Washed It!

As Jerry Brown prepares to take over as governor, California faces a $25.4-billion deficit — far larger than state officials were projecting only days ago — the state’s chief budget analyst said Wednesday.

The figure, projected over the next year and a half, results from billions of dollars in phantom savings approved by Gov. Arnold Schwarzenegger and legislators last month, more budget restrictions passed by voters last week and predictions of a “painfully slow economic recovery,” according to the report from the nonpartisan Legislative Analyst’s Office.

In addition, more than $8 billion in temporary sales, car and income taxes are set to expire in the coming year, and the federal stimulus program that has helped prop up schools, healthcare for the poor and other state programs also will soon disappear.

The report shows $20-billion annual shortfalls in future years as well.

“There is no good news,” said Legislative Analyst Mac Taylor.

Simply keeping K-12 public schools funded at their current level would expand the deficit, Taylor said. That is because billions of dollars in school cutbacks are already factored in.

The predicted $25.4-billion deficit is the equivalent of about 29% of this year’s general fund budget. Erasing the gap will require a combination of severe cuts and more in tax collections over several years, the report said.

“They have to consider everything,” Taylor said of lawmakers and the governor-elect.

Brown, on a post-election vacation, was unavailable for comment. He is scheduled to return to Sacramento next week. One of his campaign pledges was that he would not raise taxes without voters’ approval.

Republicans immediately vowed to block any tax hikes, and Democrats pledged to protect core programs and jobs and to use the shortfall as a reason to restructure government. Senate minority leader Bob Dutton (R-Rancho Cucamonga) called for an emergency legislative session to immediately address the projected deficit.

Schwarzenegger signed the latest spending plan in modern history last month, 100 days into the fiscal year. The analyst’s report Wednesday estimated that $6 billion, or roughly a third, of the deficit-cutting that the governor and legislative leaders said they achieved will never materialize.

Prisons spending will outpace what was budgeted only a month ago by $965 million, and overly rosy assumptions of a helping hand from Washington will prove too optimistic by $3.5 billion, according to the report.

Any future aid from the nation’s capital, where Republicans decisively seized control of the House of Representatives last week on promises to curb federal spending, is also unlikely.

“Good luck,” Rep. Howard P. “Buck” McKeon (R-Santa Clarita) said Wednesday. “We’re going to be trying to reduce spending here, not increase spending.”

Taylor sought to lower expectations that a robust economic recovery would pave the way for California’s return to solvency. His report reduces tax receipt estimates for the current year, citing a “sluggishly” improving economy.

Tax collections in California — a center of the mortgage boom and bust — won’t return to their peak levels of 2007-08 until 2015-16, the report forecasts.

“It’s not just budget, it’s also the economy,” said Assembly Budget Committee Chairman Bob Blumenfield (D-Woodland Hills).

Taylor projected a $22.4-billion deficit in fiscal 2012-13. That ebbs only slightly to $19.4 billion by fiscal 2015-16. Even those bleak figures could prove optimistic: They assume no cost-of-living adjustments and that California will win all pending lawsuits against the state.

Voters widened the deficits last week by approving two measures that constrain legislators’ ability to assess fees on businesses and to take funds from local governments. Combined, the measures unravel $800 million in savings this year and up to $1 billion annually in the future, the report said.

But Californians also voted to allow the Legislature, which Democrats control, to pass budgets with a simple majority rather than a two-thirds vote. That could eliminate the need for GOP approval, which has often stalled the budget process. But a two-thirds vote is still required to raise taxes, which necessitates some Republican support.

shane.goldmacher@latimes.com

Times staff writer Richard Simon in Washington, D.C., contributed to this report.

Estimated state budget deficit reaches $25.4 billion

After a survey of U.S. troops and their families, a Pentagon study group has concluded that the military can lift the ban on gays serving openly in uniform with only minimal and isolated incidents of risk to current war efforts, the Washington Post reported Wednesday.

The newspaper quoted two people familiar with a draft of the study, which is to be completed for Defense Secretary Robert Gates by Dec. 1., but with an uncertain public release date.

More than 70% of respondents to a survey sent to active-duty and reserve troops over the summer said the effect of repealing the military’s “don’t ask, don’t tell” policy on gays and lesbians in uniform would be positive, mixed or nonexistent, the sources told the newspaper.

The newspaper said the survey results have led the report’s authors to conclude that objections to openly gay colleagues would drop once troops were able to live and serve alongside them.

The long, detailed and nuanced report will almost certainly be used by opponents and supporters of repeal legislation to bolster their positions in what is likely to be a heated and partisan congressional debate. And it is expected to reveal challenges the services could face in overturning the long-held policy, including overcoming fierce opposition in some parts of the force — primarily in the Army and Marine Corps — even if they represent a minority.

The Marine Corps commandant, Gen. James Amos, last week said that with forces fighting in Afghanistan and still deployed in Iraq, now was the wrong time to lift the ban.

“This is not a social thing. This is combat effectiveness,” Amos said.

That brought a mild rebuke from Joint Chiefs of Staff Chairman Mike Mullen, who said he was surprised that Amos had spoken publicly. He said the heads of the military services had committed to “look at the data and then make our recommendations privately.”

The Post said Gates, Mullen and uniformed and civilian leaders of the four military branches received copies of the draft report late last week.

The document totaled about 370 pages and is divided into two sections, the newspaper said. The first section explores whether repealing “don’t ask, don’t tell” would harm unit readiness or morale. The second part of the report presents a plan for ending enforcement of the ban. It is not meant to serve as the military’s official instruction manual on the issue but could be used if military leaders agreed, one of the sources told the newspaper.

Among other questions, the survey asked whether having an openly gay person in a unit would have an effect in an intense combat situation. Although a majority of respondents signaled no strong objections, a significant minority is opposed to serving alongside openly gay troops. About 40% of the Marine Corps is concerned about lifting the ban, according to one of the people familiar with the report, the Post said.

Pentagon spokeswoman Cynthia Smith said that of the 400,000 surveys sent randomly to troops, 115,052 responded. An additional 150,000 surveys were sent to spouses with 44,266 completed. Defense officials have said they were pleased with the response rate and believed it was enough to get an accurate sampling of the force.

President Obama has vowed to end the policy. A Democratic proposal to repeal the 1993 law already has passed the House as part of a broader defense policy bill that includes such popular provisions as a pay raise for the troops. But that same legislation sank in the Senate under Republican objections just weeks before the Nov. 2 elections.

Senate Majority Leader Harry Reid (D-Nev.) has promised another vote by year’s end, although the political dynamics in this lame-duck session haven’t changed much. Gates has asked Congress to act before January, but Senate Democrats still hold a shaky majority and they are unlikely to give in to Republican demands for a protracted debate.

A Republican gay rights group, the Log Cabin Republicans, has challenged the constitutionality of the policy in court. The Obama administration on Wednesday urged the Supreme Court to keep the “don’t ask, don’t tell” policy in place while a federal appeals court considers the issue.

The administration filed court papers in defense of an appeals court order that allowed “don’t ask, don’t tell” to go back into effect after a federal judge declared it unconstitutional and barred its enforcement. The U.S. 9th Circuit Court of Appeals in San Francisco is reviewing the administration’s appeal.

The Log Cabin Republicans asked the Supreme Court to step into the case to reverse the appeals court decision that has allowed “don’t ask, don’t tell” to remain in effect despite the order by U.S. District Judge Virginia Phillips.

Among several recommendations, the Pentagon report urges an end to the military ban on sodomy between consenting adults, regardless of what Congress or the federal courts might do about “don’t ask, don’t tell,” the source told the Post.

The report also concludes that gay troops should not be put into a special class for equal employment or discrimination purposes, that person said. The recommendation is based on feedback the study group obtained from gay troops and same-sex partners who said they do not want a special classification, according to the source.

The report recommends few, if any, changes to policy covering military housing and benefits because the military must abide by the federal Defense of Marriage Act, which does not recognize same-sex marriage.
Pentagon draft study shows low risk to ending ‘don’t ask’ policy

In a sharp setback, the United States and South Korea failed to reach agreement on an elusive free-trade deal but will continue pressing for an accord in the weeks ahead, President Obama said Thursday.

Obama had hoped to announce a deal on the long-stalled pact while in South Korea for meetings of the Group of 20 economic powers, but instead he will return home empty-handed.

“We have asked our teams to work tirelessly in the coming days and weeks to get this completed,” Obama said at a joint news conference with South Korean President Lee Myung-bak.

“We don’t want months to pass before we get this done,” Obama said. “We want this to be done in a matter of weeks.”

Prospects for reaching a deal seemed unlikely before Obama’s meeting and subsequent appearance with his South Korean counterpart.

At issue is a pact to slash tariffs and other barriers to trade, one that was signed in 2007 when previous administrations were in power. It remains unratified by lawmakers in both countries, and trade between the nations has slipped. The U.S. wants the deal to address a trade imbalance and beef access to South Korea’s market before submitting it to Congress.

Earlier in the day in a speech marking America’s Veterans Day, Obama condemned North Korea for continuing on “a path of confrontation and provocation” that he says deepens its isolation from the world and worsens the poverty of its people.

Obama said the reclusive communist nation must show a “seriousness of purpose” before the U.S. will restart six-party talks aimed at curbing the country’s drive to become a nuclear power.

He saluted the bravery of U.S. troops who defended South Korea during its war with North Korea.

Speaking at an Army garrison in a country where the U.S. keeps more than 28,000 troops, Obama said North Korea knows the path to prosperity and suggested its leaders take it.

“Because the Korean War ended where it began geographically, some used the phrase ‘Die for a Tie’ to describe the sacrifice of those who fought here,” Obama said. “But as we look around at this thriving democracy and its grateful, hopeful citizens, one thing is clear: This was no tie. This was victory.

“This was a victory then, and it is a victory today,” he said.

In the Veterans Day address, Obama said that, some 60 years after the war, the Korean peninsula provides the world’s clearest contrast between a society that is open and one that is closed, between a dynamic, growing nation like South Korea and a North Korea “that would rather starve its people than change.”

“It’s a contrast that’s so stark you can see it from space, as the brilliant lights of Seoul give way to utter darkness in the North,” he said, describing the difference as a direct result of the road taken by the reclusive, communist North.

Obama said the U.S. “will never waver” in its commitment to South Korea’s security and that North Korea’s continued pursuit of nuclear weapons will only lead to more isolation and less security. He urged Pyongyang to take another path, a road that he said will offer its people growing opportunity instead of crushing poverty.

The commander in chief spoke inside a packed gymnasium, addressing a uniformed audience of service members from the different branches of the U.S. military. They surrounded him from all sides and many snapped photos as he spoke.

Obama condemned North Korea, saying its circumstances were not “an accident of history” but a direct result of the country choosing “a path of confrontation and provocation.” That path, Obama said, includes its relentless pursuit of nuclear weapons and the deadly sinking earlier this year of a South Korean warship.

“In the wake of this aggression, Pyongyang should not be mistaken: The United States will never waver in our commitment to the security of the Republic of Korea. We will not waver,” he said. “The alliance between our two nations has never been stronger, and along the with the rest of the world, we have made it clear that North Korea’s continued pursuit of nuclear weapons will only lead to more isolation and less security.”

Obama said North Korea has another path available to it.

“If they choose to fulfill their international obligations and commitments to the international community, they will have the chance to offer their people lives of growing opportunity instead of crushing poverty — a future of greater security and greater respect; a future that includes the prosperity and opportunity available to citizens on this end of the Korean peninsula,” he said.

After the speech, Obama laid a wreath at a war memorial.
U.S. fails to reach free-trade deal with South Korea

For former insiders at some of the several hundred banks that collapsed during the financial crisis and in its aftermath, a day of reckoning has arrived.

The Federal Deposit Insurance Corp. has told dozens of former bank officers and directors that it has drawn up lawsuits accusing them of misdeeds such as fraud and breach of fiduciary duty. The federal agency is seeking damages to help offset losses in the nation’s deposit insurance fund.

It’s time, the FDIC warns these officials, to sit down and work out settlements — or head to court to decide the matters there.

The letters being sent by the agency are “very detailed,” said Jeffrey A. Tisdale, a Los Angeles lawyer for former officials of five banks targeted by the agency.

“I mean eight to 10 single-spaced pages of purported misdeeds,” he said.

The showdowns follow FDIC probes that typically take well over a year.

“We’re only doing this after careful investigation. We don’t bring suit every time a bank fails,” said Richard Osterman, the FDIC’s acting general counsel.

The FDIC board has authorized suits seeking to recover more than $2 billion from more than 80 former bank officials, up from about 50 a month ago, Osterman said. The number could multiply as the agency works through its investigative backlog.

The agency could end up suing or settling with former insiders of about one-quarter of the more than 300 banks that have failed since the start of 2008, officials say.

“This is only the first wave,” Tisdale said. “I’ve got my next five-year professional plan laid out pretty well.”

Although the FDIC says it will try to settle the cases, officials expect to file a significant number of suits. Criminal charges could result in a few cases.

“We are investigating [criminal] bank fraud and related cases in many different parts of the country, including in California,” said Fred Gibson, deputy inspector general at the agency.

So far only two civil suits have been filed. The first, filed in July, accuses four executives of Pasadena’s defunct IndyMac Bank of negligence in granting construction and development loans that the suit says were unlikely to be repaid. The defendants are contesting the suit, which seeks $300 million in damages.

Last week, the FDIC sued 11 former insiders at defunct Heritage Community Bank in Glenwood, Ill. Calling the case “regrettable and wrong,” defense lawyers said in a statement that their clients, in failing to foresee the economic meltdown, were no different from Wall Street and the FDIC itself.

Tisdale concurs that the FDIC is going after people for failing to accurately predict the future.

“The economy is the real culprit here,” he said. “There was no way to plan for real estate values dropping 30% to 50% throughout California, Nevada and Arizona.”

But Darren Robbins, a San Diego lawyer who specializes in filing investment fraud suits, says the FDIC has plenty to work with just by looking at what banks said about their assets toward the end of the boom.

“It’s our belief that in places like Illinois, Georgia, California and Arizona there was an inordinate amount of game-playing with financial statements in ‘07 and ‘08,” said Robbins, whose firm has fraud suits pending against several casualties of the bust, including PFF Bancorp, the former parent company of Pomona’s PFF Bank & Trust, which failed in November 2008.

In targeting the former officials, the FDIC typically also has its eyes on insurance companies that would be on the hook for damages stemming from alleged misconduct by the bankers. In many cases, the FDIC formally gave notice of possible litigation months ago, just before the expiration of the relevant insurance policies, to ensure that the coverage would apply.

Some policies covering directors and officers don’t apply to actions by the FDIC. In such cases, the agency is going after bank officials only if they have sufficient assets to justify the expense and risk of litigation, Osterman said.

The FDIC’s litigation strategy borrows from a playbook the agency used after the savings and loan meltdown of about two decades ago. From 1986 through 1996 the FDIC recovered $5.1 billion from former insiders at failed banks and savings and loans, Osterman said. That’s a small fraction of the eventual cost of the S&L crisis.

scott.reckard@latimes.com
FDIC prepares to crack down on officials of failed banks

Google Inc.’s decision to give all of its 23,300 employees a 10% pay raise next year — and a $1,000 bonus to boot — is just the latest volley in what has become a full-fledged war for top Silicon Valley talent.

With engineers in short supply, technology companies are competing for employees who can write the software programs needed for new products and services. And they’re increasingly stealing them from one another.

Google is particularly vulnerable. The Internet search giant, long known for aggressively recruiting the smartest in the business, is under siege from Facebook Inc. and other competitors that are trying to lure them away.

A few weeks ago, Lars Rasmussen, the brainy co-founder of Google Maps and a six-year Google veteran, bolted for Facebook, joining more than 200 former Google employees who now work at the world’s most popular social networking service.

Facebook tapped its most persuasive pitchman to close the deal. Founder and Chief Executive Mark Zuckerberg personally wooed Rasmussen to move halfway around the world from his Google office in Sydney, Australia, to Facebook’s headquarters in Palo Alto.

Facebook could be “a once-in-a-decade type of company,” the Danish-born computer science engineer said in explaining his decision.

That kind of talk rankles Google executives, who think they run the hottest company in Silicon Valley.

With 2,000 employees, Facebook is a much smaller operation than Google. Even so, 1 in 5 employees can list “Google” somewhere on their resumes, including Chief Operating Officer Sheryl Sandberg and Executive Chef Josef Desimone, who prepares fresh meals for Facebook employees.

Facebook says its recruiters don’t target Google; they seek out top candidates wherever they work.

“For us, it’s just important to find the best talent,” said Thomas Arnold, Facebook’s director of recruiting, who himself hails from Google. “If it comes from Google, that’s great. If it comes from Hewlett Packard, that’s great. If it comes from a start-up you have never heard of, that’s great. If it’s a kid sitting in a basement in small town somewhere who has created something neat on the Web, that’s even better.”

The flight to Facebook is not a subject Google would discuss, though it did throw out a few counterpunches: Google’s attrition, it said, remains below the industry standard. It hires more people every 10 days than Facebook has recruited in all from Google. And when Google makes a counteroffer to its employees, 70% decide to stay at Google rather than leave for Facebook, the company said.

“Google is an attraction and training ground for incredible talent,” recruiter Paul Daversa said. “The question is: Can Google fill up on talent as fast as it’s losing it?”

The skirmish for talent is driving up compensation and prompting a flood of offers and counteroffers. In one case, Google countered an offer from Facebook to a software developer with a promise of a 15% bump to his $150,000 salary, a quadrupling of stock benefits and a $500,000 cash bonus to stay a year, according to people familiar with the situation. He still took off for Facebook.

Google is hardly alone as it tries to make itself as sticky as flypaper to prospective recruits and employees alike.

Despite California’s unemployment rate of 12.4%, tech job listings are up 62% year over year in Silicon Valley, which has shown 11 straight months of growth, according to technology and engineering career website Dice.com. On any given day, companies are trying to fill 4,600 jobs on Dice.com, up from 2,800 open positions last year.

That reflects the strength of Silicon Valley’s major tech companies, chiefly Google, Apple Inc. and Facebook. Google dominates Internet advertising, Apple rolls out one must-have gadget after another, and Facebook has taken flight with more than 500 million users.

Along with these companies, there are newcomers such as Zynga Gaming Network Inc., a San Francisco company that makes wildly popular social games on Facebook and elsewhere. Zynga added 800 of its 1,200 employees in the last year alone.

With strong demand for their products and services, Silicon Valley companies have plenty of money to shower on signing bonuses and retention incentives.

“We believe this trend will only accelerate in the next 18 months,” Patrick Pichette, Google’s chief financial officer, said on a call to discuss the company’s strong third-quarter results. “We strongly believe that the difference between the winners and the losers in our industry will be to a large extent determined by who can continue to attract and retain the very best people.”

Venture capitalist Marc Andreessen, whose firm helps the companies it invests in recruit engineers and other key employees, says the supercharged recruiting market is the “single hardest challenge in Silicon Valley.”

“A good engineer can easily have 10 job offers,” Andreessen said.

All the top companies are poaching from the same pool: sought-after workers with a prized mix of engineering chops, ingenuity and initiative.

They raid one another’s ranks, mine colleges and universities for promising prospects and jump at unusual opportunities to nab engineers. As soon as news broke this week that Ask.com was laying off 130 people, job offers started popping up on Twitter.

In September, Feross Aboukhadijeh, a computer science major at Stanford University, bet his roommate that in one hour he could create software that would search YouTube in real time. He lost the bet (it took him three hours) but YouTube Instant racked up 1 million users in 10 days, netting Aboukhadijeh a job offer from YouTube co-founder Chad Hurley. Aboukhadijeh, already an intern at Facebook, decided to take the job at YouTube while he continues his studies at Stanford.

As the behemoths duke it out, some fleet-footed start-ups are giving everyone a run for their money in the recruiting department.

Facebook is competing with companies started by its own employees such as Asana, Path and Quora. These spinoffs are snapping up their share of the brightest engineers by appealing to their entrepreneurial instincts.

“There is definitely stepped-up and accelerated pace and urgency around courting the name talent and the high-quality talent,” Daversa said. “He who courts best is going to win. You have to embrace a candidate with a big bear hug. If you blink, he’s gone.”

jessica.guynn@latimes.com
War heats up for top Silicon Valley talent

The first great American autobiographies both appeared in the 19th century, were born of conflict and written by public men — “The Life and Times of Frederick Douglass” and “The Personal Memoirs of Ulysses S. Grant.”

Since then, what we might call the publishing-industrial complex has turned the reminiscences of our public men and women into a never-ending stream. As former President George W. Bush — barely two years out of office — points out in the acknowledgement of his memoir, “Decision Points,” virtually every member of his extended, very political family has published a bestseller, including his parents’ dogs.

Where does Bush’s account of his astonishingly eventful eight years rank in such company? Probably far higher than many of his detractors expected. As Bush writes in “Decision Points,” he enjoys surprising those who underestimate him. As the title suggests, the former chief executive elected to abandon the usual chronological approach to these volumes (except for a brief, obligatory foray into childhood and school years) in favor of his recollection of his presidency’s key choices and the personal decisions that Bush says prepared him to make them.

Foremost among the latter were his conversion to active Christianity, which he attributes to an after-dinner talk that evangelist Billy Graham gave to the extended Bush family at their Maine compound, and to participation in his male friends’ Crawford, Texas Bible study group. According to Bush, he continued to read the Bible every morning of his presidency — like his daily run, a comforting habit. Bush credits his religious awakening, along with a growing sense of obligation to his wife and daughters, with his other foundational personal choice: the decision to quit drinking after a night of boorish overindulgence in celebration of his Laura’s 40th birthday. It’s a change Bush credits with making possible his subsequent public life.

Leaks and an active publicity campaign of television and radio appearances have made many of the substantial points Bush makes rather familiar. Essentially, “Decision Points” confirms many of the better nonfiction accounts of his presidency published while he was in office, particularly Bob Woodward’s four volumes and Robert Draper’s “Dead Certain.” The Bush White House may not have been given to doubts or its chief executive to indecision, but it did have a penchant for ad hoc deliberation, stubborn persistence in the face of failure — as in Iraq up to the surge — excessive personal loyalty and for being “blind-sided” by events beyond the unforeseeable tragedy of 9/11.

Nearly midway through “Decision Points,” Bush writes that, “History can debate the decisions I made, the policies I chose, and the tools I left behind. But there can be no debate about one fact: After the nightmare of September 11, America went seven and a half years without another successful terrorist attack on our soil. If I had to summarize my most meaningful accomplishment as president in one sentence, that would be it.”

For that reason, Bush is singularly unapologetic and clear about the fact that he personally ordered the torture of key Al Qaeda members, who CIA interrogators were convinced held information of other planned terrorist attacks. (Bush also continues to insist that waterboarding is not torture.) When then-CIA Director George Tenet asked whether he had permission to waterboard Khalid Sheikh Mohammed, the 9/11 mastermind, Bush replied, “Damn right.” Bush writes that about 100 “terrorists” were placed in the CIA interrogation program and that about a third “were questioned using enhanced interrogation”; three were waterboarded. All, according to Bush, gave up usable intelligence that thwarted other acts of terrorism. Other reports have contradicted that assertion, but Bush is firm on the point.

Similarly, he writes that his stomach still churns over the fact that he and the rest of the country were misled by faulty intelligence concerning Saddam Hussein’s pursuit of weapons of mass destruction, but that the nation and world still are better off with the Iraqi dictator deposed. His only real regret, in fact, is that he failed to act more rapidly and decisively when Hurricane Katrina devastated New Orleans.

Many readers will be surprised by Bush’s warm account of his cooperative relationship with the late Sen. Edward Kennedy and his disappointment that they were unable to push through comprehensive immigration reform, which both felt was within a vote or two of their grasp. Given the contentious political use Karl Rove and other Bush aides made of abortion, readers also may be interested in the former president’s unfailingly respectful discussion of the abortion-rights advocates with whom he disagrees. (There’s also something amusing about Bush’s account of urging the late Pope John Paul II not to waver in his pro-life convictions.)

Actually, one of the impressions that arises repeatedly in “Decision Points” is how much civility and bi-partisan cooperation matter to Bush. “The death spiral of decency during my time in office, exacerbated by the advent of 24-hour cable news and hyper-partisan political blogs, was deeply disappointing,” he writes.

Looking back on his exit from office, Bush recalls, “I reflected on everything we were facing. Over the past few weeks we had seen the failure of America’s two largest mortgage entities, the bankruptcy of a major investment bank, the sale of another, the nationalization of the world’s largest insurance company, and now the most drastic intervention in the free market since the presidency of Franklin Roosevelt. At the same time, Russia had invaded and occupied Georgia, Hurricane Ike had hit Texas, and America was fighting a two-front war in Iraq and Afghanistan. This was one ugly way to end the presidency.”

There’s a great deal in that statement of what this unexpectedly engrossing memoir suggests is the essential George W. Bush — a disarming candor, for example, combined with almost alarming off-handedness about the implications of what’s being said. The man and the president portrayed in these pages is, at the same time, passive and strong; intelligent but not curious; a public person apparently at his best in private; willing to admit shortcomings, but not particularly self-critical; unfailingly civil himself, but happily surrounded by bare-knuckle partisans. There is a kind of pragmatic courage that makes a leader fearless of contradictions. Bush, for his part, seems oblivious to them.

Immediately after the admission that his presidency was coming to an “ugly” end, Bush adds, “I didn’t feel sorry for myself. Self-pity is a pathetic quality in a leader…. As well, I was comforted by my conviction that the Good Lord wouldn’t give a believer a burden he couldn’t handle.”

One suspects that Bush hopes to have the way in which he bore his unexpected burdens compared to the service of another wartime president, Lincoln. “Decision Points” records that, during his eight years in the Oval Office, Bush read 14 books on the first Republican commander-in-chief.

Somehow, though, it isn’t the Great Emancipator who comes to mind at the end of this memoir, but Shakespeare’s Macbeth:

“To know my deed, ’twere best not know myself.”

timothy.rutten@latimes.com
Book review: ‘Decision Points’ by George W. Bush

They’re called “floating cities,” massive cruise ships that resemble skyscrapers and offer all the amenities of high-end resorts — spas and casinos, Broadway shows and amusement parks, fine dining and luxury shopping.

But the Carnival Splendor also offers a cautionary tale about just how vulnerable these mega-ships can be. Left powerless by an engine fire shortly after embarking on a seven-day cruise to the Mexican Riviera, the Splendor is expected to be towed into port in San Diego late Thursday. If the ship cannot make sufficient speed under tow, it is possible it will be taken to Ensenada, company officials said.

An early morning fire in the generator compartment Monday knocked out several of the ship’s operating systems and left the nearly 4,500 passengers and crew members without air conditioning, hot food and telephone service. Even the flush toilets were down for a while.

With communications largely cut off, it’s unclear what kind of hardship passengers have had to endure. But Carnival Chief Executive Gerry Cahill acknowledged in a statement that passengers were dealing with an “extremely trying situation.”

“Conditions on board the ship are very challenging, and we sincerely apologize for the discomfort and inconvenience our guests are currently enduring,” he said.

The “gourmet delicacies” of the “Manhattan chic” Pinnacle Steakhouse were replaced by 70,000 pounds of bread, canned milk and other emergency supplies, which were flown from the North Island Naval Air Station at Coronado to the U.S. aircraft carrier Ronald Reagan and then helicoptered out to the Splendor, stranded 160 miles southwest of San Diego. The company is paying the military for the food and supplies, officials said.

“There are significant risks as these ships get bigger and bigger,” said Kendall Carver, president of International Cruise Victims. “This one held over 4,000 people. The new ones owned by Royal Caribbean hold over 6,000 passengers and 2,000 crew members, over 8,000 people. A fire on a ship like that would be disastrous.”

The Carnival Splendor experienced its problems relatively close to several major ports, making rescue possible in only a few days.

“If it was hundreds of miles out, and you had a fire that wasn’t suppressed, and you had rough weather, you’d have a complete disaster,” said Jim Walker, a Miami-based attorney who specializes in cruise line litigation.

Although the $40-billion cruise ship industry — and its vessels — has been growing, it has been dogged in the last decade with controversies over passenger health and safety. Carver helped start International Cruise Victims after his daughter, Merrian, disappeared while on an Alaskan cruise in 2004.

The organization has pushed for stiffer laws regulating the cruise ship industry; just four months ago, President Obama signed into law tougher new rules for reporting crimes at sea, improving ship safety and training staff to collect evidence of crimes. The changes will go into effect in 2012.

But the new law makes only passing mention of fire safety issues, even though “the most serious event that can happen on a cruise ship is a main space fire, which is what happened on the Splendor,” said Mark Gaouette, former director of security for Princess Cruises and author of the recently released “Cruising for Trouble.”

On a Navy ship, Gaouette notes, every person has a fire-fighting role, and the crew is trained constantly in how to respond to a fire. On a cruise ship, “two-thirds to three-quarters of the population are passengers. They become problems and liabilities in a major fire. They have to be shepherded to safe areas.”

Statistics are hard to come by for incidents on cruise ships, but Gaouette said the website cruisebruise.com lists eight major fires on cruise ships in the last five years, compared with just three in the previous seven years.

“As cruise ships become larger and their number increases on the high seas,” he said, “the threat of fire and other risks to passengers will increase proportionally.”

On the Splendor at 6:30 a.m. Monday, the 3,299 passengers were evacuated from their cabins and told to go to the ship’s upper deck. They were later allowed to return. By afternoon, the U.S. Coast Guard had dispatched three cutters and an HC-130 Hercules helicopter to the ship’s aid. The Mexican navy sent aircraft and a 140-foot patrol boat.

The Coast Guard has remained in contact with the ship throughout the ordeal, officials said. Whether the ship goes to San Diego or Ensenada, the company has promised to transport passengers back to Long Beach.

Miami-based Carnival Cruise Lines has promised a full refund for passengers and a complimentary future cruise equal to the amount paid for this voyage, which was scheduled to visit Puerto Vallarta, Mazatlan and Cabo San Lucas. The company, which along with its brands has 98 ships worldwide, announced that the Nov. 14 seven-day cruise from Long Beach to the same ports has been canceled.

“The safety of our passengers and crew is our top priority, and we are working to get our guests home as quickly as possible,” said Cahill of Carnival Cruise Lines. Carnival Corp. reported revenues of $13.2 billion in 2009.

A spokeswoman for the Cruise Lines International Assn. did not respond to requests for comment. The organization’s website says the U.S. Coast Guard calls cruising “one of the safest modes of transportation, and the industry is constantly striving to improve its safety procedures. Over the past two decades, an estimated 90 million passengers safely enjoyed a cruise vacation.”

But that is little comfort to Lynnette Hudson, whose father died of smoke inhalation during a fire on the Star Princess, which is operated by Carnival, in 2006. It was his first cruise, she testified to Congress, and he was celebrating his 72nd birthday.

Hudson pushed for the more stringent standards that were signed into law this summer and is still fighting for stiffer laws. “I think if there’s a major fire on a cruise ship, they’re not prepared,” she said in an interview. “They don’t have sufficient training.”

maria.laganga@latimes.com

tony.perry@latimes.com

Times staff writer Richard Marosi contributed to this report.

Stranded cruise ship offers lesson in huge vessels’ vulnerabilities

Prime Minister Benjamin Netanyahu clashed publicly with President Obama on Tuesday over Israeli construction in disputed East Jerusalem, throwing a teetering Mideast peace effort deeper in doubt.

Responding to criticism from Obama, Netanyahu struck a defiant tone in commenting on plans to build 1,300 more Jewish housing units in East Jerusalem, saying his government had never agreed to limit construction in the city.

“Jerusalem is not a settlement. It is the capital of the state of Israel,” Netanyahu said in a statement. “Israel sees no connection between the diplomatic process and the planning and building policy in Jerusalem.”

Netanyahu’s statement came hours after Obama warned that the new construction, announced by Israel on Monday, could harm a renewed Mideast peace effort began in early September. Obama made the remarks a few hours after arriving in Indonesia, his boyhood home for four years, where he was set to deliver the second major speech Wednesday in his outreach to the Muslim world.

“This kind of activity is never helpful when it comes to peace negotiations, and I’m concerned that we’re not seeing each side make that extra effort involved to get a breakthrough,” Obama said. “Each of these incremental steps end up breaking trust.”

Israel also is moving ahead with 800 units in the West Bank settlement of Ariel, Israeli news reports said Tuesday.

Saeb Erekat, the chief Palestinian negotiator, said Israel’s latest expansions are part of “a premeditated process to kill the possibility of an independent Palestinian state.” He said that if the Obama administration is unable to get peace talks back on track in the coming weeks, it should recognize an independent Palestinian state with pre-1967 borders.

Israel claims all of Jerusalem, but the Palestinians claim East Jerusalem, which was captured in the 1967 Middle East War, as the capital of their future state. The international community does not recognize Israel’s annexation of the city’s eastern sector, and a succession of American administrations have urged Israel not to build there.

Netanyahu’s pronouncement was consistent with Israeli policy, yet his sharp tone may embarrass Obama at a moment of vulnerability. Obama is visiting the world’s largest Muslim country, and the rebuke may again raise questions in the Muslim world about how much influence the American leader really has on a priority issue.

The disagreement also comes a week after Obama suffered a setback in the midterm elections, which gave Republicans, who are likely to be sympathetic to Netanyahu’s point of view, majority control of the House of Representatives. Some Israeli officials and U.S. analysts had predicted before the election that Netanyahu might feel emboldened to push back on Obama if the Democrats fared poorly.

Obama launched a new peace effort Sept. 1, but it has been nearly stalled as the Palestinians refuse to negotiate unless Israel halts construction in the disputed areas. Palestinian leaders contend that the Jewish settlers are taking land whose ownership should be decided in negotiations.

Robert Danin, a former U.S. official and specialist on Arab-Israeli issues, said it may have been politically risky for Netanyahu to oppose the new construction project, since Israelis view such building as fully within their rights.

With Netanyahu planning to meet Secretary of State Hillary Rodham Clinton in Washington on Thursday, the strong words will not help the U.S. efforts to bring the two sides back to the peace table, said Danin, who is with the Council on Foreign Relations.

“For there to be a deal, the temperature has to come down,” he said.

Israel’s go-ahead to build 1,300 homes in East Jerusalem met with a storm of disapproval from around the world, including all four members of the diplomatic “quartet” that seeks to promote the Mideast peace talks: the United Nations, the European Union, Russia and the United States.

The Russian Foreign Ministry said in a statement that Russia views the announcement “with most serious concern.… We find it essential that the Israeli party refrain from the declared construction.”

Obama’s relationship with Netanyahu has gone through alternating periods of warm and cool. Obama was furious with Netanyahu in March, when new construction was announced in East Jerusalem just as Vice President Joe Biden was visiting. In July, Obama warmly welcomed Netanyahu to the White House.

Yet Obama has maintained pressure on the Israeli prime minister like few recent presidents. In September, he called on Netanyahu from the podium of the United Nations General Assembly to halt settlement construction in the name of peace, a plea Netanyahu has so far resisted.

cparsons@latimes.com

paul.richter@latimes.com

Parsons reported from Jakarta and Richter from Washington. Times staff writer Edmund Sanders in Jerusalem contributed to this report.

Netanyahu defiantly answers Obama’s warning over construction in East Jerusalem

A dispute among influential Republican lawmakers over a ban on “earmark” spending threatens an area of potential bipartisan agreement between the GOP and White House in the aftermath of last week’s midterm election.

The incoming House Republican majority has proposed extending a moratorium on earmarks, which are funds requested by individual lawmakers for specific projects back home. On Tuesday, conservative Sen. Jim DeMint of South Carolina said that he would press his GOP colleagues in the Senate to adopt a similar moratorium when lawmakers returned to Washington next week.

But several senior Republican lawmakers consider earmarks part of their constitutional obligation to determine how federal money is spent. They disagree with election-year rhetoric that government spending can be reined in with a strict earmark ban. A ban is an idea that “doesn’t save any money,” said Mitch McConnell of Kentucky, the Senate Republican leader.

The disagreement is surfacing at a crucial point. Republicans, fresh from winning control of the House and gaining seats in the Senate, will make their first attempt next week to convert ideas from successful political campaigns into governing policy.

Earmark spending is a favorite campaign symbol of government excess. Examples of pork projects go back years — among the most well-known is the “bridge to nowhere” in Alaska.

Yet attempts to limit lawmakers’ ability to steer funding to their home states regularly runs into dissent. Popular Capitol wisdom holds that one lawmaker’s pork is another’s vital infrastructure project, representing a road or hospital that would not get built without federal government funds.

The House GOP this year imposed a moratorium on earmarks within its own ranks as a way to burnish its conservative credentials heading into campaign season, particularly among “tea party” voters. Earmarks soared to unprecedented levels prior to 2006, the last time the GOP had been in the majority.

Senate Republicans, though, did not agree to such a ban. DeMint proposed a halt on earmarks this spring, but senators voted it down.

Now, in a first test of their newly bolstered numbers in Congress, Republicans in both chambers are returning to the issue. The GOP is intent on showing voters it understood the lesson of the election and the message of tea party conservatives who helped propel the party to power.

President Obama identified the earmark ban as an issue “we can work on together.” Rep. Eric Cantor, the No. 2 Republican in the House, said he would like to take Obama up on the offer.

Yet old spending habits are hard to break among Congress members who see the power of the purse as one of their greatest strengths. Although earmarks make up a tiny fraction of the federal budget, they are an enormous source of power for lawmakers to provide resources to constituents.

The Republican leaders of the main House and Senate spending committees are divided on the question. Rep. Jerry Lewis of Redlands supports an earmark moratorium, while Sen. Thad Cochran of Mississippi does not.

In recent days, Sen. James M. Inhofe (R-Okla.) has appeared on 10 conservative radio talk shows across the country with an appeal about the importance of such spending.

“People now realize you can’t have a ban on earmarks,” Inhofe said.

If Congress chooses not to direct spending, Inhofe argues, the responsibility will fall to the administration, which already exerts influence over its own pet projects in the president’s annual budget. Inhofe said his aim was to reform the earmarking process, not eliminate it.

The conservative Oklahoman, who is perhaps most widely known for calling global warming a hoax, is intent on branding earmark foes as “goguers” — those who demagogue the issue to score political points.

“It’s the most demagogued thing I’ve run into in the years I’ve been in politics,” Inhofe said. “Many of the big-spending Republicans demagogue earmarks so people think they’re conservative.”

Inhofe will argue for new Senate rules to make the earmarking process more transparent, without an outright ban.

But he will face a challenge from fellow conservative DeMint, who will be seeking an unqualified ban next week from his peers.

The South Carolina senator counts support from several newly elected colleagues — including Rand Paul in Kentucky, Marco Rubio in Florida and Pat Toomey in Pennsylvania — and other tea-party-backed candidates he supported in the election.

“Many Republicans are still addicted to earmarks and won’t give them up without a fight,” DeMint wrote in a letter to supporters Tuesday. “I know it’s difficult to quit this habit.”

He should know. DeMint confided to supporters, “I used to request earmarks too.”

lmascaro@tribune.com
‘Earmark’ ban proves an early obstacle to GOP unity

Military and aviation officials say they don’t know who may have launched a mysterious object spotted in the sky late Monday off the Southern California coast, but said that whatever the projectile was, it did not pose a threat to national security.

A KCBS news helicopter spotted what appeared to be a missile traveling through the sky northwest of Catalina Island, about 35 miles west of Los Angeles.

Video posted online by the television station showed a luminous point hurtling through the sky followed by a long contrail.

Officials with the Defense Department, the Navy and the Air Force said did not have any details on the object or its launch site. Pentagon officials said that initial indications were that the military was not involved.

“We are aware of the unexplained contrail reported off the coast of Southern California yesterday evening,” according to a statement from the North American Aerospace Defense Command and the U.S. Northern Command, which operates the U.S. and Canadian missile warning system. “At this time, we are unable to provide specific details but we are working to determine the exact nature of this event.”

“We can confirm that there is no indication of any threat to our nation and we will provide more information as it becomes available,” the statement said.

The Federal Aviation Administration didn’t approve any commercial space launches in the area Monday, said spokesman Ian Gregor.

“We’re looking into this,” he said.

Updated at 9:55 a.m.: Naval Base Ventura County spokeswoman Teri Reid said the contrail seen off the Southern California coast Monday did not originate at Naval Air Station Point Mugu.

“It didn’t happen here,” she said. “There was no firing on the range yesterday.”

Nor was it Vandenberg Air Force Base, whose last launch was putting a satellite into orbit on Friday.
Mystery ‘missile’ launch near L.A. no threat to national security, government officials say