Status Update

With the stroke of a pen, a new bill in Congress could slash the number of Palestinian refugees -- and open a world of controversy.

A war is brewing on Capitol Hill. And while wars tend to create refugees, this one may result in fewer of them.

Sen. Mark Kirk (R-IL) is trying to get a handle on the real number of Palestinian refugees in the Middle East -- a move that could result in a change of status for millions of Palestinians. His proposed language for the 2013 foreign appropriations bill would require the U.S. government to confirm just how many Palestinians currently served by the U.N. Relief and Works Agency (UNRWA) -- the body tasked with providing assistance, protection, and advocacy for Palestinian refugees -- are actually refugees. The bill, slated for markup on May 22, would challenge the status of the children, grandchildren, and great-grandchildren of Palestinian refugees -- a great many of whom claim to be refugees despite the fact that they were never personally displaced in the 1948 and 1967 Arab-Israeli wars.

The aim of this proposed legislation, Kirk's office explains, is not to deprive Palestinians who live in poverty of essential services, but to tackle one of the thorniest issues of the Palestinian-Israeli conflict: the "right of return." The dominant Palestinian narrative is that all of the refugees of the Israeli-Palestinian wars have a right to go back, and that this right is not negotiable. But here's the rub: By UNRWA's own count, the number of Palestinians who describe themselves as refugees has skyrocketed from 750,000 in 1950 to 5 million today. As a result, the refugee issue has been an immovable obstacle in round after round of negotiations between the Israelis and Palestinians.

How have these numbers swelled, particularly as the Palestinians who fled or were forced from their homes in 1948 and 1967 grew old and died? This question lies at the crux of the Kirk amendment. And the answer is UNRWA.

The knock on UNRWA is that it exists to perpetuate the refugee problem, not solve it. It was UNRWA that bestowed refugee status upon "descendants of refugees," regardless of how much time had elapsed. As a result, the Palestinian refugee population has grown seven-fold since the start of the Arab-Israeli conflict. As one study projects, if descendants maintain their current status, the number of "refugees" in 2020 will be 6.4 million -- despite the fact that few of the actual, displaced Palestinians will still be alive. In 2050, that number will reach 14.7 million.

UNRWA, which calls for a "just and durable" solution to the refugee problem, has unquestionably been a silent partner to the Palestinian leadership. The agency's administration fully understands that if Israel accepted the PLO's demand, it would be demographic suicide. As Palestinian Authority President Mahmoud Abbas himself has admitted, asking the Jewish state to repatriate 5 million Palestinians "would mean the end of Israel."

UNRWA's warts notwithstanding, American taxpayers have rewarded it year after year. In the 2011 fiscal year, U.S. assistance to UNRWA stood at $249.4 million. Total contributions since its founding in 1949 amount to a staggering $4.4 billion.

In recent years, politicians and policy wonks, including one former UNRWA administrator, have called for UNRWA reform. The agency hasn't merely demurred; it has girded for battle. UNRWA set up shop in Washington with two Hill-savvy professionals, despite the fact that its operations are entirely based in the Middle East, anticipating the need for what looks a full-scale lobby effort to defend its mission. The agency even toyed with changing its name last year in an attempt to burnish its image in the West.

UNRWA's time to defend itself has unquestionably arrived. The Kirk amendment would require the secretary of state to report to Congress on how many Palestinians serviced by UNRWA are true refugees from wars past -- those who could prove that they were personally displaced. That number is believed to be closer to 30,000 people. This new tally would then become the focus of America's assistance to UNRWA for refugee issues.

Despite congressional Republicans' current fervor to rein in America's out-of-control debt, the bill's proponents do not call for a full cutoff to the descendants. Rather, they seek to ensure that UNRWA services keep flowing to those who are needy. The United States would simply not view them as refugees -- just people living in the West Bank or Gaza and below the poverty line.

But funding for the future would not be guaranteed. As Kirk's office explains, Congress will soon need to consider tough questions, like whether U.S. taxpayers should be footing the bill for welfare programs in the West Bank and Gaza, or whether such services should be provided by the Palestinian Authority.

The fact that this language has made it to mark-up is nothing short of remarkable. The Israelis have historically avoided locking horns with UNRWA at all costs. In fact, they have quietly lobbied against UNRWA reform in the past. As one Israeli official confided, the Israel Defense Forces don't want to risk being saddled with providing services to the refugees in the West Bank and Gaza should UNRWA unravel. Indeed, one of the Israelis' primary purposes in signing the Oslo Accords and supporting the creation of the Palestinian Authority was to ensure that they were no longer saddled with the responsibility of providing services to the Palestinians in the West Bank and Gaza.

But today, with the peace process moribund, if not dead, the Israelis believe that UNRWA reform could serve as a defibrillator of sorts. By tackling one of the toughest challenges of the Palestinian-Israeli conflict without the bedlam that typically accompanies bilateral negotiations, there would theoretically be one less sticking point when the stars align again for diplomacy. Under the leadership of Knesset member Einat Wilf, this idea now has the backing of the prime minister's office, the Ministry of Defense, and the Ministry of Foreign Affairs.

In Washington, a coalition is still forming. Rep. Howard Berman (D- CA), the ranking member of the House Foreign Affairs Committee, broadly backs this idea but has yet to introduce language on the House side. However, bipartisanship may not be enough: The State Department, which pledged an additional $10 million in UNRWA in March, is expected to put up a fight. The legislation would undoubtedly anger some of Washington's Arab allies, and Foggy Bottom tries to avoid that at all costs.

But such grumblings will likely pale in comparison to the expected outcry in the West Bank, Gaza, and the Palestinian refugee camps in neighboring Arab countries. The refugee narrative is a sacred one in Palestinian political culture. Palestinian leaders will not simply table it because Congress passes new legislation. Rather, it's a fair bet they will mobilize. When UNRWA merely mulled a name change in July 2011, Palestinians organized protests and sit-ins. Proposing real changes to UNRWA could even prompt violence.

In short, the Kirk legislation would strip Palestinian the descendants of their political symbolism. It would be a landmark for this generations-old conflict, but whether it paves the way for peace or conflict remains to be seen. There are few more potent symbols of the Palestinian cause. Don't expect Palestinians to give it up easily.



The Government We Deserve

Americans are sick and tired of Washington's dysfunctional politics. But it's not Congress they should be angry at -- Americans got exactly the system of government they asked for.

Something is rotten in these United States, and Americans know it. As usual, the focal point of their anger is Washington's dysfunctional politics and partisan bickering. But the problem isn't just the decline of civility in the halls of the Capitol. It's much bigger. Today the country is reaping the foul harvest of policy decisions it has enthusiastically endorsed over the last 30 years.

How mad are Americans? Just look at this chart. For the last 30 years, Gallup has polled Americans about whether they are satisfied with the direction in which their country is heading. This chart shows the gap between the percentage that is satisfied and the percentage that is not. When the chart heads north of the zero line, most people are satisfied. When it heads south, most aren't. And it's fallen off a cliff.

In fact, the numbers have been sliding southward for a decade. There have been some brief upticks -- the post-9/11 launch of the war on terror, the 2003 Iraq invasion, Barack Obama's 2009 inauguration -- but the trend is clear. And there's no simple, short-term explanation. Earlier periods of intense dissatisfaction, such as the early 1980s and early 1990s, were closely tied to sharp economic downturns. But the recent decline was already in full swing when Americans seemed to be living large, well before the 2008 Great Recession.

Why? Because over the past few decades, Americans eagerly supported a series of decisions aimed at rolling back government's influence in daily life. They were popular at the time. But now the country is paying a heavy price.

Call it a hangover from America's neoliberal binge of the late 20th century, a massive political project aimed at limiting government's role in everyday life. Americans wanted "a minimum of government authority," Ronald Reagan said while campaigning for the presidential nomination in 1976. "Very simply, they want to be left alone." And that was exactly the program enacted over the next quarter-century: Marginal tax rates were reduced, especially for the wealthy; social programs were restricted; controls on commerce and finance were removed. By the time 2000 rolled around, Reagan was remembered as one of the greatest presidents in modern history.

By then, the project of restricting government and liberating market forces was a bipartisan one. It was a Democrat, President Bill Clinton, who famously conceded in 1996 that the era of big government was over. Clinton signed the North American Free Trade Agreement in 1993 and a trade agreement with China in 2000, saying that this was "the only way we can recover the fortunes of the middle class in this country." He also signed laws that loosened federal control over the financial sector, promising they would actually "enhance the stability of our financial services system." Despite all his personal baggage, the American people heartily approved of this agenda: Clinton ended his presidency with a 65 percent approval rating.

Clinton merely followed what was, by then, the conventional wisdom about the virtue of the neoliberal project. Federal Reserve Chairman Alan Greenspan helped set the tone, promising that free markets would generate wealth and regulate themselves effectively. The United States, Greenspan said in 2005, had a "far more flexible, efficient, and hence resilient financial system than the one that existed just a quarter-century ago." Yes, Greenspan's credibility took a beating after 2008, but before the crisis, he was one of the country's most highly regarded policymakers. A 1998 Gallup poll showed that 57 percent of Americans had a favorable view of the Fed chairman, while only 9 percent had an unfavorable view. "With Greenspan, we find comfort," journalist Bob Woodward wrote in his 2000 book Maestro. "He helps breathe life into the vision of America as strong, the best, invincible."

Unfortunately, the decades-long neoliberal project had a price, which became increasingly obvious in the new millennium. The removal of trade barriers put U.S. jobs at risk, while lowering top tax rates and loosening the social safety net aggravated problems of inequality. Lighter regulation encouraged overexpansion and recklessness in the financial sector. Even before the 2007-2008 crisis, Americans were uneasy about the effects that followed from policies they had once enthusiastically endorsed. In 2004, according to an ABC News poll, a majority of Americans believed that they were no better off than when Reagan was inaugurated. In a 2006 CBS poll, two-thirds of respondents doubted that the next generation would be better off than they were. And in an April 2007 Gallup poll, a similar share said that wealth in the United States was unfairly distributed.

Then came the crash of 2008. The collapse of household wealth and the spike in unemployment were bound to produce widespread popular anger. In a sense, though, the United States was again realizing the consequences of its earlier choices. History showed that loose regulation of the financial sector would encourage cycles of boom and bust. Such crises had been commonplace in the decades before the New Deal and less frequent in the four decades afterward. Turbulence in the financial sector intensified after 1980, and each crisis demanded a vigorous governmental response. U.S. authorities were forced to intervene during the savings and loan crisis of the late 1980s, after the Black Monday crash of 1987, during the Long-Term Capital Management crisis in 1998, and after the dot-com collapse in 2000. The 2008 crisis was the same thing, just much, much bigger.

Popular attitudes about the handling of the crisis also reflected a deep ambivalence about the role of government in economic life. There was widespread anger at not just the rating agencies, predatory lenders, and fat-cat bankers, but also at the apparent cost of bailouts for the financial sector, along with opposition in principle to interventions like the takeover of General Motors. And as the government took on these onerous, unwanted economic necessities, many also worried about the rising federal debt. But there's little doubt that the public would have been equally outraged if the Obama administration had actually followed a strict neoliberal path of nonintervention and deficit reduction. It would have been seen as cruel and inhuman.

The confusion that characterized economic policy generally was also evident on specific issues such as health care. Public ambivalence about the proper role of government was evident in a March 2010 Gallup poll about Obama's 2010 Affordable Care Act, in which a majority complained that the law expanded government's role in the health-care system too much -- and also that it failed to go far enough in regulating the health-care industry. Now the country is stranded in a no man's land: The system is predominantly private, but it lacks the key virtue of private provision-efficiency. At the same time, there is an extensive governmental role in regulating the sector, but this is frequently ineffective in achieving regulatory objectives such as cost containment. The U.S. health-care system is now so deeply entrenched, accounting for one-seventh of the national economy, that a radical overhaul is difficult, if not impossible, to imagine.

Americans' ambivalence about the role of government also infects foreign policy. Consider the wars in Iraq and Afghanistan. As the Gallup satisfaction chart above shows, both campaigns produced an initial frisson of satisfaction with the country's direction. The public mood, however, soon turned sour. Majority support for the Iraq war evaporated quickly, yet the engagement dragged on for eight long years. Similarly, it has been years since Americans had confidence in the Afghanistan mission, yet that fight continues.

Why is there such a disconnect? In part, because that's the way the American people wanted it. After the Vietnam War, the U.S. military was transformed, relying more on technology and abandoning the draft. Today's active-duty military represents a smaller proportion of the U.S. population than at any point since the eve of the Pearl Harbor attack. Moreover, today's soldiers are volunteers. We don't often think of these military reforms as part of the neoliberal project, but they undoubtedly were. The commission that recommended eliminating the draft included not only Greenspan but also America's intellectual godfather of the unfettered free market, Milton Friedman. In 1962, Friedman had included the draft as one of those activities that was indefensible in a free society, along with tariffs, Social Security, and "detailed regulations on banking." The commission's report concluded that abolition of the draft would "minimize government interference with the freedom of the individual."

And it did. But the military's transformation had an unexpected effect. Americans might have won greater freedom from governmental interference, but the military complex gained some freedom too. Wars could be launched more easily because they did not impose a substantial burden on the American people. As the armed forces went to war in Afghanistan and Iraq, the rest of America followed President George W. Bush's injunction: They went shopping. But a military divorced from its citizens also meant that wars could grind on long after the public had turned against them.

The neoliberal reforms launched 30 years ago did not come out of thin air. They were a response to a stodgy, feckless government, and they offered a fresh start after a decade of drift and uncertainty in national politics. That's what Reagan meant in 1984 when he said that it was "morning again in America." The slate was being wiped clean. But that was a generation ago, and now the limitations of the neoliberal project have become painfully clear. At that time, most Americans approved of smaller, more hands-off government. The question now is whether they will accept the consequences.