Radically Moderate Answers to the Debate Questions

It didn't take more than about five minutes into the debate last night before I started having this fantasy about a candidate that would actually answer the questions being posed with something resembling a sophisticated, even wonky, version of the truth. Without any further ado, then, here is the Radically Moderate version of the debate. (I'm not going to rebut McCain and Obama's individual points here--that would simply be too painful.)

QUESTION: With the economy on the downturn and retired and older citizens and workers losing their incomes, what's the fastest, most positive solution to bail these people out of the economic ruin?

The worst thing we could do in this crisis is to to focus on one set of citizens at the expense of the others, so I wouldn't be doing anything specific to favor retired and older citizens.

There is a short-term solution to the current crisis, a medium-term solution, and a long-term solution. All must be implemented properly to get the least bad outcome we can hope for. A recession is a foregone conclusion at this point. The trick is to prevent the recession from becoming severe and to make it as short as possible.

In the short term, we have an erosion of trust and confidence in the institutions that extend credit for the economy. Restoring that trust is time-critical, because every day that passes where lending is impaired is a day where producers of goods and services may run into cash flow difficulties that cause them to lay off workers or even go bankrupt. So the short-term priority is to restore lending practices to some semblance of normality.

The TARP, the Fed accepting commercial paper, coordinated, worldwide interest rate cuts, and targeted injections of liquidity are all necessary. Similarly, relaxing mark-to-market accounting rules and instituting a decimalized update of the uptick rule for short selling are important. But the biggest problem we face in the short term is that public ignorance about the nature of the crisis is fueling panic.

Finance is hard; I don't pretend to understand it well enough to manage this crisis personally. But it is every American's duty to get as educated as he can on the issues. It is essential to understand what parts of the problem are caused by fundamental changes in the economic situation and what parts are being caused by panic. Knowledge is power; when you understand the crisis, you can be worried without panicking. Reductions in panic are what finally stanches the bleeding on the first phase of this crisis.

In the medium term, once we have bought ourselves some breathing room and restored a functioning credit market, we have to fix the immediate cause of the credit crisis, which is the decline in home prices and the disruptions that that has caused in the mortgage market. Here we have to understand that, just as American financiers did stupid things and we still had to rescue some of them for the sake of the public good, American borrowers did stupid things and we're going to have to rescue some of them for the common good.

There are two problems here. First, lots of people are upside-down on their mortgages; the mortgage is worth more than the house. That means that, for the fairly modest cost of taking a hit on one's credit report, it's cheaper to mail in the keys to the lender and default than it is to stay and tough out the payments on a non-productive asset. There should be no moral judgment attached to this. The fundamental problem is that American homeowners are acting rationally by walking away, which further erodes home prices. To solve this problem, we have to prevent this from happening, which means that the mortgage principal has to be reduced to something like 90-95% of the current fair market value of the house. This will entail a huge loss for lenders. For that reason, the government is going to have to subsidize these reductions.

The next problem is that borrowers took out mortgages--sub-prime and otherwise--with ridiculously low teaser interest rates and equally ridiculous escalators once the teaser expired. Blame can be assessed for this both on the lenders, who knew that the borrower was going to get in trouble, and the borrower, who should have known better in the first place. Again, blame gets us nowhere; we have to increase the affordability of the mortgages to prevent homeowners from defaulting. That means that we have to split the difference and reduce the escalators while still providing some return on investment for the lender.

Finally, we get to the long term. The mantra throughout the country is "re-regulate" and some new regulation is clearly in order, as is regulatory reform and restructuring for efficiency. But let's be clear: there is a cost to regulation. Regulation makes lending more expensive. Regulation means that consumer loans and mortgages will be more expensive and harder to come by in the future. All regulations come with unintended consequences. Excessive regulation can prove disastrous.

The temptation to punish Wall Street for their excesses is almost overwhelming. But we're grownups; we have to resist that temptation when that punishment also punishes the ordinary citizen, either directly or indirectly. Instead, we need to look soberly at what went wrong and fix it in as elegant and minimal a way as possible.

There appear at this time to be two no-brainers. First, we have proven yet again that over-leveraging investments, while immensely profitable in the short term, always leads to disastrous consequences in the end. This simply has to be illegal. Capital requirements need to be enforced not just on regulated banking but on all segments of the financial system that rely on leverage to increase profits. Figuring out the proper ratio of capitalization to leverage is one of the most important things we can do.

Second, we know that the rise of derivatives needs to be looked into. These instruments are enormously useful for hedging risk but there's something more than a little bit rotten when they're used as speculative instruments. We need to tread very carefully here, since even the people who invented the various derivatives don't fully understand their macroeconomic consequences. However, one lesson seems to have been adequately learned: credit default swaps work great as insurance but they have no business being offered as speculative instruments.

Obviously the powers of the treasury secretary have been greatly expanded. The most powerful officer in the cabinet now. Hank Paulson says he won't stay on. Who do you have in mind to appoint to that very important post?

I have no idea yet, but I can tell you that you're not going to like him. He'll be from Wall Street, because the job of running the Treasury requires sophisticated financial expertise and knowledge of the most exotic financial strategies. We will, in effect, be rewarding someone who was at least peripherally involved in precipitating the current crisis. But to do otherwise, to "promote the non-participant," to use a famous aphorism from the engineering world, would be disastrous.

Well, Senators, through this economic crisis, most of the people that I know have had a difficult time. And through this bailout package, I was wondering what it is that's going to actually help those people out.

See above.

Senator Obama, time for a discussion. I'm going to begin with you. Are you saying to Mr. Clark (ph) and to the other members of the American television audience that the American economy is going to get much worse before it gets better and they ought to be prepared for that?

Yes.

The current financial crisis seems far removed from everyday life but the damage it has done to the credit markets has all but ensured at least a mild to moderate recession. We need to accept that, plan for it, and plan for how to speed a recovery. But anybody who tells you that the government can still completely avert a recession is lying to you. The trick is to manage the short and medium term, as I laid out above, to lessen the severity of the recession.

How can we trust either of you with our money when both parties got -- got us into this global economic crisis?

You can't but you still have to be a grownup and recognize that one or the other of us will get elected. Once you accept this fact, there are two things that you need to think about.

First, you need to understand that, just as our economic health is ultimately based on the trust that all parties to a transaction will fulfill their obligations, our national political health is based on some degree of trust that all three branches of government live up to their responsibilities and put the good of the country ahead of their own personal gain or aggrandizement. That trust has been sorely abused in recent years, to the severe detriment of our society. It must be restored and you as a voter are the key to its restoration. You must insist on the integrity of your Congressperson and your Senators. It is your responsibility to diligently investigate his or her record, constantly asking yourself, "Did this person act in the country's best interest?" You have to understand that it's wonderful when your Representative gets your district goodies and indulges your every passing whim or ill-informed opinion, but it is ultimately corrosive to our national security. It is your responsibility to look out for the big picture and to hold your representatives accountable.

Second, understand that controversy and even obstruction are the best friends of good government. Lots of things need to be done in this country but history shows us that government is only the solution in rare instances. Given enough time, the American public and its economy often will improvise a better solution than the one some policy wonk thought up one morning in the shower. The things that weed out the bad ideas in government are time and controversy. We should not fear these, even when they lead to a lot of unpleasantness and noise.

There are new economic realities out there that everyone in this hall and across this country understands that there are going to have to be some choices made. Health policies, energy policies, and entitlement reform, what are going to be your priorities in what order? Which of those will be your highest priority your first year in office and which will follow in sequence?

Energy policy has to be our priority. Energy policy lies at the intersection of our economic well being, our national security, and our environmental health. It is the transcendent challenge of the twenty-first century.

We need to understand that our current entitlement system is ultimately unsustainable. Perhaps the current economic crisis will wake us up a little bit: It's easier to fix things early, before they blow up in your face.

I would love to find ways to reduce the anxiety that ordinary Americans face when they contemplate things that can occur to them or their families because of illness or injury. But we need to understand one thing: There is no free lunch. All health services get paid for. They can be paid for by taxes, by deficit spending, or by the consumer, but that's it. Figuring out the proper mix is essential. Understanding that there is no new money is equally essential.

Finally, let's understand that our national spending habits have now risen to near-crisis levels. Make no mistake: the national debt is a national security issue. Our fate is now partially in the hands of our international creditors. We need to reduce our exposure to those creditors. This will involve severe pain and hard choices, but those choices must be made.

Since World War II, we have never been asked to sacrifice anything to help our country, except the blood of our heroic men and women. As president, what sacrifices -- sacrifices will you ask every American to make to help restore the American dream and to get out of the economic morass that we're now in?

This sounds very noble but it's a bunch of nonsense. Should we ration things when market forces work better than rationing unless we need materiel for a war? Should we restrict individual freedom and force people into community or government service? Should we force people to "volunteer?"

Let's face it: there is only one form of "sacrifice" that government requires of us. It requires that we pay money to support the common weal. That's appropriate. But let's understand that, when you hear somebody talking about how George Bush failed to ask us to sacrifice after 9/11, what they're really saying is that George Bush didn't use 9/11 as a pretext to raise taxes.

You argue whether raising or lowering taxes was an appropriate response to 9/11. But let's make sure that we know that that's the argument we're having.

I do believe that there is a place for leadership. The President can wield huge powers of persuasion and can use those powers to urge the citizenry to be less selfish and act more for the common good. But that case is much better made by education and a little cheerleading. Calls for "sacrifice" are going to fall on deaf ears, as well they should.

Senator Obama, as we begin, very quickly, our discussion period, President Bush, you'll remember, last summer, said that "Wall Street got drunk."

A lot of people now look back and think the federal government got drunk and, in fact, the American consumers got drunk.

How would you, as president, try to break those bad habits of too much debt and too much easy credit, specifically, across the board, for this country, not just at the federal level, but as a model for the rest of the country, as well?

First, the bad habits of too much debt and too much easy credit have pretty much taken care of themselves at the personal and corporate level, haven't they? But this is one of those areas where culture counts. There's a reason why most religions value frugality: it produces a healthier society.

Can government really affect culture through legislation and policy? Maybe a little, but not very much. Can leadership inspire our citizens to reexamine their lives and make changes that benefit not only themselves but society as a whole? Yes. Can one of the two candidates do it? We'll see. Such inspiration requires not only superb communication skills but a certain optimism, a certain confidence in the rightness of one's course of action, and then some serious cheerleading skills.

One thing's for sure: we're unlikely to be able move forward as a nation without at least minor adjustments to the current norms for how we live our economic lives and what we expect from government.

There are lots of issues that we are going to be dealing with here tonight. And we have a question from Langdon (ph) in Ballston Spa, New York, and that's about huge unfunded obligations for Social Security, Medicare, and other entitlement programs that will soon eat up all of the revenue that's in place and then go into a deficit position.

Since the rules are pretty loose here, I'm going to add my own to this one. Instead of having a discussion, let me ask you as a coda to that. Would you give Congress a date certain to reform Social Security and Medicare within two years after you take office? Because in a bipartisan way, everyone agrees, that's a big ticking time bomb that will eat us up maybe even more than the mortgage crisis.

Tom, you were doing so well. Why'd you have to toss in the gotcha question? A date certain is impossible to promise and you know it. It requires the collusion of Congress, which is, at the moment, utterly dysfunctional.

But let's be clear here. Social security and Medicare benefits are going to be reduced over time or they're going to cost much, much more. There is no free lunch. We can either deal with these issues before they reach crisis proportions or we can deal with them when our options have been so reduced that the collapse of the system is all but assured.

Senator McCain, I want to know, we saw that Congress moved pretty fast in the face of an economic crisis. I want to know what you would do within the first two years to make sure that Congress moves fast as far as environmental issues, like climate change and green jobs?

First, please understand that what we did with the financial crisis sucked and we will be dealing with the repercussions of the band-aids we slapped on for years. We want legislation to be deliberative, contentious, and gradual--the complete antithesis of acting in a crisis. This goes as much for environmental legislation as for anything else.

This is not to deny that environmental legislation isn't necessary. But it is impossible to consider climate legislation outside the context of a reasonable energy policy.

Should we fund a Manhattan-like project that develops a nuclear bomb to deal with global energy and alternative energy or should we fund 100,000 garages across America, the kind of industry and innovation that developed Silicon Valley?

Neither.

Manhattan projects work great when the goal is to provide a piece of technology that is utterly independent of the economy, as it was when we built nuclear weapons, and as it was again when we went to the moon. But sustainable energy must be economical or it will simply fail. Betting the farm on a single government project and hoping that it happens to come up with the solution that just happens to be economically viable--to say nothing of optimal--is the height of insanity.

Similarly, government funding of thousands of small projects is intensely inefficient and a criminal waste of the taxpayer's money. Private enterprise knows how to fund thousands of startups and invests money efficiently because the funders are willing to incur the risk for huge financial reward. Getting government to act like venture capitalists is simply impossible. Government doesn't have the same incentives.

What government can do is to tweak the economic climate so that the rewards of sustainable energy projects are enhanced and the costs of unsustainable energy sources are simultaneously increased. Tax credits for hybrid or non-petroleum cars and trucks, home solar energy, and nuclear power plants are good examples of the former. A carbon tax is an example of the latter--a much simpler and more honest example, I might add, than a cap-and-trade system.

Also, please note that none of the above conflicts with permitting new petroleum and gas exploration in offshore, in ANWR, or in oil shale deposits in within our borders. We need a bridge to our new green future. We probably don't need to provide tax breaks for this exploration but we surely need to allow it.

Senator, selling health care coverage in America as the marketable commodity has become a very profitable industry. Do you believe health care should be treated as a commodity?

In this single question we find the biggest problem with the debate over health care. Health care "coverage" is an insurance issue. Health care itself is a service for which we must pay.

A portion of the health care problem is indeed an insurance issue but let's understand what insurance is for. Insurance allows a group of people to share the risk that a very small number of them will get very sick or very badly injured. To share that risk, everybody in the group agrees to pay more than they actually expect to need in return for getting the huge bill paid for if they're unlucky.

"Insurance" for routine care is simply impossible. The best an insurer can do is to provide a central clearinghouse for billing and payments, then pass through the cost for this service and the cost for the actual health care to the consumer. But if the average person buys $500 of health services a year, the insurance bill for those services is guaranteed to be more than $500.

The debate between McCain and Obama revolves around the best way to provide insurance. McCain is arguing that the tax deductions for employer-provided group insurance distort the market and should be done away with. In return, McCain wants to shift those tax breaks to the individual, so that he can buy individual insurance even if he's not fortunate enough to work for an employer with a good group plan. This is fine as far as it goes but it omits the horrible uncertainty associated with individual plans. Until that uncertainty is removed, McCain's plan will merely ensure that even fewer employers offer good group plans, causing more nervousness for more Americans.

Obama is arguing that we can keep existing employers' group plans as-is, force all other employers to adopt similar group plans, and finally backstop the whole thing with a Medicare-style group plan that's run by the government. Obama is right that we must offer the security of group insurance to all Americans but he's doing it in a way that all but guarantees the destruction of the private insurance market. Employers will drop their private plans in favor of the vanilla-flavored government plan, thereby reducing the pool of available subscribers to the point where the private guys will exit the business. We'll be left with a single-payer health care system after a while.

Neither candidate does anything to distinguish the difference between insurance to catastrophes and routine health care costs in general. That distinction is crucial, because it allows a portion of the health care market--the portion responsible for relatively routine care--to be subjected to market forces.

McCain has made more noise about local clinics and low-cost care and he deserves credit for that. But this is ultimately futile unless those clinics are able to do fee for service or at the very least participate in HMO schemes that aren't burdened with mandatory coverage for catastrophic procedures.

Obama has understood that the fundamental insecurity of individual insurance is intolerable and he deserves credit for that. But mandating group insurance for all is prohibitively expensive unless that group insurance is limited to catastrophic insurance. Furthermore, the built-in bias that ultimately leads to a single-payer system is just awful for future health care innovation. Few companies want to develop a product or service and sell it into a monopsony, and those that do have very little interest in efficiency. Check out your local defense contractor if you think otherwise.

The proper solution is to mandate catastrophic, private group coverage for all. That will increase the average catastrophic premium by quite a bit, but it will dramatically reduce the premium one would pay for combined routine+catastrophic coverage. Those premiums will need to be subsidized for lower-income citizens. McCain's tax credit, subject to suitable phase-outs, would work fine for that.

We can then let the market experiment with all kinds of schemes to handle routine care: doc-in-the-box, WalMart-style clinics, slimmed-down HMOs, you name it. As with the insurance portion, this routine care will need to be subsidized through tax policy or some other mechanism.

Quick discussion. Is health care in America a privilege, a right, or a responsibility?

This is a stupid question. Health care is something you have to pay for. All we're arguing about is whether to pay for it as a nation (through taxes or deficit spending), as a set of groups (through insurance policies and employer benefits), or as individuals.

However, one hard truth needs to be spoken here. The nature of medical technology has now advanced to the point where arbitrary life extension can be had for an exponentially increasing cost. On one level, this is wonderful news, because those that can afford to pay for such treatment subsidize an industry that will make cheap life-extension possible as treatments are perfected. But on a much more fundamental level, this fact will force us to change one of our most dearly held beliefs: that life is sacred and must be extended at any cost. That was fine when "any cost" simply didn't mean very much because medical technology couldn't do much. Continuing to provide the most exotic life-extension treatments to the ordinary citizen through a program like Medicare is simply not feasible. We must confront this truth soon and begin to grapple with it as a society.

Senator McCain, how will all the recent economic stress affect our nation's ability to act as a peacemaker in the world?

We pay for wars with deficit spending. If we have existential wars, we lose when the world decides that we are no longer able to pay those debts. That's one of the many reasons why the national debt is a national security problem.

We also engage in wars or military actions to further our national interest. Those operations must sometimes be curtailed when the money isn't available for them. Neither Iraq nor Afghanistan are existential wars. In some respect, they are "optional." However, no war is optional once we have engaged in it. These last few weeks have once again reinforced how much our world operates on trust. Foreign powers, both our friends and enemies, must trust that the US will accomplish what it sets out to accomplish, however difficult the undertaking. That is why we must leave both Iraq and Afghanistan only when those countries are stable and able to defend their sovereignty. In many respects, even though those wars may have begun as "optional," they are now an existential matter, in that failure in either of them so damages US credibility that they could invite a truly existential threat.

Senator Obama, let me ask you if -- let's see if we can establish tonight the Obama doctrine and the McCain doctrine for the use of United States combat forces in situations where there's a humanitarian crisis, but it does not affect our national security.

Take the Congo, where 4.5 million people have died since 1998, or take Rwanda in the earlier dreadful days, or Somalia.

What is the Obama doctrine for use of force that the United States would send when we don't have national security issues at stake?

Here's the Radically Moderate doctrine for the use of US military force:

1. The US will use military force to further the national interest. In some cases, furtherance of national interest includes humanitarian missions, especially when those missions build goodwill and/or trust in a troubled region.


2. The US will only undertake military missions where success is possible and, once undertaken, the US will take any and all steps to ensure success.
   

Seems pretty simple to me.

Should the United States respect Pakistani sovereignty and not pursue al Qaeda terrorists who maintain bases there, or should we ignore their borders and pursue our enemies like we did in Cambodia during the Vietnam War?

Like Iraq, we are fighting a counter-insurgency in Afghanistan. The key to winning a counter-insurgency doesn't lie first in denying the enemy safe havens. They key to winning lies in expelling the enemy from the territory over which he wishes to gain control. As long as we concentrate on al Qaeda bases in Pakistan and ignore the crucial task of making Afghans willing to fight to expel these invaders, we'll never make any progress.

This isn't to say that attacking enemy bases in Pakistan might not be necessary. It's simply not the key strategy to victory. As long as we keep getting wrapped around the axle over Pakistani sovereignty and violations thereof, we're not focusing on the proper priorities.

A better question, however, is what we do if the contagion spreads in Pakistan and it becomes a failed state. A nuclear nation in chaos is simply unacceptable. We need to extend as much help as we can provide to Pakistan, be it military, economic, or political, to ensure that a stable democracy thrives there. That democracy is every bit as important as those in Iraq and Afghanistan, even if the "Pottery Barn rule" doesn't quite apply.

At the same time, we must communicate to Pakistan in no uncertain terms that with membership in the nuclear club come the gravest of responsibilities. Instability simply cannot be tolerated and, while we fully support their efforts to maintain a stable, sovereign democracy, we can't have infinite patience if their nation deteriorates below some critical threshold.

Can I get a quick response from the two of you about developments in Afghanistan this week? The senior British military commander, who is now leading there for a second tour, and their senior diplomatic presence there, Sherard Cowper-Coles, who is well known as an expert in the area, both have said that we're failing in Afghanistan.

The commander said we cannot win there. We've got to get it down to a low level insurgency, let the Afghans take it over. Cowper-Coles said what we need is an acceptable dictator.

If either of you becomes president, as one of you will, how do you reorganize Afghanistan's strategy or do you? Briefly, if you can.

We have had our our focus on Iraq for quite a while now. Whether you believe the war in Iraq was justified or not (and I think it might have waited for a little bit longer in retrospect, although I supported the invasion at the time), Iraq became strategically more important the moment we invaded it. Unfortunately, this required that we de-prioritize Afghanistan, just as we had a "Europe first" strategy in World War II that let the war in the Pacific languish until Germany was on the ropes.

The good news is that we have developed counter-insurgency tactics that actually work in Iraq. I am optimistic that those tactics will port over to Afghanistan with minimal modifications. As the need for military force in Iraq decreases, a robust counter-insurgency can be mounted in Afghanistan. That is a change of emphasis but not necessarily of strategy.

Senator Obama makes much of the fact that we haven't killed or captured Osama bin Laden. Our failure to do so at Tora Bora was inexcusable and a major failure of the Bush Administration. However, the Senator is indulging in the most scurrilous demagoguery when he suggests that increased troop presence in Afghanistan would have allowed us to chase down bin Laden. Bin Laden is not an idiot. He's hiding out in Pakistan because he knows that we can hunt him there only indirectly. All the troops in the world wouldn't make a difference to that. Surely the Senator isn't suggesting that we invade Pakistan simply to further our hunt for bin Laden?

How can we apply pressure to Russia for humanitarian issues in an effective manner without starting another Cold War?

On internal Russian humanitarian issues we can't do very much, nor should we. We can keep some low-level diplomatic pressure on Russia with regard to human rights, similar to the way that we put diplomatic pressure on China for the same reason.

Russia is a threat to its neighbors, especially the former SSRs. In reality we're already engaged in a Cold War with Russia over those states' sovereignty. Russia's Georgian adventure is unlikely to be its last in its former republics. A Cold War is entirely appropriate in this case.

We have three major approaches to de-fang Russia when it comes to its neighbors. First, we can extend the NATO umbrella to more former republics, especially to the Ukraine and Georgia. Second, we can do everything we can to change the oil and gas logistics in Europe. To the extent that the European economy becomes less dependent on hydrocarbons flowing specifically from Russia, the less leverage Russia has over Europe. Finally, an overall reduction in demand for hydrocarbons through the use of sustainable energy sources will choke off a major source of wealth to Russia. The Russians aren't stupid; if they can't make petrodollars, they will put their incredibly well-trained labor force to work doing something more productive. That's to everybody's benefit--especially the Russians.

This requires only a yes or a no. Ronald Reagan famously said that the Soviet Union was the evil empire. Do you think that Russia under Vladimir Putin is an evil empire?

No.

Putin is taking Russia in a direction that may be good only for Russia, but they are far from a world-threatening power. Russia has interests that sometimes conflict with ours. We need to thwart those conflicting interests while fostering those that coincide with ours. Diplomacy is all about being a grownup. Demonization is inappropriate, especially for Russia.

Senator, as a retired Navy chief, my thoughts are often with those who serve our country. I know both candidates, both of you, expressed support for Israel.

If, despite your best diplomatic efforts, Iran attacks Israel, would you be willing to commit U.S. troops in support and defense of Israel? Or would you wait on approval from the U.N. Security Council?

Iran has only two ways to attack Israel. First, it can attack through its proxies, Hezbollah and Hamas. These groups, while vicious and immensely problematic, do not pose an existential threat to Israel. Under no circumstances should the US be militarily involved in combating them, nor should we retaliate directly against Iran for proxy attacks against Israel.

The only way that Iran can existentially threaten Israel is with nuclear weapons. The development of nuclear weapons by Iran must be resisted vigorously. That resistance should be diplomatic, economic, and, as a last resort, military.

But we have a weak hand here. We can and should try more robust diplomacy with Iran. However, let's understand that diplomacy through our European allies has already been pretty robust and has yielded nothing. Iran may simply have judged that the acquisition of nukes trumps any temporary blows to its political and economic standing with the West. After all, we're still buying oil and gas from them and they may figure that that's plenty to keep them afloat until they can consolidate their power.

Our military options are poor. We can raid their nuclear facilities but the sad fact is that even a robust international coalition would have a hard time invading Iran deeply enough to guarantee a permanent end to their nuclear program. They have us over a barrel and they know it.

But we have one other option, which we simply haven't tried. Since a nuclear Iran is possible, we will need to develop a doctrine for how we deter Iran, just as we had a nuclear deterrence doctrine to deal with the Soviet Union. And that doctrine may actually be useful in convincing Iran to give up on its nuclear ambitions. I would advocate that we adopt the following policy immediately, even before Iran has acquired nuclear weapons:

"Absent incontrovertible proof to the contrary, it shall be the policy of the United States to regard any nuclear attack in the Middle East as an attack, by Iran, against the United States, requiring a full retaliatory response."

Students of the Cuban Missile Crisis will recognize this adaptation of President Kennedy's language, which ensured that the Soviet Union understood the stakes of their little adventure. I see know reason why similar language can't make it clear to Iran that there is very little upside to their membership in the nuclear club, and a catastrophic downside. Iran must learn that nuclear power comes with great responsibility. If they then choose to embark upon this perilous course, let no one say that they didn't understand that their national existence hinged upon their restraint.

And you'll both be interested to know this comes from the Internet and it's from a state that you're strongly contesting, both of you. It's from Peggy (ph) in Amherst, New Hampshire. And it has a certain Zen-like quality, I'll give you a fair warning.

She says, "What don't you know and how will you learn it?"

In the last eight years, the United States has suffered three huge disasters: the 9/11 attacks, Hurricane Katrina, and now the financial crisis. All three of these crises revealed systemic deficiencies in our response, as well as deep failures of imagination in the period before each of them.

The thing that we should learn from all three of these events is that even our huge, immensely powerful, immensely wealthy government has real, finite limitations, not only on its power but on its competence and ability. This is not a condemnation of our government nor is it an expression of futility. It is simply an acknowledgment of fact. Governments don't do well with new situations.

In a world of increasing complexity, it is entirely possible that crises like these are going to be increasingly frequent. We don't know what shape the next one will take. But we have learned from the past and our capabilities have improved as a result.

The next President will steer into increasingly perilous waters. He needs to be smart. He needs to be agile. He needs to be humble and able to find and adapt the best advice he can get. But most of all, he needs to be courageous. Whatever the challenge, we will depend upon him and his government to do the things that individuals or smaller groups can't do for themselves. We will count on him for leadership in the rough weather ahead.