirees, generally those individuals who were hired after Jan. 1, 2004. In addition, 10% of surveyed employers said they terminated coverage in 2003 for future retirees. The survey was released Wednesday. Those retirees that have coverage are being hit with increases in premium contributions and greater benefits cost-sharing. For example, more than 70% of employers said they increased retiree premium contributions last year, while 86% expect to boost premium contributions in the next three years and 75% expect to increase deductibles.

Those plan and benefit cutbacks come amid double-digit increases in the costs associated with offering retiree health plans. Last year, plan costs rose by 13.7%, with the largest employers being hit with the biggest cost increases, the survey found. Costs increased by an average of 15.5% for employers with between 10,000 and 19,999 employees and by 14.9% for employers with at least 20,000 employees.

In his first round of tax cuts in 2001, Bush got Congress to phase out the estate tax by 2010. Last year, with Republicans in control on Capitol Hill, he reduced the top tax rate on dividends from 39.6 percent to 15 percent, and brought the capital gains tax rate down from 20 percent to 15 percent as well. This year, his new budget proposes that families be allowed to shield as much as $30,000 yearly on their investment income, which will abolish all remaining taxes on such income. … In part, this devaluing of work is simply an expression of Bush family values. As Kevin Phillips points out in his new biography of the Bush dynasty, the Bushes don't do anything so vulgar as going into professions. … Theirs is the cronyest form of capitalism.

But a broader theory is at work here, too. It says that investment, rather than labor, powers economic growth, so rewarding investment is merely the most direct way to help the economy. As Ernest S. Christian, a former Treasury official in the Reagan administration, [said,] "Tax reform is supposed to mean removing barriers to economic growth" … . To be sure, investment income and corporate profits [under the Bush plan] are high. But just 278,000 new jobs have been generated since June, which means the recovery is about 7.5 million jobs shy of the norm for post-World War II recoveries. Bush's Council of Economic Advisers had predicted job growth of 510,000 from the 2003 tax cuts, plus another 1,335,000 new jobs, during the second half of last year. … The problem is that to invest today in stocks or mutual funds doesn't mean you're investing in job creation in the United States.

Outsourcing has turned the phrase "investment-led growth" into the grimmest of oxymorons. It means that Bush's tax policy subsidizes job growth in India and China rather than the United States. And in failing to create more employment here at home, the tax cuts have also helped depress wages. Real wages in the United States actually fell 0.7 percent in the fourth quarter of last year.

A new study has concluded that both the average price of settling class-action lawsuits and the average fee paid to lawyers who bring them have held steady for a decade, even though companies have said the suits are driving up the cost of doing business, hurting the economy and lining lawyers' pockets. … [The study] covers the biggest sample to date of class-action cases, ranging from civil rights violations to securities fraud. Its results, published in a new law publication, the Journal of Empirical Legal Studies, and already circulating, will certainly be used by lawyers trying to head off such legislation. …

In their article, Mr. [Theodore] Eisenberg and his co-author, Geoffrey P. Miller, a New York University law professor, write that if the effects of inflation are taken into account, then from 1993 through 2002, "contrary to popular belief, we find no robust evidence that either recoveries for plaintiffs or fees for their attorneys as a percentage of the class recovery increased." According to the study, the average settlement over the 10-year period was $100 million in inflation-adjusted 2002 dollars. It rose as high as $274 million in 2000 - a result of four settlements that year for more than $1 billion each - and fell as low as $25 million in 1996. "The mean client recovery has not noticeably increased over the last decade," the professors wrote.

The study also found that "neither the mean nor the median level of fee awards has increased over time." The average fee rose as high as $31 million in 2000, but exceeded $10 million in only two other years. The professors also report that as one might expect, the larger a settlement, the smaller the percentage allocated to legal fees. For the largest 10 percent of settlements, which averaged $929 million, lawyers received an average of 12 percent. For the smallest 10 percent, which averaged $800,000, lawyers received nearly 30 percent. Fees were higher in cases that were more risky and were higher in federal court cases than in state courts.

… Those who advocate limiting class-action filings - and changing the nation's tort laws more generally - are dismissing the study's results. "I'm not sure that these findings end up meaning a lot," said Stan Anderson, executive vice president and chief legal officer of the United States Chamber of Commerce and chairman of the Class Action Coalition, a group of 100 companies supporting legislation to change rules governing class-action lawsuits. "You can't argue against class actions per se or its efficacy. What we argue is very simple, that there are problem jurisdictions around the country."

Federal officials announced a new front in the investigations into the mutual fund industry on Tuesday, saying they had uncovered widespread instances of brokers receiving undisclosed payments for steering investors toward specific funds. … [SEC investigators] said that their examinations found that only about half of the brokers disclosed their revenue-sharing arrangements at all, but that even in many of those instances, the disclosures appeared to have been inadequate.

Officials said the compensation to the brokers from the funds was typically for "shelf space" at the brokerage houses — meaning access to sales staff members, promotional material and inclusion on the brokers' recommended lists. The payments varied from 0.05 percent to 0.40 percent on sales, and up to 0.25 percent of the value of the investor's assets managed by the broker. In other words, for every $100,000 in new sales, the broker would receive $50 to $400 annually, and for every $100,000 that remained invested through the broker, the broker would receive up to $250 a year.

“[E]ven large savings in premiums can have only a small direct impact on health care spending—private or governmental—because malpractice costs account for less than 2% of that spending.” The brief notes that both advocates and opponents of limiting medical malpractice liability cited other possible effects of changing the tort system—from reducing the extent of “defensive medicine” to possibly increasing the incidence of medical injuries. The evidence for such effects is “weak or inconclusive,” according to the CBO brief. … “In short, the evidence available to date does not make a strong case that restricting malpractice liability would have a significant effect, either positive or negative, on economic efficiency. Thus, choice about specific proposals may hinge more on their implications for equity—in particular their effects on health care providers, patients injured through malpractice and users of the health care system in general,” the brief concludes.

In a stroke, L. Paul Bremer III, who heads the Coalition Provisional Authority, wiped out longstanding Iraqi laws that restricted foreigners' ability to own property and invest in Iraqi businesses. The rule, known as Order 39, allows foreign investors to own Iraqi companies fully with no requirements for reinvesting profits back into the country, something that had previously been restricted by the Iraqi constitution to citizens of Arab countries. In addition, the authority announced plans last fall to sell about 150 of the nearly 200 state-owned enterprises in Iraq, ranging from sulfur mining and pharmaceutical companies to the Iraqi national airline.

… The conflict centers on Article 43 of the Hague Regulations, which says an occupying power must "re-establish and insure, as far as possible, public order and safety, while respecting, unless absolutely prevented, the laws in force in the country." In other words, the occupying power is like a temporary guardian. … In a memo written last March and leaked in May to The New Statesman, the British magazine, Lord Goldsmith, Prime Minister Tony Blair's top legal adviser, warned that "the imposition of major structural economic reforms" might violate international law, unless the Security Council specifically authorized it. Officials of the coalition authority insist the Security Council did that with Resolution 1483. They maintain that wiping out Saddam Hussein's entire economic system falls within Resolution 1483's instructions "to promote the welfare of the Iraqi people through the effective administration of the territory" and assist the "economic reconstruction and the conditions for sustainable development."

Job growth came to an unexpected halt in December, the Bureau of Labor Statistics reported yesterday, and rather than hunt for scarce work, tens of thousands of people disappeared from the labor force. Most forecasters had said they thought December would be a breakthrough month for job creation, given the strengthening economy. But instead of the 150,000 new jobs they had expected, there were a minuscule 1,000. The unemployment rate dropped to 5.7 percent from 5.9 percent in November, but that was mainly because so many people chose not to look for work, a requirement to be counted as unemployed. … The government lowered by more than a third its original estimates of the number of jobs created in October and November. Instead of an increase of 143,000 jobs in those months, the revised total was 94,000. … Reflecting this exodus, the employment-to-population ratio - a measure of the percentage of the working-age population actually holding jobs - has been dropping, as well. It has fallen nearly eight-tenths of a percentage point, to 62.2 percent, since the recession ended in November 2001, and 2.1 percentage points since the start of the recession in March of that year.

… The jobs data left economists struggling to reconcile the nation's strong economic growth with faltering employment. How can the output of goods and services be going up so briskly, as most statistics show, without bringing up employment, too?

[T]he official unemployment rate, in turn, greatly understates the number of people who would like to be working. In December, for example, the nation's employers added 1,000 new jobs, a small number, but the unemployment rate plunged 0.2 percentage points, according to data released by the bureau on Friday. How could there be only 1,000 new jobs yet 300,000 fewer unemployed people, as the December numbers suggest?

President Bush was focused on removing Saddam Hussein from power in Iraq from the start of his administration, more than seven months before the terrorist attacks that he later cited as the trigger for a more aggressive foreign policy, Paul H. O'Neill, Mr. Bush's first Treasury secretary, said in an interview broadcast on Sunday. "From the very beginning, there was a conviction that Saddam Hussein was a bad person and that he needed to go," Mr. O'Neill said in an interview with the CBS program "60 Minutes." … The tone at that meeting and others, Mr. O'Neill said, was "all about finding a way to do it," with no real questioning of why Mr. Hussein had to go or why it had to be done then. … "In the 23 months I was there, I never saw anything that I would characterize as evidence of weapons of mass destruction," Mr. O'Neill told Time, speaking of his tenure in the administration.

Health spending accounts for nearly 15 percent of the nation's economy, the largest share on record, the Bush administration said on Thursday. The Department of Health and Human Services said that health care spending shot up 9.3 percent in 2002, the largest increase in 11 years, to a total of $1.55 trillion. That represents an average of $5,440 for each person in the United States. … Health spending surged in recent years while the economy sputtered. As a result, health spending rose from 13.3 percent of the G.D.P. in 2000 to 14.1 percent in 2001 and 14.9 percent in 2002, the report said. From 1992 to 1999, the share was stable.

… Even though more than 43 million Americans are uninsured, the United States devotes more of its economy to health care than other industrial countries. In 2001 — the last year for which comparative figures are available — health accounted for 10.9 percent of the gross domestic product in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France, according to the Organization for Economic Cooperation and Development.

In the first study of its kind, researchers in a range of habitats including northern Britain, the wet tropics of northeastern Australia and the Mexican desert said yesterday that global warming at currently predicted rates will drive 15 to 37 percent of living species toward extinction by mid-century. … "The midrange estimate is that 24 percent of plants and animals will be committed to extinction by 2050," said ecologist Chris Thomas of Britain's University of Leeds. "We're not talking about the occasional extinction -- we're talking about 1.25 million species. It's a massive number."

With its rising budget deficit and ballooning trade imbalance, the United States is running up a foreign debt of such record-breaking proportions that it threatens the financial stability of the global economy, according to a report released Wednesday by the International Monetary Fund. … The report warns that the United States' net financial obligations to the rest of the world could be equal to 40 percent of its total economy within a few years — "an unprecedented level of external debt for a large industrial country," according to the fund, that could play havoc with the value of the dollar and international exchange rates. The danger, according to the report, is that the United States' voracious appetite for borrowing could push up global interest rates and thus slow global investment and economic growth. … [They] predict[ed] that underfunding for Social Security and Medicare will lead to shortages as high as $47 trillion over the next 70 years or nearly 500 percent of the current gross domestic product in the coming decades.

In a paper presented over the weekend at the meeting of the American Economic Association, Mr. Rubin and his co-authors — Peter Orszag of the Brookings Institution and Allan Sinai of Decision Economics — argue [that] [o]fficial projections that [our budget] deficit will decline over time aren't based on "credible assumptions." Realistic projections show a huge buildup of debt over the next decade, which will accelerate once the baby boomers retire in large numbers. … What's new is what Mr. Rubin and his co-authors say about the consequences. Rather than focusing on the gradual harm inflicted by deficits, they highlight the potential for catastrophe.

"Substantial ongoing deficits," they warn, "may severely and adversely affect expectations and confidence, which in turn can generate a self-reinforcing negative cycle among the underlying fiscal deficit, financial markets, and the real economy. . . . The potential costs and fallout from such fiscal and financial disarray provide perhaps the strongest motivation for avoiding substantial, ongoing budget deficits." … [T]he paper rather mischievously quotes at length from an earlier paper by Laurence Ball and N. Gregory Mankiw, who make a similar point. Mr. Mankiw is now the chairman of the president's Council of Economic Advisers, a job that requires him to support his boss's policies, and reassure the public that the budget deficit produced by those policies is manageable and not really a problem. But here's what he wrote back in 1995, at a time when the federal deficit was much smaller than it is today, and headed down, not up: the risk of a crisis of confidence "may be the most important reason for seeking to reduce budget deficits. . . . As countries increase their debt, they wander into unfamiliar territory in which hard landings may lurk. If policymakers are prudent, they will not take the chance of learning what hard landings in [advanced] countries are really like."

The point made by Mr. Rubin now, and by Mr. Mankiw when he was a free agent, is that the traditional immunity of advanced countries like America to third-world-style financial crises isn't a birthright. Financial markets give us the benefit of the doubt only because they believe in our political maturity — in the willingness of our leaders to do what is necessary to rein in deficits, paying a political cost if necessary. … [I]nvestors will eventually conclude that America has turned into a third world country, and start to treat it like one. And the results for the U.S. economy won't be pretty.

Time is only one of many hidden costs of abundance to our society, according to Swarthmore social psychologist Barry Schwartz in his intermittently brilliant sixth book, "The Paradox of Choice." "As a culture, we are enamored of freedom, self-determination, and variety, and we are reluctant to give up any of our options," he writes with characteristic directness. "But clinging tenaciously to all the choices available to us contributes to bad decisions, to anxiety, stress, and dissatisfaction - even to clinical depression."

… Driving this malaise is the problem that "everything suffers from comparison." Schwartz describes a simple experiment in which people are asked whether they'd rather be given $100 outright, or gamble on winning $200 at the toss of a coin. That the vast majority would prefer the $100 may seem strange at first: A 50 percent chance of earning $200 is mathematically equivalent to a 100 percent chance of earning $100. Half the people asked ought to opt for the coin toss. However, the alternatives are not psychologically equivalent: Getting twice the money is not twice as pleasurable. The distance between zero and 100 is subjectively greater than the distance between 100 and 200.

Economists capture this phenomenon in the law of diminishing marginal utility (and provide us the formulae to calculate that, psychologically, we'd need winnings of $240 to be equally tempted by the coin toss). How, though, does this asymmetry relate to real-life choices? If losses subjectively weigh more heavily than gains, the advantages of any chocolate chip cookie or career path we select will count for less than those of the options we pass up. "Ultimately, the quality of choices that matters to people is the subjective experience that the choices afford," Schwartz points out. "And if, beyond a certain point, adding options diminishes our subjective experience, we are worse off for it."

A consummate salesman, Chiang cleverly marketed himself as an anti-fascist anticommunist. As long as the US government believed that Chiang was the only hope for China, it was prepared to bankroll his campaigns. During World War II, he took advantage of American desperation by effectively blackmailing the Roosevelt administration, occasionally hinting that the Japanese might offer a better deal. Chiang's reputation for extortion was so great that he earned the nickname "Cash My Check."

Roosevelt recognized Chiang's defects but nevertheless felt obliged to support him. While he told the American people that Chiang was "an unconquerable man of great vision and great courage," he confessed to Gen. Joe Stillwell that he was "fed up" with the generalissimo. "If you can't get along with Chiang and can't replace him," Roosevelt remarked in a moment of extreme frustration, "get rid of him once and for all. You know what I mean."

The remark bears close resemblance to a comment John Kennedy made to Henry Cabot Lodge about the equally inconvenient South Vietnamese President Ngo Dinh Diem in 1963. On that occasion, Lodge acted on Kennedy's frustration, and a few days later Diem was dead. In the case of China, however, the Americans could not find a way to rid themselves of a troublesome premier.

George W. Bush is going to run in 2004 on the idea that his administration is the only one capable of protecting us from another attack like the ones which took place on 9/11. Yet the record to date is clear. Not only did they fail in spectacular fashion to deal with those first threats, not only has their reaction caused us to be less safe, not only have they failed to sufficiently bolster our defenses, but they used the aftermath of the attacks to ram through policies they couldn't have dreamed of achieving on September 10. It is one of the most remarkable turnabouts in American political history: Never before has an administration used so grisly a personal failure to such excellent effect.