OurFuture.org Blogs: Mike Elk

Protestors to Goldman Sachs: "You Are Not God" - Bernanke Explains Why

Mike Elk — Mon, 16 Nov 2009 14:56:47 -0800

VIDEO: Goldman Sachs protest in Washington.

Somebody call up Pat Robertson! Goldman Sachs CEO Lloyd Blankfein is going around claiming he's "doing God's work."

That's exactly what he's quoted as saying last week in an interview for the Times of London. A group of around 200 protesters gathered outside the company's Washington headquarters Monday to say that while the company may have enough power to wreck the United States economy, that doesn't place it on the side of God. In fact, as one of the protesters, Barbara Kalbach of Iowa Citizens for Community Impovement said, the pain that Goldman Sachs and its Wall Street brethren have caused as the aftershocks of the Wall Street collapse ripped apart state and local government budgets as well as family budgets "is a sin, Mr. Blankfein. You should be familiar with sin, I think."

Goldman Sachs is, in the words of Rolling Stones journalist Matt Taibbi, "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

Goldman Sachs did its ungodly work by engaging in such manipulative, shadowy practices as credit default swaps and by extensive short-selling in mortgage-backed securities when the subprime mortgage bubble began to burst in 2007. In other words, Goldman Sachs profited from the very practices that led to record foreclosures, collapsing property values and the resulting slashes of state and local governemt programs. Blankfein justified the "God's work" comment by saying the company benefited the nation by effectively allocating capital to make the economy function properly. However, Federal Reserve Chairman Ben Bernanke pointed out on Monday that banks haven't been doing such a good job lately in making the economy work. In fact, Bernanke said that the banks are the reason for continued high unemployment:

Banks' reluctance to lend will limit the ability of some businesses to expand and hire. Because smaller businesses account for a significant portion of net employment gains during recoveries, limited credit could hinder job growth.

The banks instead have been engaging in merely sucking capital out of the real economy and into the liquor cabinets of their yachts. As Campaign for America's Future fellow Dave Johnson pointed out in his study of a bank that pulled the plug on a project that could have created 2,000 jobs, "$140 Billion for Bonuses, Zero for America’s Future":

Wall Street and the financial economy are supposed to be to supporting the real economy by playing the role of middleman, connecting sources of money with companies needing that money to allocate capital where it is needed. This is supposed to be a constructive process that helps We, the People fund innovative startup companies, build factories and schools,allocate capital for company expansion and fund other large-scale projects that require a pooling of resources and dilution of risk. That is their essential role in the economy.

But there is a problem with the way Wall Street has been and is operating. Instead of playing a background role supporting the real economy, Wall Street has been dominating the economy, influencing the government and running quick-buck schemes, creating bubbles, speculating up prices on commodities and generally running wild. Before the financial meltdown Wall Street was not allocating capital productively, it was allocating capital destructively. In the companies-as-buy/sell-commodities posts I have been exploring how Wall Street's practices has been destroying companies, eliminating jobs and generally wrecking our economy while making a very few vastly wealthy. The company-buyout game turns good companies into debt-ridden, job-shedding shells. The greed-based drive for ever-higher returns tries to destroy companies like Costco because they are “overly generous” to their customers and employees. Wall Street has turned into a machine that grinds up jobs and communities, forcing wage cuts, dehumanization of workplaces, and corruption of our democracy.

When the financial sector broke down as a result of quick-buck risky investments (that didn’t allocate capital), massive leveraging (that didn’t allocate capital), Ponzi-like scams (that didn’t allocate capital), outright but not-yet-prosecuted fraud (that didn’t allocate capital), etc., our government stepped in to rescue the sector. But instead of fixing the system, Wall Street still is not allocating capital where it is needed. They are, however, taking huge profits and giving out huge bonuses.

Getting capital flowing back into the real economy will require capturing these outrageous profits while reducing risky speculation on Wall Street. A good way to do this would be to impose a small financial transaction tax on all profitable stock transactions. A study by Dean Baker's Center for Economic and Policy Research show that a tax as small as .25 percent per stock transaction would raise $140 billion dollars for the government. Millions of jobs can be created by investing that money in projects and programs that would put people to work: jump-starting the green economy, rebuilding our infrastructure, assisting struggling manufacturers, and aiding struggling states so they aren't forced to lay off teachers, firefighters and police officers. Also, according to Baker, a financial transaction tax would severely limit greed-induced speculative practices:

A small increase in trading costs would be a very manageable burden for those who are using financial markets to support productive economic activity. However, it would impose serious costs on those who see the financial markets as a casino in which they place their bets by the day, hour, or minute. Speculators who hope to jump into the market at 2 o'clock and pocket their gains by 3 o'clock would be subject to much greater risk if they had to pay even a modest financial transaction tax.

A financial transaction tax would both raise money necessary to rebuild our economy while at the same time reducing the speculative practices of Wall Street.

The idea of a transaction tax is not a new one. The United States had a transfer tax from 1914 to 1966 which levied a 0.2 percent tax on all sales or transfers of stock. In 1932, Congress more than doubled the tax to help financial recovery and job creation during the Great Depression.

It's time that Wall Street start working again for Main Street after all that Main Street has done for Wall Street. Main Street's bailout of Wall Street has been so effective that Wall Street is now profitable. Now it's time for Wall Street to bail out Main Street. A financial transaction tax is a way to do it.

Escaping the Claws of Wall Street and Building an Economy on Making Things

Mike Elk — Thu, 29 Oct 2009 11:48:07 -0700

Today, the Campaign for America’s Future is holding a “Building the New Economy” conference. As we build the new economy, it’s important we build one not based on the assets bubbles of the past but on the firm rock of manufacturing.

As AFL-CIO President Richard Trumka argues:

Flawed trade and tax policies and a financial system focused on short-term profits drove good jobs offshore, led to record trade deficits, and left the economy in ruins. With the manufacturing share of gross domestic product withering to 12 percent (from 15.9 percent in 1995) and the financial sector growing to 22 percent, the structure of the U.S. economy looks more like Monaco than Germany. This growth model of asset bubbles, low wages, credit pyramids, toxic assets and unregulated out-of-control global capital has been a recipe for disaster.

There is a reason every other developed and advanced developing nation has a manufacturing strategy. Most governments see manufacturing as key to long-term growth, and they target investment in industries and technology. In contrast, our government abandoned strategy to market forces and left workers and communities hanging without a safety net.

However, if we just regulate Wall Street alone, we will not be able to grow a good economy. We must invest in manufacturing. Scott Paul, executive director of the Alliance for American Manufacturing, puts it this way:

But chalking up the blame to a few bad apples on Wall Street and their risky financial instruments, and responding by simply providing appropriate regulation in the financial services sector, will ultimately be unsatisfying. There are much deeper, structural issues which must be urgently addressed. Otherwise, the absurd positive feedback loop will continue: consumer debt, subsidized Chinese imports, American job loss and factory closures, the growing U.S. current account deficit, burgeoning Chinese currency reserves reinvested in American debt…These will only inflate new bubbles and reinforce our current problems.

We must both re-regulate the financial markets and re-create our manufacturing base to ensure an economy that works for everyone. Otherwise, we will simply borrow and borrow more and inflate asset bubbles that leave us deeper and deeper in financial crisis every time.

Labor Leader Trumka To Testify Against "Reform" Bill Deemed "TARP on Steroids"

Mike Elk — Wed, 28 Oct 2009 23:18:13 -0700

After leading the dramatic three-day Showdown in Chicago at the American Bankers Association (ABA) Convention in Chicago, AFL-CIO President Richard Trumka will head to the House Financial Service Committee today to testify against proposed reform legislation and argue that the bill actually gives the banks more power.

As he testifies against the banksters, he will, in a twist of irony, be sitting at the same table with American Bankers Association President Ed Yingling.

After weakening current law on derivatives, the committee is proposing once again to weaken law in the banker's favor. The draft legislation concerning banks "too big to fail" would actually lead to more bailouts over the long run. In an advance copy of AFL-CIO President Richard Trumka's prepared testimony that I obtained, Trumka will tesify that:

The discussion draft appears to take the most problematic and unpopular aspects of the TARP and makes them the model for permanent legislation.

Essentially the legislation would weaken regulation and lead to the conditions in which the American people would be forced to bail out the banks again. As Trumka testifies:

The discussion draft would appear to give power to the Federal Reserve to preempt a wide range of rules regulating the capital markets - power which could be used to gut investor and consumer protections.

Trumka goes onto explain in vivid details how the Federal Reserve with its lack of accountability has traditionally acted in the interests of the banks:

The Federal Reserve currently is the regulator for bank holding companies. In that capacity, it was responsible throughout the period of the bubble for regulating the parent companies of the nation's largest banks. While regulatory authority rests in the Board of Governors of the Federal Reserve in Washington, routine responsibility for regulatory oversight has been delegated by the Board of Governors to the regional Federal Reserve Banks. The Federal Reserve System's regulatory expertise resides in these regional banks. The problem is that these regional Federal Reserve Banks are actually controlled by their member banks - the very banks whose holding companies the Fed regulates. The member banks control the selection of the majority of the regional bank boards, and the boards pick the regional bank president, who are effectively the CEO's of the regulatory staff... Giving the Federal Reserve with its current governance control over which financial institutions are bailed out in a crisis is effectively giving the banks the ability to raid the Treasury for their own benefit.

Trumka explains how the proposed legislation would give the big banks more of an incentive to take risky bets in order to drive out their competition:

We are also deeply troubled by provision in the discussion that would allow the Federal Reserve to use taxpayer funds to rescue failing banks, and then bill other non-failing banks for the costs.

Isn't that absolutely absurd? If a bank deemed "too big to fail" by the Fed takes out risky bets and its fails miserably, the other banks who were engaged in safe banking would have to bail them out. For the big banks that can afford to take huge bets, this would simply give them more incentive to do it. If they lose, the smaller banks not deemed "too big to fail" would merely go under bailing out the big banks. So why not gamble big on Wall Street since every situation would be a win-win. If you win, big profits. if you lose, you get a bailout and your competition goes out of business. Sounds like a good deal to me.

Furthermore, as Congressman Brad Sherman points out, the proposed legislation would allow the government to bail out banks into the trillions of dollars without having to seek Congressional approval. It would allow the Federal Reserve to bail these banks out secretly without the public knowing about it. This is just simply undemocratic. At least the last time we bailed them out, the bankers at least had to go to Congress and beg in shame. Now, as Sherman points out, the current legislation meant to reform Wall Street would actually be like "TARP on steroids".

The obvious question remains why has the House Financial Service Committee, under the leadership of Rep. Barney Frank, strayed so far from President Obama's plans to regulate Wall Street and dramatically weakened his proposals? Perhaps the $223 million that the banking lobbyists spent on lobbying Congress in the first six months of 2009 alone has something to do it. Or perhaps, as the Wall Street Journal reports, campaign contributions to committee members have increased dramatically as they consider financial reform.

However, as the Showdown in Chicago showed, anger over the bailout and greed on Wall Street has increased dramatically as well. The message is loud and clear: We will go to any venue to take on the banks. We will fight the banks wherever or whenever, whether it be the halls of Congress as Trumka is doing today, the thousands of protesters busting up the American Bankers Association's Convention earlier this week, or, like the members of United Electrical Workers (UE) who, as portrayed in Michael Moore's Capitalism, occupied their factory after Bank of America closed it down, at our workplaces.

We will not rest until real reform of Wall Street is passed. We will hold any politicians—Republicans and Democrats alike—accountable for passing fake reform that merely lines the pockets of Wall Street. We will not rest until justice is done.

Frank Allowing Weakening Amendments to Financial Reform To Pass Without Roll Call Votes

Mike Elk — Tue, 20 Oct 2009 14:34:16 -0700

As markup on financial reform legislation continued today in the House Financial Service Committee, a pattern has emerged in which committee members are not forced to go on the record to vote for key amendments that weaken financial reform. Instead, the chairman of the House Financial Services Committee, Rep. Barney Frank, is calling voice votes in which the yea or nays against certain weakening provisions are not recorded.

Two of these weakening amendments have been particularly in the banks' favor. One amendment, the Miller-Moore Amendment to HR 3126, the Consumer Financial Protection Agency bill, exempts 98 percent of banks ( 8,000 of 8,200), all of which were covered by the President’s plan, from the oversight authority of the proposed new CFPA.

Because exempting so many banks from regulation is highly unpopular, members of Congress don't want voters to know that they voted for such ridiculous measures. So Chairman Frank was allowed to merely call for a voice vote. That way, the committee members don't have to answer for where they stand.

The same thing happened last week on a vote on the regulation of derivatives, the exotic financial instruments that Warren Buffett called “weapons of financial mass destruction.” A key weakening amendment, passed by voice vote in committee, would ban the Securities and Exchange commission and the Commodities Futures Trading Commission (the regulators in charge of overseeing derivatives) from stopping derivatives that seem abusive or risky to the markets. Not allowing the regulators to stop derivatives that appear abusive is like telling a cop that he can't intervene if he sees what appears to be a crime in process.

In these votes, the banks won, and members dodge retribution from voters.

Meanwhile, the CFPA and other regulators will fall short of meeting the goals that President Obama set for regulating the markets, thus putting Americans at risk of another financial disaster.

As a veteran financial watchdog of the National Community Reinvestment Coalition, John Taylor, states in regard to the CFPA bill:

“The bill is unacceptable; it does not reign in the outrageous and abusive practices in the banking industry. Congress is failing to deliver on President Obama’s commitment to achieve fundamental reforms of the financial system. The bill’s flaws are so glaring that it’s impossible not to see the influence of the banking and credit card lobbies. The bill’s intentional inadequacies assure that working families will continue to struggle with inappropriate, deceptive, and high cost financial products.”

If members of Congress are going to vote in favor of the big banks, they should go on the record; that way the big banks know where to send the checks.

Financial reform is still a top issue of many Americans. The media might not be covering it as much as it did a year ago, but for Americans who have lost their retirement savings, their jobs, and frequently their homes—it's still a huge issue. A poll recently released by the SEIU showed that 74 percent of Americans agree that "the greed and risky decision of banks and financial companies led to the financial crisis and recession and its time that Congress crackdown on their reckless practices to protect consumers."

After more than a year in office, the public is no longer inclined to lay the blame for the financial bailout and its consequences on the Republicans. If Democrats fail to pass meaningful financial reform, the American public will hold Democratic officeholders in general accountable, whether or not they go on the record.

Advocating for a Weak Dollar Policy Is Like Throwing a Birthday Party for Osama Bin Laden?

Mike Elk — Mon, 19 Oct 2009 09:36:16 -0700

Despite all the apocalyptic naysaying by right-wing economists that the falling dollar is a bad thing, it's actually a really great development for economic recovery:

From Nobel Prize-winning economist Paul Krugman:

The truth is that the falling dollar is good news. For one thing, it’s mainly the result of rising confidence: the dollar rose at the height of the financial crisis as panicked investors sought safe haven in America, and it’s falling again now that the fear is subsiding. And a lower dollar is good for U.S. exporters, helping us make the transition away from huge trade deficits to a more sustainable international position.

But if you get your opinions from, say, The Wall Street Journal’s editorial page, you’re told that the falling dollar is a terrible thing, a sign that the world is losing faith in America (and especially, of course, in President Obama).Something, you believe, must be done to stop the dollar’s slide.

A weak dollar is good because it means that it is cheaper for foreign countries to buy American products. Indeed, the falling dollar is helping put workers back to work in the U.S. As an article in today's New York Times points out:

Mr. Stevenson’s family-owned company, Eastman Machine, has been making cutting tools for the textile industry for 120 years. A year ago, in the depths of the financial crisis, Mr. Stevenson had to lay off a dozen workers, but the dollar’s almost 20 percent decline since March has made his goods much more competitive overseas. Next month, Mr. Stevenson hopes to sign a multimillion-dollar deal in Europe that could enable him to rehire his workers.

“This wouldn’t have happened five years ago, or even two years ago,” he said. “Business conditions are still slow but the dollar has allowed us to be much more aggressive overseas.”

So why does a weak dollar get such a bad rap in the media? Part of it has to do with messaging. Last week, Ezra Klein brought up a good point:

When people hear "weak" dollar, they think something bad is being done to the United States. It's terribly hard for a politician to advocate a "weak dollar" policy. It sounds like you're throwing Osama bin-Laden a birthday party.

So how do we get around these barriers? One reason why right-wing economists are able to so easily manipulate the debates in the big multinationals' interest is that messaging and labels on this subject are just so tough for most people to understand.

What is "free trade"? What is "fair trade"? "Weak dollar" policy? "Strong dollar" policy?

Most people don't know so conservatives can easily come in and label something as fair trade that isn't necessarily good for anyone. What are some ideas that people have on this issue? How can we overcome the barriers that make it tough to advocate for policies that build a sustainable economy both in the U.S. and abroad?

Wall Street's Favorite Democrat Misrepresents Financial Watchdog Elizabeth Warren

Mike Elk — Thu, 15 Oct 2009 10:30:27 -0700

Democratic Congresswoman Melissa Bean is earning the title of Wall Street's favorite Democrat.

The three-term Illinois congresswoman and leader in the New Democrat Coalition has pocketed almost $2.2 million since she's been in Congress from the banking and financial services interests she oversees as a member of the House Financial Services Committee, according to the Center for Responsive Politics, including $338,125 so far this year.

Don't worry, though; she's working hard for her money. She's trying to amend a financial regulatory reform bill to nullify tough laws against predatory lending that several states have already adopted, and cripple the ability of states to regulate banks, credit card companies and other predatory lenders.

In doing so, Bean has spread the myth that even financial watchdog Elizabeth Warren, who is the chair of the Congressional Oversight Panel, would support such a move. In a dear colleague letter signed by six Democrats who have also received large sums of money from Wall Street this year—Rep. Jim Himes ($326,623), Rep. Ed Perlmutter ($123,350), Rep. Jon Adler ($140,717), Rep. Suzanne Kosmas ($103,311) and Rep. Gary Peters ($134,553) —they misrepresent a statement from an academic paper Warren wrote in 2008:

"In an era of interstate banking, uniform regulation of consumer credit products at the federal level may well be more efficient than a litany of consumer protection rules that vary from state to state. The problem is not in the federal preemption; it is in the failure of federal law to offer a suitable alternative to the preempted state law."

However, Warren has been clear that she supports the legislative approach backed by President Obama that would allow states to regulate banks and has said, when asked by Bean's office and others, that she opposes Bean's amendments.

Warren came out with a statement earlier today responding to Bean's letter saying:

“The CFPA should be able to set basic safety regulations – a floor – and states should be able to go beyond that floor if they choose. The CFPA will play a critical role in rebuilding a secure Middle Class, but no regulator is perfect. It is important that states have the chance to protect their citizens when federal enforcement is inadequate and to serve as a front-line defense against new threats.”

If Bean wanted to quote someone in favor of limiting the ability of states to regulate banks, she should have called up Goldman Sachs. Or perhaps the American Bankers association, which recently cried that a consumer financial protection agency "needlessly rips apart all the existing regulatory agencies . . . and creates a new agency with powers to mandate loans and services that go well beyond consumer protection."

Given the millions of families in thousands of communities whose financial foundations were needlessly ripped apart as these regulatory agencies either slept through the creation of the financial bubble or facilitated the move toward the inexorable burst, it is hard to argue against a "ripping apart"—or, more accurately, a sensible restructuring—of these agencies in ways that protect consumers and the economy.

Plus, allowing states to regulate banks is a key component of stopping corporate crime. The state are often the first entities to observe on-the-ground malfeasance by major banks; thus they are quicker to act.

In a letter from Bean's own Attorney General, Illinois Attorney General Lisa Madigan , says:

National banks and thrifts claim that allowing states to enact tougher laws will result in a too great a burden on the system. The argument is disingenuous. Many of these lenders are multinational companies that currently have to comply with a vast array of varying rules both inside and outside our nation's borders. In fact, as demonstrated by the swollen dockets of our state's foreclosure courts, national banks seem to have no problem complying with the varying state and local laws governing foreclosure process.

In fact, not allowing states to pass tough laws on predatory lending was one of the reasons for the financial crisis, Madigan argues:

Federal laws have frequently stymied state reform efforts. These laws preempted states from regulating certain risky loan terms and features. It was precisely these types of features that led to widespread abuses in the mortgage lending market. State attorney generals saw the abuses of prepayment penalties, which often locked burrowers into unaffordable sub-prime mortgages. Yet federal preemption barred the states from enacting tougher laws to address these abuses, even as applied to those entities we regulate.

This whole argument that allowing states as well as the federal government to regulate banks will hurt the economy is completely bogus. When you talk to bankers privately, they will acknowledge that they are not afraid of the administrative costs of 50 state rules. Companies have to deal with different laws in 50 different states when it comes to safety, labor practices and a host of other areas. It's standard practice for them, and in some cases, they will argue in favor of state over federal regulation when it's in their bottom-line interest to do so.

The real story is that these financial institutions just don't want more rules that will clamp down on the profits they make from predatory lending. They certainly don't want to have to pay for lobbying in 50 states. The banks have decided that buying off Melissa Bean is a lot cheaper than buying off state legislatures.

We won't let the banks get away with this. The American public is awake to the game that Wall Street is playing and we will hold people like Melissa Bean accountable for her work on behalf of the banks. The banks may be funding her political campaign but her paycheck still comes from us. It's time to tell Bean to work for her constituents, not Wall Street.

Martin Luther King Would Have Loved the Teabaggers, Not Called Them Racists

Mike Elk — Mon, 05 Oct 2009 08:36:41 -0700

A few weeks ago, I attended the teabagger protests in D.C. The thing I noticed the most about the folks there was that, for the most part, they were friendly, nice, hardworking people. Sure, there were some crazies; sure, there were some racists. For the most part, though, they looked like the type of folks I grew up with in the labor movement, coming to D.C. to participate in a protest and spend the rest of the weekend taking in some monuments and museums. These weren't rich suburbanites; the teabaggers I saw were mainly poor people, whose trip to D.C. was probably the only the vacation they would be able to afford this year.

Growing up in Pittsburgh, I had known many poor white people, but they all seemed to vote for Democrats because they had manufacturing jobs and were union members. Gradually, though, the unions—which were a means of educating people about politics—evaporated under the anti-union policies of Democrats and Republicans alike. I saw more and more strong Democrats turn Republican as they began to distrust a Democratic Party that took away their jobs with policies like the North American Free Trade Agreement and one massive corporate giveaway after another.

Even recently, my own grandmother, a lifelong Democrat, admitted to my mother that she was unsure about health care reform because of the "death panels."

Is my grandmother some sort of stupid, racist, teabagging reactionary? I think not. This is the woman who, after all, told me stories about how she was called a “Mediterranean n****r” growing up and was sympathetic to the experience of African Americans. But has my grandmother been lied to by Democrats and Republicans alike and seen her standard of living decline over the past 30 years? Sure. And has this led my grandmother to the point where she is so confused about what to believe that she simply doesn't trust government because, mostly, what government has done is hurt her over the last 30 years? Without a doubt.

As Sara Robinson argues in her must-read piece analyzing the rise of the teabagger movement among working-class Americans:

No democracy in history has ever survived with our current levels of inequality. There's no reason for the middle and working classes to trust anything about a system that's so clearly rigged to suck money straight out of their pockets into the tax-free offshore bank accounts of the wealthy - who, of course, turn right around and use that money to buy off our government, so they can suck up even more of our economy for themselves.

People are confused. They are angry, and they have little faith in government.

As President Obama has pointed out, we are all guilty of subconscious racism on one level, but few of us intentionally want to hate another person. People get very offended when you call them racists because most people don't intend or want to act in a racist matter.

I, myself, am guilty of have experiencing racist thoughts at time. But I have taken part in civil rights marches, dated women of color and shared an apartment for a very long time with a person of color.

However, I was outraged when the head of an organization told me that they would like to hire me, but they couldn't because they needed to hire a person of color. Likewise, I cringed a few weeks ago when a well-off, South Asian colleague of mine at a strategy meeting stood up and said, "Forget about white working class males. We need to expose them for the racist scumbags that they are."

As a white male from a working-class background, I thought to myself, "Who the hell is this guy, to get up and say that the folks I grew up with—my family members—are 'racists scumbags.'" It made me feel defensive.

I thought to myself, "I bet you the only white working-class males this guy interacts with are the guys serving him hamburgers on the way to his vacations in the Hamptons." My immediate reaction was not to listen to him, but to figure out a way to attack back.

Likewise, the progressive movement—in particular, progressive bloggers—are making a big mistake in attacking the other side by calling them racist. It merely makes them feel defensive because nobody wants to listen to someone that is attacking them with such an emotional bomb.

It makes the teabaggers resent the progressive movement and view progressives as rich, college-educated elitists who only want to tell them how wrong they are.

Meanwhile, Rush Limbaugh and Glenn Beck are giving white working-class males a huge hug. They are saying, "Come here; we understood you; we are one of you. We will fight on your behalf against elitist liberals who call you names." Working-class people, especially men, respond by listening to Glenn Beck even more and attacking progressives. It's an endless, destructive cycle in which no one wins.

As Martin Luther King explained in his sermon "The Strength To Love":

Returning hate for hate multiplies hate, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness: only light can do that. Hate cannot drive out hate: only love can do that.

Hate multiplies hate, violence multiplies violence, and toughness multiplies toughness in a descending spiral of destruction.

During the whole dialogue on the teabaggers, I never heard the narrative of why these poor people were turning up at the town halls. They were turning up because they were scared of change, because the only change they have known is their standard of living dramatically decreasing over the last 30 years. I never heard anyone talk about how most of the teabaggers are the people that need health care reform the most.

In fact, we got off message entirely. We stopped talking about health care reform altogether. We failed to articulate a progressive vision these people might adopt. We took an eye for an eye, leaving everyone blind.

Very few of us made any attempt to really reach out and embrace these teabaggers on the issues that we share with them. Many of their concerns about the bailout, NAFTA-style trade deals and the general loss of trust in government are core progressive issues. We could lock arms with the teabaggers and form a powerful alliance, but, instead, we attack our potential allies because we do not take the time to engage them.

As Martin Luther King explains:

Men often hate each other because they fear each other; they fear each other because they don't know each other; they don't know each other because they cannot communicate.

If we don't communicate with the white working class, we are never going to achieve true progressive change. We are just going to attack each other in an endless cycle and fail to realize our shared values.

It's time that we rise above immature name-calling and start talking to the teabaggers. Together, we can win!

Key Senators, Krugman Call For Tariffs On High-Carbon-Footprint Imports

Mike Elk — Wed, 23 Sep 2009 12:07:11 -0700

Speaking Tuesday on a Campaign for America's Future conference call, Ohio Sen. Sherrod Brown said that the climate change legislation will not get 50 Senate votes if it does not place a tariff on imports that have unacceptably high carbon footprints.

For example, Chinese steel mills produce three times as much carbon emissions as American steel mills As a large body of research has pointed out, most of these savings come from weaker environmental standards and not labor costs, since labor accounts for less than 10 percent of the price savings.

U.S. steel companies spend around twice as much per ton of steel to control pollution than does the Chinese steel industry. Chinese industry is expending only about 3 percent of its capital expenditure budget on pollution control equipment, far less than the 17 percent the U.S. industry averaged for the last few years as it was improving its environmental controls. China and many other countries are able to make cheaper products because they cut corners on environmental costs.

The U.S. steel industry is the most sophisticated and efficient of steel producers, so advanced that when a group of bloggers toured a steel mill during Netroots Nation, we weren't allowed to take pictures out of fear that competitors could steal trade secrets from the photos. However, the American industry can't compete with nations like China and India who are allowed to cut costs dramatically by poisoning the air and the water at levels that are threatening to us all.

To enact strict emissions regulations domestically and not force other countries to do the same would be a tragedy for the American economy as industry would flee for these countries. For this reason, a group of 10 Democratic senators—including Brown, Robert Byrd of West Virginia, Russ Feingold of Wisconsin, Evan Bayh of Indiana and Al Franken of Minnesota—sent a letter to President Obama that said they would not vote for any legislation that does not include tariffs on products with unacceptably high carbon footprints. As the Senators argued in their letter:

We must not engage in a self-defeating effort that displaces greenhouse gas emissions rather then reducing them and displaces U.S. jobs rather than bolstering them.

Indeed, if the U.S. adopts agreed-upon climate terms and other countries do not live up to their end of the bargain, we will see companies close factories in the U.S. and ship them to countries that allow unlimited harmful pollution.

As we have seen in the instances of the Chinese tire import issues, countries have again and again allowed big multinationals to violate their treaty obligations in the name of profits. By putting tariffs on products with unacceptably high carbon footprints, we can effectively combat global warming as many environmental organizations have advocated .

Even Paul Krugman, a typical defender of free trade, called for similar tariffs in a must-read piece entitled "the Empire of Carbon" . Krugman dismisses those that cry that a tax on carbon dioxide is protectionism by saying:

As the United States and other advanced countries finally move to confront climate change, they will also be morally empowered to confront those nations that refuse to act. Sooner than most people think, countries that refuse to limit their greenhouse gas emissions will face sanctions, probably in the form of taxes on their exports. They will complain bitterly that this is protectionism, but so what? Globalization doesn’t do much good if the globe itself becomes unlivable.

Furthermore, globalization doesn't do much good if the global economy becomes unsustainable. Manufacturing is the backbone of any economy. If you don't make something, you are forced to borrow until you can't borrow anymore. With credit markets frozen, the American economy has reached that point we can no longer borrow and are unable to buy the world's products on credit.

We have seen that unemployment and poverty have risen around the world as a direct result of the global economic imbalance. Leaders of the labor union federations from the 20 countries have called on their leaders to make the economy more sustainable in their "Pittsburgh Declaration." According to their report, unemployment is slated to double over the next 18 months in the industrial countries, and continue to rise with rates over 10 percent well into 2011. Additionally, over 200 million workers worldwide will be pushed back into extreme poverty.

Creating a system of global trade that is sustainable and allows all countries including the United States to flourish is necessary for a global economic recovery. To do this, we must enact strong laws that don't allow one country to cheat the other by polluting their way to low prices.

Some argue that such measures, such as putting a tariff on products with a high carbon footprint are protectionists and harmful. However, as Steelworkers President Leo Gerard argues today in a must-read New York Times piece defending the decision of his union to call for enforcement of trade laws on tire and paper imports:

“Anybody who believes we have a rule-based system, but we shouldn’t enforce the laws, they’re the ones jeopardizing the global trading system.”

Without a commitment to live up to—and a precedent of enforcing—agreements, any climate change treaty signed at Copenhagen or at future summits won't be worth the paper it is printed on.

In the wake of the China tire-import decision, we have heard a lot of rhetoric falsely labeling it as the beginning of a trade war. It is not. What is really happening is that workers around the world are engaged in an effort to protect themselves from the harmful effects of pollution and an unsustainable economy that hurts us all.

Washington Post Spreads Myths That Trade Enforcement Will Hurt Climate Change Agreements

Mike Elk — Tue, 15 Sep 2009 12:13:34 -0700

My breakfast nearly fell out of my mouth this morning when I read this line about the China Tire Case on the front page of the Washington Post:

"A Chorus of economists and climate activists fretted that the president's action might undercut U.S.-China climate talks and poison relations just two before the summit of the Group of 20 major economies."

Chorus of climate activists???? What chorus????

The Washington Post makes it sound like there is some huge army of environmental activists angry as all hell over the decision to enforce China-U.S. trade agreements by imposing tariffs on illegally imported tires. However, the Washington Post fails to cite a single environmental activist saying that this trade decision will hurt climate talks.

In fact the very opposite is true. There is a chorus of environmental activists saying that we do need to enforce trade laws like we did in the China tire decision. Organizations like the Sierra Club and the Blue-Green Alliance have traditionally called for the enforcement of trade laws in order to protect the environment.

Trade agreements all have sections in which countries agree to certain environmental standards. If we don't enforce certain sections of trade agreements related to export, why would countries uphold their end of the deal when it comes to issues like climate change?

As President Obama pointed out in his speech on Wall Street this week:

No trading system will work if we fail to enforce our trade agreements. So when, as happened this weekend, we invoke provisions of existing agreements, we do so not to be provocative or to promote self-defeating protectionism. We do so because enforcing trade agreements is part and parcel of maintaining an open and free trading system.

In other words, it's necessary to maintain the rules of the road in order to maintain trust in the system that parties will live up to the end of an agreement.

So why then is the Washington Post spreading lies that somehow enforcing trade agreements will hamper our ability to forge climate agreements? A big part of it could have to deal with the fact that big multinational corporations, as Dave Johnson has pointed out repeatedly, have spent millions of dollars building a network of think tanks, lobbyists, and media consultants to push lies against fair trade. (I would highly suggest you read Dave Johnson's three part expose on the inner workings of the trade debate in D.C.)

These think tanks and lobbyists develop cozy relationships with the reporters like those at the Washington Post. Indeed, several companies planned to sponsor salons as part of the Washington Post's quickly aborted pay-for-access scheme.

So if you see a lie such as that enforcing trade agreements will hurt effort to combat climate change, it's good to do what a famous Washington Post reporter once said, "Follow the money."

2.5 Million Green Jobs Lost From the Bailout Bonuses Alone: Escaping the Wall Street Economy of Debt

Mike Elk — Tue, 15 Sep 2009 11:22:28 -0700

This week on the anniversary of the financial crisis, there has been a flurry of talk about the bailout. We often talk about the bailout in terms of the increase in the national debt and the lack of transparency at major banks. Rarely do we discuss it in terms of the jobs and opportunities lost as a result of it.

This bailout was literally financed on the backs of working-class people, since it cost $6,500 per family. However, it has done little to help working-class people, as the "Bailout Watchdog" Neil Barofsky has pointed out several times in detailed analyses. His and Elizabeth Warren's work show that most of the money from the bailout went to acquiring smaller banks and paying off debts, and did little to promote the lending necessary to put people back to work and get the economy moving again.

Why not take $700 billion and invest in stuff that literally gives people jobs?

$32 billion was spent on bonuses alone, and created relatively few jobs. The money from those bonuses contributed nothing to our economy and, instead, went toward lining Swiss bank accounts and the harbors of West Hampton.

On the other hand, the IMPACT Act, which costs only $30 billion, would create 2.5 million green jobs and jump-start our new green economy.
The IMPACT Act would do this by providing loans to small manufacturers - the type of businesses that have had trouble getting them from the big banks we bailed out. The government would provide loans directly to businesses that intend to create jobs, instead of to bankers that use the money for little other than living lives of luxury most of us could hardly imagine.

With just $30 billion ,almost equal than the amount the government gave away in the form of executive bonuses, we could create 2.5 million jobs in manufacturing, erasing the nearly two million manufacturing jobs that have been lost since the recession began in 2007.

Imagine what we could do to our economy with 700 billion dollars? We wouldn't be talking about unemployment; we would be talking about companies having trouble finding enough workers.

We responded to the financial system's crisis by propping it up. Why not prop up manufacturing, which has been disappearing at a stunning rate from this country over the last 30 years?

Manufacturing is the real backbone of our economy, not speculation and mounting up huge cycles of debt. As author Dave Johnson has argued, you either manufacture or borrow (until you can't anymore):

When it comes down to it, you can't have a healthy service sector unless you are manufacturing items to sell and trade. You can't pay for the restaurant bill or the insurance or the hotel room or the lawyer or even the doctor if you don't make something to sell and trade. And you can't keep buying the things made elsewhere. You can only borrow for so long.

Unlike almost every country, the United States has no real current policy to
promote domestic manufacturing. When Italy bailed out Fiat, they did on the condition that Fiat would commit to keeping its factories in Italy open. When we bailed out GM, we did it on the condition that they move factories to
Mexico.

As President Obama has said repeatedly, we can't go back to a country built on 40 percent of the profit coming from finance. Otherwise, we will slip into a cycle in which we are constantly investing in financial bubbles in order to produce wealth. The only winners we have seen in this cycle are the CEO's of big banks. Average workers will always be the losers.

If American people wish to make it as a country, we must make something.