Australia's new leader Kevin Rudd vowed Sunday to tackle climate change and Iraq war policy, a day after sweeping veteran prime minister John Howard from power in a stunning election landslide. 

Rudd pledged to implement his campaign promises as a new era dawned for Australia after Saturday's poll ended nearly 12 years of conservative rule by US President George W. Bush's closest remaining ally in the war in Iraq. 

Voters abandoned Howard, 68, who presided over a record economic boom and became Australia's second longest-serving leader, in a humiliating drubbing in which he is also likely to suffer the indignity of losing his parliamentary seat of 33 years. 

As the campaign hubris dissipated, Rudd, 50, said his centre-left Labor Party would immediately begin work on fulfilling campaign pledges, which included tackling global warming and withdrawing combat troops from Iraq.    

"This is one of the most arrogant, incompetent administrations I've ever seen personally or ever read about," the always blunt and frequently quotable Sen. Chuck Hagel, R-Neb., said yesterday during an appearance at the Council on Foreign Relations in New York.

"This administration in my opinion has been as unprepared as any administration I'm aware of," Hagel added, "not only the ones that I have been somehow connected to and that's been every administration -- either I've been in Washington or worked within an administration or Congress or some way dealing with them since the first Nixon administration. I would rate this one the lowest in capacity, in capability, in policy, in consensus -- almost every area, I would give it the lowest grade. ... 

"And you know, I think of this administration, what they could have done after 9/11, what was within their grasp. Every poll in the world showed 90% of the world for us. Iran had some of the first spontaneous demonstrations on the streets of Tehran supporting America. They squandered a tremendous amount of opportunity."

The Bush administration intends to slash counterterrorism funding for police, firefighters and rescue departments across the country by more than half next year, according to budget documents obtained by The Associated Press.

The Homeland Security Department has given $23 billion to states and local communities to fight terrorism since the Sept. 11 attacks, but one document says the administration is not convinced that the money has been well spent and thinks the nation's highest-risk cities have largely satisfied their security needs.

The department wanted to provide $3.2 billion to help states and cities protect against terrorist attacks in 2009, but the White House said it would ask Congress for less than half _ $1.4 billion, according to a Nov. 26 document. The plan calls for outright elimination of programs for port security, transit security, and local emergency management operations in the next budget year. This is President Bush's last budget, and the new administration would have to live with the funding decisions between Jan. 20 and Sept. 30, 2009. . . .

The proposal to drastically cut Homeland Security grants is at odds with some of the administration's own policies. For example, the White House recently promised continued funding for state and regional intelligence "fusion centers" _ information-sharing centers the administration deems critical to preventing another terrorist attack. Cutting the grants would limit money available for the centers. . . .

"This budget proposal is dead on arrival," said Sen. Barbara Boxer, D-Calif. "This administration runs around the country scaring people and then when it comes to putting their money where their mouth is, they say 'sorry, the bank is closed.'" . . .

"To zero out essential Homeland Security programs which have more to do with protecting Americans and fighting the war on terror than much of the money spent in Iraq shows how warped and out of touch this administration's priorities are," said Sen. Charles Schumer, a Democrat.

There's a whiff of stagflation in the air. Not the 1970s disease, when a stagnant economy generated 9% unemployment and 12% inflation. What's shaping up now is a much milder case, with more danger of "stag-" than "-flation." Over the next few months, economic growth is set to grind down, perhaps abruptly, as the jobless rate rises. At the same time, overall inflation will be rising rapidly, thanks to the latest surge in oil prices and a speedup in already rising food costs. It's a nasty mix that could complicate Federal Reserve policymaking and leave investors wondering which way to turn.

Some seasoned Fed watchers say he should have avoided the optimistic assertion that the damage caused by subprime mortgages was "contained" before the collapse of credit in the world's money markets prompted extraordinary central bank intervention this month. Now, as he resists demands to cut the benchmark interest rate, the fault-finding, some from former Fed policy makers, has escalated to charges that he is behind in the game and losing his credibility and effectiveness.

"If the Fed cuts rates, it will probably push oil prices higher," said Adam Sieminski, chief energy economist at Deutsche Bank.

[L]ower interest rates usually cause the dollar to fall, as they make dollar-denominated investments like Treasurys less attractive for foreign investors.

Oil, like many other commodities, is priced in dollars worldwide. If the dollar falls, oil producing nations, like those in OPEC, need a higher price per barrel to maintain . . . the same level of revenue. While oil producing countries don't set the price of oil in the market, they do have control over production and are less likely to increase it when faced with the declining dollar. Also, foreign consumers have less incentive to reduce demand if oil is, relatively, getting cheaper for them.

President Bush doesn't talk about the dollar much, but when he does, he's got exactly one thing to say about it: "We have a strong dollar policy."

It's becoming increasingly clear, however, that Bush's "strong dollar policy" is driving the greenback into the ground.

The dollar is hitting record lows this week amidst fears that the mortgage-market meltdown will spread to other parts of the economy and as the Chinese make noise about moving more of their investments into euros. But it is the underlying dynamics of the American economy -- continued massive trade deficits and a whopping national debt -- that have put the dollar in such a precarious position.

A true strong dollar policy, aimed at increasing the confidence of international investors, would require Bush to do a bunch of things he doesn't want to do. For instance, he would have to stop borrowing so much money to fund his tax cuts and his wars. He would need to encourage the Federal Reserve to raise interest rates, rather than depend on it to keep propping up the domestic economy by decreasing them. That sort of thing.

Instead, Bush just offers the strong-dollar line, without specifics, and moves on.

By letting the dollar continue to weaken, the Bush administration is making another in its long series of huge, avoidable mistakes.

It is an administration that . . . has been utterly incompetent, not to mention bullheaded in ignoring important data and empirical evidence, on far too many fronts. . . .

ALL THIS IS RELEVANT because it shows an administration that, no matter how high its ideals, has been repeatedly asleep at the switch. And so it is again with regard to the free-falling dollar. Other experts (here, here, here, and here, among many others) have explained and will continue to explain the details of what is now a crisis in the dollar's value. . . .

[T]he administration has been sending signals from day one that it actually prefers a weaker dollar, beginning when then-Treasury Secretary Paul O'Neill noted that a "strong dollar" meant little in policy terms. O'Neill's successor at Treasury, John Snow, continued with the message by asking at a G-8 meeting in France, "What's wrong with a weak dollar?" Now, though, even French President Nicolas Sarkozy is warning that a weak dollar is a threat to world economic stability -- and even supermodels are sounding the alarm.

Unless the dollar's decline is stopped by strong words and concrete actions, and soon, the American economy is in serious danger of sliding into the sort of stagflation -- stagnation plus inflation -- that rocked the nation throughout most of the 1970s.

The home foreclosure crisis slamming into the nation's neighborhoods is having the effect of about "one Hurricane Katrina per month," James K. Galbraith, an economist with the University of Texas at Austin, said Friday at a forum examining the credit crisis.

In the immediate aftermath of Hurricane Katrina in the fall of 2005, nearly 275,000 Gulf Coast residents were forced to move into group shelters, according to the Federal Emergency Management Agency.

Economists who recently completed a study for the U.S. Conference of Mayors predicted the number of home foreclosures will hit 1.4 million in 2008.

Also new in whittling way at the Constitution is Homeland Security’s program teaching big-city firefighters who enter homes to report, among other things, people expressing “discontent” with government. Democrats, newspaper columnists, anti-war activists, disloyal Republicans—beware.

This replicates Fidel Castro’s block-by-block snitch network that reports grumblers. Using firefighters as spies is anathema to their profession and an affront to the Fourth Amendment’s prohibition of search and seizure without a warrant. . . .

President Bush is under way with warrantless wiretaps, kidnapping terrorism “suspects” without evidence and sending them to foreign prisons indefinitely for grilling, ordering telephone companies to turn over customers’ records without court permission and firing federal attorneys who won’t play along with politics in prosecutions.

All this is happening on the watch of a president who claims to believe in “strict constructionist” judges to protect the Constitution. Next year’s presidential election can’t arrive fast enough.