U.S. ambassador to Mexico resigns after WikiLeaks revelations

By Mary Beth Sheridan

March 19, 2011--The U.S. ambassador to Mexico has resigned after the publication of U.S. diplomatic cables that criticized that government’s anti-drug fight, infuriating the Mexican president.

Carlos Pascual appears to be the first senior U.S. diplomat to lose his job because of the WikiLeaks revelations. He had been stationed in Mexico for 19 months.

Secretary of State Hillary Rodham Clinton said in a statement Saturday evening that she had accepted Pascual’s resignation “with great regret.”

“Carlos has relayed his decision to return to Washington based upon his personal desire to ensure the strong relationship between our two countries and to avert issues raised by President [Felipe] Calderon that could distract from the important business of advancing our bilateral interests,” she said.

Calderon has publicly criticized Pascual, telling The Washington Post early this month that he was angered by the U.S. ambassador’s characterization of the Mexican army as “risk-averse” in going after drug traffickers. Calderon also said the cables laid bare U.S. attempts to play Mexican agencies off against one another in the drug fight. Calderon said he intended to talk to President Obama in a meeting on March 3 about his troubles with Pascual.

The White House and Clinton have steadfastly expressed support for Pascual, a 23-year veteran of the State Department and U.S. Agency for International Development.

Pascual has been a leading architect of U.S. policy toward Mexico, particularly the latest developments in the Merida Initiative, a joint effort to fight soaring drug violence. He is highly regarded at the senior levels of the State Department, and Clinton’s statement said he will assume a new position there.

Analysts say the opinions expressed by Pascual and other U.S. diplomats in the classified documents aren’t surprising to most people who follow the drug fight in Mexico. But the Mexican government clearly felt exposed upon publication of the criticism by a close ally, which became a media sensation.

“Save” Social Security?

By Robert Reich

New Jersey Governor Chris Christie, a Republican presidential hopeful, says in order to "save" Social Security the retirement age should be raised. The media are congratulating him for his putative "courage." Deficit hawks are proclaiming Social Security one of the big entitlements that has to be cut in order to reduce the budget deficit.

This is all baloney.

In a former life I was a trustee of the Social Security trust fund. So let me set the record straight.

Social Security isn't responsible for the federal deficit. Just the opposite. Until last year Social Security took in more payroll taxes than it paid out in benefits. It lent the surpluses to the rest of the government.

Now that Social Security has started to pay out more than it takes in, Social Security can simply collect what the rest of the government owes it. This will keep it fully solvent for the next 26 years.

But why should there even be a problem 26 years from now? Back in 1983, Alan Greenspan's Social Security commission was supposed to have fixed the system for good - by gradually increasing payroll taxes and raising the retirement age. (Early boomers like me can start collecting full benefits at age 66; late boomers born after 1960 will have to wait until they're 67.)

Greenspan's commission must have failed to predict something. But what? It fairly accurately predicted how quickly the boomers would age. It had a pretty good idea of how fast the US economy would grow. While it underestimated how many immigrants would be coming into the United States, that's no problem. To the contrary, most new immigrants are young and their payroll-tax contributions will far exceed what they draw from Social Security for decades.

So what did Greenspan's commission fail to see coming?

Inequality.

Remember, the Social Security payroll tax applies only to earnings up to a certain ceiling. (That ceiling is now $106,800.) The ceiling rises every year according to a formula roughly matching inflation.

Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security. That 90 percent figure was built into the Greenspan Commission's fixes. The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.

Today, though, the Social Security payroll tax hits only about 84 percent of total income.

It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.

If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000.

Presto. Social Security's long-term (beyond 26 years from now) problem would be solved.

So there is no reason even to consider reducing Social Security benefits or raising the age of eligibility. The logical response to the increasing concentration of income at the top is simply to raise the ceiling.

Not incidentally, several months ago the White House considered proposing that the ceiling be lifted to $180,000. Somehow, though, that proposal didn't make it into the President's budget.

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Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores.