California Free Press

Senator Bernie Sanders: Stop Shipping American Jobs Overseas!

Bernie is leading a campaign to stop outsourcing American jobs to low-wage countries overseas. “We've got to tell corporate America that if they want us to buy the products they produce, they've got to start manufacturing those products here in the United States," Bernie told a Capitol Hill press conference on Tuesday. On MSNBC, Bernie reminded Ed Schultz that “during the Bush years, alone, we lost 30 percent of our manufacturing jobs.” The number of U.S. factory workers plunged from 17 million to about 12 million, fewer than at any time since before World War II.

Fair Trade

Senate Republicans on Tuesday blocked a modest proposal to stem the flow of jobs overseas. Bernie would go much further. He wants a total turnaround in U.S. trade policies that unfairly tip the scales against American workers in favor of other countries and multinational corporations. "We need fair trade which represents the needs of the American worker, not unfettered free trade which simply benefits CEOs and their corporations," Bernie said.  The American public overwhelmingly thinks outsourcing is bad for the U.S. economy. What do you think?

China Says U.S. Yuan Bill Could Harm Ties

By Chris Buckley

BEIJING | Thu Sep 30, 2010 5:01am EDT, From Reuters

House targets Chinese yuan (01:19) Report

BEIJING (Reuters) - China on Thursday warned that a House of Represenatives bill to penalize it for not letting the yuan rise faster could seriously affect bilateral ties.

In a relatively measured response, Foreign Ministry spokeswoman Jiang Yu said Congress should avoid steps that could harm relations, saying Beijing was "resolutely opposed" to the bill. But she declined to say whether China would retaliate.

The House of Representatives bill, which many analysts say is unlikely to become law, is aimed at pressuring Beijing to let its currency, also called the renminbi, rise faster by branding it in violation of world trade rules.

"Using the renminbi exchange rate issue as an excuse to engage in trade protectionism against China can only harm China-U.S. trade and economic relations, and will have a negative effect on both countries' economies and the world economy," Jiang told a regular news briefing.

"We urge the members of the Congress to understand clearly the importance of China-U.S. trade and economic relations, and put a halt to protectionism so as to avoid hurting the interests of the peoples of the two countries and of the world."

Whether China would take any U.S. law on the yuan to the World Trade Organization was "hypothetical," she said.

The bill would need to be passed by the Senate -- far from certain and not likely until after congressional elections on November 2 when the U.S. political landscape could be greatly changed -- and signed by President Barack Obama to become law.

China's tight leash on the yuan is under intense scrutiny as countries around the world look to export their way back to economic health, raising concerns they will intentionally weaken their currencies to gain an edge.

PRICE ADVANTAGE

The bill allows the U.S. Commerce Department to treat "fundamentally undervalued currencies" as an illegal export subsidy so that U.S. companies can request a countervailing duty to offset China's price advantage.

Earlier in the day, the official Xinhua news agency quoted China's Commerce Ministry spokesman, Yao Jian, as saying: "Starting a countervailing investigation in the name of exchange rates does not conform with relevant WTO rules."

That lawyer-like statement was relatively moderate compared with China's reaction to other disputes this year, including U.S. weapons sales to Taiwan, when Beijing froze military contacts with the United States.

"I don't think China will have any dramatic reaction to this bill's passing," said Jin Canrong, a professor of international relations at Renmin University in Beijing, who specializes in U.S.-China relations. "China wants to preserve the stability of overall relations."

The American Chamber of Commerce in China voiced its opposition to the Chinese currency legislation in an email, saying: "If enacted into law, the chamber does not believe the bill will be effective in achieving its objectives and would fail to create significant U.S. job growth."

China's central bank fixed the yuan's daily mid-point versus the dollar at a weaker level on Thursday.

GDP Revised Up; New Jobless Claims Down

by The Associated Press

September 30, 2010

The nation's economic growth tailed off sharply in the spring and probably isn't faring any better now.

The Commerce Department reported Thursday that gross domestic product — the broadest measure of the economy's health — expanded at a feeble 1.7 percent annual rate in the April-to-June quarter.

Meanwhile, the initial claims for unemployment benefits fell last week.

The new GDP reading is a notch higher than the 1.6 percent growth rate the government estimated a month ago. But it marks a sharp slowdown from a 3.7 percent growth rate logged in the first quarter. And, the new figure doesn't change the big picture: The economy has been losing momentum since the end of last year.

Tracking U.S. Growth

Seasonally adjusted annual rate, in percent

 
Source: Commerce Department

Credit: NPR

Many think the economy grew at around the same anemic pace, or slightly worse, during the July-to-September quarter. Little improvement is expected in the final quarter of this year. That's why unemployment - now at 9.6 percent — is expected to stay high or even rise in the coming months.

Americans just aren't spending at a robust pace to bulk up companies' sales and make them confident enough to beef up hiring. Consumers and businesses, battered by the worst recession since the 1930s, are clinging to their cautious ways.

Consumers, in particular, are paring down debt, aren't spending as much as they normally do during an economic recovery and they are saving more. Their spending accounts for roughly 70 percent of economic activity, so their frugal behavior explains why the economy is stuck in a slow-growth rut.

In the second quarter, Americans saved 5.9 percent of their disposable income, the most in a year. Before the recession, they saved just 2.1 percent.

Consumers boosted their spending in the second quarter at a 2.2 percent pace. It was a tad better than the government's previous estimate but is still considered lackluster for this point in the recovery by historical standards. Economists think consumers will spend at a slightly slower pace through the rest of this year.

The economy is the No. 1 concern to voters going to the polls on Nov. 2 in the congressional midterm elections. Voter backlash could cause Democrats to lose control of Congress.

GDP measures the value of all goods and services produced in the U.S. It covers everything from machinery to manicures.

The sharp drop off in GDP in the second quarter mainly reflected fallout from a bigger trade deficit. A surge in imported goods swamped growth in U.S. exports to other countries. The bigger trade gap that resulted shaved 3.5 percentage points from second quarter growth, the most since 1947.

Weekly Unemployment Claims Dip

A separate report Thursday showed that applications for jobless benefits dropped last week for the third time in four weeks, a sign that U.S. employers are cutting fewer jobs.

Initial claims for unemployment aid fell by 16,000 to a seasonally adjusted 453,000, the Labor Department said. Wall Street analysts had expected a smaller drop.

The decline returns jobless claims to the same level they were at two weeks ago. Initial claims have fluctuated around 450,000 for most of this year.

The four-week average of claims, a less-volatile measure, dropped for the fifth straight week to 458,000, the lowest level in two months.

Applications for unemployment benefits, while volatile, provide a real-time snapshot of the job market. The weekly claims figures are considered a measure of the pace of layoffs and an indication of companies' willingness to hire.

Initial claims have fallen sharply since June 2009, the month the recession ended. They topped 600,000 at the end of that month. But most of that decline took place last year.

The economy has slowed sharply this year, discouraging many employers from hiring. The economy grew at a 3.7 percent pace in the January-March period, but that fell to 1.7 percent in the second quarter. Most economists expect growth to be similarly weak in the current July-September quarter.

The number of people continuing to receive jobless benefits fell by 83,000 to just below 4.5 million, the department said. But that doesn't include several million people who are receiving unemployment aid under extended programs approved by Congress during the recession.

The extended benefit rolls dropped by about 300,000 to 4.9 million in the week ending Sept. 11, the latest data available. All told, about 8.8 million people received unemployment aid that week.

Some companies are still cutting workers. Last week, pharmaceutical company Bristol-Myers Squibb Co. said it would eliminate about 3 percent of its positions over the next six months. That's about 840 jobs out of 28,000 worldwide.

US Pushing on a String With Regards to China Trade Policy

by John Lawrence

The US is running a trade deficit with China of $5 billion a week. China loans the US huge sums of money in order that the US can keep taxes low and borrow the money it needs to run its government. Instead of enacting tariffs on Chinese imports, it has been US policy to beg the Chinese to revalue their currency. This is like pushing on a string. If the US doesn't like Chinese policy regarding their exports to the US, the US has direct recourse: it can put tariffs selectively on Chinese imports. But instead, probably because the US doesn't want to offend its banker, the US has allowed itself to be put into the subservient position of begging the Chinese to revalue its currency.

A recent report details the fact that the US is running higher trade deficits with trading partners that it has Free Trade Agreements (FTAs) with. The report entitled "Lies, Damned Lies and Export Statistics" reached this conclusion after an exhaustive examination of the data.

President Obama’s goal to double U.S. exports over the next five years to create two million new American jobs is widely supported. How to accomplish it is a subject of considerable contention. Proponents of President Bush’s “Free Trade Agreements” (FTAs) with Korea, Colombia and Panama claim that passing these pacts is the best way to expand U.S. exports and create jobs. Obama administration officials have similarly argued that passing FTAs is a key component of the effort to double exports, especially in the context of the president’s recent announcement that he wants Congress to pass Bush’s FTA with Korea early next year.  Yet, analysis of the actual outcomes of past U.S. FTAs show that the growth of U.S. exports to countries that are not FTA partners is as much as double the growth of exports to U.S. FTA partners. Moreover, with respect to Obama’s job creation goal, the United States has suffered trade deficits with most of its major FTA partners and with the group of FTA nations as a whole. Even as trade flows declined because of the economic crisis, as of 2009, the United States had a $54 billion trade deficit in goods with its 17 FTA partners, even when oil is excluded. And, contrary to the frequent claims made by proponents of the North American Free Trade Agreement (NAFTA) that U.S. farmers have benefitted from this model, the United States’ agricultural trade deficit with the bloc of 17 FTA partners increased.   This highlights why, especially now, an honest, data-based discussion about the economic impact of FTAs based on the NAFTA model is critical. People are entitled to their own opinions about NAFTA-style FTAs, but they’re not entitled to their own facts. Among public concerns about job loss, the decimation of the U.S. manufacturing base, and the ballooning U.S. trade deficit, corporate lobbyists have unveiled a series of misleading and erroneous studies and talking points, alleging all sorts of benefits from NAFTA-style pacts. It is impossible to know whether these are deliberate attempts to distort the truth, or simply sloppy economics.

The fact is that US corporations and their lobbyists have used the 'free trade' pretext to export millions of jobs to China because labor there is cheaper than American labor. This practice is called 'labor arbitrage.' US corporations then import products from their Chinese subsidiaries back into the US market parking the profits offshore. This both denies the American people jobs and the government revenues. Not only is labor cheaper in Asia, but so is the cost of plants and equipment. The following is a prescient article written in 2005 that already foretells the asset bubble that burst in 2008.

The most obvious example of the effects of globalization in this country is our relationship with Asia. Over the past few years, we have not only outsourced our jobs, but have moved our manufacturing to the Asian countries, especially China and India. Corporate money has influenced our government to allow the transfer of practically any business into these new rising economies at the expense of American jobs. There are two major reasons for this interest. First, Asia is seen as the future of economic progress because of their tremendous population and potential buying power. Second, labor and manufacturing plant is so cheap that exorbitant profits can be made when Asian manufactures are sold here - at American prices of course. It is not difficult to understand that when the cost of plant and equipment is about half of the costs required in the United States, and labor costs are only 10% of the costs in the United States, corporations will naturally choose to manufacture in Asia. Our government officials are no longer concerned about the common good of its citizens; rather they are interested in their personal gain to be acquired through corporate influence. At home, our service industries can only exist as long as there is enough money circulating among the middle and lower classes to support the consumerism. Our Financial industry can only continue to exist as long as the asset bubble continues. Our only real source of income is our military weapons business. We supply most of the world's weapons. Where does the money come from to maintain our economy? It is the consistent growth of our national and personal debts that maintains the momentum of our economy. Our government needs to maintain that momentum for a while longer. As far as our corporations are concerned, the writing is on the wall. Real, or long-term investment will be made in Asia where a huge population with rising incomes will eventually dominate the economic world. The unemployed population in China alone is greater than the entire population of the United States. As the income of the average American citizen continues to erode, we are viewed by the corporate world as a mature market. The United States is no longer a prime market for investment. It is time to reap the profits of past investments and maintain the cash cow as long as possible, or at least until a prosperous Asian economy can be built. Unfortunately, it is obvious that our government supports this corporate view, regardless of what their lips tell us. A few years ago, these investments would not have happened. There were laws against unfair trade, concerning environmental issues, unfair labor practices, and a plethora of other rules and considerations for the public good. In the past few years many of these laws have been expunged or relaxed in the name of deregulation to allow for the international exploitation of labor. This is our government at work in behalf of their corporate constituencies. Lest they lose their corporate sponsors, our media is now blaming Asia and especially China for the loss of our jobs and their excessive use of "our" oil. It is our own government that encourages companies to invest in foreign countries, even to the point of awarding tax breaks for doing so. It is our own government that is encouraging the displacement of American workers with cheaper foreign workers. China is not the villain here. It is our own government encouraging and aiding international corporations to move their business overseas in search of that Holy Grail, profits.

The National Association of Manufacturers and other pro-free trade groups have used faulty data to champion NAFTA style free trade agreements. Contrary to recent corporate claims, however, the trade balance in non-oil manufactured goods with U.S. FTA partners over 2008-2009 was a deficit of $97 billion. The NAM reported that “over the past two years FTAs have resulted in a U.S. manufactured goods surplus of nearly $50 billion.” To achieve this outcome, the NAM used “total export,” data, a measure including billions of “re-exports” of foreign products transshipped through U.S. ports but not made by U.S. workers. They counted these as "exports." When the domestic export data employed by the U.S. International Trade Commission is used, the opposite result is produced. The US is running a trade deficit with almost every FTA partner while running trade surpluses with non-FTA partners.

Obama's pro-free trade stance will leave him barking up the wrong tree. Fortunately Congress recently passed some legislation that holds the promise of clamping down on the egregious practices brought about by free trade agreements. But even these tenuous efforts are focused and fixated on currency manipulation instead of taking the bull by the horns and ending FTAs and making it less profitable for US corporations to ship jobs and plants abroad and import cheap products back into the US market.

Thom Hartmann makes the case for protectionist tariffs. And what we should be protecting ourselves against is not imports of products locally made and produced by local companies in China and elsewhere that can't be made or produced here, but products produced abroad by American corporations that could be made here. What's really at stake here and deserving of protection is American jobs. As long as American corporations can relocate plants, equipment and workers abroad and import products back into the American market, their profit margins will be greater. So American workers must be protected from American corporations who import from abroad under the guise of free trade.

 

House Overwhelmingly Passes Trade Sanctions Bill Targeted At China

From Huffington Post

First Posted: 09-29-10 11:20 PM   |   Updated: 09-29-10 11:20 PM

WASHINGTON (AP) -- The House has approved legislation that would allow the U.S. to seek trade sanctions against China and other nations for manipulating their currency to gain trade advantages.

The 348-79 vote Wednesday sends the measure to the Senate, where its prospects are unclear. Senate supporters hope to get a vote on a similar proposal after Congress returns following the November congressional elections.

Supporters said the bill would allow the Obama administration to pressure China on an issue that they say has led to the loss of more than 2 million manufacturing jobs in the U.S. over the past decade.

The vote came as lawmakers scrambled to wrap up unfinished business so they can hit the campaign trail with a little over a month before the Nov. 2 elections. Polls show that the state of the economy and an unemployment rate that remains stuck at 9.6 percent are the top concerns of voters.

The measure was passed by a wide margin with 99 Republicans joining Democrats to vote yes. Those in opposition included 74 Republicans and five Democrats.

Supporters said the size of the vote should send a strong message to Beijing that Washington will not tolerate currency manipulation and other trade practices viewed as unfair to American workers.

House Speaker Nancy Pelosi said that in 20 years America's trade deficit with China has gone from $5 billion annually to $5 billion every week, an imbalance she said demanded action by Congress to protect American jobs.

"We do this because 1 million American jobs could be created if the Chinese government took its thumb off the scale and allowed its currency to respond to market forces," she said in a speech on the House floor.

American manufacturers contend that China's currency is undervalued by as much as 40 percent against the dollar. That makes Chinese products cheaper and more competitive in the United States and American products more expensive in China.

The legislation would allow the imposition of stiff sanctions on Chinese imports. It would expand the definition of improper government subsidies to include a government's manipulation of its currency to gain trade advantages. Currently, the Commerce Department does not consider currency manipulation as a government subsidy for which it can impose trade sanctions.

During the House debate, supporters cited studies that they said show the legislation would boost American exports and create more manufacturing jobs in this country.

"Some credible estimates are that we could return a million American jobs to this country," said Rep. Xavier Becerra, D-Calif., in urging support for the legislation. "We can either take bold steps or we can take baby steps."

Opponents said the legislation would boost the cost of clothing, toys and other goods that American consumers buy and also ran the risk of sparking retaliation by China against American exports.

"The available evidence is that the price of many of these Chinese goods will go up 10 percent, a pair of shoes that a mother needs for her child to go to school ... toys at Christmas, all become more expensive," said Rep. Jeb Hensarling, R-Texas.

Supporters rejected that argument, saying it is critical in hard economic times to protect U.S. jobs.

"Without a job, you can't buy goods at any price. This bill is about jobs," said Ways and Means Committee Chairman Sander Levin, D-Mich.

Passage of the proposal was cleared when Levin led an effort to craft a compromise proposal that supporters believe will be better able to withstand a challenge before the World Trade Organization, the Geneva-based group that oversees the rules of world trade.

Before the House vote, Chinese officials in Beijing reiterated that they support exchange rate flexibility but offered no new indications that they plan to accelerate the revaluation of their currency, the yuan.

In June, Beijing promised a more flexible exchange rate but since that time the yuan has risen by only about 2 percent in value against the dollar.

Treasury Secretary Timothy Geithner told Congress earlier this month that the administration stands ready to find a more effective strategy for pressuring China. He said the administration is not only focused on the currency issue but on such topics as rampant copyright piracy of U.S. products and various barriers the Chinese have erected to U.S. goods.

In a statement, the Treasury Department said, "Today's vote clearly shows lawmakers have serious concerns about this issue. The president and Secretary Geithner share those concerns. They have said repeatedly that China needs to allow a significant, sustained appreciation over time."

The administration has not taken a position on whether it will support the House bill. But trade experts said they believed the administration will use its passage as a way to pressure Beijing to accelerate its appreciation efforts.

President Barack Obama raised the currency issue in a meeting with Chinese officials last week in New York. He is expected to pursue the issue in November at the summit of the Group of 20 major economies in South Korea.

Sen. Charles Schumer, D-N.Y., who is pushing a similar China currency bill in the Senate, said after the House vote that he will work to get a Senate vote on his bill during a lame-duck session of Congress after the November elections.

"The Chinese ought to be aware that Congress is serious about confronting their currency manipulation," Schumer said in a statement.

The Rise of the New Power Co-Op Movement

by Brendan Smith

Oysterman and Labor Network for Sustainability Co-Founder

Posted: September 28, 2010 10:43 AM on Huffington Post

[Drafted with Jeremy Brecher]

Breakdown at Copenhagen. Climate legislation stalled. EPA regulation of greenhouse gasses threatened. Is climate protection dead?

Maybe not. Climate protection has gone local. Political leaders may fiddle while the world burns, but grassroots groups around the country are organizing to cut greenhouse gas emissions and build a greener future for their communities. Block by block and using every tool at their disposal, groups are fighting to green schools and workplaces; setting up networks of green job training centers; installing solar water heaters in low income communities; and halting new coal-fired power plants with both political and direct action.

One of the least known but most promising examples of this "localization" of climate politics is the greening of utility co-ops to create affordable and renewable energy, green jobs, and regional green development. These efforts may well represent the beginning of a "New Power Co-Op Movement" that can help jump start the shift to a new green economy.

Electric co-ops are owned by their customers, who are called "members" due to their dual role as customer/owner. Their primary mission is to provide access to electricity at affordable prices for every potential member in their service area.

Electric co-ops were created as one of President Franklin Roosevelt's New Deal programs in order to promote rural development. The first electric co-op was born in 1934 in the back of a furniture store in Corinth, Mississippi. Within a few years, it had thousands of counterparts across the nation.

Today, America's 930 electric cooperatives are the sole source of electricity for 42 million people in 47 states -- nearly 12 percent of the nation's population. They control $100 billion in assets and $31 billion in member equity.

What Matters in Kansas

In western Kansas, rural communities, farms, and businesses get their electricity from Midwest Energy, the electric co-op based in Hays, Kansas. The co-op has pioneered an energy conservation strategy known as "on-bill financing." It has developed a program called How$mart that provides money for energy efficiency improvements such as insulation, air sealing, and new heating and cooling systems for residential and small business consumers. Co-op members -- whether owners or tenants -- don't have to put up any money "up-front." Instead, they repay the funds through energy savings on their monthly power bills.

Members start with an energy audit to determine potential savings. The co-op develops an individualized conservation plan. Members choose a contractor. If the member moves or sells the property, the deal passes to the next customer at that location.

The program started with a pilot in four rural counties in the summer of 2008; it then spread through rural Western Kansas. A year later it had invested $1 million in more than two hundred rural homes and businesses. It is estimated that customers will save over 400,000 kilowatt-hours per year, enough to power forty homes. That will put 13,000 fewer tons of carbon dioxide into the environment over the next twenty years. The Environmental Defense Fund recently recognized How$mart as one of America's best energy innovations.

"New Power" in Kentucky

For decades residents of eastern Kentucky have been fighting Big Coal's destruction of their majestic environment and cherished way of life by coal extraction. Much of that fight is led by the statewide citizens organization Kentuckians For The Commonwealth. KFTC has deep roots in the state's impoverished mountain communities where coal is mined; many of its leaders are former coal miners. While it has engaged in direct action against mountaintop removal, it recognizes that such action is not enough. Kentuckians desperately need a new strategy for economic development, energy, and jobs. KFTC is now promoting a plan for "New Power" that would make eastern Kentucky's electric cooperatives the pivot for such a strategy.

East Kentucky Power Cooperative (EKPC) is a cooperative that is owned by 16 local electric distribution coops. EKPC generates and sells power to these co-ops, which serve half a million members in 87 counties. EKPC is proposing to build a new 278-megawatt coal-burning power plant in central Kentucky along the Kentucky River at an estimated cost of nearly one billion dollars.

The Smith plant would only increase the dependence of Kentucky on coal for its energy supply and thereby increase the pressures for mountaintop removal. The struggle against the Smith plant has led KFTC to accompany its fight to save the mountains with a search for a "New Power" alternative.

With the help of KFTC, co-op members are now proposing that the co-ops not waste their funds on the Smith coal plant, but instead invest in an alternative plan to meet the power needs of their members through energy-saving and renewable energy programs. These local energy needs will be met by a combination of energy efficiency and weatherization initiatives paid through on-bill financing, along with local renewable energy, such as small-scale hydroelectric plants and rooftop solar hot water heaters. The New Power plan would cost less than the Smith Plant while meeting the same energy demand.

Such a plan would not only provide for eastern Kentucky's energy needs in a way that would protect the local environment and the global climate, it would also provide far more and better jobs. According to EKPC itself, the Smith plant will create only 700 temporary jobs at the peak of construction and 60 permanent jobs. Yet, according to the Ochs Center for Metropolitan Studies,an energy plan based on efficiency and renewables will create nearly 4,600 direct jobs over the same period it would take to build the Smith Plant. Members of local communities could be trained and hired for these green energy jobs.

The New Power plan would also significantly lower the utility bills of co-op members (some co-op members in eastern Kentucky spend more than 50% of income on energy). The estimated cost of electricity from the alternative plan is 17% less than the Smith coal-burning plant. Money saved could be invested in affordable housing, environmental restoration, healthcare, and other job-creating activities. (For more on KFTC's alternative program read: "A Cooperative Approach to Renewing East Kentucky".)

Co-op members in Kentucky are weighing the trade-off. According to Rachel Harrod, whose stepmother ran for a local co-op board this summer:

I believe there's an alternative that will be better for the environment, less costly to co-op members, and far more beneficial economically. The jobs generated by a clean energy portfolio would be a welcome boost to our local economy. I can't tell you how significant this would be to an area that has lost much of its agricultural base in recent years.

 

In addition to saving co-op members from paying for dirty power, a New Power program in eastern Kentucky could kick-start a broader agenda for transitioning Appalachia to the new green economy. Co-ops already have the key infrastructure in place. And instead of being controlled by for-profit investor utilities, the new facilities will literally be owned by eastern Kentucky -- the co-op owners, not distant stakeholders. These economic benefits will stay in Kentucky and reverberate through the region.

Greening Economic Democracy

Rural electric co-ops were once a model for economic democracy. David Lilienthal, a founding director of the Tennessee Valley Authority, described an electric coop annual meeting in the 1940s:

Throughout a whole day as many as 2,000 farmers and their wives and children discussed the financial and operating reports made to them by their [co-op] superintendent and board of trustees, and later while we ate a barbecue lunch watched new uses of electricity demonstrated.

 

He added,

These membership "town meetings" are not simply business sessions. They have an emotional overtone, a spiritual meaning to people who were so long denied the benefits of modern energy.

 

But many electric coops have become distant from such town meeting democracy. In eastern Kentucky, for example, elections to coop boards are rarely contested, with many of the officers serving for decades. Policies are often controlled by coal and other energy companies; as a result, Kentucky's rural electrical cooperatives are more than 90 percent dependent on coal. That makes rural Kentuckians vulnerable to rising fuel prices and coal depletion.

Building the new green economy will require the revival of democracy -- at every level. That's why co-op members, with the help of KFTC, have begun challenging the entrenched leadership of local co-op boards. This year, KFTC members Dallas Ratliff and Tona Barkley ran for the board of the Owen Electrical Cooperative. In her campaign materials Barkley says:

As a board member, I will strive to make the co-op more open and democratic. I'll also promote a stronger approach to helping members improve the energy efficiency of their homes and businesses and a more aggressive approach to transitioning into more renewable sources of energy -- to protect members from rising energy costs, to protect our health, and to create local jobs.

Like Tona, hundreds of KFTC members throughout the state see a clear link between new democratic power and new clean energy power.

Such a program could be a model for the 400 rural electrical co-ops with 40 million members nationwide. And that could be a significant contribution to a new strategy for protecting the global climate -- from below.

The President’s Backyard Discussion of the Economy (as It Could Be)

by Robert Reich

Wednesday, September 29, 2010

President Obama continues his economic tour today (Wednesday) with stops in Des Moines, Iowa, and Richmond, Va. In Des Moines he hosts a backyard discussion on the challenges currently facing the middle class with approximately 70 neighbors from the area, according to the White House. Here’s an imagined version of that discussion:

OBAMA: Thanks so much for joining me. I know many of you are hurting and angry about the economy, and I don’t blame you. It’s the worst economy since the Great Depression. When consumers can’t buy and businesses won’t expand for lack of customers, government has to be the purchaser and employer of last resort. We learned that in the Great Depression, but Republicans obviously didn’t — and they’ve blocked every jobs program I’ve offered.

NEIGHBOR: Why don’t you have a showdown with them? Let them filibuster a jobs bill and show which side you’re on and which side they’re on?

OBAMA: That’s just Washington at its worst. More deadlock. I can’t even get Republicans to agree to extend the Bush tax cuts for 98 percent of Americans. They’re threatening to block it unless I agree to extend the tax cut for the top 2 percent. Can you believe it? The top 2 percent got the lion’s share of the Bush tax cuts in 2001 and 2003, and if we extended it just one more year for them they’d get a windfall of $36 billion they never had any right to expect. Millionaire families would get $31 billion next year. That’s money I’d rather use saving the jobs of teachers and fire fighters — people who protect our communities and who need the jobs and would spend the money rather than just putting it away.

NEIGHBOR: Why don’t you have a showdown with them? Let them try to block the middle-class tax cut for 98 percent because they want to give it to the top 2 percent, and show which side you’re on and they’re on?  

OBAMA: That’s would be just more of the same old Washington, and I promised to bring change to Washington. Let me tell you, the underlying reason for the economic mess we’re in has been building for years. It’s a fundamental imbalance in which the top 1 percent now gets almost a quarter of all national income. We haven’t seen income and wealth this concentrated since the late 1920s, and we all know what happened then — the Great Depression. We’ll never really get out of the gravitational pull of the Great Recession until we fix this basic problem. Health care reform was a small step forward, but the Republicans won’t let me do anything else. I’d like to help struggling homeowners who can’t pay their mortgages, I’d like to invest in our crumbling infrastructure, I’d like to reform the tax system so multimillionaires can’t pretend their earnings are capital gains and pay at the rate of 15 percent. I’d like to exempt the first $20,000 of income from the payroll tax and make it up by applying payroll taxes to incomes over $250,000. I’d like to make public higher education free, and pay for it with a small transfer tax on all financial transactions. I’d like to do much more — a new new deal for Americans. But Republicans are blocking me at every point.

NEIGHBOR: Why don’t you have a showdown with them? Make restoring the broad middle and working class of American into a national campaign. Let them try to block these reforms and show which side you’re on and which side they’re on?

OBAMA: That’s just Washington gridlock. I promised change. In any event, I’m afraid it’s too late. Congress is going home soon. All we have left is the midterm elections and then a lame duck session. Republicans may take over the House and take more seats in the Senate in November, and then I won’t be able to do much of anything.

NEIGHBOR: If they do make gains in the midterm, it will be more important than ever for you to show which side you’re on and which side they’re on. Then at least you have a fighting chance of mobilizing Americans behind you. Otherwise this aftershock of a recession will go on for years, demagogues will prey on the public’s anxiety to foment even more anger and resentment, you’ll lose in 2012, and we’ll have an even more hateful politics.

OBAMA (blinking, momentarily unsteady, stuttering): You … You’re …  right! You’re … absolutely right! I hadn’t understood until this very moment! Thank you! Thank you! (Everyone cheers.) We’re gonna fight! We’re going to really take them on! That’s the only way to make real change! I finally get it! (More cheers.)

NEIGHBOR: And while you’re at it, read Robert Reich’s latest book, AFTERSHOCK. It explains it all. Here’s a copy.

Schwarzenegger Blasts Big Oil Over Prop 23

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Can Gadgets Save the World?

by John Lawrence

There is no doubt that the developed world is hooked on gadgets. There is the ipad, the ipod, the Kindle, the smart phone and too many others too numerous to mention. The question is is this proliferation of gadgets really going to save the world, the environment, the planet. Or is the proliferation of gadgets as a world changer a pipe dream in the mind of some CEOs? In the August 19, 2010 edition of the San Diego Union, Paul Jacobs, CEO of Qualcomm, says this: "I think the thing that excites most Qualcomm employees is the idea that we can literally change the world with our ideas because we can get those ideas and put them into the hands of 100 million people in a matter of three months." Well exactly how Mr. Jacobs intends to change the world isn't specified. Another app for the iphone perhaps?

I can see how an African wife that has to walk eight miles each day to a water source and then haul water home could be enabled to talk to her family via cell phone during her long and arduous trek. However, what might improve her lot even more would be a source of fresh water in her village so that she wouldn't have to make the trek in the first place. The infrastructure necessary to guarantee each of the 6.7 billion people of the world a supply of clean water close to their home is not high tech. Nor can another gadget bring it about. It's not so exciting to think about the provision of clean water and adequate sanitation facilities to everyone, but that would do more to reduce child mortality and water borne disease throughout the world. On the one hand you have a CEO of a major Fortune 400 corporation proposing that the proliferation of gadgets is exactly what the world needs now. On the other you have the reality that what the world really needs in order to reduce disease and drudgery is basic infrastructure. Which is it?

While Qualcomm stands to make money from the proliferation of cell phones and other smart gadgets, who stands to make money off of the provision of clean water and adequate sanitation? They tried the privatization of water in Bolivia, and the result was that the desperately poor people who really needed it could not afford it. This is what happened when water was privatized:

Etched deeply into the granite walls just inside the entrance of the World Bank headquarters in Washington are the words, "Our dream, a world free of poverty." Earlier this month in Bolivia, the citizens of South America's poorest country sent the bank a message once again that the poor aren't too keen on the part of that dream that involves handing their water over to foreign corporations. On January 10 the citizens of El Alto took to the streets en masse to demand that their water system, privatized in 1997 under World Bank pressure, be returned to public hands. Three days later Bolivia's president issued a decree canceling the water concession, led by the French water giant Suez, and an arm of the World Bank itself. The El Alto water revolt follows, by five years exactly, the now famous revolt against water privatization in Cochabamba, in which a company controlled by the Bechtel Corporation was ousted from the country. Together, these two revolts over water should send an important message to officials at the World Bank, if they are willing to hear it. The people of Bolivia did not choose to privatize their public water systems. That choice was forced on them, as it has been in many poor nations around the world, when the World Bank made privatization an explicit condition of aid in the mid-1990s. Poor countries such as Bolivia, which rely heavily on foreign assistance for survival, are not in much of a position to say no to such pressures. World Bank water officials claim all the best intentions when they make the push for water privatization. The bank has argued that poor governments are often too plagued by local corruption and too ill equipped to run public water systems efficiently. Handing water over to foreign corporations, the bank has said, opens the door to needed investment and skilled management. However, to borrow a phrase, the road to bad public policy is often paved with good intentions. Bolivia's experience with bank-forced water privatization is a striking example of the yawning gap between World Bank theory and how things actually work in the real world for the poor families who have to live with the results. In Cochabamba five years ago, the water contract with Bechtel and the Abengoa Corporation of Spain paved the way for rate increases of double and more for poor water users. Those steep and sudden price hikes, needed in part to finance the 16 percent annual profit demanded by the companies, led to citywide protests and eventually to Bechtel's and Abengoa's ouster.The Bolivian government declared martial law in an effort to save the companies' contra ct, leaving one teenage boy dead and more than 100 people wounded. In El Alto the chief complaint about the Suez/World Bank privatization is that it left tens of thousands of poor families with no access to water whatsoever. Fortunately, no one was killed or wounded in this latest water revolt, a credit to President Carlos Mesa, who agreed that the water contract was inadequate and approved its cancellation.

It's true that gadgets have marginally improved the lives in the developed world for people who already have a considerable amount of wealth and who have adequate supplies of fresh water and adequate sanitation. For such people a new gadget is like another new toy to put under the Christmas tree. But for a CEO like Mr. Jacobs to be so misguided and out of touch with the world situation to state that another gadget will "change the world", shows a lack of understanding and empathy for anyone except the class of people that can afford to buy the gadgets that Qualcomm produces. In the US today 15% of the people live in poverty. I don't think they represent the market for the next "smart" cell phone. And who exactly are the 100 million people that Mr. Jacobs can put Qualcomm's ideas into the hands of? They sure aren't the people that are living on a dollar a day or have to walk miles to get water that may or may not be contaminated.

The problems facing the world today can't be solved by the proliferation of gadgets. And basic infrastructure can be better provided by governments and not private corporate capitalism. It would be less arrogant if Mr. Jacobs had said something like "we can't solve the world's problems with our technology but we can make life marginally better for the world's affluent." That kind of a statement would not only be more accurate, but more in an appropriate spirit of humility.

A CONVENIENT TRUTH: Gearing Up For Climate Change Could Supercharge The Job Market

HuffingtonPost.com | Dan Froomkin | Posted 09.28.2010

(This is Idea No. 5 in Huffington Post's ongoing America Needs Jobs series; see the introduction.)

Could one major crisis be solved.... by solving another?

If we're talking about the nation's desperately poor job market on the one hand, and the dire threat of climate change on the other, then the answer is: Quite possibly, yes.

The solution to both would be an enormous investment in green technology and green jobs -- creating a robust "clean energy economy" while reducing carbon emissions; putting millions of Americans back to work while increasing our energy independence; rebuilding our manufacturing base while saving consumers money on their energy bills; and saving the planet.

It certainly sounds a heck of a lot cheerier than the alternative.

And it makes sense that to genuinely restart the American jobs engine, you're going to need something really big.

Here's University of Texas economist James Galbraith putting today's need in historical perspective:

The illusion of stimulus was that the economy would "return to normal" with a little "fiscal boost." The reality is that having exhausted (however imperfectly) the 1940s agenda of middle-class housing, the 1950s highways agenda, the 1960s health-care agenda and the 1990s information-technology bubble, the economy needs a new strategic direction. The clear and pressing priorities are energy and climate change. To address these challenges is a grand task, requiring decades of research, careful planning and many investments, if we are to pass on a livable planet and a decent living standard. Institutionally it will require new lending agencies to assure that the funds needed are available over the long term. And the work can provide jobs for millions, for many years.

In a major report issued last year, John Podesta and colleagues at the Center for American Progress described the characteristics of a clean energy economy. Among its attractive qualities, it promises to revive the American middle class:

Solving global warming means investment. Retooling the energy systems that fuel our economy will involve rebuilding our nation's infrastructure. We will create millions of middle-class jobs along the way, revitalize our manufacturing sector, increase American competitiveness, reduce our dependence on oil, and boost technological innovation. These investments in the foundation of our economy can also provide an opportunity for more broadly shared prosperity through better training, stronger local economies, and new career ladders into the middle class. Reducing greenhouse gas pollution is critical to solving global warming, but it is only one part of the work ahead. Building a robust economy that grows more vibrant as we move beyond the Carbon Age is the greater and more inspiring challenge.

Famed venture capitalist John Doerr is an evangelist for clean energy and one of seven business leaders (also including Bill Gates and Jeff Immelt) who make up the American Energy Innovation Council (AEIC). That group is calling for "both robust, public investments in innovative energy technologies as well as policy reforms to deploy these technologies on a large scale."

Here's how Doerr explains the group's thinking:

Well, today, we are in a worldwide race for the next great global industry. And I believe, and my partners believe, the president and members of Congress believe that is the new clean-energy technologies....

[I]f you look at the top 30 companies around the world in new clean energy -- that's the top 10 in wind, the top 10 in solar, and the top 10 in advanced batteries, the sort that would power our electric vehicles -- only four of those 30 are American companies.

If I compare that to the Internet, it's -- it's as if, gosh, Microsoft and Apple and Google and Intel and Yahoo! were all companies headquartered in Europe or Asia, and only Amazon was a company here in the United States.

So, we have got to make choices, make decisions now about whether we want to be making our own energy future with American jobs, or if we want to be buying that future from China and other countries around the world.

 

There are many different paths to a green jobs future. The AEIC's plan, for instance, calls for $16 billion in annual federal government investment in clean energy innovation. Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) is still pushing for a "Green Bank," at a cost of $10 billion a year, that would facilitate "significant and sustained investment" in new clean-energy technologies.

(Bingaman, however, will be lucky if he can win passage of his bipartisan Renewable Energy Standard bill, written with Republican Senator Sam Brownback of Kansas, which would require utilities to get 15 percent of their power from renewable energy sources like wind and solar by 2021.)

So what may be the last, best hope for major federal clean-energy investment is a retooled green bank proposal that former FCC chairman Reed Hundt is pushing.

Bowing to the political realities -- that, as he puts it, "Congress won't appropriate any money now for any cause, no matter how worthy" and that unemployment is a more urgent priority than clean energy -- Hundt is advocating a nonprofit Energy Independence Trust (EIT) that he bills as a massive jobs generator, and that he says would not require appropriations because it would just be borrowing money from the Treasury.

At the core of the proposal is Hundt's embrace of one of the many facts that deficit hawks try to ignore: that despite concerns that high deficits will force the U.S. to increase interest rates, the Treasury is currently able to borrow money -- i.e. sell Treasury bills -- at stunningly low rates.

"You want to take the astoundingly low interest rates that the government has to pay to borrow money, and you want to transfer that to the degree possible to productive, revenue-producing businesses," Hundt told HuffPost. "There's a huge unmet need for productive new investment, but the only way to really prime the pump is to put in really cheap capital."

The investments Hundt is talking about, however, need to generate returns. "You want to build toll roads, not roads; dams that produce electricity, where you get paid back after a long period of time; electric transmission lines, where the revenue comes in from carrying the electricity; wind farms, where the revenue comes in from selling the electricity."

The Treasury would sell securities at very low interest, lend the money at cost to the EIT, and the EIT would then turn around and lend it to private investors. Hundt calls this "really, really, low, wonderfully low, cheap capital for investors who will build these clean energy systems."

And everyone would eventually get paid back.

"It's really pretty simple. In fact, it's what China does," Hundt said. "And in fact China has used low-cost lending to stimulate about twice as much clean energy investing as we have in the United States."

But how many jobs would this create?

"Roughly speaking, $1 billion in capital is 10,000 direct jobs and about 50,000 indirect jobs," Hundt said. "So one way to do it is say: How many jobs to you want?

"So if you tell me you want a million jobs, then I need $100 billion of investment, which means that I need probably about $30 billion of cheap capital, because the rest would come from other forms of capital."

Meanwhile, that $100 billlion would buy an awful lot of clean power. "Everyone knows that we need to build a clean energy system to replace a dirty energy system," Hundt said.

The plan also allows for private industry and the states to be the decisionmakers. "I don't believe that we need some kind of federal, national comprehensive, Washington-dictated solution. Electricity is a very local business," Hundt said.

"But I do believe if we said to all the states and all the businesses: Here's a once-in-a-lifetime opportunity for very cheap capital... then we would be opening the door to a variety of technological solutions that would be selected on the local level....

"If you want to rebuild the country, this is a golden opportunity."

The Party of Nonsense

Posted on Sep 23, 2010, from Truthdig

By Eugene Robinson

The Republicans were doing pretty well for themselves as the Party of No. So why did they decide to rebrand themselves as the Party of Nonsense?

All right, I’m being slightly disingenuous. Inquiring minds demanded to know just what the GOP proposed to do if voters entrusted them with control of one or both houses of Congress. But if the “Pledge to America” unveiled Thursday is the best that House Republicans can come up with, they’d have been better off continuing to froth and foam about “creeping socialism” while stonewalling on specifics.

The problem with the Pledge is that the numbers don’t remotely add up. The document is such a jumble of contradictions that it’s hard to imagine how it could possibly pass muster with anyone who survived eighth-grade arithmetic—unless, perhaps, the Republicans have something in mind that they’re not prepared to talk about quite yet.

The Pledge bills itself as a plan to “create jobs, end economic uncertainty, and make America more competitive.” These sound like worthy initiatives, but the GOP also promises to “stop out-of-control spending and reduce the size of government.” Most economists would contend that right now, given the level of economic distress throughout the nation, those goals are mutually exclusive. No matter, I suppose, since the Pledge wouldn’t really do either.

To create jobs, the Republicans vow to make all of the Bush administration’s tax cuts permanent—as opposed to the Democrats’ position, which is to make the cuts permanent for the middle class but allow taxes to return to Clinton-era levels for households making more than $250,000 a year. The GOP also would give small-business owners a new 20 percent tax deduction on their business income. The Pledge also tosses in the perennial Republican promise to curb “excessive federal regulation.”

But on the spending side, the party would take a number of actions that would immediately destroy jobs. Republicans propose a hiring freeze for federal employees—exempting the defense and security sectors. Since the private sector isn’t hiring, a public-sector job freeze would only ensure that unemployment remains higher than it otherwise would have been. The Pledge also proposes embargoing any funds from last year’s economic stimulus bill that have not already been spent—money that is meant to keep construction workers, teachers, firemen and others on the job.

If Americans who might have been hired by the federal government or paid with stimulus funds are out of work, they won’t have money to spend on goods and services—and businesses, facing lower demand for their goods and services, won’t hire workers or invest in new facilities. Do Republicans actually want to send the economy back into recession, or have they just not read the document issued in their name?

There’s much more. I’m just coming to the most dishonest—or, charitably, most insincere—of the Pledge’s many promises. Republicans claim to want to reduce the “massive” federal deficit. That is, indeed, a noble aim. But the plan is riddled with measures that would make the deficit grow, not shrink.

Perhaps the biggest is not just extending the tax cuts, but making them permanent. Over the next decade, this measure would add an estimated $4 trillion to the deficit. The Republicans’ notion that cutting the federal budget will somehow make up the difference is laughable. The Pledge exempts defense, entitlements and debt service—the biggest components of the federal budget—and focuses on “discretionary” spending, which they would cut by “at least $100 billion in the first year alone.” Yeah, right.

Sucking that much money out of discretionary programs would require draconian cuts in programs, such as education grants, that both red states and blue states have come to depend on. It won’t happen. And even if it did, the impact on the deficit would pale in comparison to that of the tax cuts.

One funny thing: The “Pledge to America” mentions the phrase Social Security just twice in passing. If the GOP were somehow to enact its full plan, one of the only conceivable ways to keep the country out of bankruptcy would be to make radical changes to Social Security—perhaps privatizing the program, which George W. Bush tried and failed to accomplish. Is that what Republicans have in mind?

That would be a question to ask before November. I think more than a few people would love to know the answer.

Eugene Robinson’s e-mail address is eugenerobinson(at)washpost.com.
   
© 2010, Washington Post Writers Group

Republican Economics as Social Darwinism

by Robert Reich

Sunday, September 26, 2010

John Boehner, the Republican House leader who will become Speaker if Democrats lose control of the House in the upcoming midterms, recently offered his solution to the current economic crisis: “Liquidate labor, liquidate stocks, liquidate the farmer, liquidate real estate. It will purge the rottenness out of the system. People will work harder, lead a more moral life.”

Actually, those weren’t Boehner’s words. They were uttered by Herbert Hoover’s treasury secretary, millionaire industrialist Andrew Mellon, after the Great Crash of 1929.

But they might as well have been Boehner’s because Hoover’s and Mellon’s means of purging the rottenness was by doing exactly what Boehner and his colleagues are now calling for: shrink government, cut the federal deficit, reduce the national debt, and balance the budget.

And we all know what happened after 1929, at least until FDR reversed course.

Boehner and other Republicans would even like to roll back the New Deal and get rid of Barack Obama’s smaller deal health-care law.

The issue isn’t just economic. We’re back to tough love. The basic idea is force people to live with the consequences of whatever happens to them.

In the late 19th century it was called Social Darwinism. Only the fittest should survive, and any effort to save the less fit will undermine the moral fiber of society.

Republicans have wanted to destroy Social Security since it was invented in 1935 by my predecessor as labor secretary, the great Frances Perkins. Remember George W. Bush’s proposal to privatize it? Had America agreed with him, millions of retirees would have been impoverished in 2008 when the stock market imploded.

Of course Republicans don’t talk openly about destroying Social Security, because it’s so popular. The new Republican “pledge” promises only to put it on a “fiscally responsible footing.” Translated: we’ll privatize it.  

Look, I used to be a trustee of the Social Security trust fund. Believe me when I tell you Social Security is basically okay. It may need a little fine tuning but I guarantee you’ll receive your Social Security check by the time you retire even if that’s forty years from now.

Medicare, on the other hand, is a huge problem and its projected deficits are truly scary. But that’s partly because George W. Bush created a new drug benefit that’s hugely profitable for Big Pharma (something the Republican pledge conspicuously fails to address). The underlying problem, though, is health-care costs are soaring.

Repealing the new health-care legislation would cause health-care costs to rise even faster. In extending coverage, it allows 30 million Americans to get preventive care. Take it away and they’ll end up in far more expensive emergency rooms.

The new law could help control rising health costs. It calls for medical “exchange” that will give people valuable information about health costs and benefits. The public should know certain expensive procedures only pad the paychecks of specialists while driving up the costs of insurance policies that offer them.

Republicans also hate unemployment insurance. They’ve voted against every extension because, they say, it coddles the unemployed and keeps them from taking available jobs.

That’s absurd. There are still 5 job seekers for every job opening, and unemployment insurance in most states pays only a small fraction of the full-time wage.

Social insurance is fundamental to a civil society. It’s also good economics because it puts money in peoples’ pockets who then turn around and buy the things that others produce, thereby keeping those others in jobs.

We’ve fallen into the bad habit of calling these programs “entitlements,” which sounds morally suspect – as if a more responsible public wouldn’t depend on them. If the Great Recession has taught us anything, it should be that.anyone can take a fall through no fault of their own.

Finally, like Hoover and Mellon, Republicans want to cut the deficit and balance the budget at a time when a large portion of the workforce is idle.

This defies economic logic. When consumers aren’t spending, businesses aren’t investing and exports can’t possibly fill the gap, and when state governments are slashing their budgets, the federal government has to spend more. Otherwise, the Great Recession will turn into exactly what Hoover and Mellon ushered in – a seemingly endless Great Depression.

It’s also cruel. Cutting the deficit and balancing the budget any time soon will subject tens of millions of American families to unnecessary hardship and throw even more into poverty.

Herbert Hoover and Andrew Mellon thought their economic policies would purge the rottenness out of the system and lead to a more moral life. Instead, it purged morality out of the system and lead to a more rotten life for millions of Americans.

And that’s exactly what Republicans are offering yet again.

When Will Obscenely Rich A**holes Stop Crying About Taxes?

by Bill Maher

The wildly wealthy got us into this mess, and now they're whining non-stop because they might have to pay a little more in taxes.

September 26, 2010, From Alternet        

New Rule: The next rich person who publicly complains about being vilified by the Obama administration must be publicly vilified by the Obama administration. It's so hard for one person to tell another person what constitutes being "rich", or what tax rate is "too much." But I've done some math that indicates that, considering the hole this country is in, if you are earning more than a million dollars a year and are complaining about a 3.6% tax increase, then you are by definition a greedy asshole.

And let's be clear: that's 3.6% only on income above 250 grand -- your first 250, that's still on the house. Now, this week we got some horrible news: that one in seven Americans are now living below the poverty line. But I want to point you to an American who is truly suffering: Ben Stein. You know Ben Stein, the guy who got rich because when he talks it sounds so boring it's actually funny. He had a game show on Comedy Central, does eye drop commercials, doesn't believe in evolution? Yeah, that asshole. I kid Ben -- so, the other day Ben wrote an article about his struggle. His struggle as a wealthy person facing the prospect of a slightly higher marginal tax rate. Specifically, Ben said that when he was finished paying taxes and his agents, he was left with only 35 cents for every dollar he earned. Which is shocking, Ben Stein has an agent? I didn't know Broadway Danny Rose was still working.

Ben whines in his article about how he's worked for every dollar he has -- if by work you mean saying the word "Bueller" in a movie 25 years ago. Which doesn't bother me in the slightest, it's just that at a time when people in America are desperate and you're raking in the bucks promoting some sleazy Free Credit Score dot-com... maybe you shouldn't be asking us for sympathy. Instead, you should be down on your knees thanking God and/or Ronald Reagan that you were lucky enough to be born in a country where a useless schmuck who contributes absolutely nothing to society can somehow manage to find himself in the top marginal tax bracket.

And you're welcome to come on the show anytime.

Now I can hear you out there saying, "Come on Bill, don't be so hard on Ben Stein, he does a lot of voiceover work, and that's hard work." Ok, it's true, Ben is hardly the only rich person these days crying like a baby who's fallen off his bouncy seat. Last week Mayor Bloomberg of New York complained that all his wealthy friends are very upset with mean ol' President Poopy-Pants: He said they all say the same thing: "I knew I was going to have to pay more taxes. But I didn't expect to be vilified." Poor billionaires -- they just can't catch a break.

First off, far from being vilified, we bailed you out -- you mean we were supposed to give you all that money and kiss your ass, too? That's Hollywood you're thinking of. FDR, he knew how to vilify; this guy, not so much. And second, you should have been vilified -- because you're the vill-ains! I'm sure a lot of you are very nice people. And I'm sure a lot of you are jerks. In other words, you're people. But you are the villains. Who do you think outsourced all the jobs, destroyed the unions, and replaced workers with desperate immigrants and teenagers in China. Joe the Plumber?

And right now, while we run trillion dollar deficits, Republicans are holding America hostage to the cause of preserving the Bush tax cuts that benefit the wealthiest 1% of people, many of them dead. They say that we need to keep taxes on the rich low because they're the job creators. They're not. They're much more likely to save money through mergers and outsourcing and cheap immigrant labor, and pass the unemployment along to you.

Americans think rich people must be brilliant; no -- just ruthless. Meg Whitman is running for Governor out here, and her claim to fame is, she started e-Bay. Yes, Meg tapped into the Zeitgeist, the zeitgeist being the desperate need of millions of Americans to scrape a few dollars together by selling the useless crap in their garage. What is e-Bay but a big cyber lawn sale that you can visit without putting your clothes on?

Another of my favorites, Congresswoman Michele Bachmann said, "I don't know where they're going to get all this money, because we're running out of rich people in this country." Actually, we have more billionaires here in the U.S. than all the other countries in the top ten combined, and their wealth grew 27% in the last year. Did yours? Truth is, there are only two things that the United States is not running out of: Rich people and bullshit. Here's the truth: When you raise taxes slightly on the wealthy, it obviously doesn't destroy the economy -- we know this, because we just did it -- remember the '90's? It wasn't that long ago. You were probably listening to grunge music, or dabbling in witchcraft. Clinton moved the top marginal rate from 36 to 39% -- and far from tanking, the economy did so well he had time to get his dick washed.

Even 39% isn't high by historical standards. Under Eisenhower, the top tax rate was 91%. Under Nixon, it was 70%. Obama just wants to kick it back to 39 -- just three more points for the very rich. Not back to 91, or 70. Three points. And they go insane. Steve Forbes said that Obama, quote "believes from his inner core that people... above a certain income have more than they should have and that many probably have gotten it from ill-gotten ways." Which they have. Steve Forbes, of course, came by his fortune honestly: he inherited it from his gay egg-collecting, Elizabeth Taylor fag-hagging father, who inherited it from his father. Of course then they moan about the inheritance tax, how the government took 55% percent when Daddy died -- which means you still got 45% for doing nothing more than starting out life as your father's pecker-snot.

We don't hate rich people, but have a little humility about how you got it and stop complaining. Maybe the worst whiner of all: Stephen Schwarzman, #69 on Forbes' list of richest Americans, compared Obama's tax hike to "when Hitler invaded Poland in 1939." Wow. If Obama were Hitler, Mr. Schwarzman, I think your tax rate would be the least of your worries.

Bill Maher is host of HBO's "Real Time with Bill Maher", Friday's at 10:00PM

Census Finds Record Gap Between Rich and Poor

By HOPE YEN

The Associated Press
Tuesday, September 28, 2010; 6:46 AM, From the Washington Post

WASHINGTON -- The income gap between the richest and poorest Americans grew last year to its widest amount on record as young adults and children in particular struggled to stay afloat in the recession.

The top-earning 20 percent of Americans - those making more than $100,000 each year - received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent earned by those below the poverty line, according to newly released census figures. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968.

A different measure, the international Gini index, found U.S. income inequality at its highest level since the Census Bureau began tracking household income in 1967. The U.S. also has the greatest disparity among Western industrialized nations.

At the top, the wealthiest 5 percent of Americans, who earn more than $180,000, added slightly to their annual incomes last year, census data show. Families at the $50,000 median level slipped lower.

"Income inequality is rising, and if we took into account tax data, it would be even more," said Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in poverty. "More than other countries, we have a very unequal income distribution where compensation goes to the top in a winner-takes-all economy."

Lower-skilled adults ages 18 to 34 had the largest jumps in poverty last year as employers kept or hired older workers for the dwindling jobs available, Smeeding said. The declining economic fortunes have caused many unemployed young Americans to double-up in housing with parents, friends and loved ones, with potential problems for the labor market if they don't get needed training for future jobs, he said.

Rea Hederman Jr., a senior policy analyst at The Heritage Foundation, a conservative think tank, agreed that census data show families of all income levels had tepid earnings in 2009, with poorer Americans taking a larger hit. "It's certainly going to take a while for people to recover," he said.

The findings are part of a broad array of U.S. census data being released this month that highlight the far-reaching impact of the recent economic meltdown. The effects have ranged from near-historic declines in U.S. mobility and birth rates to delayed marriage and the first drop in the number of illegal immigrants in two decades.

The census figures also come amid heated political debate in the run-up to the Nov. 2 elections over whether Congress should extend expiring Bush-era tax cuts. President Barack Obama wants to extend the tax cuts for individuals making less than $200,000 and joint filers making less than $250,000; Republicans are pushing for tax cuts for everyone, including wealthy Americans.

The 2009 census tabulations, which are based on pre-tax income and exclude capital gains, are adjusted for household size where data are available. Prior analyses of after-tax income made by the wealthiest 1 percent compared to middle- and low-income Americans have also pointed to a widening inequality gap, but only reflect U.S. data as of 2007.

Among the 2009 findings:

-The poorest poor are at record highs. The share of Americans below half the poverty line - $10,977 for a family of four - rose from 5.7 percent in 2008 to 6.3 percent. It was the highest level since the government began tracking that group in 1975.

-The poverty gap between young and old has doubled since 2000, due partly to the strength of Social Security in helping buoy Americans 65 and over. Child poverty is now 21 percent compared with 9 percent for older Americans. In 2000, when child poverty was at 16 percent, elderly poverty stood at 10 percent.

-Safety nets are helping fill health gaps. The percentage of children covered by government-sponsored health insurance such as Medicaid and the Children's Health Insurance Program jumped to 37 percent, or 27.6 million, from 24 percent in 2000. That helped offset steady losses in employer-sponsored insurance.

The 2009 poverty level was set at $21,954 for a family of four, based on an official government calculation that includes only cash income. It excludes noncash aid such as food stamps.

Arloc Sherman, a senior researcher at the left-leaning Center on Budget and Policy Priorities, noted the effects of expanded government programs in cushioning the impact of skyrocketing unemployment. For example, the Census Bureau estimates that 3.6 million people would have been lifted above the poverty line if food stamps were counted - a number that would have reduced the 2009 poverty rate from the official 14.3 percent to 13.2 percent.

Sheldon Danziger, a University of Michigan public policy professor, said while the U.S. has developed policies to combat poverty, it has trouble addressing ever-widening income inequality - even with a growing federal deficit and previous warnings by former Federal Reserve Chairman Alan Greenspan about soaring executive pay.

An Associated Press-GfK Poll this month found that by 54 percent to 44 percent, most Americans support raising taxes on the highest U.S. earners. Still, many congressional Democrats have expressed wariness about provoking the 44 percent minority so close to Election Day.

"We're pretty good about not talking about income inequality," Danziger said.

---

Online:

http://www.census.gov

Why the Rich Don't Need More Tax Cuts

Economic View

What the Rich Don’t Need

By RICHARD H. THALER

Published by the New York Times: September 25, 2010

WANT to give affluent households a present worth $700 billion over the next decade? In a period of high unemployment and fiscal austerity, this idea may seem laughable. Amazingly, though, it is getting traction in Washington.

I am referring, of course, to the current debate about whether to extend all, or just some, of the tax cuts of President George W. Bush — cuts that are due to expire at year-end. They’re expiring because the only way they could be enacted initially was by pretending that they were temporary.

In this situation, it’s not clear what should be called a tax “cut.” If the temporary law is allowed to expire as planned, does that represent a return to normal, or a tax increase? Conversely, if some parts of the current rates are extended, should those count as a tax cut?

Psychologists call these descriptive choices “framing.” No one is proposing that tax rates be lower than they are now, so the question is whether some people should pay more, and, if so, who.

President Obama has proposed retaining the current rates on incomes up to $200,000 for individuals and $250,000 for couples. Under this plan, everyone would receive a tax “cut” relative to the rates in effect in the Clinton era. For a family with a $250,000 income or more, the cut would be about $6,000, because its first $250,000 of income would be subject to the current, lower rate. But such families would have a higher bill than they do now.

With the exception of the House minority leader, John Boehner, the Republican leadership has drawn a line in the sand, saying it will oppose Mr. Obama’s bill unless all taxpayers remain at current rates. Although it wouldn’t put it this way, the Republican position is, in effect, that if the rich can’t share in the bounty, rates should rise for everyone.

They offer three arguments to support their view.

The first is that it is folly to raise taxes in a weak economy. There is some merit to this argument, of course, but economic policy is always about trade-offs.

Tax cuts are one of many ways to stimulate the economy. Building infrastructure, for example, is another. We have to choose. And if the primary goal is stimulating the economy, tax breaks to the rich are simply not cost-effective. Numerous studies have shown that the poor spend nearly all of their income, while the rich save a significant amount of theirs.

The second argument is that not extending the tax cuts to high-income earners would impose an excessive burden on small businesses. Here, however, we fall into a statistical morass. The administration points out that only 3 percent of all businesses earn enough to have to pay any additional tax. But Republicans reply that those 3 percent of businesses earn 47 percent of the income from this entire sector, meaning that the higher taxes would apply to the bulk of small-business income.

Which is the most relevant number?

To understand these statistics, we need to know how small business is defined. The data come from tax returns, and the definition of a “small” business is one that is organized so that all the profits pass through to the owners, who then report these profits as income on their personal tax returns.

Partnerships and firms structured as S corporations are examples. This category can include businesses as diverse as barbershops, car washes, hedge funds and law firms. Goldman Sachs was in this category before it became a public company. And the fact that 3 percent of the businesses earn nearly half of the money is precisely what many people are concerned about: growing income inequality.

Which brings us to the third argument. Conservatives say that to do anything other than extending tax cuts to everyone would amount to “class warfare.”

The best response to that notion comes from Warren E. Buffett: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

Thomas Piketty and Emmanuel Saez, two academic economists, provide data to back up Mr. Buffett’s view. They show that the proportion of income earned by the top 1 percent of American families was about 10 percent of the national total from 1945 to 1979. Since 1980, that share has doubled, reaching about 20 percent in 2008 — or more, if capital gains are included.

The growth rate has been even faster for the ultrarich — those in the top one-hundredth of 1 percent in income.

Other segments of society, meanwhile, are losing out, with their share of the total declining, and their real incomes remaining stagnant.

And what about incentives? Will the owners of the profitable small businesses work less hard, or hire fewer people, if their own after-tax income falls? This is a much-researched question, and the weight of current evidence suggests that we shouldn’t expect significant real reductions in economic activity if rates change in the range under discussion.

There is another possible argument for including the rich in these tax cuts, one based on “fairness.” By this reasoning, the wealthy are entitled to low tax rates because they have temporarily had them, and it would now be unfair to take them back.

But by that same argument, unemployment insurance should never expire, and every day should be your birthday. “Temporary” has no meaning if it bestows a permanent right.

The question comes down to whether we want a society in which the rich take an ever-increasing share of the pie, or prefer to return to conditions that allow all classes to anticipate an increasing standard of living. Demanding that the rich get a tax cut as a condition for tax relief for others is simply elitist. Tea Partiers, take note.

Richard H. Thaler is a professor of economics and behavioral science at the Booth School of Business at the University of Chicago.

Republican Math Doesn't Add Up

Op-Ed Columnist

Downhill With the G.O.P.

By PAUL KRUGMAN

Published in the New York Times: September 23, 2010

Once upon a time, a Latin American political party promised to help motorists save money on gasoline. How? By building highways that ran only downhill.

I’ve always liked that story, but the truth is that the party received hardly any votes. And that means that the joke is really on us. For these days one of America’s two great political parties routinely makes equally nonsensical promises. Never mind the war on terror, the party’s main concern seems to be the war on arithmetic. And this party has a better than even chance of retaking at least one house of Congress this November.

Banana republic, here we come.

On Thursday, House Republicans released their “Pledge to America,” supposedly outlining their policy agenda. In essence, what they say is, “Deficits are a terrible thing. Let’s make them much bigger.” The document repeatedly condemns federal debt — 16 times, by my count. But the main substantive policy proposal is to make the Bush tax cuts permanent, which independent estimates say would add about $3.7 trillion to the debt over the next decade — about $700 billion more than the Obama administration’s tax proposals.

True, the document talks about the need to cut spending. But as far as I can see, there’s only one specific cut proposed — canceling the rest of the Troubled Asset Relief Program, which Republicans claim (implausibly) would save $16 billion. That’s less than half of 1 percent of the budget cost of those tax cuts. As for the rest, everything must be cut, in ways not specified — “except for common-sense exceptions for seniors, veterans, and our troops.” In other words, Social Security, Medicare and the defense budget are off-limits.

So what’s left? Howard Gleckman of the nonpartisan Tax Policy Center has done the math. As he points out, the only way to balance the budget by 2020, while simultaneously (a) making the Bush tax cuts permanent and (b) protecting all the programs Republicans say they won’t cut, is to completely abolish the rest of the federal government: “No more national parks, no more Small Business Administration loans, no more export subsidies, no more N.I.H. No more Medicaid (one-third of its budget pays for long-term care for our parents and others with disabilities). No more child health or child nutrition programs. No more highway construction. No more homeland security. Oh, and no more Congress.”

The “pledge,” then, is nonsense. But isn’t that true of all political platforms? The answer is, not to anything like the same extent. Many independent analysts believe that the Obama administration’s long-run budget projections are somewhat too optimistic — but, if so, it’s a matter of technical details. Neither President Obama nor any other leading Democrat, as far as I can recall, has ever claimed that up is down, that you can sharply reduce revenue, protect all the programs voters like, and still balance the budget.

And the G.O.P. itself used to make more sense than it does now. Ronald Reagan’s claim that cutting taxes would actually increase revenue was wishful thinking, but at least he had some kind of theory behind his proposals. When former President George W. Bush campaigned for big tax cuts in 2000, he claimed that these cuts were affordable given (unrealistic) projections of future budget surpluses. Now, however, Republicans aren’t even pretending that their numbers add up.

So how did we get to the point where one of our two major political parties isn’t even trying to make sense?

The answer isn’t a secret. The late Irving Kristol, one of the intellectual godfathers of modern conservatism, once wrote frankly about why he threw his support behind tax cuts that would worsen the budget deficit: his task, as he saw it, was to create a Republican majority, “so political effectiveness was the priority, not the accounting deficiencies of government.” In short, say whatever it takes to gain power. That’s a philosophy that now, more than ever, holds sway in the movement Kristol helped shape.

And what happens once the movement achieves the power it seeks? The answer, presumably, is that it turns to its real, not-so-secret agenda, which mainly involves privatizing and dismantling Medicare and Social Security.

Realistically, though, Republicans aren’t going to have the power to enact their true agenda any time soon — if ever. Remember, the Bush administration’s attack on Social Security was a fiasco, despite its large majority in Congress — and it actually increased Medicare spending.

So the clear and present danger isn’t that the G.O.P. will be able to achieve its long-run goals. It is, rather, that Republicans will gain just enough power to make the country ungovernable, unable to address its fiscal problems or anything else in a serious way. As I said, banana republic, here we come.

The Dismantling of Civilized Society

Published on Saturday, September 25, 2010 by CommonDreams.org

by David Michael Green

How stupid are you?

I mean, let's just face it, shall we? That is precisely the question the right has been asking the American public for thirty years (and more) now. And that is the question the American public has been enthusiastically answering for the same period of time.

Like a crack junkie, in fact.

In the 1980s, Ronald Reagan presented America with a set of economic lies so transparent that even a monster like George H. W. Bush called them "voodoo economics". When he was contesting Reagan for the Republican nomination, that is. Once Bush had lost it, and when he wanted to be added to the ticket as the Vice Presidential nominee, everything became hunky dory, and no more voodoo critiques were uttered. That was one of the greatest acts of treason (I choose my words carefully) in American history.

But back to Reagan. "Watch this", he said. "I'm gonna slash taxes, especially for the rich, spend huge sums on ‘defense', and balance the budget at the same time".

Okay, so he wasn't a math major in college. Two out of three ain't bad, though, eh? Well, it is if you have to pay for his ‘mistakes', plus interest, as so many of us continue to do to this day. Prolly not a big problem, though. Even though Americans hate taxes with the passion of the truly infantile, I'm sure they don't mind working extra hours flipping burgers each week to pay for the enrichment of the previous generation of plutocrats and defense contractors. Right?

Or maybe it's just that their answer to the "How stupid" question is: "Very".

You might think that, because Reagan and Bush actually managed to quadruple the national debt with their little exercise in national folly. Or you might especially think that because Lil' Bush came along with the exact same snake oil a decade later. You had to be stupid to buy it the first time, but you had to have been really stupid to buy it the second time. We, of course, were.

And not just in terms of federal debt, either. A generation of Reaganomics has now succeeded in suspending ninety-eight percent of the country in standard-of-living formaldehyde, so that they felt zero effect whatsoever from the substantial growth in GDP over the last thirty years, and now those policies are cutting off their legs from underneath them altogether. All while the people of Reagan's class, of course, just piled on the riches. How stupid do you have to be to not notice who's diddling you?

Very, of course, but not necessarily as stupid as is maximally possible. ‘Cause, guess what? Here they come again. This week Republicans once again have issued a manifesto calling for slashing taxes on billionaires and cutting deficits, all at the same time. And once again they will win big electoral landslide victories in November despite that patent idiocy. Or perhaps because of it.

Why don't they just come out and do magic tricks, instead? Oh wait. That's their Jesus bit. Never mind.

On the one hand, I don't blame Americans for voting for the party that isn't the Democratic Party this fall. Obama and crew are miserable failures, as completely unable to provide meaningful solutions to the problems facing Americans today as they are inept at winning political fights against manifest criminals. Looking at the landscape in front of them as it appears to voters' blinkered vision, it makes perfect sense to desperately swing to the party not in government when the house is on fire and the party in government is showing up with squirt guns. What could be more logical? This is, indeed, the fundamental notion of ‘responsible government' itself, and it is at the core of democratic theory.

On the other hand, of course, there are two very excellent reasons why such a vote is completely idiotic. First, because there actually are more than two alternatives to choose from. I wish we had viable third parties in America but I don't normally advocate for them, given the massive systemic improbability of their success. That said, if there was ever a moment for which a third party vote was called for, this is it.

And second, because ‘the alternative' to the Democrats are the very folks who put us in these crises to start with, and they are now explicitly devoted to making conditions even worse for ordinary Americans. That's exactly what will happen, of course, and if you think the present moment is grim, wait until you see how much fun the next two years are gonna be. They're gonna look like the mangled and ferocious spawn of a tainted marriage between the Depression politics of the Hoover era, the sick depravity of McCarthyism, the relentless scandal-mongering of the Gingrich era, and the completely unmitigated greed of the Cheney years. Welcome to the dismantling of civilized society in America. Yes, yes, I know - it's quite arguable whether such a beast ever existed. Well, at least that's one debate we're about to put to rest definitively.

And we also know for sure of yet one more thing Ol' W was wrong about. Remember when he said: "There's an old saying in Tennessee - I know it's in Texas, probably in Tennessee - that says, fool me once, shame on - shame on you. Fool me - You can't get fooled again!"

He shoulda checked with Karl Rove and the rest of his party of predatory shucksters, who seem quite incapable of not constantly trying to fool the public. And he shoulda considered the ridiculous improbability of his own presidency before attempting to quote Pete Townshend. Not to mention the current moment. We know why the GOP has to lie, and does so compulsively. Even in contemporary America, surely the stupidest country on the planet, the homo sapiens are still sentient enough to opt out of the most overt cases of self-immolation. If kleptocratic Republicans told the truth, who in the world would ever vote for them, other than the richest two percent of Americans?

The bigger mystery is why people continue to fall for this crap over and over. This is the "shame on me" concept that Dauphin George was reaching for but couldn't quite grasp (too bad he didn't actually, er, study, when he was at Yale). How many times can fools be told the same foolish line and be fooled into foolishly falling for it, like a pack of so many fools?

It would appear that for Americans, at least, there is no limit, based on the contents of the Republicans' just released "Pledge to America" manifesto, which I could have drafted for them, so predictable is its contents. There is of course, loads of debauchery and rampant destruction in there, dressed up as piety and patriotism. But the fiscal insanity is the most egregious. Can they really pledge the old voodoo economics once again - slashing tax revenue while simultaneously cutting deficits - and get away with it? Yes they can, and yes they have.

Perhaps their lies are more plausible because they have promised to cut spending. It's just that there are two little caveats they hope you won't notice. First, that they somehow miraculously fail to specify in advance of the election what they intend to cut. Gee, I wonder why that is? Could it be that if people knew what those cuts would be they would be aghast? Or could it be - and this brings us to the other small footnote - that what they are proposing is to mathematics what a dropped object falling upward would be to physics?

As Paul Krugman notes, the Republican Pledge claims that "everything must be cut, in ways not specified - ‘except for common-sense exceptions for seniors, veterans, and our troops.' In other words, Social Security, Medicare and the defense budget are off-limits. [Krugman should have also mentioned service to the existing debt, which is one of the biggest single items in the federal budget today, and absolutely cannot be touched.] So what's left? Howard Gleckman of the nonpartisan Tax Policy Center has done the math. As he points out, the only way to balance the budget by 2020, while simultaneously (a) making the Bush tax cuts permanent and (b) protecting all the programs Republicans say they won't cut, is to completely abolish the rest of the federal government: ‘No more national parks, no more Small Business Administration loans, no more export subsidies, no more N.I.H. No more Medicaid (one-third of its budget pays for long-term care for our parents and others with disabilities). No more child health or child nutrition programs. No more highway construction. No more homeland security. Oh, and no more Congress.'"

And yet - of course - poll data shows that the folks purveying this heap of garbage are about to be swept into office. Meanwhile, city governments are folding their tents across America, slashing all their services entirely, and the GOP is nominating former witches, anti-masturbators, racists, wrestling promoters and every other form of personal screw-up and jive con-artist to be found everywhere killers and thieves congregate.

I'm sorry, but surveying the landscape, it just feels so over now in America. We seem like little more than a popped balloon, with only the faux blustering fart noises of rapid deflation remaining where once there was an empire and once there were truly revolutionary and truly valuable ideas.

It's no accident, either, that the near-complete obsession of the tea party right and their followers is taxes. It's naked greed, it's more infantile than the politics of a kindergarten sandbox, and it's as corrosive as can be. Oliver Wendell Holmes wrote "Taxes are what we pay for civilized society". He meant it, too. When he died, he donated his estate to the US government.

What is happening to America today is nothing short of the dismantling of such civilized society. Does anyone think the country is economically better off today than in the 1950s or 1960s? Does anyone seriously think that the Millennial Generation will be better off than their parents? Would anyone seriously bet on America today, as an economic comer? Does anyone think that the next hundred years will be the American century?

There is so much tragedy to this story that it is hard to know where to start. Perhaps the greatest ugliness of the whole affair is the self-inflicted nature of our demise, and, therefore, the complete lack of necessity for all the pain and suffering already endured and the vastly greater amounts still to come. It never had to be this way, which just makes it all the more pathetic.

If there is any silver lining here it is that the hooligans of the right will manifestly fail at governing, which at least opens up the potential for them to be rejected once again.

I will be interested - as a political scientist, not as a citizen - to see what sort of budget proposal Republicans will pass out of the House once they control it. Like Reagan and Bush before them, their numbers cannot possibly jibe. Unlike Reagan and Bush, however, they will have far less luxury to resort to the shell game of grossly irresponsible deficits as a way out of their own lies, having made deficit reduction so overtly the centerpiece of their campaign this year. The freaks of the tea party right don't seem so likely to let them off the hook for another round of campaign lies as they were the last two times out. How's that for an irony? The only prospect of real accountability for these monsters would be coming from the monsters of their own constituency.

But, assuming the GOP can find a way around that problem (perhaps by proposing a draconian pretend budget that they know could never be accepted by congressional Democrats or Obama?), I would expect them to prevail again in 2012. Unless the jobs picture changes radically in 2011 - and no economist that I know of is predicting that - Obama is complete toast. Indeed, he is probably so wounded that we might expect a Democrat or two to challenge him in the primaries for the nomination. Doesn't matter, though. Either way, whoever the Republicans nominate will be the next president.

Which is where I start to get real nervous. Governments that combine a commitment to holding power at all costs with a total absence of real policy solutions and an amoral willingness to do anything to serve their true aspirations are a truly scary prospect. History suggests that the years after 2012 could be the ones during which the wheels finally came off the wagon of what is left of American democracy.

But it could be far worse than that, too, for us and for others. The prospect of a hugely powerful empire lashing out at the rest of the world - whether in rage or seeking domestic diversion - is not a pretty one at all. The Soviet superpower was kind enough to implode rather innocuously. I'm not at all convinced that we yanks would be quite so gracious about doing the same.

I remain haunted to this day by the words of John le Carré, written on the eve of the Bush invasion of Iraq: "America has entered one of its periods of historical madness, but this is the worst I can remember: worse than McCarthyism, worse than the Bay of Pigs and in the long term potentially more disastrous than the Vietnam War".

Sadly, I think he had everything right in his assessment, save for the word "periods". That term implies a temporariness to our condition that might at least make it somehow barely tolerable.

But what if it only gets worse from here?

And let's be honest. Given the nature of the Republicans, the Democrats, the media and the public in America today, how does it not? 

© 2010

David Michael Green is a professor of political science at Hofstra University in New York. He is delighted to receive readers' reactions to his articles (mailto:[email protected]), but regrets that time constraints do not always allow him to respond. More of his work can be found at his website, www.regressiveantidote.net.

Under Obama's Plan to Deny Tax Cuts to the Upper 2%, the Upper 2% Would Still Get a Larger Tax Cut Than Anyone in the 'Middle Class'

by John Lawrence

The Democrats have not explained this well, but under Obama's plan to extend the Bush tax cuts for the middle class while allowing them to expire for the upper 2%, the wealthy would still get the Bush tax cut on the first $250,000. of their income. The rest of their income above $250,000. would be taxed at a 4.6% higher rate than it is today. The tax rate would go from 35% to 39.6% for high wage earners but only for earnings greater than $250,000. The wealthy would still enjoy a Bush 4.6% tax cut on $250,000. which amounts to $11,500. This amount would still be far higher than what the average middle class individual or family would gain by virtue of having the Bush tax cuts extended.

So what all the fuss is about as far as the Republicans are concerned is huge tax cuts for the wealthy over and above what the whole middle class would get. They would still get more than a 'middle class' household earning $249,999.99 even if the Bush tax cuts for the wealthy are not extended! Last year the 25 largest hedge fund managers earned an average of a billion dollars apiece and paid taxes at a rate of just 17%. So the Republicans want them to have not just an $11,500. tax cut but a whopping additional $45,988,500 tax cut!! To continue the Bush tax cuts for the wealthy would add an additional $700 billion to the national debt over ten years. Republicans and Tea Baggers pretend to be so worried about the national debt, but, when it comes to deficits and debts caused by tax breaks for the wealthy, why their concerns all evaporate and vanish. They only have a problem with narional debt when it comes to providing social security, Medicare, food stamps and other programs which benefit the middle class and the poor.

Democrats should absolutely bring the extension for the Bush tax cuts for the middle class (which also includes a $11,500. tax cut for the wealthy, remember) to a vote before the November elections and let the Republicans vote it down which they will because what they're after is not tax cuts for the middle class which amount to chicken feed and chump change but tax cuts for the wealthy where you're talking about real money. The upward shift in income and wealth from the middle class to the wealthy which has occured over the last 10 years was brought about primarily by the Bush tax cuts. Also the underfunding of the Federal government which directly contributes to the deficit and national debt has been brought about by the Bush tax cuts, two wars, the money for which was borrowed, and the prescription drug benefit for seniors which again was borrowed money. As the US borrows more money from the Chinese, they gain more control over the American economy and political process. While the Chinese economy booms, the US economy languishes.

Although we've been told the Great Recession was over as of June 2009, unemployment is still hovering around 10%, foreclosures are still continuing at a high rate and 15% of Americans live in poverty. Firemen, policemen and school teachers are being laid off. American infrastructure is badly in need of repair. And what do the Republicans have to offer? In their "Pledge to America" they offer more of the Bush policies that created the Great Recession in the first place! More tax cuts for the rich, more deregulation that created the Wall Street meltdown, salmonella in eggs, the Gulf oil spill and the San Bruno gas explosion and more transfer of wealth from the middle class to the rich!

That's a prescription for disaster, and the result will be a Third World America with a super wealthy class and a class of peons, a political system dominated by monied interests and the elimination of all social programs which benefit the poor and middle class. 

The Super Rich Get Richer, Everyone Else Gets Poorer, and the Democrats Punt

by Robert Reich

Friday, September 24, 2010

 

The super-rich got even wealthier this year, and yet most of them are paying even fewer taxes to support the eduction, job training, and job creation of the rest of us. According to Forbes magazine’s annual survey, just released, the combined net worth of the 400 richest Americans climbed 8% this year, to $1.37 trillion. Wealth rose for 217 members of the list, while 85 saw a decline.

For example, Charles and David Koch, the energy magnates who are pouring vast sums of money into Republican coffers and sponsoring tea partiers all over America, each gained $5.5 billion of wealth over the past year. Each is now worth $21.5 billion.

Wall Street continued to dominate the list; 109 of the richest 400 are in finance or investments.

From another survey we learn that the 25 top hedge-fund managers got an average of $1 billion each, but paid an average of 17 percent in taxes (because so much of their income is considered capital gains, taxed at 15 percent thanks to the Bush tax cuts).

The rest of America got poorer, of course. The number in poverty rose to a post-war high. The median wage continues to deteriorate. And some 20 million Americans don’t have work. 

Only twice before in American history has so much been held by so few, and the gap between them and the great majority been a chasm — the late 1920s, and the era of the robber barons in the 1880s. 

And yet the Bush tax cuts of 2001 and 2003, which conferred almost all their benefits on the rich, continue.

Democrats have decided to delay voting on whether to extend them for the top 2 percent of Americans or for the bottom 98 percent until after the mid-term elections. 

Democrats have thereby given up a defining issue that could have enabled them to show the big story of the last three decades — the accumulation of almost all the gain from economic growth at the top — and to make a start at reversing it. 

When will they ever learn? 

“AFTERSHOCK: The Next Economy and America’s Future”

Another Angle on the Economy

by Steve Unger

Published on the Range Voting Blog, September 23, 2010

The problem with our economy today is not with the stock market or
with businesses in trouble. Banks, Wall Street, even General Motors
are all doing fine. The only glitch is that, except for the financial
upper crust, Americans, ranging from farm workers to engineers, are
having trouble finding jobs. Many of those who succeed are not
employed at good jobs doing what they are educated for, but are
finding part-time work of a dead-end type.

The reason is not hard to find. Manufacturing, traditionally the
source of the best jobs for most people, is being phased out in our
country. US companies are importing products made elsewhere (mainly in China) or setting up manufacturing plants in other countries. Try and
find an American-made product in a department store. In addition, over a million people, mostly from poor countries, enter the country
annually, legally or illegally. They are willing to work at menial
jobs for very low wages and under miserable working conditions. Americans who would normally be doing that sort of work,
mainly poor people themselves, must either accept the same conditions or join the unemployed. Under programs such as H-1B, temporary work visas are given to engineers, computer programers, nurses, etc. They effectively displace Americans, and, since they will work hard for less pay, lower the incomes of those not displaced.

Suppose the US abandoned its slogan-based trade policy and restricted
imports of goods produced by grossly underpaid people, or from
countries that imposed all manner of barriers to imports from the
US. (The changes would not affect such imports as Japanese cars, or
Danish wind turbines, which are produced by reasonably paid workers.)
It would have a major impact on imports from China, the source of most US consumer goods. We need not worry about retaliation, since exports to China constitute a small fraction of imports. What would happen to our economy?

Suddenly there would be a need to manufacture electric drills,
hammers, sneakers, microwave ovens, DVD players, dehumidifiers... the list is endless. Companies previously producing such items would start rehiring skilled workers, new companies would start up and compete for able people. Former shop foremen would quit their jobs as Walmart clerks to get back into industry. There would be a need for
construction workers of all types to refurbish abandoned factory
buildings and build new ones. In agriculture, it would no longer be
possible to get the work done by impoverished people from south of our border. Wages would have to be boosted and working conditions improved (perhaps more machinery used) so as to attract American workers. In short there would be a major economic boom, not limited to financial manipulators, but having a major effect on ordinary Americans.

This would lead to increases in retail prices, but greatly increased
income would easily compensate. It would not be practical to do this
all overnite. A plan would have to be devised to phase in the
changeover smoothly over a period of years. Of course there are many
details to work out, and these are important. Also, this approach does
not rule out additional measures to rejuvenate our economy. Immigration should be reduced to a minimum, Programs H-1B
visas and the like should be ended. A large-scale federal effort to
repair and enlarge our degraded infrastructure (deteriorating bridges,
inadequate sewage treatment facilities, etc.) and to jump-start green
energy projects would, in addition to serving important needs, also
get a lot of people back to doing decent work and also stimulate large
and small businesses. Terminating our massive war expenditures would
do much to restore order to the federal budget.

I've written in more detail about the job situation and about
immigration in essays accessible at
http://www1.cs.columbia.edu/~unger/articles/jobs.html
http://www1.cs.columbia.edu/~unger/articles/immigration.html
http://www1.cs.columbia.edu/~unger/articles/arizona.html

Steve
............

Stephen H. Unger
Professor Emeritus
Computer Science and Electrical Engineering
Columbia University
............

Bush Tax Cuts Made the Rich Richer, Federal Revenues Poorer

So How Did the Bush Tax Cuts Work Out for the Economy? David Cay Johnston | Sep. 24, 2010 08:02 PM EDT

The 2008 income tax data are now in, so we can assess the fulfillment of the Republican promise that tax cuts would produce widespread prosperity by looking at all the years of the George W. Bush presidency.

Just as they did in 2000, the Republicans are running this year on an economic platform of tax cuts, especially making the tax cuts permanent for the richest among us. So how did the tax cuts work out? My analysis of the new data, with all figures in 2008 dollars:

Total income was $2.74 trillion less during the eight Bush years than if incomes had stayed at 2000 levels.

That much additional income would have more than made up for the lack of demand that keeps us mired in the Great Recession. That would mean no need for a stimulus, although it would not have affected the last administration's interfering with market capitalism by bailing out irresponsible Wall Streeters instead of letting the market determine their fortunes.

In only two years was total income up, but even when those years are combined they exceed the declines in only one of the other six years.

Even if we limit the analysis by starting in 2003, when the dividend and capital gains tax cuts began, through the peak year of 2007, the result is still less income than at the 2000 level. Total income was down $951 billion during those four years.

Average incomes fell. Average taxpayer income was down $3,512, or 5.7 percent, in 2008 compared with 2000, President Bush's own benchmark year for his promises of prosperity through tax cuts.

Had incomes stayed at 2000 levels, the average taxpayer would have earned almost $21,000 more over those eight years. That's almost $50 per week.

The changes in average and total incomes are detailed on the next page in Table 1, the first of four tables analyzing the whole data.

Now that we have looked at the whole eight-year period, what does the new data show about 2008, the worst recession ear since the 1930s, show when compared to the peak year of 2007, when the average taxpayer made $63,096, which was 2.5 percent more than in 2000.

In only two of the eight Bush years, 2006 and 2007, were average incomes higher than in 2000, but the gains were highly concentrated at the top. Of the total increase in income in 2007 over that in 2005, nearly 30 percent went to taxpayers who made $1 million or more.

Now surely some will say that it is not fair to saddle George W. Bush and those who supported his tax cuts with the economic figures from 2001 and 2008. The first would be on the theory that President Clinton should be charged for that year (just as Bush should be charged with 2009, the first year of the Obama administration). The second is on less solid ground, but let's consider it for the sake of argument.

Just measuring the second through seventh years we find that total income was still nearly $2 trillion lower than if 2000 level income continued. Stacking the deck in President George W. Bush's favor does not change the awful performance or even soften it much.

The tax cuts cost $1.8 trillion in the first eight years, according to an analysis by the Tax Policy Center, whose reliability the last administration went out of its way to praise. Those cuts were heavily weighted toward the people candidate George W. Bush famously called "haves and the have-mores . . . some people call you the elite. I call you my base."

In the two years since 2008, the cuts' total cost grew to $2.3 trillion, the Tax Policy Center estimated.

One of every eight dollars of the tax cuts went to the 1 in 1,000 taxpayers in the top tenth of 1 percent, the annual threshold for which was in the $2 million range throughout the last administration. The only other large beneficiary was parents with children under 17 who make enough to pay income taxes, thanks to the $1,000-per-child tax credit Republicans started championing in the mid-1990s.

Now let's look at wages, the source of most people's income. In 2008 the average taxpayer made $58,000. That was $5,100 less than in 2007, a decline of 8.1 percent.

The number of taxpayers reporting any wages in 2008 was 1.26 million fewer than in 2007, a scary figure when you consider that most people do not expect to be out of work for an entire year and that the population grew by more than a percentage point. In August 42 percent of the unemployed -- 6.2 million people -- had been out of work for 27 weeks or more, the Bureau of Labor Statistics said. The average for all jobless workers was 33.6 weeks of unemployment, the equivalent of going from New Year's Day through August 23 without a paycheck.

The number of taxpayers with incomes below $100,000 with any wage income fell in 2008 by 1.8 million. Because married couples file many tax returns, this means more than 2 million people who worked in 2007 earned no wages in 2008.

Total wages in 2008 fell by nearly 4 percent, compared with a year earlier, for the 87 percent of Americans whose total income was less than $100,000. Since 2000, population grew more than wages.

Those reporting negative incomes quadrupled from less than 600,000 in 2000 to nearly 2.5 million in 2008. Their losses worsened slightly from -$64,000 on average to -$66,000.

The number of workers earning $500,000 or more in total income also fell, by just under 100,000 (or nearly 12 percent), but their average wage of $718,000 is still more than the average American earns in a decade at 2008 levels.

The number of people reporting incomes of $200,000 or more but legally paying no federal income taxes skyrocketed in the second Bush term. A decade ago it was fewer than 1,500 taxpayers; in 2000 it was about 2,300. This high-income, tax-free group jumped to more than 11,000 in 2007 and then doubled in 2008 to more than 22,000.

In 2008 nearly 1 in every 200 high-income taxpayers paid no federal income tax, up from about 1 in 1,500 in 1998.

The share of high incomes that were untaxed increased more than sevenfold to one dollar of every $166.

The Statistics of Income data on tax-free, high incomes severely understate economic reality because they exclude deferral accounts, including those of hedge fund managers with billion-dollar incomes who can legally report no current income and borrow against their untaxed gains to live tax free.

 

Table 1. 2008 Average Incomes Fell Well Below 2000 Level

The one bright spot in the SOI data at Table 1.4 was that the number of people making $100,000 to $200,000 grew significantly between 2007 and 2008. Their ranks increased by 393,465, or 3 percent, to more than 13.8 million taxpayers.

This truly is good news, because most of the increase had to be people who worked their way up into six-figure incomes from 2007 to 2008.

We know this because fewer than 160,000 taxpayers fell out of the $200,000-and-up income groups. Even if we assume that every one of them fell into the $100,000-$200,000 class, that still leaves 233,000 taxpayers who joined this income group. These 233,000 taxpayers must be people who increased their incomes enough to get them above the $100,000 line. And we know that they did it mostly through becoming more valuable workers, because this group relies on paychecks for more than 77 percent of its income.

But despite that one sliver of good news about low six-figure incomes, the data show overwhelmingly that the Republican-sponsored tax cuts damaged our nation.

Examining performance against the promises, what do we find? Overwhelming evidence that the tax cuts of 2001 and 2003 made us much worse off.

 

Table 2. More Taxpayers, Less Revenue

Ignore the cynics who say the Republican leaders on Capitol Hill, in Wasilla, and on the airwaves care only about the rich. I don't believe that. I think they are captive to economic theories few of them understand and that are simplistic in the extreme. I take them at their word, that they truly believe their policies will produce broad benefits for all, but accepting that does not diminish the fact that the policies these Republicans promote also produce massive tax savings for the superrich who finance their campaigns.

The question to ask is whether their policies worked as promised. Have they even come close? Where is the prosperity -- and where was it in the Bush years, when massive increases in both military and discretionary spending provided a chronic stimulus to the economy?

 

Table 3. 2007 to 2008: Fewer Jobs, Less Money (Mostly)

The hard, empirical facts:

The tax cuts did not spur investment. Job growth in the George W. Bush years was one-seventh that of the Clinton years. Nixon and Ford did better than Bush on jobs. Wages fell during the last administration. Average incomes fell. The number of Americans in poverty, as officially measured, hit a 16-year high last year of 43.6 million, though a National Academy of Sciences study says that the real poverty figure is closer to 51 million. Food banks are swamped. Foreclosure signs are everywhere. Americans and their governments are drowning in debt. And at the nexus of tax and healthcare, Republican ideas perpetuate a cruel and immoral system that rations healthcare -- while consuming every sixth dollar in the economy and making businesses, especially small businesses, less efficient and less profitable.

This is economic madness. It is policy divorced from empirical evidence. It is insanity because the policies are illusory and delusional. The evidence is in, and it shows beyond a shadow of a reasonable doubt that the 2001 and 2003 tax cuts failed to achieve the promised goals.

So why in the world is anyone giving any credence to the insistence by Republican leaders that tax cuts, more tax cuts, and deeper tax cuts are the remedy to our economic woes? Why are they not laughingstocks? It is one thing for Fox News to treat these policies as successful, but what of the rest of what Sarah Palin calls with some justification the "lamestream media," who treat these policies as worthy ideas?

The Republican leadership is like the doctors who believed bleeding cured the sick. When physicians bled George Washington, he got worse, so they increased the treatment until they bled him to death. Our government, the basis of our freedoms, is spewing red ink, and the Republican solution is to spill ever more.

Those who ignore evidence and pledge blind faith in policy based on ideological fantasy are little different from the clerics who made Galileo Galilei confess that the sun revolves around the earth. The Capitol Hill and media Republicans differ only in not threatening death to those who deny their dogma.

How much more evidence do we need that we made terrible and costly mistakes in 2001 and 2003?

 

Figure 1. High-Income Paying Zero Tax 1998-2008

The number of individual income tax returns showing adjusted gross income of $200,000 or more, but no income tax liability, has been rising rapidly in recent years.

 

Table 4. 2008: Fewer Jobs, Lower Pay
(With Exceptions in Bold)

GM Has No Business Using Our Money On Campaign Contributions

by Robert Reich

Wednesday, September 22, 2010

General Motors has given $90,500 to candidates in the current election cycle, according to the Federal Election Commission.

Hmmm? Last time I looked, you and I and every other U.S. taxpayer owned a majority of GM. That means some of the money we’re earning as GM owners is being used to influence how we vote in the upcoming mid-term election.

To put it another way, we taxpayers are paying some people (GM executives) to tell us how we should vote for another group of people (House and Senate candidates) who will decide how our taxes will be used in the future.  

GM spokesman Greg Martin justifies the expenditure as a competitive necessity. “We’re not going to sit on the sidelines as our competitors and other industries who have PACS are participating in the political process,” he told the Wall Street Journal.

In other words, now that we taxpayers own GM, it’s in our interest that GM use our money to affect how we vote, lest we mistakenly decide to support candidates who, once in office, enact legislation that helps GM’s competitors and not GM.

Wait a moment. I smell hypocrisy. Didn’t we help GM (and Chrysler) with a big bailout, and not help competitors Ford, Nissan, Honda, or Toyota or any other automaker that builds cars in the U.S.? 

Moreover, the circularity of GM’s logic leads to some strange places. It would presumably allow any big corporation to get tax deductions (in effect, tax subsidies from the rest of us) for outlays for lobbyists, political ads, and political donations to members of congress – so long as these expenditures help the company relative to its competitors.

Problem is, the tax laws don’t allow this.

Nor does the law allow taxpayer-supported entities to use taxpayer dollars to influence elections. And yet this is exactly what GM is doing. 

Since TARP, suspicions about big government in cahoots with big business have fueled angry tea partiers on the right and despairing cynics on the left. GM’s crass disregard for the spirit if not the letter of the law continues to fuel them.

Keith Olberman Exposes Republican 'Small Business' Scam

by John Lawrence

Visit msnbc.com for breaking news, world news, and news about the economy

When Republicans talk about how Obama's proposal to let the Bush tax cuts expire on incomes over $250,000. would hurt small business, they are talking about some really, really huge businesses which are classified as 'small business' for tax purposes only. They are talking about any S  corporation, partnership or sole proprietorship, some of which have incomes of billions of dollars. For example, the Bechtel Corporation, the largest construction company in the world with 2009 revenues of $30.8 billion is classified as a 'small business' for tax purposes. Price Waterhouse Coopers, an accounting firm with $26 billion in revenue in 2009, is classified as a 'small business.' It seems that any business with less than 100 owners can be classified as a small business no matter how many employees or how much revenue they have. Some small businesses are owned by billionaires. Koch Industries, a conglomerate of partnerships with 70,000 employees, owned by the billionaire Koch brothers Charles and David, is classified as a 'small business.'

Last Sunday on Face the Nation Bob Schieffer questioned John Boehner about the fact that Obama's proposed expiration of Bush tax cuts for individual incomes above $250,000. would affect only 3% of small business. Boehner replied yes, but that 3% produced over half the revenues of 'small business.' So in effect what he was saying is that 97% of small businesses would not be affected by the expiration of the Bush tax cuts, and that the 3% that would be affected includes 'small businesses' like the Bechtel Corporation, Price Waterhouse Coopers and the Koch brothers whose revenues are in the tens of billions of dollars. Last year the top 25 hedge funds had average revenues of $1 billion each. No doubt they were all classified as small businesses. And they paid about 17% in Federal taxes because of a tax scam known as 'carried interest.' This was in a year that was one of the worst for most people since the Great Depression. So when Republicans talk about how not extending tax cuts to those with over $250,000. would hurt small business, they are including businesses with revenues in the billions.

Keith Olberman in a special report blew the lid off this Republican scam. Small businesses are not just Mom and Pop stores. In fact most Mom and Pop stores do not have revenues in the billions or even more than the $250,000. limit. Republicans for years have protected 'small businesses' which are owned by billionaires who in return give them generous campaign donations. The Koch brothers, who founded the conservative think tank known as the Cato Institute, contribute mightily to right wing causes. The Republican mantra about small business is just that - a mantra which is as hollow and fake and as much a lie and distortion as most of their other talking points. In fact 'small business,' the supposed jobs generator of the economy has not really created that many jobs. That is another lie and distortion so there is no real need to make 'small business' sancrosanct and to give them generous tax cuts.

This is from the Olberman report:

Fewer than 750,000 people, less than 0.25 percent of the country, would be affected by the top rate, according to Joint Committee on Taxation figures quoted by Olbermann. Owners of such businesses would benefit from continuation of Bush era tax cuts due to expire at the end of this year. Rather than paying corporate taxes, the firms operate as S Corporations, sole proprietorships or partnerships, including limited liability companies that put LLC instead of Inc. at the end of their names. All are considered pass-through structures, in which company profits are passed directly to individual owners, who then pay taxes. Traditional corporations pay taxes on profits and pass along dividends to individuals, who pay taxes on the dividends. Olbermann explained the rules for classification as a small business. “It’s not the income that’s small, it’s not the number of employees that’s small, it’s just the total number of owners that’s small,” Olbermann said. In the case of S corporations, the total number of owners can be 100, he said.

Besides that the individuals who receive the "pass through profits" have many ways of avoiding paying taxes. That's why the tax code is so thick. Their lobbyists have been hard at work making sure that wealthy people pay as little in taxes as possible.

It is time for Obama and the Democrats to take a stand against tax breaks for the very wealthy. Conservatives are never concerned about the deficit when it comes to tax cuts. Letting the Bush tax cuts expire for those making over $250,000. would bring down the deficit by $700 billion over 10 years. Letting the tax cuts continue would give an average of $100,000. to households with an income greater than $1 million. Filers with taxable income of $500,000 to $1 million would still get on average a tax cut of $6,700 compared with pre-2001 rates because their first $250,000. would still qualify for the Bush tax cuts. So even though the wealthy would still get a larger tax cut than most other Americans, they still are not satisfied because it would not be a tax cut on their entire income, only on the first $250,000. of it. Certainly the wealthy, who received most of the benefits from the Bush tax cuts, should be forced to pay their fair share to reduce the deficit. But their whole goal is to avoid paying taxes and to only talk about their concern for deficits in the same breath as ending social programs which help the needy.

Certainly tax cuts should not be given to businesses, small or otherwise, in a blanket fashion a priori in the hopes that they will create jobs. They should only be givern to businesses a posteriori which have actually created jobs, and those tax cuts should be rescinded if the jobs don't last at least five years. Any tax cuts for small business should be fine tuned enough to exclude businesses like Bechtel, Price Waterhouse Coopers and the Koch brothers each of which had 2009 revenues in the tens of billions of dollars.

 

 

 

We Might Have Been Better Off if Wall St Had Been Allowed to Go Bankrupt

Published on Tuesday, September 21, 2010 by The Guardian/UK

Wall Street's Greatest Heist: The TARP

The notion that without the $700bn bailout we would be reduced to bartering was a ruse by the banks to get taxpayers' money

by Dean Baker

Two years ago, the top honchos at the Fed, Treasury and the Wall Street banks were running around like Chicken Little warning that the world was about to end. This fear-mongering, together with a big assist from the elite media (thatis, NPR, the Washington Post, the Wall Street Journal, etc), earned the banks their $700bn Troubled Asset Relief Programme (Tarp) blank cheque bailout. This money, along with even more valuable loans and loan guarantees from the Fed and FDIC, enabled them to survive the crisis they had created. As a result, the big banks are bigger and more profitable than ever.

Now, the same crew that tapped our pockets two years ago is eagerly pitching the line that their bailout was good for us. It may be the case that the history books are written by the winners, but that doesn't prevent the rest of us from telling the truth.

Let's step back to where we were two years ago. The huge investment bank Bear Stearns had collapsed. So had Fannie Mae and Freddie Mac, the mortgage giants. Lehman Brothers, the fourth largest investment bank had also gone down. AIG, the country's largest insurer, had been put on life support by the government.

At this point, Merrill Lynch, Morgan Stanley and Goldman Sachs, the three remaining independent investment banks, all faced runs that would quickly sink them without government intervention. Citigroup and Bank of America, two of the three largest commercial banks, were also almost certainly insolvent. Many other banks also faced insolvency, especially if they took big losses on their loans to other institutions that were about to go bankrupt.

This was when the Wall Street boys made their mad rush for the public trough. They enlisted everyone that mattered in the effort, including Treasury secretary Henry Paulson, Federal Reserve Board chairman Ben Bernanke, and Timothy Geithner, then the head of the New York Federal Reserve Bank.

The line was that the economy would collapse if congress did not immediately rescue the banks. They were prepared to make up anything to save the banks in their hour of need. Bernanke was probably caught in the biggest fabrication when he told congress that the commercial paper market was shutting down.

If true, this would have been disastrous, since most major companies rely on selling commercial paper to meet their payroll and other routine expenses. If this market shut down, it would mean that even healthy businesses could not pay their workers and suppliers, which would quickly cause the whole economy to grind to a halt.

Bernanke did not bother to inform congress and the public that he had the ability to single-handedly support the commercial paper market. He waited until the weekend after congress approved the Tarp to announce that he would establish a special Fed lending facility to buy commercial paper.

In reality, the Fed almost certainly had the ability to keep the economy going by sustaining the system of payments, even if the chain of bank collapses was allowed to run its course. In the 1980s Latin American debt crisis, the Fed had an emergency plan to seize the money centre banks, and keep them operating, if a default by a major Latin American country pushed them into insolvency.

By the time of the Lehman crisis, the financial markets had been severely stressed for over a year. The first major bank collapse had occurred more than six months earlier. It would have required a degree of unbelievable incompetence and/or irresponsibility for the Fed not to have devised a similar emergency plan to keep the systems of payments operating in a worst-case scenario.

Furthermore, even if the Fed had been as incompetent as many claim, it would not have taken long for it to improvise a system whereby certain payments would be prioritised and the system of payments would again be up-and-running. The notion that we would be sitting in a 21st-century economy and reduced to barter payments was an invention of the bank lobby to get the taxpayers' money.

The first Great Depression was the result of a decade of failed policies, not a single bad mistake at its onset. There was absolutely nothing that we could have done back in September-October of 2008 that would have required that we experience a decade of double-digit unemployment. The spectre of a "second great depression" is a fairy tale invented by the bank lobby to make the rest of us feel good about having given them our money.

We are also supposed to feel good that the vast majority of the Tarp money was repaid. This is another effort to prey on the public's ignorance. Had it not been for the bailout, most of the major centre banks would have been wiped out. This would have destroyed the fortunes of their shareholders, many of their creditors, and their top executives. This would have been a massive redistribution to the rest of society – their loss is our gain.

It is important to remember that the economy would be no less productive following the demise of these Wall Street giants. The only economic fact that would have been different is that the Wall Street crew would have lost claims to hundreds of billions of dollars of the economy's output each year and trillions of dollars of wealth. That money would, instead, be available for the rest of society. The fact that they have lost the claim to wealth from their stock and bond holdings makes all the rest of us richer, once the economy is again operating near normal levels of output.

Instead, we have the same Wall Street crew calling the shots, doing business pretty much as they always did. The rest of us are sitting here dealing with wreckage of their recklessness: 9.6% unemployment and the loss of much of the middle class's savings in their homes and their retirement accounts.

And the lackeys of the Wall Street crew are telling us that we should be thankful that we didn't have a second Great Depression. Maybe we don't have the power to keep the bankers from picking our pockets, but we don't have to believe their lies.

© 2010 Guardian News and Media Limited

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( www.conservativenannystate.org) and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. 

Health Insurance Corporations Drop Children

Published on Wednesday, September 22, 2010 by FireDogLake.com

Surprise! Private Insurers Skirt New Health Care Law

by Jon Walker

Democrats were extra proud when they put a requirement that insurance companies cover children with pre-existing conditions in their new health care law. Now, I bet the CEOs at the country’s largest for-profit insurance companies are even more proud of themselves for easily finding a way around this regulation: simply stop offering child-only policies. From the Denver Post:

At least six major companies — including Anthem, Aetna, Cigna and Humana — have said they will stop writing new policies for individual children not covered by their parents’ or other plans, insurance officials said.

They blamed health reform mandates taking effect Thursday requiring companies that write such policies as of that date to also cover sick children up to age 19.

Of course, President Obama and the rest of the Democrats have already begun pretending to shake their fists in anger at the insurance companies for being evil and putting profits over people. From the Washington Post:

But officials of the Obama administration said the move contradicted a letter from the leader of one of the insurance industry’s most important trade groups after the law’s adoption in March. Karen Ignagni, president of America’s Health Insurance Plans, expressed support for the law’s provisions concerning children with preexisting conditions and promised to “fully comply” with them.

“We expect [insurance companies] to honor that commitment. Insurers shouldn’t break their promise and turn their backs on some of our most vulnerable Americans,” said Jessica Santillo, a spokeswoman for the Department of Health and Human Services.

Frankly, the complaining from Obama is just sad. Either it is hollow grandstanding, or Obama actually thought that the private, for-profit health insurance companies were honest brokers he could trust to not try to find loopholes in the new regulations. If it is the latter, President Obama’s much-touted intellect needs a reevaluation.

At this point, for Democrats to blame the for-profit insurance companies is pathetic. Private insurers are the scorpion in the story of turtle and the scorpion. They have proven for decades they will do anything to avoid regulation, and will always put profits over the health care needs of regular Americans. Heck, by law, as for-profit corporations, they are required to put profits over everything else. Democrats let insurance companies hop on their back, and now they are smack-dab in the middle of the river with them. Don’t scream when they sting you–it is just their nature.

Of course, watching this recent action should fill all Americans with dread. Democrats actually chose to expand coverage to millions by forcing them to buy insurance exclusively from these same misbehaving private companies. If Democrats really believe the job of the government is to insure every American, then they should have had the government do it directly–and more cost effectively–through expanding Medicare for all or a public option, instead of outsourcing it to untrustworthy private insurers that put profits before people.

Signs don’t point to sunny skies ahead

This most recent revelation, cutting out new child policies, combined with the latest massive and apparently unstoppable rate hikes is just more proof of what I spent months warning about: the new law leaves the health insurance companies completely unchecked and the regulations are almost meaningless due to a lack proper enforcement. Frankly, given the billions at stake, and the drive of the for-profit insurance companies to maximize profits, I don’t even know of a really well-designed regulator system could prevent insurers continuing to exploit loopholes.

This might be one of the first examples how, due to poor design, weak regulation, and weaker enforcement, the new law fails to live up to expectations, but I promise you (as someone who read the entire law thoroughly, which apparently even Sen. Max Baucus didn’t) it won’t be the last.

© 2010 FireDogLake.com

Jon Walker is political writer and blogger for FireDogLake. He is an expert on health care policy and the politics of health care reform.

Why No Amount of Fiscal or Monetary Stimulus Will Be Enough, Given How Small A Share of Total Income the Middle Now Receives

by Robert Reich

Tuesday, September 21, 2010

Fiscal policy is deadlocked. So, apparently, is monetary policy. 

The Fed’s decision today (Tuesday) to keep short-term interest rates near zero is no surprise. What’s odd is its apparent decision not to boost the economy by buying hundreds of billions of bonds — despite its acknowledgment that ”the pace of recovery in output and employment has slowed in recent months,” and that prices are rising too slowly for comfort (i.e., we might be facing deflation). 

Every indicator suggests third-quarter growth will be as slow if not slower than in the second quarter. Consumer confidence is down. Retail sales are down. Housing sales are down. Commercial real estate is in trouble.

A growth rate of 1.6 percent means even higher unemployment ahead. Maybe we’re not in a double-dip but we might as well be in one. Growth this slow is the equivalent of heading downward, relative to the growth needed to get us out of the hole we’re in. 

The Fed is deadlocked because it harbors hawks who worry near-zero interest rates will lead to another round of speculation, ending in an even bigger bust. Kansas City Fed President Thomas Hoenig, for example, is openly dissenting from the Fed’s near-zero policy and I’m sure he resists doing anything more to stimulate borrowing. 

I don’t generally side with the hawks but they have a point.

Even though economy is heading downward, flooding it with more money may not help. 

The problem isn’t the cost of capital. Most businesses can get all the money they need. Big ones are still sitting on $1.8 trillion in cash.

The problem is consumers, who are 70 percent of the economy. They can’t and won’t buy enough to turn the economy around. Most don’t qualify for more credit given how much they already owe (or have already defaulted on).

Without consumers, businesses have no reason to borrow more. Except to speculate by buying back their own stock and doing mergers and acquisitions, which is exactly what they’re doing. 

Ultimately, even if fiscal and monetary policy weren’t deadlocked, we’d still face the same conundrum. Say the White House and Ben Bernanke got everything they wanted to boost the economy. At some point these boosts would have to end. The economy would have to be able to run on its own. 

But it can’t run on its own because consumers have reached the end of their ropes.

After three decades of flat wages during which almost all the gains of growth have gone to the very top, the middle class no longer has the buying power to keep the economy going. It can’t send more spouses into paid work, can’t work more hours, can’t borrow any more. All the coping mechanisms are exhausted. 

Anyone who thinks China will get us out of this fix and make up for the shortfall in demand is blind to reality. 

So what’s the answer? Reorganizing the economy to make sure the vast middle class has a larger share of its benefits. Remaking the basic bargain linking pay to per-capita productivity. 

Let me end with a brief commercial. My new book, “Aftershock: The Next Economy and America’s Future” is out today. In it, I explain this in detail. 

Two Simple Things You Can Do to Help Save the Environment and Your Own Health

by John Lawrence

Stop drinking water out of little plastic bottles which contain bisphenol A, otherwise known as BPA which is banned in Europe. BPA acts like a synthetic estrogen and is thought to cause everything from premature puberty in girls to interference with sexual development in boys. Instead get yourself some BPA free plastic bottles or a metal bottle and fill it up with your own water from home to take with you. Get yourself a filtration system for your home water or get water from a water store which is deionized and has gone through a variety of purification systems such as reverse osmosis. It's better tasting and better for you and the cost is minimal.

Buying water in little plastic bottles is bad for the environment since the corporation who provided that water extracted it out of the ground and contributed to the reduction of ground water in aquifers. These companies are known to have pumped huge quantities of water out of aquifers and have been banned in some areas. They are basically robbing the ground water from future generations whose wells will run dry sooner than they would have if huge quantities of water had not been pumped to put into plastic bottles and then hauled all over thus degrading the environment even more due to carbon emissions from trucking the water around.

And then the plastic bottles are thrown away clogging up landfills and contributing to the plastic mass in the Pacific Ocean. These bottles are made from petroleum products which are an additional envronmental burden not to mention the contribution they make to the trade deficit as most petroleum is imported. All in all water in plastic bottles is a bad way to go both from a health standpoint and from the standpoint of huge amounts of water extracted from local aquifers and trucked around thereby increasing carbon emissions. It's best to keep the water supply local and to drink local not corporate water.

The second thing you can do is to stop getting your groceries or other store bought items in plastic bags. Plastic bags are clogging up our oceans and don't biodegrade. Instead get some reusable cloth bags now sold in most super markets, and take them with you when you go shopping. Stores will bag your items in the cloth bags, and you'll be saving the oceans and landfills. Fish can become entangled in plastic bags and they're a huge waste when you consider that cloth bags can be used over and over again instead of using the throwaway plastic bags. If you buy just one or two items tell the clerk not to bag them. Instead carry them yourself without a bag. When you get to your car you can bag them yourself in reuseable cloth bags if you happen to forget to take them with you into the store. Keep a number of them in your car.

Some towns and cities are banning both plastic bottled water and plastic shopping bags. Local citizens are also taking action to prevent large corporations from pumping huge amounts of their local ground water. An enlightened citizenry can do much to not only save the environment and their own health but to save money too.

Passenger Trains: Our Hope for a More Sustainable Future

Published on Sunday, September 19, 2010 by CommonDreams.org

by Olga Bonfiglio

President Obama's proposal to spend $50 billion on transportation infrastructure—including 4,000 miles of rail lines—couldn't be a better expenditure of our federal tax dollars.

After spending two days on the Empire Builder, the long-haul Amtrak line from Chicago to Seattle/Portland, I quickly realized that our investment in trains should be readily and heartily embraced.  And, if more Americans were to take such trips, I’m sure they, too, would choose trains as an alternative mode of travel.

Amtrak staff was courteous and responsive to passengers, a bit quirky as train people can be, but absolutely delightful while we all traveled the miles and hours together across the country. Riding the train, especially on an overnight, was romantic and adventurous and we kept to our schedule despite the numerous times we had to yield to freight trains.

Actually, it’s a miracle that Amtrak has lasted these past 40 years since President Richard Nixon deliberately designed it for failure.  Different administrations—both Democratic and Republican—have either ignored passenger rail or, like President George W. Bush, actively sought to scuttle it.

James McCommons, author of Waiting on a Train: The Embattled Future of Passenger Rail Service tells the story about Amtrak and America’s relationship with trains along with some great travelogues of his year-long train trips around the country.

He points out that most legislators who vote on appropriations for passenger trains have never ridden a train, which severely works against Amtrak. Others have been adamant that Amtrak make a profit.

Truth is, there is no public transportation system in the world that earns a profit.

What is clear is that train networks serve as a means to an end, namely, they contribute to an area’s economic development, an idea that is capturing the attention of more and more mayors across the country, especially in this weak economy.

Actually, highways and airports are not money-makers either and the federal government subsidizes them to the tune of $180 billion per year. Amtrak only gets $1 billion. Unfortunately, many Americans don’t realize that a transportation network is one of the benefits of their taxes.

The reason that Amtrak has been short-sheeted is that passenger rail has simply not been a government priority.

After 100 years of moving people within our cities and around the country, trains lost favor because people were sick of the rapacious and corrupt conduct of the railroad corporations. The vehicles were dirty and staff was rude or mean. Ridership had been steadily declining since 1920. After World War II, the nation made a dramatic switch to invest in highways because our roads were poor and lacked connectivity and, well, people liked driving their cars. It didn’t help that the automobile, oil and tire companies conspired—or at least lobbied—against the public transportation system for their own interests as depicted in the 1996 PBS film, “Taken for a Ride” and its 2008 Part II version. 

Promoted by President Dwight D. Eisenhower, the Federal-Aid Highway Act of 1956 required citizens to finance the Interstates by paying 15 to 20 percent of the price of a gallon of gas. The 46,876-mile Interstate system took 35 years to complete and cost $128.9 billion.  The feds paid 90 percent of the cost or about $114 billion—$425 billion in 2006 dollars— even though the Interstates were under the control of the states.  Governors and mayors signed onto this massive public works plan without hesitation because they saw it as an economic development tool for their cities. They would be proved wrong within a couple decades.

As more and more people needed and bought cars, they found themselves stuck in more traffic jams and having to contend with endless road repair. Operating an automobile amounted to $6,000 to $7,000 per year (outside its purchase) and the accident and death rates related to cars—at least 40,000 deaths per year—were overwhelming.

Building the Interstates in the cities also drastically changed urban life, something Eisenhower never intended and experts never foresaw. Neighborhoods were torn up to make way for the highways. Social stratification and racial discrimination intensified as middle class white people migrated to the suburbs and left poor people and minority groups behind in the cities. Downtowns that were designed for pedestrians became congested places and the influx of cars made them frustrating to navigate. Old buildings were demolished to create surface parking, which then created gaping, ugly holes in the cityscape.  People felt unsafe and increasingly reluctant to go downtown. Retail moved out to the suburbs and the companies eventually followed. Of course, all of this out-migration ended up depleting the tax base and making ghost towns out of our once vibrant and prosperous downtowns.

By the late 1990s transportation engineers and analysts began questioning the Interstate’s “externalities” as they costed out pollution, energy waste, land disruption, accidents, time wasted in traffic jams.  They also learned that spending hundreds of millions of dollars to add highway lanes and interchanges didn’t relieve congestion.

The airlines tried to make up for their operational costs with reduced legroom, poorer air quality and overcrowding. Greater demand for air travel also necessitated building or expanding airports, which all takes up a lot of tax dollars.

With the 1990s came new attitudes toward cities and toward the environment. Young people and empty nesters found cities a “hip” place to live and began moving back. They reduced their car usage and demanded more public transportation options. People started a movement to restore historic buildings and revitalize their downtowns.

Meanwhile, rail advocates were keeping Amtrak alive, albeit by a thread. Among them was Gil Carmichael, a former highway lobbyist, owner of five car dealerships and an airport charter service. He later founded the Intermodal Transportation Institute at the University of Denver where he advocates for what he calls Interstate II.

Interstate II (http://www.texasrailadvocates.org/InterstateII.htm) involves double- or triple-tracking 20,000 to 30,000 miles of mainline freight railroads, establishing corridors for high-speed trains and eventually electrifying the trains to replace diesel engines. Carmichael estimates this could all be done in 20 years for two cents on the motor fuel tax.

“We have this incredible railroad network that goes out all over this land from city center to city center. That's what is so amazing. It's already there,” said Carmichael (in McCommons).

Another idea train advocates promote is the re-establishment of a combined freight and passenger rail system through private-public partnerships that work with state transportation departments.  Dedicated passenger lines have a multiplier effect that can relieve traffic congestion, reduce freight bottlenecks, diminish flight delays, reduce this country's carbon footprint and accommodate people without cars or the means or desire to fly.

When Amtrak was created, politicians, lobbyists and fiscal conservatives really wanted to deep-six passenger rail altogether within two years. It was only through political wrangling and arm-twisting that train advocates were able to save passenger rail by separating it from freight and calling it Amtrak, the National Railroad Passenger Corporation. That did not mean, however, that it would be efficient, well-funded or make a profit despite Nixon’s caveat that the new railroad be off the government dole as soon as possible.

The United States has never had a vision for an integrated railroad network nor has it adequately funded one, says John Gibson, vice president of Operations Research and Planning at CSX (quoted in McCommons).  Instead, passenger rail has been a hit and miss enterprise as Amtrak has tried to put its trains on networks owned and managed by the freight companies.

Could there be a renaissance in trains? Yes, says McCommons, because as the nation’s population increases, as more people decide to lead urban lives and as cities increase in density, it makes sense to use rail—especially with energy costs expected to climb.

“In terms of efficiency—fuel savings, lower carbon outputs, smaller footprint on the landscape—the advantage is really rail,” said Anthony Carbonell of the Lincoln institute of Land Policy in Cambridge (quoted in McCommons). “It has been significantly underinvested in and disadvantaged against the other modes. We once had good train service in this country. We need to recover that capacity.”

The Obama administration clearly sees the possibilities of rail and so it gave Amtrak $8 billion in the stimulus package and another $1.3 billion for car rehabilitation and infrastructure repair on the Northeast Corridor. Vice President Joe Biden, a well-known train buff and consistent passenger during his senatorial days, obviously had a lot to do with this boost for Amtrak. 

This is all a good start but we still have a long way to go.

So, ride the train if you haven’t already, and encourage others to ride also, including your congressional representatives. It's a great way to get this country back on track!

Olga Bonfiglio is a professor at Kalamazoo College in Kalamazoo, Michigan, and author of Heroes of a Different Stripe: How One Town Responded to the War in Iraq. She has written for several national magazines on the subjects of social justice and religion. Her website is www.OlgaBonfiglio.com. Contact her at [email protected].

Redefining Work

Published on Sunday, September 19, 2010 by CommonDreams.org

Economics as if People Mattered

by Grace Lee Boggs

As I‘ve been following President Obama's desperate efforts to devise a popular Jobs programs in order to avoid his party's defeat in the November election, I've also been re-reading (and urging others to read) "Buddhist Economics" by E.F. Schumacher.

I first read this amazingly timely article in 1969 when my friend, Henry Geiger, featured it in Manas, his little 8-page weekly with only 2500 subscribers. Robert M. Hutchins, the internationally renowned University of Chicago President, called them "the 2,500 most interesting people in the world."

Schumacher (1911-1977) was a British economist who served as Chief Economic Advisor to the UK National Coal Board. In 1973 he explained Buddhist Economics and advocated small, appropriate technologies in a little book titled Small Is Beautiful: Economics as if People Mattered. The Times Literary Supplement ranked it among the "100 most influential books published since World War II. "

I only met Schumacher once (in Ann Arbor in 1976), but I have long believed that one day his profoundly human approach to economics would be recognized as the alternative to our dehumanizing and increasingly unsustainable economic system.

That day has come!

In "Buddhist Economics" Schumacher explains why mass joblessness is inevitable as long as Work is viewed as Labor, because both employers and employees, each for their own reasons, are constantly seeking to reduce or eliminate it.

"The modern economist," he writes, ‘ has been brought up to consider ‘labour' or work as little more than a necessary evil. From the point of view of the employer, it is in any case simply an item of cost, to be reduced to a minimum if it cannot be eliminated altogether, say, by automation. From the point of view of the workman, it is a ‘disutility'; to work is to make a sacrifice of one's leisure and comfort, and wages are a kind of compensation for the sacrifice.

"Hence the ideal from the point of view of the employer is to have output without employees, and the ideal from the point of view of the employee is to have income without employment. The consequences of these attitudes both in theory and in practice are, of course, extremely far-reaching. If the ideal with regard to work is to get rid of it, every method that "reduces the work load" is a good thing. The most potent method, short of automation, is the so-called "division of labour" and the classical example is the pin factory eulogized in Adam Smith's Wealth of Nations....dividing up every complete process of production into minute parts, so that the final product can be produced at great speed without anyone having had to contribute more than a totally insignificant and, in most cases, unskilled movement of his limbs."

By contrast, Buddhist economics is based on recognizing the role that Work plays in human development: "to give man (sic) a chance to utilize and develop his faculties; to enable him to overcome his ego-centeredness by joining with other people in a common task; and to bring forth the goods and services needed for a becoming existence."

Therefore, "to organize work in such a manner that it becomes meaningless, boring, stultifying, or nerve-racking for the worker would be little short of criminal; it would indicate a greater concern with goods than with people, an evil lack of compassion and a soul-destroying degree of attachment to the most primitive side of this worldly existence. Equally, to strive for leisure as an alternative to work would be considered a complete misunderstanding of one of the basic truths of human existence, namely, that work and leisure are complementary parts of the same living process and cannot be separated without destroying the joy of work and the bliss of leisure."

You can find "Buddhist Economics" on the web. Reading it will open up both your heart and your mind. See also my June 20-26 column, "Maybe Jobs aren't what we need" by Frank Joyce. It's on the Boggs Center website www.boggscenter.org/

Grace Lee Boggs has been an activist for more than 60 years and is the author of the autobiography Living for Change.

Why There’s An Enthusiasm Gap: An Illustration

by Robert Reich

Monday, September 20, 2010

Why is there an enthusiasm gap? Let me illustrate. 

Today (Monday) at a “town hall” sponsored by CNBC in Washington, the President took questions about the economy. When a hedge-fund manager complained that Wall Street executives “feel like we’ve been whacked with a stick” by the administration, Obama said most of his critics think he’s been too soft on the Street.

He noted he still hasn’t been able to end the practice of taxing some hedge fund and private-equity earnings at the capital-gains rates rather than the higher income-tax rates. “The notion that somehow me saying maybe you should be taxed more like your secretary when you’re pulling home a billion dollars…a year I don’t think is me being extremist or anti-business.”

Good as far as he went. But that’s as far as he was willing to go. It was a golden opportunity for Obama to connect the dots — to make the case that

(1) super-rich financiers on Wall Street and top corporate executives have grown even richer than they were before the Great Recession, even though most Americans are getting poorer or losing their jobs and homes and savings, and more Americans are in poverty.

(2) Yet the lobbyists for the financiers and top corporate executives, and their Republican allies have blocked or tried to block every effort of the Administration to widen the circle of prosperity, including enacting a major jobs program, providing major relief for mortgage holders who are under water, helping working families afford college for their kids, making sure states and cities have enough money to pay our classroom teachers, and cutting taxes on average working people.

(3) They almost scuttled the effort to make sure health care would be affordable to average Americans.

(4) The super-rich say the nation can’t afford any of this because of budget deficits. Yet at the same time their platoons of lobbyists are fighting off efforts to treat their income as taxable earnings rather than capital gains. So last year the 400 richest families in America, with an average income of $300 million each, were taxed at an average rate of only 17 percent. That’s the same tax rate paid by a family earning $30,000. 

(5) And they’re fighting off efforts to end the temporary Bush tax cuts. If they’re successful, the richest 1 percent of Americans will get a windfall of $36 billion next year. Millionaire families will avoid paying $31 billion in taxes. Over ten years, they’d avoid paying $700 billion.  

(6) And they’re fighting off efforts to restore the estate tax, which only applies to the top 2 percent of Americans, and which has been in effect since Abraham Lincoln introduced it to help finance the Civil War. How do we afford national defense if the richest and most privileged Americans won’t pay their fair share?

(7) Wealth and power in this country are so distorted that the top 25 hedge-fund managers each earned an average of $1 billion last year. $1 billion would support 20,000 classroom teachers. Yet who contributes more to this country — a hedge-fund manager or a teacher? 

But he didn’t.

Instead, he challenged tea-party activists to come up with specific spending cuts. “It’s not enough just to say, ‘Get control of spending.’ I think it’s important for you to say, you know, I’m willing to cut veterans’ benefits, or I’m willing to cut Medicare or Social Security benefits, or I’m willing to see taxes go up.”

The Defining Issue: Who Should Get the Tax Cut — The Rich or Everyone Else?

by Robert Reich

Sunday, September 19, 2010

Who deserves a tax cut more: the top 2 percent — whose wages and benefits are higher than ever, and among whose ranks are the CEOs and Wall Street mavens whose antics have sliced jobs and wages and nearly destroyed the American economy — or the rest of us?

Not a bad issue for Democrats to run on this fall, or in 2012.

Republicans are hell bent on demanding an extension of the Bush tax cut for their patrons at the top, or else they’ll pull the plug on tax cuts for the middle class. This is a gift for the Democrats.

But before this can be a defining election issue in the midterms, Democrats have to bring it to a vote. And they’ve got to do it in the next few weeks, not wait until a lame-duck session after Election Day.

Plus, they have to stick together (Ben Nelson, are you hearing me? House blue-dogs, do you read me? Peter Orszag, will you get some sense?)

Not only is this smart politics. It’s smart economics.

The rich spend a far smaller portion of their money than anyone else because, hey, they’re rich. That means continuing the Bush tax cut for them wouldn’t stimulate much demand or create many jobs.

But it would blow a giant hole in the budget — $36 billion next year, $700 billion over ten years. Millionaire households would get a windfall of $31 billion next year alone.

And the Republican charge that restoring the Clinton tax rates for the rich would hurt the economy — because it would reduce the “incentives” of the rich (including the richest small business owners) to create jobs — is ludicrous.

Under Bill Clinton and his tax rates, the economy roared. It created 22 million jobs.

By contrast, during George Bush’s 8 years, commencing with his big 2001 tax cut, the economy created only 8 million jobs. And as the new Census data show, nothing trickled down. In fact, the middle class families did far worse after the Bush tax cut. Between 2001 and 2007 — even before we were plunged into the Great Recession — the median wage dropped.

It’s an issue that could also be used to expose the giant chasm that’s opened between the rich and everyone else — aided and abetted by Republican policies. As I’ve noted before, in the late 1970s, the top 1 percent got 9 percent of total national income. By 2007, the top 1 percent got almost a quarter of total national income.

These figures don’t even count in taxes. The $1.3 trillion Bush tax cut of 2001 was a huge windfall for people earning over $500,000 a year. They got about 40 percent of its benefits. The Bush tax cut of 2003 was even better for high rollers. Those with net incomes of about $1 million got an average tax cut of $90,000 a year. Yet taxes on the typical middle-income family dropped just $217. Many lower-income families, who still paid payroll taxes, got nothing back at all.

And, again, nothing trickled down.

As I’ve emphasized, the U.S. economy has suffered mightily from the middle class’s lack of purchasing power, while most of the economic gains have gone to the top. (The crisis was masked for years by women moving into paid work, everyone working longer hours, and, more recently, the middle class going into deep debt — but all those coping mechanisms are now exhausted.) The great challenge ahead is to widen the circle of prosperity so the middle class once again has the capacity to keep the economy going.

In other words, this is the right issue. It’s the right time. It allows Democrats to explain what the Bush tax cuts really did, why supply-side economic is bogus, and the economic challenge ahead.

Even if Democrats feel they have to respond to the Republican charge that taxes shouldn’t be raised on anyone when the employment rate is 9.6 percent, they have a powerful fallback: Extend the Bush tax cuts for everyone through 2011, then end them for the rich while making them permanent for the middle class.

Get it, Democrats? Please don’t blow it this time.

Since 2009, Unemployed More Likely To Drop Out Of Labor Force Than Get Jobs

From Huffington Post,

First Posted: 09-20-10 06:37 PM   |   Updated: 09-20-10 10:53 PM

Since 2009, a layoff victim has been more likely to give up looking for work and drop out of the labor force than to find a job, according to a new report from the Roosevelt Institute, meaning employment prospects for the jobless are the worst they have been since the government started keeping track of them.

From data going back to 1967, "We can see that it has never been more likely than it is now for the unemployed to leave the labor force over finding a job in the labor market," write the Roosevelt Institute's Arjun Jayadev and Michael Konczal.

Since the recession began in December 2007, 4.7 million people have dropped out of the labor force, which means they lost hope of finding work and so quit looking. Even more people would have given up on their job searches had it not been for a dramatic increase in unemployment benefits, which encourage the jobless to keep searching, according to the report's authors.

If policymakers fail to address long-term joblessness and the large number of people dropping out of the labor force, the report says, the unemployment problem could become permanent. "Officials need to act in a bold and imaginative manner to repair the labor market's dysfunction -- much as Roosevelt did -- or risk entrenching the social misery that engulfs many Americans today," Jayadev and Konczal write.

Here's a graph from the Roosevelt Institute that compares the flow of workers between employment, unemployment and separation from the labor force:

 

Ben Stein Whines About Paying More Taxes on His $250,000. Plus Income

by John Lawrence

This morning on CBS they had commentator Ben Stein on to whine about the fact that, if the Bush tax cuts expire for the rich, he'll have to pay more taxes. Boo hoo, Mr. Stein. First he admits to making more than $250,000. a year, but he doesn't say how much more. He admits to owning some real estate, but he doesn't say how much real estate or what it's worth. Instead he whines about the fact that Obama is going to raise his taxes. Of course, he doesn't mention the fact that it was President Bush that set the process in motion by using reconciliation to give him tax cuts for ten years in the first place that were set to expire in 2011. Not a word of thankfulness or gratitude for ten years' worth of tax cuts! Just his perception that Obama (not Bush who set the process in motion) is going to raise his taxes. First, this guy is supposed to have something smart to say. Why else does CBS have him on as a talking head? But, evidently, he doesn't even know the history of the Bush tax cuts and how they were set to expire.

He just moans, "Why me, Mr. President. What have I done wrong?" Pullease. He has no sympathy for the 15% of the American people living in poverty which money from the tax cuts on the upper 2% could conceivably help. He has no understanding that not letting those tax cuts expire could add $700,000. to the national debt over 10 years. All Mr. Ben Stein can think about is his poor, poor self. If his tax cuts expire, it won't make an iota of difference to Mr. Stein's lifestyle. He'll still eat well. He'll still be well housed and well clothed. He'll still get to do everything he does now and so will his wife and kid. It's just a ridiculous spectacle that somebody as rich as Mr. Stein gets on TV and whines about having to pay more taxes. He actually wants you to feel sorry for him! He wants to elicit your sympathy for him, not for the jobless, the homeless, the poverty stricken. Poor, poor Mr. Stein!

People like Mr. Stein only have sympathy for themselves, and they have the nerve to try and get you to feel sorry for them! Not a word from Mr. Stein about the 98% of the American population that is less fortunate than he is. Just a big speech that amounts to self-centered selfishness in a bid to get the less fortunate to feel sorry for him and his family! "What did I do wrong, Mr. President?" Indeed. Maybe what you did wrong was to get on TV in the first place and whine that your $250,000. income for doing next to nothing wasn't enough and that the rest of America should keep on subsidizing you like they've been subsidizing the rich under Republican administrations for the last 30 years.

Next time you make a commentary, Mr. Stein, you might sound a note of thankfulness for your good fortune in being among the upper 2% in America making more than $250,000. in income a year. Because what you have to offer is just a bunch of hot air which doesn't amount to a hill of beans. And this morning's sermon was a new low even for you.

More on the Republican Jobs Program: Expanding the Military-Industrial Complex

by John Lawrence

 
None other than Defense Secretary Robert Gates is trying to rein in the military-industrial complex. A recent profile in Newsweek told about Gates' attempts to reduce the "brass creep." He wants to eliminate some of the redundant generals.

Gates grumbles about perks and posh quarters—generally defended by senior officers as a reward for decades of stressful family moves every couple of years—but those are not his real targets. The defense secretary’s deeper complaint is about what he calls “brass creep.” Roughly translated, it means having generals do what colonels are perfectly capable of doing. Generals require huge staffs and command structures: three-star generals serving four-stars, two-stars serving three, each tended by squadrons of colonels and majors. This sort of elaborate hierarchy may have been called for in Napoleon’s day, but in an era of instant communication, Gates thinks the military could benefit from a much flatter, leaner management structure. These entourages are symbolic of a military leadership that, in the view of its civilian leader, is suffering from an inflated sense of entitlement and a distorted sense of priorities. If Gates has his way, the top brass will have to shed old habits and adjust to leaner times. Some of them will become civilians. The number of generals and admirals has increased by more than a hundred since 9/11, to 969 (and counting Reserves, roughly 1,300). Gates plans a first cut of at least 50. He intends to disband an entire headquarters, the Joint Forces Command, created after the Cold War with the noble aim of making the different armed forces work better together, but which has grown into a $250 million-a-year, 6,000-strong operation of questionable usefulness.

The military-industrial complex has created jobs at all levels which are unnecessary but consume huge quantities of taxpayer cash. The interesting thing is that these jobs have been created in every state in the union and are both civilian and military. They form the backbone of local economies ubiquitously throughout the US. Under George W Bush the military-industrial complex grew indiscriminately. Money was thrown at it. While there was a net loss of jobs in the US from 2000 to 2010, it wasn't because the military-industrial complex shrunk in size. On the contrary, if it wasn't for the jobs created by the military-industrial complex, the US would be in another Great Depression instead of the mere Great Recession we're now experiencing.

After 9/11, U.S. military spending more than doubled. President Obama has vowed to cut back—to only 1 percent growth a year. Deeper cuts appear inevitable. Gates sees the need to turn off “the spigot of money”; he also sees it as an opportunity. In his speech at the Eisenhower library, he noted that Ike understood that real security lay in a strong economy. Having been Army chief of staff after Marshall, Eisenhower knew the Pentagon and how to tame its appetites, but few presidents since have been so wise or lucky. In conversation with NEWSWEEK, Gates was frank about the challenge he faces in forcing what Eisenhower called the “military-industrial complex” to adjust to the new budget realities. Since 9/11, “what little discipline existed in the Defense Department when it came to spending has gone completely out the window,” he says. He is measured but scathing in his judgment: “I concluded that our headquarters and support bureaucracies, military and civilian alike, have swelled to cumbersome and top-heavy proportions, grown overreliant on contractors, and grown accustomed to operating with little consideration to cost.”

Republicans want to return to the good old days when there was a job for everyone in the military-industrial complex. From grunt to PhD, from high school drop-out to research fellow, from illegal immigrant earning his citizenship to West Point and Annapolis graduates, the military-industrial complex could accomodate anyone and everyone. Can't find a job in the civilian economy? Join the Navy! There you will find floating cities in the biggest Navy in the world - bigger than all the rest of the world's Navys combined.

Don't take it from me about the behemothness of the sprawling military-industrial complex - take it from its titular head himself - Secretary of Defense Robert Gates. There is abundant make-work at all levels. They used to say about the Soviet M-I complex, "They pretended to work and the Soviets pretended to pay them." The US military-complex is slightly different. People pretend to work and in return are paid very well indeed. If Republicans have their way, they will continue to be paid very well and the money will come from eliminating social programs like social security and Medicare. Now the bloated M-I complex has had an axe taken to it by Robert Gates, much to the chagrin of those Generals and defense contractors who will be losing their jobs and lucrative contracts. But not to worry. Gates will be gone next year, and Republicans are poised to take over Congress. The spigot will soon be reopened.

Asked by President Obama to stay on as defense secretary, he did not hesitate. In 10 hectic weeks in early 2009—with everyone involved sworn to secrecy to prevent leaks to Congress—Gates drew up a hit list of big-ticket weapons to be chopped in favor of programs that were less glamorous but more useful. He scrapped far-out missile-defense schemes and gave priority to near-term alternatives. He ended production of the F-22, the Air Force’s next-generation fighter, and also tried to cancel its C-17 transport aircraft—while pouring new money into drones. He stopped production of the Navy’s futuristic DDG-1000 destroyer and postponed its CG(X) cruiser while increasing the purchase of Littoral Combat Ships, useful for in-shore operations that are far more likely to engage the Navy than a full-scale sea battle (last fought in World War II). Demonstrating that no program was sacrosanct, he canceled the replacement for Marine One, the presidential helicopter. The new craft was so over-designed that, Gates says, “it was a billion-dollar helicopter in which the president could cook up a meal during a nuclear attack.” In all, Gates cut or eliminated 20 high-profile weapons, averting by DOD reckoning some $330 billion in future spending. In an interview with NEWSWEEK, he seemed surprised that Congress agreed to the cuts. “The amazing thing is how almost nobody thought I would win those fights,” he said. “Damn right. I’d have bet against myself.”

But what Gates is doing is only a drop in the bucket. The next Congress and the next Defense Secretary will surely restore all the cuts Gates is making especially under a Republican Congress and a Republican White House. Gates' cuts are a temporary blip in an otherwise orderly march to complete dominion over the economy by the military-industrial complex with its role of forming the backbone of every local economy throughout the US and indeed contributing mightily to local economies throughout its 1000 base world. Layers and layers of bureacracy make a giant sucking sound on taxpayer money while proponents of the military-industrial complex advocate freeing up even more money by reducing or eliminating 'social programs.' But don't take my word for it. Take Newsweek's.

Now that Obama has lost his political clout, his defense secretary needs to think hard about how to handle Congress. Many lawmakers, as the saying goes, confuse warfare with welfare. Weapons factories and military bases mean jobs back home. Already, the senators from Virginia are squawking that doing away with the Joint Forces Command, based in Norfolk, will harm national security (it won’t, but it will cost several thousand jobs). Gates is also looking to cut the Pentagon’s civilian bureaucracy, which has added a thousand new staff since 9/11. Around the time of the attacks, Rumsfeld reckoned that 17 layers of officialdom lay between him and a line officer. A recent internal study, Gates says, found that “in some cases the gap between me and an action officer may be as high as 30 layers.” (In 1948, when the Cold War began, the secretary of defense had a deputy and a staff of three supervising 50 employees; today, he has 26 political appointees running a staff of 3,000.) The outcome, says Gates, is “a bureaucracy which has the fine motor skills of a dinosaur.”

Am I the only one who finds it strange that the military has as many musicians in military bands as the State Department has diplomats? I don't think so. I think the public is vastly underinformed about what goes on with the Republican jobs program. They have taken the lesson from World War II that the only way for the US economy to reach full employment is to have an enormous military or, in lieu of that, a gigantic military-industrial complex as its backbone. While FDR's New Deal provided some jobs directly, the US didn't really pull out of the Great Depression until the wartime economy of WW II pulled it out. So the unfortunate lesson was that the government creation of peace time jobs building infrastructure cannot do the job of providing employment the way growth in the military-industrial complex can. While Obama is trying to devote a relatively paltry sum to peace time infrastructure building, the huge military-industrial complex cranks on and will be unleashed even further once the Republicans regain power. That will finally pull us out of the Great Recession, but at the expense of reducing or eliminating 'social programs' so that the military-industrial complex's voracious appetite for Federal government money can be assuaged without going further into debt.

In his quest for savings, Gates faces reflexive pushback from the political right, which condemns any cut in a weapons system as a gain for a prospective adversary like China. Gates inquires, sardonically, “Is it a dire threat that by 2020 the United States will have only 20 times more advanced stealth fighters than China?” He takes issue with the left, too. Although he finds it “bizarre” that the Pentagon has as many musicians in military bands as the State Department has diplomats, he parts company with those who want to cut military spending and pull back from U.S. commitments abroad.

But in Gates' defense he doesn't really want to slash the military budget - only rearrange it. He wants to reduce overhead - the layers and layers of bureaucracy - and redirect the money to more fruitful miltary projects. The taxpayers will get no break here nor will more money be available for 'social programs.' No, any savings will stay within the military. And those Generals who will have their jobs cut will probably retire with generous pensions and abundant health care.

He thinks he can persuade Congress to go along. But he concedes that he faces some very tricky political issues. Four-stars are not the only members of the military to enjoy costly perks. Leaving aside the costs of treating wounded warriors—Gates calls that “a sacred obligation”—health-care spending on the military and their families has doubled (in constant dollars) over the last decade. Yet the premiums that military families pay for coverage remain ridiculously low because Congress balks at raising them. (The fraction of the overall bills covered by premiums has dropped from 37 percent to 9 percent since 1999). Health-care costs, Gates says, are “eating the Defense Department alive.” But the issue is a political third rail.

The Republican Jobs Plan: Expand the Military-Industrial Complex, Fight More Wars, Build More Bases Throughout the World

by John Lawrence

Many people say that the Republicans have no plan to increase the number of jobs in America. This is not true. The largest employer in America at the present time is the military-industrial complex and the Republicans want to increase its size even more. Under George W Bush, 17 million square feet of office space with a concomitant increase in personnel was built so that the intelligence establishment could increase its size. This is equivalent to three times the size of the Pentagon. Under George W Bush civilian and military employees of the military-industrial complex were ramped up. Republicans want to go back to the policies of George W Bush and these certainly include increasing the size of government as long as that increased size has to do with the military-industrial complex and not with any 'social programs.'

The US Defense budget is already larger than the combined defense budgets of the rest of the world. The US is already a national security state. That is its economic interests are so intertwined with military interests that any attempt to change that meets with widespread disapproval either from the defense contractors who stand to profit from more defense spending or from ordinary citizens many of whom have been processed through the military and have been subjected to the military's brainwashing. They see patriotism through the narrow prism of saluting the flag and singing God Bless America or the National Anthem before the umpire yells "Play Ball!" They are more worried about whether or not Obama wears an American flag pin in his lapel than whether or not the poverty rate among American children is increasing. One of the reasons they are not worried about poverty is that every time the evening news runs a story on poverty, they show a bunch of black people. Every time they run a story on the misery caused by Katrina they show a bunch of black people. Every time they run a story on unemployment they show a bunch of black people standing in an unemployment line. So the white majority can justifiably conclude that all the maladies of America only affect black people and not them.

So Republicans want to take us back to the 1950s when taxes were low (well, not really - the upper brackets under Eisenhauer were in the 90% range), cars had tail fins and there were plenty of jobs in the defense establishment. The same remains true today. If you want a good job with benefits, go to work for the military-industrial complex - Lockheed Martin, Boeing, Raytheon, General Dynamics, the FBI, the CIA and many others too numerous to mention. While Republicans want to expand budgets for these corporations and departments, they want to reduce them for social programs that mainly help the poor (read: black). White people's programs are with the military establishment and its offshoots. Welfare, unemployment, food stamps and the like are for poor (mainly black) people. Therefore, Tea Baggers are against those Big Government social programs and for those Big Government National Security State programs which mainly employ white people.

The US has around 1000 military bases spread throughout the world. That's several for every country in the world. This is from America's Empire of Bases by Chalmers Johnson:

As distinct from other peoples, most Americans do not recognize -- or do not want to recognize -- that the United States dominates the world through its military power. Due to government secrecy, our citizens are often ignorant of the fact that our garrisons encircle the planet. This vast network of American bases on every continent except Antarctica actually constitutes a new form of empire -- an empire of bases with its own geography not likely to be taught in any high school geography class. Without grasping the dimensions of this globe-girdling Baseworld, one can't begin to understand the size and nature of our imperial aspirations or the degree to which a new kind of militarism is undermining our constitutional order. Our military deploys well over half a million soldiers, spies, technicians, teachers, dependents, and civilian contractors in other nations. To dominate the oceans and seas of the world, we are creating some thirteen naval task forces built around aircraft carriers whose names sum up our martial heritage -- Kitty Hawk, Constellation, Enterprise, John F. Kennedy, Nimitz, Dwight D. Eisenhower, Carl Vinson, Theodore Roosevelt, Abraham Lincoln, George Washington, John C. Stennis, Harry S. Truman, and Ronald Reagan. We operate numerous secret bases outside our territory to monitor what the people of the world, including our own citizens, are saying, faxing, or e-mailing to one another. Our installations abroad bring profits to civilian industries, which design and manufacture weapons for the armed forces or, like the now well-publicized Kellogg, Brown & Root company, a subsidiary of the Halliburton Corporation of Houston, undertake contract services to build and maintain our far-flung outposts. One task of such contractors is to keep uniformed members of the imperium housed in comfortable quarters, well fed, amused, and supplied with enjoyable, affordable vacation facilities. Whole sectors of the American economy have come to rely on the military for sales. On the eve of our second war on Iraq, for example, while the Defense Department was ordering up an extra ration of cruise missiles and depleted-uranium armor-piercing tank shells, it also acquired 273,000 bottles of Native Tan sunblock, almost triple its 1999 order and undoubtedly a boon to the supplier, Control Supply Company of Tulsa, Oklahoma, and its subcontractor, Sun Fun Products of Daytona Beach, Florida.

The above was written in 2004 when the US had "only" 700 military bases. Many more have been added since then especially in Iraq and Afghanistan. If the US were to defund the military-industrial complex and instead devote those funds to building infrastructure or helping the poor, many "white" jobs would be eliminated. Is it any wonder why the Tea Baggers are up in arms? They want the military establishment to remain strong because that is the primary source of their employment. That is one area where there is no lack of jobs at all levels from high school dropout to PhD. American militarism is a cash cow providing both opportunities for entrepreneurs and employees. Good, stable jobs with the best possible benefits including health care and pensions. But if you're a high school dropout and can't find a job, the Army will provide you with one.

WW II proved that the way out of a depression is through the military. WWII solved the problem of the Great Depression which FDR's WPA and CCC only partially solved. It wasn't the war itself exactly but the buildup to the war - the humming factories producing guns, ammunition, tanks, boats and airplanes. Military production produced a full employment economy so it stands to reason that massive government expenditures in the military sphere can stem the tide of unemployment. That's the lesson of the Great Depression: direct government intervention in the economy can only do so much while a military build-up can provide jobs for everyone.

And there is little belt tightening among government workers. While private sector employees are having their pay and benefits reduced to near minimum wage, the average pay for government workers is $75,000. a year with ample benefits.

And Big Government only got bigger under George W Bush. Let's face it. Republicans aren't against Big Government as long as that Big Government is in the military arena. They are only against Big Government when it comes to 'social programs,' programs that help the poor (read black). Republicans are not against socialism as long as it mainly benefits the rich. They are only against socialism that mainly benefits the poor. Here's how Big Government got bigger under Bush:

The federal government keeps getting bigger. The Republican Party's oft-stated affinity for smaller government has not applied during the Bush administration. According to a recent study, not only is the number of federal civil servants on the rise, but so are the numbers of employees working for government-funded contractors and for organizations that receive government grants. Roll all of those together -- and mix in the numbers of postal workers and military personnel on the federal payroll -- and the "true size" of the federal government stands at 14.6 million employees, said Paul C. Light, the study's author and a government professor at New York University. That compares with 12.1 million employees in 2002, said Light, who has tracked the growth of government for years and has data for as far back as 1990. The latest increase is almost entirely due to contractors, whose ranks swelled by 2.5 million since 2002, Light wrote in his 10-page research brief. "This time, almost all of the growth can be attributed from the war on terrorism, which boosted Defense spending for both goods and services systems and covered the continued cost of the wars in Afghanistan and Iraq," he wrote. "The rest of the hidden workforce held steady at roughly 2.9 million grantees, while civil service employment inched up and postal employment fell." Light calls the 10.5 million federal contractors and grantees the government's "hidden workforce" because politicians tend not to mention them when discussing the size of the federal bureaucracy. Yet such workers absorbed nearly $400 billion in federal contracting funds and $100 billion in federal grants in 2005. They often performed vital work such as researching new vaccines, running federal computer systems and making body armor, weapons and meals for the military.

So Big Government subcontracts out a lot of its work to the private sector creating military-industrial complex jobs. This doesn't bother Republicans at all since they claim that these jobs are created by the private sector when in reality they are created by government contracts. But Republicans will squawk if government contracts out any jobs to repair infrstructure. That's socialism whereas anything military related is not socialism according to their definition. In Nazi Germany big corporations like I G Farben, Krupp and Siemens funded the Nazi Party and were in return rewarded with military contracts. Today Boeing, Lockheed Martin and others fund the Republicans Party which rewards them with generous military related contracts. The collusion of defense contractors with a political party is one of the hallmarks of fascism and it's as true today as it was in 1930s Germany. There are no corresponding giant corporations which are devoted to 'social programs' or infrastructure building who are feeding at the government trough. It's only military related so-called defense contractors who are living off the government. Republicans want to eliminate the 'social programs' budget so that they can grow the military-industrial complex even larger and provide jobs that way. This kind of socialism doesn not bother them. What bothers them is the kind of socialism that helps poor people.

So Republicans actually have a jobs program: the military-industrial complex. In order to fund this program to the maximum possible extent money needs to be taken away from programs which help the poor or even the middle class which they consider 'wasteful' government spending. Their well-funded lobbyists swarm Capitol Hill cajoling, persuading and demanding that more money be devoted to defense spending while there are no lobbyists arguing for more money to be devoted to helping the poor or even the middle class who are expected to find employment in the military-industrial complex.

 

 

 

Arianna: Both Parties 'Have For 30 Years Now Screwed The Middle Class'

 

Arianna appeared on "The Tonight Show" Friday night to discuss her new book, "Third World America," as well as the rise of the tea party during the current election cycle. Arianna argues that the middle class has been abandoned by politicians and devastated by 30 years of neglect by both parties, but it's not too late to turn things around. (For more news on "Third World America, click here.)

She attributes the Tea Party's rise largely to the growing anger of struggling Americans who don't see politicians addressing their problems.

That fury is mostly directed toward Democrats at the moment because they hold the reins of power, Arianna said, but it's not exclusive to one party. "The anger is because the Democrats and the Republicans have for 30 years now screwed the middle class," she told "Tonight Show" host Jay Leno.

The Senate nomination of Christine O'Donnell in Delaware is one response, Arianna said, and it's not all bad. "Anyone in my book who gets Karl Rove that upset must be doing something right," she told Leno.

Arianna broke with O'Donnell, though, on one major issue. "She seems to think that masturbation is really a huge problem, and I don't think it's as huge a problem for Americans given all the other problems they're facing, like unemployment, foreclosures, et cetera," Arianna said. "Self-love is deficit-neutral."

Poverty Rises as Wall Street Billionaires Whine

Published on Friday, September 17, 2010 by Huffington Post

by Les Leopold

The ranks of the working-age poor in the United States climbed to the highest level since the 1960s as the recession threw millions of people out of work last year, leaving one in seven Americans in poverty. The overall poverty rate climbed to 14.3 per cent, or 43.6 million people, the Census Bureau said yesterday in its annual report on the economic well-being of US households. Gulfnews.com

While 43.6 million Americans live in poverty, the richest men of finance sure are getting pissy. First Steve Schwartzman, head of the Blackrock private equity company, compares the Obama administration's effort to close billionaires' tax loopholes to "the Nazi invasion of Poland." Then hedge fund mogul David Loeb announces that he's abandoning the Democrats because they're violating "this country's core founding principles" -- including "non-punitive taxation, Constitutionally-guaranteed protections against persecution of the minority, and an inexorable right of self-determination." Instead of showing their outrage about the spread of poverty in the richest nation on Earth, the super-rich want us to pity them?

Why are Wall Street's billionaires so whiny? Is it really possible to make $900,000 an hour (not a typo -- that's what the top ten hedge fund managers take in), and still feel aggrieved about the way government is treating you? After you've been bailed out by the federal government to the tune of $10 trillion (also not a typo) in loans, asset swaps, liquidity and other guarantees, can you really still feel like an oppressed minority?

You'd think the Wall Street moguls would be thankful. Not just thankful -- down on their knees kissing the ground taxpayers walk on and hollering hallelujah at the top of their lungs! These guys profited from puffing up the housing bubble, then got bailed out when the going got tough. (Please see The Looting of America for all the gory details.) Without taxpayer largess, these hedge fund honchos would be flat broke. Instead, they're back to hauling in obscene profits.

These billionaires don't even have to worry about serious financial reforms. The paltry legislation that squeaked through Congress did nothing to end too big and too interconnected to fail. In fact, the biggest firms got even bigger as they gobbled up troubled banks, with the generous support of the federal government. No bank or hedge fund was broken up. Nobody was forced to pay a financial transaction tax. None of the big boys had a cap placed on their astronomical wealth. No one's paying reparations for wrecking the US economy. The big bankers are still free to create and trade the very derivatives that catapulted us into this global crisis. You'd think the billionaires would be praying on the altar of government and erecting statues on Capital Hill in honor of St. Bailout.

Instead, standing before us are these troubled souls, haunted by visions of persecution. Why?

The world changed. Before the bubble burst, these people walked on water. Their billions proved that they were the best and the brightest -- not just captains of the financial universe, but global elites who had earned a place in history. They donated serious money to worthy causes -- and political campaigns. No one wanted to mess with them.

But then came the crash. And the things changed for the big guys -- not so much financially as spiritually. Plebeians, including me, are asking pointed questions and sometimes even being heard, both on the Internet and in the mainstream media. For the first time in a generation, the public wants to know more about these emperors and their new clothes. For instance:

• What do these guys actually do that earns them such wealth?
• Is what they do productive and useful for society? Is there any connection between what they earn and what they produce for society?
• Did they help cause the crash?
• Did these billionaires benefit from the bailouts? If so, how much?
• Are they exacerbating the current unemployment and poverty crisis with their shenanigans?
• Why shouldn't we eliminate their tax loopholes (like carried interest)?
• Should their sky-high incomes be taxed at the same levels as during the Eisenhower years?
• Can we create the millions of jobs we need if the billionaires continue to skim off so much of our nation's wealth??
• Should we curb their wealth and political influence?

How dare we ask such questions! How dare we consider targeting them for special taxes? How dare we even think about redistributing THEIR incomes... even if at the moment much of their money comes directly from our bailouts and tax breaks?

It's true that the billionaires live in a hermetically sealed world. But that doesn't mean they don't notice the riffraff nipping at their heels. And they don't like it much. So they've gotten busy doing what billionaires do best: using their money to shield themselves. They're digging into their bottomless war chests, tapping their vast connections and using their considerable influence to shift the debate away from them and towards the rest of us.

We borrowed too much, not them. We get too much health care, not them. We retire too soon, not them. We need to tighten our belts while they pull in another $900,000 an hour. And if we want to cure poverty, we need to get the government to leave Wall Street alone. Sadly, their counter-offensive is starting to take hold.

How can this happen? Many Americans want to relate to billionaires. They believe that all of us are entitled to make as much as we can, pretty much by any means necessary. After all, maybe someday you or I will strike it rich. And when we do, we sure don't want government regulators or the taxman coming around!

Billionaires are symbols of American individual prowess and virility. And if we try to hold them back or slow them down, we're on the road to tyranny. Okay, the game is rigged in their favor. Okay, they got bailed out while the rest of us didn't -- especially the 29 million people who are jobless or forced into part-time work. But what matters most is that in America, nothing can interfere with individual money-making. That only a few of us actually make it into the big-time isn't a bad thing: It's what makes being rich so special. So beware: If we enact even the mildest of measures to rein in Wall Street billionaires, we're on the path to becoming North Korea.

Unfortunately, if we don't adjust our attitudes, we can expect continued high levels of unemployment and more people pushed below the poverty line. It's not clear that our economy will ever recover as long as the Wall Street billionaires keep siphoning off so much of our wealth. How can we create jobs for the many while the few are walking off with $900,000 an hour with almost no new jobs to show for it? In the old days, even robber barons built industries that employed people -- steel, oil, railroads. Now the robber barons build palaces out of fantasy finance. We can keep coddling our financial billionaires and let our economy spiral down, or we can make them pay their fair share so we can create real jobs. These guys crashed the economy, they killed billions of jobs, and now they're cashing in on our bailout. They owe us. They owe the unemployed. They owe the poor.

Dwight D. Eisenhower was no radical, but he accepted the reality: If America was going to prosper -- and pay for its costly Cold War -- the super-rich would have to pony up. It was common knowledge that when the rich grew too wealthy, they used their excess incomes to speculate. In the 1950s, memories of the Great Depression loomed large, and people knew that a skewed distribution of income only fueled speculative booms and disastrous busts. On Ike's watch, the effective marginal tax rate for those earning over $3 million (in today's dollars) was over 70 percent. The super-rich paid. As a nation we respected that other important American value: advancing the common good.

For the last thirty years we've been told that making as much as you can is just another way of advancing the common good. But the Great Recession erased that equation: The Wall Streeters who made as much as they could undermined the common good. It's time to balance the scales. This isn't just redistribution of income in pursuit of some egalitarian utopia. It's a way to use public policy to reattach billionaires to the common good.

It's time to take Eisenhower's cue and redeploy the excessive wealth Wall Street's high rollers have accumulated. If we leave it in their hands, they'll keep using it to construct speculative financial casinos. Instead, we could use that money to build a stronger, more prosperous nation. We could provide our people with free higher education at all our public colleges and universities -- just like we did for WWII vets under the GI Bill of Rights (a program that returned seven dollars in GDP for every dollar invested). We could fund a green energy Manhattan Project to wean us from fossil fuels. An added bonus: If we siphon some of the money off Wall Street, some of our brightest college graduates might even be attracted not to high finance but to jobs in science, education and healthcare, where we need them.

Of course, this pursuit of the common good won't be easy for the billionaires (and those who indentify with them.). But there's just no alternative for this oppressed minority: They're going to have to learn to live on less than $900,000 an hour.

© 2010 Huffington Post

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

How the Poor Are Kept Poor So the Rich Can Be Kept Rich

Published on Friday, September 17, 2010 by The Independent/UK

Suffocating the Poor: A Modern Parable

They democratically elected a president to stand up to the rich and multinational corporations - so our governments have him kidnapped

by Johann Hari

Today, I want to tell you the story of how our governments have been torturing and tormenting an island in the Caribbean - but it is a much bigger story than that. It's a parable explaining one of the main reasons how and why, across the world, the poor are kept poor, so the rich can be kept rich. If you grasp this situation, you will see some of the ugliest forces in the world laid out before you - so we can figure out how to stop them.

The rubble-strewn island of Haiti is now in the middle of an election campaign that will climax this November. So far, the world has noticed it solely because the Haitian-American musician Wyclef Jean wanted to run for President, only to be blocked because he hasn't lived in the country since he was a kid. But there is a much bigger hole in the election: the most popular politician in Haiti by far, Jean-Bertrand Aristide. He's not there because, after winning a landslide election, he followed the will of the Haitian people who demanded he take on the multinational corporations and redistribute enough money that their children wouldn't starve - so our governments had him kidnapped him at gunpoint and refuse to let him back.

But we have to start a little earlier if this is going to make sense. For over two centuries, Haiti has been effectively controlled from outside. The French enslaved the entire island in the eighteenth century and worked much of the population to death, turning it into the sugar and coffee plantation for the world. By this century, Western governments were arming, funding and fuelling the psychopathic dictatorship of the Duvalier family - who slaughtered 50,000 people - supposedly because they were "our friends" in the fight against communism.

All this left Haiti the most unequal country in the world. A tiny elite lives in vast villas in the hills, while below and all around them, the overwhelming majority of the population live in tiny tin shacks with no water or electricity, crammed six-to-a-room. Just 1 per cent own 50 per cent of the wealth and 75 per cent of the arable land. Once the Haitian people were finally able to rise up in 1986 to demand democracy, they obviously wanted the country's wealth to be shared more fairly. They began to organize into a political movement called Lavalas - the flood - to demand higher wages and higher taxes on the rich to build schools and hospitals and subsidies for the half-starved poor. This panicked the elite.

And nobody panicked them more than a thin, softly-spoken, intellectual slum-priest named Aristide who found himself at the crest of this wave. He was born into a bitingly poor family and became a brilliant student. As a priest he soon became one of the leading exponents of Liberation Theology, the left-wing Catholicism that says people shouldn't wait passively for justice in the Kingdom of Heaven, but must demand it here and now. (The current Pope tried desperately to stamp out this "heresy".) Aristide explained: "The rich of my country, a tiny percentage, sit at a vast table overflowing with good food, while the rest of my countrymen are crowded under that table, hunched in the dirt and starving. One day the people under the table will rise up in righteousness."

On this platform, he was elected in 1990 in a landslide in the country's first free and fair election, taking 64 per cent of the vote. He kept his promise to the Haitian people: he increased the minimum wage from 38 cents a day to $1, demanding the multinational corporations pay a less insulting wage. He trebled the number of free secondary schools. He disbanded the murderous national army that had terrorized the population. Even the International Monetary Fund had to admit that over the Aristide period and just after, Haiti's Human Poverty Indicator - a measure of how likely your kids are to die, starve or go uneducated - dropped dramatically from 46.2 per cent to 31.8 per cent.

But why would foreign governments care about a small country, the poorest in the Western hemisphere, with only ten million inhabitants? Ira Kurzban, an American lawyer based in Haiti, explains: "Aristide represented a threat to [foreign powers] because he spoke for the 85 per cent of his population who had never been heard. If that can happen in Haiti, it can happen anywhere, including in countries where the [US and Europe] have huge economic interests and extract natural resources. They don't want real popular democracies to spread because they know it will confront US economic interests." Oxfam called this phenomenon "the threat of a good example."

So after Haiti had experienced seven months of democracy, the US toppled Aristide. Ordinary Haitians surrounded his home, calling for his return - and they were fired on so indiscriminately that more ammo had to be sent from Guantanamo Bay on Cuba. Their bodies were left in the streets to be eaten by dogs as the advances were repealed one by one.

In 1994, the Clinton administration agreed to return Aristide to power - provided he castrate his own political program and ignore the demands of his people. They made him agree to privatize almost everything, freeze wages, and sack half the civil service. Through gritted teeth, he agreed, and for the remainder of his time in office tried to smuggle through what little progress he could. He was re-elected in an even bigger landslide in 2000 - but even his tiny shuffles towards redistribution were too much. The US and French governments had Aristide kidnapped at gunpoint and dumped him in the Central African Republic. They said he was a "dictator", even though the last Gallup poll in a free Haiti found 60 per cent supported him, compared to just 3 per cent backing the alternative imposed on the country by the US.

The human rights situation in Haiti then dramatically deteriorated, with a massive campaign of terror and repression. The Lavalas Party was banned from running again, with most of the country's democracy activists jailed. There were huge military assaults on the slums which demanded Aristide's return. A US Army Psychological Operations official explained the mission was to ensure Haitians "don't get the idea they can do whatever they want."

The next President, Rene Preval, learned his lesson: he has done everything he was told to by corporations and governments, privatizing the last remaining scraps owned by the state, and using tear gas to break up strikes for higher wages. The Haitian people rejected the whole rigged electoral process, with turn-out falling to just 11 per cent. Today, Aristide is a broken man, living in exile in South Africa, studying for a PhD in linguistics, banned from going home.

This is part of a plain pattern. When poor countries get uppity and tried to ask for basic justice, our governments have toppled them, from Iran wanting to control its own oil in 1953 to Honduras wanting its workers to be treated decently in 2009. You don't have to overthrow many to terrify the rest.

It doesn't have to be this way. This is not the will of the people, in the US or Europe: on the contrary, ordinary citizens are horrified when the propaganda is stripped away and they see the truth. It only happens because a tiny wealthy elite dominates our foreign policy, and uses it to serve their purposes - low wages and control of other people's economies and resources. The people of Haiti, who have nothing, were bold and brave enough to campaign and organize to take power back from their undemocratic elites. Are we?

© 2010 The Independent/UK

Johann Hari is a columnist for the London Independent. He has reported from Iraq, Israel/Palestine, the Congo, the Central African Republic, Venezuela, Peru and the US, and his journalism has appeared in publications all over the world.

It's Consumer Demand, Stupid, Not the Deficit

Published on Friday, September 17, 2010 by In These Times

Chorus of Progressive Economists: Govt. Must Spur Demand to End Recession

by Roger Bybee

Largely oblivious to the reality among working families grappling with unemployment, wage cuts, and trying to avoid foreclosures, conservative politicians (mostly GOP, but also a considerable number of Democrats) are building momentum for an assault on federal budget deficits by slashing government spending.

The Republican approach to deficit cutting is certain to extinguish any hope of economic recovery, bluntly declared Dean Baker. (photo by Flickr user bredgur)

But more than 300 economists have countered with a strong statement calling calling instead for the opposite solution: a vigorous expansion of federal stimulus efforts—and the deficit—to lift the economy out of the persisting Great Recession.

 "The deficit focus risks repeating the mistakes of1937, when FDR pulled back on public spending and plunged us back into the depths of a very deep recession," former Labor Secretary Robert Reich told reporters Thursday on a national conference call with several of the country's most prominent progressive economic experts. "We're in danger of deflation, continued recession, and not getting out of this recession."

The economic recovery is anything but vigorous, as shown by a weak 1.6% level of growth during the second quarter and a rise in poverty, which now afflicts 43 million people, the highest level in a half-century. Other fundamental problems remain, the economists point out:

"The basic problem is a lack of demand," argued economist Dean Baker of the Center on Economic and Policy Research, and author most recently of   Plunder and Blunder.  "Yet it is striking that we've had a dominant narrative that's 180 degrees at odds with reality." As the economists wrote:

Today, the economy is growing only weakly. 7.8 million jobs have been lost in the recession. Consumers, having suffered losses in home values and retirement savings, are tightening their belts. The business sector, uncertain about consumer spending, is reluctant to invest in expansion or job creation, leaving the economy trapped on a path of slow growth or stagnation. Over 20 million American workers are now unemployed, underemployed or simply have given up looking for a job.

The increase in deficits and long-term federal debt is hardly due to anti-recessionary spending, explained Baker.

REAL ROOTS OF DEFICIT

The largest portion of the federal debt is due to unfunded tax cuts and two wars enacted during the George W. Bush administration, Baker noted. President Obama's $787 billion stimulus plan and other initiatives comprise only a fraction of the red ink, but they weren't sufficient to generate enough consumer demand to escape the recession.

"Emergency stimulus policies here and around the world broke the fall, but brought us only part way to full recovery," the economists' statement declared.

The push for drastic deficit-cutting flies in the face of logic and the hard-learned lessons of the 1930's, the statement read:

History suggests that a tenuous recovery is no time to practice austerity. In the Great Depression, Franklin Roosevelt’s New Deal generated growth and reduced the unemployment rate from 25 percent in 1932 to less than 10 percent in 1937. 

However, the deficit hawks of that era persuaded President Roosevelt to reverse course prematurely and move toward budget balance. The result was a severe recession that caused the economy to contract sharply and sent the unemployment rate soaring. Only the much larger wartime spending of the early 1940s produced a full recovery.

"Austerity economics" will not provide the level of consumer demand needed to rekindle the economy and bring down unemployment, the economists argue.

"There are four sources of demand for business," explained Reich. "The first are consumers, who are buried in debt. Second, there is business, which is sitting on more than a trillion dollars in profits but not plowing it back into new machinery and not hiring because they don't see the customers." Exports, another demand source, offer limited hope, as other advanced nations are also in a slump...
 

ONLY GOVERNMENT CAN BOLSTER DEMAND

"Finally, there is government as a consumer, when all else fails," Reich said.

President Obama has taken some steps in the right direction recently to prevent layoffs and service cuts in the public sector and to aid small businesses, but needs to act much more boldly, said Robert Borosage, president of the Institute for America's Future. Borosage urged a vast expansion of stimulus and public sector job-creation programs, especially for young people coupled with tax cuts for all but the richest 3%.

Democratic "deficit hawks" should recognize that deferring the problems of prolonged high unemployment and weak consumer demand will play directly into the Republicans' hands. "The Democrats who are worried about the deficit need to remember that the Republicans are not averse to seeing a bad economy going into the next election, because it's not in their political self-interest," Reich stated.

Not only is a choice of trimming the deficit over stimulating the economy bad politics, but it is bad policy, argued Reich. "Democrats must understand that government has responsibility but opportunity, with low interest rates, to rebuild the nation's infrastructure. ... If we wait to rebuild the infrastructure, we will face much a higher bill to repair it later on."

Robert Kuttner, co-founder of The American Prospect and author of A Presidency in Peril, said that the nation faced a choice between "a high road to recovery or a low road to fiscal balance."

RECOVERY BEFORE TACKLING DEFICIT

"We need the proper sequencing: first, recovery via adequate stimulus and job creation programs. And then we can go to work on the deficit with much lower unemployment and much less need for the government to spend. The idea that we can belt-tighten our way to recovery defies every proven theory in economics," Kuttner stressed.

Even the most valuable forms of government spending are coming into the gun sights of conservatives, the expertss noted. Teresa Ghilarducci, author of When I'm 64: The Plot Against Pensions, outlined how Social Security—once under attack from the Right, as in Rep. Paul Ryan's (R-Wis.) "Roadmap for America"—is preventing the current downturn from growing much worse.

"Social Security benefit increases are more necessary than ever because of the collapse of the private pension system," as the shrinkage of union strength has allowed employers to switch, with federal subsidies, to less-expensive 401K plans that provide a smaller and much more unreliable source of retirement income.

With the pension system weakened for workers, Social Security's role has been critical during the present crisis. The program's existence has held down unemployment by allowing older workers to retire rather than continue in the job market. It has also bolstered consumer demand, she said.

But because of the Right's longstanding ideological hostility to all forms of "social insurance," as Kuttner put it, Social Security is under attack again, including recent barbs by the former Sen. Alan Simpson, co-chair of the presidential commission on debt.

Meanwhile, the Republicans are eagerly yanking on the cords on their chainsaws, hoping that the Nov. 2 mid-term elections will allow them to start lopping off $100 billion in domestic spending, which Minority Leader John Boehner recently declared as the GOP's goal.

The Republican approach to deficit cutting is certain to extinguish any hope of economic recovery, bluntly declared Dean Baker.

© 2010 In These Times

The Winds of Deflation

by Robert Reich

Friday, September 17, 2010

Three economic reports today (Friday) that should sound warning bells about deflation.

1. The Labor Department reports that consumer prices are essentially flat. Compared to August 2009, prices are up 1.1%. That’s only slightly lower than the 1.2% year-on-year rise in July. Excluding volatile food and energy, however, consumer prices in August were 0.9% higher than a year earlier. That’s below the Fed’s informal inflation target of between 1.5% and 2.0%.

2. In a separate report, the Labor Department said real average weekly earnings were unchanged in August from July, as both the average work week and hourly earnings were flat.

3. The Thomson Reuters/University of Michigan September reading of consumer confidence shows consumers more pessimistic in September than in August. In fact, consumer sentiment is the lowest since August 2009.

Put the three together and you have what could be a recipe for deflation: Flat consumer prices, weekly earnings, and hours, coupled with increased pessimism about where the economy is heading.

Consumers aren’t buying. They’re acting rationally. Their debt load is still huge, they’re worried about keeping their jobs, they know they have to tighten belts, and they’re justifiably worried about the future.

But for the nation as a whole, it spells even more trouble. If consumers hold back even more, prices will start dropping. When and if they do, consumers will hold back even more in anticipation of still lower prices. That means more layoffs and less hiring.

It’s a vicious cycle. And once deflation sets in, it’s hard to reverse. Just ask Japan.

The Crackpot Gap: Why It May Be A Boon To Democrats But A Danger To America

by Robert Reich

Friday, September 17, 2010

After the victories of many of the insurgent primary candidates she’s sponsored, Sarah Palin is off to Iowa today (Friday) for a high-profile series of political events. Is it possible she’s looking to make a run in 2012? Do birds fly?

Republicans are being fueled by a so-called “enthusiasm gap” but their biggest worry leading up to the midterms should be the “crackpot gap.”

In Delaware, Palin-endorsed tea partier Christine O’Donnell is so far right she’s called “delusional” by Delaware’s GOP leader. In Kentucky, Palin-favored Rand Paul says the Civil Rights Act of 1964 shouldn’t apply to businesses. In Colorado, tea partier Ken Buck talks of getting rid of the 17th amendment, which provides for the direct election of senators. In Arizona, Palin-favored Sharon Angle has called for “2nd Amendment remedies” if Congress doesn’t change hands.

Many Americans these days don’t like Congress and are cynical about government. The lousy economy has made almost all incumbents targets of the public’s anger and anxiety. 

But if there’s one thing Americans like even less it’s people pretending to be legitimate politicians whose views are so far removed from those of ordinary Americans that they pose a danger to our system of governance.

In the latest Wall Street Journal/NBC News poll, a third of undecided voters had a negative view of the tea party movement. 13 percent of those who said they prefer Republicans to win control of Congress this fall also reported a negative view of the tea-partiers.

The latest CBS poll shows that 40 percent of voters viewed Sarah Palin negatively in August; today, 46 percent do.

When Newt Gingrich, who has all but declared his candidacy for president in 2012, says President Obama exhibits “Kenyan anti-colonial” behavior, and that allowing an Islamic center near New York’s Ground Zero is tantamount to permitting Nazi’s near the Holocost Museum, he doesn’t sound like an ordinary American. He sounds like a hate-mongering crackpot.

We’re not dealing with “extremism in defense of liberty,” as Barry Goldwater put it in 1964 (and even then, a large majority of Americans decided against him). We’re dealing with extremism that defies the principles undergirding our Constitution.

Some Democrats think all this is wonderful because it boosts the odds of Democratic wins, not only in the midterms but also in 2012 when the Republicans put up Palin, Gingrich, or someone equally bizarre. Even voters who are are unenthusiastic about Democrats will be motivated to turn out if they fear that crackpots will otherwise take over our government.

I’m not as sanguine about what’s happening. Political discourse in America is important. What candidates say can legitimize hateful or divisive views that would otherwise never see the light of day.

We’re in the midst of an ongoing economic emergency that requires clear thinking, intense work, and practical ideas. It also requires that we join together rather than be pushed apart. The loonies who are taking over the GOP pose a real and present danger.

Germany Cooks American Goose in China

Germany seizes on big business in China

By Anthony Faiola

Washington Post Foreign Service, Saturday, September 18, 2010; 3:50 AM

VERL, GERMANY - As Americans fret over high unemployment and the prospect of another recession, an economic renaissance is putting Germans back to work and propelling the economy at a pace not seen since the fall of the Berlin Wall.

Ask a German executive why, and you are likely to get the same one-word answer that slips like silk off Gunter Scheipermeier's tongue: "China."

Vilified in the United States as a great sucking sound on the American economy, China is courted here as a revered client. Fast-growing demand from Asia's giant is helping to fuel the strong German recovery, and Germany now stands as proof that a rich nation can profit off China's rise.

China passed the United States last year as the No. 1 overseas market for big-ticket German machinery, with Teutonic titans from Siemens to Volkswagen - which so far this year has sold 1.3 million cars in China, five times as many as it has in the United States - ramping up production and payrolls to fill Chinese orders.

More important, China is driving growth at smaller German manufacturing firms like Scheipermeier's Nobilia that form the true backbone of Europe's largest economy. A family-run company making modular kitchens in a half-mile-long factory, where free-roaming robots work alongside humans on the most advanced assembly line of its kind in the world, Nobilia is treating nouveau riche Chinese like Americans of the 1950s - when nothing said success such as a sparkling, modern kitchen.

At the same time, the company is aiding Germany's domination in the surging Chinese market for imported household goods. Through alliances with other German companies, Nobilia is selling kitchens to the Chinese that fit standard European-size appliances, 24-inch-wide ovens, for example. These kitchens do not accommodate the larger ovens commonly made by U.S. manufacturers and built for American families cooking Thanksgiving turkeys and Sunday rib roasts.

Overdependence on China for exports growth, many here say, could hurt Germany as the economy there eventually cools. And German companies, like their American and Japanese counterparts, are facing increasingly sophisticated piracy threats from a nation where blackmarketeers can copy an entire BMW roadster or Mercedes sedan.

But with showrooms in 17 cities and sales surging 40 percent this year alone, Nobilia now sells more kitchens in China than all but two domestic Chinese manufacturers, with no American challengers in the top 10.

"China is vital to Germany's future," Scheipermeier said. If he has his way, he said, "Chinese duck will be cooked in kitchens more like those designed for German chickens than American turkeys."

A trade competition

One thing is for sure: When it comes to building a healthy trading relationship with China, Germany is cooking America's goose. U.S. exports to the world's second-largest economy surged 25 percent in the second quarter of this year, but German sales to China grew twice as fast. Overall, German exports have jumped 17 percent this year, driven in large part by a 55 percent rise in China of imports. Although the United States still exports more to China in total dollar terms, adjusted for the size of their economies, Germany is now out-exporting the United States to China by a factor of three to one.

Last year, Germany's trade volume with China was $115 billion, while the U.S. trade volume with China was more than $370 billion. Like most nations, Germany suffers a trade deficit with China - or the difference between what it sells and what it buys. But it is nowhere near as much in the red with Beijing as the United States. In fact, during one month this year - February - Germany even came within a narrow $1 billion of chalking up a trade surplus with China.

That is partly because of frugal German consumers, who unlike Americans eschew credit and save like mad. As such, Germany's imports of cheap Chinese toys and TVs are ebbing, lower now than they were at any point since 2005. But it is also because of domestic manufacturing prowess that allows Germans to buy many products still made in Germany. At the same time, Germany has created the most finely honed export economy outside of China.

As the Obama administration vows to fix America's troubled trading relationships and build an economic recovery in part on the back of exports, business leaders such as Jeffery Immelt, chief executive of GE, are pointing to Germany as a model. The Germans have funded "business centers" to aid small- and medium-sized companies in tapping the Chinese market, using government money to support their Chamber of Commerce networks and boost trade. They have adopted a less confrontational approach to China on issues including China's exchange rate and copyright infringements, focusing instead on sales.

The government, through energy and transportation policy, has fostered a German edge in manufacturing high speed rail, wind turbines and other technologies that Germans have sold to the Chinese.

"There are critics who say our manufacturing in the United States can never be competitive with China because of their wages," said Scott Paul, executive director for the District-based Alliance for American Manufacturing. "But in Germany, you see a country that has wages and benefits at least as high as the United States, and yet they have managed a manufacturing base and trading relationship with China that we in the U.S. would love to have."

In recent decades, as countries including the United States and Britain put greater emphasis on financial services and property values, the Germans have hyper-focused on the art of manufacturing. Even relatively small German companies have grown into global market leaders for the products Chinese want, from drilling equipment to optical mirrors to prefabricated kitchens. Exports now account for more than one-third of Germany's national output, more than double the rate in the United States, with Germany's $1.2 trillion in annual exports roughly equal to the entire gross national product of India.

In the aftermath of the financial crisis, Germany became the first major economy to exit the Great Recession. Unlike in the United States, the export-led recovery here is translating into jobs. In August, Germany's unemployment rate stood near a two-year low of 7.6 percent, with some companies in Germany now complaining of a labor shortage and the need to loosen immigration rules. The U.S. unemployment rate is 9.6 percent.

Few expect the pace of growth to continue, citing signs of a cooling off in China and economic uncertainty in Germany's major markets in Europe and the United States. But after painful adjustments since reunification of East and West - including years of falling wages and high unemployment - there is a growing sense here that Germany is better positioned for prolonged, stable growth than it has been in years.

"Why is Germany doing better than the U.S.? The answer is not so difficult," said Hans-Jochen Beilke, chief executive of Ebm-Papst, the German ventilation company now dominating the Chinese market in refrigeration technology. "Our industrial base is simply much higher now than yours," he said. "Look at the state of machinery manufacturing in your country. There are nearly no important American makers left anymore, and most of the ones you have now are German subsidiaries. And then, look at cars. Go ask the Chinese if they want to buy a BMW or a Ford."

Selling to Shanghai

"This," beamed Matthias Keudel, export chief at Nobilia, gesturing to a pressure chamber in the company's factory here, "is our Shanghai Climate Chamber."

Inside the chamber, the company based in a small city 250 miles west of Berlin tests the impact of tropical Chinese heat on a variety of materials used in Nobilia's kitchens, now being fitted into high rises during a real estate boom from Shanghai to Hangzhou. The Chinese prefer wooden cabinets, rather than the hyper-modern plastic replicas that are the norm in Europe.

"The plastic is actually better than wood," he said, "but the Chinese client does not want anything that seems like an imitation or a copy; they get enough of that at home."

Nobilia is a classic German manufacturing success story. Launched in 1945 from the rubble of World War II as a company making sewing machine tables, it found its niche in kitchens by the 1960s. Today it makes nothing but kitchens, using similar technology and just-in-time delivery methods employed by BMW for high-performance cars.

From selling a few dozen kitchens in 1997, the company's now sells more than 10,000 a year.

Scheipermeier, the company's blue-eyed chief executive, is now the German face of Nobilia in China, with his ruddy, smiling image adorning billboards and ads. A special on his life broadcast on Chinese TV this year captured 175 million viewers. "What we are selling to the Chinese is a German lifestyle," he said.

Once in China, the kitchens are typically sold in a package with German appliances, including those produced by Miele, another family-run Germany company. In large part because of German appliance makers, Chinese washing machines, dishwashers and other appliances are also now built largely to European, rather than American, specifications.

"We are installing a European standard in China for kitchens and appliances," Keudel said. "That's going to make it harder for any manufacturer outside of Europe to challenge us down the line."

Although many German companies - like the Americans and Japanese - have moved production, and jobs, to China, others, like Nobilia, have not. But even Scheipermeier admits it is something the company may need to consider in the future.

"I can't tell you how things will be down the line, we will need every advantage to maintain our market share in China," he said. "But right now, well, we are quite pleased."

Number of Americans Without Health Insurance Rises to 50.7 Million

By Richard Wolf

Published by USA TODAY, September 17, 2010

A record rise in the number of people without health insurance across the nation is fueling renewed debate over a health care law that could to work better at boosting coverage than controlling costs.
More than 50 million people were uninsured last year, almost one in six U.S. residents, the Census Bureau reported Thursday. The percentage with private insurance was the lowest since the government began keeping data in 1987.

The reasons for the rise to 50.7 million, or 16.7%, from 46.3 million uninsured, or 15.4%, were many: workers losing their jobs in the recession, companies dropping employee health insurance benefits, families going without coverage to cut costs. Driving much of the increase, however, was the rising cost of medical care; a Kaiser Family Foundation report shows workers now pay 47% more than they did in 2005 for family health coverage, while employers pay 20% more.

Although the health care law signed by President Obama in March is designed to insure an additional 32 million people in public and private programs, it doesn't fully kick in until 2014. For the next few years, experts say, the problem could get worse. The average cost to insure a family of four is already about $14,000.

"Eventually, more people will be covered if everything goes the way it should starting in 2014," says Helen Darling, president of the National Business Group on Health, which represents large employers. "But that's four years away, and there's going to be a lot of financial pain and economic burden before 2014."

The increase in the uninsured population had been expected as employers continue to shed jobs. Those in low-income households were three times as likely to be uninsured as those with incomes above $75,000. Workers ages 18-64 were the primary losers, as public programs such as Medicare, Medicaid and the Children's Health Insurance Program protected the young and aged.

President Obama picked up on that glimmer of hope in his response to the Census report. He said the new health care law, which is designed to insure more poor and middle-income Americans, "will build on that success by expanding health insurance coverage to more families."

Proponents of the law say the sharp rise in the number of uninsured in 2009 only makes their case stronger.

Opponents say the Census report exposes the fallacy of the new law — its reliance on government insurance programs to shield low-income families from soaring medical costs. The government's health care actuary projected last week that overall health care spending would rise slightly over the next decade.

"If ever one needed an affirmation about how essential the Affordable Care Act is, this is that affirmation," says Ron Pollack, executive director of the health consumers group Families USA. "The clear message for people now is that help will be on the way."

Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities, says the decline in employer-provided insurance shows the need for state health insurance exchanges, to be created under the law. Insurers would compete in the exchanges for consumers' business.

"There needs to be some other mechanism for people ... to have a way to get coverage, other than through employers," Greenstein says.

Since its passage, the law has struggled to win public support. The latest USA TODAY/Gallup Poll found Americans disapprove of the new law 56% to 39%, though the Kaiser Family Foundation has found that many individual provisions are more popular.

"The White House and its allies won the legislative debate. They lost the debate in the court of public opinion," says Robert Moffit, director of the Center for Health Policy Studies at the conservative Heritage Foundation.

Obama is likely to address the law next week as its earliest provisions — including one allowing children to remain on their parents' policies until they turn 26 — start taking effect.

At the same time, Republicans in Congress led by Rep. Steve King of Ohio are mounting an uphill drive to repeal the law. Others, such as Sen. Tom Coburn of Oklahoma, threaten to block funds needed to implement it.

Opponents in several states are challenging — in courts and legislatures and at the ballot box — the law's mandate that most people buy insurance. They say people should not be required to have health insurance and states should not be required to pay additional costs not covered by the federal government.

Why Getting Tough With China Won’t Solve Our Jobs Problem

by Robert Reich

Thursday, September 16, 2010

With unemployment in the stratosphere and the midterm elections weeks away, politicians naturally want to show voters they’re committed to getting jobs back.

So now they’re getting tough on China.

But it’s a dangerous ploy based on wishful thinking.

Treasury Secretary Tim Geithner told the Senate Banking Committee Thursday the Administration is “examining the important question of what mix of tools, those available to the United States and multilateral approaches, might help encourage the Chinese authorities to move more quickly.” Translated: We’re on the verge of threatening them with trade sanctions.

Even this didn’t satisfy the Senators. Charles Schumer (D-New York) charged that trade with China “diminishes America, our standard of living here in America, and America as a world power.” Richard Shelby (R-Ala) demanded to know why “the administration protecting China by refusing to designate it as a currency manipulator” – a designation that could lead to trade sanctions.

On Wednesday the U.S. filed a pair of complaints against China with the World Trade Organization, alleging China was unfairly denying American companies access to its market. Meanwhile, several Democrats facing elections in November are introducing measures that would allow companies to pursue sanctions against China for manipulating its currency.

It’s true China has kept the value of its currency artificially low relative to the dollar. If China allowed its currency to rise, Chinese exports would become more expensive to us and our exports would be relatively cheaper to them. This would help shrink the trade imbalance.

It’s also true China has dragged its feet. In June, the U.S. stopped short of branding China a currency manipulator after China promised to reform its ways. But since then China’s currency has risen just 1 percent relative to the dollar.

America’s trade imbalance with China is growing. In the first half of this year, China exported $119 billion more goods and services to us than we did to them – putting the two nations on course to exceed last year’s $227 billion trade gap.

But it’s naive to assume all we have to do to get Chinese to do what we want is to threaten them with tariffs.

First, they might retaliate. Remember, China is the biggest foreign investor in U.S. Treasury securities, with holdings of more than $843 billion. If China were to start selling off large amounts, America’s borrowing costs would soar – and we’d end up worse off.

Second, it’s already costly to China to keep its currency artificially low – requiring that China buy loads of dollars. So why would anyone suppose that making it more expensive for them would bring China around?

China has been willing to bear this huge cost because its export policy doubles as a social policy, designed to maintain order.

Each year, tens of millions of poor Chinese stream into China’s large cities from the countryside in pursuit of better-paying work. If they don’t find it, China risks riots and other upheaval. Massive disorder is one of the greatest risks facing China’s governing elite. That elite would much rather create jobs than allow its currency to rise substantially and thereby risk job shortages at home.

Third, even if China did allow its currency to rise against the dollar, there’s no reason to think this would automatically generate lots more American jobs.

American exports would become cheaper to Chinese consumers. But Japan, Germany, and other major exporters would also demand a piece of the action. Unemployment is high in all developed nations, and every government is under pressure to create more jobs.

Meanwhile, Chinese manufacturers – whose goods would suddenly become more expensive to American consumers – could simply shift their production to other nations with lower currencies. Indeed, as Chinese wages have begun to rise, Chinese manufacturers have already started to shift production to Vietnam, Indonesia, and other low-wage outposts of Southeast Asia.

What worries me most about all this tough talk about China is it diverts attention from the real problem. American isn’t suffering high unemployment because we’re buying too much from China and not selling them enough. Trade with China is a small portion of the U.S. economy.

Twenty million Americans lack jobs because American consumers – especially America’s vast middle class – can no longer spend what’s necessary to keep nearly everyone employed.

After three decades of stagnant middle-class wages, during which almost all the economic gains have gone to the top, we’ve finally reached a day of reckoning. The middle class can no longer borrow vast sums by using their homes as ATMs. They can’t squeeze more working hours out of two wage earners. And they have to start saving for retirement.

The central challenge we face isn’t to rebalance trade with China. It’s to rebalance the American economy so its benefits are more widely shared.

California Braces for Showdown on Emissions

By ADAM NAGOURNEY

Published: September 16, 2010 by the New York Times

LOS ANGELES — A ballot initiative to suspend a milestone California law curbing greenhouse gas emissions is drawing a wave of contributions from out-of-state oil companies, raising concerns among conservationists as it emerges as a test of public support for potentially costly environmental measures during tough economic times.

Charles and David Koch, the billionaires from Kansas who have played a prominent role in financing the Tea Party movement, donated $1 million to the campaign to suspend the Global Warming Solutions Act, which was passed four years ago, and signaled that they were prepared to invest more in the cause. With their contribution, proponents of the proposition have raised $8.2 million, with $7.9 million coming from energy companies, most of them out of state.

This latest embrace by the Koch brothers of a conservative cause jolted environmental leaders who are worried that a vote against the law in this state — with its long history of environmental activism — would amount to a powerful setback for emission control efforts in Washington and statehouses across the country.

“It would have big implications,” said George P. Shultz, the former secretary of state, who is a chairman of a campaign to defeat the ballot initiative. “That is one reason why these outside companies are pouring money in to try to derail the same thing. At the same time, the reverse is true: they put this fat in the fire and if we win, that also sends a message.”

Gene Karpinski, president of the League of Conservation Voters, who has been traveling California to rally support against the proposition, called it “by far the single most important ballot measure to date testing public support for continuing to move to a clean energy economy.”

The campaign against California’s greenhouse gas law comes as business groups have invested heavily across the country in trying to defeat members of Congress who voted for a cap-and-trade bill that also mandated emission reductions; the bill passed the House but failed in the Senate in the face of strong opposition from lawmakers in industrial states.

Traditionally, public support for environmental measures suffers during tough economic times. Here in California, backers of the initiative have seized on that anxiety — which is particularly acute in this state, with its 12.3 percent unemployment rate — in search of a victory.

“I believe the battle over cap and trade in America is taking place in California on Nov. 2 of this year,” said Dan Logue, a Republican assemblyman from north-central California who wrote the ballot initiative. He added: “What we’re saying is, this is not the time for political correctness. This is a time for putting America back to work; let the experiments happen later.”

The law in question, known as A.B. 32, mandates slashing carbon and other greenhouse emissions to 1990 levels by 2020, by forcing power companies and industries to cap their emissions and by slashing carbon in gasoline. Some oil industry leaders said it would force them to invest millions of dollars to comply, and asserted that it would force companies to cut jobs and raise the price of gas at the pumps.

Although the vast majority of the money being contributed to fight the law is coming from oil companies, the oil industry is clearly not united in opposition: some major California oil refineries, including Chevron, have notably stayed out of the battle so far.

The ballot initiative, known as Proposition 23, would suspend the law from going into effect as scheduled in 2012 until state unemployment falls to 5.5 percent or lower for at least four consecutive quarters. That has happened only three times over the last 40 years, state officials said; thus, the proposition could have the practical effect of killing the law.

“The company believes that implementing A.B. 32 will cause significant job losses and higher energy costs in California,” said Katie Stavinoha, a spokesman for Flint Hills Resources, the petroleum company in Wichita, Kan., owned by the Koch brothers. “What’s more, the company thinks it sets a bad precedent for other state and federal governments to do the same thing.”

That said, the issue hardly breaks cleanly along business lines, reflecting in part the diverse business environment in California, which has always had a strong research and development sector, powered by venture capitalists ready to finance cutting-edge technology. Many business groups have opposed the drive to suspend the greenhouse law, and the list of contributors backing the measure is notable for the absence of venture capitalists.

“There is a huge clean energy revolution going on: this is going to happen,” said Thomas F. Steyer, founder of Farallon Capital Management, a hedge fund in San Francisco, and a co-chairman with Mr. Shultz of the campaign to defeat the proposition. “If we’re not careful, it’s just not going to happen in the United States.”

Mr. Steyer has contributed $2.5 million to the effort to defeat the initiative and said he was prepared to contribute an additional $2.5 million.

Mr. Schultz said that since the passage of the law, “a whole industry is developing here, and I might say a lot of jobs are connected with it.”

“There’s been a virtual eruption of research and development activities of all kinds on alternate ways to produce and use energy,” he said.

In most years, this should not be a worrisome battleground for environmentalists. The greenhouse gas law enjoyed strong support from the public when it passed four years ago, according to polls. The roster of opponents to Proposition 23 includes Gov. Arnold Schwarzenegger, a Republican, who views the law as a defining accomplishment of his career here.

Early polling suggests that voters who know about the measure are evenly split.

Yet supporters said they were concerned that the proposition could slip through at a time when Democratic spirits are low. More significant is the question of how much more supporters of Prop 23 can raise to finance their campaign. Of the $8.2 million raised so far, $1 million came from the Koch firm, $4 million from the Valero Energy Corporation and $1.5 million from the Tesoro Corporation; both corporations are based in San Antonio.

“We have every reason to believe that they are going to put the money in to run a big television campaign in the most expensive media market in the country,” said Annie Notthoff, the California advocacy director for the Natural Resources Defense Council, an environmental group. “We certainly are expecting to have a fight on our hands.”

Supporters of the law, if nervous about the proposition, remain optimistic than they can beat it back at the polls in November, and hope that such an outcome would have the opposite effect nationally that opponents of the bill are seeking. “If the proposition loses, the lesson is going to be there’s no going back,” said Wesley P. Warren, director of programs for the Natural Resources Defense Council.

One in Seven Americans is Living in Poverty, Census Shows

By Carol Morello

Washington Post Staff Writer

Thursday, September 16, 2010; 3:08 PM

One in seven Americans is living in poverty, the highest number in the half-century that the government has kept such statistics, the Census Bureau announced Thursday.

Last year was the third consecutive year that the poverty rate climbed, in part because of the recession, rising from 13.2 percent in 2008 to 14.3 percent, or 43.6 million people, last year.

Asians were the only ethnic group whose poverty rate did not change substantially; every other race and Hispanics experienced increases in poverty rates.

In addition, 51 million Americans were uninsured, as the number of people with health insurance dropped from 255 million to less than 254 million -- the first decrease since the government started keeping track in 1987. The number would have been worse because 6.5 million fewer people got insurance through their jobs, but it was offset by a leap in government-backed health insurance. More than 30 percent of Americans now get coverage from the government.

"Given all the unemployment we saw, it's the government safety net that's keeping people above the poverty line," Douglas Besharov, a University of Maryland public policy professor and former scholar at the American Enterprise Institute, told the Associated Press.

The grim statistics reflect the depth of the recession that began almost three years ago and could have an impact on midterm elections less than two months away.

"These numbers should be a wake-up call," said Peter Edelman, a Georgetown University professor and co-director of the Georgetown Center on Poverty, Inequality and Public Policy. "These are deeply disturbing numbers."

At organizations where the unemployed come to get help finding a job or seek food, the numbers were no surprise.

"In the decade I've been doing this work, this is a low point," said Jason Perkins-Cohen, executive director of the Job Opportunities Task Force in Baltimore. "We're getting a real feeling of desperation. For sheer numbers, it's a new, unhappy world."

At the nonprofit Action Though Service in Prince William County late Thursday morning, the shelves of the agency's pantry were starting to empty, as the line for help snaked out the door with a few dozen people seeking assistance.

Prince William resident Carol Williams said she has come to the shelter once a month since January, when she was laid off from her job at United Medical Center due to budget woes.

"I worked since I was 15, and, now, for the first time I don't have a job and I can't feed my family," said Williams, 55. "I have a degree; doesn't matter. The jobs aren't there."

Williams said she has been applying for dozens of jobs a week and had about 20 interviews since January. "I think people are scared to hire someone who is not working," she said, adding there also is just a lot more competition because of the high unemployment rate.

A single mother, Williams has five mouths to feed -- children and grandchildren-- ranging in age from 17 months to 28. Williams said she was able to raise three sons on her own, but she now turns to the food pantry at ACTS and her father and friends for help.

"We had no bread, no nothing last Friday because the pantry was closed," she said. "Luckily a friend helped me or we would have had no food for the weekend."

Advocates said they're seeing a lot more people like Williams.

"We have definitely seen many more individuals who are very well-educated, with high degrees, where it's the first time to ever be in a situation to ever have to ask for help for food or shelter," said Vickie Koth, executive director of Good Shepherd Alliance in Loudoun County.

Koth recalls one family of four in particular, where both parents were highly educated -- the mother was a lawyer, and the father was a mortgage broker. "They were in the business of buying and selling homes, and they had three foreclosures within the same span of time and were homeless for the first time.

"We're full all the time and we turn people away every day, and that's always been true. But the types of people that call have changed," Koth said. "Time after time I've heard individuals say, 'I've given to shelters, I've volunteered at food pantries. I've never thought I'd be here myself.' "

 Staff writers Jennifer Buske and Caitlin Gibson contributed to this report.

 

 

Mahathir Blames Singapore for Racism in Malaysia

From An Huu Nguyen:

By Angela Lim - Sept 15th, 2010, Published by asiaoneforum

A war of words has erupted between Singapore and Malaysia’s former leaders.

Ex-Malaysian prime minister Mahathir Mohamad said yesterday that racism in Malaysia is a result of Singapore’s two-year membership there, and not because the island was “turfed out” as suggested by the Republic’s founding father Lee Kuan Yew recently.

Rebutting recent comments made by Minister Mentor Lee Kuan Yew, Tun Dr Mahathir wrote on his blog, “With the background of Singapore’s activities in Malaysia in the short three (sic) years of its membership, can we really believe that if it had not been ‘turfed out’, race relations would be better in Malaysia?”

“While Kwan Yew (sic) talks about his belief that all ethnic communities should free themselves from the shackles of racial segregation in order to promote fairness and equality among races, he also said that ‘once we are by ourselves (out of Malaysia) the ‘Chinese become the majority’.”

His remarks were in response to comments Mr Lee made in an interview with The New York Times in which he compared how Singapore and Malaysia handle race relations.

Mr Lee had expressed that Malaysia would have achieved much of what Singapore had accomplished if it had accepted a multi-racial base, and described Malaysia as being in a “most unhappy situation”.

“I think if the Tunku had kept us together, what we did in Singapore — had Malaysia accepted a multi-racial base for their society– much of what we’ve achieved in Singapore would have been achieved in Malaysia. But not as much because it’s a much broader base. We would have improved inter-racial relations and an improved holistic situation,” Mr Lee said in the NYT interview, referring to Tunku Abdul Rahman.

The 85-year-old Dr Mahathir rejected the view, claiming it was “not supported by facts of history”.

“Before Singapore joined the Peninsular, Sabah and Sarawak to form Malaysia, there was less racial politics in the Federation of Malaysia,” he wrote.

Dr Mahathir claimed that after Singapore became a part of Malaysia in 1963, Mr Lee reneged on a promise that the People’s Action Party (PAP) would not participate in Peninsular, Sabah and Sarawak politics and attempted to displace the Malaysian Chinese Association (MCA) in the Alliance by appealing to Chinese sentiments in the Peninsular.

“Of course the slogan was ‘Malaysian Malaysia’, which implied that the Chinese were not having equal rights with Malays. If this appeal to Chinese sentiments against the Malays was not racial, I do not know what is racial,” Dr Mahathir said.

Instead, he took aim at Singapore politics, claiming “whether the PAP admits it or not, the party has always been led and dominated by ethnic Chinese and has won elections principally because of Chinese votes. The others are not even icing on the cake,” he said.

“Amnesia is permissible, but trying to claim it is because Singapore had been ‘turfed out’ for the present racial politics in Malaysia is simply not supported by facts of history,” he added.

In Malaysia, opinions were mixed in response to both leaders’ remarks.

The Straits Times reported that Umno Youth chief Khairy Jamaluddin said on Monday that Mr Lee’s comments were “ill-informed and coloured with historical bias.”

On the other hand, Selangor Menteri Besar Khalid Ibrahim felt that Mr Lee’s comments were a “historical statement”. Selangor executive councillor and opposition politician Teresa Kok agreed, saying Singapore is ahead of Malaysia because it placed merit above race considerations.

MCA president Chua Soi Lek admitted that race relations are not as good as they should be. But he told Bernama it would be unfair “to say that Malay leaders always harp on Malay superiority”.

Tan Sri Khalid said both Dr Mahathir and Mr Lee had the right to express their opinions on the issue.

“You can’t say Singapore has progressed while Malaysia has not. Malaysia’s progress is subject to several constraints, and so is Singapore’s,” he told The Malaysian Insider.

“The future is not about that, it’s about how we can work together,” he adds.

Restore Carter's Legacy: Put Solar Panels Back on Roof of White House Now!

Published on Wednesday, September 15, 2010 by TruthDig.com

A Little Missed Sunshine

by Amy Goodman

BONN, Germany-When first lady Michelle Obama started an organic garden at the White House, she sparked a national discussion on food, obesity, health and sustainability. But the green action on the White House lawn hasn't made it to the White House roof, unfortunately.

Back in 1979, President Jimmy Carter installed solar panels on the roof of the West Wing as part of a new solar strategy. "In the year 2000," Carter said, "the solar water heater behind me, which is being dedicated today, will still be here, supplying cheap, efficient energy. A generation from now, this solar heater can either be a curiosity, a museum piece, an example of a road not taken, or it can be just a small part of one of the greatest and most exciting adventures ever undertaken by the American people."

Sadly, after President Ronald Reagan came into office, he had the panels removed, and some of them did end up in museums. Environmental activist Bill McKibben, founder of the group 350.org, told me, "You know where one of these other panels is? It's in the private museum of the Chinese entrepreneur who's built the world's largest solar thermal company on earth, Himin Solar. They've installed 60 million arrays like this across China."

In 1990, the White House panels were retrieved from government storage and put back into use by Unity College in Maine. To make the case for solar, McKibben joined with a group of Unity College students and drove one of the panels from their campus to the White House, asking that it be put back on the roof. The White House declined the offer.

President Barack Obama campaigned on the pledge that he would create millions of new green jobs. He hired Van Jones as his White House green jobs czar-only to fire him shortly after Jones became the target of what he called a "vicious smear campaign," which was promulgated by Fox News Channel. Now Obama faces a massive unemployment problem, jeopardizing not only the livelihoods of tens of millions, but the political prospects for the Democrats.

Here in Bonn, the answer couldn't be clearer: Use stimulus money and policy to jump-start a green job sector, to help create, for example, solar panel manufacturing, installation and servicing.

Germany, one of the most advanced economies in the world, did just that.

Now, as reported in the Financial Times, German photovoltaic cell installations last year amount to more than one-half of those in the world.

I'm here covering the 30th anniversary of the Right Livelihood Awards, an amazing gathering of scores of activists and thinkers from around the world. Among them is Hermann Scheer, a member of the German Parliament.

When he received his Right Livelihood Award, he said: "Solar energy is the energy of the people. To use this energy does not require big investments of only a few big corporations. It requires billions of investments by billions of people. They have the opportunity to switch from being a part of the problem to becoming a part of the global solution."

And Germany is making this happen. Small-scale residential and commercial solar power installations are not only providing jobs, increased efficiency and cost savings-they actually are allowing the owners of the systems to sell excess power back to the power grid, running their meters in reverse, when conditions allow.

Here, too, are representatives of the Bangladeshi organization Grameen Shakti, which makes loans and offers technical assistance to allow poor, rural people to install solar power in their homes, often granting access to electricity for the first time in their family's history. They have helped install more than 110,000 systems, often with a woman hired to maintain the system-creating jobs, empowering women and raising the standard of living.

Also in Bonn is the headquarters of the United Nations Framework Convention on Climate Change, the sponsor of the failed Copenhagen climate talks last year. U.N. member countries and other stakeholders will meet again in December in Cancun, Mexico, with expectations for substantial progress declining almost daily.

The Obamas' organic garden shows that when the most powerful, public couple takes a stand, people pay attention. Instead of just saying no, President Obama could make an important statement in restoring the White House solar panels to the roof: After the BP Gulf oil disaster, after the reckless invasion and profoundly costly occupation of Iraq (which many believe was based on our need for oil), after the massive, ongoing loss of jobs, we are changing. We will power a vital movement away from fossil fuels, to sustainable energy, to green jobs.

Denis Moynihan contributed research to this column.

© 2010 Amy Goodman

Amy Goodman is the host of "Democracy Now!," a daily international TV/radio news hour airing on 800 stations in North America. She was awarded the 2008 Right Livelihood Award, dubbed the “Alternative Nobel” prize, and received the award in the Swedish Parliament in December.

Exporting Jobs, Importing Workers

Published on Wednesday, September 15, 2010 by Creators.com

 

by Jim Hightower

 

Maybe you're one of the thousands of young lawyers in America working in some low-skill, part-time job because law firms have cut so many of the starting positions you were educated to take. If so, I have good news: Jobs for young lawyers are now mushrooming in companies that provide legal services to U.S. corporations.

Unfortunately, you'll have to move to India to get one. And the pay will be - how shall I put this? - "disappointing."

Lawyering has become the latest category of good jobs disappearing from our Land of the Free, as corporate chieftains continue to offshore the American workplace. The average student loan debt for a recent law school graduate is upward of $100,000, and now law school grads are finding that jobs are scarce - especially since Wall Street banks, insurance corporations, mining giants and others are shipping more and more of their law business to Pangea3, CPA Global, UnitedLex and other rapidly expanding legal outsourcing outfits in India.

In the past five years, the number of these upstart firms has more than tripled, with each one offering from a few dozen to hundreds of young Indian law-school graduates. These eager legal beagles are hunkered down in corporate cubicles, ready to write contracts, review legal documents and - increasingly - to handle the more sophisticated chores of case management and regulatory filings that corporations have been entrusting to more experienced American lawyers.

Even though U.S. corporations have amassed record levels of profits and cash reserves, they are offshoring their legal work simply because it puts even more money in their pockets. They can pay Indian lawyers as little as a tenth of what they'd pay young American attorneys - and the 90-percent wage difference goes to the corporation, rather than being spread through our economy as family incomes.

It's another move by the corporate elite to separate their expanding fortunes from the well-being of America's middle class - and from the well being of America itself.

But what about work that needs to be done here? I mean, physically, here, in the good ol' U.S.A.

At last Obama is getting serious about America's jobs crisis. Last week, he proposed a $50 billion effort that would put Americans to work repairing our national infrastructure. Of course, congressional Republicans have responded as they always do: petulantly shouting "no" and plopping their fat butts down in the middle of the legislative path to block progress.

But Obama could take one symbolic step on his own that would create jobs for about a dozen American workers. It involves the construction of a memorial and statue of Martin Luther King Jr. on our National Mall. After all, King's historic 1963 march on Washington was about jobs and poverty - so why not have some of our highly skilled bricklayers and stone masons who're now unemployed build this monument in honor of King's legacy?

Seems sensible - but guess what? The quasi-governmental foundation overseeing the King memorial project doesn't seem to have much sense. It is importing eight to 12 workers from - believe it or not - China to do this job!

Why don't they just poke every out-of-work American in the eye with a sharp stick? As the Bricklayers union said in exasperation, this is "wrong, wrong, wrong."

Well, sniffed a spokeswoman for the foundation, only the centerpiece of the memorial is outsourced to Chinese craftworkers, so stop your griping. Ironically, that centerpiece is named the "Stone of Hope," but apparently no one at the foundation has any grasp of irony, so they are proceeding to obtain work visas to bring the Chinese into our nation's capital and construct King's monument. Presumably, America's vast pool of jobless workers will be allowed to watch them.

OK, it's only a dozen jobs - but symbolism is important, especially in these hard times. To join the Bricklayers' protest of this insult, call the Martin Luther King Memorial Foundation and tell them to put Americans back to work: (202) 737-5420.

© 2010 Creators.com

National radio commentator, writer, public speaker, and author of the book, Swim Against The Current: Even A Dead Fish Can Go With The Flow, Jim Hightower has spent three decades battling the Powers That Be on behalf of the Powers That Ought To Be - consumers, working families, environmentalists, small businesses, and just-plain-folks.

Five Reasons to Let the Bush Tax Cuts for the Rich Expire

Published on Thursday, September 16, 2010 by CommonDreams.org

by Chuck Collins

Congress is actively debating whether to retain President Bush’s 2001 and 2003 tax cuts for the wealthy that are due to expire at the end of this year.   President Obama supports extending tax cuts for households with incomes under $250,000, but ending the tax breaks for higher income households.  

Here are five good reasons for Congress to let them go.

1. Borrowing to Give the Rich Tax Breaks is a Really Bad Idea. We’ve already borrowed $700 billion since 2001 to pay for these tax cuts. Maintaining them for another decade would cost an estimated $700 billion, plus interest on the national debt estimated at $126 billion.  Does it really make sense to send interest payments to China and millionaire bond-holders in the U.S. –so that we can cut taxes for U.S. millionaires and billionaires?  

2. There are 700 Billion Better Ways to Use the Money.  Consider the superior ways to spend $700 billion. We could use a portion to reduce budget deficits.  We could make long overdue investments in infrastructure such as bridges, roadways, railroads, water treatment facilities, retrofitting buildings –things that make our economy strong and competitive. We could direct funds to make the transition to the new economy that is less dependent on foreign oil.  In the short-term, all these investments would create millions of jobs.  In the long term, it would put the economy on better footing for the future. There are a billion better ways to use the money.

3. Restores Balance to Tax Code.  Over the last half century, Congress has steadily reduced tax obligations for the very rich and global corporations. Between 1960 and 2004, the top 0.1 percent of U.S. taxpayers –the wealthiest one in one thousand –have seen the share of their income paid in total federal taxes drop from 60 to 33.6 percent.  Restoring the tax rates to pre-2001 levels would be a very slight increase, yet begin the process of rebalancing the tax code.

4. It Won’t Hurt the Economy. You’ve heard the blather about how taxing the rich is going to hurt the economy.  But cutting the taxes for the wealthy are an ineffective way to help the economy.  A recent analysis by the Congressional Budget Service ranked 11 strategies to spur the economy and create jobs.  Cutting taxes for the rich was the worst ranked strategy.  Here’ the reality: Taxing the rich is different than taxing the middle class.  The rich save more of their tax cuts while working people and middle class spend it in the economy.  Over the last decade, the top wealth holders have shifted trillions of dollars into speculative investments that have hurt the economy.  

5. Reduces the Dangerous Concentration of Wealth and Power. We’re living in a period of unprecedented economic inequality.  A recent series in the online journal Slate examined the “Growing Divergence” of wealth and income.  Taxes are one of the ways we lessen inequality and promote a more balanced economy. A final reason is that the U.S. public supports letting these tax cuts for the rich expire.  A recent Gallup Poll reveals that 57 percent of the population support letting the tax cuts for the rich expire –while 37 percent support extending them.  Polls rarely reveal support for any form of taxation – which indicates that a majority of Americans –including those who will pay the higher taxes – recognize the imprudence of extending them.  Alan Greenspan, who supported the tax cuts in 2001, has now reversed his position and believes the time has come to raise taxes.

Take action: Organizations such as Wealth for the Common Good and Americans for Responsible Taxes are working to build public support for letting the tax cuts expire. 

Chuck Collins is a senior scholar at the Institute for Policy (IPS) and directs IPS’s Program on Inequality and the Common Good. He is an expert on U.S. inequality and author of several books, including Economic Apartheid in America: A Primer on Economic Inequality and Insecurity (New Press, 2005). He coordinates a national effort to preserve the federal estate tax, our nation’s only tax on inherited wealth. He co-authored with Bill Gates Sr. Wealth and Our Commonwealth, (Beacon Press, 2003), a case for taxing inherited fortunes.