FRIDAY, OCTOBER 8, 2010
KLMNO Washington FORUM
Justice’s assault on
leging that our rules prevent consumers from getting a lower price when they shop. Visa and MasterCard quickly set- tled and agreed to follow a complex set of remedies developed by government attorneys. We chose to fight. Let me ex- plain why. The government remedy does noth- ing for consumers. And, whatever its in- tention, the Justice Department is head- ing down a path that eventually leads to less competition, not more. Merchants accept plastic because
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they know many customers often want to use credit, charge or debit cards at the checkout counter. Card acceptance brings higher sales, prevents fraud or counterfeiting, and protects against losses when a customer doesn’t pay his or her bill. In return, merchants agree to welcome cards at the point of sale and to pay a fee, which is typically between 2 and 3 percent of the purchase price. Perversely, the government’s remedy would allow merchants that sign a con- tract and post decals to show which credit cards they accept to then ignore the contract’s ban on discrimination by pressuring their customers to use a dif- ferent card when they pay. In theory, you might be offered a small discount for putting up with the inconvenience. But this will not lead to lower prices overall for consumers.Mer- chant associations, even those that sup- port the Justice Department, won’t com- mit to lower prices. Nothing in the gov- ernment’s lawsuit requires them to do so. As it is, merchants are already al- lowed to offer a discount or incentive to customers who pay by cash, checks or debit cards. Very few do. The net result of this “bait and
switch” is an unhappy customer who was pushed to use a backup card that didn’t provide the customer service, buyer protection, benefits or rewards that he or she prefers. Only in Washing- ton could that be called a consumer ben- efit.
Antitrust laws were designed to pro- mote competition. But in this case, the government lawyers who enforce those laws are doing just the opposite by of- fering a solution that favors the two dominant networks. Here’s how. Earlier court rulings found that Visa
and MasterCard have market power that allows them to unfairly dominate the payment industry. Given the sheer size of their customer base, most mer- chants do business with them because they have to. Only a small percentage of their card holders also carry an Amer- ican Express or Discover product. By contrast, American Express is a
network of choice and the smallest in terms of merchant acceptance. Mer- chants don’t have to do business with us, but those that do appreciate our overall service and value, including more business from higher-spending customers who carry our cards. In re- turn, we require that they not dis- criminate against our card. Unlike the dominant networks, virtually all Amer- ican Express customers carry another card in their wallet. American Express customers don’t have to use our card, but they choose to do so. Their choice recognizes the superior value and serv- ice we provide. Compare the two different business models, and you’ll see the flaw in the government’s thinking. It is difficult to steer Visa or MasterCard holders to American Express because those con- sumers don’t carry our card. By con- trast, it’s possible to pressure our cus- tomers toward one of the backup prod- ucts they carry deeper in their wallet. If the government is allowed to do
away with the protections we build into our merchant contracts, the net result would be more business for the two dominant networks. Visa and MasterCard already control 70 percent of the market. When domi- nant parties gain even more market share, no one will be able to negotiate freely or fairly with them. The inevitable result would be higher costs for mer- chants and less value for consumers. That’s the real cost of government in- tervention. The Justice Department is supporting bad policy and disguising it with vague promises of consumer benefit. We think their case is weak and we intend to fight it.
It’s never easy to take on a long, costly
battle with the government, but what’s at stake are some important issues: con- sumer choice, free market competition and the ability to deliver superior prod- ucts and services to our customers. This is a fight worth fighting.
The writer is chairman and chief executive officer of American Express Co.
competition Why Amex is fighting a bad credit card deal
by Kenneth I. Chenault
his week, the Justice Department sued Visa, MasterCard and my company, American Express, al-
Science isn’t a political experiment
By Michael E. Mann
and indeed all my fellow climate scien- tists — do.
A PHOTOS BY ASSOCIATED PRESS (LEFT) AND VIA NEWSCOM Barack Obama, at a rally in Aurora, Colo., in 2006, and his father, Barack Obama Sr., in a 1964 photo.
The dreams from his father Why I believe Obama is an anti-colonialist
by Dinesh D’Souza
f you want to understand what is going on in the White House today, you have to begin with Barack Obama. No, not that Barack Obama. I mean Barack Obama Sr., the president’s father. Obama gets his identity and his ideology from his father. Ironically, the man who was ab- sent for virtually all of Obama’s life is precisely the one shaping his values and actions. How do I know this? Because Obama tells us himself. His autobiography is titled “Dreams From My Father.” Notice that the title is not “Dreams of My Father.” Obama isn’t writing about his father’s dreams. He is writing about the dreams that he got from his father. In his book, Obama writes, “It was into my father’s im-
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age, the black man, son of Africa, that I’d packed all the at- tributes I sought in myself.” Those who know Obama well say the same thing. His grandmother Sarah Obama told Newsweek, “I look at him and I see all the same things — he has taken everything from his father . . . this son is realiz- ing everything the father wanted.” But who was Barack Obama Sr., and what did he want? Do the views of the senior Obama help clarify what the jun- ior Obama is doing in the Oval Office? Let’s begin with President Obama, who routinely castigates investment banks and large corporations, accusing them of greed and exploitation. Obama’s policies have established the heavy hand of government control over Wall Street and the health-care, auto and energy industries. President Obama also regularly flays the rich, whom he
accuses of not paying their “fair share.” This seems odd, given that the top 10 percent of earners pay about 70 per- cent of all income taxes. Yet the president would like this group to pay more. Some have described the president as being a conven- tional liberal or even a socialist. But liberals and socialists are typically focused on poverty and social equality; Oba- ma rarely addresses these issues, and when he does so, it is without passion. Pretty much the only time Obama raises his voice is when he is expressing antagonism toward the big, bad corporations and toward those earning more than $250,000 a year. I believe the most compelling explanation of Obama’s actions is that he is, just like his father, an anti- colonialist. Anti-colonialism is the idea that the rich coun- tries got rich by looting the poor countries, and that within the rich countries, plutocratic and corporate elites contin-
ue to exploit ordinary citizens. I know about anti-colonialism because I grew up in India in the decades after that country gained its independence from Britain. And Barack Obama Sr. became an anti- colonialist as a consequence of growing up in Kenya during that country’s struggle for independence from European rule. Obama Sr. also became an economist and embraced a form of socialism that fit in well with his anti-colonialism. All of this is relevant and helpful in understanding his son’s policies.
Consider the article “Problems Facing Our Socialism”
that Obama Sr. published in 1965 in the East Africa Jour- nal. Writing in the aftermath of colonialism, the senior Obama advocated socialism as necessary to ensure nation- al autonomy for his country. “The question,” he wrote, “is how are we going to remove the disparities in our country, such as the concentration of economic power in Asian and European hands . . .?” Obama Sr.’s solutions are clear. “We need to eliminate power structures that have been built through excessive ac- cumulation so that not only a few individuals shall control a vast magnitude of resources as is the case now.” He pro- posed that the state seize private land and turn it over to collective cooperatives. He also demanded that the state raise taxes with no upper limit. Just in case the point is unclear, Obama Sr. insisted that
“theoretically there is nothing that can stop the govern- ment from taxing 100 percent of income so long as the peo- ple get benefits from the government commensurate with their income which is taxed.” Absurd as it seems, the idea of 100 percent taxation has its peculiar logic. It is based on the anti-colonial assumption that the rich have become rich by exploiting and plundering the poor; therefore, whatever the rich have is undeserved and may be legiti- mately seized. Remarkably, President Obama, who knows his father’s
history very well, has never mentioned this article. Even more remarkably, there has been virtually no media cover- age of a document that seems directly relevant to the cur- rent policies of the junior Obama. Yet when the senior Obama’s article is placed side by side with the junior Obama’s policies, it seems evident that the father’s hatred of those on top, and his determination to confiscate their wealth, is largely replicated in the son.
Dinesh D’Souza is president of King’s College in New York City. His new book is “The Roots of Obama’s Rage.”
Rep. Darrell Issa (R-Calif.) has threat- ened that, if he becomes chairman of the House Committee on Oversight and Gov- ernment Reform, he will launch what would be a hostile investigation of cli- mate science. The focus would be on e- mails stolen from scientists at the Univer- sity of East Anglia in Britain last fall that climate-change deniers have falsely claimed demonstrate wrongdoing by sci- entists, including me. Rep. James Sen- senbrenner (R-Wis.) may do the same if he takes over a committee on climate change and energy security. My employer, Penn State University, ex-
onerated me after a thorough investiga- tion of my e-mails in the East Anglia ar- chive. Five independent investigations in Britain and the United States, and a thor- ough recent review by the Environmental Protection Agency, also have cleared the scientists of accusations of impropriety. Nonetheless, Virginia Attorney General
Ken Cuccinelli is investigating my previ- ous employer, the University of Virginia, based on the stolen e-mails. A judge re- jected his initial subpoena, finding that Cuccinelli had failed to provide objective evidence of wrongdoing. Undeterred, Cuccinelli appealed the decision to the Virginia Supreme Court and this week is- sued a new civil subpoena. What could Issa, Sensenbrenner and Cuccinelli possibly think they might un- cover now, a year after the e-mails were published?
Politicians’ attacks against science are not good-faith questioning of scientific research. They are anti-science.
uring the presidential campaign, it sometimes seemed that Barack Obama was even more popular in Europe than in the United States. If any- one could span transatlantic differences on fighting terrorism, you might have thought it would be Obama. But since he took office, Europe has consistently opposed the Obama admin- istration’s counterterrorism initiatives. The latest rebuff may be the most seri- ous — and a last straw for the adminis- tration. That’s because it strikes at the heart of Obama’s effort to construct a less controversial strategy for stopping terrorists. Everyone knows about his expanded use of Predator drones. Less dramatical- ly, the administration has also be- gun to rely heavily on travel and reservation data at the border to spot suspicious travelers. The technique has proved its worth in almost every domestic plot the president has faced. Times Square bomber Faisal Shahzad was pulled from his interna- tional flight because alert officials at the Department of Homeland Security were scanning airline data in real time. Umar Farouk Abdulmutallab, the would-be Christmas Day bomber of Northwest Airlines Flight 253, had already been flagged for border questioning by DHS officials with access to travel data — but was given no special treatment by offi- cials who did not have that data. So it’s no wonder that, as reported in
Bob Woodward’s new book, “Obama’s Wars,” one of the administration’s top negotiating priorities with Pakistan has been access to airline passenger data. Access grows only more vital as reports filter back of European passport holders training in Pakistan for terrorist assaults in the West. Understandably, the admin-
How Europe puts America at risk D
By Stewart Baker
istration wants to know which Euro- peans and Americans have spent months in Pakistan without family con- nections or visible means of support. Obama is right to see this kind of scru-
tiny at the border as lawful, effective and far less controversial than many of the counterterrorism measures that he has reluctantly kept in place. That doesn’t mean it’s going to be easy to accomplish, however. Pakistan and other countries in a position to share useful travel data have been slow to share the information.
But the real roadblock is in Brussels, where the European Parliament has uni- laterally demanded that the administra-
Europe broke its promise by thwarting U.S. efforts to get passenger data from other countries that could help stop attacks.
tion renegotiate the E.U.-U.S. agreement on travel reservation data — launching the fourth set of talks on this topic in seven years. More recently, the Euro- pean Commission announced plans to insist that other countries join what amounts to a data boycott of the United States. Under the commission’s propos- al, Pakistan and other countries would be prohibited from sharing travel data about Europeans with the United States except on a “case-by-case basis.” That would leave U.S. border officials in the dark at the most crucial stage — when they’re trying to decide which travelers will be questioned carefully at the border and which will be waved through. Perhaps most remarkably, the new European position violates a solemn written promise that the E.U. would nev- er do such a thing again. In 2007, the United States promised to
help several Caribbean countries keep track of dangerous travelers attending
the Cricket World Cup. Both sides ben- efited. The Caribbean nations could or- der airlines to hand over the data, but they couldn’t process it quickly. The United States could, and it had at least as strong an interest in identifying risky travelers before they arrived in a region that is sometimes called the United States’ “third border.” Sharing the data seemed to make all the sense in the world — but an E.U. offi- cial barged in, threatening trade sanc- tions against Caribbean countries if the sharing did not get European approval. I was the lead U.S. negotiator at the time, and I hit the roof. With the talks hanging in the balance, the E.U. backed down. To make sure it didn’t happen again, we insisted that the E.U. add a promise in the 2007 agreement about travel data — that the E.U. “will take all necessary steps to discour-
age” third countries from interfering with U.S. travel data programs. But the Europeans have evidently concluded that promises made to an ear- lier administration can be ignored. The timing is atrocious. Intelligence
agencies on both sides of the Atlantic are warning of European terrorists trained in Pakistan — precisely the kind of threat that travel data could help to stop. As so often is the case in foreign af- fairs, this is not a challenge the presi- dent wanted, or one that he could have foreseen two years ago. But how he han- dles it will tell Europeans — and Amer- icans — a lot about his determination to protect the United States from another terrorist attack.
Stewart Baker is a Washington lawyer and a former official of the National Security Agency and the Department of Homeland Security. He is the author of “Skating on Stilts,” a memoir about terrorism and technology.
The truth is that they don’t expect to uncover anything. Instead, they want to continue a 20-year assault on climate re- search, questioning basic science and promoting doubt where there is none. Cuccinelli, in fact, rests his case largely on discredited claims that Rep. Joe Bar- ton (R-Tex.) made during hearings in 2005 at which he attacked me and my fel- low researchers. Then-Rep. Sherwood Boehlert (R-N.Y.) had the courage and character to challenge Barton’s attacks. We need more political leaders like him today. We have lived through the pseudo- science that questioned the link between smoking cigarettes and lung cancer, and the false claims questioning the science of acid rain and the hole in the ozone layer. The same dynamics and many of the same players are still hard at work, ques- tioning the reality of climate change. The basic physics and chemistry of how carbon dioxide and other human-pro- duced greenhouse gases trap heat in the lower atmosphere have been understood for nearly two centuries. Overloading the atmosphere with carbon dioxide from burning fossil fuels is heating the planet, shrinking the Arctic ice cap, melting gla- ciers and raising sea levels. It is leading to more widespread drought, more frequent heat waves and more powerful hurri- canes. Even without my work, or that of the entire sub-field of studying past cli- mates, scientists are in broad agreement on the reality of these changes and their near-certain link to human activity. Burying our heads in the sand would
leave future generations at the mercy of potentially dangerous changes in our cli- mate. The only sure way to mitigate these threats is to reduce global greenhouse gas emissions dramatically over the next few decades. But even if we don’t reduce emis- sions, the reality of adapting to climate change will require responses from gov- ernment at all levels. Challenges to policy proposals for how to deal with this problem should be wel- come — indeed, a good-faith debate is es- sential for wise public policymaking. But the attacks against the science must stop. They are not good-faith ques- tioning of scientific research. They are anti-science. How can I assure young researchers in
climate science that if they make a break- through in our understanding about how human activity is altering our climate that they, too, will not be dragged through a show trial at a congressional hearing? America has led the world in science for decades. It has benefited our culture, our economy and our understanding of the world. My fellow scientists and I must be ready to stand up to blatant abuse from politicians who seek to mislead and dis- tract the public. They are hurting Amer- ican science. And their failure to accept the reality of climate change will hurt our children and grandchildren, too.
Michael E. Mann, the author of “Dire Predictions: Understanding Global Warming,” is a professor in the meteorology department at Penn State University and director of the Penn State Earth System Science Center.
s a scientist, I shouldn’t have a stake in the upcoming midterm elections, but unfortunately, it seems that I —
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