Brilliant speech....from a "grown up".

"Thank you all very much, and Arthur, thank you for that introduction. It’s good to be back at AEI, where we have many friends. Lynne is one of your longtime scholars, and I’m looking forward to spending more time here myself as a returning trustee. What happened was, they were looking for a new member of the board of trustees, and they asked me to head up the search committee.

I first came to AEI after serving at the Pentagon, and departed only after a very interesting job offer came along. I had no expectation of returning to public life, but my career worked out a little differently. Those eight years as vice president were quite a journey, and during a time of big events and great decisions, I don’t think I missed much.

Being the first vice president who had also served as secretary of defense, naturally my duties tended toward national security. I focused on those challenges day to day, mostly free from the usual political distractions. I had the advantage of being a vice president content with the responsibilities I had, and going about my work with no higher ambition. Today, I’m an even freer man. Your kind invitation brings me here as a private citizen – a career in politics behind me, no elections to win or lose, and no favor to seek.

The responsibilities we carried belong to others now. And though I’m not here to speak for George W. Bush, I am certain that no one wishes the current administration more success in defending the country than we do. We understand the complexities of national security decisions. We understand the pressures that confront a president and his advisers. Above all, we know what is at stake. And though administrations and policies have changed, the stakes for America have not changed.

Right now there is considerable debate in this city about the measures our administration took to defend the American people. Today I want to set forth the strategic thinking behind our policies. I do so as one who was there every day of the Bush Administration –who supported the policies when they were made, and without hesitation would do so again in the same circumstances.

When President Obama makes wise decisions, as I believe he has done in some respects on Afghanistan, and in reversing his plan to release incendiary photos, he deserves our support. And when he faults or mischaracterizes the national security decisions we made in the Bush years, he deserves an answer. The point is not to look backward. Now and for years to come, a lot rides on our President’s understanding of the security policies that preceded him. And whatever choices he makes concerning the defense of this country, those choices should not be based on slogans and campaign rhetoric, but on a truthful telling of history.

Our administration always faced its share of criticism, and from some quarters it was always intense. That was especially so in the later years of our term, when the dangers were as serious as ever, but the sense of general alarm after September 11th, 2001 was a fading memory. Part of our responsibility, as we saw it, was not to forget the terrible harm that had been done to America … and not to let 9/11 become the prelude to something much bigger and far worse.

That attack itself was, of course, the most devastating strike in a series of terrorist plots carried out against Americans at home and abroad. In 1993, they bombed the World Trade Center, hoping to bring down the towers with a blast from below. The attacks continued in 1995, with the bombing of U.S. facilities in Riyadh, Saudi Arabia; the killing of servicemen at Khobar Towers in 1996; the attack on our embassies in East Africa in 1998; the murder of American sailors on the USS Cole in 2000; and then the hijackings of 9/11, and all the grief and loss we suffered on that day.

Nine-eleven caused everyone to take a serious second look at threats that had been gathering for a while, and enemies whose plans were getting bolder and more sophisticated. Throughout the 90s, America had responded to these attacks, if at all, on an ad hoc basis. The first attack on the World Trade Center was treated as a law enforcement problem, with everything handled after the fact – crime scene, arrests, indictments, convictions, prison sentences, case closed.

That’s how it seemed from a law enforcement perspective, at least – but for the terrorists the case was not closed. For them, it was another offensive strike in their ongoing war against the United States. And it turned their minds to even harder strikes with higher casualties. Nine-eleven made necessary a shift of policy, aimed at a clear strategic threat – what the Congress called “an unusual and extraordinary threat to the national security and foreign policy of the United States.” From that moment forward, instead of merely preparing to round up the suspects and count up the victims after the next attack, we were determined to prevent attacks in the first place.

We could count on almost universal support back then, because everyone understood the environment we were in. We’d just been hit by a foreign enemy – leaving 3,000 Americans dead, more than we lost at Pearl Harbor. In Manhattan, we were staring at 16 acres of ashes. The Pentagon took a direct hit, and the Capitol or the White House were spared only by the Americans on Flight 93, who died bravely and defiantly.

Everyone expected a follow-on attack, and our job was to stop it. We didn’t know what was coming next, but everything we did know in that autumn of 2001 looked bad. This was the world in which al-Qaeda was seeking nuclear technology, and A. Q. Khan was selling nuclear technology on the black market. We had the anthrax attack from an unknown source. We had the training camps of Afghanistan, and dictators like Saddam Hussein with known ties to Mideast terrorists.

These are just a few of the problems we had on our hands. And foremost on our minds was the prospect of the very worst coming to pass – a 9/11 with nuclear weapons.

For me, one of the defining experiences was the morning of 9/11 itself. As you might recall, I was in my office in that first hour, when radar caught sight of an airliner heading toward the White House at 500 miles an hour. That was Flight 77, the one that ended up hitting the Pentagon. With the plane still inbound, Secret Service agents came into my office and said we had to leave, now. A few moments later I found myself in a fortified White House command post somewhere down below.

There in the bunker came the reports and images that so many Americans remember from that day – word of the crash in Pennsylvania, the final phone calls from hijacked planes, the final horror for those who jumped to their death to escape burning alive. In the years since, I’ve heard occasional speculation that I’m a different man after 9/11. I wouldn’t say that. But I’ll freely admit that watching a coordinated, devastating attack on our country from an underground bunker at the White House can affect how you view your responsibilities.

To make certain our nation country never again faced such a day of horror, we developed a comprehensive strategy, beginning with far greater homeland security to make the United States a harder target. But since wars cannot be won on the defensive, we moved decisively against the terrorists in their hideouts and sanctuaries, and committed to using every asset to take down their networks. We decided, as well, to confront the regimes that sponsored terrorists, and to go after those who provide sanctuary, funding, and weapons to enemies of the United States. We turned special attention to regimes that had the capacity to build weapons of mass destruction, and might transfer such weapons to terrorists.

We did all of these things, and with bipartisan support put all these policies in place. It has resulted in serious blows against enemy operations … the take-down of the A.Q. Khan network … and the dismantling of Libya’s nuclear program. It’s required the commitment of many thousands of troops in two theaters of war, with high points and some low points in both Iraq and Afghanistan – and at every turn, the people of our military carried the heaviest burden. Well over seven years into the effort, one thing we know is that the enemy has spent most of this time on the defensive – and every attempt to strike inside the United States has failed.

So we’re left to draw one of two conclusions – and here is the great dividing line in our current debate over national security. You can look at the facts and conclude that the comprehensive strategy has worked, and therefore needs to be continued as vigilantly as ever. Or you can look at the same set of facts and conclude that 9/11 was a one-off event – coordinated, devastating, but also unique and not sufficient to justify a sustained wartime effort. Whichever conclusion you arrive at, it will shape your entire view of the last seven years, and of the policies necessary to protect America for years to come.

The key to any strategy is accurate intelligence, and skilled professionals to get that information in time to use it. In seeking to guard this nation against the threat of catastrophic violence, our Administration gave intelligence officers the tools and lawful authority they needed to gain vital information. We didn’t invent that authority. It is drawn from Article Two of the Constitution. And it was given specificity by the Congress after 9/11, in a Joint Resolution authorizing “all necessary and appropriate force” to protect the American people.

Our government prevented attacks and saved lives through the Terrorist Surveillance Program, which let us intercept calls and track contacts between al-Qaeda operatives and persons inside the United States. The program was top secret, and for good reason, until the editors of the New York Times got it and put it on the front page. After 9/11, the Times had spent months publishing the pictures and the stories of everyone killed by al-Qaeda on 9/11. Now here was that same newspaper publishing secrets in a way that could only help al-Qaeda. It impressed the Pulitzer committee, but it damn sure didn’t serve the interests of our country, or the safety of our people.

In the years after 9/11, our government also understood that the safety of the country required collecting information known only to the worst of the terrorists. And in a few cases, that information could be gained only through tough interrogations.

In top secret meetings about enhanced interrogations, I made my own beliefs clear. I was and remain a strong proponent of our enhanced interrogation program. The interrogations were used on hardened terrorists after other efforts failed. They were legal, essential, justified, successful, and the right thing to do. The intelligence officers who questioned the terrorists can be proud of their work and proud of the results, because they prevented the violent death of thousands, if not hundreds of thousands, of innocent people.

Our successors in office have their own views on all of these matters.

By presidential decision, last month we saw the selective release of documents relating to enhanced interrogations. This is held up as a bold exercise in open government, honoring the public’s right to know. We’re informed, as well, that there was much agonizing over this decision.

Yet somehow, when the soul-searching was done and the veil was lifted on the policies of the Bush administration, the public was given less than half the truth. The released memos were carefully redacted to leave out references to what our government learned through the methods in question. Other memos, laying out specific terrorist plots that were averted, apparently were not even considered for release. For reasons the administration has yet to explain, they believe the public has a right to know the method of the questions, but not the content of the answers.

Over on the left wing of the president’s party, there appears to be little curiosity in finding out what was learned from the terrorists. The kind of answers they’re after would be heard before a so-called “Truth Commission.” Some are even demanding that those who recommended and approved the interrogations be prosecuted, in effect treating political disagreements as a punishable offense, and political opponents as criminals. It’s hard to imagine a worse precedent, filled with more possibilities for trouble and abuse, than to have an incoming administration criminalize the policy decisions of its predecessors.

Apart from doing a serious injustice to intelligence operators and lawyers who deserve far better for their devoted service, the danger here is a loss of focus on national security, and what it requires. I would advise the administration to think very carefully about the course ahead. All the zeal that has been directed at interrogations is utterly misplaced. And staying on that path will only lead our government further away from its duty to protect the American people.

One person who by all accounts objected to the release of the interrogation memos was the Director of Central Intelligence, Leon Panetta. He was joined in that view by at least four of his predecessors. I assume they felt this way because they understand the importance of protecting intelligence sources, methods, and personnel. But now that this once top-secret information is out for all to see – including the enemy – let me draw your attention to some points that are routinely overlooked.

It is a fact that only detainees of the highest intelligence value were ever subjected to enhanced interrogation. You’ve heard endlessly about waterboarding. It happened to three terrorists. One of them was Khalid Sheikh Muhammed – the mastermind of 9/11, who has also boasted about beheading Daniel Pearl.

We had a lot of blind spots after the attacks on our country. We didn’t know about al-Qaeda’s plans, but Khalid Sheikh Muhammed and a few others did know. And with many thousands of innocent lives potentially in the balance, we didn’t think it made sense to let the terrorists answer questions in their own good time, if they answered them at all.

Maybe you’ve heard that when we captured KSM, he said he would talk as soon as he got to New York City and saw his lawyer. But like many critics of interrogations, he clearly misunderstood the business at hand. American personnel were not there to commence an elaborate legal proceeding, but to extract information from him before al-Qaeda could strike again and kill more of our people.

In public discussion of these matters, there has been a strange and sometimes willful attempt to conflate what happened at Abu Ghraib prison with the top secret program of enhanced interrogations. At Abu Ghraib, a few sadistic prison guards abused inmates in violation of American law, military regulations, and simple decency. For the harm they did, to Iraqi prisoners and to America’s cause, they deserved and received Army justice. And it takes a deeply unfair cast of mind to equate the disgraces of Abu Ghraib with the lawful, skillful, and entirely honorable work of CIA personnel trained to deal with a few malevolent men.

Those personnel were carefully chosen from within the CIA, and were specially prepared to apply techniques within the boundaries of their training and the limits of the law. Torture was never permitted, and the methods were given careful legal review before they were approved. Interrogators had authoritative guidance on the line between toughness and torture, and they knew to stay on the right side of it.

Even before the interrogation program began, and throughout its operation, it was closely reviewed to ensure that every method used was in full compliance with the Constitution, statutes, and treaty obligations. On numerous occasions, leading members of Congress, including the current speaker of the House, were briefed on the program and on the methods.

Yet for all these exacting efforts to do a hard and necessary job and to do it right, we hear from some quarters nothing but feigned outrage based on a false narrative. In my long experience in Washington, few matters have inspired so much contrived indignation and phony moralizing as the interrogation methods applied to a few captured terrorists.

I might add that people who consistently distort the truth in this way are in no position to lecture anyone about “values.” Intelligence officers of the United States were not trying to rough up some terrorists simply to avenge the dead of 9/11. We know the difference in this country between justice and vengeance. Intelligence officers were not trying to get terrorists to confess to past killings; they were trying to prevent future killings. From the beginning of the program, there was only one focused and all-important purpose. We sought, and we in fact obtained, specific information on terrorist plans.

Those are the basic facts on enhanced interrogations. And to call this a program of torture is to libel the dedicated professionals who have saved American lives, and to cast terrorists and murderers as innocent victims. What’s more, to completely rule out enhanced interrogation methods in the future is unwise in the extreme. It is recklessness cloaked in righteousness, and would make the American people less safe.

The administration seems to pride itself on searching for some kind of middle ground in policies addressing terrorism. They may take comfort in hearing disagreement from opposite ends of the spectrum. If liberals are unhappy about some decisions, and conservatives are unhappy about other decisions, then it may seem to them that the President is on the path of sensible compromise. But in the fight against terrorism, there is no middle ground, and half-measures keep you half exposed. You cannot keep just some nuclear-armed terrorists out of the United States, you must keep every nuclear-armed terrorist out of the United States. Triangulation is a political strategy, not a national security strategy. When just a single clue that goes unlearned … one lead that goes unpursued … can bring on catastrophe – it’s no time for splitting differences. There is never a good time to compromise when the lives and safety of the American people are in the balance.

Behind the overwrought reaction to enhanced interrogations is a broader misconception about the threats that still face our country. You can sense the problem in the emergence of euphemisms that strive to put an imaginary distance between the American people and the terrorist enemy. Apparently using the term “war” where terrorists are concerned is starting to feel a bit dated. So henceforth we’re advised by the administration to think of the fight against terrorists as, quote, “Overseas contingency operations.” In the event of another terrorist attack on America, the Homeland Security Department assures us it will be ready for this, quote, “man-made disaster” – never mind that the whole Department was created for the purpose of protecting Americans from terrorist attack.

And when you hear that there are no more, quote, “enemy combatants,” as there were back in the days of that scary war on terror, at first that sounds like progress. The only problem is that the phrase is gone, but the same assortment of killers and would-be mass murderers are still there. And finding some less judgmental or more pleasant-sounding name for terrorists doesn’t change what they are – or what they would do if we let them loose.

On his second day in office, President Obama announced that he was closing the detention facility at Guantanamo. This step came with little deliberation and no plan. Their idea now, as stated by Attorney General Holder and others, is apparently to bring some of these hardened terrorists into the United States. On this one, I find myself in complete agreement with many in the President’s own party. Unsure how to explain to their constituents why terrorists might soon be relocating into their states, these Democrats chose instead to strip funding for such a move out of the most recent war supplemental.

The administration has found that it’s easy to receive applause in Europe for closing Guantanamo. But it’s tricky to come up with an alternative that will serve the interests of justice and America’s national security. Keep in mind that these are hardened terrorists picked up overseas since 9/11. The ones that were considered low-risk were released a long time ago. And among these, it turns out that many were treated too leniently, because they cut a straight path back to their prior line of work and have conducted murderous attacks in the Middle East. I think the President will find, upon reflection, that to bring the worst of the worst terrorists inside the United States would be cause for great danger and regret in the years to come.

In the category of euphemism, the prizewinning entry would be a recent editorial in a familiar newspaper that referred to terrorists we’ve captured as, quote, “abducted.” Here we have ruthless enemies of this country, stopped in their tracks by brave operatives in the service of America, and a major editorial page makes them sound like they were kidnap victims, picked up at random on their way to the movies.

It’s one thing to adopt the euphemisms that suggest we’re no longer engaged in a war. These are just words, and in the end it’s the policies that matter most. You don’t want to call them enemy combatants? Fine. Call them what you want – just don’t bring them into the United States. Tired of calling it a war? Use any term you prefer. Just remember it is a serious step to begin unraveling some of the very policies that have kept our people safe since 9/11.

Another term out there that slipped into the discussion is the notion that American interrogation practices were a “recruitment tool” for the enemy. On this theory, by the tough questioning of killers, we have supposedly fallen short of our own values. This recruitment-tool theory has become something of a mantra lately, including from the President himself. And after a familiar fashion, it excuses the violent and blames America for the evil that others do. It’s another version of that same old refrain from the Left, “We brought it on ourselves.”

It is much closer to the truth that terrorists hate this country precisely because of the values we profess and seek to live by, not by some alleged failure to do so. Nor are terrorists or those who see them as victims exactly the best judges of America’s moral standards, one way or the other.

Critics of our policies are given to lecturing on the theme of being consistent with American values. But no moral value held dear by the American people obliges public servants ever to sacrifice innocent lives to spare a captured terrorist from unpleasant things. And when an entire population is targeted by a terror network, nothing is more consistent with American values than to stop them.

As a practical matter, too, terrorists may lack much, but they have never lacked for grievances against the United States. Our belief in freedom of speech and religion … our belief in equal rights for women … our support for Israel … our cultural and political influence in the world – these are the true sources of resentment, all mixed in with the lies and conspiracy theories of the radical clerics. These recruitment tools were in vigorous use throughout the 1990s, and they were sufficient to motivate the 19 recruits who boarded those planes on September 11th, 2001.

The United States of America was a good country before 9/11, just as we are today. List all the things that make us a force for good in the world – for liberty, for human rights, for the rational, peaceful resolution of differences – and what you end up with is a list of the reasons why the terrorists hate America. If fine speech-making, appeals to reason, or pleas for compassion had the power to move them, the terrorists would long ago have abandoned the field. And when they see the American government caught up in arguments about interrogations, or whether foreign terrorists have constitutional rights, they don’t stand back in awe of our legal system and wonder whether they had misjudged us all along. Instead the terrorists see just what they were hoping for – our unity gone, our resolve shaken, our leaders distracted. In short, they see weakness and opportunity.

What is equally certain is this: The broad-based strategy set in motion by President Bush obviously had nothing to do with causing the events of 9/11. But the serious way we dealt with terrorists from then on, and all the intelligence we gathered in that time, had everything to do with preventing another 9/11 on our watch. The enhanced interrogations of high-value detainees and the terrorist surveillance program have without question made our country safer. Every senior official who has been briefed on these classified matters knows of specific attacks that were in the planning stages and were stopped by the programs we put in place.

This might explain why President Obama has reserved unto himself the right to order the use of enhanced interrogation should he deem it appropriate. What value remains to that authority is debatable, given that the enemy now knows exactly what interrogation methods to train against, and which ones not to worry about. Yet having reserved for himself the authority to order enhanced interrogation after an emergency, you would think that President Obama would be less disdainful of what his predecessor authorized after 9/11. It’s almost gone unnoticed that the president has retained the power to order the same methods in the same circumstances. When they talk about interrogations, he and his administration speak as if they have resolved some great moral dilemma in how to extract critical information from terrorists. Instead they have put the decision off, while assigning a presumption of moral superiority to any decision they make in the future.

Releasing the interrogation memos was flatly contrary to the national security interest of the United States. The harm done only begins with top secret information now in the hands of the terrorists, who have just received a lengthy insert for their training manual. Across the world, governments that have helped us capture terrorists will fear that sensitive joint operations will be compromised. And at the CIA, operatives are left to wonder if they can depend on the White House or Congress to back them up when the going gets tough. Why should any agency employee take on a difficult assignment when, even though they act lawfully and in good faith, years down the road the press and Congress will treat everything they do with suspicion, outright hostility, and second-guessing? Some members of Congress are notorious for demanding they be briefed into the most sensitive intelligence programs. They support them in private, and then head for the hills at the first sign of controversy.

As far as the interrogations are concerned, all that remains an official secret is the information we gained as a result. Some of his defenders say the unseen memos are inconclusive, which only raises the question why they won’t let the American people decide that for themselves. I saw that information as vice president, and I reviewed some of it again at the National Archives last month. I’ve formally asked that it be declassified so the American people can see the intelligence we obtained, the things we learned, and the consequences for national security. And as you may have heard, last week that request was formally rejected. It’s worth recalling that ultimate power of declassification belongs to the President himself. President Obama has used his declassification power to reveal what happened in the interrogation of terrorists. Now let him use that same power to show Americans what did not happen, thanks to the good work of our intelligence officials.

I believe this information will confirm the value of interrogations – and I am not alone. President Obama’s own Director of National Intelligence, Admiral Blair, has put it this way: “High value information came from interrogations in which those methods were used and provided a deeper understanding of the al-Qaeda organization that was attacking this country.” End quote. Admiral Blair put that conclusion in writing, only to see it mysteriously deleted in a later version released by the administration – the missing 26 words that tell an inconvenient truth. But they couldn’t change the words of George Tenet, the CIA Director under Presidents Clinton and Bush, who bluntly said: “I know that this program has saved lives. I know we’ve disrupted plots. I know this program alone is worth more than the FBI, the Central Intelligence Agency, and the National Security Agency put together have been able to tell us.” End of quote.

If Americans do get the chance to learn what our country was spared, it’ll do more than clarify the urgency and the rightness of enhanced interrogations in the years after 9/11. It may help us to stay focused on dangers that have not gone away. Instead of idly debating which political opponents to prosecute and punish, our attention will return to where it belongs – on the continuing threat of terrorist violence, and on stopping the men who are planning it.

For all the partisan anger that still lingers, our administration will stand up well in history – not despite our actions after 9/11, but because of them. And when I think about all that was to come during our administration and afterward – the recriminations, the second-guessing, the charges of “hubris” – my mind always goes back to that moment.

To put things in perspective, suppose that on the evening of 9/11, President Bush and I had promised that for as long as we held office – which was to be another 2,689 days – there would never be another terrorist attack inside this country. Talk about hubris – it would have seemed a rash and irresponsible thing to say. People would have doubted that we even understood the enormity of what had just happened. Everyone had a very bad feeling about all of this, and felt certain that the Twin Towers, the Pentagon, and Shanksville were only the beginning of the violence.

Of course, we made no such promise. Instead, we promised an all-out effort to protect this country. We said we would marshal all elements of our nation’s power to fight this war and to win it. We said we would never forget what had happened on 9/11, even if the day came when many others did forget. We spoke of a war that would “include dramatic strikes, visible on TV, and covert operations, secret even in success.” We followed through on all of this, and we stayed true to our word.

To the very end of our administration, we kept al-Qaeda terrorists busy with other problems. We focused on getting their secrets, instead of sharing ours with them. And on our watch, they never hit this country again. After the most lethal and devastating terrorist attack ever, seven and a half years without a repeat is not a record to be rebuked and scorned, much less criminalized. It is a record to be continued until the danger has passed.

Along the way there were some hard calls. No decision of national security was ever made lightly, and certainly never made in haste. As in all warfare, there have been costs – none higher than the sacrifices of those killed and wounded in our country’s service. And even the most decisive victories can never take away the sorrow of losing so many of our own – all those innocent victims of 9/11, and the heroic souls who died trying to save them.

For all that we’ve lost in this conflict, the United States has never lost its moral bearings. And when the moral reckoning turns to the men known as high-value terrorists, I can assure you they were neither innocent nor victims. As for those who asked them questions and got answers: they did the right thing, they made our country safer, and a lot of Americans are alive today because of them.

Like so many others who serve America, they are not the kind to insist on a thank-you. But I will always be grateful to each one of them, and proud to have served with them for a time in the same cause. They, and so many others, have given honorable service to our country through all the difficulties and all the dangers. I will always admire them and wish them well. And I am confident that this nation will never take their work, their dedication, or their achievements, for granted.

Thank you very much."

Interesting take on the credit issue....

You’ve probably seen this story already, the piece by Edmund Andrews, an economics reporter for the New York Times, about his descent into the fifth circle of subprime hell, “My Personal Credit Crisis,” but it’s worth a read, purely for entertainment value, if you missed it.

The article, very inadvertently, gets at what I think is a profound and equally widespread misconception we have about people who make objectively bad decisions with their money.

Most of us believe, contrary to all evidence, that as long we’re well informed, we won’t get into real financial trouble. No! Being good with your money, especially when it comes to avoiding the obvious mistakes that squeeze so many people, has nothing to do with what you know.

We like to tell ourselves otherwise because it means the problem is fixable. People who are mired in credit card debt? Oh, they just didn’t understand what they were getting into. They were tricked, they were ignorant, and if we can just enlighten the masses, they’ll do okay.

The idea comes out at the very beginning of Andrews’ tale: “If there was anybody who should have avoided the mortgage catastrophe, it was I,” he tells us, because, “As an economics reporter for The New York Times, I have been the paper’s chief eyes and ears on the Federal Reserve for the past six years… I know a lot about the curveballs that the economy can throw at us.”

Dude, covering the economics beat has nothing to do with staying out of debt or whether or not your home goes into foreclosure. You don’t become more adept at dealing with your finances just because you know the things other people do wrong. And you know what? The fact that Andrews thinks of himself as someone who’s well informed about money is probably one of the reasons why he ended up unable to pay his mortgage and saddled with a mountain of credit card debt.

We rack up credit card debt and buy things we can’t afford because it’s convenient, and easy, and most importantly, because money doesn’t exist in a vacuum. We are always going to do things that seem irresponsible from an objective perspective because that’s just how people are put together. Sometimes we just don’t care about paying 40% interest on money borrowed from the credit company. Sometimes some of us don’t care enough to pay our bills on time. If I were an economist I’d say that some people derive more utility from not worrying or even thinking about being punctual with their payments than they lose from getting hit with a late fee and losing a few points on our credit scores.

Making the “right” basic financial decisions has got very little to do with what you know, and a whole lot more to do with what you care about.

Read the piece in the Times, you’ll see: Andrews isn’t an exception, he’s the rule.

Raisin' cash!!!!!

Bank of America has priced 825 million shares at $10 each, sources familiar with the offering told CNBC.

Bank of America also is considering an exchange of preferred for common shares, but no details on the size of that exchange were available.

The sale price is 11.1 percent below Bank of America's $11.25 closing price [BAC 11.87    0.62  (+5.51%)   ] on Tuesday. The bank's shares, which briefly dropped about 5 percent in late trading, later were close to flat.

Click here for real-time, before-hours Bank of America stock quotes.

In a statement late on Tuesday, Bank of America said that it had issued 1.25 billion shares since the program began on May 8 at an average price of $10.77, representing gross proceeds of approximately $13.47 billion.

"We're pleased to have this portion of our capital plan completed," Chief Financial Officer Joe Price. "This strengthens and diversifies our capital structure."

A sale of stock would help the bank, America's biggest, lender raise capital, after regulators told it to bolster its finances following a government "stress test" of its ability to handle a deep recession.

Nell Redmond / AP A Bank of America branch.

Ten of the 19 large U.S. banks that underwent such tests were told this month to raise capital, with Bank of America's $33.9 billion shortfall being by far the largest.

• More from David Faber: The 'Faber Report' Blog

Bank of America has said it plans to raise $17 billion of common equity. It said this could involve the issuance of 1.25 billion common shares, and involve the conversion at less than face value of some preferred shares held by private investors.

The bank has said it plans to raise roughly $17 billion more from asset sales and other means. Last week, it sold part of its stake in China Construction Bank for $7.3 billion.

Stressed?

The Treasury released its bank "stress test" results late yesterday, and the good news is that the financial system has survived this very public undressing better than most analysts figured three months ago. We'd attribute the results much more to Adam Smith's continuing workout than to this public strip-tease, but we'll take relief wherever we can get it.

AP

Stress-testing is what banks and their regulators are supposed to do as a matter of course, albeit more quietly. The current very loud and public effort was advertised to provide an extraordinary measure of transparency at a time when no one trusted bank books. Do markets trust them any better now? Judging by the run-up in bank stock prices from their oversold levels in January, they do. This is progress.

On the other hand, all we really have to go on is the word of the federal employees who looked at the banks and estimated their losses against certain economic assumptions. Did they go easier than they might have, and how much did they bend when the banks fought back? The Fed's overview yesterday claimed they ran a "deliberately stringent test" and pegged potential "adverse"-case losses at the 19 largest banks at $600 billion this year and next.

Yet markets are also full of reports that regulators showed more than a little forbearance, especially after it became clear that President Obama had no desire to go back to Congress to ask for more public money. With only $110 billion or so in Troubled Asset Relief Program (TARP) funds left uncommitted, it's probably no coincidence that Treasury now sees new net bank capital needs as a manageable $75 billion.

And maybe that optimism will prove correct. Most banks are earning healthy profits again, thanks to a low cost of funds and steep yield curve. They're also taking steps to burn bad debt and clean up their balance sheets. Some banks that got too big during the boom are looking to sell some of their operations in order to raise cash. This is how a financial system shapes itself up under the market pressure of recession, with or without stress tests.

Not that there still aren't plenty of financial risks out there. On the credit side, commercial real estate is ugly and both home mortgage and credit card losses are a long way from receding. While the economy seems to be bottoming out at last, unemployment will keep rising for several months, which will mean more bank losses.

But our biggest question concerns interest-rate risk. Thanks to the Federal Reserve's emergency easing, short-term rates are close to zero. That can't last forever, and the longer the Fed keeps rates this low the more likely it is that rates will have to climb higher down the road to prevent inflation. Remember how the Fed's 1% rate of 2003-2004 rose to 5.25% by 2006 and what that did to housing prices and the cost of bank funds? Yet the Fed didn't disclose the interest-rate projections for 2010 and beyond that it built into its stress test models.

On the interest-rate point, by the way, one omen was yesterday's terrible 30-year Treasury bond auction. Treasury sold $14 billion of the securities, but investors demanded yields in mid-auction that were higher than forecast and bond prices fell the most since February. The 30-year yield hit 4.3%. With trillions of dollars in budget deficits still in the pipeline -- even before health care -- Treasury may find the world keeps demanding higher yields to offset the fear of potential inflation. Fed Chairman Ben Bernanke didn't help on that score this week when he told Congress that it was too early to take liquidity out of the financial system because the economy was still too weak. By the time the economy is growing, it will be too late. Think 2004, again.

In the wake of the stress tests, the weaker banks will now have six months to raise private capital to fill the hole identified by Treasury. They'll be desperate to do so, because the alternative is that Treasury will force them to accept more public capital. This will include the conversion of Treasury's preferred stock, bought last year via the TARP, into common shares.

Under accounting rules, this gives the banks more "tangible common equity," the measure of capital favored by Treasury. Yet it provides not a penny more in actual capital to absorb losses. Meantime, the feds would suddenly own big chunks of those banks via common stock, the way they now are the largest shareholder in once-proud Citigroup. We've called this a back-door nationalization, and it means Congress looking over banker shoulders. The silver lining is that bank executives are now so appalled by this idea that they'll sell anything that moves to avoid such a fate.

As for the "stronger" banks, a major goal will be to flee as fast as possible from the TARP, also known as the Hotel Geithner. Banks can check in but it's a lot harder to check out. Treasury has set up major hurdles before a bank can escape, even if it wants to. Clearly banks at risk of failing can't be allowed to endanger the larger financial system, but banks that have adequate capital shouldn't be held hostage to the political worries of regulators.

The best that can be said about the stress tests is that they're over. Now the most urgent task is to get back to a financial system free of government guarantees, public capital and political control

Global Tax Raid?

President Obama revealed Monday that he's half a supply-sider. If only someone could explain to him the other half. We have a tax code, the President said, "that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York." That sounds like a great argument for lowering taxes on the guy creating jobs in Buffalo. Alas, that's not what he has in mind.

AP

Set aside that India is a poor example to make Mr. Obama's point, since its corporate tax rate on foreign-owned companies can be as high as 55%. The President's argument is that U.S. tax-deferral rules make it more expensive for American companies to reinvest overseas profits at home than abroad. This, he claims, creates a perverse incentive for companies to "ship jobs overseas" and reduces investment and job creation in the U.S.

He's right, except that his proposals would only compound the problem. His plan would limit the tax deferral on income earned abroad by tightening the rules, limiting allowable deductions and restricting eligibility for foreign-tax credits. This "solution" is antigrowth, job-destroying, protectionist and unlikely to raise the tax revenue Mr. Obama predicts. Other than that . . .

The current tax-deferral system is a clumsy attempt to deal with the fact that most other countries don't tax their companies' overseas profits. A German firm doing business in Ireland, say, pays no German income tax on its Irish profits, but it does pay Ireland's corporate income tax at its 12.5% rate. The U.S. company competing with that German business in Ireland, by contrast, pays Ireland the same 12.5% on its profits -- and it then pays Uncle Sam up to 35%, minus a credit for what it paid the Irish. And because almost everyone else's corporate tax rates are lower than America's (see nearby table), U.S. companies end up paying higher taxes than their international competitors.

Congress long ago created the corporate tax deferral to compensate for this competitive disadvantage. Under deferral, a company doesn't have to pay the U.S. corporate rate until it repatriates its earnings. It can retain them overseas or reinvest them abroad with no penalty. But if it brings them home or pays them as dividends, the tax bill comes due.

The German company faces no such quandary. It pays the Irish tax, and it's free to invest that money in Ireland or Germany or anywhere else. This territorial tax system, embraced by most of the world, eliminates the perverse incentive to hold money abroad that America's deferral system creates. Adopting a territorial system would be the most obvious and simplest way to eliminate the distortion that tax deferral creates. Alternatively, Mr. Obama could lower the U.S. corporate tax rate to a level that is internationally competitive.

Yes, we know: Few major U.S. companies pay 35% of their profits in taxes because of the foreign tax-deferral and other deductions, credits and loopholes. But that's precisely why Mr. Obama should want to take the better path to corporate tax reform by reducing the rate and removing loopholes. America now has the worst of both worlds -- a high statutory rate and a tax code so riddled with complexity that it is both expensive to administer and inefficient at collecting revenue. And yet Mr. Obama's proposal to limit deferral only layers on the complexity.

In promoting its new global tax raid, the White House fingered the Netherlands, which it lumped with Ireland and Bermuda as "small, low-tax countries" that supposedly account for an outsize share of reported foreign profits of U.S. firms. The Dutch corporate tax rate is 25.5% -- which isn't even all that low by current European standards. And the U.S. is the largest foreign investor in that "small, low-tax country," according to the Dutch Embassy. Perhaps reducing American investment there and slamming the Netherlands as a tax haven is Mr. Obama's way of reaching out to friends and allies.

But the Netherlands won't be the only country hurt. The explicit goal of this plan is to reduce the incentive for U.S. companies to invest abroad, which Mr. Obama derisively calls "shipping jobs overseas." Foreign companies may relish the loss of U.S. corporate competitiveness that his proposal will bring in the short term. But in the long term, reducing U.S. investment globally will hurt everyone. And that investment is a two-way street -- the Netherlands is also the fourth-largest foreign investor in the U.S.

Some of Mr. Obama's advisers understand all this, but then their real goal isn't tax reform or U.S. competitiveness. It's a revenue grab, one made easier by the fact that overseas tax "avoidance" is easily demagogued. To that political end, Mr. Obama conflates tax deferral with the offshoring of jobs -- hence the sly reference to Bangalore, India. With trillions of dollars of new spending, the White House and Treasury are desperate for new tax sources to pay for it all.

But even as a revenue raiser, this is likely to fail. Fewer companies will keep their headquarters in the U.S., especially small or mid-sized firms that can slip away without becoming a political target. Those companies that can't flee will sooner or later demand relief from Congress, which will be happy to create even more loopholes.

If Mr. Obama's proposal has a silver lining, it is that he has embraced the principle that tax rates matter to investment decisions. If his new and short-sighted proposal becomes law, he and all Americans will discover just how much.