An Economy For All

Will Workers Survive State Budget Belt-Tightening?

Susan Ozawa — Tue, 13 Jan 2009 15:30:36 -0500

Executing the Main Street Economic Recovery Program Equitably

Susan Ozawa — Mon, 22 Dec 2008 16:14:25 -0500

Given the male dominated nature of construction and heavy manufacturing involved in infrastructure projects Eileen Appelbaum, at the School of Management and Labor Relations and Director of the Center for Women and Work recommends that proposals pushing infrastructure investment include construction of child care centers and additional space to accommodate expanded pre-K programs. Appelbaum also recommends including in this investment funds targeting training historically marginalized workers and incentives alongside other mechanisms to ensure these jobs are distributed equitably.

A petition along these lines can be signed here. Progressive economists highlight the importance of the quality of the jobs created, pushing for those receiving recovery funds be held accountable to create jobs with livable wages, health insurance, paid sick days, paid holidays and vacations. Monitoring and oversight to ensure transparency is fundamental. Provisions are outlined by the National Partnership for Women & Families here.

Endorser of the Main Street Recovery Program, Randy Albelda, professor of economics and Senior Research Fellow at the Center for Social Policy at University of Massachusetts Boston, highlights the need to address our severe deficits in social infrastructure as well as physical infrastructure. The Main Street Economic Recovery Program emphasizes spending on education, health care and child care, recognizing these should be down payments on larger reforms in our domestic budget priorities.

Signatory, Robert Drago, Professor of Labor Studies and Women's Studies at Penn State University further highlights the economic benefit of child care funding. The multiplier effect embodied in services is stronger than pure construction partly because child care workers earn less, but also because infrastructure investment is capital intensive and can involve foreign inputs although the Main Street Recovery Program emphasizes procuring domestic supplies. You can find Drago’s full argument here.

Following this lead, the Direct Care Alliance has laid out a series of recommendations to President-Elect Obama here. To avoid the kinds of jobs created after Katrina, to begin to set in order our ailing economy and to redirect our comprehensive infrastructure priorities these recommendations offer sound guidance on executing a progressive Main Street Economic Recovery Program that can benefit us all.

Other Economic Recovery Plans

Susan Ozawa — Tue, 16 Dec 2008 16:19:41 -0500

Center for American Progress, How to Spend $350 Billion in a First Year of Stimulus and Recovery

The United States Conference of Mayors, MainStreet Economic Recovery Report

National Governors Association, Economic Recovery: A Federal‐State Partnership

National Environmental Coalition, Economic Recovery through Investments in our Environment, Energy System and Heritage

USAction, TrueMajority.org and USAction Education Fund, The Next New Deal: Our Plan to Invest in America’s Future

Change.gov Discussion on the Main Street Recovery Program

Susan Ozawa — Mon, 15 Dec 2008 11:44:00 -0500

Participate in the discussion about the Main Street Recovery Program on Change.gov.

Consolidating US Money Power: The Four Horsemen of Global Banking

Philip Palij — Mon, 30 May 2011 15:48:24 -0400

The September 2000 marriage which created JP Morgan Chase was the grandest merger in a frenzy of bank consolidation that took place throughout the 1990’s. Merger mania was fed by a massive deregulation of the banking industry including revocation of the Glass Steagal Act of 1933, which was enacted after the Great Depression to curb the banking monopolies which had caused the 1929 stock market crash and precipitated the Great Depression.

7 Ways to Stop Wall Street’s Con Game

Philip Palij — Sat, 28 May 2011 04:38:12 -0400

Wikipedia defines a “confidence trick” as “an attempt to defraud a person or group by gaining their confidence. The victim is known as the mark, the trickster is called a confidence man, con man, confidence trickster, or con artist, and any accomplices are known as shills. Confidence men exploit human characteristics such as greed and dishonesty.”

Photo by Jun

Fire Fighters Turn off the Spigot

Mary Bottari — Wed, 27 Apr 2011 15:30:14 -0400

Remember when the fight broke out in Wisconsin over the right to collectively bargain and President Obama and a phalanx of national democratic leaders spread out across the country fighting for the rights of American workers?

Right, we don't remember that either.

As unions battled for their very existence, the thunderous silence from Washington, D.C. did not go unnoticed by working families fighting for their livelihoods or by powerful political players. At least one organization has decided to hold a few of their former friends accountable.

The International Association of Fire Fighters, announced yesterday it would no longer be giving money to federal candidates. Rather, the 300,000-member union said it would put its energy and resources into the fight at the state level over collective bargaining.

Wake Up Call for Democrats

The announcement sent a shock wave through the Washington Democratic establishment, because in recent years the union has given much more to Democrats than Republicans. It donated $1.9 million to Democratic candidates in national elections during the 2010 campaign cycle and only $408,000 to Republicans.

But union president Harold A. Schaitberger said he was turning off the tap. He told the New York Times: "We're tired that our friends have not been willing to stand up and fight back on our behalf with the same ferocity, the same commitment that our enemies have in trying to destroy our members' rights," he said. "Quite frankly, our enemies are trying to kill us as a labor movement and union trying to represent workers and help the middle class."

"Not only are extremist Republicans trying to destroy us -- too few Democrats are standing up and fighting for us," the union said in its announcement.

Take No Prisoners

The union's endorsement has been prized by politicians across the political spectrum since the September 11, 2001 attacks elevated the heroic efforts of fire fighters in the public eye. In an effort to get federal legislation passed that that would require states to grant public-safety employees, including police, firefighters and EMTs, the right to collectively bargain, the union has stepped up its federal spending and has embraced a series of Democratic presidential candidates including Al Gore, John Kerry and Barack Obama.

But their agenda in Congress has stalled. Even when Democrats controlled both houses, the fire fighters could not get their priority bill pass the Senate's cloture rules in the final days of the 2010 lame-duck session.

While the fire fighters applauded the courage of the "Wisconsin 14," the 14 State Senators who fled the state to block a vote on Governor Scott Walker's collective bargaining bill, they are much less enthused by their friends at the federal level.

In an interview with MSNBC's Ed Shultz, Schaitberger said that Democrats at the federal level need to stand up and fight. "They need to have a collective voice, they need to do what the opposition has done. The opposition has been very focused, organized, orchestrated. Their message is very clear. They have their sights on the attack and they are willing to take no prisoners. We need our Democratic friends in Congress to have a unified voice, step up and fight back with us," said Schaitberger.

"Not Politics as Usual Anymore"

Here in Wisconsin where the fightback began, Joe Conway, the head of IAFF Local 311 applauded Schaitberger's "bold move." "This is not politics as usual anymore. We are under attack in Wisconsin, Indiana, Ohio, New Hampshire, Florida. If unions don't survive, there won't be any money for any candidate in the future."

Conway said the union spent $50,000 in independent expenditures in the recent Wisconsin Supreme Court race and is now gearing up for the fight when one third of the Wisconsin State Senate is thrown into recall races over the summer. This decision at the national level would mean "more money for these local races in Wisconsin."

"The Republicans have done a great job convincing people that whatever economic problems they are having in their life, they can blame on public unions," says Conway. "But the truth is - and every study shows this -- that unions bring up everyone's wages, they improve everyone's economic status. We have to win all of these state fights, not just for ourselves but for everyone."

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The Madison-based Center for Media and Democracy has been reporting live on developments from Wisconsin at www.PRWatch.org.

Social Security Myth-Busting: the Myth of Cuts that Only Affect the Rich

Daniel Marans — Mon, 10 Jan 2011 19:18:54 -0500

One of the persistent myths about Social Security is that benefit cuts could be done in a way that would only affect the richest Americans. So let us clarify the issue for those who are confused. Cuts that would have any meaningful impact on Social Security’s finances will necessarily fall on the middle class. Period.

We hear it all the time from prominent people, of both the earnest and disingenuous variety. “Why should Warren Buffet get Social Security benefits”? They ask. Here is the line almost verbatim from GOP presidential hopeful Gov. Mitch Daniels in an interview with New York Times columnist David Leonhardt last week (I’ll let you decide whether he is one of the myth’s earnest or disingenuous proponents):

“I always say, ‘Why do we send a pension check to Warren Buffett?’”

Never mind for a moment that conservatives never seem able to summon equally populist sentiments when it comes to the tax cuts Buffett receives (they let Buffett do that himself).

Most Social Security advocates respond to the “only-cuts-for-the-rich” myth by arguing that such cuts, though harmless in themselves, are a slippery slope to bigger cuts, because they will turn the wealthy against the program. They are right. Social Security’s universality is what has allowed it to stay in good graces while support for other government programs has dropped off significantly.

And it is indeed a fundamental feature of the program. Social Security is social insurance, not welfare. People receive benefits in relation to what they pay in. For those who do not desperately need it, Social Security is a convenience that they have paid to receive. We would not insist that rich people pay fire insurance premiums, and then be forced to pay out-of-pocket when a fire engulfs their home, would we?

But there is a much simpler point to be made. Even if we were prepared to endure the damage that cuts for the rich would inflict on the program, doing so would not shore up Social Security’s finances. There is not enough money in the Social Security checks of the richest men in the country to buy the government an armored Humvee, let alone fill Social Security’s $700 billion shortfall. This is true first and foremost because Social Security benefits are already capped, and have been from the very beginning. So even if you’re a billionaire, your Social Security benefits are calculated on a wage base of $106,800. Whether you make $1 billion a year or $200,000, if you retire today at age 70 you will only be entitled to a $27,000 annual benefit from Social Security (in 2010 dollars, not adjusted for inflation).

Even if that $27,000 payment seems excessive to you, there are very few people in the country that are eligible for benefits that large, and the vast majority of them have earnings closer to the $106,800 cap. Cutting the benefits for people making between $100,000 and $200,000 is a much dicier subject. Most of these people consider themselves middle class, and do not exactly have money to throw around. Here the slippery slope argument is much more feasible. Upper middle income earners would probably resent paying the same amount into the program and receiving significant reduction in the returns they receive when they retire, become disabled or die.

Worse still, no more than 10% of the country earns upwards of $100,000. Cutting the top 10% of American workers’ benefits by as much as half would still not generate nearly the amount of cash needed to shore up Social Security’s finances. And if cutting benefits for these “rich” people, using our extremely broad definition, does not enable Social Security to pay full benefits for the next 75 years than there is really no reason to do it.

Besides, it is not as if the government is twisting people’s arms to accept these benefits. Anyone can voluntarily return their benefits to the Social Security Trust Fund. Only no one seems to be in a rush to do it.

All of which leaves conservatives who hide behind the “only-cuts-for-the-rich” myth in a difficult position. You can either be in favor of “only-cuts-for-the-rich” or in favor of cutting Social Security in order to avoid inevitable cuts later on, but not both.

In reality, conservatives are not particularly concerned with either the program’s solvency or its fairness. They would like to phase out Social Security altogether, and if they can’t do that, they’ll roll it back for all but the poorest. But they know that is a political non-starter. So they take the progressive high ground, righteously opposing benefits for the likes of Warren Buffett, all while issuing proposals that would gut benefits for nearly everyone—and then hope that nobody is doing the math.

QE2 risks currency wars and the end of dollar hegemony

Philip Palij — Sat, 01 Jan 2011 16:03:25 -0500

As the US Federal Reserve meets today to decide whether its next blast of quantitative easing should be $1 trillion or a more cautious $500bn, it does so knowing that China and the emerging world view the policy as an attempt to drive down the dollar.

Solutions to the Foreclosure Crisis without Legislation

Susan Ozawa — Wed, 20 Oct 2010 15:41:40 -0400

Congress out of session with a crisis on our hands? What can we do without passing legislation to address rampant fraud in processing foreclosures?

Dean Baker makes a good point; respecting the veracity of documents and the legally requisite paperwork on all outstanding debts and securities is a matter of obeying the law not amending it. Circumvention of the law for expedience to generate short-term returns led to standard practices that are illegal. This provides no basis for an argument to change the law to make the problematic and haphazard practices legal. The question is enforcement. Unfortunately, it’s not that simple. Who needs to be demanding veracity? At what stage in the titling, securitization, investment or recovery phase of the life of the mortgage? From whom, servicers alone? And how do we get these entities to make these demands?

Conyers, Grayson, et al. had the right idea pursuing government agencies with a role in this fraud, e.g. GMAC, Fannie and Freddie. Releasing the offending robo signers and frauds pursuing foreclosure from these agencies’ payrolls is a great start. But this is the tip of the iceberg; fraud and problematic practices in the foreclosure process reflects rampant problems with the titling process and we should be pushing for an internal audit of all troubled loans we are holding in our government portfolio in one form or another. Brown, et al. have pushed for the White House to support a foreclosure moratorium and is the right thing to do but it has been unsuccessful.

Why: The government owns or is on the hook for quite a large share of the loans and securities attached to the US securitized mortgages outstanding. This is part of the problem and part of the solution. This is why Shaun Donovan and Tim Geithner are taking positions inconsistent with the goals of their own program, HAMP, on the implications of slowing the rate of foreclosures. See Baker on this here. The US government has too much stake as investors in this market to really want to shake it down in the short-term but in the long-term we have the most to lose by propping up an inflated set of assets and paying dearly to do so into perpetuity by way of a financial sector burdened by NPLs and a subsequent stagnant economy.

As far as a strategy goes, pressuring agencies that have a role as investors, issuers or guarantors of any and all distressed mortgage products, agencies which have the authority already to require legal documentation on these products, is, perhaps, the best multipronged non-legislative strategy out there for the longer-term. Some make better targets than others. The Fed invests in MBS (they’re unwinding their position in bailout investments but MBSs still comprised over $1078 billion of the Fed’s portfolio at the end of September), and by association, they also have a stake in AIG which is loaded with CDSs dependent on the market's view of banks balance sheets with these assets on them. The Fed and Treasury are not going to take a hit to market value of their holdings lightly, and they certainly won’t provoke that happening themselves. Treasury is funding HAMP alongside HUD, which has more of a political stake in solving the foreclosure crisis than a financial one, and of course, then there’s Fannie and Freddie. We could push for these agencies to pursue self-imposed internal audits of all the distressed properties they have in their various portfolios. This would run up against the Fed’s portfolio strategy and the holdings Treasury is trying to unwind from TARP—AIG needs to be behind us completely for that, also the Fed is still holding commercial paper from firms presumably holding structured assets. The Fed is also still holding commercial real estate backed securities. These all need to be unwound first before expecting the heads of these agencies and the White House to be on-board for serious writedowns caused by writeoffs on unrecoverable assets. (Treasury's sell-off of AIG shares is not expected to start until 2011.)

What we are left with, without a legislative impetus, by way of strategy is supporting and championing lawsuits by individuals (ideally a highly publicized class action) against a lender that is foreclosing on them without proper documentation to do so. The ACLU is going after the courts themselves but since the courts are doing their best and have no financial or political support from the federal government to do much more than muddle through, I think ACLU’s strategy could backfire on them. Their target has no money and nothing to gain materially from what they are processing, although the org can be commended for being pragmatic and working all the angles available to them.

Once AIG is sold off in its entirety and the Fed’s portfolio unwound we should pounce on Fannie and Freddie to audit their holdings. The problem is that Treasury and the Fed won’t sell off until the market value of their holdings increases, and that won’t happen until this foreclosure fraud settles down, which it won’t on its own fruition. Thus, the paradox of the bailout operations continues. The US government has too many conflicts of interest and cannot expect to really make money off our bailout without deceiving markets about the value of those holdings. Expect the market cheerleading to continue.

In the meantime, what can you do? Look out for word of a class action lawsuit you or someone going through foreclosure you know can join and demand your bank show you your mortgage using this site.