Thursday, November 3, 2011

Study proves many U.S. corporations pay zero taxes

By Agence France-Presse
Thursday, November 3, 2011

Dozens of US corporations paid no federal taxes in recent years, and many received government subsidies despite earning healthy profits, a new study showed Thursday.

The report by Citizens for Tax Justice and the Institute on Taxation and Economic Policy, which examined 280 US firms, found 78 of them paid no federal income tax in at least one of the last three years.

It found 30 companies enjoyed a negative income tax rate — which in some cases means getting tax rebates — over the three-year period, despite combined pre-tax profits of $160 billion.

“These 280 corporations received a total of nearly $223 billion in tax subsidies,” said the report’s lead author, Robert McIntyre, director at Citizens for Tax Justice.

“This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.”

The study looked at 280 corporations from the Fortune 500 list, all of which were profitable in each of the last three years and provided sufficient data to analyst profits and taxes.

It found the average effective tax rate for the 280 companies in the study over the three years period was 18.5 percent, well below the statutory rate of 35 percent.

The study concluded that 78 of the companies had at least one year in which their federal income tax was zero or less.

Thirty companies had a negative income tax rate over the entire three year period on their combined pre-tax profits of $160 billion.

The study said banking giant Wells Fargo topped the list of corporations receiving the most in tax subsidies, getting nearly $18 billion in tax breaks in the last three years.

The report comes as US lawmakers are struggling to find ways to curb a bulging US deficit and are looking at possible revenue sources, despite opposition by conservatives to any tax increases.

Rep. Tom Price: House passed ‘God’ resolution to remind Obama

By David Edwards - RAW Story
Thursday, November 3, 2011

A member of the Congressional Prayer Caucus insisted on Thursday that House Republicans were forced to pass a resolution reaffirming that “In God We Trust” is the national motto as a reminder to President Barack Obama.

“This was a priority because the president himself had stated that the motto of the country was E Pluribus Unum,” Prayer Caucus member Rep. Tom Price (R-GA) told Fox News host Bill Hemmer. “So, we thought we’d remind him.”

“Are you suggesting that there is a crisis of identity?” Hemmer asked.

“Well, the resolution was necessary because we felt it was appropriate to remind the president what, in fact, the motto of our great country is,” Price explained.

“You aren’t saying he’s against religion or there’s no suggestion in there?” Hemmer wondered.

“There was no suggestion at all,” Price declared. “It was an opportunity to say, ‘No, Mr. President, the motto of this country is not E Pluribus Unum.’ … We’ll remind you.”

“That’s not putting people back to work,” Obama said Tuesday. “I trust in God, but God wants to see us help ourselves by putting people back to work. There’s work to be done. There are workers ready to do it. The American people are behind this.”

“In God We Trust” was also reaffirmed in 2002 when the Republican-controlled Congress passed a bill that said no changes should be made to a 1956 law that originally made the phrase the national motto.

Critics of Tuesday’s resolution noted that in 2010, House Majority Leader Eric Cantor (R-VA) promised a laser-like focus on jobs and the economy, even crafting what has been termed the “Cantor Rule.”

“Each day, we will hold ourselves accountable by asking the following questions: Are our efforts addressing job creation and the economy; are they cutting spending; and are they shrinking the size of the federal government while protecting and expanding individual liberty?” Cantor explained. “If not, why are we doing it?”


oh, that's important! good thing they didn't waste time on a jobs bill!--jef

Beavis & Butthead

They're back...

Wednesday, November 2, 2011

The Oblivious Committee

Why the supercommittee should disband

Congress has now achieved the remarkable feat of making itself less popular than Wall Street bankers.

And the way it is heading, it hasn’t hit bottom yet — there’s still 9 percent of the public that approves of the job the legislators are doing.

The entire country is terrified about the economy. There are 24 million people in need of full time work, wages are declining, one in four homes is under water, workers entering the workforce outnumber the jobs being created, Europe and China’s economies are slowing.

People understandably want Congress to focus on jobs and the economy.

So how is it that after a few weeks of inching toward talk about jobs (with the president proposing a modest jobs plan and Republicans filibustering to block even a discussion of it), some members of Congress have turned their attention back to cutting spending and raising taxes — both actions guaranteed to destroy jobs, not to create them?

We’re headed toward the deadline of the supercommittee’s Gang of 12 — the despicable offspring of the debt ceiling deal. It must report its plan to reduce the deficit by $1.2 trillion (on top of the $900 billion in spending cuts mandated in the deal) before Thanksgiving. If nothing is passed before Christmas, deep automatic cuts in discretionary spending will begin to kick in — in 2013.

Last week, the majority of Democratic representatives on the supercommittee offered up an even larger deal — suggesting $3 trillion in deficit reduction, with a ratio of 6-to-1 spending cuts to tax hikes, according to the most reasonable Congressional Budget Office (CBO) baseline, or nearly 2-to-1 cuts to tax hikes on the CBO’s current policy baseline. Whatever the measure, the offer was markedly worse on spending than either the Simpson-Bowles Deficit Commission’s recommendations or the ideas ladled out by the bipartisan Senate Gang of Six.

A large chunk of the spending cuts would come from Medicare and Medicaid (some $475 billion over 10 years) and the newest establishment fad — a chained Consumer Price Index that would cut a medium earner’s Social Security benefits by about 9.2 percent in real dollars by 2042.

While Democrats reportedly also included some $300 billion in stimulus — largely by extending the Social Security payroll tax cut and extending unemployment benefits — they have decided to get into a bidding war with conservatives about cutting government — at a time of mass unemployment, when spending cuts and tax hikes will simply cost jobs.

And to make the offer enticing, they casually decided to throw in the core legacy of the Democratic Party — and the core obligation of the nation — to protect Social Security, Medicare and Medicaid.

House Speaker John Boehner once more scorned the preemptive Democratic concessions, opposing any tax hikes. There may be logic to his insidious intransigence. Republicans keep saying no and Democrats keep offering more concessions. Supercommittee Republicans suggested instead a package based largely on cuts in Medicare, Medicaid and Social Security, combined with magical hundreds of billions they say would be produced by slashing assistance to the elderly and the vulnerable, by selling off government assets, and by the growth sparked by tax cuts.

This leaves Congress offering a choice between the ruinous and the risible. No wonder Americans despair. A vast majority want Congress focused on jobs. They want Medicare and Social Security protected, not cut. They want taxes raised on the wealthy and on Wall Street. They want the wars ended, the troops brought home and the money saved to be devoted to rebuilding America.

The most sensible decision of the supercommittee would be to disband so Congress can reconsider the disastrous debt ceiling deal. Failing that, the supercommittee should be held to the following common-sense principle:

Jobs first. Any report should include significant investment in jobs in the early years of the decade. That would require more than simply sustaining what’s now on the table: extending the payroll tax cut and unemployment insurance. It would require a dramatic initiative to rebuild America’s decrepit infrastructure, a serious manufacturing strategy for the country, aid to states and localities, action on refinancing underwater mortgages, and government-funded public service jobs.

Jobs first would demand that the trigger for turning to paying down deficits and the debt be not an arbitrary date, but when the unemployment rate comes down.

When people go back to work, a good portion of the deficit problem will be erased. The remainder of the deficit comes largely from the economic costs of the Wall Street excesses that blew up the economy, as well as the lingering costs of the unfunded wars and top-end Bush tax cuts.

So it is only sensible that those who made the mess should be given the bill for cleaning it up. Close tax havens, close corporate-tax loopholes, slash the subsidies to Big Oil, the drug companies and agribusiness. Get serious about progressive taxation.

The Republican position that we can’t raise taxes on “job creators,” or anyone else for that matter, is simply a cover for sending the bill to the vulnerable, the elderly and working families. But the “reasonable” Democratic position doesn’t make sense either. How can there be “shared sacrifice” in cleaning up the mess when most Americans have been sacrificing all along, while the wealthiest Americans had the party and created the mess?

Occupy Wall Street has captured the nation’s attention, but Congress seems oblivious. Who is prepared to make Wall Street and the wealthy pay? It isn’t just the demonstrators who will be looking for the answer.

Tax the One Percent -- Make Wall Street Fund America

The giant cries of protest sweeping across the country are starting to reverberate in the halls of Congress. Senator Tom Harkin (D-IA) and Representative Peter DeFazio (D-OR) are proposing a Wall Street Tax. Their bill would establish a tiny financial transaction tax of 0.03% on every single trade of stocks, bonds, options, futures, swaps, and credit default swaps.

Notably, a Wall Street Tax is in the Contract for the American Dream, the 10-point plan to fix our economy that more than 131,000 people created earlier this year, through a grassroots, bottom-up process. To date, more than 300,000 people have signed the Contract for the American Dream. In other words, the idea of a Wall Street Tax is already popular.

The Wall Street Tax would be a tiny cost for those of us socking away our savings for retirement or our children's education -- the average person paying into a 401(k) would pay only one dollar per year.

But Wall Street traders could no longer bet thousands of times a second for free. Much of the risk in today's market comes from rapid-fire "flash trading," where financial firms use computer algorithms to make thousands of trades per second. This doesn't add any real value to the market or to our economy.

When we buy something of real value, like a winter coat for our kids, we pay a sales tax, and rightly so. Yet these Wall Street speculators pay zero taxes while making a fortune passing electrons back and forth millions of times a day, all the while destabilizing our economy.

The Harkin-DeFazio Wall Street Tax is common sense. The concept has been around for a while. Hundreds of economists and responsible investors have long called for it, including Nobel Laureates Paul Krugman and Joseph Stiglitz, plus stock market billionaire Warren Buffett and former Goldman Sachs Chairman John Whitehead.

This idea is already law in several countries, including financial centers like the UK and Hong Kong. And the European Union is currently considering a much steeper version of what's on the table in the U.S.

The Wall Street Tax would raise somewhere between $700 billion and $1.2 trillion over ten years, critical funds we need to create jobs and protect vital programs.

Meanwhile, the Super Committee has been charged with finding $1.5 trillion in deficit reductions and has floated the idea of targeting Social Security, Medicare, and Medicaid. Notice: the Wall Street Tax would cover nearly all of the Super Committee's mandated deficit reductions.

Congress is about to face a telling choice. Will they vote to tax Wall Street gamblers in the 1%, or cut the Social Security checks of senior citizens in the 99%?

Members of Congress should take note: If they vote against the 99% on this bill, they should be prepared for the 99% to vote against them next November.

Israel Considers Pre-Emptive Attack on Iran

by Emma Hurd 
Israeli Prime Minister Benjamin Netanyahu is trying to rally support in his cabinet for an attack on Iran, according to government sources.

The country's defence minister Ehud Barak and the foreign minister Avigdor Lieberman are said to be among those backing a pre-emptive strike to neutralise Iran's nuclear ambitions.

But a narrow majority of ministers currently oppose the move, which could trigger a wave of regional retaliation.

The debate over possible Israeli military action has reached fever pitch in recent days with newspaper leader columns discussing the benefits and dangers of hitting Iran.

Mr Lieberman responded to the reports of a push to gain cabinet approval by saying that "Iran poses the most dangerous threat to world order."

But he said Israel's military options should not be a matter for public discussion.

The International Atomic Energy Agency (IAEA) is due to report on the state of Iran’s nuclear capabilities on November 8, and that assessment is likely to influence Israel’s decision.

Western intelligence officials estimate that Iran is still at least two to three years away from obtaining a nuclear bomb.

Israel has long made it clear that it will not allow Iran to obtain a nuclear capability that could threaten the Jewish State.

Publicly it is pushing for a diplomatic offensive against Iran - including the imposition of sanctions - rather than a military strike.

But prime minister Netanyahu has repeatedly warned that all options are on the table.

Israel's former defence minister Benjamin Ben-Eliezer told Haraatez newspaper that he feared a "horror scenario" if Israel attacked Iran.

Washington is also strongly opposed to Israel taking unilateral action.

Any strike on Iran could trigger retaliation from Iran and across the region.

Syria, a close ally of Tehran, could also launch attacks, along with the Iranian-backed Hizbollah militia in Lebanon.

The Dollar’s Not Almighty Anymore

I was talking yesterday with the chief financial officer of a US-based drug firm that operates here in China, producing for the Chinese market, and got an up-close look at how bad things are for what used to be called the Almighty Dollar.

The company in question, a joint venture between a very profitable U.S. drug company and a local Chinese company, is quite profitable itself.

The guy was explaining to me that his firm needed to add another factory, because the one they had was running full-tilt and couldn’t keep up with demand. That might sound like a simple problem, and one that most enterprises would be happy to confront, but the shrinking US dollar, and concerns in China about inflation, complicate things.

You would think that it would be a simple matter of the parent company’s sending over the $50 million or so that it would cost to build the new plant and that would be that, but it turns out that the dollar is falling so fast against the Renminbi (RMB), the Chinese local currency, that no contractors or other vendors necessary for setting up a new facility are willing to accept it as payment. That means the company has to try and come up with the construction costs in local currency.

I won’t go into the arcane machinations that involves, except to say that because Chinese financial authorities and the country’ central bank, the People’s Bank of China (PBOC), aren’t letting local banks or foreign-owned banks with offices in China lend money without going through a tough approval process, the outcome of which is iffy, and they are setting interest rates at 6.5% for those loans they do approve, which is a pretty stiff rate to have to live with.

The important point here is that the dollar is being viewed here in China the way people in the U.S. have typically viewed Mexican pesos or Chinese RMB.

I remember back when I was a Fulbright professor at this city’s elite Fudan University, back in 1991-92, people wanted dollars so badly that you had to be crazy to go to a bank to change them at the official rate of about 8 RMB to the dollar. Practically anyone you met, even strangers on the street, were willing to swap you their RMB bills at a rate of 9 or even 10 RMB to the dollar.  I had an American friend who told me he was riding his bike into the city, and was on a crowded street packed solid with slowly moving bicyclists when everyone was forced to press to the side to allow a bus to pass. His bike ran up against a neighboring cyclist and the handlebar cut a gash in the man’s wrist, apparently severing a small artery, which began gushing blood. My friend, who like me spoke Chinese, began apologizing profusely, and was getting off his bike to offer help when the man began asking, “Change money? Change money?”

Today, if you’ve got dollars nobody wants them, but I’ve been told that if you have RMB, you will find the reverse situation, with just about everyone having dollars they are stuck with that they’re desperate to unload at way above the official exchange rate of 6.35 RMB to the dollar.

That should tell us Americans all we need to know about what is being done to our own economy and to our standard of living.  According to Business Week magazine, Americans will spend about $1.7 trillion on consumer goods, including gasoline and oil, this year. More than half of this amount is imported, meaning that we Americans are spending about $1 trillion a year on imported goods. As the dollar sinks — and it’s sinking because of the deliberate policies of the government and the Federal Reserve Bank — the cost of those goods rises (actually the costs of many other goods, seemingly locally produced, also rises because so many of the components–for example the parts that go into a supposedly US-made car–are imported from abroad).

For most of those goods — particularly oil and gas, but in fact most others too, from computers to televisions to small fuel-efficient cars to clothing — there are no domestic substitutes, because other deliberate government policies, such as the latest international trade pact President Obama and Congressional Democrats and Republicans reached with South Korea, have pushed or driven manufacturing overseas, effectively de-industrializing the United States. So we Americans have little choice but to pay more for the products we want or need. Either that or we cut back on our standard of living.

This is happening of course in a time of 20+ percent unemployment or underemployment, when wages are being hammered by greedy employers taking advantage of the desperate desire for jobs, and of the severely weakened labor union movement.

No wonder Americans are taking to the streets to protest Wall Street, and the bought-and-paid elected officials who have been stripping the economy like a demolition crew in a condemned building before the arrival of the wrecking ball!

Meanwhile, here in China, where the country has been vacuuming up American dollars like an Orick TV commercial, people, at least in the big cities like Beijing and Shanghai, are looking incredibly well off. HuaiHai Road, a major east-west thoroughfare I remember from as late as 1996 as having been a drab street lined with dismal-looking noodle shops and stores selling shoddy tools and drab, poorly made clothing for the local market, and street vendors selling produce, is lined with top-of-the-line fashion stores thronged by women seeking the latest look and restaurants that charge almost New York prices.

Instead of fleets of bicycles, or even the motor scooters that throng streets in much of Asia, Shanghai’s streets are filled with new cars, many of them costly Toyotas, BMWs and Mercedes sedans. Of course the wealth gap in China is enormous — roughly what it has become of late in the U.S. — but even the working class here, at least in the cities, feels generally better off, because of where they’ve come from, while we in the U.S. are seeing ourselves sink.

All those dollars (and euros) pouring into China, and especially into cities like Shanghai and Guangzhou in the south, are also being put to use raising the standard of living in other more collective ways. Friends of mine here in Shanghai who used to live in cramped one or at best two-room bare concrete walled and floored flats, often with no bath and a shared community kitchen, are today ensconced in four-room apartments, nicely appointed, with tiled full bathrooms, spacious kitchens, and wood parquet floors. When they travel into the center of town, instead of riding a bike for two hours, they hop on a modern subway–part of a city-wide system completed in some 15 years’ time that now rivals the Paris Metro of the London tube, only with all glistening new stations and cars. There’s even a mag-lev segment to take people to the airport.

Schools have also received a tremendous amount of funding, from grade school through college. I could barely recognize Fudan’s modern campus with its towering new buildings and surrounding well-groomed parks and campus grounds.

I don’t want to overstate China’s progress. This country and its people face huge challenges. The environment has been raped and in many parts continues to be raped, there are beggars sleeping on the sidewalks, prostitutes proposition foreigners even on the better streets of Shanghai, and the air in this city, while perhaps a bit cleaner than I remembered, has me coughing and clearing my burning throat constantly after only a week here. It also continues to be a police state.

But the point is that despite all that, this remains a country that is improving the lot of its citizens, while the U.S. is clearly moving in the opposite direction. More importantly the impoverishing of Americans is happening, clearly, by design, as U.S. politicians act not in the interests of the many, but of the 1% who own them.

China’s political system is at least as corrupt as the U.S. system, but what is different is that the Chinese elite has a healthy fear of the wrath of the public. The violent risings of the Chinese masses, in the revolution that installed the Communist Party,  and in the Cultural Revolution of the late 1960s and early ‘70s, the peaceful but determined 1989 Tiananmen protests and the growing wave of rural and urban unrest by peasants, workers and even over-taxed shopowners, have all made rulers here acutely aware that they can only cling to power if they keep trying to improve broader living standards for the majority.

Just this week, for example, a mob of hundreds of angry shop-owners and residents of  Zhili, a town near Huzhou in Zhejiang Province, rioted over extortionate tax collections by local officials, overturning and burning several police cars and reportedly injuring some police officers and local officials — this according to local published news reports. Such events are not uncommon and serve to keep officials on their toes.

In the U.S. there is, or at least for decades has been, no such fear in the hearts of America’s ruling elite and their craven politician servants.

Perhaps with the advent of the Occupation Movement sweeping the country, this will change, though it remains to be seen whether a purely peaceful protest movement, with demonstrators passively accepting mass arrests by local police, will create enough fear in those avaricious hearts to bring an end to the current economic and political system of oligarchy, greed and exploitation that characterizes today’s United States.

Abbott’s Scary $8 Billion Drug

How did Abbott LaboratoriesHumira become an $8 billion a year drug, capable of anchoring an entirely new drug company as Abbott splits into two?

How did it become a blockbuster even though such drugs (which include Remicade, Enbrel and Cimzia and are called TNF blockers) are linked to TB, rare cancers and lethal infections like histoplasmosis?

How did it become a blockbuster even though Humira is only approved for the rare conditions of rheumatoid arthritis,  juvenile idiopathic arthritis, ankylosing spondylitis adults, Crohn’s disease, psoriatic arthritis and chronic plaque psoriasis?

The same way all expensive, dangerous drugs become blockbusters: an easy touch FDA, bought doctors and doctor groups, PR firms to establish diseases as “public health threats” and massive direct-to-consumer advertising!

The FDA approved Humira, the first TNF blocker to use human, not mice and hamster cells, three months early, in 2002, and its Arthritis Advisory Committee announced the following year, that TNF blockers do not, repeat not, increase the risk of lymphoma.

Abbott enlisted the public relations giant Edelman to “educate” doctors about the exciting new drug and to team with the Arthritis Foundation. It also enlisted the PR giant Young & Rubicam, and the healthcare advertising heavy, Harrison and Star to let the world know about their Humira deficiencies.

And Abbott gave out free samples of Humira to seniors in 2003 while it lobbied Congress to get the drug’s $15,000 to $20,000-a-year costs on the Medicare dole. It wasn’t even Halloween. (PS–it worked!)

In fact, Abbott advertised Humira so widely, pharmaceutical reporters asked why since the general public can neither afford the drug nor does it need it. “Rheumatoid arthritis is a market where people often don’t know what they have for a while,” and it is often “misdiagnosed,” said Abbott Vice President of Specialty Operations, Heather Mason in classic disease-selling Pharma language.

When Pharma sells a disease to justify a drug, the disease is always “under-recognized,” with “barriers” and “stigmas” preventing treatment and with under-recognized social costs and “burdens.”

Sure, Humira is expensive, Joel M. Kremer, MD, an Abbott consultant, told the New York Times in 2008 but there are unrecognized social burdens. “Inadequately treated rheumatoid arthritis typically leads to multiple joint replacements, lost productivity, lost tax revenue and a greatly diminished quality of life, as well as an increased risk of life-threatening infections and cardiovascular disease,” he said. “You have to consider what it costs to fix a bridge against what it will cost when the bridge collapses.”

In Reviews in Gastroenterological Disorders in 2007, Abbott consultant Stephen Hanauer, MD echoed the cheaper-to-treat argument. Humira treatment reduces “overall costs” and enhances “patients’ quality of life,” he says.

But is it really cheaper to give patients Humira when they could use less expensive and dangerous drugs that don’t suppress the immune system?

The Cochrane Collaboration, an international, not-for-profit drug review organization says, “Overall, in the short term biologics were associated with significantly higher rates of total adverse events, withdrawals due to adverse events and TB reactivation,” and stresses that, “There is an urgent need for more research regarding the long-term safety of biologics and the comparative safety of different biologics.”

In 2008, the FDA announced that 45 people died from fungal diseases from taking Humira, Enbrel, Remicade and Cimzia–20 percent of those who got sick! People who lived near the Ohio and Mississippi river valleys were especially at risk. The same year, the FDA investigated Humira for thirty reports of childhood cancer and its links to lymphoma, leukemia and melanoma in children. Yes, lymphoma.

This year, the FDA warned that Humira can cause, “a rare cancer of white blood cells,” in young people and five patients died during Humira trials in Italy. Other articles, this year, link drugs like Humira to heart problems.

Still, the Humira’s spin machine is humming as Abbott prepares to found an entire company on the blockbuster drug. An investigator with the Italian trials called the deaths “bad luck” and not necessarily Humira-related. (Trials were not stopped.) An avalanche of Pharma planted articles dispute the heart findings. And Abbott is seeking approvals to market Humira for ulcerative colitis and pediatric Crohn’s disease.

Maybe there will be free samples.

Midnight Raid in Austin

If last Friday you could pull yourself from the temptation of ordering a $17 risotto among jam-packed downtown luncheoneers, then you could walk a little further to the west side of Austin City Hall and catch a free viewing of the noon sun as it stopped to warm a heap of oversized sleeping bags right outside the picture window of city council chambers.

Probably the architect who west-walled the council room in glass was suggesting something about democracy, so you wondered for a minute how that impromptu pile of cozy bedding looked from inside and how long the sight would be tolerated.  Out on the west plaza meanwhile a well-bred dog concentrated on the art of warming, stretching its front legs out in such a way as to flatten its tummy across the sun-stained stone, stretching, and coughing just a little bit.

Of course it sounds too perfect that the only other thing you heard was the quiet melody of guitar strings being finger-picked by a youngish man whose presence, style, and musicality seemed to account for the dog’s single-minded attention to relaxation.

Now at what point exactly on this fourth weekend of Occupy Austin did the Austin Police swoop down to scoop up all these sleeping bags and dump them at some pre-authorized location?  By Sunday afternoon a shoeless young woman will be trying to explain it all, pointing to her feet and saying yes, that’s why she has no shoes, because they were lost in the sleeping bag raid.

And sure enough on Sunday afternoon when you walk back around to check out the view near “democracy window” there is nothing but bare stone.

Rounding the corner to the south plaza on Friday, you saw a dozen folks sitting in various places upon the amphitheater to your upper left and another dozen people gathered in the plaza before you.  Beyond the plaza, and around the sidewalks, perhaps another dozen sat, walked, or stood.   Three dozen in all, up, down, and around.

A shirtless man with a bicycle mocked you on Friday for gaping at the scene, then turned his attention to two middle aged men with really cool bikes who were also just looking at things.

Where the east steps of the amphitheater met the plaza was an empty metal bookshelf labeled “Free Library,” not too far from a line-up of books sunning themselves on a warm block of stone.  Sitting also on the stone was a young woman deep into the art of making a sign from poster-board and magic marker.

“The police took the bookshelf, too,” explains the barefoot woman on Sunday.  “I think they called it a permanent fixture.”

On Friday also you recall making notes about the food table that was serving free lunch on the lower deck of the amphitheater.  “Mom’s Work” said a sign behind the table as food was being served by a healthy looking blonde.
“They didn’t come for the food table until midnight Saturday,” the barefoot woman explains on Sunday.  “There was a new rule about no food from 10 pm to 6 am, so we were kinda giddy about it when they didn’t come for the table at 10.  But the rule didn’t go into effect until Sunday, so that’s why they waited.”

Although the food-table arrests were not the first arrests for Occupy Austin, they were the first to be met with a unified and organized response.  As the barefoot woman was informing me on Sunday about the overnight arrests, she wondered how she was going to march barefooted from city hall to the county jail.

Thinking back on Friday, you got the impression that the occupation camp was mostly glowing on the question of police relations.  The Austin Police Chief had come to Thursday night’s General Assembly with some encouraging words and promises.  Folks were chatting Friday about how Austin was an exception to the police attacks that had rocked other occupations.

Not that police had been exactly kindly up to the fourth weekend of Occupy Austin.  For example, the “flag man” of the movement who wore a Veteran’s Administration tag around his neck and who camped out near the front sidewalk with an American flag said the cops warned him once that if he put his head down to sleep they would arrest him.  After 36 hours of sleepless occupation he walked several miles to the VA facility before he felt safe enough to close his eyes.

After the food-table take-down, the police came back.

“Oh I don’t remember exactly what time it was, maybe between two and four in the morning,” says a trusted witness.

“One group of cops lined up at the top of the amphitheater.”

“No, there were two lines of cops at the top of the amphitheater,” says a friend.

“And they had another line of cops over there,” says the trusted witness, pointing to the sidewalk along the east side of the city hall plaza.

The cops swept southward down the amphitheater and westward across the plaza.

“It was ridiculous, because we have been moving to that side two or three times a week so that they could power-wash the plaza and amphitheater,” chimes in the friend.   “Then last night they also changed the order of the power washing.  Usually they wash the amphitheater first so that it has a chance to dry first and we can go back to sleep.  But last night they washed the amphitheater last and we had the feeling they did it on purpose so that we would have wet spaces to sleep on.”

By the time the police intimidations were over with, nearly 40 people had been arrested.  They were being bailed out all day Sunday, and at 4 pm it was time to redouble the support group that was assembled at the door of the county jail.

After a brief double-check via an iPhone map, organizers led 60 marchers north, up Guadalupe, from city hall to the county jail.  Our barefooted marcher carried a sign taller than her that read: “Unless someone like you cares a whole awful lot, nothing’s going to get better, it’s not.” Signed by, “The Lorax.”  Next time I will see her, she will be educating a television reporter who doesn’t appear shoeless to me.

“Shame on APD, Occupiers must go free!” chant some 60 marchers as they step past prime retailers and polished tour buses.  “It’s the War Economy,” declares one protest sign as marchers pass a couple of banks.

Small cars honk friendly notes as they pass us going south.  Then as the last stragglers of the march finish crossing Fifth Street a big white gas-guzzling combo SUV pickup monstrosity lays on its horn and gas at the same time, nearly threatening to run ‘em down.

After marchers pass the John Henry Faulk city library and take a turn around Wooldridge Park, they are greeted with cheers from the branch occupation at the county jail.  The merged rally is easily 150 strong.  In this hour of triumph, the arrests themselves have energized the movement to a new plateau of solidarity and determination.

“Free Speech Dies, [The Police Chief] Lies,” chant the occupiers.  They recite the First Amendment in unison.

The Bail and Jail Magnet for the occupation announces that $400 has just been posted for two more releases, a third release is pending after that, and a supporter has donated pizza!  Boxes of pizza are stacked five high on a bench.

“This is what Democracy looks like,” chants the crowd as a lead organizer points to them.  “This is what Hypocrisy looks like,” they chant as he point to the jail house door.  All this is going out via live stream on the occupation’s trusty laptop, which has been marched up here, too.

“What happens when people violate your constitutional rights?” asks an organizer.  “Do they get arrested?”
“They get elected!” answers a backbencher, cackling.

At that point the door to the county jail opens up and out come three jail trustees in blue scrubs, walking a dog, supervised by a uniformed deputy.  The four of them take the dog to a grassy patch where he knows just what to do.

Two television crews break down and return home.  A third crew arrives with a satellite truck.  The air is swooning with the smell of hand-rolled tobacco.

Then we see our first liberation.  Out from the glass doors of the jail strides a young man of stocky build, green t-shirt, desert camo pants, black bandana tied around his neck, and topped with a broad, flat Mohawk.  He looks good to us, and you can tell we look good to him.  He saunters toward the back benches where the jail veterans are sharing stories.  Someone passes him a Coke.

Another stocky young man about this time is talking to the live stream about getting in and out of jail.  Inside, they told him there were too many people in jail.  He said he told them that’s an easy problem to fix.  Just let the folks who didn’t do anything out.

When organizers report three more arrests back at city hall, I walk south to check it out.  At Wooldridge Park, three women have set up a table to give food, socks, undershorts, and t-shirts to a line that is already 60 men long.  A man is asking for extra socks that he can give to his girlfriend.  Down 9th St. near the Hirshfeld-Moore House I catch the back end of a Zombie march.  Then it’s past the Texas Observer on 7th, under the porch at Betsy’s Bar, and down a stretch of Lavaca that stinks like puke and grease.  At an upscale hotel, valets are lining up a Prius, an Audi, and a BMW.

“Yes, two guys got arrested here about ten minutes ago,” is what I hear from several people back at city hall.  “They were fighting.  Then while they were being arrested, another guy kept talking to the cops and wouldn’t shut up, so they arrested him too.”

It’s close to 6 pm Sunday and the fourth weekend of Occupy Austin is coming to a close.  The last jail release won’t be live streamed until 9:22 pm.  Meanwhile Bob Jensen is leading a few folks to the West side of city hall for a teach-in on toxic economics.

Occupiers on the plaza are already debating the meaning of today’s arrests and planning further actions to seek divestment of the city from Bank of America.  Everybody is thinking about the next move.

Anonymous Hackers Vs. Mexican Drug Cartel

Analysis by Nic Halverson - Mon Oct 31, 2011

The days of hackers and computer geeks being pegged as pasty, 90-pound weaklings are over. In fact, they've been flexing some serious muscle lately with tough-guy bravado, and they're intent on saving the day.

Need proof? Look no further than the international hacker movement known as Anonymous.

The Guy Fawkes-masked collective just released an Internet video threatening vengeance on arguably one of the world's most savage and violent criminal outfits: Mexico's Zetas drug cartel.

Claiming to be from Anonymous "Veracruz, Mexico, and the world," the YouTube video is a response to the Zetas cartel's alleged kidnapping of an Anonymous member.

"You made a huge mistake by taking one of us. Release him," says a masked, computer-voiced individual in the video.

Reminiscent of a WWE hype video, Anonymous puts forth an ultimatum to Zetas: either release the Anonymous member, or they will release the identities of local police, journalists, taxi drivers and other allies who conspire with the Zetas.

"We cannot defend ourselves with a weapon, but we can do this with their cars, houses, bars, brothels ..." the video message adds, alluding to properties and possessions owned by cartel supporters. "It will not be difficult. We all know who they are and where they are."

Anonymous has given the Zetas cartel until the end of the week to release their kidnapped member.

"If anything happens to him, you will always remember this upcoming Nov. 5," the message states. "Knowledge is free. We are Anonymous. We are legion. We do not forget. Wait and see."

The Used Car Salesman, a Mexican Drug Cartel and the Saudi Ambassador

When on October 11, 2011, the Obama Administration claimed that the Iranian Revolutionary Guard Corps-Qods Force (IRGC-QF) had attempted to kill Saudi Arabia’s ambassador to the US, many commentators expressed skepticism. Why would IRGC-QF, supposedly a professional organization, hire a used-car salesman, with a dubious background, to carry out such a delicate task on the US soil, knowing full well that if the plot is uncovered, there would be severe consequences for Iran? Why would those involved in the plot converse on the phone, knowing full well that such phone calls might be monitored? Why would they wire money for the plot via a foreign bank to a US bank, knowing full well that Iran is under severe US financial sanctions and any transaction originating from Iran will be scrutinized? These and a number of other anomalies made the story hard to believe.

Indeed the story was so bizarre that in announcing the case FBI Director Robert Mueller stated that it “reads like the pages of a Hollywood script” (Reuters, October 11, 2011).  Others, of course, saw it more as a Keystone Kops script.

The comical nature of the case made it appear so implausible that President Obama became defensive when he was asked about the issue in a press conference on October 13, 2011. In answering the question, Obama referred to the Attorney General’s “specific set of facts” and stated: “those facts are there for all to see.  And we would not be bringing forward a case unless we knew exactly how to support all the allegations that are contained in the indictment.”

Even though comical, it is difficult, at least in the short run, to prove or disprove the US allegation against Iran. After all, when invading Iraq in 2003 the US government showed a set of evidence that at first was hard to disprove. It was only later that the set of evidence was shown to be fabricated.

In the absence of evidence to prove or disprove the US allegation, one might approach the issue from a different angle. If the plot was somehow concocted by the US—for example, the used-car salesman was entrapped—what was the US motivation? This question is much easier to answer.

On the same day that the US Attorney General and FBI Director went public with the alleged plot, the Department of Treasury issued a press release announcing the “designation” of not only the used-car salesman but four “senior” IRGC-QF officers connected to the plot. Among the four individuals was IRGC-QF commander Qasem Soleimani. As the press release stated, the Treasury Department had designated Soleimani twice before, once for “his relationship to the IRGC” and again for his connection to “human rights abuses in Syria.”

Soleimani’s name was also mentioned as a “key person” involved in “nuclear or ballistic missile activities” in the United Nations Security Council Resolution 1747, issued on March 24, 2007. In addition, on June 23, 2011, the European council had announced that it is banning travel and freezing the assets of some Syrian individuals and companies and targeting three commanders of IRGC for supporting the Syrian government. Among these was Qasem Soleimani. Thus, it appears that the US was connecting a high profile character, such as Soleimani, to the assassination plot in order to make the case more significant and ominous. But why was the Treasury Department involved in what appeared to be a criminal case in the first place?

There was a partial answer to the above question in the Treasury Department’s announcement. The press release quoted David S. Cohen, Under Secretary for Terrorism and Financial Intelligence, as saying: “Iran once again has used the Qods Force and the international financial system to pursue an act of international terrorism, this time aimed against a Saudi diplomat. . . The financial transactions at the heart of this plot lay bare the risk that banks and other institutions face in doing business with Iran.” In his press conference on October 13, 2011, President Obama also gave a hint as to why the Department of Treasury was involved in dealing with the alleged terror plot and what the US intended to do about it. He stated that we will “apply the toughest sanctions [against Iran] and continue to mobilize the international community to make sure that Iran is further and further isolated and that it pays a price for this kind of behavior.”

A more specific answer became available on October 13, 2011, when Cohen gave his testimony before the Senate Banking Committee. Cohen announced that the Department of Treasury is “weighing more sanctions against Iran’s central bank to tighten the financial screws and deepen the country’s estrangement from the international financial community” (Reuters, October 13, 2011). After this testimony, many news sources correctly realized that the US Treasury Department was intent to use the alleged plot to sanction Iran’s Central Bank or Bank Markazi. Some also realized that such a sanction might paralyze the Iranian economy, since Bank Markazi is the bank of banks in Iran, and sanctioning it is equivalent to immobilizing the US Federal Reserve System.  Indeed, one AFP headline on October 14, 2011, read “US mulls Iran ‘sanction of mass destruction’”. 

The news report correctly pointed out that after “three decades of blanket US sanctions against Iran, it has become received wisdom that the United States has few financial tools left to bend Iran’s will.” One of those tools, the report went on to say, was sanctioning “Bank Markazi—which sits at the center of Iran’s financial and energy interests.” The report quoted Avi Jorisch, a former advisor at the Treasury Department’s office of terrorism and financial intelligence, as saying: “Essentially financial institutions around the world would have to choose between doing business with the United States and with the central bank [of Iran].”

What was missing from the above reports, however, was the history of the attempt by the US to sanction the Central Bank of Iran. Also missing, was the host of characters and institutions behind the attempt. Below, I will provide a brief account of the missing pieces.

After decades of sanctioning Iran and not bringing about the intended “regime change,” the neoconservatives, Israeli lobby groups and their conduits in the US government came up with a novel idea: sanctioning the Central Bank of Iran. In late May and early June of 2008, two resolutions were introduced in the House and Senate, which effectively called, among other things, for a US blockade of Iran and sanctioning of Bank Markazi. The American Israel Public Affairs Committee (AIPAC) summarized the two resolutions on its website under “Stop Iran’s Nuclear Program” and called for action:
Members of the House and Senate have introduced resolutions (H. Con. Res. 362 and S. Res. 580) calling on the administration to focus on the urgency of the Iranian nuclear threat and to impose tougher sanctions on Tehran. The resolutions, introduced in the House by Reps. Gary Ackerman (D-NY) and Mike Pence (R-IN) and in the Senate by Sens. Evan Bayh (D-IN) and John Thune (R-SD), urge the president to sanction Iran’s Central Bank and other international banks and energy companies investing in the country. They also demand that the United States lead an international effort to increase pressure on Iran by curtailing Iran’s ability to import refined petroleum products. Please urge your representatives to cosponsor this critical resolution.

The Bush Administration, however, realized that the rest of the world would not go along with sanctioning Iran’s Central Bank. Instead, the Administration relied on the Treasury Department to sanction major banks in Iran and prepare the ground for sanctioning Bank Markazi at some later date. Stuart Levey, the Treasury Department’s Under Secretary for Terrorism and Financial Intelligence, who was well known for his connection to Israeli lobby groups and his personal war against Iran, was given the task [1].  Levey did succeed, and under his tenure, which lasted well into the Obama Administration, major banks in Iran were sanctioned. Yet, the neoconservatives, Israeli lobby groups and their conduits in the US government wanted more.

Sanctioning Bank Markazi became a campaign issue in the 2008 presidential election.  As I mentioned in my pre-election essay, “What the Future has in Store for Iran,” in spring of 2008 John McCain, who was being advised by the neoconservatives, delivered a speech at the AIPAC conference in which he mentioned sanctioning Bank Markazi. “Central Bank of Iran,” McCain stated, “aids in Iran’s terrorism and weapons proliferation.”

He further stated that the Europeans “can help by imposing targeted sanctions that will impose a heavy cost on the regime’s leaders, including the denial of visas and freezing of assets; as a further measure to contain and deter Iran, the United States should impose financial sanctions on the Central Bank of Iran which aids in Iran’s terrorism and weapons proliferation. We must apply the full force of law to prevent business dealings with Iran’s Revolutionary Guard Corps.”

The push to sanction the Central Bank of Iran continued during the campaign season, and just prior to the presidential election of 2008 Senator Charles Schumer pressed the Bush Administration to impose financial sanctions on Bank Markazi (AP, November 6, 2008). Yet, the Bush Administration remained unconvinced that other countries would go along with the sanction and left the matter to be handled by the next administration. Stuart Levey, who stayed in his post in the Obama Administration, continued to lead the sanction campaign against the financial sector of Iran and waited for an opportunity to sanction Bank Markazi.  Once he left office in March of 2011, the campaign was carried on by Levey’s deputy, David S. Cohen.

On August 8, 2011, the Wall Street Journal reported that more “than 90 U.S. senators signed a letter to President Barack Obama pressing him to sanction Iran’s central bank, with some threatening legislation to force the move, an outcome that would represent a stark escalation in tensions between the two countries.” This, as the report noted, would be a drastic action, a “nuclear option” that if implemented, “could potentially freeze Iran out of the global financial system and make it nearly impossible for Tehran to clear billions of dollars in oil sales.”

The letter, as the report stated, was co-sponsored by Senators Mark Kirk and Charles Schumer.  It told the President:
We must do more to increase the economic pressure on the regime. In our view, the United States should embark on a comprehensive strategy to pressure Iran’s financial system by imposing sanctions on the Central Bank of Iran (CBI), or Bank Markazi. If our key allies are willing to join, we believe this step can be even more effective.
As you know, the Iranian regime continues to pursue avenues to circumvent both U.S. and multilateral sanctions. In the banking sector, the Central Bank of Iran lies at the center of Iran’s circumvention strategy. In May, Under Secretary of the Treasury for Terrorism and Financial Intelligence David Cohen stated that “the activities of the Central Bank of Iran (CBI) have been, and continue to be, a focus of the Treasury Department. Treasury has noted previously that the CBI and Iranian commercial banks have requested that their names be removed from international payment messages to make it more difficult for intermediary financial institutions to determine the true parties to the transaction, and we remain concerned that the CBI may be facilitating transactions for sanctioned Iranian banks.”
The time has come to impose crippling sanctions on Iran’s financial system by cutting off the CBI. There is strong bipartisan support in Congress for the imposition of sanctions on the CBI. As recently as consideration of the FY10 National Defense Authorization Act, the Senate unanimously supported an amendment urging you to impose such sanctions. We urge you to strongly consider imposing U.S. sanctions against the CBI and to encourage key allies to join us in this important action.
According to the above report, in an interview Kirk stated that “he would introduce a law by year’s end to enforce sanctions on Bank Markazi if the White House doesn’t move independently.” The report quoted Kirk as saying: “The administration will face a choice of whether it wants to lead this effort or be forced to act.” It also quoted Schumer as saying: “It’s time for the administration to use the tools Congress has provided and choke off the money spigot.”

The pressure was on and Under Secretary David S. Cohen had to find a plot to push for sanctioning the Central Bank of Iran. The used-car salesman, hired by IRGC-QF to arrange for the assassination of Saudi Arabia’s ambassador, was just that plot. It was now time to bring on board the rest of the world.

Immediately after the alleged plot, US officials, particularly Under Secretary Cohen, were travelling around the world, trying to convince other countries, especially those that were reluctant to sanction Bank Markazi, that the plot was real. On October 14, 2011, Harakah Daily reported from Ankara that a “US team will travel to Turkey soon to brief Turkish authorities on what the US says a clumsy plot to assassinate the Saudi ambassador to the United States on American soil.” On October 21, AP reported that following the visit by two US officials to Turkey to “brief the country on evidence they have in the alleged plot,” Turkey’s foreign minister urged Iran to cooperate with the US. On October 24, 2011, the headline of a news item published by Radio Free Europe/Radio Liberty read: “Top U.S. Treasury Official [Cohen] in Europe for Talks on Sanctioning Iranian Central Bank.” After his stop in London, the report stated, Cohen will take his message to Berlin, Paris and Rome. On the same day, AP reported the same news and quoted Cohen as saying: “Iran needs to be held accountable for this plot. . . We are going to continue to look at those financial institutions that are involved with proliferation activity for Iran and continue to try to isolate them from the international financial sector.” According to the report Cohen added: “Any further sanctions would also be part of efforts to deter Iran from pursuing nuclear capabilities . . . and could target the country’s central bank.”

In sum, the bizarre story of the used-car salesman, Mexican drug cartel, and the Saudi Ambassador is inextricably linked to the US-Israeli desire to sanction Bank Markazi. It is expected that this “sanction of mass destruction,” or “nuclear option,” will do the trick and will help to paralyze the Iranian economy. Down the line, it is hoped, the shattered economy will create the right conditions for the overthrow of the “Iranian regime” and its replacement by a US-Israeli friendly government.

What a way to bring about regime change!

[1] On Levey’s connection to the Israeli lobby groups and the role that he played in sanctioning Iran in the Bush Administration see my book: The United States and Iran: Sanctions, Wars and the Policy of Dual Containment, Routledge, 2008.

Secrets of the Flat Tax

With Herman Cain soaring to the top of the Republican pack on the basis of his 9-9-9 plan, a flat tax is once again at the center of public debate. Texas Gov. Rick Perry, and some days Mitt Romney, are always spouting the virtues of a tax system that is “simpler, flatter, and fairer.”

While simplicity is generally desirable in a tax code, it has nothing to do with the tax code being flat. And being flat would be the opposite of being fair, unless people think it is unfair that they don’t pay more taxes.

Confusing a simple tax code with a flat tax is a cheap political stunt. The number of tax brackets doesn’t affect simplicity at all. Regardless of the number of brackets, there is only one calculation needed. The instruction is simple. It looks like this: “pay $1,000, plus 15 percent of income above $50,000.” You can have a flat tax or 100 tax brackets, it is the same formula. Even a Republican presidential candidate can figure it out.

The other part of the story is that the flat tax means a large tax cut for rich people. Every economist who has examined flat tax proposals over the years comes to that same conclusion: A flat tax means the rich pay less.

And if the rich pay less and we raise the same amount of money, then someone else has to pay more. And the someone in this story is the middle class. It really is that simple.

The flat taxers like to run around with Lake Wobegone economics where we are all going to pay less and still have the same amount of money, but the world doesn’t work that way. We have tried reducing taxes to raise revenue. People remember Reagan’s tax cuts and the large deficits they led to. They remember Bush’s tax cuts and the large deficits they led to.

No one is going to fall for this trick yet again. When we cut taxes on the rich, we get less money and the rest of us will have to make up the shortfall.

For middle-class people, a flat tax means that they will have to pay more taxes. If people think it would be fairer that they pay higher taxes, then the Republican Party has the presidential candidates for you.

'Highly Probable' Fracking Tests Caused Earthquakes in UK Drill Site

It is "highly probable" that shale gas test drilling triggered earth tremors in Lancashire, a study has found.

But the report, commissioned by energy firm Cuadrilla, also said the quakes were due to an "unusual combination of geology at the well site".

It said conditions which caused the minor earthquakes were "unlikely to occur again".

Protesters against fracking, a gas extraction method, said the report "did not inspire confidence".

Six protesters from campaign group Frack Off climbed a drilling rig at one of Cuadrilla's test drilling sites in Hesketh Bank, near Southport, ahead of the report.

They oppose fracking, a controversial extraction method which blasts water into rock to release the shale gas, because they fear it is not safe.

Safety concerns

A spokesman for Lancashire Police said the force was "liaising with the site owners and the protesters to bring about a peaceful resolution".

Cuadrilla suspended its shale gas test drilling in June, over fears of links to the earthquakes.

One tremor of magnitude 2.3 hit Lancashire's Fylde coast on 1 April, followed by a second of magnitude 1.4 on 27 May.

A study by The British Geological Survey placed the epicentre for each quake as being 500m away from the Preese Hall-1 well, at Weeton, near Blackpool.

The Geo-mechanical Study Of Bowland Shale Seismicity report said the combination of geological factors that caused the quakes was rare, and would be unlikely to occur together again at future well sites.

It said: "If these factors were to combine again in the future local geology limits seismic events to around magnitude 3 on the Richter scale as a worst-case scenario."

However, it said that "even the maximum seismic event is not expected to present a risk".
Cuadrilla said the report would also be subject to peer review.

A spokesman for Frack Off said: "This report does not inspire confidence, they should have done their research before drilling began."

He added: "Can we believe anything else the industry says when it talks about the safety of fracking?"

Flash mob

Frack Off is intending to holding a flash mob-style protest at the Shale Gas Environmental Summit in London later.

Protesters have called for an end to fracking. There have been concerns that potentially carcinogenic chemicals could escape during the process and find their way into drinking water sources.

Nick Molho, head of energy policy at World Wildlife Fund UK, reiterated a call for a moratorium on fracking in the UK.

"These findings are worrying, and are likely to add to the very real concerns that people have about fracking and shale gas," he said.

The industry denies that shale gas is unsafe and a government committee has recommended that fracking should be allowed to go ahead.

The Department of Energy and Climate Change (DECC) said: "The implications of this report will be reviewed very carefully - in consultation with the British Geological Survey, independent experts, and the other key regulators, HSE and the Environment Agency - before any decision on the resumption of these hydraulic fracture operations is made."

The process involves water and chemicals being pumped underground at high pressure to shatter the rock formations and release the gas.

Is the US heading for war with Iran?,

War with Iran is the last thing Barack Obama needs with the American economy in dire trouble and a tough White House election campaign looming next year, according to officials in Washington as well as political analysts.

But while the Obama administration is desperate to avoid another conflict – it would be America's fourth in a decade – the drumbeat from Israel has been growing louder.

The Israeli cabinet was reported on Wednesday to be debating whether to launch air strikes on Iranian nuclear sites in the coming weeks. The prime minister, Binyamin Netanyahu, and the defence minister, Ehud Barak, are lobbying in favour of action, but other senior ministers are urging caution.

In response, Iran has warned, as it has in the past, that any attack by Israel would result in retaliation against the US. The Iranian news agency ISNA quoted Hassan Firouzabadi, Iran's military chief, as saying: "The Zionist regime's military attack against Iran will inflict heavy damages to the US as well as the Zionist regime."

The rhetoric from Tel Aviv and Tehran is making some within the Obama administration nervous.

A Washington official familiar with the issue acknowledged the temperature has been rising and that Israel introduced an unpredictable element. He reiterated, however, that the policy of the Obama administration was to pursue all diplomatic channels, backed by tougher sanctions, and avoid military action.

"I do not think the US has the stomach for it," Sam Gardiner, a retired air force colonel who taught strategy at the National War College and who has specialised in carrying out war games targeting Iran, said. But if Israel went ahead, it would be difficult for the US to stay out. "The US would have to be involved and finish it," he said.

A congressional hearing on Iran last week was told that the Pentagon has a series of contingency plans for military action, ranging from all-out war to limited operations. Obama had signed off on these, the hearing was told.

Retired general Jack Keane was hawkish, urging escalation. "We've got to put our hand around their throat now," he said. The hearing was told options included increased covert action, more cyberwarfare and sanctions that would target the Iranian central bank, a serious move that Iran might regard as tantamount to a declaration of war.

But Keane and other military colleagues giving evidence on Capitol Hill all stopped short of advocating an air strike against Iran. That has been line for years from the Pentagon, which sees all-out war against Iran as the worst of options.

The issue of a possible military attack on Iran was reignited in Israel by influential columnist Nahum Barnea last Friday. "Rumours are increasing about an Israeli offensive that would change the face of the Middle East and perhaps seal the fate of the Jewish state for the coming generations," he wrote.

Members of the inner cabinet swiftly tried to put a lid on conjecture. The intelligence affairs minister and deputy prime minister, Dan Meridor, said the issue should not be a matter of public debate. "A public debate about this is nothing less than a scandal … The public elected a government to make decisions about things like this in secret. The public's right to know does not include the debate about classified matters like this," he said.

Israel test-fired a "rocket propulsion system" capable of striking Iran on Wednesday, adding to speculation over its intentions regarding military action. However, defence officials said the exercise had been planned for a long time.

With the next White House election 13 months away, an Israeli attack on Iran is Obama's nightmare. It would be hard for a president to sell another conflict to a war-weary American public on top of Iraq, Afghanistan and Libya.

There might be a temporary rallying round the flag but Obama would lose the Democratic left, the base he needs to get out and campaign for him.

That would be problematic for a president facing a tight election. But there is an even bigger problem: the impact of rising oil prices – an almost certain consequence of conflict – on the faltering US recovery.

Karim Sadjadpour, one of the leading analysts in the US on relations with Iran, based at the Washington-based Carnegie Endowment for International Peace, is sceptical about the chances of war with Iran.

"A US military attack on Iran is not going to happen during Obama's presidency. If you're Obama, and your priority is to resuscitate the American economy and decrease the US footprint in the Middle East, bombing Iran would defeat those two objectives. Oil prices would skyrocket."

Larry Sabato, a widely-respected political analyst and professor of politics at the University of Virginia, shared the scepticism, though he noted that Obama was more bellicose than people had expected. "He has not been hesistant to use force. And that has surprised not just the left but people round the world. I am not sure he would get the Nobel peace prize now. Just as well he got it early," he said.

If there was to be a conflict, it would be better late next year, close to the election, rather than during the remainder of this year or early next. "We always talk about October surprises and we would have people rallying round the flag if there was sufficient justification. October means the election would be held before the US becomes mired down in conflict or faces a boomerang effect," Sabato said.

Israel is not alone in talking about military action against Iran. Among the state department documents disclosed by WikiLeaks was one in Saudi Arabia called for action to chop what it called "the head of the snake".

The attitude of the Obama adminstration towards Iran is well illustrated by the episode in which allegations surfaced of an Iranian plot to assassinate the Saudi ambassador to Washington with the help of a Mexican drug cartel.

If the US was finally bowing to pressure from not just Israel but Saudi Arabia, the alleged Iranian plot would have been a useful casus belli or at least the start of a softening up process in preparation for war.

Instead, Obama administration staff briefed privately almost immediately that a military response was not being contemplated, not even sending more naval vessels to the Gulf or announcing new military maneuvers in the region.


Fuck Israel! Let them fight Iran themselves. They don't need us to fight their wars!