By Raquel Brown, Media Consortium Blogger
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."
By Nezua, Media Consortium Blogger
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."
By Lindsay Beyerstein, Media Consortium Blogger
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.
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.
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.
by Zach Carter, Media Consortium Blogger
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 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.
By Raquel Brown, Media Consortium Blogger
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.
By Nezua, Media Consortium Blogger
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.
By Zach Carter, Media Consortium Blogger
Bailout pay czar Ken Feinberg raised a ruckus last week when he announced plans to slash cash payouts to executives at seven companies that have received massive levels of taxpayer support. While better oversight of the bailout barons is helpful, the best way to change Wall Street pay practices is to adopt a set of tough, comprehensive regulations that cover everything from the executive suite to the loan department. As is, many of the executives Feinberg cracked down on will still make millions this year from stocks and other perks, while the very banks that depend the most on bailout money are spending like mad to lobby against reform.
Feinberg's new salary limits only apply to executives at Citigroup, Bank of America, AIG, GM, Chrysler, GMAC and Chrysler Financial. But while these new rules are an effort to reduce the incentive for executives to take big risks for short-term gains, the rules of the game for non-bailout barons haven't changed at all. Risky securities trading and unenforced consumer protection regulations still allow financiers to make a killing by gambling on mortgages and credit cards.
As Greg Kaufmann explains for The Nation, Feinberg has been barred from altering some of the most egregious bonus arrangements at even the biggest fund recipients, as the employment contracts were signed prior to the government's bailout. AIG plans to pay out $198 million in bonuses in March 2010, and none of Feinberg's recent rulings will change that. As Kaufmann also notes, back in March, AIG agreed to pay pack $45 million of the bonuses it shelled out early this year. After over seven months, just $19 million has been repaid.
The government's hands-off approach to AIG employment contracts is a rather flagrant display of deference to executives. Nothing stopped the government from renegotiating contracts for union laborers when it bailed out Chrysler and GM, as Dean Baker notes for The American Prospect.
Lest we forget, the government literally owns AIG, and would own both Citigroup and Bank of America had it demanded a market rate of return for its investment. Taxpayers injected several times the stock market values of both Citi and BofA into the troubled banks, but settled for a 36% stake in Citi and preferred stock in BofA. As Mike Madden emphasizes for Salon, Feinberg is still letting executives make several times the median household income in cash alone--nevermind stock--and it's unlikely that his move will spark changes among bankers outside the handful of companies ordered to make changes.
"Executives are still taking home paychecks that dwarf what the average American earns. And it's not clear whether any other companies will get on board with the Treasury plan unless they're forced to," Madden writes.
Congress hasn't taken any significant steps to curb Wall Street paydays since the crisis broke, but lawmakers did take two other important steps toward banking reform this week. Two different House committees passed bills to rein in the wild world of derivatives trading and establish a new Consumer Financial Protection Agency (CFPA). In a video piece for the Huffington Post Investigative Fund, Amanda Zamora and Lagan Sebert detail the legislative battle to create a CFPA, which has faced an enormous lobbying push from both banks and the top lobby group for the corporate executive class, the U.S. Chamber of Commerce.
Zamora and Sebert note that top bank lobbyist Ed Yingling is arguing that if regulators simply enforced the existing consumer protection laws, all of the major abuses in mortgage lending and credit cards would have been prevented. Even for a corporate lobbyist, Yingling's disingenuousness is absolutely breathtaking. He acknowledges that existing regulators are not enforcing consumer protection laws, says he wants the laws enforced, and then says it would be a bad idea to create a new agency to enforce those laws.
The CFPA won't have any mysterious new powers. It will have the same authorities on credit cards and mortgages that existing federal regulators have. But the current regulators are focused primarily on bank profits, which often run directly contrary to fair play with consumers. Yingling and Wall Street are really afraid of a serious regulator who will stand up for consumers. They're terrified that the CFPA will actually enforce consumer protection rules against powerful banks--but are talking as if all they want is effective enforcement. It's a lie, pure and simple.
On Monday and Tuesday, thousands took to the streets in Chicago to protest a meeting of Yingling's lobby group, the American Bankers Association (ABA). Esther Kaplan details the protests in a piece for The Nation, complete with video footage. The ABA retaliated against Kaplan's reporting by revoking her press credentials, but it appears to have been worth it, as her piece describes everything from citizen outrage to police intimidation and awkward banker solidarity. As Democracy Now! explains, the ABA has spent decades lobbying against rules to strengthen the economy and prevent banker abuses, and is now at the heart of an effort to use taxpayer bailout money to lobby Congress against financial reforms.
So far, their efforts seem to be paying off. Last week, one of the CFPA's chief advocates, Rep. Brad Miller (D-NC), co-authored an amendment significantly restricting the agency's enforcement powers. As Sebert and Zamora note, Miller agreed to exempt banks with $10 billion or less in assets from regulatory examinations by the CFPA--roughly 98% of all banks. The existing, corrupted regulators who didn't lift a finger to prevent the subprime mortgage crisis will be the people actually going to the banks and reviewing their books. While the CFPA could send along one of its own regulators to participate in the exam, the new agency can't tax the bank to pay for it, which would make it very difficult for the CFPA to keep an eye on smaller banks.
Even worse, there is nothing to prevent a giant bank like Bank of America from moving all of its most egregiously predatory activities into a series of small corporate subsidiaries. By exploiting this loophole, 100% of U.S. banks could be exempt from CFPA enforcement, including the giant banks most heavily involved in subprime mortgage abuses.
The other big piece of Obama-backed financial legislation to make its way through Committee last week had to do with derivatives, also known as the wild Wall Street securities that brought down AIG. The best way to fix the derivatives mess is to require that derivatives be traded on an exchange the same way stocks are, so that companies can't make crazy bets without regulatory and market scrutiny. But Obama only wants "standardized" derivatives to be processed through a central clearinghouse--like an exchange, except without any public pricing information. And so long as a derivative contract can be deemed "customized," it would be totally exempt from even this limited reform.
But as Art Levine notes for AlterNet, the derivatives bill actually got worse in committee. Plenty of non-financial businesses use derivatives to legitimately hedge real risks: Airlines try to insure themselves against swings in oil prices, for instance. Lawmakers agreed to exempt any contract with these companies, termed "end-users" in the financial jargon, from central clearing requirements. The trouble is, big Wall Street hedge funds and private equity firms can be classified as "end-users," opening a fatal loophole in the legislation. The five banks who control 95% of the derivatives market will just conduct all of their most reckless trades with hedge funds and avoid oversight entirely.
A modest reform on paychecks for bailout recipients is nowhere near sufficient to protect our economy from banker excess. If Wall Street is going to serve any productive economic function, it has to be subject to serious consumer protection rules, and its derivatives casino has to be dismantled.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
By Raquel Brown, Media Consortium Blogger
After several prominent members left the Chamber of Commerce over its prehistoric climate change policies, the organization appeared to do an about-face on its climate stance during a press conference on Monday. Sound too good to be true? It was. Members of the Yes Men, a group of satirical, anti-corporate activists, posed as Chamber of Commerce officials and held a fake press conference claiming that "There is only one sound way to do business: That's to support a strong climate-change bill quickly, so that this December in Copenhagen, President Obama can lead the entire business world in ensuring our long-term prosperity." In reality, the Chamber has not changed their climate stance and continues to oppose climate change legislation. The Yes Men's stunt is just one more in a chain of hoaxes this Autumn, including a boy in a balloon, death panels on health care reform, and recent allegations that radical Islamists are using interns to infiltrate Capitol Hill.
By Nezua, Media Consortium Blogger
For the most part, it's been a good week for immigration reform. The Senate approved a measure that will end the "Widow Penalty," which rescinded applications for U.S. residency if one's spouse of two years or less years dies, and on Tuesday, as RaceWire reports, the San Francisco Board of Supervisors passed legislation that restores the right of due process to immigrant youth.
By Lindsay Beyerstein, Media Consortium Blogger
A plan to reform health care that includes a robust public option would actually cut the deficit, according to preliminary estimates by the Congressional Budget Office (CBO). For the purposes of this analysis, a robust public option was defined as one that reimburses doctors at Medicare rates plus five percent. The latest CBO estimate is critical for Democrats because President Barack Obama said he wouldn't sign a health care bill that adds to the deficit. (There's a double standard at work. Health care has to pay for itself or save money. But as Jo Comerford notes for Democracy Now!, the president has no compunction about bloating the budget with defense spending.)
As health care reform moves into the closed-door, intra-party negotiation phase, House of Representatives Speaker Nancy Pelosi is emerging as a champion of a public option. Pelosi has always said that she can't pass a bill without some kind of public plan, though she has wavered about how tough that plan should be on payouts to providers. But according to Brian Beutler of TPMDC, yesterday's "favorable CBO report seems to have settled all that, and Pelosi's decided to go all in for a public option."
And why not? A clear majority of Americans now favor a public option, as John Byrne reports in Raw Story. According to a Washington Post/ABC News poll published on Tuesday, 57 percent of respondents favor a public health insurance option to compete with private insurers. That's an increase of five percentage points in two months.
Two bills made it out of committee in the Senate, one with a public option (the Health Education Labor and Pensions Committee's effort) and one without (the Senate Finance bill). So, proponents of the public option are putting pressure on Senate Majority Leader Harry Reid to include one in the final bill. The Progressive Change Campaign Committee is running ads in Reid's district that ask if he's strong enough to back a public option. Reid might be more susceptible than usual to progressive pressure because he's up for reelection and facing dismal poll numbers, according to Alex Koppelman in Salon.
The public option has come back from the abyss several times, thanks to a combination of popular appeal, political courage and determined progressive activism. But Mike Lillis of the Colorado Independent argues that Democrats shot themselves in the foot by taking single payer off the table early on. Single payer health care would abolish private health insurance and cover everyone through a Medicare-like system. It would be an easier and cheaper way to achieve universal coverage than any of the options Congress is considering now, but it's an anathema to the insurance industry.
As Lillis observes, a basic principle of negotiation is to ask for more than you think you're going to get and negotiate down from there. But the White House made a point of shooting down single payer in May and Congressional Democrats held but one hearing on the prospect. Talk about lousy business skills.
By choosing the public option -- not single payer -- as the left-most negotiating point, Democrats left themselves with few places to go but toward more conservative proposals for insurance reform, experts say, including the co-op model and a system of triggering public plans only if private insurers fail to meet certain cost and coverage targets. In the blood sport of congressional negotiating -- which dictates that you over-ask, and then move toward your goal during the subsequent bartering -- Democrats were asking merely for the public plan they wanted in the final bill.
While we're on the subject of preemptive concessions to unreasonable political parties, Amanda Marcotte of RH Reality Check describes how Democrats have bent over backwards to accommodate the anti-choice lobby on funding abortions under a public plan. Democrats have proposed elaborate bureaucratic workarounds to make sure that abortions are only covered by private money. Still, anti-choice militants like Michelle Bachmann (R-MN) are accusing them of backing abortion fieldtrips for school kids. Speaking of starting high and negotiating downward, Democrats should threaten to overturn the Hyde Amendment, which bans the use of federal funds for most abortions. Let's see what the anti-choicers are prepared to give up in exchange.
In a sense, it's reassuring that legislators are taking the public option seriously enough to argue about how it might pay for abortions. If they didn't think we were going to get a public option, it would be a moot point.
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 Zach Carter, Media Consortium Blogger
The U.S. economy has diverged: Wall Street is living high on the hog while everyone else is struggling. The Dow Jones Industrial Average eclipsed 10,000 for the first time since last October this week, even as unemployment continues to spiral out of control. And while President Barack Obama has taken some very real steps to help ordinary people, his administration's efforts to save Wall Street have far outstripped their support of workers.
Matthew Rothschild details these disparities for The Progressive. Regulatory reforms are moving through Congress at a snail's pace and the wreckage from the mortgage bubble is increasing. Wage cuts are more widespread today than in any era since the Great Depression, even as bankers capitalize on taxpayer bailouts to score epic profits and outsized bonuses.
"One economy is for the rich and the upper middle class," Rothschild writes. "The other economy is for everybody else."
So how can a few big banks make so much money while the rest of the economy suffers? As Kevin Drum explains for Mother Jones, the kind of banking that helps the economy is a pretty simple business of taking deposits and making loans. But a lot of what we now call "banking" really just consists of making bets on just about anything you can dream up.
"Banks aren't using all this cheap money to increase lending. They're using it to fund bigger and bigger bets in the fixed-income sector -- the same sector that brought us junk bonds, credit default swaps, subprime loan securitization, interest rate carries, collateralized debt obligations, and all the rest of Warren Buffett's 'financial weapons of mass destruction.'"
The banks, in other words, are gambling with taxpayer money. A host of big finance companies have reported earnings in the past week, and the numbers are ugly: JPMorgan Chase reaped $3.59 billion in third-quarter profits and Goldman Sachs is planning to payout $23 billion in bonuses from speculative trading, while Bank of America and Citigroup are hemorraging money on mortgages and credit cards. The Wall Street casino is alive and well, but anything that is actually tied to the real economy is a disaster.
According to a new report from the U.S. Treasury, lending among the largest recipients of the Troubled Asset Relief Program fell by 17% from July to August. Small businesses can't cope with the cutoff in financing. A lot of businesses stay profitable over the long-term by borrowing money to meet short-term expenses. A baker can borrow money to buy flour and pay the bank back when she sells her bread. With bank lending on ice and consumers cutting back on spending, many small businesses are failing. Thousands more will be at risk in the next couple of years while unemployment remains elevated.
Writing for Salon, former Clinton Secretary of Labor Robert Reich notes that these economic struggles are not reflected in major stock indices. Stock are soaring as big corporations who don't need bank loans score short-term profits from cost-cutting, i.e., mass layoffs. Obviously, this strategy can't work for very long. When millions of Americans are out of work, they can't afford to buy the things companies make.
There's an important lesson in our current economic state-of-affairs, as Katrina vanden Heuvel emphasizes for The Nation. The bailout has not done what Henry Paulson told us it would do. To be sure, it saved the banks- even the strongest banks would have failed last fall without extraordinary government support. But it has not increased lending and kept the economy from disaster. The Obama administration, which has extended the Bush administration's support for bank balance sheets and bonus checks, is facing a political nightmare if it doesn't show produce some stronger economic results for ordinary citizens.
"Heading into 2010, the Obama administration must put itself back on the side of working people," vanden Heuvel writes.
The administration must address two critical problems in order to restore the nation's economic credibility. Putting the unemployed back to work is at the top of the list. Anything that saves jobs will help, including aid to states to keep teachers and cops on government payrolls and tax credits for companies that hire new full-time workers.
Something must also be done about the foreclosure epidemic. Nothing underscores our economic disparity like continuing housing mess, which has been in full-blown crisis mode since 2006. Despite a multi-trillion-dollar bank bailout, foreclosures are surging to all-time highs. Writing for The American Prospect, Tim Fernholz details the prolonged problems with the Obama administration's current foreclosure relief program.
While millions of troubled borrowers are eligible for the plan, which reduces monthly mortgage payments to affordable levels, foreclosures are still outpacing loan relief efforts by more than two-to-one.
Banks are dragging their feet and the administration has imposed no penalties on lenders who don't live up to the program's standards. Instead, the Treasury Department is offering banks cash incentives to keep people in their homes. Bank of America, which has received $45 billion in direct government bailout funds, plus hundreds of billions in government guarantees and other perks, has modified merely 11% of the mortgages it controls that are eligible for the plan.
Fernholz offers several potential improvements to Obama's foreclosure relief plan, including more aggressive government policing of the current plan and allowing foreclosed homeowners to continue to live in their homes as renters. With up to 12 million foreclosures projected by the end of 2012, just about anything the administration does will help.
The economy is a measure of social well-being, not a stock market index or a corporate earnings statement. Policymakers need to prove they can respond to the very real needs of all their citizens, not just those with financial clout.
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.
By Raquel Brown, Media Consortium Blogger
The U.S. might not have to go to December's climate change talks in Copenhagen empty handed. Two weeks after Senators John Kerry (D-MA) and Barbara Boxer (D-CA) unveiled a new draft of the climate change bill, Kerry and Sen. Lindsey Graham (R-SC) announced their bipartisan partnership to pass climate change legislation in an op-ed for the New York Times. By working together, the two hope to appeal to their respective party's interests and help the climate change bill get 60 votes in the Senate.
By Nezua, Media Consortium Blogger
A crowd of thousands gathered on Capitol Hill Tuesday, to lobby for and support immigration reform, as Debayani Kar writes for RaceWire. Representative Luis Gutierrez (D-IL) of the Congressional Hispanic Caucus "presented his key principles for comprehensive immigration reform" at the rally. They include:
By Lindsay Beyerstein, Media Consortium Blogger
Yesterday, the Senate Finance Committee finally passed its health care bill. John Nichols of the Nation reacts:
If every kid in class finishes their homework except for one, guess which kid will get the most attention. That's right, the slacker.
And, when the slacker finally does turn in the assignment, it is invariably a slapdash job that fails to meet minimum standards.
So it is in the U.S. Senate, where the Finance Committee finally got around to finishing its health care reform assignment.
The bill passed by a vote of 14-9. All the Democrats, plus Sen. Olympia Snowe (R-Maine) voted in favor. As we know, it doesn't include a public option.
Robert Scheer, also of the Nation, sums up the bill as written:
The main thrust of the proposal is to forcibly submit even more customers to the tender mercies of the insurance industry while doing nothing significant to cut costs. Insurers will now pretend that the burdens on them are onerous and will demand concessions to make this an even bigger boondoggle for the medical profiteers than George W. Bush's prescription drug coverage initiative.
Sheer sees the Finance Committee bill as a sop to the health insurers. If it were to pass in its present form, it would deliver millions of new customers to private insurers by requiring everyone to carry insurance. The free market keeps costs down when companies compete to give the best value for the lowest price. But most health insurers operate as monopolies on their home turf. If insurers had to compete for customers, they'd have an incentive to lower their prices. That's why progressives want to introduce competition in the form of a public option.
An all-private insurance system gives power to an industry that it is indifferent to the needs of the people it claims to serve.
Before we go any further, our warmest congratulations to Robin Marty, who is expecting her second child. In a piece for RH Reality check, Marty details how the private insurance industry toys with people's lives in pursuit of profit. For Marty and her husband, joy is mixed with apprehension because their maximum out-of-pocket insurance cost just doubled. By the time the baby arrives, Marty's husband expects to pay 10% of his pre-tax income just to keep his family insured. And they'd better hope that bundle of joy is of an actuarially-approved size. An insurance company in Colorado refused to cover a 4-month-old baby because he was "too fat," according to the boy's father. The company relented after media pressure, but there's no indication that they plan to drop their general rule that babies whose weight is above the 95th percentile don't get covered.
Earlier this week, the insurance industry broadsided the Obama administration by releasing a "report" warning that health care reform would cause premiums to skyrocket.
As economist Robert Reich explains in TAPPED, the industry was upset that the Senate Finance Committee was considering more lenient punishments for young healthy people who don't buy health insurance. (They would still be fined, just not as much.) The industry report claimed that if the government spares the rod, only old sick people will sign up, and premiums will be higher for everyone. Reich argues that the report inadvertently makes the case for the public option:
But the bomb went off under the insurers. The only reason these costs can be passed on to consumers in the form of higher premiums is because there's not enough competition among private insurers to force them to absorb the costs by becoming more efficient. Get it? Health insurers have just made the best argument yet about why a public insurance option is necessary.
Steve Benen of the Washington Independent notes that former Democrat Joe Lieberman (I-Conn) went on Don Imus's syndicated shock jock radio show to echo the insurance industry's talking points. "I'm afraid that in the end, the Baucus bill is actually going to raise the price of insurance for most of the people in the country," Lieberman said.
With all this hypothesizing and posturing, it's easy to forget that neither Lieberman-nor anyone else--is going to vote on the Baucus bill as written. The Finance Committee bill is just one of several proposals to have passed their respective committees. In the Senate, the more liberal Health Education Labor and Pensions Committee (HELP) passed a bill with a public option this summer. All the House health reform bills also include a public option.
As Mike Lillis of the Washington Independent explains, the tone of the debate is expected to shift dramatically: Now that the various bills have cleared their bipartisan committees, power shifts to the Democratic leaders in the House and the Senate who are in charge of shaping the final legislation.
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 Pulse 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 Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
by Zach Carter, Media Consortium Blogger
Last month, the U.S. unemployment rate surged to 9.8% as 260,000 people lost their jobs. Although the stock market and corporate profits appear to be recovering from last year's financial catastrophe, work is harder to find. President Barack Obama and Congress need to act now to get people working again and help soften epic unemployment in years to come.
The current job prospects are dim. Without additional economic stimulus, the Congressional Budget Office projects that unemployment will average 10.2% in 2010, and 9.1% in 2011. That means things are going to be as bad as they are today for nearly two more years. That's an eternity in economic time. Two years ago there were banks called Washington Mutual, IndyMac, Lehman Brothers, Bear Stearns and Wachovia. Two years of nearly double-digit unemployment means a massive increase in poverty, and the eradication of economic opportunities for an entire generation that grows up without access to basic needs.
Unemployment holds greater significance than any other economic statistic. As the editors of The Nation write, "Except for a military threat, no issue confronting a president is more serious than widespread unemployment."
The official unemployment rate also drastically underrepresents the scope of economic suffering. As The Nation's editors explain, over 15 million Americans cannot find any work at all. Another 9 million people are settling for part-time work because they can't find a full-time job. When you include people who have simply given up looking for a job after months without success, 17% of the country is either out of work or underemployed. That's roughly equal to the entire rural population of the U.S.
It's important to note that today's hefty percentage of joblessness is not a result of Obama's economic stimulus package. As economist Dean Baker emphasizes for AlterNet, we'd be staring at 11% or 12% unemployment without that effort. New America Media correspondent Suzanne Menneh details a great stimulus package success story. The Mosaic Youth Theater in Detroit gives at-risk youth the opportunity to do constructive, creative work putting on dramatic productions, and has had a dramatic impact on its performers drop-out rate. The theater was facing heavy recession-induced cutbacks before Obama's stimulus plan was enacted, but with a $50,000 grant, the theater can continue to employ teachers and directors.
The problem, Banker argues, is that the stimulus was too small. The president's economic advisers expected the recession to be milder than it has been, and then scaled down the package when political pressure was applied.
While political realities do place limits on Obama's options to create more jobs, voters are not going to find fault with the president for fighting joblessness. One of the easiest ways to boost employment, Baker notes, is to offer employers a tax credit for hiring more people.
Writing for The American Prospect, Tim Fernholz emphasizes another straightforward way to stymie layoffs. State budgets are incredibly strapped right now. The loss of tax revenue from plummeting home values and lost income has left local governments with few choices. To get the bottom line to work, states are slashing some of the most critical positions in society: Teachers, cops and firefighters are being laid off. Putting together a fresh package of aid to states can save these jobs, and as Fernholz notes, good luck to the politician running on an anti-teacher, anti-firefighter platform.
But unemployment is not the only front in the economic battle. As layoffs mount, credit card bills get higher, mortgage payments get harder to meet and many cash-strapped households turn to predatory payday loans to make ends meet. As the current wave of foreclosures demonstrates, consumer protection in the realm of finance has been absolutely dismal for decades. But despite the obvious shortcomings of the existing regulatory framework, the Obama administration's push for better consumer protection is morphing into all-out legislative war between the bank lobby and anybody interested in the public good.
Art Levine explains the situation in a post for In These Times' Working blog. Financial firms spent a massive $223 million lobbying the government against new regulations in the first half of 2009 alone. The Chamber of Commerce, the top lobbing group for U.S. corporate executives, is spending $2 million on ads smearing Obama's plan to create a new Consumer Financial Protection Agency (CFPA). The new regulator would do just what its name implies: make sure banks can't gouge you on credit cards, mortgages, debit cards and payday loans. But the Chamber's new ads make the ridiculous claim that the new regulator will destroy local businesses like your neighborhood butcher or baker.
The good news, Levine notes, is that Obama isn't taking the attacks lying down. The President sharply criticized the Chamber in a speech on Friday, and groups like Americans for Financial Reform are pushing to make sure lawmakers look at the issue from the perspective of consumers, not just bank profits. The House Financial Services Committee is scheduled to mark-up the consumer bill on Wednesday. Creating a strong CFPA is absolutely critical to making sure our economy answeres to ordinary people. Levine quotes It Takes a Pillage author Nomi Prins, a former Goldman Sachs managing director, to emphasize that banks will not act in the public good on their own.
"We still have a bizarre and misplaced faith that huge corporations--which are deisgned for the sole purpose of making profits--are somehow able to act ethically and restrain themselves," Prins says.
Even if your own pocketbook has never taken a pounding from the banking industry, the legitimacy of your government is at stake. As Glenn Greenwald explains for Salon, even after wrecking the global economy, banks have been able to sabotage efforts to avert foreclosure while demanding enormous bailouts at taxpayer expense. The chain of command is clear: The banking industry still showers lawmakers with campaign contributions, while individual bankers can still get the ear of top policymakers charged with major economic decisions. How easy is it for Wall Street bigwigs to influence policy? Laura Flanders of GRITtv highlights an AP report that details Treasury Secretary Timothy Geithner's phone records. Geithner has spoken with Citigroup CEO Vikram Pandit more times this year than he has with Rep. Barney Frank, D-Mass., the key legislator pushing Geithner's own financial reform package. And Goldman Sachs CEO Llyod Blankfein has talked to Geithner more times than Sen. Chris Dodd (D-Ct), who is Frank's regulatory reform counterpart in the Senate.
Many top policy makers, in fact, come to government from high-profile positions on Wall Street. The result has been almost direct control of the legislative branch of our government, and ideological control of the executive branch.
"Earnest, substantive debates over this or that policy are so often purely illusory, as the only factor that really drives outcomes is the question of who owns and thus controls the political system," Greenwald writes.
The government is supposed to represent all of us, not just the wealthy and not just major corporations. The past two years have made clear to everyone that the government often must take strong actions to limit the damage created by private-sector calamaties. We need another round of economic stimulus to get people working again, and we need a fair set of rules to make sure working people don't get duped by predatory bankers.
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.
