In the Florida primary, the first contest only open to Republicans, John McCain beat Mitt Romney in Florida 36 percent to 31 percent. He won among moderates, seniors and Hispanics and dispelled the argument that he needed Independents and Democrats to become the frontrunner.

According to exit polls, McCain beat Romney among the 50 percent of voters who said the economy was their most important issue by 38 percent to 35 percent, reports John Dickerson in Slate.com. “Another explanation may be that McCain’s relentless attacks on pork barrel spending may have worked for him, validating his long-held theory that spending restraint has always been the key economic issue among most GOP voters.”

Veteran political consultant Dick Morris suggests that the McCain’s people may “examine Romney’s record in the companies he has ‘turned around’ for how many layoffs resulted. If his efforts seemed to cost people their jobs, the economy issue could backfire” on Romney.

And Mike Huckabee’s decision to stay in the race is not good news for Romney because his presence will split the conservative Christian vote.

Rudy Giuliani, who made an unprecedented decision to focus all of his time and money in one state, suffered a humiliating defeat in Florida.. Some pundits offer the lame excuse that Giuliani did not expect McCain’s resurrection and the very heavy Florida turnout. Perceived as arrogant, he just didn’t wear well. And, like it or not, the more Floridians saw of Giuliani, the less they liked him.

An advocate of hard measures to deal with terrorism, Giuliani did not realize that voters wanted to hear his vision for the country’s other problems. Learning that he trailed McCain even in his home city of New York, he knew it was over.

In his concession speech, he said: “I’m proud that we chose to stay positive and to run a campaign of ideas in an era of personal attacks, negative ads and cynical spin.” Endorsing McCain Wednesday, speculation at once started: Will there be McCain/Giuliani bumper stickers?

Others now wonder if right-wing opponents such as anti-tax advocate Grover Norquist or talk show host Rush Limbaugh or other Republican Party regulars will try to stop McCain.

What is obvious is that the economy is the most important issue in the 2008 campaign. Faced with growing signs of recession, the Federal Reserve made its second deep interest-rate cut in a week and slashed the key short-term rate by a half-percentage point Wednesday.

The divided Democrats don’t automatically benefit. “The widespread notion that a downturn or a recession gives a clear advantage to the Democratic presidential challenger is not always supported by the facts,” says historian Michael Lind at the New America Foundation in Washington, D.C. “The past offers just as much evidence that we could get a Republican president with a Democratic Congress in November as Democratic control of both,” wrote Lind, as reported in the Financial Times.

Going into the February 5th, Super Tuesday primaries, I am willing to bet that McCain is now unstoppable – provided he tightens up his crucial, neglected fundraising operation.

In all its traditional pomp and formal ceremony, the President’s annual State of the Union address is an anachronism we cherish. The President reviews the vast expanse of the federal establishment and global commitments at a breathless pace, repeatedly interrupted by applause, that is relentlessly upbeat and politically correct.

I would have to do a line by line comparison, but it seems to this old presidential speech writer that Bush has given this same speech seven times before. And in this seventh and final State of the Union address, Bush had an opportunity to outline his legacy and, in the process, possibly raise his poll ratings and help decrease some of his Administration’s negatives that the present Republican presidential candidates are trying to duck.

He spent a good deal of time speaking about the “surge” strategy in Iraq and how it had succeeded and the audience cheered. The greater threat that I have warned about was not mentioned by Bush -- that al Qaeda has shifted from the main front of Iraq to Pakistan and has escalated its offensive there. Bush did say Iraq is only one battleground in a regional conflict in which the U.S. and our Sunni Muslim allies are just beginning to make progress, adding that Iraq is years away from being capable of surviving in freedom on its own. Read: it was certainly very clear again that Iraq will be left to his successor and his war will not be “over” any time soon.

Bush also tentatively promised to bring home 20,000 U.S. troops from Iraq in this election year, leaving 140,000 there and announced 3,200 Marines would be sent to Afghanistan, taking the role there that NATO has rejected. Then he addressed Iran directly: “We will defend our vital interests in the Persian Gulf.” (That has been the basic aim of U.S. policy and strategy since the Eisenhower Administration.) He softened that by expressing hope for democracy in Iran but his early posturing and rhetoric were gone.

Bush highlighted the massive, unfinished business of ensuring the financial future of Social Security and Medicare and of course gave highest priority to the prompt enactment of the $150 billion stimulus package. (The House yesterday overwhelmingly approved a $146 billion economic stimulus package that would provide rebate checks to taxpayers. The measure now goes to the Senate, where some Democrats want to amend it to add more benefits.)

He pledged more resources to secure the U.S. borders and asked for a sensible and humane way to employ migrant workers and simultaneously uphold our laws and highest ideals governing our nation.

Line by line through the speech, Bush laid out his agenda that Congress will largely ignore in this 2008 election year. He asked for more of everything but did not request any new taxes or sacrifices, only more borrowing to support our accustomed way of governing everything but our appetites.

The State of the Union is a bipartisan incumbent’s rally of the permanent Congressional government, a celebration of itself by America’s legislative ruling class. Bush’s address was muted and understated; he avoided too much notice of what he greatly fears – the grave uncertainties of the faltering economy.

The applause fell on his failures and false hopes as well as his few achievements, including the belated beginnings of the long-deferred Mideast peace process. Perhaps this State of the Union sounded the same as the other seven because this man still does not have a clue what he has wrought upon this nation both internationally and economically.

Bush sought to show he’s still relevant – somehow, but he failed.

Have you noticed that the presidential candidates now refer to “the war” almost in the past tense? The economy and Bill you-know-who now has all the media’s attention but, in the meantime, on January 9th, Bush & Co. authorized the CIA to secretly operate U.S. Special Forces troops in the wild, lawless territories of Northwestern Pakistan, where the Taliban, al Qaeda and other militant Islamic groups hold sway.

All that was needed was Pakistan’s quick approval, which was assumed. Making the request were Mike McConnell, the Director of National Intelligence and General Michael V. Hayden, the CIA Director who personally traveled 14,000 miles for the one-day meeting in Islamabad.

They were turned down flat. Pakistan’s President Pervez Musharraf, former Commander-in-Chief of the Army and now the civilian leader, rejected his visitor’s argument that the Pakistanis are now seriously pursuing Taliban subversion and violence directed at the regime. Pakistani authorities say they have more than 100,000 troops in the remote region, conducting a major offensive in South Waziristan. The U.S. pays Pakistan some $10 billion annually to patrol the remote region and seek out al Qaeda and Taliban leaders.

The high-level American official requests followed the December 27, 2007 murder of former Prime Minister Benazir Bhutto, shot down by al Qaeda gunmen in the suburbs of the capital in the Army’s headquarters town of Rawalpindi. The audacious murder of Bhutto, whom Musharraf sought to engage in a civilian political alliance, showed that al Qaeda and its shadowy masters in the Army’s all-powerful Inter-Services-Intelligence (ISI), a state within the state, acted with impunity in the subverted, deeply compromised and penetrated political realm. (The ISI invented the Taliban after the Soviets invaded Afghanistan and still control it.)

Pakistan’s Army Chief, General Ashfaq Parvez Kayani, Musharraf’s hand-picked successor, is personally loyal to him but the ISI-dominated Army is corrupt, allied with the Muslim world’s most fanatical extreme Islamists, and eager to gain control of the double-keys to Pakistan’s estimated 80 nuclear weapons. Musharraf is playing for time to purge the ISI and strike a bargain with another civilian ex-Prime Minister, Nawaz Sharif, to restore a semblance of democracy and gain Washington’s favor.

The U.S. has used and abused poor, pliable Pakistan since the days when, in the 1950s, Gary Francis Powers and others took off from their secret U2 bases to spy at high altitudes above closed Russia. Now, the U.S. sees 160 million Pakistanis as the Muslim backdoor to Hindu India and a semi-reliable guardian against Afghanistan, Russia, China and Central Asia’s “Stans” states. But the Pakistanis see the U.S. as a receding great power losing interest in the geopolitical great game. For the U.S., Pakistan could become expandable as the ill-protected Bhutto murder shows. Musharraf sees the ISI shifting sides towards his enemies, the fanatical Islamists, and regards Americans as dangerous friends.

We have no Kipling to sing the hymns of our retreats. He wrote: “If any questions why we died, tell them, because our fathers lied.”

It would have been enough to concentrate and analyze the exit polls of Barack Obama’s overwhelming South Carolina victory over Hillary Rodham Clinton – 55 – 27 percent.

Then, the most evocative force in our politics, the Kennedy factor, entered the equation. CBS News and other news media reported that both Senator Ted Kennedy (D-Mass) and his son Rep. Patrick Kennedy, (D-R.I.) will endorse Barack Obama at a rally at American University in Washington, D.C. today. And they will be joined by JFK’s daughter Caroline Kennedy, who endorsed Obama in an op-ed in the yesterday’s New York Times (1/27/08).

I think that Caroline Kennedy’s endorsement is the single most important public statement by a non-candidate in the 2008 campaign. Her powerful words evoke a sense of urgency, writing quite sincerely: “I have never had a president who inspired me the way people tell me that my father inspired them.” She believes Obama can change our history and has conferred the mantle of John F. Kennedy’s memory on a black American politician whose slogan is – “Yes We Can”.

Ted Kennedy’s endorsement has been highly sought after by all the Democratic candidates because of his status as a liberal icon, a member of the Kennedy dynasty and his broad national fundraising and political network, the New York Times reminds (1/27/08). A source tells CNN that Kennedy has “enormous respect and admiration for Senator Clinton but believes Senator Obama has a unique message and a unique opportunity.”

Since the wound of Dallas we all suffered almost a half century ago, we have had a sorry succession of mediocrities in our highest office -- LBJ, Nixon, Jerry Ford, Clinton and Bush I and II. Only Ronald Reagan was touched by greatness and knew how to share the lift of a driving dream with the people.

Sad then that the sole surviving child of JFK who has studiously avoided public attention comes forward and writes: “I want a president who understands that his responsibility is to articulate a vision and encourage others to achieve it, who holds himself and those around him to the highest ethical standards; who appeals to the hopes of those who still believe in the American Dream….”

Sad, too, that last year I accepted the position as Senior Advisor to David M. Abshire’s Center for the Study of the Presidency in Washington, DC. I use the word “sad” because it was necessary to create this Center. One of its missions is to “educate and inspire the next generation of America’s leaders to incorporate civility, inclusiveness and character into their public and private lives and discourse.”

The question that emerges: will the Kennedy endorsement help Obama? I think Caroline’s article gives an accurate picture of how fed up Americans are and crave change so much they are willing to give up the “old” – the Clintons – for someone who may not have as much experience but who has the “qualities of leadership, character and judgment.”

Let me hear from you.

Even before the recession of 2008 is officially recognized, Andy Kohut of Pew Research and others find that consumer confidence has plunged and satisfaction with the economy and its prospects has hit a 15-year low. This is a powerful anti-Republican force building up in the electorate ahead of the November Congressional races.

Even older, wealthier citizens think America is “on the wrong track” by a large majority. This “track” question is used by pollsters to orient a respondent generally rather than according to specific issues. A big majority for “wrong track” indicates to pollsters a deep dissatisfaction with the Bush Administration and Congressional Republicans among self-identified “conservatives.” When the “wrong track” majority tops 60 percent, the GOP is in danger of losing part of its base.

The biggest change: many Republicans have lost their former confidence in “Bush’s war” – now opposed by two-thirds of poll respondents. If Bush had confronted these attitudes at such current intensity levels during the 2004 election, he would have been defeated by Senator John Kerry.

The 2008 recession will provide the crucial backdrop for the November election. The Iraq war’s costs will be seen as “a trillion-dollar tax” on the U.S. economy, denying voters many other desirable programs. Any anti-recession stimulus package Congress enacts is not likely to influence the election. Congress will become more Democratic in both chambers, especially in the Senate, where the GOP must defend 21 seats to the Democrats dozen. A net Democratic gain of 4 to 6 Senate seats would put them within reach of the 60-vote super-majority needed to cut off debate and control every aspect of the future administration.

An election-year recession is a rarity – and a downturn that would end George W. Bush’s presidency at the same kind of 1991-92 low point that George H.W. Bush suffered - is a grand irony and poetic justice. It will be as though the worst presidency in modern U.S. history had never happened, and that the Bush Dynasty, marked by needless war, death, slump and suffering had been a bad dream.

The all-purpose Federal Reserve medicine of reducing short-term interest rates will not help those who are in trouble because of overvalued assets, excessive debts, unaffordable mortgages and other investment mistakes. A broad, quick tax cut targeted to the middle-classes might help the weakening economy find its feet and rally, but the basic problem goes much deeper.

Dollar-smart Mayor Michael Bloomberg summed it up last evening as reported in The New York Post: “What good is a rebate going to do for a family about to lose their home? It’s shortsighted to allow whole neighborhoods to fall victim to this because when neighborhoods empty out, crime and drugs and violence rush in.”

Amen.

The increasingly nasty and personal mud wrestling between Hillary Clinton and Barack Obama exhibited in Myrtle Beach, S.C. is reminiscent of Bush’s sleazy radio ads against Senator John McCain prior to the South Carolina primary in 2000, falsely accusing McCain of opposing federal funds for breast cancer research – one of the lowest blows in Republican Party’s history.

Obama complained during the debate: “When Senator Clinton says – or President Clinton says – that I wasn’t opposed to the war from the start or says it’s a ‘fairy tale’ that I opposed the war, that is simply not true,” adding “I can’t tell who I am running against sometimes.” More and more, Obama’s quiet dignity makes the Clintons look like clumsy muggers. And supporters of both campaigns concede that the level of bitterness and personal animosity between the two has become almost impossible to reverse, reports the Financial Times,

Longtime political consultant Dick Morris wrote this week in the NY Post: “In the days before Iowa and leading up to New Hampshire, Hillary… took shots for misusing Bill’s record and trying to adopt it as her own….Now they’re hitting Bill instead.” Morris adds that this may be fine with the Clinton strategists: “Bill wants to suck up all the oxygen in the room and dominate the coverage of the Democratic contest,” thus keeping Obama off the front page.

But real people have serious problems and are seeking real life answers and feel that they are being cheated by the cheap, dirty-tricks campaigning of the Clintons. Hillary must have had some warnings about the mood of voters to her continuous barrage of insults to her opponent because she stopped long enough to smell some coffee and predicted January 22 that the U.S. was heading for a long, deep recession and said her campaign would now focus almost entirely on the economy.

Such a statement is not rocket science. All of the candidates are now quite aware that people are frightened to death by a plunging stock market and how it jeopardizes their retirement savings; the market value of their homes; the cost of gas and heating; etc. People want answers to their economic and health care concerns – not an abusive name-calling pseudo-debate that is insulting to voters both in South Carolina and elsewhere.

The Clintons’ decision to attack Obama so harshly obviously stems from fear of his growing support, confirmed by a private poll that Hillary is losing momentum. She appears to have already conceded her chances in the upcoming South Carolina primary to travel to California, New York and Arizona.

Clinton’s cynical “just politics” debating style is very risky not only in South Carolina with its huge proportion of blacks among Democratic voters but in the major primaries coming up on February 5. American voters are desperately searching for a new president with character and maturity.

This is what panic looks like: a frightened President waving a phony, temporary “economic stimulus” package to try to stop the global bear rampage in plunging stock markets around the world. Then at 6 PM Monday, January 21, the Fed decided it could not wait another nine days for their scheduled meeting – January 30 – and slashed its key lending rate by 75 basis points to 3.4 percent.

This global stock market panic -- the worst single day for equity markets and the first unscheduled Fed Rate cut since the terrorist attacks of September 11, 2001 -- is an overdue wake-up call. This is not a surprise, I have been warning for many months about such fallout from the U.S. housing slump and the crisis in the credit markets. Actually, it is a tribute to the resiliency of our economic system that this avalanche did not happen sooner.

It is only partly triggered by the U.S. recession – that, remarkably, still has not yet been declared “official”. More deeply, it is a reaction against multiple, compounded failures of our present administration.

In fiscal politics, President Bush and the spend-happy Congress alike have behaved like berserk teens using grown-ups’ credit cards. The U.S.’s long string of budget deficits is reflected in the weak and falling dollar. Is the Fed’s radical rate cut too little, too late? The Fed exists to rescue banks not consumers. The Fed can temporarily manipulate (reduce) short-term interest rates but the Federal Reserve alone cannot correct the fundamental imbalances in our economy and markets. Only Congress can curb and reverse reckless “earmarked’ pork-barrel spending that creates huge deficits and forces the U.S. to borrow heavily overseas and inflate and cheapen the dollar to lighten the resulting debt burden. The Fed has dramatically lowered the cost of money for the banks, making their profits virtually automatic. But badly-run banks, including some big names, still must unwind their high-risk speculative investments in coming months.

We need another Teddy Roosevelt now. Roosevelt, the champion of stand-up, vigorous capitalism and free enterprise, helped reform late 19th and early 20th century American capitalism of greed, corruption and blatant self-dealing at public expense. He restored, revitalized and modernized market capitalism.

The stark truth is that America’s failing global leadership is on the line. In 2006 and 2007, China, Russia and India together accounted for almost half the world’s total growth, while the U.S. shrank to roughly one-quarter.

The entire year of 2008, climaxed by the November elections, is going to be a stomach-churning test of America’s maturity and political will to restore our credibility and leadership, at home and abroad.

The opposing human emotions of fear and greed rule markets. I believe we’re approaching a peak of fear, possibly panic. Suddenly, poll-reading politicians are speaking about the economy that voters have been worrying about for years. This could prove a decisive turning-point and even provide a climactic cleansing and revitalization of our abused, mismanaged but resilient economy.

Evidence of panic is all around us, from the plunging Wall Street stock market to the beaten down dollar to $100 a barrel oil to the soaring price of gold, above $850 an ounce and seemingly poised to run to $1,000. Residential real estate prices are falling, home equity nest eggs disappearing, all kinds of consumer debts going into default from re-fi loans to student and car loans and credit cards.

Mega-banks like Citigroup and Merrill Lynch are writing off multi-billion speculative losses and handing failed CEOs golden parachutes. Corporate loan defaults and bankruptcies are multiplying. A sharp increase in the unemployment rate to 5 percent in December flashed a time-tested signal of recession, threatening expanding job losses as the economy slows.

Economists in Washington have warned politicians of the downturn. That’s why President Bush and Congressional Democratic leaders are agreed on a quick $145 billion “emergency stimulus" program of federal giveaways to anxious consumers.

In our $15 trillion GDP economy, the proposed one percent “stimulus” package is like giving a canapé to a starving man. Our jerry-built hopelessly complex and counterproductive tax system needs radical overhaul. It should encourage thrift, savings, capital formation and investment by individuals and businesses. Capitalism requires capital and freedom to invest it. We should follow Europe’s and Asia’s examples and make the overdue shift to consumption-based taxes on spending.

The U.S. cannot continue to finance unbudgeted foreign wars and reckless domestic consumption deficits by borrowing from the Bank of China, the Bank of Japan and other Asian dollar-holders already stuffed with dubious U.S. paper and unkept American promises. The fallen dollar and soaring gold foretell a coming climax and global panic triggered by America’s profligacy.

In the next administration, “fiscal integrity” will be no mere slogan but the precondition for America’s survival and renewal. The next administration and Congress will have to marshal the best bi-partisan economic advice and the political will to make America’s economy and our dollar sound again.

Over the past 28 years, the candidate who has won the South Carolina Republican primary has gone on to win the party’s nomination – a testament both to the Palmetto State’s importance and to the GOP’s enduring national governing ascendancy.

Senator John McCain’s smashing victory in South Carolina’s GOP primary has lifted the “curse” of his defeat there in 2000. Voters in exit polls identified themselves as 8 in 10 Republican and one in three “very” conservative.

The decisive factor for the “maverick” McCain: this time, unlike 2000, he had the support of some of the state party’s establishment. They see him as a winner at the top of the 2008 national GOP ticket who will help protect their own state and local candidates down lower on the ballot.

As he showed in South Carolina, McCain has the same broadly popular appeal to Independents and Democrats that Reagan possessed. This greatly enhances his electability, but raises suspicions among narrowly ideological conservatives. The churlish George Will dismisses McCain as an ill-tempered “moralizer.” Conservative Rick Lowry, editor of National Review, cheers McCain’s victory, achieved by running to the right, emphasizing his national security credentials and all-but ignored fiscal conservatism as well as his pro-life voting record in the Senate.

McCain, measured by his experience and his personal qualities, is the “class” figure in the GOP field. He is the leader of a party that wants to win, not the post-Bush burnt-out GOP gang in Washington who know they deserve to lose and want a rest. Many Bushies assume they can earn big bucks lobbying against the anti-business legislation to be expected from a more heavily Democratic Congress.

Liz Smith reminds me that Reagan once told his staff: “Politics is supposed to be the second-oldest profession. I have come to realize that it bears a very close resemblance to the first.”

Those who long for “another Reagan” do not remember – or perhaps do not even know – how he got there. After the GOP’s disastrous 1964 defeat, behind Senator Barry Goldwater of Arizona, Reagan assumed leadership of the conservative movement left in the wilderness. For 16 years, including Nixon’s 1968 victory and the subsequent Watergate debacle, Reagan consolidated and built the Republican Party into a governing vehicle. (See an interesting article about “In Search of Reagan” from the New York Times.)

This is what McCain can revitalize – a governing conservative majority, measured not by ideological purity and promises but by solid achievements through wise, practical skill and necessary respect for and political compromise with cooperative minorities.

Robert Rubin, Bill Clinton’s former Treasury Secretary and now Hillary Clinton’s chief issues strategist, is preparing her economic program to head off a recession, drafting her position papers and writing her economic speeches, say sources close to Rubin. He would be a principal White House adviser on the economy in a future Clinton Administration.

Drawing on top-flight bipartisan economic talent assembled for his “Hamilton Project” at Washington’s Brookings Institution, Rubin has devised an initial $100 billion package of specific proposals, featuring tax credits and rebates and other fiscal measures to maintain the level of spending and the economy’s momentum.

Among those advising Rubin on the “Hamilton Project” to revitalize U.S. industry are Martin Feldstein, Chairman of the National Bureau of Economic Research, and Reagan’s top economic adviser; Alice Rivlin, Clinton’s budget director and a staffer at the Brookings Institution and Mark Zandi, president of Moody’s economy.com.

New York’s former Mayor Rudolph Giuliani, a modern media pol, is running a curious, pre-TV kind of campaign.  He’s concentrating all of his time, energy and money in Florida – staking his entire presidential bid on Florida’s 57 winner-take-all delegate votes January 29.

In his native Michigan, Mitt Romney finally found a place where he could buy affection, but I am willing to bet that the national Republican Party’s heart belongs to Senator John McCain. Only six months ago, McCain seemed to have imploded. Then he staged a spectacular comeback by winning the New Hampshire primary. In the last CBS/New York Times poll taken Jan. 9-12 after the New Hampshire primary, McCain was the choice of 33 percent of Republican primary voters.

Despite his Michigan setback, McCain should win the major test in South Carolina and wrap up the nomination in the flurry of March 4th primaries. McCain’s strength is his elect-ability. In the current poll, 41 percent of Republicans now view McCain as the most elect-able. Importantly, McCain leads among self-described conservatives with 31 percent to Huckabee’s 17 percent.

In a three-way race for the presidency, New York’s Mayor Michael Bloomberg is rich and smart enough to figure out how to legally purchase enough votes on the open market to win the White House. Whatever form the transaction took, it would not be bribery or any form of conventional corruption but a very efficient form of capitalist democracy.  The United States would have a president who is keenly interested in performing the tasks of the office.  For 7 years plus, we have had a president who was neither interested nor competent and the condition of the nation shows it.

Before Pakistan's former Prime Minister Benazir Bhutto was murdered, she debated the wisdom of permitting the United States to send some 20,000 special forces troops into the wild and lawless Northwestern territories of her country. She was killed by Al Qaeda before the decision was made.

The current President of Pakistan, former Army General Pervez Musharraf, acknowledges al Qaeda's threat inside his country -- but he dares not act against the Islamic extremists. The General is in every sense a captive and a hostage of al Qaeda.

His friend, Admiral Michael Mullen, Chairman of the U.S. Joint Chiefs of Staff, said Friday, in the Washington Times: "There are concerns about how much al Qaeda has turned inward literally inside Pakistan as well as the kind of planning, training, financing and support at the worldwide level." To emphasize his concern, Mullen deliberately repeated himself: "So the Pentagon is extremely concerned about al Qaeda influence inside Pakistan and I think continued pressure will have to be brought there."

At that point, Admiral Mullen acknowledged a geo-political reality: "Pakistan is a sovereign country and certainly it is really up to ... President Musharraf and certainly his advisers and his military to address that problem directly."

However, President Musharraf told the Straits Times an East Asian newspaper that the U.S. military presence would not be welcomed unless Pakistan requested assistance. "Nobody will come here until we ask them to come and we haven't asked them."

The U.S. will not be able to rescue its ally, President Musharraf, without a U.S. invasion through Afghanistan. On the desk of Secretary of Defense Robert Gates is an order deploying 3,000 Marines for this mission. Politically, however, there will be no wider war without Congressional approval in this election year.

Can the U.S. make a deal with Iran that enables us to withdraw honorably from Iraq?

Yes, writes retired General William E. Odom, the senior military critic of the war and a brilliant strategist, “if the U.S. is willing to pay the price of dropping its ‘all sticks’ policy for stopping Iran’s nuclear weapons program. Put plainly, the U.S. has two choices: it can have an Iran with nuclear weapons that refuses to cooperate on many shared interests. Or it can have an Iran with nuclear weapons that is willing to cooperate.”

Iran wants access to superior U.S. oil production technology. Increasing Iranian oil and gas production coincides with U.S. interests. Iran’s ties with Russia, Odom notes, “are without historical precedent and strained.” America offers more and better technologies than Russia across the entire array of modern nationhood.

A sticking point: Iran supports the terrorist Hezbollah in Lebanon, which threatens Israel’s security. This is a noteworthy departure from Iran’s cautious attitude toward terrorist groups and it reflects the rising influence of the Iranian Revolutionary Guard Corps, which is beginning to function as a state within the Iranian state.

In negotiations with the U.S., Iran might well demand a guarantee against Israeli nuclear attack, which could not be undertaken without U.S. tactical and logistical support. If ever there was a time for the U.S. to reach out to peace-minded moderate elements in Iran and Israel alike, isolating the extremists and their “existential” war talk, it is now.

The U.S. has made the nuclear non-proliferation agreement a dead letter. As India and Pakistan have demonstrated, a nation determined to gain nuclear weapons capability can be sure of the U.S.’s opposition until it succeeds. Once nuclear weapons status is achieved, the U.S. has shown it will drop the subject and seek to improve relations.

The U.S. and Iran have begun to explore secretly the restoration of their relations within a more stable Middle East and Gulf region, no longer occupied by American troops. Within this context, the issue of Iraq’s postwar status and independence, free of foreign influence, will be resolved and the U.S. enabled to depart.

The presidential candidates who have issued statements on U.S.-Iran relations would split sharply over this approach. Democrats Barack Obama and John Edwards would probably accept it, while Hillary Clinton might not. Among the Republicans, John McCain would reject it while Mitt Romney might accept it. Mike Huckabee has not yet made a statement about Iran.

Hillary Clinton pulled an upset in New Hampshire, confounding nearly all the polls that showed Barack Obama motoring to a big victory on the heels of his Iowa win. And that raises some questions about what the American electorate is all about.

There is a long way to go and Obama still has his chance to be the presidential candidate of the Democratic Party and, at that, the first African-American standard bearer. He has that chance because he belongs to a generation of African-Americans who are part of a social and cultural (and biracial) elite class for whom everything is possible.

“(Obama) is being consumed as the embodiment of color-blindness,” says Angela Davis, professor of History of Consciousness at the University of California at Santa Cruz. “It’s the notion that we have moved beyond racism by not taking race into account. That’s what makes him conceivable as a presidential candidate. He’s become the model of diversity in this period, and what's interesting about his campaign is that it has not sought to invoke engagements with race other than those that have already existed.”

These razor-sharp insights by a black radical intellectual deflate much of the chattering about “change” that has been so much a part of Obama's appeal.

Writing in The Nation, Gary Younge, a black Briton and New York correspondent for the Guardian, declares that Obama has soared to the heights “less because (he) is ‘acting white’ than because he is making every effort not to act ‘too black’ … Indeed, the main thing that the new leaders (such as Obama) have in common is that they don’t scare white people. Or at least not too many and not too much … Race is, among other things, a performance.” And, above all, Obama is a masterful performer.

Americans lie to pollsters about everything, including race. In 1982, the press noticed “the Bradley effect,” which showed California’s black gubernatorial candidate Tom Bradley ahead in the polls, until the votes were cast and counted. Bradley received about five points less than predicted and lost. Seven years later, the press noticed “the Wilder effect” in Virginia. Gov. Douglas Wilder was predicted to be an easy winner but barely squeaked in.

We are still pretending to be more liberal and high-minded than we really are, but perhaps that disparity is smaller now. I hope so. A report by the Pew Research Center, after studying the results for five black candidates in statewide races during the 2006 midterm elections, found the polls and the results were highly accurate, and concluded, “Fewer people are making judgments about candidates based solely or even mostly on race itself.”

Will there be an "Obama Effect" in 2008?

The only way to determine whether there is an “Obama effect” will be to nominate him, see what happens in the general election campaign, and compare the polls to the votes he wins on Election Day.

Like making sausage, financing the U.S. economy, a multi-trillion dollar daily operation, is best appreciated as an abstract result. There’s no need to witness the concrete details of the process that includes rooms full of sweating traders yelling at each other. That’s the human fear-and-greed part that has not yet been computerized.

A major financial catastrophe is waiting to happen in such trading rooms around the world, leading very likely to a global financial crisis and panic, unless American financial officials, regulators and Congressional oversight committees address more urgently the spreading contagion of doubt in our markets. These markets are nervous and shaky because participants realize that much beyond their control is not right.

The universally known crisis of doubt surrounding subprime mortgages, which is leading to spiraling defaults and foreclosures, has not been “contained” in that sector as the authorities had hoped. On the contrary, it is spreading throughout the vast paper economy underlying the U.S. credit system, infecting prime mortgages, car loans, student loans – the works. Doubts about debt repayment are growing. Rumors move markets and when fear spreads a rumor, traders turn panicky.

Major U.S. banks, corporations and investment banking firms finance themselves in the huge commercial paper market, where they sell unsecured paper IOUs for very short terms, usually overnight. In this kind of market, reputation is everything. A “name” stands behind the paper it issues or it never issues paper again.

The doubts seeping into U.S. markets focus on some of the biggest and best-known names in the marketplace, names such as Citigroup that are, as it is often said, “too big to fail.” That may be true, but if the authorities move too slowly to remedy weaknesses, and if events/rumors gallop ahead of prudent actions, the unthinkable can occur swiftly.

The Bush Administration, led by Treasury Secretary Hank Paulson, is moving much too slowly to address the dangerously inadequate capital of major banks. Congressional Committees are just beginning to hold hearings. The prevailing assumption is that substantive policy action and legislation can be deferred until after the November 2008 elections, and until the 111th Congress gets organized, sometime after January 2009. This is a dangerous delusion.

Congress needs to revive the Resolution Trust Corporation, the indispensable agency used to cope with the collapse of the S & L industry in the early 1990s. Fortunately, some of the seasoned crisis managers who dealt with the S & Ls are still available to share their experience. Secretary Paulson and Federal Reserve Chairman Ben Bernanke should tap this invaluable expertise before a bank commercial paper user fails.

It would be extremely embarrassing if Secretary Paulson, who visits Beijing two or three times monthly to kow-tow to our biggest creditor, had to seek an emergency loan from the Bank of China to bail out Citigroup before he and Congress got around to the wider problem – our banks have the shorts

Every imperial power enjoys an historical “moment” of ascendancy when its inhabitants and the world at large recognize a new hegemonic power. World War II turned the U.S. into an imperial power, and we fought a four-decade long Cold War against the Soviet empire to establish our hegemony. Our Vietnam mistake undermined U.S. global leadership, but we recovered – until Iraq.

Now many Arabs fear Iran is pursuing the vision of a reborn Persian Empire, and their apprehension prompted them to come to an uneventful American-sponsored Mideast summit meeting in Annapolis in late November. A Palestinian who attended gave a New York Times’ reporter this explanation of the Arabs’ state of mind: “They worry that Iran and its allies act as if this may be the beginning of the end of America’s moment in the Middle East.”

The fear is well-founded. The American public and the Congress are weary of the Iraq war, now longer than World War II and as divisive as Vietnam. The Iraq war has served as a holy cause for recruiting local Iraqi Jihadists, eager to expel “the Crusaders and Zionists.” The war has also greatly increased the influence of the Iranians, both with the timid fellow Shia regime installed in Baghdad by the Americans and with the Shia who control strategic, oil-rich Basra in southern Iraq that generates 80 percent of Iraq’s oil revenues.

What will happen when the 150,000 American troops leave Iraq is the subject of highly secret talks being held in Baghdad’s Green Zone between American and Iranian mid-level diplomats. An American diplomat with decades of experience in the Mideast says these talks are proving to be “quite business like.” He believes the U.S. must restore our global leadership and rally our allies toward a broader Mideast strategy.

Iran has not had formal diplomatic relations with the U.S. since 1979. The Islamic Revolution then seized the U.S. Embassy in Tehran, along with 44 American hostages whom they held for more than a year and a half. In 1980, the U.S. instigated a CIA-funded Iraqi war against Iran that lasted eight years and caused one million casualties.

Now the non-Arab Iranians enjoy unprecedented sway over war-torn Mesopotamia, the heartland of the Arab world – and the Iraqis resent it. They are Arabs first and Shia and Sunni second and they know that the arrogant Persians consider them subhuman. Iran also wants the territory around Basra. “The impatient Persians overestimate their influence, and are in for some rude surprises,” says the veteran U.S. diplomat monitoring the talks over the future of Iraq. “Precisely because we Americans know we are outsiders, and are willing to be useful while we stay, we are enjoying some leverage over the Iranians.”

The American moment in the Mideast may be prolonged the sooner we retire from the quagmire of Iraq, a non-nation incapable of being raised to the standards of 21st century democracy. Other states in the region, especially Israel, Saudi Arabia, Egypt and the smaller oil-rich emirates, will rejoice at America’s liberation from Iraq and Washington’s greater ability to concentrate on shared regional concerns.

Such a scenario would fulfill America’s true, momentous global role.

On Thursday night, Iowans – first in the nation to vote its presidential preference – shocked the nation with a major victory for Senator Barack Obama at 38 percent, a surprise second for former Senator John Edwards at 30 percent and Hillary Rodham Clinton dead last at 29 percent.

Voters in Iowa were shaken by the December 27th assassination of Pakistan’s former Prime Minister Benazir Bhutto. The violence and unrest in a key U.S. ally sobered many voters as they weighed the candidates’ ability to lead the U.S. in a dangerous world. It also restored the threat of terrorism to a once-again major issue along with voters’ economic concerns.

Now we know why Reagan and Bush I avoided Iowa. Vanished in last night’s result was Clinton’s aura of “inevitability” as the Democrats’ nominee. If she does not win BIG in the next three primaries, she’s done.

On the Republican side, as expected, ex-Arkansas Governor Mike Huckabee relied on a church-based network of social conservatives and evangelical Christians to attract 34 percent of the vote. With the New Hampshire primary only days away – January 8 -- former Massachusetts’ Governor Mitt Romney who had spent heavily to achieve only 26 percent will not be able to recover in time.
Obama’s powerful and inspirational speech reflected voters longing for a new face – a symbol of change – who promises to unite our nation. But the New York Times reminds that only twice since 1976 has the same Democrat won both Iowa and New Hampshire in a contested nominating campaign. And for all the boasting that Granite-Staters do about picking presidents, both Al Gore and John Kerry went on to lose the general election.

A bipartisan group of senior Democrats, Republicans and Independents, hosted by David Boren, former Senator and now President of the University of Oklahoma, will meet January 7th with New York’s Mayor Michael Bloomberg to help him decide whether to launch a 2008 independent presidential campaign.

Among the invited Republicans are former GOP Chairman and Senator Bill Brock; former New Jersey Governor and environmental overseer Christie Todd Whitman; former Reagan adviser and Ambassador David Abshire and retiring Senator Chuck Hagel of Nebraska (mentioned as a possible Bloomberg running mate.)

Among the invited Democrats, besides longtime party insider Boren, are former Senator Sam Nunn of Georgia; former Senator Chuck Robb of Virginia; and former Senator and 1988 presidential candidate Gary Hart of Colorado.

In a December 13th memo to Senator Nunn, David M. Abshire, founder and Director of the Center for the Study of the Presidency, wrote that America had become “a house divided…. polarized and often lacking unity of effort. Had we been this divided in World War II or the Cold War, we would have lost both.”

“He’s itching to do it,” Steve Forbes told CNN. Forbes, a national co-chairman of the Rudy Giuliani presidential campaign, said he expected Bloomberg to run. Like Bloomberg, Forbes had reached into his own fortune to finance his presidential campaign. Giuliani has said he doubts his successor would run. “I think Mike would only do it to win,” said Giuliani in an interview, sounding hopeful.

The New York Post reported that Bloomberg’s press secretary Stu Loeser said the Mayor is going to Oklahoma because he has seen again and again how hyper-partisanship in Washington isn’t just getting in the way of big reforms, it’s getting in the way of any meaningful progress on a whole host of issues.”

Bloomberg, the richest man in New York as well as one of the smartest, has a personal fortune estimated at $10 billion. Should the economy sputter and the financial credit crisis deepen this winter, his experience would be sought across the country by anxious homeowners, small businessmen and workers fearful of losing their jobs.

David Boren, who headed the Senate Intelligence Committee for years, is a serious, thoughtful man, and he’s invited busy national political leaders to come together for a purpose. After talking privately to some of the participants, I expect Bloomberg to listen carefully, seek support from those willing to give it and announce his candidacy in early March or possibly earlier.

Senator John McCain of Arizona, the son and grandson of admirals, and a heroic POW during the Vietnam War, has no illusions about the tough, dangerous world that the United States leads. McCain says that he alone among his Republican rivals has the credentials to deal with the national security threats posed by Islamic Jihadists.

At a morning rally in Urbandale, Iowa, the Washington Post quoted McCain as saying of his GOP rivals: “None of them supported what’s working in Iraq, except for me, and I was condemned at the time for it, for supporting the (troop) surge, which is succeeding. I think my record is clear – 20 years, I’ve been involved in every national security issue that’s faced this nation. And I have the judgment to handle it, and I’ve proven it.”

But while McCain talked about the importance of the unrest in Pakistan, he did not acknowledge that al Qaeda has switched from Iraq to Pakistan as the main front, and is now bent on subverting and controlling the oldest U.S. ally in South Asia. Pakistan’s President Pervez Musharraf – himself the target of nine assassination attempts – is strongly pro-U.S.

Al Qaeda is helped by renegade Islamists in the powerful, shadowy Pakistani spy agency, the Inter Services Intelligence (ISI), which secretly runs the country. The ISI created the Taliban and uses it to control neighboring Afghanistan, the world’s leading opium producer. The ISI controls the very lucrative drug traffic – and also simultaneously advises U.S. and NATO forces fighting the Taliban and trying to eradicate poppy-growing.

Saudi Arabia, another duplicitous U.S. “ally”, bankrolls Pakistan and also badly needs to be squeezed to come clean with the U.S. on a wide array of subjects, beginning with the truth about the 9/11 conspiracy in which 15 of the 17 hijackers were Saudis.

McCain has suffered politically for stretching the limits of loyalty by defending Bush’s war in Iraq. The question is now that his “surge” strategy has succeeded in stabilizing Baghdad, will voters forgive and forget?

The Des Moines Register's last pre-caucus poll Tuesday showed ex-Governor Huckabee at 32 percent, Romney at 26 percent and McCain 13 percent, having gained six points since November. McCain’s supporters are hoping for an upset and say that McCain could overtake Romney on Thursday, January 3. But even if he runs third in Iowa, he must win New Hampshire’s primary (January 8th), repeating his 2000 victory there. Will the backdrop of the Pakistan crisis give McCain the crucial momentum going into the flurry of primaries through early February?