A professor of economics at the University of Michigan, Gary Saxonhouse joins AEI this month as a visiting scholar focusing on the structure and operation of the Japanese economy, U.S.-Japanese trade relations, the economics of technology transfer, and the policy applications of econometrics. He has served as a member of the senior staff of the president's Council of Economic Advisers, as a consultant for the U.S. Departments of State, Treasury, and Commerce and the World Bank, and on advisory panels to the U.S. Congress.

Thomas Donnelly, writing in The Weekly Standard (November 29), contends that spending must increase to build the bigger military needed to enforce the Bush Doctrine: "Creating the force we need for the many missions we [have] given our military in the Middle East and around the globe will require between 5 percent and 6 percent of GDP. That is $500 billion to $600 billion a year, and it needs to be sustained for the foreseeable future." Moreover, Donnelly argues, "the gap between our strategic ends and military means" will be filled "only if President Bush decides to spend some of the political capital he earned in the election."

In the Chronicle of Higher Education (November 3), Frederick M. Hess speculates on the higher-education policy issues that are likely to draw the most attention in President Bush's second term: "Any new efforts will probably focus on low-cost initiatives that fit into the administration's larger priorities, like its pilot effort to provide additional student aid for students who take rigorous high-school courses. . . . It seems likely that the administration will also try to find ways to pressure traditional colleges to control costs, pursue accountability measures, and respond to conservative concerns of political bias-although limited budgetary resources will restrict its leverage to push for substantial changes." For further analysis of the same topic, please see www.aei.org/event958.

Freedom Scholar Michael A. Ledeen

Michael A. Ledeen, in The Australian (November 29), assesses the European approach to the threat of nuclear capability from Iran: "The Europeans, like many U.S. diplomats, would be secretly pleased if someone else-that is to say, Israel-were to 'do something' to rid them of [Iran's nuclear menace]. When they whisper that thought to themselves in the privacy of their own offices or the darkness of their own bedrooms, they mentally replay the Israeli bombing of the nuclear reactor in Osirak, Iraq, in 1981, an attack they publicly condemned and privately extolled. . . . Rarely has the metaphor of the scapegoat been so appropriate: the burden of our sins of omission loaded on to the Israelis, who are then sacrificed to atone for us all."

Alex J. Pollock argues in Barron's (November 29) that Financial Accounting Standard 133 has contributed to Fannie Mae and Freddie Mac's current financial woes: "The best guardian of good financial reporting remains informed and informative disclosure. Disclosure relevant to hedging activities could be improved by adopting the 'two sets of books' approach, as the best of the limited set of alternatives. Fannie, Freddie, other GSEs and any company whose financial results are heavily influenced by activity in derivatives markets should publish statements that follow FAS 133 to the last detail, as well as that can be determined."

Resident Scholar John H. Makin

In the Wall Street Journal (November 15), John H. Makin calls for an end to China's currency peg to the dollar: "The reluctance of America's trading partners to allow dollar depreciation, even as the U.S. current account deficit has grown to a point where nearly $2 billion a day must be purchased in order to keep the dollar stable, has created a massive global imbalance. U.S. consumption is being artificially elevated to support rising excess manufacturing capacity in Asia and Europe. While adjustment will involve some transitional pain, the emergence of a virtually zero U.S. saving rate, while Chinese investment rises at a 40 percent annual rate, is not sustainable."