Last weekend in Singapore, President Barack Obama acknowledged that
a comprehensive international climate deal will not be reached during
the climate change summit in Copenhagen. While many might view this as
a letdown, lowering expectations might actually be a good thing, as Matthew Yglesias notes for the American Prospect.
According to Yglesias, the conference can now be framed as a relative
success whatever happens, and that will keep the momentum for climate
action going after Copenhagen.
First it was immigrants from Mexico, now Muslims in the armed services.
After the tragic shootings at Fort Hood, conservative pundits are
verbally attacking Muslims and Arab-Americans, much like they have
vilified the immigrant community. The complexities of Islamic faith are
being glossed over and "Muslim Terrorist" is stamped upon any act of
violence involving their community. As a result, nuanced voices are
buried in favor of suspicion and violence.
A Michigan woman threatened a Minnesota newspaper with mass murder for criticizing Rep. Michelle Bachmann (R-MN)'s anti-health reform rally, reports Paul Schmelzer in the Minnesota Independent:
...A woman in Michigan, angered over a newspaper editorial
criticizing Bachmann's event, threatened to take a gun to the paper and
"do what they did at Fort Hood" in response.
How pro-life.
David Corn of Mother Jones reports that Bachmann (R-MN) may also face an ethics investigation
for using her taxpayer-funded website to promote the Tea Pary-Superbowl
of Freedom, a partisan political rally to defeat health care reform.
The Center for Responsibility and Ethics in Washington (CREW), a
non-profit political watchdog, alleges that Bachmann violated a House
rule against using official websites for "grassroots lobbying or [to]
solicit support for a Member's position." She literally told her
supporters to come to Washington on Nov 5 and tell their
representatives to vote against health reform. That's textbook
grassroots lobbying and a clear no-no for a taxpayer-funded website.
Speaking of pesky rules and regulations, Rep. Bart Stupak's (D-MI) C Street residence
is no-longer tax exempt. Stupak, who became famous for inserting a
radical and far-reaching abortion funding ban into the House health
reform bill, lives with several other lawmakers at a house on C Street.
The house is owned by a secretive fundamentalist sect known as The
Family. For years, C Street avoided paying property taxes by claiming
to be a church. All that's over now. Ed Brayton of the Michigan
Messenger reports that the IRS has finally figured out that C Street is a dorm.
Alex Koppelman reports in Salon
that Stupak is reiterating his threat to kill health care reform if his
language is stripped from the final bill:
"They're not going to take it out," Stupak said of
Senate Democrats during an appearance on "Fox and Friends" Tuesday
morning. "If they do, healthcare will not move forward ... At least 10 to
15 to 20 of us will not vote for it."
At Feministing, Jos Truit
discusses the Hyde Amendment, a piece of 1976 legislation that bans the
use of federal funds for abortions. The Hyde Amendment is back in the
news because Stupak is falsely claiming that his amendment merely
applies Hyde principles to health insurance.
Does he know that 45,000 born people die every year because they don't have health insurance?
The fight over abortion coverage in a reformed health care system is
far from over. It's unlikely that Reid wrote Stupak language into his
version of the bill, and it's equally unlikely that anti-choicers have
the 60 votes to add it back in as an amendment. (Contrary to popular
belief, the Senate is much more pro-choice than the House.) Anti-choice
Dems Sens. Ben Nelson and Bob Casey seem to be walking back from their
earlier threats to vote against a bill without Stupak language.
Harry Reid announced that Democrats would meet today
to preview the Senate's version of the health care bill. The first
procedural vote on the Senate bill could come before Thanksgiving.
This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
By proposing financial reforms that won't curb Wall Street excess, U.S. policymakers have offered an unacceptably weak response to our enormous financial crisis. If voters don't demand that their elected representatives help workers and consumers instead of simply boosting corporate profits, the economic downturn will last for several more years and leave the economy vulnerable to another bank-induced meltdown.
The banks have unbelievable lobbying clout. In an interview with Cenk Uyger of The Young Turks, Heather Booth, executive director of Americans for Financial Reform, describes how one-sided the Wall Street reform fight has been. Despite broad public support for a fundamental financial overhaul, going up against the bank lobby is, as Booth describes, "a David and Goliath fight." It's basically Americans for Financial Reform against every major corporation in the U.S.
Booth notes that the Chamber of Commerce has vowed to spend $100 million on a campaign to defend the "so-called free enterprise system"--you know, the "free market"--in which corporate lobbyists spend millions of dollars to write the rules of the economic game. Just seven financial lobby groups have spent a massive $147 million peddling influence over the past two years.
In fact, as Janine Wedel observes for Salon, the U.S. economic system is starting to look an awful lot like the clannish systems of government that looted Eastern European countries in the early 1990s. Today, the public good takes a backseat to the narrow interests of powerful corporations.
With the Obama administration working with advisers from Citigroup and Goldman Sachs, we're not just watching Wall Street write its own regulations. We're watching the financial sector re-write the official role of the government in the economy. In this new role, the government's top priority is securing profits for corporate America.
"The intertwined coterie of financial and policy deciders in the United States is creating not only the financial architecture of the future, backed by the power and billions of the state, but, more generally, new relationships between the bureaucracy and the market," Wedel writes.
GRITtv's Laura Flanders echoes this theme in an interview with John Perkins, author of Confessions of an Economic Hit Man, and journalist Russ Baker. Lobbyists have so thoroughly hijacked the U.S. economy, Perkins argues, that the nation's government now resembles those of Latin American nations he worked with in the 1980s and 1990s.
"I don't think the U.S. president has much power these days, to be honest with you. . . . It's the big corporate executives who call the shots today, and let's face it, they financed Obama's campaign," Perkins says.
The very efforts the government deployed to save the financial system are being perverted to create another disaster. In a five-part interview with Paul Jay of The Real News, Jane D'Arista, an influential economist and author of The Evolution of U.S. Finance, explains how Wall Street destroyed itself over the past decade. By borrowing massive amounts of money, Wall Street was able to place bigger bets in the capital markets casino, resulting in huge profits when those bets paid off. But when the bets backfired, the losses were just as massive. Companies couldn't pay them off, so the government stepped in to support them.
One of those support mechanisms came from the Federal Reserve, which began making incredibly cheap loans to firms that engaged predominantly in speculative trading. The Fed used to lend exclusively to commercial banks, which used the money to make loans that helped grow the real economy. But now those loans are being used to support risky securities trading, so we're seeing big profits in the financial sector, without much help for workers and consumers. This is a major long-term problem--if the economy can't keep pace with the Wall Street casino, those speculative trades are going to backfire and we'll be right back to the chaos of September 2008, only with an even weaker economy.
All hope is not lost. As Perkins and Baker emphasize in their interview with Flanders, citizens have to demand corporate accountability and a government that actually serves the public good. For much of the past decade in Latin America, governments have been elected that stood up to major corporations and demanded that they stop pillaging their nation's resources at the people's expense.
In addition to demanding much stronger reforms for the financial sector, we have to demand that the government respond seriously to problems facing workers. With the unemployment rate at 10.2% and expected to go still higher, we need jobs. As Steve Benen notes for The Washington Monthly, Obama's economic stimulus package helped stave off total economic devastation. What we need now is another stimulus to get people back to work, not just slow the pace of job losses.
"A bold, ambitious jobs bill can make a huge difference--the stimulus got us out of the ditch, a new effort can get us going in the right direction again," Benen writes.
And the only argument against this plan is that we "can't afford it." That is--the government's fiscal deficit is too high, and we just can't spend money to help people in real economic trouble.
But as Christopher Hayes writes for The Nation, the deficit excuse is pretty pathetic. Economic stimulus bolsters economic growth, thus improving tax returns for the government in the future. And any spending on any project can be taken out of the budget from other measures. Hayes notes that our massive military spending is almost never included in discussions about "fiscal responsibility." If we were really worried about how much it would cost to fix the economy, we could stop spending so much money killing people.
"Fiscal conservatism and deficit concern is nearly always code speak in Washington for something else," Hayes writes. "Most often, when someone in Washington says they're concerned about the deficit, what they're really saying is, 'I would like to make sure we have a government that focuses maximally on blowing people up.'"
The government has to start saying 'no' to corporate America. Corporate profits are not the same thing as a strong economy. We need to demand an economic policy that answers to workers, not just bank balance sheets.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
For weeks, Sen. Max Baucus (D-MT) has opposed climate change
legislation. In the Environment and Public Works (EPW) Committee, he
openly voiced his doubts and was the only Democrat to refrain from
voting for the bill's passage. Now that the bill is in the Finance
Committee, which Baucus chairs, many worry that the bill is doomed.
However, it looks like Baucus might have outwitted us all.
After 30 years, commentator Lou Dobbs--infamous for his tirades against undocumented immigrants--has left CNN, as TPM reports.
Dobbs employed disturbing, dangerous, and dated language to slur
immigrants, often equating them with disease and infection. There is a connection between this type of demagoguery and violence.
A clique of anti-choice Democrats in Congress joined forces with
Republicans to write abortion access out of the House's health care
reform bill last Saturday. Rep. Bart Stupak (D-MI) wants to force women
to choose between affordable health insurance and abortion coverage,
even if they pay for abortion coverage with their own money.
Pro-choice Democrats and women's health activists are up in arms over the eleventh hour deal. Ellie Smeal of Ms. Magazinedenounces the Stupak amendment as a betrayal of women:
Millions of poor and middle-class women would be denied
abortion coverage and millions more would lose the coverage they
already have, since 85 percent of private plans now cover abortion. Far
from being abortion-neutral, the Stupak amendment is a giant step
backward for women. It's unacceptable. In the compromise to get the
bill passed, women and their health-care rights were thrown under the
bus.
Yesterday, The Pulse interviewed Jodi Jacobson, political director
of RH Reality Check, about the implications of the Stupak amendment for
reproductive choice in America. Jacobson explained that, if language
from the Stupak amendment finds its way into the final health care
bill, insurance companies would be forced to eliminate all abortion
coverage if they wanted to participate in any aspect of the health care
reform plan. Listen to the full interview here. (Note: there's a slight delay before the audio starts.)
Jacobson calls the Stupak language a "monumental setback." If an
insurance plan accepts customers who take government subsidies, then
nobody on that plan could have abortion coverage--not even those who
were paying their whole premium out of pocket. In effect, the Stupak
amendment would be "a total ban on public and private money for
abortion coverage," Jacobson said.
In TAPPED, Michelle Goldberg accuses the Democrats of "leaving women behind"
in their rush to pass health care reform at any cost. Goldberg warns
that if the amendment becomes law, Democrats will have handed the
anti-abortion lobby its biggest victory since the 2003 Partial Birth
Abortion Act.
In the Nation, Eyal Press argues that the Stupak amendment would be an especially cruel blow to poor women:
If this highly regressive amendment makes its way into
the legislation that Barack Obama eventually signs, millions of less
affluent women who obtain access to affordable health insurance will
thus join the ranks of low-income women on Medicaid, most of whom live
in states that don't cover abortion procedures. The two-tiered system
that dictates who in America has "choice" (more privileged women do,
less affluent women do not) will be further entrenched.
Robin Marty of RH Reality Check wonders whether the Stupak amendment would apply to miscarriages
as well as elective abortions. Sometimes, when a fetus dies in utero,
doctors must surgically remove it. It's the same procedure as an
elective termination and it has the same name: Abortion. Last month,
Marty lost a much-wanted pregnancy. Doctors laid out her options: a
$1500 surgery, a $40 chemical abortion, or an interminable wait to
expel the dead fetus naturally. Marty chose the surgery. She worries
that the Stupak amendment would take that choice away from other women.
The House bill is not yet the law of the land. There is still time
to strip the Stupak language out in conference (the merging process
whereby the House bill is combined with whatever comes out of the
Senate).
But will it actually get stripped out in the senate? Sen. Ben Nelson (D-NE) announced that "If it isn't clear that government money is not to be used to fund abortions, I won't vote for it."
On a conference call yesterday, Sen. Arlen Specter (D-PA) told The
Pulse that he was optimistic that a compromise could be worked out.
"Ben Nelson said he wasn't going to support a bill if it isn't clear
that government money won't be used to fund abortions," Specter said,
"Well, we can make it clear that if someone wants to buy abortion
coverage with her own money, she can do it."
This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
On Friday, we learned that the U.S. unemployment rate officially
broke 10% for the first time since the early Reagan years. This is
about as bad as it gets for a modern, developed economy. No economic
force takes a heavier toll on a society than rampant joblessness, and
few personal setbacks take a deeper psychological toll than being out
of a job for months on end. If Congress and President Obama don't do
something to create jobs fast, both are going to pay a hefty political
price when next year's mid-term elections roll around.
So how bad is it? In October, the economy shed 190,000 jobs and the
unemployment rate jumped from 9.8% to 10.2%. That percentage is the
most optimistic reading of the labor market in Friday's report. If you
take people who want full-time jobs but are settling for part-time
work, then add those who have simply given up on finding a job, the
rate is a massive 17.5%.
The problem is not that either Obama or Congress have failed to act
on the problem, but rather that they have not done enough. When
Congress was moving on Obama's $787 billion economic stimulus package
back in February, we were shedding upwards of 700,000 jobs a month. So
the stimulus package has worked--it's probably helped keep unemployment
from jumping to 12% or 13%. But this is cold comfort to the nation's
15.7 million unemployed, 5.6 million of whom have been out of a job for
more than six months.
As Robert Reich notes for Salon,
Obama's economic advisers dramatically underestimated how bad things
would get when they crafted the stimulus package. As a result, the
package was too small and unemployment has remained high. Obama needs
to go back to Congress and demand more economic relief funding.
Republicans will continue to whine about government spending to excuse
their obstructionism, of course, and conservative Democrats will
probably start sweating, too--Sen. Ben Nelson (D-NE) helped cut back the
original stimulus bill in February to help boost his "centrist"
credentials. This of course had nothing to do with economics or policy.
Government spending is what saves the economy in a recession. In a
downturn as severe as this one, it takes a lot of spending to turn
things around.
But as Reich notes, Nelson and his cohorts will have a lot more to
worry about in the 2010 elections if the economy doesn't actually
improve over the next year. And few economists think it will. The
Congressional Budget Office, which is run by a conservative economist
named Douglas Elmendorf, projects an average unemployment rate of over
10% in 2010. That's worse than this year. Democrats from swing
districts need to support economic relief packages. Continued economic
malaise will severely hurt them at the polls.
Congress finally took some action on joblessness on Thursday, voting
to extend unemployment benefits for an additional 14 weeks. If we want
the economy to recover, we need people to spend money, but if people
aren't working, they don't have any money to spend. So the government
cuts people checks to help them get by and stimulate a demand for goods
and services. Even most conservative economists thinks this is a good
idea.
But as Kevin Drum notes for Mother Jones,
the soundness of the policy did nothing to prevent Republicans from
fighting the effort to extend benefits tooth-and-nail. The bill had to
overcome three--that's right, three--filibusters in the Senate from
Republicans, who held up the bill for weeks for no apparent reason. In
a blog post for The Washington Monthly, Steve Benen
explains the economic cost of this obstructionism: In the weeks of
delay, 200,000 people looking for work stopped receiving benefits.
But extending unemployment benefits will not solve our economic
woes. The total program is just $2.4 billion, a drop in the bucket
compared to the trillions of dollars the government put up to salvage
Wall Street. $2.4 billion is not enough to reverse the unemployment
trend. Cutting the checks certainly helps, but as Matthew Rothschild emphasizes for The Progressive,
we need an economic policy that actually puts people back to work.
We've known for months that the stimulus was too small and watched the
labor market continue to deteriorate. We need more than tweaks at the
economic margins, we need a robust job creation plan.
As Stephen Franklin notes for Working In These Times,
we already know that the recession has created a significant jump in
the nation's poverty rate. According to official government statistics,
the rate climbed from 12.5% to 13.2% in 2008, the largest increase
since 1991. But the National Academy of Science thinks the government
statistics are misleading, as they account for rising costs associated
with medical care, transportation, child care and different regional
living standards, as Franklin notes. Taking these factors into account,
the National Academy of Sciences calculates the actual poverty rate to
be 15.8%. That's an additional 7 million people living in poverty, for
a total of over 47 million. That's more than the entire population of
the New York, Los Angeles, Chicago, and Philadelphia metropolitan areas
combined. What's worse, we don't have poverty statistics for this year,
when the most severe economic damage was been dealt.
Workers are facing tough economic prospects around the world. Writing for The Nation, Kristina Rizga
details Latvia's economic turmoil. Just like the US, overexcited
bankers in Latvia inflated a massive real estate bubble that took down
the entire economy when it burst. But with the bubble burst, much of
the country is now out of a job and stuck with a mortgage worth far
less than what they paid for it. It's almost exactly the same story
we've seen at home.
No domestic economic problem is more pressing than our epic levels
of unemployment. We need another round of stimulus to get people
working again. If not, we'll see the same public unrest here as in
Eastern Europe.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Senate Democrats in the Environment and Public Works Committee (EPW)
finally squelched Republican boycotts and passed a version of the
climate bill yesterday morning. Last week, Republican Senators refused
to show up to committee hearings in an attempt to stall the bill. Brian Beutler of Talking Points Memo notes that EPW has now set "the stage for other panels to amend the legislation."
While many pundits and political analysts are musing about what
Tuesday's mixed bag election results mean for Obama administration, New America Media reports that "there's another trend to watch; the surprising prominence of immigration politics."
The House released a final version of the health reform bill. It has a public option all right, but not the robust version progressives were hoping for. The public plan would only cover 2% of Americans and premiums will cost more than anticipated.
Meanwhile, Sen. Joe Lieberman (I-CT) continued to threaten to join a Republican filibuster of a health care bill with a public option. A lot of people still think he's bluffing. Realistically, the public option probably faces more serious threats from inside the Democratic caucus. It's been whittled down at an alarming rate.
Nick Baumann of Mother Jones asks "What now for the public option?"
The Congressional Budget Office has estimated that public option premiums will actually be higher than the premiums for private plans on the health insurance exchanges. That doesn't mean it's going to cost the government more money--the public option is paid for by premiums, not taxes; it actually cuts the deficit. But it will be more expensive than some private plans. Wasn't part of the point of the public option to prove that a government-run program could compete successfully with privately-run plans? Well, yes, but here's the problem: that was all based on the idea that the public option would pay health care providers at Medicare rates.
Baumann predicts that insurers will do everything they can to drive the sick people off private insurance onto the public plan, a phenomenon known as "adverse selection." Hopefully some of the proposed insurance reforms will curb their worst excesses, like kicking people off the rolls for misspelling their preexisting conditions on their application forms.
Mike Lillis of the Washington Independent reports that the House health care bill would eliminate the popular and cost-effective Child Health Insurance Program (CHIP) and shift its low-income beneficiaries onto private health insurance exchanges.
This looks like a stealthy preemptive strike on the prospect of single-payer health care. CHIP is a single-payer program that progressive health policy types envisioned as a prototype for a future single-payer system for all kids, or even eventually for everyone.
As Lillis points out, abolishing CHIP is also a gimme to insurance companies. Generally speaking, kids are cheap to insure because they're healthy. Private insurers would love to stock their risk pools with kids on federal subsidies. It's like getting paid to stock your pond with delicious trout. We worry about adverse selection making the public plan more expensive. Well, CHIP is the reverse of that because this public program is keeping the good risks for itself.
Suzy Khimm argues at TAPPED that killing CHIP could be a good thing, provided the kids continue to enjoy the same legal protections that they get under the public plan. Khimm suggests that moving low-risk kids into insurance exchanges could help keep costs down for everyone by making the risk pool healthier on average:
That being said, if CHIP's dismantling ended up moving more folks into the health-insurance exchange, it wouldn't simply be a boon for "the insurance lobby and moderate Democrats." It could strengthen one of the most fundamental parts of the Democratic reform package -- a robust insurance exchange with a pool of participants that's large enough to drive down costs precisely because insurance companies have an incentive to jump in and compete for customers. Moreover, folding CHIP into the exchange would add a younger, healthier pool of participants to the exchange, offsetting its potential of becoming a dumping ground for the sick and elderly. Finally, CHIP has always suffered from under enrollment -- about 6 million children aren't insured in the program who should be -- and by bringing whole families in under the same plan, more children will be covered.
That's a nice idea, but it seems foolish to scrap one a popular and successful social program in favor of an untested insurance exchange system.
The frustrating thing about so-called health care reform is that legislators don't really want to change the system. They want to make the system work better while catering to all the established interests that made it suck in the first place.
Politicians aren't the only ones to balk at fundamental change. The Real News Network interviews Sam Gindin (video below), a former assistant to the Canadian Auto Workers Union, now a professor at York University. Gindin says that, over the years, labor conceded too much on health care and thereby failed to reestablish itself as a leading force for progressive change in the United States. Helping elect Barack Obama was a step in the right direction for labor, he maintains, but it's not nearly enough.
As John Nichols of the Nation put it, when the House finally wrote the bill, the compromise was even more compromised than expected.
This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Last week, President Barack Obama released key legislation designed
to fight the banking industry's too-big-to-fail problem. But Obama's
plan doesn't actually address too-big-to-fail at all. It reinforces a
broken system in which economically dangerous companies are bailed out
whenever they drive themselves to the brink of failure.
If we want the economy to support all people, we have to break up
the big banks and start treating the creation of good jobs as an
economic priority on par with Wall Street rescues.
The editors of The Nation break the political debate over banking into three camps:
The first camp is composed of bank lobbyists, Republicans and conservative Democrats and wants to do nothing.
Camp two, endorsed by the White House and influential Rep. Barney
Frank (D-MA), would impose tougher regulations on too-big-to-fail banks
to keep them from getting out of control.
The third camp wants to go even further: If a bank is
too-big-to-fail, it is also too-big-to-regulate. Companies that pose a
danger to the economy have to be split up into smaller firms that
cannot induce economic ruin.
The Nation editors rightly see the third strategy as the
most sensible. While the "break-up-the-banks" policy is being portrayed
as a left-wing pipe dream by cable news networks, the policy actually
relies on an age-old observation of conservative economists. Regulators
make mistakes, and they often get co-opted by the very industries they
are supposed to be supervising.
The practical policy is to impose structural limits on what
activities banks can participate in and how big they can get. Just look
at the list of high-profile supporters: former Federal Reserve Chairman
Paul Volcker, former Citigroup Chairman John Reed, Bank of England
Governor Mervyn King. I don't remember seeing any of those guys at the
Iraq War protests.
Many of the regulatory blind spots that brought down the economy
were obvious to some policymakers for years. Back in 1994, Sen. Byron
Dorgan (D-ND) wrote an article for The Washington Monthly
warning that derivatives trading was putting the economy in grave
danger. Commodities Futures Trading Commission Chair Brooksley Born
tried to take action on these derivatives, but was overruled by other
regulators, including then-Fed Chair Alan Greenspan, and then-Treasury
Secretary Lawrence Summers, now the top economic adviser to President
Obama. Summers and Greenspan even convinced Congress to pass a law
banning the regulation of key derivatives, including credit default
swaps, which ultimately brought down insurance giant AIG.
Fifteen years after Dorgan's article first ran, The Washington Monthly is featuring it again, along with a recent speech by Dorgan that details massive failures in Wall Street and Washington.
"We had regulators come to town in recent years and willfully boasted that they wanted to be blind as regulators," Dorgan says.
There are good elements of Obama's plan to deal with
too-big-to-fail. It gives policymakers the option of putting a
too-big-to-fail institution through a special bankruptcy process
administered by the executive branch, thus avoiding the problems
created in bankruptcy court when Lehman Brothers failed. But the bad
part is really bad: Officials would also have the option to
provide unlimited bailouts to Big Finance via loans, guarantees and
even asset purchases.
As Mike Lillis notes for The
Washington Independent, some responsible Democrats like Rep. Brad
Sherman (D-CA) have been objecting to this aspect of the legislation
for months. Sherman, in fact, calls it "TARP on steroids," noting that
the bank bailout at least came with some meager oversight and a limit
on the program's actual size.
The bank lobby is spending money like mad to maintain their
stranglehold on the economy. Neither Congress or the administration
will change course without intense public pressure. So it was very
reassuring last week to see thousands of people protesting the annual
meeting of top bank lobby group, the American Bankers Association. David Moberg chronicles the protest in a blog post for Working In These Times
that covers speeches by both key union leaders and ordinary people
facing foreclosure after watching their tax dollars go to the very
bankers who wrecked the economy.
"There was broad agreement on anger at the banks for providing so
little, if any, public benefit for the massive bail-out, and for so
quickly returning to the greed and abuse that precipitated the crisis,"
Moberg writes.
Laura Flanders covers the
protests for GRITtv, including video of protesters chanting "Bust up
big banks!" In a roundtable discussion with Christina Clausen of the
United Food & Commercial Workers Union, George Goehl of National
People's Action and Rob Robertson of the Right To The City Alliance,
Rolling Stone journalist Matt Taibbi explains the overriding impotence
of the regulations Congress is about to approve. Regulators will not be
able to crack down on abusive derivatives, a full 8,000 of 8,200 banks
will be exempt from Consumer Financial Protection Agency oversight,
while the same agencies that screwed up heading into this crisis will
be charged with preventing the next one.
"They've had sweeping powers to do whatever they wanted," Taibbi says. "They've had this regulatory power all along."
What we need are good jobs, and lots of them. Obama's economic
stimulus package has made tangible economic progress. It's saved
hundreds of thousands of jobs, and is clearly responsible for the
turnaround in gross domestic product (GDP) we saw in the third quarter.
But a full 17% of the workforce remains unable to find full-time work,
as Julianne Malveux explains for The Progressive.
When Wall Street crashed in 1929 and unleashed the Great Depression,
the government eventually stepped in as an employer-of-last-resort. The
Works Progress Administration (WPA) and Civilian Conservation Corps
(CCC). built schools, parks, roads and bridges which still serve our
communities today. Both the WPA and the CCC employed literally millions
of people--in the 1930s. It's a model that could work very well today.
As the current recession makes clear, ending too-big-to-fail and
guaranteeing a good job for everyone in our society who wants one are
the two most critical structural reforms our economy needs. Don't let
lawmakers forget it.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
This week the Senate Environment and Public Works Committee held
three hearings on the Kerry-Boxer clean energy bill and, as David
Roberts reports for Grist, Republican Senators had an "adolescent tantrum"
about the cost of emission reductions. The Environmental Protection
Agency (EPA), Congressional Budget Office, Energy Information
Administration and other organizations have extensively debunked this
line of debate.
Anti-immigration groups and pundits
cling to phrases like "Illegal Alien" because they only focus on
foreignness and danger. These extreme factions are all about casting
immigrants as what ails our society, conjuring up demons upon which to
focus national ire, and perpetuating a subhuman category of being. It's
a convenient distraction from things that are actually endangering our
nation. A new web-only series from ColorLines called "Torn Apart by Deportation"is the perfect antidote to people like CNN's Lou Dobbs.
Bailout pay czar Ken Feinberg raised a ruckus last week when he announced plans to slash cash payouts to executives at seven companies that have received massive levels of taxpayer support. While better oversight of the bailout barons is helpful, the best way to change Wall Street pay practices is to adopt a set of tough, comprehensive regulations that cover everything from the executive suite to the loan department. As is, many of the executives Feinberg cracked down on will still make millions this year from stocks and other perks, while the very banks that depend the most on bailout money are spending like mad to lobby against reform.
Feinberg's new salary limits only apply to executives at Citigroup, Bank of America, AIG, GM, Chrysler, GMAC and Chrysler Financial. But while these new rules are an effort to reduce the incentive for executives to take big risks for short-term gains, the rules of the game for non-bailout barons haven't changed at all. Risky securities trading and unenforced consumer protection regulations still allow financiers to make a killing by gambling on mortgages and credit cards.
As Greg Kaufmann explains for The Nation, Feinberg has been barred from altering some of the most egregious bonus arrangements at even the biggest fund recipients, as the employment contracts were signed prior to the government's bailout. AIG plans to pay out $198 million in bonuses in March 2010, and none of Feinberg's recent rulings will change that. As Kaufmann also notes, back in March, AIG agreed to pay pack $45 million of the bonuses it shelled out early this year. After over seven months, just $19 million has been repaid.
The government's hands-off approach to AIG employment contracts is a rather flagrant display of deference to executives. Nothing stopped the government from renegotiating contracts for union laborers when it bailed out Chrysler and GM, as Dean Baker notes for The American Prospect.
Lest we forget, the government literally owns AIG, and would own both Citigroup and Bank of America had it demanded a market rate of return for its investment. Taxpayers injected several times the stock market values of both Citi and BofA into the troubled banks, but settled for a 36% stake in Citi and preferred stock in BofA. As Mike Madden emphasizes for Salon, Feinberg is still letting executives make several times the median household income in cash alone--nevermind stock--and it's unlikely that his move will spark changes among bankers outside the handful of companies ordered to make changes.
"Executives are still taking home paychecks that dwarf what the average American earns. And it's not clear whether any other companies will get on board with the Treasury plan unless they're forced to," Madden writes.
Congress hasn't taken any significant steps to curb Wall Street paydays since the crisis broke, but lawmakers did take two other important steps toward banking reform this week. Two different House committees passed bills to rein in the wild world of derivatives trading and establish a new Consumer Financial Protection Agency (CFPA). In a video piece for the Huffington Post Investigative Fund, Amanda Zamora and Lagan Sebert detail the legislative battle to create a CFPA, which has faced an enormous lobbying push from both banks and the top lobby group for the corporate executive class, the U.S. Chamber of Commerce.
Zamora and Sebert note that top bank lobbyist Ed Yingling is arguing that if regulators simply enforced the existing consumer protection laws, all of the major abuses in mortgage lending and credit cards would have been prevented. Even for a corporate lobbyist, Yingling's disingenuousness is absolutely breathtaking. He acknowledges that existing regulators are not enforcing consumer protection laws, says he wants the laws enforced, and then says it would be a bad idea to create a new agency to enforce those laws.
The CFPA won't have any mysterious new powers. It will have the same authorities on credit cards and mortgages that existing federal regulators have. But the current regulators are focused primarily on bank profits, which often run directly contrary to fair play with consumers. Yingling and Wall Street are really afraid of a serious regulator who will stand up for consumers. They're terrified that the CFPA will actually enforce consumer protection rules against powerful banks--but are talking as if all they want is effective enforcement. It's a lie, pure and simple.
On Monday and Tuesday, thousands took to the streets in Chicago to protest a meeting of Yingling's lobby group, the American Bankers Association (ABA). Esther Kaplan details the protests in a piece for The Nation, complete with video footage. The ABA retaliated against Kaplan's reporting by revoking her press credentials, but it appears to have been worth it, as her piece describes everything from citizen outrage to police intimidation and awkward banker solidarity. As Democracy Now! explains, the ABA has spent decades lobbying against rules to strengthen the economy and prevent banker abuses, and is now at the heart of an effort to use taxpayer bailout money to lobby Congress against financial reforms.
So far, their efforts seem to be paying off. Last week, one of the CFPA's chief advocates, Rep. Brad Miller (D-NC), co-authored an amendment significantly restricting the agency's enforcement powers. As Sebert and Zamora note, Miller agreed to exempt banks with $10 billion or less in assets from regulatory examinations by the CFPA--roughly 98% of all banks. The existing, corrupted regulators who didn't lift a finger to prevent the subprime mortgage crisis will be the people actually going to the banks and reviewing their books. While the CFPA could send along one of its own regulators to participate in the exam, the new agency can't tax the bank to pay for it, which would make it very difficult for the CFPA to keep an eye on smaller banks.
Even worse, there is nothing to prevent a giant bank like Bank of America from moving all of its most egregiously predatory activities into a series of small corporate subsidiaries. By exploiting this loophole, 100% of U.S. banks could be exempt from CFPA enforcement, including the giant banks most heavily involved in subprime mortgage abuses.
The other big piece of Obama-backed financial legislation to make its way through Committee last week had to do with derivatives, also known as the wild Wall Street securities that brought down AIG. The best way to fix the derivatives mess is to require that derivatives be traded on an exchange the same way stocks are, so that companies can't make crazy bets without regulatory and market scrutiny. But Obama only wants "standardized" derivatives to be processed through a central clearinghouse--like an exchange, except without any public pricing information. And so long as a derivative contract can be deemed "customized," it would be totally exempt from even this limited reform.
But as Art Levine notes for AlterNet, the derivatives bill actually got worse in committee. Plenty of non-financial businesses use derivatives to legitimately hedge real risks: Airlines try to insure themselves against swings in oil prices, for instance. Lawmakers agreed to exempt any contract with these companies, termed "end-users" in the financial jargon, from central clearing requirements. The trouble is, big Wall Street hedge funds and private equity firms can be classified as "end-users," opening a fatal loophole in the legislation. The five banks who control 95% of the derivatives market will just conduct all of their most reckless trades with hedge funds and avoid oversight entirely.
A modest reform on paychecks for bailout recipients is nowhere near sufficient to protect our economy from banker excess. If Wall Street is going to serve any productive economic function, it has to be subject to serious consumer protection rules, and its derivatives casino has to be dismantled.
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