Thursday, March 3, 2011

Don’t Balance Budget on Backs of Middle Class

WASHINGTON - March 2 - Sen. Bernie Sanders (I-Vt.) said today that Congress must not balance the budget by cutting programs for working families after giving tax breaks to millionaires and billionaires.

“At a time when the gap between the rich and everyone else is wider than it has been in decades, it would be wrong to balance the budget on the backs of people already suffering from the recession who are receiving Social Security, enrolled in Head Start or depend on home heating assistance,” Sanders said.

House Republicans last month rammed through a bill that would cut this year's budget by more than $60 billion. That bill would:
  • Cut $1.1 billion from Head Start depriving services for 218,000 children.
  • Cut $1.3 billion for Social Security delaying benefits for 500,000 Americans.
  • Slash $1.3 billion from community health centers taking primary health care from 11 million patients.
  • Reduce or eliminate Pell Grants for 9.4 million low-income college students.
  • Cut $405 million from Community Services Block Grants affecting 20 million seniors, families with children and the disabled.
  • End job training and other employment services for 8 million Americans.
Over Sanders’ objections, Congress late last year extended tax breaks for the top 2 percent of Americans who now pay the lowest tax rates in decades. “It is time to ask the wealthy to start paying their fair share,” Sanders said. A member of the Senate Budget Committee, Sanders also noted that today’s $14 trillion national debt was driven up by tax breaks for the wealthy, wars in Iraq and Afghanistan, a Wall Street bailout and a prescription drug program drafted by pharmaceutical companies.

CONTACT: Senator Bernie Sanders
Michael Briggs or Will Wiquist (202) 224-5141

Dealing Financial Junk

An Orgy of Speculation
 By MIKE WHITNEY

Ben Bernanke is confident that his policies have paved the way for a self sustaining recovery, but there's plenty of reason to be skeptical. For one thing, the Fed's zero rates and bond buying program (QE2) have had a negligible effect on unemployment and housing. And for another, they've led to a surge in speculation. That's hardly a reason to celebrate. In the last week, a number of reports confirm that hedge funds have been loading up on debt believing that improving economic data and the Fed's liquidity support will push stocks even higher. That seems like a risky bet given the unevenness of the rebound and the spreading mayhem in the Middle East. Even so, fund managers are levering-up like there's no tomorrow convinced that this is the beginning of another bull market. Here's the rundown from Bloomberg:
"Hedge funds increased their net leverage in January to the highest level since October 2007, as they took advantage of record-low borrowing costs to bet that the U.S. equity rally will continue.

Debt at margin accounts at the New York Stock Exchange minus cash and unused credit from margin accounts climbed to $46 billion, according to data released by NYSE yesterday. Hedge funds had $290 billion of debt from margin accounts in December, the largest sum since Lehman Brothers Holdings Inc. collapsed in September 2008.

"It makes a lot of sense given the low cost of borrowing and some equities' valuations," said Patrick Armstrong, who helps manage $356 million in multiasset strategies at Armstrong Investment Managers LLP in London. "There is a capital- structure arbitrage to be made by buying stocks with leverage." ("Hedge Funds Borrow the Most Since 2007 to Purchase U.S. Stock, Bloomberg)

Indeed, it does make sense to borrow tons of money (to bet on stocks) if the outcome is certain, but QE2 is not a "sure thing" by a long shot. While swapping Treasuries for reserves does push investors into riskier assets, like stocks; it's no guarantee that the market won't suddenly go into a nosedive and wipe out earlier gains. What this shows is that even very bright people don't understand how the Fed's program works. They think QE2 is a one-way ticket to Brigadoon, so they're gearing up and setting the stage for another meltdown. This seems to be a recurring theme with Bernanke; slash rates, inflate bubble, crash, rinse, repeat. This latest cheap money boondoggle is bound to end as badly as it did in 2008.

While it's true that QE2 has been net-positive for stocks, (so far!) the dangers of the Fed's easy money policies are considerable. They encourage financial market speculation while doing very little to boost the real economy. In fact, Fed policy hasn't increased overall investment at all. Big business is still hanging on to $2 trillion that they refuse to invest (and create jobs) because they don't see growing demand for their products. Here's an excerpt from an article by Mark Provost that explains what's going on:
"Corporate executives have found a simple formula: the less they contribute to the economy, the more they keep for themselves and shareholders.....

Non-financial companies have amassed nearly two-trillion in cash, representing 11% of total assets, a sixty year high. Companies have not deployed the cash on hiring as weak demand and excess capacity plague most industries. Companies have found better use for the cash, as Robert Doll explains, "high cash levels are already generating dividend increases, share buybacks, capital investments and M&A activity—all extremely shareholder friendly."...
Companies invested roughly $262 billion in equipment and software investment in the third quarter. That compares with nearly $80 billion in share buybacks. The paradox of substantial liquid assets accompanying a shortfall in investment validates Keynes' idea that slumps are caused by excess savings. Three decades of lopsided expansions has hampered demand by clotting the circulation of national income in corporate balance sheets. An article in the July issue of The Economist observes:
"business investment is as low as it has ever been as a share of GDP." ("Corporate Profits Soaring Thanks to Record Unemployment", The Economic Populist)
None of this is news to Bernanke who knows exactly what's going on. He knows that zero rates and swapping bonds won't trigger a wave of investment, just as he knows that higher stock prices won't necessarily lead to more jobs. Just look at the facts. Businesses are not going to invest their money where demand for their products is weak. They're not fools. That's why they're using their windfall for more mergers and acquisitions (M&A), more share buybacks, more dividends and more paper-shuffling operations that do nothing for the broader economy. They're doing what they have to do to maximize profits without risking their capital.

What's needed is more fiscal stimulus to put money in the hands of people who will spend it quickly and rev-up the economy. If businesses have no incentive to spend (because of flagging demand) and consumers cannot spend (because their personal balance sheets are in the red), then government must take the initiative and increase its budget deficits to keep the economy chugging-along in positive territory. Of course, that won't happen because the leaders of both parties have abandoned Keynesian remedies and taken the vow of austerity. That means unemployment benefits, state aid, and other critical fiscal lifelines will be further slashed leading to more misery and more economic contraction. David Leonhardt makes this very point in a recent article in the New York Times. Here's what he said:
"....many members of Congress continue to insist that budget cuts are the path to prosperity. The only question in Washington seems to be how deeply to cut federal spending this year....

The fundamental problem after a financial crisis is that businesses and households stop spending money, and they remain skittish for years afterward. Consider that new-vehicle sales, which peaked at 17 million in 2005, recovered to only 12 million last year. Single-family home sales, which peaked at 7.5 million in 2005, continued falling last year, to 4.6 million. No wonder so many businesses are uncertain about the future.

Without the government spending of the last two years — including tax cuts — the economy would be in vastly worse shape. Likewise, if the federal government begins laying off tens of thousands of workers now, the economy will clearly suffer." ("Why Budget Cuts Don't Bring Prosperity", New York Times)
So, there's a real danger that the deficit hawks on both sides of the aisle will fail to see how weak the economy really is and begin trimming the deficits too early. This is what happened to FDR in 1937, and it thrust the country into another slump. Here's another clip from the NY Times that explains what tightening on the state level will mean. The article is titled "Smaller Government Can Be a Drag (on Growth)":

"Output last quarter grew more slowly than initially reported, according to the Bureau of Economic Analysis: an annual rate of 2.8 percent rather than 3.2 percent. One of the main reasons for the downward revision was that state and local governments cut their spending at a 2.4 percent annual pace.....

A decline in state and local spending — and the layoffs that are likely to be involved — can have dangerous reverberations throughout the economy. So would the cut in federal spending that many Congressional Republicans have been threatening. Besides chucking even more workers into the pool of the unemployed, such cutbacks would also take away services supporting the many Americans trying to get back on their feet. This in turn hurts their ability to spend, threatening the bottom lines of the businesses they patronize, potentially leading to even more layoffs in the private sector. And so on." ("Smaller Government Can Be a Drag (on Growth)", Catherine Rampell, New York Times)
So, the cutbacks in state assistance will have a contractionary effect that will increase excess capacity, raise unemployment, and put a damper on growth. Slashing deficits when long-term bond yields are at historic lows and there's no sign of a fiscal crisis, is lunacy in the extreme. Unfortunately, both Congress and the White House are fully committed to near-term belt-tightening.

So, how does Bernanke fit in all of this? The Fed's loose monetary policies are stimulating speculation without really improving conditions in the underlying economy. The record amounts of debt the hedge funds have taken on are just one sign of this. (According to nasdaq.com: "At the end of January, margin debt totaled $289.6 billion, up from $276.6 billion at the end of December and the highest level since September 2008, according to Big Board data for customers of NYSE-member securities firms.") The problem for heavily-levered hedge funds is that if the market falls even a small amount, they can be wiped out. That means the Fed would have to come to the rescue again to prevent the defaults from dominoing through the system. Once again, the public would be called on to bail out unregulated financial institutions because the Fed's policies spawned a culture of risky behavior. And this phenomenon is not limited to hedge funds either. Just look at bond yields; it's the same thing there, too. Here's an excerpt from the Wall Street Journal:
"The rally in junk bonds has notched a new milestone: yields on the low-rated securities are now at their lowest levels on record.

The average junk bond yield has fallen to 6.837%, according to Merrill Lynch's high yield index, slipping under the previous low of 6.863% in December 2004.

Yields fall as prices rise. And prices of junk bonds have been soaring for the past two years, a reflection of demand from investors seeking securities that yield more than U.S. Treasurys. Investors have poured billions of dollars into the market for speculative-grade debt." ("Junk Yields Hit New Low", Wall Street Journal)
What a surprise, another Bernanke record. Investors are shifting into high-risk junk bonds because they're sick of getting zilch-interest on their "risk free" CDs. But the stampede into lower quality bonds has also lowered the rate of return. Bernanke sees this as a triumph, because, by keeping rates low, he has forced the rats (you and me) back onto the flywheel pushing yields down and stocks up. It all fits in the Fed's grand plan, but it's tough medicine for retirees who feel like they've been coerced into taking a chance with their hard-earned savings just so they could meet their modest retirement goals. These are the people who stand to lose the most by Bernanke's endless meddling.

Also, just look what's happening with mortgage-backed securities (MBS), which were at the center of the financial meltdown. Now they've become Wall Street's "darling", a favorite of the big banks and brokerages. How did that happen? Keep in mind, that the Dodd-Frank reforms have done nothing to standardize loans or force the banks to retain a portion of the credit risk on the MBS. That means that the paper that the banks are now purchasing could be as "toxic" (Liar's loans, ARMs, subprimes etc) as it was before. Nothing has changed, but that hasn't stopped the latest buying spree. Here's the scoop from the Wall Street Journal:
"Investment banks and hedge funds are once again making money from a sector that was defunct only 18 months ago: U.S. mortgage-backed securities, the loan products that spread the credit crunch throughout the world.

Only two years later, and despite the fact that many U.S. cities are on the edge of bankruptcy, these securities have turned into one of the most lucrative profit areas for banks, such as Credit Suisse Group, UBS AG or Société Générale SA.

"In large part, the buoyancy comes from government support for the U.S. mortgage market, both for agency securities backed by the government and also for deals which don't have direct government backing," said Deepak Narula, a former Lehman Brothers Holdings mortgage-bond trader, who now runs New York-based hedge fund Metacapital Management. "The successful attempts by the central bank to bring down mortgage rates, along with many other programs aimed at reviving housing have also helped." ("Toxic Securities Turn Lucrative for Banks", Wall Street Journal
So, yes, government underwriting has made garbage mortgages look more attractive to investors (Lipstick on a pig) but it's Fed zirp policy which forces investors to seek a better return on their investment, which is why they are willing to take a chance and risk everything on these MBS turkeys.

Did you ever imagine that just two years after the biggest market blowout in 7 decades, there would be a gold rush for mortgage-backed securities?

And, that's not all. Bernanke's zero rates have also breathed new life into other Wall Street speculators, like Private Equity (PE). These are the high-fliers who buy up companies on-the-cheap via leveraged loans (LBOs) and then strip the meat from the carcass. It's bare-fang capitalism at its worst. Here's a clip from an article in Bloomberg's Businessweek:
"The biggest leveraged buyouts from the takeover boom, once seen as almost certain bankruptcies by derivatives traders, are seeing borrowing costs tumble to the lowest since 2007....

As the Federal Reserve holds benchmark interest rates near zero to stimulate the economy, Blackstone Group LP, KKR & Co. and other private-equity firms are taking advantage of record investor demand for high-yield debt to refinance buyout-related loans and bonds. Last year saw $93 billion worth of leveraged buyouts worldwide, more than triple the figure in 2009, according to Bloomberg data....

"You have a lot of money searching for yield, and when that happens, a lot of folks can get money regardless of the situation of their balance sheet and income statement," said Lon Erickson, a money manager who helps oversee $9 billion of fixed-income assets for Thornburg Investment Management Inc. in Santa Fe, New Mexico." ("Near-Death LBOs Thrive in Bernanke Bond Market: Credit Markets", Bloomberg)
Once again, the hidden costs of cheap money should be fairly obvious. These LBOs do not add a thing to the nation's productive capacity, nor do they increase employment. In fact, people are usually fired as the company is strip-mined of its value and loaded up with low-interest financing. In other words, it's another subsidy provided to Wall Street hucksters via the Federal Reserve.

Then, there's this from GoBankingRates.com:

"For the first time since the financial crisis, people with a credit score below 680 are able to get their hands on new car loans again. Some are even obtaining loans for larger amounts than in previous years. While it's great that individuals in need have access to reliable vehicles again, some concern has been expressed over the possibility of more loan defaults as a result of the increased leniency in borrowing standards....

General Motors is one of the companies able to regain profits after its bankruptcy. One of the ways it did so was by getting back into lending, specifically the subprime business. After struggling to convince Ally Financial Inc.–which had taken control of its financing business after the bankruptcy–that it should get back into subprime lending, GM acquired AmeriCredit Corp. and began presenting car financing options to subprime borrowers.

Many financial institutions associated with auto manufacturers have decided to redistribute the bad credit auto loan. According to a Dec. 2010 report from Experian, the percentage of loans going to subprime buyers rose 8 percent in the third quarter.

So while 63 percent of all auto loans went to buyers with prime credit scores of 680 or above, more than in previous months went to people with no-so-great credit....

Is it possible that loosening up too much result in more people taking on debt they can't handle? Could giving people with lower credit scores access to a subprime loan cause more problems than it fixes?...("Will Increased Subprime Auto Lending Result in Another Financial Crisis?", GoBankingRates.com)

Hell, no. Why would it be a problem to loan money to people who can't pay it back? After all, what could go wrong?

Do you see the pattern here? Do you see how the Fed is feeding this monster and putting the system at peril with its easy money policies and light regulations? Households need to trim their debt and increase their savings, but all-the while the Fed is trying to lure them into another credit-binge by dangling low rates before their eyes. And the same rule applies to student loans, too, where our young people who are taking on mountains of debt they'll never be able to repay or repudiate through bankruptcy. They're stuck for life, a generation of debt slaves. Here's an excerpt from the Financial Times:
"One example is Corinthian College's Genesis Lending Program, which is described in its 2010 SEC filing:

In the face of this change in policy, we created a new student lending program with a different origination and servicing provider, Genesis, who specializes in subprime credit. This new Genesis loan program has characteristics similar to our previous "discount loan" programs. Under this Genesis loan program, we pay a discount to the origination and servicing provider. As with our previous discount loan program, we record the discount as a reduction to revenue, as the collectability of these amounts is not reasonably assured.

So what? Well, according to the earnings call transcript available on seeking alpha, the discount rates on this $150m worth of lending is a whopping 56 – 58 per cent. According to Corinthian, this equates to anticipating a default rate of 56-58 per cent, of its own students who go into this programme." ("The biggish short — subprime student loans", FT.Alpahville)
Let's be clear, any lender that anticipates a default rate of 50% or more, is just a con-artist bent on ripping people off. Period. The reason why so many young people have returned to college in the first place is because they swallowed that bunkum about a "high-paying job waiting for them after they graduate". Baloney. That's a bigger load of horsecrap than that other myth that "No one ever lost money on real estate".

So, whether it's subprime auto loans, student loans, LBOs, mortgage-backed securities or junk bonds; the Fed's malign and meddlesome influence can be seen throughout. And to what end; more borrowing, more speculation, more asset bubbles? Is that the goal?

Whether QE pumps liquidity directly into the financial system or merely exchanges one asset for another is beside the point. The fact is, the Fed has changed investors expectations, and in doing so, triggered another boom in debt-instruments and other exotic securities. That's increasing instability and making a crisis-prone system even more wobbly. It would be much better to enact a second round of fiscal stimulus targeting the sectors of the economy that are in greatest distress, the labor and housing markets. By extending unemployment benefits, providing funding for the shortfall in state revenues, and creating jobs programs aimed at rebuilding dilapidated infrastructure, the congress could reassert its control over economic policy and deliver money directly where it's needed rather than "trickling" it down through the financial system. (The Fed's method) Another slug of stimulus would have the added benefit of reducing bulging inventories and boosting demand. That would lead to more investment and hiring, in other words, a virtuous circle.

If there's one thing we can all agree on, it's that the market is not a self-correcting mechanism that eventually finds its own equilibrium. That's nonsense. The housing and labor markets need help, and not the kind of bubble-help that Bernanke has in mind. The government has a role to play when people are out of work and the economy's on the ropes. It's just a matter of seeing what needs to be done and doing it.

The Real National Security Budget

The Figure No One Wants You to See
By CHRISTOPHER HELLMAN

What if you went to a restaurant and found it rather pricey? Still, you ordered your meal and, when done, picked up the check only to discover that it was almost twice the menu price.

Welcome to the world of the real U.S. national security budget. Normally, in media accounts, you hear about the Pentagon budget and the war-fighting supplementary funds passed by Congress for our conflicts in Iraq and Afghanistan. That already gets you into a startling price range -- close to $700 billion for 2012 -- but that's barely more than half of it. If Americans were ever presented with the real bill for the total U.S. national security budget, it would actually add up to more than $1.2 trillion a year.

Take that in for a moment. It's true; you won't find that figure in your daily newspaper or on your nightly newscast, but it's no misprint. It may even be an underestimate. In any case, it's the real thing when it comes to your tax dollars. The simplest way to grasp just how Americans could pay such a staggering amount annually for "security" is to go through what we know about the U.S. national security budget, step by step, and add it all up.

So, here we go. Buckle your seat belt: it's going to be a bumpy ride.

Fortunately for us, on February 14th the Obama administration officially released its Fiscal Year (FY) 2012 budget request. Of course, it hasn't been passed by Congress -- even the 2011 budget hasn't made it through that august body yet -- but at least we have the most recent figures available for our calculations.

For 2012, the White House has requested $558 billion for the Pentagon's annual "base" budget, plus an additional $118 billion to fund military operations in Iraq and Afghanistan. At $676 billion, that's already nothing to sneeze at, but it's just the barest of beginnings when it comes to what American taxpayers will actually spend on national security. Think of it as the gigantic tip of a humongous iceberg.

To get closer to a real figure, it's necessary to start peeking at other parts of the federal budget where so many other pots of security spending are squirreled away.

Missing from the Pentagon's budget request, for example, is an additional $19.3 billion for nuclear-weapons-related activities like making sure our current stockpile of warheads will work as expected and cleaning up the waste created by seven decades of developing and producing them. That money, however, officially falls in the province of the Department of Energy. And then, don't forget an additional $7.8 billion that the Pentagon lumps into a "miscellaneous" category -- a kind of department of chump change -- that is included in neither its base budget nor those war-fighting funds.

So, even though we're barely started, we've already hit a total official FY 2012 Pentagon budget request of:

$703.1 billion dollars.

Not usually included in national security spending are hundreds of billions of dollars that American taxpayers are asked to spend to pay for past wars, and to support our current and future national security strategy.

For starters, that $117.8 billion war-funding request for the Department of Defense doesn't include certain actual "war-related fighting" costs. Take, for instance, the counterterrorism activities of the State Department and the U.S. Agency for International Development. For the first time, just as with the Pentagon budget, the FY 2012 request divides what's called "International Affairs" in two: that is, into an annual "base" budget as well as funding for "Overseas Contingency Operations" related to Iraq and Afghanistan. (In the Bush years, these used to be called the Global War on Terror.) The State Department's contribution? $8.7 billion. That brings the grand but very partial total so far to:

$711.8 billion.

The White House has also requested $71.6 billion for a post-2001 category called "homeland security" -- of which $18.1 billion is funded through the Department of Defense. The remaining $53.5 billion goes through various other federal accounts, including the Department of Homeland Security ($37 billion), the Department of Health and Human Services ($4.6 billion), and the Department of Justice ($4.6 billion). All of it is, however, national security funding which brings our total to:

$765.3 billion.

The U.S. intelligence budget was technically classified prior to 2007, although at roughly $40 billion annually, it was considered one of the worst-kept secrets in Washington. Since then, as a result of recommendations by the 9/11 Commission, Congress has required that the government reveal the total amount spent on intelligence work related to the National Intelligence Program (NIP).

This work done by federal agencies like the CIA and the National Security Agency consists of keeping an eye on and trying to understand what other nations are doing and thinking, as well as a broad range of "covert operations" such as those being conducted in Pakistan. In this area, we won't have figures until FY 2012 ends. The latest NIP funding figure we do have is $53.1 billion for FY 2010. There's little question that the FY 2012 figure will be higher, but let's be safe and stick with what we know. (Keep in mind that the government spends plenty more on "intelligence." Additional funds for the Military Intelligence Program (MIP), however, are already included in the Pentagon's 2012 base budget and war-fighting supplemental, though we don't know what they are. The FY 2010 funding for MIP, again the latest figure available, was $27 billion.) In any case, add that $53.1 billion and we're at:

$818.4 billion.

Veterans programs are an important part of the national security budget with the projected funding figure for 2012 being $129.3 billion. Of this, $59 billion is for veterans' hospital and medical care, $70.3 billion for disability pensions and education programs. This category of national security funding has been growing rapidly in recent years because of the soaring medical-care needs of veterans of the Iraq and Afghan wars. According to an analysis by the Congressional Budget Office, by 2020 total funding for health-care services for veterans will have risen another 45%-75%. In the meantime, for 2012 we've reached:

$947.7 billion.

If you include the part of the foreign affairs budget not directly related to U.S. military operations in Iraq and Afghanistan, as well as other counterterrorism operations, you have an additional $18 billion in direct security spending. Of this, $6.6 billion is for military aid to foreign countries, while almost $2 billion goes for "international peacekeeping" operations. A further $709 million has been designated for countering the proliferation of weapons of mass destruction, combating terrorism, and clearing landmines planted in regional conflicts around the globe. This leaves us at:

$965.7 billion.

As with all federal retirees, U.S. military retirees and former civilian Department of Defense employees receive pension benefits from the government. The 2012 figure is $48.5 billion for military personnel, $20 billion for those civilian employees, which means we've now hit:

$1,034.2 billion. (Yes, that's $1.03 trillion!)

When the federal government lacks sufficient funds to pay all of its obligations, it borrows. Each year, it must pay the interest on this debt which, for FY 2012, is projected at $474.1 billion. The National Priorities Project calculates that 39% of that, or $185 billion, comes from borrowing related to past Pentagon spending.

Add it all together and the grand total for the known national security budget of the United States is:

$1,219.2 billion. (That's more than $1.2 trillion.)

A country with a gross domestic product of $1.2 trillion would have the 15th largest economy in the world, ranking between Canada and Indonesia, and ahead of Australia, Taiwan, the Netherlands, and Saudi Arabia. Still, don't for a second think that $1.2 trillion is the actual grand total for what the U.S. government spends on national security. Former Secretary of Defense Donald Rumsfeld once famously spoke of the world's "known unknowns." Explaining the phrase this way: "That is to say there are things that we now know we don't know." It's a concept that couldn't apply better to the budget he once oversaw. When it comes to U.S. national security spending, there are some relevant numbers we know are out there, even if we simply can't calculate them.

To take one example, how much of NASA's proposed $18.7 billion budget falls under national security spending? We know that the agency works closely with the Pentagon. NASA satellite launches often occur from the Air Force's facilities at Vandenberg Air Force Base in California and Cape Canaveral Air Force Station in Florida. The Air Force has its own satellite launch capability, but how much of that comes as a result of NASA technology and support? In dollars terms, we just don't know.

Other "known unknowns" would include portions of the State Department budget. One assumes that at least some of its diplomatic initiatives promote our security interests. Similarly, we have no figure for the pensions of non-Pentagon federal retirees who worked on security issues for the Department of Homeland Security, the State Department, or the Departments of Justice and Treasury. Nor do we have figures for the interest on moneys borrowed to fund veterans' benefits, among other national security-related matters. The bill for such known unknowns could easily run into the tens of billions of dollars annually, putting the full national security budget over the $1.3 trillion mark or even higher.

There's a simple principle here. American taxpayers should know just what they are paying for. In a restaurant, a customer would be outraged to receive a check almost twice as high as the menu promised. We have no idea whether the same would be true in the world of national security spending, because Americans are never told what national security actually means at the cash register.

Wednesday, March 2, 2011

Police Defy Order to Clear Protesters from Wisconsin Capital

Mar 1, 2011 by Lindsay Beyerstein

On Monday afternoon, the Capitol Police in Madison, Wisconsin refused to enforce an order to clear the Capitol building of hundreds of peaceful protesters who have been occupying the site to protest Governor Scott Walker’s plan to eliminate the collective bargaining rights of public employees.

Amy Goodman of Democracy Now! interviews State Rep. Kelda Helen Roys (D), who spent Sunday night in the Capitol building with other protesters. Roys describes what happened at four o’clock on Monday afternoon when the government gave the order to clear the protesters from the building:

And after several hours of the same sorts of scenes that we’ve been seeing all week—singing, chanting, drumming, speechifying—the Capitol police captain, Chief Tubbs, made an announcement, and he said that the protesters that had remained in the building, they were being orderly and responsible and peaceful and there was no reason to eject them from the Capitol.

Police attempted to clear the building of protesters on Sunday night, but they relented when the protesters refused to leave and allowed them to stay another night. On Monday, the police decided not to eject protesters already inside, but no additional activists would be allowed in. The governor plans to deliver his budget address on Tuesday afternoon. Walker is expected to call for spending cuts that could exceed $1 billion dollars.

Gov. Walker has threatened mass public sector layoffs if the Democratic senators do not return from Illinois by March 1. However, the Uptake.com reports that one of the absent legislators, State Sen. Jon Erpenbach, claims Walker is not telling the truth. Erpenbach says the unions have already agreed to come up with the money the governor needs to balance the budget, and therefore, he has no need to lay anyone off to bridge the gap.

Wisconsin 101

Matthew Rothschild of The Progressive describes the epic scale of the Wisconsin protests:
This is the largest sustained rally for the rights of public sector workers that this country has seen in decades — perhaps ever.

The crowds at the state Capitol have swelled from 10,000-65,000 during the first week all the way up to 100,000 on Feb. 26. Hundreds of people occupied the Capitol building with a sit-in and sleep-in for days on end, and total strangers from around the world ordered pizzas for them.
In case you’re still wondering what all of this means, Andy Kroll, Nick Baumann, and Siddhartha Mahanta of Mother Jones have joined forces to bring you this “Wisconsin 101″ primer.

The Republicans in the Wisconsin House passed a bill that would take away collective bargaining rights for public sector unions, restrict their ability to collect dues, and force them to undergo yearly recertification votes. But the bill cannot become law until the state Senate also passes it. Currently, 14 Democratic state senators are hiding out in Illinois to deprive the Republican majority of the quorum they need to vote on the bill. However, as Kroll notes, if only one Democrat breaks faith and returns to Madison, the Republicans will be able to pass the bill.

Nationwide solidarity

Jamilah King of Colorlines.com brings us a photo essay on the solidarity rallies held around the country over the weekend in support of the Wisconsin protesters. From San Francisco to Salt Lake City to Atlanta to New York, people took to the streets in support of the right of workers to organize. Also at Colorlines.com, historian Michael Honey draws parallels between the situation in Wisconsin and Dr. Martin Luther King’s last crusade. Shortly before his assassination, King stood with the sanitation workers of Memphis to demand collective bargaining rights and the power to collect union dues.

George Warner of Campus Progress profiles some young activists who took to the streets of Washington, D.C. to express their solidarity with the Wisconsin protesters. About 1,500 people came out to a rally in support of the protesters on Saturday.

Anonymous strikes again

In a bizarre twist, a loosely organized coalition of anarchic hackers known as “Anonymous” attacked websites linked to Koch Industries on Sunday, Jessica Pieklo reports for Care2.com. The Koch brothers are among Gov. Walker’s most generous benefactors. The hackers launched a distributed denial of service attack on the website of the Koch-funded conservative group Americans for Prosperity.

In addition to generous campaign contributions, the Koch brothers gave $1 million to the Republican Governors Association, which in turn paid for millions of dollars worth of ads against Walker’s opponent in 2010. Walker is evidently very grateful to Koch. Last week, a writer for a Buffalo-based website got Walker on the phone by pretending to be David Koch.

Don’t look now, but…

Meanwhile, in Indiana, the state assembly reconvened on Monday to find most of the 40 Democratic members had decamped for Illinois. The legislators are apparently taking a page from the Wisconsin playbook. Indiana’s Republican governor is trying to pass legislation that would make permanent a ban on collective bargaining by public sector workers and the Democratic legislators are seeking to deny him the 2/3rds quorum required to vote on the bill.

Tuesday, March 1, 2011

Shifting Political Power: From Citizens United to Wisconsin

Tuesday, March 1, 2011 by CommonDreams.org
by Brian Miller

Let’s be clear: Governor Scott Walker’s proposed cuts are not about balancing the state budget. It’s a power play aimed at cutting the heart out of what remains of the once vibrant labor movement. [A war waged against unionized workers ultimately harms all workers, and the overt strategy to squelch collective bargaining exposes the deep resentment that monied interests hold towards worker rights everywhere.] A war waged against unionized workers ultimately harms all workers, and the overt strategy to squelch collective bargaining exposes the deep resentment that monied interests hold towards worker rights everywhere.

The public sector unions in Wisconsin have already agreed to make sacrifices, including significant wage cuts and increased contributions to the pension fund. But these economic concessions are not enough for Governor Walker. That’s because his true goal is to permanently cripple the unions by defunding their organizational base and stripping away their right to collective bargaining.

Sadly, Wisconsin is just one of many front lines in this fight. In the wake of the November elections, anti-union measures are on the move in Ohio, Indiana, and elsewhere.

To understand the true significance of this assault on unions, one must remember that unions do far more than negotiate benefits for its own workers. Unions have fought to strengthen public policies that benefit all Americans, both unionized and non-unionized. We have unions to thank for the weekend and the 40-hour workweek. More recently, unions fought to strengthen minimum wage laws, worker safety protections, and public safety nets. And unions, much to the dismay of corporate power brokers, help provide a powerful mechanism for voter turnout that keeps our democracy strong.

Unions have long understood that “speaking truth to power” is not enough. It takes a strong, organized movement to affect real change in our society. That has become especially important in the face of rising corporate power and, more recently, the Supreme Court’s Citizens United ruling. Today, unions represent one of the few organized forces providing a counterbalance to the role of corporate money and power in our democracy. As the fight to limit corporate power through campaign finance reform and other such policies heats up, unions will undoubtedly play a crucial role.

From the 1940s through the mid-1970s, Americans saw an unprecedented period of economic growth, and more importantly, a period when income growth was shared proportionally across all major income groups. This was not an accident or a force of nature. It was the result of a deliberate set of public policies—including a highly progressive tax system, strong worker protections, and large-scale public investments in our shared infrastructure to name a few. But these laws didn’t just magically appear. They were created in part through the political organizing of strong, well-organized unions at a time when one out of three American workers were unionized.

Unions have long understood that “speaking truth to power” is not enough. It takes a strong, organized movement to affect real change in our society.

Beginning in the 1970s, well-heeled corporations began to organize and work to undo these earlier labor victories. In their new book “Winner-Take-All Politics,” Pierson and Hacker document this dramatic power shift. In 1968, only 100 corporations had public affairs offices in Washington. That grew to 500 by 1978. Only 175 firms had registered lobbyist in 1971. That grew to 2,500 by 1982. Mirroring this rise of corporate power was the realignment and dramatic growth of the Chamber and the National Federation of Independent Businesses as a powerful political force.

As corporate influence was on the rise, the once powerful labor unions that helped grow America’s strong middle class were under attack. In some cases, this was a frontal assault as powerful forces worked to undo union victories. In other cases, it was a dodge as corporations moved their operations to anti-union states, cutting the political legs out from under the unions.

As this fierce class war has waged on for the past 30 years, hard-working Americans have consistently been on the losing end. Many progressives point to Reagan as the impetus for this power shift, but Reagan was simply riding a tidal wave of corporate power that was laid in the decade before he took office. To the victor go the spoils indeed. Since this great power shift has taken place, we’ve seen tax cuts for the wealthy, deregulation, and the gutting of the public sector with profound implications for our society. Income inequality is now at its highest level since 1928, just before the Great Depression.

After nearly four decades of attack, only about 12 percent of American workers are now unionized. In the public sector however, the unionization rate remains at 36 percent. In fact, over half of all unionized workers are public sector employees today. This brings us full circle back to Wisconsin. As corporate influence continues to grow, Governor Walker is seeking to limit the power of working people by removing one of the most powerful tools in our cache: unions and their organizing power. If he succeeds, it will be deeply troubling for the health of our democracy.

If we as a nation are serious about renewing America’s commitment to a strong and vibrant middle class, we must look to reform the political landscape that created the winner-take-all economy. As the nation’s eyes remain on Wisconsin, it is in each or our interests—unionized and non-unionized, private sector and public sector workers—to stand in solidarity with our fellow Americans on the front lines in Wisconsin. The health of our democracy depends on it.

Changing the Terms of Economic Debate

As long as we let ourselves be boxed in by a rightwing agenda that leaves us searching for least-worst options, we're losing
by Dean Baker
Tuesday, March 1, 2011 by The Guardian/UK

There is a new economists' sign-on letter being circulated that warns bad things will happen if there are big cuts to the public investment portion of the federal budget, as Republicans in Congress are now advocating. The argument in the letter is correct, but it is nonetheless painful to see this sort of thing being circulated right now.

The politicians in Washington may have missed it, but we are still in the middle of the worst economic downturn since the Great Depression. The unemployment rate is still 9.0% and virtually no forecaster, including those in the administration, expects it to return to normal levels any time soon. In addition to the unemployed, we have more than 8 million people underemployed, and millions more who have given up looking for work altogether.

In such times, we might expect that there would be discussion of a big new stimulus programme. After all, we do know how to generate growth and create jobs. As a large and growing body of research shows (pdf), we just have to spend money. This means that 25 million people are suffering as a result of unemployment or underemployment simply as a result of bad economic policy.

The politicians who could, in principle, push through more stimulus have been intimidated into silence by the business lobbies and the media which have decided to make concerns about the deficit the top and only economic priority. In this context, it would have been reasonable to expect that a letter drafted by prominent liberal economists (the lead signers include Alan Blinder and Laura Tyson, two of the top economists from the Clinton administration) would centre on the need to boost demand to create jobs. Economists, who don't have to run for office can say such things, even when politicians can't.

But there is no mention of stimulus, just a plea not to cut public investment. This plea could even be taken as an implicit endorsement of cuts to other areas of spending like Medicare, Medicaid and social security.

In fairness to the authors of the letter, the state of politics in Washington is quite bleak right now from a progressive standpoint. The Republicans won a huge victory last fall, with the conservative wing of the party on the ascendancy. They seem virtually certain to retake the Senate in 2012. Arguably, the best that can be hoped for is to shelter a few selected areas from spending cuts.

While that may be true at the moment, it is hard to see this path as anything other than a slower road to disaster. After all, no one believes that the economy is going to turn around based on the sort of budget that is likely to come from a compromise with the Republicans. And President Obama is virtually certain to be held accountable for the state of the economy in 2012. Furthermore, even if he does manage to get re-elected, he will still be dealing with the same sort of congressional opposition he faces today. And, of course, no one in their right mind can think that the current economic situation is acceptable.

At some point, we have to talk about changing the terms of the debate. This is where our two honcho Democratic economists need to be taken to the woodshed. They could be trying to argue the case that the economy needs additional stimulus to get back to normal rates of unemployment. The Republicans may block this path, but at least, then, the public might understand that people are unemployed or underemployed because of a political decision, not an act of God.

If they think increased stimulus is an impossible lift at this point, why not argue the case for work-sharing? We can encourage employers to shorten hours instead of laying people off. If we can reduce the rate of layoffs by just 10%, this would translate into almost 2.5m additional jobs over the course of a year.

In principle, this work-sharing doesn't even have to cost any money. It's just substituting payments for short-time work for unemployment benefits. Work-sharing is the reason that Germany's unemployment rate has fallen in this downturn, even though it has seen less GDP growth than the United States.

Pushing for either more stimulus or work-sharing would at least set out a positive agenda, as opposed to splitting the difference on a really bad path. Of course, if our leading Democratic economists had been a little more farsighted, we never would have been in this mess in the first place.

They would have been talking about the housing bubble back in 2002-2004, when it could have been reined in without wrecking the economy. Better yet, they could have been talking about the stock bubble back in the Clinton years before that set the US economy on a path of bubble-driven growth.

It would be good if Republican plans to shut down the government and/or gut large areas of public investment can be thwarted. But serious progressives have to move beyond a situation where we are choosing between bad choices and worse ones. The folks setting the economic policy agenda for the Democrats are not going to get us there.

BP Fund Lawyer to Refuse 100,000 Gulf Spill Disaster Claims

Vast majority of 130,000 unsettled claims do not have adequate documentation, says Ken Feinberg, a.k.a. soulless scumbag
Tuesday, March 1, 2011 by The Guardian/UK
by Suzanne Goldenberg

Upwards of 100,000 claims arising from the BP oil disaster in the Gulf of Mexico may never be paid, the beleaguered administrator of the oil company's compensation fund has acknowledged.

 A defensive Ken Feinberg, under fire from the Obama administration, Gulf leaders and local business for the slow pace of payouts for losses due to the BP spill, said the vast majority of the 130,000 unsettled claims did not have adequate documentation.

"Here is the problem that I continually have to address … roughly 80% of the claims that we now have in the queue lack proof," Feinberg told foreign reporters in Washington. "That is a huge number."

Feinberg did not rule out settling claims in the future, but he added: "The claims that were denied had woeful, inadequate or no documentation to speak of."

He indicated that BP is unlikely to pay out more than the initial $20bn (£12.3bn)agreed for the compensation fund in a meeting at the White House last summer. "I am cautiously optimistic that $20bn will be enough," he said.

Any funds remaining from the $20bn would revert to BP under an agreement with the White House, Feinberg said: "My understanding is that if $20bn is sufficient and there is money left over it is retained by BP. That is not on my watch, that is not my responsibility."

The Obama administration, state governments, and local businesses have grown increasingly frustrated with Feinberg's handling of the claims process. Since August, Feinberg has paid out nearly $3.6bn to some 168,000 individuals and businesses in the Gulf.

The state governments of Louisiana, Mississippi, Alabama and Florida accuse Feinberg of stalling claims, causing hardship to local businesses. They also accuse Feinberg of under-estimating losses to local businesses. They have asked the courts to order emergency payments.

Earlier this month, a New Orleans judge ordered Feinberg to stop calling himself an independent operator, as BP pays his law firm $850,000 a month to oversee the compensation fund.

BP meanwhile said Feinberg has been overly generous. Feinberg, on the defensive, told reporters that most of his estimates were based on the assumption that the Gulf would make a full recovery by the end of next year .

However, the fishing and tourist industries, which were badly damaged by the spill, claim it will take much longer to recover.

Middle class Revolution -- warning to fight till the end

As American workers fight for their rights for over two weeks, RT's Anastasia Churkina looks at what led to the middle class uprising, and where it could end up taking the United States.

Corporate 'Education Reform' is National Insanity

Tuesday, March 1, 2011 by Education Week
by Diane Ravitch

I'm beginning to think we are living in a moment of national insanity. On the one hand, we hear pious exhortations about education reform, endlessly uttered by our leaders in high political office, corporate suites, foundations, and the media. President Obama says we have to "out-educate" the rest of the world to "win the future."

Yet the reality on the ground suggests that the corporate reform movement—embraced by so many of those same leaders, including the president—will set American education back, by how many years or decades is anyone's guess. Sometimes I think we are hurtling back a century or more, to the age of the Robber Barons and the great corporate trusts.

Consider a few events of the past week:
  • In Detroit, the school system will reduce its deficit by closing half the city's public schools and creating classes of as many as 60 students. These are among the poorest and lowest-performing students in the nation. Parents and teachers should be rioting in the streets of Detroit, along with everyone who cares about these children and our future. This is an outrage.
  • The school board of Providence, R.I., voted to fire all of its teachers to address its deficit. Most will be rehired, but now the board has maximum flexibility to choose which ones. At the same time, Providence's leaders are humiliating every teacher, breaking the bonds of trust that are essential for the culture of a good school. Will anyone hold these reckless, heedless, unprofessional "leaders" in Rhode Island to account?
  • And, in Idaho, the state superintendent of education has proposed a plan that would lay off 770 teachers over five years, banking on students taking more online courses. Do they know there is no evidence for the efficacy of virtual learning? I don't think they care. For them, this is just a cost-cutting measure. And it's other people's children who will get this bargain-basement training, not their own.
If more was needed to strip away the mask of "reform," consider the deafening silence of the corporate school reformers in response to these events. A few, like Joe Williams of Democrats for Educational Reform, surprised their confreres (and me) by siding with the teachers of Wisconsin. Most, however, complained that public employees are overpaid, have unnecessarily rich benefits, and need a comeuppance. All those who wrote such articles enjoy comfortable upper-middle-class lives; do they want to reduce teachers to penury? Some circulated spurious claims that Wisconsin's schools were dreadful because only one-third of 8th graders were proficient on the National Assessment of Educational Progress reading assessment in 2009; I assume they don't realize that "proficient" on NAEP is far higher than proficient on state tests and is equivalent to an "A."

I was disappointed when my friend Rick Hess, who blogs for Education Week, expressed his support for Wisconsin's Governor Scott Walker (I Stand With Governor Walker); in another piece, Rick reported that the average salary of Wisconsin teachers was about $52,600 in 2009-10. I wonder what the average salary is for professionals at the American Enterprise Institute, where Rick does his thinking and writing. I'm sure it's far more than what teachers earn, and that the working conditions are pleasanter, the stress level lower, and the responsibilities fewer.

The corporate reformers have done a good job of persuading the media that our public schools are failing because they are overrun by bad teachers, and these bad teachers have lifetime tenure because of their powerful unions. (See the corporate reform film, Waiting for Superman). I'm sorry to say that Race to the Top, Education Secretary Arne Duncan, and the Bill & Melinda Gates Foundation have stirred up a frenzy of anti-teacher sentiment that hurts even our very best teachers, by their much-publicized search for "bad teachers."

National Board-certified teachers are organizing a march on Washington this July to fight back against the vilification of their profession. Their website is www.saveourschoolsmarch.org.

In the wake of the attacks on teachers and public schools this past year, the haters of teachers feel respectable as they write their venomous diatribes and post them widely. When I recently defended teachers and their right to bargain collectively on CNN.com, I was startled by the raw expressions of rage in the thousands of comments that poured in.

So much madness on the loose. So many districts firing teachers and closing schools. So many legislators slashing education budgets while refusing to raise taxes on millionaires or allowing taxes on the wealthiest to expire as they lay off teachers.

What do we hear from the corporate reformers? Merit pay. Really? Bonuses for some, layoffs for others? Fire teachers with low value-added scores? Ah, more teaching to the test, more narrowing the curriculum.

Nothing to improve education. Just "innovation" (i.e., no evidence) and "disruption" (I.e., firing the whole staff, closing the school).

Our schools remain subject to a failed federal accountability system. We are packing children into crowded classrooms, ignoring the growing levels of child poverty (the U.S. now leads all advanced nations in infant mortality), and putting fear into the hearts of our nation's teachers. Who will want to teach? How does any of this improve schools or benefit children? Do you understand it? I don't.

Automotive WOW!



Some day, baby...some day...

House Republican Budget will cost 700,000 jobs by end of 2012

Monday, February 28, 2011 by The Hill
Economist's Fodder for Dems: $61 Billion Cut Would Cost 700K Jobs
by Eric Wasson

A new report out Monday from Moody’s Analytics economist Mark Zandi estimates that the House-passed seven-month spending bill, which cuts $61 billion in spending, would cost 700,000 jobs by the end of 2012.

Zandi’s report echoes one by the left-leaning Economic Policy Institute, which concluded the GOP bill would cost 800,000 jobs. He predicts that this year the bill could cost 400,000 jobs and run the risk of another recession. Goldman Sachs has found that it could cause as much as a 2 percent loss in economic growth.

Zandi estimates that the CR would reduce real growth in gross domestic product by 0.5 percent in 2011 and by 0.2 percent in 2012.

Congressional Democrats will be sure to cite new estimate as they argue against cuts to spending this year.

House Republicans argue that their bill should become law as part of a “cut and grow” strategy that they say, by removing uncertainty about higher taxes to pay for government spending, would spur spending by businesses.

A spokesman for House Speaker John Boehner (R-Ohio) discredited Zandi.

"The fact that a relentless cheerleader for the failed 'stimulus' - which the Democrats who run Washington claimed would keep unemployment below eight percent - refuses to understand that ending the spending binge will help the private sector create jobs is sad, but not surprising," said Boehner spokesman Michael Steel.

Zandi, who backed the 2009 Obama stimulus plan, also concludes that allowing the spending fight to cause a lengthy government shutdown would do deep damage to the economy.

“The economy is much improved and should continue to gain traction, but the coast is not clear; it won’t be until businesses begin hiring aggressively enough to meaningfully lower the still-high unemployment rate. The economy is adding between 100,000 and 150,000 per month — but it must add closer to 200,000 jobs per month before we can say the economy is truly expanding again,” he argues.

“Imposing additional government spending cuts before this has happened, as House Republicans want, would be taking an unnecessary chance with the recovery,” he states.

Zandi’s report echoes one by the left-leaning Economic Policy Institute, which concluded the GOP bill would cost 800,000 jobs. Goldman Sachs has found that it could cause as much as a 2 percent loss in economic growth.

He argues that long-term deficits need to be tackled, but that government borrowing is not crowding out private investment at this point, so reducing spending would not have the effect of quickly expanding credit for the private sector.

Zandi tells investors that he predicts both sides will find a compromise that cuts less than House Republicans are demanding, and that the economy will be able to absorb that compromise.

Pay Up, Corporate Tax Dodgers

Monday, February 28, 2011 by OtherWords
We're chumps unless we force Congress to stop tax haven abuse.
by Chuck Collins




Instead of cutting state and federal budgets, the United States should crack down on the corporate tax dodgers thumbing their noses at us.

Across the nation, states are making deep cuts that will wreck the quality of life for everyone to close budget gaps that total more than $100 billion.

But there's a more sensible option. Overseas tax havens enable companies to pretend their profits are earned in other countries like the Cayman Islands. Simply making that ruse illegal would bring home an estimated $100 billion a year.

The next time you read a story about some politician bemoaning that "there's no money" and "we have to make cuts," just point to artful tax dodgers in our midst.

They include some of the banks that trashed the economy but gladly took our tax dollars to stay alive after the economic meltdown. Bank of America. Wells Fargo. Citigroup.

Goldman Sachs took a $10 billion taxpayer bailout but then gamed its effective tax rate down to one percent through what its shakedown-artist executives call "changes in geographic earnings mix." Shame on them. Pay up.

See that FedEx delivery van go by on the roads you paid for? Pay up FedEx! Don't pretend you're not making billions in the U.S. Don't lie and tell us you made all those profits on some island with more palm trees than people. We know the demand for coconut delivery isn't that big.

These corporations are heavy users of our taxpayer funded public infrastructure and property rights protection systems. They use our regulated marketplace, call upon our law enforcement system and judiciary to remedy disputes. They're protected by U.S. police forces and firefighters. They enjoy all the privileges and benefits of tax-paying citizens. They just don't pay their fair share for them.

So, ExxonMobil: the next time your gas station erupts in flames, why don't you call the fire department on the Cayman Islands? Or when someone holds up the joint, how about calling the Luxembourg police, since that's where you claim your profits so you don't have to pay the taxes you owe Uncle Sam.

Hey, Pfizer. Without our remarkable taxpayer-funded system of patents and intellectual property rights protections, everyone and their brother would be making Viagra and undercutting your sales of little blue pills. Pay up!

Those of us who pay sales taxes and have income taxes withheld from our paychecks will bear the brunt of state and federal budget cuts in schools, public transportation, and recreational facilities. Our most vulnerable family members and neighbors will suffer thanks to cuts in mental health services, elder care, and Medicaid.

Oh yes, and children. Arizona is cutting health care for 47,000 children. California, New York, and Mississippi are cutting K-12 education funding. Hey, kids don't vote. Nor do they have corporate lobbyists. An estimated 900,000 jobs will be cut, including teachers, firefighters, police officers, and medical first responders.

Boeing, you want another contract for a taxpayer-funded military jet? Well, pay up! Pay up General Electric, Mattel, Dow Chemical, Hewlett-Packard, and Cisco. Yes, we know you pay some taxes. But look these children who are losing their health insurance and teaching aides in the eye. Tell them you're paying your fair share.

These global corporations will complain that forcing them to pay their fair share of taxes will "kill jobs." Let's be clear: the patriotic businesses that currently pay their taxes and have to compete against these tax dodgers are the employers we want. It undercuts U.S. jobs for domestic banks, retailers, and manufacturers to have to compete against companies that can game the tax system.

The next time you're waiting longer for a bus or train than you should, or someone you know can't get timely mental health or drug treatment services, remember the tax dodgers. The next time your car hits a pothole or your kid's teacher loses her job, remember the corporations that are using armies of accountants to lower their tax bills.

In a democracy, if we sit back and just grumble, we get what we deserve. We're chumps until we wake up and force our members of Congress to stop tax haven abuse.

Local and Organic Food and Farming

The Real Gold Standard
By WILL ALLEN, KATE DUESTERBERG and RONNIE CUMMINS

More and more consumers and corporations are touting the benefits of “local” foods, often described as “sustainable,” “healthy,” or “natural.” According to the trade publication, Sustainable Food News, local as a marketing claim has grown by 15 percent from 2009 to 2010, and it’s likely that number will increase in the coming year.1 Even supermarket giant and junk food purveyor Wal-Mart, with total sales in 2009 of $405 billion, has jumped on the bandwagon. It has pledged to reduce food miles and increase its purchase of “local” fruits and vegetables to include 9% of its produce by 2015. 2

Those who espouse local food are now called “locavores.” But, beyond the greenwashing and co-opting of the term by Wal-Mart, the supermarket chains, and factory farms and feedlots, what does “local” food and farming really mean? What is the impact of non-organic local food and farming on public health, nutrition, soil, water, marine life, biodiversity, and climate?

Jessica Prentice coined the term locavore for World Environment Day in 2005 to promote local eating, and local consumption in general. Her goal was to challenge people to obtain as much food as possible from within a one hundred mile radius. Her success was more than she imagined. In 2007 the New Oxford American Dictionary selected “locavore” as its word of the year. Local had arrived!

Then, the highly respected author Barbara Kingsolver published Animal Vegetable, Miracle emphasizing the value of eating locally, and the concept spread like wildfire. 3 While the eat local/buy local concept is increasingly popular, looking beyond the label or the marketing claims, it is obvious that “local” is a rather fuzzy concept, lacking in most cases a concrete definition or a set of principles and guidelines.

By contrast, the organic system of food production has legal definitions, a handbook of rules, permitted and prohibited substances, acceptable practices, an inspection process, and labels to guide the consumers. Local has none of these guidelines, rules, inspections or protections. It has the cachet of popularity without any guarantee of safety or sustainability.

Some chemical farmers, and even poultry, egg, pork, dairy, or beef operators feeding their animals genetically modified (GMO) grains, claim that local is better than organic, because it stimulates the local economy and reduces the distance (food miles) that food travels between the farm or feedlot and your table. But does so-called local farming, utilizing toxic pesticides, GMO seeds and feed, chemical fertilizers, and animal drugs mean that the food is safe and sustainable? Obviously not. We believe that there shouldn’t have to be a choice between local and safe organic; but rather that consumers should look for food that is not only local or regionally produced, but food that is also organic and therefore safe and sustainable. Local and chemical, or local using GMO seeds and feed, is nothing more than greenwashing. Organic and local is the new gold standard!

The locavore phenomenon brings up several important concerns including: food miles, chemically grown food, greenhouse gas emissions, factory farming, genetically engineered animal feed, and the value of organic labeling. All of these crucial issues relate to the central question: what should be in your market basket?

Does Local Mean Safe?

Despite the increasing popularity of the eat-local movement, many people do not understand that “local” does not necessarily mean that food is organic or even safe. Chemically grown foods produced locally may be cheaper than organic and may aid the local economy. But they pollute the ground water, kill the soil food web, and decrease the soil’s ability to sequester climate-destabilizing greenhouse gasses, broadcast pesticides into the air, poison farmworkers, and incrementally poison consumers with toxic residues on their foods. “Local” pesticides, genetically modified organisms (GMOs), and chemical fertilizers are just as poisonous as those used in California, Mexico, Chile, or China.

Frequently, local chemical farmers claim that they only use “less toxic” pesticides or herbicides such as Monsanto’s Roundup. Unfortunately, “less toxic” is a dangerously relative term! Roundup is a powerful weed-killer, and is now sprayed so heavily on the nation’s 150 million acres of genetically engineered crops that it is poisoning our water supplies, killing the soil, and creating superweeds that can only be killed with super-toxic herbicides such as 2,4 D, arsenic and paraquat. Farmers in the U.S. have used everything from arsenic, lead, cyanide, fluorine, DDT, and nerve poisons since the 1860s, and they still use massive amounts. More than 80% of all the pesticides currently used in vegetable, fruit, and flower production are nerve poisons that were used on insects and also on concentration camp victims during the first and second World Wars.

Organophosphate pesticides or nerve poisons have been linked to Attention Deficit Hyperactivity Disorder (ADHD) in children. Organophosphate nerve poisons were found in the urine and saliva of Seattle preschool children who were eating conventional (chemical) and local food from off the shelf. When the kids stopped eating chemical food and ate organic food the organophosphates disappeared from their saliva and urine. When the children returned to the chemical diet, the nerve poisons showed up in their urine and saliva again.4 Nerve poisons, whether they are used on foods that are locally, nationally, or internationally produced and distributed are dangerous hazards, especially for growing children and at-risk populations. They need to be driven off the market, as soon as possible.

Does “Pesticide Free” Mean Safe or Sustainable?

Often, growers at farmers markets will say, “ I don’t use pesticides, I only use chemical fertilizers.” Sadly, what many people do not realize is that chemical fertilizers are extremely hazardous. A high percentage of these fertilizers seep into our wells and municipal drinking water, or else run off into our streams, rivers, and finally end up in the ocean. Two-thirds of the nation’s drinking water is contaminated with hazardous levels of nitrogen fertilizer. Non-organic farmers and feedlot operators are literally poisoning us and our children with the collateral damage of chemical fertilizers. High nitrogen and phosphorous levels in rivers and oceans kill fish and other marine wildlife. When this enormous amount of excess nitrogen enters the ocean it causes dead zones and oceanic acidification.

Some “pesticide free” growers will argue that since they only use chemical fertilizers, their produce is cleaner. Their food may not have high pesticide residues. But, remind them that cleaner isn’t clean! And inform your local chemical farmer that their toxic fertilizer is polluting our drinking water, trashing the oceans, killing the soil’s ability to sequester greenhouse gases, destabilizing the nitrogen cycle of plants, and emitting billions of pounds of deadly greenhouse gasses every year. Synthetic nitrogen fertilizer is perhaps the most potent greenhouse gas emitter in the U.S. To produce each pound of fertilizer, 6.6 pounds of nitrous oxide (N2O) are emitted. Nitrous oxide accounts for a full ten percent of all climate-destabilizing greenhouse gases.

Nitrous oxide is extremely hazardous. It depletes the ozone layer in the upper atmosphere (thereby increasing skin cancer for humans). It increases ozone pollution levels at the ground level (fueling the current epidemic of asthma and respiratory diseases.) Poisonous nitrate fertilizers leaching into our rural wells and municipal drinking water supplies (where it combines into a super-toxic brew with pesticides) are a biological time bomb, a major cause of cancer, infertility, hormone disruption, and birth defects.

Perhaps most deadly of all, nitrate fertilizer kills our living soils and soil microorganisms, decreasing their ability to sequester (through plant photosynthesis) excess greenhouse gasses in the soil. Even after a century of industrial farmers dumping hundreds of billions of pounds of chemical fertilizers on farmlands, our living soils still contain two to three times as much carbon as the atmosphere, with the practical capacity to clean and safely sequester a considerable amount of greenhouse gases over the next 40 years. In other words, our living soils can save us—but only if we stop the widespread use of nitrate fertilizers, GMO crops, and pesticides and replace these deadly chemicals and mutant organisms with organic compost, compost tea, and cover crops, augmented by the biological power and fertility generated by organic, carefully planned, high-density rotational grazing of animals.

The energy-intensive manufacturing of nitrate fertilizers requires the use of massive amounts of natural gas, a resource in short supply, that will increasingly be needed to take us through the transition from fossil fuels to alternative energy. We can no longer afford to waste natural gas in order to uphold the profits of Cargill, Monsanto the devil, and Food Inc. We can no longer afford to have chemical-intensive food and farming greenwashed as “local.”

U.S. non-organic farmers used an average of 24 billion, 661 million pounds of synthetic nitrogen fertilizer per year from 1998 to 2007. That means that more than one hundred sixty-two billion, seven hundred sixty-two million pounds of nitrous oxide (N2O) are released each year in the process of manufacturing that fertilizer. 5 Also released is the CO2 from transporting the fertilizer. Since 70% of synthetic nitrogen is imported, the transportation cost is increasingly higher each year. Beyond production and transportation emissions, enormous quantities of N2O get released when the 24.66 billion pounds of synthetic nitrogen is applied to farmland every year. Nitrous oxide is 310 times more damaging as a greenhouse gas than carbon dioxide. Every year, U.S. farmers use enough synthetic nitrogen to fill more than 12,330, railroad boxcars with a capacity of 200,000 pounds each.

Consequently, farmers and supermarkets that tout their products as local and pesticide-free, while still using synthetic fertilizers, are engaged in greenwashing. Non-organic farms poisoning the environment with chemical fertilizers are a far cry from safe or environmentally friendly, even though they promote themselves as pesticide-free and local.

“Local” Factory Farms and CAFOs: Destroying Public Health and Climate Stability

According to Wal-Mart and Food Inc.’s definition of local (anything produced within a 400-mile radius), meat, dairy, and eggs, reared on a diet of GMO grains, slaughterhouse waste, and antibiotics, qualify as “local.” According to the USDA, the majority of the nation’s non-organic meat, dairy and eggs are now produced on massive factory farms, euphemistically called Confined Animal Feeding Operations (CAFOs). 6 CAFOs are typically overcrowded, filthy, disease ridden, and inhumane, not only for the hapless animals imprisoned inside their walls, but also for the typically non-union, exploited, immigrant workers who toil in these hellish facilities. According to the EPA, the legal definition of a CAFO is a farm or a feedlot where large numbers of animals are confined and reared, beef – 1000 head; dairy – 700 head; swine – 2500 pigs weighing more than 55 lbs; poultry – 125,000 broilers or 82,000 laying hens or pullets.

Unfortunately meat, dairy, or eggs coming from CAFOs in North America are not required by law to be labeled as such. Greenwashing CAFO products as “natural” or “local” is a major source of profits for Wal-Mart, Cargill, Conagra, Perdue, Land O’ Lakes, Kraft, McDonald’s, KFC, Monsanto and chemica/GMOl farmers and ranchers. Organic consumers, farmers, and retailers need to educate the public about the hazards and inhumanity of factory farms and CAFOs. These animal factories, where GMO feed and drugs are force-fed to most of the nation's livestock and poultry, are not only poisoning consumers, but are also generating massive amounts of climate-destabilizing greenhouse gases, especially methane, which is 72 times more destructive per ton than CO2. Methane (CH4) pollution is responsible for approximately 14% of human-induced global warming.

Where does methane pollution come from? Methane pollution mainly comes from factory farms and the overproduction of non-organic meat, dairy, and eggs, from throwing hundreds of millions of tons of rotting food, paper, and lawn wastes into landfills (instead of composting them for use on farms, ranches, and gardens), and the destruction of wetlands for shrimp and fish farms, industrial agriculture, chemical-intensive rice farming, and urban development or sprawl.

How do we get rid of excess, climate-destabilizing methane? By purchasing organic foods, especially those produced by family farmers and ranchers in our regions, and by increasing consumer awareness that it is unhealthy and inhumane to purchase factory farm foods. It is becoming increasingly clear that buying or consuming meat, dairy, or eggs that come from a factory farm or CAFO is an ethical abomination and a climate crime. While calling for a boycott of factory-farmed products we must deliver the positive message that the organic, humane, healthy, food producing small farms and ranches of North America are actually greenhouse gas sequestration centers, arguably our most important allies in cooling off the planet.

Millions of consumers are still "in the dark" about how "conventional" foods--especially the cheaper brands of animal products, processed, fast, and fake foods--are produced. We must educate the public about the need to fight for Truth-in-Labeling so that CAFO products, derived in great measure from Monsanto’s GMO crops, are no longer greenwashed as “local” or “natural.”

Food Miles and Greenhouse Gas Emissions

Food miles are the average miles that food travels from the farm to the consumer. Since more than 80% of the U.S. grocery purchases are now processed foods, a huge percentage of the carbon or fossil fuel footprint of industrial agriculture comes from transporting factory farm crops or animals to the processing plant or slaughterhouse and then transporting these processed foods from the processing plant to the dinner table via the supermarket. By reducing the processed foods in our diet we can greatly reduce the food miles or carbon footprint for which our households are responsible, since the shorter the distance food travels, the lower the greenhouse gas emissions.

Part of the locavore ethic is to get people to eat from their own food shed, to save energy, reduce greenhouse gas emissions, and stimulate the local economy. But, real “local” is also about stimulating a return to in-home food preparation, an appreciation for taste, and the joy in cooking—and eating. As folks begin to appreciate the taste of locally grown fresh organic foods, their dependence on processed foods from afar usually dwindles.

The 20% of the U.S. diet that is not processed food includes fresh fruits and vegetables, dairy products, farm raised meats, eggs, whole grains, cold pressed oils, raw honey, syrup, natural sugars, etc. Though only 20% of the total food budget, the sales of non-processed food are huge! Unfortunately, production of non-processed foods is largely regional with production concentrated on the southern half of both coasts and the southwest. So, even a majority of the fresh foods come from afar. This requires lots of trucking and refrigeration to get the food to local markets the across the country.

“Fresh food miles” indeed contribute to the high CO2 emissions from the U.S. food system, but these whole foods are certainly not the major greenhouse gas contributor in our food system. That dubious honor belongs to factory-farmed meat, eggs, and milk, which generate 30 to 50% of all of the U.S. greenhouse gasses, more than industry and fossil fuels combined. 7

Fortunately, locally and nationally, farmers have worked out strategies of how to grow fresh foods in the middle of the winter with better technology and a minimum of heat, even in extremely cold places like Maine, Vermont, Minnesota, and Montana. Consequently, farmers and consumers are growing and storing food throughout the year so that they are not responsible for so many food miles on their tables.

Our thesis is that a majority of our food miles could be chopped off if we prepare more of our food from local ingredients. But, that begs another question. What kind of local ingredients?

Chemical and Local versus Organic and Local

Some growers and brokers argue that local, chemically grown is better than fresh organic, because so much that is organic travels long distances from the two coasts. If they are talking about comparing supermarket fresh organic with fresh chemically grown local, we should still choose supermarket organic, because, whether they are used locally or nationally, pesticides and fertilizers are more dangerous and deadly to your health and the health of the environment than chemically-free organic foods transported from outside your local region.

Chemical farmers are not inspected or reprimanded by the federal or state governments as to their use or abuse of pesticides or fertilizers unless there is an accident, whether they are local farmers or factory farmers from California, Florida, or China. The only way the abusers are caught is when there is a fish kill, a labor poisoning, a recall after multiple poisonings, or some other notable injury as a result of a spill, overuse, or carelessness.

By contrast, organic growers are inspected every year and can be inspected at any time the certifying agency or the federal government (USDA) deems it appropriate. These are the rules in California, Vermont, Chile, and all countries that grow and market certified organic products. Because organic farms are inspected (at least once a year), and their soil and water checked for toxins, consumers can be secure that the organic products are the safest on the market. Consumers can be confident that organic food does not contain poisonous pesticide residues, did not poison farmworkers, and was not grown with a fertilizer that trashed the soil, the water, the atmosphere, and the oceans.

Organic farming is a set of techniques and strategies that encourage the life to come back into the soil and into our food. Chemical fertilizers kill soil life and inhibit the accumulation of organic matter (plant residues in the soil). Chemical food has less life force because chemicals kill soil microorganisms and earthworms. Organic matter is critical to organic farmers because nutrients cling to organic matter, so the plant roots can efficiently find and mine nutrients and water at those spots.

Organic farmers add nutrients such as lime, rock phosphate, potash, and sulfur in an effort to get the soil balanced so that the maximum amount of all nutrients and water are available to foraging plant roots. This soil-balancing act is a constant process. On light and sandy soils, organic matter must be replaced every year by growing a fertilizer crop and by adding small amounts of compost, which has billions of soil microorganisms. These critters go to work breaking down the organic matter and making it available to plant roots while constantly adding to the fertility by defecating the digested organic matter (and they work 24-7, not 9 to 5).

To control pests, organic farmers rotate their crops, so that pests do not build up from continuous monocropping. Instead of toxic pesticides, organic growers use beneficial insects as predators and parasites on pests. They use bacterial sprays for certain worms and beetles. They spray clay on their apples and other fruits. They use insect traps and lures. And, they use trap crops that the insects like better than the main crop. They use disease resistant crops that are immune or less prone to disease. And, they monitor their fields often so that they can spot problems early.

The Gold Standard: Local and Organic

Local organic food and farming are the gold standard. Organic farmers gladly adhere to a set of regulations, use non-toxic products, and accept the need to be scrutinized by an independent third party inspector. Why? Because, regulation of food safety is essential to guaranteeing consumers that the farmer has their health and well being at the center of his or her business plan. The organic regulatory process is neither easy nor happily anticipated by the farmer. But it is necessary! It is our covenant with our customers.

There are no regulations governing “local” chemically grown or GMO-derived food. Anything goes! Nobody is inspecting the farm! Nobody is watching the store! As customer, you must also be the regulator of non-organic food. Instead of depending on a regulator, you as customer should ask the “local” growers what they used as a fertilizer source, how they controlled pests and diseases, and what chemicals they used to stimulate yield.

When the local chemical grower tells you that local is better than organic, tell them that they should switch to organic so that you can trust their food to be safe, clean, inspected, and environmentally friendly. Local food is not the gold standard, and may not even be safe. Local-organic is the gold standard.

Citations:


1. Sustainable Food News, November 12, 2010.


2. Hightower, Jim, Other Words, Dec. 8, 2010, “Meet Your New Neighborhood Food Market”


3. Kingsolver, Barbara, et. al 2007 Animal, Vegetable, Miracle: A Year of Food Life.Harper-Collins, May 2007.


4. Curl, Cynthia L., Fenske, Richard A., Elgethun, Kai. 2010 Organophosphorus Pesticide Exposure of Urban and Suburban Preschool Children with Organic and Conventional Diets. Department of Environmental Health, School of Public Health and Community Medicine, University of Washington, Seattle, Washington.


5. Fertilizer Use Statistics, 1998-2007 . National Agricultural Statistical Service, United States Department of Agriculture.


6. “Factory Farm Nation,” Food and Water Watch, 2010,


7. Goodland, Robert and Anhang, Jeffery, 2009 Livestock and Climate Change. World Watch Magazine. November 1.

What $3 Trillion Bought the US

Imperial Ingratitude
By CHRISTOPHER BRAUCHLI

One bit news coming out of Iraq suggests that in at least one respect Iraq has modeled itself after its invaders. It comes as a welcome antidote to the bad news coming out of other places in that part of the world.

In Bahrain where the United States Fifth Fleet is docked when it's not sailing around protecting the United States' vital interests, the Bahrain royal family whom the U.S. been supporting for almost 50 years, took offense at the notion that its people might favor greater freedom, similar, perhaps, to the freedom enjoyed by its benefactors. It expressed its offense by killing and clubbing demonstrators who were peacefully expressing their hopes for those greater freedoms. As of this writing, the Bahrain royal family has said it's sorry for having clubbed and killed those peacefully seeking greater freedoms and now wants to talk with its citizens. That makes those not clubbed and killed feel a bit better.

Another good friend that disappoints is Afghanistan, the country into which the United States continues to pour money and blood. Although the war there is not going as well as one might wish, in at least one respect, Afghanistan is doing exceptionally well. According to Transparency International's annual list of corruption in 178 countries that was published in October 2010, Afghanistan is number 176. The downside is that unlike some scoring systems , the higher the number, the worse the result. Only two countries on the list are more corrupt than Afghanistan: Myanmar, formerly known as Burma (home to the almost perpetually house arrested Aung San Suu Ky) and Somalia, a country which as far as can be determined, has been without a government of any sort for years. With all that dismal news and the uprisings in other countries in that part of the world, news from Iraq offered a bit of relief.

Although random attacks in Baghdad and outlying areas continue at an alarming rate and a day of rage was planned for February 25 to protest a lack of government services in the city, in at least one respect Iraq is adapting to the United States way of doing things-assigning blame when bad things happen. In mid-February, Hakeem Abdul Zahra, a spokesman for the city of Baghdad, said the invasion of Iraq by United States forces inflicted considerable damage on Baghdad. This does not come as a surprise to anyone who has seen television footage of what went on in that country after it was invaded in 2002. What is surprising is that it took almost 10 years for any Baghdad official to point this out. Equally surprising it that the damage about which he complains is limited to the erection of blast walls and the use of humvees within the city limits of Baghdad. Damage inflicted by bombs was not mentioned. In demanding payment of damages of $1 billion and an apology, Zahra said: "The U.S. forces changed this beautiful city to a camp in an ugly and destructive way, which reflected deliberate ignorance and carelessness about the simplest forms of public taste. Due to the huge damage, leading to a loss the Baghdad municipality cannot afford. . . we demand the American side apologize to Baghdad's people and pay back these expenses." Elaborating on his concerns he said that sewer and water systems have been damaged by the heavy walls that were erected to protect against the force of blasts, humvees that were carrying troops did not always stay on roadways but sometimes drove on median strips and through gardens, ruining the vegetation. These violations Sahra said, caused "economic and moral damage."

In the overall scheme of things, the amount being requested by Zahra is modest. Although different analysts assess the cost of the war in Iraq differently, it seems fairly clear that any way the amount is calculated, the war has been an expensive undertaking. In an analysis by Joseph Stiglitz and Linda Bilmes in the Washington Post last September, the overall cost was estimated to be $3 trillion. The Cost of War analysis is somewhat more modest, placing the cost at just under $800 billion. Whichever figure you believe, what the city of Baghdad is requesting is a modest amount. Using the Cost of War analysis, the damages sought are only 1/800th of the total cost of the war and that does not seem like an unreasonable request for reimbursement.

The request proves that the Iraqis are good students. In the United States there is a belief that when bad things happen it is someone else's fault and the offending party should be made to pay. That is true even if the offending party was trying to help the party aggrieved. The planned Day of Rage suggests that Iraq may not have learned from its invaders how to govern. Zahra's demand suggests it has at least learned to assert its rights when it believes it has been wronged. Time will tell whether that is a good thing.

How Timidity in Washington Wrecked the Economy

The Latest Evidence
By DEAN BAKER

We now have even more evidence that inept policies from Washington are causing enormous suffering across the country. It is not quite the line that the right-wingers are pushing. The new evidence is that the stimulus worked and was in fact more effective than had been predicted.

The new evidence comes in the form of a study by two Dartmouth professors, James Feyrer and Bruce Sacerdote. Past estimates of the impact of the stimulus on jobs and the economy relied on simply plugging the tax breaks and spending into standard macro models and reporting the predicted effect. In this sense, the impact of the stimulus was actually built into the model. However this new study directly measures the impact of stimulus spending on employment across states, comparing the number of jobs created to the amount of spending.

The study consistently finds significant results over a wide range of specifications. This means that states that got more stimulus money had more jobs. The multipliers varied across specifications and types of spending but the range was 0.5 to 2.0. (The multiplier is the ratio of the change in GDP to the amount of stimulus spending. If the multiplier is 1.5 this means that $1 billion in stimulus increases GDP by $1.5 billion.) While the authors view their multiplier estimates as being somewhat below those predicted by the standard macro models, given the nature of their study their estimates are almost certainly higher than would be expected.

The approach used in this study almost certainly understates the true multiplier effect for the stimulus because it is effectively measuring the in-state multiplier. In other words, it is measuring how much $1 billion spent in Indiana will increase the size of Indiana's economy.

This will certainly be far less than its impact on the U.S. economy for three reasons. First many of the people hired for stimulus related projects are likely to live out of state. If Indiana contracts to rebuild Indiana Harbor (adjacent to Chicago), it is virtually certain that many of the workers will come from Illinois. This will be true of spending in any state with major population centers near the border (e.g. New York City, Philadelphia, Chicago).

The second reason is that much of the inputs are likely to come from out of state. Very little of the steel, asphalt or other materials connected with an infrastructure project will come from the state where the project is taking place.

The third reason that the study would understate the multiplier is that the re-spending from stimulus is far more likely to go out of state. This is not just because many people may cross state lines to do shopping or go to restaurants. Even if a person were to go to a store or restaurant in state to spend the money they earned through working on a stimulus project, much of the money would end up going out of state.

An appliance or video game may have been made in the United States, but it would be unlikely that it was made in Indiana, or whatever state's spending is being investigated. Similarly, the food served in a restaurant may have been grown in the United States, but probably not in Indiana.

For these reasons, measuring the amount that stimulus spending in Indiana led to an increase in the size of Indiana's economy is going to hugely understate the actual multiplier for the country as a whole. The range of multipliers found in this study suggests that the actual multiplier for stimulus spending is quite likely higher than the 1.5 in most macro models.

This is hugely important for macro-policy debates because it suggests that more stimulus would provide a further boost to the economy and reduction in unemployment. This means that the only reason that we are sitting here with 25 million people unemployed and underemployed is that the politicians in Washington are too intimidated by the Wall Street deficit hawks.

The deficit hawks have used their enormous political power and control over the media to shut down any further discussion of stimulus. They have managed to completely dominate public debate with their brand of flat-earth economics. They are using the crisis that was created through their greed and incompetence to reduce hugely valued public benefits, like Social Security and Medicare. And, now they are using the crisis that they have created for state and local governments to destroy public sector unions.

This looks really awful because it is. Our nations' leaders are deliberately inflicting enormous pain on tens of millions of people to advance their political agenda. This new study helps to prove this fact.