economic crisis

Job One For Congress: Respond To The Jobs Emergency

Isaiah J. Poole — Tue, 14 Sep 2010 08:43:35 -0400

The House of Representatives, which returns from its summer recess today, and the Senate, which returned Monday, really only has one legislative priority it should be focused on before members return to the campaign trail: Treat the jobs emergency as the emergency that it is, and enact the legislation that will get unemployed Americans back to work quickly.

That means calling for more than the tax incentives and accelerated infrastructure investment that President Obama has put forward in a series of recent speeches. It will mean making the case for, and enacting, direct spending on jobs creation.

If Obama and the Democratic leadership in Congress would embrace a more aggressive jobs agenda that recognizes the jobs emergency for what it is, they would find broad grassroots support. For example, the Jobs for America Now coalition is preparing a renewed legislative push this week in support of the Local Jobs for America Act, which would funnel up of $100 billion to states and localities to keep people working on vital public services. The Jobs with Justice coalition is declaring Wednesday a “jobs emergency national day of action,” with at least 120 demonstrations and events around the country.

Listening to Senate Minority Leader Mitch McConnell and to some of the chattering class on cable news, you would think that the most urgent question facing the Congress is whether individuals earning more than $250,000 should continue to receive the tax break they received from the Bush administration—the tax break that helped turn the budget surplus President Bush inherited into a deep deficit.

Seemingly lost in the discussion is the fact that the unemployment rate in the U.S. is 9.6 percent (and much higher in many rural areas and among African-Americans and Latinos), and that tax cuts for wealthy individuals will have no significant impact on creating jobs for these people. On Monday, Moody’s Analytics reiterated what progressive economists have been saying for years: Wealthy individuals pocketed a significant share of the Bush tax cuts rather than reinvest that money in job-creating investments. What really drives investment, Moody’s says, is a growing economy that employs its people.

“I would tend to wonder how much the tax cut actually influences spending behavior,” said Chris Cornell, an economist who mined government reports back to 1989 for West Chester, Pennsylvania-based Moody’s Analytics. “Spending by the top 5 percent of households seems much more closely tied to business- cycle issues than it does to tax-cut issues.”

The Moody’s research covering couples earning more than $210,000 found that spending by the wealthy is more likely to be influenced by the ups and downs of the stock market than changes in income-tax rates.

Stock-market performance is the “primary factor that is driving the savings of the top 5 percent of households,” said Mustafa Akcay, economist and co-researcher of the savings data.

The wisdom of direct spending on job creation, and the folly of extending the Bush tax cuts on the wealthy, is reinforced by sobering warnings about the global economy such as the one Monday from the chief economist of the International Monetary Fund, who said that the financial crisis “won’t be over until unemployment significantly decreases” and said that nations should spend more on job creation in order to regain financial stability. The comments are a sharp rebuke to conservatives in the United States and other industrialized countries who have used the global economic crisis to drive their agenda of dismantling government.

The message is clear: The best way to reduce a government deficit is with a growing economy that offers good-paying jobs.

The Obama administration deserves credit for pointing in the right direction. In an interview with the Wall Street Journal, Treasury Secretary Timothy Geithner offered a twist on the conservative canard that “uncertainty” about government policy in Washington is holding the economy back: It’s the paralysis created by a conservative obstructionist minority, particularly in the Senate, that has blocked initiatives such as the Local Jobs for America Act that otherwise would already be working to help revive the economy. "If the government does nothing going forward, then the impact of policy in Washington will shift from supporting economic growth to hurting economic growth," Geithner warned in that interview.

And the last thing that Americans can afford is a Washington that does nothing in the face of this crisis.

According to the Economic Policy Institute, if Congress would spend $75 billion on direct jobs creation, taxpayers would see a $39 billion return as newly hired workers pay taxes and no longer need such government services as food stamps. Plus, in addition to the more than 675,000 people who would be directly hired with those funds, another 150,000 jobs would be created just as a result of the increased economic activity of putting that many people back to work.

There is also a jobs program that is set to expire in just 16 days if Congress does not act. A welfare-to-work program, the Targeted Assistance for Needy Families (TANF) Energency Fund, has employed more than 250,000 people. Yet, despite being a program that does what conservatives demand—that needy people work and receive job training instead of collecting welfare—House conservatives led by House Whip Eric Cantor have been working to shut the program down. The Obama administration wants $2.5 billion to extend the program into 2011.

For the 15 million unemployed and 11 million underemployed people in the country, Congress needs to enact this TANF Emergency Fund extension and other job-creating bills this month—and force conservatives to explain why they are willing to see hundreds of billions of dollars go toward extending tax breaks for the wealthiest Americans while being unwilling to spend a fraction of that to help an unemployed American who needs a job.

Economic News Shows Still More Uncertainty

Isaiah J. Poole — Wed, 04 Aug 2010 11:47:54 -0400

Too Much Little Ball? Day 2 of the Financial Inquiry Commission (Update)

Les Leopold — Thu, 14 Jan 2010 12:51:04 -0500

After two days of hearings, the Financial Crisis Inquiry Commission seems to be drifting away from the biggest questions that haunt our economic system like the oligopoly of banks that are far too big to fail, the mal-distribution of wealth, and the failure to prevent destructive financial innovations.

It is understandable that the Financial Crisis Inquiry Commission would want to explore the many facets of mortgage fraud. After all, millions are suffering under all manner of predatory practices right now. By highlighting such fraud, the commission can help make the case for a new Financial Consumer Protection Agency that the major banks are trying to kill.

But as witnesses like Lisa Madigan, the Illinois Attorney General, makes clear, the demand for these products came a few major Wall Street firms who profited wildly by packaging and selling vast pools of high risk mortgages, (and then also sold layers of synthetic products based on the same debt to further leverage their bets.)

If the Commission follows Ms. Madigan’s lead, they will head back into Wall Street and ask the most fundamental questions: why were these toxic securities so profitable and where did all the wealth come from to buy them up?

Denise Crawford, the Texas Securities Commissioner, also recognized the larger implications when she said "The great minds of Wall Street are probably right now coming up with new securitization products" that could lead us to the next crash. It's not just mortgages. It's the entire structure of Wall Street and the super-wealthy that create the demand for new speculative products.

The commissioners should haul the Wall Street CEOs back and demand that they explain in detail how they are lobbying against consumer protections. The commission should ask the big bankers to explain how much profit they made from these toxic assets, before they crashed. Then they should ask how many of these assets they are still creating and how much profit comes from them.

Of course, we should eliminate mortgage fraud and a strong consumer protection agency could do so. But what about the big banks that created the demand for all of that fraudulent activty? Regulating them won’t do enough. Busting them up would be a good start.

So far we have heard precious little from the commissioners or the witnesses about busting up Goldman Sachs, Morgan Stanley, JP Morgan Chase, Bank of America and the other giant banks that are too big to fail.

Until the they show a willingness to dig deep into trust-busting, this commission, which has so much promise, will not speak to the fury of the American public. Nor will it get us nearer to the root causes of the crisis.

Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.

Drinking the “Financial Innovation” Kool-Aid?

Les Leopold — Thu, 14 Jan 2010 11:32:05 -0500

You can smell it on their breath – the tell-tale fumes of “financial innovation.”

Drink it and you start to believe that financial innovation actually exists. The commissioners and their witnesses are being ever so careful to insist that our economy will make room for it, not discourage it, not to over-regulate it , and to find market forces to enhance it.

But they seem incapable of the healthy skepticism expressed so well by Paul Volcker:

"I hear about these wonderful innovations in the financial markets and they sure as hell need a lot of innovation. I can tell you of two - Credit Default Swaps and CDOs - which took us right to the brink of disaster: were they wonderful innovations that we want to create more of? .... I wish that somebody would give me some shred of neutral evidence about the relationship between financial innovation recently and the growth of the economy, just one shred of information.... The most important financial innovation that I have seen in the past 20 years is the automatic teller machine... How many other innovations can you tell me of that have been as important to the individual?" ("What Has Financial Innovation Done for You?")

Here’s a line of questioning they might want to consider:

Which of the financial innovations that have taken place over the past twenty years have been good for the American people? Can you name any at all?

Why not set up a process by which new financial products must be approved (like drugs) before they can poison the economy?

How many of these “innovations” actually are nothing more than sophisticated casino games for those with excess wealth and for those who profit by creating them?

I not looking to slam the commission. But financial innovation is not like any other kind of innovation in our economy. If you create a new IPod and it goes sour, it hurts Apple, its investors and its suppliers. You create a synthetic collateralized debt obligation that goes south, you crash the world economy and kill millions of jobs.

Market forces will never solve the problem of innovation. It will take the heavy hand of regulation or we’ll be bailing out the financial sector again and again when these “innovations” blow up. Warren Buffet is right: to call them “weapons of financial mass destruction.”

We could use some straight talk about how to take them out.

Day 2 at the Financial Crisis Hearings: Sheila Bair Has Something to Say, Does the Commission Hear Her?

Les Leopold — Thu, 14 Jan 2010 10:11:44 -0500

Shelia Bair, the head of the FDIC, is the first witness get near to addressing the major underlying causes of the crisis: the distended, distorted nature of our finance-heavy economy. She discussed “economic distortions” and the “disproportional” size of financial profits in our economy. She said that during the 1950s and 1960s financial profits accounted for 15 percent of all corporate profits. By 2008 they had metastasized to 34 percent.

If someone had bothered to ask, she may have also addressed the underlying distribution of wealth and income that has created the demand for more and more speculative financial products. It once was the case that that productivity increases inevitably led to real wage increases. That's no longer true. Those two trends have split apart starting in the mid-1970s, and now the lion’s share of the productivity increases go to the super rich.

In general there is a high correlation between the mal-distribution of income and economic crashes. The last time our wealth and income distribution was as skewed as it is today was 1929, and that's not an accident. When too much money is in the hands of the few it runs out of real world investment and gravitates towards speculative investments. This inevitably creates asset bubbles and crashes. Record pay and bonuses on Wall Street and high unemployment are connected.
(See The Looting of America Chapter 2 and 11).

Ms. Bair opened the door to a line of questioning about how those imbalances were caused by decades of “tax reforms” that moved money to the very top of the income brackets. This was deliberate economic policy from Reagan on. This was the heart of trickle down. Combine the mal-distribution of wealth with financial deregulation and your get a crash, guaranteed.

Instead the commissioners are going after fraud, the rating agencies, the lack of regulation of subprime products, and derivatives. But, that won’t get us there.

The commission would do well to review how we controlled finance and the distribution of wealth from the 1930s to the 1970s. Then, policy makers understood that a vibrant and stable capitalist system required a growing middle class, a tightly regulated financial sector, and a constrained distribution of income.

Instead we got this: In 1970 the ration of pay between the top 100 CEOs and the average worker was 45 to 1. By 2008 it was 1,081 to one.

Please Mr. Angelides, go there!

Day One Summary: The Big Boys Got Away and the Big Questions Weren't Asked

Les Leopold — Wed, 13 Jan 2010 16:29:11 -0500

The heads of Goldman Sachs, JP Morgan Chase, Morgan Stanley and Bank of America came to testify and said........just about nothing.

Yes, they made mistakes. But gee, they had learned a great deal and they certainly didn't cause the crash. They promised they are managing risk better, even though they claimed always to have done so. Also they insist they are not too big too fail and they are reforming compensation so we shouldn't worry about their sky high compensation packages.

After these predictable pronouncements Phil Angelides, the former Democratic California State Treasurer and chairman of the commission, came out swinging at Lloyd Blankfein, CEO of Goldman Sachs. But he ended up shadow boxing.

Angelides threw his best punches at Goldman Sachs concerning reports that it provided toxic assets to customers while it was betting against them. "It sounds to me a little bit like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars," said Angelides.

Blankfein easily parried the punches by explaining that that's what market makers are supposed to do. He then turned the conversation into technicalities that few of the public could follow or understand. Meanwhile the big questions weren't asked.

Angelides' almost cornered Blankfein with the question of whether or not Goldman Sachs would have gone under had it not been bailed out by the taxpayer. Blankfein again successfully parried the punches by saying no one knows...that they were doing the best they could...better than everyone else.

Angelides best punch came when he listed a slew of government programs that supported Goldman Sachs: TARP, the AIG pass through of taxpayer money, no-interest loans from the Fed, guarantees from the FDIC and more.

Blankfein bobbed and weaved. But Angelides missed the chance to nail him. It was the perfect time to bring up the fact that AIG gave Goldman Sachs our money to cover its bets at 100 cents on the dollar.

This is key to the allegations that Geithner pressured AIG to give Goldman Sachs $12.9 billion dollars to settle bets whose market value was about $2 billion. This was clearly a gift of taxpayer money that has directly fattened the bottom line of Goldman Sachs and their bonus pool. (See GeithnerGate)

Heather Murren, a former Merrill Lynch analyst chosen by the Democrats for the commission, pushed Blankfein at bit more: "Did anyone ask you to take anything less than 100 cents on the dollar?"

Blankfein said other staff had that discussion but it never really came up to him. Unfortunately, she backed off and didn't follow up with the obvious question: "Shouldn't you have taken much less --yes or no -- since you admitted already that you didn't really need taxpayer support?"

The answer might have had severe consequences for Geithner and for Goldman Sachs's outrageous bonus pool. Clearly, Geithner helped Goldman Sachs walk off with taxpayer money it didn't need then and certainly doesn't need now. Tough public questioning might help provide Obama the basis for taxing it back.

Overall, the Commission let the big boys off the hook. Here are the kind of questions they failed to ask and if they don't ask them soon, the American people will tune out.

1. Now that you've paid back TARP, how much government support are you getting currently from various government programs? This would punch through the PR spin that says the big banks have paid back the government. The reality is that these highly profitable institutions are still taking advantage of an array of government financial programs that are padding their bottom lines and bonus pools.

2. Given all the mergers that have taken place during the crisis, is your institution, right now, too big to fail? If so, shouldn't we break you up? The committee should be setting up the basis for the break up of these giant companies. Keith Hennessey, a Republican, started to get there. The other commissioners should help him follow-up.

3. How do you justify having your employees earn 10 to 100 times the compensation earned by the leading neurosurgeons? The commission needs to point out that the pay scale is wildly excessive in the financial markets and that it represents a distortion of our entire system. The free market alone cannot correct it. There is no economic justification for it.

4. Are your banks paying for lobbyists that are working against efforts to create a Financial Consumer Protection Agency? This is the perfect time to get these bankers to explain how they are lobbying against the public's interest.

5. Given all the support you have received (and are still receiving), and given all the damage your industry has done to the economy and to the lives of millions of Americans, why shouldn't the government place a windfall profits tax on your near record profits and bonuses? This might pressure the Obama administration to get back some of our money.

Dynamite from one Expert Witness:
In its second panel, the Financial Crisis Inquiry Commission heard from Kyle Bass, of Hayman Financail Advisors, who read a statement that had some juice to it. I don't know this guy, but it's pretty clear no PR flack scripted him.

He took direct aim at the fiction that top traders at troubled institutions like AIG must receive top compensation or we will lose the vital "talent" needed to unwind their complicated bets. Those traders at AIG placed more than $450 billion in bets on toxic securities. The traders, of course, made these bets because of the enormous fees and bonuses they received.

But why should we continue to pay these traders, given their disastrous track records and the fact that the taxpayer is bailing out AIG to the tune of more than $150 billion? Unfortunately, the Obama administration is going along with the myth that these traders need to receive large compensation packages because if they leave AIG, it will hurt the taxpayers' investment.

But Bass demolished that argument by saying flat out that he knew of hundreds of unemployed derivative brokers who would gladly to do the job for $100,000 a year instead of for millions. The trading emperors have no clothes.

Too bad the commissioners didn't bring up that argument to the CEOs before them in the AM session. The commission should hire Bass for its staff.

There were more thoughtful witnesses during the rest of the day, but no fireworks, which is precisely what these hearing need to focus the public's attention. Ok, It's only Day One,and we should cut them some slack. But they will have to develop a sense of drama or they might fade away.

Phil Angelides will have to show much more of the fire in the belly that he momentarily unleashed on Blankfein. The American people are waiting for someone to express their anger and frustration. It would be very important if this Commission could lead the way.

Expert Witnesses Say it Like It Is

Les Leopold — Wed, 13 Jan 2010 13:33:25 -0500

In its second panel, the Financial Crisis Inquiry Commission, heard from Kyle Bass, of Hayman Financail Advisors, who read a statement that had some real dynamite it. I don't know this guy, but it's pretty clear no PR flack scripted him.

He took direct aim at the fiction that top traders at troubled institutions like AIG must receive top compensation or we will lose the vital “talent” needed to unwind the complicated bets that were made. Those traders at AIG placed more than $450 billion in bets on toxic securities. The traders, of course, made these bets because of the enormous fees and bonuses they received.

But why should we continue to pay these traders, given their disastrous track records and the fact that the taxpayer is bailing out AIG to the tune of more than $150 billion? Unfortunately, the Obama administration is going along with the idea that these traders need to receive large compensation packages because if they leave AIG, it will hurt the taxpayers’ investment.

Too bad the commissioners didn’t bring up that argument to the CEOs before them in the AM session.

Bass also did us a favor by saying that Fannie and Freddie should be owned and run as public non-profit agencies of the government instead of government-backed private enterprises that use implied public backing to make private profits and to make disastrous investments. He asked why the taxpayers are shouldering all the losses instead of the creditors and investors who bet on Fannie and Freddie. Good question.

The commission should hire Bass for its staff.

Panelists Peter Solomon and Michael Mayo also added some strong comments. Both took on Mr. Dimon's claim that JP Morgan wasn't really too big to fail. Solomon said the top banks formed an "oligopoly."

Who will have the guts to bust the trusts or to at least say it?

Progressive Breakfast: The Net Domestic Product

Isaiah J. Poole — Fri, 30 Oct 2009 09:30:34 -0400

The daily Progressive Breakfast serves up what progressive movement members need to know to start their day. Bill Scher is traveling; he will return Monday.

Thursday's news that the nation's gross domestic product grew at an annual rate of 3.5 percent in the third quarter comes with a lot of asterisks. A few of them:

*The Wall Street Journal reports that the White House recovery plan will claim responsibility today for creating or saving 650,000 jobs with a bit less than half of the $339 billion in recovery funds spent through September 30. "The White House sees the data as proof that its $787 billion American Reinvestment and Recovery Act of 2009 will meet its goal of creating or saving at least 1 million jobs," the WSJ writes.

*John Authers of the Financial Times critiques what helped drive the GDP increase:

Household disposable incomes actually fell during the quarter, by 3.4 per cent, but consumer spending rose, also by 3.4 per cent. This is not a pattern that can be sustained for long, and it is inconsistent with the need for US families to pay down their debts.

Consumption rose largely because of a huge increase in expenditure on durable items, led by motor cars. Government subsidies through the “cash for clunkers” programme, removed before the quarter had ended, largely explain this.

Meanwhile, tax credits for homebuyers, which helped revive activity in the housing market, are due to be withdrawn later this year. The question now is whether higher consumption can be sustained without government support.

... Thursday’s new data on initial claims for unemployment insurance confirmed that the rate of the rise in joblessness has slowed significantly – but the jobless rolls are still rising faster than at any time this decade, before the financial crisis took hold.

*At BusinessWeek, Michael Mandel sees in the numbers evidence "that companies are robbing the future to pay for short-term profits," and if we measured economic growth to take into account the impact of these business decisions, we'd find GDP growth to be significantly lower:

...[T]he official statistics are not designed to pick up cutbacks in "intangible investments" such as business spending on research and development, product design, and worker training. There's ample evidence to suggest that companies, to reduce costs and boost short-term profits, are slashing this kind of spending, which is essential for innovation. Without investment in intangibles, the U.S. can't compete in a knowledge-based global economy. Yet you won't see that plunge reflected in the GDP and productivity statistics, which are still too focused on more traditional sectors, such as motor vehicles and construction.

... Over the past year, U.S. employment of scientists and engineers—the people who create the next generation of products and make the U.S. more competitive over the long term—has fallen by 6.3%, according to a BusinessWeek tabulation of unpublished data. Yet overall employment has fallen only 4.1%. "There are really bright people who are struggling to find a job," says Josh Albert, managing director at Klein Hersh International, an executive search firm for life scientists.

*Bloomberg News reminds us that the future prognosis is for anemic growth:

The economy will likely grow at a 2.4 percent annual rate from October through December, the median forecast in a survey

earlier this month showed. GDP will also grow 2.4 percent next year and 2.8 percent in 2011, the survey showed, compared with an average of 3.4 percent growth over the past six decades.

*In Olathe, Kansas, a suburb of Kansas City, a side effect of the economic downturn is playing out that is happening around the country. From The Olathe News:

The Olathe Salvation Army Food Pantry continues to see an increase in people needing help during these difficult times. The need, however, has changed in recent months.

“We’re seeing people we normally don’t serve,” said Mindia McManness, volunteer coordinator for the Olathe Salvation Army. “They call us not knowing even how to get help because they’ve never needed it before. They don’t know where to begin.”

They’ve lost their jobs or are experiencing other difficulties because of the floundering financial markets.

“They’ve run out savings or maxed out credit cards, something that usually helped them through short-term difficulties in the past,” McManness said.

This recession has gone on much longer than expected, and the impending recovery will take even longer, leading to a new pool of people needing assistance.

Shelves once filled with canned corn, spaghetti noodles, chili, pork and beans or peanut butter and jelly are empty more frequently, and tight food supplies have become the rule, not the exception, all around the metro area.

Health Care: House Moves Ahead

House Democrats unveiled the long-awaited health care reform legislation Thursday that will be up for debate on the House floor, and the best that can be said about it, at least according to a headline this morning on Politico, is that "liberals don't bolt" from it:

...[T]he bill [House Speaker Nancy Pelosi unveiled Thursday includes big pieces of what the most liberal members of her party wanted — most likely setting up a serious battle when negotiators try to merge it with the far more moderate Senate legislation.

The public option stays, even if it’s not the same one the House speaker preferred. So, too, does the so-called millionaire’s tax to help offset the $894 billion price tag. Individuals will be required to own insurance. Most employers will be legally mandated to offer it.

And in return, the House speaker won assent — if not complete agreement — from the liberals in her caucus, as well as a surprising amount of support from Democratic moderates who have long railed against some of these provisions.

Liberals expressed frustration that the speaker bowed to political reality by allowing doctors and hospitals participating in the public option to negotiate payments directly with the Department of Health and Human Services, and some promised to request an amendment that would allow them to scrap the current plan for one tied to Medicare. But few pledged to vote against the bill.

Adele Stan at AlterNet says that at least the House bill is "almost (dare we say it?) progressive" when compared to what's pending in the Senate:

So, okay, it isn't the "robust" public option promised to AlterNet readers by Ways and Means Committee Chairman Charles Rangel, D-N.Y., this summer, but it doesn't include that silly opt-out plan. Unlike the lonely Harry Reid, who stood alone to face reporters on Monday, Pelosi was surrounded by members of her caucus, all smiles. Implicit in her timing was a message to the Senate: Keep noodling all you want, but here's a bill, a decent bill -- the bill we're gonna pit against yours in a conference committee if you ever get around to passing one. So, you might want to hop to it. And the more yours looks like ours, the easier it's gonna be for all of us.

As for the compromises in the House bill...

The deficit neutrality of the House bill presumably wins the support of the White House, while the less-than-robust public option seems to have passed muster with the big labor unions, who are surely influenced by another important distinction between the House and Senate bills: the House bill helps pay for itself through a new tax on the nation's most well-off citizens, while the yet-to-be-finalized Senate bill will likely pay for part of its cost by taxing high-priced, fully-loaded health-care plans -- like the plans many unions have negotiated in lieu of salary increases (and even as trade-offs for give-backs) by their members. Within hours of Pelosi's unveiling, both the AFL-CIO and the Service Employees International Union (SEIU) released statements praising the House bill.

Some ConservaDems are still refusing to get behind the House bill, reports McClatchy's David Lightman, claiming they need to hear from constituents:

"The plan on the table has some good points and some bad points. I want to look at it," said Rep. Lincoln Davis, D-Tenn.

Blue Dogs wanted to hear from constituents, many of whom are more conservative than those represented by most Democrats. "I have both sides of the health care debate well-represented in my district," said Rep. Allen Boyd, D-Fla.

... Blue Dogs and some party moderates have been concerned about the plan's cost, as well as its impact on small business and expansion of government. Those concerns remain.

But Pelosi thinks that there's already been so much debate on the merits and impact of all aspects of the legislation that she wants the nearly 2,000-page bill to face an up-or-down House vote without a lengthy amendment process. Ryan Grim at The Huffington Post:

House Speaker Nancy Pelosi said Thursday that there's been plenty of time for amendments already, so neither her caucus nor members of the minority party should expect a chance to amend the health care bill when it gets to the House floor.

"I've considered all of that input as our amendment process," Pelosi said on a conference call with bloggers, citing "probably 78 caucuses on this subject where we've listened to members [and] 2,000 town meeting on this subject."

A stinging rebuke of one feature of the House health-care bill comes from FireDogLake's Jane Hamsher, who says as a breast-cancer survivor she felt "tremendous disappointment" that the bill places higher hurdles the marketing of generic versions of biologic anti-cancer drugs:

Nancy Pelosi made a choice with regard to the lifesaving biologic drugs I took when I was in chemotherapy that will cost many of my fellow breast cancer survivors everything they own, and quite possibly their lives. ... Thanks to Representatives Anna Eshoo and Joe Barton, there will be no generic versions of these drugs. At least not for 12 years, if the House health care bill announced today passes. And because of an “evergreening” clause that grants drug companies a continued monopoly if they make slight changes to the drug (like creating a once-a-day dose where the original product was three times per day), they will never become generics. Instead of the Waxman-Deal amendment that granted much more reasonable terms to biologic patent holders, Speaker Pelosi chose the Eshoo-Barton amendment. And we could all be paying for that choice for the rest of our lives.

Hamsher is helping to organize with Public Option Please "treat, not trick" Halloween-themed protests at 3 p.m. at the Russell Senate Office Building, the Baltimore office of Maryland Sen. Barbara Mikulski and the offices of Rep. Sen. Kay Hagan and Rep. Anna Eshoo.

'Too Big To Fail' Reform Too Bad To Work?

The Obama administration's plan to change the rules for so-called too-big-to-fail financial institutions so that taxpayers will not be compelled again to prop them up when they engage in reckless gambles is receiving significant criticism on Capitol Hill. The Washington Post:

Under legislation unveiled this week by the committee chairman, Rep. Barney Frank (D-Mass.), in close coordination with the Obama administration, an oversight council of regulators would act as a monitor of systemic risk throughout the financial system and impose tougher regulatory standards on the largest companies. Compared to an earlier draft put forward by President Obama's team, the current bill expands the role of the council, entrusting it to identify risks to the system. The Fed would be the enforcer of the council's recommendations.

But that structure came under fire from Sheila C. Bair, chairman of the Federal Deposit Insurance Corp., who argued the new council should be headed by an independent chairman rather than by the Treasury secretary, and that the council should have greater authority.

Bair also joined both Republican and Democratic lawmakers in questioning the government's plan to pay for the cost of winding down large, failing financial firms. The plan calls for companies with more than $10 billion in assets to be assessed fees only after a large collapse, rather than contributing ahead of time into an insurance-like fund. [Treasury Secretary Timothy F.] Geithner and Frank have said the intent is to shift the burden of such failures from taxpayers to the financial industry itself, but Bair argued for the insurance approach.

The Washington Independent also details the objections that Treasury Secretary Timothy Geithner faced when he testified before the House Financial Services Committee:

“Mr. Secretary, I’m not a man that fears this administration or you,” Rep. Paul Kanjorski (D-Penn.) told Geithner. “But I do fear the accumulation of power exercised by someone in the future that can be extraordinary.”

Rep. Brad Sherman (D-Calif.) echoed those concerns, arguing that the bill represents “the most unprecedented transfer of power to the executive branch to make decisions about both spending and taxes in history — all without congressional approval.”

... [S]ome lawmakers are attacking the proposed bailout tax on large institutions, arguing that it should be collected beforehand as a type of insurance fund, rather than imposed after a competitor went under.

“No more TARP. No more bailouts,” said Rep. Luis Gutierrez (D-Ill.). “Let them [the companies] create the fund, the systemic risk fund, that will guarantee that the American taxpayer will no longer have to be involved should they cause such a crisis ever again.”

The Measure of Our Progress

Terrance Heath — Wed, 16 Sep 2009 16:14:37 -0400

In the previous post, I included a quote from Franklin Roosevelt's Second Inaugural Address.

We are determined to make every American citizen the subject of his country's interest and concern; and we will never regard any faithful law-abiding group within our borders as superfluous. The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.

It was a short quote, only because I couldn't very well quote the entire speech. I wanted to, because so much in it speaks directly to where we stand today, the kind of country we want to be, and the choices that will lead us closer to that goal — or farther from it.

Delivered on January 20, 1937, the speech came after Roosevelt's landslide victory in the 1936 election, and two years after he stared down businessmen and bankers who sought to halt an economic recovery that had not yet trickled down to — as Roosevelt said — one-third of the population.

He was elected President in November 1932, to the first of four terms. By March there were 13,000,000 unemployed, and almost every bank was closed. In his first "hundred days," he proposed, and Congress enacted, a sweeping program to bring recovery to business and agriculture, relief to the unemployed and to those in danger of losing farms and homes, and reform, especially through the establishment of the Tennessee Valley Authority.

By 1935 the Nation had achieved some measure of recovery, but businessmen and bankers were turning more and more against Roosevelt's New Deal program. They feared his experiments, were appalled because he had taken the Nation off the gold standard and allowed deficits in the budget, and disliked the concessions to labor. Roosevelt responded with a new program of reform: Social Security, heavier taxes on the wealthy, new controls over banks and public utilities, and an enormous work relief program for the unemployed.

In 1936 he was re-elected by a top-heavy margin. Feeling he was armed with a popular mandate, he sought legislation to enlarge the Supreme Court, which had been invalidating key New Deal measures. Roosevelt lost the Supreme Court battle, but a revolution in constitutional law took place. Thereafter the Government could legally regulate the economy.

The words of Roosevelt's 1937 inaugural address are particularly relevant, as America and the rest of the world still reels from the worst economic downturn since the Great Depression — a downturn made possible by a 30-year project of rolling back many of the reforms Roosevelt put into place.

Roosevelt's words are relevant today, as bankers and economists declare "Recovery!" — and advise that a second stimulus unnecessary — before lacing up their wingtips for a victory lap. Meanwhile, for many Americans it's a jobless recovery that hasn't held much benefit for them.

Jumbo shrimp. Buy and save. Jobless recovery. Americans are on full oxymoron alert these days, as we read and hear about this "jobless recovery." Recovery for whom?

The unemployment rate is high and growing higher, nearing an official 10 percent - an estimate which is always lower than the reality of impoverished, underemployed and "discouraged workers" who have stopped bothering to officially register. Since this recession began, 7 million Americans have lost their jobs.

Why aren't 7 million of us "too big enough to fail"?

If stimulus packages for corporate sinkholes are good enough for the American taxpayer, why can't we find $5.4 billion to create minimum wage jobs with full health care benefits for the 216,000 Americans who lost their jobs in August?

It is, at best a weak recovery, due to the lack of what economist Joseph Stiglitz called "a recovery of sustained consumption" — which basically means American consumers can't spend the economy back into recovery, because they haven't experienced a recovery yet.

They are reeling from double-digit unemployment, and some 15 million are "locked into a nightmare of unemployment." Thousands of them are living in hotels, as more families are joining the ranks of the homeless and mortgage defaults soar to record heights. One in five of their children are sinking into poverty, with them. Seventeen percent of their children under five face hunger, with them.

Roosevelt's words have undeniable resonance when the poverty rate hits an 11-year high, and the the suffering of American families increases in kind.

The government's first broad look at the recession's effect on the nation's households in 2008 showed the poverty rate jumped to an 11-year high, incomes sank across the board and the number of people without health insurance rose to 46.3 million.

As bleak as these statistics were from the Census Bureau on Thursday, they captured only part of the devastating effects of the economic downturn that worsened last fall and into this year.

Experts said they expected the official poverty rate, which rose to 13.2% of the nation from 12.5% in 2007, to keep climbing this year and next, reversing the progress made in the 1990s.

With the U.S. unemployment rate averaging 8.9% this year and increasing almost every month, compared with 5.8% in 2008, incomes are likely to deteriorate further as well.

In 1937, with the country only partially out of the woods, Roosevelt rejected those who said recovery had gone far enough.

Shall we pause now and turn our back upon the road that lies ahead? Shall we call this the promised land? Or, shall we continue on our way? For "each age is a dream that is dying, or one that is coming to birth." 16

Many voices are heard as we face a great decision. Comfort says, "Tarry a while." Opportunism says, "This is a good spot." Timidity asks, "How difficult is the road ahead?"

True, we have come far from the days of stagnation and despair. Vitality has been preserved. Courage and confidence have been restored. Mental and moral horizons have been extended.

But our present gains were won under the pressure of more than ordinary circumstances. Advance became imperative under the goad of fear and suffering. The times were on the side of progress.

To hold to progress today, however, is more difficult. Dulled conscience, irresponsibility, and ruthless self-interest already reappear. Such symptoms of prosperity may become portents of disaster! Prosperity already tests the persistence of our progressive purpose.

Let us ask again: Have we reached the goal of our vision of that fourth day of March 1933? Have we found our happy valley?

And he challenged the country to live up to its promise for all Americans.

I see a great nation, upon a great continent, blessed with a great wealth of natural resources. Its hundred and thirty million people are at peace among themselves; they are making their country a good neighbor among the nations. I see a United States which can demonstrate that, under democratic methods of government, national wealth can be translated into a spreading volume of human comforts hitherto unknown, and the lowest standard of living can be raised far above the level of mere subsistence.

But here is the challenge to our democracy: In this nation I see tens of millions of its citizens—a substantial part of its whole population—who at this very moment are denied the greater part of what the very lowest standards of today call the necessities of life.

I see millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day.

I see millions whose daily lives in city and on farm continue under conditions labeled indecent by a so-called polite society half a century ago.

I see millions denied education, recreation, and the opportunity to better their lot and the lot of their children.

I see millions lacking the means to buy the products of farm and factory and by their poverty denying work and productiveness to many other millions.

I see one-third of a nation ill-housed, ill-clad, ill-nourished.

It is not in despair that I paint you that picture. I paint it for you in hope—because the Nation, seeing and understanding the injustice in it, proposes to paint it out. We are determined to make every American citizen the subject of his country's interest and concern; and we will never regard any faithful law-abiding group within our borders as superfluous. The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.

Last year saw a record decline in American families' wealth, as households saw a 9% drop in wealth. Meanwhile the wealthiest one percent saw an increase in their incomes, the wealthiest 10 percent of Americans now have a larger-than-ever share of total income, and American has one of the highest rates of income inequality, surpassed only by Mexico and Turkey.

Much of what was true for those Americans Roosevelt mentioned in his speech is true for far, far too many American families today, as the result of decades spent "adding to the abundance of those who have much." Now, we face the same text of our progress — of our commitment to progress— that Roosevelt recognized in 1937.

Will Americans rise to the challenge? It remains to be seen. In the absence an FRD-like leadership, we will make our leaders rise to the challenge? Will we pass this test of our progress? It remains to be seen.

Econocide: A Silent, Violent Epidemic

OurFuture.org Staff — Thu, 04 Jun 2009 10:15:03 -0400