The idea of a public option has started to pop up beyond just the health care debate, and pursuing it could provide a very effective complement to the traditional means of protecting the public.
For more on pruning back executive power see Pruning Shears.
On Thursday afternoon, Sen. Lisa Murkowski (R-AK) pulled out a rarely-used Congressional tool in an attempt to keep the Environmental Protection Agency (EPA) from regulating carbon and other greenhouse gasses. Sen. Murkowski offered a "resolution of disapproval" of the EPA's impending action, which would limit companies' carbon emissions.
The resolution would overturn the EPA's finding that carbon dioxide is harmful to the public health. Three Democrats-Sen. Ben Nelson (D-NE), Sen. Blanche Lincoln (D-AR), and Sen. Mary Landrieu (D-LA)-joined Sen. Murkowski and 35 Republicans in sponsoring the resolution.
"Ms. Murkowski's Mischief'"
"This command and control approach is our worst option for reducing the gasses associated with climate change," said Sen. Murkowski on the floor of the Senate yesterday. She called the EPA's actions "backdoor climate regulations with no input from Congress" and said they would damage the country's flailing economy.
The EPA first announced in April 2009 that carbon dioxide and other greenhouse gasses posed a threat to the public health. The agency formalized that finding last month, giving itself the power to regulate emissions of greenhouse gasses under the Clean Air Act. In March 2010, for instance, the agency is expected to announce carbon emissions rules for the auto industry that would match California's higher standards. Sen. Murkowski's resolution would derail that process.
Sen. Murkowski argued that she wants to give Congress room to come up with a legislative solution to climate change, but her critics see a more dangerous tilt to her resolution. "It's a radical attempt by the legislative branch to interfere with executive branch scientists," writes David Roberts at Grist.
Responding to "Ms. Murskowski's mischief" on the Senate floor yesterday, Sen. Barbara Boxer (D-CA) called the resolution an "unprecedented effort to overturn scientific decision" and "a direct assault on the health of the American people."
Resolution of disapproval
What is a "resolution of disapproval?" Grist's Roberts called it "the nuclear option."
"It would rescind the EPA's endangerment finding entirely and thereby eliminate its authority over both mobile and stationary sources," Roberts explains. "Furthermore, the administration would be prohibited from passing a regulation "substantially the same" as the one overruled, so the constraint on the EPA would effectively be permanent."
This type of resolution was created by the Clinton-era Congressional Reform Act. The resolution has one big advantage: It cannot be filibustered. Passage requires only a majority in both houses of Congress. Members have tried using it in the past to delay the Dubai Ports World deal, derail FCC regulations on new media, and stop the flow of bailout funds.
Kate Sheppard at Mother Jones has been following Sen. Murkowski's actions closely. She reports that "Senate supporters of climate action say Murkowski could obtain the votes of moderate Democrats from coal, oil, and manufacturing states. However, a resolution would still need to be approved by the House and signed by the president-both long shots, to put it mildly. 'I think we're a little worried about [Murkowski's resolution] winning. I'm not sure we're worried about it becoming law,' a Senate Democratic staffer says."
But Grist's Roberts argues that passage in the Senate alone would be a problem. "Even if blocked by the House or vetoed by the president, such a public, bipartisan slap at the administration would be highly embarrassing and demoralizing," Roberts writes. "It would mean at least ten conservative Democrats washing their hands of the administration's initiative."
Climate change and Congress
Sen. Murkowski insists that she's still ready to work with her colleagues on climate change and that it's better to approach the problem of climate change via legislation, not regulation.
But no one in Washington believes that climate change legislation is going to pass-even come to the Senate floor-any time soon. The issue was already in line behind health care, and the election of Republican candidate Scott Brown to Sen. Ted Kennedy's Massachusetts seat this week means that none of the bills that the Senate is working on are likely to come to a vote this year.
"There was hope that the [climate] bill would come to the floor in the spring," writes Steve Benen at Washington Monthly. "Regrettably, a narrow majority of Massachusetts voters have made it significantly more likely that Congress won't address the problem at all. Proponents focused on solutions have vowed to "persist," but Massachusetts has made a difficult situation considerably worse."
The role of special interests
Sen. Murkowski has come under criticism for allowing Bush-era EPA administrators, now lobbyists representing clients on climate change issues, to help her craft an earlier amendment cracking down on the EPA. Yesterday, she said that those criticisms are "categorically false."
But as JP Leous reports at Care2, Sen. Murkowski does receive substantial backing from energy industries that oppose climate change legislation and regulation.
"According to OpenSecrets.org Sen. Murkowski has received hundreds of thousands of dollars from polluting companies, and some of her biggest campaign contributors in recent years include firms with fossil-fueled motives like Exxon Mobil Corp," Leous writes "Add those dots into the mix and a different picture emerges - and it starts to look like a person who is poised to introduce legislation next week attacking the Clean Air Act."
On the Senate floor yesterday, Sen. Boxer charged, "Why would the Senate get in the business of repealing science? Because that's what the special interests want to have happen now. Because they're desperate."
The Democratic Senators who co-sponsored the resolution also come from energy producing states where companies object to the new EPA regulations.
If at first you don't succeed...
If Sen. Murkowski's resolution does pass the Senate, there's little chance it will pass the House as well. But this isn't the only option that regulation opponents are looking at to fight the EPA. The Chamber of Commerce and other groups are planning to challenge the regulatory action in court, as Mother Jones' Sheppard reports.
Last week, these opponents met to discuss their strategy. What's interesting, Sheppard says, is that "the group was apparently divided on the best course of action. The Hill observes that "two camps have emerged." One wants to challenge whatever rules the EPA issues, while another wants to question the science of global warming itself."
We're back to that old saw? With legislation off the table, the fight over climate change, for now, is in the regulatory arena.
This post features links to the best independent, progressive reporting about the environment by members of The Media Consortium. It is free to reprint. Visit the Mulch for a complete list of articles on environmental issues, or follow us on Twitter. And for the best progressive reporting on critical economy, health care and immigration issues, check out The Audit, The Pulse, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
It used to be that businesses were supposed to operate for the good of the public. And we used to have regulations that made sure they did.
For example, there used to be a regulation limiting "commercialization" of broadcast media. Broadcasters were required to serve the public interest by airing documentaries, providing our democracy with news, educational content, etc. and only then were allowed to commercialize a bit of the content to make themselves a profit. BUT even then there were strict limits. Even during the commercialized segments they couldn't air more than a few minutes of commercials, they had to be true, they couldn't be louder than the shows, etc. Think of it as if we were hiring these companies to develop a resource that WE owned, and they were paid for their service by allowing them to commercialize of a small bit of it within strict limits.
That was back when We, the People were in charge here. It's a pretty simple concept: why else would we allow businesses to operate, except that doing so benefits the public and the customer? And we made rules that made sure this was the way things worked.
That, of course, has all changed with "deregulation." Now it's the other way around. Now the public exists for the benefit of the big corporations. The big corporations are at the top of the food chain now -- and that makes us the food, to be harvested.
So for your Friday reading pleasure here is a small example of a benefit that could come from regulation:
Unemployment figures in the U.S. are staggering: The official rate stands at 10.2%, the highest in 26 years. A broader measure that includes people who are involuntarily working part-time or who have given up looking for work is at 17.5%. That's a full-blown economic emergency.
But, as Joshua Holland explains for AlterNet, President Barack Obama's response to the unemployment crisis has not matched the urgency of his response to the crisis on Wall Street. This isn't just unfair, it's bad economics.
"It's important to understand that the economic crisis in which we find ourselves is not just a function of a shaky financial system but of a crash in consumption that's come along with the evaporation of $14 trillion worth of the wealth of American families," Holland writes.
Widespread joblessness can be every bit as damaging to the economic structure as a financial crisis. When people are out of work, they buckle down on household expenses. When several million people cut back at the same time, the economic machine grinds to a halt. If people are not buying and selling stuff, the economy isn't working.
As Mary Kane explains for The Washington Independent, about 40% of families don't have enough money to cover expenses through a three-month stretch of unemployment-even if one member of the household is receiving unemployment benefits. Kane highlights a Brandeis University study that reveals the haggard state of the American household and the unfair distribution of wealth along racial lines. A full 66% of African-American and Latino families can't afford three months without work. At a time when 5.6 million workers have been jobless for at least six months, the study highlights just how dire finances have become for many households.
GRITtv's Laura Flanders discusses potential labor market remedies with economist Dean Baker and The Nation's John Nichols. Baker suggests a work-share arrangement, in which employers cut back on their workers' hours to allow more people to work. To prevent losses for households, the government would step in and pay for the shortfall in hours. Employers would have more part-time jobs available, but the government would make sure everyone was paid as if they were working full-time. Baker also endorses a public jobs program, which he says could be especially useful in cities like Detroit and Cleveland that have been hit particularly hard by the economic downturn.
Nichols highlights the political consequences of failing to fix the unemployment mess. Unemployment directly affects the lives of voters. If widespread joblessness persists through November 2010, Democrats will net huge Congressional losses. If Obama thinks it's hard to garner bipartisan support for his legislative priorities now, imagine a few dozen more Republican obstructionists.
It's not that Obama failed to respond to the unemployment crisis. He did. That's what the stimulus package was all about. Today's 10.2% unemployment is a catastrophe, but it would be more like 12% without the stimulus package. But, given the seriousness of the issue, Obama is not giving unemployment enough attention.
In fact, Obama's economic priorities are a mirror-image of his campaign promises, as Robert Scheer argues in both a column for TruthDig and an interview with Amy Goodman on Democracy Now! After talking tough about reining in recklessness on Wall Street and making the financial system more accountable, Obama has hired many of the very policy makers who pushed through the deregulatory agenda back in the 1990s. Top Obama administration officials like Larry Summers, Timothy Geithner, Gary Gensler and Neal Wolin helped make this mess in the first place.
"This is not a minor criticism," Scheer says. "I think the guy is betraying his own presidency."
Obama's timid efforts to rein in Wall Street and heal the ailing job market are setting the stage for a political disaster. If Obama and Congressional Democrats can't take strong action to fix the economy, they will find themselves with much narrower majorities next November. The economy, and the public institutions that support it, are supposed to work for everyone, not just the financial elite.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Last week, President Barack Obama released key legislation designed to fight the banking industry's too-big-to-fail problem. But Obama's plan doesn't actually address too-big-to-fail at all. It reinforces a broken system in which economically dangerous companies are bailed out whenever they drive themselves to the brink of failure.
If we want the economy to support all people, we have to break up the big banks and start treating the creation of good jobs as an economic priority on par with Wall Street rescues.
The editors of The Nation break the political debate over banking into three camps:
The first camp is composed of bank lobbyists, Republicans and conservative Democrats and wants to do nothing.
Camp two, endorsed by the White House and influential Rep. Barney Frank (D-MA), would impose tougher regulations on too-big-to-fail banks to keep them from getting out of control.
The third camp wants to go even further: If a bank is too-big-to-fail, it is also too-big-to-regulate. Companies that pose a danger to the economy have to be split up into smaller firms that cannot induce economic ruin.
The Nation editors rightly see the third strategy as the most sensible. While the "break-up-the-banks" policy is being portrayed as a left-wing pipe dream by cable news networks, the policy actually relies on an age-old observation of conservative economists. Regulators make mistakes, and they often get co-opted by the very industries they are supposed to be supervising.
The practical policy is to impose structural limits on what activities banks can participate in and how big they can get. Just look at the list of high-profile supporters: former Federal Reserve Chairman Paul Volcker, former Citigroup Chairman John Reed, Bank of England Governor Mervyn King. I don't remember seeing any of those guys at the Iraq War protests.
Many of the regulatory blind spots that brought down the economy were obvious to some policymakers for years. Back in 1994, Sen. Byron Dorgan (D-ND) wrote an article for The Washington Monthly warning that derivatives trading was putting the economy in grave danger. Commodities Futures Trading Commission Chair Brooksley Born tried to take action on these derivatives, but was overruled by other regulators, including then-Fed Chair Alan Greenspan, and then-Treasury Secretary Lawrence Summers, now the top economic adviser to President Obama. Summers and Greenspan even convinced Congress to pass a law banning the regulation of key derivatives, including credit default swaps, which ultimately brought down insurance giant AIG.
Fifteen years after Dorgan's article first ran, The Washington Monthly is featuring it again, along with a recent speech by Dorgan that details massive failures in Wall Street and Washington.
"We had regulators come to town in recent years and willfully boasted that they wanted to be blind as regulators," Dorgan says.
There are good elements of Obama's plan to deal with too-big-to-fail. It gives policymakers the option of putting a too-big-to-fail institution through a special bankruptcy process administered by the executive branch, thus avoiding the problems created in bankruptcy court when Lehman Brothers failed. But the bad part is really bad: Officials would also have the option to provide unlimited bailouts to Big Finance via loans, guarantees and even asset purchases.
As Mike Lillis notes for The Washington Independent, some responsible Democrats like Rep. Brad Sherman (D-CA) have been objecting to this aspect of the legislation for months. Sherman, in fact, calls it "TARP on steroids," noting that the bank bailout at least came with some meager oversight and a limit on the program's actual size.
The bank lobby is spending money like mad to maintain their stranglehold on the economy. Neither Congress or the administration will change course without intense public pressure. So it was very reassuring last week to see thousands of people protesting the annual meeting of top bank lobby group, the American Bankers Association. David Moberg chronicles the protest in a blog post for Working In These Times that covers speeches by both key union leaders and ordinary people facing foreclosure after watching their tax dollars go to the very bankers who wrecked the economy.
"There was broad agreement on anger at the banks for providing so little, if any, public benefit for the massive bail-out, and for so quickly returning to the greed and abuse that precipitated the crisis," Moberg writes.
Laura Flanders covers the protests for GRITtv, including video of protesters chanting "Bust up big banks!" In a roundtable discussion with Christina Clausen of the United Food & Commercial Workers Union, George Goehl of National People's Action and Rob Robertson of the Right To The City Alliance, Rolling Stone journalist Matt Taibbi explains the overriding impotence of the regulations Congress is about to approve. Regulators will not be able to crack down on abusive derivatives, a full 8,000 of 8,200 banks will be exempt from Consumer Financial Protection Agency oversight, while the same agencies that screwed up heading into this crisis will be charged with preventing the next one.
"They've had sweeping powers to do whatever they wanted," Taibbi says. "They've had this regulatory power all along."
What we need are good jobs, and lots of them. Obama's economic stimulus package has made tangible economic progress. It's saved hundreds of thousands of jobs, and is clearly responsible for the turnaround in gross domestic product (GDP) we saw in the third quarter. But a full 17% of the workforce remains unable to find full-time work, as Julianne Malveux explains for The Progressive.
When Wall Street crashed in 1929 and unleashed the Great Depression, the government eventually stepped in as an employer-of-last-resort. The Works Progress Administration (WPA) and Civilian Conservation Corps (CCC). built schools, parks, roads and bridges which still serve our communities today. Both the WPA and the CCC employed literally millions of people-in the 1930s. It's a model that could work very well today.
As the current recession makes clear, ending too-big-to-fail and guaranteeing a good job for everyone in our society who wants one are the two most critical structural reforms our economy needs. Don't let lawmakers forget it.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Bailout pay czar Ken Feinberg raised a ruckus last week when he announced plans to slash cash payouts to executives at seven companies that have received massive levels of taxpayer support. While better oversight of the bailout barons is helpful, the best way to change Wall Street pay practices is to adopt a set of tough, comprehensive regulations that cover everything from the executive suite to the loan department. As is, many of the executives Feinberg cracked down on will still make millions this year from stocks and other perks, while the very banks that depend the most on bailout money are spending like mad to lobby against reform.
Feinberg's new salary limits only apply to executives at Citigroup, Bank of America, AIG, GM, Chrysler, GMAC and Chrysler Financial. But while these new rules are an effort to reduce the incentive for executives to take big risks for short-term gains, the rules of the game for non-bailout barons haven't changed at all. Risky securities trading and unenforced consumer protection regulations still allow financiers to make a killing by gambling on mortgages and credit cards.
As Greg Kaufmann explains for The Nation, Feinberg has been barred from altering some of the most egregious bonus arrangements at even the biggest fund recipients, as the employment contracts were signed prior to the government's bailout. AIG plans to pay out $198 million in bonuses in March 2010, and none of Feinberg's recent rulings will change that. As Kaufmann also notes, back in March, AIG agreed to pay pack $45 million of the bonuses it shelled out early this year. After over seven months, just $19 million has been repaid.
The government's hands-off approach to AIG employment contracts is a rather flagrant display of deference to executives. Nothing stopped the government from renegotiating contracts for union laborers when it bailed out Chrysler and GM, as Dean Baker notes for The American Prospect.
Lest we forget, the government literally owns AIG, and would own both Citigroup and Bank of America had it demanded a market rate of return for its investment. Taxpayers injected several times the stock market values of both Citi and BofA into the troubled banks, but settled for a 36% stake in Citi and preferred stock in BofA. As Mike Madden emphasizes for Salon, Feinberg is still letting executives make several times the median household income in cash alone-nevermind stock-and it's unlikely that his move will spark changes among bankers outside the handful of companies ordered to make changes.
"Executives are still taking home paychecks that dwarf what the average American earns. And it's not clear whether any other companies will get on board with the Treasury plan unless they're forced to," Madden writes.
Congress hasn't taken any significant steps to curb Wall Street paydays since the crisis broke, but lawmakers did take two other important steps toward banking reform this week. Two different House committees passed bills to rein in the wild world of derivatives trading and establish a new Consumer Financial Protection Agency (CFPA). In a video piece for the Huffington Post Investigative Fund, Amanda Zamora and Lagan Sebert detail the legislative battle to create a CFPA, which has faced an enormous lobbying push from both banks and the top lobby group for the corporate executive class, the U.S. Chamber of Commerce.
Zamora and Sebert note that top bank lobbyist Ed Yingling is arguing that if regulators simply enforced the existing consumer protection laws, all of the major abuses in mortgage lending and credit cards would have been prevented. Even for a corporate lobbyist, Yingling's disingenuousness is absolutely breathtaking. He acknowledges that existing regulators are not enforcing consumer protection laws, says he wants the laws enforced, and then says it would be a bad idea to create a new agency to enforce those laws.
The CFPA won't have any mysterious new powers. It will have the same authorities on credit cards and mortgages that existing federal regulators have. But the current regulators are focused primarily on bank profits, which often run directly contrary to fair play with consumers. Yingling and Wall Street are really afraid of a serious regulator who will stand up for consumers. They're terrified that the CFPA will actually enforce consumer protection rules against powerful banks-but are talking as if all they want is effective enforcement. It's a lie, pure and simple.
On Monday and Tuesday, thousands took to the streets in Chicago to protest a meeting of Yingling's lobby group, the American Bankers Association (ABA). Esther Kaplan details the protests in a piece for The Nation, complete with video footage. The ABA retaliated against Kaplan's reporting by revoking her press credentials, but it appears to have been worth it, as her piece describes everything from citizen outrage to police intimidation and awkward banker solidarity. As Democracy Now! explains, the ABA has spent decades lobbying against rules to strengthen the economy and prevent banker abuses, and is now at the heart of an effort to use taxpayer bailout money to lobby Congress against financial reforms.
So far, their efforts seem to be paying off. Last week, one of the CFPA's chief advocates, Rep. Brad Miller (D-NC), co-authored an amendment significantly restricting the agency's enforcement powers. As Sebert and Zamora note, Miller agreed to exempt banks with $10 billion or less in assets from regulatory examinations by the CFPA-roughly 98% of all banks. The existing, corrupted regulators who didn't lift a finger to prevent the subprime mortgage crisis will be the people actually going to the banks and reviewing their books. While the CFPA could send along one of its own regulators to participate in the exam, the new agency can't tax the bank to pay for it, which would make it very difficult for the CFPA to keep an eye on smaller banks.
Even worse, there is nothing to prevent a giant bank like Bank of America from moving all of its most egregiously predatory activities into a series of small corporate subsidiaries. By exploiting this loophole, 100% of U.S. banks could be exempt from CFPA enforcement, including the giant banks most heavily involved in subprime mortgage abuses.
The other big piece of Obama-backed financial legislation to make its way through Committee last week had to do with derivatives, also known as the wild Wall Street securities that brought down AIG. The best way to fix the derivatives mess is to require that derivatives be traded on an exchange the same way stocks are, so that companies can't make crazy bets without regulatory and market scrutiny. But Obama only wants "standardized" derivatives to be processed through a central clearinghouse-like an exchange, except without any public pricing information. And so long as a derivative contract can be deemed "customized," it would be totally exempt from even this limited reform.
But as Art Levine notes for AlterNet, the derivatives bill actually got worse in committee. Plenty of non-financial businesses use derivatives to legitimately hedge real risks: Airlines try to insure themselves against swings in oil prices, for instance. Lawmakers agreed to exempt any contract with these companies, termed "end-users" in the financial jargon, from central clearing requirements. The trouble is, big Wall Street hedge funds and private equity firms can be classified as "end-users," opening a fatal loophole in the legislation. The five banks who control 95% of the derivatives market will just conduct all of their most reckless trades with hedge funds and avoid oversight entirely.
A modest reform on paychecks for bailout recipients is nowhere near sufficient to protect our economy from banker excess. If Wall Street is going to serve any productive economic function, it has to be subject to serious consumer protection rules, and its derivatives casino has to be dismantled.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Interesting news out of Britain, as the BBC Trust issues new guidelines banning editorial content that defames human dignity. Although the move seems to confront the American ideal for freedom of speech, their efforts demonstrate the role that media leaders have in shaping public perception. If successful, advocates for human rights could leverage similar action in the U.S., in hopes to help frame positive values based messaging over American airwaves. It might seam dreamlike, but Hollywood is where dreams breathe life.
An expatriated journalist—vetted during the 1990s, when the craft of communicating embarked on its greatest transition since the invention of the printing press—I consider myself a strong advocate for the freedom of information. what I do promote, however, is a restructuring of how American broadcast media operates, a medium of mass communication that has always been seen as public property and, therefore, subject to editorial guidelines. Yet, in the spirit of selling the airwaves to the highest bidders, the public's best interest has been compromised by advertising revenues.
After postponing twice, President Obama finally met with a bipartisan group of lawmakers on June 25 to discuss moving immigration reform legislation forward. The meeting was applauded by activists and advocates for immigration reform, as the issue seemed to have stalled, and the acrimonious tone of the debate has proven deadly.
This week a rumor circulated that the president was looking to beef up the Federal Reserve at the expense of the Securities and Exchange Commission. If true it will not be a reform so much as another pull in the tug of war between the branches. Unfortunately, it will also help to obscure a more fundamental problem.
For more on pruning back executive power see Pruning Shears.
Last night, Rachel Maddow uses this NY Times article about privatized food safety inspections to explicitly lay out the core liberal ideological rationale for regulation:
There's a mighty storm a brewin' in the occupational health world. It is always a marvel to us that no matter how jaded we think we are, there is always room for more indignation. It is the Bush administration's only form of renewable energy.
The issue first poked its head above water on July 8 when my colleague Celeste Monforton over at The Pump Handle noticed something suspicious on the website of the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA, pronounced oh-EYE-ra):
