Progressives have waited a year for President Barack Obama to roll up his sleeves and fight for serious financial reform. Last week, he finally jumped in the ring, telling weak-kneed Senators to stand up to Wall Street and endorsing a critical ban on risky securities trading.
But while it was good to see Obama start throwing financial punches against the banks, this week he also started throwing them at workers. His recent rhetoric on implementing a spending freeze to reduce the deficit is an economic catastrophe in the making. It indicates that Obama is willing to sacrifice jobs to try and win over Republicans.
A spending freeze would kill jobs
A three-year spending freeze is crazy talk. It’s a right-wing ideologue’s dream that accomplishes nothing and drives millions of people out of work. John McCain campaigned on it during his 2008 presidential run. Our long-term deficit problems are tied to the rising cost of health care. If you want to fix the deficit, fix health care. In the short-term, there is no deficit problem. In fact, the U.S. fiscal position looks very good compared to many European nations.
As Matthew Rothschild notes for The Progressive, a spending freeze would kill any legislation to create jobs. With unemployment at 10%, the economy desperately needs another round of government spending to put people back to work. While the abrupt policy reversal is clearly a political ploy, voters care much more about results than they care about ideology. If Obama actively sabotages the job market to win over conservative deficit-hawks, he’ll be putting his political future in serious jeopardy.
And yet, as Steve Benen notes for The Washington Monthly, Obama’s recent, ramped-up rhetoric against banks still marks a significant change in tone. For most of the year, Obama hasn’t been involved in the financial reform debate at all, letting Treasury Secretary Timothy Geithner capitulate to Wall Street and the politicians it owns. Benen highlights the end of Obama’s speech announcing his new banking rules on Jan. 21. Obama says:
So if these folks want a fight, it’s a fight I’m ready to have. And my resolve is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see soaring profits and obscene bonuses at some of the very firms claiming that they can’t lend more to small business, they can’t keep credit card rates low, they can’t pay a fee to refund taxpayers for the bailout without passing on the cost to shareholders or customers — that’s the claims they’re making. It’s exactly this kind of irresponsibility that makes clear reform is necessary.
Saving the CFPA
Katrina vanden Huevel lays out Obama’s new financial reform agenda in a column for The Nation, praising a new $117 billion tax on the nation’s largest banks, a plan to cap overall bank size, and a proposal to ban high-risk trading by economically essential commercial banks (more on thatlater).
But vanden Huevel also rightfully denounces recent indications that Senate Banking Committee Chairman Chris Dodd (D-CT) may cave to lobbyist pressure and drop the measure to create a new Consumer Financial Protection Agency (CFPA) from the Senate’s financial reform bill.
The death of the CFPA would be a devastating blow to reform. Existing bank regulatory agencies see their primary job as protecting bank profits, meaning that any time the interests of the U.S. consumer conflict with those of bank balance sheets, the regulators have shafted consumers. Current federal banking regulators not only failed to enforce consumer protection laws, they went so far as to join the bank lobby in suing state regulators who were trying to protect households from predatory lending.
Fortunately, Obama isn’t taking Dodd’s bank lobby-induced cowardice sitting down. At Talking Points Memo, Rachel Slajda highlights a New York Times report that claims Obama met with Dodd and told him that the CFPA is a “non-negotiable.”
Commercial banks are important
There’s a lot to like in Obama’s plan to bar commercial banks from participating in risky securities trading. As I emphasize in a piece for AlterNet, commercial banks form the backbone of the U.S. economy. They’re the institutions that accept your paychecks as deposits and keep businesses moving with loans. They also form the core of the economy’s payments system. Without commercial banks, nobody can pay anybody else for goods and services-the economy literally shuts down.
Nevertheless, in the late 1990s, regulators and lawmakers tore down the walls between commercial banking and riskier, complex securities trading, allowing these critical economic utilities to gamble in the capital markets like high-flying hedge funds. That kind of behavior puts the entire economy in jeopardy, and Obama’s proposal to end such behavior is very urgently needed.
But, as vanden Huevel and I both note, Obama’s cap on bank size is a little too timid. Obama indicated that he wants to prevent big banks from getting bigger going forward. That misses the point.
Bustin’ up “too big to fail”
Financial giants like Citigroup and Bank of America are already much too big and pose an economic threat. That’s why we refer to them as “too big to fail,” and why the government had to devote over $17 trillion to saving them. Obama must cap bank size and break up our behemoth banks into companies that are small enough to fail without wreaking havoc on the economy. A good rule of thumb: 1% of gross domestic product.
Shouting down the bank lobbyists
In Mother Jones, David Corn emphasizes that Obama’s credentials as a serious reformer depend more on his policy maneuvering than on his rhetoric. While it has been extremely promising see Obama finally demanding something serious from the financial giants that taxpayers saved, he’ll have to shout down the bank lobbyists to secure meaningful economic-or political-gains. Corn writes:
If Obama aims to be widely regarded as a warrior for the middle class, he will have to take some mighty swings that cut through the clutter. Proclaiming ‘I am a fighter’ will not be enough. He will have to name his foes (financial institutions, insurance companies, Republicans, and perhaps recalcitrant Democrats) and truly exchange blows.
Obama’s stance on the CFPA alone should be enough to get the lobbyists into a lather, but he’ll have to keep up the fight on multiple fronts if he wants to protect our economy from the Wall Street recklessness that spurred millions of foreclosures and sent the unemployment rate soaring into double digits.
Last week, Obama finally told us he was willing to fight for economic change. Now it looks like he’s going to attack anyone who is looking for a job. Let’s hope he turns it around before it’s too late.
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.
Professional pundits and Democratic politicians are in a frenzy over what Martha Coakley’s senate seat loss to Republican Scott Brown might mean for American politics.
Immigration reform in jeopardy
As Harold Meyerson of the American Prospect reports, the loss of one seat probably won’t derail heath care reform, but it does make the chances of passing immigration reform slimmer. Meyerson writes that immigration reform is “necessary to restore our economic vitality and political equality,” and actually passing reform would benefit the Democratic faction. Unfortunately, that means that immigration reform will require 60 votes in order to pass the senate.
The Texas Observer‘s Melissa del Bosque writes about the slim chances of immigration reform passing in 2010. According to Rep. Henry Cuellar (D-TX), a member of the Congressional Hispanic Caucus, a 2011 target date is “probably more realistic.” del Bosque refuses to lose hope, reminding us that Rep. Luis Gutierrez (D-IL) has assured the public that “the Obama administration promised to bring up the issue in 2010.” Of course, bringing up an issue and actually passing reform are two very different animals.
Holding on to hope for 2010
In her daily roundup of Spanish-language media, Erin Rosa of Campus Progress also urges a positive outlook “despite the reorganization of the Senate.” Rosa relays that Rep. Xavier Becerra (D-CA) assured the media during a telephone conference that President Obama “remembers his promise well.” While “most latinos” interviewed are impatient, they hold on to hope that 2010 is the year for reform.
TPS for Haitians
Haitian undocumented that are currently within U.S. borders will be given Temporary Protected Status (TPS), as Julianne Hing reports for RaceWire. The decision only applies to Haitian immigrants in the U.S. prior to January 12, 2010. Hing observes that it is unfortunate that it took “a disaster of this magnitude” to inspire the White House to offer TPS to Haitian immigrants, though it is “a great relief.”
What will the recently granted TPS status mean for Haitians that are already in deportation proceedings? Such is the case of Haitian immigrant Jean Montrevil, asAarti Shahani reports for New America Media. Montrevil came to the U.S. on a green card in 1986 to “make it big,” but in his efforts, “got stupid,” and caught up in selling drugs from his taxi cab. That was 20 years ago, and Montrevil has served 11 years in prison to pay for his errors. Montrevil is now a father of four and a community leader. The Department of Homeland Security considers his prison time proper cause to deport him. Many others feel he has done his time, and is a positively contributing member of our society. Democracy Now! also covered Montrevil’s story recently, as noted in the Jan. 7 Diaspora.
Invisible to the first world
Why are countries like Haiti mostly invisible to first world nations like the U.S. until catastrophe strikes? Leonardo Padura asks, before the earthquake, “Who talked about Haiti?” for IPS News. Haiti desperately needs the emergency aid so generously given today, but the country has needed help for a long time. “Let us hope that tomorrow, when the tragedy no longer dominates the headlines, and the dead are buried,” writes Padura, “we will not forget Haiti exists….”
Disappointingly, “U.S. corporations, private mercenaries, Washington and the International Monetary Fund” are remembering Haiti in a rather cruel and opportunist fashion, as Benjamin Dangl reports for AlterNet. At a time of crisis and great human need, Washington D.C. is “promoting unpopular economic policies and extending military and economic control over the Haitian people.” This is disturbing, as a long history of economic exploitation helped render the country vulnerable to disaster. The recent earthquake has claimed roughly 200,000 lives so far.
Haiti in context
While borders and border cities bear the brunt of blame when migrants move, the cure won’t be found in bigger bails of barbed wire, or harsh enforcement tactics that deny escape from economic desperation or dangerous conditions.
Jocelyn Barnes, reporting for The Nation, provides a much needed contextualization of Haiti. There are many related factors that weakened and harmed Haiti’s ability to thrive, not the least of which have been storms and earthquakes. But the privatization of Haiti’s infrastructure-which was “championed” by current envoy to Haiti in charge of “leading the quake assistance brigade” former president Bill Clinton-have definitely been instrumental in the country’s fate.
Marching against Arpaio
Finally, given the recent holiday celebrating the life and efforts of civil rights hero Martin Luther King, Jr., we would be remiss in overlooking the January 16 march in Arizona protesting Maricopa County Sheriff Joe Arpaio. The event was organized by Salvador Reza, a respected Mexican American activist and community organizer in Arizona. Musician Linda Ronstadt, Co-Founder of United Farm Workers Dolores Huerta, and approximately 5,000 people marched from a park to Tent City, the name for the sheriff’s makeshift detention center.
Arpaio is reviled by many in the Latino and undocumented community for his methods of racial profiling and humiliating treatment of detainees. Recently, Arpaio was compared to Bull Connor by an ad published in in the Arizona Republic by 60 black leaders and the Center for New Community.
King’s vision was large and led to new horizons; it cannot possibly be contained to one era, or one day on a calendar. The struggle continues, every day, everywhere.
This post features links to the best independent, progressive reporting about immigration by members of The Media Consortium. It is free to reprint. Visit the Diaspora for a complete list of articles on immigration issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, and health care issues, check out The Audit, The Mulch, and The Pulse. This is a project of The Media Consortium, a network of leading independent media outlets.
What Will Coakley’s Defeat Mean for Health Care Reform?
By Lindsay Beyerstein, Media Consortium Blogger
Last night, Republican Scott Brown defeated Democrat Martha Coakley in the special election to fill Teddy Kennedy’s senate seat in Massachusetts. Coakley’s loss puts health care reform in jeopardy.
With Coakley’s defeat, the Democrats lose their filibuster-proof 60-seat majority in the Senate. However, as Paul Waldman explains in The American Prospect, Coakley’s loss is not the end for health care reform.
Remember, the Senate already passed its health care reform bill in December. Now, the House has to pass its version of the bill. The original plan was for House and Senate leaders to blend the two bills together in conference to create a final piece of legislation (AKA a conference report) that both houses would vote on. Once the Democrats are down to 59 votes, the Republicans can filibuster the conference report and kill health care reform.
But if the House passes the same bill the Senate just passed, there’s no need to reconcile the two bills. This so-called “ping pong” approach may be the best way to salvage health care reform. Some of the flaws in the Senate bill could still be fixed later through budget reconciliation. It would be an uphill battle, but nothing compared to starting health care reform from scratch.
The second option would be to get the bill done before Scott Brown is sworn in. According to Waldman, there could be a vote within 10 days. The House and Senate have already drafted some compromise legislation, which Waldman thinks is superior to the straight Senate bill. If that language were sent to the Congressional Budget Office immediately, the Senate could vote before Brown is sworn in.
Sen. Majority Leader Harry Reid (D-NV) said in a statement last night that Brown won’t be sworn in until the election results are certified, a process that could take two weeks. Historically, the winners of special Senate elections have taken over from their interim predecessors within a couple of days. If the Republicans were in this position, they’d use every procedural means at their disposal to drag out the process. The question is whether the Democrats have the fortitude to make the system work for them.
Remember how the Republicans did everything in their power to hold up the Senate health care vote, including forcing the clerk to read the 767-page bill aloud? They were trying to delay the vote until after the Massachusetts special election. If it’s okay for the GOP to stall, the Democrats should be allowed to drag their feet on swearing in Brown.
Also, remember how the Republicans fought to keep Al Franken from being seated after he defeated Norm Coleman? For his part, Franken says he’s determined to pass health care reform one way or another, according to Rachel Slajda of Talking Points Memo.
Incongruously, some Democrats are arguing that rushing to a vote would be a violation of some vague democratic principle. Sen. Jim Webb (D-VA) wasted no time in proclaiming that there should be no vote before Brown was sworn in. Rep. Barney Frank (D-MA), of all people, averred last night that the Democrats should respect the democratic process and start acting like they have 59 votes while they still have 60.
All this talk of “respecting the process” is hand waving disguised as civics. According to the process, Scott Brown isn’t the senator from Massachusetts yet. According to the process, you have the votes until you don’t.
Talk about moving the goalposts. It’s bad enough that we need 60 votes to pass a bill on any given day. Now, they’d have us believe that we also need 60 votes next week. Webb and Frank are arguing that Brown’s victory obliges Democrats to behave as if Brown were already the Senator from Massachusetts. Of course, if Webb won’t play ball, it’s a moot point. The whole fast-track strategy is predicated on 60 votes. Steve Benen of the Washington Monthly thinks that Webb effectively took the fast-track option off the table with his strongly worded statement.
Katrina vanden Huevel of The Nation argues that this historic upset should be a wake up call to President Barack Obama to embrace populism with renewed fervor. I would add that Obama was elected on a platform of hope and change. There is no better way to fulfill a promise of change than to reshape the nation’s health care system and provide insurance for millions of Americans.
Ping pong, anyone?
This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Rampant poverty can’t be written off as the result of historical accident or a worker’s incompetence. It is actively cultivated by bad public policies that direct economic resources into the hands of a wealthy few. The resulting inequality creates unnecessary suffering all over the world, from the humanitarian crisis in Haiti to the alarmingly high poverty rate in the United States.
Systemic poverty in Haiti
The tragedy in Haiti is not only the result of a massive earthquake. As Richard Kim explains for The Nation, Haiti has long been one of the world’s poorest nations, and that poverty has prevented the country from protecting itself against natural disasters. As Kim explains:
Haiti’s vulnerability to natural disasters, its food shortages, poverty, deforestation and lack of infrastructure, are not accidental. To say that it is the poorest nation in the Western hemisphere is to miss the point; Haiti was made poor-by France, the United States, Great Britain, other Western powers and by the IMF and the World Bank.
Kim details Haiti’s struggles under the weight of colonialist debt that dates back to 1804, the year it won its independence from France. Soon after the revolution, the U.S. and France threatened a trade embargo against Haiti unless the nation of former slaves agreed to pay reparations to its former slave-masters in France. Haiti paid off this extortion with loans from U.S. and European banks. The country was still paying those loans back in the 1940s.
In 2003, Haitian President Jean-Bertrand Aristide demanded that France repay Haiti $21 billion of these unjust payments. He was ousted by a military coup for his efforts. Even today, the emergency IMF loans that are ostensibly helping Haiti cope with the disaster are crippled by insane stipulations, such as raising electricity prices for Haiti’s poorest citizens.
One-eighth of U.S. population receiving food stamps
The U.S. has been waging a quiet war against its own poor for decades as well. In a blog for Working In These Times, Akito Yoshikane highlights today’s record level of poverty: One in four U.S. children are living on food stamps, while one-eighth of the entire nation is receiving them. That’s over 38 million people, or more than four times the population of New York City. A poverty epidemic on this scale is a total affront to any concept of economic justice, liberal or conservative.
MLK and economic justice
Just economic policy was a critical concern for Dr. Martin Luther King, Jr. But today’s 13.2% U.S. poverty rate is actually higher than when King spoke out against it in 1968, as Rich Benjamin notes for AlterNet. The economic oppression of minorities continues to this day. While the overall U.S. unemployment rate is 10%, among black workers, the rate is an astonishing 16.2%, while Latino and Latina workers face 12.9% unemployment.
10% unemployment vs. multi-million dollar bonuses
It’s impossible to tolerate 10% unemployment in any economy. But those high rates are especially cruel considering the multi-million-dollar bonuses being paid to bankers who were bailed out with U.S. citizens’ tax dollars. Nomi Prins‘ fantastic interactive chart at Mother Jones reveals both the obscene executive pay levels and staggering federal bailouts that banks subsequently used to boost profits and banker pay.
Top bank executives scored regal paydays for nearly destroying the economy, and some of them even helped pervert the government into an enabler of banking excess. Need an example? Prins highlights Robert Rubin, who pushed through a host of radical deregulatory laws as Treasury Secretary in the 1990s, then left to take a job at Citigroup, where he reaped over $120 million before his company needed a massive bailout. There’s no reason for policymakers to accept a 13.2% poverty rate while subsidizing paychecks for wealthy bankers.
What can be done?
The Financial Crisis Inquiry Commission, a panel convened to uncover the causes of the financial crisis, could play a key role in overturning the injustices embedded within the U.S. financial system. As Ruth Coniff notes for The Progressive, it’s not simply that the bailouts saved the banks. It’s that the banks are piggybacking on taxpayer-granted perks to score record profits.
Economic arguments are routinely deployed to excuse outrageous social injustices-the most common argument for the U.S. bank bailout claims that things would have been much worse for everyone if we hadn’t thrown billions at the banks. There are grains of truth in the argument. If all of the banks had actually failed, the result would have been economic mayhem. But that bailout money should have come with major strings attached. There is no reason why bank CEOs, rather than taxpayers, should be reaping the rewards from profits that taxpayer funds generated.
In both global and domestic politics, severe inequality is often accepted as an economic fact, not a problem that must be solved. But the moral outrage prompted by the disaster in Haiti and the U.S. financial bailout is both real and justified. If we want to live in a just society, we cannot continue to subsidize the rich by exploiting the poor.
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.
On Tuesday, the worst earthquake in 200 years struck just off the coast of Port-au-Prince, Haiti, as The Nation reports. Bringing “catastrophic destruction” to the poorest nation in the Western Hemisphere, the disaster has spurred relief efforts worldwide. Crises like this are important reminders of how the treatment and protection of refugees must be a part of immigration reform.
Temporary protected status for Haitian refugees
In September of 2009-just one year after Haiti was decimated by four successive hurricanes and tropical storms that affected at least 3 million people-New America Media (NAM) made a prescient call to halt all deportation to Haiti, and grant Haitians temporary protected status (TPS) status in the U.S. “before more Haitians die or are impacted by natural disasters.”
Andrea Nill, writing for NAM’s EthnoBlog, reminds us it was only ten months ago, in March of 2009 that the Obama administration indicated it would “continue deporting undocumented Haitians,” in spite of the critical situation on the ground. Yesterday, Nill argued that not granting Haitian refugees TPS at this point would be “inconsistent with the promises the Obama administration has already made to the people of Haiti.” Later in the day, Department of Homeland Security (DHS) Secretary Janet Napolitano responded by stating deportations to Haiti would, indeed, be temporarily halted.
[ED. NOTE: Stay tuned for more coverage of Haiti and relief efforts. The Media Consortium will release a special report compiling our member’s coverage of the crisis and ways to help later today.]
Legalize the undocumented; boost the economy
It’s a fortunate confluence of circumstance, when doing the right thing could also help our faltering economy. Jorge Rivas of RaceWire highlights a new study on the beneficial economic effects of legalizing undocumented workers through comprehensive immigration reform. The study came about through a partnership between the Center for American Progress and Dr. Raul Hinojosa-Ojeda, associate professor at the University of California, Los Angeles. The research suggests that legalization would yield $1.5 trillion to the U.S. Gross Domestic Product over a 10-year period, generate billions of dollars in additional tax revenue, increase wages for all levels of workers in the U.S. (the “wage floor”) and create hundreds of thousands of jobs.
Detention center cover up continues
RaceWire also reveals new developments in the horrific tale of corrupt immigration officials “desperate to conceal” multiple incidents of abuse in Immigrations and Customs Enforcement (ICE) detention centers. Violations of law include “covering up evidence of gross mistreatment, undercounting the number of detention deaths, discharging patients right before they die, and major efforts to avoid scrutiny from the news media.” Reportedly, ICE has made great efforts to cover up detention conditions and cruelty. (Video below).
‘Draconian’ anti-immigration legislation passed in Mississippi
Rev. Jeremy Tobin of American Forum reports on a piece of “draconian” anti-immigration legislation passed in Mississippi in March of 2008. SB 2988 makes it a felony for an undocumented immigrant to work in the state. The bill includes a waivable fine for employers that cooperate with the prosecution of undocumented workers. SB 2988 oppresses immigrants and weakens the power of organized labor. According to Tobin, one frustrated legislator said that the bill was “making it a crime to work an honest job.”
Tobin calls out various organizations that backed the bill. These groups “started out anti-civil rights” and have since “reinvented themselves to be anti-immigrant rights.” He also notes that a “disturbing” number of Mississippi Democrats voted for SB 2988.
This post features links to the best independent, progressive reporting about immigration by members of The Media Consortium. It is free to reprint. Visit the Diaspora for a complete list of articles on immigration issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, and health care issues, check out The Audit, The Mulch, and The Pulse. This is a project of The Media Consortium, a network of leading independent media outlets.
The AIG bailout is one of the largest redistributions of wealth from ordinary taxpayers to bigwig bankers in history, one in which current Treasury Secretary Timothy Geithner played a key role. Newly uncovered emails reveal that Treasury Secretary Timothy Geithner’s New York Federal Reserve office urged AIG to conceal key information about the bailout from the Securities and Exchange Commission.
If Geithner was involved in those decisions, he could face charges of securities fraud. As John Nichols explains for The Nation, the quality of Geithner’s judgment is no longer in question-we already knew he committed plenty of errors while negotiating the AIG bailout as president of the New York Federal Reserve. The question now is whether Geithner needs to be prosecuted for misleading federal regulators.
AIG bet on the housing market with credit default swaps, a new form of financial derivative that helped the company score big profits during the housing boom. But when the market tanked, the company couldn’t cover its losses. AIG’s housing market gambles were completed with help from some of the largest banks in the world, including Goldman Sachs, Merrill Lynch, Bank of America, and Citigroup. If AIG had filed for bankruptcy in September of that year, those banks would have been required to accept much lower payouts on those bets-as little as 10% of their face value.
Instead, when the government swooped in to save AIG, the banks ended up with amazing deals. As a chief negotiator in the AIG bailout, Geithner allowed Goldman and others to receive full payout at 100 cents on the dollar. That meant U.S. tax dollars were going to the banks with no strings attached. But Geithner refused to tell the public which banks were benefiting from the bailout for almost six months. He finally relented when the AIG bonus outrage boiled over in March.
Last week, we learned the most damaging development yet: Geithner’s New York Fed urged AIG to keep the SEC in the dark about its sweetheart deals for the banks. Withholding key information from the SEC can be a criminal offense, and if Geithner was involved in the push to mislead the SEC, he must be held accountable.
For now, the Obama administration is standing by Geithner, saying that the decision to pressure AIG against cooperating with the SEC “did not rise to his level at the Fed” last Friday. But as Mike Lillis notes for The Washington Independent, that explanation strains credulity:
The federal government had recently bailed out AIG to the tune of $180 billion; AIG was funneling that cash to other (already bailed out) Wall Street giants; the New York Fed was telling AIG not to disclose those payments; and that decision didn’t rise to the level of the Fed chairman?
Lately, the government hasn’t had a very good record on prosecuting financial crime. Prosecutors wouldn’t have uncovered a massive tax evasion scheme at Swiss banking giant UBS without the help of whistleblower Bradley Birkenfeld. And the tax fraud was indeed massive-the Justice Department believes that UBS illegally helped shield over 19,000 wealthy clients from paying taxes.
But, as Amy Goodman reveals for Democracy Now!, in return for uncovering the biggest tax fraud in history, the Justice Department has successfully pushed to have Birkenfeld jailed for more than three years. By contrast, almost everyone involved in the scam is getting off with fines, probation, or less. What signal do you think this sends to other potential whistleblowers?
The housing boom encouraged banks to pour money into speculative investments outside the traditional mortgage market, especially by making loans to property developers to build high-end condominiums. When the housing bubble burst, it became clear that there were far more fancy condos than anybody wanted. Today, most economists expect the loans that financed these developments to prove nearly worthless.
As Alyssa Katz details for The American Prospect, scores of those buildings are now nearly vacant in New York City alone. In order to create these useless towers, developers cleared the land by forcing out tenants in affordable housing complexes, and shut down productive businesses. If these spaces are to be used productively-say, for affordable rental housing-banks and developers need to acknowledge that their market has tanked, accept their losses and move on.
Instead, Katz notes, federal regulators are letting banks apply very optimistic accounting values to these commercial real estate projects. This accounting creates illusory short-term profits for banks and eliminates incentives to let the land go to socially useful enterprises. If regulators don’t force banks to get serious about their commercial real estate losses, the government will effectively be subsidizing a rash of useless eyesores, allowing neighborhoods to decay in the process.
Subprime shenanigans from AIG, UBS and other banks helped tank the global economy. We’re still feeling the job fallout from a financial crisis that banks triggered over two years ago. Last week, the government reported that the economy lost 85,000 jobs in December, while the unemployment rate held even at 10%. David Moberg explains why we desperately need the Senate to approve a robust jobs bill in a blog for Working In These Times. A $174 billion package passed the House last month, but it’s a pittance compared to what the government has pledged to save Wall Street.
So how did we get here-saving the crooked jerks who created the mess while leaving everyone else out to dry? Kevin Drum’s story in Mother Jones on the bank lobby offers critical insight into the operations of the U.S. democratic process, and also stands up as one of a handful of investigative journalism masterpieces that have stemmed from the financial crisis. In the last dozen years, elite financiers have secured government approval to shoulder greater risks and pay bigger bonuses, despite a series of near-catastrophic financial market failures. Drum details the financial industry’s pervasive influence over lawmakers in Congress, key policymakers at the Federal Reserve and federal regulators in other agencies, influence often purchased outright with campaign contributions and massive lobbying efforts.
These days, the money still talks in American government. But the true economic coup is not financial. It’s ideological: Bankers have convinced leaders of both political parties that what’s good for Wall Street is always good for America, even if the cost of boosting the bottom line involves dismantling productive firms, ravaging neighborhoods with foreclosures or scamming poor people with massive overdraft fees.
“…There’s more to the finance lobby than just money and political influence,” Drum writes. “Their real power lies in the fact that they’ve so thoroughly changed our collective attitude toward financial regulation that sometimes they barely need to lobby in the traditional sense at all.”
This is precisely how we got stuck with banker apologists like Geithner, a Justice Department that punishes whistleblowers while letting corporate crooks go free, and why we’re allowing neighborhoods to rot away for no reason. We have to demand more from our government, regardless of which party is in power. If we don’t, we’ll get stuck with the same save-Wall-Street-first policies forever, regardless of the consequences for society.
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.
The next United Nations climate change conference is almost a year away, and health care is still dominating the legislative agenda in Washington. That means climate reform opponents, from the coal industry to the global warming skeptics, have plenty of time to work, out of the spotlight, to derail progress. Here’s a glimpse of the enemies of reform-and the companies and individuals that are still fighting for change in 2010.
The United Nations Climate Change Conference (Cop15) turned ugly today when police officers beat back hundreds of demonstrators, including a group of 50 to 100 delegates that were trying to meet with the protesters.
More than 250 people were arrested, including spokespeople for Climate Justice Action (CJA), a global network of NGOs that organized a walkout at the Bella Center today. CJA’s spokesperson Dan Glall told Mantoe Phakathi at Inter Press Service that “as a condition for going back to the negotiations, we demand industrialized nations uphold the Kyoto Protocol, commit adequate funds to adaptation and reduce greenhouse gas emissions significantly.”
OneClimate has video (below) of today’s walkout.
“More than 1,000 people have been arrested, detained and released over the course of the past week,” Jennifer Prediger writes for Grist. “Some were made to sit on freezing sidewalks for six hours in a nasty version of time out. The people who threw rocks and set cars on fire were rightfully detained. But the droves who were dragged in last night for dancing awkwardly in Christiana? Seems like overkill to me.”
The chaos outside reflects the increasing pressure inside the Bella Center, as delegates turn to the United States and China for leadership in the final days of the summit. Together these countries account for 42 percent of the world’s carbon emissions.
In order to finalize a global climate agreement in Copenhagen, both countries need to take a big step forward, as David Doniger and Barbara Finamore report for Grist. For the U.S., this means aid for the world’s poorest and most vulnerable people; for China, this means making steady progress to meet the country’s carbon reduction goals.
The U.S. has already committed to pay its share of a $30 billion fund to last through 2012. “But to lead in Copenhagen, the U.S. needs to back even larger investments to meet these core needs for the longer-term-2015 or 2020,” Doniger and Finamore write. “China has the opportunity to enhance its standing as a responsible world leader by building global confidence in the implementation of its carbon reduction goals.”
But as David Corn reports for Mother Jones, China and the U.S. are apparently “stuck in a standoff.” An Obama administration official insisted that it’s not about the money: “‘We have to get the developing nations into an international agreement,’ the official said… Yet China has forcefully resisted the idea of incorporating their self-professed emissions goals (essentially, slowing the growth rate of emissions) into a binding agreement. China has also repeatedly said that it will not submit its performance to official outside vetting.”
Corn writes, “But with 115 heads of states beginning to arrive, the Copenhagen talks have left some fundamental gaps for the last minute. Even if those gaps are bridged, the resulting agreement could fall far short of what experts say is necessary to redress the dire consequences of rising global temperatures. Just ask the scientists roaming the halls.”
Secretary of State Hillary Clinton arrived in Copenhagen today in a last minute appearance. Clinton has booked a full day of meetings on Thursday and will join President Barack Obama in negotiations when he arrives Friday. Like Obama’s schedule switch at the conference (he originally planned to be there last week and instead will arrive Friday), Clinton’s arrival could indicate the U.S.’s intention to seal a deal by the end of the week.
For live updates of the negotiations and protests, check out The Uptake’s live video stream from the Bella Center.
<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.
The Mulch: 10 Million Strong, and Growing
By Alison Hamm, Media Consortium Blogger
It’s one of the largest petitions in history-and the biggest climate-related petition ever delivered. Organized by the TckTckTck campaign, 10 million people called for leaders to sign a fair, ambitious, and legally binding climate treaty at the 15th United Nations Climate Change Conference in Copenhagen (Cop15).
After the opening press conference on Monday, young people from around the globe handed the petition to Yvo de Boer, head of the United Nations agency organizing Cop15, and Connie Hedegaard, Danish Climate Minister and President of Cop15. More than 220 leading civil society organizations from environmental, development, labor, and health fields came together for the campaign.
Richard Graves of Yes! Magazine reports on the event: “Although the number of people that had signed the petition is a staggering figure, what really captivated the crowd was the short speech by Leah Wickham, 24, of Fiji, who spoke about the ‘hopes and dreams’ of the ten million people that had signed the petition. Her heartfelt talk silenced the room. Small island nations like her own, she said, are on the front line of climate change.”
According to Wickham, the Copenhagen climate treaty “‘represents our hopes and dreams for all the generations that will be … Fifty years from now, my children will be raising their own families and it is my biggest hope that they will still be able to call our islands home. … In the end, climate change will not discriminate.'”
Yvo de Boer promised to deliver, saying, “This is not just about U.N. decisions and treaties, this is about people, culture, and countries’ survival. The talking needs to stop and the action needs to begin.”
The U.S. Environmental Protection Agency (EPA) also added incentive for a deal. On Monday, the EPA announced that greenhouse gases endanger human health and the environment and must be regulated. As Marjorie Childress reports for the New Mexico Independent, the endangerment finding means that the EPA can set stronger emissions requirements in the future.
In Grist, David Roberts debunks a leaked draft agreement that has caused a media flurry. He writes: “It’s now become clear that the supposedly new draft is one of several old drafts that have been floating around for weeks. For the most part [the drafts] are boring and practical, though the anti-World Bank crowd is pissed. Regardless, the draft is of no particular significance in and of itself; it reflects longstanding points of tension between rich and poor countries but did not cause them.”
People want a climate deal, now. In an interview with the Uptake’s Jacob Wheeler (video below), Naomi Klein of The Nation warns against the idea of “Hopenhagen,” saying, “There’s no point in hoping for something that is not on the negotiating table.” Instead, she discusses what we can realistically expect from the climate talks.
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.
President Barack Obama invited leading economic thinkers to a job creation summit on Thursday to help combat the worst unemployment crisis in decades. The stakes couldn’t be higher: If Obama can’t build momentum for robust legislation that will create jobs, the unemployment rate could remain in double-digits all the way through 2011.
In Salon, Andrew Leonard highlights some positive comments Obama made at the jobs summit. In an exchange with The American Prospect‘s Robert Kuttner, Obama said that the long-term budget deficit is an issue, but that the best way to reduce that deficit is to spur economic growth. When the economy is growing, the same tax rates reap greater returns for the government.
If the U.S. dramatically slashes economic support programs to clamp down on the deficit in the short-term, the economy is going to shrink. About two-thirds of the economic growth in the third-quarter of 2009 came from intiatives related to Obama’s economic stimulus plan. If we cut back on stimulus, we lose more jobs and make the long-term deficit worse by hampering growth.
We’ve faced this kind of dilemma before and seen what happens when you focus too much on the deficit, as Katrina vanden Heuvel emphasizes in a column for The Nation. “In 1937, just as there was some recovery from the Depression, the debt hawks swooped in and there was a return to the deficit reduction model,” vanden Heuvel writes. “Things went south again. We don’t need a repeat of that.”
So Obama doesn’t want to attack the deficit at the expense of jobs, which is good. But it’s problematic that the President is still at the summit stage on the most politically pressing issue for Democrats, as Terence Samuel explains for The American Prospect. If the labor market doesn’t start getting better soon, voter dissatisfaction with Obama’s economic platform will impact other critical policy initiatives, from health care to climate change.
“The president is up against an unpredictable clock,” Samuel writes. “With his approval rating hovering around 50%, he can’t be sure how long Democrats in Congress will stick with him on anything if there is not some noticeable improvement in the jobs picture soon. The urgency on the job situation is not lost on Democrats in the House and Senate who must defend the seats of 18 Democrats in 2010.”
Most of the pressure Obama now faces is to create jobs, not just save them. That’s because his stimulus helped get the unemployment rate under control-we’re still losing jobs, but not as fast as we were in January. But as Aaron Glantz notes for New America Media, the risk of heavier job loss is still present.
State governments are up against very difficult budget constraints, thanks to tax losses related to widespread layoffs and foreclosures. If they don’t get help from the federal government, states will be forced to cut expenses, which means shedding more jobs. Glantz highlights a recent conference call with AFL-CIO leaders who warned that state and local governments could be forced to cut up to one million jobs in 2010 if Congress and President Obama fail to enact a major jobs bill.
David Moberg envisions an ideal jobs bill for Working In These Times. We need a major aid package to state governments, modernizing our schools and transportation network, a public-sector job program to fund important work in our communities, and a tax credit for companies that hire workers. The whole thing would only cost $400 billion and would create 4.6 million jobs. That could be enough money to move unemployment out of crisis-mode. Right now, about 15.4 million workers are out of a job. Half those workers have been put out of work over the course of the recession. Creating 4.6 million jobs would make an enormous difference.
And while the $400 billion price tag may sound like a big number, it’s a drop in the bucket compared to our $9 trillion fiscal deficit. Going back to The Nation: As vanden Heuvel notes, the whole package could be paid for with a modest tax on risky Wall Street securities trading.
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.
Over 15,000 people from 192 countries began to work towards an international climate deal today in Copenhagen. These discussions are part of the largest and most important United Nations climate change summit in history. After two years of contentious negotiations, heads of states are convening through Dec. 18 to curb greenhouse gases, encourage the development of clean energy, and transfer hundreds of billions of dollars to help developing nations curb climate change.
It’s going to be a lively 11 days. Jacob Wheeler has already posted video of a demonstration to save the climate for In These Times‘ blog, The ITT List. For live coverage of the Cop15 summit, make sure to check out video streams hosted by The UpTake and OneWorld.
Robert Eschelman reports in The Nation that Cop15’s probable outcome will be a draft agreement. But what will this potential deal look like? “Four issues will dominate the negotiations taking place inside Copenhagen’s Bella Center. First, developed nations, such as the United States, must commit to significant reductions in their greenhouse gas emissions. Second, developing countries like India and China will have to reduce the rate at which their emissions increase over the next several decades. Third, developed countries will have to provide clean energy technologies and funding to developing nations as they address the effects of climate change. And, finally, negotiators will have to agree on how to monitor and enforce an international climate agreement.”
The U.S. has taken some good first steps to reaching such an agreement. Last week, President Barack Obama announced the country’s commitment to a global fund that will mobilize $10 billion per year by 2012 to support developing countries that are already experiencing the effects of climate change. It’s an important first step. But as Yes! Magazine reports, using the World Bank and the International Monetary Fund to manage this money isn’t a good idea. “Both have track records of saddling poor countries with debt, requiring government spending cuts that undermine national economies, and handing lucrative contracts to transnational corporations.”
President Obama has also changed the timing of his Copenhagen visit from this Wednesday, Dec. 9, to the conference’s big finale on Friday, Dec. 18. Grist consulted with a panel of experts regarding the significance of the schedule switch. They all agree: It’s a big deal. Obama’s arrival on the last day “changes the game,” according to Kenneth P. Green, resident scholar at the American Enterprise Institute. “It suggests that a ‘deal’ is already in the bag, and Obama’s expecting that he’ll get to bask in the glow of a new global agreement, flagrantly repudiating the position of the Bush administration in previous climate negotiations.” Andrew Light, a senior fellow at the Center for American Progress, believes that Obama’s appearance at the end of the conference will “transform the Copenhagen climate conference into the largest summit yet of world leaders focused on global warming.”
Scientists warn that without such an agreement in Copenhagen, the Earth will face ever-rising temperatures, flooding of coastal cities (about half of the human race lives within 100 miles of a coastline), more extreme weather events, and the spread of diseases.
Air America features a comprehensive look at what’s at stake in Copenhagen. “The change in U.S. administrations a year ago had aroused hopes the long-running climate talks might finally produce an all-encompassing package in 2009 to combat global warming and help its victims. Too little time and too little agreement, however, especially between rich and poor countries, mean the 192-nation Copenhagen conference is likely to produce, at best, a framework – a basis for continuing talks and signing internationally binding final agreements next year.”
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.
Two key lawmakers on the House Financial Services Committee, Reps. Alan Grayson (D-FL) and Ron Paul (R-TX), are pushing to authorize a full, comprehensive audit of the Federal Reserve. The plan has sparked fury from both the Fed and the corporate banking industry, but the proposal is so appealing that the controversy is almost laughable.
The Federal Reserve is one of the most powerful economic institutions in the world, but most of its operations are conducted in total secrecy. The Fed’s rescue activities have dwarfed the $700 billion Troubled Asset Relief Program, but without any public accounting. Some of these efforts may have been entirely appropriate, but we don’t even know who the Fed is helping. That fact is a major barrier to establishing effective and fair economic policy.
“The Fed is a typical Washington institution that operates un-democratically and in virtually total secrecy, and a Congressionally-mandated audit that they (and much of the DC establishment) desperately oppose would be a serious step towards changing the dynamic of how things function. At the very least, it would provide an important template for defeating the interests which, in Washington, almost never lose.”
Under the Grayson-Paul plan, which is offered as an amendment to the Financial Stability Improvement Act of 2009, the Government Accountability Office would be given the authority to audit all of the Federal Reserve’s activities, just as it can audit other public programs and institutions.
Last week, the House Financial Services Committee approved the audit-the-fed bill, despite opposition from panel Chairman Barney Frank (D-MA), who tried to gut the plan. Even on the Financial Services Committee, where the banks concentrate their campaign contributions, Grayson was able to convince 14 other Democrats to stand up to the financial establishment.
The vote of approval scarcely registered on mainstream media’s radar, and even then, the Grayson-Paul legislation was portrayed as an assault on the Fed’s “political independence.” As Dean Baker notes for Talking Points Memo, it’s hard to see how a simple, public accounting can be construed as a political hit on the Fed’s policy-making.
By setting interest rates, the Fed has enormous power to do almost anything under the economic sun, from fueling quick growth to destroying jobs. All of these powers have useful functions under the right circumstances, and we really don’t want Congress to make decisions about the economy based on the interests of powerful lobby groups. The Grayson-Paul bill wouldn’t do anything of the sort. As John Nichols explains for The Nation, audits of sensitive economic policy decisions would be subject to a six-month lag before they could be publicly released. If the Fed needs to act fast, Congress won’t be able to get in its way. The public will eventually know how its own money is being spent, however, and learn how a public institution is conducting itself.
“In other words, this is about simple transparency, which everyone should favor,” Nichols writes.
The White House and the Congressional Democratic leadership need to support a full and comprehensive audit of the Federal Reserve. It’s an issue of basic democratic accountability. There is no good reason why economic policy should be conducted in secret.
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.
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.
First it was immigrants from Mexico, now Muslims in the armed services. After the tragic shootings at Fort Hood, conservative pundits are verbally attacking Muslims and Arab-Americans, much like they have vilified the immigrant community. The complexities of Islamic faith are being glossed over and “Muslim Terrorist” is stamped upon any act of violence involving their community. As a result, nuanced voices are buried in favor of suspicion and violence.
By proposing financial reforms that won’t curb Wall Street excess, U.S. policymakers have offered an unacceptably weak response to our enormous financial crisis. If voters don’t demand that their elected representatives help workers and consumers instead of simply boosting corporate profits, the economic downturn will last for several more years and leave the economy vulnerable to another bank-induced meltdown.
The banks have unbelievable lobbying clout. In an interview with Cenk Uyger of The Young Turks, Heather Booth, executive director of Americans for Financial Reform, describes how one-sided the Wall Street reform fight has been. Despite broad public support for a fundamental financial overhaul, going up against the bank lobby is, as Booth describes, “a David and Goliath fight.” It’s basically Americans for Financial Reform against every major corporation in the U.S.
Booth notes that the Chamber of Commerce has vowed to spend $100 million on a campaign to defend the “so-called free enterprise system”-you know, the “free market”-in which corporate lobbyists spend millions of dollars to write the rules of the economic game. Just seven financial lobby groups have spent a massive $147 million peddling influence over the past two years.
In fact, as Janine Wedel observes for Salon, the U.S. economic system is starting to look an awful lot like the clannish systems of government that looted Eastern European countries in the early 1990s. Today, the public good takes a backseat to the narrow interests of powerful corporations.
With the Obama administration working with advisers from Citigroup and Goldman Sachs, we’re not just watching Wall Street write its own regulations. We’re watching the financial sector re-write the official role of the government in the economy. In this new role, the government’s top priority is securing profits for corporate America.
“The intertwined coterie of financial and policy deciders in the United States is creating not only the financial architecture of the future, backed by the power and billions of the state, but, more generally, new relationships between the bureaucracy and the market,” Wedel writes.
GRITtv’s Laura Flanders echoes this theme in an interview with John Perkins, author of Confessions of an Economic Hit Man, and journalist Russ Baker. Lobbyists have so thoroughly hijacked the U.S. economy, Perkins argues, that the nation’s government now resembles those of Latin American nations he worked with in the 1980s and 1990s.
“I don’t think the U.S. president has much power these days, to be honest with you. . . . It’s the big corporate executives who call the shots today, and let’s face it, they financed Obama’s campaign,” Perkins says.
The very efforts the government deployed to save the financial system are being perverted to create another disaster. In a five-part interview with Paul Jay of The Real News, Jane D’Arista, an influential economist and author of The Evolution of U.S. Finance, explains how Wall Street destroyed itself over the past decade. By borrowing massive amounts of money, Wall Street was able to place bigger bets in the capital markets casino, resulting in huge profits when those bets paid off. But when the bets backfired, the losses were just as massive. Companies couldn’t pay them off, so the government stepped in to support them.
One of those support mechanisms came from the Federal Reserve, which began making incredibly cheap loans to firms that engaged predominantly in speculative trading. The Fed used to lend exclusively to commercial banks, which used the money to make loans that helped grow the real economy. But now those loans are being used to support risky securities trading, so we’re seeing big profits in the financial sector, without much help for workers and consumers. This is a major long-term problem-if the economy can’t keep pace with the Wall Street casino, those speculative trades are going to backfire and we’ll be right back to the chaos of September 2008, only with an even weaker economy.
All hope is not lost. As Perkins and Baker emphasize in their interview with Flanders, citizens have to demand corporate accountability and a government that actually serves the public good. For much of the past decade in Latin America, governments have been elected that stood up to major corporations and demanded that they stop pillaging their nation’s resources at the people’s expense.
In addition to demanding much stronger reforms for the financial sector, we have to demand that the government respond seriously to problems facing workers. With the unemployment rate at 10.2% and expected to go still higher, we need jobs. As Steve Benen notes for The Washington Monthly, Obama’s economic stimulus package helped stave off total economic devastation. What we need now is another stimulus to get people back to work, not just slow the pace of job losses.
“A bold, ambitious jobs bill can make a huge difference-the stimulus got us out of the ditch, a new effort can get us going in the right direction again,” Benen writes.
And the only argument against this plan is that we “can’t afford it.” That is-the government’s fiscal deficit is too high, and we just can’t spend money to help people in real economic trouble.
But as Christopher Hayes writes for The Nation, the deficit excuse is pretty pathetic. Economic stimulus bolsters economic growth, thus improving tax returns for the government in the future. And any spending on any project can be taken out of the budget from other measures. Hayes notes that our massive military spending is almost never included in discussions about “fiscal responsibility.” If we were really worried about how much it would cost to fix the economy, we could stop spending so much money killing people.
“Fiscal conservatism and deficit concern is nearly always code speak in Washington for something else,” Hayes writes. “Most often, when someone in Washington says they’re concerned about the deficit, what they’re really saying is, ‘I would like to make sure we have a government that focuses maximally on blowing people up.'”
The government has to start saying ‘no’ to corporate America. Corporate profits are not the same thing as a strong economy. We need to demand an economic policy that answers to workers, not just bank balance sheets.
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.
A clique of anti-choice Democrats in Congress joined forces with Republicans to write abortion access out of the House’s health care reform bill last Saturday. Rep. Bart Stupak (D-MI) wants to force women to choose between affordable health insurance and abortion coverage, even if they pay for abortion coverage with their own money.
Pro-choice Democrats and women’s health activists are up in arms over the eleventh hour deal. Ellie Smeal of Ms. Magazine denounces the Stupak amendment as a betrayal of women:
Millions of poor and middle-class women would be denied abortion coverage and millions more would lose the coverage they already have, since 85 percent of private plans now cover abortion. Far from being abortion-neutral, the Stupak amendment is a giant step backward for women. It’s unacceptable. In the compromise to get the bill passed, women and their health-care rights were thrown under the bus.
Yesterday, The Pulse interviewed Jodi Jacobson, political director of RH Reality Check, about the implications of the Stupak amendment for reproductive choice in America. Jacobson explained that, if language from the Stupak amendment finds its way into the final health care bill, insurance companies would be forced to eliminate all abortion coverage if they wanted to participate in any aspect of the health care reform plan. Listen to the full interview here. (Note: there’s a slight delay before the audio starts.)
Jacobson calls the Stupak language a “monumental setback.” If an insurance plan accepts customers who take government subsidies, then nobody on that plan could have abortion coverage-not even those who were paying their whole premium out of pocket. In effect, the Stupak amendment would be “a total ban on public and private money for abortion coverage,” Jacobson said.
In TAPPED, Michelle Goldberg accuses the Democrats of “leaving women behind” in their rush to pass health care reform at any cost. Goldberg warns that if the amendment becomes law, Democrats will have handed the anti-abortion lobby its biggest victory since the 2003 Partial Birth Abortion Act.
In the Nation, Eyal Press argues that the Stupak amendment would be an especially cruel blow to poor women:
If this highly regressive amendment makes its way into the legislation that Barack Obama eventually signs, millions of less affluent women who obtain access to affordable health insurance will thus join the ranks of low-income women on Medicaid, most of whom live in states that don’t cover abortion procedures. The two-tiered system that dictates who in America has “choice” (more privileged women do, less affluent women do not) will be further entrenched.
Robin Marty of RH Reality Check wonders whether the Stupak amendment would apply to miscarriages as well as elective abortions. Sometimes, when a fetus dies in utero, doctors must surgically remove it. It’s the same procedure as an elective termination and it has the same name: Abortion. Last month, Marty lost a much-wanted pregnancy. Doctors laid out her options: a $1500 surgery, a $40 chemical abortion, or an interminable wait to expel the dead fetus naturally. Marty chose the surgery. She worries that the Stupak amendment would take that choice away from other women.
The House bill is not yet the law of the land. There is still time to strip the Stupak language out in conference (the merging process whereby the House bill is combined with whatever comes out of the Senate).
But will it actually get stripped out in the senate? Sen. Ben Nelson (D-NE) announced that “If it isn’t clear that government money is not to be used to fund abortions, I won’t vote for it.”
On a conference call yesterday, Sen. Arlen Specter (D-PA) told The Pulse that he was optimistic that a compromise could be worked out. “Ben Nelson said he wasn’t going to support a bill if it isn’t clear that government money won’t be used to fund abortions,” Specter said, “Well, we can make it clear that if someone wants to buy abortion coverage with her own money, she can do it.”
This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
On Friday, we learned that the U.S. unemployment rate officially broke 10% for the first time since the early Reagan years. This is about as bad as it gets for a modern, developed economy. No economic force takes a heavier toll on a society than rampant joblessness, and few personal setbacks take a deeper psychological toll than being out of a job for months on end. If Congress and President Obama don’t do something to create jobs fast, both are going to pay a hefty political price when next year’s mid-term elections roll around.
So how bad is it? In October, the economy shed 190,000 jobs and the unemployment rate jumped from 9.8% to 10.2%. That percentage is the most optimistic reading of the labor market in Friday’s report. If you take people who want full-time jobs but are settling for part-time work, then add those who have simply given up on finding a job, the rate is a massive 17.5%.
The problem is not that either Obama or Congress have failed to act on the problem, but rather that they have not done enough. When Congress was moving on Obama’s $787 billion economic stimulus package back in February, we were shedding upwards of 700,000 jobs a month. So the stimulus package has worked-it’s probably helped keep unemployment from jumping to 12% or 13%. But this is cold comfort to the nation’s 15.7 million unemployed, 5.6 million of whom have been out of a job for more than six months.
As Robert Reich notes for Salon, Obama’s economic advisers dramatically underestimated how bad things would get when they crafted the stimulus package. As a result, the package was too small and unemployment has remained high. Obama needs to go back to Congress and demand more economic relief funding. Republicans will continue to whine about government spending to excuse their obstructionism, of course, and conservative Democrats will probably start sweating, too-Sen. Ben Nelson (D-NE) helped cut back the original stimulus bill in February to help boost his “centrist” credentials. This of course had nothing to do with economics or policy. Government spending is what saves the economy in a recession. In a downturn as severe as this one, it takes a lot of spending to turn things around.
But as Reich notes, Nelson and his cohorts will have a lot more to worry about in the 2010 elections if the economy doesn’t actually improve over the next year. And few economists think it will. The Congressional Budget Office, which is run by a conservative economist named Douglas Elmendorf, projects an average unemployment rate of over 10% in 2010. That’s worse than this year. Democrats from swing districts need to support economic relief packages. Continued economic malaise will severely hurt them at the polls.
Congress finally took some action on joblessness on Thursday, voting to extend unemployment benefits for an additional 14 weeks. If we want the economy to recover, we need people to spend money, but if people aren’t working, they don’t have any money to spend. So the government cuts people checks to help them get by and stimulate a demand for goods and services. Even most conservative economists thinks this is a good idea.
But as Kevin Drum notes for Mother Jones, the soundness of the policy did nothing to prevent Republicans from fighting the effort to extend benefits tooth-and-nail. The bill had to overcome three-that’s right, three-filibusters in the Senate from Republicans, who held up the bill for weeks for no apparent reason. In a blog post for The Washington Monthly, Steve Benen explains the economic cost of this obstructionism: In the weeks of delay, 200,000 people looking for work stopped receiving benefits.
But extending unemployment benefits will not solve our economic woes. The total program is just $2.4 billion, a drop in the bucket compared to the trillions of dollars the government put up to salvage Wall Street. $2.4 billion is not enough to reverse the unemployment trend. Cutting the checks certainly helps, but as Matthew Rothschild emphasizes for The Progressive, we need an economic policy that actually puts people back to work. We’ve known for months that the stimulus was too small and watched the labor market continue to deteriorate. We need more than tweaks at the economic margins, we need a robust job creation plan.
As Stephen Franklin notes for Working In These Times, we already know that the recession has created a significant jump in the nation’s poverty rate. According to official government statistics, the rate climbed from 12.5% to 13.2% in 2008, the largest increase since 1991. But the National Academy of Science thinks the government statistics are misleading, as they account for rising costs associated with medical care, transportation, child care and different regional living standards, as Franklin notes. Taking these factors into account, the National Academy of Sciences calculates the actual poverty rate to be 15.8%. That’s an additional 7 million people living in poverty, for a total of over 47 million. That’s more than the entire population of the New York, Los Angeles, Chicago, and Philadelphia metropolitan areas combined. What’s worse, we don’t have poverty statistics for this year, when the most severe economic damage was been dealt.
Workers are facing tough economic prospects around the world. Writing for The Nation, Kristina Rizga details Latvia’s economic turmoil. Just like the US, overexcited bankers in Latvia inflated a massive real estate bubble that took down the entire economy when it burst. But with the bubble burst, much of the country is now out of a job and stuck with a mortgage worth far less than what they paid for it. It’s almost exactly the same story we’ve seen at home.
No domestic economic problem is more pressing than our epic levels of unemployment. We need another round of stimulus to get people working again. If not, we’ll see the same public unrest here as in Eastern Europe.
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.
After several prominent members left the Chamber of Commerce over its prehistoric climate change policies, the organization appeared to do an about-face on its climate stance during a press conference on Monday. Sound too good to be true? It was. Members of the Yes Men, a group of satirical, anti-corporate activists, posed as Chamber of Commerce officials and held a fake press conference claiming that “There is only one sound way to do business: That’s to support a strong climate-change bill quickly, so that this December in Copenhagen, President Obama can lead the entire business world in ensuring our long-term prosperity.” In reality, the Chamber has not changed their climate stance and continues to oppose climate change legislation. The Yes Men’s stunt is just one more in a chain of hoaxes this Autumn, including a boy in a balloon, death panels on health care reform, and recent allegations that radical Islamists are using interns to infiltrate Capitol Hill.
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