The Pentagon warned Friday that cash-flush China was militarizing under an opaque budget and that Beijing's ballistic nuclear missiles could now strike the United States. . . .  

"Americas financial sugar daddy" is China, because it has capital "for a nation that abhors savings, worships spending and is addicted to other peoples money.". . .   

Reportedly, two-thirds of China's 1.2 trillion dollars in reserves are in dollar-denominated assets, including 420 billion in US Treasury bills. . . .  

Washington is . . . concerned China is spending its mountain of foreign reserves on its military. 

An annual Pentagon report on Friday said China could be "planning for pre-emptive military options in advance of regional crises." 

US Defense Secretary Robert Gates said the report "paints a picture of a country that is devoting substantial resources to the military and developing ... some very sophisticated capabilities."

Bush has presided over a Republican Party in “collapse,” and Karl Rove’s strategy in the 2004 presidential election was “maniacally dumb” for focusing so heavily on the conservative base. . . .  

That harsh assessment of the president and his chief political adviser is being offered rather by former Representative Newt Gingrich, who engineered the Republicans’ Congressional election victory of 1994 and went on to become speaker of the House. 

Mr. Gingrich made the comments in an interview with The New Yorker, parts of which were published in this week’s issue. They opened a new feud between himself and the White House, which replied with a stiff defense late Tuesday.

The criticism speaks to a question that has hung over the race for the Republican presidential nomination since its early start this year: How will the candidates contend with the unpopularity of the president who heads their party? And will any of them break from him forcefully? . . .  

Mr. Gingrich said, “who over the last three years became the clear advocate of fundamental change.” 

He compared the state of the Republican Party now to its state after the Watergate scandal and blamed in part Mr. Rove’s election strategy in 2004.

“You can’t be a governing national party and write off entire regions,” Mr. Gingrich said. “All he proved was that the anti-Kerry vote was bigger than the anti-Bush vote.” 

Rick Tyler, a spokesman for Mr. Gingrich, said his remarks had been reported accurately.

Viguerie, whose new book is called “Conservatives Betrayed: How George W. Bush and Other Big Government Republicans Hijacked the Conservative Cause,” told me how the conservative movement has been undermined: “It’s not any one thing, but, when you add everything up, what you have is a massive overreach of executive powers, and massive overspending by people who claim they’re conservatives. Every President, with hardly any exceptions, will take as much power as he gets. That’s what Presidents do. Bush has tried more than most. And it was supposed to be the Republicans in Congress who would do oversight of the President, so that he wouldn’t get away with too much abuse of power. But they abdicated that role. It was all about the maintenance of power, and now look where they are.” He continued, “This President has strengths and weaknesses, but he has a major character flaw, and that’s that he will brook no criticism and his people won’t, either. And the whole Party gave in to him on that.”

The Bush Administration told us it does not deal with reality -- it creates reality -- Bush has created a legal façade allowing him to create his own world and then react to it as he chooses. Unfortunately, we are all dragged into his make-believe world with its make-believe legal system. 

Samuel Alito, John Roberts (in his Circuit Court decisions), Attorney General Alberto Gonzalez, and wunderkind John Yoo give the President unchecked domestic and foreign powers to create that world. Bush can start his own wars, preemptive or otherwise, is the ultimate interpreter of foreign treaties, he defines enemy combatants as he wishes, he detains prisoners for as long as he wishes, he continues surveillance on foreign intercepts for as long as he wishes, he tortures as he wishes, he can ignore Congressional directives and statutes such as those creating FISA, as well as essential elements of our Constitution. 

This litany has no end. We cannot now anticipate all the ramifications of the "unitary" president and his claim of "inherent powers," except that it clearly allows him to fully take over the government. 

Although the Alito nomination process was largely a waste, it was very valuable in showing us how long and hard the Conservatives have thought about the "unitary" president. In Alito's earliest days with the Reagan administration, he laid out his concept of unchecked power -- of inherent authority. Tracing the clear, straight line from Meese to Bork to Alito to Thomas to Yoo to Gonzalez is easy, for those who can look. We can see the further immediate development, deepening and expansion of the concept of the unitary President that it became, long ago, before anyone was aware of it, a critical tenet of the Federalist Society and of the Conservative wing of the Republican Party.

There is a race currently underway between different flanks of the administration to determine the future course of US-Iran policy.  

On one flank are the diplomats, and on the other is Vice President Cheney's team and acolytes -- who populate quite a wide swath throughout the American national security bureaucracy. 

The Pentagon and the intelligence establishment are providing support to add muscle and nuance to the diplomatic effort led by Condi Rice, her deputy John Negroponte, Under Secretary of State R. Nicholas Burns, and Legal Adviser John Bellinger. The support that Director of National Intelligence Mike McConnell, Secretary of Defense Robert Gates, and CIA Director Michael Hayden are providing Rice's efforts are a complete, 180 degree contrast to the dysfunction that characterized relations between these institutions before the recent reshuffle of top personnel. 

However, the Department of Defense and national intelligence sector are also preparing for hot conflict. They believe that they need to in order to convince Iran's various power centers that the military option does exist. 

But this is worrisome. The person in the Bush administration who most wants a hot conflict with Iran is Vice President Cheney. The person in Iran who most wants a conflict is Iranian President Mahmoud Ahmadinejad. Iran's Revolutionary Guard Quds Force would be big winners in a conflict as well -- as the political support that both have inside Iran has been flagging. 

Multiple sources have reported that a senior aide on Vice President Cheney's national security team has been meeting with policy hands of the American Enterprise Institute, one other think tank, and more than one national security consulting house and explicitly stating that Vice President Cheney does not support President Bush's tack towards Condoleezza Rice's diplomatic efforts and fears that the President is taking diplomacy with Iran too seriously. 

This White House official has stated to several Washington insiders that Cheney is planning to deploy an "end run strategy" around the President if he and his team lose the policy argument. 

The thinking on Cheney's team is to collude with Israel, nudging Israel at some key moment in the ongoing standoff between Iran's nuclear activities and international frustration over this to mount a small-scale conventional strike against Natanz using cruise missiles (i.e., not ballistic missiles).  

This strategy would sidestep controversies over bomber aircraft and overflight rights over other Middle East nations and could be expected to trigger a sufficient Iranian counter-strike against US forces in the Gulf -- which just became significantly larger -- as to compel Bush to forgo the diplomatic track that the administration realists are advocating and engage in another war. 

There are many other components of the complex game plan that this Cheney official has been kicking around Washington. The official has offered this commentary to senior staff at AEI and in lunch and dinner gatherings which were to be considered strictly off-the-record, but there can be little doubt that the official actually hopes that hawkish conservatives and neoconservatives share this information and then rally to this point of view. This official is beating the brush and doing what Joshua Muravchik has previously suggested -- which is to help establish the policy and political pathway to bombing Iran. 

The zinger of this information is the admission by this Cheney aide that Cheney himself is frustrated with President Bush and believes, much like Richard Perle, that Bush is making a disastrous mistake by aligning himself with the policy course that Condoleezza Rice, Bob Gates, Michael Hayden and McConnell have sculpted. 

According to this official, Cheney believes that Bush cannot be counted on to make the "right decision" when it comes to dealing with Iran and thus Cheney believes that he must tie the President's hands. 

On Tuesday evening, I spoke with a former top national intelligence official in this Bush administration who told me that what I was investigating and planned to report on regarding Cheney and the commentary of his aide was "potentially criminal insubordination" against the President. I don't believe that the White House would take official action against Cheney for this agenda-mongering around Washington -- but I do believe that the White House must either shut Cheney and his team down and give them all garden view offices so that they can spend their days staring out their windows with not much to do or expect some to begin to think that Bush has no control over his Vice President. 

It is not that Cheney wants to bomb Iran and Bush doesn't, it is that Cheney is saying that Bush is making a mistake and thus needs to have the choices before him narrowed.

"Results", with one or two exceptions, either were minimal, or not what Secretary Paulson seemed to expect. And at the closing press conference, the Chinese didn't even pretend they had had a good time. Madam Wu Yi read her statement, and walked off. No pretence of a friendly hug for the US side. . . .  

Today, an impertinent ink-stained scribbler asks, privately, "if Treasury chairs the SED, and Paulson isn't allowed to press his case on currency, and to get a Chinese response, what's the point?" In fact, sources indicate there was some "heated dialogue" on currency. But the bottom line is the same...after all the US pressure, all it got was last week's very minimal "float", increasing the maximum daily trading band by 0.2% to 0.5% total. . .exactly half what Bretton Woods defines as a "fixed rate". 

So you have to wonder if this time, Paulson's patience has worn out, and the still-delayed Treasury report to Congress on undervalued currencies will. . .finally. . ."cite" China. Since that would formally kick-off mandated "negotiations", you have to wonder how Beijing would react, given its clear public heartburn over the IPR and other WTO cases. . . .  

Paulson, the guy with 72 private trips to China, all that hands-on experience, he who told the White House, State and USTR not to worry, that he would be the China Guy in this Administration...at the closing press conference, Paulson stalked in, well ahead of Wu Yi, and then started reading his statement before she even reached the podium. 

Excuse me? An American or European would have cold-cocked the President for such calculated rudeness! In China (Japan, Korea, etc.) you watch older married couples walk into someplace . . . the husband is 10 feet in front, and the subservient wife is dutifully plodding behind. You think for one minute that elderly maiden lady Wu Yi didn't catch the insult here? . . .  

This was a calculated act of rudeness which told everyone in the room, and anyone watching on TV, that a major failure had taken place. . . .

Commented one, privately, "it was as cold as ice in there. The Chinese just looked like they wanted to get off the stage quickly. They really didn't bother to put on a show for the cameras back home." 

Maybe that was the point? Certainly, Chinese officials had made very clear their displeasure at the Administration's decision to start those three WTO cases at the beginning of April. . .that was a major point of Wu Yi's "frank" opening remarks yesterday. 

And perhaps that explains why Paulson got nothing on something which he had already, in a sense, "leaked" to the press. . .China lifting its 25% foreign ownership cap on domestic bank investment.  Nope. . .not this time. 

And even with yesterday's OIE announcement of "controlled risk" clearance of US beef exports, no one hinted if the US asked China to at least agree to talk about its continuing ban later on.  . . much less did anyone say something specific today, despite the obvious political importance for pro-trade/pro-China trade senators like Finance Chair Max Baucus, and former chair Chuck Grassley. . . .  

Have we run into a clash of negotiating cultures? Are we discovering that when China considers itself an equal, does that change the whole "negotiating game"? Does that mean that when the Administration. . .finally. . .pulled the trigger on some narrowly drawn WTO cases, that when it also asked China for "deliverables" at the SED it was giving self-destructive offense to Beijing? . . .

President Bush on Thursday told a senior Chinese economic minister that the United States is "watching very carefully" whether Beijing will strengthen the value of its currency. 

After a meeting with Vice Premier Wu Yi, the leader of the largest high-level Chinese delegation ever to visit the United States, Bush said the United States is "making it clear to China that we value our relationship, but the $233 billion trade deficit must be addressed." Strengthening China's currency, he said, is one way to deal with the deficit.

The U.S. Treasury declined to brand China a manipulator of its currency, risking a clash with lawmakers who say an undervalued yuan is inflating the U.S. trade deficit and costing factory jobs.

China has made ``far too little progress'' in making its exchange rate more flexible, the Treasury said in its semiannual report on the currency policies of U.S. trade partners. Still, steps China has taken since a July revaluation and its promises to do more suggest the nation isn't deliberately seeking an unfair trade advantage, it said.

Treasury Secretary John Snow has sought to coax China into loosening its grip on the yuan while avoiding a confrontation with the world's fastest-growing major economy. Snow is also trying to blunt protectionist sentiment in Congress, where more than a dozen proposals seek to punish China for its economic policies.  . . .

Overseas sales helped China's economy double in size in the past decade and vault ahead of the U.K. to become the world's fourth largest. The U.S. trade deficit with China jumped to a record $201.6 billion last year, eliciting calls for penalties from lawmakers who say the government keeps the yuan artificially weak to spur exports.

``I'm very disappointed that once again the Bush administration has failed to cite China as a currency manipulator,'' said Charles Schumer, Democrat from New York. ``Clearly China is intervening in the market,'' he said. ``There's no other explanation.''