Two data points to consider about America’s future in the second half of 2007:

One

After Under Secretary of State Eric Edelman told Senator Clinton that she was a traitor and emboldening the enemy for asking whether the Army has contingency plans for leaving Iraq, the Senator wrote a letter to Defense Secretary Gates asking about the entire affair.

Secretary Gates has replied to Senator Clinton.

WASHINGTON - Defense Secretary Robert Gates wrote to Sen. Hillary Rodham Clinton that a top Pentagon official did not intend to impugn her patriotism by suggesting that questions about U.S. planning in Iraq boosts enemy propaganda.

At the same time, Gates defended his aide and the author of the letter, Undersecretary for Policy Eric Edelman, calling him "a valued member" who provides "wise counsel and years of experience (that) are critically important to the many pressing policy issues facing the military."

In a three-page letter, obtained by The Associated Press on Thursday, Gates sought to calm a politically stoked exchange between the Pentagon and the Democratic presidential front-runner over planning for the withdrawal of U.S forces from Iraq.

No, of course Mr Edelman didn’t mean to impugn Senator Clinton’s patriotism. He said that, but he didn’t really mean it.

Gates' letter, dated Wednesday, insisted that was not the point of Edelman's missive.

"I emphatically assure you that we do not claim, suggest, or otherwise believe that congressional oversight emboldens our enemies, nor do we question anyone's motives in this regard," Gates wrote.

The Defense Secretary both agreed with Clinton that congressional oversight of military planning is needed and at the same time defended Edelman.

"I truly regret that this important discussion went astray and I also regret any misunderstanding of intention," Gates wrote.

"I agree with you that planning concerning the future of U.S. forces in Iraq — including the drawdown of those forces at the right time — is not only appropriate but essential," Gates wrote, adding that Edelman also agrees with that point.

"You may rest assured that such planning is indeed taking place with my active involvement," he wrote in the letter.

So even though Secretary Gates feels that Mr Edelman was wrong, and says Mr Edelman agrees, that’s the end of the issue.

Data Point Two

The Heritage Foundation released a report Wednesday on a recent wargame project examining the economic impact war with Iran, or an attack on Iran, would have on the world economy.

From December 2006 to March 2007, Heritage Foundation scholars conducted a computer simulation and gaming exercise that examined the likely economic and policy consequences of a major oil disruption in the Persian Gulf. The exercise utilized a realistic scenario, state-of-the-art macroeconomic modeling, and a knowledgeable team of subject-matter experts from government, business, academia, and research institutes from around Washington, D.C.

This project was a proof-of-principle investigation that combined computer modeling and gaming to capture how U.S. decisions during a crisis might affect how global energy markets and the U.S. economy adjust to sudden and significant disruptions of oil supplies. In this scenario, the United States responded to a crisis precipitated by an attempted Iranian blockade of the Strait of Hormuz.

(While wargaming has a long history in the military and is fairly continuous within the military, participation of civilian think tanks is somewhat newer. Herman Kahn, of the RAND Corporation, and later a founder of the Hudson Institute, was really one of the very first civilians to intrude into this arena. During the 1960s his advice and participation in wargaming “the unthinkable” was eagerly sought by several administrations. Mr Kahn felt that nuclear war was “winnable” and that some form of civilized life would go on afterwards. He was the creator of the Mutually Assured Destruction concept.)

The game began with a series of economic results based on a scenario in which Iran began blockading the Strait of Hormuz in January 2007. The assumption was that Iran may succeed in fully blockading the strait for up to one week, but after that, some oil shipping would slowly resume.

The Heritage Foundation economics team, supported by analysts at Global Insight, then modeled the blockade's likely economic effects on world oil prices and the U.S. economy. They found that under worst-case circumstances:

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The price of West Texas Intermediate (WTI) crude[1] would peak in the third quarter of 2007 at $150 per barrel, an increase of $85 per barrel;
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Real (inflation-adjusted) gross domestic product (GDP) would fall by over $161 billion in the fourth quarter of 2007;
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Private non-farm employment would decline by over 1 million jobs by the middle of 2008; and
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Real disposable personal income would be more than $260 billion lower by the fourth quarter of 2007.

The above are best guess estimates of the results of conflict in or near the Straits of Hormuz. Obviously there could be only one country designated as the “problem” in this exercise, and the effects of that country’s response is being considered solely in economic terms.

The purpose of the exercise was to attempt to develop a set of policy initiatives and responses to conflict in the Hormuz area to mitigate the worst-case estimates.

[T]he group broke up into three teams: policy–makers (National Security Council); government agencies that implement the policy (federal agencies); and industry that meets the technical needs of implementing policy (industry). Teams consisted of experts in foreign policy, including regional experts; experts from the Departments of State, Homeland Security, Energy, and Defense; and congressional staff members. The policymakers directed policy; the federal agencies and industry members determined the best way to implement and meet the technical needs of the policy.

You will be surprised to learn that the results of this project indicate that it is possible to develop policies and responses or initiatives to minimize the economic dislocation of a conflict in the area of the Straits of Hormuz.

Just in case you thought the Likudniks weren’t still in charge of our foreign and military policy machinery.