Nancy Pelosi

Choose Your Poison: As the Economy Burns, GOP & Dems Fight Over How to Make Things Worse

Richard Eskow — Thu, 28 Jul 2011 14:30:44 -0400

Gandhi famously answered the question "What do you think of Western Civilization?" by saying "I think it would be a good idea." That phrase might come in handy the next time somebody asks what you think of a two-party democracy: It would be a good idea. As the economy burns to the ground, nobody's calling the Fire Department. Both parties want to throw gasoline on the fire, and their only disagreement is whether to use regular gas or unleaded.

Here's a challenge, if anyone's willing to take it: Can you read the statistics below without concluding that our current debate is a national disgrace? Both parties are pushing radical and counterproductive cuts that would devastate middle class and lower-income Americans, compounding the misery for ninety percent of us. Neither asks the top one percent of earners, some of whom caused this crisis, to help repair the damage after enjoying historically low tax rates.

And this isn't just somebody's opinion. These are the numbers talking, not me. John Boehner's plan is a radical right-wing assault on government that would have embarrassed previous generations of Republicans. Nevertheless, his party's base and members of the House will probably reject it. Harry Reid's proposal is also devastating - and his party's rank and file may very well support it. It's hard to know which is a sadder statement on the degraded state of our politics.

Both proposals would defer the most brutal cuts until after the election. Both try to insulate their architects from the consequences of their actions - actions which the public strongly opposes - by placing them in the hands of an unelected 'Super Congress' whose directives would be given a high pressure up-or-down vote. That's cowardice, not courage. A vote for either plan is a vote against democratic process, and a vote against the middle class and those in need.

Democratic failure of leadership

There are sane and courageous Democrats and independents, to be sure, like the Progressive Caucus in the House and Bernie Sanders in the Senate. But the party's leadership have become "leaders" in name only. Even Nancy Pelosi, who could once be counted on to be a voice of reason, has suddenly begun murmuring the mad mantra of austerity economics as her friends and supporters struggle to decode her words for a hidden explanation.

""It is clear we must enter an era of austerity," said Pelosi, "to reduce the deficit through shared sacrifice," "She said 'we must ,'" one told me yesterday, "so she might have meant 'she has no choice.'" But that's like trying looking for hidden messages in the gestures of kidnapped soldiers as they make their taped confessions to a hostile government. This is a time for clear calls to action, not coded signals sent by semaphore.

The Democratic failure starts at the top. The President has relentlessly sought to cut Social Security and Medicare, apparently to prove his "post-partisan" nature before the 2012 elections. He appointed a "deficit commission" led by two entitlement haters; had senior Administration officials privately tell people (including this writer) that "a deal will be done" to cut benefits (although Social Security doesn't contribute to the deficit); planned to include Social Security cuts in the State of the Union message, until a political backlash loomed: and now insists on including entitlements in these negotiations by saying "let's do all of it at once." (Who insists on negotiating cherished programs when your opponent has something as effective as the debt ceiling to use as leverage?)

It's a replay of health and financial reform. The President's relentless pursuit of a deal - any deal - that he can hang on his wall means he's eager to sacrifice popular and needed programs, both for expediency and to burnish his own chosen image as "above left and right." His focus on process over policy has led him to chide members in both parties of Congress to "eat their peas" by embracing explosive cuts that will harm the economy. This "ap-peas-ment" strategy would sacrifice the middle class in pursuit of "peas in our time."

Leader Reid and Leader Pelosi may feel that these are the only proposals that have a chance of being enacted. But they're not saying that. And they're certainly not proposing urgently-needed solutions to our jobs and housing crisis. Where is the real debate we should be having? Where is the distinction being drawn between Republican and Democratic policies, so that voters have a choice and not an echo? Not in Washington.

What do the numbers tell us about the debate we should be having? Here are the flickering vital signs for an economy on life support:

A dying middle class

Jobs and Wages

The real combined figure for unemployment and under-employment is approximately 22 percent
The number of Americans who "live paycheck to paycheck," has gone from 43% in 2007 to 61% today, and more people are tapping their 401(k) accounts and other retirement savings.
Total wages have fallen 5% from 2007, or about313 billion (in fixed dollars). But incomes went up at the very top, so the real figure for everybody but the wealthiest among us is even worse.
The median wage fell by $159 to $26,261 between 2009 and 2010, which means half of all workers made $505 a week or less. The median wage is now $196 less than it was in 2000.
From 1930 to 1980, income for the bottom 90% of Americans grew by 74%. Since 1980, the year of Ronald Reagan's election, it's grown 1%.

Housing

The average cost of a house nearly doubled between 1975 and 2008. Prices have been falling since the crisis, but tens of millions carry a worthless debt burden and can't unload their houses to achieve relief. Only the top 5% earners have seen their incomes increase enough to cover this explosion in housing costs.
The number of employed Americans grew by more than 21 million between 1992 and 1990, but only 2.8 million more were on the employment rolls nine years later.
108 million people, 45 percent of working-age Americans, are either unemployed, underemployed, or "not in the labor force" (which often means they've given up altogether - there are 85 million people in that category).
Residential real estate has lost more than six trillion dollars in value since 2008, after 57 consecutive months of decline - although a large chunk of that money is still being repaid as bank loans.
Housing values are down by a third over the last three years. Even more ominously, they're down 4.6% since their 2009 lows, and they're still falling.
Overall, middle-class Americans have lost an estimated $7.7 trillion in assets - and the end is not in sight.

Generational Decline

College tuitions have gone up 900% since 1978. The country's total student debt is now greater than its credit card debt, and will reach1 trillion this year.
Only 44% of those polled believe that children will have "a better life than their parents." Ten years ago that figure was 71%.

The bottom line? For the middle class, the dream is over. And it's not coming back unless strong action is taken.

Poverty USA

The overall figures are staggering:

Since the financial crisis, more than two million Americans have fallen into poverty.
More than 43 million Americans now live below the poverty line. More than 20% of this country's children now live in poverty, more than twice the figure for children in Great Britain or France.
More than one household in twenty lives with "extreme food insecurity," which means normal eating patterns have been disrupted "at times" during the year because they didn't have money for food.

A new study by the Pew Research Center shows how devastating the new economy has been to minorities:

Median wealth of Hispanic households fell by 66 percent from 2005 to 2009 (versus 16 percent for white).
Median wealth for African Americans fell 53 percent.
Median wealth of whites is now 20 times that of black households and 18 times that of Hispanic household, twice the difference that existed before the year 2000. (And that disparity was disgraceful.)
Wealth disparities in this country are the greatest they've been in a quarter century, since this data was first collected.

Party on, Rich America!

Ready for some good news? When it comes to the wealthy, there's plenty:

66% of the income growth between 2001 and 2007 went to the top 1% of all Americans.
The average income for Americans earning 50 million or more surged from91.2 million in 2008 to518.8 million in 2009. In the midst of the recession, there were fewer of these high earners, but the survivors - just 74 people - made as much as the 19 million lowest-paid people in America.
The top 5% of American households have seen their income increase by 103% since 1975 (as opposed to a 1% increase since 1980 for the bottom 90%).

Burning Down the House

By failing to fight for job-creating infrastructure programs, Democrats are losing a chance to put people to work and save the economy trillions. As a new report explains, "the nation's deteriorating surface transportation infrastructure will cost the American economy more than 870,000 jobs, and suppress the growth of the country's Gross Domestic Product by $3.1 trillion by 2020." Savings include lost productivity and added travel time as well as safety and travel costs.

Austerity measures in Great Britain, on the other hand, have weakened the economy more than expected. The International Monetary Fund notes that a cut of themagnitude being debated here " typically reduces GDP by about 0.5 percent within two years and raises the unemployment rate by about 0.3 percentage point." And since both the Boehner and Reid plans leave the tough decisions until later, the actual impact could be even greater.

Austerity's already hurt us. As a senior Goldman Sachs analyst (not one of the trading guys you probably despise - an analyst) explains,"fiscal adjustment ... (in) the first quarter of 2011 showed the largest negative impact of government spending (cuts) on real GDP growth since the mid-1980s..." He estimates that we've already lost more than 1% of our growth through austerity measures like those being proposed by Reid and Boehner.

Who would be affected most by these cuts? The poor, as programs for them are cut back. Seniors, as Social Security and Medicare are slashed. (Yes, Mr. President and Leader Reid, the "chained CPI" and a raised retirement age are "slashes.") The middle class, as their taxes go up through a "chained CPI" and the elimination of deductions that benefit them. In other words, between 90% and 99% of the country would suffer.

Real Solutions

Where are the real solutions? We need an 18-month "job surge," where governments invest in job-creating programs that also build up our crumbling infrastructure. That will prime the pump and get the economy moving again.

If we can restore $313 billion in lost wages and then build to an acceptable employment level we'll see billions of dollars billions in added income -- which will leaded to new spending, which creates even more jobs. And the taxes paid by these newly-employed people would go a long was toward reaching the Boehner and Reid goals for cutting the deficit. The remainder could be addressed in a couple of years, once the economy's moving again.

Democracy Fail

The political posturing by leaders of both parties isn't just ruthless, or foolish, or cynical, though it is all of those things. It's counterproductive. The nation's two capitals - its political capital in Washington and its financial capital on Wall Street - aren't just refusing to help the suffering majority. They're actively working to inflict more damage. Don't believe for a moment our leaders will be there for you when you need them. The public will need to pressure them through calls, votes, and demonstrations.

The economy's burning, and the leaders of both parties are treating you the way Rhett Butler treated Scarlett O'Hara in Gone With the Wind: Frankly, my dear, they don't give a damn. Or if they do, they've either miscalculated badly or they're too intimidated to say so. Either way, it's up to us to act.

3 Simple Things to Do Today Instead of Saying "Eff You Washington!"

Richard Eskow — Mon, 25 Jul 2011 23:09:23 -0400

People in the capital were thrilled by Twitter's role in 2009's Iranian uprisings. They probably weren't as excited this weekend when a new "hashtag" (topic) suddenly climbed toward the top of Twitter's trend list. It's not printable here, but the first word began with a "F." After that came the words "you" and "Washington."

The frustration's understandable, given Washington's bizarre monomania with applying the wrong solutions to the wrong problems. But there are more constructive ways to spend your day than tweeting four-letter words in the general direction of the Potomac River.

Tweet Dreams

The Twitter trend was started by the seemingly mild-manner media analyst Jeff Jarvis, who explains (warning: not work safe): "I listened to the latest from Washington about negotiations over the debt ceiling ...After dinner, I tweeted: "Hey, Washington *****, it's our country, our economy, our money. Stop f**ing with it."

Somebody responded by tweeting, "Hashtag it: #F***YOUWASHINGTON." Says Jarvis: "So I did ... And then it exploded as I never could have predicted."

It's easy to make too much out of this sort of thing. Twitter users aren't a cross-section of America. Too much can be made of its top trends -- which as of this writing include #Dear Taylor Swift, #Fantasy Football, and #Russell Brand. If hashtags alone can predict our political future, comedians will rule a nation of make-believe athletes who write love letters to teenaged country singers. (Somebody's probably muttering, 'You mean, like right now?')

The revolution will not be twitterized.

Genuine and Widespread Discontent

But there may be a larger phenomenon here, once that can be seen in polling numbers too. People are in despair for their future. Nearly 70 percent of Americans believe we're still in a recession (which, for many people, we are). Consumer confidence has plunged. Almost 40 percent of Americans believe we've entered a state of permanent decline, while nearly half expect another major recession in the next year.

And they don't believe anything's being done to stop it, since unemployment is still high and the views of the American Majority aren't being represented in this week's deficit discussions. More than 60 percent now say that the country's on the wrong track and unfavorable opinions of both parties are nearing record highs.

In other words, "F**k you, Washington."

Deal or No Deal?

Harry Reid's "grand bargain" won't include cuts to Medicare and Social Security. If he's successful (the president now supports him) that will mean that public outcries have once again thwarted attempts to cut these programs.

But Reid's proposal has problems, too. Like Boehner's plan, it would create a "supercommission" empowered to recommend drastic cuts, which would be submitted for an up-or-down vote with no modifications. (It's not clear if entitlements would be excluded from Reid's version.) There would be no tax increases under the Reid plan, either, which means the wealthy would continue their easy ride while other Americans bear the brunt of spending cuts. You can't fix our economic problems without increasing taxes, as this chart from economist Menzie Chinn shows:

It's all there. Spending rose sharply and tax revenues declined dramatically when George W. Bush took office. Both trends spiked again after the Great Recession. Why? First came the cost of two major wars, along with the Bush tax cuts. Then came the cost of (partially) repairing the damage left by a deregulated and unsupervised Wall Street, along with lost tax revenue as millions of people lost their jobs.

In the face of all this, here's Washington's plan: Continue the wars, preserve tax cuts for the wealthy, and fight Wall Street regulations. Hey, what was that hashtag called again?

Into Action

But despair not, ye infuriated Americans. As promised, here are three things you can do today (unless it's not Tuesday, July 26, in which case you can only do two of them):

1. Use this link to tell your Senators and Representatives that you oppose any deal that would cut Social Security, Medicare, or Medicaid, and ask them to raise the debt limit without any conditions attached.

2. Call your Senators and/or Members of Congress to tell them the same thing. (The link above should give you their contact information when you're done. It will ask you for a donation, too -- which, if you decide to give, would make four things you can do today.) If the phone numbers don't appear, they're publicly available.

3. If it's before noon on Tuesday, you still have time to find your Representative's local office and go there for a noon demonstration sponsored by a number of groups, including MoveOn and the Campaign for America's Future. You can find the nearest office here and then, as MoveOn says, "tell your Representative that they need to protect the programs working families rely on, and make the richest few pay their share."

The Progressive Change Campaign Committee summarizes the goals of these actions as 1) thanking the 81 Democrats in Congress who signed the Progressive Caucus letter opposing cuts to Social Secial, Medicare, and Medicaid, 2) urging other Democrats to oppose any plans that includes these cuts, and 3) telling Republicans to stop pushing for cuts to these programs. (They could add a few Democrats to that list, too.)

These actions could make a difference. And if these actions continue and grow, we may someday live in a country where the biggest trending hashtag on Twitter is "#thankyouWashington."

Taylor Swift might be disappointed, but the rest of us would be pretty happy.

(Abbreviated from an earlier version that was published in The Huffington Post)

Wanted: An Opposition Party, Not a Center/Right Coalition

Richard Eskow — Mon, 25 Apr 2011 22:45:24 -0400

Only two budget proposals are being 'taken seriously' in Washington right now. One adopts the rhetoric of "austerity economics," that grab-bag of right-wing misconceptions that's weakened the British economy and wounded its ruling coalition.

The other comes from the Republicans.

There's a third budget plan, too. It reflects the views most Americans hold - including, in some cases, most Republicans . But it's either being ignored or contemptuously dismissed by the People That Matter, apparently for that most traditionally British of reasons: it doesn't come from "the right sort of people."

What this country really needs right now is an opposition party, one that refuses to accept stale and discredited conservative ideas. The President and other Democrats have been governing as if they were in a coalition government with Republicans - and sometimes like the junior partner in that coalition. There are better ways to serve themselves, their party, and their country.

Fight Club

The front page of a Los Angeles weekly published last week illustrates just how skewed the American debate has become:

That's how the debate's being presented: In this corner, a center/right proposal which adopts some unpopular conservative ideas. And in this corner, a radical right proposal with ideas that majorities of all political persuasions hate. But the center/right proposal is described as coming from the "left," which may help explain why the left isn't very popular these days.

Granted, the Los Angeles Jewish Journal isn't a Beltway opinion shaper (although my colleague Marty Kaplan is a columnist there). But their headline shows how the Washington consensus has distorted public perception outside the Beltway. To many people President Obama represents the 'leftmost' side of the spectrum, even though his budget plan borrows liberally (you should forgive the expression) from a right-leaning philosophy that's rapidly losing credibility.

Oy.

President Clegg?

We're having a crucial national debate about our priorities and governing philosophies. That's a heck of a time for President Obama to position himself as the American Nick Clegg. Clegg, the leader of Great Britain's centrist Liberal Democrats, formed a coalition government with the Conservatives and gave their austerity program an aura of reasonableness and a dash of youthful vigor. Like Obama, Clegg strikes a Januslike pose, with rhetoric that faces left and compromises that face right. Clegg and his senior partner, Prime Minister David Cameron, even embraced a favorite slogan of the President's when they said they would "agree to disagree" on crucial matters.

It's not going well. While the British Conservatives are far more civilized than their American counterparts, they're still happy to undercut Clegg whenever it suits them. Clegg's posture of "reasonable centrism" has cost him both his base and swing voters, and has left him holding the bag as the economy flounders. Only 9% of likely voters now say they'll vote for a Liberal Democrat, down from a high of 30% one year ago. The Labor Party, which suffered what might be called a "whuppin'" last year, now dominates the polls at 39%. The Conservatives are holding steady at 35%, but austerity measures have cost Mr. Clegg's party most of the country's 'persuadable' and independent voters.

As well they should. As the New York Times reports, retail sales have fallen 2.5% in the year since Great Britain's austerity program began. Household income is projected to fall another 2%. Hundreds of thousands of jobs are being lost as a result of the cuts, triggering fears of another recession.

Of course, Great Britain is not the United States. Conservative leader Cameron is well to the left of American conservatives, and in many ways he's to the left of President Obama too. Cameron supports the country's national health system and is resisting calls to lower the top tax rate for high earners from its present level of 50%. President Obama, by contrast, is proposing to raise the top rate to 39.5% and offered only lip service to the public option.

And Great Britain has three major parties, not two. That means voters who aren't happy with the Conservative/Liberal Democratic coalition have an alternative.

The Loyal Opposition

Great Britain is a parliamentary democracy with a tradition of the "loyal opposition." As Clegg triangulated, the Labor Party assumed that role. And as the Liberal Democrats' fortunes have fallen, Labor's have risen. Where's our loyal opposition, our alternative to unpopular and failed austerity policies?

It might surprise most newspaper readers or cable news watchers, but there is one. It's in a subset of the Democratic Party called the Progressive Congressional Caucus. They've released a budget proposal that's more fiscally responsible than Ryan's, and which more accurately reflects voters' preferences.

But their budget plan has a serious problem: It has the word "progressive" attached to it. That immediately provokes an attitude of contemptuous dismissal from the media herd. (See the ever-predictable Dana Milbank for one of the saddest examples of this. I fear for his state of mind if he ever realizes his impact on the national discourse. That's not "snark." I really do.)

If the "P word" were stripped from its title page and this budget was given a dummy name (like the "American Business and Stability Council Plan For Economic Growth"), it would poll like gangbusters and be met with the appropriate journalistic genuflections. But the "P" is there (and so is the unfortunate name "the People's Budget"). That's one of the reasons that reporters are either mocking it Milbank style or, more typically, ignoring it altogether.

A Plan That Works

The Progressive Caucus budget actually cuts the deficit, which Paul Ryan's extremist plan fails to do. And where Ryan's budget was rejected in polling, polls suggest that the policies in this proposal would be even more popular than the President's. On the revenue side, for example, it creates additional brackets for very high earners and it establishes a more progressive estate tax that asks a bit more from the Paris Hiltons among us. In other words, this proposal does exactly what the public wants: It raises taxes on the rich.

The Progressive budget also addresses Social Security in the manner that's supported by strong majorities in both parties and among Tea Partiers and independents - first, by separating that program from an overall deficit discussion, and then by eliminating the payroll tax cap for employers and raising it for employee contributions. The proposal cuts more from the defense budget, which is also highly popular, and it restores the public option for health care (which received wide public support last year, including from a slim majority of Republicans in swing districts).

The Progressive budget also provides funds for creating jobs. Post-election polling showed that jobs are a much higher priority for the public than deficits, and recent polling confirms that.

Weak Tea

Obama's budget, by contrast, embraces the unpopular personal proposals from Erskine Bowles and Alan Simpson. It embraces the right-wing formulation of "two thirds spending cuts and one-third revenue increases," which ignores the stimulative effect of government spending. While the President's rhetoric is powerful, his proposal only offers a nebulous, Clegg-like cloud. The Republican Ryan budget, on the other hand, is clear and direct. (The President's proposal does, of course, have the virtue of not being pathologically destructive to the American dream - but that's setting the bar a little low, isn't it?)

Obama's proposal would be considered center/right by any reasonable measure. Now it's being upstaged by negotiations among the Senate's "Gang of Six," a group of three center/right Democrats and three Republicans. They're using the leverage given to them by that body's undemocratic structure to attempt a "compromise" - between the far-right GOP proposal, and the position of Democrats like Dick Durbin, who tacked to the right of the President even before negotiations begin.

That's not what the public wants. But if the progressive proposal's such an exciting road to fiscal and political success, and is supported by Democratic House leader Nancy Pelosi, how did the Jewish Journal come to believe that Obama represents the "left" side of the political spectrum?

Marginalized

I'd have to agree with the argument which says the progressive proposal is getting ignored because it won't get passed or even influence the final outcome. Its invisibility seems to say more about our media's "who's in/who's out" mindset than it does any Pravda-like suppression of dissident ideas.

But it's only treated as irrelevant because the Congressional Democrats have been marginalized by their own party, starting at the top with the White House and extending to the Senate. The President and the Senate leadership don't believe for a second that House Democrats will refuse to pass a budget that's been hammered out by President Obama - or by the Gang of Six, for that matter. They could probably defeat it if they did, but it's assumed that they'll be "responsible."

What's more, the White House has pre-empted and marginalized the progressive representatives with its centrist budget and talking points. As The Hill reports, "This year's budget battles have forged a loose bond between President Obama and Steny Hoyer (D-Md.) while revealing some distance between the White House and Nancy Pelosi (D-Calif.)." Hoyer's right-leaning opinions and longstanding intention to cut Social Security are unpopular with the general public, but they make him a handy ally for the Simpson/Bowles White House.

That leaves proposals like the Progressive Caucus budget out in the cold, even though they reflect majority opinion. Most people don't even know it exists. A Google News search on the phrase "Gang of Six" came up with 4,280 hits today, while "Ryan budget" came up with more than 16,000. "Progressive caucus budget" got 363 hits.

Choices

The President's lofty "the parties should stop squabbling" approach to the budget debate seems to be part of his approach toward winning re-election (although it's more likely to backfire). But it's no way to lead in a two-party democracy.

There's no doubt that the President can lead. As McClatchy reported, "Support for higher taxes rose by 5 percentage points after Obama called for that as one element of his deficit-reduction strategy last week. Opposition dropped by 6 points." But if he raises expectations only to abandon them without a serious fight, he won't be serving his country or his own future very well.

Voters don't want radical austerity that supports the newly rich, and they don't want "austerity lite" either. The President and his party should consider the fate of Nick Clegg and his Liberal Democrats before committing themselves to joining with the right in a "coalition government" that's doomed to fail. Sure, they'll eventually have to compromise to keep the government running. But before they do they should offer voters a real alternative, not just a cup of weak tea whose best quality is that it's not Republican cyanide.

This post was produced as part of the Curbing Wall Street project and the Strengthen Social Security campaign.

A Toast to a Remarkable Leader: Speaker Nancy Pelosi

Robert Borosage — Wed, 22 Dec 2010 12:28:53 -0500

Speaker Nancy Pelosi will relinquish the gavel to the perpetually tanned, lachrymose Republican leader John Boehner when the new Congress convenes next January. It will be four years after that January 4, 2007 day when she "broke the marble ceiling" and became the first woman Speaker in the two-century history of the House.

At the time, Republican pundits mocked Democrats for the choice of a "San Francisco liberal" woman as speaker, suggesting she'd be a weak leader, unable to control the conservatives in the ever disputatious Democratic party, and easy to burlesque in campaigns across the country.

But this was Nancy Patricia D'Alesandro Pelosi, raised in a tough Baltimore Italian political family, who imbibed politics with her mother's milk. Republicans soon discovered that Democrats had chosen not just the most progressive, but also the most effective and powerful speaker in memory.

She was disciplined, shepherding her flock of progressives, Blue Dogs, New Dems, blacks, Latinos, women and good old boys, to focus on core issues -- the kitchen table concerns that Americans worry over every night at home, the challenge to George Bush's disastrous wars abroad. She was tireless, intent on consolidating her majority and helping Democrats to take the White House. She was practical, raising record sums of money in fundraisers across the country, the necessary coin of America's debauched politics. She was tough, getting members to take votes they wanted to duck, forging the majorities she need to overcome unified Republican opposition. And she was, for better and worse, independent, willing to block the left's efforts to impeach the president or end funding for the war that she thought would be damaging electorally.

In the face of the Bush White House and launch of the Republican strategy of obstruction through misuse of the filibuster, Pelosi produced far more in her first term as Speaker than anyone expected; far more, for example, than the much ballyhooed Gingrich Contract with America Congress in 1995-96.

The Pelosi-driven Congress increased the minimum wage, expanded investment in education and college, passed a bold new GI bill for veterans, passed lobbying and ethics reform, enacted many of the recommendations of the 9/11 Commission, and made headway on new energy, childrens' health care, college loans, Head Start, and more — much running afoul the mosh pit of the Senate and some the veto of the president.

Liberals were livid that the House failed to cut off funding for the Iraq War, with many of the Blue Dog candidates of former Democratic Congressional Campaign Committee head Rahm Emanuel getting in the way. But Pelosi's Democrats kept the pressure on, setting up timetables and reporting deadlines that made it clear it was time to declare victory and get out.

With the election of Barack Obama and the consolidation of her majority, Pelosi demonstrated her remarkable leadership. The swing votes in the House came from largely conservative Democrats elected in districts that voted for John McCain. Yet, time and again, in the face of unified Republican opposition, Pelosi rallied her caucus to pass historic legislation — the largest recovery act ever, the largest increase in student aid ever, comprehensive health care reform, comprehensive energy legislation, financial reform, and more. She asked her members to take tough votes and they responded. Too often, she was then hung out to dry by a passive White House and an obstructionist Senate that diluted, delayed and defeated major reforms.

Her true grit was demonstrated in the fight over health care. After Scott Brown's stunning victory for Sen. Edward Kennedy's Senate seat in Massachusetts, many in the White House and the Congress assumed comprehensive reform was dead. Pelosi would not accept retreat or defeat, and wouldn't allow the White House to go wobbly on her. The lady was not for turning. Inane White House strategy — dithering for months with Max Baucus, for example — made the bill far weaker than it had to be, but the result was an historic accomplishment.

The best measure of Pelosi's stature — and her achievement as a woman in leadership — was that Republicans joined her with the president as their poster targets in the election. With hundreds of hours of ads vilifying her without any effective rebuttal, her popularity plummeted, her "negatives" soared. Democrats were held accountable for failing to revive the economy that conservative policies had taken over the cliff. The recovery act — too small in conception and weakened badly in the Senate — was inadequate to the cause. With a Democratic president commanding the bully pulpit of the White House, no speaker, no matter how powerful, could drive the election message.

There is no need to idealize her. On several issues from the war to the public option, many liberals, including myself, fought against compromises Pelosi forged. But there is no doubt that she has been the most effective reform speaker since the days of the New Deal.

Starting in January, she will lead a smaller, more liberal caucus against the most right-wing majority in post-Civil War history, with a White House already showing more switch than fight. The last time she was minority leader, Pelosi helped stop President Bush's efforts to privatize Social Security. This time she may have to lead the opposition against another president's willingness to cut Social Security.

She will no doubt be ready to offer John Boehner tissues for his tears, even as she organizes resources and energy for regaining the majority in 2012.

So in this holiday season, as we reflect on the year past, let us afford recognition to an extraordinary leader. San Francisco liberal? You bet. Doting mother and grandmother? No doubt. Tough, proud Italian scion of a political family, daughter and brother of Baltimore mayors? Never forget. From those of us who have fought with her, beside her and behind her, a toast to the most effective Speaker of our lifetime, Nancy Pelosi.

The Fightin' Side of Nancy Pelosi

Richard Eskow — Fri, 05 Nov 2010 14:53:19 -0400

Nancy Pelosi has just announced that she's running for the position of House Minority Leader. As a San Franciscan, maybe she understood that turning her leadership role over to the Blue Dogs would have been like giving the Giants franchise to Oakland. She's been the most effective Speaker in a generation and she'll be equally effective in the opposition. If you agree, why not tell your Representative how you feel?

"Our greatest glory is not in never failing, but in rising up every time we fail." Ralph Waldo Emerson

There are fighters and there are quitters. Nancy Pelosi's no quitter. It's great to see somebody who doesn't adopt the typical DC defensive crouch when things get tough. Some politicians are chameleons, cold blooded creatures who'd rather take on the protective coloration of their opponents than stand and fight. Not her. Cheerleading's not really my thing, but if anyone deserves cheers she does.

Pelosi lost the Speaker's gavel through no fault of her own, after the Senate nullified some of her greatest achievements and the big-money interests spent mega-millions to bring her down. The money boys won that gavel - for now - but that doesn't mean her work is done. The Democrats need her leadership, the President needs her guidance, and the country needs her voice.

After the struggle of the last few years, Pelosi might have found the idea of stepping down attractive. Who wouldn't? Life would be so much easier as an ordinary member of Congress. She and her family would be spared all the vile personal attacks - attacks that have been funded by Wall Street and distributed by its minions. And after a couple of years of relative peace she could have gone home to San Francisco, where she might have sipped coffee on the veranda as the fog rolled silently through its watercolor hills. Sounds pretty good, doesn't it?

Sorry, Madam Speaker. You're needed elsewhere.

Success Story

After leading House Democrats to their 2006 victory, Pelosi's Congress chalked up a stunning record of legislative achievement. Unfortunately, this accomplishment was obscured and partially neutralized by the ditherings of a hapless Senate held hostage by a cynical minority. The Senate's Democratic leaders were too gridlocked by the filibuster to build on Pelosi's accomplishments, and too diffident to fight back aggressively against the GOP's abuse of the filibuster. More than 400 of Pelosi's bills weren't even voted on in the Senate, since the leadership there was reluctant to introduce them.

It's a little ironic that Harry Reid's keeping his majority leader role while Pelosi's losing hers. Had Reid been more like Pelosi - if he had been willing to take more fights to the floor of the Senate, forcing his opponents to defend unpopular positions - things might be very different today. In a very real sense, the House of Representatives was punished for the sins of the Senate. Minority Leader Pelosi will be able to lead the Senate Democrats by example next year as Harry Reid's advisor and partner.

Consider this: Nancy Pelosi's Congress passed health reform bill that included the public option and taxed the wealthy, rather than workers' health benefits. Had that bill passed, instead of the Senate's, it's very likely that Scott Brown wouldn't have been elected last January. (1) Senate Democrats would probably have retained a 60-seat majority, and might - just might - have used it to pass more and better legislation.

Nancy Pelosi's Congress passed a better financial reform bill than the Senate's, it passed a better jobs bill, it passed a carbon cap bill, and it passed a larger stimulus. There must be something in San Francisco's water, because that's like winning the World Series four games to one.

An Echo, Not a Choice

The anti-Pelosi movement is led by some Blue Dog Democrats, a group of right-leaning politicians whose Republican-lite ideas are exactly what got House Democrats into this mess. If they succeed, Congressional Democrats will be represented by somebody who offers no clear alternative to the pro-corporate, anti-small business, and anti-elderly philosophy of the GOP.

Here's a glimpse into a certain future: The corporatist Republican approach of the next Congress will produce nothing but gridlock, more joblessness, crumbling infrastructure - and very possibly another (and even more severe) recession. How will the Democrats respond when that happens? If Pelosi's opponents have their way, they won't be able to offer anything except watered-down versions of the same failed ideas. At that moment the American people will deserve a choice between two philosophies of governance. If they Blue Dogs have their way, they won't get it.

One of the Democrats who wants Nancy Pelosi's is newcomer Health Shuler. Heath Shuler? If Shuler wants to quarterback the Democratic team, he's probably hoping nobody remembers his career as a quarterback. As a politician, Shuler's led the charge to repeat and amplify right-wing themes that paint Democratic values as un-American. Shuler is anti-choice, anti-gun sanity, and anti-immigrant.

Remember, the Democrats lost this election because their core constituencies didn't show up for them. How would a Shuler-led Congress do with key Democratic constituencies like young voters, women, and Latinos? Let's just say that Democrats could anticipate a lot of electoral ... interceptions.

Shuler's still considered a long shot for the job (maybe because too many Washingtonians remember the first Shuler era, when he quarterbacked the Redskins.) Steny Hoyer's a likelier pick. Let's just say that Hoyer's not a dynamic public figure. He's also far to the right of both his party and the American public on economic issues, aggressively emphasizing deficit reduction at a time when most economists believe government action is needed to address unemployment first. What's more, he has pushed aggressively for cutting Social Security and would almost certainly lead Democrats on a political kamikaze mission to reduce retirement benefits.

What finally moved the understated Mr. Hoyer to a rare outburst of passion? Was it massive unemployment? Runaway bank greed? An assault on our civil liberties? Well, no. Instead Hoyer was publicly outraged by Stephen Colbert's in-character testimony on the Hill on behalf of farmworkers. Is that the leader who'll electrify the critical youth vote? Hoyer's no Blue Dog, but he won't move the Democrats in the right direction.

Better Policies, Better Results

Nancy Pelosi once led the Congressional Progressive Caucus. One of the interesting outcomes of this election is that, despite Democratic losses, the Progressive Caucus will actually have more members than it did before. The Blue Dogs, on the other hand, were decimated. Most of the Blue Dog losses are due to the fact that they were elected in swing districts where any Democrat would have had an extremely difficult time. But outspoken progressives like Raul Grijalva, who were widely expected to lose this year, fought their way to victory. That's food for thought. (Dave Dayen did an excellent writeup of the Blue Dog/Progressive Caucus issue.)

Barack Obama needs Nancy Pelosi, too - although he may not know it. Time and time again, Speaker Pelosi guided (and sometimes goaded) the President into adopting positions that were more popular than the ones he would have otherwise taken, either because of his own leanings or to placate the Senate. The President needs a strong progressive voice to counteract the advice he'll get from Senate leaders and some of his own inner circle. Who better than Nancy Pelosi?

Corporate-Financed Hate Speech

Powerful economic forces targeted Nancy Pelosi and spent enormous sums of money to bring her down. They spent $50 million, in fact, and money talks. And as we wrote the other day, these forces don't hesitate to use the ugliest impulses of racism, sexism, and xenophobia. The anti-Pelosi campaign was a case study in the ugliest form of hate campaigning. When Republicans portrayed her as Satan they were showing their kinder, gentler side. The preferred tactics were sexist: Republicans and their big-media allies characterized her as the Wicked Witch, "Pussy Galore," a "hag," and a "bitch." And you don't want to know what their blogger pals have been saying ...

The loss of Pelosi's leadership would be a victory for ugliest impulses among us - impulses that have been aided, abetted, and financed by the big money cabal led by lobbyists from Wall Street and the U.S. Chamber of Commerce.

It's Your Turn

If you care about better policy, you want Nancy Pelosi in a leadership position. So if you do, this page will make it easy to let your Representative know that you support her. You can also use Twitter to let Speaker Pelosi know you appreciate somebody who's not afraid of a tough battle or two (she's @SpeakerPelosi). If she can fight like hell when the chips are down, surely the rest of us can do that much.
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Regarding Scott Brown's victory (it seems so long ago, doesn't it?): There's more here and here, but these are the highlights: By a 3 to 2 margin, Obama voters who voted for Brown thought that Obama's reform bill "doesn't go far enough." Those Obama voters who didn't bother voting felt that way by a 6 to 1 margin. 82% of Obama voters who went for Brown (and 86% of those who stayed home) support a public option. And 57% of Brown voters said that Obama is "not delivering enough" on change.

What's more, that health benefit tax (the misnamed "Cadillac tax") drove even more voters into Brown's waiting arms: "Fully 42% of voters believed the health care bill would tax employer health benefits, and those voters voted for Brown by two to one."

Why Are Democrats Losing the Social Security Issue?

Richard Eskow — Wed, 18 Aug 2010 10:38:50 -0400

The Republican Party's attempt to privatize Social Security under George W. Bush was wildly unpopular. At least one Republican Congressional candidate is openly calling for Social Security cuts, and Rep. Paul Ryan's widely-publicized "Roadmap for the Future" includes both privatization and benefit cuts. With all these GOP threats to a popular program, why do polls show that the Democratic Party's advantage on this issue has collapsed?

Here's one reason: Voters want to know that their leaders won't cut Social Security benefits, and not enough Democrats have promised they won't. Some, including the President, are avoiding the issue or changing the subject. Democrats clearly think that Social Security is a winning issue for them, but polls suggest that voters aren't likely to be swayed by declarations that oppose privatization but are vague on benefits.

A recent NBC News/Wall Street Journal poll tells the story of the Democrats' declining fortunes in Social Security. People who were polled this month only gave Democrats a four-point advantage over Republicans (30%-26%) on the issue of "dealing with Social Security." That's down from the 28-point advantage (48%-20%) they enjoyed in October 2006. Meanwhile, recent polls showed that 68% of people responding oppose cutting Social Security and Medicare to pay for the deficit, including 60% of Republicans.

Voters looking for a clear statement on benefits from the Democratic leadership aren't getting them yet. Instead, Democratic leaders insist on fighting a battle that's not being waged right now: privatization. While Republicans probably would revive this issue if they had the White House and majorities in both Houses, that's not on the table right now. On the battle that is being fought, benefit cuts, statements from the President and other party leaders have been conspicuously silent. As this Greenberg poll shows, politicians that support Social Security cuts will face strong voter backlash.

President Obama's weekly address, on the 75th anniversary of Social Security's creation, was entitled "Honoring Social Security, Not Privatizing It." The address was directed at the issue that's not on the table right now - privatization - and offered no assurances for voters on the subject of benefit cuts. And observers won't be reassured by the President's comment that he was "encouraged by the reports of serious bipartisan work being done on this and other issues in the fiscal commission that I set up several months ago." The Democratic and Republican co-chairs of that commission both have a history of advocating benefit cuts, as does economist and commission member Alice Rivlin.

The President chose to cap his remark with the same FDR quote Nancy Pelosi used for the the occasion of Social Security's birthday: That it should provide "some measure of protection to the average citizen and to his family against poverty-stricken old age." That quote doesn't reassure voters that Democrats will protect their benefits. It suggests, in fact, that "some measure" against poverty is all they intend to provide. That's disturbing, since Social Security keeps 20 million Americans out of poverty. It's also a selective use of FDR's words. In the same speech, Roosevelt went on to say: "This law, too, represents a cornerstone in a structure which is being built but is by no means complete ... It is, in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness."

Speaker Pelosi understands the need to take a more unequivocal stand against cutting Social Security benefits than that quote provides. That's why she, along with twelve other Congressional candidates, have taken the pledge to protect Social Security from both privatization and benefit cuts. The Campaign for America's Future will be tracking all candidates to see who's signed the pledge and is offering an online petition to defend Social Security for citizens to sign.

"Today," said President Roosevelt at the birth of Social Security, "a hope of many years' standing is in large part fulfilled." That hope must now be defended from those who would cut or dismantle it. If Democrats want the job, and the political majority that will enable them to do it, they're going to have to be clear about their intentions.

UPDATE: The President spoke about Social Security again today (Wednesday) in Columbus, OH. While reassuring voters that the program is "not in crisis," he repeated his statement that "fairly modest changes" will stabilize it. But telling Ohio voters that they will get "the benefits they deserve," rather than the benefits as designed (which can be done by raising the cap on payroll taxes), isn't likely to reverse the Democrats' fortunes on this subject.

Pelosi: Congress' Coming 'Making It In America' Initiative

Dave Johnson — Sat, 24 Jul 2010 16:03:37 -0400

At the Netroots Nation convention today in Las Vegas, Speaker Nancy Pelosi talked about an upcoming Congressional initiative to help restore American manufacturing. The initiative, called “Making It In America” will include a series of bills to be introduced after the summer recess.

A few days ago Politico wrote about the upcoming initiative,

Democrats are priming the House floor for a manufacturing agenda they hope will bolster the economy, produce easy bipartisan votes and boost their chances in the midterm elections — at least if the polls they’re using are on target.

Speaker Nancy Pelosi (D-Calif.) teased the plan — sometimes dubbed “Making It in America” — after a White House meeting with President Barack Obama last week. The agenda appears to be the Democrats’ final pre-election push to clear the deck of jobs-related bills that have been sitting around for months.

Democrats plan to present the agenda as a means of creating jobs, promoting green manufacturing through tax credits and grants and enhancing national security by rebuilding the domestic manufacturing sector at a time when many Americans are worried about China’s strength, according to aides.

The Politico story referred to the impact made on members of Congress by a new poll from the Alliance for American Manufacturing. According to the poll,

A majority believe the U.S. no longer has the world’s strongest economy—a title they want to regain
Voters are anxious about the economy—specifically China debt, spending and loss of manufacturing
86% of voters want Washington to focus on manufacturing, and 63% feel working people who make things are being forgotten while Wall Street and banks get bailouts
Two-thirds of voters believe manufacturing is central to our economic strength, and 57% believe manufacturing is more central to our economic strength than high-tech, knowledge or financial service sectors
Across all demographics, voters’ economic solutions center on trade enforcement, clean energy, tax credits for U.S. manufacturing and replacing aging infrastructure using American materials, a surprising overlap between Tea Party supporters, independents, non-union households and union households.

Wednesday the House passed the first bill of the initiative, H.R. 4380, the U.S. Manufacturing Enhancement Act, to help American manufacturers by temporarily suspending or reducing duties on materials these companies use that are made abroad or opposed by domestic producers.

California Rep. John Garamendi has introduced three bills to close corporate tax loopholes that reward the off-shoring of jobs and end taxpayer subsidies for foreign-produced clean energy technology, buses, railcars, and ferries.

Garamendi says "I want to walk into Target and see "Made in America" throughout the store. We can make it in America,"

At Netroots Nation Speaker Pelosi also said that Congress is looking at addressing the China currency problem, where China is manipulating its currency to give goods made there a huge pricing advantage. She also pointed out that China imposes many other barriers to free trade, including not allowing American companies to bid on government procurement, even when the goods are made in China.

I will be writing more on this, but it is a breaking story and I want to get the news out.

The Unbearable Lightness of Reading Dana Milbank

Richard Eskow — Fri, 11 Jun 2010 11:55:08 -0400

Feel free to read Dana Milbank if that sort of thing appeals to you, but don't imagine for a minute that you're learning anything. That would be like studying the French Revolution by reading Marie Antoinette's cake recipes. The Milbank school of journalism - which at this point is American journalism -doesn't just fail to inform. Somehow it's able to subtract from a reader's overall body of information, as if by magic, leaving her or him even less informed than they were before.

That was made clear this week during the annual conference held by the Campaign for America's Future, the progressive organization where I am a Fellow (although I certainly don't speak for the organization). An objective reporter would have found much of substance to cover there, especially the widespread agreement that the progressive movement must lead the political debate rather than yielding that role to the Democratic Party establishment. In saner journalistic times, that's a heckuva story. But with newspaper readership down and cable news fueling an ADD-like journalistic tone, publishers have apparently decided to take a different tack: politics as gossip journalism.

That's not a new observation, of course, but the Milbank School takes the creeping Lindsey Lohanism of the American media to new heights. (Actually that's not fair to Lindsay, who is a surprisingly gifted actor in the right vehicle - I'm referring, of course, to her press coverage.) Politico is often credited with the celebretization of political journalism, but Milbank has an even longer history of practicing the craft. (And let us not overlook the First Czarina of the Gossip Empire, Maureen Dowd.) That's why the mournful cry often rises from information-hungry readers like ululations in a Sophocles tragedy: Why oh why can't we have a better press corps?

The two-and-a-half day conference was punctuated by precisely twenty-three minutes of protest. That was the amount of time it took Speaker Nancy Pelosi to address the conference - a task she conducted heroically under challenging circumstances. Guess which twenty-three minutes Milbank chose to cover. We'll pause for a split-second to let you think ... Hey, you're right! Now guess what theme he chose ... right again! Liberal House Speaker heckled ... by liberals. How ironic! How droll! How celebrity-journalism-like!

How ... inaccurate. Actually, Pelosi was not heckled by liberals. She was shouted down - quite rudely - by a single-issue group that treated her even less respectfully than Kanye West treated Taylor Swift. They didn't even say "I'ma let you finish." The group apparently supports the Community Choice Act, a good bill that - ironically, for you Milbankian irony junkies - one that the Speaker reportedly supports. Memo to Dana: Single-issue advocates are not "liberals" or "conservatives," and the demonstrators expressed no political agenda. But "liberals heckle a liberal" is too juicy a tag to sacrifice just because it's inaccurate. Code Pink, which really is a progressive group, was also there and unfurled a sign about Israel policy, but they did not heckle the Speaker. They failed to provide Milbank with a catchy hook for his piece.

That means they failed to perform their patriotic duty. Don't these lefties want to save the newspaper industry? They should realize how much the country needs a medium that provides ledes like this one: "For 17 months, anger at President Obama and congressional Democrats has been pooling on the left. On Tuesday morning, it spilled onto the floor of an Omni Shoreham ballroom and splashed all over House Speaker Nancy Pelosi." Now that's great political prose! I. F. Stone, eat your heart out.

Consistency and logical coherence are optional in the Milbank school. You've already read his first sentence: Anger has been pooling on the Left for 17 months. Now read the opener to his second paragraph: "The celebrated San Francisco liberal took the stage to greet what should have been a friendly audience ..." (Note the use of the word "celebrated." In Milbank's world, celebrity rules.)

How can a competent writer or analyst say this "should have been a friendly audience" after he's just said that the same audience has been "angry" for a year and a half? That's incoherent. The Milbank School apparently believes that surprise, like irony and celebrity, helps sell newspapers. So forget logic - "move those units," baby!

Let's be clear: There is a sense of frustration with the White House and Congress, and it was expressed at the conference. But the sentiments expressed at the conference were not personal, and they included recognition that, given the right strategies, progressives can engage productively with a Democratic leadership that also has accomplished some meaningful things. But let's face it: That story isn't "splashy." "Liberals are mad at Daddy and Mommy" fits more closely to the Milbankian style. They don't permit him to write that the "San Francisco liberal" (get it? lattes and hippies?) was "eaten by her own."

The real discontent expressed at the conference stems from a number of unresolved problems which center around our ongoing economic crisis, and the sense that the government isn't doing enough to address them. This picture will help put the conference's themes into context:

That captures the urgency of one of the conference's key messages - we need jobs now. The blue lines show the Administration's expected unemployment rate with and without the stimulus, compare with today's reality: Our jobless rate is far worse with the stimulus than the White House thought it would be without it. Yet, instead of proposing more jobs-centered stimulus, the Administration's focusing on deficit reduction.

Milbank didn't address this issue or anything else of substance. Instead he used precious column inches to quote lyrics from a song played during the break, and to observe that "I Can't Get No Satisfaction" was one of the other tunes coming through the loudspeakers. His hurried scribbling of words from an old MTV hit may explain why he was unable to fit more substantive information in his notebook.

Poltico's coverage of the event looked like Pulitzer Prize material when compared to Milbank's vapid scribblings. Reporter Glenn Thrush's headline was "Left to Obama: We're Not Happy," which was certainly a major theme of the conference. His first quote was from Ilyse Hogue of MoveOn: ""We are not apathetic, we are not depressed -- we are willing to get out and fight for the people who fight for us." That captures of one the conference's themes. But the comment that "criticism of Obama during the lightly attended opening day was more visceral than issue specific" leaves the sneaking suspicion that Thrush only attended plenary presentations. If he had attended breakout sessions, chatted with the authors signing their books throughout the day, or interviewed the many policy experts and activists in attendance, he would have encountered a lot of specifics.

At least Politico's readers have some idea what took place. Milbank's will have come away with this impression: Liberals are eating their own, and their digestive process is leaving big splashy pools that some celebrity from San Francisco stepped in while speaking to people who were critical of her, although that was really some other people, and which in any case comes as a total surprise because they've only had a mounting sense of anger for the last 17 months, which means they should have been really friendly to her. People in wheelchairs suddenly became spokespeople for the liberal community rather than activists for the disabled, and they rode their wheelchairs right through those pools of boiling anger, and all those people were angry at Mommy and Daddy and probably at themselves, but the details don't really matter and I want to report this in a catchy, celebrity-driven way and besides hey Fatboy Slim and the Rolling Stones are on the radio and I love this song and my notebook's almost full and, and ...

And for God's sake, please buy this and save the American newspaper - because, after all, how would people stay informed without reporters like us?

Speaker Pelosi Previews Address On Progressive Leadership For America's Future Now!

Bill Scher — Wed, 02 Jun 2010 12:38:34 -0400

On Tuesday, House Speaker Nancy Pelosi will address a nationwide gathering of progressives at America's Future Now! -- one day after the conference holds "The Great Debate: Progressive Strategy in the Obama Era," where attendees will discuss whether to fully back President Obama's agenda or constitute an independent force pushing for bolder, faster action.

Yesterday, during an on-the-record question-and-answer session Speaker Pelosi held with progressive bloggers and reporters, I had the opportunity to raise with the speaker the concerns that many liberals have about a lack of leadership in Washington on pressing issues such as the jobs crisis, and I asked what was her advice for progressives to help bring about a bolder agenda.

Previewing her America's Future Now! remarks for next week, the Speaker laid out a vision for a "New Prosperity" -- a "different kind of economy" that did not suffer from extreme boom-and-bust cycles, a modern "industrial revolution," and investments creating new opportunities in "health care, education and energy." (Last week, she discussed the "New Prosperity" in her commencement address at Cornell University. Read her remarks here.)

And how does the Speaker believe we can help realize that vision?

First, she implied that patience would be required in enacting legislation, noting a "changed climate" in Congress with increased resistance from right-leaning Blue Dog Democrats and others, "about the size of the investment packages that we are putting forward."

But despite that, she insisted Congress can "do it in pieces."

She pointed to the latest jobs bill that included $1 billion in new funding for summer jobs, extensions for jobless assistance, and the end of a tax break that has been rewarding businesses for sending jobs overseas.

While aid to state governments and COBRA health insurance subsidies were taken out of the jobs bill to appease certain Democrats, Speaker Pelosi sought to reassure that Congress would simply revisit those goals in separate legislation, keeping the overall agenda moving forward.

Second, she called for progressives to blaze their own path on deficit reduction, "not just with cuts, but by making the proper investments," arguing, for example, that "nothing brings more money to the Treasury than investment in education."

Finally, she suggested that frustrated progressives should tone down criticism, saying, "It would helpful if we worked together on it, instead of undermining each other."

We'll hear more from the Speaker at America's Future Now! on Tuesday morning. For more about the conference, and to find out how you can be a part of it, check out www.ourfuture.org/now.

For other reports on Speaker Pelosi's conference call, check out The Huffington Post, FDL News Desk and AmericaBlog.

Law and Order: AIG

Richard Eskow — Tue, 01 Jun 2010 19:48:12 -0400

President Obama's Department of Justice announced last week that there would be no indictments in the collapse of AIG, an event which led to a worldwide economic collapse and cost the American taxpayer trillions. As someone who once worked for AIG I was shocked, but apparently that's how this mystery ends: Hundreds of millions of victims, smoking guns in every room, and not a perp to be found anywhere.

Yves Smith is disappointed that PriceWaterhouseCoopers, the auditors who signed off on AIG's financial claims despite mounds of disturbing evidence, escaped serious legal scrutiny. She observes that our "Potemkin" financial reform (her word) won't remove the barriers that prosecutors face in pursuing secondary parties like auditors (although I believe the Supreme Court ruling she cited only addressed civil suits.) Not only is the auditor protected, but that allows the fraudster himself to use the defense that he kept his auditor informed - kind of like Bush and Cheney using John Yoo's legal opinion to inoculate themselves from criminal prosecution.

Here's another possible reason there won't be a prosecution: Our economy was shattered by a syndicate, a ring, a cabal at the top of the financial pyramid. To move against any one of them - AIG's Joe Cassano, the auditors, Goldman Sachs, or even the credit agencies - would trigger a chain reaction of rats turning on one another, summoning each other to testify, and spilling each other's dirty secrets in an attempt to save themselves.

Of course, that's exactly what most prosecutors want. But doing that could topple that pyramid at the top of our economy, and it looks like our leaders don't recognize that this would be a good thing. We must protect the booming stock market, whatever it takes. If it means leaving the con artists in power, leave 'em in power. If it mean breaking America's longstanding social contract in the name of "deficit reduction," that's okay too. (There's an irony in the fact that Great Britain's new government is under pressure to make cuts to keep its AAA rating. and that we may be next. The ratings agencies are part of the problem, and now it looks like they're controlling governments instead of the other way around.)

Was there reasonable suspicion regarding Cassano and AIG Financial Products? Let's review the record: AIG paid $80 million to settle criminal charges against Cassano's unit in 2004 when it helped PNC Financial conceal assets. AIG didn't just pay a settlement. It also signed a deferred prosecution agreement with the Justice Department leaving it open to criminal prosecution if it misbehaved again. (There's a good timeline here.)

After that Cassano kept reassuring the public - and investors - that his products were safe throughout 2007. (It's illegal to mislead investors.) Cassano fought the independent auditor who was brought in to watch his books, preventing him from looking at certain critical books of business and eventually driving him to resign. Cassano insisted that PwC stay out of his way when he prepared for a presentation to investors in December 2007 (hello, Securities and Exchange Commission!)

Then, of course, all hell broke loose. With that history, why didn't Cassano face trial? As the Wall Street Journal reports, "prosecutors obtained information about Mr. Cassano's disclosures to AIG senior executives and AIG's outside auditor, PricewaterhouseCoopers LLP. That changed the course of the investigation, these people said." So he stonewalled the outside auditor, but he shared info with the cozy inside one? Apparently a compliant auditor is even better than a Father Confessor - you're absolved when you tell him your sins, and he'll never give you "go and sin no more" nonsense.

PriceWaterhouseCoopers weren't just AIG's auditors. They were Goldman Sachs', too. That's right: they had another huge contract with the counterparty whose thirteen billion dollar claim was paid in full on the instructions of Tim Geithner's New York Federal Reserve. So PwC let two massive financial institutions engage in a highly speculative venture - one possibly misleading the other - and raised no warning flags.

Publicly traded companies are required to disclose corporate threats in their 10-K statements, which are approved by their auditors. Here's what AIG said in its 2005 statement (buried several pages into the "Risk Factors" section): "AIG's liquidity could be impaired by an inability to access capital markets or by unforeseen significant outflows of cash." (Gee, ya think?) That's about it for risks. PwC either ignored or missed the warning signs as AIG accumulated losses great enough to break the world's economy.

How have they suffered for this dismal track record? Their revenues rose 8% to $28.2 billion in 2008, and operating profits grew in the fiscal year ending June 2009. And why not? A lot of businesses enjoy the, uh, shall we say flexibility that comes with an auditor like that. Of course, there's no proof their conduct was criminal. They may have just overlooked the worst meltdown in modern financial history.

How about the ratings agencies? The warning signs were there: A plea deal on a charge of criminal fraud, ongoing negotiations with the New York Attorney General, leading economists expressing concern about the stability of the housing market. Yet remarkably (or not), leading ratings agencies S&P and Moody's were rating AIG well right up until September of 2008, when it became clear that it had already lost $18.5 billion and the worst was yet to be revealed. Until that point, S&P had given AIG's counterparty deals the top rating of A-1+, which means "obligor's capacity to meet its financial commitment on the obligation is (very) strong."

In 2007, well after the Spitzer investigation was underway, Best's affirmed that in its judgment AIG's creditworthiness was "superior," saying that "AIG's renewed focus on accounting integrity and future successful remediation of accounting concerns provides a level of stability."

Accounting integrity? Write your own joke, as Ed McMahon used to say. When it comes to PwC and the ratings agencies, Upton Sinclair got it right: "It is difficult to get a man to understand something when his job depends on not understanding it."

We've already reviewed the emails and internal documents showing that ratings agencies were always selling their services to these institutions, a hopeless conflict of interest. The Franken Amendment would improve that situation significantly, but there's no guarantee it will survive the House/Senate negotiations - which should be fully transparent to the public (sign the petition to televise them here, folks.)

My own background as an AIG exec adds an extra dimension to my sense of outrage. The company was destroyed by the ratings agencies, the auditors, and Goldman Sachs (AIG's replacement CEO, Edward Liddy, served on the Goldman board). I heard horror stories about hard-working people who had nothing to do with the scandal receiving death threats or having to pull their kids out of school. Joe Cassano kept his ill-earned salary and bonuses, and for a while after he left was paid $1 million every month at Liddy's behest. PwC had a boom year, and the ratings agencies still (remarkably) have some credibility.

But a once-thriving company is dead. We've paid hundreds of billions of dollars directly, and trillions of dollars indirectly. 15 million people are out of work. The gamblers in the Wall Street casino are still placing bets, secure in the knowledge we'll cover their debts. As they said about Nicky in Casino, they "had a good system: When they won, they collected. When they lost, they told the bookies to go f**k themselves."

And now we're told that nobody's guilty. That's getting it backward. It's like Murder On the Orient Express: They all did it. But apparently we're the only ones who are going to pay for it.
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(We'll be discussing financial reform and other critical issues with Simon Johnson, Nancy Pelosi, Alan Grayson, Robert Kuttner, Arianna Huffington, Bob Herbert, and a host of other luminaries at the Campaign For America's Future Annual Conference on June 7-9.(1) Walk-ins welcome! More info here. Come on in!)

(1) As they (never) taught me on Wall Street, "always be closing."