INDEX (full text of stories follow Democracy Now headlines)
The administration’s stated budget priorities: Cut Social Programs to Save War (aka “Defense”)
Jury Still Out on New Orleans Police Accused of Shooting Unarmed Katrina Survivors on Danziger Bridge
- International Stock Values Plummet After S&P Downgrades U.S. Credit Rating
- Hundreds Arrested in Britain as Unrest Spreads Across Nation
- Former London Mayor Blames Violence on Sweeping Spending Cuts
- U.N. Makes Historic Aid Delivery to Famine-Stricken Somalia
- Death Toll in Syria Crackdown Surpasses 2,000
- U.S. Vows to Stay the Course After Single-Bloodiest Attack in Afghan War; Bars Media from Ceremony
- Japan Withheld Information Following Nuclear Disaster Placing Residents at Risk of Radiation
- Court Refuses to Dismiss Torture Lawsuit Against Donald Rumsfeld
- July Fourth-Warmest Month in U.S. History
- Wisconsin Voters Head to Polls in Recall Elections
- White Mississippi Teens Accused in Racially Motivated Murder
- Catholic Priest Roy Bourgeois Faces Expulsion over Support of Female Priests
- Salvadoran Soldiers Arrested in Connection with 1989 Jesuit Priest Murders
- Activists Arrested for Blocking Entrance to U.S. Navy Base Housing Nuclear Submarines
- 10 Arrested Protesting Arizona Ski Resort’s Fake Snow Plan on Mountain Sacred to Native Americans
Cornel West & Tavis Smiley on Obama: “Many of Us Are Exploring Other Possibilities in Coming Election”
We speak with veteran journalist Tavis Smiley and Princeton University Professor Cornel West about President Barack Obama and the 2012 elections. “He’s rightly associated much more with the oligarchs than with poor people,” says West. Adds Smiley, “I don’t think the President would be hurt, necessarily—the country certainly would not be hurt—by a primary challenge that would refocus him on what really matters. It would refocus him on what’s happening to too many people in this country. It would refocus him on a more progressive agenda.” [includes rush transcript]
The veteran broadcaster Tavis Smiley and the author and Princeton University Professor Cornel West are in the midst of a 15-city, cross-country trek they have dubbed “The Poverty Tour: A Call to Conscience.” The tour comes on the heels of last week’s deficit agreement, which has been widely criticized for excluding a tax hike on the wealthy, as well as any measures to tackle high unemployment. “Any legislation that doesn’t extend unemployment benefits, doesn’t close a single corporate loophole, doesn’t raise one cent in terms of new revenue in terms of taxes on the rich or the lucky, allows corporate America to get away scot-free again—the banks, Wall Street getting away again—and all these cuts ostensibly on the backs of everyday people,” says Smiley. [includes rush transcript]
from AMERICAblog: A great nation deserves the truth by Gaius Publius
With all the oxygen that Obama-nalysis is sucking out of the air, I think we’re missing a major story — riots by the underclass in England. There’s a lot to this, and it’s developing (as they say).
First, the latest on the ground. In London (all emphasis mine):
16,000 police to take to streets as Parliament is recalled
The number of police officers on the streets of London is to be almost trebled tonight to 16,000 to deal with the “sickening” scenes of violence … Parliament will also be recalled for a day on Thursday[.]
‘Mindless violence’ spreads to Liverpool, Leeds and Birmingham
Embattled police struggled to contain a third night of riots, looting and arson as David Cameron cut short his holiday to chair a session of Cobra, the emergency co-ordination committee, scheduled for this morning.
As darkness drew in last night violence broke out in so many parts of London that it began to read like an A to Z of the capital. Peckham, Ladbroke Grove, Ealing, Catford, Chalk Farm, East Dulwich, Bethnal Green, Lewisham, Clapham and Croydon – where one person was shot and wounded – were all affected. In Hackney police fought for much of the day with rioters who hurled shopping trolleys, bins and pieces of concrete at officers, and set fire to vehicles.
Here’s the latest on the proximate source of the riots, the police killing last week of Mark Duggan (my emphasis):
Fragments of a bullet modified to maximise its destructive power were last night being analysed to cast crucial light on what happened at around 6.15pm last Thursday when police marksmen surrounded the minicab carrying Mark Duggan alongside a north London reservoir and shot him dead. … Investigators yesterday refused to confirm reports that initial results from the tests by the National Ballistics Intelligence Service suggested that the bullet fragments were from police-issue ammunition, meaning they could not have been from a weapon fired by Mr Duggan and casting doubt on claims that he was killed in an exchange of gunfire.
Well, that sounds familiar. More “mindless violence”?
Didn’t David Cameron looked pissed off having been dragged back to gritty, sweltering, seething, burning London from his lovely £10,000/week 18th Century Tuscan holiday villa near Montevarchi!
His answer to the rioters who have spread from Tottenham to almost every corner of London and up to Birmingham and Liverpool is one dimensional: he’s going to go all Bashar al-Assad on them. Tonight the police on the streets of London will increase from 6,000 to 16,000.
As he said he’s recalling Parliament– no doubt to force Labour to embrace his harsh plans for repression– he muttered something about rebuilding the burning communities… but nothing about the roots causes of the three days of rioting. It surely went beyond one instance of police brutality in the extra-judicial murder of community activist Mark Duggan. That was a spark in Tottenham– aspark that set off hours of peaceful– if unreported– protest.
But the conflagration that followed, there and beyond, has much more to do with a breakdown of social cohesion in the U.K. There’s a hopelessness brought on by Cameron’s enthusiastic buy-in to world capital’s insistence on an Austerity Regime. Cameron was the first major embraceor of the concept, a concept that the GOP feels will serve their nefarious purposes here in the U.S. as well, regardless of how disastrously it has failed– in every way– in the U.K.
Or, as I said a year ago:
When the social contract breaks from above, it breaks from below as well.
That’s “mindless violence” on both sides; not purposeless, mind you, but mindless. The rest of Howie’s post is excellent as well. (And don’t forget to click the wicked NSFW video.) He’s certainly not alone in his thinking.
The reaction to ugly is almost always ugly. We focus, for example, on the short, brutal years of the guillotine, and somehow forget ten centuries of ugly, brutal, predatory, self-serving abuse of literally millions of souls that spawned that briefer moment.
Or, in more modern terms: Every now and then we get a Cairo. But mostly we get either Libya (blood-ugly on both sides) or Syria (that’s the “Bashar al-Assad” reference above). That’s what “doing the time” usually looks like if a society decides to “do the crime” of destroying the social contract.
And we’re kinda getting there too. Will it be just “Cairo” for us? We should be so lucky. Finding the next FDR — the real one this time — would help an awful lot in that regard.
Here’s that Ken Silverstein piece from Harper’s in 2006 I keep referring to. I’m quoting (with permission) the introduction in full, since that story tells the tale. Note two things:
- ■ Obama uses a green event to paint himself freely with liberal cred (look familiar?)
- ■ The only call to action from Obama is to support his BigAg corn state ethanol agenda. The only one.
For Silverstein, Obama is a known made man at that point, and Silverstein wrote this in 2006, way before Obama announced for president. A great story and a great read (my emphasis):
Barack Obama Inc.:
The birth of a Washington machine
In July, on a typically oppressive summer day in Washington, D.C., roughly a thousand college students from across the country gathered at a Marriott hotel with plans to change the world. Despite being sponsored by the Center for American Progress, a moderate think tank founded by one of Bill Clinton’s former chiefs of staff, John Podesta, the student group—called Campus Progress—leans decidedly farther to the left. At booths outside the main auditorium, young activists handed out pamphlets opposing nuclear power, high pay for CEOs, excessive profits for oil companies, harsh prison sentences for drug users, and Israeli militarism in Gaza and the West Bank. At one session, Adrienne Maree Brown of The Ruckus Society—a protest group whose capacious mission is to promote “the voices and visions of youth, women, people of color, indigenous people and immigrants, poor and working class people, lesbian, gay, bisexual, gender queer, and transgendered people”—urged students to “break the fucking rules.” Even the consummate insider Podesta told attendees, with unintended ambiguity, “We need more of you hanging from trees.”
Around noon, conference participants began filing into the auditorium; activists staffing the literature booths abandoned their posts to take seats inside as well. The crowd, and the excitement, building in the hall was due entirely to the imminent arrival of the keynote speaker: Illinois Senator Barack Obama. Having ascended to political fame through a stirring and widely lauded speech at the 2004 Democratic Convention, Obama, the U.S. Senate’s only African-American member, is now considered to be the party’s most promising young leader—especially among those who, like the student organizers present, are seeking to reinvigorate its progressive wing. In terms of sheer charisma, Obama is certainly the party’s most magnetic leader since Bill Clinton, and perhaps since Robert F. Kennedy.
The senator was running a bit late; but when he finally glided into the auditorium, escorted by an assortment of aides, he was greeted by a tremendous swell of applause as he took to the stage. Dressed in a brown jacket and red tie, Obama approached the podium, flanked by two giant screens enlarging his image, and began a softly spoken but compelling speech that recalled his own days, after his graduation in 1983 from Columbia University, as a community organizer in poor neighborhoods of Chicago. “You’ll have boundless opportunities when you graduate,” he told the students, “and it’s very easy to just take that diploma, forget about all this progressive-politics stuff [his phrase], and go chasing after the big house and the large salary and the nice suits and all the other things that our money culture says you should buy. But I hope you don’t get off that easy. There’s nothing wrong with making money, but focusing your life solely on making a buck shows a poverty of ambition.”
Obama complained of an American culture that “discourages empathy,” in which those in power blame poverty on people who are “lazy or weak of spirit” and believe that “innocent people being slaughtered and expelled from their homes halfway around the world are somebody else’s problem.” He urged the assembled activists to ignore those voices, “not because you have an obligation to those who are less fortunate than you, although I think you do have that obligation . . . but primarily because you have that obligation to yourself. Because our individual salvation depends on collective salvation. It’s only when you hitch yourself up to something bigger than yourself that you realize your true potential.”
It was a rousing speech, and Obama is probably the only member of Congress who could have delivered it with any conviction or credibility. When he left the stage and headed toward the hotel exit, he was trailed by a pack of autograph seekers, picture takers, and glad-handers.
Despite its audience and ostensible subject matter, however, Obama’s speech had contained just a single call for political action. This was when he had introduced Mark Pike, a law student who then came bounding across the stage in a green one-piece mechanic’s outfit. As part of a campaign called “Kick the Oil Habit,” Pike was to depart directly from the conference and drive from Washington to Los Angeles in a “flex-fuel” vehicle. “Give it up for Mark!” Obama had urged the crowd, noting that Pike would be refueling only at gas stations that offer E85—which Obama touts as “a clean, renewable, and domestically produced alternative fuel.”
Although the senator did not elaborate, E85 is so called because it is 85 percent ethanol, aproduct whose profits accrue to a small group of corporate corn growers led by Illinois-headquartered Archer Daniels Midland. Not surprisingly, agribusiness is a primary advocate of E85, as are such automobile manufacturers as Ford, which donated Pike’s car. The automakers love E85 because it allows them to look environmentally correct (“Live Green, Go Yellow,” goes GM’s advertising pitch for the fuel) while producing vehicles, mostly highly profitable and fuel-guzzling SUV and pickup models, that can run on regular gasoline as well as on E85.
Obama had essentially marshaled his twenty minutes of undeniably moving oratory to plump for the classic pork-barrel cause of every Midwestern politician.
Ken adds in a footnote:
 Since producing most domestic ethanol requires large amounts of fossil fuel, and regular gasoline provides about 30 percent more mileage per gallon than E85, it’s arguably preferable from a conservation standpoint to drive a standard gasoline car rather than a flex-fuel vehicle.
Then, after lauding Obama’s early Senate advocacy of leftish causes, Silverstein notes this stunning list of Beltway integration moves:
Yet it is also startling to see how quickly Obama’s senatorship has been woven into the web of institutionalized influence-trading that afflicts official Washington. He quickly established a political machine funded and run by a standard Beltway group of lobbyists, P.R. consultants, and hangers-on. For the staff post of policy director he hired Karen Kornbluh, a senior aide to Robert Rubin when the latter, as head of the Treasury Department under Bill Clinton, was a chief advocate for NAFTA and other free-trade policies that decimated the nation’s manufacturing sector (and the organized labor wing of the Democratic Party). Obama’s top contributors are corporate law and lobbying firms (Kirkland & Ellis and Skadden, Arps, where four attorneys are fund-raisers for Obama as well as donors), Wall Street financial houses (Goldman Sachs and JPMorgan Chase), and big Chicago interests (Henry Crown and Company, an investment firm that has stakes in industries ranging from telecommunications to defense). Obama immediately established a “leadership PAC,” a vehicle through which a member of Congress can contribute to other politicians’ campaigns—and one that political reform groups generally view as a slush fund through which congressional leaders can evade campaign-finance rules while raising their own political profiles.
In other words, Obama built a Washington machine, just like the one he built to defeat Bobby Rush in Illinois, once he realized he needed one. The whole piece makes a fine read; it’s a remarkable bit of original reporting.
Is it possible that Obama’s just a machine politician in the generic sense, but a machine he’s at the top of, not in the middle of? (Remember how he shut down outside funding groups like MoveOn in the 2008 election? It’s not your machine if you’re not in charge.)
If so, Obama’s loyalties are, to all appearances, to his machine and his own career. Something to think about when you think about Obama and his motives.
You can always do what many do and excuse him for weakness (this comfortingly assumes he’s on your side, but not good at it). Or you can go with Drew Westen’s kind assessment, that perhaps Obama “does not know what he believes or is willing to take whatever position he thinks will lead to his re-election.” Or Westen’s slightly less kind assessment that “he has already been consciously or unconsciously corrupted”.
But for me, that 2006 story tells the whole tale. How hard is it to believe that the politician Barack Obama is, and always was … a politician?
He paints himself green when he can because that’s his “brand” — for as long as he can get away with it anyway — and shills for corporate and special-interest donors, just like Mitch McConnell or Kent Conrad do.
The only difference is in the branding, the same as with most mass market, nationally advertised products. Dish soap is dish soap. Some is “enhanced with space-age enzymes” and some is “made from herbs and tea.” Some is “attractively priced” and some “smells like a garden in your kitchen.”
But it’s just product differentiation. McConnell has his brand, Conrad his, and Obama has his — each tailored to a different target market. You and me, we’re part of Obama’s target market; we’re the left-liberals hungry for hope. (“Hope? Can we build a theme around that?” “Sure boss; I’ll get back to you.”)
How hard is that to believe? For me, not hard at all. I’m an Occam’s Switchblade guy—he does what he wants to; it’s that simple. I’m glad to let others do the Voyage Round My Father thing. It’s just possible those are comfortable — and reality-avoiding — delusions.
from Glenn Greenwald by Glenn Greenwald
(updated below – Update II)
The theory of Round II of the debt deal is that both parties will be motivated to reach an agreement in the “Super-Committee” on how to reduce the debt by another $1.5 trillion because, if they fail to agree, there will be automatic cuts that are horrendous to each party: draconian domestic cuts will scare Democrats into compromising, while supposedly substantial reductions in military spending will frighten the GOP. But a serious and quite predictable deviation from that scheme has already emerged: Republicans (at least its Tea Party faction) don’t seem bothered at all by the prospects of military cuts, while Democrats — specifically the Obama administration — are acting as if such cuts, literally, would be nation-threatening.
Yesterday, President Obama’s Defense Secretary, Leon Panetta, donned his Dr. Strangelove hat and decried these prospective cuts as a “doomsday mechanism” — doomsday! — warning that these would be “very dangerous cuts” that “would do real damage to our security, our troops and their families, and our military’s ability to protect the nation.” Then, this morning, we have this from The Washington Post:
Defense Secretary Leon Panetta warned Thursday of dire consequences if the Pentagon is forced to make cuts to its budget beyond the $400 billion in savings planned for the next decade.
Senior Pentagon officials have launched an offensive over the past two days to convince lawmakers that further reductions in Pentagon spending would imperil the country’s security. Instead of slashing defense, Panetta said, the bipartisan panel should rely on tax increases and cuts to nondiscretionary spending, such as Medicare and Social Security, to provide the necessary savings.
Just think about that for a minute. We have a Democratic administration installed in power after millions of liberals donated large amounts of their time and money to help elect them. Yet here we have a top official in the President’s cabinet demanding cuts to Medicare and Social Security in order to protect the military budget from further reductions. That’s the position of the Democratic administration. While it’s true that Pentagon officials reflexively protect the Pentagon budget, there is zero question that Panetta — the career-long supremely loyal Democratic Party functionary — is speaking here on behalf of and with the authorization of the White House; indeed, he said exactly that in the written message he sent about these cuts to the Pentagon’s staff(“this outcome would be completely unacceptable to me as Secretary of Defense, the President, and to our nation’s leaders”).
For all the boastful claims from Panetta and others about how much the Pentagon budget was just cut by the first round of the debt deal, the reality, as McClatchy detailed yesterday, is much different: “The new deficit-cutting law appears to reduce defense spending by $350 billion up front and perhaps by as much as $850 billion over 10 years, but in fact that’s highly unlikely to happen.” That’s because defense hawks ensured that these initial cuts would be applied not only to “defense” but also “security” spending, which encompasses programs “such as homeland security, border enforcement, foreign aid and even veterans’ benefits as potential targets.” Moreover, as Foreign Policy‘s Josh Rogin explained on Tuesday night on Rachel Maddow’s program, the magnitude of this first round of cuts as well as the potential series of automatic cuts in the second round is wildly overstated by administration officials given budgetary gimmicks in how these numbers are derived.
President Obama yesterday instructed his supporters on how to advocate for his re-election, and told them that when they go forth to evangelize about his accomplishments — as Steve Benen did yesterday with his celebration of Obama as “the most effective politician since Reagan, and depending on the day, perhaps even the most effective politician since LBJ” — that they should “not to get too bogged down in detail” but instead should emphasize broad themes and values. As one example of how this avoid-the-details advocacy should work, Obama instructed: “If somebody asks about the war, whether it’s Iraq or Afghanistan — if it’s Iraq, you have a pretty simple answer, which is all our folks are going to be out of there by the end of the year.” Except that appears to be completely untrue, as his administration appears on the verge of succeedingin its many months of efforts to pressure the Iraqi Government to allow U.S. troops to remain in that country well past the 2011 withdrawal deadline Obama repeatedly vowed to enforce (and that’s beyond the oversight-free private army which the State Department has long planned to keep in Iraq).
As the U.S. continues to spend almost more than the rest of the world combined on its military while it wages and escalates war in multiple Muslim countries around the world — to say nothing of the dozens of nations in which it continuously engages in lower-level covert military action — the very idea that American security would be gravely jeopardized by these cuts is absurd on its face. If anything, American security is far more endangered by continuing on this path of unbridled militarism and aggression. Yet here we have the bizarre spectacle of a Democratic administration demanding cuts to Social Security and Medicare in order to protect the defense industry from cuts that are, in any event, far less meaningful than are being depicted. Given how public they’re being with these statements, does anyone have any remaining doubt about the constituencies to which they’re actually loyal?
* * * * *
There are reports this morning that a NATO airstrike killed (another) one of Gadaffi’s sons in Libya, so we’ll be able to have some collective celebration to keep our minds off little things like the collapsing economy. It is telling indeed how virtually all political good news — all national celebrations — now involve America’s ability to kill the latest Bad Guy. One benefit of Endless War is that it distracts the citizens’ attention away from what is being done to them at home and makes them cheer for the leaders who are doing it to them.
UPDATE: Lsat week, Joe Lieberman said we must cut entitlement programs in order to “have the national defense we need to protect us in a dangerous world while we’re at war with Islamist extremists who attacked us on 9/11 and will be for a long time to come.” About that, Joan McCarter wrote: “since the Super Congress has been created specifically to pit defense and safety net programs against each other, don’t be surprised if you see this one getting traction” (h/t sysprog) That is exactly the purpose of the “triggers” and the Super Committee; it is not hard to guess who will prevail in the war between entitlement programs and military spending; and Panetta’s statements are little more than a push to ensure the right outcome.
from Ted Rall’s Rallblog by Ted Rall
What I Would Do If I Were Obama
Jobs, jobs, jobs. Throughout the presidency of Barack Obama, Americans have been preoccupied with jobs. Unemployed people need work. The underemployed need more work. The employed want salaries that go up instead of down.
The rich are worried too. The Depression of 2008-? is killing their stock portfolios.
Most presidents struggle to find the pulse of the people. Trapped in the D.C. bubble, they try to find out what voters want. Obama was lucky. He didn’t have to do that. The U.S. was in the midst of an epic economic collapse in January 2009, and has been ever since. It’s the only issue that everyone, rich to middle to poor, cared about. It still is.
In this single-issue environment, any idiot could have been a successful president. All Obama had to do was express sympathy and understanding while announcing a bunch of jobs initiatives.
Weirdly, though, Obama has focused on everything else except jobs: healthcare, gays in the military, gays getting married, more war against Afghanistan, new war against Libya, secret wars against Somalia and Yemen, the dreary showdown over taxes, budget cuts and the federal debt ceiling.
According to the latest ABC News/Washington Post poll, Obama’s approval rating is down to 39 percent. The crappy economy—and Obama’s inaction—is the simple cause.
“What Happened to Obama?” Drew Westen asked in a much-passed-around New York Times op-ed. It used to be just me. Now everyone sane agrees that Obama’s presidency has failed.
This is my favorite part of Westen’s postmortem: “Those of us who were bewitched by his eloquence on the campaign trail chose to ignore some disquieting aspects of his biography: that he had accomplished very little before he ran for president, having never run a business or a state; that he had a singularly unremarkable career as a law professor, publishing nothing in 12 years at the University of Chicago other than an autobiography; and that, before joining the United States Senate, he had voted “present” (instead of “yea” or “nay”) 130 times, sometimes dodging difficult issues.”
Westen is nicer than I am. He left out the fact that Obama had an undistinguished career as a U.S. Senator.
Is Obama a secret pawn of evil plutocrats? Does he suffer a character flaw alluded to in Westen’s piece, that he doesn’t know who he is?
Maybe. But I don’t think so. I think eight years of George W. Bush caused Americans to make a mistake. Obama was calm, so they assumed he was wise.
Obama is calm. He’s calm that it’s hard to tell if he’s sentient. But that doesn’t make him smart. Based on his record before and after becoming president, there’s a better-than-even chance that he’s not very smart.
Let’s be logical. Let’s assume that appearances don’t lie—that Obama doesn’t lose a wink of sleep over the fact that he’s presiding over a disaster that makes 9/11 look like a joke.
Let us further stipulate, for the sake of argument, that Obama isn’t stupid. That he’s merely another cynical and/or corrupt politician. If nothing else, Mr. Cynical (But Intelligent) Dirtbag ought to care about getting reelected.
If I were in Obama’s shoes, and I had any brains, if I wanted to turn those lousy poll numbers around, I’d hold press conferences to talk about jobs every day. I’d talk about jobs until the media was sick of it. Then I’d do it some more.
I’d spend two or three nights every week couchsurfing with families who were suffering, cameras rolling as I pretended to care about their silly problems with mean bosses and evil health insurers.
Most importantly, I’d set up next year’s television attack ads. I wouldn’t let a single week go by without proposing some piece of legislation related to creating jobs, alleviating the problems of the jobless, and increasing wages.
I’d send Congress huge publics-works bills. I’d ask them to hire millions of unemployed people to work for federal agencies. I’d push for higher unemployment benefits, payments that don’t expire until you find a job. Tax breaks for companies that hire. Tax deductions for those that give raises. Penalties for outsourcing jobs. Keep the Bush tax cuts, but only for the poor and middle class.
Let the Republicans kill my ideas. All the better for my 2012 ad buy! “Republicans voted against new jobs for Americans 22 times. Against helping homeowners keep their houses 15 times. Republicans: They just don’t care about you.” You get the idea.
Of course, a president can accomplish a lot by executive order. Remember that story about how Apple had more ready cash than the U.S. Treasury? Since America obviously needs the money more than Steve Jobs, Obama could have nationalized it and given it to the states in order to bolster their unemployment compensation funds.
American voters are so defeated and disgusted that they no longer demand a president like FDR or LBJ who actually fights for them. They’ll settle for one who goes through the motions.
The question for Obama and his advisors is: Are they smart enough to pretend to care about the only issue that matters to voters?
COPYRIGHT 2011 TED RALL
I’m watching a tape of the President’s remarks today about , and he once again failed to blame the Republicans for any of our problems (just as Geithner failed to do it last night). It’s “Washington.” No it’s not. It’s the Republican party in Washington. But in any case, what does that even mean, even if it is Washington? All the President is willing to say is it that it’s people who put their party first? Well, that pretty much defines everyone in town, which is I think is his point.
The President is once again trying to cast blame on everyone but himself, and by everyone, I include – heincludes – the Democrats in Congress, who are just barely hanging on in the Senate. The President’s continuing effort to cast blame on “Washington” and “Congress” has to be hurting Democrats. He’s been doing this for years. And now, we face a GOP that is as nutty as its ever been, and it’s threatening real disaster, but the President can’t find it in himself to blame them by name.
Finally, the President concludes by talking about our troops and how much we love them or something. Let’s wait and see how much love the troops feel when the “trigger” guts them. Of course, we know that the trigger won’t gut the troops. No one in Congress, or the White House, would ever let that happen. Mark my words. Our stuff will be gutted by the trigger, Defense (which, oddly, was defined in this debate as “their stuff”) won’t. Not that I want Defense gutted, but the possibility of it being gutted is supposed to be what keeps the GOP honest. It won’t, because it won’t get gutted, they (and I mean all of them) will just pass legislation “fixing” it by cutting more of our programs. Just wait.
(And yes, Axelrod blamed the Tea Party for the S&P downgrade, and when Geithner was asked that same day about whether the Tea Party owned this crisis, he refused to answer the question, other than blaming “congress,” i.e., Dems too. It’s really not a “message” when you have one guy say it once and all the rest contradict him.)
Treasury Secretary Geithner says it would be “political” to accuse the GOP of being the ones who refused to pass the debt ceiling and thus got S&P to downgrade us. He says Congress, in general, is to blame. That means Democrats are to blame too. Which is flat out untrue, unless you count the President, who has enabled the Republicans from the beginning, and continues to enable them through statements like this, where administration representatives just cannot bring themselves to blame the Republicans.
If you were a Republican, and you knew the President was going to have your back, and refuse to blame you, regardless of what you did, why wouldn’t you continue to not only take hostages, but take more and more? It’s not “politics” to simply state a fact as to who caused a problem in the first place.
Check the transcript of Geithner’s interview about the GOP hostage crisis. The word “Republican” is said once, and only by the interviewer. In fact, when Geithner is asked whether the GOP did this, he demurs.
JOHN HARWOOD: You said a moment ago that Congress owns the credit rating. John Kerry, Democratic Senator, said today, “This is the Tea Party downgrade.” Is that right?
TIM GEITHNER: Well, I wouldn’t– I’m not going to do politics, John. And I think if we’ve learned anything these last few months it’s– it’s time to put the economy ahead of politics. Again, these are challenges facing the country of the United States, not– not facing one party or the other. We both have some responsibility for coming together to dig our way out of this stuff.
And, again, this was– you know, it’s a big down payment on our fiscal challenges. Very strong bipartisan support for it. Our challenge is to build on that support and try to take the next steps that make some longer term progress. You know, we need to reform our tax system to help the middle class make this a stronger place to invest. Obviously we need to reform entitlement to secure Medicare for the next generation. And we’ve got to do some additional things to make the economy strong.
And what do you know – Medicare is back on the table! Which is odd, since the DNC just the other day issued a statement attacking Republicans for threatening Medicare when it’s the White House, and now Geithner, a senior administration official, who keeping putting Medicare on the table. It’s just not clear how any Democrat can any longer say with a straight face that the Republicans are the ones attacking Medicare. The President pretty took that issue away from us during these past negotiations, and Geithner does it again right here.
Hundreds of state legislators from all 50 states have gathered in New Orleans for the annual meeting of the American Legislative Exchange Council, known as ALEC. Critics say the Washington-based organization plays a key role in helping corporations secretly draft model pro-business legislation that has been used by state lawmakers across the country. Unlike many other organizations, ALEC’s membership includes both state lawmakers and corporate executives who gather behind closed doors to discuss and vote on model legislation. In recent months, ALEC has come under increasing scrutiny for its role in drafting bills to attack workers’ rights, roll back environmental regulations, privatize education, deregulate major industries, and passing voter ID laws. Nonetheless, this year’s annual ALEC meeting boasts the largest attendance in five years, with nearly 2,000 guests in attendance. We go to New Orleans to speak with Lisa Graves, executive director of the Center for Media and Democracy. Last month, her organization released 800 model bills approved by companies and lawmakers at recent ALEC meetings. [includes rush transcript]
from TomDispatch – Blog by Chalmers Johnson
However ambitious President Barack Obama’s domestic plans, one unacknowledged issue has the potential to destroy any reform efforts he might launch. Think of it as the 800-pound gorilla in the American living room: our longstanding reliance on imperialism and militarism in our relations with other countries and the vast, potentially ruinous global empire of bases that goes with it…
from Mondoweiss by Philip Weiss
After that Chinook helicopter was shot down in Afghanistan, killing 38 people (yes, 30 of them Americans, but Brian Williams would you please say 38, not 30, those Afghans, including an interpreter, were killed because of us) Daniel Zwerdling of NPR went to the naval museum in Hampton Roads, Virginia, and spoke to Navy enthusiasts (at minute 3:30 or so):
Here’s the astonishing thing. Out of the 10 people I’ve talked to in the last hour, every single one of them said those men in Afghanistan are heroes, and– it is time to bring all the troops home. One person after another, the elderly, young people, men, women, they all said– this is not a war the United States is winning, we have not accomplished our goals, and it’s time to get out. And I just talked to one woman whose husband is in the service, and she said, we are just simply losing too many wonderful young men and women who are wasting their lives over there.
The state is at the vanguard of a movement to prevent citizens from documenting police brutality
With the Obama administration considering federal civil-rights investigations into police brutality, some local police departments have reacted not by cleaning up their act, but instead by intensifying their ongoing efforts to stop citizens from even documenting police misconduct in the first place.
Earlier this summer, Rochester authorities arrested Emily Good for videotaping police while on her own property — and then later used parking tickets to try to punish and intimidate those protesting Good’s arrest. In Las Vegas, it was even worse — the Las Vegas Review-Journalon Friday reported that a police not only arrested Mitchell Crooks but then beat him to a pulp — all for the “crime” of innocently videotaping them from his own driveway. Importantly, Crooks may have been specifically marked for police revenge after he had made headlines in 2002 by documenting Inglewood, California police beating a 16-year-old boy.
The hypocrisy of police trying to stop citizens from videotaping their public actions should be obvious in this, the Patriot Act Age. From warrantless wiretapping to data mining to the proliferation of red-light cameras, the Surveillance State is clearly on the march. And yet, when citizens occasionally exercise their constitutional rights and turn the camera on the Surveillance State itself, they increasingly face the threat of police retribution.
No locale singularly exemplifies this contradiction better than Massachusetts. There, a man named Simon Glik was arrested for taping police officers who seemed to be beating someone on the street. TheBoston Globe reports that “the effort [by] police to intimidate [Glik] was clear: The cops warned Simon that, if convicted, he’d never be able to practice law… he was forced to put his job search on hold and to spend money to hire a lawyer to defend him[self]… and the police erased all but one snippet of [his] recording.” Worse, when Glik filed a lawsuit for false arrest, the city — which has been arresting others for videotaping as well — used the case as an opportunity to try to get a federal court to set a national legal precedent officially sanctioning such arrests (the court has not yet ruled).
As all of this has been unfolding, the same Massachusetts law enforcement establishment so intent on stopping surveillance of police has started building a system of mass surveillance previously unheard of in the United States. As the Boston Herald reports:
Civil libertarians are raising the alarm over the state’s plans to create a Big Brother database that could map drivers’ whereabouts with police cruiser-mounted scanners that capture thousands of license plates per hour — storing that information indefinitely where local cops, states, feds and prosecutors could access it as they choose…
“People who aren’t wanted for a crime, all of their information is stored in a database that is shared with another government agency,” the ACLU’s Kade Crawford said.
The double standards here are stunning.
In arguing that arrests of citizen videographers is legal, Massachusetts officials cite the state’s 1968 “two-party” consent statute, which requires all parties to consent to being recorded. As the Boston Globe notes, that law wasn’t intended to protect police against oversight — it was “intended to protect the privacy rights of individuals’ after “a series of high-profile cases involving private detectives who were recording people without their consent.” And indeed, the New England Center for Investigative Reporting notes that in Pennsylvania, one of the other 12 “two-party” states, police that had been arresting videographers were recently compelled “to adopt a written policy confirming the legality of videotaping police while on duty.”
Nonetheless, Massachusetts officials are aggressively trying to twist the 4-decades-old “two-party” law protecting citizens’ civil liberties into one limiting those civil liberties. Yet, at the very same time, their Big Brother database project completely ignores the “two party” principle — it is based on the idea that police have an inherent right to record your driving without your consent.
The ideology that ties together up these seemingly conflicting positions is one of privilege. Essentially, Massachusetts law enforcement officials are suggesting that a police officer must agree to be surveilled in a public space, but a mere rank-and-file citizen does not have to agree to be similarly surveilled. In other words, Massachusetts seems to believe a police officer is entitled to special protections that citizens should not have.
Of course, just a few centuries ago, Massachusetts was the very place where foment against this very form of tyrannical thinking first took hold. Out of that uprising came the American Revolution and then a Constitution specifically guaranteeing “equal protection” under the law — a constitution based on protecting citizens from government power, not the other way around. That this principle is under assault in the original cradle of democracy shows just how far the Surveillance State is now willing to go to protect itself.
- David Sirota is a best-selling author of the new book “Back to Our Future: How the 1980s Explain the World We Live In Now.” He hosts the morning show on AM760 in Colorado. E-mail him at firstname.lastname@example.org, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com. More: David Sirota
Michael Moore (per Avedon Carol) on what many don’t know we had, and when it all began to end. (I added all the paragraphing; I wanted to emphasize that great list of lost benefits in the now-gone post-war world.)
From time to time, someone under 30 will ask me, “When did this all begin, America’s downward slide?”
They say they’ve heard of a time when working people could raise a family and send the kids to college on just one parent’s income (and that college in states like California and New York was almost free).
That anyone who wanted a decent paying job could get one.
That people only worked five days a week, eight hours a day, got the whole weekend off and had a paid vacation every summer.
That many jobs were union jobs, from baggers at the grocery store to the guy painting your house, and this meant that no matter how “lowly” your job was you had guarantees of a pension, occasional raises, health insurance and someone to stick up for you if you were unfairly treated.
Young people have heard of this mythical time – but it was no myth, it was real. And when they ask, “When did this all end?”, I say, “It ended on this day: August 5th, 1981.”
Read that list again; it’s worth your time. This really is a lost world, isn’t it, a world long gone.
Moore goes on to talk about the PATCO strike, and how striking a move (no pun intended) the Reagan decision to fire all the strikers was, considering that the union supported Reagan in 1980.
By the way, notice the complicity of the AFL-CIO in that anti-union coup:
The biggest organization of unions in America told its members to cross the picket lines of the air traffic controllers and go to work. And that’s just what these union members did. Union pilots, flight attendants, delivery truck drivers, baggage handlers – they all crossed the line and helped to break the strike. And union members of all stripes crossed the picket lines and continued to fly.
They did it to themselves. (This, by the way, is why the “hippies” of that day had trouble with union members.Contra Kevin Drum’s analysis, hippies reached out and were rejected; welcome to the world of Reagan Democrats.)
But I want to focus primarily on that list — on the archeology of it. Again, what a stunning array of benefits. And for anyone thirty years old or less, it describes a time they’ve never even seen — and never will.
Jury Still Out on New Orleans Police Accused of Shooting Unarmed Katrina Survivors on Danziger Bridge
This week federal prosecutors in New Orleans finished presenting their case against police officers involved in the infamous Danziger Bridge shooting in the days after Hurricane Katrina. Four police officers are charged with shooting six unarmed civilians, killing two. A fifth officer is accused of helping them cover up their crimes. On Wednesday, the trial culminated in final arguments, leaving the case in a jury’s hands. A verdict could come as early as today.* We are joined in New Orleans by independent journalist Jordan Flaherty, who has been in the courtroom following the case, and Norris Henderson, a longtime community organizer and former co-director of Safe Streets/Strong Communities, a group that played a key role in helping the families of the victims in this case come forward to seek justice. “At the closing statement, one of the most moving moments was Bobbi Bernstein, the federal prosecutor, said, ‘The real heroes are these families who continued struggling against a justice system that had failed them for all these years.'” says Flaherty.
*UPDATE: The five New Orleans police officers have been convicted in the deaths of two people and the injuring of four others on the Danziger Bridge in the days after Hurricane Katrina.
New Exposé Tracks ALEC-Private Prison Industry Effort to Replace Unionized Workers with Prison Labor
Many of the toughest sentencing laws responsible for the explosion of the U.S. prison population were drafted by the American Legislative Exchange Council, which helps corporations write model legislation. Now a new exposé reveals ALEC has paved the way for states and corporations to replace unionized workers with prison labor. We speak with Mike Elk, contributing labor reporter at The Nation magazine. He says ALECand private prison companies “put a mass amount of people in jail, and then they created a situation where they could exploit that.” Elk notes that in 2005 more than 14 million pounds of beef infected with rat feces processed by inmates were not recalled, in order to avoid drawing attention to how many products are made by prison labor. [includes rush transcript]
LABOR / THE ECONOMY
from Glenn Greenwald by Yves Smith
By Yves Smith
For most citizens, one of the mysteries of life after the crisis is why such a massive act of looting has gone unpunished. We’ve had hearings, investigations, and numerous journalistic and academic post mortems. We’ve also had promises to put people in jail by prosecutors like Iowa’s attorney general Tom Miller walked back virtually as soon as they were made.
Yet there is undeniable evidence of institutionalized fraud, such as widespread document fabrication in foreclosures (mentioned in the motion filed by New York state attorney general Eric Schneiderman opposing the $8.5 billion Bank of America settlement with investors) and the embedding of impermissible charges (known as junk fees and pyramiding fees) in servicing software, so that someone who misses a mortgage payment or two is almost certain to see it escalate into a foreclosure. And these come on top of a long list of runup-to-the-crisis abuses, including mortgage bonds having more dodgy loans in them than they were supposed to, banks selling synthetic or largely synthetic collateralized debt obligations as being just the same as ones made of real bonds when the synthetics were created for the purpose of making bets against the subprime market and selling BBB risk at largely AAA prices, and of course, phony accounting at the banks themselves.
Louise Story and Gretchen Morgenson lament this sorry state of affairs in an article today on a $10 billion lawsuit expected to be filed today by AIG against Bank of American over dodgy mortgage securities:
The private actions stand in stark contrast to the few credit crisis cases brought by the Justice Department, which is wrapping up many of its inquiries into big banks without filing any charges. The lack of prosecutions — the Justice Department has brought three cases against employees at large financial companies and none against executives at large banks — has left private litigants, mainly investors and consumers, standing more or less alone in trying to hold financial parties accountable.
“When federal authorities don’t fulfill their obligation to enforce the law, they essentially give an imprimatur to the financial entities to do whatever they want and disregard the law,” said Kathleen C. Engel, a professor at Suffolk University Law School in Boston. “To the extent there are places where shareholders and borrowers can pursue claims, they are really serving the function of the government. They are our private attorneys general.”
But this isn’t really true. Even when the plaintiffs in these suits prevail, it just transfers funds from one company to another. The real perps, the executives and line managers involved in the bad behavior, almost always get off scot free. The few cases where we have seen individual executives targeted, such as Angelo Mozilo of Countrywide and Gary Crittenden of Citigroup, the fines are chump change compared to their compensation.
This sorry situation parallels the aftermath of the Great Crash in 1929. Precisely because the securities laws were weak to non-existent, conduct that was fraudulent by common sense standards (“deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage“) was kosher under the law. The only high profile case in the wake of that crisis was the remarkable fall from grace of patrician Richard Whitney, former head of the New York stock exchange. As the marvelous book Once in Golconda recounts, Whitney had the unfortunate combination of having a very costly lifestyle and being a terrible speculator. He filled the gap for a while by borrowing from friends but finally resorted to embezzlement. Whitney, unlike our modern miscreants, ‘fessed up to his crimes when they came to light, took responsibility for them, and went to Sing Sing.
But that era’s publicity and investigations did lead to well though out, durable financial reforms that served the US well for over 50 years Why have they proven to be useless in the new millennium?
It would take a book to recount how once well regulated financial markets were turned back into a casino, and one of the best one stop accounts of the legal changes is Frank Partnoy’s Infectious Greed. But let me describe some of the major culprits.
The first measure, and its effects go well beyond the financial markets, was to make the courts far more friendly to business. A well funded effort dates back to the early 1980s to change the teaching of law to produce more pro-business attitudes. An overview of the law and economics movement from “ECONNED”:
The third avenue for promoting and institutionalizing the “free market” ideology was inculcating judges. It was one of the most far-reaching actions the radical right wing could take. Precedents are powerful, and the bench turns over slowly… While conservative scholars like Richard Posner and Richard Epstein at the University of Chicago trained some of the initial right-leaning jurists, attorney Henry Manne gave the effort far greater reach. Manne established his “law and economics” courses for judges, which grew into the Law and Economics Center, which in 1980 moved from the University of Miami to Emory in Atlanta and eventually to George Mason University.
Manne had gotten the backing of over 200 conservative sponsors, including some known for extreme right-wing views, such as the Adolph Coors Company, plus many of the large U.S. corporations that were also funding the deregulation effort….
Manne approached his effort not simply as education, but as a political movement… The program expanded to include seminars for judges, training in legal issues for economists, and an economics institute for Congressional aides…
It is hard to overstate the change this campaign produced, namely, a major shift in jurisprudence. As Steven Teles of the University of Maryland noted:
Moving law and economics’ status from “off the wall” to “controversial but respectable” required a combination of celebrity and organizational entrepreneurship. . . . Mannes’ programs for federal judges helped erase law and economics’ stigma, since if judges— the symbol of legal professional respectability—took the ideas seriously, they could not be crazy and irresponsible.
Now why was the law and economics vantage seen as “off the wall?… The law and economics promoters sought to colonize legal minds. And, to a large extent they succeeded. For centuries (literally), jurisprudence had been a multifaceted subject aimed at ordering human affairs. The law and economics advocates wanted none of that. They wanted their narrow construct to play as prominent a role as possible.
The second route was getting more conservative judges on the bench. Most readers are probably aware of the ongoing fight over Federal judicial appointments, as both Democratic and Republican administrations seek to install sympathetic jurists, and the opposing party, when it can, fights the effort. But less well known is the state and local analogue to this effort, and here again, the campaign by corporate interests has paid off handsomely.
My favorite illustration is the Alabama Supreme Court. Alabama was once one of the favored states for launching class action litigation, since Alabama residents were particularly keen on handing out big damage awards. The Alabama Supreme Court elections are now the most expensive state supreme court elections in the nation, with the spending exceeding that of Alabama gubernatorial campaigns. And the effort has provided a great return on investment. The Alabama Supreme Court is guaranteed to reduce any punitive damages award to at most $1 million. In the financial arena, the difficulty of launching criminal cases is both statutory and bureaucratic. Securities law, thanks to the Depression-era reforms, is the most favorable grounds for action, since it sets forth a very high standard for disclosure. The critical language come in Rule 10b-5 of the Securities Act of 1934:
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, (a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
The requirement in (b) is particularly important, the prohibition against making material omissions. Now with this great weapon, why hasn’t the SEC done more? One basic reason is it can’t pursue criminal prosecutions on its own. It needs to go through the Department of Justice. Needless to say, the DoJ has been missing in action for pretty much all of the Obama administration.
A second reason is that the statute of limitations on securities litigation is effectively three years. Since the market for subprime dreck died permanently in July 2007, it’s too late to file claims using securities law theories (unless they relate to continuing statements in SEC filings). Wronged parties can still use contract law theories, but the standards for fraud are higher (more on that shortly).
The third is that the SEC has been kept budget starved for years, starting in the Clinton Administration. Former SEC chief Arthur Levitt, who was generally industry-friendly but was serious about protecting consumers, was regularly threatened by the Senator from Hedgistan, Joe Lieberman. As a result, the SEC has become incompetent at pursuing anything other than insider trading cases (it did score a big success in Enron, but seemed unable to build on that).
A fourth barrier is the use of lawyers and accountants as shields. Do you remember the Lehman Repo 105 chicanery, in which it moved over $50 billion off its balance sheet at the end of the quarter in what was pure and simple accounting chicanery? The bankruptcy examiner Anton Valukas concluded there was no basis for criminal charges, and the reason was simple: they’d gotten a UK law firm to bless the ruse.
So even if you aggressively shopped for a dubious opinion to give you cover for something that didn’t pass the smell test, you as executive can bat your baby blues and say, “Gee, I’m just a businessman, I defer to experts on these matters,” and you are home free as far as fraud is concerned.
But….you may squawk, what about going after the unscrupulous lawyers and accountants? Well, it just so happens we can’t bust any more accounting firms, since we are down to four and so they are all too big to fail, and no prosecutors seem willing to sue big white shoe law firms (perhaps because they aren’t terribly well staffed and a large firm would seek to engage in a costly war of attrition, as well as enlist all of its deep pocket fancy firm peers to fund his opponent in the next election). And private plaintiffs are barred from action. As incredible as it seems, if an investor loses money, say because a crooked accounting firm cooked the books, he can’t sue the accountant. Only his client, meaning the company that hired him, can. Again from “ECONNED”:
[The Supreme Court, via a 1994 decision, reduced investor protection. In a stunning show of illogic, the court ruled in Central Bank of Denver v. First Interstate Bank of Denver that plaintiffs could not sue advisors like investment bankers, accountants, and lawyers for aiding and abetting securities fraud. A suit against them could only proceed if the defendant was charged with primary liability, meaning the damaged party was his client. This was a radical decision, reversing sixty years of court and administrative rulings. Thus, for instance, if an accountant signed off on fraudulent financial statements that an investor relied upon, the investor could no longer pursue the accountant to recover any losses that resulted from the unraveling of the fraud. Yet in criminal law, an accessory, like the car driver in a bank robbery, is subject to prosecution along with the gunmen who took the cash.
In theory, the SEC has another big weapon it could use, Sarbanes Oxley. Since Sarbanes Oxley became law in 2002, Sections 302, 404, and 906 of that act have required executives to establish and maintain adequate systems of internal control within their companies. In addition, they must regularly test such controls to see that they are adequate and report their findings to shareholders (through SEC reports on Form 10-Q and 10-K) and their independent accountants. “Knowingly” making false section 906 certifications is subject to fines of up to $1 million and imprisonment of up to ten years; “willful” violators face fines of up to $5 million and jail time of up to 20 years.
This makes for a politically less risky path for the SEC. It could file a civil claim, and if it prevailed, it has what would seem to be a virtual slam dunk in then filing criminal charges, since the language of the two sections (302 and 906) track each other.
It is blooming obvious that for a financial firm, “internal control” has to include risk controls, and at virtually all the big financial firms, they were woefully deficient, by design. Risk management is politically weak; the staff are typically trying to curry favor with the business side to get more lucrative jobs with them; risk managers are generally loath to tangle in a serious way with profit centers. It’s almost certain that you can’t have an adequate system of internal controls if you all of a sudden drop multi-billion dollar loss bombs on investors out of nowhere. Banks are not supposed to gamble with depositors’ and investors’ money like an out-of-luck punter at a racetrack. It’s pretty clear many of the banks who went to the wall or had to be bailed out because they were too big to fail, and we can toss AIG in here as well, since they had no idea they were betting the farm every day with the risks they were taking.
So why hasn’t the SEC used Sarbox? Our reading is they were deterred by a widely overlooked ruling in SEC v. Mozilo, in which the judge (with no explanation) nixed that the SEC could file both securities laws charges and Sarbox charges in that case (the judge treated it as double dipping). The judge’s negative ruling on a separate Sarbox charge on securities violations does not rule out other types of Sarbox charges, but the SEC incorrectly seems to have reacted this way. Remember, the part of Sarbox that gave a lot of boards fits was that the CEO and the CFO certify the adequacy of internal controls (Section 404). That goes above and beyond traditional SEC representations.
What about legal theories for fraud ex securities law? If a party is suing for fraud in most other commercial contexts, they must establish intent, that is, that they meant to deceive. That isn’t as easy as it sounds. Even if you find damning-sounding e-mails, as the SEC did in its failed effort to sue the managers of two Bear Stearns hedge funds, there are often other communiques in the same time frame that can muddy the waters. It is frequently possible for people who have engaged in bad conduct to offer up plausible-sounding rationales and point to actions that appear to support it.
So the only solution, it seems, is to go back and have another go at rewriting the rules. It’s worth noting that Dodd Frank got at none of these issues, so it appears we need to have another crisis to create a second opportunity. And it may be starting as we speak.
Yves Smith is the creator of the blog Naked Capitalism and author of “ECONNED: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism“
from AMERICAblog: A great nation deserves the truth by John Aravosis (DC)
The Great Recession of 2008 has morphed into the North Atlantic Recession: it is mainly Europe and the United States, not the major emerging markets, that have become mired in slow growth and high unemployment. And it is Europe and the US that are marching, alone and together, to the denouement of a grand debacle. A busted bubble led to a massive Keynesian stimulus that averted a much deeper recession, but that also fueled substantial budget deficits. The response – massive spending cuts – ensures that unacceptably high levels of unemployment (a vast waste of resources and an oversupply of suffering) will continue, possibly for years.
But, even as Europe’s leaders promised that help was on the way, they doubled down on the belief that non-crisis countries must cut spending. The resulting austerity will hinder Europe’s growth, and thus that of its most distressed economies: after all, nothing would help Greece more than robust growth in its trading partners. And low growth will hurt tax revenues, undermining the proclaimed goal of fiscal consolidation.
The end of the stimulus itself is contractionary. And, with housing prices continuing to fall, GDP growth faltering, and unemployment remaining stubbornly high (one of six Americans who would like a full-time job still cannot get one), more stimulus, not austerity, is needed – for the sake of balancing the budget as well. The single most important driver of deficit growth is weak tax revenues, owing to poor economic performance; the single best remedy would be to put Americans back to work. The recent debt deal is a move in the wrong direction.
But the real problem stems from another form of contagion: bad ideas move easily across borders, and misguided economic notions on both sides of the Atlantic have been reinforcing each other. The same will be true of the stagnation that those policies bring.
Americans are deeply confused about why the economy is so bad – and their President isn’t telling them. In fact, the White House apparently has decided to join with Republicans and blame it on the long-term budget deficit.
Before I turn to the President, though, let’s be clear: The lousy economy is due to insufficient demand. Consumers – who are 70 percent of the economy — can’t and won’t buy because they’re running out of cash. They can’t borrow against homes that are worth a third less than they were five years ago, and most consumers are bad credit risks anyway because they’re losing their jobs and their wages are dropping. They also have to start saving for the kids’ college or for retirement, which will cut their spending even more.
Without enough consumers, businesses won’t hire enough people and pay them enough to reverse the vicious cycle. So we’re dead in the water. Even the stock market has caught on to the truth.
Which means government has to step in to boost the economy – as it has every time the economy has fallen into recession over the last eight downturns. Include the massive spending on World War II that lifted us out of the Great Recession, and it’s nine. The Fed can help, but it can’t do it alone. And it’s least helpful after a huge asset bubble has burst because the financial system won’t channel low interest rates where they’re most needed – to small businesses and average consumers.
This time we tried one stimulus that was way too small relative to the size of the falloff in demand that started in 2008 — especially given that states and locales cut their spending by almost as much as the federal government increased it.
So we need another – a bold jobs plan. (I’ve offered an outline of what it might look like in prior posts.)
Which gets me to the President. Even though the President’s two former top economic advisors (Larry Summers and Christy Roemer) have called for a major fiscal boost to the economy, the President has remained mum. Why?
I’m told White House political operatives are against a bold jobs plan. They believe the only jobs plan that could get through Congress would be so watered down as to have almost no impact by Election Day. They also worry the public wouldn’t understand how more government spending in the near term can be consistent with long-term deficit reduction. And they fear Republicans would use any such initiative to further bash Obama as a big spender.
So rather than fight for a bold jobs plan, the White House has apparently decided it’s politically wiser to continue fighting about the deficit. The idea is to keep the public focused on the deficit drama – to convince them their current economic woes have something to do with it, decry Washington’s paralysis over fixing it, and then claim victory over whatever outcome emerges from the process recently negotiated to fix it. They hope all this will distract the public’s attention from the President’s failure to do anything about continuing high unemployment and economic anemia.
When I first heard this I didn’t want to believe it. But then I listened to the President’s statement yesterday in the midst of yesterday’s 634-point drop in the Dow.
At a time when the nation’s eyes were on him, seeking an answer to what was happening, he chose not to talk about the need for a bold jobs plan but to talk instead about the budget deficit – as if it were responsible for the terrible economy, including Wall Street’s plunge. He spoke of Standard & Poor’s decision to downgrade the nation’s debt as proof that Washington’s political paralysis over deficit reduction “could do enormous damage to our economy and the world’s,” and said the nation could reduce its deficit and jump-start the economy if there was “political will in Washington.”
The President then called upon the nation’s political leadership to stop “drawing lines in the sand.” The lines were obviously Republicans’ insistence on cutting entitlements and enacting a balanced-budget amendment while refusing to raise taxes on the rich, and the Democrats’ insistence on tax increases on the rich while refusing to cut entitlements.
These partisan “lines in the sand” are irrelevant to the current crisis. They’re not even relevant to the budget standoff now that Congress and the President have agreed to a process that postpones the next round of debt-ceiling chicken until after the election.
But that process itself will offer enough distraction over coming months to let the White House avoid coming up with a bold jobs plan – even if the nation succumbs to a double dip.
The drama continues this week and next as congressional leaders decide on their “super committee” of 12 lawmakers (six from each party). It then runs for another three months as the super committee decides on $1.2 trillion of proposed cuts, culminating in a tumultuous December when Congress votes on the package. Then we’ll have more drama if, as seems likely, Congress votes it down and the budget triggers go into effect – cutting sharply into defense and Medicare. But this stage won’t require any new decisions from Congress or the White House because the cuts happen automatically.
After that, we’re deep into campaign season and very possibly a double dip recession. Republicans will blame “big government” and the President and Democrats will blame Republican intransigence over the budget.
During yesterday’s pep talk, Obama restated his small-bore calls for extending a payroll tax cut that expires at the end of the year, extending unemployment insurance benefits, and creating an ill-defined “infrastructure bank” to create construction jobs. But these policy miniatures were added as a postscript to the debt talk, as if he felt obligated to mention jobs.
There’s still time for political operatives in the White House – and the person they work for – to change their minds. If economic stresses increase, Americans may insist on government doing more. A CNN poll released Monday found 60% believe the nation remains in an economic downturn and conditions are worsening. Only 36% believed that in April.
But for now the President is being badly advised. The magnitude of the current jobs and growth crisis demands a boldness and urgency that’s utterly lacking. As the President continues to wallow in the quagmire of long-term debt reduction, Congress is on summer recess and the rest of Washington is asleep.
The President should present a bold plan, summon lawmakers back to Washington to pass it, and, if they don’t, vow to fight for it right up through Election Day.
Imagine your house is burning. You call the fire department but your call isn’t answered because every fire fighter in town is debating whether there will be enough water to fight fires over the next ten years, even though water is plentiful right now. (Yes, there’s a long-term problem.) One faction won’t even allow the fire trucks out of the garage unless everyone agrees to cut water use. An agency that rates fire departments has just issued a downgrade, causing everyone to hoard water.
While all this squabbling continues, your house burns to the ground and the fire has now spread to your neighbors’ homes. But because everyone is preoccupied with the wrong question (the long-term water supply) and the wrong solution (saving water now), there’s no response. In the end, the town comes up with a plan for the water supply over the next decade, but it’s irrelevant because the whole town has been turned to ashes.
Okay, I exaggerate a bit, but you get the point. The American economy is on the verge of another recession. Most Americans haven’t even emerged from the last one. Consumers (70 percent of the economy) won’t or can’t spend because their major asset is worth a third less than it was five years ago, they can’t borrow as before, and they’re justifiably worried about their jobs and wages. And without customers, businesses won’t expand and hire. So we’re trapped in a vicious cycle that’s getting worse.
But the government won’t come to the rescue by spending more and cutting most peoples’ taxes because it’s obsessed by a so-called “debt crisis” based on budget projections over the next ten years. That obsession – which serves the ideological purposes of right-wing Republicans who really want to shrink government — has even spread to the eat-your-spinach media, deficit hawks in the Democratic Party, and a major (and thoroughly irresponsible) credit-rating agency that’s neither standard nor poor.
Meanwhile, some lazy (or misinformed) commentators are linking our faux debt crisis to Europe’s real one. But the two are entirely different. Several European nations don’t have enough money to repay what they owe their lenders, or even pay the interest. That’s threatening the entire euro-zone.
But there’s no question that the United States has enough money to pay what it owes. We’re the richest nation in the world and we print the money the world relies on. The only question on this side of the pond is whether tea-party Republicans will allow America to pay its bills when the debt-ceiling fight resumes at the end of 2012.
Europe is scared of what’s happening in the United States – but it’s not America’s faux “debt crisis” that’s spooked them. It’s the slowdown here (and the likelihood of another recession), made all the worse as our debt obsession prevents the U.S. government from doing what it should. A slowdown and recession here mean fewer exports from Europe to America. When combined with their genuine debt crisis, this could push Europe’s economy over the edge.
The most important aspect of policy making is getting the problem right. We are slouching toward a double dip because we’re getting the problem wrong. Despite what Standard & Poor’s says, notwithstanding what’s occurring in Europe, and regardless of U.S. budget projections years from now — our current crisis is jobs, wages, and growth. We do not now have a debt crisis.
Every time you hear an American politician analogize the nation’s budget to a family budget (as, sadly, even President Obama has done), you should know the politician is not telling the truth. The truth is just the opposite. Our national budget can and should counteract the shrinkage of family budgets by running larger deficits when families cannot.
Americans are more frightened, economically insecure, and angrier than at any time since the Great Depression. If our lawmakers continue to obsess about the wrong thing and fail to do what must be done – and they don’t explain it to the nation – Americans will only become more fearful, insecure, and angry.
We are slouching toward a double dip, with all the human costs that implies. We don’t have to be. That is the tragedy of our time.
They’re calling it a tax “holiday,” and some holiday it is.
Trillions of dollars that corporations earned and parked overseas (where they “delay” paying U.S. taxes on it) are being invited back into the country by the promise of a lowered tax rate on all money repatriated. The discussion starts at 5%.
That’s correct — if you bring your money back home, you can pay 5% tax on it (more or less, not including deductions and loopholes). As Groucho used to say, “Cut me off a piece of that.”
Here’s Matt Taibbi discussing this on Keith Olbermann’s Countdown. Great segment.
“Rewarding companies for off-shoring their profits” and for keeping their expenses in the high-tax states. The NeoLiberal Party (and project) at work. (By the way, and apropos of none of this, is the Clinton daughter still ahedge-fund employee? Maybe not; just wondering.)
Taibbi is right (starting at about 4:40) — this is the big one in lost revenue. Perhaps $70 billion per year in tax collections since 2004, gone forever.
It’s called the “Freedom to Invest Act” by the way. Nice one; the only freedom the NeoLiberal Party cares about.
For those who want something to ready, here’s Taibbi’s latest write-up (short, clear, Taibbi-esque) on this deal.
And if you really want to stay ahead of the action, watch for Barack Obama’s reaction. Just sayin’.
[Update: For more on Taibbi’s point about how this connects to corporate stock buy-backs, see this follow-on post.]
It was at lunch with the editor of Harper’s Magazine that the subject came up: How does anyone actually live “on the wages available to the unskilled”? And then Barbara Ehrenreich said something that altered her life and resulted, improbably enough, in a bestselling book with almost two million copies in print. “Someone,” she commented, “ought to do the old-fashioned kind of journalism — you know go out there and try it for themselves.” She meant, she hastened to point out on that book’s first page, “someone much younger than myself, some hungry neophyte journalist with time on her hands.”
That was 1998 and, somewhat to her surprise, Ehrenreich soon found herself beginning the first of a whirl of unskilled “careers” as a waitress at a “family restaurant” attached to a big discount chain hotel in Key West, Florida, at $2.43 an hour plus tips. And the rest, of course, is history. The now famous book that resulted, Nickel and Dimed: On (Not) Getting By in America, is just out in its tenth anniversary edition with a new afterword by Ehrenreich — perfectly timed for an American era in which the book’s subtitle might have to be changed to “On (Not) Getting a Job in America.” TomDispatch takes special pride in offering Ehrenreich’s new afterword, adapted and shortened, for a book that, in its latest edition, deserves to sell another million copies. Tom
Nickel and Dimed (2011 Version)
On Turning Poverty into an American Crime
By Barbara Ehrenreich
I completed the manuscript for Nickel and Dimed in a time of seemingly boundless prosperity. Technology innovators and venture capitalists were acquiring sudden fortunes, buying up McMansions like the ones I had cleaned in Maine and much larger. Even secretaries in some hi-tech firms were striking it rich with their stock options. There was loose talk about a permanent conquest of the business cycle, and a sassy new spirit infecting American capitalism. In San Francisco, a billboard for an e-trading firm proclaimed, “Make love not war,” and then — down at the bottom — “Screw it, just make money.”
When Nickel and Dimed was published in May 2001, cracks were appearing in the dot-com bubble and the stock market had begun to falter, but the book still evidently came as a surprise, even a revelation, to many. Again and again, in that first year or two after publication, people came up to me and opened with the words, “I never thought…” or “I hadn’t realized…”
To my own amazement, Nickel and Dimed quickly ascended to the bestseller list and began winning awards. Criticisms, too, have accumulated over the years. But for the most part, the book has been far better received than I could have imagined it would be, with an impact extending well into the more comfortable classes. A Florida woman wrote to tell me that, before reading it, she’d always been annoyed at the poor for what she saw as their self-inflicted obesity. Now she understood that a healthy diet wasn’t always an option. And if I had a quarter for every person who’s told me he or she now tipped more generously, I would be able to start my own foundation.
Even more gratifying to me, the book has been widely read among low-wage workers. In the last few years, hundreds of people have written to tell me their stories: the mother of a newborn infant whose electricity had just been turned off, the woman who had just been given a diagnosis of cancer and has no health insurance, the newly homeless man who writes from a library computer.
At the time I wrote Nickel and Dimed, I wasn’t sure how many people it directly applied to — only that the official definition of poverty was way off the mark, since it defined an individual earning $7 an hour, as I did on average, as well out of poverty. But three months after the book was published, the Economic Policy Institute in Washington, D.C., issued a report entitled “Hardships in America: The Real Story of Working Families,” which found an astounding 29% of American families living in what could be more reasonably defined as poverty, meaning that they earned less than a barebones budget covering housing, child care, health care, food, transportation, and taxes — though not, it should be noted, any entertainment, meals out, cable TV, Internet service, vacations, or holiday gifts. Twenty-nine percent is a minority, but not a reassuringly small one, and other studies in the early 2000s came up with similar figures.
The big question, 10 years later, is whether things have improved or worsened for those in the bottom third of the income distribution, the people who clean hotel rooms, work in warehouses, wash dishes in restaurants, care for the very young and very old, and keep the shelves stocked in our stores. The short answer is that things have gotten much worse, especially since the economic downturn that began in 2008.
When you read about the hardships I found people enduring while I was researching my book — the skipped meals, the lack of medical care, the occasional need to sleep in cars or vans — you should bear in mind that those occurred in thebest of times. The economy was growing, and jobs, if poorly paid, were at least plentiful.
In 2000, I had been able to walk into a number of jobs pretty much off the street. Less than a decade later, many of these jobs had disappeared and there was stiff competition for those that remained. It would have been impossible to repeat myNickel and Dimed “experiment,” had I had been so inclined, because I would probably never have found a job.
For the last couple of years, I have attempted to find out what was happening to the working poor in a declining economy — this time using conventional reporting techniques like interviewing. I started with my own extended family, which includes plenty of people without jobs or health insurance, and moved on to trying to track down a couple of the people I had met while working on Nickel and Dimed.
This wasn’t easy, because most of the addresses and phone numbers I had taken away with me had proved to be inoperative within a few months, probably due to moves and suspensions of telephone service. I had kept in touch with “Melissa” over the years, who was still working at Wal-Mart, where her wages had risen from $7 to $10 an hour, but in the meantime her husband had lost his job. “Caroline,” now in her 50s and partly disabled by diabetes and heart disease, had left her deadbeat husband and was subsisting on occasional cleaning and catering jobs. Neither seemed unduly afflicted by the recession, but only because they had already been living in what amounts to a permanent economic depression.
Media attention has focused, understandably enough, on the “nouveau poor” — formerly middle and even upper-middle class people who lost their jobs, their homes, and/or their investments in the financial crisis of 2008 and the economic downturn that followed it, but the brunt of the recession has been borne by the blue-collar working class, which had already been sliding downwards since de-industrialization began in the 1980s.
In 2008 and 2009, for example, blue-collar unemployment was increasing three times as fast as white-collar unemployment, and African American and Latino workers were three times as likely to be unemployed as white workers. Low-wage blue-collar workers, like the people I worked with in this book, were especially hard hit for the simple reason that they had so few assets and savings to fall back on as jobs disappeared.
How have the already-poor attempted to cope with their worsening economic situation? One obvious way is to cut back on health care. TheNew York Times reported in 2009 that one-third of Americans could no longer afford to comply with their prescriptions and that there had been a sizable drop in the use of medical care. Others, including members of my extended family, have given up their health insurance.
Food is another expenditure that has proved vulnerable to hard times, with the rural poor turning increasingly to “food auctions,” which offer items that may be past their sell-by dates. And for those who like their meat fresh, there’s the option of urban hunting. In Racine, Wisconsin, a 51-year-old laid-off mechanic told me he was supplementing his diet by “shooting squirrels and rabbits and eating them stewed, baked, and grilled.” In Detroit, where the wildlife population has mounted as the human population ebbs, a retired truck driver was doing a brisk business in raccoon carcasses, which he recommends marinating with vinegar and spices.
The most common coping strategy, though, is simply to increase the number of paying people per square foot of dwelling space — by doubling up or renting to couch-surfers.
It’s hard to get firm numbers on overcrowding, because no one likes to acknowledge it to census-takers, journalists, or anyone else who might be remotely connected to the authorities.
In Los Angeles, housing expert Peter Dreier says that “people who’ve lost their jobs, or at least their second jobs, cope by doubling or tripling up in overcrowded apartments, or by paying 50 or 60 or even 70 percent of their incomes in rent.”According to a community organizer in Alexandria, Virginia, the standard apartment in a complex occupied largely by day laborers has two bedrooms, each containing an entire family of up to five people, plus an additional person layingclaim to the couch.
No one could call suicide a “coping strategy,” but it is one way some people have responded to job loss and debt. There are no national statistics linking suicide to economic hard times, but the National Suicide Prevention Lifeline reported more than a four-fold increase in call volume between 2007 and 2009, and regions with particularly high unemployment, like Elkhart, Indiana, have seen troubling spikes in their suicide rates. Foreclosure is often the trigger for suicide — or, worse, murder-suicides that destroy entire families.
“Torture and Abuse of Needy Families”
We do of course have a collective way of ameliorating the hardships of individuals and families — a government safety net that is meant to save the poor from spiraling down all the way to destitution. But its response to the economic emergency of the last few years has been spotty at best. The food stamp program has responded to the crisis fairly well, to the point where it now reaches about 37 million people, up about 30% from pre-recession levels. But welfare — the traditional last resort for the down-and-out until it was “reformed” in 1996 — only expanded by about 6% in the first two years of the recession.
The difference between the two programs? There is a right to food stamps. You go to the office and, if you meet the statutory definition of need, they help you. For welfare, the street-level bureaucrats can, pretty much at their own discretion, just say no.
Take the case of Kristen and Joe Parente, Delaware residents who had always imagined that people turned to the government for help only if “they didn’t want to work.” Their troubles began well before the recession, when Joe, a fourth-generation pipe-fitter, sustained a back injury that left him unfit for even light lifting. He fell into a profound depression for several months, then rallied to ace a state-sponsored retraining course in computer repairs — only to find that those skills are no longer in demand. The obvious fallback was disability benefits, but — catch-22 — when Joe applied he was told he could not qualify without presenting a recent MRI scan. This would cost $800 to $900, which the Parentes do not have; nor has Joe, unlike the rest of the family, been able to qualify for Medicaid.
When they married as teenagers, the plan had been for Kristen to stay home with the children. But with Joe out of action and three children to support by the middle of this decade, Kristen went out and got waitressing jobs, ending up, in 2008, in a “pretty fancy place on the water.” Then the recession struck and she was laid off.
Kristen is bright, pretty, and to judge from her command of her own small kitchen, probably capable of holding down a dozen tables with precision and grace. In the past she’d always been able to land a new job within days; now there was nothing. Like 44% of laid-off people at the time, she failed to meet the fiendishly complex and sometimes arbitrary eligibility requirements for unemployment benefits. Their car started falling apart.
So the Parentes turned to what remains of welfare — TANF, or Temporary Assistance to Needy Families. TANF does not offer straightforward cash support like Aid to Families with Dependent Children, which it replaced in 1996. It’s an income supplementation program for working parents, and it was based on the sunny assumption that there would always be plenty of jobs for those enterprising enough to get them.
After Kristen applied, nothing happened for six weeks — no money, no phone calls returned. At school, the Parentes’ seven-year-old’s class was asked to write out what wish they would present to a genie, should a genie appear. Brianna’s wish was for her mother to find a job because there was nothing to eat in the house, an aspiration that her teacher deemed too disturbing to be posted on the wall with the other children’s requests.
When the Parentes finally got into “the system” and began receiving food stamps and some cash assistance, they discovered why some recipients have taken to calling TANF “Torture and Abuse of Needy Families.” From the start, the TANF experience was “humiliating,” Kristen says. The caseworkers “treat you like a bum. They act like every dollar you get is coming out of their own paychecks.”
The Parentes discovered that they were each expected to apply for 40 jobs a week, although their car was on its last legs and no money was offered for gas, tolls, or babysitting. In addition, Kristen had to drive 35 miles a day to attend “job readiness” classes offered by a private company called Arbor, which, she says, were “frankly a joke.”
Nationally, according to Kaaryn Gustafson of the University of Connecticut Law School, “applying for welfare is a lot like being booked by the police.” There may be a mug shot, fingerprinting, and lengthy interrogations as to one’s children’s true paternity. The ostensible goal is to prevent welfare fraud, but the psychological impact is to turn poverty itself into a kind of crime.
How the Safety Net Became a Dragnet
The most shocking thing I learned from my research on the fate of the working poor in the recession was the extent to which poverty has indeed been criminalized in America.
Perhaps the constant suspicions of drug use and theft that I encountered in low-wage workplaces should have alerted me to the fact that, when you leave the relative safety of the middle class, you might as well have given up your citizenship and taken residence in a hostile nation.
Most cities, for example, have ordinances designed to drive the destitute off the streets by outlawing such necessary activities of daily life as sitting, loitering, sleeping, or lying down. Urban officials boast that there is nothing discriminatory about such laws: “If you’re lying on a sidewalk, whether you’re homeless or a millionaire, you’re in violation of the ordinance,” a St. Petersburg, Florida, city attorney stated in June 2009, echoing Anatole France’s immortal observation that “the law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges…”
In defiance of all reason and compassion, the criminalization of poverty has actually intensified as the weakened economy generates ever more poverty. So concludes a recent study from the National Law Center on Poverty and Homelessness, which finds that the number of ordinances against the publicly poor has been rising since 2006, along with the harassment of the poor for more “neutral” infractions like jaywalking, littering, or carrying an open container.
The report lists America’s ten “meanest” cities — the largest of which include Los Angeles, Atlanta, and Orlando — but new contestants are springing up every day. In Colorado, Grand Junction’s city council is considering a ban on begging; Tempe, Arizona, carried out a four-day crackdown on the indigent at the end of June. And how do you know when someone is indigent? As a Las Vegas statute puts it, “an indigent person is a person whom a reasonable ordinary person would believe to be entitled to apply for or receive” public assistance.
That could be me before the blow-drying and eyeliner, and it’s definitely Al Szekeley at any time of day. A grizzled 62-year-old, he inhabits a wheelchair and is often found on G Street in Washington, D.C. — the city that is ultimately responsible for the bullet he took in the spine in Phu Bai, Vietnam, in 1972.
He had been enjoying the luxury of an indoor bed until December 2008, when the police swept through the shelter in the middle of the night looking for men with outstanding warrants. It turned out that Szekeley, who is an ordained minister and does not drink, do drugs, or cuss in front of ladies, did indeed have one — for “criminal trespassing,” as sleeping on the streets is sometimes defined by the law. So he was dragged out of the shelter and put in jail.
“Can you imagine?” asked Eric Sheptock, the homeless advocate (himself a shelter resident) who introduced me to Szekeley. “They arrested a homeless man in a shelter for being homeless?”
The viciousness of the official animus toward the indigent can be breathtaking. A few years ago, a group called Food Not Bombs started handing out free vegan food to hungry people in public parks around the nation. A number of cities, led by Las Vegas, passed ordinances forbidding the sharing of food with the indigent in public places, leading to the arrests of several middle-aged white vegans.
One anti-sharing law was just overturned in Orlando, but the war on illicit generosity continues. Orlando is appealing the decision, and Middletown, Connecticut, is in the midst of a crackdown. More recently, Gainesville, Florida, began enforcing a rule limiting the number of meals that soup kitchens may serve to 130 people in one day, and Phoenix, Arizona, has been using zoning laws to stop a local church from serving breakfast to homeless people.
For the not-yet-homeless, there are two main paths to criminalization, and one is debt. Anyone can fall into debt, and although we pride ourselves on the abolition of debtors’ prison, in at least one state, Texas, people who can’t pay fines for things like expired inspection stickers may be made to “sit out their tickets” in jail.
More commonly, the path to prison begins when one of your creditors has a court summons issued for you, which you fail to honor for one reason or another, such as that your address has changed and you never received it. Okay, now you’re in “contempt of the court.”
Or suppose you miss a payment and your car insurance lapses, and then you’re stopped for something like a broken headlight (about $130 for the bulb alone). Now, depending on the state, you may have your car impounded and/or face a steep fine — again, exposing you to a possible court summons. “There’s just no end to it once the cycle starts,” says Robert Solomon of Yale Law School. “It just keeps accelerating.”
The second — and by far the most reliable — way to be criminalized by poverty is to have the wrong color skin. Indignation runs high when a celebrity professor succumbs to racial profiling, but whole communities are effectively “profiled” for the suspicious combination of being both dark-skinned and poor. Flick a cigarette and you’re “littering”; wear the wrong color T-shirt and you’re displaying gang allegiance. Just strolling around in a dodgy neighborhood can mark you as a potential suspect. And don’t get grumpy about it or you could be “resisting arrest.”
In what has become a familiar pattern, the government defunds services that might help the poor while ramping up law enforcement. Shut down public housing, then make it a crime to be homeless. Generate no public-sector jobs, then penalize people for falling into debt. The experience of the poor, and especially poor people of color, comes to resemble that of a rat in a cage scrambling to avoid erratically administered electric shocks. And if you should try to escape this nightmare reality into a brief, drug-induced high, it’s “gotcha” all over again, because that of course is illegal too.
One result is our staggering level of incarceration, the highest in the world. Today, exactly the same number of Americans — 2.3 million — reside in prison as in public housing. And what public housing remains has become ever more prison-like, with random police sweeps and, in a growing number of cities, proposed drug tests for residents. The safety net, or what remains of it, has been transformed into a dragnet.
It is not clear whether economic hard times will finally force us to break the mad cycle of poverty and punishment. With even the official level of poverty increasing — to over 14% in 2010 — some states are beginning to ease up on the criminalization of poverty, using alternative sentencing methods, shortening probation, and reducing the number of people locked up for technical violations like missing court appointments. But others, diabolically enough, are tightening the screws: not only increasing the number of “crimes,” but charging prisoners for their room and board, guaranteeing they’ll be released with potentially criminalizing levels of debt.
So what is the solution to the poverty of so many of America’s working people? Ten years ago, when Nickel and Dimed first came out, I often responded with the standard liberal wish list — a higher minimum wage, universal health care, affordable housing, good schools, reliable public transportation, and all the other things we, uniquely among the developed nations, have neglected to do.
Today, the answer seems both more modest and more challenging: if we want to reduce poverty, we have to stop doing the things that make people poor and keep them that way. Stop underpaying people for the jobs they do. Stop treating working people as potential criminals and let them have the right to organize for better wages and working conditions.
Stop the institutional harassment of those who turn to the government for help or find themselves destitute in the streets. Maybe, as so many Americans seem to believe today, we can’t afford the kinds of public programs that would genuinely alleviate poverty — though I would argue otherwise. But at least we should decide, as a bare minimum principle, to stop kicking people when they’re down.
Barbara Ehrenreich is the author of a number of books, most recently Bright-Sided: How the Relentless Promotion of Positive Thinking Has Undermined America. This essay is a shortened version of a new afterword to her bestselling book Nickel and Dimed: On (Not) Getting By in America, 10th Anniversary Edition, just released by Picador Books.
Excerpted from Nickel and Dimed: On (Not) Getting By in America, 10th Anniversary Edition, published August 2nd by Picador USA. New afterword © 2011 by Barbara Ehrenreich. Excerpted by arrangement with Metropolitan Books, an imprint of Henry Holt and Company, LLC. All rights reserved.
from Glenn Greenwald
By Yves Smith
One of the most mesmerizing aspects of the market rout of the last week is the decline in Bank of America’s stock price. It fell a stunning 20% yesterday, and even with a strong rebound today, it closed over 22% below its level of two week ago. That puts it well below half of the book value, which is a serious vote of no confidence. An even more troubling sign is that its credit default swaps, which strongly influence the bank’s cost of raising new funds in the bond market, have also shown considerable decay.
Yet officials at the Financial Stability Oversight Council, which had an emergency conference call last night, as well as many equity analysts believe that banks in general, and Bank of America in particular, have good liquid reserves and are in a much better position than they were going into the crisis.
So why is Bank of America at risk? The short answer is that it may be insolvent even if it is liquid. Consider two individuals. One makes only $30,000 a year but spends $50,000. He inherited 20 Picassos worth at least $1 million each even in a terrible art market. He has arranged to sell one which he figures will cover his expenses for a very long time. However, the buyer, who pretended to be from a reputable gallery, instead absconds with the painting. Until the owner sells a second painting, he is scrambling for cash. No one doubts that he will be money good, but he is having trouble raising the funds right now.
Consider a second individual. He makes $70,000 a year and his expenses are $60,000. But a friend lent him $500,000 personally to start a business, and that never got off the ground. They have a former written agreement, but the borrower pays no cash interest (his friend is treating the annual interest due as a gift under IRS rules). The note is due in five years but they plan to replace the old loan with a new one if he can’t repay, which looks certain.
The lender gets in a financial pickle himself, and enters into agreement with Mr. Tough Collector to sell some assets to raise cash. Due to inartful drafting by his attorney, the $500,000 loan gets transferred to Mr. Tough Collector. So our hapless entrepreneur is going to face a shakedown by Mr. Tough Collector in five years, since absent winning the lotto, he looks unlikely to have $500,000, and will probably have to go bankrupt.
Bank of America’s situation is a lot like that of the borrower who has a looming obligation he can’t meet. But unlike having a well identified big debt to pay down the road, the financial behemoth faces large but uncertain in size payments in the future thanks to pending and growing lawsuits to recover alleged damages resulting from the misdeeds of its acquisition, Countrywide. The current wave of litigation that has investors rattled results from Countrywide telling investors that the loans they were packing into securities were much better than they really were.
The Charlotte bank tried to put most of that problem behind it by entering into a settlement for $8.5 billion, which if they can pull it off, will be the bargain of the century. But that deal is being challenged on multiple fronts, including by New York state attorney general Eric Schneiderman. It looks like that pact either will not go through or will be renegotiated substantially and cost Bank of America a good deal more.
Another blow landed Monday when it was sued by AIG for $10 billion, for the same sort of liability it was seeking to discharge in the settlement. If one investor thinks it is owed $10 billion on $28 billion of mortgages,. or 35%, when the old settlement deal for $8.5 billion was for only about 3.5% of the total amount of bonds, that alone shows how much more Bank of America might have to shell out.
And that’s only one risk Bank of America faces. The meteor-hitting-the-financial-system sort of lawsuit, which no one has dared to launch, would attack originators and packagers like Countrywide for failing to transfer mortgages properly to the mortgages securities in the first place, in violation of their own contract. This astonishing and apparently widespread “securitization fail” is leading to more and more underwater homeowners successfully challenging foreclosures in court. And it is also leading to banks undermining the rule of law. The robosigning scandal of last fall is only the tip of the iceberg. Both Schneiderman and Delaware’s attorney general Beau Biden are investigating conduct by mortgage securitizers on a broad basis. Schneiderman’s objection to the Bank of America settlement notes:
The ultimate failure of Countrywide to transfer complete mortgage loan documentation to the Trusts hampered the Trusts’ ability to foreclose on delinquent mortgages, thereby impairing the value of the notes secured by those mortgages. These circumstances apparently triggered widespread fraud, including BoA’s fabrication of missing documentation.
This language suggests that he may be considering legal action against Bank of America over this issue.
And on top of that, Bank of America has roughly $125 billion of home equity loans and other second liens on its balance sheet. Most of these will be worth nothing in a foreclosure but bank like BofA have taken only relatively modest writedowns because they are applying strong arm tactics to borrowers to persuade them to pay (in preference to the first mortgage which is actually senior). And for home equity loans, which are the overwhelming majority of the bank’s second liens, the banks can count a loan as current even if the borrower sends only a partial payment (this isn’t the case with first mortgages). So they are a great vehicle for extend and pretend.
The danger of BofA lumbering on if it is truly insolvent is that its counterparties and creditors are effectively throwing good money after bad. The poster child of this phenomenon is Greece, which virtually all economists agree is going to have to default on its loans or have them restructured. But since May of 2010, the Eurozone supervising adults have engaged in a succession of rescue packages, the latest of which was economically equivalent to a restructuring, but far short of what was necessary. The ultimate result will be bigger losses than if the problem were dealt with sooner.
Banking expert Chris Whalen, in a Reuters opinion piece today, argues that Bank of America needs to be put into Dodd Frank resolution because it threatens other banks and the economy. But no one has ever used the new Dodd Frank approach, and both the Bank of International Settlements and the well respected Institute for International Finance have said Dodd Frank won’t work on overseas operations. This is a major problem, since the Bank of America subsidiary has major trading operations around the world. Merrill was too big to fail before the crisis, and Dodd Frank’s only viable approach for dealing with major dealer firms is to get them sold, rather than to resolve them.A former Treasury official has also expressed serious doubts. But no banks look like obvious Merrill buyers, ex a subsidy, and it’s hard to imagine subsidies will be easy to arrange with the Tea Party on an anti-spending and anti-Federal Reserve warpath.
So Bank of America is a sword of Damocles over the banking system, and looks more and more troubled as time passes. Yet the history of the crisis and its aftermath suggests that the officialdom is loath to intervene unless forced to. And we know how well that turned out the last time around.
from LBO News from Doug Henwood by Doug Henwood
Here’s something that should revise a lot of clichés, though it probably won’t: less than 3% of U.S. consumption expenditures are on goods made in China. Almost 90% are made in the USA. Of course, the domestic total is boosted by services—but even durable goods are 12% China, 67% U.S. And less than half the value of Chinese imports go to China—55% of the money spent on “Chinese” goods represent processing and other services (like distribution and retailing) provided in the U.S.
This info comes from a new paper by Galina Hale and Bart Hobijn of the San Francisco Fed. Their point was to show that Chinese inflation has minimal influence on U.S. price levels, which is persuasive. But it’s also an antidote to the widespread belief that the U.S. is hollowed out and all the action is in China. We’ve got problems, yes, but we’ve also got resources—resources we can do a lot better with than we are now.
from Informed Comment by Juan
The decision of Standard & Poor to downgrade the credit rating of the United States of America from AAA to AA+ was clearly based on uncertainty in two major areas. The first and least important was the wrangling on the debt ceiling, which took the US to the brink of not being able to meet its debt servicing obligations for as long as the impasse lasted. The second was the increasing refusal of the American business classes to pay their fair share of taxes.
If a couple borrowed a big sum from the bank and had debt servicing obligations of say $10,000 a month, and they were repeatedly late and had a series of big shouting matches in the bank lobby about whether they might not just skip this month’s payment, then the next time they went to that bank for a loan, it would be declined or higher interest would be demanded, since they were clearly acting as though they were a bad bet for the loan officers. Getting a loan has in part to do with reputation, and with the lender’s expectation of being paid back with interest regularly and without delay. When you delay making a payment, you are in essence costing the lender money. If the lender has lots of people asking for loans, why would she make one to the couple that seems flaky?
So the first reason for the downgrade was the irresponsible and flaky behavior of the Tea Party, which created an artificial crisis for the benefit of its Koch Brother patrons, so as to throw more government resources at the super-rich and fewer at ordinary people.
The second reason for the downgrade was Dick Cheney’s insistence on deep tax breaks for the ultra-wealthy, and the Republican Party’s refusal to revise them. Obama wanted to raise taxes on the multi-millionaires and billionaires, but didn’t have the votes in the Senate to do so, and the Republicans threatened to take the welfare of ordinary people hostage (as they just did with the debt ceiling mafiosi tactics). I thought at the time that Obama should have dug in his heels and just called the Republican bluff, since it was clear that they would use those tactics on him at some point anyway.
Standard & Poor is saying that if you project out the US structural deficit– caused mainly by the Bush tax cuts, prescription drugs give-away and debt-financed wars–over the next ten or fifteen years, it is going to get worse and worse because rich people have started refusing to pay their taxes in the US. There is a long-term structural deficit that the Republicans in Congress are refusing to allow the country to redress. In short, they are talking about this chart, which I posted last week:
It would not take a large tax hike on the wealthy to fix the problem. Bill Clinton did it in the early 1990s. People who say that this step would not resolve the difficulty are shills for the super-rich and are refuted by the successfully balanced budgets of the late Clinton period.
People who say that the rich ‘create jobs’ and that taxing them would hurt the economy have to explain whycorporations are making record profits but the rest of the population is increasingly living on food stamps.
What I read in economics was that it is bad for the economy to have a high gini coefficient, i.e. it is bad to have a big gap between a handful of wealthy at the top and great masses of poor at the bottom. It is much better if there is a big middle class and the rich aren’t so very rich.
Why is this the case? Well, you would want everyone who wanted one to be able to buy a car from Detroit. When people buy a Chevy Volt, that creates jobs at GM, and it creates demand for spare parts, which creates more jobs, and it creates jobs for car salesmen and for the people who make the battery, etc., etc.
So if there are roughly 75 million families in the United States, you’d like them all to be able to buy a Chevy Volt if they wanted one. But if you reduce them to living on food stamps (as 40 million people now do), then they can’t buy a new car, even on credit. Now you’ve set up your tax policy to throw trillions into the hands of 3 million people or 750,000 families. But how many cars are those families going to buy? Even if each had a fleet of ten, that would be as though 7.5 million families each bought one. It can’t compare to having 75 million families each buy one.
Tax policy helps to decide on the distribution of wealth in society. Using it to throw all your money to the top 1 percent and to reduce everyone else to relative poverty is a big drag on industry and services and causes unemployment. That’s right. If you don’t have a job, it is in part because Cheney cut taxes on the super-rich and made it impossible for the Federal government to ameliorate the economic straits of the middle class with various programs. This problem just got worse, with the budget deal this year.
Here is what the US gini coefficient (the measure of economic inequality) has looked like for the past over 40 years:
We increasingly look like a Third World robber baron country with a few rich at the top and luckless peasants toiling below.
The wealthy use the nation’s highways to transport their goods around the country. Interstates mainly benefit trucking companies and their clients. It is the trucks that are hard on the roads and require them to be rebuilt every summer. The highways are paid for by taxes. When Congress lowers taxes on the wealthy, it is saying they don’t have to pay for this public good that they benefit enormously from. It is saying that the people who make $50,000-$200,000 a year have to pay for the highways instead. And if the government uses tolls to pay for the highways, it is saying that even the minimum wage worker who uses a toll road to get to a fast food restaurant for employment has to pay for these highways and for the constant damage to them done by the big trucks serving the corporations, who are now held harmless from paying their fair share. Reducing taxes on the super-wealthy is a way of increasing taxes on everyone else.
Of course, joblessness was also caused in part by the near-Depression of 2008-2009 and its aftermath, which was caused by the government not regulating big banks and by it allowing most corporations to act like banks.
Most of our problems come from the US government coddling very rich people, which it does because the very rich pay for politicians’ campaigns and expect a payback. And as more and more of the country’s wealth has gone to the 750,000 families, they have gained more and more control over Congress. (Of course, it is the 400 billionaires who are the big players here). Their interests are increasingly not the same as the interests of the rest of us, and they are intent on screwing us over big time.
Standard & Poor does not care about whether rich people feel coddled. They want to know whether the US government is going to pay back the trillions it is having to borrow because it won’t tax the people with trillions of dollars. They don’t see how it can be sure of doing so. So they are warning investors about that.
The likely outcome is that it will be more expensive for the US government to borrow money, which will worsen the debt crisis.
The long term effect of these trends will certainly be the decline of the United States, which has already begun. And it will be a further decline in the standard of living of middle class people in the US.
I spent the summer in places like Tunisia and Egypt, where people were similarly taken advantage of by the corrupt and the wealthy and by the politicians the latter bought, and where they rose up and got rid of the miscreants. It is a matter of some astonishment that most Americans are just bending over and taking this treatment without so much as a protest.
Standard & Poor’s downgrade of America’s debt couldn’t come at a worse time. The result is likely to be higher borrowing costs for the government at all levels, and higher interest on your variable-rate mortgage, your auto loan, your credit card loans, and every other penny you borrow.
Why did S&P do it?
Not because America failed to pay its creditors on time. As you may have noticed, we avoided a default.
And not because we might fail to pay our bills at the end of 2012 if tea-party Republicans again hold the nation hostage when their votes will next be needed to raise the debt ceiling. This is a legitimate worry and might have been grounds for a downgrade, but it’s not S&P’s rationale.
S&P has downgraded the U.S. because it doesn’t think we’re on track to reduce the nation’s debt enough to satisfy S&P — and we’re not doing it in a way S&P prefers.
Here’s what S&P said: “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.” S&P also blames what it considers to be weakened “effectiveness, stability, and predictability” of U.S. policy making and political institutions.
Pardon me for asking, but who gave Standard & Poor’s the authority to tell America how much debt it has to shed, and how?
If we pay our bills, we’re a good credit risk. If we don’t, or aren’t likely to, we’re a bad credit risk. When, how, and by how much we bring down the long term debt — or, more accurately, the ratio of debt to GDP — is none of S&P’s business.
S&P’s intrusion into American politics is also ironic because, as I pointed out recently, much of our current debt is directly or indirectly due to S&P’s failures (along with the failures of the two other major credit-rating agencies — Fitch and Moody’s) to do their jobs before the financial meltdown. Until the eve of the collapse S&P gave triple-A ratings to some of the Street’s riskiest packages of mortgage-backed securities and collateralized debt obligations.
Had S&P done its job and warned investors how much risk Wall Street was taking on, the housing and debt bubbles wouldn’t have become so large – and their bursts wouldn’t have brought down much of the economy. You and I and other taxpayers wouldn’t have had to bail out Wall Street; millions of Americans would now be working now instead of collecting unemployment insurance; the government wouldn’t have had to inject the economy with a massive stimulus to save millions of other jobs; and far more tax revenue would now be pouring into the Treasury from individuals and businesses doing better than they are now.
In other words, had Standard & Poor’s done its job over the last decade, today’s budget deficit would be far smaller and the nation’s future debt wouldn’t look so menacing.
We’d all be better off had S&P done the job it was supposed to do, then. We’ve paid a hefty price for its nonfeasance.
A pity S&P is not even doing its job now. We’ll be paying another hefty price for its malfeasance today.
John Boehner said Tuesday the Republicans got “90 percent of what we wanted” from the budget deal. So presumably he and his colleagues are willing to take responsibility for some 450 points of today’s mammoth 513-point drop in the Dow Jones Industrial Average.
I’m being a bit facetious – but only a bit. It’s always dangerous to read too much into one day’s move in the stock market. As we’ve learned painfully over the last several years, Wall Street investors are not entirely rational.
Yet the stock sell-off – not just today’s, but that of the last days – cannot be easily dismissed. It marks Wall Street’s largest losing streak since 2008.
Republicans repeatedly assured the nation that once the debt-limit deal was done – capping spending, cutting the budget deficit, and getting “90 percent” of what they wanted — the economy would bounce back.
Just the opposite seems to be happening.
Call it the Republican’s double-dip recession.
Wall Street investors aren’t ideologues. They don’t obsess about budget deficits ten years from now, or the size of the government. They invest on the basis of hard, cold realities.
Here are the two hard, cold realities investors are worried about:
First, the economy looks like it’s dead in the water. The Commerce Department reports almost no growth in the first half of the year. And job growth is just about at a standstill. Far fewer jobs were generated in May and June than necessary just to keep up with the growth in the potential labor force – meaning the employment picture is actually worsening. Investors fear tomorrow’s (Friday’s) jobs report for July will show more of the same.
Secondly, investors now know the federal government’s hands are tied. The original stimulus is over; the Fed’s “quantitative easing” is over.
This week’s deal over the debt ceiling cinches it. The market is now on its own — without enough rocket power get out of the continuing gravitational pull of the Great Recession.
Now that the deal is done, Obama and the Democrats will have a much harder time passing anything close to the stimulus necessary to breach the gap between what consumers (who are 70 percent of the economy) are willing to spend and what the economy can produce at or near full-employment.
Not incidentally, the Commerce Department’s revised data for what happened to the economy in 2008 and 2009 shows the drop to have been far greater than had been supposed. The economy plunged 8.9 percent in the fourth quarter of 2008 – the steepest quarterly decline in more than half a century. And in 2009 household buying declined almost 2 percent (compared with a previous estimate of 1.2 percent). That’s the biggest contraction in almost sixty years.
That means the original stimulus should have been much larger in order to offset the drop. With cash-starved state and local governments simultaneously scaling back their own spending, the federal stimulus needed to be even bigger.
So much for Republican claims that the original stimulus “didn’t work.” Of course it didn’t, given the size of the slide.
It was never a debt crisis. The debt crisis was manufactured. It’s been a jobs, wages, and growth crisis all along. And that reality has finally caught up with us.
Now that we’re slouching toward a double-dip recession, the only hope is voters will tell their members of Congress – who are now on recess back home – to stop obsessing about future budget deficits and get to work on the real crisis of unemployment, falling wages, and no growth.
We need a bold jobs bill to restart the economy. Eliminate payroll taxes on the first $20,000 of income for two years. Recreate the WPA and the Civilian Conservation Corps. Lend money to cash-strapped states and local governments. Give employers tax credits for net new jobs. Amend the bankruptcy laws to allow distressed homeowners to declare bankruptcy on their primary residence. Extend unemployment insurance. Provide partial unemployment benefits to people who have lost part-time jobs. Start an infrastructure bank.
The jobs bill should be number one on the nation’s agenda. It should have been all along.