Austerity for the Poor; Bail Outs for the Banks; Tax Cuts for the Rich
By BRIAN TIERNEY
Across the U.S. working-class people are struggling, scrapping together meager sums in order to get by. In state and local governments throughout the country, workers are watching public services slashed in the name of balanced budgets.
Trillions of dollars have been doled out to Wall Street titans and big banks. And while the epidemic of home foreclosures and cuts to public services rages on, untaxed corporate profits are soaring at record highs and banks are sitting on hordes of accumulated capital.
Still, we are told, there simply isn't enough money to help the millions struggling in these economic hard times.
Earlier this month, in the same city where Congress is enacting cuts from the bottom, more budget cuts affecting childcare and affordable housing were voted on by the city council of Washington , D.C.
Community activists and affected city residents insisted on a different path: increasing the tax rate by up to one percent on the city's top income-earners.
One young unemployed single mother on disability approached council chair Vincent Gray. Her glassy black eyes peered into the darting glances of a city bureaucrat who nervously recoiled before the faces of low-income residents affected by his decisions. In her soft, trembling voice, she told the chairman that she might lose her daughter if the council carries through with the budget cuts.
With a straight face, Chairman Gray – who will soon replace Adrian Fenty as mayor of the district – looked at the young woman and said, "If you can print money, please do." On the same day and in the same chamber Gray led the council in voting down a resolution that would have modestly raised taxes on the top income-earners in D.C. and staved off cuts that hurt the poorest residents in the city.
This is the human face of Merriam-Webster's word of the year: austerity.
The reality of a system based on such backward priorities that reward the rich and punish workers and the poor was again laid bare in the waning days of the lame-duck Congress of 2010. Many were left wondering why it was that the only "pragmatic" way to extend unemployment benefits for the long-term unemployed was to extend tax-cuts for the rich.
We live in a society where Congress becomes deadlocked in dispute over aiding the jobless while it simultaneously passes a massive war spending bill without so much as a symbolic show of debate.
Meanwhile, across the Atlantic, scenes of barricades, burning park benches, outraged students "kettled" by police and striking workers stand against the backdrop of plumes of teargas. From Greece to Ireland , harsh austerity measures that threaten to eradicate the already besieged traditional welfare states of Europe are inspiring rolling strikes and student mobilizations against fee hikes.
Yet by contrast, the streets in the U.S. remain comparatively calm. Where is the organized uproar of workers in the U.S. ? Where is the labor movement?
The weakness of a small, institutionalized labor movement in the U.S. , as compared to the clout of trade unionism in Europe , helps to explain some of the discrepancy.
But in addition to its shrinking numbers, a major qualitative failing prevents the U.S. labor movement from becoming a fighting force against austerity. Indeed, organized labor in the U.S. is impaired by its entanglement in one of the political machines championing austerity in the first place: the Democratic Party.
Much has been said about the fury that erupted among Obama's liberal base since the White House pushed its "tax-cut compromise." The deal struck between Obama and Republicans adds on to the administration's ever-growing rap sheet of offenses that has infuriated progressives.
And somewhere between Obama's band of centrist apologists and his spurned liberal base lies the U.S. labor movement, a disjointed community of institutional organs for collective bargaining and the 15 million rank-and-file workers they represent. The labor movement may be fragmented in many ways, but the loyalty of labor leaders to the Democratic Party has for the last three decades remained a point of unity.
In 2008 labor spent an unprecedented amount of money – more than $400 million – to support the election of Obama and Democratic candidates to Congress. And even after a Congress controlled by labor's supposed allies dropped the Employee Free Choice Act – labor's top legislative priority that would have made it easier for workers to join unions – unions stuck by Obama and the Democrats.
The American Federation of State, County and Municipal Employees (AFSCME) alone spent $87.5 million to support Democrats in 2010. A few weeks after the 2010 midterm elections, the Obama administration showed its appreciation for labor's undying fidelity by announcing a two-year pay freeze for federal employees, one of the most unionized sectors of the workforce.
AFL-CIO President Richard Trumka condemned the wage freeze. But leaders like Trumka have been increasingly caught in the awkward position of defending Obama while condemning anti-worker policies pushed by his administration.
"No one is served by our government participating in a 'race to the bottom' in wages," Trumka said of the federal pay freeze. "The president talked about the need for shared sacrifice, but there's nothing shared about Wall Street and CEOs making record profits and bonuses while working people bear the brunt."
Politicians on the right would have us believe that it's not Wall Street that caused the economic mess vexing the nation. Rather it's public sector workers. Those workers and their unions are the new scapegoats for the country's economic woes. Incoming GOP Wisconsin Governor Scott Walker recently declared, "We can no longer live in a society where the public employees are the haves and the taxpayers who foot the bill are the have-nots."
In early December, AFSCME announced it was launching a media campaign called "Stop the Lies" to "expose right wing lies" against public sector workers.
But Democrats have also joined the efforts to demonize public workers.
The campaign of Democratic Governor-elect Andrew Cuomo of New York included calls for public sector unions to grant massive concessions in order to ease the state's budget gap. The incoming governor is rallying business lobbying groups to his side to launch a $10 million anti-union effort against worker in the public sector.
Meanwhile, Obama's deficit commission, with its crosshairs trained on Social Security and other "entitlements," has set the terms for congressional debate on reducing the nation's deficit through punishing austerity measures.
So, it's fair to ask how far to the right Obama and the Democratic Party will shift before the labor movement can no longer support them. How much longer can labor leaders continue to justify to their membership the massive sums of money spent to prop up Democrats, whose allegiance to corporate welfare surpasses whatever expressed interests they share with working-class people?
Looking forward to 2012, Chris Townsend, political action director of the rank-and-file-driven United Electrical Workers Union (UE), doesn't see the abusive relationship between Democrats and labor ending anytime soon.
"Labor leaders and the apparatus they control will go all-out and spend even more money than they did this year," he said. "They see no other way to proceed. They don't call it the two party 'trap' for nothing. Labor will not support third-party efforts, and they will not sit out the election, either. So, they will crank up the negative campaign and scare machinery to mobilize for the Democrats and against the even-worse Republicans."
What's more, unions are increasingly spending huge portions of their budgets on these political losing strategies and devoting fewer resources toward organizing and workplace activism, a trend that Townsend describes as a kind of "reverse syndicalism."
"It is obvious to me that growing numbers of unions are opting to demobilize and dismantle workplace structures, replaced by election-time activities to prop up Democrats," he explained.
As the White House cleared the final hurdles in Congress to secure the tax-cut deal, Trumka described the compromise thusly: "This is a huge relief for the more than 1.4 million long-term job seekers who already have lost their emergency unemployment benefits. But this deal comes at a terrible price: It rewards obstructionists with huge tax breaks for millionaires and billionaires."
If ever there was a time for the labor movement to assert bold political independence rather than a slavish deference to Democratic talking points, that time is now. But Trumka is careful not to be too critical of Obama, reserving the main thrust of his criticism for Republican obstructionists.
Any hope of the labor movement helping to forge a genuine progressive alternative independent of Republicans and Democrats is of course diminished by the continued division of the labor unions in two separate camps – the AFL-CIO and Change to Win federations. But that hope is even more hampered by the culture of union leadership that is so thoroughly intertwined with Democratic Party politics.
The latest tax-cut deal with Republicans is certainly another compromise by Obama and the Democrats which tack decidedly to the right, leaving progressives feeling profoundly betrayed and further harnessing the livelihoods of workers to the welfare of Wall Street.
But so long as the lesser-evil calculus of the two-party system remains the prevailing wisdom among liberals, Obama and the Democrats can always count on browbeating much of their progressive base, including labor, to come around again when it's time to hit the campaign trail.
Short of a mass grassroots movement on the left buttressed by a unified, independent labor movement, there is little reason for politicians like Obama to fear being held accountable by workers.
A serious challenge is needed to stop the agenda of austerity that both political parties are using to bludgeon workers and the poor. But fighting back against the bipartisan cutback consensus requires higher levels of bottom-up organization, as opposed to top-down institutionalization. And it requires an independent labor movement through which workers can chart their own political course.
If the conventional political wisdom among unions is that the Democrats are the only game in town, then we must ask when the labor movement will step out from the sidelines.
Friday, December 31, 2010
Another Year of Opacity and Ghostwriting for the Drug Industry
Interests in Conflict
By MARTHA ROSENBERG
At the annual American Psychiatric Association meeting in New Orleans this summer, 200 protestors chanted "no conflicts of interest" and held up photos of individual doctors outside the convention center. Inside the hall, their charges were verified.
The meeting's Daily Bulletin disclosed that the APA president himself, Alan Schatzberg, has 15 links to drug companies including stock ownership and serving on a speakers bureau.
Doctors on other speaker bureaus like Shire's Ann Childress and Wyeth's Claudio Soares gave presentations and workshops that -- surprise! -- extolled company drugs.
And signing books, side by side, was the duo now accused of penning an entire book for the drug industry: Alan Schatzberg and Charles Nemeroff.
This month ProPublica and the New York Times report that Schatzberg and Nemeroff's book, Recognition and Treatment of Psychiatric Disorders: A Pharmacology Handbook for Primary Care, may be the first entirely drug industry-approved textbook ever. Published in 1999, the book's preface says it was funded by an unrestricted education grant to Scientific Therapeutics Information through London-based GlaxoSmithKline (GSK). Scientific Therapeutics Information of Springfield, NJ is the same medical publishing company that spun Vioxx.
Schatzberg was investigated by the Senate in 2008 which found "a lack of consistency" between what he earned from drug companies and what he reported to Stanford where he continues to head the psychiatry department. He owns $6 million of stock in a company he co-founded, Corcept Therapeutics, which sought FDA approval for a psychiatric drug despite Schatzberg's APA position.
Nemeroff, for his part, left Emory University in disgrace after a 2008 Congressional investigation unearthed $1.2 million in drug industry income, his $9 million NIH grant was terminated (a rare occurrence) and he was banned from further NIH grants for two years. But he resurfaced as head of the psychiatry department at the University of Miami in 2009 after the medical school dean, Pascal Goldschmidt, was assured by crony Thomas Insel, director of the National Institute of Mental Health (NIMH), that Nemeroff could still draw NIH money, according to the Chronicle of Higher Education. It was payback for when Nemeroff got Insel a job, say observers. Nemeroff still sits on NIH scientific panels reviewing others' grant applications, ensuring further cronyism.
Ghostwriting, of course, solves the "Company-Says-Company's-Product-Is-Great" problem and increases the chance of a paper's publication in a journal. It helps "authors"' careers and may even spur their individual prescribing habits since studies show doctors prescribe more of a drug they are paid to promote.
But the consumer version, unbranded advertising, is also effective: radio and TV commercials posing as public service announcements that push "awareness" of diseases like ADHD, Irritable Bowel Syndrome (IBS), Restless Legs Syndrome (RLS) or Excessive Sleepiness (ES) and drive worriers to sites where they can self-diagnose with simple quizzes.
Meanwhile, the consumer version of bought doctors is "Astroturf" or patient front groups like the "grassroots" National Alliance on Mental Illness (NAMI), investigated by Congress for drug industry links. These bought patients flash mob the FDA with sob stories when an expensive drug is up for approval and lobby Medicaid to not substitute less expensive drugs, inflating entitlement program and insurance premium costs for industry's benefit.
In the war against drug industry duplicity, company employees are increasingly reporting misdeeds thanks to provisions that entitle whistleblowers to 15 and even 30 percent of fraud settlement sums, in some cases. And last month the Justice Department filed the first criminal, not civil, charges against a the drug industry operative, Lauren Stevens, a former VP and assistant general counsel at GlaxoSmithKline. But as long as politicians like former Louisiana Rep. Billy Tauzin, who headed the industry trade group PhRMA, and former CDC director Julie Gerberding, now head of Merck vaccines, are willing to parlay a career's worth of knowledge and relationships to sell product, the government is essentially fighting itself.
By MARTHA ROSENBERG
At the annual American Psychiatric Association meeting in New Orleans this summer, 200 protestors chanted "no conflicts of interest" and held up photos of individual doctors outside the convention center. Inside the hall, their charges were verified.
The meeting's Daily Bulletin disclosed that the APA president himself, Alan Schatzberg, has 15 links to drug companies including stock ownership and serving on a speakers bureau.
Doctors on other speaker bureaus like Shire's Ann Childress and Wyeth's Claudio Soares gave presentations and workshops that -- surprise! -- extolled company drugs.
And signing books, side by side, was the duo now accused of penning an entire book for the drug industry: Alan Schatzberg and Charles Nemeroff.
This month ProPublica and the New York Times report that Schatzberg and Nemeroff's book, Recognition and Treatment of Psychiatric Disorders: A Pharmacology Handbook for Primary Care, may be the first entirely drug industry-approved textbook ever. Published in 1999, the book's preface says it was funded by an unrestricted education grant to Scientific Therapeutics Information through London-based GlaxoSmithKline (GSK). Scientific Therapeutics Information of Springfield, NJ is the same medical publishing company that spun Vioxx.
Schatzberg was investigated by the Senate in 2008 which found "a lack of consistency" between what he earned from drug companies and what he reported to Stanford where he continues to head the psychiatry department. He owns $6 million of stock in a company he co-founded, Corcept Therapeutics, which sought FDA approval for a psychiatric drug despite Schatzberg's APA position.
Nemeroff, for his part, left Emory University in disgrace after a 2008 Congressional investigation unearthed $1.2 million in drug industry income, his $9 million NIH grant was terminated (a rare occurrence) and he was banned from further NIH grants for two years. But he resurfaced as head of the psychiatry department at the University of Miami in 2009 after the medical school dean, Pascal Goldschmidt, was assured by crony Thomas Insel, director of the National Institute of Mental Health (NIMH), that Nemeroff could still draw NIH money, according to the Chronicle of Higher Education. It was payback for when Nemeroff got Insel a job, say observers. Nemeroff still sits on NIH scientific panels reviewing others' grant applications, ensuring further cronyism.
Ghostwriting, of course, solves the "Company-Says-Company's-Product-Is-Great" problem and increases the chance of a paper's publication in a journal. It helps "authors"' careers and may even spur their individual prescribing habits since studies show doctors prescribe more of a drug they are paid to promote.
But the consumer version, unbranded advertising, is also effective: radio and TV commercials posing as public service announcements that push "awareness" of diseases like ADHD, Irritable Bowel Syndrome (IBS), Restless Legs Syndrome (RLS) or Excessive Sleepiness (ES) and drive worriers to sites where they can self-diagnose with simple quizzes.
Meanwhile, the consumer version of bought doctors is "Astroturf" or patient front groups like the "grassroots" National Alliance on Mental Illness (NAMI), investigated by Congress for drug industry links. These bought patients flash mob the FDA with sob stories when an expensive drug is up for approval and lobby Medicaid to not substitute less expensive drugs, inflating entitlement program and insurance premium costs for industry's benefit.
In the war against drug industry duplicity, company employees are increasingly reporting misdeeds thanks to provisions that entitle whistleblowers to 15 and even 30 percent of fraud settlement sums, in some cases. And last month the Justice Department filed the first criminal, not civil, charges against a the drug industry operative, Lauren Stevens, a former VP and assistant general counsel at GlaxoSmithKline. But as long as politicians like former Louisiana Rep. Billy Tauzin, who headed the industry trade group PhRMA, and former CDC director Julie Gerberding, now head of Merck vaccines, are willing to parlay a career's worth of knowledge and relationships to sell product, the government is essentially fighting itself.
Thursday, December 30, 2010
Capitalism in Crisis
Get Your Wheelbarrows Ready!
By MARY LYNN CRAMER
Creating jobs is not the raison d'être nor the primary goal of a Capitalist economy. Creating profits for the purpose of Capital accumulation and expansion is the sine qua non and essential function of Capitalism.
Often larger profits can be made by increasing the productivity of workers and upping overall output. When such efforts are not possible or do not result in an increased rate of profit, some Capitalists---especially those who own and control vital resources---can limit real production, thus creating shortages of that essential product. They then raise prices without increasing production and thereby increase the profits of their particular enterprise. (Or, in the case of the US and British oil companies, they can support the creation of a foreign organization like OPEC that will cooperate in restricting output in ways that would be illegal in the US or Great Britain.) This hurts the "bottom-line" or profits of those other industries dependent upon the restricted resource; and, therefore, is not a long-run solution for correcting crises in profitability for the Capitalist system as a whole.
If profits cannot be increased through new investment in updated labor-saving technology, then those Capitalists who can may increase the hours of their workers, as well as cut their wages and benefits in order to increase company profits.
If investment in more modern plant and equipment is not deemed profitable, then Capitalists will invest their profits in things other than expanding real material production. Besides satisfying their own appetite for increased consumption of luxury goods, they turn to speculation in all forms of financial "instruments" (paper) that result in profits for the "winners" and enormous government bailouts for the so-called losers who are "too big to fail." No expansion of the real economy---i.e., no increased production of material goods, nor additional jobs---results from these high stakes gambling activities.
In sum, a rate of profit sufficient to attract investment in expanded Capital accumulation is what is necessary for increased Capitalist production in the real economy... the real economy of material production that is also the foundation for all other forms of exploitation and speculation. Increased consumption by exploited wage labor is contrary to the needs of Capitalism during periods of "economic down turns," and particularly during the global economic crisis we are experiencing today. Increasing the labor force in order to produce more "consumer" goods is not on the agenda.
Yet, the myth persists. Bourgeois theorists will insist that consumer demand of the working population is what drives Capitalist production. It is clear that after many of these well intentioned spokespersons actually believe what they are saying. (Even though they may also insist, within the same sound bite, that economic growth and stability depends upon "consumers" saving more.) The simple lay person, the professionals concede sympathetically, finds it difficult to understand often complex and contradictory theories of economics. Well, let me share with you one admittedly simple little thought that I often toy with: If a feudal lord were to have told his serf, that the sole purpose of his exploitation was to enable his lord to provide the serf with the material goods necessary to maintain an acceptable level of poverty, the serf would have thought the lord insane. Likewise, if an African slave had been told by the American plantation owner that his enslavement and low standard of living was necessary so that the plantation could produce what the slave needed to survive, she would have thought her master crazy. But for some reason, wage labor exploited by Capitalists are suppose to believe that all the accumulation of vast resources, enormous factories, state-of-the art ports, refineries, etc., etc., owned by the Capitalists are necessary for, and simply serve the purpose of producing what working people need to survive and maintain an acceptable standard of living. It is all done for us, and it all comes back to us working people. If that sounds absurd to you, maybe the following will more clearly reflect your reality:
Yes, under the Capitalist system of distribution, "consumer goods" sufficient for the the employed labor force to survive (at an acceptable standard of living), is necessary. However, Capital expansion and production of real, material "producer goods"--- such as industrial machinery, factories, infrastructure, technology, planes, company limos, corporate cars, trucks, freight trains, ships, docks, commercial ports and transport of all kinds, along with the communications centers, security apparatus, administrative compounds, together with the pipelines, refineries, natural resources, raw materials and fuel to operate this enormous, global empire---make up the larger part of material production and privately-owned accumulated wealth in this nation and globally; and these tremendous means of production are neither consumed by nor owned by the workers who produce them. Under a system of Capitalist production, exploitation of a labor force that produces much more than it consumes is the essential source of real profits. It is production and expansion of the enormous, modern industrial Capitalist empire that is the aim of Capitalism (and all those who identify as successful competitive players in this deadly game), not increased consumption of goods and services for working people. The latter is the necessary "spin-off" so to speak, until those workers themselves are no longer deemed "necessary."
If Capital expansion and accumulation can be periodically accomplished profitably with a smaller workforce, then that is incentive enough for Capitalism to ignore or eliminate, directly or indirectly, the "useless eaters" and the "unproductive" members of society (that is, those who cannot contribute to the profitability of Capitalist production)---like the old, the mentally and physically disable, and others unemployable*
We have witnessed today (and throughout history) the standard methods of increasing productivity in pursuit of profits without increasing consumption or improving the standard of living of working people. Most economists now are in agreement that the average wage of the American worker has not increased in real value since 1970. During the same time period, American manufacturing jobs have gone abroad in search of better rates of profit, and major American industries like steel and auto manufacturing plants have been closed and abandoned. During times like these, the most common Capitalist remedies to falling rates of profit include
The stockpiled banking and manufacturing trillions are not going into increased production and more jobs. The Obama administration complains that the banks are not making loans, and big manufacturers--- rather than invest in expanded production and employment---are just sitting on top of billions in record profits. No, they are not! Guess what they are doing with it...again. (Hint: Can you sing "I'm forever blowing bubbles, pretty bubbles in the air.")
John Maynard Keynes, the sweetheart of the liberal left, made it crystal clear that the use of inflation is a much better economic tool for lowering workers real wages and consumption than direct wage cuts by employers. He explained that angry workers could be a threat to individual Capitalists, whereas employing workers in government-funded industries and projects that did not produce consumer goods would cause generalized inflation, but make it hard for workers to know whom to blame for the diminished value of their wages, their declining standard of living and lower consumption. Government transferring labor and material into war production, while rationing consumer goods for working people, was greatly facilitated in the 1930's by nationalist propaganda justifying the US entry into WWII and patriotic sacrifices.
What a magnificent booty was gained from America's participation in that fight for democracy and freedom overseas! And the Depression ended! The usual manner of correcting serious economic depressions is through wide-spread unemployment that lowers wages, causes bankruptcies of the less competitive companies, and facilitates the take over of devalued plant and equipment by larger corporations. This reorganization of Capitalist production on the basis of cheaper labor and cheaper materials all around, allows the surviving, enlarged and more "efficient" Capitalists to renew production at a rate of profit and Capitalist expansion of production and employment even greater than before the downward dive in the "business cycle." Prior to "the war effort," this usual process was underway but had not gotten the economy going again.
However, the riches plundered in times of war---the take over and reorganization of conquered nations' entire material wealth, equipment, cheap labor, factories, and infrastructure---are vastly more profitable than is the process of domestic bankruptcies and economic rebuilding at home. Keynes knew this. Roosevelt (whom Keynes complained did not understand anything he told him) did not have to be told this. As FDR said, the model he followed had already been proven effective in Communist Russia, Fascist Italy, and Nazi Germany under those "command economies."
What Keynes and Roosevelt could not have anticipated is the enormity of the current global depression . This time around, government-assisted attempts at redistribution of wealth, resources and cheaper labor does not appear to be adequate to the task of increasing U.S. Capitalists profitability sufficiently to encourage investment in the expansion of real material production domestically, and certainly not sufficient to attract private investment in overhauling existing, antiquated means of production. Waging wars this time has not provided a solution, although the economy is now dependent upon production and marketing of weapons, military equipment and related technology.
China and India with large numbers of starving displaced peasants and an abundance of slave labor may be able to increase profitability sufficiently to initiate the larger Capital goods production necessary to dominate the global economy, setting off yet another round of expanded global competition, depressions and war. A more likely scenario, given the authoritarian methods increasingly used throughout the world in an attempt to control all real and imagined forms of threat to those who had fancied themselves in control of global Capitalism, would be a world-wide economic collapse that could give birth to new forms of barbarism beyond what we have known in Fascist and Nazi attempts to overcome economic collapse. Get your wheel barrels ready.**
Our solution is not to give up on demanding an end to the wars, or more jobs with good wages and benefits, universal health care, the preservation of social security, continued funding of public schools, or respect for civil rights and human rights. But our solution must address the larger context within which all these individual issues and concerns exist. When we work to "Stop Global Warming," we need to recognize that business and industry, by their own accounting, use over 80% of the energy sources that are polluting the atmosphere. And the military is the biggest polluter of all. Capitalist industries and the military are fighting globally to protect the profitability of the system that benefits and empowers them. That system is suffering a global depression. The battle to sustain it leaves no room or resources for reorganizing Capitalist production to meet the needs of sound ecological production, let alone to provide for a better standard of living and increased consumption for working people. As mad as it sounds to the average normal person, increasing profits and maintaining positions of power are more meaningful to those who benefit from the militarized economy than is survival of the planet and the human race. Our solution will require a revolution in creative thinking about what are "economic problems," who can solve them, and how.
*Elderly, mentally and physically ill hospital patients were the first victims of Hitler's furnaces at Dachau. Children from the village laughed and shouted when they saw the bus loads of patients approaching: "You're going to the furnaces!" they taunted. When the parents of those same children complained to local officials of the Third Reich that the stench was too much, they were to told to shut up or they themselves would soon become fuel for the fires. This plan for exterminating the "unproductive consumers" was carried out sometime before the Communists, "Marxists," dissidents, and "Jews," became targeted victims of Third Reich concentration camps, gas chambers and incinerators.
**After WWI, Germans were reported to wander streets pushing wheel barrels filled with worthless Reich currency in attempt to purchase a loaf of bread.
Recommended Reading:
Economics, Politics, and the Age of Inflation, by Paul Mattick (1978)
Fascism and Big Business, by Daniel Guerin (1973)
The Coming of the Third Reich, by Richard J. Evans (2003)
Bound Upon a Wheel of Fire, by John V. H. Dippel (1996)
By MARY LYNN CRAMER
Creating jobs is not the raison d'être nor the primary goal of a Capitalist economy. Creating profits for the purpose of Capital accumulation and expansion is the sine qua non and essential function of Capitalism.
Often larger profits can be made by increasing the productivity of workers and upping overall output. When such efforts are not possible or do not result in an increased rate of profit, some Capitalists---especially those who own and control vital resources---can limit real production, thus creating shortages of that essential product. They then raise prices without increasing production and thereby increase the profits of their particular enterprise. (Or, in the case of the US and British oil companies, they can support the creation of a foreign organization like OPEC that will cooperate in restricting output in ways that would be illegal in the US or Great Britain.) This hurts the "bottom-line" or profits of those other industries dependent upon the restricted resource; and, therefore, is not a long-run solution for correcting crises in profitability for the Capitalist system as a whole.
If profits cannot be increased through new investment in updated labor-saving technology, then those Capitalists who can may increase the hours of their workers, as well as cut their wages and benefits in order to increase company profits.
If investment in more modern plant and equipment is not deemed profitable, then Capitalists will invest their profits in things other than expanding real material production. Besides satisfying their own appetite for increased consumption of luxury goods, they turn to speculation in all forms of financial "instruments" (paper) that result in profits for the "winners" and enormous government bailouts for the so-called losers who are "too big to fail." No expansion of the real economy---i.e., no increased production of material goods, nor additional jobs---results from these high stakes gambling activities.
In sum, a rate of profit sufficient to attract investment in expanded Capital accumulation is what is necessary for increased Capitalist production in the real economy... the real economy of material production that is also the foundation for all other forms of exploitation and speculation. Increased consumption by exploited wage labor is contrary to the needs of Capitalism during periods of "economic down turns," and particularly during the global economic crisis we are experiencing today. Increasing the labor force in order to produce more "consumer" goods is not on the agenda.
Yet, the myth persists. Bourgeois theorists will insist that consumer demand of the working population is what drives Capitalist production. It is clear that after many of these well intentioned spokespersons actually believe what they are saying. (Even though they may also insist, within the same sound bite, that economic growth and stability depends upon "consumers" saving more.) The simple lay person, the professionals concede sympathetically, finds it difficult to understand often complex and contradictory theories of economics. Well, let me share with you one admittedly simple little thought that I often toy with: If a feudal lord were to have told his serf, that the sole purpose of his exploitation was to enable his lord to provide the serf with the material goods necessary to maintain an acceptable level of poverty, the serf would have thought the lord insane. Likewise, if an African slave had been told by the American plantation owner that his enslavement and low standard of living was necessary so that the plantation could produce what the slave needed to survive, she would have thought her master crazy. But for some reason, wage labor exploited by Capitalists are suppose to believe that all the accumulation of vast resources, enormous factories, state-of-the art ports, refineries, etc., etc., owned by the Capitalists are necessary for, and simply serve the purpose of producing what working people need to survive and maintain an acceptable standard of living. It is all done for us, and it all comes back to us working people. If that sounds absurd to you, maybe the following will more clearly reflect your reality:
Yes, under the Capitalist system of distribution, "consumer goods" sufficient for the the employed labor force to survive (at an acceptable standard of living), is necessary. However, Capital expansion and production of real, material "producer goods"--- such as industrial machinery, factories, infrastructure, technology, planes, company limos, corporate cars, trucks, freight trains, ships, docks, commercial ports and transport of all kinds, along with the communications centers, security apparatus, administrative compounds, together with the pipelines, refineries, natural resources, raw materials and fuel to operate this enormous, global empire---make up the larger part of material production and privately-owned accumulated wealth in this nation and globally; and these tremendous means of production are neither consumed by nor owned by the workers who produce them. Under a system of Capitalist production, exploitation of a labor force that produces much more than it consumes is the essential source of real profits. It is production and expansion of the enormous, modern industrial Capitalist empire that is the aim of Capitalism (and all those who identify as successful competitive players in this deadly game), not increased consumption of goods and services for working people. The latter is the necessary "spin-off" so to speak, until those workers themselves are no longer deemed "necessary."
If Capital expansion and accumulation can be periodically accomplished profitably with a smaller workforce, then that is incentive enough for Capitalism to ignore or eliminate, directly or indirectly, the "useless eaters" and the "unproductive" members of society (that is, those who cannot contribute to the profitability of Capitalist production)---like the old, the mentally and physically disable, and others unemployable*
We have witnessed today (and throughout history) the standard methods of increasing productivity in pursuit of profits without increasing consumption or improving the standard of living of working people. Most economists now are in agreement that the average wage of the American worker has not increased in real value since 1970. During the same time period, American manufacturing jobs have gone abroad in search of better rates of profit, and major American industries like steel and auto manufacturing plants have been closed and abandoned. During times like these, the most common Capitalist remedies to falling rates of profit include
(1) demanding employees work longer hours for the same or less pay; (2) raising prices without increasing production so that the value of real wages fall, workers' are forced to consume less, and the portion of value produced that goes to the Capitalist in form of profits increases; (3) requiring increased involvement of the federal government in the process of redistributing value and resources away from the "consumer" and into the bank accounts of Capitalists.Social programs are cut, money is made available to Capitalists at 0% interest rates (while those on fixed incomes get just about 0% interest on their retirement and savings accounts ); and public services are discontinued or privatized as for-profit programs. Witness the $500 billion cut in government funding of Medicare Advantage HMO programs. These HMO programs---the most popular Medicare programs among low-income elderly---were determined to be the most efficient and least costly of all the Medicare programs according to the 2009 and 2010 Report to Congress on Medicare Spending. Nevertheless, private insurance CEO's agreed to Obama's huge cut in these programs, in exchange for a much more lucrative scheme forcing all "consumers" to purchase private, for-profit, health insurance plans. As mentioned above, transferring trillions of dollars to banks for lending, interest free, to large Capitalist corporations while allowing the foreclosure on home mortgages held by poor and middle class workers, is just one more example of how the government facilitates the cut in workers' consumption while increasing the Capitalists' piece of the pie--- all in the name of getting the economy going again. Nota Bene: It is not working this time.
The stockpiled banking and manufacturing trillions are not going into increased production and more jobs. The Obama administration complains that the banks are not making loans, and big manufacturers--- rather than invest in expanded production and employment---are just sitting on top of billions in record profits. No, they are not! Guess what they are doing with it...again. (Hint: Can you sing "I'm forever blowing bubbles, pretty bubbles in the air.")
John Maynard Keynes, the sweetheart of the liberal left, made it crystal clear that the use of inflation is a much better economic tool for lowering workers real wages and consumption than direct wage cuts by employers. He explained that angry workers could be a threat to individual Capitalists, whereas employing workers in government-funded industries and projects that did not produce consumer goods would cause generalized inflation, but make it hard for workers to know whom to blame for the diminished value of their wages, their declining standard of living and lower consumption. Government transferring labor and material into war production, while rationing consumer goods for working people, was greatly facilitated in the 1930's by nationalist propaganda justifying the US entry into WWII and patriotic sacrifices.
What a magnificent booty was gained from America's participation in that fight for democracy and freedom overseas! And the Depression ended! The usual manner of correcting serious economic depressions is through wide-spread unemployment that lowers wages, causes bankruptcies of the less competitive companies, and facilitates the take over of devalued plant and equipment by larger corporations. This reorganization of Capitalist production on the basis of cheaper labor and cheaper materials all around, allows the surviving, enlarged and more "efficient" Capitalists to renew production at a rate of profit and Capitalist expansion of production and employment even greater than before the downward dive in the "business cycle." Prior to "the war effort," this usual process was underway but had not gotten the economy going again.
However, the riches plundered in times of war---the take over and reorganization of conquered nations' entire material wealth, equipment, cheap labor, factories, and infrastructure---are vastly more profitable than is the process of domestic bankruptcies and economic rebuilding at home. Keynes knew this. Roosevelt (whom Keynes complained did not understand anything he told him) did not have to be told this. As FDR said, the model he followed had already been proven effective in Communist Russia, Fascist Italy, and Nazi Germany under those "command economies."
What Keynes and Roosevelt could not have anticipated is the enormity of the current global depression . This time around, government-assisted attempts at redistribution of wealth, resources and cheaper labor does not appear to be adequate to the task of increasing U.S. Capitalists profitability sufficiently to encourage investment in the expansion of real material production domestically, and certainly not sufficient to attract private investment in overhauling existing, antiquated means of production. Waging wars this time has not provided a solution, although the economy is now dependent upon production and marketing of weapons, military equipment and related technology.
China and India with large numbers of starving displaced peasants and an abundance of slave labor may be able to increase profitability sufficiently to initiate the larger Capital goods production necessary to dominate the global economy, setting off yet another round of expanded global competition, depressions and war. A more likely scenario, given the authoritarian methods increasingly used throughout the world in an attempt to control all real and imagined forms of threat to those who had fancied themselves in control of global Capitalism, would be a world-wide economic collapse that could give birth to new forms of barbarism beyond what we have known in Fascist and Nazi attempts to overcome economic collapse. Get your wheel barrels ready.**
Our solution is not to give up on demanding an end to the wars, or more jobs with good wages and benefits, universal health care, the preservation of social security, continued funding of public schools, or respect for civil rights and human rights. But our solution must address the larger context within which all these individual issues and concerns exist. When we work to "Stop Global Warming," we need to recognize that business and industry, by their own accounting, use over 80% of the energy sources that are polluting the atmosphere. And the military is the biggest polluter of all. Capitalist industries and the military are fighting globally to protect the profitability of the system that benefits and empowers them. That system is suffering a global depression. The battle to sustain it leaves no room or resources for reorganizing Capitalist production to meet the needs of sound ecological production, let alone to provide for a better standard of living and increased consumption for working people. As mad as it sounds to the average normal person, increasing profits and maintaining positions of power are more meaningful to those who benefit from the militarized economy than is survival of the planet and the human race. Our solution will require a revolution in creative thinking about what are "economic problems," who can solve them, and how.
*Elderly, mentally and physically ill hospital patients were the first victims of Hitler's furnaces at Dachau. Children from the village laughed and shouted when they saw the bus loads of patients approaching: "You're going to the furnaces!" they taunted. When the parents of those same children complained to local officials of the Third Reich that the stench was too much, they were to told to shut up or they themselves would soon become fuel for the fires. This plan for exterminating the "unproductive consumers" was carried out sometime before the Communists, "Marxists," dissidents, and "Jews," became targeted victims of Third Reich concentration camps, gas chambers and incinerators.
**After WWI, Germans were reported to wander streets pushing wheel barrels filled with worthless Reich currency in attempt to purchase a loaf of bread.
Recommended Reading:
Economics, Politics, and the Age of Inflation, by Paul Mattick (1978)
Fascism and Big Business, by Daniel Guerin (1973)
The Coming of the Third Reich, by Richard J. Evans (2003)
Bound Upon a Wheel of Fire, by John V. H. Dippel (1996)
'Serfing' USA
How Corporate America is Robbing Workers
By DAVE LINDORFF
Along with the staggering theft in broad daylight of Americans' assets that has occurred in the course of the ongoing financial crisis, as taxpayers funded multi-trillion bank bailouts and banks stole homes through foreclosures with the help of fraudulent paperwork, American companies have also been picking the pockets of workers more directly.
This second round of paycheck theft has come in the form of stolen productivity gains.
Historically, the relatively high and rising standard of living of American workers--both blue and white-collar--, which once gave the US one of the highest standards of living in the world, has come courtesy of rising productivity, which has allowed US companies to produce more goods with less labor, and to then pass some of the enhanced profits on to workers in the form of higher wages, without having to raise prices. That has been important because, when higher wages are financed by higher prices, it tends to be a kind of zero-sum game: higher wages cancelled out by inflation.
But beginning in 2000, the old system, already creaky, broke down.
The corporate onslaught against trade unions and against the minimum wage, which began with the Nixon administration in 1968, combined with so-called "free-trade" deals that allowed US companies to shift production overseas and then to freely import the products of their overseas production facilities back for sale to Americans at home, by weakening the power of workers to demand higher wages, has led to a situation where companies can just pocket all the profits from productivity gains, leaving wages stagnant, or even driving them down.
The recession that began in late 2007 has only made matters worse, giving owners and managers to opportunity to really hammer employees. With real unemployment and underemployment now running at close to 20%, employees are in no position to press for higher wages, even as those who are still working are putting in extra effort to keep their jobs, thus pushing productivity gains even higher.
The figures speak for themselves.
According to the Bureau of Labor Statistics, productivity gains during the 1990-1999 decade averaged just 2.1% per year. The prior decade, from 1980-1989, the average productivity gain was 1.5% per year. But between 2000 and 2009, when the economy suffered two recessions, the average annual productivity gain has been 2.9%, almost 50% higher than the prior decade, and almost double the rate in the 1980s.
During this same period, however, wages have actually declined. According to the BLS, wages in 2010 rose 0.1%, but inflation, running at an official (and grossly under-measured) 1%, more than ate that up. According to the Economic Policy Institute, a Washington think tank, for the whole decade from 2000 through 2009, wages actually sank for most people. In 2000, the median weekly wage for a high school graduate was $629. By the end of 2009, high school graduates were earning a median weekly wage, in inflation-adjusted dollars, of just $626--three dollars a week less than a decade earlier. A college degree didn't change things, either. In 2000, the median weekly wage for a college grad was $1030, but that had fallen to $1025 by the end of 2009.
Remember, all during that decade, companies were seeing productivity gains averaging almost 3% per year. If 50% of that gain in productivity annually had gone to workers, as might have been typical back 30 years ago when unions were stronger and before Congress gave away the store by signing onto the World Trade Organization and the North American Free Trade Act and similar trade agreements, that high school grad would have been earning $729 a week in inflation-adjusted dollars by 2009, while the college grad would have been earning $1,195.
Of course as a whole, Americans have been doing even worse, because these are just the mean wages of people who are working full weeks. In fact, many companies have been laying off workers, and making the remaining workers, desperate to hang on to their jobs, work harder to produce the same amount of product, meaning that besides not getting any pay increase, they are producing much more profit for the boss. Many workers who are still hanging onto their jobs are actually working fewer hours, and thus are taking home smaller paychecks, all of which goes into that higher productivity figure for output per worker the government is reporting.
Indeed, the Wall Street Journal today reported glowingly that US production of goods and services had returned to its 2007 pre-recession level, but this is with unemployment running at an official rate of 9.8 percent, and an actual rate of about 19 percent.
What we're witnessing is a massive national "speed-up" which is enriching the owners of capital, while the workers are getting stiffed. It is the payoff to the ruling class of decades of hammering of trade unions, and also of trade unions cutting deals with the Democratic Party, which in turn has refused to defend workers' interests. Look at the sell-out of Labor during the first two years of the Obama administration. The union movement's one big issue--restoring some measure of fairness to the Labor Relations Act, so that it would be at least possible to organize unions and to win contracts and improved wages and working conditions--was dropped without even a fight by the Obama administration and the leadership of the House and Senate. The government, fully in the hands of Democrats, has also continued to sign trade agreements, most recently with Korea, that further shift jobs overseas, thus further weakening the position of workers here at home.
A cynic might speculate that this is also why the Democrats have refused for over three years now to come up with any real public jobs program despite the desperate straits of tens of millions of jobless people who have been without work for more than a year. The Democrats, in thrall to corporate interests, would on the evidence much rather spend $50 billion on a program of extended unemployment benefits that leaves those millions of people hungry for any real job, than spend that same sum on providing them with government jobs, as that would actually reduce unemployment and increase the bargaining power of all workers vis-a-vis employers.
Meanwhile, the national corporate media, itself viciously anti-union, continue to skew news coverage to portray unions as corrupt and greedy, so that the 90 percent of American workers who are not in a union don't even realize that any pay gains or benefits they get are because employers are trying to avoid unionization of their workforce.
Unless Americans wake up soon to how this process is impoverishing us all, we will see this shifting income and wealth to the top strata of the population continue until most of us are little more than modern-day serfs.
A start would be for people to at least recognize that this stagnation and decline in incomes we're witnessing is not some natural phenomenon. It is, no less than the fat salaries, perks and bonuses paid by corporate managers to themselves, simply another manifestation of corporate greed gone wild.
By DAVE LINDORFF
Along with the staggering theft in broad daylight of Americans' assets that has occurred in the course of the ongoing financial crisis, as taxpayers funded multi-trillion bank bailouts and banks stole homes through foreclosures with the help of fraudulent paperwork, American companies have also been picking the pockets of workers more directly.
This second round of paycheck theft has come in the form of stolen productivity gains.
Historically, the relatively high and rising standard of living of American workers--both blue and white-collar--, which once gave the US one of the highest standards of living in the world, has come courtesy of rising productivity, which has allowed US companies to produce more goods with less labor, and to then pass some of the enhanced profits on to workers in the form of higher wages, without having to raise prices. That has been important because, when higher wages are financed by higher prices, it tends to be a kind of zero-sum game: higher wages cancelled out by inflation.
But beginning in 2000, the old system, already creaky, broke down.
The corporate onslaught against trade unions and against the minimum wage, which began with the Nixon administration in 1968, combined with so-called "free-trade" deals that allowed US companies to shift production overseas and then to freely import the products of their overseas production facilities back for sale to Americans at home, by weakening the power of workers to demand higher wages, has led to a situation where companies can just pocket all the profits from productivity gains, leaving wages stagnant, or even driving them down.
The recession that began in late 2007 has only made matters worse, giving owners and managers to opportunity to really hammer employees. With real unemployment and underemployment now running at close to 20%, employees are in no position to press for higher wages, even as those who are still working are putting in extra effort to keep their jobs, thus pushing productivity gains even higher.
The figures speak for themselves.
According to the Bureau of Labor Statistics, productivity gains during the 1990-1999 decade averaged just 2.1% per year. The prior decade, from 1980-1989, the average productivity gain was 1.5% per year. But between 2000 and 2009, when the economy suffered two recessions, the average annual productivity gain has been 2.9%, almost 50% higher than the prior decade, and almost double the rate in the 1980s.
During this same period, however, wages have actually declined. According to the BLS, wages in 2010 rose 0.1%, but inflation, running at an official (and grossly under-measured) 1%, more than ate that up. According to the Economic Policy Institute, a Washington think tank, for the whole decade from 2000 through 2009, wages actually sank for most people. In 2000, the median weekly wage for a high school graduate was $629. By the end of 2009, high school graduates were earning a median weekly wage, in inflation-adjusted dollars, of just $626--three dollars a week less than a decade earlier. A college degree didn't change things, either. In 2000, the median weekly wage for a college grad was $1030, but that had fallen to $1025 by the end of 2009.
Remember, all during that decade, companies were seeing productivity gains averaging almost 3% per year. If 50% of that gain in productivity annually had gone to workers, as might have been typical back 30 years ago when unions were stronger and before Congress gave away the store by signing onto the World Trade Organization and the North American Free Trade Act and similar trade agreements, that high school grad would have been earning $729 a week in inflation-adjusted dollars by 2009, while the college grad would have been earning $1,195.
Of course as a whole, Americans have been doing even worse, because these are just the mean wages of people who are working full weeks. In fact, many companies have been laying off workers, and making the remaining workers, desperate to hang on to their jobs, work harder to produce the same amount of product, meaning that besides not getting any pay increase, they are producing much more profit for the boss. Many workers who are still hanging onto their jobs are actually working fewer hours, and thus are taking home smaller paychecks, all of which goes into that higher productivity figure for output per worker the government is reporting.
Indeed, the Wall Street Journal today reported glowingly that US production of goods and services had returned to its 2007 pre-recession level, but this is with unemployment running at an official rate of 9.8 percent, and an actual rate of about 19 percent.
What we're witnessing is a massive national "speed-up" which is enriching the owners of capital, while the workers are getting stiffed. It is the payoff to the ruling class of decades of hammering of trade unions, and also of trade unions cutting deals with the Democratic Party, which in turn has refused to defend workers' interests. Look at the sell-out of Labor during the first two years of the Obama administration. The union movement's one big issue--restoring some measure of fairness to the Labor Relations Act, so that it would be at least possible to organize unions and to win contracts and improved wages and working conditions--was dropped without even a fight by the Obama administration and the leadership of the House and Senate. The government, fully in the hands of Democrats, has also continued to sign trade agreements, most recently with Korea, that further shift jobs overseas, thus further weakening the position of workers here at home.
A cynic might speculate that this is also why the Democrats have refused for over three years now to come up with any real public jobs program despite the desperate straits of tens of millions of jobless people who have been without work for more than a year. The Democrats, in thrall to corporate interests, would on the evidence much rather spend $50 billion on a program of extended unemployment benefits that leaves those millions of people hungry for any real job, than spend that same sum on providing them with government jobs, as that would actually reduce unemployment and increase the bargaining power of all workers vis-a-vis employers.
Meanwhile, the national corporate media, itself viciously anti-union, continue to skew news coverage to portray unions as corrupt and greedy, so that the 90 percent of American workers who are not in a union don't even realize that any pay gains or benefits they get are because employers are trying to avoid unionization of their workforce.
Unless Americans wake up soon to how this process is impoverishing us all, we will see this shifting income and wealth to the top strata of the population continue until most of us are little more than modern-day serfs.
A start would be for people to at least recognize that this stagnation and decline in incomes we're witnessing is not some natural phenomenon. It is, no less than the fat salaries, perks and bonuses paid by corporate managers to themselves, simply another manifestation of corporate greed gone wild.
Out Lickspittle Mainstream Corporate Press
Doorkeepers to the House of Lies
By PAUL CRAIG ROBERTS
Anyone who doesn’t believe that the US is an incipient fascist state needs only to consult the latest assault on civil liberty by Fox News (sic). Instead of informing citizens, Fox News informs on citizens. Jason Ditz reports on antiwar.com that Fox News “no longer content to simply shill for a growing police state,” turned in a grandmother to the Department of Homeland Security for making “anti-American comments.”
The media have segued into the police attitude, which regards insistence on civil liberties and references to the Constitution as signs of extremism, especially when the Constitution is invoked in defense of dissent or privacy or placarded on a bumper sticker. President George W. Bush set the scene when he declared: “you are with us or against us.”
Bush’s words demonstrate a frightening decline in our government’s respect for dissent since the presidency of John F. Kennedy. In a speech to the Newspaper Publishers Association in 1961, President Kennedy said:
In a statement unlikely to be repeated by an American president, Kennedy told the newspaper publishers:
If polls can be believed, Americans brainwashed and programmed by O’Reilly, Hannity, Beck, and Limbaugh want Bradley Manning and Julian Assange torn limb from limb for informing Americans of the criminal acts of their government. Politicians and journalists are screeching for their execution.
President Kennedy told the Newspaper Publishers Association that “it is to the printing press, the recorder of man’s deeds, the keeper of his conscience, the courier of his news, that we look for strength and assistance, confident that with your help man will be what he was born to be: Free and Independent.” Who can imagine a Bill Clinton, a George W. Bush, or a Barack Obama saying such a thing today?
Today the press is a propaganda ministry for the government. Any member who departs from his duty to lie and spin the news is expelled from the fraternity. A public increasingly unemployed, broke and homeless is told that they have vast enemies plotting to destroy them in the absence of annual trillion dollar expenditures for the military/security complex, wars lasting decades, no-fly lists, unlimited spying and collecting of dossiers on citizens supplemented by neighbors reporting on neighbors, full body scanners at airports, shopping centers, metro and train stations, traffic checks, and the equivalence of treason with the uttering of a truth.
Two years ago when he came into office President Obama admitted that no one knew what the military mission was in Afghanistan, including the president himself, but that he would find a mission and define it. On his recent trip to Afghanistan, Obama came up with the mission: to make the families of the troops safe in America, his version of Bush’s “we have to kill them over there before they kill us over here.”
No one snorted with derision or even mildly giggled. Neither the New York Times nor Fox News dared to wonder if perhaps, maybe, murdering and displacing large numbers of Muslims in Iraq, Afghanistan, Pakistan, and Yemen and US support for Israel’s similar treatment of Lebanese and Palestinians might be creating a hostile environment that could breed terrorists. If there still is such a thing as the Newspaper Publishers Association, its members are incapable of such an unpatriotic thought.
Today no one believes that our country’s success depends on an informed public and a free press. America’s success depends on its financial and military hegemony over the world. Any information inconsistent with the indispensable people’s god-given right to dominate the world must be suppressed and the messenger discredited and destroyed.
Now that the press has voluntarily shed its First Amendment rights, the government is working to redefine free speech as a privilege limited to the media, not a right of citizens. Thus, the insistence that WikiLeaks is not a media organization and Fox News turning in a citizen for exercising free speech. Washington’s assault on Assange and WikiLeaks is an assault on what remains of the US Constitution. When we cheer for WikiLeaks’ demise, we are cheering for our own.
By PAUL CRAIG ROBERTS
Anyone who doesn’t believe that the US is an incipient fascist state needs only to consult the latest assault on civil liberty by Fox News (sic). Instead of informing citizens, Fox News informs on citizens. Jason Ditz reports on antiwar.com that Fox News “no longer content to simply shill for a growing police state,” turned in a grandmother to the Department of Homeland Security for making “anti-American comments.”
The media have segued into the police attitude, which regards insistence on civil liberties and references to the Constitution as signs of extremism, especially when the Constitution is invoked in defense of dissent or privacy or placarded on a bumper sticker. President George W. Bush set the scene when he declared: “you are with us or against us.”
Bush’s words demonstrate a frightening decline in our government’s respect for dissent since the presidency of John F. Kennedy. In a speech to the Newspaper Publishers Association in 1961, President Kennedy said:
“No president should fear public scrutiny of his program, for from that scrutiny comes understanding, and from that understanding comes support or opposition; and both are necessary. . . . Without debate, without criticism, no administration and no country can succeed, and no republic can survive. That is why the Athenian law makers once decreed it a crime for any citizen to shrink from controversy. And that is why our press was protected by the First Amendment.”The press is not protected, Kennedy told the newspaper publishers, in order that it can amuse and entertain, emphasize the trivial, or simply tell the public what it wants to hear. The press is protected so that it can find and report facts and, thus, inform, arouse “and sometimes even anger public opinion.”
In a statement unlikely to be repeated by an American president, Kennedy told the newspaper publishers:
“I’m not asking your newspapers to support an administration, but I am asking your help in the tremendous task of informing and alerting the American people, for I have complete confidence in the response and dedication of our citizens whenever they are fully informed.”The America of Kennedy’s day and the America of today are two different worlds. In America today the media are expected to lie for the government in order to prevent the people from finding out what the government is up to.
If polls can be believed, Americans brainwashed and programmed by O’Reilly, Hannity, Beck, and Limbaugh want Bradley Manning and Julian Assange torn limb from limb for informing Americans of the criminal acts of their government. Politicians and journalists are screeching for their execution.
President Kennedy told the Newspaper Publishers Association that “it is to the printing press, the recorder of man’s deeds, the keeper of his conscience, the courier of his news, that we look for strength and assistance, confident that with your help man will be what he was born to be: Free and Independent.” Who can imagine a Bill Clinton, a George W. Bush, or a Barack Obama saying such a thing today?
Today the press is a propaganda ministry for the government. Any member who departs from his duty to lie and spin the news is expelled from the fraternity. A public increasingly unemployed, broke and homeless is told that they have vast enemies plotting to destroy them in the absence of annual trillion dollar expenditures for the military/security complex, wars lasting decades, no-fly lists, unlimited spying and collecting of dossiers on citizens supplemented by neighbors reporting on neighbors, full body scanners at airports, shopping centers, metro and train stations, traffic checks, and the equivalence of treason with the uttering of a truth.
Two years ago when he came into office President Obama admitted that no one knew what the military mission was in Afghanistan, including the president himself, but that he would find a mission and define it. On his recent trip to Afghanistan, Obama came up with the mission: to make the families of the troops safe in America, his version of Bush’s “we have to kill them over there before they kill us over here.”
No one snorted with derision or even mildly giggled. Neither the New York Times nor Fox News dared to wonder if perhaps, maybe, murdering and displacing large numbers of Muslims in Iraq, Afghanistan, Pakistan, and Yemen and US support for Israel’s similar treatment of Lebanese and Palestinians might be creating a hostile environment that could breed terrorists. If there still is such a thing as the Newspaper Publishers Association, its members are incapable of such an unpatriotic thought.
Today no one believes that our country’s success depends on an informed public and a free press. America’s success depends on its financial and military hegemony over the world. Any information inconsistent with the indispensable people’s god-given right to dominate the world must be suppressed and the messenger discredited and destroyed.
Now that the press has voluntarily shed its First Amendment rights, the government is working to redefine free speech as a privilege limited to the media, not a right of citizens. Thus, the insistence that WikiLeaks is not a media organization and Fox News turning in a citizen for exercising free speech. Washington’s assault on Assange and WikiLeaks is an assault on what remains of the US Constitution. When we cheer for WikiLeaks’ demise, we are cheering for our own.
The Pope's Bizarre Justification for Catholic Sex Abuse
(It's a good thing that pope mobile is bullet proof.--jef)
***
By Digby | Sourced from Hullabaloo
Posted at December 29, 2010
The Vatican has come up with some thin explanations for their molestation scandal, but this one by the pope himself last week is a real doozy:
Victims of clerical sex abuse have reacted furiously to Pope Benedict's claim yesterday that paedophilia wasn't considered an “absolute evil” as recently as the 1970s.Huh?
In his traditional Christmas address yesterday to cardinals and officials working in Rome, Pope Benedict XVI also claimed that child pornography was increasingly considered “normal” by society.
“In the 1970s, paedophilia was theorised as something fully in conformity with man and even with children,” the Pope said.
“It was maintained — even within the realm of Catholic theology — that there is no such thing as evil in itself or good in itself. There is only a ‘better than' and a ‘worse than'. Nothing is good or bad in itself.”
The Pope said abuse revelations in 2010 reached “an unimaginable dimension” which brought “humiliation” on the Church.
Asking how abuse exploded within the Church, the Pontiff called on senior clerics “to repair as much as possible the injustices that occurred” and to help victims heal through a better presentation of the Christian message.
“We cannot remain silent about the context of these times in which these events have come to light,” he said, citing the growth of child pornography “that seems in some way to be considered more and more normal by society” he said.
I'm fairly sure that pedophilia was considered an absolute evil in the 1970s. It was just covered up --- mostly because of institutions like the Church which made even the thought of sex so shameful that even innocent victims of abuse were afraid to admit it. But whatever "context" he's thinking of, in normal society sexual exploitation of children wasn't part of it except on
society's fringe
(just as it is today among certain fundamentalist sects)
I know the Pope is infallible and all, but you can only conclude from these comments that he still has not come to grips with what happened in his Church and neither has the institution.
There are many examples of our leadership and elite institutions and leadership failing, but I think this one is the best example. When even the Church that has made human sexuality a purely procreative necessity within sanctioned marriage is making excuses for pedophilia among its priests because of "the times" then it's fairly clear that any institution can be thoroughly corrupted to its very core. It tends to create just a little mistrust among the people.
In Money-Changers We Trust
by Robert Scheer - Wednesday, December 29, 2010 by TruthDig.com
Two years into the Obama presidency and the economic data is still looking grim. Don't be fooled by the gyrations of the stock market, where optimism is mostly a reflection of the ability of financial corporations-thanks to massive government largesse-to survive the mess they created. The basics are dismal: Unemployment is unacceptably high, the December consumer confidence index is down and housing prices have fallen for four months in a row. The number of Americans living in poverty has never been higher, and a majority in a Washington Post poll said they were worried about making their next mortgage or rent payment.
In a parallel universe lives Peter Orszag, President Barack Obama's former budget director and key adviser, who even faster than his mentor, Robert Rubin, has passed through that revolving platinum door linking the White House with Wall Street. The goal is to use your government position to advance the interests of your future employer, and Orszag and Rubin's actions in the government and then at Citigroup provide stunning examples of the synergy between big government and high finance.
As Bill Clinton's treasury secretary, Rubin presided over the dismantling of Glass-Steagall, the New Deal legislation that would have prohibited the creation of the too-big-to-fail Citigroup. He was rewarded with a $15-million-a-year job at Citigroup, where he became a leader in the bank's aggressive move into high-risk ventures. An SEC report in September claimed that Rubin as Citigroup chairman was aware that the bank failed to disclose $40 billion it held in subprime mortgages before the collapse.
During those years at Citigroup, Rubin financed the Brookings Institution's Hamilton Project, an economic policy program, and named Orszag, a Clinton economic adviser, as its director. The Hamilton Project continued to celebrate Rubin's deregulation philosophy up to the point of utter embarrassment. Clearly, Orszag is not easily embarrassed, for upon taking his new job recently he boasted "I am pleased to be joining Citi, with its unmatched global platform and dedication to providing clients with service and advice."
The most damning comment on this corrupt syndrome was offered by former Citigroup co-chief executive John Reed, who had worked with Rubin to get Glass-Steagall reversed and now is a sharp critic of the result. "We continue to listen to the same people whose errors in judgment were central to the problem," Reed told Bloomberg News. "I'm astounded because we basically dropped the world's biggest economy because of an error in bank management." Reed estimated that the financial deregulation proposals contained in the Dodd-Frank bill and other reforms of the Obama administration represent only 25 percent of the change needed.
The failure to provide serious regulation of the financial industry to avoid future downturns is documented in devastating detail in that Dec. 28 Bloomberg report, written by Christine Harper: "The U.S. government, promising to make the system safer, buckled under many of the financial industry's protests. Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives."
The reason for that failure is obvious from the president's choice of advisers featuring Rubin acolytes from the Clinton years. Harper writes: "While Obama vowed to change the system, he filled his economic team with people who helped create it," referring to, among others, Timothy F. Geithner, who had gone from the Clinton Treasury Department to head the New York Fed, where he presided over the salvaging of Citigroup and AIG. As Obama's treasury secretary he was quick to appoint a Goldman Sachs lobbyist as his chief of staff. Geithner's subservience to Wall Street was reinforced by White House top economic adviser Lawrence Summers, Rubin's deputy and then replacement in the Clinton administration who pushed through the repeal of Glass-Steagall and fought against the regulation of derivatives.
And with the decisive assistance from both a Republican and Democratic president, all has worked out just as planned for the banks. Harper reports: "The last two years have been the best ever for combined investment-banking and trading revenue at Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc., and Morgan Stanley, according to data compiled by Bloomberg."
It's all wonderfully bipartisan. Recently it was announced that Carlos Gutierrez, commerce secretary under George W. Bush, had been named to a high position at Citigroup. For President Obama, there's no cause for worry about the loss of indispensable talent from his administration. Orszag's replacement as head of the Office of Management and Budget, Jacob J. Lew, was both a member of Rubin's Hamilton Project and a former Citigroup executive-thus ensuring that government of the banks, by the banks, for the banks shall not perish from the Earth.
Two years into the Obama presidency and the economic data is still looking grim. Don't be fooled by the gyrations of the stock market, where optimism is mostly a reflection of the ability of financial corporations-thanks to massive government largesse-to survive the mess they created. The basics are dismal: Unemployment is unacceptably high, the December consumer confidence index is down and housing prices have fallen for four months in a row. The number of Americans living in poverty has never been higher, and a majority in a Washington Post poll said they were worried about making their next mortgage or rent payment.
In a parallel universe lives Peter Orszag, President Barack Obama's former budget director and key adviser, who even faster than his mentor, Robert Rubin, has passed through that revolving platinum door linking the White House with Wall Street. The goal is to use your government position to advance the interests of your future employer, and Orszag and Rubin's actions in the government and then at Citigroup provide stunning examples of the synergy between big government and high finance.
As Bill Clinton's treasury secretary, Rubin presided over the dismantling of Glass-Steagall, the New Deal legislation that would have prohibited the creation of the too-big-to-fail Citigroup. He was rewarded with a $15-million-a-year job at Citigroup, where he became a leader in the bank's aggressive move into high-risk ventures. An SEC report in September claimed that Rubin as Citigroup chairman was aware that the bank failed to disclose $40 billion it held in subprime mortgages before the collapse.
During those years at Citigroup, Rubin financed the Brookings Institution's Hamilton Project, an economic policy program, and named Orszag, a Clinton economic adviser, as its director. The Hamilton Project continued to celebrate Rubin's deregulation philosophy up to the point of utter embarrassment. Clearly, Orszag is not easily embarrassed, for upon taking his new job recently he boasted "I am pleased to be joining Citi, with its unmatched global platform and dedication to providing clients with service and advice."
The most damning comment on this corrupt syndrome was offered by former Citigroup co-chief executive John Reed, who had worked with Rubin to get Glass-Steagall reversed and now is a sharp critic of the result. "We continue to listen to the same people whose errors in judgment were central to the problem," Reed told Bloomberg News. "I'm astounded because we basically dropped the world's biggest economy because of an error in bank management." Reed estimated that the financial deregulation proposals contained in the Dodd-Frank bill and other reforms of the Obama administration represent only 25 percent of the change needed.
The failure to provide serious regulation of the financial industry to avoid future downturns is documented in devastating detail in that Dec. 28 Bloomberg report, written by Christine Harper: "The U.S. government, promising to make the system safer, buckled under many of the financial industry's protests. Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives."
The reason for that failure is obvious from the president's choice of advisers featuring Rubin acolytes from the Clinton years. Harper writes: "While Obama vowed to change the system, he filled his economic team with people who helped create it," referring to, among others, Timothy F. Geithner, who had gone from the Clinton Treasury Department to head the New York Fed, where he presided over the salvaging of Citigroup and AIG. As Obama's treasury secretary he was quick to appoint a Goldman Sachs lobbyist as his chief of staff. Geithner's subservience to Wall Street was reinforced by White House top economic adviser Lawrence Summers, Rubin's deputy and then replacement in the Clinton administration who pushed through the repeal of Glass-Steagall and fought against the regulation of derivatives.
And with the decisive assistance from both a Republican and Democratic president, all has worked out just as planned for the banks. Harper reports: "The last two years have been the best ever for combined investment-banking and trading revenue at Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc., and Morgan Stanley, according to data compiled by Bloomberg."
It's all wonderfully bipartisan. Recently it was announced that Carlos Gutierrez, commerce secretary under George W. Bush, had been named to a high position at Citigroup. For President Obama, there's no cause for worry about the loss of indispensable talent from his administration. Orszag's replacement as head of the Office of Management and Budget, Jacob J. Lew, was both a member of Rubin's Hamilton Project and a former Citigroup executive-thus ensuring that government of the banks, by the banks, for the banks shall not perish from the Earth.
Photoshopping the American Dream
by Linh Dinh
Wednesday, December 29, 2010 by CommonDreams.org
The spinmeisters are playing same record over and over, recovery, recovery, scratch, scratch, recovery’s in da house! The Associated Press trumpeted, “After two years of recession, Christmas 2010 will go down as the moment when Americans rediscovered how much they like to shop.” On December 28th, Yahoo Finance reassured us at 9AM, “The recovery is on track,” but an hour later, it featured a new headline, “Consumer Confidence Unexpectedly Falls in December.”
With its attendant social chaos, crime and despair, the country is sinking into an economic quicksand, yet Americans are injected daily with a massive dose of tranquilizing nonsense. Today’s top stories, “Elton John Becomes a Dad,” “Air Force Mascot Goes Missing at Game,” “10 Best Celebrity Hair Moments” and “Synchronized Walking Routine.”
The cheeky and cheery are occasionally contradicted by grimmer admissions, however. Even Voice of America, that Cold War relic and official mouthpiece of Washington, has this exchange:
Weird, such candor from the VOA. Maybe their CIA check bounced? In any case, let’s meet some denizens of Philadelphia’s the Gallery, my local shopping center. Mrs. Fischel runs a meat and cheese shop. Business has steadily declined over several years now. To make matters worse, management has raised her rent, to make up for the other merchants who have closed shops or who are behind in their payments. The third level of this mall is completely dead, and the second is barely hanging on. Just this week, Payless Shoes as well as G&G, Unica and Sunshine Blues, all clothing stores, have gone belly up.
Fischel’s son, a recent graduate of law school, has moved back home from Orange County. He has no job, only mushrooming debts from student loans and credit cards. He loved California and never expected to live in Philly again. It used to be that once you moved out, you stayed out. It was an American right of passage. By 2006, however, two thirds of American college graduates were already returning to their parents. Now, the number is up to 85%.
Meet Mr. Ali, who runs a modest kiosk offering cheap purses, belts and watches made in China. He used to sell Gucci and Coach labels—not the bags, just the labels—which were sewn onto knockoffs by the customers themselves. Many of our poorest are infatuated with brand names. With a CK, say, slapped onto their person, they feel instantly higher class.
An immigrant from Pakistan, Ali’s first job was at a Seven Eleven, before he saved enough to buy a gas station. With his current business, it was no big deal to sell $1,500 daily. Now, he’s lucky to gross $500. Whenever this mall’s open, Ali’s in there. All he does is work. Even if there were 12 inches of snow on the ground, Ali would be there at 9AM, waiting for his first customer.
When he had saving, Ali made the fatal mistake of investing in Fannie Mae and Citigroup, among other supposedly blue chip stocks. Like millions of others worldwide, he lost his shirt. A hundred-and-forty-six thousand dollars gone. Ali sold his home and his new truck, hired a lawyer to consolidate his credit card debts. He now drives an unheated lemon. “In a couple of years, I’ll buy another house for my wife and children,” he insists even as his earning nosedives. He’s lost money the last two Christmases.
Meet Mr. Giuliani, who used to make $28 an hour as a computer repairman. He supplemented his day job by freelancing, charging $85 and up for each home visit. Replaced by technicians from India, Giuliani became a transit police officer. The goal of globalism has always been to outsource jobs and import labor. To maximize profits, bosses must minimize costs. At $15 an hour, Giuliani now patrols the Gallery to make sure teenagers don’t go berserk after they get off the trains.
Some of these kids like to pick fights with each other, shopkeepers or even security guards. With no jobs and little money, their idea of fun is to raise hell, inside this shopping mall or wherever. In March, a 73-year-old man and a 41-year-old woman were hospitalized after beatings by a gang of kids around 12-years-old. Playing a game called “catch and wreck,” they chanted “Fight! Fight!” and called Belinda Moore a “bald-headed bitch” as they pummeled her, knocked her to the ground, snatched her bag and stomped on her hat. Moore told the Philadelphia Daily News, "I don't know if these kids hate society or hate life itself but I cannot believe they could do that to someone. Where is all that hatred coming from when you're only 11 or 12?" Also in Philadelphia, an 18-year-old killed a 68-year-old woman with a frying pan, stole her truck, then blogged on MySpace two days later, “Bored as fuck! Meh and Mira bout 2 go touch city hall! put sum more money in mah mouth!”
Back to Giuliani: he inherited his house, so Giuliani doesn't have to worry about a mortgage, but thanks to the housing bubble, his property tax has ballooned. For sentimental reasons, Giuliani doesn’t want to sell his childhood home, but he may have to. With ten rooms, the heating bill is enormous, and there won’t be too many buyers lining up.
The Gallery is a hub for commuter and subway trains. This design brings in more customers, sure, but the labyrinthine concourses also provide a haven for many homeless people. Dazed, they wander among shoppers, to be shooed away by guys like Giuliani. Dozing in wheelchairs, collapsing in corners or picking through trash cans, these resilient men and women seem oddly unaware that the recovery is in full swing, and that even dogs, according our cynical media, got expensive toys this holidays.
The collapse will not be televised. Ignored and alone, each of us will experience it singly. As blemish and accusation, you will be photoshopped from the American Dream group portrait. The lower you slip, the more invisible you will become. The disconnect between what's real and what's broadcast will become even more obscene by the day.
Wednesday, December 29, 2010 by CommonDreams.org
The spinmeisters are playing same record over and over, recovery, recovery, scratch, scratch, recovery’s in da house! The Associated Press trumpeted, “After two years of recession, Christmas 2010 will go down as the moment when Americans rediscovered how much they like to shop.” On December 28th, Yahoo Finance reassured us at 9AM, “The recovery is on track,” but an hour later, it featured a new headline, “Consumer Confidence Unexpectedly Falls in December.”
With its attendant social chaos, crime and despair, the country is sinking into an economic quicksand, yet Americans are injected daily with a massive dose of tranquilizing nonsense. Today’s top stories, “Elton John Becomes a Dad,” “Air Force Mascot Goes Missing at Game,” “10 Best Celebrity Hair Moments” and “Synchronized Walking Routine.”
The cheeky and cheery are occasionally contradicted by grimmer admissions, however. Even Voice of America, that Cold War relic and official mouthpiece of Washington, has this exchange:
[VOA]: "How does it feel from the beginning of the Christmas season from your point of view?
[Cashier]: "It's not that good. It's like so-so, you know."
[VOA]: "So business isn't so great right now."
[Cashier]: "No I don't think so. Because people don't have the money to buy, there are lots of people who don't have jobs."
[VOA]: "Is your job in danger?"
[Cashier]: "Yeah."
Weird, such candor from the VOA. Maybe their CIA check bounced? In any case, let’s meet some denizens of Philadelphia’s the Gallery, my local shopping center. Mrs. Fischel runs a meat and cheese shop. Business has steadily declined over several years now. To make matters worse, management has raised her rent, to make up for the other merchants who have closed shops or who are behind in their payments. The third level of this mall is completely dead, and the second is barely hanging on. Just this week, Payless Shoes as well as G&G, Unica and Sunshine Blues, all clothing stores, have gone belly up.
Fischel’s son, a recent graduate of law school, has moved back home from Orange County. He has no job, only mushrooming debts from student loans and credit cards. He loved California and never expected to live in Philly again. It used to be that once you moved out, you stayed out. It was an American right of passage. By 2006, however, two thirds of American college graduates were already returning to their parents. Now, the number is up to 85%.
Meet Mr. Ali, who runs a modest kiosk offering cheap purses, belts and watches made in China. He used to sell Gucci and Coach labels—not the bags, just the labels—which were sewn onto knockoffs by the customers themselves. Many of our poorest are infatuated with brand names. With a CK, say, slapped onto their person, they feel instantly higher class.
An immigrant from Pakistan, Ali’s first job was at a Seven Eleven, before he saved enough to buy a gas station. With his current business, it was no big deal to sell $1,500 daily. Now, he’s lucky to gross $500. Whenever this mall’s open, Ali’s in there. All he does is work. Even if there were 12 inches of snow on the ground, Ali would be there at 9AM, waiting for his first customer.
When he had saving, Ali made the fatal mistake of investing in Fannie Mae and Citigroup, among other supposedly blue chip stocks. Like millions of others worldwide, he lost his shirt. A hundred-and-forty-six thousand dollars gone. Ali sold his home and his new truck, hired a lawyer to consolidate his credit card debts. He now drives an unheated lemon. “In a couple of years, I’ll buy another house for my wife and children,” he insists even as his earning nosedives. He’s lost money the last two Christmases.
Meet Mr. Giuliani, who used to make $28 an hour as a computer repairman. He supplemented his day job by freelancing, charging $85 and up for each home visit. Replaced by technicians from India, Giuliani became a transit police officer. The goal of globalism has always been to outsource jobs and import labor. To maximize profits, bosses must minimize costs. At $15 an hour, Giuliani now patrols the Gallery to make sure teenagers don’t go berserk after they get off the trains.
Some of these kids like to pick fights with each other, shopkeepers or even security guards. With no jobs and little money, their idea of fun is to raise hell, inside this shopping mall or wherever. In March, a 73-year-old man and a 41-year-old woman were hospitalized after beatings by a gang of kids around 12-years-old. Playing a game called “catch and wreck,” they chanted “Fight! Fight!” and called Belinda Moore a “bald-headed bitch” as they pummeled her, knocked her to the ground, snatched her bag and stomped on her hat. Moore told the Philadelphia Daily News, "I don't know if these kids hate society or hate life itself but I cannot believe they could do that to someone. Where is all that hatred coming from when you're only 11 or 12?" Also in Philadelphia, an 18-year-old killed a 68-year-old woman with a frying pan, stole her truck, then blogged on MySpace two days later, “Bored as fuck! Meh and Mira bout 2 go touch city hall! put sum more money in mah mouth!”
Back to Giuliani: he inherited his house, so Giuliani doesn't have to worry about a mortgage, but thanks to the housing bubble, his property tax has ballooned. For sentimental reasons, Giuliani doesn’t want to sell his childhood home, but he may have to. With ten rooms, the heating bill is enormous, and there won’t be too many buyers lining up.
The Gallery is a hub for commuter and subway trains. This design brings in more customers, sure, but the labyrinthine concourses also provide a haven for many homeless people. Dazed, they wander among shoppers, to be shooed away by guys like Giuliani. Dozing in wheelchairs, collapsing in corners or picking through trash cans, these resilient men and women seem oddly unaware that the recovery is in full swing, and that even dogs, according our cynical media, got expensive toys this holidays.
The collapse will not be televised. Ignored and alone, each of us will experience it singly. As blemish and accusation, you will be photoshopped from the American Dream group portrait. The lower you slip, the more invisible you will become. The disconnect between what's real and what's broadcast will become even more obscene by the day.
Obama Likely to Pursue Corporate-Tax Cut
by David Wessel
Wednesday, December 29, 2010 by The Wall Street Journal
All signs point to President Barack Obama pursuing far-reaching changes to the corporate income tax, seeking to lower one of the highest statutory corporate-tax rates in the world by eliminating deductions, credits and loopholes.
If he proceeds, the administration will insist that any changes raise as much revenue as the existing, 35% corporate tax. That's to constrain those who want to lighten the business-tax burden and those who want to get more money from business. But the constraint means that for every company that saves a dollar, another will pay a dollar more.
The White House says no decisions have been made and that the president has yet to have a session with his economic team devoted to corporate taxes. But Treasury tax technicians are sifting through options, CEOs are buzzing and the president has voiced his druthers: "We would be very interested," he said in October, "in finding ways to lower the corporate-tax rate so that companies that are operating overseas can so do effectively and aren't put at a competitive disadvantage." In a recent NPR interview, Mr. Obama talked about "a conversation over the next year" aimed at "simplifying the system, hopefully lowering rates, broadening the base."
Any Obama pitch, perhaps in the State of the Union, will be that corporate-tax reform will make America "more competitive," induce more companies to invest here, reduce costly complexity and improve long-term growth prospects. Truth be told, this won't do a whole lot to boost growth, but this is one of the options that is free and doesn't widen the budget deficit. Congressional Republicans say they're at least interested in talking.
Unlike income and payroll taxes, the corporate tax has been shrinking. From 3.8% of gross domestic product, the value of goods and services produced in a year, in the 1960s, it was down to 2% of GDP before the recent recession. "The corporate tax is a shadow of its former self," Congressional Research Service economist Jane Gravelle has said. It's largely a big-company tax: Half of all business profits go to entities organized to be taxed as individuals, a way to pay less in taxes; 85% of corporate income taxes are paid by 0.5% of companies, fewer than 10,000 in all.
In the past 25 years, the corporate tax has grown barnacles, some crafted to encourage investment, others narrow provisions with little economic merit. With the capitulation of Japan and the U.K., the U.S. is the only major economy that tries to tax multinationals on world-wide income instead of profits made at home, an unsustainable perch. Although various deductions mean most companies pay far less than the 35% statutory rate, most estimates suggest that the actual U.S. federal-state corporate-tax rate in ordinary times (when the government isn't offering the temporary investment tax breaks it is now) is higher than in many, not all, other big countries. Several others, most recently Japan and Canada, are moving to cut corporate rates, which could put the U.S. at a disadvantage at a time when capital moves across borders with increasing ease.
Before the financial crisis, the Bush Treasury was eyeing the corporate tax, arguing that it distorted decisions, fostered inefficiency and cost business $40 billion a year in compliance. Mr. Obama's Presidential Economic Recovery Advisory Board (Perab) picked up the baton, saying in August that the current corporate tax has "deleterious economic consequences," encourages borrowing and induces investment "for tax reasons rather than for reasons of economic efficiency."
In short, the corporate income tax has few defenders. But changing it without losing revenue is challenging. Each percentage-point cut in the existing corporate tax reduces revenues by about $120 billion over 10 years. Closing a few loopholes won't do enough to reduce the rate significantly: Taxing credit unions as corporations yields $19 billion over 10 years, for instance; taxing Blue Cross/Blue Shield yields $8 billion.
To make this worth doing, the rate probably needs to fall toward 25%. That means big changes. Take the 2004 tax break for "domestic production," described as a way to boost manufacturing but so broadly defined that it covers hamburger making. If it were eliminated, the corporate tax rate for all companies-from Wall Street to the Rust Belt-could be reduced by 1.4 percentage points. But to the one third of companies that get the tax break, it shaves the rate by 3.5 percentage points. So their taxes would go up unless some other popular deductions are eliminated, such as accelerated depreciation (which allows companies to write off investments for tax purposes more quickly than for accounting purposes).
Basically, there's a trade-off: Fewer tax breaks for companies to do what Congress has been convinced (either by economists or lobbyists) they should do, versus a lower tax rate. Deeper rate cuts may mean bigger changes, perhaps limits on the interest on debt that companies can deduct or forcing big businesses now outside the corporate tax to pay it.
Deficit hawks will say any savings should reduce debt, not tax rates. Some executives will say just cut the rate, forget the base-broadening. Some liberals will object to shielding business from paying more. And every loser will lobby hard. Ultimately, Mr. Obama likely will try to make this a problem for big business: You want lower rates, he'll say, find us a way to pay for it.
Wednesday, December 29, 2010 by The Wall Street Journal
All signs point to President Barack Obama pursuing far-reaching changes to the corporate income tax, seeking to lower one of the highest statutory corporate-tax rates in the world by eliminating deductions, credits and loopholes.
If he proceeds, the administration will insist that any changes raise as much revenue as the existing, 35% corporate tax. That's to constrain those who want to lighten the business-tax burden and those who want to get more money from business. But the constraint means that for every company that saves a dollar, another will pay a dollar more.
The White House says no decisions have been made and that the president has yet to have a session with his economic team devoted to corporate taxes. But Treasury tax technicians are sifting through options, CEOs are buzzing and the president has voiced his druthers: "We would be very interested," he said in October, "in finding ways to lower the corporate-tax rate so that companies that are operating overseas can so do effectively and aren't put at a competitive disadvantage." In a recent NPR interview, Mr. Obama talked about "a conversation over the next year" aimed at "simplifying the system, hopefully lowering rates, broadening the base."
Any Obama pitch, perhaps in the State of the Union, will be that corporate-tax reform will make America "more competitive," induce more companies to invest here, reduce costly complexity and improve long-term growth prospects. Truth be told, this won't do a whole lot to boost growth, but this is one of the options that is free and doesn't widen the budget deficit. Congressional Republicans say they're at least interested in talking.
Unlike income and payroll taxes, the corporate tax has been shrinking. From 3.8% of gross domestic product, the value of goods and services produced in a year, in the 1960s, it was down to 2% of GDP before the recent recession. "The corporate tax is a shadow of its former self," Congressional Research Service economist Jane Gravelle has said. It's largely a big-company tax: Half of all business profits go to entities organized to be taxed as individuals, a way to pay less in taxes; 85% of corporate income taxes are paid by 0.5% of companies, fewer than 10,000 in all.
In the past 25 years, the corporate tax has grown barnacles, some crafted to encourage investment, others narrow provisions with little economic merit. With the capitulation of Japan and the U.K., the U.S. is the only major economy that tries to tax multinationals on world-wide income instead of profits made at home, an unsustainable perch. Although various deductions mean most companies pay far less than the 35% statutory rate, most estimates suggest that the actual U.S. federal-state corporate-tax rate in ordinary times (when the government isn't offering the temporary investment tax breaks it is now) is higher than in many, not all, other big countries. Several others, most recently Japan and Canada, are moving to cut corporate rates, which could put the U.S. at a disadvantage at a time when capital moves across borders with increasing ease.
Before the financial crisis, the Bush Treasury was eyeing the corporate tax, arguing that it distorted decisions, fostered inefficiency and cost business $40 billion a year in compliance. Mr. Obama's Presidential Economic Recovery Advisory Board (Perab) picked up the baton, saying in August that the current corporate tax has "deleterious economic consequences," encourages borrowing and induces investment "for tax reasons rather than for reasons of economic efficiency."
In short, the corporate income tax has few defenders. But changing it without losing revenue is challenging. Each percentage-point cut in the existing corporate tax reduces revenues by about $120 billion over 10 years. Closing a few loopholes won't do enough to reduce the rate significantly: Taxing credit unions as corporations yields $19 billion over 10 years, for instance; taxing Blue Cross/Blue Shield yields $8 billion.
To make this worth doing, the rate probably needs to fall toward 25%. That means big changes. Take the 2004 tax break for "domestic production," described as a way to boost manufacturing but so broadly defined that it covers hamburger making. If it were eliminated, the corporate tax rate for all companies-from Wall Street to the Rust Belt-could be reduced by 1.4 percentage points. But to the one third of companies that get the tax break, it shaves the rate by 3.5 percentage points. So their taxes would go up unless some other popular deductions are eliminated, such as accelerated depreciation (which allows companies to write off investments for tax purposes more quickly than for accounting purposes).
Basically, there's a trade-off: Fewer tax breaks for companies to do what Congress has been convinced (either by economists or lobbyists) they should do, versus a lower tax rate. Deeper rate cuts may mean bigger changes, perhaps limits on the interest on debt that companies can deduct or forcing big businesses now outside the corporate tax to pay it.
Deficit hawks will say any savings should reduce debt, not tax rates. Some executives will say just cut the rate, forget the base-broadening. Some liberals will object to shielding business from paying more. And every loser will lobby hard. Ultimately, Mr. Obama likely will try to make this a problem for big business: You want lower rates, he'll say, find us a way to pay for it.
Wall Street's Biggest Lies of 2010
What a great year for Wall Street: profits up, bonuses up and, best of all, criticism down. Somehow Wall Street has much of America believing its lies and rationalizations.
By Les Leopold, AlterNet
Posted on December 29, 2010
What a great year for Wall Street: profits up, bonuses up and, best of all, criticism down, especially from Washington. Somehow Wall Street has much of America believing its lies and rationalizations. We're even beginning to forget that Wall Street is largely responsible for the economic mess we're in.
So before we're completely overtaken by financial Alzheimer's, let's revisit Wall Street's greatest fabrications for 2010. (For the full story, please see The Looting of America.)
By Les Leopold, AlterNet
Posted on December 29, 2010
What a great year for Wall Street: profits up, bonuses up and, best of all, criticism down, especially from Washington. Somehow Wall Street has much of America believing its lies and rationalizations. We're even beginning to forget that Wall Street is largely responsible for the economic mess we're in.
So before we're completely overtaken by financial Alzheimer's, let's revisit Wall Street's greatest fabrications for 2010. (For the full story, please see The Looting of America.)
1."Honest, we didn't do it!"
Two years ago Wall Street's colossal greed crashed our economy. Our financial elites created and spewed highly leveraged toxic assets around the globe. These poisonous "innovations" pumped up the housing bubble and Wall Street grew insanely rich in the process. When it all burst, we learned that the big Wall Street institutions that had caused the crash were far too big to fail -- and too connected. High government officials came to their rescue with trillions in cash and guarantees -- underwritten, of course, by we taxpayers. Everyone knew this at the time. But if you asked just about anyone on "The Street" they denied all culpability and pointed the finger everywhere else: Fannie, Freddie, the Fed, the Community Reinvestment Act, tax deductions for home buying, bad regulations, not enough regulations, too many regulations, too much consumer debt, the rating agencies, the Chinese -- and on and on. Sadly, their blame-shifting strategy worked, bamboozling the media and people across the political spectrum. The GOP members of the Financial Crisis Commission are so drunk with this Kool-Aid that in their minority report, they refuse even to use the words "Wall Street" or "speculation" in assessing the causes of the crash. Hypocrites? Crooks? Morons? Take your pick.
2."The overall costs will be incredibly small in comparison to almost any experience we can look at in the United States or around the world."
Ever since Treasury Secretary Timothy Geithner screwed up his tax returns we knew he was numerically challenged. But his statement to Congress on December 16, 2010, on the cost of the bailout shows a willful inability to count. Yes, Wall Street has paid back most of our bailout funds. Whoopee! Our economy is in shambles, and millions of people are suffering. With his offensive "no big deal" analysis, Geithner glosses over all this human misery, and sidesteps the hidden costs of the bailout, including the financial insurance we taxpayers provided to every giant financial company in the country via the Fed. On the open market, that insurance -- which guarantees trillions of dollars in toxic assets -- would come at a very steep price. We coughed it up for free. But that's still chump change compared to the human costs of the worst employment crisis since the Great Depression -- the lost income, the depleted savings, the ravaged neighborhoods. Then there's the capsized state and local budgets, the public service reductions, the laid off teachers, firefighters and police officers -- all resulting from a plunge in public revenues caused by Wall Street's crash. Why aren't these costs on Geithner's balance sheet? A cynic might think Tim was priming us to accept the latest round of Wall Street bonuses. Hey -- they paid us back, so why should we care how much they earn?
3. "It's a war. It's like when Hitler invaded Poland in 1939."
Steven Schwarzman is supposed to be brilliant. After all, he made billions as head of the Blackstone Group, a private equity company and hedge fund. But last August, as some members of Congress mulled about eliminating a very lucrative tax loophole, he suffered a mental meltdown and saw an impending Nazi invasion. But the awful attack never happened. Schwartzman and his fellow hedge fund honchos all held onto their unbelievable tax break: Hedge fund and private equity income is still only taxed at 15 percent rather than at the top income tax rate of 35 percent. (That's because, inexplicably, it's considered "capital gains," not income.) Taxing Schwartzman's income as income would cost him hundreds of millions of dollars -- and the prospect of this apparently triggered a shock spasm that catapulted his foot into his mouth. I'm sure my IQ isn't high enough to keep up with the genius logic behind Steve's analogy. But just who is Hitler and who is Poland in his scenario? Maybe in his grandiose conceit, his firm is as big as Poland? Or it would require a Blitzkrieg to wipe out his tax loophole? In reality, even if Schwarzman had to pay a 90 percent tax rate (as he would have under Eisenhower), it would hardly have been a hardship -- let alone World War 3. He'd still have more money than he could ever spend in his lifetime. Schwarzman should be proud though: He gets 2010's Dumbest Wall Street Quote of the Year Award. Bravo! (In 2009 the honor went to Lloyd Blankfein, CEO of Goldman Sachs, who claimed he was "doing God's work."
4. "The hard truth is that getting this deficit under control is going to require some broad sacrifice, and that sacrifice must be shared by employees of the federal government."
But not by Wall Street. President Obama words of November 29th came only days before he "compromised" with the Republicans to continue the Bush tax cuts for the super-rich and to bestow an enormous estate tax gift to the 6,600 richest families in America. Mr. President, the "hard truth" is that you're slapping around public sector workers because you don't have the nerve to take on Wall Street. If you had the guts, you could raise real money by going to war with Steven Schwartzman and eliminating the hedge fund tax loophole. By the way, closing that loophole for just the top 25 hedge fund managers would raise twice the revenue than you'll get by freezing the wages of all two million federal workers! (See "The Wall Street Tax Debate that Never Was" )
5. "25 hedge fund managers are worth 658,000 teachers."
Nearly everyone on Wall Street sincerely believes that they are "worth" the enormous sums they "earn." You see, their pay is determined by the market, and markets don't lie. They reflect the high value our skilled elites bring to the economy. So we shouldn't be shocked that the top 25 hedge fund managers together "earn" $25 billion a year, even at a moment when more than 29 million Americans can't find full-time work. The outrageous economic logic of Wall Street compensation has those 25 moguls taking home as much as 658,000 entry level teachers (they earn about $38,000 per year). How can that be justified? It can't. These obscene "earnings" are the product of 30 years of financial deregulation, as well as the tax cuts and tax loopholes that our government has just extended. The hedge fund honchos get most of their money by siphoning off wealth from the rest of us, not by creating new value. I dare Wall Street to prove otherwise.
6. "To bolster the economy we need .... an improvement in the relationship between business and government (the current antagonism, even if not the primary explanation for slow hiring and sluggish investment, does seem to be affecting hiring and other business behavior)."
In this op-ed, Peter Orszag, Obama's former budget director, parrots the Wall Street line that employers aren't hiring because of "regulatory uncertainty." Mother of God, how much more certainty do they want? The Republicans and Blue Dog Democrats aren't about to let Obama seriously regulate Wall Street, even if he wanted to, which he doesn't. The truth is that employers aren't hiring because there's insufficient consumer demand for goods and services. But at least Peter Orszag is a man of his word. He personally plans to "improve the relationship between business and government" by tapping his government contacts at his new fat job at Citigroup, the nearly failed mega-bank that he helped to save at taxpayer expense. Orszag could have landed a coveted professorship at just about any university in the world. But apparently the 42-year-old wiz kid prefers Citigroup's multi-million dollar compensation package. Any bets on how long it takes for Larry Summers to cash in?
7. "Lengthened availability of jobless benefits has raised the unemployment rate by 1.5 percentage points."
You see, the unemployed cause their own unemployment, at least if you believe this assessment from a March 17th research note from JP Morgan Chase. (Next, Wall Street will call for a return of the Poor Houses.) The theory is simple -- you give people money not to work and they won't look for jobs. Still, it takes chutzpah for JP Morgan Chase, the beneficiary of billions of dollars in taxpayer largess, to criticize the unemployed for not finding jobs that aren't there, precisely because JP Morgan Chase helped to destroy them! Dear JP Morgan research staff: Five to six workers are now competing for every available job. If that's too complicated for you quants to grasp, maybe you should try a game of musical chairs in the trading room.
8. "Private employers, led by our revitalized financial sector, will create the jobs we need -- that is, if the government would just stay out of the way."
We now need 22 million new jobs to get us back to full employment (5 percent unemployment). In addition, each month the economy must generate another 105,000 jobs just to keep up with new entrants into the workforce. To get to full employment, the private sector would have to create about 630 firms the size of Apple (35,000 employees each). These numbers don't lie. Does anyone on Wall Street really believe that the private sector alone can pull off this miracle? But really, why should they care? They've got theirs, thank you very much. The painful truth that both Wall Street and Washington refuse to face is that if the big, bad government doesn't fund or create millions of new jobs, we'll face crippling unemployment for decades to come.
9. "Tim Geithner extolled 'the benefits of financial innovation' to the American economy." (Wall Street Journal, August 4, 2010)
Sorry to beat up on Tim again, but it's sometimes hard to tell who he's working for. Whenever you hear the phrase "financial innovation" put your hand on your wallet. That's the phrase Wall Street uses to justify its casinos and its outlandish profits and bonuses. People who talk about "financial innovation" are either getting big bucks on Wall Street, want more bucks on Wall Street, or hope to get a job on Wall Street the nano-second their public service ends. My question for Tim is: If Apple creates iPhones, what does Wall Street create? Warren Buffett says it creates "financial weapons of mass destruction." Paul Volcker, Reagan's Fed Chair, said there is not a "shred of evidence" that "financial innovation" is beneficial. Volcker also believes that the economy "was quite good in the 1980s without credit-default swaps and without securitization and without CDOs." Volcker gets the Smartest Wall Street Quote of the Year Award: "The most important financial innovation I've seen in the last 25 years is the automatic teller machine." How could Tim get it so wrong?
10. "I'm shocked, shocked to find that gambling is going on in here." Okay, okay, Claude Raines said that in Casablanca, not on Wall Street. But Wall Street and its defenders say exactly the same thing about their opaque derivatives games. Louise Story's excellent piece in The New York Times shows how a handful of banks have cornered the market clearinghouses for derivatives - entities that are supposed to make derivatives less risky. The big banks are limiting competition, according to Story, because they "want to preserve their profit margins, and they are the ones who helped write the membership rules." Meanwhile, Wall Street is quietly pushing to exempt its most profitable derivatives from even these rigged exchanges. So don't be "shocked, shocked" when Wall Street crashes again and we're asked to foot the bill. And that's when, not if.
A Year of Fall and Decline
What Does It Say About Us?
By DAVID SWANSON
The fall and decline of an empire can take many years, but certain "benchmarks" (as imperial courts have been known to call them) can measure the progress in one year alone. Take, for example, the year 2010.
This year opened with the United States Supreme Court claiming further power to rewrite the U.S. Constitution, specifically by further opening up elections to the highest bidder. The year closed with congressional elections that cost more than before and in which money spent by third parties to influence the elections was more decisive than before. Election advertisements, in the view of myself and many others, also became uglier, baser, and more hateful than before, while the positions advertised moved a big step rightward. These were all trends that could be measured in previous years as well, and which we will probably see advance further in years to come, barring a change of course.
The year 2010 opened with the closing of Air America Radio, a semi-leftist radio network that was badly managed. The year also saw right-wing radio networks cancel top programs in various cities because those programs leaned left. Meanwhile, rightwing media took further steps into astroturfed activism, promoting and then reporting on rallies. And the year ended with the corporate media selling the public on the need to criminalize actual journalism that exposed what the U.S. government was doing. These were all trends that could be measured in each previous year, and as likely as not in the years to come.
As in past years, 2010 saw the largest U.S. military budget yet recorded, whether one counts only the Pentagon or the Pentagon and the off-the-books wars or the Pentagon, the wars, and all the military spending through other departments. As in past years, in 2010, military spending became a larger percentage of government spending, more of the military was privatized, more U.S. military bases were opened in more nations, more missile offense equipment was positioned, more wars were fought in secret, more drone strikes killed more people, more wars were underway -- including an unacknowledged (much less congressionally declared) ground war in Pakistan; and by all measures of violence, death, expense, and public opinion the wars in Afghanistan, Pakistan, and Iraq were headed in a bloodier and more counterproductive direction. As in each year of the global war on terrorism, terrorism increased globally.
In 2010, as in each previous year, presidential power expanded, while the power of the legislature and the power of the people contracted. The president claimed greater powers of secrecy, immunity, and legislative and judicial ability. Lawless imprisonment is being "legalized" and habeas corpus lost to time. The president has claimed the power to assassinate Americans as well as to imprison them for life without charge. Crimes of aggressive war, torture, and warrantless spying, among others, have been granted immunity, and known criminals rewarded with huge sales for published remorseless confessions. Congress continued its collapse, its addiction to filibuster fever, its domination by partisanship, and the degradation of the powers of impeachment, subpoena, and oversight.
In 2010, our nation owed more money to others than it did before, more Americans had no jobs than before, more Americans had been foreclosed on, more poverty shortened more lives, more people lived without homes, and Wall Street saw more profits with more of its money than before coming from the public treasury. Inequality continued to rise, and the very richest Americans got richer. The United States fell in international rankings in areas including inequality, education, life expectancy, and the rule of law.
In 2010, the idea of addressing global warming before it destroys the planet -- which had actually been a topic of conversation in 2009 -- pretty much disappeared. Our government resigned itself to facilitating the death and suffering of billions of people not yet born, and most of us flipped the channel to something sexier.
And then there was light, or at least wikileaks, which in 2010 exposed U.S. efforts in 2009 to sabotage international negotiations on global warming, not to mention exposing US embassies as servants of its military and CIA full of contempt for the world and serving primarily as salesrooms for U.S. weapons against which the United States might be able to arrange to fight some future wars. Wikileaks has just begun, and has exposed wars, war crimes, torture, support for military coups, diplomacy as muscle for corporations, Saudi terrorism funding, Saudi pressure for an illegal attack on Iran, lies about Iranian missiles, and U.S. pressure to block investigations or prosecutions of its crimes in Spain, Italy, Germany, and England. The rest of the world is coming to terms with the cynical militarization of U.S. diplomacy, and so might Americans themselves if they find out about it.
And they might. Good media outlets are growing and being born as well as dying. No new war on Iran or Korea has been launched yet, and I think we could stop it if it were publicly debated. Cutting the military budget, including foreign bases and NATO, is very much on the table. The START treaty is a start in a better direction. The filibuster rule's future is not certain, and a vote may be taken in the Senate to end or modify it in the next week. (Our demand must be to end it!) The veal pen has some broken fences, as groups loyal to both justice and the Democratic Party are having to choose one or the other. And sometimes it has been known to be true that what does not kill us makes us stronger.
By DAVID SWANSON
The fall and decline of an empire can take many years, but certain "benchmarks" (as imperial courts have been known to call them) can measure the progress in one year alone. Take, for example, the year 2010.
This year opened with the United States Supreme Court claiming further power to rewrite the U.S. Constitution, specifically by further opening up elections to the highest bidder. The year closed with congressional elections that cost more than before and in which money spent by third parties to influence the elections was more decisive than before. Election advertisements, in the view of myself and many others, also became uglier, baser, and more hateful than before, while the positions advertised moved a big step rightward. These were all trends that could be measured in previous years as well, and which we will probably see advance further in years to come, barring a change of course.
The year 2010 opened with the closing of Air America Radio, a semi-leftist radio network that was badly managed. The year also saw right-wing radio networks cancel top programs in various cities because those programs leaned left. Meanwhile, rightwing media took further steps into astroturfed activism, promoting and then reporting on rallies. And the year ended with the corporate media selling the public on the need to criminalize actual journalism that exposed what the U.S. government was doing. These were all trends that could be measured in each previous year, and as likely as not in the years to come.
As in past years, 2010 saw the largest U.S. military budget yet recorded, whether one counts only the Pentagon or the Pentagon and the off-the-books wars or the Pentagon, the wars, and all the military spending through other departments. As in past years, in 2010, military spending became a larger percentage of government spending, more of the military was privatized, more U.S. military bases were opened in more nations, more missile offense equipment was positioned, more wars were fought in secret, more drone strikes killed more people, more wars were underway -- including an unacknowledged (much less congressionally declared) ground war in Pakistan; and by all measures of violence, death, expense, and public opinion the wars in Afghanistan, Pakistan, and Iraq were headed in a bloodier and more counterproductive direction. As in each year of the global war on terrorism, terrorism increased globally.
In 2010, as in each previous year, presidential power expanded, while the power of the legislature and the power of the people contracted. The president claimed greater powers of secrecy, immunity, and legislative and judicial ability. Lawless imprisonment is being "legalized" and habeas corpus lost to time. The president has claimed the power to assassinate Americans as well as to imprison them for life without charge. Crimes of aggressive war, torture, and warrantless spying, among others, have been granted immunity, and known criminals rewarded with huge sales for published remorseless confessions. Congress continued its collapse, its addiction to filibuster fever, its domination by partisanship, and the degradation of the powers of impeachment, subpoena, and oversight.
In 2010, our nation owed more money to others than it did before, more Americans had no jobs than before, more Americans had been foreclosed on, more poverty shortened more lives, more people lived without homes, and Wall Street saw more profits with more of its money than before coming from the public treasury. Inequality continued to rise, and the very richest Americans got richer. The United States fell in international rankings in areas including inequality, education, life expectancy, and the rule of law.
In 2010, the idea of addressing global warming before it destroys the planet -- which had actually been a topic of conversation in 2009 -- pretty much disappeared. Our government resigned itself to facilitating the death and suffering of billions of people not yet born, and most of us flipped the channel to something sexier.
And then there was light, or at least wikileaks, which in 2010 exposed U.S. efforts in 2009 to sabotage international negotiations on global warming, not to mention exposing US embassies as servants of its military and CIA full of contempt for the world and serving primarily as salesrooms for U.S. weapons against which the United States might be able to arrange to fight some future wars. Wikileaks has just begun, and has exposed wars, war crimes, torture, support for military coups, diplomacy as muscle for corporations, Saudi terrorism funding, Saudi pressure for an illegal attack on Iran, lies about Iranian missiles, and U.S. pressure to block investigations or prosecutions of its crimes in Spain, Italy, Germany, and England. The rest of the world is coming to terms with the cynical militarization of U.S. diplomacy, and so might Americans themselves if they find out about it.
And they might. Good media outlets are growing and being born as well as dying. No new war on Iran or Korea has been launched yet, and I think we could stop it if it were publicly debated. Cutting the military budget, including foreign bases and NATO, is very much on the table. The START treaty is a start in a better direction. The filibuster rule's future is not certain, and a vote may be taken in the Senate to end or modify it in the next week. (Our demand must be to end it!) The veal pen has some broken fences, as groups loyal to both justice and the Democratic Party are having to choose one or the other. And sometimes it has been known to be true that what does not kill us makes us stronger.
Wednesday, December 29, 2010
2010 moments of pure crazy (Part 2!)
Beck, Breitbart, vintage Bush, Bob Beckel -- and oh so much more
By Tom Tomorrow
By Tom Tomorrow
The Year in Wall Street Investigations
by Karen Weise
Tuesday, December 28, 2010 by Pro Publica
It's been over three years since credit markets started shaking with the early tremors of the subprime crisis, and two years since that spread into a marketwide collapse. Prosecutors, regulators, Congress and journalists have spent the year uncovering the financial shenanigans that brought the market to its knees. It's been marked by a few blockbuster settlements and more revealing investigations -- as well as by some noticeable inaction in the reckoning.
Let's start at the ground level, with selling risky mortgages to homeowners. Nobody symbolized the subprime market -- from its growth to its downfall -- better than former Countrywide CEO Angelo Mozilo. This fall, the Securities and Exchange Commission reached a $67.5 million settlement [1] with Mozilo in its only major case against a financial executive. The SEC charged Mozilo with praising Countrywide to investors while internally doubting its lending standards. As part of the settlement, Mozilo admitted no wrongdoing.
Moving up the finance chain, we come to the banks that sold mortgage deals to investors. Much of the scrutiny focuses on a type of mortgage deal called collateralized debt obligations, or CDOs, which are essentially bundles of other mortgage bonds that were sold off to investors.
Though nearly every bank [2] is rumored to be under investigation, the year was marked by one major case looking at the CDO business. In April, the SEC accused Goldman Sachs of creating a mortgage deal [3] that was designed to fail. The SEC's argument was that Goldman's hedge-fund client helped design the deal specifically to bet against it -- without Goldman explaining the relationship to investors. In July, Goldman settled for $550 million (or about two weeks' worth of profit [4]), admitting a "mistake" but no wrongdoing.
The idea of betting against deals lies at the center of a number of other investigations as well. The SEC is looking into [5] whether JPMorgan Chase allowed a hedge fund named Magnetar to choose assets for a mortgage deal without disclosing Magnetar's role in selecting what went into the deal. As ProPublica reported in April with the radio programs This American Life and NPR's Planet Money, Magnetar encouraged banks to put together riskier deals [6] and bought the riskiest bond slices that otherwise may have been unsold. Magnetar then bet against some of those deals [7], standing to make far more by shorting its losses on those risky slices if the housing market went south.
U.S. prosecutors are also looking into whether Morgan Stanley created a series of CDOs that its own trading desks bet against [8], the Wall Street Journal reported in May. A few months later it reported on how Deutsche Bank also bet against the souring housing market at the same time [9] it was marketing new mortgage deals.
The SEC is also looking into whether Citigroup improperly encouraged an independent manager to stuff a deal with leftover pieces [10] of other deals that it couldn't sell in the market. In September, ProPublica and NPR's Planet Money reported on self-dealing [11] among CDOs, showing how banks structured deals to buy portions of each others' [12] often leftover inventory of hard-to-sell pieces. This created a daisy-chain of investments [13] that manufactured demand, thereby prolonging the housing bubble. The SEC has said it is investigating [14] one independent management firm and looking into about 50 others.
The year ended with rumors of mass settlements [15], where banks and the SEC settle broadly over their CDO practices rather than battling over individual deals, according to the Wall Street Journal.
Deal-by-deal fights may flame up in courts, however, with investors pushing banks to buy back sour deals, egged on by new evidence [16] that banks may have known the mortgages underlying the deals were flawed. With such complicated shenanigans going on behind the scenes, investigators also want to know how banks hid their exposure to these risky securities from investors. The investigations are looking into various tactics, from general misstatements, like the Citigroup's $75 million settlement [17] with the SEC for not disclosing $40 billion in subprime risk, to accounting maneuvers that moved certain deals off bank balance sheets.
In the spring, a court-appointed examiner in the bankruptcy of failed investment bank Lehman Brothers shined a light on a practice known as "Repo 105," where Lehman moved $50 billion in assets off its books right before it had to submit investor reports. Last week, the New York attorney general filed civil charges against the accounting firm Ernst & Young [18], saying it had "substantially assisted" Lehman's "house-of-cards business model" that misled investors. Executives from the now-bankrupt Lehman have not been charged.
Despite revelations coming up and down the financial spectrum, there have been no major criminal charges and almost no civil charges against executives. And while the SEC and some government prosecutors have been active, federal bank regulators have so far been quiet [19].
This all comes as Congress passed the Dodd-Frank financial reform bill this summer, seeking to overhaul the oversight of everything from mortgage securities to how banks make bets with their own money. As regulators hammer out the rules of the reforms, the devil may lie in the hotly contested [20] details.
Tuesday, December 28, 2010 by Pro Publica
It's been over three years since credit markets started shaking with the early tremors of the subprime crisis, and two years since that spread into a marketwide collapse. Prosecutors, regulators, Congress and journalists have spent the year uncovering the financial shenanigans that brought the market to its knees. It's been marked by a few blockbuster settlements and more revealing investigations -- as well as by some noticeable inaction in the reckoning.
Let's start at the ground level, with selling risky mortgages to homeowners. Nobody symbolized the subprime market -- from its growth to its downfall -- better than former Countrywide CEO Angelo Mozilo. This fall, the Securities and Exchange Commission reached a $67.5 million settlement [1] with Mozilo in its only major case against a financial executive. The SEC charged Mozilo with praising Countrywide to investors while internally doubting its lending standards. As part of the settlement, Mozilo admitted no wrongdoing.
Moving up the finance chain, we come to the banks that sold mortgage deals to investors. Much of the scrutiny focuses on a type of mortgage deal called collateralized debt obligations, or CDOs, which are essentially bundles of other mortgage bonds that were sold off to investors.
Though nearly every bank [2] is rumored to be under investigation, the year was marked by one major case looking at the CDO business. In April, the SEC accused Goldman Sachs of creating a mortgage deal [3] that was designed to fail. The SEC's argument was that Goldman's hedge-fund client helped design the deal specifically to bet against it -- without Goldman explaining the relationship to investors. In July, Goldman settled for $550 million (or about two weeks' worth of profit [4]), admitting a "mistake" but no wrongdoing.
The idea of betting against deals lies at the center of a number of other investigations as well. The SEC is looking into [5] whether JPMorgan Chase allowed a hedge fund named Magnetar to choose assets for a mortgage deal without disclosing Magnetar's role in selecting what went into the deal. As ProPublica reported in April with the radio programs This American Life and NPR's Planet Money, Magnetar encouraged banks to put together riskier deals [6] and bought the riskiest bond slices that otherwise may have been unsold. Magnetar then bet against some of those deals [7], standing to make far more by shorting its losses on those risky slices if the housing market went south.
U.S. prosecutors are also looking into whether Morgan Stanley created a series of CDOs that its own trading desks bet against [8], the Wall Street Journal reported in May. A few months later it reported on how Deutsche Bank also bet against the souring housing market at the same time [9] it was marketing new mortgage deals.
The SEC is also looking into whether Citigroup improperly encouraged an independent manager to stuff a deal with leftover pieces [10] of other deals that it couldn't sell in the market. In September, ProPublica and NPR's Planet Money reported on self-dealing [11] among CDOs, showing how banks structured deals to buy portions of each others' [12] often leftover inventory of hard-to-sell pieces. This created a daisy-chain of investments [13] that manufactured demand, thereby prolonging the housing bubble. The SEC has said it is investigating [14] one independent management firm and looking into about 50 others.
The year ended with rumors of mass settlements [15], where banks and the SEC settle broadly over their CDO practices rather than battling over individual deals, according to the Wall Street Journal.
Deal-by-deal fights may flame up in courts, however, with investors pushing banks to buy back sour deals, egged on by new evidence [16] that banks may have known the mortgages underlying the deals were flawed. With such complicated shenanigans going on behind the scenes, investigators also want to know how banks hid their exposure to these risky securities from investors. The investigations are looking into various tactics, from general misstatements, like the Citigroup's $75 million settlement [17] with the SEC for not disclosing $40 billion in subprime risk, to accounting maneuvers that moved certain deals off bank balance sheets.
In the spring, a court-appointed examiner in the bankruptcy of failed investment bank Lehman Brothers shined a light on a practice known as "Repo 105," where Lehman moved $50 billion in assets off its books right before it had to submit investor reports. Last week, the New York attorney general filed civil charges against the accounting firm Ernst & Young [18], saying it had "substantially assisted" Lehman's "house-of-cards business model" that misled investors. Executives from the now-bankrupt Lehman have not been charged.
Despite revelations coming up and down the financial spectrum, there have been no major criminal charges and almost no civil charges against executives. And while the SEC and some government prosecutors have been active, federal bank regulators have so far been quiet [19].
This all comes as Congress passed the Dodd-Frank financial reform bill this summer, seeking to overhaul the oversight of everything from mortgage securities to how banks make bets with their own money. As regulators hammer out the rules of the reforms, the devil may lie in the hotly contested [20] details.
US Changes How It Measures Long-Term Unemployment
by Rick Hampson
Tuesday, December 28, 2010 by USA Today
So many Americans have been jobless for so long that the government is changing how it records long-term unemployment.
Citing what it calls "an unprecedented rise" in long-term unemployment, the federal Bureau of Labor Statistics (BLS), beginning Saturday, will raise from two years to five years the upper limit on how long someone can be listed as having been jobless.
The move could help economists better measure the severity of the nation's prolonged economic downturn.
>The change is a sign that bureau officials "are afraid that a cap of two years may be 'understating the true average duration' — but they won't know by how much until they raise the upper limit," says Linda Barrington, an economist who directs the Institute for Compensation Studies at Cornell University's School of Industrial and Labor Relations.
Likening recessionary unemployment spikes in recent decades to a storm at sea, she says, "The waves are getting higher, and we want to understand the intricacies of how they're made up."
The change involves the form used for the bureau's Current Population Survey, based on interviews with thousands of the unemployed. Currently, no matter how much longer than two years someone has been out of work, the form allows interviewers to check off only "99 weeks or over." Starting next month, jobless stints of "260 weeks and over" can be selected on the response form.
"The BLS doesn't make such changes lightly," Barrington says. Stacey Standish, a bureau assistant press officer, says the two-year limit has been used for 33 years.
A two-year limit hampers economists' ability to compare this recession's effect on the job market with another severe one in the early 1980s, Barrington says.
Although "this feels like something we've not experienced" since the Great Depression, she says, economists need more information to be sure.
The change will not affect how the unemployed are counted or the unemployment rate is computed nor how long those eligible for unemployment benefits receive them. (so what good is it?--jef) Analysts call the move a sign of the times.
"We realize more and more people are unemployed longer than 99 weeks, so we need to break it down further," Standish says.
Long-term unemployment has grown markedly over the past few years. The BLS says the average length of unemployment has increased from 29.4 weeks in November 2009 to 34.5 weeks last month. Nearly 10% of the USA's 15.1 million jobless have been looking for work for two years or more.
Rick Bartz, 59, of Cary, N.C., a purchase and supply expert, was laid off by Sony Ericsson's struggling North Carolina operation eight months ago.
"It puts a lot of stress on me and the wife," he says. "She gets tired of me not being able to find something." He says that lately he's been able to get just a few interviews.
Some workers despair. "I don't know when I'll work again," says Ricky Browner, 30, of Passaic, N.J., who lost his construction job two years ago. "This thing goes on and on."
Heidi Shierholz, a labor economist at the Economic Policy Institute, a Washington think tank, says most economists expect hiring to remain sluggish in 2011 before improving in 2012.
Tuesday, December 28, 2010 by USA Today
So many Americans have been jobless for so long that the government is changing how it records long-term unemployment.
Citing what it calls "an unprecedented rise" in long-term unemployment, the federal Bureau of Labor Statistics (BLS), beginning Saturday, will raise from two years to five years the upper limit on how long someone can be listed as having been jobless.
The move could help economists better measure the severity of the nation's prolonged economic downturn.
>The change is a sign that bureau officials "are afraid that a cap of two years may be 'understating the true average duration' — but they won't know by how much until they raise the upper limit," says Linda Barrington, an economist who directs the Institute for Compensation Studies at Cornell University's School of Industrial and Labor Relations.
Likening recessionary unemployment spikes in recent decades to a storm at sea, she says, "The waves are getting higher, and we want to understand the intricacies of how they're made up."
The change involves the form used for the bureau's Current Population Survey, based on interviews with thousands of the unemployed. Currently, no matter how much longer than two years someone has been out of work, the form allows interviewers to check off only "99 weeks or over." Starting next month, jobless stints of "260 weeks and over" can be selected on the response form.
"The BLS doesn't make such changes lightly," Barrington says. Stacey Standish, a bureau assistant press officer, says the two-year limit has been used for 33 years.
A two-year limit hampers economists' ability to compare this recession's effect on the job market with another severe one in the early 1980s, Barrington says.
Although "this feels like something we've not experienced" since the Great Depression, she says, economists need more information to be sure.
The change will not affect how the unemployed are counted or the unemployment rate is computed nor how long those eligible for unemployment benefits receive them. (so what good is it?--jef) Analysts call the move a sign of the times.
"We realize more and more people are unemployed longer than 99 weeks, so we need to break it down further," Standish says.
Long-term unemployment has grown markedly over the past few years. The BLS says the average length of unemployment has increased from 29.4 weeks in November 2009 to 34.5 weeks last month. Nearly 10% of the USA's 15.1 million jobless have been looking for work for two years or more.
Rick Bartz, 59, of Cary, N.C., a purchase and supply expert, was laid off by Sony Ericsson's struggling North Carolina operation eight months ago.
"It puts a lot of stress on me and the wife," he says. "She gets tired of me not being able to find something." He says that lately he's been able to get just a few interviews.
Some workers despair. "I don't know when I'll work again," says Ricky Browner, 30, of Passaic, N.J., who lost his construction job two years ago. "This thing goes on and on."
Heidi Shierholz, a labor economist at the Economic Policy Institute, a Washington think tank, says most economists expect hiring to remain sluggish in 2011 before improving in 2012.
Obama's Economist Pick Seen as Sign of New Agenda
Tuesday, December 28, 2010 by Associated Press
HONOLULU - Among the first announcements President Barack Obama will make upon returning from his Hawaiian vacation is his choice for top economic adviser, a decision that could signal a new direction for the administration as it struggles to jumpstart the economy and wrestle down unemployment.
With the unemployment rate at (9.8) percent, the private sector struggling to maintain steady growth and the public ranking the economy as the top concern, Obama's handling of the issue over the coming months is certain to play a central role in his reelection bid. The question is, with whom will he entrust to help shape (and sell) his economic vision?
It's far more than a personnel move. The replacement for the outgoing director of the National Economic Council, Lawrence Summers, will have a guiding hand in nearly every economic decision the Obama administration makes, and the president's choice is being closely watched for signs of where he wants to take his economic agenda in the second half of his term.
Will he tap the business world with a figure such as Roger Altman, an investment banker and Clinton administration alumnus who might carry too much baggage from his association with Wall Street? Will he turn to academia instead, calling on a scholar such Yale President Richard Levin? Or will he go with deeply experienced insiders such as deficit hawk Gene Sperling at the Treasury Department or Jason Furman, the council's deputy director?
With the unemployment rate at 9.8 percent, the private sector struggling to maintain steady growth and the public ranking the economy as the top concern, Obama's handling of the issue over the coming months is certain to play a central role in his reelection bid.
The selection process for the council post has dragged on for months. Summers announced his resignation in September, and many in the administration knew well before then that he planned to return to Harvard University after serving two years at the White House.
Obama spokesman Robert Gibbs said he expects Obama to make an announcement in early January, and blamed any delay on the frenzied legislative session that consumed the White House through the end of the year.
The administration's thinking on how to fill the job has evolved since Summers announced his resignation. The initial view - both inside and outside the White House - was that Obama should name a business leader to the post, in an attempt to give the private sector a greater voice in the administration and ease the perception that the president is anti-business.
But the administration now believes the relationship between Obama and the business community has started to thaw. For example, both sides praised each other following Obama's meeting with CEOs earlier this month. The White House has grown more willing to find another prominent job for a private sector appointee while leaving the council post to an economic heavyweight who can coordinate the advice Obama is receiving from throughout the administration.
"To get a business person in there, it seems like an odd place," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. "And if he does need someone from business, I don't think he would want someone from Wall Street."
It's that Wall Street connection that's been a knock against one of the leading candidates for the job, Altman, founder of Evercore Partners. Altman does have government experience, though, having served as deputy treasury secretary under President Bill Clinton.
Sperling, another top contender, has also dabbled in Wall Street, advising Goldman Sachs and other financial firms, although he's most well-known for his work in the Clinton and Obama administrations, including his current post as counselor to Treasury Secretary Timothy Geithner. Sperling helped craft the 1993 Deficit Reduction Act, and his appointment could show Obama is serious about his pledge to address the mounting debt and deficit next year.
Levin, who as president of Yale shares Summers' academic pedigree, is likely to favor stepped up Wall Street regulation. Furman is also said to be in the running for a promotion from the deputy's job.
Both Sperling and Furman would bring an insider's knowledge of the Obama White House and the president's economic policies to the job, attributes that may not necessarily be to their benefit. Critics have accused Obama's economic advisers of not fully grasping the depths of the crisis, and the team's prediction that the president's massive stimulus bill would keep unemployment below 8 percent has caused headaches within the administration.
Selecting an outsider to fill the top economic job would help Obama counter the notion that he's too insular and unwilling to accept advice from outside the administration. He filled two other high-profile vacancies on his economic team this year from within the administration, replacing Budget Director Peter Orszag with State Department official Jacob Lew, and Council of Economic Advisers chair Christina Romer with Austan Goolsbee, who was serving as a member of the council.
"They should be looking to take things in a new direction," Baker said. "I don't think more of the same is the answer."
Beyond the economic qualifications of the candidates he's considering, the president is also believed to be looking for a council director who can serve as both a good manager and a team player. For all of Summers' intellectual heft, he brought along a healthy ego and an often prickly temperament. Rumors swirled of conflict among Summers, Orszag and Romer, a rarity in a White House run by a president with little patience for drama.
HONOLULU - Among the first announcements President Barack Obama will make upon returning from his Hawaiian vacation is his choice for top economic adviser, a decision that could signal a new direction for the administration as it struggles to jumpstart the economy and wrestle down unemployment.
With the unemployment rate at (9.8) percent, the private sector struggling to maintain steady growth and the public ranking the economy as the top concern, Obama's handling of the issue over the coming months is certain to play a central role in his reelection bid. The question is, with whom will he entrust to help shape (and sell) his economic vision?
It's far more than a personnel move. The replacement for the outgoing director of the National Economic Council, Lawrence Summers, will have a guiding hand in nearly every economic decision the Obama administration makes, and the president's choice is being closely watched for signs of where he wants to take his economic agenda in the second half of his term.
Will he tap the business world with a figure such as Roger Altman, an investment banker and Clinton administration alumnus who might carry too much baggage from his association with Wall Street? Will he turn to academia instead, calling on a scholar such Yale President Richard Levin? Or will he go with deeply experienced insiders such as deficit hawk Gene Sperling at the Treasury Department or Jason Furman, the council's deputy director?
With the unemployment rate at 9.8 percent, the private sector struggling to maintain steady growth and the public ranking the economy as the top concern, Obama's handling of the issue over the coming months is certain to play a central role in his reelection bid.
The selection process for the council post has dragged on for months. Summers announced his resignation in September, and many in the administration knew well before then that he planned to return to Harvard University after serving two years at the White House.
Obama spokesman Robert Gibbs said he expects Obama to make an announcement in early January, and blamed any delay on the frenzied legislative session that consumed the White House through the end of the year.
The administration's thinking on how to fill the job has evolved since Summers announced his resignation. The initial view - both inside and outside the White House - was that Obama should name a business leader to the post, in an attempt to give the private sector a greater voice in the administration and ease the perception that the president is anti-business.
But the administration now believes the relationship between Obama and the business community has started to thaw. For example, both sides praised each other following Obama's meeting with CEOs earlier this month. The White House has grown more willing to find another prominent job for a private sector appointee while leaving the council post to an economic heavyweight who can coordinate the advice Obama is receiving from throughout the administration.
"To get a business person in there, it seems like an odd place," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. "And if he does need someone from business, I don't think he would want someone from Wall Street."
It's that Wall Street connection that's been a knock against one of the leading candidates for the job, Altman, founder of Evercore Partners. Altman does have government experience, though, having served as deputy treasury secretary under President Bill Clinton.
Sperling, another top contender, has also dabbled in Wall Street, advising Goldman Sachs and other financial firms, although he's most well-known for his work in the Clinton and Obama administrations, including his current post as counselor to Treasury Secretary Timothy Geithner. Sperling helped craft the 1993 Deficit Reduction Act, and his appointment could show Obama is serious about his pledge to address the mounting debt and deficit next year.
Levin, who as president of Yale shares Summers' academic pedigree, is likely to favor stepped up Wall Street regulation. Furman is also said to be in the running for a promotion from the deputy's job.
Both Sperling and Furman would bring an insider's knowledge of the Obama White House and the president's economic policies to the job, attributes that may not necessarily be to their benefit. Critics have accused Obama's economic advisers of not fully grasping the depths of the crisis, and the team's prediction that the president's massive stimulus bill would keep unemployment below 8 percent has caused headaches within the administration.
Selecting an outsider to fill the top economic job would help Obama counter the notion that he's too insular and unwilling to accept advice from outside the administration. He filled two other high-profile vacancies on his economic team this year from within the administration, replacing Budget Director Peter Orszag with State Department official Jacob Lew, and Council of Economic Advisers chair Christina Romer with Austan Goolsbee, who was serving as a member of the council.
"They should be looking to take things in a new direction," Baker said. "I don't think more of the same is the answer."
Beyond the economic qualifications of the candidates he's considering, the president is also believed to be looking for a council director who can serve as both a good manager and a team player. For all of Summers' intellectual heft, he brought along a healthy ego and an often prickly temperament. Rumors swirled of conflict among Summers, Orszag and Romer, a rarity in a White House run by a president with little patience for drama.
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