| Robs Real News |
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| Mel Carnahan, democratic senator from Missouri who was assasinated right before the 2000 election on behalf of criminal conservatives mobsters who have taken over our government in order to pass legislation on behalf of criminals in the energy, healthcare and Tobacco industries and force their ideology on the world. Their agenda is to have an income distribution like Latin America. |
| Paul Wellstone, Democratic Senator from Minnesota who was assasinated before the 2002 election by the conservative mobsters that rules this country so they could take control of the senate and ram their agenda down the throats of the american people |
| Click on the links to read a rough draft of a screen play I started to write called "The New Deal" |
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| AIPAC, The American Enterprise Institute and the above slime-ball Jew cohorts in crime, murder and genocide. AIPAC is the force behind the neocons. I hold them more responsible than anyone for pushing the US into Iraq, costing the US tax payers trillions, ruining the lives of millions in Iraq, the destruction of the Iraqi economy. |
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| Click here to watch an excerpt from the film The Trials of Henry Kissinger and understand that the US is The Evil Empire, AVI File |
| The mafia put FOX News on the air, own behind Cerberus Capital, are responsible for the oil companies price gouging, We need regulation or nationalization of oil, water, utilities, energy, defense contractors, transportation, steel, other natural resources, banks, health care, mail delivery, and many big businesses. The gangsters just privatized Greece's water supply. |
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| The country needs the progressive tax rates it had post WW2 when the top tax rate was over 80% and the capital gains rate should be what it was before Reagan took office which I believe was 40%. I'd eliminate all taxes for people earning less than $20,000. Corporate rates should return to the post WW2 rates. Robert Eisner would recognize all capital gains when acrued. The proceeds should be used to eliminate poverty, provide free education and healthcare and nationalize the industries mentioned below to take the profits out of them and have them serve the interests of the people. |
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| Click here to get your copy of "The Money and the Power" the making of Las Vegas and its hold on America |
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Speeches by Michael
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Speeches by Chomsky
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| Conservative thought is not thought but propaganda on behalf of the criminals. For that reason it should be removed from public discourse. The two links above concern the mafias attempt to rid the media of any real news. FOX, DowJones (everything owned by Murdock) Headline News and CNBC are devoted to conservative propaganda. |
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| Whacked by the demented mob |
Memorable quotes-"They're
not fit to lead" Their
objective is to comfort the
comfortable and afflict the
afflicted" by Noem Chomsky
not fit to lead" Their
objective is to comfort the
comfortable and afflict the
afflicted" by Noem Chomsky
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My favorite sites
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Not Whacked
by the mob
by the mob
"The money powers prey upon
the nation in times of peace,
and conspire against it in
times of adversity. The
banking powers are more
despotic than a monarchy,
more insolent than autocracy,
more selfish than
bureaucracy. They denounce
as public enemies, all who
question their methods or
throw light upon their
crimes.” – Abraham Lincoln
the nation in times of peace,
and conspire against it in
times of adversity. The
banking powers are more
despotic than a monarchy,
more insolent than autocracy,
more selfish than
bureaucracy. They denounce
as public enemies, all who
question their methods or
throw light upon their
crimes.” – Abraham Lincoln
In an ugly and unhappy world
the richest man can purchase
nothing but ugliness and
unhappyness. GBS
the richest man can purchase
nothing but ugliness and
unhappyness. GBS
A modern gentleman is
necessarily an enemy of his
country. Even in war he does
not fight to defend it, but to
prevent his power of preying
on it from passing to a
foreigner. Such combatants
are patriots in the same
sense as two dogs fighting
for a bone are animal lovers.
GBS
necessarily an enemy of his
country. Even in war he does
not fight to defend it, but to
prevent his power of preying
on it from passing to a
foreigner. Such combatants
are patriots in the same
sense as two dogs fighting
for a bone are animal lovers.
GBS
The reasonable man adapts
himself to the world: the
unreasonable man persists in
trying to adapt the world to
himself. Therefore all
progress depends on the
unreasonable man. GBS
himself to the world: the
unreasonable man persists in
trying to adapt the world to
himself. Therefore all
progress depends on the
unreasonable man. GBS
In his efforts to escape from
ugliness and unhappiness the
rich man intensifies both.
Every new yard of west end
creates a new acre of east
end. GBS
ugliness and unhappiness the
rich man intensifies both.
Every new yard of west end
creates a new acre of east
end. GBS
Gambling promises the poor what
property promises the rich: that is
why the bishops dare not denounce
it fundamentally. GBS
property promises the rich: that is
why the bishops dare not denounce
it fundamentally. GBS
Do not waste your time on social
questions. What is a matter with the
poor is poverty: what is the matter with
the rich is Uselessness. GBS
questions. What is a matter with the
poor is poverty: what is the matter with
the rich is Uselessness. GBS
If the wicked flourish and
the fittest survive nature
must be the God of tyrannts .
GBS
the fittest survive nature
must be the God of tyrannts .
GBS
Those who understand evil
pordon it: those who resent it
destroy it. GBS
pordon it: those who resent it
destroy it. GBS
Ladies and gentlemen are
permitted to have friends in
the kennel but not in the
kitchen. GBS
permitted to have friends in
the kennel but not in the
kitchen. GBS
What a man believes may be
ascertained not from his
creed but from the
assumptions on which he
habitually acts. GBS
ascertained not from his
creed but from the
assumptions on which he
habitually acts. GBS
Vice is waste of life. Poverty
obedience and celibacy are
the canonical vices.
obedience and celibacy are
the canonical vices.
We admit that when the
divinity we worshipped made
itself visible and
comprehensible we crucified
it. GBShaw
divinity we worshipped made
itself visible and
comprehensible we crucified
it. GBShaw
The rich are rich because the
poor are poor. GBS
poor are poor. GBS
Reporting from Ghetto America, one world under the mafia pimps and
drug dealers.
drug dealers.
| FOX News bankrolled by Jewish Mafia |
| The great depression proved capitalism doesn't work-Noem Chomsky |
Watch Boardwalk Empire and
learn the ideology of the
deranged ruling sleeze-balls
learn the ideology of the
deranged ruling sleeze-balls
To each according to his
needs Acts 2-42
needs Acts 2-42
Property, said
proudhon, is theft
proudhon, is theft
"I believe that banking institutions are more
dangerous to our liberties than standing
armies."
Thomas Jefferson, US President; 1743 -
1826, as quoted by Tanya Cariina Hs
dangerous to our liberties than standing
armies."
Thomas Jefferson, US President; 1743 -
1826, as quoted by Tanya Cariina Hs
"The Great depression
proved capitalism doesn't
work" Chomsky
proved capitalism doesn't
work" Chomsky
Mafia jackass news run by
Roger Ailes who ran Reagan's
campaign for the Chicago mob
Roger Ailes who ran Reagan's
campaign for the Chicago mob
The German finance minister, at a
Jackson Hole meeting, said "Bernanke is
an idiot" The mob gave Bernanke that job
Jackson Hole meeting, said "Bernanke is
an idiot" The mob gave Bernanke that job
| Robsrealnews@yahoo.com |
John K Galbraith commented on the logic of Conservative claims that the
wealthy needed tax cuts to make them produce and the poor needed poverty.
Yet such thinking is the mafia sadists reasoning for austerity policies.
wealthy needed tax cuts to make them produce and the poor needed poverty.
Yet such thinking is the mafia sadists reasoning for austerity policies.
The may 19th NYTimes runs a front page article saying being gay isn't a choice. The NYT is controlled by the
Chicago mob and the Chicago mob owns the boy brothels in bankock Thailand. Probably more propaganda
from the gay mafia so they have more people to pimp out. Remember Rosie Odonnel's insane love for Tom
Cruise. Then when she couldn't have him she supposedly went gay. Then you have Ellen Degenate who
probably went gay because i don't see a guy dating her. There was an opera coach years ago in NY named
Marshal Williamson who went from being gay when he was unemployed but when he got a good job he got
married and had three kids. Then you had singers like William Warfield who was married to Leontyne Price
but their careers kept them on different sides of the planet almost all the time. He supposedly went gay.
The gangsters use this when they attempt to play match maker. The fact is the gay mafia and Jews are like
rabbid dogs and wish to impose their will on everyone and the only way to deal with them is a bullet to their
brain.
Probably the nicest place to live except during the summer is Palm Springs. Most people are tied to their
jobs and family so they can't move there so its considered a gay town because they can easily move. If you
ask them if they want gay marriage i bet the majority say no. This is all the rabbid gay mafia's agenda. Just
exterminate them before they get a hold of your children and start them on crystal meth to try to convert
them to their perversions.
Then you have Roger Ailes, who runs FOX News for the gay mafia who said on TV he finds Scott Brown
attractive. Republican Ailes like Gingrich probably could get a date with a sane woman for a million dollars.
But the gay mafia gives these guys jobs. The mobsters can use people different from strait couple because
strait couple have children that have to be supported. The gangsters want obedient slaves. Not people that
have to take care of children.. Its about money. They kept Howard Hughes locked in a hotel room till his
death in order to divert his wealth to buy out Las Vegas gangsters who wished to retire. They kept Michael
Jackson in Parump Nevada till they whacked him to prevent him from interacting with adults. They keep
people in poverty so they can enslave them. Mob controlled Disney once had Michael Ovitz but he quit after
two months rather than put up with the gay mafia. All the mobsters said Tom Cruise was gay because they
dreamt it till he got married. It shouldn't be that difficult to round up the gay mafia and exterminate the
sick twisted mafia shit. The sick mafia shit that brought us FOX News wants the people to be thinking of
their sexual perversion rather than economic injustice, economic inequality, and their criminal behavior.
The Wall street journal is just an instrument of mafia propaganda since the mob bought it. The editorial
section on 5/11/12 ran two articles about war planning during WW2 that simply weren't true. the US
economy was planned during WW2 from natural resource use by the National Resources Planning Board
(WWII) to The Production Requirements Plan (PRP) was introduced in the first half of 1942 to gather
relevant information, but it "had scarcely begun to operate on a large scale when it revealed serious
defects."22 In November, 1942, the War Production Board announced the Controlled Materials Plan (CMP).
Superseding the Production Requirements Plan, it was introduced in 1943 to simplify and augment the failing
priorities mechanism. This was the beginning of the allocation system. the OPAThe Office of Price
Administration (OPA). These books contained stamps and gave precise details of the amounts of certain
types of food that you were allowed. Rationing insured that each person could get their fair share of the
items that were in short supply due to the war effort and import reductions. By the end of the war, over a
hundred million of each ration book were printed.
The Office of Price Administration (OPA) was in charge of rationing consumer goods such as sugar, coffee,
shoes, household appliances, and other goods during World War II. The OPA accepted ration book
applications and issued ration books, from which consumers tore out stamps in order to purchase food and
other supplies at grocery stores.
Read more: http://wiki.answers.com/Q/Who_were_the_OPA_in_World_War_2#ixzz1uiUYT4JX
.Germany's economic defeat stemmed from two mains reasons. Firstly .... This all goes down to planning, and
not "luck". This article proves the WSJ is just an instrument of gangster propaganda, http://www.ibiblio.
org/hyperwar/USA/BigL/BigL-3.html
A real democracy wouldn't have morons like Paul Ryan and Mark Rubio. Mafia fat boy Chis Christie said he
would accept the VP nod.
Mafia controlled Apple recognizes its taxes in mob controlled nevada. I told you years ago the mob
bankrolls these guys to sing the praises of the private sector.
I was just having a conversation with a police officer from New Jersey. He said Chris Christie is just
another bully and he agreed the mob put him into office because he helped them rob everyone when he was
attorney general.
In accordance with mob economic ideology the general population is prey for the mobsters but because they
have impoverished the people there is little picking left for them to steal. They never want to talk about the
fact that upward mobility is twice the rate in the so called socialist countries.
The solution is to exterminate the gay mafia.
ECONOMY
AlterNet / By Marshall Auerback
comments_image 107 COMMENTS
Why Low Minimum Wages Kill Jobs and Crush Living Standards for Everyone
Contrary to right-wing propaganda, decent pay for workers helps the economy and boosts job creation.
April 24, 2012 |
LIKE THIS ARTICLE ?
Join our mailing list:
Sign up to stay up to date on the latest Economy headlines via email.
Senator Tom Harkin, Democrat of Iowa, has introduced a bill to raise the federal minimum wage to $9.80
from its present level of $7.25. Polls are showing many voters in favor, though they are confused about what
it would mean for the job market. The truth is that a move would be good for a slow economy and have a
positive impact on the jobs crisis. Naturally, this has led to the usual cries of opposition, largely based on the
notion that raising the minimum wage hurts the very people it is supposed to help. Typical of this view is a
letter to the New York Times from Michael Saltsman, a fellow at the Employment Policies Institute, a
business-backed nonprofit research group (surprise!).
Saltsman trots out the old canards against the minimum wage, claiming that research indicates that a
minimum wage increase "simply doesn’t help the poor — in fact, it hurts them." He cites studies which showed
that states with their minimum wages between 2003 and 2007 found no associated decline in state poverty
rates. Saltsman gives three reasons for this:
A majority of working-age individuals who live in poverty don’t work, and thus cannot benefit from the raise.
A clear majority of those who do earn the minimum wage live in households that aren’t in poverty.
Less skilled and less experienced employees lose employment opportunities when the cost to hire and train
them rises as a result of a minimum-wage increase.
Let’s take these arguments in turn. Implicit in the first point is that a majority of working-age individuals don’
t work because they choose not to (i.e. they are lazy scroungers), or because unemployment is caused by
laziness or lack of training. The argument they often use is that “I can get a job, therefore all the
unemployed could get jobs if only they tried harder, or got better education and training.”
The way I go about demonstrating that fallacy is a dogs-and-bones example. Say we have 10 dogs and we
bury nine bones in the backyard. We send the dogs out to find bones. At least one dog will come back
without a bone.
We decide that the problem is lack of training. We put that dog through rigorous training in the latest bone-
finding techniques. We bury nine bones and send the 10 dogs out again. The trained dog ends up with a bone,
but some other dog comes back without a bone (empty-mouthed, so to speak).
The problem is that there are not enough bones and jobs to go around. The “bones” in the jobs discussion are
insufficient spending power in the economy. It is certainly true that a well-trained and highly motivated
jobseeker can usually find a job. But that is no evidence that aggregate unemployment is caused by laziness
or lack of training. And besides, we could easily determine how much unemployment is truly voluntary. The
government could serve as the “employer of last resort” under a job guarantee program modeled on the
WPA (the Works Progress Administration, in existence from 1935 to 1943) and the CCC (Civilian
Conservation Corps, 1933-1942). The program would offer a job to any American who was ready and willing
to work at the federal minimum wage, plus legislated benefits. No time limits. No means testing. No minimum
education or skill requirements.
It's hard to believe that reducing or even eliminating the minimum wage (which is the corollary of Saltsman’s
point), would actually enhance employment, when the problem is a basic lack of demand. Business will not hire
more workers until it has more sales. Consumers will not spend more until they’ve got more jobs. A private-
sector recovery requires 300,000 new jobs every month. But the private sector doesn’t need 300,000 new
workers per month until there exists sufficient spending power in the economy to induce them to hire those
workers. How is retaining a static, or reduced minimum wage, going to achieve this?
Higher wages means higher income and thus higher consumption spending, which induces firms to employ
more labor. So the truth is that economic theory does not tell us that raising minimum wages will lead to
more unemployment, indeed, theory tells us it can go the other way—raising the minimum wage could increase
employment. That’s one of the reasons why Henry Ford believed in paying his workers a decent wage: so that
they could buy his product.
To be sure, even an increase in the minimum wage to $12 or $15 an hour is not going to provide the means to
purchase a Ford (or GM) today. And so what if, as Saltsman argues, the workers earning this minimum wage
are not living in poverty? Does that mean they wouldn’t spend the money derived from an increased minimum
wage? I wonder if Saltsman would also argue that tax cuts across the board are unnecessary because most
of the people who receive them are not living in poverty?
That argument is a red herring. The truth is, if you earn your money through wages (unlike many of the 1
percent, who earn through things like investments and a tax system biased in favor of capital gains over
income) then a higher wage, minimum or otherwise, would mean that you'd spend the additional dollars,
creating jobs for other workers. You'd pay down your mortgages and car loans, getting yourself out of
debt. You’d pay more taxes — on sales and property, mostly — thereby relieving the fiscal crises of states
and localities. More teachers, police and firefighters would keep their jobs. America would get a virtuous
cycle toward higher employment and, more importantly, the cycle would be based on a policy which creates
higher incomes, not higher debt via credit expansion.
Then there's the common belief that minimum wages cause unemployment, which relates to Saltman’s third
point – namely that less skilled and less experienced employees lose employment opportunities when the
cost to hire and train them rises as a result of a minimum-wage increase. It is at least partly true that for
an individual firm, higher wages reduce the number of workers hired. But we cannot extrapolate that to the
economy as a whole. The issue of eroding wage competitiveness, which allegedly follows from a higher
minimum wage, doesn’t really apply to jobs which offer the minimum wage. It might apply to areas such as
manufactured goods and traded services like insurance and banking. But these are sectors in which most
people already earn far more than the minimum wage.
As far as the minimum wage goes, the jobs we’re talking about are in non-traded services like checkout
clerks, haircutters, domestic help, and food-service workers. When checkout clerks and cooks earn more in
wages, then businesses start getting the sales required to induce them to hire more workers. And if sales
are robust enough, then guess what? Even more workers will be hired, or wages will actually be increased.
The point is: wages are a source of demand, as well as a cost input. Reduce wages and demand plummets,
which more than overrides any cost savings derived from paying less to workers (especially given today's
paltry minimum wage, which is hardly a living wage for any American).
Let's be clear; Americans have never embraced welfare. For better or worse, our nation has always
preferred a more libertarian path: self-help, personal responsibility, individual initiative. As a result, our
welfare programs have always been stingy, temporary and purposely demeaning. But maintaining the minimum
wage at today’s ridiculously depressed level does not enhance anybody’s employment prospects. In fact, it
makes it worse, because it sucks demand out of the economy and minimizes the chances of those now
receiving unemployment benefits or other assistance to quickly get back into the workforce, to "pull
themselves up by their own bootstraps," as conservatives like to say. They cannot do that when our work
force continues to focus on policies which merely enhance the incomes of the top 1 percent.
Here’s mobster Draghi defending austerity in an interview with the Wall Street Journal:
“There was no alternative to fiscal consolidation, and we should not deny that this is contractionary in the
short term. In the future there will be the so-called confidence channel, which will reactivate growth; but it’
s not something that happens immediately, and that’s why structural reforms are so important, because the
short-term contraction will be succeeded by long-term sustainable growth only if these reforms are in
place.” (“Q&A: ECB President Mario Draghi”, Wall Street Journal) Thats what I think austerity came out of
that nut job Marty Feldman.
EuroSpeak for "Starve the Beast"
The Meaning of “Austerity Measures”
by MIKE WHITNEY
The eurozone is slipping into a recession that could have been avoided. Had policymakers provided fiscal
support for stricken countries in the South and guarantees on their government bonds, (as the USG does for
US Treasuries) then their economies could have continued to grow while the necessary reforms were put in
place. But the Troika (The IMF, the ECB, and the European Commission) decided to make the bailouts
conditional on member states’ acceptance of harsh austerity measures which forced leaders to slash
government payrolls, services and programs. The result was entirely predictable; economic activity began to
sputter as one country after another succumbed to a vicious slump.
So the downturn was a basically matter of choice, a self-inflicted wound brought on by poor decision-making
in Brussels and Frankfurt. Anyone could see what the result was going to be because contractionary policy
leads to economic contraction. Implement policies that are designed to shrink the economy, then the economy
will shrink.
For the last month or so, the focus has mainly been on Spain, and for good reason. Spain’s banking system is
crumbling beneath the weight of tens of billions in non performing loans generated by the gigantic housing
bubble which is still deflating. Unemployment in Spain is the highest in Europe at 24 percent. (Youth
unemployment is over 50 percent) Even so, Spain’s right wing PM Mariano Rajoy is attempting to reach the
deficit targets demanded by the troika which will push unemployment higher while further deepening the
depression. According to Der Speigel:
“The prime minister recently announced that he wants to reduce expenditures in the country’s education and
health system by €10 billion. …. To meet the demands of the central government, the regions would have to
slash 80,000 out of 500,000 teaching positions.”
As you can see, austerity measures and debt consolidation are only adding to Spain’s woes. Eventually, after
much unnecessary misery, Spain will require a bailout, although ECB president Mario Draghi insists that this
is not so.
But Europe’s problems are not limited to Spain or countries on the periphery. France’s output has slipped for
a second month in a row and the pace of the decline is accelerating. The service sector is also showing signs
of distress as belt tightening measures take hold and gradually reduce aggregate demand. Unemployment is
edging higher as the slump deepens. According to data from Eurostat the seasonally adjusted jobless rate
in France reached 10 percent in April, a 12 year high. Ballooning unemployment has led to an uptick in poverty
which now affects 13.5 percent of the population. Austerity measures have led to a decline in personal
consumption, an erosion of confidence, and a more generalised slowdown across all sectors. Still, intractable
bankers and bureaucrats in Brussels and Frankfurt have not veered one bit from the original policy. They
remain steadfast in their commitment to austerity.
Here’s Draghi defending austerity in an interview with the Wall Street Journal:
“There was no alternative to fiscal consolidation, and we should not deny that this is contractionary in the
short term. In the future there will be the so-called confidence channel, which will reactivate growth; but it’
s not something that happens immediately, and that’s why structural reforms are so important, because the
short-term contraction will be succeeded by long-term sustainable growth only if these reforms are in
place.” (“Q&A: ECB President Mario Draghi”, Wall Street Journal)
Notice how Draghi does not defend austerity on the basis of any identifiable economic theory, nor does he
cite any examples of austerity’s successes. (Are there any?) Nor does he name any prominent economists
who support the theory. It’s all just “Trust us, we’re the experts”…. “contractionary expansion will work
because we say so” even though the economy is sinking, unemployment and extreme poverty are at record
highs, and the Eurozone is embroiled in the worst slump in the last 80 years. “Trust us. We know what we’re
doing”.
And here’s a sample of Draghi’s views on taxation from the same interview:
“A ‘good’ consolidation is one where taxes are lower and the lower government expenditure is on
infrastructures and other investments.”…”A ‘bad’ consolidation is actually the easier one to get… by raising
taxes and cutting capital expenditure.”
Let’s summarize: Cutting public spending and austerity, “Good”. Raising taxes, “Bad”. Isn’t this the same right
wing blather we’ve heard for years?
“Austerity” amounts to an attack on Europe’s social model and aims to roll back the progressive advances of
the last century. There’s nearly-universal agreement that belt tightening doesn’t lead to recovery, but just
make matters worse. Trimming deficits in the throes of a recession is a surefire way to choke off economic
activity and foment social unrest. And so it has. Aside from turning many of the EU’s biggest cities into free-
fire zones, austerity is reshaping the political landscape and fueling radical elements on the right and left
who are calling for an end to the 17-member union and a return to national sovereignty. (Hooray)
Still, policymakers seem oblivious to the political firestorm they’ve touched off. They remain focused
laserlike on their primary objective, which is to make sure that a bigger share of the national wealth moves
up the income chain. The way they do this is by demagoging the fake “debt crisis” while their political lackeys
and “technicians” slash pensions, health care and subsidies to protected industries; hack away at state
budgets, reduce their federal workforce, crush organized labor, remove tariffs and taxes on capital, and
privatize more public assets and services. Smaller government means less activity, fewer jobs, weaker
demand, and greater hardship for working people. In other words, austerity achieves exactly what it was
meant to achieve; bigger profits for the 1% and zilch for everyone else. Here’s a clip from an article in
Reuters:
“The euro zone’s business slump deepened at a far faster pace than expected in April, suggesting the
economy will stay in recession at least until the second half of the year….
“Today’s dismal PMI figures clearly indicate that the euro zone economy remains in dire straits”….European
factories had their worst month since June 2009. Companies said their order books were shrinking and they
were cutting jobs in reaction to falling demand….
“There are no real drivers of growth here, which suggests that although the overall rate of decline is
modest at the moment, we could see it continue to worsen in coming months,” said Chris Williamson, chief
economist of PMI compiler Markit.” (“Euro zone slump deepens unexpectedly in April”, Reuters)
Draghi’s ”debt consolidation” and “structural reforms” have increased deflationary pressures and deepened
the slump. They’ve been a total flop as anyone with half-a-brain could have predicted.
So, are we supposed to believe that the ECB president didn’t know what the effect of his policies would be,
that he didn’t know that contractionary policies would result in economic contraction?
Of course, he knew. Draghi’s not an idiot; he’s a very competent economist. This just shows that he had an
ulterior motive, that the policy was crafted to serve the interests of his banking buddies and not those of
the 99%. After all, the real purpose of austerity is not to cut deficits or spur growth, but to stuff
government into a fiscal starightjacket so that private industry and big finance get a bigger slice of the pie.
Isn’t that what this is really all about?
Sure, it is. Austerity is just the euro-version of “starve the beast”.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics
of Illusion (AK Press). He can be reached at fergiewhitney@msn.com.
There is no way socialist Denmark would approve austerity policies unless forced on them by the mafia jack-
asses. They know austerity was implemented by Herbert Hoover in the 1920s and it gave them the great
depression but its part of mafia ideology so we have gangsters like Chris Cristie and Paul Ryan demanding
them. The mob had Ayn Rand high on Meth to write mafia ideology and now the gangsters demand their
leaders pledge fealty to such ideology before the gangsters make them governor like Chris Christie or jack-
asses like Paul Ryan. Even Greenspan had to say he was a devotee of the nonsense. The ideology sings the
praises of the entrepreneur when in reality one has to join the mob to get company money to start a business
and they have the bank allocate capital to those who parrot the ideology. For businesses the gangsters want
to own they have their gangsters like Romney, Icahn and Steven Schwarzman steal them. I'm not against
entrepreneurs but the US loses one industry after another to countries with not-for-profit health care. GM
would move factories across the border to Canada
If this was a democracy the government would whack Jew sociopaths like Peter G. Peterson and Stephen A.
Schwarzman. The Jew mafia backs Romney as a fellow gangster who trained with Nethanyahoo. They back
candidates they think will help the Jews rob and pillage and control the world as they did at the fall of the
soviet union when they put Boris Yeltsin in power knowing he was an alcoholic so Jews like Mikhail
Khodorkovsky could steal Russia's oil leases and industries. In 1995, Abramovich and Boris Berezovsky, an
associate of President Boris Yeltsin, acquired the controlling interest in the large oil company Sibneft. The
deal was within the controversial loans-for-shares program and each partner paid US$100 million for half of
the company, below the stake's stock market value of US$150 million at the time, and rapidly turned it up
into billions. The fast-rising value of the company led many observers, in hindsight, to suggest that the real
cost of the company should have been in the billions of dollars.[19] Abramovich later admitted in court that
he paid huge bribes (in billions) to government officials and obtained protection from gangsters to acquire
these and other assets (including aluminium assets during the aluminium wars).[20]
Friendship with Boris Berezovsky
In 1993, Abramovich founded Mekong. He began selling oil from Noyabrsk. Eventually, he met fellow Russian
businessman and entrepreneur Boris Berezovsky.
According to two different sources, he first met Berezovsky either at a meeting of the Russian
businessmen in the Caribbean in 1993[23] or in the summer of 1995 on the yacht of his friend Pyotr Aven.
[24]
Berezovsky introduced Abramovich to "the family", the close circle around the then president, Boris Yeltsin,
which included his daughter Tatyana Dyachenko and chief security adviser, Alexander Korzhakov.[23]
Together with Berezovsky, Abramovich founded the offshore company Gibraltar-registered Runicom Ltd.
and five Western European subsidiaries. Abramovich headed the Moscow affiliate of the Swiss firm,
Runicom S.A. In August 1995, Sibneft was created by Boris Yeltsin’s presidential decree. It was rumored
that Abramovich was the chief of the organization with Berezovsky promoting the business in higher circles.
[25][26]
Acquisition of Sibneft, aluminium wars, and loans-for-shares
Further information: Sibneft, Loans-for-shares, and Gazprom Neft
In 1995, Abramovich and Berezovsky acquired a controlling interest in the giant Soviet oil company Sibneft.
Affiliates of Abramovich, with affiliates of Boris Berezovsky, purchased Russian oil company Sibneft for
$100.3 million (the company was worth $2.7 billion at that time). Sibneft produces around $3 billion worth of
oil annually.[27][28] Abramovich established several fly-by-night firms and together with his friend Boris
Berezovsky used them to acquire the stock of Sibneft. As a result, the tycoon managed to pay for the
company 25 times less than the market price.[27] Bought for a total of $200 million, Sibneft is now worth
seventy five times as much.[29] Here they make sure there are judges that let them steal everything like
Michael Milkin did in the 80s and Annenburg did for decades. I used to know this Jew on 4th st named
barbara in Hancock park in LA who spent her days suing insurance co and the Jews bought off the judges so
she would win. But Maddof was convicted for being a jew robbing the jews. Of course those are
generalizations as Jew Elliot Spitzer found out when he prosecuted the gangsters that caused the collapse
of the banking industry. That's the difference between the Jew mafia and the Italian mafia. Tony Resco and
the Chicago Outfit backed Clinton and Obama because they thought he would be a competent presidents.
The Jew mafia backed Reagan, Bush and Romney because they thought they would allow the Jews to rob the
world. But the Italians used Jew gangsters like Bugsy Seagel , and Meyer Lansky because they were more
ruthless, sleazy and depraved.
Did you ever go through downstate Illinois like Kankakee. The mobsters went in, shipped all the jobs to China
and now it has 30 unemployment and resembles a ghetto like new Orleans or Paul Ryan's Milwaukee..Why
are the democratic gangsters in Chicago and all the republican gangsters in Milwaukee, far suburbs of
Chicago and downstate Illinois?
A civilized society would support livable wages at full employment like Japan inc used to have before the
gangsters fucked it up because they proved it was possible. Japan Inc had an economy planned by MITI and
its ministry of finance and mega bank Keiretsu system that allocated all profits to its industrial strategy
designed to create high value added jobs that provided middle class wages for all its people. Trade was
managed so foreign competition couldn't compete by undercutting Japanese wages. Profit margins where
often kept as low as possible so that the industrial groups could reinvest profits in making a superior
product in every industry. Japanese students staked out American engineering programs at US universities
to capitalize on american technology that US firms waited for the free market to make viable. Japans auto
industry implemented american made technology that GM never bothered to put in their cars.
Now half of Americans live in poverty and this topic isn't discussed because journalists are illiterate when it
comes to economic history. Laisse faire just drives down wages for the majority for the benefit of the few.
But as history has proven eventually the whole thing collapses and the free market economies can't compete
in the long run with the planned economies like Japan inc without resulting to subterfuge. After Clinton won
in 1992 the CIA was blowing up japanese chip factories. The US can't manage trade in such a manner with
China. I believe globalization came out of FDR's administration because economic considerations caused
WW2 when the British had an empire to exploit and germany wanted a place in the sun. FDR disbanded the
British empire. Germany consumers kicked mob controlled Walmart out of Germany. They saw no reason to
ship all their jobs to China when they had unemployment at home.
By Marshall Auerback
comments_image 45 COMMENTS
Why Low Minimum Wages Kill Jobs and Crush Living Standards for Everyone
Contrary to right-wing propaganda, decent pay for workers helps the economy and boosts job creation.
April 24, 2012 |
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Senator Tom Harkin, Democrat of Iowa, has introduced a bill to raise the federal minimum wage to $9.80
from its present level of $7.25. Polls are showing many voters in favor, though they are confused about what
it would mean for the job market. The truth is that a move would be good for a slow economy and have a
positive impact on the jobs crisis. Naturally, this has led to the usual cries of opposition, largely based on the
notion that raising the minimum wage hurts the very people it is supposed to help. Typical of this view is a
letter to the New York Times from Michael Saltsman, a fellow at the Employment Policies Institute, a
business-backed nonprofit research group (surprise!).
Saltsman trots out the old canards against the minimum wage, claiming that research indicates that a
minimum wage increase "simply doesn’t help the poor — in fact, it hurts them." He cites studies which showed
that states with their minimum wages between 2003 and 2007 found no associated decline in state poverty
rates. Saltsman gives three reasons for this:
A majority of working-age individuals who live in poverty don’t work, and thus cannot benefit from the raise.
A clear majority of those who do earn the minimum wage live in households that aren’t in poverty.
Less skilled and less experienced employees lose employment opportunities when the cost to hire and train
them rises as a result of a minimum-wage increase.
Let’s take these arguments in turn. Implicit in the first point is that a majority of working-age individuals don’
t work because they choose not to (i.e. they are lazy scroungers), or because unemployment is caused by
laziness or lack of training. The argument they often use is that “I can get a job, therefore all the
unemployed could get jobs if only they tried harder, or got better education and training.”
The way I go about demonstrating that fallacy is a dogs-and-bones example. Say we have 10 dogs and we
bury nine bones in the backyard. We send the dogs out to find bones. At least one dog will come back
without a bone.
We decide that the problem is lack of training. We put that dog through rigorous training in the latest bone-
finding techniques. We bury nine bones and send the 10 dogs out again. The trained dog ends up with a bone,
but some other dog comes back without a bone (empty-mouthed, so to speak).
The problem is that there are not enough bones and jobs to go around. The “bones” in the jobs discussion are
insufficient spending power in the economy. It is certainly true that a well-trained and highly motivated
jobseeker can usually find a job. But that is no evidence that aggregate unemployment is caused by laziness
or lack of training. And besides, we could easily determine how much unemployment is truly voluntary. The
government could serve as the “employer of last resort” under a job guarantee program modeled on the
WPA (the Works Progress Administration, in existence from 1935 to 1943) and the CCC (Civilian
Conservation Corps, 1933-1942). The program would offer a job to any American who was ready and willing
to work at the federal minimum wage, plus legislated benefits. No time limits. No means testing. No minimum
education or skill requirements.
It's hard to believe that reducing or even eliminating the minimum wage (which is the corollary of Saltsman’s
point), would actually enhance employment, when the problem is a basic lack of demand. Business will not hire
more workers until it has more sales. Consumers will not spend more until they’ve got more jobs. A private-
sector recovery requires 300,000 new jobs every month. But the private sector doesn’t need 300,000 new
workers per month until there exists sufficient spending power in the economy to induce them to hire those
workers. How is retaining a static, or reduced minimum wage, going to achieve this?
Higher wages means higher income and thus higher consumption spending, which induces firms to employ
more labor. So the truth is that economic theory does not tell us that raising minimum wages will lead to
more unemployment, indeed, theory tells us it can go the other way—raising the minimum wage could increase
employment. That’s one of the reasons why Henry Ford believed in paying his workers a decent wage: so that
they could buy his product.
To be sure, even an increase in the minimum wage to $12 or $15 an hour is not going to provide the means to
purchase a Ford (or GM) today. And so what if, as Saltsman argues, the workers earning this minimum wage
are not living in poverty? Does that mean they wouldn’t spend the money derived from an increased minimum
wage? I wonder if Saltsman would also argue that tax cuts across the board are unnecessary because most
of the people who receive them are not living in poverty?
That argument is a red herring. The truth is, if you earn your money through wages (unlike many of the 1
percent, who earn through things like investments and a tax system biased in favor of capital gains over
income) then a higher wage, minimum or otherwise, would mean that you'd spend the additional dollars,
creating jobs for other workers. You'd pay down your mortgages and car loans, getting yourself out of
debt. You’d pay more taxes — on sales and property, mostly — thereby relieving the fiscal crises of states
and localities. More teachers, police and firefighters would keep their jobs. America would get a virtuous
cycle toward higher employment and, more importantly, the cycle would be based on a policy which creates
higher incomes, not higher debt via credit expansion.
Then there's the common belief that minimum wages cause unemployment, which relates to Saltman’s third
point – namely that less skilled and less experienced employees lose employment opportunities when the
cost to hire and train them rises as a result of a minimum-wage increase. It is at least partly true that for
an individual firm, higher wages reduce the number of workers hired. But we cannot extrapolate that to the
economy as a whole. The issue of eroding wage competitiveness, which allegedly follows from a higher
minimum wage, doesn’t really apply to jobs which offer the minimum wage. It might apply to areas such as
manufactured goods and traded services like insurance and banking. But these are sectors in which most
people already earn far more than the minimum wage.
As far as the minimum wage goes, the jobs we’re talking about are in non-traded services like checkout
clerks, haircutters, domestic help, and food-service workers. When checkout clerks and cooks earn more in
wages, then businesses start getting the sales required to induce them to hire more workers. And if sales
are robust enough, then guess what? Even more workers will be hired, or wages will actually be increased.
The point is: wages are a source of demand, as well as a cost input. Reduce wages and demand plummets,
which more than overrides any cost savings derived from paying less to workers (especially given today's
paltry minimum wage, which is hardly a living wage for any American).
Let's be clear; Americans have never embraced welfare. For better or worse, our nation has always
preferred a more libertarian path: self-help, personal responsibility, individual initiative. As a result, our
welfare programs have always been stingy, temporary and purposely demeaning. But maintaining the minimum
wage at today’s ridiculously depressed level does not enhance anybody’s employment prospects. In fact, it
makes it worse, because it sucks demand out of the economy and minimizes the chances of those now
receiving unemployment benefits or other assistance to quickly get back into the workforce, to "pull
themselves up by their own bootstraps," as conservatives like to say. They cannot do that when our work
force continues to focus on policies which merely enhance the incomes of the top 1 percent.
Mafia supporters of austerity should be exterminated.
U.S. Hawks Behind Iraq War Rally for Strikes Against Iran
Jim Lobe*
WASHINGTON, 17 Oct (IPS) - Key neo-conservatives and other right-wing hawks who championed the
2003 U.S. invasion of Iraq are calling for military strikes against Iran in retaliation for its purported
murder-for-hire plot against the Saudi ambassador here.
Leading the charge is the Foreign Policy Initiative (FPI), the ideological successor to the Project for the
New American Century (PNAC), which played a critical role in mobilising support for "regime change" in Iraq
in the late 1990s and subsequently spearheaded the public campaign to invade the country after the 9/11
attacks. The group sent reporters appeals by two of its leaders for military action on its letterhead Monday.
In a column headlined "Speak Softly &And Fight Back" in this week's Weekly Standard, chief editor William
Kristol, co-founder of both PNAC and FPI, said the alleged plot amounted to "an engraved invitation" by
Tehran to use force against it.
"We can strike at the Iranian Revolution Guard Corps (IRGC), and weaken them. And we can hit the regime's
nuclear weapons program, and set it back," he wrote, adding that Congress should approve a resolution
authorising the use of force against Iranian entities deemed responsible for attacks on U.S. troops in Iraq
and Afghanistan, acts of terrorism, or "the regime's nuclear weapons program".
Kristol's advice was seconded by Jamie Fly, FPI's executive director, who called for President Barack
Obama to emulate former presidents Ronald Reagan and Bill Clinton when they ordered targeted strikes
against Libya in 1986 and Iraq in 1993, respectively, in retaliation for alleged terrorist plots against U.S.
targets.
"It is time for President Obama to follow in the footsteps of his predecessors and stand up to tyrants who
kill Americans and threaten our interests," wrote Fly, who served on the National Security Council staff and
the Pentagon under George W. Bush, in the on-line edition of The National Review.
"It is time to take military action against the Iranian government elements that support terrorism and its
nuclear program. More diplomacy is not an adequate response," he wrote.
The FPI appeals, which have been echoed by other former Iraq war hawks, such as Bush's former U.N.
ambassador, John Bolton, and Reuel Marc Gerecht at the neo-conservative Foundation for Defense of
Democracies (FDD), came as analysts here continue to debate the credibility of the alleged plot against
Saudi Amb. Adel al-Jubeir and how to react to it if, as the administration contends, it was authorised at a
high level in Tehran.
The likelihood that the plot was indeed real - and, if so, whether it gained high-level authorisation - has been
widely questioned, mainly by two sets of experts here.
Reaction among virtually all Iran specialists, including former government and intelligence personnel, has
ranged from outright scepticism to bewilderment over what, if the alleged plot was actually consummated,
Tehran would have hoped to gain from assassinating the Saudi ambassador on U.S. soil.
"(N)othing short of mind-boggling," wrote Vali Nasr, a senior fellow at the Brookings Institute, in reaction to
the alleged plot. "If true, this plot shows a monumental lapse in judgment on Tehran's part, an audacious and
reckless adventurism that will go down as the clerical regime's colossal mistake that will weaken its hand
internationally and even unravel its grip on power&"
Counter-terrorist experts knowledgeable about Iran's Quds Force, the elite unit of the Islamic
Revolutionary Guard Corps (IRGC) accused of sponsoring the scheme, have been even more sceptical that it
would rely on an untested Iranian-American used-car salesman to make contact with a purported member
of the Zetas drug cartel in Mexico to arrange the assassination.
The supposed Zeta contact turned out to be an informant for the U.S. Drug Enforcement Administration
(DEA), according to the complaint released with great fanfare last week by the attorney general.
"Fishy, fishy, fishy," said Bruce Riedel, a Central Intelligence Agency (CIA) veteran who was formerly in
charge of the Near East and South Asia on the National Security Council, when asked to characterise his
assessment, while Robert Baer, a former Middle East CIA field officer, compared the plot as outlined by
the complaint to a "truly awful Hollywood script".
"None of it measures up to Iran's unsurpassed skill in conducting assassinations," he wrote on Time
magazine's website.
"Why on earth would they create a situation in which they had to rely on this untested, untrained, unguided,
and uncontrolled asset rather than their own people?" wrote Col. Pat Lang (ret.), the Defense Intelligence
Agency's former top Middle East and South Asia analyst on his Sic Semper Tyrannis blog.
Calling the government's case "trash", Lang added that, "The overwhelming likelihood is that this is
someone's 'information operation' intended to condition public attitudes for some purpose."
Such scepticism, however, has not deterred the administration, key lawmakers, or former Iraq hawks from
calling for a stern response.
Indeed, Obama himself said Thursday that he will push for "the toughest sanctions" against Iran on the part
of the U.S. allies and the U.N. Security Council, while senior Treasury officials testified that they were
considering blacklisting Iran's central bank, a move that enjoyed strong bipartisan support in Congress,
notably from lawmakers most closely associated with the Israel lobby, even before the alleged plot was
disclosed.
But a number of former Iraq hawks, few of whom appear to entertain much doubt about the plot's
seriousness or provenance, are calling for military action.
"More sanctions aren't a bad idea&," wrote Gerecht, a major proponent of invading Iraq when he was at the
American Enterprise Institute (AEI), in a column published Friday by the Wall Street Journal's staunchly
neo-conservative editorial page. "But they will not scare (the regime). The White House needs to respond
militarily to this outrage. If we don't we are asking for it."
Another Iraq war booster, Andrew McCarthy, also of FDD, joined the chorus in the National Review Online:
"There is a range of possible political responses, of course, but given its three-decade campaign of
aggression, the response to Iran must be military - and decisive. The regime must be destroyed."
Monday's appeal by FPI for military action was perhaps more remarkable, if only because three of the
group's four directors - Eric Edelman, Robert Kagan, and Dan Senor - were recently named as key advisers
to Mitt Romney, the frontrunner for the 2012 Republican presidential nomination.
Like Kristol, Kagan was a co-founder of both PNAC and FPI and a critical advocate of invading Iraq, while
Senor served in Iraq after the invasion as a top official in the Coalition Provisional Authority. Edelman, who,
as ambassador to Turkey at the time, lobbied its military to support the 2003 invasion, went on to serve as
undersecretary of defence for policy under former Pentagon chief Donald Rumsfeld.
Although Romney has remained silent to date on how Washington should respond to the alleged plot, a
number of his other advisers who championed the Iraq invasion have long called for the U.S. to make the
threat of military action against Iran more credible.
In his first major policy address two weeks ago, Romney himself called for two aircraft carrier task forces
to be permanently deployed in the region as a deterrent to Tehran.
*Jim Lobe's blog on U.S. foreign policy can be read at http://www.lobelog.com.
Mitt Romney, American Parasite
His years at Bain represent everything you hate about capitalism
A A A Comments (9) By Pete Kotz Wednesday, Apr 18 2012
Courtesy DonkeyHotey
James Sanderson had encountered a rare moment of industrial harmony.
Bain Capital, 1984
The smartest guys in the room: Members of Bain Capital with Romney, center, who managed to destroy four
of his 10 biggest moneymakers
Jayme Halbritter
David Foster, a union official at Kansas City’s Armco steel mill, says Bain drove the mill into the ground by
placing its own interests above customers’.
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It was the early 1990s, and the 750 men and women at Georgetown Steel were pumping out wire rods at
peak performance. They had an abiding trust in management's ability to run a smart company. That allegiance
was rewarded with fat profit-sharing checks. In the basement-wage economy of Georgetown, South
Carolina, Sanderson and his co-workers were blue-collar aristocracy.
"We were doing very good," says Sanderson, president of Steelworkers Local 7898. "The plant was making
money, and we had good profit-sharing checks, and everything was going well."
What he didn't know was that it was about to end. Hundreds of miles to the north, in Boston, a future
presidential candidate was sizing up Georgetown's books.
At the time, Mitt Romney had been running Bain Capital since 1984, minting a reputation as a prince of
private investment. A future prospectus by Deutsche Bank would reveal that by the time he left in 1999,
Bain had averaged a shimmering 88 percent annual return on investment. Romney would use that success to
launch his political career.
His specialty was flipping companies—or what he often calls "creative destruction." It's the age-old theory
that the new must constantly attack the old to bring efficiency to the economy, even if some companies are
destroyed along the way. In other words, people like Romney are the wolves, culling the herd of the weak
and infirm.
His formula was simple: Bain would purchase a firm with little money down, then begin extracting huge
management fees and paying Romney and his investors enormous dividends.
The result was that previously profitable companies were now burdened with debt. But much like the Enron
boys, Romney's battery of MBAs fancied themselves the smartest guys in the room. It didn't matter if a
company manufactured bicycles or contact lenses; they were certain they could run it better than anyone
else.
Bain would slash costs, jettison workers, reposition product lines, and merge its new companies with other
firms. With luck, they'd be able to dump the firm in a few years for millions more than they'd paid for it.
But the beauty of Romney's thesis was that it really didn't matter if the company succeeded. Because he
was yanking out cash early and often, he would profit even if his targets collapsed.
Which was precisely the fate awaiting Georgetown Steel.
When Bain purchased the mill, Sanderson says, change was immediate. Equipment upgrades stopped.
Maintenance became an afterthought. Managers were replaced by people who knew nothing about steel. The
union's profit-sharing plan was sliced twice in the first year—then whacked altogether.
"When Bain Capital took over, it seemed like everything was being neglected in our plant," Sanderson says.
"Nothing was being invested in our plant. We didn't have the necessary time to maintain our equipment. They
had people here that didn't know what they were doing. It was like they were taking money from us and
putting it somewhere else."
History would prove him correct. While Georgetown was beginning its descent to bankruptcy, Romney was
helping himself to the company's treasury.
The Working Man's Villain
He should have known better. The year before Romney purchased Georgetown, he mounted his career in
politics, setting his sights on the biggest target in Massachusetts: the U.S. Senate seat held by Ted Kennedy.
There were early signs that he might topple the Kennedy dynasty. Much like today, Romney was pitching
himself as a commander of the economy, a man with the mastery to create jobs. Yet he suffered an
affliction common to those atop the financial food chain: He assumed that what was good for him was good
for all. Call it trickle-down blindness.
In the midst of that 1994 campaign, one of Romney's companies, American Pad & Paper, bought a plant in
Marion, Indiana. At the time, it was prosperous enough to be running three shifts.
Bain's first move was to fire all 258 workers, then invite them to reapply for their jobs at lower wages and
a 50 percent cut in health care benefits.
"They came in and said, 'You're all fired,'" employee Randy Johnson told the Los Angeles Times. "'If you
want to work for us, here's an application.' We had insurance until the end of the week. That was it. It was
brutal."
But instead of reapplying, the workers went on strike. They also decided the good people of Massachusetts
should know what kind of man wanted to be their senator. Suddenly, Indiana accents were showing up in
Kennedy TV ads, offering tales of Romney's villainy. He was sketched as a corporate Lucifer, one who
wouldn't blink at crushing little people if it meant prettying his portfolio.
Needless to say, this wasn't a proper leading man's role for a labor state like Massachusetts. Taking just 41
percent of the vote, Romney was pounded in the election. Meanwhile, the Marion plant closed just six months
after Bain's purchase. The jobs were shipped to Mexico.
Yet Romney didn't learn his lesson. He seemed incapable of noticing that his brand of "creative destruction"
left a lot of human wreckage in its wake. Or that voters might see him as more scumbag than saint.
Just a few months after being hammered by Kennedy, he set fire to another company.
The Price of Incompetence
Lyric Cabral
A Bain partner told author Josh Kosman that higher-ups frequently discussed cutting workers. Job growth
“was never part of the plan.”
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The move was classic Bain. Before buying Georgetown, Romney had purchased the Armco steel mill in Kansas
City, Missouri, which had been in business for more than 100 years.
"We were setting a lot of records for production at that time," says employee Steve Morrow. "We were
making a lot of money because we were getting profit sharing."
Bain combined Armco with the mill in Georgetown and foundries in Tempe, Arizona, and Duluth, Minnesota, to
form the newly christened GS Industries.
Romney purchased Armco with just $8 million down and borrowed the rest of the $75 million price tag. Then
he issued bonds—basically IOUs—to borrow even more to pay himself and his investors $36 million.
Within a year, he'd already made four times his initial investment while barely lifting a finger. But he'd also
run up a staggering $378 million in debt on GSI's tab.
Steel is an infamously cyclical business, a worldwide commodity prone to the same wild price fluctuations as
oil. The Kansas City plant forged parts for equipment used in mining gold and copper, leaving it susceptible to
the instability of those markets as well.
Yet the smartest guys in the room thought they could run the plant better than the people setting
production records.
"They were getting rid of old managers and hiring new managers that didn't have any steel experience,"
Morrow says. "Some of the guys were nice guys and everything, but they didn't have a clue what was going
on."
Many of the new supervisors were ex-military, people who believed that grown men and women are best
motivated by punishment. Before Bain, says Morrow, "everybody got along."
Afterward? "They wanted to run the plant like a disciplinary environment. They wanted to discipline people
for getting hurt on the job. They wanted to put us in an environment like a war, where we were always
fighting with them."
Romney was charging GSI $900,000 a year in management fees to run the company. The Kansas City mill
received $900,000 worth of ineptitude in return.
Although Bain borrowed $97 million to retool the plant so it could also produce wire rods, it left the rest of
the facility to rot.
To save costs, Bain went miserly on everything from maintenance to spare parts and earplugs. Equipment
deteriorated. Because the new managers didn't know how to repair it, "they'd want to rent a new piece of
equipment out instead of maintaining what we had," Morrow says. The waste and inefficiency was
breathtaking.
Bain's plan all along was to streamline the company into greater profitability, then reap the rewards with a
public stock offering. But the exact opposite was happening. Even Roger Regelbrugge, whom Bain installed
as CEO, knew the debt was crushing GSI from within, according to Reuters. If a public offering didn't
materialize, the company would collapse.
Steel was about to enter a periodic downturn. Countries around the world were locked in a war of tariffs
and government-subsidized production, creating a glut and driving down prices. Romney's strategy of the
flip was never meant to endure difficult times.
Workers saw the end coming; they were particularly worried that Bain was badly underfunding their pension
plan. So they went on strike in 1997, bringing a traditional Rust Belt flair to the festivities by littering the
streets with nails and gunning bottle rockets at security guards.
When it was all over, the steelworkers union agreed to wage and vacation cuts in exchange for extra health
and pension safeguards should the plant close.
Yet GSI was now hemorrhaging money, says David Foster, the union official who negotiated the deal. He
claims that Bain cursed the company by placing its own interests above those of customers or long-term
stability.
"Like a lot of private equity firms, Bain managed the company for financial results, not production results,"
Foster says. "It didn't invest in maintenance or immediate customer needs. All that came second to meeting
monthly financial goals."
It would take a few more years of bleeding, but GSI eventually fell to bankruptcy.
The Kansas City mill closed for good; 750 people lost their jobs. Worse, Romney had shorted their pension
fund by $44 million. The feds were forced to cover the difference, while workers saw their benefits
slashed in bankruptcy court.
The battered Georgetown plant and the foundries in Arizona and Minnesota ultimately were bought out of
bankruptcy by new companies. Their workforces were halved.
Still, Romney walked away unbruised. All that debt was technically GSI's, not Bain's. Because he'd repaid
himself and his investors just months after the purchase, Romney pocketed millions for running the company
into the ground.
"They were clever and ruthless enough to pay their own investors back at a really high return rate," Foster
says.
This was the beauty of Romney's racket. Even if he killed a company—and he tended to kill them fairly
often—he still made out, leaving others to take the hit.
The Parasitic Capitalist
On the campaign trail, Romney describes his work at Bain as resurrecting distressed companies. In this
version, he's the white knight lifting troubled firms from the precipice of failure.
Not true.
Private equity companies like Bain rarely buy anything but profitable firms for one compelling reason: The
patient must be healthy enough to be force-fed all that debt. So it's something of a misnomer for
Republican opponents to slur him as a "vulture capitalist."
Bain Capital, 1984
The smartest guys in the room: Members of Bain Capital with Romney, center, who managed to destroy four
of his 10 biggest moneymakers
Jayme Halbritter
David Foster, a union official at Kansas City’s Armco steel mill, says Bain drove the mill into the ground by
placing its own interests above customers’.
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"Romney is not a vulture capitalist, as Rick Perry says, since vultures eat dead carcasses," notes Josh
Kosman, who has written about the private equity business for 15 years. He's "more of a parasitic capitalist,
since he destroys profitable businesses."
Judging by the title of his book—The Buyout of America: How Private Equity Is Destroying Jobs and Killing
the American Economy—it's safe to assume that Kosman is no fan of the industry. But he concedes that the
business isn't inherently wicked.
The game works like this: Big-money investors write checks to people like Romney, who pool that money to
buy or invest in other companies. Internal company documents show that a year before Romney left Bain in
1999, one of his funds had reached a massive $10 billion.
Although Bain requires a $1 million minimum for a seat at the table, its investors don't just come from the
wealthiest 1 percent. They also include college endowments and teachers' pension funds.
Jon Burgstone, a professor at the University of California, Berkeley's Center for Entrepreneurship &
Technology, sees private equity as essential to the economy. He might be a member of President Obama's
National Finance Committee, but he's still an admirer of Bain.
"Generally, private equity companies invest in larger firms that need reorganization or in smaller companies
that need growth capital," he says. And their management can usually benefit from "very bright Bain
consultants."
That feeling is shared by Steven Kaplan, among the foremost scholars in the field. The University of Chicago
finance professor says that, statistically speaking, firms like Bain improve a company's cash flow while
providing investors with a better return than the stock market.
There's no question that Romney had a gift for minting money. In 1986, he bought medical-equipment
manufacturer Calumet Coach for just $1 million, later flipping it for $34 million. He made 16 times his initial
investment in the Gartner Group, a technology-research firm.
In what was perhaps his crowning achievement, he bought the money-losing Wesley Jessen VisionCare for
$6 million in 1994. Seven years later, it was sold for a dazzling $300 million.
Kaplan argues that critics rarely mention these success stories, preferring to "cherry-pick" deals that paint
Romney as unmerciful and gluttonous. "I think it's quite unfair," he says. "He was extremely successful at
Bain, generating returns for his investors. Bain Capital had a tremendous track record. When you invest in
dozens of companies, some of those deals don't work out."
But if critics are quick to disregard Romney's triumphs, defenders are equally swift to rationalize his
catastrophes. They'll note that for all of Romney's bankruptcies, most were rescued by new companies and
survive today. It's the final dollar tally that matters.
Yet they seem strangely incurious about the ruin he has delivered across the country. Take Kansas City, for
example.
The Armco plant closing involved more than the torching of 750 jobs, Morrow says. Contractors and
suppliers collapsed. Workers' children and widows lost health care and pension benefits. And while Bain
received millions in tax breaks—paid for by the very people left holding the bag—Romney walked away
millions richer.
So one might forgive everyday Americans for feeling they're on the wrong end of a rigged game, one where
the wealthy always win—no matter how inept—and the little guy is left to hack through the debris.
Bain is a private company, meaning it has no obligation to reveal its practices. It has never made public a list
of companies it has purchased (nor would Bain or the Romney campaign comment for this story).
So in January, The Wall Street Journal did its best to piece together Romney's track record, reviewing 77
investments made under his direction. It turned out that nearly one in three of the companies experienced
severe financial trouble. One in five wound up in bankruptcy.
The more telling figure: Of Romney's 10 biggest moneymakers, he ultimately destroyed four of them,
leaving bankruptcy judges to clean up the mess.
As Foster sees it, Romney was an early pioneer of gaming the system. It would take another decade before
large banks used many of the same principles to detonate the mortgage industry.
"The great irony is that his entire management experience at Bain Capital is buying companies and loading
them up with debt and then looting the balance sheet," Foster says. "It's the very model that drove the
American economy off the cliff then left other people to manage the wreckage."
The Job Assassin
Renee Fry doesn't recognize the tin man she sees on TV, the candidate so congenitally wooden that he
makes Al Gore seem like Flavor Flav. She was Romney's deputy chief of staff when he was governor of
Massachusetts. The guy she served was warm and considerate, quick to distill data and seize the big picture.
"I'm lucky because I know him from the day-to-day Mitt," Fry says. "He liked going out and talking to
people and learning from people. The Mitt I know had a real appreciation for people."
But if Romney played the friendly politician, kindness wasn't his specialty at Bain. Rewarding CEOs with huge
bonuses, he was generous to ranking executives. Yet he tended to treat those below his pay grade as little
more than machinery.
Romney has claimed to have created 100,000 jobs at Bain and says that providing work for Americans was a
primary company goal.
Bain Capital, 1984
The smartest guys in the room: Members of Bain Capital with Romney, center, who managed to destroy four
of his 10 biggest moneymakers
Jayme Halbritter
David Foster, a union official at Kansas City’s Armco steel mill, says Bain drove the mill into the ground by
placing its own interests above customers’.
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April 16, 2012
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More About
• Mitt Romney
• Private Equity Firms
• Industries
• Private Equity
• Pensions
Like this Story?
Sign up for the Weekly Newsletter: (Sent out every Thursday) Our weekly feature stories, movie reviews,
calendar picks and more - minus the newsprint and sent directly to your inbox.
He cites Domino's, Sports Authority, and Staples, companies that added jobs after Bain bought in.
But Bain bought Domino's just months before Romney left to run the Salt Lake City Olympics, meaning
someone else created those jobs. And he didn't manage Staples or Sports Authority; Bain was a minority
investor.
By Romney's logic, any large investor—say, the Texas teachers' pension fund—also creates hundreds of
thousands of jobs. The boast is so foolish that his campaign has since backed away from it.
Even Kaplan admits that private equity firms rarely create jobs. Workers are seen as costs, and costs are
the enemy. According to Kosman, Romney was in truth among the most heinous job-killers of them all.
While writing his book, Kosman conducted an interview with a Bain managing partner. The man told him that
when Bain was about to buy a company, its partners would hold a meeting. "He said that about half the time
[they] would talk about cutting workers," Kosman says. "They would never talk about adding workers. He
said that job growth was never part of the plan."
That claim was buttressed by the Associated Press, which studied 45 companies bought by Bain during
Romney's first decade. It found that 4,000 workers lost their jobs. The real figure is likely thousands
higher, since the analysis didn't account for bankruptcies and factory and store closings.
An example of Romney's cold-blooded approach is his 1994 purchase of Dade International, an Illinois
medical-equipment company. He soon merged it with two similar firms, a move that tripled sales.
Once again, he couldn't help but raid the vault, peeling away $100 million for himself and investors at the
same time Dade was laying off 1,700 American workers.
After Bain closed a Dade plant in Puerto Rico, human-resources manager Cindy Hewitt was asked to lure a
dozen of those employees to work in the company's Miami factory.
But that plant soon closed as well. Although Romney was gobbling up millions, Bain still wanted those laid-off
employees to repay their moving costs.
"They were treated horribly," Hewitt told The New York Times. "There was absolutely no concern for the
employees. It was truly and completely profit-focused."
Yet Bain's molestation wasn't complete. It was trying to sell Dade but didn't like the offers it received on
the open market. So it created an artificial market of its own.
In 1999, it forced Dade to borrow $242 million, which was used to buy back company stock from Bain, Dade
executives, and their banker, Goldman Sachs.
Bain was again extracting profits with borrowed money. It had pushed Dade's debt to a bracing $2 billion.
To help pay for the deal, the company laid off another 367 workers.
But that debt proved too much for Dade's shoulders to carry. Three years later, the company was bankrupt.
Kosman calls it standard Romney operating procedure. To pump short-term earnings, he would essentially
"starve a company," whacking not just employees, but also customer-service and research-and-development
funding—the ingredients of long-term prosperity.
"I think they're one of the worst, at least during Romney's time," Kosman says. "They were very aggressive
about dividends. They were very aggressive about borrowing the most money they could. He's very driven to
be the best he could be, and that was to be as cutthroat as he could be. But in the process, he hurt a lot of
companies and cost a lot of jobs, maybe tens of thousands of jobs."
Kosman says it's telling that Romney never cites companies he actually managed as evidence of his job-
building skills.
"If Romney had some stories to tell, he'd use those stories," he says. "I think it's very interesting that he's
not telling those stories because I think they don't exist."
The Welfare Queen
Romney's economic views were on stark parade during this year's Michigan primary. He ripped President
Obama for bailing out the auto industry and argued that it should have been dealt with in his favorite resting
place: bankruptcy court.
He was particularly incensed that the president rescued workers' pension funds before covering Wall
Street's bad loans.
But his faith in the free market wobbles when his friends need rescuing. Romney just as vigorously defends
the $10 billion government bailout of Goldman Sachs, his investment partner at Bain.
After all, Romney frequently assumed the role of welfare queen himself.
In 1988, he bought South Carolina photo-album maker Holson Burnes. In exchange for the firm's promise to
build a new factory, the people of Gaffney, South Carolina, gave Bain $5 million in bonds and $200,000 in
utility upgrades.
The plant closed just four years later. The 100 jobs there were later shipped to Mexico.
At GSI, he dumped $44 million in pension shortfalls on the federal government. And when he bought
mattress maker Sealy in 1997, he took $600,000 in welfare to move the firm from Ohio to North Carolina.
Even a company Romney cites as one of his greatest achievements—Steel Dynamics, where he was a minority
investor—was practically launched by corporate welfare. Indiana taxpayers gave the firm $77 million to
open a plant. Residents of DeKalb County actually had their income taxes raised solely to help Romney and
his friends.
Tad DeHaven calls it "theft and redistribution."
Bain Capital, 1984
The smartest guys in the room: Members of Bain Capital with Romney, center, who managed to destroy four
of his 10 biggest moneymakers
Jayme Halbritter
David Foster, a union official at Kansas City’s Armco steel mill, says Bain drove the mill into the ground by
placing its own interests above customers’.
Related Content
• Rightbloggers Rush to Defend Mitt Romney -- The Corporate Raider, Not the Candidate
January 16, 2012
• Sorry, Ladies: Mitt Romney's Women Problem Might Not Matter in The Election
April 17, 2012
• What Does Mitt Romney Have in Common With Catholic Incense?
April 16, 2012
• Live from New York... It's Mitt Romney?
April 15, 2012
• This Week in The Voice: Mitt Romney, American Parasite
April 18, 2012
More About
• Mitt Romney
• Private Equity Firms
• Industries
• Private Equity
• Pensions
Like this Story?
Sign up for the Weekly Newsletter: (Sent out every Thursday) Our weekly feature stories, movie reviews,
calendar picks and more - minus the newsprint and sent directly to your inbox.
He's no yammering Trotskyite; DeHaven is a former budget adviser to Republican U.S. senators Jeff
Sessions of Alabama and Tom Coburn of Oklahoma. Yet he notes that firms like Bain often get governments
to subsidize their raiding parties.
The feds take $100 billion a year from everyday taxpayers and send it straight to companies like Romney's,
says DeHaven, who now works for the Cato Institute, a conservative think tank.
But like most good Republicans, he's reticent to single out the candidate for criticism. "It depends on what
he knew and Bain's involvement in obtaining subsidies," DeHaven says. "I don't know if it makes him a
hypocrite or not, but he should answer questions about it."
The President of Russia
Those answers won't be forthcoming. Romney refuses to discuss most of the companies he purchased at
Bain, nor will he release his tax records from those years. As a result, voters are left to make their own call
on his catalog of creative destruction—and what he might be like as president.
Romney has professed his admiration for Ronald Reagan. But judging by his business history, the president
he most resembles is Vladimir Putin. Romney has devoted his life to ensuring that every last penny rises to a
few hands at the top. And like Putin, he has never shown much concern for the countrymen he tramples along
the way.
"The word 'oligarchy' comes to mind," says Michael Keating when asked to envision a Romney presidency.
Keating is a former business consultant and executive at Bertelsmann, a multinational investment firm that
operates in 63 countries. He asserts that men like Romney "hide their antisocial actions behind a rhetoric of
free-market capitalist platitudes. But in the end, it's all about the bottom line—and only their own bottom
line . . ."
"I don't think Romney is so much dangerous as he is unimaginative," Keating adds. "And in the world we live
in, that amounts to the same thing."
pete.kotz@villagevoicemedia.com
Siding with Gov. Walker in union fight could cost Romney in Nov.
By Josh Lederman - 04/01/12 08:10 PM ET
Unable to avoid the pandemonium surrounding Gov. Scott Walker (R) and his union crackdown in Wisconsin,
GOP presidential contender Mitt Romney has chosen to make the embattled governor’s fight his own.
Embracing Walker offers major short-term advantages for Romney in Wisconsin, which holds its primary
contest Tuesday, as the GOP front-runner looks for the last few wins he needs to lock up the nomination. But
it might also risk alienating voters in union-heavy swing states such as Ohio, Michigan and Pennsylvania — at
just the time when Romney and his campaign hope to turn their attention to the general election.
“He’s shown pretty clearly what side he’s on,” said Bruce Colburn of the SEIU in Wisconsin. “We have a
number of members who often vote for Republicans, and they take offense at somebody coming in and
challenging their basic rights.”
The presidential race has become almost an afterthought in Wisconsin, where Walker and public-sector
unions have been waging an all-out war for more than a year. At issue is Walker’s push to curb the collective
bargaining rights of public workers, whose pension and healthcare costs Walker says have spiraled out of
control.
On Friday, a state panel set a June 5 election to recall Walker after opponents collected more than
900,000 signatures — almost twice what was needed. Portions of the law Walker heralded were also struck
down Friday by a federal court.
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“Workers should have the right to form unions, but unions should not be forced upon them,” Romney said
Friday in Appleton, Wis. “And unions should not have the power to take money out of their members’
paychecks to buy the support of politicians favored by the union bosses.”
It wasn’t the first time Romney went toe to toe with the powerful unions that are expected to spend tens of
millions of dollars to reelect President Obama. Campaigning in Michigan in February, Romney blasted “labor
stooges” who he said were shilling for Obama. The former Massachusetts governor also backed Ohio Gov.
John Kasich’s (R) anti-union law, which voters overturned in November.
Romney’s campaign said he stands with Walker and will continue to address the union issue in the final days
of the Wisconsin primary, including by visiting a call center where volunteers are working to keep Walker in
office.
The union issue gives Romney an opening to attack Rick Santorum. The former Pennsylvania senator has also
thrown his support behind Walker, but represented a union-heavy state in the Senate. Romney has accused
Santorum of siding with liberal Democrats on right-to-work issues — an attack echoed in ads that Romney’s
super-PAC has aired in Wisconsin.
If the growing momentum behind Romney triggers the start of the general election and an end to the
primary, the focus on Santorum will soon become moot. Over the past week, Romney has locked up the
support of Wisconsin Rep. Paul Ryan (R), former President George H.W. Bush and Sen. Marco Rubio (R-Fla.),
three GOP luminaries whose endorsement could signal the end of a drawn-out fight for the Republican
nomination.
But if and when Romney becomes the nominee, he has no plans to let up his tough stand on unions.
“He’s going to continue to run on this message in the general election,” said Romney spokesman Ryan Williams.
“This is what his campaign is about: making difficult decisions in order to preserve America’s promise.”
The union issue is one of many where Romney has taken an aggressively conservative stance in hopes of
quelling speculation that he isn’t a true conservative. But he and his aides are instinctively averse to
suggestions he might tack back to the center in the general election.
“That leads into the whole 'Romney waffling, Romney flip-flopping' narrative his opponents want to stick on
him,” said GOP pollster Chris Perkins.
The farther he moves to the right, the more difficult it will be to embrace more centrist positions that play
better among the swing voters he will need to defeat Obama in November. And Democrats are laying in wait
to dub Romney an opportunist who let the GOP’s right flank get the best of him.
“He has, for the last eight months, pandered to the Tea Party, pandered to the right, to people like Scott
Walker and Gov. Kasich in Ohio, and gotten himself to the point where he’s so extreme on some of these
issues that he’s not going to be able to pivot back,” said one Democratic strategist.
It isn’t entirely clear how the union issue will play politically, but a USA Today/Gallup poll in February
showed that 61 percent of Americans opposed a law in their state similar to the one Walker championed in
Wisconsin.
Meanwhile, states with large numbers of union voters — such as Ohio, Pennsylvania and Wisconsin — also
happen to be swing states that are pivotal to winning the White House.
Wisconsin hasn’t voted for a Republican presidential nominee since 1984, but the results have often been
close in recent years. The race likely holds special meaning for Republican National Committee Chairman
Reince Priebus, a Wisconsin native.
And what happens at the top of the ticket could affect the state’s open-seat Senate race, where Rep.
Tammy Baldwin (D-Wis.) will face the winner of a GOP primary pitting former Gov. Tommy Thompson (R-
Wis.) against three more conservative candidates.
Republican strategist Dan Hazelwood said diehard union supporters have already made up their minds to
support Obama, so Romney risks little by backing Walker and his union crackdown.
“It doesn’t matter if your opponent’s base hates you,” said Hazelwood. “To the extent that the fight is
Romney versus the union bosses, he’s in great shape.”
The Jews got the Jews favorite general running the CIA, General Patreus and their man Panetta at Defense.
Only the mobsters would make a movie about Margeret Thatcher.
Notable quote," we have so much capital we don't know what to do with it." Jew criminal Micheal Milkin
The problem in the US and Europe is simple. There needs to be a wealth tax to retire government debt.
Just increase taxes on the wealthy and confiscate the wealth of Jew millionaires and billionaires. Being in
the arts I got to meet all these wealthy Jew sleaze-balls. Obama should have let the Bush tax cuts expire
and increased spending. They should whack Bloomberg and slime Jews like Stephen Schwarzman who is
backing Romney. They should also make a preemptive attack on Israel. Here's an example of the Jews who
control the US government:
Jew billionaire threatens to sue Greg Palast with Jew controlled justice system.
Romney's Billionaire Threatens
BBC Investigative Reporter
"We have a File on Palast"
Friday, December 2, 2011
by Greg Palast for Truthout/Buzzflash
Palast is the author of Vultures' Picnic: in Pursuit of Petroleum Pigs, Power Pirates and High-Finance
Carnivores. See Palast live on stage in New York, DC and other cities.
Last Monday, a call came in to BBC Television Centre, London, from the office of Mitt Romney's billionaire
backer and "advisor" Paul Singer.
Singer, top donor to the Republican Senate Campaign Committee had a message for the news chiefs at the
prestigious broadcaster:
"We have a file on Greg Palast."
I bet they do.
The purpose of the Singer call was clear: to smear the reporter whose broadcasts from Africa for BBC
Newsnight, The Guardian and Democracy Now! had identified Singer as a "Vulture," a speculator
profiteering from misery, mayhem, corruption and civil war.
Apparently, the Republican Presidential front-runner would prefer his sugar-daddies be known as "job
creators," not predators.
And the Vulture really, really, doesn't like his starring role in my new book, Vultures' Picnic. I bet he
doesn't.
Is BBC going to let Palast continue to investigate? The Romney money man added an unsubtle threat, "Palast
has been sued before."
Neither BBC nor The Guardian are backing down, bless'm.
What is in the file Mitt's billionaire has on Greg Palast? I'll show it to you myself, right here, if you have a
little patience.
But it's not what's in Singer's file on me that's important –– it's what's in my file about him.
You need to know: BBC has identified Singer as the Number One donor of the Republican Party in New York.
His fundraising, in coordination with the Koch Brothers through a strange little group of far-right
billionaires, is the cash-locomotive of the GOP.
How Singer "The Vulture" got his feathers, got that money that fuels the Romney and Republican causes is
not a minor matter. Romney and the whole crew from Newt to Cain are selling us the line that Occupy Wall
Street has it all wrong: calling for taxing or controlling the One Percent is a misguided attack on "job
creators."
Indeed, one of Romney's demands is that I change the name of my book from Vultures' Picnic to Job-
Creators' Picnic. [OK, I made that up.]
Let's begin with how Singer got his feathers.
I didn't give Singer the name "Vulture." His own banker buddies did––with admiration in their voices. Like
any vulture, he feasts when victims die. Literally. For example, Singer made a pile buying an asbestos
company, Owens Corning, out of bankruptcy. Owens had knowingly allowed thousands of its workers to get
deadly asbestosis, then concealed it. You don't want to die of asbestosis. Your lungs turn to mush and you
drown inside yourself.
Singer, the Job Creator, used his political muscle to screw down the compensation workers would get.
Offered them peanuts. And dying, they took it. With the asbestos workers buried or bought, the asbestos
death factories were now worth a fortune ...and Singer made his first "killing."
Then it was on to Peru where Singer had, through a brilliant financial-legal maneuver too questionable for
others to attempt, grabbed control of the entire financial system of Peru. Most important, he seized the
President's jet. When the scamp of a President, Alberto Fujimori, decided it was a good idea to flee his
country (ahead of his arrest on murder charges), Singer, Peru's lawyer told me, let Fujimori escape in
return for the Murderer-in-Chief ordering Peru's treasury to pay Singer $58 million.
But that's nothing. What really sent Mitt's man up a wall was my report from the Congos (there are two
nations in Africa called 'Congo') where there's a cholera epidemic due to lack of clean water. Singer paid
we're told about $10 million for some "debt" supposedly incurred by the Republic of Congo. Congo would pay
the $10 million, but Singer had begun seizing about $400 million in the poor nation's assets.
The former Deputy Secretary of the UN said about the vultures, "you are causing babies to die."
It's legal, it's sick, it's Singer.
Well, not legal in most of the civilized world. Former British Prime Minister Gordon Brown said about Singer
and his fellow crew, "I deplore the activities of so-called Vulture Funds, [they] are nothing short of
scandalous." Britain has outlawed Singer's re-po man seizures (after all, it's ultimately the aid money we
give Africa). In the UK, and in much of Europe, Singer is a finance outlaw. But in the USA, he's a "job
creator."
Look, I've only scratched the surface from BBC's four-year investigation of Singer who says he'll talk with
us, "Never, ever."
The "Suicidal State" and the War on Youth
Tuesday, 10 April 2012 11:14 By Henry A Giroux, Truthout | Op-Ed
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An Occupy Wall Street protester is detained during a march through lower Manhattan, in New York,
November 17, 2011. (Photo: Robert Stolarik / The New York Times)
In spite of being discredited by the economic recession of 2008, market fundamentalism has once again
assumed primacy as a dominant force for producing unprecedented inequalities in wealth and income,
runaway environmental devastation, egregious amounts of human suffering and what Alex Honneth has called
an "abyss of failed sociality."(1) The Gilded Age is back with big profits for the ultra-rich and large financial
institutions and increasing impoverishment and misery for the middle and working class. Political illiteracy
and religious fundamentalism have cornered the market on populist rage providing support for a country in
which, as Robert Reich points out, "the very richest people get all the economic gains [and] routinely bribe
politicians" to cut their taxes and establish policies that eliminate public goods such as schools, social
protections, health care and important infrastructures.(2)
It gets worse. Everywhere we look, the power of the rich and powerful operates to create a "suicidal state"
(3) in which regulations meant to restrict their corrupting power are shredded; shamelessly and without
apology, they use their unchecked power to lay off millions of workers while simultaneously cutting the
benefits and rights of those on the job in order to dramatically increase corporate profits. As social
protections are dismantled, public servants denigrated and public goods such as schools, bridges, health
care services and public transportation deteriorate, the current neoliberal social order embraces the
ruthless and punishing values of economic Darwinism and a survival-of-the-fittest ethic. In doing so, the
major political parties now reward as its chief beneficiaries the mega banks, ultralarge financial industries,
the defense establishment and big business.
Reinvigorated by the passing of tax cuts for the superrich, the right-wing dominated House of
Representatives along with number of right-wing state governorships have launched an ongoing war on
women's rights, the welfare state, workers, students, and anyone who has the temerity to speak out against
such attacks. The corporate-controlled media, especially Fox News and Clear Channel Communications,
emulate the former Soviet Union's version of Pravda, its once laughable propaganda rag. At the same time,
the liberal media is as spineless as it is complicit with existing relations of power - more willing to
compromise with right-wing ideology than exercising civic courage in searching for the truth and exposing
the lies of normalizing power.
Hiding behind the mantle of balance and objectivism, the liberal media is incapable of a discriminating
judgment and moral position and, increasingly, resembles a game show nervously repeating bad jokes,
promoting sensationalist stories, emulating celebrity culture and garnering elevated ratings in order to lure
in big money from advertisers.
Neoliberalism is once again imposing its values, social relations and forms of social death upon all aspects of
civic life.(4) One consequence is that the United States has come to resemble a "suicidal state," where
governments work to destroy their own defenses against anti-democratic forces;(5) or as Jacques Derrida
has put it, such states offer no immunity against authoritarianism and in fact emulate "that strange behavior
where a living being, in quasi-suicidal fashion 'itself' works to destroy its own protection, to immunize itself
against its 'own' immunity ... What is put at risk by this terrifying autoimmunity logic," he grimly stated, "is
nothing less than the existence of the world...."(6) Susan Searls Giroux follows up this logic with a series of
important questions. She writes:
Since then, I've wondered about the troubling figure of societal suicide. How is it possible that a free and
democratic society, precisely in the act of securing itself, or claiming to secure itself, could quicken its own
demise? Where does the suicidal urge come from - is it a function of a deep, abiding illness in the collective
psyche or a fleeting impulse linked to traumatic loss, or some imagined heroism? Is this really the future we
face and, if so, how do we determine our degree of risk? Do we invoke the same assessment scale used for
individual suicides? Gender, for example, is a factor; males are at greater risk, but how does one determine
the gender of a society - by its masculinist inclination? Evidence of depression is another sign. Does one look
to dips in the stock market or consumer confidence indices? Sales of anti-depressant medications? How
about recent suicide attempts? Derrida describes the Cold War as a "first moment," a "first autoimmunity."
Recent significant trauma or loss? Without question. Capacity for rational thinking lost? So it would seem.
Little or no social support? Would loss of global support work here? Going down such a list, the signs don't
look promising.[7]
For over thirty years, the North American public has been reared on a neoliberal dystopian vision that
legitimates itself through the largely unchallenged claim that there are no alternatives to a market-driven
society, that economic growth should not be constrained by considerations of social costs or moral
responsibility, that war is a permanent condition of society and that democracy and capitalism are virtually
synonymous.
At the heart of this market-driven regime is materialist and instrumental rationality that sells off public
goods and services to the highest bidders in the private sector, while simultaneously dismantling those public
spheres, social protections and institutions serving the larger society. As economic power succeeds in
detaching itself from government regulations, social costs and ethical considerations, a new global financial
class reasserts the prerogatives of capital and systemically destroys those public spheres - including public
and higher education - that traditionally advocated for social equality and an educated citizenry as the
fundamental conditions for a viable democracy.
At the same time, the bloated financial class and their lobbyists do their magic by buying off politicians who
are all too willing to squander the public coffers on wars abroad, while attempting to establish across the
globe what can be called death zones inhabited by drones, high-tech weaponry and increasingly private
armies.(8) Andrew Bacivich captures the expanding parameters of this militarized death march in the
following commentary. He writes:
Pentagon outlays running at something like $700 billion annually, the United States spends as much or more
money on its military than the entire rest of the world combined. The United States currently has
approximately 300,000 troops stationed abroad, again more than the rest of the world combined (a total
that does not even include another 90,000 sailors and marines who are at sea); as of 2008, according to the
Department of Defense, these troops occupied or used some 761 "sites" in 39 foreign countries, although
this tally neglected to include many dozens of U.S. bases in Iraq or Afghanistan; no other country comes
even remotely close to replicating this "empire of bases" - or to matching the access that the Pentagon has
negotiated to airfields and seaports around the world.[9]
Empire now provides the salutes, spectacles and high drama to overlook the predatory violence that shapes
domestic politics. Unfortunately, despite our knowledge of the corrupt profiteering practices that
instigated a global financial meltdown, free-market fundamentalism appears to be losing neither its claim to
legitimacy nor its claims on democracy. On the contrary, in this new era in which we live, consumerism and
profit-making are defined as the essence of democracy, while freedom has been reconceived as the
unrestricted ability of markets to govern economic relations free from government regulation or moral
considerations.
As the principle of economic deregulation gradually merges with a notion of unregulated self-interest, one
consequence is that people eager to protect what they believe is their freedom are all too willing to
relinquish their power, civil rights and social protections to unaccountable and unchecked forms of
authoritarian corporate and state control. Of course, since September 2011, the paralyzing fog of
depoliticization has been ruptured by the Occupy movement, the roar of angry workers and of young people
who refuse to cede their future to the new oligarchs, bankers, the Koch brothers, hedge fund managers,
Christian extremists and the corporate-controlled liberal and conservative media apparatuses.(10)
As a result of the triumph of corporate power over democratic values - made visible recently in the Citizens
United Supreme Court case that eliminated all controls on corporate spending on political campaigns - the
authority of the state does more than defend the market and powerful financial interests, it also is
expanding its disciplinary control over the rest of society. There is more at work here than, as David Harvey
points out, a political project designed "to re-establish the conditions for capital accumulation and to restore
the power of economic elites"(11); there is also a reconfiguration of the state into what might be called a
merging of the warfare and punishing state, or what I am calling, borrowing a Virilio term, "a suicidal state."
(12)
Lending muscle to corporate initiatives, the "suicidal state" becomes largely responsible for managing and
expanding mechanisms of control, containment and punishment over a vast number of public institutions. As a
weakened social contract comes under sustained attack, the model of the prison, along with its accelerating
mechanisms and practices of punishment, emerges as a core institution and mode of governance under the
suicidal state - a hyper mode of punishment creep now seeps into a variety of institutions.(13)
Agencies and public services that once offered relief and hope to the disadvantaged are now being replaced
with a police presence along with other elements of the criminal justice system.(14) The brutal face of the
emerging police state is also evident in the attack on young black people, youthful protesters and "stop and
frisk" policies initiated in major urban cities which contain a large black, brown and immigrant populations. In
Bloomberg's New York City, a "Clean Halls" program allows the police to conduct repressive search policies
in private apartment buildings, stopping people in hallways and demanding an ID, and in too many cases
harassing and arresting people needlessly. The extent of the brazenly illegal legalities have prompted Matt
Taibbi, writing in Rolling Stone, to state that he has just discovered that the punishing state is as much as a
threat to democracy than the threat of white-collar corruption. He writes:
"Stories like this 'Clean Halls' program are beginning to make me see that journalists like myself have
undersold the white-collar corruption story in recent years by ignoring its flip side. We have two definitely
connected phenomena, often treated as separate and unconnected: a growing lawlessness in the financial
sector and an expanding, repressive, increasingly lunatic police apparatus trained at the poor and especially
the nonwhite poor."[15]
Democracy is on life support and the list of casualties in the war to empty it of any substance is long. We are
witnessing the ongoing privatization of public schools, health care, prisons, transportation, the military, public
air waves, public lands, and other crucial elements of the commons along with the undermining of our most
basic civil liberties. Privatization in this case not only turns public goods over to the savage interests of the
corporate elite, but puts such goods in the hands of market-based fundamentalists who can exercise control
over the production of identities, values, modes of agency and dissent.
Home schooling, vouchers, charter schools and the rhetoric of school choice all serve as code for privatizing
public goods, spheres and non-commodified institutions. Similarly, the bridges between public and private
life are being dismantled, while the market - with its disregard for the complex web of systemic forces
that bear down on people's lives, not to mention its disregard for human life itself - becomes the template
for structuring all social relations.
Already disenfranchised by virtue of their age, young people are under assault today in ways that are
entirely new because they now face a world that is far more dangerous than at any other time in recent
history. Not only do they live in a space of social homelessness in which precarity and uncertainty lock them
out of a secure future, they also find themselves living in a society that seeks to silence them as it makes
them invisible. Victims of a war against economic justice, equality and democratic values, young people are
now told not to expect too much, to accept the status of "stateless, faceless and functionless"(16) nomads,
a plight for which they alone have to accept responsibility. At best, they are told to assume sole
responsibility for their fate. At worse, they are viewed as unproductive, excess and utterly expendable. But
the discourse of redundancy has a darker side, one that reveals not just a society that is no longer willing to
invest in poor minority and white youth, but also a social order that views many young people as a prime
target of its governing through youth crime complex.
Today's young people inhabit an age of unprecedented symbolic, material and institutional violence - an age
of grotesque irresponsibility, unrestrained greed and unchecked individualism. Youth now constitute a
present absence in any talk about democracy. Their absence or disappearance is symptomatic of a society
that has turned against itself, punishes its children and does so at the risk of killing the entire body politic.
The "suicidal state" produces an autoimmune crisis in which a society attacks the very elements of a society
that allow it to reproduce itself, while at the same time killing off of any sense of history, memory and
ethical responsibility.
Under such circumstances, all bets are off regarding the future of democracy. Besides a growing inability to
translate private matters into public concerns, what is also being lost in the current historical conjuncture is
the very idea of the public good, the notion of connecting learning to social change and developing modes of
civic courage infused by the principles of social justice. Under the regime of a ruthless economic Darwinism
which emphasizes a survival-of-the-fittest ethic, concepts and practices of community and solidarity have
been replaced by a world of cutthroat politics, financial greed, media spectacles and a rabid consumerism.
We are witnessing the triumph of individual rights over social rights, nowhere more exemplified than in the
gated communities, gated intellectuals and gated values that have become symptomatic of a society that has
lost all claims to democracy.
The threat to democracy is now overridden by the fear of youth as the other, viewed largely as a threat to
authority. The eminent sociologist Zygmunt Bauman is right in claiming, "Visions have nowadays fallen into
disrepute and we tend to be proud of what we should be ashamed of."(17) Politics has become an extension
of war, just as state sponsored violence increasingly finds legitimation in popular culture and a broader
culture of cruelty that promotes an expanding landscape of fear and undermines any sense of shared
responsibility toward others.
As is evident in the recent killing of 17-year-old Trayvon Martin, poor minority youth are not just excluded
from "the American dream," but have become utterly redundant and disposable, waste products of a
society that no longer considers them of any value. Such youth, already facing forms of racial and class-
based exclusion, now experience a kind of social death as they are pushed out of schools, denied job-training
opportunities, subjected to rigorous modes of surveillance and criminal sanctions and viewed less as
chronically disadvantaged than as flawed consumers and civic felons. Some such as Trayvon Martin and Rekia
Boyd experience something more ominous - death by homicide.
No longer tracked into either high- or low-achievement classes, many of these youth are now pushed right
out of school into the juvenile criminal justice system.(18) Under such circumstances, matters of survival and
disposability become central to how we think about and imagine not just politics, but the everyday existence
of poor white, immigrant and minority youth. Too many young people are not completing high school, but are,
instead, bearing the brunt of a system that leaves them uneducated and jobless and, ultimately, offers
them one of the few options available for people who no longer have available roles to play as producers or
consumers - either poverty or prison. When the material foundations of agency and security disappear, hope
becomes hopeless and young people are reduced to the status of waste products to be tossed out or hidden
away in the global human waste industry.
Not only have social safety nets and protections unraveled in the last thirty years, but the suffering and
hardships many children face have been greatly amplified by both the economic crisis and the austerity
policies that are being currently implemented, with little justification in the current historical moment. Young
people now find themselves in a world in which sociality has been reduced to an economic battle ground over
materialistic needs waged by an army of nomadic, fiercely competitive individuals, just as more and more
people find their behavior pathologized, criminalized and subject to state violence.(19) Youth now inhabit a
social order in which bonds of trust have been replaced by bonds of fear. As Zygmunt Bauman puts it,
"Trust is replaced by universal suspicion. All bonds are assumed to be untrustworthy, unreliable, trap-and-
ambush-like - until proven otherwise."(20)
All forms of social solidarity are now abandoned to a free-market fundamentalism logic that has
individualized responsibility and reduced civic values to the obligations of consumer-driven self-interest
advanced against all other larger social considerations and social costs. How else to explain the fate of
generations of young people, especially poor white, brown and black youth, who find themselves in a country
which is the world's leader in incarceration, one in which such youth are considered the nexus of crime.
The United States is one of the few countries in the world that puts children in supermax prisons, tries
them as adults, incarcerates them for exceptionally long periods of time, defines them as super predators,
pepper sprays them for engaging in peaceful protests and in an echo of the discourse of the war on terror
describes them as "teenage time bombs."(21) Young people have become the enemy of choice, elevated to
the status as an all-pervasive threat to dominant authority. Instead of nurturing such children, we now taser
them, sequester them to dangerous prisons and demonize them in order to divert our attention from real
social problems, while at the same time engaging a public purification through the ritual of imposing harsh
disciplinary practices on them.
Current statistics paint a bleak picture for young people in the United States: 1.5 million are unemployed,
which marks a 17-year high; 12.5 million are without food; and in what amounts to a national disgrace, one out
of every five American children lives in poverty. Nearly half of all US children and 90 percent of black
youngsters will be on food stamps at some point during childhood.(22) Increasingly, kids are forced to
inhabit a rough world where childhood is nonexistent, crushed under the heavy material and existential
burdens they are forced to bear.
The deteriorating state of youth may be the most serious challenge facing educators, social workers, youth
workers, and others in the 21st century. It is a struggle that demands a new understanding of politics, one
that demands that we think beyond the given, imagine the unimaginable and combine the lofty ideals of
democracy with a willingness to fight for its realization. But this is not a fight that can be won through
individual struggles or fragmented political movements. It demands new modes of solidarity, new political
organizations and a powerful social movement capable of uniting diverse political interests and groups. It is a
struggle that is as educational as it is political. It is also a struggle that is as necessary as it is urgent. It is
also a struggle that cannot be ignored.
One way of addressing our collapsing intellectual and moral visions regarding young people is to imagine
those policies, values, opportunities and social relations that invoke adult responsibility and reinforce the
ethical imperative to provide young people, especially those marginalized by race and class, with the
economic, social and educational conditions that make life livable and the future sustainable. Clearly such a
vision, one that moves beyond what Alain Badiou has called the "crisis of negation,"(23) which is a crisis of
imagination, historical possibility and an aversion to new ideas, can be found in the global protests of the
Occupy movement in North America and other youth resistance movements around the globe. What is
evident in this worldwide movement of youth protests is a bold attempt to imagine the possibility of another
world, a refusal of the current moment of historical one dimensionality, a refusal to settle for reforms that
are purely incremental.
The "suicidal state" devalues any viable notion of rationality, ethics and democracy and has given rise to a
suicidal society marked by a culture of cruelty in which the ultimate form of entertainment has become the
pain and suffering of others, especially those considered throwaways, other, or without consumer privileges
and rights. High-octane moral panics, a flight from civic responsibility, extreme callousness and the
reproduction of human suffering have become the by-products of a market-driven society marked by an
autoimmunity disease that destroys its own protections against a creeping authoritarianism.
My emphasis here is on how the "suicidal state" is organized around the primacy of sadistic impulses and how
widespread violence and modes of hyper-punishment now function as part of an anti-immune system that
turns the economy of genuine pleasure into a mode of sadism that creates the foundation for sapping
democracy of any political substance and moral vitality. The prevalence of institutionalized injustice, illegal
legalities and expanding violence in American society suggest the need for a new conversation and politics
that address what a just and fair world looks like. We see the beginning of such a conversation among the
protesters who inhabit the Occupy movement. This is a conversation infused by the need for a new political
language that needs to be formulated with great care and self-reflection by intellectuals, artists, workers,
unions, parents, educators, young people, and others whose individual protections and social rights are in
grave danger from the threat of a creeping fundamentalism that spreads its poison everywhere in the body
politic.
The rise of the "suicidal state" and its apparatuses of violence have crept into in all aspects of social life,
making clear that too many young people and others marginalized by class, race and ethnicity have been
abandoned by American society's claim to democracy, especially in light of the rising forces of militarism,
neoliberalism, religious fundamentalism and state terrorism. America has become a "suicidal state,"
prompting a new urgency for a collective politics and social movements capable of both negating the
established order and imagining a new one. In this discourse, critique merges with a sense of realistic hope
and individual struggles merge into larger social movements. Until we address what Stanley Aronowitz has
brilliantly analyzed as our "Winter of Discontent," the "suicidal state" will continue to engage in autoimmune
practices that attack the very values, institutions, social relations and hopes that keep the ideal of
democracy alive.(24)
At the very least, the American public owes it to its children and future generations to begin to dismantle
this machinery of death and reclaim the spirit of a future that works for life rather than the death worlds
of the current authoritarianism, dressed up with a soft edge of the spectacle of consumerism and celebrity
culture. It is time for the 99 percent to connect the dots, educate themselves and develop social
movements that can not only rewrite the language of democracy, but put into place the institutions and
formative cultures that make it possible. There is no room for failure here because failure would cast us
back into the clutches of an authoritarianism - that while different from previous historical periods - shares
nonetheless the imperative to proliferate violent social formations and a death-dealing blow to democracy.
Mafia fat boy Thu Apr 05, 2012 at 09:52 AM PDT
New Jersey Gov. Chris Christie pretends $1.57 billion in corporate tax breaks is a jobs program
by Laura ClawsonFollow for Daily Kos Labor
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$1.57 billion in tax breaks to businesses,
pension and benefit cuts for public workers
(Reuters/Jonathan Ernst)
Under Gov. Chris Christie, New Jersey supposedly can't afford to pay its public workers the pensions they
worked for and contributed to while the state failed to contribute its share. But meanwhile Christie has
doled out $1.57 billion in tax cuts to businesses, supposedly to create or preserve jobs, the New York
Times' Charles Bagli reports.
About those jobs: One program has provided $900 million in tax credits to 15 companies. The result?
The companies have promised to add 2,364 jobs, or $387,537 in tax credits per job, over the next decade.
With savvy, thrifty fiscal policy like that, no wonder:
New Jersey has recovered only 20 percent, or 51,500, of the 261,000 jobs lost during the recession,
compared with 80 percent in New York City.
Chris Christie isn't spending $1.57 billion on a jobs program. In line with his priorities, it's a corporate tax
break program thinly disguised as a jobs program.
Various matters
By Glenn Greenwald
•
(1) I have an Op-Ed in The Guardian today regarding the complete lack of consequences for the CIA’s
illegal destruction of interrogation videos — culminating in a federal judge’s refusal this week to hold
the CIA in contempt despite recognizing that they violated his own order — and what this reflects
about America’s two-tiered justice system. It can be read here.
(2) Mitt Romney yesterday unveiled his foreign policy team consisting almost entirely of Bush/Cheney
neocon retreads, and then today attacked Obama’s national security policy from the Right, falsely
claiming that Obama cut military spending and vowing to reverse those non-existent cuts; Romney also
vowed to take a “harder-line” against Iran. But National Journal‘s Marc Ambinder put his finger on
exactly what made Romney’s attack particularly absurd:
If you think about it, Ambinder’s observation is amazing: it means that the current iteration of Obama
is to the Right on national security as compared to where Romney would have been a few years ago
while attacking Obama from the Right. And remember: national security a few years ago was already
well to the (neocon) Right due to individuals by the name of George Bush and Dick Cheney.
That’s how far to the Right Obama has taken not just the country, but the Democratic Party and the
nation’s bipartisan consensus. In my view, that is clearly one of the most significant and enduring
aspects of the Obama legacy. He even has self-identified progressive Democrats — who a few years
ago were shrilly objecting to Bush’s mere attempt to eavesdrop on or detain Americans without due
process — now running around defending the President’s power to target American citizens for
assassination: in secret and without a shred of due process, to say nothing of radical secrecy,
indefinite detention, and an unprecedented war on whistleblowers. To see just how extreme a
situation this is, consider this article from today’s Hill:
Many Democrats love to complain that Republicans will never give Obama credit no matter what he
does, but that’s absolutely not true. The most right-wing polemicists have repeatedly praised Obama’
s Terrorism and civil liberites policies the way that Boehner did today. To take one of countless
examples: here’s Peter King praising Obama for using military tribunals; here’s Peter King praising
Obama for codifying indefinite detention; and here’s Peter King praising Obama for ordering Awlaki
killed. They are duly appreciative that he’s embracing the Terrorism and civil liberties policies they
have long advocated and moved his own Party so much closer to their own positions, and they have not
been shy about expressing that appreciation.
(3) Although there’s still no evidence that Anwar Awlaki was responsible for any actual or planned
Terrorist plots, a newly released WikiLeaks cable seems to provide definitive proof of what Amnesty
International has long claimed: that the U.S., in late 2009, carried out an air strike in Yemen using
cluster bombs that killed dozens of innocent women, children and men. It’s so telling how much
intense and unquestioning media attention was devoted to depicting Awlaki as an Evil Terrorist, and so
little devoted to the dozens of innocent people actually killed by the U.S., under the direction of the
2009 Nobel Peace Prize winner, in the very country where Awlaki lived.
(4) One thing the Internet has definitely changed for the better is that media stars like Erin Burnett
are no longer able to spew shoddy, misleading “journalism” without hearing loud and effective
responses. The Atlantic recounts just some of the criticism here; meanwhile, The Huffington Post‘s
Jason Linkins and Cenk Uygur on his video program add some worthwhile thoughts of their own.
(5) Tampa is the site of the 2012 Republican National Convention, and the city is considering the
purchase of large amounts of paramilitary weaponry to control crowds and possible protests,
including “two ‘unmanned aerial vehicles’ that could hover for 20 minutes, fly in 20-knot winds and
carry cameras with zoom lenses or thermal imaging capabilities.” Nothing is more ahistorical and naive
than the view that you can vest the government with a whole slew of powers in the name of Terrorism
and expect that it will be confined to that realm.
What If the Greedy Rich Paid Their Share? 8 Things to Know About Wealth and Poverty in the US
We're far from poor -- we just have a wildly lopsided distribution of wealth that makes us seem poor.
April 17, 2012 |
Photo Credit: ShutterStock.com
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America is loaded. We are not a struggling nation ready to go under. We are not facing an enormous debt
crisis despite what the politicians and pundits proclaim. We are not the next Greece.
Rather, we have an enormous concentration-of-wealth problem -- one that must be solved for the good of
our commonwealth. We are a very rich nation but it doesn’t seem that way because our wealth is so
concentrated in the hands of a few. This is America’s disaster.
But wait. Doesn’t the wealth belong to the super-rich? Didn’t they earn it fair and square? Isn’t that the way
it’s always been?
Not by a long shot. The amount of wealth that flows to the super-rich is determined by our public policies. It’
s all about how we choose to share our nation’s productivity.
Productivity and the Wealth of Nations
Our country is rich because we are enormously productive as measured by output per hour worked. The
greater our collective output per hour, the more our economy produces and the wealthier we are…or should
be. It’s not a perfect measure since it doesn’t adequately take into account our environment, our health or
our overall well-being. But it is a good gauge of our collective level of effort, skill, knowledge, level of
organization, and productive capacity. As the top line on the productivity chart below shows, we’ve been able
to produce more and more per hour year after year since WWII. It’s a remarkable achievement.
From 1947 until the mid-1970s, the fruits of our bountiful productivity were shared reasonably fairly with
working people. As productivity rose so did workers’ real wages (See the bottom line in the chart below. It
represents the average weekly wage of non-supervisory workers who make up about 80 percent of the
entire workforce.) This wasn’t socialism. There were still plenty of rich people who earned a significant slice
of the productivity harvest. But much of that wealth was plowed back into the economy through taxation
rates that between 1947 and 1980 hovered between 70 to 91 percent on incomes over $3 million (in today’s
dollars). Much of that money was used to build our physical and knowledge infrastructures, and to fight the
Cold War. Unions were supported by public policy and workers' real wages rose steadily after accounting
for inflation. Wall Street was tightly controlled and the middle-class grew like never before.
Then something happened.
It wasn’t an act of God, or the blind forces of technological change, or the mysterious movements of
markets. Nor did the super-rich become enormously smarter than before. Instead, flesh-and-blood policy
makers decided that deregulation and tax cuts should become the order of the day starting in the mid-
1970s. The idea was that if we cut taxes on the super-rich and deregulated the economy (and especially
Wall Street), investment would dramatically increase and all boats would rise. But as we can see from the
chart below, the average worker's wage in real terms stalled and even declined after the mid-'70s. The
fruits of productivity no longer were shared equitably. The enormous gap between the two lines (trillions of
dollars per year) went almost entirely to the super-rich. The wealth of the wealthy skyrocketed, not by
accident, but by policy design. "Greed is good" replaced the middle-class American dream.
What Is Wealth and Who Has It?
Wealth or net worth is the total value of what you own (your assets) minus the total value of your debts
(your liabilities.) Our collective net worth is really huge. We’re talking big, big numbers. As of the end of
2011, U.S. households had $30 trillion in private assets and $13.6 trillion in liabilities for a total net worth of
$16.4 trillion (PDF). How much is that? It comes to an average of $141,000 per household – free and clear
of any debts.
But averages are extremely misleading, because wealth is so highly concentrated at the top. Here are some
eye-popping numbers.
1. The number of households with a million dollars or more of net worth grew by 202 percent between 1983
and 2007.
2. The number of households with a net worth of $5 million or more grew by 494 percent.
3. The number of $10 million or more households grew by a whopping 598 percent!
4. There are now more than 464,000 households worth $10 million or more. (PDF)
5. But the bottom 40 percent of American households has a net worth of nearly zero (.2 percent).
6. If you take out the value of our homes, the bottom 40 percent has a negative net worth of minus 1
percent – meaning they owe more than their assets are worth.
7. Meanwhile the top one percent holds 34.6 percent of our total net worth and 42.7 percent of all financial
assets (excluding homes).
8. That means that the top one percent has a positive net worth valued at approximately
$5,700,000,000,000 (that’s $5.7 trillion).
Why We Need a Financial Transaction Tax
Most Americans live on earned income which is taxed instantly through substantial payroll taxes. You can’t
collect a paycheck without paying taxes. The super-rich, however, receive most of their income through
financial investments that are taxed at lower capital gains rates and which can be offset through a myriad of
deductions and loopholes. In effect, the super-rich live by one tax code and the rest of us use another. This
is why the wealthiest Americans pay lower effective tax rates than their servants. It’s also why our
government appears to be starved for income. If we want a vibrant economy and good investments in our
public infrastructures, the wealthy must pay a great deal more, just like they did during the early post-
WWII period.
For starters we need a financial transaction tax which is a small sales tax on each and every financial trade –
from stocks and bonds to futures and other derivatives. Since the super-rich hold so many financial assets,
this kind of tax would directly target their excessive trading and enormous holdings. Not only would this
sales tax produce upwards of $150 billion a year in federal revenue, but also, it may help eliminate much of
the financial gambling that took down the economy in 2007. Considerate it a tax on financial toxic waste.
A Wealth Tax to Improve our Commonwealth
Finland, France, Iceland, Luxembourg, Norway, Spain, Sweden and Switzerland have small net wealth taxes,
and England has had a financial transaction tax for three centuries. We should join them. A 1 to 3 percent
wealth tax with a million-dollar deduction would only hit the top 1 percent and would provide the nation with
from $50 to $150 billion per year in income. Spare change for the super-rich.
The beauty of a wealth tax is that there are no loopholes. Your assets (which include both foreign and
domestic) and your liabilities are easily calculated. It’s easier to spot the cheaters. It’s easier to press for
information from other countries that may be tempted to launder money for our super-rich. There’s
nowhere to run unless the super-rich want to give up their citizenship.
Even Ronald McKinnon, a conservative economist writing in the Wall Street Journal (“The Conservative Case
for a Wealth Tax”) is advocating a wealth tax on the super-rich:
In order to have a fairer tax system, we should implement a new federal wealth tax in addition to the
federal income tax. Unlike the current income tax, the wealth tax would not rely on how income is defined.
Rather, it would require that households list all their domestic and foreign assets on, say, Dec. 31 in the
relevant tax year. With a large exemption of $3 million that effectively excludes more than 95% of the
population, a moderate flat tax—say 3%, on wealth so defined—could then be imposed.
Combined with the financial transaction tax, we would have more than $200 to $300 billion per year which
could rebuild our crumbing infrastructure, provide higher education for our children, eliminate much of the
student loan burden, and hire millions of laid-off teachers. Unemployment would fall dramatically and deficit
hysteria would vanish into its own hot air.
We can cry about the distribution of income all we want. We can moan and groan about the top 1 percent and
how they have captured political power. We can proclaim our membership in the 99 percent for all to hear.
But none of that matters much unless we build a mass movement that reclaims our fair share of the fruits of
productivity.
The 1 percent didn’t get there just because they were great entrepreneurs or because they were smarter
than the rest of us. They got there because they pressed for tax cuts for the super-rich and the
deregulation of Wall Street. Those twin policies poured the money into their coffers and stalled our middle-
class dead in its tracks. Those policies also crashed the economy and destroyed the jobs of millions of
Americans.
A financial transaction tax combined with a wealth tax will bring us closer to the time when the middle-class
again was growing year by year. It would put Americans back to work and place our foot right back on Wall
Street’s neck – where it needs to be for the good of us all.
But you know it won’t come easy. The super-rich feel entitled to all they can grab. Which means we’ll have to
organize like never before and fight like hell. Let’s hope the 99 percent are ready, able and willing.
Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and
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, 2009).
Single-Payer Health Care: $570 Billion Cheaper
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Posted on Apr 14, 2012
david drexler (CC-BY)
Economist Gerald Friedman has what looks to be the silver bullet against the claim that single-payer health
care is infeasible on economic grounds, showing how “Medicare for all” could save billions of dollars while
improving millions of lives.
Study his easy-to-grasp charts and figures explaining how to fund the plan and how much it would save in the
two-page document linked below. —ARK
Gerald Friedman at Dollars & Sense:
The Expanded & Improved Medicare for all act” (HR 676) would establish a single authority responsible for
paying for health care for all Americans. Providing universal coverage with a “single-payer” system would
change many aspects of American health care. While it would raise some costs by providing access to care
for those currently uninsured or under-insured, it would save much larger sums by eliminating insurance
middlemen and radically simplifying payment to doctors and hospitals. While providing superior health care, a
single-payer system would save as much as $570 billion now wasted on administrative overhead and
monopoly profits. A single-payer system would also make health-care financing dramatically more
progressive by replacing fixed, income-invariant health-care expenditures with progressive taxes. This
series of charts and graphs shows why we need a single-payer system and how it could be funded.
The Corrupt, Unhelpful "Center"
Washington Elites Push for a Consensus that Ignores Reality
by Katrina vanden Heuvel
“Why can’t we all get along?” The iconic question has become the fixation of much of Washington’s chattering
class. David Brooks and Thomas Friedman censure President Obama for blowing the “Grand Bargain” or not
embracing the recommendations of Alan Simpson and Erskine Bowles, co-chairs of the deficit reduction
commission. Self-proclaimed bipartisan efforts — No Labels, Americans Elect — call for putting aside
partisan squabbles and electing moderates who can get things done. In this file photo, Erskine Bowles, left,
accompanied by former Wyoming Sen. Alan Simpson, co-chairmen of President Barack Obama's bipartisan
deficit commission, take part in a news conference on Capitol Hill in Washington. (Alex Brandon/AP/File)
All this chatter leaves out one thing — any sense of reality. The old bipartisanship, such as it was, was built
on the postwar economy that worked for everyone. Top-end taxes were at 90 percent, providing the
resources to invest in essential programs such as the interstate highways, the Marshall Plan that rebuilt
Europe, the G.I. bill and housing subsidies that educated a generation and built the suburbs.
In those days, U.S. companies exported goods rather than jobs, and a decent argument could be made that
what was good for General Motors was in fact good for America. It wasn’t perfect. The “other America”
lived lives of quiet desperation. Segregation still was brutally enforced. But the bipartisan consensus
reflected an economy that was working for many, not just the few.
That is no longer true, and hasn’t been for years. Multinationals ship jobs abroad and park profits overseas
to avoid taxes. Wall Street blew up the economy but got bailed out, with the bankers continuing to pocket
the big bucks. Three-fourths of the country thinks the recession hasn’t ended. And no wonder: Wages are
still falling and mass unemployment inflicts grinding misery. In 2010, the top 1 percent captured an obscene
93 percent of the rewards of “recovery.”
Not surprisingly, more and more Americans at both ends of the spectrum think Washington is corrupted by
big money and big business. And when the parties do come together — as they recently did to pass the
corporate-championed, falsely named JOBS Act that declares open season for fraudulent corporate stock
offerings — they simply prove the case.
Also ignored in the plea for cooperation is the simple reality that the Republican Party has been captured by
an extreme-right wrecking crew, who have not the slightest interest in compromise. Rather they are intent
on gutting modern government, outside of the bloated military. Grover Norquist was delivering his normal
incendiary rant in 2001 when he said he aimed to shrink government “to the size where I can drag it into the
bathroom and drown it in the bathtub.” At the time, I doubt even he expected that this year’s Republican
House budget — devised by the Beltway favorite Paul Ryan — would actually aspire to that standard,
reducing discretionary spending by 2050 to levels that can be met only by dismantling all of government
outside of the military, Social Security, Medicare and other health programs.
Obama, a mediator by instinct and experience, paid a deep price by trying to pursue bipartisan cooperation.
He wasted months on health care as Sen. Max Baucus (D-Mont.) engaged in phantom negotiations with
supposed Republican moderates. The president turned prematurely to deficit reduction, and then to seeking
a grand bargain with John Boehner, impervious to the reality that Boehner could not produce his caucus for
any kind of tax hikes. Now, for the election, the president has begun to clarify the stark differences
between the parties, to the benefit of his reelection and the public’s understanding.
But what makes the elite consensus so dangerous is that we’re headed into a train wreck after the election
that will require some kind of a deal. By the end of the year, if nothing is done, the Bush tax cuts, the payroll
tax cut and extended unemployment benefits will expire, and the automatic sequester will cut another $110
billion out of discretionary spending for the remainder of the fiscal year. This would surely cripple the weak
recovery we have, and very likely drive the economy into recession.
But the terms of the “grand bargain” represented by the Obama-Boehner negotiations or the Simpson-
Bowles recommendations are skewed dramatically to the right. The basic outline exchanges cuts in Social
Security and Medicare for “tax reform,” promising to lower tax rates while closing enough loopholes to raise
revenues. That requires erasing the mortgage deduction for middle-class homeowners or ending the
employer deduction for providing health care to employees. This notion of “shared sacrifice” is
unconscionable, given that working Americans have been sacrificing for years and weren’t even invited to the
Wall Street bacchanalia that created the mess.
Worse, the entire frame of the discussion — driven by Washington elites — is perverse. We should be
focused on how to put people to work. How much should we take advantage of record-low interest rates and
borrow to rebuild America and put construction workers back to work? How much should we raise taxes on
Wall Street and multinationals to pay for rehiring teachers, and direct employment of young people?
Instead, guided once more by a misbegotten elite consensus, we’re going to argue about how much of a hit a
barely growing economy should take. That’s a consensus the country can’t afford.
© 2012 The Washington Post
The gangsters want to feed off the British healthcare system
NHS: The shape of things to come
Continue reading the main story
NHS shake-up
• Q&A: The NHS shake-up
• What next for the NHS changes?
• Health reforms - where they stand
• NHS changes: The picture now
The health and social care bill has gone though more than a year of debate and more than 1,000 amendments
in the Commons and the Lords. So what has changed?
What the coalition wanted:
* GPs to take responsibility for £60bn of NHS funds
* Competition to be extended to more NHS services
* Reduced bureaucracy and fewer managers
* An increased role for the private sector
* Backing from every professional group involved.
What they have had to compromise on:
* NHS professionals such as hospital consultants and nurses given greater say in spending
* Competition limited to quality not price
* More managers to look into perceived risks
* All providers to be assessed for their suitability to run services.
The shape of things to come:
* Clinical commissioning groups (CCGs) replace primary care trusts
* CCGs decide on care for patients, advise them where to go for treatment and pay the bills
*Some of the day-to-day control of the NHS passes to the new NHS Commissioning Board, which will manage
the CCGs at a national and local level
*Responsibility for public health issues like obesity, smoking and alcohol abuse is handed to local councils
*All hospitals become foundation trusts and compete for treatment contracts from CCGs
*The cap on how much hospitals can earn from private patients rises from as little as 1.5% to 49%.
The Housing Doldrums
The Bottomless Pit
by MIKE WHITNEY
“There are many good reasons to believe that the 5.5 million foreclosures we have seen are barely halfway
through their full course. The United States may end up with a total of 8-10 million foreclosures before we
are finished.”
– Barry Ritholtz, The Big Picture
It all gets down to supply and demand. The banks have been keeping millions of homes off the market until a
settlement was reached in the $25 billion robosigning scandal. Now that the 49-state deal has been
finalized, the banks are preparing to put more of their of distressed homes up for sale. That will lead to
lower prices and the next leg down in the 6-year long housing crisis.
According to Reuters, new foreclosures “begun by Deutsche Bank were up 47 percent from 2011. Those of
Wells Fargo’s rose 68 percent and Bank of America’s, including BAC Home Loans Servicing, jumped nearly
seven-fold — 251 starts versus 37 in the same period in 2011.”
So BofA, which unwisely purchased Countryside following the Crash of ’08, is scrambling to get its house in
order by removing the deadwood from its balance sheet. Good luck with that.
In order to avoid a sudden plunge in prices–which would be devastating for bank balance sheets–the banks
will continue to control the number of homes that are released onto the market. In 2011, existing home
inventory shrunk by 20 percent year over year while the shadow backlog of distressed homes continued to
grow in leaps and bounds. This shows that the banks are managing inventory to minimize their losses.
But even though “visible” inventory has shrunk by as much as 30 percent in some markets, housing prices
have continued their downward trek, dropping roughly 4 percent in 2011. This reflects the truly dismal
condition of the underlying economy that is wracked by high unemployment, flat wages, and soaring personal
debt. Absent another round of fiscal stimulus, there’s little chance that housing sales
will rebound in 2012 despite historic low rates and myriad government loan modification programs.
The biggest problem facing housing now is that ordinary working people can’t make their monthly payments.
An article in Reuters summed it up like this: “The subprime stuff is long gone,” said Michael Redman,
founder of 4closurefraud.org. “Now the folks being affected are hardworking, everyday Americans
struggling because of the economy.”
So what we’re seeing now is the knock-on effects from high unemployment, tight credit, shitty wages and
deep protracted economic stagnation. This is a policy issue, but policymakers refuse to address it, so housing
will bump along the bottom for years to come. Now take a look at this article in the Wall Street Journal:
“Delinquent mortgage borrowers, take note: Banks still aren’t moving very fast to kick you out of your
homes. February’s foreclosure settlement between big U.S. banks and state attorneys general should have
been bad news for mortgage deadbeats — and for house prices. Having resolved charges that they had
filed bogus documents to speed up repossessions, the banks should have felt free to move ahead with
millions of foreclosures. They should also have started selling more repossessed houses, an influx of cheap
supply that would weigh on the market.
So far, though, that’s not happening. …. as a result, the average number of days since the last mortgage
payment had been made on homes in the foreclosure process rose to 667, up from 660 the previous month
and 253 in February 2008. In other words, the average delinquent borrower could live rent-free for nearly
two years without getting evicted, assuming the borrower chose to stay in the house.” (“The Foreclosure
Deal Spares the Housing Market (So Far)”, Bloomberg)
Just to be clear, we do not agree with the author that the people who were victims in this vast criminal
mortgage laundering scam– that destroyed the financial system and pushed the global economy into a
Depression–can be fairly characterized as “mortgage deadbeats”. Even so, the point he makes is important,
because it illustrates how the banks are fiddling with supply to avoid the losses on non performing loans.
Screwball accounting regulations allow the banks to keep mortgages on their books at fictitious prices
(artificially high) until the house is sold. Only then, are they required to write down the difference.
Considering that they still have millions of distressed homes on their books, this is no small matter. An
accurate accounting of bank real estate inventory would show that most of the biggest banks in the country
are technically insolvent.
So what does this mean for people who are thinking about buying a house in the near future? Should they
hang on to their money and wait for another year or so or jump at that $450,000 McMansion with the Gothic
parapets and custom Swedish sauna that’s been marked-down to a mere $185,000?
That’s hard to say. It depends on one’s own priorities. But one thing is certain, housing prices won’t be going
up for a very long time. Maybe never. Moody’s ratings agency forecasts that we’ll see ”an 8% to 10% decline
in housing prices” due to a 25 percent uptick in repossessed properties from 1 million in 2011. Unfortunately,
Moody’s calculations are far too optimistic. In fact, “top housing analyst Laurie Goodman estimates the
amount of shadow inventory at between 8 and 10 million homes, and Michael Olenick, using a different
methodology, comes in at just under 9 million homes.” (“Moody’s Foresees 10% Drop in US Housing Prices“,
naked capitalism)
Even if Goodman-Olenick’s predictions are wrong by half–which is unlikely–prices have a long way to go
before they hit bottom.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics
of Illusion (AK Press). He can be reached at fergiewhitney@msn.com.
Inequality and Keynesian Economics
Daron Acemoglu and James Robinson
Paul Krugman and Robin Wells have an interesting article in the Occupy Handbook edited by Janet Byrne
that has just come out that has just been reprinted at salon.com. (Actually, it turns out we also have a paper
in the volume, see this post).
Krugman and Wells articulate and expand on a thesis that they have suggested previously. They start by
arguing that the huge increase in income inequality has also had major political consequences. So far so good.
This is in line with our perspective in Why Nations Fail, and it’s something we have argued elsewhere, for
example here. Next comes the original part of Krugman and Wells’s argument: the main corrosive effect of
this inequality is in preventing Keynesian policies to combat the recession 2007-2008 and the sharp increase
in unemployment that resulted. The idea here is that the “right” (the GOP) opposes any government
intervention, and Keynesian fiscal policies and work programs that would have increased employment and
combatted the recession are opposed by the right because, with increased inequality, they have become
more beholden to the very wealthy.
Though intriguing, this idea is not backed up with direct evidence by Krugman and Wells. It may well be true,
but it is also a curious thesis. Here are some of the things we find less than fully clear about this thesis.
First, the distinction between “right” and “left” (or perhaps pro-elite and anti-elite) is not a natural one when
it comes to Keynesian economics and policies. Many conservative politicians, and not just Nixon and Reagan,
have embraced Keynesian economics. Both Fascist Italy and Nazi Germany were big-time Keynesians. Work
creation via government programs was a cornerstone of Nazi economic policy, so much so that an economic
history of Nazi Germany by Dan P. Silverman is entitled Hitler’s Economy: Nazi Work Creation Program,
1933-1936 — though Adam Tooze, The Wages of Destruction: The Making and Breaking of the Nazi
Economy, argues that work creation was only a secondary objective. (See also Peter Gourevitch’s Politics in
Hard Times: Comparative Responses to International Economic Crises for a comparative and nuanced picture
of how political attitudes and coalitions influenced macroeconomic policies during the crisis of 1873-96, in the
aftermath of the Great Depression, and in the 1970s).
Second, the argument that elites are generally opposed to government involvement in the economy reveals
the very US-centric focus of Krugman and Wells. Even a perfunctory look at recent or distant history (or at
our book!) should have been enough to convince one that in most societies, even in the supposedly laissez-
faire 19th century Britain, elites work very hard to make the government intervene in the economy — of
course, in a very specific way, to support them. It should thus be no surprise that extractive institutions are
rarely built on the foundations of laissez-faire economics — think of slavery, labor draft systems such as
the mita, government monopolies, institutions such as the “colour bar” in South Africa designed to keep
blacks disadvantaged and forced to supply cheap labor, and government corruption. This is not to argue that
laissez-faire is inherently pro-poor or anti-elite, but to emphasize that the opposite perspective is also
plainly false.
Third, even in the current US context it is not clear why the wealthiest Americans should be opposed to
Keynesian policies. After all, wealthy Americans are the owners of the major corporations or at the very
least are strongly vested in the US corporate sector, which would also be one of the main beneficiaries of
expanded aggregate demand.
Fourth, even if Krugman and Wells’s emphasis is right, we find it hard to place lack of sufficient Keynesian
stimulus as one of the most corrosive effects of soaring political inequality and political polarization in the
US. What about the failure of our educational institutions; the huge incarceration rate, particularly for
African-Americans; erosion of civil liberties; increasingly inefficient subsidies and tax breaks to select
corporations and sectors; distortions created by implicit and explicit subsidies to the financial industry?
Lack of sufficient Keynesian zeal seems a little less important.
Having said all of that, Krugman and Wells are probably right to some degree. Republicans prevented more
aggressive Keynesian measures, and this has likely contributed to the persistence of very high
unemployment (though there is no conclusive evidence showing a very large multiplier from government
spending, which is something that needs to be factored in). All the same, the reasons for this hostility to
Keynesian economics are still mysterious. Perhaps it was just politicking, with small p — a way of frustrating
Obama’s economic policies. Perhaps it was based on a “slippery slope argument” — if the government starts
being active now, what is there to stop it from becoming even more active in the future? Perhaps and just
perhaps, it was for the same reason that some economists had a blanket opposition to Keynesian policies —
on “ideological” grounds not clearly based on pure economic interest. Not as big a story, but a possibility.
Montana Governor: Romney’s Family Came ‘From A Polygamy Commune In Mexico’
by Meenal Vamburkar | 7:57 pm, April 19th, 2012
» 121 comments
Montana Gov. Brian Schweitzer (D) spoke to The Daily Beast on Thursday about whether his state could be a
battleground come November. During the conversation, Schweitzer went further to comment on Mitt
Romney as well — saying the GOP hopeful could face problems on the national stage because his father was
“born on a polygamy commune in Mexico.”
On the topic of swing states, “Schweitzer said Romney would have a ‘tall order to position Hispanics to vote
for him.’” The Daily Beast’s Ben Jacobs “replied that was mildly ironic since Mitt’s father was born in Mexico,
giving the clan a nominal claim to being Hispanic.” The governor responded that’s “kinda ironic given that his
family came from a polygamy commune in Mexico, but then he’d have to talk about his family coming from a
polygamy commune in Mexico, given the gender discrepancy.”
He added: “[Women are] not great fans of polygamy, 86 percent were not great fans of polygamy. I am not
alleging by any stretch that Romney is a polygamist and approves of [the] polygamy lifestyle, but his father
was born into [a] polygamy commune in Mexico.”
The Daily Beast notes some background on Romney’s father:
Romney’s father, George—who served as governor of Michigan and was a member of the Nixon cabinet and
also a presidential candidate—was born in Mexico in 1907 to a family of American Mormons who fled to
Mexico when the United States government cracked down on the practice of polygamy. George Romney’s
parents were in a monogamous marriage, but Mexico was the last bastion for the practice of plural marriage
in the Church of Latter Day Saints. (The church has since expressly prohibited the practice.)
New study finds 45,000 deaths annually linked to lack of health coverage
Uninsured, working-age Americans have 40 percent higher death risk than privately insured counterparts
By David Cecere
Cambridge Health Alliance
Thursday, September 17, 2009
Nearly 45,000 annual deaths are
associated with lack of health insurance, according to a new study published
online today by the American Journal
of Public Health. That figure is about two and a half times higher than an
estimate from the Institute of Medicine (IOM) in 2002.
The study, conducted at Harvard Medical School and Cambridge Health Alliance,
found that uninsured, working-age Americans have a 40 percent higher risk of
death than their privately insured counterparts, up from a 25 percent excess
death rate found in 1993.
“The uninsured have a higher risk of death when compared to the privately
insured, even after taking into account socioeconomics, health behaviors, and
baseline health,” said lead author Andrew Wilper, M.D., who currently teaches
at the University of Washington School of Medicine. “We doctors have many new
ways to prevent deaths from hypertension, diabetes, and heart disease — but
only if patients can get into our offices and afford their medications.”
The study, which analyzed data from national surveys carried out by the Centers
for Disease Control and Prevention (CDC), assessed death rates after taking
into account education, income, and many other factors, including smoking,
drinking, and obesity. It estimated that lack of health insurance causes 44,789
excess deaths annually.
Previous estimates from the IOM and others had put that figure near 18,000. The
methods used in the current study were similar to those employed by the IOM in
2002, which in turn were based on a pioneering 1993 study of health insurance
and mortality.
Deaths associated with lack of health insurance now exceed those caused by many
common killers such as kidney disease. An increase in the number of uninsured
and an eroding medical safety net for the disadvantaged likely explain the
substantial increase in the number of deaths, as the uninsured are more likely
to go without needed care. Another factor contributing to the widening gap in
the risk of death between those who have insurance and those who do not is the
improved quality of care for those who can get it.
The researchers analyzed U.S. adults under age 65 who participated in the
annual National Health and Nutrition Examination Surveys (NHANES) between 1986
and 1994. Respondents first answered detailed questions about their
socioeconomic status and health and were then examined by physicians. The CDC
tracked study participants to see who died by 2000.
The study found a 40 percent increased risk of death among the uninsured. As
expected, death rates were also higher for males (37 percent increase), current
or former smokers (102 percent and 42 percent increases), people who said that
their health was fair or poor (126 percent increase), and those who examining
physicians said were in fair or poor health (222 percent increase).
Steffie Woolhandler, study
co-author, professor of medicine at Harvard Medical School, and a primary care
physician at Cambridge Health Alliance, noted: “Historically, every other
developed nation has achieved universal health care through some form of
nonprofit national health insurance. Our failure to do so means that all
Americans pay higher health care costs, and 45,000 pay with their lives.”
“The Institute of Medicine, using older studies, estimated that one American
dies every 30 minutes from lack of health insurance,” remarked David
Himmelstein, study co-author, associate professor of medicine at Harvard
Medical School, and a primary care physician at Cambridge Health Alliance.
“Even this grim figure is an underestimate — now one dies every 12 minutes.”
Other authors include Karen E.
Lasser, Danny McCormick, David H. Bor, and David U. Himmelstein. The study was
Kochs, Lies and Videotape
Tuesday, 03 April 2012 09:26 By , Brave New Foundation | Op-Ed
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David Koch, a billionaire known for his family's contributions to conservative causes, during an interview at
the Massachusetts Institute of Technology, in Cambridge, Massachusetts, March 4, 2011. (Photo: Gretchen
Ertl / The New York Times) This week as I premiered my new film, Koch Brothers Exposed — the result of
a year-long investigation on how two billionaires are using their wealth to corrupt democracy — Koch
Industries has launched an attack on the film and me. The Kochs intimidate, they menace; they have a letter
from their lawyer borderline threatening the media if it reports what’s in the film — and they always try to
change the subject so their behavior can stay in the shadows: not only are they unwilling to accept my offer
of a debate or interview, they also refuse to testify about their interest in the Keystone XL pipeline and may
have to be dragged kicking and screaming into revealing their secret contributions to groups doing election
work. This time, the Kochs are using a technique I point out in the film: attacking to avoid dealing with the
facts. They are dodging and distorting the truth to avoid confronting our findings on cancer, voting rights,
civil rights, and more.
How? Let me count (some of) the ways.
1) Cancer. People are dying of cancer near the Kochs’ Georgia Pacific plant in Crossett, Arkansas, and the
Kochs refuse to answer the relevant question: What are they going to do about it? On Penn Road in Crossett,
right near the mill, residents powerfully show how nine out of 11 homes have suffered from cancer. A USA
Today study said Crossett’s school district is in the top 1% in the nation for cancer. Meanwhile, the Kochs’
facility releases significant amounts of formaldehyde — a known carcinogen — and there’s no other chemical
plant in town. The Kochs are among the country’s top 10 polluters and lobbied hard to keep formaldehyde
from being labeled a carcinogen. For a company where one of the owners (David Koch) and the
communications director (Melissa Cohlmia) are cancer survivors, this is tragic and infuriating. It reflects a
warped sense of humanity where greed trumps all.
2) Voting rights. The Kochs have given over $1 million to the American Legislative Exchange Council (ALEC), a
group that’s trying to pass severe voter ID restrictions in states across the country. These bills
disenfranchise the poor, the elderly, the young, people of color — in short, people who are likely to oppose a
1% agenda. The Kochs won’t explain why anyone should believe that ALEC’s pro-corporate, anti-99% agenda
is somehow detached from its billionaire funders. Onerous voting restrictions are already impacting people’s
ability to vote in the 2012 election.
3) Re-segregation. Americans for Prosperity (AFP), which is Koch-founded and Koch-financed (they refuse
to say how much but we know it’s at least $5 million), pushed “reforms” in North Carolina that would destroy
a school district’s model of racial integration and ensure students go to school mainly with people of their
own race. We call out this “re-segregation” in Koch Brothers Exposed. The Kochs, of course, try to hide from
their connection — hoping we ignore not only their involvement in the founding and financing of AFP, but also
the fact that David Koch has served as chair of the group’s supposedly nonpolitical arm, the AFP Foundation.
Their dissembling doesn’t pass the laugh test–particularly when they’ve refused to open the books to show
where their funding is coming from.
4) Worker rights. The Kochs have been undermining labor rights, helping anti-union Gov. Scott Walker in
Wisconsin and supporting groups that want to boost employer power against employees. They also have
pushed the interests of large corporations over Main Street. The Koch brothers try pathetically to attack
me on that front, going back eight years to my film Wal-Mart: the High Cost of Low Price and saying a locally-
owned hardware store I profiled as an example of how Wal-Mart shuts down small businesses had actually
closed before the retail giant opened. Um, as the store owners said in the film, the reason it closed early
was problems involving financing and reduced appraisals in light of Wal-Mart’s impending arrival. This is yet
another example of distorting the facts and is ultimately a distraction.
Why are the Kochs flailing so desperately in the face of our findings? Because they can’t give
straightforward, convincing rebuttals to the claims we lodge against them in the film. My organization, Brave
New Foundation, doesn’t have billions of dollars at its disposal to fight back, but this time, the Kochs aren’t
getting the last word. The smears and name-calling (I’m malicious, I’m a liar, blah blah blah) may not be
pleasant but won’t stop the film from being shared by 25 groups partnering with us and thousands of people
online.
The Koch brothers epitomize the corruption of democracy that’s going on in our country, with a handful of
people at the top expanding their wealth on the backs of the 99%. Americans shouldn’t fall for their attempt
to change the subject.
This piece was reprinted by Truthout with permission or license.
Locked in a Dysfunctional Currency Union
No Exit in EU
by JEFFREY SOMMERS
Peter Praet, Chief Economist of the European Central Bank, defended the ECB’s policies at Levy Institute’s
annual Minsky meeting at the Ford Foundation this past week in New York that. In his remarks, he
retreaded the EU’s wheels with the same rhetoric of inflation fighting and fiscal tightening that drove the
EU off the road and into the ditch to begin with. The effect of his pronouncements of EU intentions was to
only further reveal the growing gap between reality and ECB ideology over their inability to successfully
address the euro crisis.
Europe risks becoming a real lived version of Jean Paul Sartre’s No Exit in which its constituent countries
are locked into a dysfunctional currency union for an eternity. Euro entry has been a Faustian bargain. There
is presently no exit clause once joining, except exiting the European Union itself. Entry promised
membership into a rich club of nations in which Europe’s southern periphery and former Soviet bloc areas to
the east would converge with Europe’s richest nations. The devil of membership, however, is in the details.
Euro rules preclude a wholesale list of policies historically demonstrated to develop nations.
In short, the answer to the question of whether Europe’s periphery is merely in purgatory or eternal
damnation rests with whether Europe is willing to undertake a revision of the rules guiding the relationships
among its constituent members. The European Central Bank understood the currency union would be
complex, but their assumptions regarding rules that create economic development and stability have proven
erroneous and mitigate against convergence and growth across Europe.
Among the faulty assumptions is that markets are the best arbiters of risk and worthy investments. This is
enshrined in article 123 of Treaty on the Functioning of the European Union. At best, the rule was
predicated on the idea that past monetary imprudence (think Zimbabwe or Weimar Germany) of some
nations meant governments can’t be trusted with monetary and fiscal independence. Not every country,
however, is Zimbabwe with a dictator serving several decades, or a Weimar Germany saddled with inflation
generating war reparation payments. By contrast, nations in the past, from Europe’s richest, to East Asia
Tigers, to the US have used domestic credit creation to fund infrastructure that enabled wealth creation
beyond the costs of expenditure on that infrastructure.
The ideology and group think resident among central bankers, however, says “halt, you can still develop
infrastructure, but you must be disciplined by the ‘Father Knows Best’ wisdom of the markets.” This is
highly problematic. First, it suggests there is something intrinsic to markets that always makes for better
decisions than public sector managers. In effect, we are told that we must pay a fee (de facto tax) to
private banks in the form of the higher prices they charge for credit over what states can as the price for
the private sector’s ‘superior’ capacities of decision making on investments.
Second, it ignores the evidence from recent decades revealing that private credit has become remarkably
inefficient. Private finance is supposed to be a service enabling greater growth in the real economy of
production and services. This argument made more sense in the Bretton Woods era following WW II until
the 1970s when economic growth was strong and financial institutions comprised some 15% of corporate
profits in the US. Yet, since the liberalization of finance from the 1970s, economic growth has continued to
diminish in the West, meanwhile in the most liberalized ‘finance gone wild’ economies, like the US, finance now
comprises some 40% of corporate profits. The bottom line is that deregulated capital markets in recent
decades have taken an ever-increasing share of our economy, while producing less economic growth. Finance
no longer enables economic growth by providing a needed service, but instead impose a massive rent seeking
tax on the economy.
Lastly, it ignores the different metrics by which markets and states measure investment success. Private
markets prefer a quick kill, with profits coming fast and furious. By contrast, states genuinely interested in
development need to make infrastructural investments where the benefits accrue to the whole economy.
Thus, the benefit, or profit, is harder to capture by a specific interest. Moreover, the time horizon on state
investments may be unacceptably long for private investors.
In short, European Central Bank assumptions and European Union rules on monetary have locked Spain, Italy,
Greece, Portugal, Ireland, the Baltics and former Soviet bloc countries into a kind of Sartrian “No Exit.”
Only a change in the rules that permit historically successful strategies for development will instead make
this current crisis merely a painful purgatory stage rather an eternal economic damnation as a cost for being
part of a European Union.
JEFFREY SOMMERS is an associate professor of political economy in Africology at the University of
Wisconsin-Milwaukee and visiting faculty at the Stockholm School of Economics in Riga. He publishes in
outlets such as CounterPunch and the Guardian, and routinely appears as an expert guest in global news
programs, most recently on Peter Lavelle’s CrossTalk. He can be reached at: Jeffrey.
sommers@fulbrightmail.org
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Russ Feingold Asks Democrats To Let Bush Tax Cuts Expire
The Huffington Post | By Ariel Edwards-Levy Posted: 04/11/2012 12:07 pm Updated: 04/11/2012 12:56
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Bush Tax Cuts, Credo Action, Russ Feingold, Buffett Rule, Progressives United, Politics News
Former Sen. Russ Feingold (D-Wis.) called on his colleagues Wednesday to follow up on their upcoming vote
on the Buffett Rule and allow the Bush tax cuts to expire.
"A stunning new report came out just this week: Citizens for Tax Justice found that 26 giant corporations --
with total revenue well over $200,000,000,000 -- haven't paid a cent in taxes over the last four years,"
Feingold wrote in an email to Progressives United, the anti-Citizens United organization he founded last year.
"In order to have a fair country, a country where the voices of average people matter as much in
government as the voices of the super wealthy, we need to close the loopholes that let corporations get
away without paying taxes and let the disastrous Bush tax cuts persist."
Feingold's campaign is in partnership with progressive advocacy group CREDO Action, which is collecting
signatures for an online petition.
"In the next few days, you'll be hearing a lot of politicians in Washington DC talk about the Buffett Rule,
which if passed would ensure that millionaires pay at least 30 percent in taxes on their income," the petition
reads in part. "But it's important that we be clear that the Buffett Rule is not a substitute for rolling back
the Bush tax cuts, which along with disastrous wars of choice, are responsible for the last decade's spike in
our national debt."
Former President George W. Bush made a rare public appearance Tuesday to argue against raising taxes on
the wealthy, saying the move would hurt job creation. The tax cuts, passed during his first term, are set to
expire at the end of the year.
Major Bank CEO Slams Wall Street For Paying Big Bonuses And Fighting New Regulations
By Pat Garofalo on Apr 9, 2012 at 9:35 am
M&T Bank CEO Robert Wilmers
Ever since the Dodd-Frank financial reform law was signed by President Obama in 2010, the financial
industry has been trying to delay, change, and otherwise obstruct it, claiming that its costs are too high or
that it puts U.S. banks at a competitive disadvantage. One of the highest profile targets has been the
Volcker rule, which is meant to prevent banks from trading for their own benefit with federally insured
dollars.
For instance, JP Morgan Chase CEO Jamie Dimon, who runs the biggest bank in the U.S., has taken issue with
the rule (while admitting he hasn’t read it all). But not all big banks are opposed to the regulation. Business
Insider’s Joe Weisenthal flagged a missive from M&T Bank CEO Robert Wilmers, in which he criticized big
banks for “a pattern of investing in areas where they possessed little knowledge.” He went on to criticize
large bank bonuses and to chastise Wall Street for lobbying against the Volcker rule:
Public cynicism about the major banks has been further reinforced by the salaries of their top executives, in
large part fueled not by lending but by trading. At a time when the American economy is stuck in the
doldrums and so many are unemployed or under-employed, the average compensation for the chief
executives of four of the six largest banks in 2010 was $17.3 million – more than 262 times that of the
average American worker. One bank with 33,000 employees earned a 3.7% return on common equity in 2011,
yet its employees received an average compensation of $367,000 – more than five times that of the average
U.S. worker. Thus, it is hardly surprising that the public would judge the banking industry harshly – and view
Wall Street’s executives and their intentions with skepticism.
Nor can one say with any confidence that we have seen a fundamental change in the big bank business
approach which helped lead us into crisis and scandal. The Wall Street banks continue to fight against
regulation that would limit their capacity to trade for their own accounts – while enjoying the backing of
deposit insurance – and thus seek to keep in place a system which puts taxpayers at high risk. In 2011, the
six largest banks spent $31.5 million on lobbying activities. All told, the six firms employed 234 registered
lobbyists.
Willmers, who oversees the 29th largest bank in the U.S. with $77 billion in assets, is surely no huge fan of
Dodd-Frank, and he heaps disproportionate blame for the financial crisis onto government backed mortgage
giants Fannie Mae and Freddie Mac. But his critique of Wall Street banks is spot-on, as is his assessment of
the financial industry’s tarnished image. According to a Stanford University study, the number of Americans
with hardly any confidence in the banking sector is at an all-time high.
March 9, 2011
Corporations Are Sociopaths
Filed under: Corporatism, Law, Reformism Can't Work — Russ @ 9:11 am
Sociopaths are people who are completely devoid of any sense of empathy or caring. Other people simply don’
t exist other than as things to be manipulated and consumed, with no more emotional consideration than when
you unwrap a candy bar, throw out the wrapper, and devour the calories. Everyone regards such individuals
with horror, except where it comes to business and politics, where suddenly the existence and tolerability,
even desirability, of sociopathy becomes controversial.
I’m not writing about this sociopathy of the elites themselves today, or about the bizarre collective
sociopathy of masses which often exempts, accepts, and celebrates it. Such issues, however, do go toward
the general critique of representative government in itself, and from there to elitism in itself. (I define the
term elitism as the tolerance of or desire for the existence of hierarchical elites, especially in politics and
the economy.)
What I want to briefly lay out here is the fact that corporations are inherently sociopathic. By their intrinsic
design and imperative they must aggressively and relentlessly seek to sociopathically manipulate and
consume. We’re all familiar with the corporation’s legal duty to maximize profit at the expense of all other
values. Henry Ford was successfully sued by his shareholders for trying to overcome the inherent
contradiction of capitalism by paying his workers a wage sufficient to sustain themselves as consumers.
While there’s some question of how far this duty extends in principle, in practice it’s always interpreted to
mean that corporate management, no matter what its subjective view of things, should always be doing every
legal thing it can, no matter how morally evil it may be. Where an evil would be illegal, the corporation’s duty
is to get the law changed. In practice the corporation should always be pushing the envelope where it comes
to bribery and extortion. And even every other law is supposed to be broken if management thinks they can
get away with it or make some patsy take the fall. So in the end the barrier of legality isn’t supposed to
exist either.
For the persons involved, where they aren’t actively evil themselves, we have what Arendt called the
banality of evil. She was talking about how “normal” people easily slid into the Nazi routine as officials,
bureaucrats, functionaries, or just people doing normal jobs. Today, as corporations consistently commit all
the same crimes of territorial aggression, robbery and mass murder (so far the murders are mostly in poor
countries like Nigeria and Nicaragua), it’s even easier for the individual to be banally evil in his actions, since
here it’s not an overtly hateful, belligerent political organization and regime, but merely a profit-seeking
business, and we’re all acculturated to assume such activity as the social norm. Those who “work for the
corporation” are further indoctrinated and acculturated to accept this as normal, even if a particular
corporate culture doesn’t go out of its way to do this. The corporation eventually comes to select for those
who are naturally sociopathic. It also must subvert the educational system itself, hijacking it toward the
corporatist agenda. This helps maximize both the prosperity of natural sociopaths in their student careers,
as well as the indoctrination of the rest. As sociopathy in the schooling, in the media, in the imagery and
discourse of society at large, and in the corporation itself becomes ever more refined, it is eventually
distilled to actual psychopathy.
No one has responsibility, as Ted Nace describes (chapter 14, p.203):
A corporation is a complex entity, not a unified mind. As Adolph
Berle and Gardiner Means pointed out in The Corporation and Private
Property, the essence of a corporation is the fragmentation of accountability
among various internal groups. Those who occupy the key leadership
position (the professional managers) aren’t necessary its owners;
those who are owners (the stockholders) are generally neither in charge
nor legally liable; and those who are supposed to be exercising strategic
direction on behalf of the owners (the board of directors) are rarely sufficiently
informed nor sufficiently empowered to actually fulfill their
theoretical function.
So we have this machine which not only doesn’t care what it does, but is programmed to systematically
destroy society. It has a legal mandate and in internal cultural imperative to do this.
The other broad aspect of corporate sociopathy is the way the corporate concept is designed to separate
rights and responsibilities. The policy of limited liability, civil and criminal, overtly and in principle seeks a
sociopathic imbalance of rights vs. responsibilities. Where the corporation itself gains fraudulent rights, this
is procyclical with the way legislatures and courts add to its powers and shed its responsibilities. A goal of
corporatism is to legalize crimes where committed by individuals acting in the capacity of corporate cadres.
Nace quotes political commenter Arthur Miller (p. 96):
As with constitutional law, so with the private law of contracts, of property, and of torts. Judge-made rules
in those fundamental categories had the result of transferring the social costs of private enterprise from
the enterprise itself to the workingman or to society at large. Tort law provides apt illustration. Under its
doctrines, a person who willfully or negligently harms another’s person or property must answer by paying
money damages. The analogue of contract, which is a consensual obligation, a tort is a nonconsensual legal
obligation. Who, then, bore the costs, in accidents and in deaths, of the new industrialism? Not the
businessman. Not the corporation. The worker himself. (Often those workers were children.) And who bore
the costs of pollution and other social costs? Society at large. How did this come about? In tort law judges
created doctrines of “contributory negligence,” “assumption of risk,” and the “fellow servant rule,” all of
which served to insulate the enterprise from liability. By “freely” taking a job, said the judges, the workers
“assumed the risk” of any accident that might occur.
Where the crimes can’t be literally legalized, the license to commit them and the legal responsibility for
them are separated. The latter is the more common example. We have Wall Street’s intentional destruction
of the economy as the result of its monumental con jobs (in particular fraudulent inducement of mortgage
borrowing), the pollution crimes of BP and many others, Monsanto’s torts wherever pollen from its GMO
Frankenplants contaminates natural crops, just to name a few major examples off the top of my head. These
are all legal crimes for which no individual is ever held accountable, and usually the corporation itself is also
let off free as a bird. One example of where the crimes are actually legalized is the CFMA, which declares
simple gambling by the banks, indistinguishable from a bunch of drunks at a bar betting on a football game,
to comprise legal contracts. Of course, when a solitary bum bets his children’s lunch money at the track and
loses, it’s terrible for that family. When the government lets the banksters do the same thing with trillions
and then pays off these bets with taxpayer money, millions of children must go hungry.
The wealth corporations amass through such banal evil is then used to subvert the rule of law, from the
legislative process to the courtroom. Again, both by its structural mandate and its internal culture the
corporation is driven to try to get antisocial laws passed, socially beneficial laws and rules overturned or
abolished, and to render any worthwhile laws which do exist neglected, disregarded, or twisted.
Greed fundamentalists among the elites first developed the systematic plan to use corporations as a vehicle
of maximal rent-seeking in the mid-19th century, and worked assiduously through the state legislatures and
federal courts to accomplish what was in sum a crypto-feudal coup against democracy and theoretical
capitalism. They received ideological assistance from the rise of Social Darwinism, which provided both a
propaganda basis for their greed and, in the form of substantive due process, a legal doctrine the SCOTUS
could use to justify its corporatist activism. Together Social Darwinism and substantive due process, in the
form of the Lochner doctrine, enshrined corporate sociopathy as literally “the law of the land”. We see again
the same pattern: The inherent sociopathic process selects for itself, distills itself, becomes conscious of
itself. Inertia becomes will; sociopathy becomes psychopathic evil.
Today we’ve reached the terminal stage of this devolution. The neofeudal “elites” wish to undertake the final
enclosure of all real assets – land, natural resources, physical space itself, buildings, infrastructure, and all
the products of the mind. At the same time they want to cut all ties with human beings other than the ties of
exploitation. They want to eradicate all semblance of government, law, and civil society, except insofar as
they are either weapons of domination or of pacification. They want to take totalitarian control of the Earth
itself, enjoy a total licentious prerogative to do anything they wish (and have this license enshrined as their
“rights”), while being absolved of literally ALL social or legal responsibility. These sociopaths, these willful
outlaws, want to actually secede from civilization. They want to steal all the benefit of human interaction but
incur zero reciprocal responsibility or obligation. They want to burn off all relationships between human and
human, distilling them to the primal confrontation of master and slave in the middle of a wasteland. Since
neither slaver nor slave can be human, these fundamentalists wish to completely eradicate civilization and
humanity itself. They are in fact post-civilizational barbarians. As David Korten put it (quoted in Nace):
As corporations gain in autonomous institutional power and become more detached from people and place,
the human interest and the corporate interest increasingly diverge. It is almost as though we were being
invaded by alien beings intent on colonizing our planet, reducing us to serfs, and then excluding as many of us
as possible.
The corporation wants to systematically define human beings out of juridical existence, except insofar as
they’re defined as debtors or criminals.
The corporation has been the primary mode of organization for this anti-civilizational devolution to the
terminal post-civilization barbarism. It has concentrated and distilled all the worst sociopathic and anti-
social aspects of the hominid experience. It has distilled them, systematized them, rendered them
conscious, formulated them into an ideology and strategy. It is now the main practical vehicle of this plan for
the final destruction of civilization. Through the doctrines, administrative structures, and ruling techniques
of globalization, the corporation intends to completely dissolve the nation-state except for the rump
functions I mentioned above. In the next post I’ll describe more fully this program, and how the corporation
is inherently anti-sovereign.
For now I’ll conclude with the warning that the only way we can avert this hideous outcome planned for us is
to smash the corporate power.
Donald Trump: Paul Ryan Budget Is 'Catastrophic'
The Huffington Post | By Sam Stein Posted: 04/10/2012 12:50 pm Updated: 04/10/2012 2:59
Donald Trump is not a politician. Nor is he someone who offers measured political analysis. As a surrogate
for the Mitt Romney campaign, he's been more of a sideshow than an actual advocate, primarily because the
subtleties of campaigning are lost on him.
On Tuesday morning, that bluntness was on full display as Trump spent several minutes plainly questioning
the political chops of Rep. Paul Ryan (R-Wis.) and declaring, with characteristic conviction, that the Ryan
budget would be an abject disaster for Romney.
"It is catastrophic what he's done," Trump told CNBC. "If they lose, it will be the single biggest reason why
the Republicans lost: the Ryan plan."
Trump said he took issue not with the content of the Ryan budget -- though he declined to weigh in on that --
but rather, the timing of its introduction.
"I think the worst thing [Romney] can do is strongly embrace that budget if he wants to get elected," he
said. "This will be the single worst move in the Republican Party for many years. This is going to be
catastrophic."
"Perhaps Paul Ryan is a bright guy but he is not a good chess player," he said later, "This gentleman is not a
good chess player, that's all I can tell you."
As someone who still thinks President Barack Obama may have forged his birth certificate, Trump's own
standing as a political chess player is obviously in question. It would be a remarkably risky move for Romney
to deploy him at all on the trail, though the idea of Trump fundraising on the former Massachusetts
governor's behalf isn't so far-fetched. (Already, Trump and his wife are slated to host a birthday
fundraiser for Romney's wife, Ann, later this month.)
That said, it's not all that simple to dismiss Trump's fears about the political fallout from the Ryan plan. And
it will be interesting to see whether Romney clarifies his position on the budget proposal that he recently
called "marvelous."
Unplugging Americans From The Matrix
by PAUL CRAIG ROBERTS
Americans, the British, and Western Europeans are accustomed to thinking of themselves as the
representatives of freedom, democracy, and morality in the world. The West passes judgment on the rest
of the world as if the West is God and the rest of the world are barbarians in need of chastisement,
invasion, and occupation. As readers know, from time to time I raise questions about the validity of the West’
s extreme hubris.
China is often a country about which Washington’s moralists get on their high horse.
However, China’s “authoritarian” government is actually more responsive to its people than America’s
“elected democratic” government. Moreover, however incomplete on paper the civil liberties of China’s
people, the Chinese government has not declared that it can violate with impunity whatever rights Chinese
citizens have. And it is not China that is running torture prisons all over the globe.
For some time I have had in mind a realistic comparison of the two countries instead of the standard
propagandistic comparison, but Ron Unz has beat me to the task twice). Unz provides a chance for an
education. Don’t miss it.
Unz has done an excellent job. Moreover, he cleverly understates the case for China and overstates the
case for America so as not to unduly arouse the flag-wavers. Nevertheless, the conclusion is clear: The
Chinese are less threatened by their “extractive elites” than Americans are by their counterparts.
Moreover, it is America’s, not China’s, extractive elites who are bombing, occupying, and droning other
countries. As the bumper sticker says, “Be nice to America or we will bring democracy to your country.”
As for economic management, there is no comparison. Unz reports that during the past three decades China
has achieved the most rapid rate of economic development in human history. Moreover, most of the new
income has flowed into the pockets of Chinese workers, not to the one percent. While American real median
incomes have been stagnant for decades, incomes for Chinese workers have doubled every decade for
three decades. A recent World Bank report attributes more than 100 percent of the drop in global poverty
rates to China’s rise.
In the last decade China’s industrial output quadrupled. China now produces more automobiles than America
and Japan combined and accounted for 85 percent of the increase in the world’s production of cars in the
past decade.
In 1978 the American economy was 15 times larger than China’s. In the next few years China’s GDP is
expected to exceed that of the US.
This is heady stuff providing astonishing details of how poorly Americans are served by their elites.
America has failed, because political elites represent only the powerful special interests that write the
country’s laws in exchange for funding the political campaigns of “lawmakers.” To divert attention from their
failures, American elites point fingers at external scapegoats. China, for example, is accused of
manipulating its currency. As Unz says, the scapegoating is political theater designed for the ignorant and
gullible.
America’s economists, or most of them, have so prostituted themselves that propaganda has become
wisdom. Most Americans believe that if China would simply let the value of its currency rise more rapidly
relative to the dollar, America’s economic woes would be at an end. It is beyond belief that any economist
could think that Americans with stagnant and declining incomes would be made better off by a sharp rise in
the prices of goods manufactured in China on which Americans are dependent, or that the US dollar’s role
as reserve currency, the main source of American power, could survive such a manifestation of Chinese
economic superiority.
Americans associate lawlessness with unaccountable governments and view China’s government as
unaccountable. However, Unz points out that it is the Bush/Obama Regime that has declared itself to be
unaccountable to both US and international law.
The demise of the War Powers Act and the Geneva Conventions, and the asserted power of the executive to
imprison without trial or charges or to assassinate any American whom the executive thinks might be a
“national-security threat” are indicative of a total police state masquerading as an accountable democracy.
In America six-year old little girls who misbehave in school are handcuffed, jailed, and charged with
felonies. Not even Hitler and Stalin went this far.
Americans have lost control of the government, and governments that are not controlled by the people are
not democracies. In America today, Social Security, Medicare, food stamps, and the entire social safety net
are threatened by the vociferous desire for war profits by armament plutocrats and by financial institutions
determined that ordinary citizens bear the cost of the banksters incompetence and fraud.
Unz’s comparison of how the Chinese media and government handled the melamine or infant formula scandal
and how the American media and government handled Merck’s Vioxx scandal is especially damning. It was
China’s controlled media and unaccountable government that punished the infant formula wrongdoers, while
America’s free press and accountable government allowed Merck to walk.
Unz’s conclusion is that it is in America, not China, where life is regarded as cheap.
Ron Unz is an American hero, and a very courageous one.
It is an even more courageous act when no one wants to hear the truth. As Frantz Fanon said, “Sometimes
people hold a core belief that is very strong. When they are presented with evidence that works against
that belief, the new evidence cannot be accepted. It would create a feeling that is extremely
uncomfortable, called cognitive dissonance. And because it is so important to protect the core belief, they
will rationalize, ignore and even deny anything that doesn’t fit in with the core belief.”
Or as it is explained to Neo in the film, “The Matrix is a system, Neo. That system is our enemy. But when you’
re inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of
the people we are trying to save. But until we do, these people are still a part of that system, and that
makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And
many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it.”
Most of the people I know personally are not willing to be unplugged. I assume my readers are, so seize the
opportunity to be further unplugged and read Ron Unz’s comparison of America and China.
Then do what you can to unplug others.
PAUL CRAIG ROBERTS was an editor of the Wall Street Journal and an Assistant Secretary of the U.S.
Treasury. His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK
Press. He can be reached through his website
Faith-Based Economics at the ECB
Europe’s Economic Maginot Line
by DEAN BAKER
In the build-up to World War II, the French military created the Maginot Line. This barrier, which utilized
state of the art military defenses, was intended to defend France from a ferocious assault by Hitler’s
armies. When the attack ultimately came, the Germans made quick work of the Maginot Line by going around
it through Belgium.
The European Central Bank’s (ECB) obsession with a 2 percent inflation target can be seen as similar to the
construction of the Maginot Line. The ECB sees achieving this inflation target as the sum total of the central
bank’s responsibilities for maintaining stable growth in Europe, just as the French generals viewed the
construction of the Maginot line as defending France from a German invasion.
The main difference is that after that German conquest, the French generals recognized their mistake. By
contrast, even after their 2.0 percent inflation obsession led to economic disaster, the people running the
ECB are still in charge and still pursuing the same policy.
At this point it is difficult to imagine what set of events in the world could persuade the ECB to pursue a
different course. As the crisis demonstrates, an improperly regulated financial and economic system can
produce massive asset bubbles. The collapse of these bubbles can lead to prolonged periods of high
unemployment and below potential output of the sort that the eurozone, the United States and the United
Kingdom are now experiencing.
This means that responsible central banks that are concerned with stable growth cannot just focus on a 2.0
percent inflation target. They must be prepared to take the steps necessary to counter the growth of asset
bubbles before they get large enough to endanger the economy. This was evident to many before the crisis;
it should be evident to everyone now.
Central banks also have the responsibility to shore up the economy and help to move it back toward full
employment. This policy can include the sort of quantitative easing designed to lower long-term interest
rates that has been pursued by the Federal Reserve Board and the Bank of England and less aggressively
by the ECB.
It should also include targeting higher inflation rates in the range of 3-4 percent, as has been advocated by
Paul Krugman, Ben Bernanke in his Princeton professor days, and Oliver Blanchard, the chief economist at the
IMF. Ken Rogoff, a former chief economist at the IMF, has suggested inflation target as high as 6 percent.
There are two reasons for targeting a higher rate of inflation. First, it will reduce real interest rates. If
businesses expect that prices will be 15-18 percent higher three years from now it will give them more
incentive to invest today, since they will be able to sell what they produce at these higher prices. Higher
inflation will also reduce debt burdens. If prices and wages rise on average by 15 percent over the next
three years, many underwater mortgages will be back above water as the house price can also be expected
to rise by 15 percent. Similarly, if wages rise by 15 percent then a fixed monthly mortgage payment will
pose a much smaller burden.
These are reasons that the ECB and other central banks should be pushing for a higher rate of inflation. But
instead of looking in this direction, the ECB is doubling down on its 2.0 percent inflation commitment. The
fact that unemployment is high and rising across the eurozone seems to have no impact whatsoever on this
policy.
In fact, the ECB is actually making things worse with the austerity policies that it is imposing on the heavily
indebted countries across the eurozone. Reductions in government spending and tax increases in the middle
of a recession have the predictable effect of slowing growth further. The ECB’s persistent refusal to act
as a lender of last resort also exacerbates the crisis by raising interest rates, and therefore debt
burdens, for highly indebted countries.
It has been roughly two years since the ECB has adopted the austerity route. The results have been almost
uniformly negative. Unemployment rates have consistently come in higher and growth lower than had been
projected. Needless to say, this also has meant that country after country has missed the deficit targets
that were supposedly the main point of the austerity plans.
If we had serious economists setting policy at the ECB, this pattern would be a basis for reconsidering the
policy. However instead of a rethink, we get a doubling down with the ECB’s leadership continually
reasserting their commitment to stay the course. (It even produced a short propaganda piece about the
“inflation monster” for the doubters.) It seems that there is no set of events in the world that can lead the
generals at the ECB to question the wisdom of the Maginot Line.
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of
Plunder and Blunder: The Rise and Fall of the Bubble Economy and False Profits: Recoverying From the
Bubble Economy.
Finance Expert: Oil Price Increase Is Being Driven By ‘Gamblers Wearing Wall Street Suits’
By Pat Garofalo on Apr 5, 2012 at 11:50 am
Republicans have been trying to pin the blame for the recent rise in oil prices on President Obama, relying on
the false claim that if Obama just allowed more drilling for oil on U.S. lands, prices would magically decline.
Speaker of the House John Boehner (R-OH) has “instructed fellow Republicans to embrace the gas-pump
anger” as they push for more drilling.
Many experts, though, have pointed out that its not for a lack of drilling that oil prices are increasing, but
rampant speculation in oil markets. Michael Greenberger, a former regulator at the Commodity Futures
Trading Commission (CFTC) who oversaw the futures markets, told McClatchy that the increase is due to
“excessive speculation” on the part of Wall Street:
“It is similar to the gambling Wall Street did on whether or not people would pay their subprime (below-
market rate) mortgages in the mortgage meltdown,” said Michael Greenberger, a law professor at the
University of Maryland and a former federal regulator of financial markets. “Now they are betting on the
upward direction of the price of oil” … “It is excessive speculation, which is a fancy word for saying that
gamblers wearing Wall Street suits have taken these markets over,” he said.
Back in February, oil prices cracked $100 per barrel despite the lowest demand since 1997.
The Obama administration has said that it will crack down on excessive oil speculation, but it’s oil speculation
task force has hardly done anything at all. The CFTC, meanwhile, has been slow to implement new rules
designed to rein in speculators that were a part of the Dodd-Frank financial reform law. Democrats have
been pushing the agency to begin that enforcement.
Tags:
• Oil
• Speculators
George Soros calls on Germany to save euro
By Agence France-Presse
Saturday, April 14, 2012 19:22 EDT
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Topics: george soros ♦ germany
US billionaire investor George Soros has called on Germany to contribute more to help save the euro,
according to an interview published in the weekly newspaper Welt am Sonntag.
“The Germans should decide if they want the euro or not. If so, they have to carry out financial transfers. If
not, they should leave theeurozone,” said Soros, also a major philanthropist and author.
If Germany chooses to ditch the eurozone, its exports would suffer as the “new German currency would
find itself at a high value.”
Soros blamed the German government and Bundesbank for putting the euro in peril over their insistence on
austerity and price stability.
“Saving and monitoring price stability worked in Germany and is leading to, in current conditions, bad luck for
Europe,” he said.
The eurozone has come under severe pressure amid alarm over the state of public finances of countries
including Greece, Ireland and Portugal.
German author Grass says Israel endangers world peace
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Reuters, 05/04 00:21 CET
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• 22:54 CET (Reuters) With £6 million bounty on his head, Pakistan militant taunts U.S.
• 22:48 CET (Reuters) Israeli and Palestinian prime ministers to meet
By Gareth Jones
BERLIN (Reuters) – Nobel Prize-winning German writer Guenter Grass has attacked Israel as a threat to
world peace and said it must not be allowed to launch military strikes against Iran, in a poem that one
German newspaper branded “anti-Semitic”.
Grass, 84, a seasoned campaigner for left-wing causes and a critic of Western military interventions such as
Iraq, also condemned German arms sales to Israel in his poem “What must be said”, published in several
newspapers on Wednesday.
His words were criticised in Germany, where any strong condemnation of Israel is taboo because of the
Nazi-perpetrated Holocaust. Grass’s own moral authority has never fully recovered from his 2006 admission
that he once served in Hitler’s Waffen SS.
“Why do I say only now … that the nuclear power Israel endangers an already fragile world peace? Because
that must be said which may already be too late to say tomorrow,” Grass wrote in the poem, published in
German in Sueddeutsche Zeitung.
“Also because we – as Germans burdened enough – may become a subcontractor to a crime that is
foreseeable,” he wrote, adding that Germany’s Nazi past and the Holocaust were no excuse for remaining
silent now about Israel’s nuclear capability.
“I will not remain silent because I am weary of the West’s hypocrisy,” wrote Grass, who won the Nobel Prize
for Literature in 1999 for novels such as “The Tin Drum” chronicling the horrors of 20th century German
history.
Israel is widely assumed to have the Middle East’s only nuclear weapons, which it neither confirms nor
denies. These could be carried by Dolphin submarines it has bought from Germany.
The Jewish state has threatened to take military action, with or without U.S. support, to halt what it sees as
a nuclear threat from Iran. Tehran says it is developing nuclear technology for purely peaceful purposes.
Germany said recently it would sell Israel a sixth Dolphin submarine and shoulder part of the cost, although
it also cautioned its ally that any military escalation with Iran could bring incalculable risks.
“ETERNAL ANTI-SEMITE”
The poem, also published in Italy’s La Repubblica, called for an international ‘agency’ to take permanent
control of both Israel’s nuclear weapons and Iran’s atomic plant.
The Welt newspaper called Grass “the eternal anti-Semite” in a front page article commenting on the poem,
which was widely circulated in advance of its publication.
“Grass is the prototype of the educated anti-Semite who means well with the Jews. He is hounded by guilt
and feelings of shame and at the same time is driven by the wish to weigh up history,” the newspaper wrote
on Wednesday.
Grass is for many the voice of a German generation that came of age during Adolf Hitler’s war and bore the
burden of their parents’ guilt.
But Grass, who for decades urged Germans come to terms with their Nazi past, lost much of his moral
authority after his belated admission in 2006 that he had once served in Hitler’s Waffen SS.
One of the most powerful organisations in Nazi Germany, the SS was first an elite force of volunteers that
played a key role in the Holocaust, operating the death camps in which millions died. But by the war’s end,
most were drafted and many under 18.
Grass said he was called up to join the SS as a teenager and insisted that he never fired a shot. But some
critics inside and outside Germany said this explanation had come too late.
Grass made the confession shortly before publishing his autobiography “Peeling Onions” which details his war
service.
Globalism's Perverse Rewards
World’s Apex Bully Leads World Into Lawlessness
by PAUL CRAIG ROBERTS
The US government pretends to live under the rule of law, to respect human rights, and to provide freedom
and democracy to citizens. Washington’s pretense and the stark reality are diametrically opposed.
US government officials routinely criticize other governments for being undemocratic and for violating
human rights. Yet, no other country except Israel sends bombs, missiles, and drones into sovereign
countries to murder civilian populations. The torture prisons of Abu Gahraib, Guantanamo, and CIA secret
rendition sites are the contributions of the Bush/Obama regimes to human rights.
Washington violates the human rights of its own citizens. Washington has suspended the civil liberties
guaranteed in the US Constitution and declared its intention to detain US citizens indefinitely without due
process of law. President Obama has announced that he, at his discretion, can murder US citizens whom he
regards as a threat to the US.
Congress did not respond to these extraordinary announcements with impeachment proceedings. There was
no uproar from the federal courts, law schools, or bar associations. Glenn Greenwald reports that the
Department of Homeland Security harasses journalists who refuse to be presstitutes, and we have seen
videos of the brutal police oppression of peaceful OWS protestors. Chris Floyd has described on
CounterPunch the torture-perverts who rule the US.
Now Washington is forcing as much of the world as it can to overthrow international treaties and
international law. Washington has issued a ukase that its word alone is international law. Any country, except
those who receive Washington’s dispensation, that engages in trade with Iran or purchases Iran’s oil will be
sanctioned by the US. These countries will be cut off from US markets, and their banking systems will not
be able to use banks that process international payments. In other words, Washington’s “sanctions against
Iran” apply not to Iran but to countries that defy Washington and meet their energy needs with Iranian oil.
According to the Christian Science Monitor, so far Washington has granted special privileges to Japan and
10 European Union countries to continue purchasing Iranian oil. Requiring countries to shut down their
economies in order to comply with Washington’s vendetta against Iran, a vendetta that has been ongoing
ever since the Iranians overthrew the Washington-installed puppet, the Shah of Iran, more than three
decades ago, was more than Washington could get away with. Washington has permitted Japan to keep
importing between 78-85 per cent of its normal oil imports from Iran.
Washington’s dispensations, however, are arbitrary. Dispensations have not been granted to China, India,
Turkey, and South Korea. India and China are the largest importers of Iranian oil, and Turkey and South
Korea are among the top ten importers. Before looking at possible unintended consequences of Washington’s
vendetta against Iran, what is Washington’s case against Iran?
Frankly, Washington has no case. It is the hoax of “weapons of mass destruction” all over again. Iran, unlike
Israel, signed the non-proliferation treaty. All countries that sign the treaty have the right to nuclear
energy. Washington claims that Iran is violating the treaty by developing a nuclear weapon. There is no
evidence whatsoever for Washington’s assertion. Washington’s own 16 intelligence agencies are unanimous
that Iran has had no nuclear weapons program since 2003. Moreover, the International Atomic Energy
Agency’s weapons inspectors are in Iran and have reported consistently that there is no diversion of nuclear
material from the energy program to a weapons program.
On the rare occasion when Washington is reminded of the facts, Washington makes a different case.
Washington asserts that Iran’s rights under the non-proliferation treaty notwithstanding, Iran cannot have a
nuclear energy program, because Iran would then have learned enough to be able at some future time to
make a bomb. The world’s apex bully has unilaterally decided that the possibility that Iran might one day
decide to make a nuke is too great a risk to take. It is better, Washington says, to drive up the oil price,
disrupt the world economy, violate international law, and risk a major war than to have to worry that a future
Iranian government will make a nuclear weapon. This is the Jeremy Bentham tyrannical approach to law that
was repudiated by the Anglo-American legal system.
It is difficult to characterize Washington’s position as one of good judgment. Moreover, Washington has
never explained the huge risk Washington sees in the possibility of an Iranian nuke. Why is this risk so much
greater than the risk associated with Soviet nukes or with the nukes of the US, Russia, China, Israel,
Pakistan, India, and North Korea today? Iran is a relatively small country. It does not have Washington’s
world ambitions. Unlike Washington, Iran is not at war with a half dozen countries. Why is Washington
destroying America’s reputation as a country that respects law and risking a major war and economic
dislocation over some possible future development, the probability of which is unknown?
There is no good answer to this question. Lacking evidence for a case against Iran, Washington and Israel
have substituted demonization. The lie has been established as truth that the current president of Iran
intends to wipe Israel off the face of the earth.
This lie has succeeded as propaganda even though numerous language experts have proven that the intention
attributed to the Iranian president by American-Israeli propaganda is a gross mistranslation of what the
president of Iran said. Once again, for Washington and its presstitutes, facts do not count. The agenda is all
that counts, and any lie will be used to advance the agenda.
Washington’s sanctions could end up biting Washington harder than they bite Iran. What will Washington do
if India, China, Turkey and South Korea do not succumb to Washington’s threats?
According to recent news reports, India and China are not inclined to inconvenience themselves and to harm
their economic development in order to support Washington’s vendetta against Iran. Having watched China’s
rapid rise and having observed North Korea’s immunity to American attack, South Korea might be wondering
how much longer it intends to remain Washington’s puppet state. Turkey, where the civilian and somewhat
Islamist government has managed to become independent of the US- controlled Turkish military, appears to
be slowly coming to the realization that Washington and NATO have Turkey in a “service role” in which
Turkey is Washington’s agent against its own kind.
The Turkish government appears to be reassessing the benefits of being Washington’s pawn.
What Turkey and South Korea face is basically a decision whether they will be independent countries or be
subsumed within Washington’s empire. The success of the American-Israeli assault on Iran’s independence
depends on India and China.
If India and China give the bird to Washington, what can Washington do? Absolutely nothing. What if
Washington, drowning in its gigantic hubris, announced sanctions against India and China?
Wal-Mart’s shelves would be empty, and America’s largest retailer would be hammering on the White House
door.
Apple Computer and innumerable powerful US corporations, which have offshored their production for the
American market to China, would see their profits evaporate. Together with their Wall Street allies, these
powerful corporations would assault America with more force than the Red Army. The Chinese trade
surplus would cease to flow into US Treasury debt. The offshored-to-India back office operations of
banks, credit card companies, and customer service departments of utilities throughout the US would cease
to function.
In America, chaos would reign. Such are the rewards to the Empire of globalism.
Obama and the neoconservative and Israeli warmongers who urge him on to more wars do not understand
that the US is no longer an independent country. America is owned by offshoring corporations and the
foreign countries in which the corporations have located their production for US markets. Sanctions on China
and India (and South Korea) mean sanctions on US corporations. Sanctions on Turkey mean sanctions on a
NATO ally.
Do China, India, South Korea and Turkey realize that they hold the winning cards? Do they understand that
they can give the bird to the American Empire and bring it down in collapse, or are they brainwashed like
Europe and the rest of the world that the powerful Americans cannot be resisted?
Will China and India exercise their power over the US, or will the two countries fudge the issue and adopt a
pose that saves face for Washington while they continue to purchase Iranian oil?
The answer to this question is: how much will Washington pay China and India in secret concessions, such as
eviction of the US from the South China Sea, for their pretense that China and India acknowledge
Washington’s dictatorial powers over the rest of the world?
Without concession to China and India, Washington is likely to be ignored while it watches its power
evaporate. A country that cannot produce industrial and manufactured goods, but can only print debt
instruments and money is not a powerful country. It is a washed-up two-bit punk that can continue to strut
around until the proverbial boy says: “the Emperor has no clothes”.
PAUL CRAIG ROBERTS was an editor of the Wall Street Journal and an Assistant Secretary of the U.S.
Treasury. His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK
Press. He can be reached through his website
Good Luck, Wisconsin
Why Scott Walker is a Classic Authoritarian
by JOHN DEAN
In my last column, I asked if Wisconsin Governor Scott Walker might be a conservative without conscience.
Stated a bit differently, my question is whether the Governor is what social science describes as a “double
high authoritarian,” an outlook that has proven itself not to be particularly well-suited for governing in a
democratic fashion. I raised this question because Walker is facing a recall vote, in which voters will decide
whether to remove him from office, on June 5.
Below, I have set forth in summary form what I discovered about Scott Walker after using Lexis-Nexis,
ProQuest, Google and similar search tools and putting my findings in the context of the relevant social-
science studies. Moreover, many people responded to my Twitter solicitation of information about Walker.
Surprisingly, to date, no one has written a truly in-depth biographical profile of Walker, so I suspect that
Wisconsin voters really do not know much about their governor.
Typologies have their problems. But based on what I found, there is little doubt in my mind that Scott
Walker is a classic authoritarian.
Walker’s Social-Dominance Disposition
In my prior column, drawing on the work of Bob Altemeyer and others, I listed traits that are consistently
revealed by social dominators, or authoritarian leaders. To earn this label, a person must show four key
traits: (1) they seek to dominate others, (2) they oppose equality, (3) they are desirous of personal power,
and (4) they are amoral. News accounts of Scott Walker reveal that he possesses all four of these defining
traits, not to mention others in the longer list I set forth in my prior column. Here, however, I will merely
note the evidence for Walker’s having a defining social-dominating disposition.
(1) Domination. Authoritarian leaders seek to control others; in short, they are social dominators. This is the
story of Scott Walker’s life. By age 7, Walker had formed a “Jesus USA” club, which was a mix of his
father’s Baptist ministry and his attraction to patriotism. By age 8, he had undertaken a door-to-door
fundraising campaign to take charge of purchasing a flag for the village hall of his small Iowa town. As a
teen, Walker sought leadership posts, which provide some control, in Boys State and Boys Nation, and
became an Eagle Scout. He attended Marquette University (but has no college degree from there or any
other school). At Marquette, he was elected to the student senate, and twice sought but failed to get
elected president of the student body. He ran for the Wisconsin State Assembly the same year that he
lost his bid to be student president at Marquette, losing the Assembly race as well.
Since then, Walker has never stopped running. In 1993, he was elected to the State Assembly, where he
remained until 2002. In 2002, he sought the post of Milwaukee County Executive, and he held that post until
he was elected Governor in 2010. This is the behavior, writ large, of a dominator.
(2) Opposition To Equality. The Oxford Handbook of Political Psychology(which is searchable) further
defines social dominators as “hard, tough, ruthless, and unfeeling toward others, as opposed to
compassionate, generous, caring, and altruistic.”
There are many examples of Walker’s harsh and uncaring treatment of those whom he does not believe to
be entitled to equality. None is more glaring than his intolerance of gays and lesbians. For example, as
Governor, he has worked to end Wisconsin’s recognition of the rights of same-sex couples. He fired the law
firmdefending the state’s domestic-partnership law. And he appointed a woman to the state’s Labor and
Industry Review Commission who believes that gays can be harassed in the workplace.
One attorney familiar with Walker’s thinking states, “Governor Walker is ideologically opposed to equal
rights for gay and lesbian and transgendered people as is everyone in his administration as far as I can tell
and they will probably want to take steps to ensure that gay and lesbian and transgendered people do not
have equal rights. Everything that Governor Walker is doing is ideological; I don’t see that his administration
has any particular respect for the law per se.”
(3) Desirous Of Personal Power. Scott Walker has been seeking personal power his entire life, and has
never stopped reaching for it. Note how Walker has worked not merely to reach higher offices, but also to
enhance his power in these offices when he occupied them. For example, as governor, Walker sought to
remove civil service jobs, in order to make them political appointments, and thus subject to his control. Most
strikingly, he has sought to undercut the public-employee unions so that he would not have to deal with them,
thus increasing his power.
Often overlooked in Walker’s infamous union-busting “budget-repair bill“ is the power grab to fill three
dozen civil-service jobs with political appointees. For instance, the bill politicized and placed under Walker’s
control functions like open-records requests, the selection of general counsels for key
agencies, and the selection of communications spokespeople in key departments. He has increased his
personal power over some fifteen state agencies, and I suspect that he is (or was, depending on the recall
vote) just getting started.
Walker’s move to break public employee unions is his most notorious personal power play. To try to prevent
the union-busting law’s passage, Democratic state senators left Wisconsin, so that the GOP-controlled
legislature could not do Walker’s bidding and ram it through. But nevertheless, using dubious parliamentary
ploys, the bill was passed by the Senate, making it a done deal. Walker’s push to get this legislation, known
as Act 10, passed into law was done in about as authoritarian a fashion as you will ever see, outside of a
dictatorship. Part of Act 10 has already been struck down by a federal judge, and, as I noted earlier, the
wisdom of Walker’s power play will be tested in the June 5th recall election.
(4) Amorality. To be amoral, of course, is to be insensitive to moral matters. A politician like Scott Walker
will wrap himself in a cloak of morality, while, in fact, acting anything but morally.
Needless to say, Walker’s policies that attack poor women by cutting off funding to Planned Parenthood; his
slashing of education budgets while giving tax breaks to wealthy corporations; and his pursuit of similar
radical Republican actions all raise serious moral issues. But different people have different moral
standards and views of such activity, so I have excluded these matters from this discussion.
Similarly, I have set aside the fact that a growing number of Walker’s closest aides are being criminally
investigated and several have been charged with, or pled guilty to, crimes stemming from actions that
occurred during Walker’s tenure as Milwaukee County Executive. Walker has hired several high-powered
criminal defense lawyers and is building a legal defense fund, but this, too, is not relevant at this time, for
little is known of this secret “John Doe” grand jury proceeding. Walker has not been charged. The grand
jury proceeding simply remains a dark cloud following him, and no conclusions can or should be drawn from it.
Nonetheless, Walker’s amorality is conspicuous. It is found in his history of ethics violations and the record
of his lying. A lengthy article could (and should) be written about both, but suffice it here to note that his
ethics problems go back to his Marquette University days, when the college newspaper called him “unfit” for
student office.
Later, in the Assembly (in 2005), Walker would earn the distinction of receiving the second-highest fine for
an ethics violation in Wisconsin history. His lying is notorious. Politifacts Wisconsin (which I am told is more
reliable than most of these sites) finds Walker to be an accomplished falsifier. With respect to 44
statements that Politifacts examined, Walker was found to have been truthful only on six occasions. The
fact that 38 statements were pants-on-fire false, false, mostly false, or half-truths is stark evidence of
amorality.
I watched a video of a Walker speech at the Goldwater Institute. He’s slick: Fast-talking, confident, and
dishonest—I watched him distort facts with which I was familiar. He spoke in mostly half-truths, and
certainly not with the kind of candor that the late Senator Goldwater expected from political figures.
Clearly, Walker has all the traits of a social dominator and authoritarian leader. More strikingly, it is also
clear that he is, in fact, what social scientists term a “double high authoritarian.”
Scott Walker Also Has Traits of Authoritarian Followers
As I mentioned in Part One in this series of columns, to fit the definition of a double high authoritarian, a
person must score highly as both a dominator/leader, and ironically, also as an authoritarian follower
(because such people see themselves running the world, and believe that others should always follow
leaders, like themselves).
Again, I listed all the traits of those who follow authoritarian leaders in that prior column. The key and
defining characteristics of such people are (1) their willingness to submit to established authority, (2) their
aggressiveness on behalf of that authority, and (3) their conventionality. Scott Walker has long shown that
he possesses these traits, conspicuously so, and thus he would likely score high on such a test.
(1) Submissive To Authority. Authority figures are parents (throughout childhood); religious officials;
government officials such as police officers, judges, and government leaders; and employers—to list a few
of the more common such positions. Authoritarian followers easily submit to such figures –which is not to say
that they will submit to any authority, but rather only those they consider to be good and compatible with
their own worldviews. News accounts reveal that Scott Walker was a “good boy” growing up. Clearly, he
worked to please his parents, and his Boy Scout and Eagle Scout superiors, and he accepted the authority of
his church elders. Since becoming involved in politics, he has accepted the leaders of the Republican Party,
particularly those with the most right-wing of views, as he has worked his way up through the ranks. While
Scott Walker plays by the rules of the authorities he accepts, because he is a dominator, it is not surprising
that his resume shows that he has constantly sought to become an authority himself.
(2) Aggressiveness On Behalf Of Authority. The aggression in authoritarian followers is largely fueled by
fear, but it is also emboldened by the abundance of self-righteousness that such people possess.
Authoritarian aggressiveness is often revealed by efforts to control others, with a recurring example the
decision to be an overly strict parent. While little has been written about Walker’s relationship with his two
sons, from watching videos of the Walker family, it appears to me that these are very obedient boys who
dare not tangle with their authoritarian father.
Another classic example of authoritarian aggressiveness is the public official who is always calling for
greater punishment for perceived and real criminals. And indeed, the most striking and telling example of
Walker’s aggressiveness on behalf of radical right wing Republican philosophy are his views on crime and
punishment.
As a member of the Wisconsin Assembly, in 1996 Walker was the moving force behind the building of a 500-
bed “Supermax” prison, which he claimed worked better than normal facilities; others had doubts. Also,
when state officials sought a 200-bed unit, Walker insisted on more than doubling the request.
Another instance of Walker’s punitive aggressiveness can be found in an examplefrom 1997, when Walker
pushed legislation that eliminated all parole, while increasing maximum criminal sentences by fifty percent.
Walker also pushed for draconian legislation that would send juvenile offenders to adult prisons at age 15,
although his colleagues in the Assembly rejected this excessively harsh approach. These, too, are examples
of classic authoritarian behavior at work.
Conventionality. Authoritarian followers act in the tradition of society’s norms and customs. They never
stand out; indeed, they are the polar opposite of rebels like the iconic long-haired hippie. The authoritarian
follower is most comfortable with a fundamentalist religion, and as a member of an organization, he or she is
most comfortable where the organization draws clear lines dividing right from wrong. Authoritarian
followers believe in “family values” and follow the “straight and narrow” in dress and behavior. Scott
Walker is Mr. Conventional. He has long been an active member of a fundamentalist church. He wears
conservative, off-the-rack clothing. His hair is always closely trimmed, and his manner polite and pleasant.
And he keeps company with like-acting and like-thinking people. (I cannot find a single radical right-wing
position that Walker rejects.)
Wisconsin’s Double High Authoritarian Governor
I have merely summarized, in the broadest of terms, the work of social science in exploring the
authoritarian disposition at work in government and politics. Similarly, I have only sketched in digest terms
the reporting I found on Scott Walker’s political career. To me, it is clear that Wisconsin has a double high
authoritarian governor, a conservative without conscience. If I lived in Wisconsin, I would be uncomfortable
with this man, whom I find more Nixonian than even Richard Nixon himself (the authoritarian leader with
whom I was, and am, so very familiar).
Please understand that these authoritarian leaders and their followers are not necessarily bad people. To
the contrary, I have many friends who fall into this group, who are wonderful people. But none of my double
high authoritarian friends are suited to serve as President of the United States, or as governor of any
state—posts which have never worked well when an authoritarian has taken charge. Democracy and
democratic institutions do not function well with dogmatic, unbending authoritarian leaders. Authoritarians
are great as dictators, and even at times benevolent. They are often outstanding at running businesses, and
when serving as high-ranking officers in the military, not to mention law enforcement. But they are failures
as presidents and governors, and as Bob Altemeyer’s work has shown, they can be dangerous to democracy.
Hopefully, one or more social scientists or political psychologists in Wisconsin, where there are many, will
step forward and tell the people of Wisconsin more about what they have on their hands, with Scott Walker
as their governor. In fact, the June 5, 2012 election is a true opportunity to discourage another leader who
is a conservative without conscience, for these leaders always have a healthy following. Altemeyer
estimates that about twenty-five percent of the population has, in varying degrees, the disposition to follow
a double high authoritarian, many blindly or simply because it assuages their fears. And, of course, these
are aggressive followers who can attract others who are unaware of the nature of the person they are
electing, thus enabling an authoritarian leader like Walker to gain ever-growing control.
Good luck, Wisconsin.
John Dean served as Counsel to the President of the United States from July 1970 to April 1973.
Krugman describes mafia fatboy from New jersey Christie. Another gangster who should be in jail.
Cannibalize the Future
By PAUL KRUGMAN
Published: April 12, 2012
One general rule of modern politics is that the people who talk most about future generations — who go
around solemnly declaring that we’re burdening our children with debt — are, in practice, the people most
eager to sacrifice our future for short-term political gain. You can see that principle at work in the House
Republican budget, which starts with dire warnings about the evils of deficits, then calls for tax cuts that
would make the deficit even bigger, offset only by the claim to have a secret plan to make up for the
revenue losses somehow or other.
And you can see it in the actions of Chris Christie, the governor of New Jersey, who talks loudly about acting
responsibly but may actually be the least responsible governor the state has ever had.
Mr. Christie’s big move — the one that will define his record — was his unilateral decision back in 2010 to
cancel work that was already under way on a new rail tunnel linking New Jersey with New York. At the time,
Mr. Christie claimed that he was just being fiscally responsible, while critics said that he had canceled the
project just so he could raid it for funds.
Now the independent Government Accountability Office has weighed in with a report on the controversy, and
it confirms everything the critics were saying.
Much press coverage of the new report focuses, understandably, on the evidence that Mr. Christie made
false statements about the tunnel’s financing and cost. The governor asserted that the projected costs
were rising sharply; the report tells us that this simply wasn’t true. The governor claimed that New Jersey
was being asked to pay for 70 percent of a project that would shower benefits on residents of New York; in
fact, the bulk of the financing would have come either from the federal government or from the Port
Authority of New York and New Jersey, which collects revenue from residents of both states.
But while it’s important to document Mr. Christie’s mendacity, it’s even more important to understand the
utter folly of his decision. The new report drives home just how necessary, and very much overdue, the
tunnel project was and is. Demand for public transit is rising across America, reflecting both population
growth and shifting preferences in an era of high gas prices. Yet New Jersey is linked to New York by just
two single-track tunnels built a century ago — tunnels that run at 100 percent of capacity during peak hours.
How could this situation not call for new investment?
Well, Mr. Christie insisted that his state couldn’t afford the cost. As we’ve already seen, however, he
apparently couldn’t make that case without being dishonest about the numbers. So what was his real motive?
One answer is that the governor is widely assumed to have national ambitions, and the Republican base hates
government spending in general (unless it’s on weapons). And it hates public transportation in particular.
Indeed, three other Republican governors — in Florida, Ohio and Wisconsin — have also canceled public
transportation projects supported by federal funds. The difference, of course, is that New Jersey is a
densely populated state, most of whose residents live either in Greater New York or Greater Philadelphia;
given that position, public transit is the state’s lifeblood, and refusing to invest in such transportation will
strangle the state’s economy.
Another answer is that canceling the tunnel allowed Mr. Christie to divert funds from that project — as his
critics have said, to cannibalize the investment — and put them into the state highway fund, thereby avoiding
the need to raise the state’s tax on gasoline. New Jersey gas taxes, by the way, are lower in real terms than
at any point in the state’s history. But, as a candidate, Mr. Christie said that he wouldn’t raise those taxes, so
cannibalizing the tunnel helped him avoid embarrassment.
The crucial point about both of these explanations is that they stand Mr. Christie’s narrative about himself
on its head. The governor poses as a man willing to make hard choices for the future, but what he actually
did was sacrifice the future for the sake of personal political advantage. He catered to national Republican
prejudices that are completely at odds with New Jersey’s needs; he cared more about avoiding
embarrassment over a misguided campaign pledge than about serving an urgent public need.
Unfortunately, Mr. Christie’s behavior is all too typical these days.
America used to be a country that thought big about the future. Major public projects, from the Erie Canal
to the interstate highway system, used to be a well-understood component of our national greatness.
Nowadays, however, the only big projects politicians are willing to undertake — with expense no object —
seem to be wars. Funny how that works.
Payola for the Most Profitable Corporations in History
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Posted on Apr 7, 2012
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By Bill McKibben, TomDispatch
This piece originally appeared at TomDispatch.
Along with “fivedollaragallongas,” the energy watchword for the next few months is: “subsidies.” Last week,
for instance, New Jersey Senator Robert Menendez proposed ending some of the billions of dollars in
handouts enjoyed by the fossil-fuel industry with a “Repeal Big Oil Tax Subsidies Act.” It was, in truth,
nothing to write home about—a curiously skimpy bill that only targeted oil companies, and just the five
richest of them at that. Left out were coal and natural gas, and you won’t be surprised to learn that even
then it didn’t pass.
Still, President Obama is now calling for an end to oil subsidies at every stop on his early presidential-
campaign-plus-fundraising blitz—even at those stops where he’s also promising to “drill everywhere.” And
later this month Vermont Senator Bernie Sanders will introduce a much more comprehensive bill that tackles
all fossil fuels and their purveyors (and has no chance whatsoever of passing this Congress).
Whether or not the bill passes, those subsidies are worth focusing on. After all, we’re talking at least $10
billion in freebies and, depending on what you count, possibly as much as $40 billion annually in freebie cash
for an energy industry already making historic profits. If attacking them is a convenient way for the White
House to deflect public anger over rising gas prices, it is also a perfect fit for the new worldview the
Occupy movement has been teaching Americans. (Not to mention, if you think about it, the Tea Party focus on
deficits.) So count on one thing: we’ll be hearing a lot more about them this year.
But there’s a problem: the very word “subsidies” makes American eyes glaze over. It sounds so boring, like
something that has everything to do with finance and taxes and accounting, and nothing to do with you. Which
is just the reaction that the energy giants are relying on: that it’s a subject profitable enough for them and
dull enough for us that no one will really bother to challenge their perks, many of which date back decades.
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By some estimates, getting rid of all the planet’s fossil-fuel subsidies could get us halfway to ending the
threat of climate change. Many of those subsidies, however, take the form of cheap, subsidized gas in petro-
states, often with impoverished populations—as in Nigeria, where popular protests forced the government
to back down on a decision to cut such subsidies earlier this year. In the U.S., though, they’re simply
straightforward presents to rich companies, gifts from the 99% to the 1%.
If due attention is to be paid, we have to figure out a language in which to talk about them that will make it
clear just how loony our policy is.
Start this way: you subsidize something you want to encourage, something that might not happen if you didn’t
support it financially. Think of something we heavily subsidize—education. We build schools, and give
government loans and grants to college kids; for those of us who are parents, tuition will often be the last
big subsidy we give the children we’ve raised. The theory is: young people don’t know enough yet. We need to
give them a hand when it comes to further learning, so they’ll be a help to society in the future. From that
analogy, here are five rules of the road that should be applied to the fossil-fuel industry.
1. Don’t subsidize those who already have plenty of cash on hand. No one would propose a government
program of low-interest loans to send the richest kids in the country to college. (It’s true that schools may
let them in more easily on the theory that their dads will build gymnasiums, but that’s a different story.) We
assume that the wealthy will pay full freight. Similarly, we should assume that the fossil-fuel business, the
most profitable industry on Earth, should pay its way, too. What possible reason is there for giving Exxon
the odd billion in extra breaks? Year after year the company sets record for money-making—last year it
managed to rake in a mere $41 billion in profit, just failing to break its own 2008 all-time mark of $45 billion.
2. Don’t subsidize people forever. If students need government loans to help them get bachelor’s degrees,
that’s sound policy. But if they want loans to get their 11th BA, they should pay themselves. We learned how
to burn coal 300 years ago. A subsidized fossil-fuel industry is the equivalent of a 19-year-old repeating
third grade yet again.
Profiling the Supremes
by ELAINE CASSEL
As a lawyer and teacher of psychology, I have more than a passing interest in the intersection of behavior
and the law. Three days of Supreme Court hearings on the Affordable Care Act (ACA) were an intellectual
feast for me. The first time I listened to the audio tapes, the day of their release, I was riveted by the
legal arguments, which ran the gamut from profound and compelling, to specious and ridiculous. On second
listening, more leisurely and over the weekend via C-Span Radio, I was struck by how personality traits
were conveyed in the justices’ comments and questioning.
This was particularly apparent in the arguments in the afternoon of Day 3, when the state of Florida argued
that the required Medicaid expansion was so coercive that it had to be stricken (unless, of course, the court
threw out the entire law, in which case the argument is moot). Little attention has been paid to this afternoon
of argument, perhaps because the issue was not as sexy as the individual mandate and severability. In short,
the law requires the states to significantly expand access to Medicaid. The federal government will pay 90%
of the cost. If the states don’t expand access, the Secretary of Health and Human Services, who
administers Medicaid, may withdraw funds from the states for services not included in the ACA.
At the outset of the argument, Justices Kagan and Sotomoyer’s empathy and compassion for “poor people,”
shown through. Why would the states not want to accept a gift from the federal government that would be
good for their citizens, they argued? Because, attorneys for Florida argued, it amounted to coercion.
When lawyers talk about coercion, the analogy of the proverbial gun to the head comes into play. Legal
coercion is hard to prove unless, the old saw goes, you can prove that someone literally held a gun to your
head and made you take some action you would not otherwise have undertaken. The gun to the head
argument was exploited by Chief Justice Roberts. Following his lead, Justices Scalia and Alito took it to such
extreme hypothetical conclusions, spinning out so many absurd hypotheticals, that the Chief Justice granted
Solicitor General Verrilli, arguing for the Obama administration, another fifteen minutes.
Justice Breyer displayed his measured and even temperament by positing that the Secretary of Health and
Human Services would be reasonable and judicious in her implementation of the requirements. Breyer
pointed out that agencies are required to administer laws fairly. Justice Alito seems personally
offended that the government would intrude upon states in such a way as to require an expansion that they
might not want or which may have strings so offensive that they may be forced, on principle, to decline to
adopt the measures and, under the law, risk losing funds other than those related to the ACC.
Justice Scalia poked his usual fun as the whole idea of providing health care to those in need (earlier in the
proceedings he suggested that the government could, if he wanted to, change laws requiring hospitals to
provide emergency services regardless of insurance status). Justice Thomas sat stone silent, reflecting his
aloofness—not for him the trenches of debate and discourse. To this listener, Justices Kennedy and
Ginsberg showed no particular personality traits as they framed their arguments in legal, not political, terms.
But the Chief Justice, who, for some reason, has always invoked in me a sense that he would be a tough man
to work around or live with, did not disappoint. His hypotheticals and arguments projected a bullying,
intimidating federal government that would hold a “gun to the head” of the states, and demand full
compliance or withdrawal of all Medicaid support. In a revealing statement he said, “I mean, if I had the
authority and I was in that position, I would use it all the time. You might — you want some little change
made? Well, guess what; I can take away all your money if you don’t make it. I win. Every time.”
Whoa! Stop tape! Was the Chief Justice projecting his own authoritarianism? As in, “If I had the power, I
wouldn’t be reasonable or judicious. I would exert power for power’s sake”? So much for being the umpire
calling “balls and strikes,” as he so famously said during his nomination hearings.
Roberts went on to project an authoritarian and arbitrary view of the federal government. Surely the HHS
secretary would do as he would do. “So, why shouldn’t we be concerned about the extent of
authority that the government is exercising, simply because they could do something less? We have to
analyze the case on the assumption that that power will be exercised, don’t we?”
Justices Kagan and Breyer piped up and pointed out that there was no evidence that the government has
ever acted with vengeance to “punish” noncompliance with a Medicaid requirement, but Roberts and Scalia
headed headed them off at the pass.
Having projected the government as a bully, Roberts casts the states in the victim role. “Of course no State
is going say, okay, go ahead, make my day, take it away. They’re — they’re going to give in.” Of course.
Roberts is nothing if not certain of his conclusion. Justice Roberts pressed Verrilli to name him one case
decision that proved the government would not retaliate against a state by defunding Medicaid.. Verrilli
couldn’t name a case precedent, so the absence of evidence became evidence. Said Roberts, “And you cannot
-you cannot represent that the Secretary has never said: And if you don’t do it, we are going to take away all
the funds.” Roberts brings back the gun to the head analogy, suggesting the no one has been shot with the
(government’s) gun because the victim (state) has “given up” its wallet. It had no choice.
At this point, you may be thinking that Roberts will condemn the bullying gun-to-the head government, but no!
He surprises us! “I’m not saying there’s anything wrong with it.” Then mocking Verrill, who tries to stop the
runaway metaphor of government as gun-toting bully butts in, “It’s not coercion, Mr. Chief Justice.” Oh,
really, Roberts said? “To say I’m going to take away all your funds, no matter how minor the infringement?”
No matter that there is not a shred of evidence that the federal government ever has or ever will cut off a
state from Medicaid funds for “minor infringement” of its rules, the government’s policy being to provide
services to those who need them most.
But Roberts is not done yet. His assigns a purpose for the bullying government of his hypothetical. The
federal government, having given the Medicaid funds which the state and its citizens got used to and,
presumably, liked, may decide to lower its “contribution to Medicaid and leave it up to the states because we
{the federal government} want the people to be mad at the States when they have to have all these budget
cuts to keep it up, and not at the federal government.” Not surprising, Verrilli has no effective counter to
this proposition that the federal government would give something, and take it away for the purpose of
(“because”) turning the American people against the state governments.
So here is Roberts’ explanation for the expanded Medicaid provision: In order to turn the people against
their states, tell the states they have to put more people on the Medicaid rolls and pay 90 % of the cost.
The states may not want to do it, well, just because. But the people will probably like it. Then just when the
people start to like it, the federal government tells the states it has no more money to fund the expansion.
The people will turn against the states or, at least, be “mad” at them. Roberts starts short of giving any
plausible motive for why the federal government would want to pit citizens against their states.
With recent polls indicating that a majority of Americans expect the Court to rule along partisan lines, the
Court’s reputation is already compromised. It began, to be fair, before Roberts’ rule, with Bush v. Gore. It
continued, under his watch, with Citizens United, which struck down decades of campaign finance laws
designed to promote fair elections and true representative government. Those who suggest that Roberts is
concerned for the reputation of the court and for his own legacy and, if believes the individual mandate is
not constitutional, would refrain from supporting a decision that would strike the entire law, should pay
attention to the personality behind the robe. Florida v. Department of Health and Human Services may well
be the next blockbuster ruling from justices who vote their politics and their personalities.
Elaine Cassel practices law in Virginia and the District of Columbia, teaches psychology, and writes about
psychology and the law. She is the author of Criminal Behavior (2007, Psychology Press) and The War on Civil
Liberties (2004, Lawrence Hill) and numerous articles on psycholegal issues.
Published on Saturday, April 14, 2012 by The Nation
The Federal Reserve Turns Left
by William Greider
Washington is lost in a snarl of confusion, cowardice and wrongheaded ideological assumptions that threaten
to keep the economy in a ditch for a long time. That prospect is not much discussed in the halls of Congress
or the White House. It’s as though the crisis has been put on hold until after the presidential election.
Federal Reserve Board Chairman Ben Bernanke. REUTERS/Molly Riley
As almost everyone understands, nothing substantial will be accomplished this year. President Obama is
campaigning on warmed-over optimism and paper-thin policy proposals. Republicans propose to make things
worse by drastically shrinking government spending, when the opposite is needed to foster a real recovery.
The president, like the GOP, embraces large-scale deficit reduction. In these circumstances, it’s just as
well that the two parties cannot reach agreement. After the election they may make a deal that splits the
difference between bad and worse. In the worst case, they might inadvertently tip the economy back into
recession.
In this sorry situation, there is really only one governing institution with the courage to dissent from the
conventional wisdom—the Federal Reserve. The central bank declines to participate in the happy talk about
recovery or in the righteous sermons attacking the deficit. In its muted manner, the Fed keeps explaining
why the house is still on fire, why more aggressive action is needed, and is gently nudging the politicians who
decide fiscal policy to step up. But its message is ignored by Congress and the president and viciously
attacked by right-wing Republicans who say, Butt out.
The stakes in this elite dialogue are enormous. The outcome will be more meaningful for ordinary citizens
than any other issue at play in this year’s campaign. If the Fed is right and politicians refuse to act,
Americans may be condemned to a bitter slog through many years of stagnation.
Japan in the 1990s is the appropriate comparison. After its financial bubble burst, Japan saw its “lost
decade” stretch into fifteen years of stunted growth. Its central bank responded hesitantly, and its
monetary policy proved ineffective—rendered impotent by a “liquidity trap,” a condition identified by John
Maynard Keynes. The United States experienced a similar fate in the Great Depression of the 1930s. As an
economics professor, Fed chair Ben Bernanke is a scholar of that period. He is determined not to let it
happen again. A decade ago, he scolded Japanese authorities for failing to be more imaginative and
aggressive. They needed “the courage to abandon failed paradigms and to do what needed to be done,”
Bernanke advised. His model was Franklin Roosevelt, whose “specific policy actions were, I think, less
important than his willingness to be aggressive and to experiment—in short, to do whatever was necessary
to get the country moving again.”
Maybe the Fed chair should give the same lecture to American politicians. But Bernanke is at risk of
embarrassment himself: despite the Fed’s firepower, it has been unable to restart the economy. And
monetary policy is running out of gas. Five years ago, in the heat of crisis, Bernanke’s response was awesome.
The Fed created trillions of dollars and flooded the system with easy money—enough to stabilize financial
markets and rescue wounded banks. It brought short-term interest rates down to near zero and long-term
mortgage rates to bargain-basement levels. It provided a huge backstop for the dysfunctional housing
sector, buying $1.25 trillion in mortgage-backed securities, nearly one-fourth of the market.
Flooding Wall Street with money saved the banks, but it didn’t work for the real economy, where most
Americans live and toil. The housing sector kept falling. The Fed knows (even if politicians do not) the danger
of sliding into a liquidity trap, which would utterly disarm its monetary tools (Charles Evans, president of the
Chicago Federal Reserve Bank, thinks the trap has already closed). So the Fed wants Congress and the
White House to borrow and spend more, which, when the private sector is stalled, only the government can
do. To advance this cause, the central bank is promoting its recent white paper on housing, proposing, ever so
gingerly, the heretical remedy of debt forgiveness for the millions of homeowners facing foreclosure.
The august central bank is engaged in a startling role reversal. It has turned left, so to speak, abandoned
old positions on fundamental matters and endorsed Keynesian principles it once spurned. Bernanke would
doubtless protest that this is not about left or right, that the Fed is simply doing what it’s supposed to do in
a crisis—using the stimulative power of money creation to act as “lender of last resort.” Nevertheless, for
nearly three decades, first under Paul Volcker and then Alan Greenspan, the Fed did pretty much the
opposite. It was the conservative authority that dominated policy-making, scolding politicians for their
spending excesses and threatening to punish over-exuberant growth by raising interest rates.
A tidal shift in governing influence is under way, because monetary policy is now eclipsed. As the central
bank loses control, the stronger hand shifts to the fiscal side of government. That seminal insight originates
with economist Paul McCulley, retired after many years as Fed watcher for PIMCO, the world’s largest
bond fund. McCulley is a Keynesian who never bought into the ideological fantasy of self-correcting markets.
His views won respect at the Fed because he was right. Only politicians still don’t get it. After thirty years
of deferring to conservative orthodoxy, both parties are afraid to break from the past. While the Fed
pushes for fiscal expansion, Congress and the president remain obsessed with deficit reduction.
“This was not supposed to happen,” McCulley observes. “The fiscal authority was always supposed to be
afraid of the Fed. The Fed would say, Don’t do this, don’t do that. And the fiscal side would back off. Now
you have a situation where monetary policy is effectively impotent and the Fed is openly inviting the fiscal
side to do what for decades the Fed told it they couldn’t do.” The “missing partner,” McCulley says, is the
fainthearted politician who clings to old dogma about fiscal rectitude, even though the crisis has made those
convictions “irresponsible.”
As a longstanding critic of the Federal Reserve, I am experiencing a role reversal of my own. In the new
circumstances, I find myself feeling sympathy and a measure of admiration for Bernanke’s willingness to
stand up for unorthodox ideas and to switch sides on the sensitive matter of debt reduction for failing
homeowners. For many years, I have assailed the institution’s unaccountable power and anti-democratic
qualities, its incestuous relations with powerful banks and investment houses. Those flaws and contradictions
remain unreformed, yet I now think the country needs a stronger Fed—a central bank not afraid to use its
awesome powers to help the real economy more directly.
People ask, How come the Federal Reserve can dispense trillions to save Wall Street banks but won’t do the
same to rescue the real economy? Good question. They deserve a better answer than the legalisms provided
by the Fed. At this troubled hour, the Federal Reserve should find the nerve to abandon “failed paradigms”
and to use its broad powers to serve a broader conception of the public interest.
* * *
The Fed belatedly turned its attention to the foreclosure crisis when it realized that the housing sector,
clogged with millions of failed mortgages and vacant houses, was a big part of why Bernanke’s monetary
policy failed. Housing, of course, is an issue that belongs to the fiscal side of government, but the Fed can
help out because its “dual mandate” in law requires monetary policy to support both maximum employment
and stable money. If the housing market does not get well, Fed experts reasoned, there will be no recovery.
Though it seemed out of character for the austere central bank, the Fed has staged its version of a media
blitz on behalf of troubled homeowners. In the span of seven days in January, two governors from the
Federal Reserve Board in Washington and three presidents from the twelve regional Federal Reserve
Banks delivered strong speeches on how to stop the bleeding and revive housing. They asked the elected
politicians to consider a broad campaign to reduce the principal owed by the 11 million homeowners who are
underwater, owing more on their mortgages than their homes are worth. Most of them can’t sell and can’t
keep up with their payments, and are thus doomed to foreclosure.
All this was explained in the white paper Bernanke sent to Capitol Hill, which explained why cleaning up the
housing mess is necessary for a “quicker and more vigorous recovery.” Housing advocates and community
activists had been telling the central bank the same thing since the collapse began. Fed governors listened
politely but never responded—until now. If nothing changes, the white paper warned, market adjustments
“will take longer and incur more deadweight losses, pushing house prices still lower and thereby prolonging
the downward pressure on the wealth of current homeowners and the resultant drag on the economy at
large.”
* * *
The white paper was hedged with lots of qualifiers, but it read like a handbook for recovery. A prime mover
behind the initiative was William Dudley, president of the New York Fed. A Goldman Sachs alumnus, Dudley
is first among equals, because the New York Fed is always closest to Wall Street. Dudley suggested $15
billion in bridge loans to tide over unemployed homeowners. He urged Fannie Mae and Freddie Mac, the two
government-sponsored enterprises (GSEs) now in conservatorship, to loosen their tightfisted control over
mortgages and reduce outstanding balances on delinquent loans—which most likely will never be repaid
anyway.
“I am uncomfortable with the notion that ‘underwater’ borrowers who owe more on their mortgages than
their homes are worth should have to go delinquent before they have a chance of securing a reduction in
their mortgage debt,” Dudley told an audience of New Jersey bankers in January. The standard objection
to debt reduction is “moral hazard”—the fear that it will encourage bad behavior by other debtors. Dudley
dismissed this as overblown. Most people in trouble, he said, are victims of bad luck—they bought their
house at the peak of market prices or they became unemployed through no fault of their own. “Punishing such
misfortune accomplishes little,” he said.
Dudley’s remark suggests a different tone at the Fed, one more sensitive to the human dimensions of
economic crisis. Governor Sarah Bloom Raskin, who was appointed to the Federal Reserve Board by Obama,
delivered an unusually caustic message to bankers last year. She is pushing substantive penalties for
banking-sector abuses—the regulatory diligence neglected by the Greenspan Fed. “In the housing sector,
we traveled a very low road that had nothing to do with looking out for the greater good,” Raskin declared.
“On the contrary, there were too many people in all of the functional component parts—mortgage brokers,
loan originators, loan securitizers, subprime lenders, Wall Street investment bankers and rating agencies—
who were interested only in making their own fast profits…. Now it is time to pay back the American
citizenry in full.”
A sense of moral resonance runs through the white paper. Fairness, it turns out, is an economic variable. So
are the social consequences of doing nothing. The foreclosure mess, the Fed noted, hurts innocent
bystanders when their neighborhoods are ruined by other people’s failure. Towns burdened by lots of empty
houses lose property-tax revenue needed to sustain public services. The foreclosure process piles up
“deadweight losses” in which nobody wins, not even bankers.
Mortgage relief, on the other hand, in effect redistributes income and wealth from creditors to debtors.
“Modifying an existing mortgage—by extending the term, reducing the interest rate, or reducing principal—
can be a mechanism for distributing some of a homeowner’s loss (for example, from falling house prices or
reduced income) to lenders, guarantors, investors, and, in some cases, taxpayers,” the Fed document
explained. Both the lender and the borrower can gain from reducing the size of an underwater mortgage,
the Fed asserted. “Because foreclosures are so costly, some loan modifications can benefit all parties
concerned, even if the borrower is making reduced payments.”
Refinancing at a lower rate and reducing the principal allows a family to keep its home with the promise of
regaining equity as they pay down the more affordable mortgage. The modification can also restore the loan
as a profitable investment for lenders, who will gain a greater return than they would if they had let the
mortgage slide into foreclosure. Writing it down acknowledges that the original debt was never going to be
repaid anyway. The lender suffers an accounting “loss” on the forgiven debt, but in real terms earns back
more.
The same logic can apply to the economy as a whole, the Fed explained. The short-term costs of adjustment
are upfront for lenders, but the long-term benefits will be much greater for the overall economy if clearing
away bad debt revives the housing market. “Greater losses…in the near term might be in the interests of
taxpayers to pursue if those actions result in a quicker and more vigorous recovery,” Fed governors
concluded. Which would taxpayers choose? Reducing deficits or achieving “a quicker and more vigorous
recovery”? I feel certain most people would choose jobs over balanced budgets. But we don’t really know
what the people think, because the choice is never put to them in those terms. Neither political party has the
nerve, and the media have failed to do so. It has fallen to the cloistered central bank.
For most Republicans the Fed’s message is alarming. It sounds suspiciously liberal. The Wall Street Journal
raked Bernanke over the coals for his “extraordinary political intrusion,” denouncing the white paper as “a
clear attempt to provide intellectual cover for politicians to spend more taxpayer money to support housing
prices.” In a stern letter Senator Orrin Hatch told the Fed chair to back off. “I worry that…your staff’s
housing white paper…treads too far into fiscal policy, and runs the risk of being perceived as advocacy for
particular policy options,” Hatch wrote. Some GOP presidential hopefuls had uglier things to say about
Bernanke.
The Fed did not push back. It could have replied that it has a direct stake in solving the foreclosure mess—
the clogged housing market is a principal reason Bernanke’s monetary policy failed to revive the economy.
The chair had assumed that, as the Fed brought mortgage interest rates below 4 percent, homeowners
would rush to refinance. The savings would give them new disposable income, thus increasing aggregate
demand for the weakened economy. The lower rates would trigger a wave of home buying and building,
igniting the rebound in real estate. Housing has always been the classic channel by which the Fed has
stimulated recovery, which it does by reducing the cost of credit. This time it didn’t happen, because the
channel was blocked. One explanation is that the Obama administration and Congress were standing in the
way, nullifying Bernanke’s accomplishment. Bankers, investors and especially Fannie Mae and Freddie Mac,
were preventing homeowners from taking advantage of the reduced rates. They threw up various obstacles
to refinancing and squeezed borrowers, trying to collect the last drop from homeowners before
foreclosure. This is shortsighted politics, resisting immediate losses when doing so prevents the larger
rewards of a genuine recovery. To put it another way, government has done a lot to protect the creditors
from the costs of their misadventures. For the borrowers, not so much.
From the start, the administration has protected the bankers and other financial players, who have resisted
the painful reckoning needed to unfreeze the housing sector. Presumably, the White House and Treasury
feared that relief for debtors would threaten bank revenues, maybe their solvency. The GSEs, which
guarantee 80–90 percent of mortgages, have cost the taxpayers some $150 billion. Congress gave them
stern instructions to stop the losses. Obama has danced on both sides of the issue. He has launched several
programs that promised to rescue homeowners, but he never used the full power of his office to force the
financial sector into cooperating. Housing advocates thought Obama’s initiatives seemed designed to fail, and
one by one, they have.
* * *
Early in his presidency, Obama made fateful choices that have come back to haunt the country. He and his
advisers, joined by the Federal Reserve and other regulators, decided to give the fragile financial sector
“forbearance.” That is, they looked the other way. It was a banker’s version of “don’t ask, don’t tell.”
Government has given generous interpretations to the wounded balance sheets of the largest banks.
Examiners have not challenged toxic assets booked at inflated valuations. The assumption was that over time
the economy would recover and so would the worth of those assets, especially in housing. But that hasn’t
happened. The result is a blanket of leftover debt, which is still burdening the economy.
Mitt Romney described this with impressive clarity while campaigning in Florida. “We’re just so
overleveraged, so much debt in our society, and some of the institutions that hold it aren’t willing to write it
off,” he told a foreclosure forum. “The banks are scared to death, of course, because they think they’re
going out of business…. They just want to pretend all of this is going to get paid someday so they don’t have
to write it off…. This is cascading throughout our system, and in some respects government is trying to just
hold things in place, hoping things get better…. My own view is you recognize the distress, you take the loss
and let people reset. Let people start over again…. This effort to try and exact the burden of their
mistakes on homeowners and commercial property owners, I think, is a mistake.”
Over the past four years, a substantial portion of overvalued mortgages have migrated onto public balance
sheets and are guaranteed by the GSEs. So taxpayers are on the hook for losses, one way or the other. The
economy would benefit if these uncollectible loans were cleared away. But who wants to tell the taxpayers
they are picking up the tab?
The government’s vast holdings in fact have created another obstacle to housing recovery. Thanks to the
Fed, Washington is the 800-pound gorilla now holding about 20 percent of the secondary market in
mortgage-backed securities (MBS). That may inhibit private investors from restoring normal trading on
their own. In past financial disasters, like the savings and loan crisis of the 1980s, regulators swiftly
disposed of government-held assets acquired from failed banks. This time, government has held on too long.
Eric Rosengren, president of the Boston Federal Reserve Bank, explained the problem. “One of the big
mistakes the Japanese made,” he said, “was they kept a huge inventory of problem real estate loans at
commercial banks and government agencies. Their housing market didn’t come back because everyone was
waiting for the next shoe to drop. When were the government and banks going to dispose of those loans?
You don’t want a situation where there is a huge overhang of real estate loans with government agencies as a
very large seller.”
The Obama administration was warned of this risk early by Sheila Bair, chair of the FDIC, and Elizabeth
Warren, chair of the Congressional Oversight Panel, as well as numerous housing advocates. They urged
Obama to clean up the foreclosure crisis upfront to generate a quicker recovery. The warnings were not
heeded. The pattern is not entirely clear, but it suggests a government decision made somewhere to
transform private liabilities into public obligations. Banks repackaged MBS and sold them to Fannie and
Freddie. The GSEs applied the government guarantee and sold the MBS to the Fed, which now has $850
billion worth of them on its balance sheet. The Fed is thus directly implicated in the government’s tolerance
for wishful thinking.
The extent of likely losses is evidently not known. The New York Fed, I learned, did not examine the MBS it
purchased to find out how many have inflated prices or are burdened by too many underwater borrowers
who can never repay them. I was told the Fed didn’t bother to look further because the securities are
guaranteed by Fannie and Freddie. That seems like ludicrous reassurance—one federal agency guaranteeing
the holdings of another agency. The taxpayers are thus on both ends of the transaction and certain to lose if
the securities turn out to be duds.
Instead, the problem is passed around like a hot potato. The Fed creates the money and buys a trillion
dollars’ worth of MBS from Fannie and Freddie. Thanks to the Fed’s vast holdings, the securities are trading
above par. Thanks to its interest income from the MBS, the Fed makes a profit, about $70 billion a year. At
the end of the year, it remits the money to the Treasury, which uses it to offset budget deficits. All three
agencies are handling the public’s money but from narrow-minded, self-protective perspectives. A more
rational response, Paul McCulley suggests, would be to take the Fed surpluses and use them to finance a
massive write-down of mortgage debt by the GSEs. Alas, in the bizarre mechanics of federal accounting, no
one knows how to get the money from here to there.
The Federal Reserve should act because nobody else will. That sounds unfair, since the Fed has already
taken heavy flak for poaching beyond its traditional domain. Further experiment will enrage right-wing
critics, but the central bank is running out of options. Monetary policy-makers say they face formidable legal
limits that people like me don’t appreciate. But the Fed still has enormous leverage. I believe what Wall
Street financiers tell me: the Fed can usually find a way to accomplish what it really wants to do. In this
case, it can break the political impasse and goad other parties into taking action. That does not require it to
violate the Federal Reserve Act. It does require reinterpretation of the vaguely defined “dual mandate,”
which has always been heavily biased in favor of Wall Street finance over the real economy. If stagnation
drags on for years, tearing up society and destabilizing politics, demands for more radical action will swell
and eventually overwhelm the old restraints.
Here is a modest example of what the Fed could do to shake up the system and help housing revive. It could
announce its intention to buy only new mortgage-backed securities that have been subjected to the process
of refinancing and modification to establish positive equity and more realistic valuations. The mere
announcement would cast a cloud over the existing stock of GSE mortgages and probably trigger a wave of
market-driven mortgage adjustments. The Fed, in effect, would not only provide a model for debt write-
downs generally but help create the market for them. The Fed’s presence would assure people the process
does not threaten the banking system. For distressed homeowners, it would amount to redistribution of
income and wealth—sharing the costs of the financial catastrophe among other players instead of dumping all
the pain on borrowers. Unilateral action would send a cleansing shock wave through the political system.
If this country ever gets back to a time when real questions are asked about democracy and our unrealized
aspirations, people and politicians will have to talk about the Federal Reserve and its “money power.” I have
a hunch current events are educating citizens and their elected representatives toward that day. It no
longer makes sense to keep fiscal and monetary policy separate, pulling the economy in opposite directions.
The present crisis suggests that monetary tools should be coordinated with the fiscal side. How this could
be done in a democratic way is a tough question, but it cannot be answered until people and politicians are
educated far beyond their primitive level of understanding.
The other promising challenge is to convince ourselves that money created by government really belongs to
the people. Could it be used—judiciously—to finance long-term public projects, like infrastructure and high-
speed rail? The government as employer of last resort? Make your own list of what the nation needs.
Imagine if highest-priority projects were financed with the new money mysteriously created by the mighty
Federal Reserve. That would be a future worth arguing over.
© 2012 The Nation
William Greider is national affairs correspondent for The Nation. He is author of "Secrets of the Temple:
How the Federal Reserve Runs the Country" and, most recently, "Come Home, America: The Rise and Fall
(and Redeeming Promise) of Our Country."
Published on Saturday, April 7, 2012 by Common Dreams
Single Payer Doctor Carol Paris Packs It Up
by Russell Mokhiber
Dr. Carol Paris is a psychiatrist. She’s practiced for 13 years in southern Maryland. And she’s fought hard
for a single payer system.
Dr. Carol Paris is arrested for disorderly conduct outside of a U.S. Senate office building Tuesday, May 5,
2009 for speaking out at Sen. Max Baucus' Congressional hearings on health care reform. (Photo/South
Maryland News) She’s even been arrested in Congress for speaking out for single payer. But now, she’s had
enough.
She’s closing her practice.
And moving it to New Zealand.
“I’m so tired and weary of trying to practice sane, passionate, good medicine in this insane health care
system in the United States,” Paris said last month in an interview at Union Station before walking over to
protest in front of the Supreme Court against the Obama health care law and for single payer. “It impairs
my ability to practice in a way that is ethical and passionate. I have a few years left in me to practice. And I’
ve decided see what it is like in another country. I have a couple of friends who are psychiatrists who have
done a sabbatical in New Zealand. And they said they are so sad to be back in the United States practicing
because it was so much more sane and caring in New Zealand. I’m going to see what it is like for my own
mental health.”
“The insanity here is that we have a system of financing health care in this country that is all about profit for
corporate America and not about the health care of the people,” Dr. Paris said. “It is opposed to the health
care of the people of America. You can’t be about profit and be about a social service.”
“Every day, I spend more time helping my patients figure out how to game the system, how to maneuver the
system of health care insurance,” Dr. Paris said. “Maybe they can afford to see me and maybe afford
medicine, but they can’t afford therapy. So, I’m robbing Peter to pay Paul.”
“Any recommendations I make for my new patients is based on the assumption that they will have no health
insurance tomorrow.”
“I can’t speak to the system they have in New Zealand,” she said. “But the sense that I have is that the
cultural imperative is premised on fairness. They argue about what is fair in New Zealand. I find that
fascinating. I want to visit a country where people argue about what is fair instead of engage in political
rhetoric about liberty and freedom.”
Does Dr. Paris feel any pangs of guilty about throwing in the towel?
“Six months of the year I’ll be back in Nashville, not working in the health care system, but working as an
advocate supporting the effort to get single payer in the United States,” Dr. Paris said. “If we are so
fortunate to accomplish that task before I am older and grayer, then I will practice medicine in the Untied
States again. But not until then.”
Rewriting the Rules of the Global Economy - Creating Economics That Improve People's Lives
Saturday, 14 April 2012 10:44 By Tory Field and Beverly Bell, Other Worlds | "Birthing Justice" Series
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Deborah James. (Photo: Other Worlds)Rather than having these people inside the Beltway be the experts on
the issue... we ask: How can we empower the people who are actually affected by the issues to be the
spokespeople?" – Deborah James
Ask just about anyone about the "99%" these days and, regardless of how they feel about the Occupy
movement, they'll probably acknowledge the increasing concentration of wealth and power that the past few
decades have brought. Occupy has successfully propelled issues of inequality and corporate control to
mainstream consciousness, here in the belly of the beast, in the nation that has been pivotal to defining the
world economic system.
The current popular US dissent over the extreme concentration of wealth and the marginalization of the
voices of the majority has long precursors in US social movements. The farmers' movements of the 1870s,
the populist movement of the 1890s, the Industrial Workers of the World (Wobblies) and other militant
labor unions from the dawn of the 20th Century through the 1950s, the civil rights and Black, Chicano, and
Native nationalist movements from the 1960s on, and many other social movements... all have been rooted in
calls for a more equitable division of power and economic resources. Parallel struggles, in many different
forms, have occurred throughout the world.
The global justice movement, also known as the anti-globalization movement, exploded around the global
South in the 1980s, when new draconian reforms demanded by the World Bank and International Monetary
Fund (IMF), as conditions for loans, destroyed national economies and the lives of those within them. The
World Trade Organization meeting in Seattle in 1999 and the World Bank and IMF meetings in Washington
in 2000, when hundreds of thousands of residents of the US and Europe turned out into the streets to
protest the trade and financial regimes, marked something new: active alliance from the global North. Since
then, organized populations everywhere have worked in their own countries and transnationally to subvert
the rules of the global economy, where the wealthiest citizens, corporations, and counties make the decisions
for all of us. The people's movements have reminded us that economic globalization, which we are told is the
only possible economic order, only commenced at the end of World War II, and that we do not have to
accept it as it currently exists.
Those who are flooding streets today in Spain, Portugal, and Greece, and the millions who have preceded
them around the world, all posit an alternative vision for economies: that they be just, that they provide for
all without exploitation, that they place the well-being of human beings and the environment over profit, and
that everyone gets to be part of shaping them. They believe that economic relationships should be driven by
our desire to nurture each other and our communities, not by the competition and greed often underlying the
corporate market. And they have won dramatic victories.
Deborah James has been a leader in the global movement for economic justice for decades. Today she
serves as Director of International Programs at the Center for Economic and Policy Research, where she
campaigns against the expansion of the World Trade Organization (WTO) and for improved US policy in
Latin America. Below she speaks about how international financial institutions hinder countries' efforts at
poverty alleviation, instead prioritizing corporate interests. She also describes citizens' efforts to oppose
the power of these institutions, and tells of the countries that have made strides toward freeing themselves
from the economic chains, providing inspiration to us all.
Deborah James | Washington, DC, USA
To start understanding what's wrong with the international financial institutions [IFIs], we need to look at
why we actually need economies to function.[1] The most important economic issues to most people are
whether they are able to get decent jobs and whether they are able to lift themselves out of poverty.
In writing the rules for economies, the International Monetary Fund [IMF] and WTO [World Trade
Organization] are major proponents of neoliberal ideology. That ideology is based on the theory that slashing
government spending, reducing tariffs, privatizing public resources, and promoting corporate investment
will result in higher economic growth, and that this will eventually result in a reduction in poverty because a
rising tide lifts all boats. This contrasts with more progressive viewpoints that focus on reducing inequality
by investing in health care, education, and opportunities for the poor.
The mandate of the IMF is to help countries overcome short-term financial difficulties by giving out loans.
[2] However, these loans are only provided if countries restructure their economies. That is, they have to
adhere to these neoliberal economic policies, like cutting government spending in areas such as education and
health care, to regain what is called "fiscal discipline," which means not spending more money than you are
taking in. The problem is that the result in many countries has actually been a reduction of growth and
development – stagnant wages, more unemployment. Thus, while the creditors are bailed out by the IMF,
often the borrowing country is unable to repay the loan, resulting in an endless cycle of impoverishment and
indebtedness.
Similarly, the World Trade Organization develops and enforces rules for trade and investment. It favors
rights for corporations to trade over the rights of governments and peoples to develop healthy and
sustainable economies.[3] We know that trade can be an engine for growth if used strategically by a
country; but trade can also be a vehicle to boost corporate profits that actually limits the ability of local
economies to develop, and pits workers against each other in a race to the bottom.
So the evidence shows that the extreme neoliberal model has actually failed to produce economic growth
and has exacerbated inequality. It's causing the biggest distribution of wealth – away from the majority of
people and into the pockets of big corporations – in the history of the modern world. However, no matter
what evidence neoliberals are shown to the contrary, they still promote this model because it's in the
interest of the corporations that are driving their agendas.
Fortunately, there's a lot of questioning of neoliberalism now. Latin America and Asia are two regions that
have largely paid off their loans and liberated themselves from the IMF in the last decade or two, and that
has had a huge impact. Asia experienced a severe economic crisis in 1997; countries like Malaysia that broke
with the IMF and took care of their domestic economy before paying off foreign investors actually did
better than the ones that followed the IMF's economic advice. Since then, much of Asia has decided that
they're never going to be subject to this foreign economic intervention again, and they've built up
tremendous economic reserves so they don't ever have to go ask for a bailout. It's been a very good thing.
They've had fairly decent economic growth over the last 15 years or so, and lifted millions and millions of
people out of poverty.
We've seen big victories within our hemisphere as well. One was the defeat of the proposed Free Trade
Area of the Americas in the early 2000s. Another example was in 2001 when Argentina broke with the IMF
and told them it wasn't going to pay foreign investors before investing in its own domestic economy. In the
last 10 years, Argentina has been one of the fastest growing economies in Latin America and has lifted 10
million people out of poverty because of that faster growth. Similarly, in spite of the fact that Venezuela has
been quite hard hit by the global recession, they've lowered their poverty rate by more than half and
extreme poverty by even more than that in the last decade. In fact, during the 80's and 90's, most of the
region experienced economic stagnation under IMF agreements. But now, most of Latin America has paid off
its debts to the IMF, and is no longer under its constraints. The people have elected leftist governments
that focus on building relationships among countries in the region, rather than being too dependent on the
United States. Now growth is rebounding, unemployment has been reduced, and countries have made great
strides in reducing poverty.
Unfortunately, many African countries are still subjected to IMF policies and are being left behind. And
now, the IMF was put in charge of managing the bailouts of many European countries, and they are being
subjected to austerity programs, which are wreaking havoc on developed and developing countries alike.
Globally we have a very important movement to get outstanding debt to the IMF cancelled, called the
Jubilee movement. They've achieved important victories for many poor countries by freeing poor nations to
be able to use their own resources for their real economic needs instead of paying the IMF. Unfortunately,
we don't actually have a movement focused on challenging the IMF's fundamental power, and I think we
need to create that. It's not just about debt cancellation, but taking the IMF out of the business of running
economies around the world.
And at a time when countries are still suffering from the global crises, and governments are imposing
"austerity" instead of spurring development through investment, we need a global movement for fiscal
stimulus – for the idea that government funds should be invested where the public will benefit the most, like
health care and education and ensuring food security. Unemployment benefits create far more jobs than tax
breaks, because those who receive these benefits generally have to spend their money immediately.
Economists know this; when politicians argue in favor of tax cuts to spur growth, they are just arguing in the
interests of corporate profit, not reflected in any economic reality. Unfortunately, because many people in
progressive movements don't understand how important growth is to poverty reduction, we often spend
more time fighting over specific cuts or programs rather than working together to demand government
investments that would benefit the entire economy.
Another key global justice campaign is to stop the expansion of the WTO agreement through what's called
the "Doha Round" of negotiations, and to roll back existing WTO rules that limit governments' abilities to
manage crises. Fortunately there's a movement focused on this, the Our World Is Not for Sale global
network. It's comprised of organizations from 50 different countries. After nearly a decade of struggle, it
looks like we have a chance of stopping the expansion of the WTO again this year – permanently this time.
The solution is not to have no global trade rules; we need to have rules disciplining corporate behavior. But
we need a new institution run with the purpose of using trade to promote growth, jobs, and sustainable
development, not just increasing trade.
To bring it home to the United States, we have a national coalition called the Citizens' Trade Campaign that's
composed of grassroots movements from across the country that would be affected by trade agreements
in a negative way, including farmers' unions, environmental groups, labor unions, student movements,
progressive people of faith, consumer advocacy groups.
As movements for justice, we need to work to bridge the efforts among those challenging the overarching
institutions that design the architecture of the global economy, and those working for economic
empowerment on the local scale who are grounded in the lived experiences of those affected by the
institutions. How can we empower the people who are actually affected by the issues to be the advocates
and spokespeople? How can we ensure that those working on economic justice on the local level have access
to information so that they can advocate for their interests in the bigger scheme of things? We need to
ensure that we don't just convey the right information, which is key, but also that we connect the bigger
picture economic struggles to the problems people experience in their communities, in a way that people can
understand and really feel motivated to come together and work to improve people's lives.
To learn more about Deborah James' organization, Center for Economic and Policy Research, please see
www.cepr.net. Photos courtesy of Deborah James.
1. International Financial Institutions (IFIs) refers to institutions such as the International Monetary Fund,
World Trade Organization, World Bank, and regional development banks.
2. The International Monetary Fund (IMF) was established, along with its sister organization the World
Bank, as part of the Bretton Woods institutions intended to rebuild the global economy in the aftermath of
WWII.
3. The World Trade Organization (WTO) is an international body, established in 1995, that develops and
enforces rules for trade and investment. The WTO includes agreements not only on tariffs and subsidies on
goods and agriculture, but also services, government procurement, trade facilitation, intellectual property,
investment, domestic regulation, and many more non-trade issues.
Inspired? Here are a few suggestions for getting involved!
• Challenge yourself to make conversations about the workings of international financial institutions
interesting and useful. Global Exchange’s Global Econ 101 webpage (www.globalexchange.
org/resources/econ101) and the International Forum on Globalization (www.ifg.org) can help.
• Get involved with campaigns such as those to halt the expansion of the World Trade Organization
(WTO), stop new trade agreements and renegotiate existing ones, end Fast Track, and cancel global debt:
• Public Citizen’s Global Trade Watch, www.citizen.org/trade
• Our World is Not for Sale global campaign, www.ourworldisnotforsale.org
• Citizens’ Trade Campaign, www.citizenstrade.org/ctc
• Democracy Is for People campaign of Public Citizen, www.democracyisforpeople.or
• Jubilee USA, www.jubileeusa.org
o Help build economic justice and power for workers. Learn about and engage in campaigns and
organizing efforts through these organizations:
o Jobs with Justice, www.jwj.org
o US Federation of Worker Cooperatives, www.usworker.coop
o United Students against Sweatshops, www.usas.org
• Work for US policy that supports women around the world and their families. Learn how through
Women Thrive Worldwide (www.womenthrive.org/index.php?
option=com_content&task=view&id=1117&Itemid=196).
Rich People Have Less Compassion, Psychology Research Suggests
| By Daisy Grewal Posted: 04/11/2012 8:32 am Updated: 04/11/2012 8:32 am
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Who is more likely to lie, cheat, and steal—the poor person or the rich one? It’s tempting to think that the
wealthier you are, the more likely you are to act fairly. After all, if you already have enough for yourself, it’s
easier to think about what others may need. But research suggests the opposite is true: as people climb the
social ladder, their compassionate feelings towards other people decline.
Berkeley psychologists Paul Piff and Dacher Keltner ran several studies looking at whether social class (as
measured by wealth, occupational prestige, and education) influences how much we care about the feelings
of others. In one study, Piff and his colleagues discreetly observed the behavior of drivers at a busy four-
way intersection. They found that luxury car drivers were more likely to cut off other motorists instead of
waiting for their turn at the intersection. This was true for both men and women upper-class drivers,
regardless of the time of day or the amount of traffic at the intersection. In a different study they found
that luxury car drivers were also more likely to speed past a pedestrian trying to use a crosswalk, even
after making eye contact with the pedestrian.
In order to figure out whether selfishness leads to wealth (rather than vice versa), Piff and his colleagues
ran a study where they manipulated people’s class feelings. The researchers asked participants to spend a
few minutes comparing themselves either to people better off or worse off than themselves financially.
Afterwards, participants were shown a jar of candy and told that they could take home as much as they
wanted. They were also told that the leftover candy would be given to children in a nearby laboratory. Those
participants who had spent time thinking about how much better off they were compared to others ended up
taking significantly more candy for themselves--leaving less behind for the children.
A related set of studies published by Keltner and his colleagues last year looked at how social class
influences feelings of compassion towards people who are suffering. In one study, they found that less
affluent individuals are more likely to report feeling compassion towards others on a regular basis. For
example, they are more likely to agree with statements such as, “I often notice people who need help,” and
“It’s important to take care of people who are vulnerable.” This was true even after controlling for other
factors that we know affect compassionate feelings, such as gender, ethnicity, and spiritual beliefs.
In a second study, participants were asked to watch two videos while having their heart rate monitored. One
video showed somebody explaining how to build a patio. The other showed children who were suffering from
cancer. After watching the videos, participants indicated how much compassion they felt while watching
either video. Social class was measured by asking participants questions about their family’s level of income
and education. The results of the study showed that participants on the lower end of the spectrum, with less
income and education, were more likely to report feeling compassion while watching the video of the cancer
patients. In addition, their heart rates slowed down while watching the cancer video—a response that is
associated with paying greater attention to the feelings and motivations of others.
These findings build upon previous research showing how upper class individuals are worse at recognizing the
emotions of others and less likely to pay attention to people they are interacting with (e.g. by checking their
cell phones or doodling).
But why would wealth and status decrease our feelings of compassion for others? After all, it seems more
likely that having few resources would lead to selfishness. Piff and his colleagues suspect that the answer
may have something to do with how wealth and abundance give us a sense of freedom and independence from
others. The less we have to rely on others, the less we may care about their feelings. This leads us towards
being more self-focused. Another reason has to do with our attitudes towards greed. Like Gordon Gekko,
upper-class people may be more likely to endorse the idea that “greed is good.” Piff and his colleagues found
that wealthier people are more likely to agree with statements that greed is justified, beneficial, and
morally defensible. These attitudes ended up predicting participants’ likelihood of engaging in unethical
behavior.
Given the growing income inequality in the United States, the relationship between wealth and compassion has
important implications. Those who hold most of the power in this country, political and otherwise, tend to
come from privileged backgrounds. If social class influences how much we care about others, then the most
powerful among us may be the least likely to make decisions that help the needy and the poor. They may also
be the most likely to engage in unethical behavior. Keltner and Piff recently speculated in the New York
Times about how their research helps explain why Goldman Sachs and other high-powered financial
corporations are breeding grounds for greedy behavior. Although greed is a universal human emotion, it may
have the strongest pull over those of who already have the most.
Are you a scientist who specializes in neuroscience, cognitive science, or psychology? And have you read a
recent peer-reviewed paper that you would like to write about? Please send suggestions to Mind Matters
editor Gareth Cook, a Pulitzer prize-winning journalist at the Boston Globe. He can be reached at
garethideas AT gmail.com or Twitter @garethideas.
Rick Scott Vetoes Bill Sending Non-Violent Drug Offenders To Rehab After Serving Half Sentence In Jail
Posted: 04/10/2012 12:42 pm Updated: 04/10/2012 4:40 pm
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Florida Governor Rick Scott on Friday vetoed a widely popular bill that would send certain non-violent drug
addicts to treatment after serving half their sentences.
“He said it was a 'public safety’ issue. No it’s not,” said bill sponsor Sen. Ellyn Bogdanoff (R-Fort
Lauderdale) according to the Miami Herald. “These are non-violent drug offenders.”
The bill, a rare common sense favorite during a legislative season that saw Scott approve dying animals and
Jay-Z lyrics debated on the House floor, was opposed by only four state lawmakers.
Sold on Bogdanoff's argument that the state would save money by getting potential re-offenders the help
they need for addiction, lawmakers including typically tough-on-crime conservatives overwhelmingly sped
the bill through the House 40-0 and the Senate 112-4.
But though offenders would remain in custody during the rehabilitation portion of their sentences, Scott said
in his veto statement that the bill would violate laws against early release -- and be an injustice to "victims."
“Justice to victims of crime is not served when a criminal is permitted to be released early from a sentence
imposed by the courts...This bill would permit criminals to be released after serving 50 percent of their
sentences, thus creating an unwarranted exception to the rule that inmates serve 85 percent of their
imposed sentences.”
Tampa Bay Times/HeraldColumnist Steve Bousquet wrote that Scott's veto missed the point:
The prison system would have chosen inmates based on their good behavior, the severity of their addictions
and the likelihood that rehabilitation would save taxpayer dollars, a House analysis said.
In other words, the bill, properly implemented, could have reduced the cost of government, the very thing
that Scott talks about so much.
"This was a very small step toward prison reform," [House sponsor Rep. Ari] Porth (D-Coral Springs) told
Bousquet. "This was a real chance to have a positive impact on the lives of people."
Robert Scheer
12 Apr 2012
You're on Your Own, Kids
Who will speak for the rights of the unborn now that Rick Santorum is gone from the race? Let me give it a
… Read More.
5 Apr 2012
Obama By Default
The Republicans are a sick joke, and their narrow ideological stupidity has left rational voters no choice in …
Read More.
28 Mar 2012
Five Hypocrites and One Bad Plan
The Supreme Court is so full of it. The entire institution, as well as its sanctimonious judges themselves, …
Read More.
For He's a Jolly Good Scoundrel
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How evil is this? At a time when two-thirds of U.S. homeowners are drowning in mortgage debt and the
American dream has crashed for tens of millions more, Sanford Weill, the banker most responsible for the
nation's economic collapse, has been elected to the American Academy of Arts & Sciences.
So much for the academy's proclaimed "230-plus year history of recognizing some of the world's most
accomplished scholars, scientists, writers, artists, and civic, corporate, and philanthropic leaders." George
Washington, Ralph Waldo Emerson and Albert Einstein must be rolling in their graves at the news that Weill,
"philanthropist and retired Citigroup Chairman," has joined their ranks.
Weill is the Wall Street hustler who led the successful lobbying to reverse the Glass-Steagall law, which
long had been a barrier between investment and commercial banks. That 1999 reversal permitted the
merger of Travelers and Citibank, thereby creating Citigroup as the largest of the "too big to fail" banks
eventually bailed out by taxpayers. Weill was instrumental in getting then-President Bill Clinton to sign off on
the Republican-sponsored legislation that upended the sensible restraints on finance capital that had
worked splendidly since the Great Depression.
Those restrictions were initially flouted when Weill, then CEO of Travelers, which contained a major
investment banking division, decided to merge the company with Citibank, a commercial bank headed by John
S. Reed. The merger had actually been arranged before the enabling legislation became law, and it was
granted a temporary waiver by Alan Greenspan's Federal Reserve. The night before the announcement of
the merger, as Wall Street Journal reporter Monica Langley writes in her book "Tearing Down the Walls:
How Sandy Weill Fought His Way to the Top of the Financial World...and Then Nearly Lost It All," a buoyant
Weill suggested to Reed, "We should call Clinton." On a Sunday night Weill had no trouble getting through to
the president and informed him of the merger, which violated existing law. After hanging up, Weill boasted
to Reed, "We just made the president of the United States an insider."
The fix was in to repeal Glass-Steagall, as The New York Times celebrated in a 1998 article: "... the
announcement on Monday of a giant merger of Citicorp and Travelers Group not only altered the financial
landscape of banking, it also changed the political landscape in Washington. ... Indeed, within 24 hours of the
deal's announcement, lobbyists for insurers, banks and Wall Street firms were huddling with Congressional
banking committee staff members to fine-tune a measure that would update the 1933 Glass-Steagall Act
separating commercial banking from Wall Street and insurance, to make it more politically acceptable to
more members of Congress."
At the signing ceremony, Clinton presented Weill with one of the pens he used to "fine-tune" Glass-Steagall
out of existence, proclaiming, "Today what we are doing is modernizing the financial services industry,
tearing down those antiquated laws and granting banks significant new authority." What a jerk.
Although Weill has shown not the slightest remorse, Reed has had the honesty to acknowledge that the
elimination of Glass-Steagall was a disaster: "I would compartmentalize the industry for the same reason
you compartmentalize ships," he told Bloomberg News.
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"If you have a leak, the leak doesn't spread and sink the whole vessel. So generally speaking, you'd have
consumer banking separate from trading bonds and equity."
Instead, all such compartmentalization was ended when Clinton signed the Gramm-Leach-Bliley Act in late
1999. In his memoir, Weill brags that he and Republican Sen. Phil Gramm joked that it should have been
called the Weill -Gramm-Leach-Bliley Act. Informally, some dubbed it "the Citigroup Authorization Act."
Gramm left the Senate to become a top executive at the Swiss-based UBS bank, which, like Citigroup, ran
into deep trouble. Leach — former Republican Rep. James Leach — was appointed by President Barack
Obama in 2009 to head the National Endowment for the Humanities, where his banking skills could serve the
needs of intellectuals. Robert Rubin, the Clinton administration treasury secretary who helped push through
the Citigroup Authorization Act, was the most blatant double dealer of all: He accepted a $15-million-a-year
offer from Weill to join Citigroup, where he eventually helped run the corporation into the ground.
Citigroup went on to be a major purveyor of toxic mortgage-based securities that required $45 billion in
direct government investment and a $300 billion guarantee of its bad assets in order to avoid bankruptcy.
Weill himself bailed out shortly before the crash. His retirement from what was then the world's largest
financial conglomerate was chronicled in The New York Times under the headline "Laughing All the Way From
the Bank." The article told of "an enormous wooden plaque" in the bank's headquarters that featured a
likeness of Weill with the inscription "The Man Who Shattered Glass-Steagall."
That's the man the American Academy of Arts & Sciences now honors, among others, for "extraordinary
accomplishment and a call to serve." Disgusting.
Robert Scheer is editor of TruthDig.com, where this column originally appeared. Email him at
rscheer@truthdig.com. To find out more about Robert Scheer and to read features by other Creators
Syndicate writers and cartoonists, visit the Creators Syndicate Webpage at www.creators.com.
COPYRIGHT 2012 CREATORS.COM
The Jobless Are Screwed
Posted: 04/10/2012 2:39 pm
As nearly 13 million Americans look for a job, federal funding to retrain American workers and prepare
them for the jobs of the 21st century are drying up.
Funding for job-training programs across the country is down 18 percent from 2006 -- even though there
are six million more unemployed Americans today. Funding for counseling for the unemployed -- like resume
guidance and job interview coaching -- is down 13 percenet.
In fact, funding for job retraining for Americans is roughly half of what it used to be more than a decade
ago.
So now -- even though the economy is slightly improving -- businesses are having difficulty finding Americans
workers who are trained and qualified to handle the new job.
President Obama's budget proposal called for a massive increase in job retraining program: increasing
funding to nearly $3 billion a year. Studies show this is a good economic investment, as every dollar spent on
retraining unemployed Americans for new jobs yields as much as eight dollars for the local community.
However, multi-millionaire Congressman Paul Ryan's Republican trickle-down austerity budget once again
slashes funding for federal job retraining programs.
Under their proposal, it's far more important to give $3-trillion in tax breaks to the super-rich than give
working Americans new job skills.
This post was originally published on Thomhartmann.com.
The Real Health Care Debate
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Posted on Apr 9, 2012
AP/J. David Ake
People wait in line overnight in front of the Supreme Court for admission on the eve of oral arguments
before the court on President Obama’s health care legislation.
By Chris Hedges
The debate surrounding the Patient Protection and Affordable Care Act illustrates the impoverishment of
our political life. Here is a law that had its origin in the right-wing Heritage Foundation, was first put into
practice in 2006 in Massachusetts by then-Gov. Mitt Romney and was solidified into federal law after
corporate lobbyists wrote legislation with more than 2,000 pages. It is a law that forces American citizens
to buy a deeply defective product from private insurance companies. It is a law that is the equivalent of the
bank bailout bill—some $447 billion in subsidies for insurance interests alone—for the pharmaceutical and
insurance industries. It is a law that is unconstitutional. And it is a law by which President Barack Obama, and
his corporate backers, extinguished the possibilities of both the public option and Medicare for all
Americans. There is no substantial difference between Obamacare and Romneycare. There is no substantial
difference between Obama and Romney. They are abject servants of the corporate state. And if you vote
for one you vote for the other.
But you would never know this by listening to the Democratic Party and the advocacy groups that purport to
support universal health care but seem more intent on re-electing Obama. It is the very sad legacy of the
liberal class that it proves in election cycle after election cycle that it espouses moral and political positions
it will not pay a price to defend. And since we have no fight in us, since we will not punish politicians like
Obama who betray our core beliefs, the corporate juggernaut rolls forward with its inexorable pace to
cement into place our global neofeudalism.
Protesting outside the Supreme Court recently as it heard arguments on the constitutionality of the
Affordable Care Act were both conservatives from Americans for Prosperity who denounced the president
as a socialist and demonstrators from Democratic front groups such as the SEIU and the Families USA
health care consumer group who chanted “Protect the law!” Lost between these two factions were a few
stalwarts who hold quite different views, including public health care advocates Dr. Margaret Flowers, Dr.
Carol Paris and attorneys Oliver Hall, Kevin Zeese and Russell Mokhiber. They displayed a banner that read:
“Single Payer Now! Strike Down the Obama Mandate!” They, at least, have not relinquished the demand for
single payer health care for all Americans. And I throw my lot in with these renegades, dismissed, no doubt,
as cranks or dreamers or impractical by those who flee into the embrace of empty political theater and junk
politics. These single payer advocates, joined by 50 doctors, filed a brief to the court that challenges, in the
name of universal health care, the individual mandate.
“We have the solution, we have the resources and we have the money to provide lifelong, comprehensive,
high-quality health care to every person,” Dr. Flowers said when we spoke a few days ago in Washington, D.C.
Many Americans have not accepted the single payer approach “because people get confused by the politics,”
she said. “People accept the Democratic argument that this [Obamacare] is all we can have or this is
something we can build on.
“If you are trying to meet the goal of universal health coverage and the only way to meet that goal is to
force people to purchase private insurance, then you might consider that it is constitutional,” Flowers said.
“Our argument is that the individual mandate does not meet the goal of universality. When you attempt to
use the individual mandate and expansion of Medicaid for coverage, only about half of the uninsured gain
coverage. This is what we have seen in Massachusetts. We do, however, have systems in the United States
that could meet the goal of universality. That would be either a Veterans Administration type system, which
is a socialized system run by the government, or a Medicare type system, a single payer, publicly financed
health care system. If the U.S. Congress had considered an evidence-based approach to health reform
instead of writing a bill that funnels more wealth to insurance companies that deny and restrict care, it
would have been a no-brainer to adopt a single payer health system much like our own Medicare. We are
already spending enough on health care in this country to provide high-quality, universal, comprehensive,
lifelong health care. All the data point to a single payer system as the only way to accomplish this and control
health care costs.”
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Obamacare will, according to figures compiled by Physicians for a National Health Plan (PNHP), leave at least
23 million people without insurance, a figure that translates into an estimated 23,000 unnecessary deaths a
year among people who cannot afford care. Costs will continue to climb. There are no caps on premiums,
including for people with “pre-existing conditions.” The elderly can be charged three times the rates
provided to the young. Companies with predominantly female workforces can be charged higher gender-
based rates. Most of us will soon be paying about 10 percent of our annual incomes to buy commercial health
insurance, although this coverage will pay for only about 70 percent of our medical expenses. And those of
us who become seriously ill, lose our incomes and cannot pay the skyrocketing premiums are likely to be
denied coverage. The dizzying array of loopholes in the law—written in by insurance and pharmaceutical
lobbyists—means, in essence, that the healthy will receive insurance while the sick and chronically ill will be
priced out of the market.
Medical bills already lead to 62 percent of personal bankruptcies, and nearly 80 percent of those declaring
personal bankruptcy because of medical costs had insurance. The U.S. spends twice as much per capita on
health care as other industrialized nations, $8,160. Private insurance bureaucracy and paperwork consume
31 percent of every health care dollar. Streamlining payment through a single, nonprofit payer would save
more than $400 billion per year, enough, the PNHP estimates, to provide comprehensive, high-quality
coverage for all Americans.
But as long as corporations determine policy, as long as they can use their money to determine who gets
elected and what legislation gets passed, we remain hostages. It matters little in our corporate state that
nearly two-thirds of the public wants single payer and that it is backed by 59 percent of doctors. Public
debates on the Obama health care reform, controlled by corporate dollars, ruthlessly silence those who
support single payer. The Senate Finance Committee, chaired by Max Baucus, a politician who gets more than
80 percent of his campaign contributions from outside his home state of Montana, locked out of the
Affordable Care Act hearing a number of public health care advocates including Dr. Flowers and Dr. Paris;
the two physicians and six other activists were arrested and taken away. Baucus had invited 41 people to
testify. None backed single payer. Those who testified included contributors who had given a total of more
than $3 million to committee members for their political campaigns.
“It is not necessary to force Americans to buy private health insurance to achieve universal coverage,” said
Russell Mokhiber of Single Payer Action. “There is a proven alternative that Congress didn’t seriously
consider, and that alternative is a single payer national health insurance system. Congress could have taken
seriously evidence presented by these single payer medical doctors that a single payer system is the only
way to both control costs and cover everyone.”
The Top Five Signs Roger Ailes is Still In Charge of the GOP
POSTED: September 26, 2:06 PM ET | By Tim Dickinson
Comment 2
Roger Ailes
Brown/Getty
Howard Kurtz has a juicy exclusive on Roger Ailes in NewsBeast today, but he's buried the actual
news under a fluffy, nonsensical storyline that Ailes has dialed back his control of the Republican
party.
From Kurtz' own story: The top five signs that "The Chairman" is still chairman of the GOP.
1) Rick Perry kissed Ailes' ring
"A few months back," when the Texas Governor was debating jumping into the presidential race, Rick
Perry paid court in Ailes' office at Fox News soliciting, in particular, fundraising advice, Kurtz
reports. “Money will find you if people believe in your message,” Ailes told Perry.
2) Romney wooed Ailes over dinner
Not to be outdone by his Lone Star rival, Mitt Romney also sought Ailes' backing, meeting recently
for a "pasta dinner." Ailes was struck by Romney's unexpected wit and gave him advice on how to be
"looser on the air."
3) Broke-Ass Tim Pawlenty went grubbing for a job at Fox
Fox News continues to be the top fallback for failed GOP politicians looking to make some fast cash.
Kurtz reveals that former 2012 contender Tim Pawlenty "showed up to ask for a gig," which Ailes
refused him, seemingly because he doesn't like Romney all that much. (Pawlenty has endorsed the
former Massachusetts governor.) “I’m not sure I want to sign you as a paid spokesman for Romney,”
Ailes told T-Paw.
4) The GOP's Anti-Regulatory Push? Thank Ailes
Ailes himself "cooked up" a Fox News programming blitz called "Regulation Nation" dedicated to
showing how regulations are killing the economy. No mystery here: This top GOP talking point reflects
a core belief for Chairman Ailes: "I think regulations are totally out of control, [with bureaucrats
hiring Ph.D.s to] sit in the basement and draw up regulations to try to ruin your life,” Kurtz quotes
Ailes as saying.
5) Ailes can't control Shep Smith
Fox News anchor Sheppard Smith, who frequently strays from the Ailes party line, has been called to
the woodshed: “Every once in a while Shep Smith gets out there where the buses don’t run," Ailes
tells Kurtz, "and we have a friendly talk.”
Bonus: Ailes remains still a wee-bit paranoid
Kurtz captures Ailes discussing the excessive security measures at Fox News (which, as I reported,
inlude a bomb-proof office): “Listen," Ailes says. "One out of every 25 people in America is a
psychopath.”
How Roger Ailes Built the Fox News Fear Factory
The onetime Nixon operative has created the most profitable propaganda machine in history. Inside
America's Unfair and Imbalanced Network
by: Tim Dickinson
Scott Walker Quietly Repeals Wisconsin Equal Pay Law
Posted: 04/ 6/2012 12:09 pm Updated: 04/ 6/2012 2:19 pm
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Wisconsin Equal Pay, Wisconsin Pay Equity, Marlo's Slideshows, Politics News
WASHINGTON -- A Wisconsin law that made it easier for victims of wage discrimination to have their day in
court was repealed on Thursday, after Wisconsin Gov. Scott Walker (R) quietly signed the bill.
The 2009 Equal Pay Enforcement Act was meant to deter employers from discriminating against certain
groups by giving workers more avenues via which to press charges. Among other provisions, it allows
individuals to plead their cases in the less costly, more accessible state circuit court system, rather than
just in federal court.
In November, the state Senate approved SB 202, which rolled back this provision. On February, the
Assembly did the same. Both were party-line votes in Republican-controlled chambers.
SB 202 was sent to Walker on March 29. He had, according to the state constitution, six days to act on the
bill. The deadline was 5:00 p.m. on Thursday. The governor quietly signed the bill into law on Thursday,
according to the Legislative Reference Bureau, and it is now called Act 219.
Walker's office did not return repeated requests for comment.
State Sen. Dave Hansen (D-Green Bay) and Rep. Christine Sinicki (D-Milwaukee), the authors of the Equal
Pay Enforcement Act, criticized Walker on Thursday for not informing the public of his actions on SB 202.
“We are finally starting to see progress here in Wisconsin, yet like their counterparts across the country,
Legislative Republicans want to turn back the clock on women’s rights in the workplace,” said Hansen.
Women earn 77 cents for every dollar that men make. In Wisconsin, it's 75 cents, according to the
Wisconsin Alliance for Women’s Health (WAWH), which also estimates that families in the state "lose more
than $4,000 per year due to unequal pay."
Business associations lobbied in support of SB 202, according to the state's Government Accountability
Board. Groups like Wisconsin Manufacturers and Commerce, and the Wisconsin Restaurant Association all
backed a repeal.
Sara Finger, executive director of WAWH, said that the repeal was a "demoralizing attack on women’s
rights, health, and wellbeing."
"Economic security is a women’s health issue," she said. "The salary women are paid directly affects the type
and frequency of health care services they are able to access. At a time when women’s health services are
becoming more expensive and harder to obtain, financial stability is essential to maintain steady access."
Walker is facing a recall election in June. The two frontrunners on the Democratic side who are competing to
unseat him, former Dane County executive Kathleen Falk and Milwaukee Mayor Tom Barrett, sharply
criticized the governor for allowing the repeal bill to become law.
Falk said Walker has "turned back the clock for women across Wisconsin."
"As a woman and as a mother who worked full-time while raising my son, I know first-hand how important
pay equity and health care are to women across Wisconsin," she said in a statement to The Huffington Post.
A spokesman for Barrett's campaign said that Walker's "ideological civil war includes a war on women, and
repeal today of this protection against pay discrimination is a major step backwards for Wisconsin values
and basic fairness."
"Tom Barrett knows equal pay for equal work is essential, and failing to stand up for Wisconsin women in the
workplace is yet another reason he [Walker] must be defeated this summer," he said.
UPDATE: 2:17 p.m. -- The Plum Line reports that President Barack Obama's campaign spokeswoman Lis
Smith responded to Walker's repeal, calling on former Massachusetts Gov. Mitt Romney, the frontrunner
for the GOP presidential nomination, to take a position on the issue.
"As he campaigned across Wisconsin, Mitt Romney repeatedly praised Governor Scott Walker's leadership,
calling him a 'hero' and 'a man of courage,'" she said. "But with his signing yesterday of a bill make it harder
for women to enforce in court their right to equal pay, Walker showed how far Republicans are willing to go
to undermine not only women's health care, but also their economic security. Does Romney think women
should have ability to take their bosses to court to get the same pay as their male coworkers? Or does he
stand with Governor Walker against this?"
Growth of Income Inequality Is Worse Under Obama than Bush
Matt Stoller is a fellow at the Roosevelt Institute. You can follow him on twitter at http://www.twitter.
com/matthewstoller
Yesterday, the President gave a speech in which he demanded that Congress raise taxes on millionaires, as a
way to somewhat recalibrate the nation’s wealth distribution. His advisors, like Gene Sperling, are giving
speeches talking about the need for manufacturing. A common question in DC is whether this populist pose
will help him win the election. Perhaps it will. Perhaps not. Romney is a weak candidate, cartoonishly wealthy
and from what I’ve seen, pretty inept. But on policy, there’s a more interesting question.
A better puzzle to wrestle with is why President Obama is able to continue to speak as if his administration
has not presided over a significant expansion of income redistribution upward. The data on inequality shows
that his policies are not incrementally better than those of his predecessor, or that we’re making progress
too slowly, as liberal Democrats like to argue. It doesn’t even show that the outcome is the same as Bush’s.
No, look at this table, from Emmanuel Saez (h/t Ian Welsh). Check out those two red circles I added.
Yup, under Bush, the 1% captured a disproportionate share of the income gains from the Bush boom of 2002-
2007. They got 65 cents of every dollar created in that boom, up 20 cents from when Clinton was
President. Under Obama, the 1% got 93 cents of every dollar created in that boom. That’s not only more
than under Bush, up 28 cents. In the transition from Bush to Obama, inequality got worse, faster, than
under the transition from Clinton to Bush. Obama accelerated the growth of inequality.
The data set is excellent, it’s from the IRS and it’s extremely detailed. This yawing gap of inequality isn’t an
accident, and it’s not just because of Republicans. It’s a set of policy choices, as Saez makes clear in his
paper.
Looking further ahead, based on the US historical record, falls in income concentration due to economic
downturns are temporary unless drastic regulation and tax policy changes are implemented and prevent
income concentration from bouncing back. Such policy changes took place after the Great Depression during
the New Deal and permanently reduced income concentration until the 1970s.
Income concentrations are relatively rare, but when they happen, sharp policy moves can retain a strong
measure of equality. It’s well-known at this point that President Obama did not want to make such moves.
TARP, cramdown, and the foreclosure fraud settlement suggest that his interests lie in preserving the
capital structure of the large banks. What about other policy priorities?
Despite his recent speech, President Obama knows that his income tax proposal is going nowhere. So let’s
look at three recent policy choices that are going somewhere.
1) President Obama is on the verge of approving a Free Trade deal with Colombia, despite the murder of
union organizers in that country. Not content with establishing similar deals with Panama (which has to do
with enlarging tax havens) and South Korea, the administration is now embarking on a much vaster Trans-
Pacific Partnership deal with countries all over Asia. And it’s being negotiated entirely in secret, with
corporate and government officials the only ones allow to be in the room. Trade is a significant driver of
lower wages.
2) President Obama just pushed for and signed the JOBS Act, which is a substantial relaxation of
regulations and accounting requirements on corporations seeking to go public. Bill Black has many four letter
words to describe this bill, but it’s basically a license for Wall Street to commit fraud in the equity
markets. The SEC is beginning to promulgate instructions on how this will work.
3) President Obama just refused to issue an executive order forcing campaign spending disclosure by
government contractors. President Obama actually criticized the Supreme Court’s decision in Citizens
United at a State of the Union address, but as with yesterday’s speech on raising taxes on millionaires, there
was actually no there there.
There are many other policy fights, and the President has engaged constructively in some areas and
negatively in others. He has been undermined as well as aided by his staff. And he’s just one man, heading
up a franchise of thousands of other political actors. It’s been clear, though, since before he took office,
that his is a consistent policy architecture on the core questions of power and wealth. In the orbit of this
President, power and wealth flow upward.
It’s important not to overstate the conclusion. It’s not obvious that Obama’s policy framework is worse than
Bush’s, only that the outcome is. After all, the losses suffered by the wealthy during 2007-2009 recession
were less severe than those it suffered in the 2000-2002 recession, and most of the Great Recession
happened under Bush (with a Democratic Congress). It’s possible that the Obama policy framework is a bit
less bad, but he has been more successful at implementation because unlike Bush, he han’t face any pressure
from Democrats. In other words, perhaps Obama’s policy thrust has just been implemented more fully,
because the traditional opposition to plutocratic rule, the left, has been silenced. Perhaps it’s a competence
issue. Or maybe you can chalk it all up to structural factors, though I suspect the JOBS Act and trade
deals imply otherwise. Maybe he really is as conservative as these policy choices suggest. It’s hard to say.
Mitt Romney might be easy to jeer at for his wealth and arrogance, but Saez’s data suggests that Barack
Obama is just as much the candidate of inequality.
Topics: Guest Post
< Headlines | Next Story >
Tuesday, April 10, 2012 Whole Show
Training Terrorists in Nevada: Seymour Hersh on U.S. Aid to Iranian Group Tied to Scientist Killings
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Journalist Seymour Hersh has revealed that the Bush administration secretly trained an Iranian opposition
group on the State Department’s list of foreign terrorists. Hersh reports the U.S. Joint Special Operations
Command trained operatives from Mujahideen-e-Khalq, or MEK, at a secret site in Nevada beginning in
2005. According to Hersh, MEK members were trained in intercepting communications, cryptography,
weaponry and small unit tactics at the Nevada site up until President Obama took office. The MEK has been
listed as a foreign terrorist groups since 1997 and is linked to a number of attacks, spanning from the
murders of six U.S. citizens in the 1970s to the recent wave of assassinations targeting Iranian nuclear
scientists. Hersh also discusses the role of Israeli intelligence and notes the Obama administration knew
about the training, "because they have access to what was going on in the previous administration in this area
in terms of the MEK, in terms of operations inside Iran." His new report for The New Yorker blog, "Our
Men in Iran?," comes as nuclear talks are set to resume this week between Iran and the International
Atomic Energy Agency. [includes rush transcript]
Highest taxes in the world Denmark #1, World Happiness Report 2012: Scandinavian Countries Are
Happiest On Earth (SLIDESHOW)
Posted: 04/ 6/2012 4:10 pm Updated: 04/ 6/2012 6:49 pm
Denmark has taken the top spot on the United Nation's first ever World Happiness Report, followed by
Finland, Norway and the Netherlands.
The 158-page report, published by Columbia University's Earth Institute, was commissioned for the United
Nations Conference on Happiness on Monday in order to "review the state of happiness in the world today
and show how the new science of happiness explains personal and national variations in happiness."
The rankings in the report were based on a number called the "life evaluation score," a measurement which
takes into account a variety of factors including people's health, family and job security as well as social
factors like political freedom and government corruption. It also looks at measurements from previous
reports on happiness from the Gallup World Poll (GWP), the World Values Survey (WVS), the European
Values Survey (EVS), and the European Social Survey (ESS).
In the introduction to the report, co-editors John Helliwell, Richard Layard and Jeffrey Sachs explain that
the report aims in part to evaluate happiness based on a more comprehensive measurement system that can
be used to inform policy-makers. As the Atlantic explains, previous reports on happiness have linked
personal contentment to income, but that correlation has been challenged in recent years by economists who
have argued that the happiness of a nation is determined by far more than its Gross National Product.
"While basic living standards are essential for happiness, after the baseline has been met happiness varies
more with the quality of human relationship than with income," the report read. "Policy goals should include
high employment and high-quality work; a strong community with high levels of trust and respect, which
government can influence through inclusive participatory policies; improved physical and mental health;
support of family life; and a decent education for all."
Based on its "life evaluation score," which is rated on a scale of 0-to-10, the report found that Denmark,
Norway, Finland and the Netherlands outstripped all other nations with an average score of 7.6 between
them.
On the other end of the spectrum, Benin, Central African Republic, Togo and the Sierra Leone had an
average life evaluation score of 3.4.
However, the fact that wealthier nations far outscore poor African nations like Togo and Sierre Leone would
point to a flaw in the study's thesis, according to Forbes' Tim Worstall.
"That basic thesis is that economic growth doesn’t really improve happiness, we really ought to be worrying
about human happiness and thus we should concentrate on things other than economic growth," Worstall
wrote on Forbes' website. "The problem with this is that their own report shows that the absence of
economic growth most definitely makes people unhappy: therefore we should indeed strive for economic
growth in order to make people happy."
House Investigator Issa Has Faced Allegations As Well
by Andrea Seabrook
Kevin LaMarque/Reuters/Landov
Rep. Darrell Issa, R-Calif., chairman of the House oversight committee, made news recently for going after
the Justice Department's botched gun operation, known as Fast and Furious. Here, Issa listens during
Attorney General Eric Holder's testimony in February.
text size A A A
April 16, 2012
The man driving the investigation into the General Services Administration, California Republican Rep.
Darrell Issa, took the top seat on the House Oversight and Government Reform Committee after the GOP
won a majority in 2010.
Issa has led several splashy investigations since. But he's also been dogged by allegations of his own.
Issa has made news in recent months by threatening to subpoena Attorney General Eric Holder, and by
calling a panel of only men to talk about women's contraception.
The Car Alarm Voice
Issa made his fortune building and selling Viper car alarms. He is the wealthiest member of Congress, worth
as much as $450 million. In fact, it's Issa's voice on the popular alarm's signature warning to would-be
thieves: "Protected by Viper. Stand back."
What's less well known is how Issa got into car alarms in the first place.
"For years I used to tell everyone that I went into it because my brother was a car thief. Then they found
out when I ran for office my brother did spend time in prison as a car thief, and it ruined the whole joke I'd
had for 20 years in business," Issa said during an interview with WhoRunsGov.
Issa himself was accused several times of auto theft. In the early 1970s, he and his brother were arrested
after police suspected them of stealing a Maserati sports car from a dealership in Cleveland. Issa says the
police mistook his identity, and the charges were later dismissed.
Another time, Issa was arrested and eventually pleaded guilty to carrying a concealed weapon. Police found
a handgun and a tear-gas gun — plus ammunition for both — in Issa's glove compartment.
Questions In The Past
These stories first arose when Issa ran for the Senate in 1998. An investigative reporter named Lance
Williams was looking into the then-candidate's biography.
"He had been a soldier, and he claimed that he was part of an elite bomb detecting unit that guarded
President Nixon at the 1971 World Series," said Williams.
Williams called up the Nixon Presidential Library, and was told that Nixon hadn't gone to any World Series
games that year. Then Williams looked into Issa's purportedly stellar career in the Army.
"The biography that he was providing the press in the context of his campaign was all wrong. He had a bad
conduct rating. He was demoted, and a fellow soldier accused him of stealing his car," said Williams.
Issa eventually took over the company that built car alarms.
Ryan Lizza, a reporter for The New Yorker magazine, detailed Issa's early business moves in a 2011 story.
The Fire
Issa had a warehouse full of electronics that, one night in 1982, caught fire. Investigators later found
"suspicious burn patterns," Lizza reported, and found that Issa had done some odd things.
A co-worker claimed that before the fire, Issa had put important electronic prototypes in a fireproof box,
and that he'd removed the business's computer and financial files from the building. Investigators also
found that less than three weeks before the blaze, Issa had increased the company's fire insurance from
$100,000 to more than $400,000.
"So you add the more than quadrupling of the insurance along with the taking the computer and putting the
other stuff in a fireproof box, and you can see why both the arson investigators and the insurance
investigators pointed a finger, you know, at Issa after this fire," said Lizza.
Issa said he had nothing to do with the fire, but the insurance company refused to pay the claim. The two
later settled out of court.
It was in part because of these allegations that Issa lost his Senate bid in 1998. He went on to win his House
seat, he worked to recall the governor of California, and now he chairs the powerful House Oversight and
Government Reform Committee.
Issa would not talk to NPR about this, but he has told several news outlets over the years that he's
surprised the allegations from his past continue to dog him.
How billionaires destroy democracy
Wealthy Wall Streeters have rigged the economy and the government against the people. Here's how they
did it
By Linda McQuaig and Neil Brooks
•
•
Kenneth Griffin, Philip Falcone, Jim Simons and John Paulson testify before a House Oversight and
Government Reform Committee hearing on the regulation of hedge funds in 2008. (Credit:
Reuters/Jonathan Ernst)
Topics:Wall Street, Editor's Picks, Fox News, Koch Brothers
There are many words that could be used to describe Barack Obama, but one adjective decidedly doesn’t
fit: Aggressive. So it was more than passing strange when a prominent member of Wall Street — Stephen
Schwarzman, chairman of the private equity giant Blackstone Group — compared actions by President Obama
to one of the most notoriously aggressive acts by one of history’s most aggressive villains. Speaking to the
board of a nonprofit group, Schwarzman fiercely denounced initiatives by the Obama administration: “It’s
war. It’s like when Hitler invaded Poland in 1939.”
In the arena of political commentary, few things are considered more clearly below-the-belt than comparing
an opponent to Hitler. So there was a small stir in August 2010 when it was reported that Schwarzman —
whom Time magazine had included on its 100 most influential people list only three years earlier — had
likened Obama to the Nazi strongman. Schwarzman acknowledged making the remark and then apologized
for it, while reaffirming the sentiment behind it. But what was striking about the Hitler comment — besides
its sheer viciousness and absurdity — was what had provoked it. Schwarzman wasn’t complaining about undue
military force, torture, or ethnic cleansing. He was likening the president to the most reviled man in history
on the grounds that Obama was trying to close a tax loophole that allowed hedge fund and private equity
managers (like Schwarzman) to pay tax at a rate that Warren Buffett famously noted was lower than that
paid by their secretaries.
In an era marked by gluttony and hubris, Steve Schwarzman has still managed to stand out.
His 60th birthday party in Manhattan in 2007 was so lavish — with live performances by Rod Stewart and
Martin Short — it became Wall Street legend. Then there’s Schwarzman’s 35-room Park Avenue residence,
his sprawling estate in Saint-Tropez, a spectacular spread in Jamaica, and his massive Palm Beach estate,
where the executive chef says it typically costs about $3,000 a weekend to feed just Schwarzman and his
wife.
Schwarzman is a major figure in private equity, part of the surging field of “alternative asset” financial
institutions that, along with hedge and real estate funds, appeared on the horizon two decades ago and now
control trillions of dollars in assets. While hedge funds are well-known for contributing to the subprime
mortgage crash, private equity funds are notorious for taking over established firms with borrowed money
and essentially pillaging them. The bought-out companies are typically saddled with increased debt from the
takeover and forced to make massive dividend and fee payouts to the private equity managers and their
investors, while employees are shedded and union contracts gutted. The companies are usually chopped up
into smaller pieces and sold soon afterwards at inflated prices, creating another windfall for the private
equity managers. By 2007, the Blackstone Group had taken control of more than 112 companies worth nearly
$200 billion. In 2011, Schwarzman ranked 169th on Forbes’ worldwide billionaire list, worth an estimated
$5.9 billion.
Schwarzman may be rougher at the edges than most of the hedge fund and private equity crowd. But his
outburst against Obama reminds us of the “war” he and others — by themselves or by proxies — have been
engaged in to minimize their contribution to the public treasury. It’s an all-too-familiar tale of how effective
the rich are at getting their way, even when the battle is being played out in a very public arena where a
small group of billionaires advancing their own self-interest would seem a very tough sell.
- – - – - – - – - – - -
Victor Fleischer didn’t set out to be a 21st-century Robin Hood. His real aim was just to get tenure.
Fleischer joined the New York law firm Polk Davis in the late 1990s, working on the formations of private
equity and venture capital funds. He was struck by the very low rates of tax paid by fund managers, even
compared to the already low tax rates being paid by executives receiving corporate stock options. Fleischer
wasn’t discovering something new; the rules had been in place since 1954. Nor was he outraged or even
particularly interested in the question of tax fairness. At the time, he was simply interested in the impact
that the tax rules governing so-called “carried interest” might have on the law firm’s clients.
The question stayed in Fleischer’s mind after he left Polk Davis in 2001 and became a law professor
specializing in taxation. Hoping to get a paper published to improve his chances of securing tenure, Fleischer
put together his thoughts on the taxation of private equity funds. Now that he was no longer constrained by
working for people in the private equity field, he started to pay attention to what seemed to him to be a
“quirk” in the law that distorted tax principles while undermining distributive justice.
He identified the fact that managers of private equity, venture capital and hedge funds were claiming a
significant part of their incomes as capital gains (taxed at 15 percent), rather than treating them as regular
income (taxed at 35 percent). That substantial difference in rates was magnified by the enormity of the
incomes in question. A private equity manager receiving, say, $600 million as a capital gain would pay $90
million in tax. If the same income were treated as income from salary, it would be taxed at 35 percent (and
also be subject to a 2.9 percent payroll tax), bringing the private equity manager’s tax bill to $227.4 million
— almost $140 million more.
The ostensible purpose of the lower capital gains rate is to compensate investors for the risk they take in
investing their capital. But private equity and fund managers aren’t investing their own capital. They’re
investing other people’s capital. They’re simply money managers. By claiming capital gains treatment, they are
passing off regular income as capital gains, simply to save themselves taxes.
The fund managers insist that their compensation is still very risky; while some deals may lead to huge
profits, others prove disastrous. True. But risk is hardly confined to fund managers. And at lower income
levels, the risks are far larger. Indeed, in the last 30 years, vast swaths of the economy could be
designated as risky for those needing to earn a living. The sort of stable, lifelong jobs that were common a
generation ago have been largely replaced by contract or part-time work, with little or no security. A layoff
can mean the loss of the family home or health benefits, or even destitution — far more serious plights than
anything likely to befall a hedge fund manager. (For that matter, no one ever seems to argue for special low
tax rates for the real risk-takers among us — miners, oil-rig workers, acrobats, firemen, window washers
working on tall buildings.)
The so-called “carried interest” loophole enjoyed by hedge fund and private equity managers raises the
larger question of whether capital gains — even real ones — should ever be taxed at lower rates. On the
face of things, the lower rate seems patently unfair. Why should someone earning income by investing their
fortune be taxed at a substantially lower rate than those earning income from the sweat of their brows or
from using skills they’ve spent years acquiring? The fairness argument has essentially been set aside,
however, as business has relentlessly promoted the notion that such preferential treatment is necessary to
coax those with capital to invest it. But do investors really need coaxing? Warren Buffett, one of the world’s
savviest investors, doesn’t think so. “I have worked with investors for 60 years and I have yet to see anyone
— not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment
because of the tax rate on the potential gain,” Buffett argues.
Our business culture tends to portray investors as modern-day heroes who put their hard-earned capital
into worthy high-risk ventures that lead to path-breaking discoveries that enrich the lives of all of us. Sadly,
the vast majority of investments don’t fit into this category (and those that do qualify for additional tax
incentives). Rather, as former mutual fund manager John C. Bogle notes, “most capital gains are made from
gambling in the stock market.” So the ultimate function of the special low rate on capital gains is to save our
wealthiest citizens billions of dollars a year on their winnings in the Wall Street casino.
- – - – - – - – - – - -
Fleischer’s paper found its way into the hands of congressional Democrats at a time when they were looking
for fresh sources of revenue to pay for the expansion of the State Children’s Health Insurance Program
and the Earned Income Tax Credit. The juxtaposition of high-flying hedge fund managers and children
without health care seemed like a public relations nightmare for the Wall Street crowd.
Schwarzman himself helped put an unsavory face on the fund manager set with his plan to turn Blackstone
into a publicly traded company in the spring of 2007. The plan would not only allow Schwarzman and other
top Blackstone executives to continue to qualify for the low capital-gains rate as fund managers, but would
also allow their new multi-billion-dollar publicly traded company to largely avoid paying corporate taxes. If
Schwarzman won the approval of SEC regulators, he and Blackstone co-founder Peter Peterson would
receive billions of dollars worth of stock, plus hundreds of millions in cash. And this would surely set a
precedent, enticing other private equity funds, as well as investment banks — including giants like Goldman
Sachs and Morgan Stanley — to reorganize themselves along similar lines, making the paying of corporate
taxes almost optional for Wall Street institutions.
Schwarzman’s move had pushed the issue of sweetheart taxation for private equity kings from law school
reviews to the front pages of newspapers. A bill to stop Schwarzman — dubbed the Blackstone bill —
quickly appeared in Congress.
Momentum seemed to be building against the Blackstone deal and more broadly for a bill, sponsored by
Democratic congressman Sander Levin that would shut down the fund manager loophole completely. But Wall
Street quickly organized a counterattack. Some of the largest private equity firms formed the Private
Equity Council, and, within six months, the Council had retained four top lobby firms to handle the case. Labor
and public interest groups lobbied from the other side, presenting a letter to Congress signed by more than
a hundred organizations across the country urging that the loophole be closed. But private equity had
resources that were probably 1,000 times greater, according to Steve Wamhoff, legislative director of the
Washington-based group Citizens for Tax Justice.
No argument seemed too extreme or silly to advance in defense of maintaining the loophole. Lobbyists
insisted, for instance, that the tax break was crucial in the fight against cancer, pointing to the fact that the
loophole also applied to those running venture capital funds, which sometimes invest in high-risk start-up
firms — including those developing products to fight cancer. Private equity was trying to make the case that
showering tax breaks on all fund managers, some of whom might be investing their funds in firms involved in
fighting cancer, was an effective way to subsidize the fight against cancer — rather than simply increasing
direct subsidies to cancer researchers or start-up firms.
In the end, the weakness of the case for maintaining the loophole didn’t matter. In three years of
Congressional battles over the issue — with the Democrats mostly voting to shut down the loophole, and
Republicans voting to keep it alive — the House passed a bill to shut it down three times. But Democrats
finally abandoned attempts to overcome Republican obstacles in the Senate in June 2010. So, even with the
Democrats holding the White House, the House and the Senate (including 60 seats for a while), “they were
still incapable of closing the most indefensible loophole in existence,” notes Wamhoff.
- – - – - – - – - – - -
In the run-up to the debt-ceiling crisis in the summer of 2011, the most indefensible loophole in existence
was once again in the spotlight. Figures from the Congressional Budget Office showed that closing the
loophole could save $21 billion over 10 years. That wouldn’t eliminate the debt, of course, but given the scope
of the debt problem, it seemed a lot of money to simply ignore. New York Times columnist Nicholas Kristof
devoted a column to the tax break, awarding it the grand prize for the “Most Unconscionable Tax Loophole.”
The president himself zeroed in on it again. “How can we ask a student to pay more for college before we
ask hedge fund managers to stop paying taxes at a lower rate than their secretaries?” Obama said in an
address to Congress in July.
But the Tea Party crowd now becoming power players in the Republican Party was as resistant to
compromise as Obama was prone to it. They blamed the mounting deficit entirely on Obama (even though
George W. Bush had added $5.07 trillion to the debt, primarily due to his tax cuts and military spending,
while Obama had added just $1.44 trillion, mostly fighting the recession). Spotting an opportunity to use the
deficit to achieve deep spending cuts, hard-line Republicans refused to raise the debt ceiling without a long-
term strategy for debt reduction, which they insisted be entirely achieved through spending cuts. In the
final deal, signed into law just hours before the deadline for a Latin American–style default, the hijackers
appeared to win, with $917 billion in deficit-reduction measures all to come from spending cuts (and another
$1.5 trillion to be worked out by a bipartisan committee). The radical Republicans had turned the fairly
routine business of raising the debt ceiling — something Republicans had agreed to 87 times since World
War II — into a bloodbath of spending cuts.
An observer could easily conclude that all this simply shows how resistant Americans have become to tax
increases. But in fact it shows no such thing. In the years leading up to the debt-ceiling showdown, Americans
have repeatedly told pollsters that they support higher taxes on the rich as a way to reduce the deficit. A
Washington Post-ABC News poll reported in July 2011, as the crisis reached a crescendo, found that 72
percent supported raising taxes on those earning more than $250,000 a year.
What the debt-ceiling fiasco really showed was how a band of Republican extremists had effectively taken
the U.S. political system hostage and were moving to enact the Right’s long-time fantasy of dismantling
popular New Deal programs — particularly Social Security — which had been politically untouchable since the
1930s. Americans were told that these programs were simply no longer affordable — even though the
country had grown considerably richer over the decades. In fact, what had changed was not the
affordability of the programs but the intransigence of the nation’s elite to paying taxes.
So while programs helping students, the elderly, and the poor were to be picked over by deficit-cutting
politicians with surgical precision, private equity and hedge fund mangers were to be spared any increase in
taxes. They could get back to work pillaging companies and destabilizing financial markets with full peace of
mind, knowing they’d continue to enjoy a tax rate lower than the mechanics who service their private jets.
Indeed, only a month after the debt-ceiling crisis, Stephen Schwarzman was back on the offensive, no
longer just defending the special tax break that saved him millions of dollars a year, but now insisting on the
need for broad tax reform — so that low-income people would pay more. Schwarzman’s concern was that
many Americans manage to avoid paying income tax at all because their incomes are so low. His solution was a
flat tax, so that everyone would pay some income tax. “If some people are left out and some people have
special deals, it doesn’t feel like the kind of situation where everyone’s going to get on board,” Schwarzman
told CNBC.” For Schwarzman, “special deals” aren’t loopholes for billionaires but exemptions for those with
low incomes — mostly the elderly, people with children, and the poor — who’ve been dubbed “lucky duckies”
by the Wall Street Journal for their apparent tax-free status.
Having rebuffed Obama’s invasion, the Wall Street crowd was now itching to launch a counter-invasion. No
longer was the goal just to protect their own loopholes. They now sought to solve the deficit crisis, which
they had greatly contributed to with their reckless financial speculation, by digging into the empty pockets
of low-income Americans. It wasn’t that the rich weren’t paying enough tax; it was that others weren’t paying
enough. It was time to go after the lucky duckies. A new rallying cry could be heard rumbling from the
boardrooms of Wall Street: Make the Poor Pay!
- – - – - – - – - – - -
Barely a month after Barack Obama had been sworn in as the 44th U.S. president, riding a wave of immense
popular support with his “Yes, we can” rallying cry echoing around the country and the world, a voice seemed
to appear from nowhere saying, “No, actually you can’t.” Ostensibly, it came first from Rick Santelli, a
relatively obscure investment manager-turned-commentator on CNBC, who denounced Obama’s plans to help
struggling American homeowners as “promoting bad behavior.” In a wide-ranging rant from the floor of the
Chicago Mercantile Exchange on February 19, 2009, Santelli said, “We’re thinking of having a Chicago Tea
Party in July. All you capitalists that want to show up to Lake Michigan, I’m gonna start organizing.” Within
hours, a protest movement had swung into action on the Internet, talk radio, and cable TV, and rallies were
scheduled across the country for the following week.
The apparently spontaneous outburst of disaffected Americans was greatly helped along by an organized
and sophisticated campaign ultimately funded by two of America’s richest men, Charles and David Koch.
In many ways, the emergence of the Tea Party as a potent force in American politics can be seen as the
culmination of almost four decades of behind-the-scenes effort on the part of the billionaire brothers. The
political views of the Koch brothers have always been on the extreme right, nurtured by their father, Fred
Koch, a cofounder of the ultra-right-wing John Birch Society. Since inheriting his massive privately held oil
fortune in the late 1960s, the brothers have been pouring untold millions of dollars into promoting libertarian
causes. The probing of Ames and Levine, as well as a comprehensive, investigative piece by Jane Mayer in
the New Yorker in August 2010, have shown that the brothers established a vast network of ultra-
conservative political organizations, advocacy groups, publications, and think tanks. Included in this network
is the high-profile Cato Institute, which has aggressively pushed for an end to Social Security, and the
Mercatus Center, located at George Washington University, which has been a leading advocate of
environmental deregulation and inaction on climate change.
The brothers have mostly stayed out of politics directly (apart from David Koch’s stint as the vice
presidential candidate for the Libertarian Party in 1980, positioned to the right of Ronald Reagan). Perhaps
the Kochs sensed how politically toxic a couple of billionaires could be to a movement whose central aim has
been slashing taxes on the rich and dismantling programs, like Social Security, that keep millions of
Americans out of poverty.
In fact, the Kochs were really just one — although a leading one — of the ultra-rich U.S. families that in the
1970s turned their attention and directed their wealth to the task of pushing American politics sharply to
the right and putting in place policies that more clearly favored their own interests.
The business elite is and always has been the most powerful force in U.S. politics, by virtue of its dominant
role in the economy. But what is striking — and perhaps inspiring to revisit — is the extent to which the
power of business was somewhat curtailed in the 1930–1970 period, and the extent to which this allowed
policies favoring other members of society to flourish.
But by the early 1970s, with postwar growth starting to stall, business had an opening. It also had a growing
sense that it was losing ground to a broader anti-business movement that came out of the mass student
protests over U.S. involvement in Vietnam. The movement’s ostensible leader, Ralph Nader, was attracting
widespread support and sympathetic media coverage for this freewheeling campaign against “corporate
power.” The threat felt by business leaders was captured well in an eight-page memorandum written in 1971
for the U.S. Chamber of Commerce by Lewis Powell, a prominent Virginia, attorney who served on a number
of corporate boards (and later on the Supreme Court). The memo, expressed a feeling of being under siege.
It amounted to a manifesto warning business that “the American economic system is under broad attack”
and the assault was gaining influence “from the college campus, the pulpit, the media, the intellectual
community . . . and from politicians.” Powell echoed Goldwater’s earlier condemnation of “scared-e-cat”
businessmen, urging them to “stop suffering in impotent silence, and launch a counter-attack.”
Powell laid out a comprehensive plan that bears an uncanny resemblance to what actually happened. He
argued that business largely owned, funded, or had influence over the key media, religious, and academic
institutions in society, and should use its leverage to counter what he perceived as the liberal, anti-business
bias of these institutions. He advocated explicit business intervention in the political sphere, where he said
the American businessman had become “truly the forgotten man.” This had to be countered with concrete
steps — expanding the “role of lobbyist for the business point of view” — in order to regain political clout
with governments. It was time, wrote Powell, for business to learn that “political power is necessary; it must
be used aggressively and with determination — without embarrassment and without reluctance which has
been so characteristic of American business.”
Powell’s manifesto reverberated powerfully within business circles. Along with the Koch brothers, a number
of America’s biggest corporate dynasties came forward to inject massive funds into the cause of pushing
the country sharply to the right. The Olin family, owner of a giant chemical and munitions business, provided
tens of millions of dollars to think tanks, organizations, and programs at major universities aimed at
inculcating right-wing ideas and policy solutions. Huge financial support for libertarian and conservative
causes (and later the attempt to impeach Bill Clinton) also came from Richard Mellon Scaife, heir to the
massive Mellon banking, aluminum, and oil fortune. Joseph Coors, who had inherited the brewery fortune,
described how he was “stirred up” by reading the Powell memo and wondered why businessmen were
“ignoring a crisis.”
Freshly stirred by Powell’s call to arms, Coors became a key figure in establishing the Heritage Foundation,
which was to become an influential promoter of radical pro-capitalist ideas as well as “the Judaeo-Christian
moral order.” The foundation quickly attracted major corporate funding from Dow Chemical, General
Motors, Pfizer Mobil, Chase, and the Manhattan Bank. Du Pont CEO Charles McCoy became one of the
instigators of the Business Roundtable, an exclusive group of CEOs of leading U.S. companies, who planned
to use their economic clout to gain access to top government and congressional leaders.
The war chest of funds from wealthy families and corporations provided the seed money for a huge new
infrastructure of organizations, think tanks, publications, and “astro-turf” campaigns funded by the wealthy
but designed to appear as grass-roots movements. With this massive effort to reshape the debate and
politics of America, the wealthy elite was investing in a deliberate long-term strategy — exactly what Powell
had called for — realizing that institutions shaped by liberal values wouldn’t change over night, but could be
completely overhauled over time through determined push-back from business. The media, owned by
business interests, quickly became a helpful collaborator, and the buzzwords of free-market ideology were
soon dominating the airwaves. The rightward drift accelerated after media mogul Rupert Murdoch hired
former Republican strategist Roger Ailes to launch Fox News in 1996 with an aggressive conservative
message that pushed the media concept of balanced coverage ever farther to the right.
The impact on the Republican Party has been the most profound, with conservative money ensuring that
moderates in the style of Dwight Eisenhower — or even George H. W. Bush — are increasingly blocked from
winning their party’s nominations. The impact of conservative money on the Democratic Party has also been
immense. With increasingly expensive political campaigns in the TV age, business gained a huge advantage
with cash-hungry Democratic candidates, particularly after labor’s economic clout and financial contributions
diminished. As labor faded, the well-financed voices of business grew louder and more persistent,
aggressive, and ubiquitous. Democrats became the new scared-e-cats, retreating in lockstep as the
conservative juggernaut advanced, putting up scant resistance as the goalposts were moved ever farther to
the right. The Democrats largely abandoned support for important labor policies, allowing the minimum wage
to languish, supporting trade deals that encouraged privatization and favored corporate interests, and even
emerging as the leading proponents of financial deregulation in the 1990s. This brought in huge campaign
support from the financial industry, realigning the party with Wall Street, particularly under the influence
of powerful Democratic senators Charles Schumer and Joseph Lieberman.
- – - – - – - – - – - -
The campaign to roll back the postwar egalitarian advances, starting in the 1970s, gained momentum in the
following decades as the rich got vastly richer and invested heavily in a sophisticated political infrastructure
to advance their cause. Their political victories not only enriched themselves further but weakened other
segments of society, creating economic insecurity for millions of Americans. That insecurity left ordinary
Americans frightened, short of resources, and no longer inclined to trust and rely on unions, which seemed
increasingly impotent in the face of rising business wealth.
The 2008 financial crash and its brutal aftermath has raised the possibility that the pendulum might swing
back, once again diminishing the wealth and power of the elite. This hasn’t happened yet — although the
Occupy Wall Street demonstrations in the fall of 2011 point to a building storm.
So far, however, the privileged elite have mostly managed to protect and even enhance their financial
position, with the Wall Street crowd using its clout to win a massive $4.7 trillion bailout. The elite have also
managed to derail attempts to raise their taxes. The very rich seem poised to dismantle programs that are
vital to the well-being of millions of ordinary Americans and that for decades seemed politically untouchable.
Mark Hanna may well have identified a crude truth about American politics when he said “There are two
things that are important in politics. The first is money and I can’t remember what the second is.” Perhaps
the second thing, which the Republican strategist so casually forgot, is that it matters how widely money is
distributed. We therefore offer up a corollary to Hanna’s rule: When money is distributed more equally in
society, ordinary citizens speak with louder voices, making meaningful democracy possible.
Excerpted from “Billionaires’ Ball: Gluttony and Hubris in an Age of Epic Inequality” by Linda McQuaig and
Neil Brooks. Copyright 2012. Excerpted with permission by Beacon Press.
DOES mob controlled AT&T HAVE A RIGHT-WING AGENDA?
If you had millions of dollars to spare, would you spend it the way AT&T does? After all, the company has
given:
• Nearly $2 million to the Republican Governors Association, which helped elect right-wing governors
like Scott Walker (WI), Rick Snyder (MI) and Rick Scott (FL).
• $730,000 to House and Senate Tea Party Caucus members since 2009 — members like Rep. Michele
Bachmann, Rep. Allen West and Sen. Rand Paul.
• $588,500 to the ultra-conservative Blue Dog Democrats — including Reps. Heath Shuler, Loretta
Sanchez and Ben Chandler.
• $1 million to help build the George W. Bush Presidential Library.
• $150,000 to the American Legislative Exchange Council (ALEC), which drafts and promotes state
legislation that is anti-worker, erodes voting rights and slashes corporate taxes.
• $100,000 to the Heartland Institute, a right-wing think tank and leading promoter of climate-science
denial.
Does AT&T have a right-wing agenda? You make the call.
Barney Frank Unloads On The ‘Great Scam’ Of Paul Ryan
share
Sahil Kapur April 12, 2012, 6:08 AM
Rep. Barney Frank (D-MA) unleashed a stinging attack on House Budget Chairman Paul Ryan in an interview
with TPM, describing him as an ideologically driven extremist who doesn’t deserve his reputation within the
political establishment as a genuine fiscal hawk.
Labeling the House-passed GOP budget a “great scam,” Frank cited its military spending hikes from current
law levels as evidence that Ryan’s primary goal isn’t deficit reduction. He also cited Ryan’s refusal to specify
which tax loopholes he’ll close as evidence of trickery.
“It’s not deficit reduction when you increase military spending so that you can make up for that by cutting
Medicare and Medicaid. That’s not budget reduction. That’s ideology. That’s the right wing,” Frank told TPM.
“The other great scam for Ryan is to say, ‘Oh, I’m not going to help the rich people … I’m going to lower their
rates and get rid of loopholes,’ although he doesn’t mention a single loophole that he’ll get rid of.”
The Massachusetts congressman, who is retiring at the end of this term, is an outspoken advocate for
reducing deficits by cutting military spending. His rationale is arithmetic: Paying off the debt while holding
revenues flat and leaving the military untouched will devastate programs that help working-class Americans.
America can afford military cuts, Frank argues, because now that the Cold War is over, “There is no force
out there in the world capable of taking away our freedoms.”
A spokesman for Ryan declined to comment.
Frank said the perception of Ryan as a venerable figure has been created by members of the political
“commentariat” who “want to say we’re somewhat ‘independent’ of all this [polarization]” in order to appear
nonpartisan.
“I agree with [Paul] Krugman’s analysis. There is this instinct to be in the middle. People don’t like to think of
themselves as some way partisan. There are people who take comfort from the fact that, ‘Oh, I’ve got
people on both sides who disagree with me.’ I think you see this in Tom Friedman. You see this in some
others,” he said, also referencing a recent article on Ryan by James Stewart of the New York Times.
“Here’s the deal,” Frank told TPM of some political pundits. “They don’t want to consider themselves to be
siding with the Democrats. It’s important for their self-image that they be seen as centrist. The problem is
the Republican Party has given them fewer and fewer things that they can identify with, because they’ve
moved so far to the right. … So they have to find something they can support on the Republican side to
maintain this self-image that they’re somehow independent of the parties. And so they pick up the Ryan
budget.”
Committing Financial Suicide to Appease Big Finance
Spain Marches Toward a Depression
by MIKE WHITNEY
“Other countries have gone through similar experiences. Latin American countries suffered a lost decade
after 1982, and Japan has been stagnating for a quarter of a century; both have survived. But the European
Union is not a country and it is unlikely to survive. The deflationary debt trap threatens to destroy a still-
incomplete political union.”
George Soros, Financial Times
Money might “make the world go ’round”, but it’s not going to stop the eurozone from breaking apart. That’s
the lesson investors learned on Tuesday when global stock markets plunged on news that yields on Spanish
and Italian debt had again entered the red zone. Stocks rebounded on Wednesday, but to little effect,
after all, the cat is out of the bag. Now everyone knows that the European Central Bank’s 1 trillion euro ”
adrenalin rush” (Long-Tern Refinancing Operation or LTRO) is a short-term fix that won’t relieve the debt
troubles of struggling countries in the south or even reduce the prospects of a vicious credit crunch in the
second half of the year. (As of Friday morning, Spanish 10-year bond yields are back in the nosebleed
section, 5.92 percent, a rate which most economists see as “unsustainable”.)
So, what exactly did the LTRO achieve anyway?
Not much, it appears. While the lavish 3-year low interest loans allowed a significant number of underwater
banks to roll over their debts; it did not address the eurozone’s institutional flaws, or –as economists Simon
Tilford and Philip Whyte say– “reverse the increasingly perverse and self-defeating policies that the region
is pursuing.” Policymakers in Frankfurt and Brussels have refused to heed the warnings of competent
economists and other experts who’ve reiterated ad nauseam that “a monetary
union outside a fiscal union is deeply unstable.” What’s needed is greater “fiscal integration and debt
mutualisation” they advize. But the ECB will have none of it. The Central Bank has decided to pursue its own
blinkered strategy and use the crisis to push through excruciating anti-labor and privatization reforms that
will help to divert more capital to big finance. The results speak for themselves. Spain is marching headlong
into a depression.
To say that Spain’s financial situation is dire would be an understatement. According to International Finance
Review:
“Covered bond syndicate bankers are expecting weak jobs data out of the US and a persistent
deterioration of Spanish bank credit to weigh heavily on the new issue market for the foreseeable future. It’
s a backdrop that is likely to lock Spanish banks out of the primary market and deprive the country’s banks
of a funding plan B, according to one banker….
“The Spanish are completely shut out of the market,” said a covered bond trader. “You won’t get any
momentum for a deal, and for investors, they have no incentive to buy into a deal when the market is
declining.” (“Spanish banks face funding lock-out”, IFR)
Also, while unemployment across Europe has risen to its highest point in more than 14 years, (17.3 million
people) in Spain, joblessness has soared to 23 percent, and among young people, it’s nearly 50 percent. An
entire generation is being sacrificed so the 1 percent can grab a greater portion of the wealth.
If Spain is unable to manage its finances due to rising bond yields, then the eurozone will surely fail. The
country is simply too big to bail out. It’s more than twice the size of Greece, Ireland and Portugal combined.
And Spain’s three largest banks — Banco Santander, BBVA, and La Caixa, “have combined assets of about
$2.7 trillion. Spain’s GDP is just about $1.4 trillion. In other words: Spain’s three biggest banks are nearly
twice as big as the entire Spanish economy.” (CNBC)
Spain’s problems go far beyond its collapsing real estate market, its skyhigh unemployment, its widening
debt-to-GDP ratio, and its teetering banking system. A historic structural adjustment program (“Austerity
measures”) implemented by newly-elected Prime Minister Mariano Rajoy has accelerated the rate of decline
by slashing spending and thrusting the economy into a deflationary spiral. Here’s a clip from Bloomberg:
“Under EU orders, Spain is promising what might be the tightest fiscal squeeze that it or any other European
economy has ever faced. The new plan calls for the budget deficit to fall from 8.5 percent of gross
domestic product to 5.3 percent this year. Since the economy is already shrinking, this requires a
discretionary fiscal tightening of roughly 4 percent of GDP — with the unemployment rate already standing
at about 23 percent.” (“Spain Not Greece Is the Real Test for the European Union,” Bloomberg)
This is fiscal suicide authored by rightwing fanatics who want to use the ongoing crisis to impose their own
business-friendly economic model on Europe. As journalist Pepe Escobar says in a recent article, (It’s) “a
counter-reformation that erases with a single stroke many labour and union rights acquired by the working
class in decades and generations”. That includes extremely harsh cuts in health, education and social
services….”
Here’s more from Escobar:
“The catalogue of Spain’s “austerity” is the usual catalogue of neoliberalism in trouble. A previous, nominally
socialist and now an ultra-conservative government have furiously decimated unemployment, retirement and
severance benefits; turned virtually all labour contracts into precariousness hell; steeply raised fees for
education and transportation; vastly militarised the police; and spent fortunes to bail out banks….” (“All the
pain in Spain”, Pepe Escobar, Aljazeera)
Now that the ECB’s lending program (LTRO) has failed and Spanish banks are more indebted than ever
(Spanish banks borrowed more money from the ECB than any other country—227.6 billion euros or $300
billion); what’s next?
For starters, ECB president Mario Draghi will be forced to revive the vastly unpopular Securities Markets
Program (SMP) and purchase more Spanish debt outright. Investors will see this as a sign of desperation
since Draghi scotched the idea of reviving the program just last week. Now he will have to reverse himself
and hastily resume the EZ’s version of QE.
Restarting the program will set off fireworks in Berlin where hardliners at the Bundesbank will fight tooth-
and-nail to stop Draghi in his tracks. Even so, the wily ex-G-SAX managing director Draghi will undoubtedly
outmaneuver his rivals and the bailout will go forward. That means big finance’s plan to crush organised
labor, savage the social safety net and reduce EZ workers to a life of debt peonage will continue apace.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics
of Illusion (AK Press). He can be reached at fergiewhitney@msn.com.
Bank of America: Too Crooked to Fail
The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why
does the government keep bailing it out?
by: Matt Taibbi
Illustration by Victor Juhasz
At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a
hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for
until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for
bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of
jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again:
This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire
hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at
your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the
government remains creepily committed to their survival, like overindulgent parents who refuse to believe
their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.
It's been four years since the government, in the name of preventing a depression, saved this megabank
from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has
looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in
their conception, some so crude that they'd be beneath your average street thug. Bank of America has
systematically ripped off almost everyone with whom it has a significant business relationship, cheating
investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of
thousands of Americans to foreclosure court using bogus, "robo-signed" evidence – a type of mass perjury
that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining
them of hundreds of millions in value. And when it wasn't ripping off workers and pensioners, it was helping
to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of
millions insuring those same worthless mortgages.
But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger
and more dangerous than ever. It controls more than 12 percent of America's bank deposits (skirting a
federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of
all American home mortgages. By looking the other way and rewarding the bank's bad behavior with a
massive government bailout, we actually allowed a huge financial company to not just grow so big that its
collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to
Fail is one thing; it's also far too corrupt to survive.
All the government bailouts succeeded in doing was to make the bank even more prone to catastrophic
failure – and now that catastrophe might finally be at hand. Bank of America's share price has plunged into
the single digits, and the bank faces battles in courtrooms all over America to avoid paying back the
hundreds of billions it stole from everyone in sight. Its credit rating, already downgraded to a few rungs
above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by
creditors, investors and stockholders – an institutional run on the bank.
They're in deep trouble, but they won't die, because our current president, like the last one, apparently
believes it's better to project a false image of financial soundness than to allow one of our oligarchic banks
to collapse under the weight of its own corruption. Last year, the Federal Reserve allowed Bank of America
to move a huge portfolio of dangerous bets into a side of the company that happens to be FDIC-insured,
putting all of us on the hook for as much as $55 trillion in irresponsible gambles. Then, in February, the
Justice Department's so-called foreclosure settlement, which will supposedly provide $26 billion in relief
for ripped-off homeowners, actually rewarded the bank with a legal waiver that will allow it to escape
untold billions in lawsuits. And this month the Fed will release the results of its annual stress test, in which
the bank will once again be permitted to perpetuate its fiction of solvency by grossly overrating the
mountains of toxic loans on its books. At this point, the rescue effort is so sweeping and elaborate that it
goes far beyond simply gouging the tax dollars of millions of struggling families, many of whom have already
been ripped off by the bank – it's making the government, and by extension all of us, full-blown accomplices
to the fraud.
Anyone who wants to know what the Occupy Wall Street protests are all about need only look at the way
Bank of America does business. It comes down to this: These guys are some of the very biggest assholes on
Earth. They lie, cheat and steal as reflexively as addicts, they laugh at people who are suffering and don't
have money, they pay themselves huge salaries with money stolen from old people and taxpayers – and on top
of it all, they completely suck at banking. And yet the state won't let them go out of business, no matter how
much they deserve it, and it won't slap them in jail, no matter what crimes they commit. That makes them not
bankers or capitalists, but a class of person that was never supposed to exist in America: royalty.
Self-appointed royalty, it's true – but just as dumb and inbred as the real thing, and every bit as expensive
to support. Like all royals, they reached their position in society by being relentlessly dedicated to the cause
of Bigness, Unaccountability and the Worthlessness of Others. And just like royals, they spend most of their
lives getting deeper in debt, and laughing every year when our taxes go to covering their whist markers.
Two and a half centuries after we kicked out the British, it's really come to this?
Bank of America started out in San Francisco in 1904 as an emblem of American capitalism. Founded by a
first-generation Italian-American named Amadeo Giannini – it was even originally called the Bank of Italy –
the bank set out to serve immigrants denied credit by other banks, and it was instrumental in helping to
rebuild the city after the devastating earthquake of 1906.
But like many of the truly bad ideas in history, the present-day version of Bank of America was the product
of a testosterone overdose. The concept of an overmassive, acquiring-everything-in-sight, bicoastal
megabank was hatched in the terminal inferiority complex of a greed-sick asshole – actually two greed-sick
assholes, both of them CEOs of Southern regional banks, who launched a cartoonish arms race of bank
acquisitions that would ultimately turn the American business world upside down.
The antagonists were Hugh McColl Jr. and Ed Crutchfield, the respective leaders of North Carolina National
Bank (which would take over Bank of America) and First Union (which turned into Wachovia), both based in
Charlotte, North Carolina. Obsessed with each other, these two men transformed their personal competition
into one of the most ridiculous and elaborate penis-measuring contests in the history of American business –
even engaging in the garish Freudian spectacle of vying to see who would have the tallest skyscraper in
Charlotte. First Union kicked things off in 1971 by erecting the 32-story Jefferson First Union Tower, then
the biggest building in town – until McColl's bank built the 40-story NCNB Plaza in 1974. Then, in the late
Eighties, Crutchfield topped McColl with the city's first post¬modern high-rise, One First Union Center, at
42 stories. That held the prize until 1992, when McColl went haywire and put up the hideous 60-story Bank
of America Corporate Center, a giant slab of gray metal affectionately known around Charlotte as the "Taj
McColl." When asked by reporters if he was pleased that his 60-story monster overwhelmed his rival's 42-
story weenie, McColl didn't hesitate. "Do I prefer having the tall one?" he said. "Yes."
For a time, this ridiculous rivalry between two strutting Southern peacocks was restrained by the law –
specifically, the McFadden-Pepper Act of 1927 and the Douglas Amendment to the Bank Holding Company
Act of 1956. These two federal statutes, which made it illegal for a bank holding company to own and
operate banks in more than one state, were effectively designed to prevent exactly the Too Big to Fail
problem we now find ourselves faced with. The goal, as Sen. Paul Douglas explained at the time, was "to
prevent an undue concentration of banking and financial power, and instead keep the private control of
credit diffused as much as possible."
But these laws didn't sit well with Hugh McColl. To him, size was everything. "We realized that if we didn't
leave North Carolina," he explained later in his career, "we would never amount to anything – that we would
not be important." Note that he didn't say the ban on expansion prevented him from turning a profit or
earning good returns for his shareholders – only that it put a limit on his sense of self-importance. So McColl
and his banking minions set out to break down the interstate banking laws. First, in 1981, they used a legal
loophole in Florida law to buy a bank branch there – evading the federal ban on out-of-state owners. Then,
following a Supreme Court decision in 1985 that allowed banks to cross state lines within a designated
region, he and Crutchfield went on a conquering spree worthy of a Mongol horde, buying up a host of banks in
other Southern states. McColl, a silver-haired ex-Marine who would eventually be celebrated for bringing a
"military approach" to his business, went to ridiculous lengths to play up the manly conquest aspect of his
bank's merger frenzy, rewarding key employees with crystal hand grenades. By 1995, McColl had acquired
more than 200 banks and thrifts across the South, while Crutchfield had snapped up 50.
A few years later, after Congress repealed most of the barriers to interstate banking, McColl took over
Bank of America, realizing his dream of creating what one trade publication called "the first ocean-to-ocean
bank in the nation's history." Later, after McColl retired, his successors kept up his acquisitive legacy,
buying notorious mortgage lender Countrywide Financial in 2008, and using some of the $25 billion in federal
bailout funds they received to acquire dying investment bank Merrill Lynch. Both firms were infamous for
their exotic gambles and their systematic cutting of regulatory corners – meaning that the shopping spree
had burdened Bank of America with a huge portfolio of doomed trades and criminal conspiracies.
But to McColl, it was all worth it – because he would never have been important if he hadn't also been big. "I
have no regrets about building it large," he said in 2010, when asked if he considered all the monster
consolidations a mistake in light of the crash of 2008. "I may have some regrets about not building it larger."
This deeply American terror of not always having the absolutely hugest dick in the room is what put us in the
inescapable box called Too Big to Fail. When the bailouts were dreamed up to save Bank of America, the
government was essentially committing public resources to preserve this lunatic spending spree – which
means two successive presidential administrations have now spent nearly half a decade and hundreds of
billions of tax dollars defending the premise that Hugh McColl should always be allowed to have the "taller
one."
And why? The rationale for allowing that merger spree in the first place was based on a phony assumption:
that big banks would somehow be more efficient and more profitable than small ones. "The whole premise of
a Citibank or a Chase or a Bank of America is wrongheaded," says Susan Webber, an analyst who writes one
of the most popular and respected financial blogs under the pseudo¬nym Yves Smith. "Studies consistently
show that after a certain size threshold, bank efficiency taps out. In fact, it turns out that all those cost
savings the banks were supposed to enjoy from being bigger were actually based on cutting corners and
fraud."
And man, what a lot of fraud!
In the end, it all comes back to mortgages. Though Bank of America would ultimately be charged with
committing a dizzyingly diverse variety of corporate misdeeds, the bulk of the trouble the bank is in today
arises from the Great Mortgage Scam of the mid-2000s, which caused the biggest financial bubble in
history.
The shorthand version of the scam is by now familiar: Banks and mortgage lenders conspired to create a
gigantic volume of very risky home loans, delivering outsize mortgages to dubious borrowers like immigrants
without identification, the unemployed and people with poor credit histories. Then the banks took those dicey
home loans and sprinkled them with bogus math, using inscrutable financial gizmos like collateralized
mortgage obligations to rechristen the risky home loans as high-grade, AAA-rated securities that could be
sold off to unions, pensioners, foreign banks, retirement funds and any other suckers the banks could find.
In essence, America's financial institutions grew vast fields of cheap oregano, and then went around the
world marketing their product as high-grade weed.
The holy trinity of Bank of America, Countrywide and Merrill Lynch represented the worst conceivable team
of financial powers to get hold of this scam. It was a little like the Wall Street version of Michael Bay's
nonclassic Con Air, in which the world's creepiest serial killer, most demented terrorist and most depraved
redneck are all thrown together on the same plane. In this case, it was the most careless mortgage lender
(the spray-tanned huckster Angelo Mozilo from Countrywide, who was named the second-worst CEO of all
time by Portfolio magazine), the most dangerous mortgage gambler (Merrill, whose CEO was the self-
worshipping jerkwad John Thain, the ex-Goldman banker who bought himself an $87,000 area rug as his
company was cratering in 2008) and the most relentless packager of mortgage pools (Bank of America), all
put together under one roof and let loose on the world. These guys were so corrupt, they even shocked one
another: According to a federal lawsuit, top executives at Countrywide complained privately that Bank of
America's "appetite for risky products was greater than that of Countrywide."
The three lenders also pioneered ways to sell their toxic pools of mortgages to suckers. Bank of America's
typical marketing pitch to a union or a state pension fund involved a double or even triple guarantee. First, it
promised, in writing, that all its loans had passed due diligence tests and met its high internal standards.
Next, it promised that if any of the loans in the mortgage pool turned out to be defective or in default, it
would buy them back. And finally, it assured customers that if all else failed, the pools of mortgages were
all insured, or "wrapped," by bond insurers like AMBAC and MBIA.
It sounded like a can't-lose deal. Not only did the bank offer a written guarantee of the high quality of the
loans it was selling, it also promised to buy back any bad loans, which were often insured to boot. What could
go wrong?
As it turned out, everything. From tits to toes, the mortgage pools created, packaged and sold by
Countrywide, Merrill Lynch and Bank of America were a complete sham: worthless and often falling apart
virtually from the day they were delivered.
First of all, despite the fact that the banks had promised that all the loans in their pools met their internal
lending standards, that turned out to be completely untrue. An SEC¬ investigation later found out, for
instance, that Countrywide essentially had no standards for whom to lend to. As a federal judge put it,
"Countrywide routinely ignored its official underwriting guidelines to such an extent that Countrywide would
underwrite any loan it could sell." Translation: Countrywide gave home loans to anything with a pulse,
provided they had a sucker lined up to buy the loan.
How did they make these loans in the first place? By committing every kind of lending fraud imaginable –
particularly by entering fake data on home loan applications, magically turning minimum-wage janitors into
creditworthy wage earners. In 2006, according to a report by Credit Suisse, a whopping 49 percent of the
nation's subprime loans were "liar's loans," meaning that lenders could state the incomes of borrowers
without requiring any proof of employment. And no one lied more than Countrywide and Bank of America. In
an internal e-mail distributed in June 2006, Countrywide's executives worried that 40 percent of the firm's
"reduced documentation loans" potentially had "income overstated by more than 10 percent... and a
significant percent of those loans would have income overstated by 50 percent or more."
"What large numbers of Countrywide employees did every day was commit fraud by knowingly making and
approving loans they knew borrowers couldn't repay," says William Black, a former federal banking
regulator. "To do so, it was essential that the loans be made to appear to be relatively less risky. This
required pervasive documentation fraud."
So what happened when institutional investors realized that the loans they had bought from Countrywide
were nothing but shams? Instead of buying back the bad loans as promised, and as required by its own
contracts, the bank simply refused to answer its phone. A typical transaction involved U.S. Bancorp, which in
2005 served as a trustee for a group of investors that bought 4,484 Countrywide mortgages for $1.75
billion – only to discover their shiny new investment vehicle started throwing rods before they could even
drive it off the lot. "Soon after being sold to the Trust," U.S. Bancorp later observed in a lawsuit,
"Countrywide's loans began to become delinquent and default at a startling rate." The trustees hired a
consultant to examine 786 loans in the pool, and found that an astonishing two-thirds of them were defective
in some way. Yet, confronted with the fraud, Countrywide failed to repurchase a single loan, offering "no
basis for its refusal."
And what about that ostensible insurance that Bank of America sold with its bundles of mortgages? Well,
those policies turned out not to be worth very much, since so many of the loans defaulted that they blew the
insurers out of business. If you went bust buying bad mortgages from Bank of America, chances are, so did
your insurer. At best, you two could now share a blanket in the poorhouse.
Many of the nation's largest insurers, in fact, are now suing the pants off Bank of America, claiming they
were fraudulently induced to insure the bank's "high lending standards." AMBAC, the second-largest bond
insurer in America, went bankrupt in 2010 after paying out some $466 million in claims over 35,000
Countrywide home loans. After analyzing a dozen of the mortgage pools, AMBAC found that a staggering 97
percent of the loans didn't meet the stated underwriting standards. That same year, the Association of
Financial Guaranty Insurers, a trade group representing firms like AMBAC, told Bank of America that it
should be repurchasing as much as $20 billion in defective mortgages.
Some of these institutional investors were at least partial accomplices to their own downfall. In the boom
era of easy money, financial professionals everywhere were chasing the lusciously high yields offered by
these bundles of subprime mortgages, and everyone knew the deals weren't exactly risk-free. But
ultimately, Bank of America was knowingly selling a defective product – and down the road, that product was
bound to blow up on somebody innocent. "A teacher or a fireman goes to work and saves money for their
retirement via their pensions," says Manal Mehta, a partner at the hedge fund Branch Hill Capital who spent
two years researching Bank of America. "That pension fund buys toxic securities put together by Wall
Street that were designed to fail. So when that security blows up, wealth flows directly from that pension
fund into the hands of a select few."
This is the crossroads where Bank of America now lives – trying to convince the government to allow it to
remain in business, perhaps even asking for another bailout or two, while it avoids paying back untold billions
to all of the institutional customers it screwed, the list of which has grown so long as to almost be comical.
Last year, the bank settled with a group of pension and retirement funds, including public employees from
Mississippi to Los Angeles, that charged Bank of America and Merrill with misrepresenting the value of
more than $16 billion in mortgage-backed securities. In the end, the bank paid only $315 million.
In the first half of last year, Bank of America paid $12.7 billion to settle claims brought by defrauded
customers. But countless other investors are still howling for Bank of America to take back its counterfeit
product. Allstate, the maker of those reassuring Dennis Haysbert-narrated commercials, claims it got stuck
with $700 million in defective mortgages from Countrywide. The states of Iowa, Oregon and Maine, as well
as the United Methodist Church, are suing Bank of America over fraudulent deals, claiming hundreds of
billions in collective losses. And there are similar lawsuits for nonmortgage-related securities, like a
revolting sale of doomed municipal securities to the state of Hawaii and Maui County. In that case, Merrill
Lynch brokers allegedly dumped $944 million in auction-rate securities on the Hawaiians, even though the
brokers knew that the auction-rate market was already going bust. "Market is collapsing," a Merrill
executive named John Price admitted in an internal e-mail, before joking about having to give up pricey
dinners at a fancy Manhattan restaurant. "No more $2K dinners at CRU!!"
In the end, says Mehta, Bank of America's fraud resulted in "one of the biggest reverse transfers of
wealth in history – from pensioners to financiers. What the 99 percent should understand is that Wall
Street knowingly inflated the bubble by engaging in rampant mortgage fraud – and then profited from the
collapse of their own exuberance by devising a way to shift the losses to countless pension funds,
endowments and other innocent investors." The assembled worldwide collection of swindled pensioners and
unions and investors is a little like the crowd that storms the basketball court in the Will Ferrell movie Semi-
Pro when the home team's owner welshes on his promise to hand out free corn dogs if the score tops 125
points. Corn dogs, Bank of America! Where are the freaking corn dogs!
Incredible as it sounds, owing practically everyone in the world billions of dollars apiece is only half of Bank
of America's problem. The bank didn't just flee the scene of its various securities rip-offs. It also made a
habit out of breaking the law and engaging in ethical lapses on a grand scale, all over the globe. Once your
money ends up in their pockets, they just slither off into the night, no matter their legal or professional
obligations.
Case in point: With all those hundreds of thousands of mortgages the bank bought, it simply stopped filing
basic paperwork – even the stuff required by law, like keeping chains of title. A blizzard of subsequent
lawsuits from pissed-off localities reveals that the bank used this systematic scam to avoid paying local
fees. Last year, a single county – Dallas County in Texas – sued Bank of America for ducking fees since 1997.
"Our research shows it could be more than $100 million," Craig Watkins, the county's district attorney, told
reporters. Think of that next time your county leaves a road unpaved, or is forced to raise property taxes
to keep the schools open.
But the lack of paperwork also presented a problem for the bank: When it needed to foreclose on someone,
it had no evidence to take to court. So Bank of America unleashed a practice called robo-signing, which
essentially involved drawing up fake documents for court procedures. Two years ago, a Bank of America
robo-signer named Renee Hertzler gave a deposition in which she admitted not only to creating as many as
8,000 legal affidavits a month, but also to signing documents with a fake title.
Yet here's how seriously fucked the financial markets are: Even the most vocal critics of Bank of America
consider the mass, factory-style production of tens of thousands of fake legal documents per month not
that big a deal. "Robo-signing is like focusing on Bernie Madoff's accountant," quips April Charney, a well-
known foreclosure lawyer who has spent large chunks of the past two decades in battle with Bank of
America.
Robo-signing is not the disease – it's a symptom of Bank of America's entire attitude toward the law. A bank
that's willing to commit whole departments to inventing legal affidavits might also, for instance, intentionally
ding depositors with bogus overdraft fees. (A class action suit accused Bank of America of heisting some
$4.5 billion from its customers this way; the bank settled the suit for a mere 10 cents on the dollar.)
Or it might give up trying to win government contracts honestly and get involved with rigging municipal bids –
a mobster's crime, for which the accused used to do serious time, back when the bids were for construction
and garbage instead of municipal bonds, and the defendants were Eye-talians in gold chains instead of Ivy
Leaguers in ties and Chanel glasses. We now know that Bank of America routinely conspired with other banks
to make sure it paid low prices for the privilege of managing the moneys of various cities and towns. If the
city of Baltimore or the University of Mississippi or the Guam Power Authority issued bonds to raise money,
the bank would huddle up with the likes of Bear Stearns and Morgan Stanley and decide whose "turn" it was
to win the bid. Bank of America paid a $137 million fine for its sabotage of the government-contracting
process – and in an attempt to avoid prosecution, it applied to the Justice Department's corporate leniency
program, essentially confessing its criminal status: As plaintiff attorneys noted, the application "means that
Bank of America is an admitted felon." Think about that when you hear about all the bailouts the bank has
gotten in the past four years. A street felon who gets out of jail can't even vote in some states – and yet
Bank of America is allowed to receive billions in federal aid and dominate the electoral process with
campaign contributions?
Some of the bank's other collusive schemes are even more ambitious. Last year, the bank was sued,
alongside some of its competitors, for conspiring to rig the London Interbank Offered Rate. Many
adjustable-rate financial products are based on LIBOR – so if the big banks could get together and
artificially lower the rate, they would pay out less to customers who bought those products. "About $350
trillion worth of financial products globally reference LIBOR," says one antitrust lawyer familiar with the
case. "Which means," she adds in a striking understatement, "that the scale of this conspiracy is extremely
large."
What's most striking in all of these scams is the corporate culture of Bank of America: These guys are just
dicks. Time and again, they go out of their way to fleece their own customers, without a trace of remorse. In
classic con-artist behavior, Bank of America even tried to rip off homeowners a second time by gaming
President Obama's HAMP program, which was designed to aid families who had already been victimized by
the banks. In a lawsuit filed last year, homeowners claim they were asked to submit a mountain of
paperwork before receiving a modified loan – only to have the bank misplace the documents when it was time
to pay up. "The vast majority tell us the same thing," says Steve Berman, an attorney for the plaintiffs.
"Bank of America claims to have lost their paperwork, failed to return phone calls, made false claims about
the status of their loans and even took actions toward foreclosure without informing homeowners of their
options." The scheme allowed the bank to bleed struggling homeowners for a few last desperate months by
holding out the carrot of federal aid they would never receive.
Even when caught red-handed and nailed by courts for behavior like this, Bank of America has remained
smugly unrepentant. As part of an $8.4 billion settlement it entered into with multiple states over predatory
lending practices, the bank agreed to provide homeowners with modified loans and promised not to raise
rates on borrowers. But no sooner was the deal signed than the bank "materially and almost immediately
violated" the terms, according to Nevada Attorney General Catherine Cortez Masto. It not only jacked up
rates on homeowners, it even instituted a policy punishing any bank employee who spent more than 10 minutes
helping a victim get a loan modification.
The bank's list of victims goes on and on. The disabled? Just a few weeks ago, the government charged
Bank of America with violating the Fair Housing Act by illegally requiring proof of disability from people who
rely on disability income to make their mortgage payments. Minorities? Last December, the bank settled
with the Justice Department for $335 million over Countrywide's practice of dumping risky subprime loans
on qualified black and Hispanic borrowers. The poor? In South Carolina, Bank of America won a contract to
distribute unemployment benefits through prepaid debit cards – and then charged multiple fees to jobless
folk who had the gall to withdraw their money from anywhere other than a Bank of America ATM. Seriously,
who hasn't this bank conspired to defraud? Puppies? One-eyed Sri Lankans?
Bank of America likes to boast that it has changed its ways, replacing many of the top executives who helped
create the mortgage bubble. But the man promoted from within to lead the new team, CEO Brian Moynihan,
is just as loathsome and tone-deaf as his previous bosses. As befits a new royal, Moynihan defended a plan
to gouge all debit-card users with $5 fees by citing his divine privilege: "We have a right to make a profit."
And despite the bank's litany of crimes, Moynihan seems to think we're just overreacting. After all, he gives
to charities! "I get a little incensed when you think about how much good all of you do, whether it's volunteer
hours, charitable giving we do, serving clients and customers well," he told employees last October. Then,
addressing would-be protesters: "You ought to think a little about that before you start yelling at us."
In sum, Bank of America torched dozens of institutional investors with billions in worthless loans, repeatedly
refused to abide by contractual obligations to buy them back, evaded hundreds of millions in local fees and
taxes, pushed tens of thousands of people into foreclosure using phony documents, ignored multiple court
orders to stop its illegal robo-signing, and exploited President Obama's signature mortgage-relief program.
The bank fixed the bids on bonds for schools and cities and utilities all over America, and even conspired to
try to game the game itself – by fixing global interest rates!
So what does the government do about a rogue firm like this, one that inflates market-wrecking bubbles,
commits mass fraud and generally treats the law like its own personal urinal cake? Well, it goes without
saying that you rescue that "admitted felon" at all costs – even if you have to spend billions in taxpayer
money to do it.
Bank of America should have gone out of business back in 2008. Just as the mortgage market was crashing,
it made an inconceivably stupid investment in subprime mortgages, acquiring Countrywide and the billions in
potential lawsuits that came with it. "They tried to catch a falling knife and lost their hand and foot in the
process," says Joshua Rosner, a noted financial analyst. It then spent $50 billion buying a firm, Merrill
Lynch, that was rife with billions in debts. With those two anchors on its balance sheet, Hugh McColl's
bicoastal dream bank should have gone the way of the dinosaur.
But it didn't. Instead, in the midst of the crash, the government forked over $45 billion in aid to Bank of
America – $20 billion as an incentive to bring its cross-eyed bride Merrill Lynch to the altar, and another
$25 billion as part of the overall TARP bailout. In addition, the government agreed to guarantee $118 billion
in Bank of America debt.
So what did the bank do with that money? First, it sat by while lame-duck executives at Merrill paid
themselves $3.6 billion in bonuses – even though Merrill lost more than $27 billion that year. In all, 696
executives received more than $1 million each for helping to crash the storied firm. (The bank wound up hit
with a $150 million fine for its failure to inform shareholders about the Merrill losses and bonuses.) Bank of
America, meanwhile, paid out more than $3.3 billion in bonuses to itself, including more than $1 million each to
172 executives.
In fact, the real bailouts of Bank of America didn't even begin until well after TARP. In the years since the
crash, the bank has issued more than $44 billion in FDIC-insured debt through a little-known Federal
Reserve plan called the Temporary Liquidity Guarantee Program. The plan essentially allows companies
whose credit ratings are fucked to borrow against the government's good name – and if the loans aren't
paid back, the government is on the hook for all of it. Bank of America has also stayed afloat by constantly
borrowing billions in low-¬interest emergency loans from the Fed – part of $7.7 trillion in "secret" loans that
were not disclosed by the central bank until last year. When the data was finally released, we found out
that, on just one day in 2008, Bank of America owed the Fed a staggering $86 billion.
That means that when you take out a credit card or a mortgage or a refinancing from Bank of America,
you're essentially borrowing from the state; the "private" bank is simply taking a cut as a middleman. "For
banks, the cost of capital is the key to success," says former New York governor Eliot Spitzer. "So by
lowering their cost of capital to almost zero, the Fed has almost guaranteed that the banks will make big
profits."
Another public lifeline is Fannie Mae and Freddie Mac, the giant, nationalized mortgage lenders. Need to
make some cash? Toss a bunch of home loan applications onto a city street, then sell the resulting mortgages
to Fannie and Freddie, which are basically a gigantic pile of public money guarded by second-rate managers.
Just like the state pensions in Iowa and Maine and Missis¬sippi, Fannie and Freddie were targeted for sales
of toxic mortgages, and just like those entities, they have sued Bank of America, claiming they were
suckered into buying more than $30 billion in shitty securities. But unlike those other suckers, Fannie and
Freddie continued to buy crap loans from Bank of America even after it was clear they'd been hoodwinked.
Last year, the bank created more than $156 billion in mortgages – nearly $38 billion of which were bought by
Fannie. Having the government as an ever-ready customer, standing by to buy mortgages at full retail
prices, has always been an ongoing hidden bailout to the banks.
But even the government has its limits. In February, Fannie announced it would no longer keep blindly buying
mortgages from Bank of America. Why? Because the bank, already slow to buy back its defective
mortgages, had gotten even slower. By the end of last year, the government reported, more than half of all
the crappy loans that Fannie wanted to return came from a single bad bank – Bank of America.
But if you think that Fannie cutting off the bank is good news, think again. If it can't get the money it's owed
from Bank of America, it'll just go begging to the Treasury. Fannie has already asked for $4.5 billion to
cover losses this year – and if Bank of America doesn't pony up, it'll have to reach even deeper into our
pockets, making for yet another shadow bailout to the firm.
It gets worse. Last fall, some of the bank's biggest creditors and counterparties started to get nervous
about the mountain of toxic bets still sitting on Merrill Lynch's books – a generation of ill-considered,
complex, exotic derivative trades, bets on bets on bets on shaky subprime mortgages, sitting there on the
company balance sheet, waiting to explode. Nobody felt good lending Bank of America money with that
dangerous shitpile lying there. So they asked the bank to move a chunk of that mess from Merrill Lynch onto
Bank of America's own balance sheet. Why? Because Bank of America is a federally insured depository
institution. Which means that the FDIC, and by extension you and me, is now on the hook for as much as $55
trillion in potential losses. Black, the former regulator, calls the transfer an "obscenity. As a regulator, I
would have never allowed it. Transferring risk to the insured institution crosses the reddest of red lines."
But by far the biggest bailout to Bank of America has come via the sweetheart deals it cut to settle the
massive lawsuits filed against it. Some of the deals, which were brokered by the Justice Department and
state attorneys general, allowed the bank to get away with paying pennies on the dollar on its mountains of
debt. Worst of all was the recent $26 billion foreclosure settlement involving Bank of America and four
other major firms. The deal, in which the banks agreed to pay cash to screwed-over homeowners in
exchange for immunity from federal prosecution on robo-signing issues, was hailed as a big multibillion-dollar
bite out of the banks. President Obama was all but strutting over his beatdown of Wall Street. "We are
Americans, and we look out for one another; we get each other's backs," he declared. "We're going to make
sure that banks live up to their end of the bargain."
In fact, the government has a lousy track record when it comes to enforcing settlements. The foreclosure
deal arrives on the heels of an $8.4 billion investor settlement, whose provisions Bank of America had
already been accused of violating, raising rates and abusing homeowners as soon as the deal was struck. The
bank also violated a previous settlement with the Federal Trade Commission, illegally slapping $36 million in
fees on struggling homeowners after specifically agreeing not to do so. So Bank of America's reward for
blowing off its previous settlements for mistreating homeowners was to get another soft-touch deal from
the government, which they will presumably be just as free to ignore. Why? Because while state officials
have ultimate enforcement authority over the foreclosure settlement, the early enforcement reviews will
be handled by "internal quality control groups." In other words, Bank of America itself will be grading its
own compliance!
Even if Bank of America coughs up its share of the $26 billion settlement, the deal is woefully inadequate to
address the wider fraud that went on in creating and pooling mortgages. "It's like handing a box of tissues
to someone whose immune system has been destroyed by AIDS," says Rosner. "It doesn't come close to
addressing the scale of the problem." Many Wall Street observers think that without the waiver from
federal prosecution provided by the settlement, Bank of America would have faced billions in lawsuits for
robo-signing offenses alone.
Oh, and one more thing, since we're talking about avoiding bills: Bank of America didn't pay a dime in federal
taxes last year. Or the year before. In fact, they got a $1 billion refund last year. They claimed it was
because they had pretax losses of $5.4 billion in 2010. They paid out $35 billion in bonuses and compensation
that year. You do the math.
And here's the biggest scam of all: After all that help – all the billions in bailouts, the tens of billions in Fed
loans, the hundreds of billions in legal damages made to disappear, the untold billions more of unpaid bills
and buybacks – Bank of America is still failing. In December, the bank's share price dipped below $5, and
after being cut off by Fannie in February, the bank announced a truly shameless plan to jack up fees for
depositors by as much as $25 a month – what one market analyst called a "measure of last resort."
The company reported positive earnings last year, with net income of $84 million, but analysts aren't
convinced. David Trainer, a MarketWatch commentator, switched his rating of Bank of America to "very
dangerous" in part because its accounting is wildly optimistic. Among other things, the bank's projections
assume a growth rate of 20 percent every year for the next 18 years. What's more, the bank has set aside
only $8.5 billion for buybacks of those crap corn-dog loans from enraged customers – even though some
analysts think the number should be much higher, perhaps as high as $27 billion. Because more lawsuits are
so likely, says Mehta, it's "virtually impossible to decipher if Bank of America requires more equity, or even
another tax¬payer bailout."
But the only number that really matters is this one: $37 billion. That's the total bonus and compensation pool
this broke-ass, state-dependent, owing-everybody-in-sight bank paid out to its employees last year. This, in
essence, is the business model underlying Too Big to Fail: massive growth based on huge volumes of high-risk
loans, coupled with lots of fraud and cutting corners, followed by huge payouts to executives. Then, with the
company on the verge of collapse, the inevitable state rescue. In this whole picture, the only money that's
ever "real" is the fat bonuses the executives cash out of the bank at the end of each year. "Fraud is a sure
thing," says Black. "The firm fails, unless it is bailed out, but the controlling officers walk away wealthy."
The Dodd-Frank financial reform approved by Congress last year was supposed to fix the problem of Too
Big to Fail, giving the government the power to take over and disband troubled megafirms instead of bailing
them out. "The way to cut our Gordian financial knot is simple," MIT economist Simon Johnson wrote in The
New York Times. "Force the big banks to become smaller." But few in the financial community believe that
will ever happen. "If Bank of America crashes, the first thing that would happen is Dodd-Frank would be
revealed as a fraud," says Rosner. "The Fed and the Treasury would ask Congress for a bailout to 'save the
economy.' It's the worst-kept secret on Wall Street."
In a pure capitalist system, an institution as moronic and corrupt as Bank of America would be swiftly
punished by the market – the executives would get to loot their own firms once, then they'd be looking for
jobs again. But with the limitless government support of Too Big to Fail, these failing financial giants get to
stay undead forever, continually looting the taxpayer, their depositors, their shareholders and anyone else
they can get their hands on. The threat posed by Bank of America isn't just financial – it's a full-blown
assault on the American dream. Where's the incentive to play fair and do well, when what we see rewarded
at the highest levels of society is failure, stupidity, incompetence and meanness? If this is what winning in
our system looks like, who doesn't want to be a loser? Throughout history, it's precisely this kind of corrupt
perversion that has given birth to countercultural revolutions. If failure can't fail, the rest of us can never
succeed.
Related
• J.P. Morgan Chase's Ugly Family Secrets Revealed
This story is from the March 29th, 2012 issue of Rolling Stone.
More Taibbi
First They Come for the Muslims
http://www.truthdig.com/report/item/first_they_come_for_the_muslims_20120416/
Posted on Apr 16, 2012
By Chris Hedges
Tarek Mehanna, a U.S. citizen, was sentenced Thursday in Worcester, Mass., to 17½ years in prison. It was
another of the tawdry show trials held against Muslim activists since 9/11 as a result of the government’s
criminalization of what people say and believe. These trials, where secrecy rules permit federal lawyers to
prosecute people on “evidence” the defendants are not allowed to examine, are the harbinger of a corporate
totalitarian state in which any form of dissent can be declared illegal. What the government did to Mehanna,
and what it has done to hundreds of other innocent Muslims in this country over the last decade, it will
eventually do to the rest of us.
Mehanna, a teacher at Alhuda Academy in Worcester, was convicted after an eight-week jury trial of
conspiring to kill U.S. soldiers in Iraq and providing material support to al-Qaida, as well as making false
statements to officials investigating terrorism. His real “crime,” however, seems to be viewing and
translating jihadi videos online, speaking out against U.S. foreign policy in the Middle East and refusing to
become a government informant.
Stephen F. Downs, a lawyer in Albany, N.Y., a founder of Project Salam and the author of “Victims of
America’s Dirty War,” a booklet posted on the website, has defended Muslim activists since 2006. He has
methodically documented the mendacious charges used to incarcerate many Muslim activists as terrorists.
Because of “terrorism enhancement” provisions, any sentence can be quadrupled—even minor charges can
leave prisoners incarcerated for years.
“People who have committed no crime are taken into custody, isolated without adequate recourse to legal
advice, railroaded with fake or contrived charges, and ‘disappeared’ into prisons designed to isolate them,”
Downs told me when we met last week at Brown University in Providence, R.I.
Downs calls the process of condemning people before they have committed a crime “pre-emptive
prosecution.” The concept of pre-emptive prosecution mocks domestic law as egregiously as pre-emptive
war mocks the foundations of international law.
Downs’ awakening to the corruption of the judicial system came in 2006 when Yassin Aref, a Kurdish refugee
from Iraq who was an imam of a mosque in Albany, was entrapped in a government sting operation. Downs,
who three years earlier had retired as chief attorney for the New York State Commission on Judicial
Conduct, became part of Aref’s legal defense team. He met with Aref two or three times a week in the
Rensselaer County jail over a six-month period.
“I was unprepared for the fact that the government would put together a case that was just one lie piled up
on top of another lie,” Downs said. “And when you pointed it out to them they didn’t care. They didn’t refute
it. They knew that it was a lie. The facts of most of these pre-emptive cases don’t support the charges. But
the facts are irrelevant. The government has decided to target these people. It wants to take them down
for ideological reasons.”
“In the past, when the government wanted to do something illegal it simply went ahead and broke the law,”
he said. “They rounded up the Japanese during World War II and stuck them in concentration camps. They
knew they were breaking the law when they decided to go after the activists with COINTELPRO in the
1960s but they rationalized that they were doing it for a higher purpose. This is different. The government
is destroying the legal framework of our country. They are twisting it out of recognition to make it appear as
though what they’re doing is legal. I don’t remember that kind of a situation in the past. The opinions of the
court are now only lame excuses as to why the courts can’t do justice.”
“The government lawyers must know these pre-emptive cases are fake,” he said. “They must know they’re
prosecuting people before a crime has been committed based on what they think the defendant might do in
the future. They defend what they are doing by saying that they are protecting the nation from people who
might want to do it harm. I’m sure they’ve been co-opted at least to believe that. But I think they also know
that they are twisting the legal concepts, they are stretching them beyond what the framework of the law
can tolerate. They have convinced themselves that it is OK to convict many innocent people as long as they
prevent a few people from committing crimes in the future. They are creating an internal culture within the
Justice Department where there is contempt for the law and for the foundational principle that it is better
for one guilty person to go free than that one innocent person is convicted. They must know they do not do
justice, and that they serve only ideological ends.”
Downs pointed out that if the government was actually concerned about the rule of law it would prosecute
politicians and other prominent Americans who have publicly spoken out in support of Mojahedin-e Khalq
(MEK or People’s Holy Jihadis), an armed group on the State Department terrorism list that carries out
terrorist attacks inside Iran. They include former New York City Mayor Rudy Giuliani, former Pennsylvania
Gov. Ed Rendell, former U.N. Ambassador John Bolton, former Vermont Gov. Howard Dean, former
Homeland Security Secretary Tom Ridge, former Attorney General Michael Mukasey, former homeland
security adviser Frances Fragos Townsend, former FBI Director Louis Freeh, former Joint Chiefs of Staff
Chairman Gen. Hugh Shelton, and Gen. James Jones, who was President Obama’s first national security
adviser. Some of them voiced their backing in speeches for which they were paid lavishly.
“Their support of MEK is far worse than any of the pre-emptive prosecution cases,” Downs said. “They are
literally engaged in material support for terrorism. But of course they’re not being prosecuted. ... The whole
thing is a game. It’s not serious law enforcement. It is political posturing. This will bring the law into
contempt. It will bring the mechanisms of prosecution into contempt and eventually it will destroy the legal
system.”
“Justice is now justice for corporations,” he went on. “Anybody who interferes with the corporations, who
interferes with their profits, who interferes with their rights, will become labeled ‘terrorists.’ They become
people we need to get rid of. Judges, politicians and lawyers all feed at the same corporate trough. And
that is why their decisions increasingly are corporate decisions.”
Downs holds out a faint hope that it may be possible to force the Justice Department to turn over
exculpatory evidence—evidence of a defendant’s innocence that by law the prosecution must disclose to the
defendant but an obligation that the prosecutors frequently ignore. He said he is certain there is
exculpatory evidence in government vaults that could free many of those pre-emptively prosecuted.
Government prosecutors, however, do not willing sabotage their own cases by turning over evidence that
would exonerate those they seek to condemn. Downs knows it is a quixotic fight, but he is working to get the
undisclosed exculpatory evidence in pre-emptive prosecution cases released to defense lawyers.
“That’s my one hope of getting these guys out of jail—I don’t see any other way,” he said.
The corruption in the judiciary, Downs argues, is so pervasive that it is probably irreversible in the short run.
Already dissidents such as peace activists, environmentalists and outspoken intellectuals have been treated
as terrorists. Downs expects soon to see labor organizers and those in Occupy encampments treated as
terrorists, especially if domestic dissent spreads. Yet despite his pessimism he has no intention of
surrendering.
“I take comfort from organizations like the White Rose in Germany,” he said, referring to the anti-Nazi
group that defied Hitler and saw most of its members arrested and executed. “They were doomed almost
from the beginning. How long could you defy Hitler before you were rounded up and shot? It appeared to
be a futile effort. And yet, after the war, when people went back and began to rebuild the German nation,
they could look to the White Rose as an example of what German culture was really about. There were
Germans who cared about peace, freedom and tolerance. I’m working now as much for the historical record
as for those still in jail.”
“When I was 6,” Mehanna told the court Thursday at his sentencing, “I began putting together a massive
collection of comic books. Batman implanted a concept in my mind, introduced me to a paradigm as to how the
world is set up: that there are oppressors, there are the oppressed, and there are those who step up to
defend the oppressed. This resonated with me so much that throughout the rest of my childhood I
gravitated towards any book that reflected that paradigm—‘Uncle Tom’s Cabin,’ ‘The Autobiography of
Malcolm X,’ and I even saw an ethical dimension to ‘The Catcher in the Rye.’ ”
“By the time I began high school and took a real history class, I was learning just how real that paradigm is in
the world,” he went on. “I learned about the Native Americans and what befell them at the hands of
European settlers. I learned about how the descendants of those European settlers were in turn oppressed
under the tyranny of King George III. I read about Paul Revere, Tom Paine, and how Americans began an
armed insurgency against British forces—an insurgency we now celebrate as the American Revolutionary
War. As a kid I even went on school field trips just blocks away from where we sit now. I learned about
Harriet Tubman, Nat Turner, John Brown, and the fight against slavery in this country. I learned about
Emma Goldman, Eugene Debs and the struggles of the labor unions, working class and poor. I learned about
Anne Frank, the Nazis, and how they persecuted minorities and imprisoned dissidents. I learned about Rosa
Parks, Malcolm X, Martin Luther King and the civil rights struggle. I learned about Ho Chi Minh, and how the
Vietnamese fought for decades to liberate themselves from one invader after another. I learned about
Nelson Mandela and the fight against apartheid in South Africa. Everything I learned in those years
confirmed what I was beginning to learn when I was 6: that throughout history, there has been a constant
struggle between the oppressed and their oppressors. With each struggle I learned about, I found myself
consistently siding with the oppressed, and consistently respecting those who stepped up to defend them—
regardless of nationality, regardless of religion. And I never threw my class notes away. As I stand here
speaking, they are in a neat pile in my bedroom closet at home.”
“In your eyes, I’m a terrorist, and it’s perfectly reasonable that I be standing here in an orange jumpsuit,”
he told the court at the end of his statement. “But one day, America will change and people will recognize
this day for what it is. They will look at how hundreds of thousands of Muslims were killed and maimed by
the U.S. military in foreign countries, yet somehow I’m the one going to prison for ‘conspiring to kill and maim’
in those countries—because I support the mujahedeen defending those people. They will look back on how
the government spent millions of dollars to imprison me as a ‘terrorist,’ yet if we were to somehow bring
Abeer al-Janabi back to life in the moment she was being gang-raped by your soldiers, to put her on that
witness stand and ask her who the ‘terrorists’ are, she sure wouldn’t be pointing at me.”
Illustration by Mr. Fish
________________________________________
A Progressive Journal of News and Opinion. Editor, Robert Scheer. Publisher, Zuade Kaufman.
Copyright © 2012 Truthdig, L.L.C. All rights reserved.
Mobsters will pay Blankfein 16 mil
Goldman Sachs CEO gets $16.2 million pay package
•
•
By Lauren Tara LaCapra
Fri Apr 13, 2012 3:33pm EDT
(Reuters) - Goldman Sachs Group Inc Chief Executive Lloyd Blankfein's compensation increased 14.5
percent to $16.2 million in 2011 despite a sharp decline in profits and share price during the year, leaving the
bank open to more attacks on its pay policies.
Blankfein's pay boost includes stock awards from previous years that vested in 2011, and therefore does
not reflect the amount that Goldman's board awarded him strictly for the company's performance last year.
Goldman offered another figure, $12 million, as the amount Blankfein received for his performance last
year. That number reflects a 35.5 percent decline from 2010, when Blankfein received $18.6 million in
performance pay.
The $16.2 million figure comes from a formula the U.S. Securities and Exchange Commission requires
companies to use when reporting pay packages in proxy filings, where Goldman detailed Blankfein's
compensation on Friday.
Both the SEC's formula and Goldman's formula include a $2 million salary and a $3 million cash bonus. The
SEC formula also reflects $454,332 Blankfein received last year in benefits and perks, such as life
insurance and a car and driver.
Whichever multimillion-dollar figure is used, Blankfein's pay package is likely to get attention both outside
and inside Wall Street's most prominent investment bank, where thousands of traders, bankers and
support staff were fired last year due to weak performance.
"Whether it's $12 million or $16 million, it's excessive," said Jack Ucciferri, research and advocacy director
at Harrington Investments Inc, a Goldman shareholder that has a proposal in Goldman's proxy that, if
passed, would require top executives to retain 75 percent of their stock holdings for at least three years
after leaving the bank.
Goldman earned a $2.5 billion profit during 2011, down from $3.6 billion in 2010, and its share price fell 46
percent last year, amid a slowdown in investment banking deals and volatile trading conditions.
Management reduced the average employee's pay by 15 percent in 2011, to $367,057. That compares with a
pre-crisis high of $568,732 per employee in 2007. The median household income in the United States is
about $50,000.
James Gorman, CEO of Goldman's main rival, Morgan Stanley, received total compensation of $13 million in
2011, down 14.5 percent from 2010.
Using the bank's performance-based pay calculation, Morgan Stanley's board awarded Gorman $10.5 million
for his work last year; the only cash component was a salary of $800,000. That was down 31 percent from
$15.2 million the previous year.
Shareholder groups have been urging Wall Street banks to reform pay policies to align compensation more
closely with shareholder interests.
The biggest U.S. banks, including Goldman, have implemented compensation reforms, such as "clawback"
provisions and putting more bonus money in the form of restricted stock, due to new regulatory
requirements.
But Goldman remains a particular target for activists because of its tendency to pay more than its
competitors, and because of high-profile conflict-of-interest issues involving senior bank officials in the
aftermath of the financial crisis.
In addition to Harrington's proposal, a coalition of religious groups had wanted the company to implement an
annual review of executive pay. But the SEC rejected the group's proposal for inclusion in the proxy.
Laura Shaffer Campos, director of shareholder activities at the Nathan Cummings Foundation, one of the
groups that proposed the annual pay review, said the increase in Blankfein's compensation puts the bank's
reputation at risk.
"Given their stock's lackluster performance and the ongoing focus on these issues by groups like Occupy
Wall Street, this certainly gives us additional fuel for next year," Campos said in an interview.
In a letter to shareholders, Blankfein said Goldman has been engaged in talks with large stakeholders to
resolve their concerns about compensation. Harrington and Nathan Cummings own relatively small amounts of
Goldman stock but have been influential through their proposals.
"Our engagement with shareholders, in particular, has provided a productive opportunity to garner
feedback on what we can do better and for our shareholders to learn more about the Board's priorities,"
Blankfein wrote. "We received valuable input from shareholders following our say on pay vote last year,
which reaffirmed our long-held view that pay-for-performance is the most critical aspect of compensation."
Goldman also reported compensation for its four other named executive officers: Gary Cohn, president and
chief operating officer; David Viniar, chief financial officer; J. Michael Evans, vice chairman and head of
emerging markets; and John Weinberg, vice chairman and co-head of investment banking.
Each of these executives received performance-based pay of $11.85 million last year, which included a
$1.85 million salary and a $3 million bonus.
Using the SEC's calculation of 2011 pay, which includes previous years' awards that vested in 2011, Cohn,
Viniar and Weinberg received $15.8 million last year, while Evans received $15.7 million.
Goldman also shaved the potential long-term cash award that certain executive officers will get if the
company hits profit targets over a three-year period. Goldman introduced a program in 2011 that gave each
executive the potential to collect $7 million if the average adjusted return-on-equity level from 2011
through the end of 2013 reaches 10 percent and book value grows an average of 7 percent over the three
years.
The grant for the years 2012 through 2015 has been cut to an initial amount of $3 million, with 50 percent of
that paid for each metric. Goldman's compensation committee also gave itself discretion in both programs to
extend the performance periods by five years.
The ROE and book value targets appeared easily attainable when they were being established in late 2010,
but Goldman's return on equity has fallen sharply since then. In 2011, adjusted ROE was just 5.9 percent,
compared with levels above 30 percent before the financial crisis.
(Reporting By Lauren Tara LaCapra; additional reporting by Jessica Toonkel and Jed Horowitz; Editing by
Gerald E. McCormick, Tim Dobbyn and John Wallace)
Mon Apr 02, 2012 at 10:47 PM PDT
America Shows No Increase in College Graduation Rates over the last 30 Years
by Kenneth ThomasFollow
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Cross-posted from Middle Class Political Economist.
Jared Bernstein (via Paul Krugman) highlights an amazing breakdown in the prospects for reducing economic
inequality any time soon. Over the last 30 years, the U.S. has made no progress whatsoever in increasing
college graduation rates. To be specific, 25-34 year olds in 2009 had a college degree rate of about 40%,
almost exactly the same as for 55-64 year old baby boomers. In the meantime, other industrialized
countries were racking up substantial gains, most spectacularly in the case of South Korea where a little
over 10% of 55-64 year olds have college degrees, but more than 60% in the 25-34 age group do. If you
want to understand how South Korea has gone from a poor developing country to an industrial powerhouse
within our lifetimes, this is one big reason.
Here are the overall results for OECD and select non-OECD countries for the two periods:
(See here for link to chart)
As we can see, the U.S. has fallen from a tie for second with Canada among current OECD members (Russia
is not a member) to 15th in the OECD. The big question is why this is happening. One major reason is rising
college costs, which have far outstripped overall inflation.
Tuition and Fees
Private Nonprofit Public Four-Year Public Two-Year
Four-Year
1980-81 to 1990-91 5.1% 4.2% 3.9%
1990-91 to 2000-01 2.6% 3.3% 3.2%
2000-01 to 2010-11 3.0% 5.6% 2.7%
Note: Average annual rate of growth of published prices in inflation-adjusted dollars over a 10-year period.
For example, from 2000-01 to 2010-11, average published tuition and fees at private four-year colleges
rose by an average of 3.0% per year beyond increases in the Consumer Price Index. See link above for
further data on tuition and fees plus room and board.
View Notes and Sources
As we can see, the rate of cost increase for public four-year universities was the most rapid of all. One big
reason for that, of course, is reduced state support of higher education. Citing State Higher Education
Executive Officers, the National Conference of State Legislatures reports that state appropriations per
student, at $6928 in fiscal year 2009, was more than $1000 below its FY 2001 peak, and lower in real
terms "than in most years since FY 1980" (p. 1). As Bernstein argues, Pell grants are one way to offset this
problem, and he points out that the Obama administration has strengthened the program. However, the Ryan
budget would slash Pell grants, among many other programs, in order to fund a tax cut for millionaires of
almost $400,000, per Bernstein.
As Alan Krueger noted in January, there is a strong relationship between higher inequality and lower social
mobility. The OECD data show that the U.S. is making no progress on one of the most important tools for
social mobility, college. If access to higher education in this country actually declines, as it is threatening to
do, our inequality problem will become infinitely harder to solve.
Obama Administration Writes Rights Out of New Indefinite Detention Law
Posted: 04/18/2012 1:05 pm
On April 5, the Defense Department quietly sent a report to Congress indicating how it intends to implement
a new law requiring lawyers and judges for detainees held in long-term U.S. military custody. As expected,
DoD largely wrote the new rights out of existence, ensuring they'd be accorded to few, if any, detainees.
What's more, it severely limited the scope of judicial review even that small number will receive.
Originally intended to apply to the prisoners held by the United States at the Bagram Air Base in
Afghanistan, Section 1024 of the National Defense Authorization Act is now more likely to apply to some
future category of indefinite detainees held by the U.S. government. And therein lies the problem.
Just three months after President Obama signed the NDAA in December, the United States negotiated
with Afghanistan to transfer most of the 3,200 detainees imprisoned at the Detention Facility in Parwan, as
the U.S.-run prison at Bagram is called, to Afghan custody within six months. That transfer agreement
doesn't mention anything about what sort of review those detainees will get from the Afghan authorities --
or, for that matter, whether they'll get any sort of hearing at all. Because there isn't an indefinite detention
law in Afghanistan spelling out the grounds for detention or any entitlement for due process, those
prisoners could end up stuck in an Afghan prison for many more years without charge or trial.
The new Defense Department regulations obviously won't apply to them. But they may apply to some of the
50 non-Afghan detainees who remain at the U.S.-run prison, and to any new suspected insurgents the U.S.
military may capture in the future.
That's the scary part. DoD has just taken the opportunity to ensure that if the administration decides its
"war on al Qaeda, the Taliban and associated forces" continues after the withdrawal of troops in
Afghanistan, it won't have to provide anyone it captures outside the United States a meaningful review of
the grounds of their detention for at least three years. Even then, the military commander in charge retains
the ultimate authority to decide whether the detainee is dangerous and must remain imprisoned.
Here's how it works. According to the new regulations:
The combatant commander with responsibility for the theater of operations in which the unprivileged enemy
belligerent is detained will ensure that a determination by the DRB or analogous review that the 1024(b)
process is applicable is made as soon as practicable but not later than 18 months after the detainee is
captured by, or transferred to the custody and control of, the Department of Defense. Additionally, the
combatant commander will ensure that a Section 1024(b) review is conducted as soon as practicable after
such a determination is made, but not later than 18 months after such a determination is made.
Eighteen months plus 18 months equals three years. So any newly captured suspect is not entitled to a
hearing by a military judge and represented by military defense counsel until three years after his initial
detention.
What's more:
A military judge will conduct a hearing for the purposes of determining whether the detainee is a covered
person as defined in subsection (b) of Section 1021 of the Act. The review will be limited to this status
determination; it will not include an assessment of the level of threat the detainee poses, nor will it serve as
a substitute for the judgment of the combatant commander as to the appropriate disposition of a detainee
lawfully detained by the Department of Defense.
In other words, the judge will decide only if the suspect is appropriately classified as an "unprivileged
enemy belligerent" -- that is, any person "who was part of or substantially supported al Qaeda, the Taliban,
or associated forces that are engaged in hostilities against the United States or its coalition partners." The
judge will not decide whether that person actually poses a threat to U.S. forces. Yet under international law,
that's a critical part of determining whether someone can be lawfully detained in a war against insurgent
groups. That critical determination will continue to be made secretly by a military commander in the field,
not by the more neutral judge following an open hearing.
Someone who did laundry, cooked meals or provided medical assistance for a member of al Qaeda, the
Taliban or unidentified "associated forces" could therefore continue to be detained indefinitely even after
his judicial review if the commander deems him dangerous. And the commander doesn't have to explain that
decision to anyone.
All in all, this doesn't sound like much of a step forward, or out of, indefinite U.S. military detention.
The Obama administration had an opportunity to make clear that it takes due process rights and
international law seriously, and that, as the war in Afghanistan winds down, it plans to bring indefinite
military detention without meaningful review, charge, or trial to an end. It just passed up that opportunity.
Obama Poised to Give Presidential Seal of Approval to Gross Labor Rights Violations in Colombia
Colombia: Obama’s Bloodiest Betrayal?
by DANIEL KOVALIK, GIMENA SANCHEZ-GARZOLI & ANTHONY DEST
On November 9, 2011, the family of Juan Carlos Galvis – a prominent union leader with Sinaltrainal and
personal friend of ours – was subjected to a violent home invasion by two presumed paramilitaries. The
intruders entered the Galvis home while Juan Carlos and his son were away and assaulted his wife, Mary, and
his two daughters, Jackeline and Mayra. They grabbed Mayra, a child with Downs Syndrome, and put a gun
to her head, threatening to kill her if Mary did not tell them the whereabouts of Juan Carlos and his son.
They then bound and gagged Mary and Jackeline, again asking them to say where Juan Carlos and his son
were. The assailants then proceeded to spray paint Mary and Juan’s faces on a wedding photo the family had
posted on the wall. Before leaving the home, they stole two laptops, some USB memory drives, documents,
and trashed the house. The traumatic attack left Mayra in shock for days and unable to speak.
The family was forced to flee to another town where they are now hiding. Their fears are well founded. Two
of Juan Carlos’ Sinaltrainal colleagues, John Fredy Carmona Bermudez and Luis Medardo Prens Vallejo,
were killed in recent months.
All in all, 30 unionists were killed in Colombia last year. The National Labor School (ENS) reports that 4 have
already been killed this year, and other trade union movements have reported additional murders (e.g.,
Justice for Colombia has reported 6). Such killings have made Colombia, where around 3,000 unionists have
been killed since 1986, the most dangerous country in the world to be a trade unionist, and if the
assassination rate this year continues as it has thus far, Colombia will most certainly retain this notorious
distinction.
Meanwhile, the Colombian government has done nothing effective to prosecute those responsible for such
anti-union violence, with the UN recently reporting that Colombia’s rate of impunity for such crimes remains
at 95% – meaning that only 5% of the union killings have ever been successfully prosecuted.
It was these two factors – the unprecedented rate of union killings and the high rate of impunity for these
killings – that led Barack Obama in 2008 to declare in his third debate with John McCain that he opposed the
Colombia Free Trade Agreement (FTA).
While being a trade unionist in Colombia is dangerous, those that are unionists are the few that can more
freely organize. Under the Alvaro Uribe Velez Administration the “associative labor cooperatives” (CTAs)
model proliferated throughout Colombia. This union-busting model that precludes direct contracts between
workers and companies gravely debilitates working conditions, salaries, and occupational safety protections.
Workers have risked losing their meager livelihoods by holding stoppages to obtain direct contracts that...
26 Major Corporations Paid No Corporate Income Tax For The Last Four Years, Despite Making Billions In
Profits
By Pat Garofalo on Apr 9, 2012 at 12:00 pm
Last year, Citizens for Tax Justice found that 30 major corporations had made billions of dollars in profits
while paying no federal income tax between 2008 and 2010. Today, CTJ updated that report to reflect the
2011 tax bill of those 30 companies, and 26 of them have still managed to pay absolutely nothing over that
four year period:
– 26 of the 30 companies continued to enjoy negative federal income tax rates. That means they still made
more money after tax than before tax over the four years!
– Of the remaining four companies, three paid four year effective tax rates of less than 4 percent
(specifically, 0.2%, 2.0% and 3.8%). One company paid a 2008-11 tax rate of 10.9 percent.
– In total, 2008-11 federal income taxes for the 30 companies remained negative, despite $205 billion in
pretax U.S. profits. Overall, they enjoyed an average effective federal income tax rate of –3.1 percent
over the four years.
Amongst the 30 are corporate titans such as General Electric, Boeing, Verizon, and Mattel. The only four
companies that slipped into positive tax territory were DTE Energy, Honeywell, Wells Fargo, and DuPont,
with DuPont the only one that paid more than 4 percent over the four years.
Corporate taxes in the U.S., contrary to the constant protestations of conservatives, are at a 40 year low,
with many of the most profitable companies paying nothing at all. CTJ noted that “had these 30 companies
paid the full 35 percent corporate tax rate over the 2008-11 period, they would have paid $78.3 billion
more in federal income taxes.” And this is not a problem that only afflicts the U.S., as the UK found out last
week that online retailer Amazon made billions in sales in 2011, while paying nothing in corporate taxes.
TPMDC
Repealing ‘Obamacare’ Would Explode Debt, Says Government Auditor
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Brian Beutler April 3, 2012, 6:05 AM 10938
A new report by an independent government auditor concludes that implementing President Obama’s health
care law as intended will make a significant dent in the long-term debt forecast.
The report comes as Supreme Court justices weigh striking some of “Obamacare’s” central provisions — and
perhaps the law in its entirety — and as the Republican Party remains committed to repealing the law if it
seizes control of government in November.
“[I]f the Patient Protection and Affordable Care Act (PPACA) is implemented as intended it would have a
major effect on the [fiscal] gap but would not eliminate it,” the Government Accountability Office wrote in a
Monday report — a conclusion in line with its own past research and similar research conducted by other
government and non-government analysts.
GAO doesn’t isolate PPACA’s stand-alone contribution to long-term budget consolidation. But it does
conclude that if key cost-control measures in the law, and other automatic cuts to Medicare spending baked
into current law, are ignored, or overridden by Congress, the implications for the national debt are vast.
If “Obamacare” is implemented as intended, and other measures, such as automatic payment cuts to
Medicare physicians, take effect, “spending on Medicare and Medicaid grows from 5 percent of GDP in 2010
to over 7 percent by 2030.”
By contrast, if Congress overrides those provisions, “[s]pending on health care grows much more rapidly
under this more pessimistic set of assumptions,” according to the report. “Absent changes to these
programs, spending on Medicare and Medicaid under the Alternative simulation grows to over 8 percent of
GDP by 2030.”
Congress has consistently passed temporary legislation to prevent Medicare doctors from experiencing a
pay cut baked into current law. But the current patch expires on Jan. 1 — along with the Bush tax cuts and
the payroll tax holiday — just as other automatic cuts to Medicare are set to take effect as a penalty for
the Super Committee’s failure to pass deficit-cutting legislation.
The confluence of these fiscal triggers suggests lawmakers will be forced to act quickly after the election
to put the country’s budget on a more sustainable path. But if Republicans win big in November and move
ahead with their plan to repeal the health care law, they’ll only make matters worse.
The Warning in Gary Webb’s DeathDecember 9, 2011Special Report: Modern American history is
more complete because journalist Gary Webb had the courage to revive the dark story of the Reagan
administration’s protection of Nicaraguan Contra cocaine traffickers in the 1980s. However, Webb
ultimately paid a terrible price, as Robert Parry reports.By Robert ParryEvery year since investigative
journalist Gary Webb took his own life in 2004, I have marked the anniversary of that sad event by recalling
the debt that American history owes to Webb for his brave reporting, which revived the Contra-cocaine
scandal in 1996 and forced important admissions out of the Central Intelligence Agency two years later.But
Webb’s suicide on the evening of Dec. 9, 2004, was also a tragic end for one man whose livelihood
and reputation were destroyed by a phalanx of major newspapers – the New York Times, the
Washington Post and the Los Angeles Times– serving as protectors of a corrupt power structure
rather than as sources of honest information.Journalist Gary WebbIn reviewing the story again this year, I
was struck by how Webb’s Contra-cocaine experience was, in many ways, a precursor to the
subsequent tragedy of the Iraq War.In the 1980s, the CIA’s analytical division was already showing
signs of politicization, especially regarding President Ronald Reagan’s beloved Contras and their war
against Nicaragua’s Sandinista government – and the U.S. press corps was already bending
to the propaganda pressures of a right-wing Republican administration.Looking back at CIA cables from the
early-to-mid-1980s, you can already see the bias dripping from the analytical reports. Any drug accusation
against the leftist Sandinistas was accepted without skepticism and usually with strong exaggeration, while
the opposite occurred with evidence of Contra cocaine smuggling; then there was endless quibbling and
smearing of sources.So, to put these reports in anything close to an accurate focus, you would need special
lenses to correct for all the politicized distortions. Yet, the U.S. news media, which itself was under intense
pressure not to appear “liberal,” worsened the Reagan administration’s fun-house
reflection of reality and attacked any dissident journalist who wouldn’t go along.Thus, Americans
heard a lot about how the evil Sandinistas were trying to “poison” America’s youth
with cocaine, although there was not a single interception of a drug shipment from Nicaragua during the
Sandinista reign, except for one planeload of cocaine that the United States flew into and out of Nicaraguan
in a clumsy “sting” operation.On the other hand, substantial evidence of Contra-related
cocaine shipments out of Costa Rica and Honduras was kept from the American people with Reagan’s
Justice Department and CIA intervening to head off investigations and thus prevent embarrassing
disclosures. The chief role of the big newspapers in this upside-down world was to heap ridicule on anyone
who told the truth.During that time frame of the early-to-mid-1980s, the patterns were set for CIA
analysts to advance their careers (by giving the president what he wanted) and mainstream journalists to
protect theirs (by accepting propaganda). By 2002-2003, these patterns had become deeply engrained,
leaving almost no one to protect the American people from a new round of falsehoods – aimed at Iraq.
Though I was not in touch with Webb in the last months of his life in 2004, I have always wondered if he saw
this connection between his own valiant efforts to correct the historical record about Contra-cocaine
trafficking in 1996 and the victory of lies over truth regarding Iraq’s WMD in 2002-2003.In the
weeks before Webb’s suicide, there also was the intervening fact of George W. Bush’s
reelection – and with it, the dashed expectation that the CIA analysts and the mainstream journalists
who played along with the Iraq-WMD fabrications might face some serious accountability. At the moment
when Webb picked up his father’s pistol and put it to his head, there must have appeared little hope
that anything would change.Indeed, we are now seeing yet another replay of this systematic distortion of
information, this time regarding Iran and its alleged nuclear weapons program. Any tidbit of information
against Iran is exaggerated, while exculpatory data is downplayed or ignored.So, it may be timely again to
recount what happened to Gary Webb and to reflect on the dangers of allowing this corrupt disinformation
system to press ahead unchecked.Dark AllianceFor me, the tragic story of Gary Webb began in 1996 when
he was working on his “Dark Alliance” series for the San Jose Mercury News. He called me
at my home in Arlington, Virginia, because, in 1985, I and my Associated Press colleague Brian Barger had
been the first journalists to reveal the scandal of Reagan’s Nicaraguan Contras funding themselves
in part by collaborating with drug traffickers.Webb explained that he had come across evidence that one
Contra-connected drug conduit had funneled cocaine into Los Angeles, where it helped fuel the early crack
epidemic. Unlike our AP stories a decade earlier — which focused on the Contras helping to ship
cocaine from Central America into the United States — Webb said his series would examine what
happened to the Contra cocaine after it reached the streets of Los Angeles and other cities.Besides asking
about my recollections of the Contras and their cocaine smuggling, Webb wanted to know why the scandal
never gained any real traction in the U.S. national news media. I explained that the ugly facts of the drug
trafficking ran up against a determined U.S government campaign to protect the Contras’ image. In
the face of that resistance, I said, the major publications — the likes of the New York Times and the
Washington Post — had chosen to attack the revelations and those behind them rather than to dig up
more evidence.Webb sounded confused by my account, as if I were telling him something that was foreign to
his personal experience, something that just didn’t compute. I had a sense of his unstated questions:
Why would the prestige newspapers of American journalism behave that way? Why wouldn’t they
jump all over a story that important and that sexy, about the CIA working with drug traffickers?I took a
deep breath, sensing that he had no idea of the personal danger he was about to confront. Well, he would
have to learn that for himself, I thought. It surely wasn’t my place to warn a journalist away from a
significant story just because it carried risks.So, I simply asked Webb if he had the strong support of his
editors. He assured me that he did. I said their backing would be crucial once his story was out. He sounded
perplexed, again, as if he didn’t know what to make of my cautionary tone. I wished him the best of
luck, thinking that he would need it.The Safe RouteWhen I hung up, I wasn’t sure that the Mercury
News would really press ahead with the story, considering how the big national news outlets had dismissed
and ridiculed the notion that President Reagan’s beloved Contras had included a large number of
drug traffickers.It never seemed to matter how much evidence there was. It was much easier — and
safer, career-wise — for Washington journalists to reject incriminating testimony against the
Contras, especially when it came from other drug traffickers and from disgruntled Contras. Even U.S. law-
enforcement officials who discovered evidence were disparaged as overzealous and congressional
investigators were painted as partisan.In 1985, as we were preparing our first AP story on this topic,
Barger and I knew that the evidence of Contra-cocaine involvement was overwhelming. We had a broad
range of sources both inside the Contra movement and within the U.S. government, people with no apparent
ax to grind who had described the cocaine-smuggling problem.One source was a field agent for the Drug
Enforcement Administration (DEA); another was a senior official on Reagan’s National Security
Council (NSC) who told me that he had read a CIA report about how a Contra unit based in Costa Rica had
used cocaine profits to buy a helicopter.However, after our AP story was published in December 1985, we
came under attack from the right-wing Washington Times. That was followed by dismissive stories in the
New York Times and the Washington Post. The notion that the Contras, whom President Reagan had likened
to America’s Founding Fathers, could be implicated in the drug trade was simply unthinkable.Yet, it
was always odd to me that many of the same newspapers had no problem accepting the fact that the CIA-
backed Afghan mujahedeen were involved in the heroin trade, but bristled at the thought that the CIA-
backed Nicaraguan Contras might be cut from the same cloth.A key difference, which I learned both from
personal experience and from documents that surfaced during the Iran-Contra scandal, was that Reagan
had assigned a young group of ambitious intellectuals such as Elliott Abrams and Robert Kagan to oversee
the Contra war.These neoconservatives worked with old-line anticommunists from the Cuban-American
community, such as Otto Reich, and CIA propagandists, such as Walter Raymond Jr., to aggressively protect
the Contras’ image. And the Contras were always on the edge between getting congressional funding
or having it cut off.So, that combination — the propaganda skills of Reagan’s Contra-support
team and the fragile consensus for continuing Reagan’s pet Contra war — meant that any
negative publicity about the Contras would be met with a fierce counterattack.Going to EditorsThe
neoconservatives were also bright, well-schooled, and skilled in their manipulation of language and
information, a process they privately called “perception management.” They proved adept,
too, at ingratiating themselves with senior editors at major news outlets.By the mid-1980s, these patterns
had become well-worn in Washington. If a journalist dug up a story that put the Contras in a negative light,
he or she could expect the Reagan administration’s propaganda team to make contact with a senior
editor or bureau chief and lodge a complaint, apply some pressure, and often offer up some dirt about the
offending journalist.Also, many news executives in that time frame were sympathetic toward
Reagan’s hard-line foreign policy, especially after the humiliations of the Vietnam War and the
Iranian revolution. Supporting U.S. initiatives abroad — or at least not allowing your reporters to
undercut those policies — was seen as patriotic.At the New York Times, executive editor Abe
Rosenthal was one of the news media’s most influential neoconservatives, declaring that he was
determined to steer the newspaper back to “the center,” by which he meant to the right.At
AP, general manager Keith Fuller was known to be a strong Reagan supporter and his preferences were
sometimes expressed forcefully to AP’s Washington bureau where I worked. At the Washington
Post and Newsweek (where I went to work in 1987), there was also a strong sense that Reagan-era
scandals should not reach the president, that it would not be “good for the country.”In
other words, on the issue of Contra drug trafficking, there was a confluence of interests between the
Reagan administration, which was determined to protect the Contras’ public image, and senior news
executives, who wanted to adopt a “patriotic” posture after convincing themselves that the
country shouldn’t endure another wrenching battle over wrongdoing by a Republican president.The
popular image of courageous editors standing up for their reporters in the face of government pressure
was not the reality, especially not where the Contras were concerned.Reverse RewardsSo, instead of a
process that outsiders might imagine — where journalists who dug out tough stories got rewarded
— the actual system worked in the opposite way. The careerists in the news business quickly grasped
that the smart play when it came to the Contras was either to be a booster or at least to pooh-pooh evidence
of the Contras’ brutality or drug traffickers.The same rules applied to congressional investigators.
Anyone who pried into the dark corners of the Nicaraguan Contra war faced ridicule, as happened to
Democratic Sen. John Kerry of Massachusetts when he followed up the early AP stories with a courageous
investigation that discovered more ties between cocaine traffickers and the Contras.When his Contra-
cocaine report was released in 1989, its findings were greeted with yawns and smirks. News articles were
buried deep inside the major newspapers and the stories focused more on alleged flaws in his investigation
than on his revelations.For his hard work, Newsweek summed up the prevailing “conventional
wisdom” on Kerry by calling him a “randy conspiracy buff.” Being associated with
breaking the Contra-cocaine story was also regarded as a black mark on my own career.To function in this
upside-down world, where reality and perception often clashed – and perception usually won –
the big news outlets developed a kind of cognitive dissonance that could accept two contradictory positions.
On one level, the news outlets did accept the undeniable reality that some of the Contras and their backers,
including the likes of Panamanian General Manuel Noriega, were implicated in the drug trade, but then
simultaneously treated this reality as a conspiracy theory.Squaring the CircleOnly occasionally did a major
news outlet seek to square this circle, such as during Noriega’s drug-trafficking trial in 1991 when U.
S. prosecutors called as a witness Colombian Medellín cartel kingpin Carlos Lehder, who —
along with implicating Noriega — testified that the cartel had given $10 million to the Contras, an
allegation first unearthed by Sen. Kerry.“The Kerry hearings didn’t get the attention they
deserved at the time,” a Washington Post editorial on Nov. 27, 1991, acknowledged. “The
Noriega trial brings this sordid aspect of the Nicaraguan engagement to fresh public attention.”
However, the Post offered its readers no explanation for why Kerry’s hearings had been largely
ignored, with the Post itself a leading culprit in this journalistic misfeasance. Nor did the Post and the other
leading newspapers use the opening created by the Noriega trial to do anything to rectify their past neglect.
And, everything quickly returned to the status quo in which the desired perception of the noble Contras
trumped the clear reality of their criminal activities.So, from 1991 until 1996, the Contra-cocaine scandal
remained a disturbing story not just about the skewed moral compass of the Reagan administration but also
about how the U.S. news media had lost its way.The scandal was a dirty secret that was best kept out of
public view and away from a thorough discussion. After all, the journalistic careerists who had played along
with the U.S. government’s Contra defenders had advanced inside their media corporations. As good
team players, they had moved up to be bureau chiefs and other news executives. They had no interest in
revisiting one of the big stories that they had downplayed as a prerequisite for their success.
PariahsMeanwhile, those journalists who had exposed these national security crimes mostly saw their
careers sink or at best slide sideways. We were regarded as “pariahs” in our profession.
We were “conspiracy theorists,” even though our journalism had proven to be correct again
and again.The Post’s admission that the Contra-cocaine scandal “didn’t get the
attention it deserved” didn’t lead to any soul-searching inside the U.S. news media, nor did it
result in any rehabilitation of the careers of the reporters who had tried to put a spotlight on this especially
vile secret.As for me, after losing battle after battle with my Newsweek editors (who despised the Iran-
Contra scandal that I had worked so hard to expose), I departed the magazine in June 1990 to write a book
(called Fooling America) about the decline of the Washington press corps and the parallel rise of the new
generation of government propagandists.I was also hired by PBS Frontline to investigate whether there had
been a prequel to the Iran-Contra scandal — whether those arms-for-hostage deals in the mid-1980s
had been preceded by contacts between Reagan’s 1980 campaign staff and Iran, which was then
holding 52 Americans hostage and essentially destroying Jimmy Carter’s reelection hopes. [For
more on that topic, see Robert Parry’s Secrecy & Privilege.]Then, in 1995, frustrated by the
pervasive triviality that had come to define American journalism — and acting on the advice of and
with the assistance of my oldest son Sam — I turned to a new medium and launched the
Internet’s first investigative news magazine, known as Consortiumnews.com. The Web site became a
way for me to put out well-reported stories that my former mainstream colleagues seemed determined to
ignore or mock.So, when Gary Webb called me that day in 1996, I knew that he was charging into some
dangerous journalistic terrain, though he thought he was simply pursuing a great story. After his call, it
struck me that perhaps the only way for the Contra-cocaine story to ever get the attention that it deserved
was for someone outside the Washington media culture to do the work.When Webb’s “Dark
Alliance” series finally appeared in late August 1996, it initially drew little attention. The major
national news outlets applied their usual studied indifference to a topic that they had already judged
unworthy of serious attention.It was also clear that the media careerists who had climbed up their
corporate ladders by accepting the conventional wisdom that the Contra-cocaine story was a conspiracy
theory weren’t about to look back down and admit that they had contributed to a major journalistic
failure to inform and protect the American public.Hard to IgnoreBut Webb’s story proved hard to
ignore. First, unlike the work that Barger and I did for AP in the mid-1980s, Webb’s series
wasn’t just a story about drug traffickers in Central America and their protectors in Washington. It
was about the on-the-ground consequences, inside the United States, of that drug trafficking, how the lives
of Americans were blighted and destroyed as the collateral damage of a U.S. foreign policy initiative.In
other words, there were real-life American victims, and they were concentrated in African-American
communities. That meant the ever-sensitive issue of race had been injected into the controversy. Anger
from black communities spread quickly to the Congressional Black Caucus, which started demanding answers.
Secondly, the San Jose Mercury News, which was the local newspaper for Silicon Valley, had posted
documents and audio on its state-of-the-art Internet site. That way, readers could examine much of the
documentary support for the series.It also meant that the traditional “gatekeeper” role of
the major newspapers — the New York Times, the Washington Post, and the Los Angeles Times
— was under assault. If a regional paper like the Mercury News could finance a major journalistic
investigation like this one, and circumvent the judgments of the editorial boards at the Big Three, then there
might be a tectonic shift in the power relations of the U.S. news media. There could be a breakdown of the
established order.This combination of factors led to the next phase of the Contra-cocaine battle: the
“get-Gary-Webb” counterattack. The first major shot against Webb and his “Dark
Alliance” series did not come from the Big Three but from the rapidly expanding right-wing news
media, which was in no mood to accept the notion that some of President Reagan’s beloved Contras
were drug traffickers. That would have cast a shadow over the Reagan Legacy, which the Right was
elevating to mythic status.It fell to Rev. Sun Myung Moon’s right-wing Washington Times to begin
the anti-Webb vendetta. Moon, a South Korean theocrat who fancied himself the new Messiah, had founded
his newspaper in 1982 partly to protect Ronald Reagan’s political flanks and partly to ensure that he
had powerful friends in high places. In the mid-1980s, the Washington Times went so far as to raise money
to assist Reagan’s Contra “freedom fighters.”Self-Interested TestimonyTo refute
Webb’s three-part series, the Washington Times turned to some ex-CIA officials, who had
participated in the Contra war, and quoted them denying the story. Soon, the Washington Post, the New York
Times, and the Los Angeles Times were lining up behind the Washington Times to trash Webb and his story.
On Oct. 4, 1996, the Washington Post published a front-page article knocking down Webb’s series,
although acknowledging that some Contra operatives did help the cocaine cartels.The Post’s
approach was twofold, fitting with the national media’s cognitive dissonance on the topic of Contra
cocaine: first, the Post presented the Contra-cocaine allegations as old news — “even CIA
personnel testified to Congress they knew that those covert operations involved drug traffickers,”
the Post sniffed — and second, the Post minimized the importance of the one Contra smuggling
channel that Webb had highlighted in his series, saying that it had not “played a major role in the
emergence of crack.”A Post sidebar story dismissed African-Americans as prone to “
conspiracy fears.”Next, the New York Times and the Los Angeles Times weighed in with lengthy
articles castigating Webb and “Dark Alliance.” The big newspapers made much of the
CIA’s internal reviews in 1987 and 1988 — almost a decade earlier — that supposedly
had cleared the spy agency of any role in Contra-cocaine smuggling.But the CIA’s cover-up began to
weaken on Oct. 24, 1996, when CIA Inspector General Frederick Hitz conceded before the Senate
Intelligence Committee that the first CIA probe had lasted only12 days, and the second only three days. He
promised a more thorough review.Mocking WebbWebb, however, had already crossed over from being a
serious journalist to a target of ridicule. Influential Post media critic Howard Kurtz mocked Webb for
saying in a book proposal that he would explore the possibility that the Contra war was primarily a business
to its participants. “Oliver Stone, check your voice mail,” Kurtz chortled.However,
Webb’s suspicion was no conspiracy theory. Indeed, White House aide Oliver North’s chief
Contra emissary, Robert Owen, had made the same point in a March 17, 1986, message about the Contras
leadership. “Few of the so-called leaders of the movement . . . really care about the boys in the field,
” Owen wrote. “THIS WAR HAS BECOME A BUSINESS TO MANY OF THEM.”
[Emphasis in original.]In other words, Webb was right and Kurtz was wrong, even Oliver North’s
emissary had reported that many Contra leaders treated the conflict as “a business.” But
accuracy had ceased to be relevant in the media’s hazing of Gary Webb.In another double standard,
while Webb was held to the strictest standards of journalism, it was entirely all right for Kurtz —
the supposed arbiter of journalistic integrity who was also featured on CNN’s Reliable Sources
— to make judgments based on ignorance. Kurtz would face no repercussions for mocking a fellow
journalist who was factually correct.The Big Three’s assault — combined with their
disparaging tone — had a predictable effect on the executives of the Mercury News. As it turned
out, Webb’s confidence in his editors had been misplaced. By early 1997, executive editor Jerry
Ceppos, who had his own corporate career to worry about, was in retreat.On May 11, 1997, Ceppos published
a front-page column saying the series “fell short of my standards.” He criticized the stories
because they “strongly implied CIA knowledge” of Contra connections to U.S. drug dealers
who were manufacturing crack cocaine. “We did not have enough proof that top CIA officials knew
of the relationship,” Ceppos wrote.Ceppos was wrong about the proof, of course. At AP, before we
published our first Contra-cocaine article in 1985, Barger and I had known that the CIA and Reagan’
s White House were aware of the Contra-cocaine problem.However, Ceppos had recognized that he and his
newspaper were facing a credibility crisis brought on by the harsh consensus delivered by the Big Three, a
judgment that had quickly solidified into conventional wisdom throughout the major news media and inside
Knight-Ridder, Inc., which owned the Mercury News. The only career-saving move – career-saving
for Ceppos even if career-destroying for Webb – was to jettison Webb and his journalism.A
‘Vindication’The big newspapers and the Contras’ defenders celebrated
Ceppos’s retreat as vindication of their own dismissal of the Contra-cocaine stories. In particular,
Kurtz seemed proud that his demeaning of Webb now had the endorsement of Webb’s editor.
Ceppos next pulled the plug on the Mercury News’ continuing Contra-cocaine investigation and
reassigned Webb to a small office in Cupertino, California, far from his family. Webb resigned from the
paper in disgrace.For undercutting Webb and other Mercury News reporters working on the Contra-cocaine
investigation, Ceppos was lauded by the American Journalism Review and was given the 1997 national Ethics
in Journalism Award by the Society of Professional Journalists.While Ceppos won raves, Webb watched his
career collapse and his marriage break up. Still, Gary Webb had set in motion internal government
investigations that would bring to the surface long-hidden facts about how the Reagan administration had
conducted the Contra war.The CIA published the first part of Inspector General Hitz’s findings on
Jan. 29, 1998. Though the CIA’s press release for the report criticized Webb and defended the
CIA, Hitz’s Volume One admitted that not only were many of Webb’s allegations true but
that he actually understated the seriousness of the Contra-drug crimes and the CIA’s knowledge of
them.Hitz conceded that cocaine smugglers played a significant early role in the Contra movement and that
the CIA intervened to block an image-threatening 1984 federal investigation into a San Francisco–
based drug ring with suspected ties to the Contras, the so-called “Frogman Case.”After
Volume One was released, I called Webb (whom I had met personally since his series was published). I
chided him for indeed getting the story “wrong.” He had understated how serious the
problem of Contra-cocaine trafficking had been.It was a form of gallows humor for the two of us, since
nothing had changed in the way the major newspapers treated the Contra-cocaine issue. They focused only
on the press release that continued to attack Webb, while ignoring the incriminating information that could
be found in the body of the report. All I could do was highlight those admissions at Consortiumnews.com,
which sadly had a much, much smaller readership than the Big Three.Looking the Other WayThe major U.S.
news media also looked the other way on other startling disclosures.On May 7, 1998, for instance, Rep.
Maxine Waters, a California Democrat, introduced into the Congressional Record a Feb. 11, 1982, letter of
understanding between the CIA and the Justice Department. The letter, which had been requested by CIA
Director William Casey, freed the CIA from legal requirements that it must report drug smuggling by CIA
assets, a provision that covered both the Nicaraguan Contras and the Afghan mujahedeen.In other words,
early in those two covert wars, the CIA leadership wanted to make sure that its geopolitical objectives
would not be complicated by a legal requirement to turn in its client forces for drug trafficking.The next
break in the long-running Contra-cocaine cover-up was a report by the Justice Department’s
Inspector General Michael Bromwich.Given the hostile climate surrounding Webb’s series,
Bromwich’s report also opened with criticism of Webb. But, like the CIA’s Volume One, the
contents revealed new details about government wrongdoing. According to evidence cited by Bromwich, the
Reagan administration knew almost from the outset of the Contra war that cocaine traffickers permeated
the paramilitary operation. The administration also did next to nothing to expose or stop the crimes.
Bromwich’s report revealed example after example of leads not followed, corroborated witnesses
disparaged, official law-enforcement investigations sabotaged, and even the CIA facilitating the work of
drug traffickers.The report showed that the Contras and their supporters ran several parallel drug-
smuggling operations, not just the one at the center of Webb’s series. The report also found that
the CIA shared little of its information about Contra drugs with law-enforcement agencies and on three
occasions disrupted cocaine-trafficking investigations that threatened the Contras.As well as depicting a
more widespread Contra-drug operation than Webb had understood, the Justice Department report
provided some important corroboration about a Nicaraguan drug smuggler, Norwin Meneses, who was a key
figure in Webb’s series.Bromwich cited U.S. government informants who supplied detailed
information about Meneses’s drug operation and his financial assistance to the Contras. For instance,
Renato Pena, a money-and-drug courier for Meneses, said that in the early 1980s the CIA allowed the
Contras to fly drugs into the United States, sell them, and keep the proceeds.Pena, who was the northern
California representative for the CIA-backed Nicaraguan Democratic Force (FDN) Contra army, said the
drug trafficking was forced on the Contras by the inadequate levels of U.S. government assistance.DEA
TroublesThe Justice Department report also disclosed repeated examples of the CIA and U.S. embassies
in Central America discouraging DEA investigations, including one into Contra-cocaine shipments moving
through the international airport in El Salvador.Inspector General Bromwich said secrecy trumped all.
“We have no doubt that the CIA and the U.S. Embassy were not anxious for the DEA to pursue its
investigation at the airport,” he wrote.Bromwich also described the curious case of how a DEA pilot
helped a CIA asset escape from Costa Rican authorities in 1989 after the man, American farmer John Hull,
had been charged in connection with Contra-cocaine trafficking.Hull’s ranch in northern Costa Rica
had been the site of Contra camps for attacking Nicaragua from the south. For years, Contra-connected
witnesses also said Hull’s property was used for the transshipment of cocaine en route to the
United States, but those accounts were brushed aside by the Reagan administration and disparaged in major
U.S. newspapers.Yet, according to Bromwich’s report, the DEA took the accounts seriously enough
to prepare a research report on the evidence in November 1986. In it, one informant described Colombian
cocaine off-loaded at an airstrip on Hull’s ranch. The drugs were then concealed in a shipment of
frozen shrimp and transported to the United States.The alleged Costa Rican shipper was Frigorificos de
Puntarenas, a firm controlled by Cuban-American Luis Rodriguez. Like Hull, however, Frigorificos had
friends in high places. In 1985-86, the State Department had selected the shrimp company to handle
$261,937 in non-lethal assistance earmarked for the Contras.Hull also remained a man with powerful
protectors. Even after Costa Rican authorities brought drug charges against him, influential Americans,
including Rep. Lee Hamilton, D-Indiana, demanded that Hull be let out of jail pending trial. Then, in July 1989
with the help of a DEA pilot – and possibly a DEA agent – Hull managed to fly out of Costa
Rica to Haiti and then to the United States. [See Consortiumnews.com’s “John Hull’
s Great Escape.”]Despite these new disclosures, the big newspapers still showed no inclination to
read beyond the criticism of Webb in the press release and the executive summary.Major DisclosuresBy
fall 1998, Washington was obsessed with President Bill Clinton’s Monica Lewinsky sex scandal, which
made it easier to ignore even more stunning Contra-cocaine disclosures in the CIA’s Volume Two,
published on Oct. 8, 1998.In the report, CIA Inspector General Hitz identified more than 50 Contras and
Contra-related entities implicated in the drug trade. He also detailed how the Reagan administration had
protected these drug operations and frustrated federal investigations throughout the 1980s.According to
Volume Two, the CIA knew the criminal nature of its Contra clients from the start of the war against
Nicaragua’s leftist Sandinista government. The earliest Contra force, called the Nicaraguan
Revolutionary Democratic Alliance (ADREN) or the 15th of September Legion, had chosen “to stoop
to criminal activities in order to feed and clothe their cadre,” according to a June 1981 draft of a
CIA field report.According to a September 1981 cable to CIA headquarters, two ADREN members made
the first delivery of drugs to Miami in July 1981. ADREN’s leaders included Enrique Bermú
dez and other early Contras who would later direct the major Contra army, the CIA-organized FDN which
was based in Honduras, along Nicaragua’s northern border.Throughout the war, Bermúdez
remained the top Contra military commander. The CIA later corroborated the allegations about
ADREN’s cocaine trafficking, but insisted that Bermúdez had opposed the drug shipments to
the United States that went ahead nonetheless.The truth about Bermúdez’s supposed
objections to drug trafficking, however, was less clear. According to Hitz’s Volume One,
Bermúdez enlisted Norwin Meneses, a large-scale Nicaraguan cocaine smuggler and a key figure in
Webb’s series, to raise money and buy supplies for the Contras.Volume One had quoted a Meneses
associate, another Nicaraguan trafficker named Danilo Blandón, who told Hitz’s investigators
that he and Meneses flew to Honduras to meet with Bermúdez in 1982. At the time, Meneses’
s criminal activities were well-known in the Nicaraguan exile community. But Bermúdez told the
cocaine smugglers that “the ends justify the means” in raising money for the Contras.After
the Bermúdez meeting, Contra soldiers helped Meneses and Blandón get past Honduran police
who briefly arrested them on drug-trafficking suspicions. After their release, Blandón and Meneses
traveled on to Bolivia to complete a cocaine transaction.There were other indications of Bermú
dez’s drug-smuggling tolerance. In February 1988, another Nicaraguan exile linked to the drug
trade accused Bermúdez of participation in narcotics trafficking, according to Hitz’s report.
After the Contra war ended, Bermúdez returned to Managua, Nicaragua, where he was shot to death
on Feb. 16, 1991. The murder has never been solved.The Southern FrontAlong the Southern Front, the
Contras’ military operations in Costa Rica on Nicaragua’s southern border, the CIA’
s drug evidence centered on the forces of Edén Pastora, another top Contra commander. But Hitz
discovered that the U.S. government may have made the drug situation worse, not better.Hitz revealed that
the CIA put an admitted drug operative — known by his CIA pseudonym “Ivan
Gomez” — in a supervisory position over Pastora. Hitz reported that the CIA discovered
Gomez’s drug history in 1987 when Gomez failed a security review on drug-trafficking questions.In
internal CIA interviews, Gomez admitted that in March or April 1982, he helped family members who were
engaged in drug trafficking and money laundering. In one case, Gomez said he assisted his brother and
brother-in-law in transporting cash from New York City to Miami. He admitted that he “knew this
act was illegal.”Later, Gomez expanded on his admission, describing how his family members had
fallen $2 million into debt and had gone to Miami to run a money-laundering center for drug traffickers.
Gomez said “his brother had many visitors whom [Gomez] assumed to be in the drug trafficking
business.” Gomez’s brother was arrested on drug charges in June 1982. Three months
later, in September 1982, Gomez started his CIA assignment in Costa Rica.Years later, convicted drug
trafficker Carlos Cabezas alleged that in the early 1980s, Ivan Gomez was the CIA agent in Costa Rica who
was overseeing drug-money donations to the Contras. Gomez “was to make sure the money was given
to the right people [the Contras] and nobody was taking . . . profit they weren’t supposed to,
” Cabezas stated publicly.But the CIA sought to discredit Cabezas at the time because he had
trouble identifying Gomez’s picture and put Gomez at one meeting in early 1982 before Gomez
started his CIA assignment.While the CIA was able to fend off Cabezas’s allegations by pointing to
these discrepancies, Hitz’s report revealed that the CIA was nevertheless aware of
Gomez’s direct role in drug-money laundering, a fact the agency hid from Sen. Kerry in his 1987
investigation.Cocaine CoupThere was also more to know about Gomez. In November 1985, the Federal
Bureau of Investigation (FBI) learned from an informant that Gomez’s two brothers had been large-
scale cocaine importers, with one brother arranging shipments from Bolivia’s infamous drug kingpin
Roberto Suarez.Suarez already was known as a financier of right-wing causes. In 1980, with the support of
Argentina’s hard-line anticommunist military regime, Suarez bankrolled a coup in Bolivia that ousted
the elected left-of-center government. The violent putsch became known as the Cocaine Coup because it
made Bolivia the region’s first narco-state.By protecting cocaine shipments headed north,
Bolivia’s government helped transform Colombia’s Medellín cartel from a struggling
local operation into a giant corporate-style business for delivering cocaine to the U.S. market.Flush with cash
in the early 1980s, Suarez invested more than $30 million in various right-wing paramilitary operations,
including the Contra forces in Central America, according to U.S. Senate testimony by an Argentine
intelligence officer, Leonardo Sanchez-Reisse.In 1987, Sanchez-Reisse said the Suarez drug money was
laundered through front companies in Miami before going to Central America. There, other Argentine
intelligence officers — veterans of the Bolivian coup — trained the Contras in the early 1980s,
even before the CIA arrived to first assist with the training and later take over the Contra operation from
the Argentines.Inspector General Hitz added another piece to the mystery of the Bolivian-Contra
connection. One Contra fund-raiser, Jose Orlando Bolanos, boasted that the Argentine government was
supporting his Contra activities, according to a May 1982 cable to CIA headquarters. Bolanos made the
statement during a meeting with undercover DEA agents in Florida. He even offered to introduce them to
his Bolivian cocaine supplier.Despite all this suspicious drug activity centered around Ivan Gomez and the
Contras, the CIA insisted that it did not unmask Gomez until 1987, when he failed a security check and
confessed his role in his family’s drug business. The CIA official who interviewed Gomez concluded
that “Gomez directly participated in illegal drug transactions, concealed participation in illegal drug
transactions, and concealed information about involvement in illegal drug activity,” Hitz wrote.
Protecting GomezBut senior CIA officials still protected Gomez. They refused to refer the Gomez case to
the Justice Department, citing the 1982 agreement that spared the CIA from a legal obligation to report
narcotics crimes by people collaborating with the CIA who were not formal agency employees.Gomez was an
independent contractor who worked for the CIA but was not officially on staff. The CIA eased Gomez out
of the agency in February 1988, without alerting law enforcement or the congressional oversight committees.
When questioned about the case nearly a decade later, one senior CIA official who had supported the gentle
treatment of Gomez had second thoughts. “It is a striking commentary on me and everyone that this
guy’s involvement in narcotics didn’t weigh more heavily on me or the system,” the
official acknowledged to Hitz’s investigators.A Medellín drug connection arose in another
section of Hitz’s report, when he revealed evidence suggesting that some Contra trafficking may
have been sanctioned by Reagan’s NSC. The protagonist for this part of the Contra-cocaine mystery
was Moises Nunez, a Cuban-American who worked for Oliver North’s NSC Contra-support operation
and for two drug-connected seafood importers, Ocean Hunter in Miami and Frigorificos De Puntarenas in
Costa Rica.Frigorificos De Puntarenas was created in the early 1980s as a cover for drug-money laundering,
according to sworn testimony by two of the firm’s principals — Carlos Soto and
Medellín cartel accountant Ramon Milian Rodriguez. (It was also the company implicated by a DEA
informant in moving cocaine from John Hull’s ranch to the United States.)Drug allegations were
swirling around Moises Nunez by the mid-1980s. Indeed, his operation was one of the targets of my and
Barger’s AP investigation in 1985. Finally reacting to these suspicions, the CIA questioned Nunez
about his alleged cocaine trafficking on March 25, 1987. He responded by pointing the finger at his NSC
superiors.“Nunez revealed that since 1985, he had engaged in a clandestine relationship with the
National Security Council,” Hitz reported, adding: “Nunez refused to elaborate on the
nature of these actions, but indicated it was difficult to answer questions relating to his involvement in
narcotics trafficking because of the specific tasks he had performed at the direction of the NSC. Nunez
refused to identify the NSC officials with whom he had been involved.”After this first round of
questioning, CIA headquarters authorized an additional session, but then senior CIA officials reversed the
decision. There would be no further efforts at “debriefing Nunez.”Hitz noted that “
the cable [from headquarters] offered no explanation for the decision” to stop the Nunez
interrogation. But the CIA’s Central American Task Force chief Alan Fiers Jr. said the Nunez-NSC
drug lead was not pursued “because of the NSC connection and the possibility that this could be
somehow connected to the Private Benefactor program [the Contra money handled by North] a decision was
made not to pursue this matter.”Joseph Fernandez, who had been the CIA’s station chief in
Costa Rica, confirmed to congressional Iran-Contra investigators that Nunez “was involved in a very
sensitive operation” for North’s “Enterprise.” The exact nature of that
NSC-authorized activity has never been divulged.At the time of the Nunez-NSC drug admissions and his
truncated interrogation, the CIA’s acting director was Robert Gates, who nearly two decades later
became President George W. Bush’s second secretary of defense, a position he retained under
President Barack Obama.Drug RecordThe CIA also worked directly with other drug-connected Cuban-
Americans on the Contra project, Hitz found. One of Nunez’s Cuban-American associates, Felipe
Vidal, had a criminal record as a narcotics trafficker in the 1970s. But the CIA still hired him to serve as a
logistics coordinator for the Contras, Hitz reported.The CIA also learned that Vidal’s drug
connections were not only in the past. A December 1984 cable to CIA headquarters revealed Vidal’s
ties to Rene Corvo, another Cuban-American suspected of drug trafficking. Corvo was working with Cuban
anticommunist Frank Castro, who was viewed as a Medellín cartel representative within the Contra
movement.There were other narcotics links to Vidal. In January 1986, the DEA in Miami seized 414 pounds
of cocaine concealed in a shipment of yucca that was going from a Contra operative in Costa Rica to Ocean
Hunter, the company where Vidal (and Moises Nunez) worked. Despite the evidence, Vidal remained a CIA
employee as he collaborated with Frank Castro’s assistant, Rene Corvo, in raising money for the
Contras, according to a CIA memo in June 1986.By fall 1986, Sen. Kerry had heard enough rumors about
Vidal to demand information about him as part of his congressional inquiry into Contra drugs. But the CIA
withheld the derogatory information in its files. On Oct. 15, 1986, Kerry received a briefing from the
CIA’s Alan Fiers Jr., who didn’t mention Vidal’s drug arrests and conviction in the
1970s.But Vidal was not yet in the clear. In 1987, the U.S. Attorney’s Office in Miami began
investigating Vidal, Ocean Hunter, and other Contra-connected entities. This prosecutorial attention worried
the CIA. The CIA’s Latin American division felt it was time for a security review of Vidal. But on
Aug. 5, 1987, the CIA’s security office blocked the review for fear that the Vidal drug information
“could be exposed during any future litigation.”As expected, the U.S. Attorney’s
Office did request documents about “Contra-related activities” by Vidal, Ocean Hunter, and
16 other entities. The CIA advised the prosecutor that “no information had been found regarding
Ocean Hunter,” a statement that was clearly false. The CIA continued Vidal’s employment
as an adviser to the Contra movement until 1990, virtually the end of the Contra war.FDN ConnectionsHitz
also revealed that drugs tainted the highest levels of the Honduran-based FDN, the largest Contra army.
Hitz found that Juan Rivas, a Contra commander who rose to be chief of staff, admitted that he had been a
cocaine trafficker in Colombia before the war.The CIA asked Rivas, known as El Quiche, about his
background after the DEA began suspecting that Rivas might be an escaped convict from a Colombian prison.
In interviews with CIA officers, Rivas acknowledged that he had been arrested and convicted of packaging
and transporting cocaine for the drug trade in Barranquilla, Colombia. After several months in prison, Rivas
said, he escaped and moved to Central America, where he joined the Contras.Defending Rivas, CIA officials
insisted that there was no evidence that Rivas engaged in trafficking while with the Contras. But one CIA
cable noted that he lived an expensive lifestyle, even keeping a $100,000 Thoroughbred horse at the Contra
camp. Contra military commander Bermúdez later attributed Rivas’s wealth to his ex-
girlfriend’s rich family. But a CIA cable in March 1989 added that “some in the FDN may
have suspected at the time that the father-in-law was engaged in drug trafficking.”Still, the CIA
moved quickly to protect Rivas from exposure and possible extradition to Colombia. In February 1989, CIA
headquarters asked that the DEA take no action “in view of the serious political damage to the U.S.
Government that could occur should the information about Rivas become public.” Rivas was eased out
of the Contra leadership with an explanation of poor health. With U.S. government help, he was allowed to
resettle in Miami. Colombia was not informed about his fugitive status.Another senior FDN official implicated
in the drug trade was its chief spokesman in Honduras, Arnoldo Jose “Frank” Arana.The
drug allegations against Arana dated back to 1983 when a federal narcotics task force put him under
criminal investigation because of plans “to smuggle 100 kilograms of cocaine into the United States
from South America.” On Jan. 23, 1986, the FBI reported that Arana and his brothers were
involved in a drug-smuggling enterprise, although Arana was not charged.Arana sought to clear up another
set of drug suspicions in 1989 by visiting the DEA in Honduras with a business associate, Jose Perez.
Arana’s association with Perez, however, only raised new alarms. If “Arana is mixed up with
the Perez brothers, he is probably dirty,” the DEA said.Drug AirlinesThrough their ownership of an
air services company called SETCO, the Perez brothers were associated with Juan Matta-Ballesteros, a
major cocaine kingpin connected to the murder of a DEA agent, according to reports by the DEA and U.S.
Customs. Hitz reported that someone at the CIA scribbled a note on a DEA cable about Arana stating:
“Arnold Arana . . . still active and working, we [CIA] may have a problem.”Despite its drug
ties to Matta-Ballesteros, SETCO emerged as the principal company for ferrying supplies to the Contras in
Honduras. During congressional Iran-Contra hearings, FDN political leader Adolfo Calero testified that
SETCO was paid from bank accounts controlled by Oliver North. SETCO also received $185,924 from the
State Department for ferrying supplies to the Contras in 1986. Furthermore, Hitz found that other air
transport companies used by the Contras were implicated in the cocaine trade as well.Even FDN leaders
suspected that they were shipping supplies to Central America aboard planes that might be returning with
drugs. Mario Calero, the chief of Contra logistics, grew so uneasy about one air freight company that he
notified U.S. law enforcement that the FDN only chartered the planes for the flights south, not the return
flights north.Hitz found that some drug pilots simply rotated from one sector of the Contra operation to
another. Donaldo Frixone, who had a drug record in the Dominican Republic, was hired by the CIA to fly
Contra missions from 1983 to 1985. In September 1986, however, Frixone was implicated in smuggling
19,000 pounds of marijuana into the United States. In late 1986 or early 1987, he went to work for Vortex,
another U.S.-paid Contra supply company linked to the drug trade.By the time that Hitz’s Volume
Two was published in fall 1998, the CIA’s defense against Webb’s series had shrunk to a
fig leaf: that the CIA did not conspire with the Contras to raise money through cocaine trafficking. But Hitz
made clear that the Contra war took precedence over law enforcement and that the CIA withheld evidence
of Contra crimes from the Justice Department, Congress, and even the CIA’s own analytical division.
Besides tracing the evidence of Contra-drug trafficking through the decade-long Contra war, the inspector
general interviewed senior CIA officers who acknowledged that they were aware of the Contra-drug
problem but didn’t want its exposure to undermine the struggle to overthrow Nicaragua’s
leftist Sandinista government.According to Hitz, the CIA had “one overriding priority: to oust the
Sandinista government. . . . [CIA officers] were determined that the various difficulties they encountered
not be allowed to prevent effective implementation of the Contra program.” One CIA field officer
explained, “The focus was to get the job done, get the support and win the war.”Hitz also
recounted complaints from CIA analysts that CIA operations officers handling the Contras hid evidence of
Contra-drug trafficking even from the CIA’s analysts.Because of the withheld evidence, the CIA
analysts incorrectly concluded in the mid-1980s that “only a handful of Contras might have been
involved in drug trafficking.” That false assessment was passed on to Congress and to major news
organizations — serving as an important basis for denouncing Gary Webb and his “Dark
Alliance” series in 1996.CIA AdmissionAlthough Hitz’s report was an extraordinary
admission of institutional guilt by the CIA, it went almost unnoticed by the big American newspapers.On Oct.
10, 1998, two days after Hitz’s Volume Two was posted on the CIA’s Web site, the New
York Times published a brief article that continued to deride Webb but acknowledged the Contra-drug
problem may have been worse than earlier understood. Several weeks later, the Washington Post weighed in
with a similarly superficial article. The Los Angeles Times never published a story on the release of
Hitz’s Volume Two.In 2000, the House Intelligence Committee grudgingly acknowledged that the
stories about Reagan’s CIA protecting Contra drug traffickers were true. The committee released
a report citing classified testimony from CIA Inspector General Britt Snider (Hitz’s successor)
admitting that the spy agency had turned a blind eye to evidence of Contra-drug smuggling and generally
treated drug smuggling through Central America as a low priority.“In the end the objective of
unseating the Sandinistas appears to have taken precedence over dealing properly with potentially serious
allegations against those with whom the agency was working,” Snider said, adding that the CIA did
not treat the drug allegations in “a consistent, reasoned or justifiable manner.”The House
committee — then controlled by Republicans — still downplayed the significance of the Contra-
cocaine scandal, but the panel acknowledged, deep inside its report, that in some cases, “CIA
employees did nothing to verify or disprove drug trafficking information, even when they had the
opportunity to do so. In some of these, receipt of a drug allegation appeared to provoke no specific
response, and business went on as usual.”Like the release of Hitz’s report in 1998, the
admissions by Snider and the House committee drew virtually no media attention in 2000 — except
for a few articles on the Internet, including one at Consortiumnews.com.Unrepentant PressBecause of this
misuse of power by the Big Three newspapers — choosing to conceal their own journalistic failings
regarding the Contra-cocaine scandal and to protect the Reagan administration’s image —
Webb’s reputation was never rehabilitated.After his original “Dark Alliance” series
was published in 1996, Webb had been inundated with attractive book offers from major publishing houses,
but once the vilification began, the interest evaporated. Webb’s agent contacted an independent
publishing house, Seven Stories Press, which had a reputation for publishing books that had been censored,
and it took on the project.After Dark Alliance: The CIA, the Contras, and the Crack Cocaine Explosion was
published in 1998, I joined Webb in a few speaking appearances on the West Coast, including one packed
book talk at the Midnight Special bookstore in Santa Monica, California. For a time, Webb was treated as a
celebrity on the American Left, but that gradually faded.In our interactions during these joint appearances,
I found Webb to be a regular guy who seemed to be holding up fairly well under the terrible pressure. He
had landed an investigative job with a California state legislative committee. He also felt some measure of
vindication when CIA Inspector General Hitz’s reports came out.However, Webb never could
overcome the pain caused by his betrayal at the hands of his journalistic colleagues, his peers. In the years
that followed, Webb was unable to find decent-paying work in his profession — the conventional
wisdom remained that he had somehow been exposed as a journalistic fraud. His state job ended; his
marriage fell apart; he struggled to pay bills; and he was faced with a move out of a modest rental house
near Sacramento, California.On Dec. 9, 2004, the 49-year-old Webb typed out suicide notes to his ex-wife
and his three children; laid out a certificate for his cremation; and taped a note on the door telling movers
— who were coming the next morning — to instead call 911. Webb then took out his
father’s pistol and shot himself in the head. The first shot was not lethal, so he fired once more.
Even with Webb’s death, the big newspapers that had played key roles in his destruction
couldn’t bring themselves to show Webb any mercy. After Webb’s body was found, I
received a call from a reporter for the Los Angeles Times who knew that I was one of Webb’s few
journalistic colleagues who had defended him and his work.I told the reporter that American history owed a
great debt to Gary Webb because he had forced out important facts about Reagan-era crimes. But I added
that the Los Angeles Times would be hard-pressed to write an honest obituary because the newspaper had
not published a single word on the contents of Hitz’s final report, which had largely vindicated
Webb.To my disappointment but not my surprise, I was correct. The Los Angeles Times ran a mean-spirited
obituary that made no mention of either my defense of Webb, nor the CIA’s admissions in 1998. The
obituary was republished in other newspapers, including the Washington Post.In effect, Webb’s
suicide enabled senior editors at the Big Three newspapers to breathe a little easier — one of the
few people who understood the ugly story of the Reagan administration’s cover-up of the Contra-
cocaine scandal and the U.S. media’s complicity was now silenced.To this day, none of the journalists
or media critics who participated in the destruction of Gary Webb has paid a price for their actions. None
has faced the sort of humiliation that Webb had to endure. None had to experience that special pain of
standing up for what is best in the profession of journalism — taking on a difficult story that seeks to
hold powerful people accountable for serious crimes — and then being vilified by your own colleagues,
the people that you expected to understand and appreciate what you had done.On the contrary, many were
rewarded with professional advancement and lucrative careers. For instance, Howard Kurtz still hosts the
CNN program, “Reliable Sources,” which lectures journalists on professional standards.[For
more on related topics, see Robert Parry’s Lost History, Secrecy & Privilege and Neck Deep,
now available in a three-book set for the discount price of only $29. For details, click here.]Robert Parry
broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest
book, Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and
Nat, and can be ordered at neckdeepbook.com. His two previous books, Secrecy & Privilege: The Rise
of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & ‘
Project Truth’ are also available there.
With regards to Milton Friedman’s Free to Chose only the top ten percent is free to chose. The rest are
pretty much slaves with little chose after they pay for necessities.
Five Reasons Why The Very Rich Have Not Earned Their Money
Submitted by BuzzFlash on Tue, 04/17/2012 - 1:10pm.
• Guest Commentary
PAUL BUCHHEIT FOR BUZZFLASH AT TRUTHOUT
The wealthiest Americans believe they've earned their money through hard work and innovation, and that
they're the most productive members of society. For the most part they're wrong. As the facts below will
show, they're not nearly as productive as middle-class workers. Yet they've taken almost all the new income
over the past 30 years.
Any one of these five reasons should reinforce the belief that the rich should be paying a LOT more in taxes:
1. They've Taken All the Middle Class Wage Increases
In 1980 the richest 1% of America took one of every fifteen post-tax income dollars. Now, according to IRS
figures, they take THREE of every fifteen post-tax income dollars. They've tripled their cut of America's
income pie. That's a trillion extra dollars a year.
For every dollar the richest 1% earned in 1980, they've added three more dollars. The poorest 90% have
added ONE CENT.
Yet the average American factory worker, according to Berkeley economist Enrico Moretti, produces
$180,000 worth of goods a year, more than three times what he or she produced in 1978, in inflation-
adjusted dollars.
So workers have TRIPLED their productivity over 30 years while the richest 1% have TRIPLED their share
of income. Worker pay remained flat as the top 10% took almost all the productivity gains since 1980.
2. They've Mismanaged Key American Industries
We have the most expensive health care system in the world. Failing banks have survived because of
taxpayer bailouts. Management-approved shortcuts have led to workplace deaths and chemical leak
disasters. Companies lobby for cap and trade laws so their profits can pay for their pollution.
Over twenty percent of Americans are unemployed or underemployed as big companies hoard $2 trillion in
cash. 93% of post-recession income is going to the 1% "job-creators" with no appreciable increase in jobs.
Private tuition is skyrocketing, with student loans reaching the $1 trillion mark. Bonuses continue for
executives at Ford and Bank of America and Sirius and other companies who have underperformed and/or
laid off workers.
No, the captains of industry have not earned their money because of their top-notch management skills.
3. They've Benefited from 50 Years of Public Research
The very rich have made their fortunes in good part because of taxpayer-funded research at the Defense
Advanced Research Projects Agency (the Internet), the National Institute of Health, the National Science
Foundation, and numerous other government agencies.
Consider just a simple communications device. Computer chips and audio/video/voice technologies grew out
of decades of funding at the Department of Defense, the Air Force, NASA, and public universities. The
pieces of the device were put together by a procession of chemists, physicists, chip designers,
programmers, engineers, production-line workers, market analysts, testers, troubleshooters, etc., etc.
They, in turn, couldn't have succeeded without another layer of people providing sustenance and medical
support and security and administrative assistance and transportation and office maintenance for the
technologists. All of them contributed to the final product.
But over the years private businesses have received government contracts to produce and market the
results, and "entrepreneurs" have rearranged the pieces into products that seem to appear out of the
magical world of a single individual.
4. They've Increased Their Incomes By Not Paying Taxes
The richest 10% own 80% of the stock market, providing billions in "unearned income" that is taxed at less
than half the rate of income earned through real work.
Hedge fund managers call their income "carried interest" instead of "income" to keep their tax rate at 15%.
Even this small amount may not be paid. Hedge fund managers with incomes in the billions can pay ZERO
income tax by deferring their profits through their companies indefinitely.
Real tax rates for the richest Americans have gone way down over the last 30 years, from 34% in 1980 to
23% in 2006. Yet the 1% claim they pay most of the taxes. They don't, if all taxes are considered. Based on
recent data from the Center on Budget and Policy Priorities, the total of all state and local taxes, social
security taxes, and excise taxes (gasoline, alcohol, tobacco) consumes 22% of the annual incomes of the
poorest quintile. For the top 1% of Americans, the same taxes consume less than 10% of their incomes.
In addition, most inherited wealth goes untaxed, with estates valued up to $5 million exempt from federal
taxes. The average tax rate on inheritance is less than 3 percent.
It's no different for corporations. U.S. Office of Management (OMB) figures show a gradual drop over the
years in Corporate Income Tax as a Share of GDP, from 4% in the 1960s to 1.3% in 2010. That's ONE-
THIRD of their previous share. From 2008 to 2010, the top 100 U.S. corporations paid only 12.2% of their
income in taxes, and thirty of them paid nothing at all.
The lack of SEC regulation has also allowed corporate America to seek tax dodges beyond our borders.
Citizens for Tax Justice reports that the 280 most profitable U.S. corporations sheltered half their profits
from taxes - up to $337 billion a year - between 2008 and 2010.
Most shocking is the long-term shift in the tax burden from corporations to middle-class workers. For
every dollar of workers' payroll tax paid in the 1950s, corporations paid three dollars. Now it's 16 cents.
5. They've Contributed Little to Society
The richest individuals and corporations have shown little regard for the majority of Americans who depend
on sound financial management for their economic security. According to sources such as the New York
Times and ProPublica, Wall Street firms including JPMorgan, Citigroup, Bank of America, and Goldman Sachs
have been repeatedly charged with fraud only to avoid punishment by paying a fraction of their profits in
fines.
Financial insiders have figured out how to cheat other investors by timing the purchase of a stock option to
precede good corporate news, timing the sale of a stock option to precede bad corporate news, and
changing the purchase date on a stock option to a time when the price was lower.
One hedge fund manager, John Paulson, made $4 billion by working with Goldman Sachs to create a financial
product that would allow him to bet on the collapse of the housing market. Other financial masterminds
packaged toxic derivatives for sale to unknowing pension funds, as ratings agencieswere paid to ensure the
worthless packages received AAA ratings.
Meanwhile, the banks were roughing up the homeowners. Bank of America foreclosed on tens of thousands
of Americans by using unverified evidence called "robo-signing."
Disdain for average citizens goes way beyond fraud, and well outside our borders, into the areas of
environmental and human rights abuses. Computer and phone makers like Apple save money by obtaining
their coltan from the Congo, where children dig it out of the mines. The "blood coltan" goes to China, where
teenagers stand for 12 hours a day performing repetitive tasks for a few dollars. Monsanto's herbicides
and pesticides cause biological damage, promote the growth of 'superbugs' and 'superweeds,' and generally
don't outperform organic methods of farming. Exxon is not only the biggest profit-maker and polluter, but
the company has conducted a lengthy campaign to deceive the public about global warming. Corporate
Accountability International named Monsanto, Exxon, Koch Industries, Chevron, Blackwater, and Halliburton
to its Corporate Hall of Shame.
And finally, how well is society served when valuable resources are spent on a yacht complete with golf
course, submarine, beach, and helicopter, and which qualified for a second-home mortgage deduction? Or on
a $250,000 playhouse for the kids?
Studies show that increased wealth is correlated with a lesser degree of empathy for others. Despite their
dependency on society for everything else, the super-rich have apparently earned the right to live in their
own privileged world.
---
Paul Buchheit teaches Economic Inequality at DePaul University. He is the founder and developer of social
justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor
and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at
paul@UsAgainstGreed.org.
Why No Sympathy for the Palestinians?
The Disgusting Attacks on Gunter Grass
by TARIQ ALI
The German writer Gunter Grass (The Tin Drum) had already predicted the response to his poem in SdZ.
There is no reason to be surprised, but there is every reason to be disgusted. Within Germany both the elite
and a layer of the population by their words and actions appear to have accepted the disgraceful Goldhagen
thesis whereby all German were guilty for the crimes of the Third Reich. This thesis has now been developed
further: all Germans are guilty for eternity for the crimes of the Third Reich.
Behind this thinking is the Zionist and Zionophile argument that the crime against the Jews of Europe was
unique in the annals of history. This was true as far as the method of extermination was concerned, but not in
any other way. The Belgians massacred the Congolese in greater numbers: over 10 million according to the
historian Adam Hochschild. The killing of Armenians during the First World War was systematic and we
could go on and discuss the nuking of Hiroshima and Nagasaki, but comparing one massacre or genocide to
another is a futile exercise. Raul Hilberg the most authoritative historian of the Judeocide was angered by
the uses that were being made of that crime today.
Some members of the extreme-right government and Lieberman in particular, that rules Israel today have
used proto-fascist language against the Palestinian Arabs. Are we not allowed to point that out? That the
Israeli government pushed the Bush administration to make war on Iraq is hardly a secret. Nor is the
statement of the Israeli Ambassador to the US the day after the fall of Baghdad: “Don’t stop. Move on to
Damascus and Teheran.’ Are we not allowed to rebuke him? The targeting and killing of young Palestinians in
Gaza and elsewhere is fine, is it?
Gunter Grass was very mild in his criticisms. He concentrated on Israeli warmongering in relation to Iran. He
could have said a lot more. The fact that it needs political courage to say even what he did in Germany or
France is a sad reflection on the political culture of both these countries. As for the attacks on Grass for
his wartime activities, these are beneath contempt. The Israelis were delighted when the former Italian
minister, Gianfranco Fini, whose party is in lineal descent from Mussolini, went to Israel and praised the
Wall. He was forgiven his party’s past. So the past only matters if a person is critical of Israel. The former
Nazis in various positions in the postwar Federal republic who pushed through reparations and backed
Israel, they were never criticized either.
German citizens should ponder the following: it was not the Palestinians who were responsible for the
murder of millions of Jews during the Second World War. Yet they, the Palestinians, have become the
indirect victims of the Judeocide. Those to whom evil is done, do evil in return to others. So why no sympathy
for the Palestinians?
Tariq Ali is the author of The Duel: Pakistan on the Flightpath of American Power. He can be reached at tariq.
ali3@btinternet.com.
Chicago mob and the Chicago mob owns the boy brothels in bankock Thailand. Probably more propaganda
from the gay mafia so they have more people to pimp out. Remember Rosie Odonnel's insane love for Tom
Cruise. Then when she couldn't have him she supposedly went gay. Then you have Ellen Degenate who
probably went gay because i don't see a guy dating her. There was an opera coach years ago in NY named
Marshal Williamson who went from being gay when he was unemployed but when he got a good job he got
married and had three kids. Then you had singers like William Warfield who was married to Leontyne Price
but their careers kept them on different sides of the planet almost all the time. He supposedly went gay.
The gangsters use this when they attempt to play match maker. The fact is the gay mafia and Jews are like
rabbid dogs and wish to impose their will on everyone and the only way to deal with them is a bullet to their
brain.
Probably the nicest place to live except during the summer is Palm Springs. Most people are tied to their
jobs and family so they can't move there so its considered a gay town because they can easily move. If you
ask them if they want gay marriage i bet the majority say no. This is all the rabbid gay mafia's agenda. Just
exterminate them before they get a hold of your children and start them on crystal meth to try to convert
them to their perversions.
Then you have Roger Ailes, who runs FOX News for the gay mafia who said on TV he finds Scott Brown
attractive. Republican Ailes like Gingrich probably could get a date with a sane woman for a million dollars.
But the gay mafia gives these guys jobs. The mobsters can use people different from strait couple because
strait couple have children that have to be supported. The gangsters want obedient slaves. Not people that
have to take care of children.. Its about money. They kept Howard Hughes locked in a hotel room till his
death in order to divert his wealth to buy out Las Vegas gangsters who wished to retire. They kept Michael
Jackson in Parump Nevada till they whacked him to prevent him from interacting with adults. They keep
people in poverty so they can enslave them. Mob controlled Disney once had Michael Ovitz but he quit after
two months rather than put up with the gay mafia. All the mobsters said Tom Cruise was gay because they
dreamt it till he got married. It shouldn't be that difficult to round up the gay mafia and exterminate the
sick twisted mafia shit. The sick mafia shit that brought us FOX News wants the people to be thinking of
their sexual perversion rather than economic injustice, economic inequality, and their criminal behavior.
The Wall street journal is just an instrument of mafia propaganda since the mob bought it. The editorial
section on 5/11/12 ran two articles about war planning during WW2 that simply weren't true. the US
economy was planned during WW2 from natural resource use by the National Resources Planning Board
(WWII) to The Production Requirements Plan (PRP) was introduced in the first half of 1942 to gather
relevant information, but it "had scarcely begun to operate on a large scale when it revealed serious
defects."22 In November, 1942, the War Production Board announced the Controlled Materials Plan (CMP).
Superseding the Production Requirements Plan, it was introduced in 1943 to simplify and augment the failing
priorities mechanism. This was the beginning of the allocation system. the OPAThe Office of Price
Administration (OPA). These books contained stamps and gave precise details of the amounts of certain
types of food that you were allowed. Rationing insured that each person could get their fair share of the
items that were in short supply due to the war effort and import reductions. By the end of the war, over a
hundred million of each ration book were printed.
The Office of Price Administration (OPA) was in charge of rationing consumer goods such as sugar, coffee,
shoes, household appliances, and other goods during World War II. The OPA accepted ration book
applications and issued ration books, from which consumers tore out stamps in order to purchase food and
other supplies at grocery stores.
Read more: http://wiki.answers.com/Q/Who_were_the_OPA_in_World_War_2#ixzz1uiUYT4JX
.Germany's economic defeat stemmed from two mains reasons. Firstly .... This all goes down to planning, and
not "luck". This article proves the WSJ is just an instrument of gangster propaganda, http://www.ibiblio.
org/hyperwar/USA/BigL/BigL-3.html
A real democracy wouldn't have morons like Paul Ryan and Mark Rubio. Mafia fat boy Chis Christie said he
would accept the VP nod.
Mafia controlled Apple recognizes its taxes in mob controlled nevada. I told you years ago the mob
bankrolls these guys to sing the praises of the private sector.
I was just having a conversation with a police officer from New Jersey. He said Chris Christie is just
another bully and he agreed the mob put him into office because he helped them rob everyone when he was
attorney general.
In accordance with mob economic ideology the general population is prey for the mobsters but because they
have impoverished the people there is little picking left for them to steal. They never want to talk about the
fact that upward mobility is twice the rate in the so called socialist countries.
The solution is to exterminate the gay mafia.
ECONOMY
AlterNet / By Marshall Auerback
comments_image 107 COMMENTS
Why Low Minimum Wages Kill Jobs and Crush Living Standards for Everyone
Contrary to right-wing propaganda, decent pay for workers helps the economy and boosts job creation.
April 24, 2012 |
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Senator Tom Harkin, Democrat of Iowa, has introduced a bill to raise the federal minimum wage to $9.80
from its present level of $7.25. Polls are showing many voters in favor, though they are confused about what
it would mean for the job market. The truth is that a move would be good for a slow economy and have a
positive impact on the jobs crisis. Naturally, this has led to the usual cries of opposition, largely based on the
notion that raising the minimum wage hurts the very people it is supposed to help. Typical of this view is a
letter to the New York Times from Michael Saltsman, a fellow at the Employment Policies Institute, a
business-backed nonprofit research group (surprise!).
Saltsman trots out the old canards against the minimum wage, claiming that research indicates that a
minimum wage increase "simply doesn’t help the poor — in fact, it hurts them." He cites studies which showed
that states with their minimum wages between 2003 and 2007 found no associated decline in state poverty
rates. Saltsman gives three reasons for this:
A majority of working-age individuals who live in poverty don’t work, and thus cannot benefit from the raise.
A clear majority of those who do earn the minimum wage live in households that aren’t in poverty.
Less skilled and less experienced employees lose employment opportunities when the cost to hire and train
them rises as a result of a minimum-wage increase.
Let’s take these arguments in turn. Implicit in the first point is that a majority of working-age individuals don’
t work because they choose not to (i.e. they are lazy scroungers), or because unemployment is caused by
laziness or lack of training. The argument they often use is that “I can get a job, therefore all the
unemployed could get jobs if only they tried harder, or got better education and training.”
The way I go about demonstrating that fallacy is a dogs-and-bones example. Say we have 10 dogs and we
bury nine bones in the backyard. We send the dogs out to find bones. At least one dog will come back
without a bone.
We decide that the problem is lack of training. We put that dog through rigorous training in the latest bone-
finding techniques. We bury nine bones and send the 10 dogs out again. The trained dog ends up with a bone,
but some other dog comes back without a bone (empty-mouthed, so to speak).
The problem is that there are not enough bones and jobs to go around. The “bones” in the jobs discussion are
insufficient spending power in the economy. It is certainly true that a well-trained and highly motivated
jobseeker can usually find a job. But that is no evidence that aggregate unemployment is caused by laziness
or lack of training. And besides, we could easily determine how much unemployment is truly voluntary. The
government could serve as the “employer of last resort” under a job guarantee program modeled on the
WPA (the Works Progress Administration, in existence from 1935 to 1943) and the CCC (Civilian
Conservation Corps, 1933-1942). The program would offer a job to any American who was ready and willing
to work at the federal minimum wage, plus legislated benefits. No time limits. No means testing. No minimum
education or skill requirements.
It's hard to believe that reducing or even eliminating the minimum wage (which is the corollary of Saltsman’s
point), would actually enhance employment, when the problem is a basic lack of demand. Business will not hire
more workers until it has more sales. Consumers will not spend more until they’ve got more jobs. A private-
sector recovery requires 300,000 new jobs every month. But the private sector doesn’t need 300,000 new
workers per month until there exists sufficient spending power in the economy to induce them to hire those
workers. How is retaining a static, or reduced minimum wage, going to achieve this?
Higher wages means higher income and thus higher consumption spending, which induces firms to employ
more labor. So the truth is that economic theory does not tell us that raising minimum wages will lead to
more unemployment, indeed, theory tells us it can go the other way—raising the minimum wage could increase
employment. That’s one of the reasons why Henry Ford believed in paying his workers a decent wage: so that
they could buy his product.
To be sure, even an increase in the minimum wage to $12 or $15 an hour is not going to provide the means to
purchase a Ford (or GM) today. And so what if, as Saltsman argues, the workers earning this minimum wage
are not living in poverty? Does that mean they wouldn’t spend the money derived from an increased minimum
wage? I wonder if Saltsman would also argue that tax cuts across the board are unnecessary because most
of the people who receive them are not living in poverty?
That argument is a red herring. The truth is, if you earn your money through wages (unlike many of the 1
percent, who earn through things like investments and a tax system biased in favor of capital gains over
income) then a higher wage, minimum or otherwise, would mean that you'd spend the additional dollars,
creating jobs for other workers. You'd pay down your mortgages and car loans, getting yourself out of
debt. You’d pay more taxes — on sales and property, mostly — thereby relieving the fiscal crises of states
and localities. More teachers, police and firefighters would keep their jobs. America would get a virtuous
cycle toward higher employment and, more importantly, the cycle would be based on a policy which creates
higher incomes, not higher debt via credit expansion.
Then there's the common belief that minimum wages cause unemployment, which relates to Saltman’s third
point – namely that less skilled and less experienced employees lose employment opportunities when the
cost to hire and train them rises as a result of a minimum-wage increase. It is at least partly true that for
an individual firm, higher wages reduce the number of workers hired. But we cannot extrapolate that to the
economy as a whole. The issue of eroding wage competitiveness, which allegedly follows from a higher
minimum wage, doesn’t really apply to jobs which offer the minimum wage. It might apply to areas such as
manufactured goods and traded services like insurance and banking. But these are sectors in which most
people already earn far more than the minimum wage.
As far as the minimum wage goes, the jobs we’re talking about are in non-traded services like checkout
clerks, haircutters, domestic help, and food-service workers. When checkout clerks and cooks earn more in
wages, then businesses start getting the sales required to induce them to hire more workers. And if sales
are robust enough, then guess what? Even more workers will be hired, or wages will actually be increased.
The point is: wages are a source of demand, as well as a cost input. Reduce wages and demand plummets,
which more than overrides any cost savings derived from paying less to workers (especially given today's
paltry minimum wage, which is hardly a living wage for any American).
Let's be clear; Americans have never embraced welfare. For better or worse, our nation has always
preferred a more libertarian path: self-help, personal responsibility, individual initiative. As a result, our
welfare programs have always been stingy, temporary and purposely demeaning. But maintaining the minimum
wage at today’s ridiculously depressed level does not enhance anybody’s employment prospects. In fact, it
makes it worse, because it sucks demand out of the economy and minimizes the chances of those now
receiving unemployment benefits or other assistance to quickly get back into the workforce, to "pull
themselves up by their own bootstraps," as conservatives like to say. They cannot do that when our work
force continues to focus on policies which merely enhance the incomes of the top 1 percent.
Here’s mobster Draghi defending austerity in an interview with the Wall Street Journal:
“There was no alternative to fiscal consolidation, and we should not deny that this is contractionary in the
short term. In the future there will be the so-called confidence channel, which will reactivate growth; but it’
s not something that happens immediately, and that’s why structural reforms are so important, because the
short-term contraction will be succeeded by long-term sustainable growth only if these reforms are in
place.” (“Q&A: ECB President Mario Draghi”, Wall Street Journal) Thats what I think austerity came out of
that nut job Marty Feldman.
EuroSpeak for "Starve the Beast"
The Meaning of “Austerity Measures”
by MIKE WHITNEY
The eurozone is slipping into a recession that could have been avoided. Had policymakers provided fiscal
support for stricken countries in the South and guarantees on their government bonds, (as the USG does for
US Treasuries) then their economies could have continued to grow while the necessary reforms were put in
place. But the Troika (The IMF, the ECB, and the European Commission) decided to make the bailouts
conditional on member states’ acceptance of harsh austerity measures which forced leaders to slash
government payrolls, services and programs. The result was entirely predictable; economic activity began to
sputter as one country after another succumbed to a vicious slump.
So the downturn was a basically matter of choice, a self-inflicted wound brought on by poor decision-making
in Brussels and Frankfurt. Anyone could see what the result was going to be because contractionary policy
leads to economic contraction. Implement policies that are designed to shrink the economy, then the economy
will shrink.
For the last month or so, the focus has mainly been on Spain, and for good reason. Spain’s banking system is
crumbling beneath the weight of tens of billions in non performing loans generated by the gigantic housing
bubble which is still deflating. Unemployment in Spain is the highest in Europe at 24 percent. (Youth
unemployment is over 50 percent) Even so, Spain’s right wing PM Mariano Rajoy is attempting to reach the
deficit targets demanded by the troika which will push unemployment higher while further deepening the
depression. According to Der Speigel:
“The prime minister recently announced that he wants to reduce expenditures in the country’s education and
health system by €10 billion. …. To meet the demands of the central government, the regions would have to
slash 80,000 out of 500,000 teaching positions.”
As you can see, austerity measures and debt consolidation are only adding to Spain’s woes. Eventually, after
much unnecessary misery, Spain will require a bailout, although ECB president Mario Draghi insists that this
is not so.
But Europe’s problems are not limited to Spain or countries on the periphery. France’s output has slipped for
a second month in a row and the pace of the decline is accelerating. The service sector is also showing signs
of distress as belt tightening measures take hold and gradually reduce aggregate demand. Unemployment is
edging higher as the slump deepens. According to data from Eurostat the seasonally adjusted jobless rate
in France reached 10 percent in April, a 12 year high. Ballooning unemployment has led to an uptick in poverty
which now affects 13.5 percent of the population. Austerity measures have led to a decline in personal
consumption, an erosion of confidence, and a more generalised slowdown across all sectors. Still, intractable
bankers and bureaucrats in Brussels and Frankfurt have not veered one bit from the original policy. They
remain steadfast in their commitment to austerity.
Here’s Draghi defending austerity in an interview with the Wall Street Journal:
“There was no alternative to fiscal consolidation, and we should not deny that this is contractionary in the
short term. In the future there will be the so-called confidence channel, which will reactivate growth; but it’
s not something that happens immediately, and that’s why structural reforms are so important, because the
short-term contraction will be succeeded by long-term sustainable growth only if these reforms are in
place.” (“Q&A: ECB President Mario Draghi”, Wall Street Journal)
Notice how Draghi does not defend austerity on the basis of any identifiable economic theory, nor does he
cite any examples of austerity’s successes. (Are there any?) Nor does he name any prominent economists
who support the theory. It’s all just “Trust us, we’re the experts”…. “contractionary expansion will work
because we say so” even though the economy is sinking, unemployment and extreme poverty are at record
highs, and the Eurozone is embroiled in the worst slump in the last 80 years. “Trust us. We know what we’re
doing”.
And here’s a sample of Draghi’s views on taxation from the same interview:
“A ‘good’ consolidation is one where taxes are lower and the lower government expenditure is on
infrastructures and other investments.”…”A ‘bad’ consolidation is actually the easier one to get… by raising
taxes and cutting capital expenditure.”
Let’s summarize: Cutting public spending and austerity, “Good”. Raising taxes, “Bad”. Isn’t this the same right
wing blather we’ve heard for years?
“Austerity” amounts to an attack on Europe’s social model and aims to roll back the progressive advances of
the last century. There’s nearly-universal agreement that belt tightening doesn’t lead to recovery, but just
make matters worse. Trimming deficits in the throes of a recession is a surefire way to choke off economic
activity and foment social unrest. And so it has. Aside from turning many of the EU’s biggest cities into free-
fire zones, austerity is reshaping the political landscape and fueling radical elements on the right and left
who are calling for an end to the 17-member union and a return to national sovereignty. (Hooray)
Still, policymakers seem oblivious to the political firestorm they’ve touched off. They remain focused
laserlike on their primary objective, which is to make sure that a bigger share of the national wealth moves
up the income chain. The way they do this is by demagoging the fake “debt crisis” while their political lackeys
and “technicians” slash pensions, health care and subsidies to protected industries; hack away at state
budgets, reduce their federal workforce, crush organized labor, remove tariffs and taxes on capital, and
privatize more public assets and services. Smaller government means less activity, fewer jobs, weaker
demand, and greater hardship for working people. In other words, austerity achieves exactly what it was
meant to achieve; bigger profits for the 1% and zilch for everyone else. Here’s a clip from an article in
Reuters:
“The euro zone’s business slump deepened at a far faster pace than expected in April, suggesting the
economy will stay in recession at least until the second half of the year….
“Today’s dismal PMI figures clearly indicate that the euro zone economy remains in dire straits”….European
factories had their worst month since June 2009. Companies said their order books were shrinking and they
were cutting jobs in reaction to falling demand….
“There are no real drivers of growth here, which suggests that although the overall rate of decline is
modest at the moment, we could see it continue to worsen in coming months,” said Chris Williamson, chief
economist of PMI compiler Markit.” (“Euro zone slump deepens unexpectedly in April”, Reuters)
Draghi’s ”debt consolidation” and “structural reforms” have increased deflationary pressures and deepened
the slump. They’ve been a total flop as anyone with half-a-brain could have predicted.
So, are we supposed to believe that the ECB president didn’t know what the effect of his policies would be,
that he didn’t know that contractionary policies would result in economic contraction?
Of course, he knew. Draghi’s not an idiot; he’s a very competent economist. This just shows that he had an
ulterior motive, that the policy was crafted to serve the interests of his banking buddies and not those of
the 99%. After all, the real purpose of austerity is not to cut deficits or spur growth, but to stuff
government into a fiscal starightjacket so that private industry and big finance get a bigger slice of the pie.
Isn’t that what this is really all about?
Sure, it is. Austerity is just the euro-version of “starve the beast”.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics
of Illusion (AK Press). He can be reached at fergiewhitney@msn.com.
There is no way socialist Denmark would approve austerity policies unless forced on them by the mafia jack-
asses. They know austerity was implemented by Herbert Hoover in the 1920s and it gave them the great
depression but its part of mafia ideology so we have gangsters like Chris Cristie and Paul Ryan demanding
them. The mob had Ayn Rand high on Meth to write mafia ideology and now the gangsters demand their
leaders pledge fealty to such ideology before the gangsters make them governor like Chris Christie or jack-
asses like Paul Ryan. Even Greenspan had to say he was a devotee of the nonsense. The ideology sings the
praises of the entrepreneur when in reality one has to join the mob to get company money to start a business
and they have the bank allocate capital to those who parrot the ideology. For businesses the gangsters want
to own they have their gangsters like Romney, Icahn and Steven Schwarzman steal them. I'm not against
entrepreneurs but the US loses one industry after another to countries with not-for-profit health care. GM
would move factories across the border to Canada
If this was a democracy the government would whack Jew sociopaths like Peter G. Peterson and Stephen A.
Schwarzman. The Jew mafia backs Romney as a fellow gangster who trained with Nethanyahoo. They back
candidates they think will help the Jews rob and pillage and control the world as they did at the fall of the
soviet union when they put Boris Yeltsin in power knowing he was an alcoholic so Jews like Mikhail
Khodorkovsky could steal Russia's oil leases and industries. In 1995, Abramovich and Boris Berezovsky, an
associate of President Boris Yeltsin, acquired the controlling interest in the large oil company Sibneft. The
deal was within the controversial loans-for-shares program and each partner paid US$100 million for half of
the company, below the stake's stock market value of US$150 million at the time, and rapidly turned it up
into billions. The fast-rising value of the company led many observers, in hindsight, to suggest that the real
cost of the company should have been in the billions of dollars.[19] Abramovich later admitted in court that
he paid huge bribes (in billions) to government officials and obtained protection from gangsters to acquire
these and other assets (including aluminium assets during the aluminium wars).[20]
Friendship with Boris Berezovsky
In 1993, Abramovich founded Mekong. He began selling oil from Noyabrsk. Eventually, he met fellow Russian
businessman and entrepreneur Boris Berezovsky.
According to two different sources, he first met Berezovsky either at a meeting of the Russian
businessmen in the Caribbean in 1993[23] or in the summer of 1995 on the yacht of his friend Pyotr Aven.
[24]
Berezovsky introduced Abramovich to "the family", the close circle around the then president, Boris Yeltsin,
which included his daughter Tatyana Dyachenko and chief security adviser, Alexander Korzhakov.[23]
Together with Berezovsky, Abramovich founded the offshore company Gibraltar-registered Runicom Ltd.
and five Western European subsidiaries. Abramovich headed the Moscow affiliate of the Swiss firm,
Runicom S.A. In August 1995, Sibneft was created by Boris Yeltsin’s presidential decree. It was rumored
that Abramovich was the chief of the organization with Berezovsky promoting the business in higher circles.
[25][26]
Acquisition of Sibneft, aluminium wars, and loans-for-shares
Further information: Sibneft, Loans-for-shares, and Gazprom Neft
In 1995, Abramovich and Berezovsky acquired a controlling interest in the giant Soviet oil company Sibneft.
Affiliates of Abramovich, with affiliates of Boris Berezovsky, purchased Russian oil company Sibneft for
$100.3 million (the company was worth $2.7 billion at that time). Sibneft produces around $3 billion worth of
oil annually.[27][28] Abramovich established several fly-by-night firms and together with his friend Boris
Berezovsky used them to acquire the stock of Sibneft. As a result, the tycoon managed to pay for the
company 25 times less than the market price.[27] Bought for a total of $200 million, Sibneft is now worth
seventy five times as much.[29] Here they make sure there are judges that let them steal everything like
Michael Milkin did in the 80s and Annenburg did for decades. I used to know this Jew on 4th st named
barbara in Hancock park in LA who spent her days suing insurance co and the Jews bought off the judges so
she would win. But Maddof was convicted for being a jew robbing the jews. Of course those are
generalizations as Jew Elliot Spitzer found out when he prosecuted the gangsters that caused the collapse
of the banking industry. That's the difference between the Jew mafia and the Italian mafia. Tony Resco and
the Chicago Outfit backed Clinton and Obama because they thought he would be a competent presidents.
The Jew mafia backed Reagan, Bush and Romney because they thought they would allow the Jews to rob the
world. But the Italians used Jew gangsters like Bugsy Seagel , and Meyer Lansky because they were more
ruthless, sleazy and depraved.
Did you ever go through downstate Illinois like Kankakee. The mobsters went in, shipped all the jobs to China
and now it has 30 unemployment and resembles a ghetto like new Orleans or Paul Ryan's Milwaukee..Why
are the democratic gangsters in Chicago and all the republican gangsters in Milwaukee, far suburbs of
Chicago and downstate Illinois?
A civilized society would support livable wages at full employment like Japan inc used to have before the
gangsters fucked it up because they proved it was possible. Japan Inc had an economy planned by MITI and
its ministry of finance and mega bank Keiretsu system that allocated all profits to its industrial strategy
designed to create high value added jobs that provided middle class wages for all its people. Trade was
managed so foreign competition couldn't compete by undercutting Japanese wages. Profit margins where
often kept as low as possible so that the industrial groups could reinvest profits in making a superior
product in every industry. Japanese students staked out American engineering programs at US universities
to capitalize on american technology that US firms waited for the free market to make viable. Japans auto
industry implemented american made technology that GM never bothered to put in their cars.
Now half of Americans live in poverty and this topic isn't discussed because journalists are illiterate when it
comes to economic history. Laisse faire just drives down wages for the majority for the benefit of the few.
But as history has proven eventually the whole thing collapses and the free market economies can't compete
in the long run with the planned economies like Japan inc without resulting to subterfuge. After Clinton won
in 1992 the CIA was blowing up japanese chip factories. The US can't manage trade in such a manner with
China. I believe globalization came out of FDR's administration because economic considerations caused
WW2 when the British had an empire to exploit and germany wanted a place in the sun. FDR disbanded the
British empire. Germany consumers kicked mob controlled Walmart out of Germany. They saw no reason to
ship all their jobs to China when they had unemployment at home.
By Marshall Auerback
comments_image 45 COMMENTS
Why Low Minimum Wages Kill Jobs and Crush Living Standards for Everyone
Contrary to right-wing propaganda, decent pay for workers helps the economy and boosts job creation.
April 24, 2012 |
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Senator Tom Harkin, Democrat of Iowa, has introduced a bill to raise the federal minimum wage to $9.80
from its present level of $7.25. Polls are showing many voters in favor, though they are confused about what
it would mean for the job market. The truth is that a move would be good for a slow economy and have a
positive impact on the jobs crisis. Naturally, this has led to the usual cries of opposition, largely based on the
notion that raising the minimum wage hurts the very people it is supposed to help. Typical of this view is a
letter to the New York Times from Michael Saltsman, a fellow at the Employment Policies Institute, a
business-backed nonprofit research group (surprise!).
Saltsman trots out the old canards against the minimum wage, claiming that research indicates that a
minimum wage increase "simply doesn’t help the poor — in fact, it hurts them." He cites studies which showed
that states with their minimum wages between 2003 and 2007 found no associated decline in state poverty
rates. Saltsman gives three reasons for this:
A majority of working-age individuals who live in poverty don’t work, and thus cannot benefit from the raise.
A clear majority of those who do earn the minimum wage live in households that aren’t in poverty.
Less skilled and less experienced employees lose employment opportunities when the cost to hire and train
them rises as a result of a minimum-wage increase.
Let’s take these arguments in turn. Implicit in the first point is that a majority of working-age individuals don’
t work because they choose not to (i.e. they are lazy scroungers), or because unemployment is caused by
laziness or lack of training. The argument they often use is that “I can get a job, therefore all the
unemployed could get jobs if only they tried harder, or got better education and training.”
The way I go about demonstrating that fallacy is a dogs-and-bones example. Say we have 10 dogs and we
bury nine bones in the backyard. We send the dogs out to find bones. At least one dog will come back
without a bone.
We decide that the problem is lack of training. We put that dog through rigorous training in the latest bone-
finding techniques. We bury nine bones and send the 10 dogs out again. The trained dog ends up with a bone,
but some other dog comes back without a bone (empty-mouthed, so to speak).
The problem is that there are not enough bones and jobs to go around. The “bones” in the jobs discussion are
insufficient spending power in the economy. It is certainly true that a well-trained and highly motivated
jobseeker can usually find a job. But that is no evidence that aggregate unemployment is caused by laziness
or lack of training. And besides, we could easily determine how much unemployment is truly voluntary. The
government could serve as the “employer of last resort” under a job guarantee program modeled on the
WPA (the Works Progress Administration, in existence from 1935 to 1943) and the CCC (Civilian
Conservation Corps, 1933-1942). The program would offer a job to any American who was ready and willing
to work at the federal minimum wage, plus legislated benefits. No time limits. No means testing. No minimum
education or skill requirements.
It's hard to believe that reducing or even eliminating the minimum wage (which is the corollary of Saltsman’s
point), would actually enhance employment, when the problem is a basic lack of demand. Business will not hire
more workers until it has more sales. Consumers will not spend more until they’ve got more jobs. A private-
sector recovery requires 300,000 new jobs every month. But the private sector doesn’t need 300,000 new
workers per month until there exists sufficient spending power in the economy to induce them to hire those
workers. How is retaining a static, or reduced minimum wage, going to achieve this?
Higher wages means higher income and thus higher consumption spending, which induces firms to employ
more labor. So the truth is that economic theory does not tell us that raising minimum wages will lead to
more unemployment, indeed, theory tells us it can go the other way—raising the minimum wage could increase
employment. That’s one of the reasons why Henry Ford believed in paying his workers a decent wage: so that
they could buy his product.
To be sure, even an increase in the minimum wage to $12 or $15 an hour is not going to provide the means to
purchase a Ford (or GM) today. And so what if, as Saltsman argues, the workers earning this minimum wage
are not living in poverty? Does that mean they wouldn’t spend the money derived from an increased minimum
wage? I wonder if Saltsman would also argue that tax cuts across the board are unnecessary because most
of the people who receive them are not living in poverty?
That argument is a red herring. The truth is, if you earn your money through wages (unlike many of the 1
percent, who earn through things like investments and a tax system biased in favor of capital gains over
income) then a higher wage, minimum or otherwise, would mean that you'd spend the additional dollars,
creating jobs for other workers. You'd pay down your mortgages and car loans, getting yourself out of
debt. You’d pay more taxes — on sales and property, mostly — thereby relieving the fiscal crises of states
and localities. More teachers, police and firefighters would keep their jobs. America would get a virtuous
cycle toward higher employment and, more importantly, the cycle would be based on a policy which creates
higher incomes, not higher debt via credit expansion.
Then there's the common belief that minimum wages cause unemployment, which relates to Saltman’s third
point – namely that less skilled and less experienced employees lose employment opportunities when the
cost to hire and train them rises as a result of a minimum-wage increase. It is at least partly true that for
an individual firm, higher wages reduce the number of workers hired. But we cannot extrapolate that to the
economy as a whole. The issue of eroding wage competitiveness, which allegedly follows from a higher
minimum wage, doesn’t really apply to jobs which offer the minimum wage. It might apply to areas such as
manufactured goods and traded services like insurance and banking. But these are sectors in which most
people already earn far more than the minimum wage.
As far as the minimum wage goes, the jobs we’re talking about are in non-traded services like checkout
clerks, haircutters, domestic help, and food-service workers. When checkout clerks and cooks earn more in
wages, then businesses start getting the sales required to induce them to hire more workers. And if sales
are robust enough, then guess what? Even more workers will be hired, or wages will actually be increased.
The point is: wages are a source of demand, as well as a cost input. Reduce wages and demand plummets,
which more than overrides any cost savings derived from paying less to workers (especially given today's
paltry minimum wage, which is hardly a living wage for any American).
Let's be clear; Americans have never embraced welfare. For better or worse, our nation has always
preferred a more libertarian path: self-help, personal responsibility, individual initiative. As a result, our
welfare programs have always been stingy, temporary and purposely demeaning. But maintaining the minimum
wage at today’s ridiculously depressed level does not enhance anybody’s employment prospects. In fact, it
makes it worse, because it sucks demand out of the economy and minimizes the chances of those now
receiving unemployment benefits or other assistance to quickly get back into the workforce, to "pull
themselves up by their own bootstraps," as conservatives like to say. They cannot do that when our work
force continues to focus on policies which merely enhance the incomes of the top 1 percent.
Mafia supporters of austerity should be exterminated.
U.S. Hawks Behind Iraq War Rally for Strikes Against Iran
Jim Lobe*
WASHINGTON, 17 Oct (IPS) - Key neo-conservatives and other right-wing hawks who championed the
2003 U.S. invasion of Iraq are calling for military strikes against Iran in retaliation for its purported
murder-for-hire plot against the Saudi ambassador here.
Leading the charge is the Foreign Policy Initiative (FPI), the ideological successor to the Project for the
New American Century (PNAC), which played a critical role in mobilising support for "regime change" in Iraq
in the late 1990s and subsequently spearheaded the public campaign to invade the country after the 9/11
attacks. The group sent reporters appeals by two of its leaders for military action on its letterhead Monday.
In a column headlined "Speak Softly &And Fight Back" in this week's Weekly Standard, chief editor William
Kristol, co-founder of both PNAC and FPI, said the alleged plot amounted to "an engraved invitation" by
Tehran to use force against it.
"We can strike at the Iranian Revolution Guard Corps (IRGC), and weaken them. And we can hit the regime's
nuclear weapons program, and set it back," he wrote, adding that Congress should approve a resolution
authorising the use of force against Iranian entities deemed responsible for attacks on U.S. troops in Iraq
and Afghanistan, acts of terrorism, or "the regime's nuclear weapons program".
Kristol's advice was seconded by Jamie Fly, FPI's executive director, who called for President Barack
Obama to emulate former presidents Ronald Reagan and Bill Clinton when they ordered targeted strikes
against Libya in 1986 and Iraq in 1993, respectively, in retaliation for alleged terrorist plots against U.S.
targets.
"It is time for President Obama to follow in the footsteps of his predecessors and stand up to tyrants who
kill Americans and threaten our interests," wrote Fly, who served on the National Security Council staff and
the Pentagon under George W. Bush, in the on-line edition of The National Review.
"It is time to take military action against the Iranian government elements that support terrorism and its
nuclear program. More diplomacy is not an adequate response," he wrote.
The FPI appeals, which have been echoed by other former Iraq war hawks, such as Bush's former U.N.
ambassador, John Bolton, and Reuel Marc Gerecht at the neo-conservative Foundation for Defense of
Democracies (FDD), came as analysts here continue to debate the credibility of the alleged plot against
Saudi Amb. Adel al-Jubeir and how to react to it if, as the administration contends, it was authorised at a
high level in Tehran.
The likelihood that the plot was indeed real - and, if so, whether it gained high-level authorisation - has been
widely questioned, mainly by two sets of experts here.
Reaction among virtually all Iran specialists, including former government and intelligence personnel, has
ranged from outright scepticism to bewilderment over what, if the alleged plot was actually consummated,
Tehran would have hoped to gain from assassinating the Saudi ambassador on U.S. soil.
"(N)othing short of mind-boggling," wrote Vali Nasr, a senior fellow at the Brookings Institute, in reaction to
the alleged plot. "If true, this plot shows a monumental lapse in judgment on Tehran's part, an audacious and
reckless adventurism that will go down as the clerical regime's colossal mistake that will weaken its hand
internationally and even unravel its grip on power&"
Counter-terrorist experts knowledgeable about Iran's Quds Force, the elite unit of the Islamic
Revolutionary Guard Corps (IRGC) accused of sponsoring the scheme, have been even more sceptical that it
would rely on an untested Iranian-American used-car salesman to make contact with a purported member
of the Zetas drug cartel in Mexico to arrange the assassination.
The supposed Zeta contact turned out to be an informant for the U.S. Drug Enforcement Administration
(DEA), according to the complaint released with great fanfare last week by the attorney general.
"Fishy, fishy, fishy," said Bruce Riedel, a Central Intelligence Agency (CIA) veteran who was formerly in
charge of the Near East and South Asia on the National Security Council, when asked to characterise his
assessment, while Robert Baer, a former Middle East CIA field officer, compared the plot as outlined by
the complaint to a "truly awful Hollywood script".
"None of it measures up to Iran's unsurpassed skill in conducting assassinations," he wrote on Time
magazine's website.
"Why on earth would they create a situation in which they had to rely on this untested, untrained, unguided,
and uncontrolled asset rather than their own people?" wrote Col. Pat Lang (ret.), the Defense Intelligence
Agency's former top Middle East and South Asia analyst on his Sic Semper Tyrannis blog.
Calling the government's case "trash", Lang added that, "The overwhelming likelihood is that this is
someone's 'information operation' intended to condition public attitudes for some purpose."
Such scepticism, however, has not deterred the administration, key lawmakers, or former Iraq hawks from
calling for a stern response.
Indeed, Obama himself said Thursday that he will push for "the toughest sanctions" against Iran on the part
of the U.S. allies and the U.N. Security Council, while senior Treasury officials testified that they were
considering blacklisting Iran's central bank, a move that enjoyed strong bipartisan support in Congress,
notably from lawmakers most closely associated with the Israel lobby, even before the alleged plot was
disclosed.
But a number of former Iraq hawks, few of whom appear to entertain much doubt about the plot's
seriousness or provenance, are calling for military action.
"More sanctions aren't a bad idea&," wrote Gerecht, a major proponent of invading Iraq when he was at the
American Enterprise Institute (AEI), in a column published Friday by the Wall Street Journal's staunchly
neo-conservative editorial page. "But they will not scare (the regime). The White House needs to respond
militarily to this outrage. If we don't we are asking for it."
Another Iraq war booster, Andrew McCarthy, also of FDD, joined the chorus in the National Review Online:
"There is a range of possible political responses, of course, but given its three-decade campaign of
aggression, the response to Iran must be military - and decisive. The regime must be destroyed."
Monday's appeal by FPI for military action was perhaps more remarkable, if only because three of the
group's four directors - Eric Edelman, Robert Kagan, and Dan Senor - were recently named as key advisers
to Mitt Romney, the frontrunner for the 2012 Republican presidential nomination.
Like Kristol, Kagan was a co-founder of both PNAC and FPI and a critical advocate of invading Iraq, while
Senor served in Iraq after the invasion as a top official in the Coalition Provisional Authority. Edelman, who,
as ambassador to Turkey at the time, lobbied its military to support the 2003 invasion, went on to serve as
undersecretary of defence for policy under former Pentagon chief Donald Rumsfeld.
Although Romney has remained silent to date on how Washington should respond to the alleged plot, a
number of his other advisers who championed the Iraq invasion have long called for the U.S. to make the
threat of military action against Iran more credible.
In his first major policy address two weeks ago, Romney himself called for two aircraft carrier task forces
to be permanently deployed in the region as a deterrent to Tehran.
*Jim Lobe's blog on U.S. foreign policy can be read at http://www.lobelog.com.
Mitt Romney, American Parasite
His years at Bain represent everything you hate about capitalism
A A A Comments (9) By Pete Kotz Wednesday, Apr 18 2012
Courtesy DonkeyHotey
James Sanderson had encountered a rare moment of industrial harmony.
Bain Capital, 1984
The smartest guys in the room: Members of Bain Capital with Romney, center, who managed to destroy four
of his 10 biggest moneymakers
Jayme Halbritter
David Foster, a union official at Kansas City’s Armco steel mill, says Bain drove the mill into the ground by
placing its own interests above customers’.
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It was the early 1990s, and the 750 men and women at Georgetown Steel were pumping out wire rods at
peak performance. They had an abiding trust in management's ability to run a smart company. That allegiance
was rewarded with fat profit-sharing checks. In the basement-wage economy of Georgetown, South
Carolina, Sanderson and his co-workers were blue-collar aristocracy.
"We were doing very good," says Sanderson, president of Steelworkers Local 7898. "The plant was making
money, and we had good profit-sharing checks, and everything was going well."
What he didn't know was that it was about to end. Hundreds of miles to the north, in Boston, a future
presidential candidate was sizing up Georgetown's books.
At the time, Mitt Romney had been running Bain Capital since 1984, minting a reputation as a prince of
private investment. A future prospectus by Deutsche Bank would reveal that by the time he left in 1999,
Bain had averaged a shimmering 88 percent annual return on investment. Romney would use that success to
launch his political career.
His specialty was flipping companies—or what he often calls "creative destruction." It's the age-old theory
that the new must constantly attack the old to bring efficiency to the economy, even if some companies are
destroyed along the way. In other words, people like Romney are the wolves, culling the herd of the weak
and infirm.
His formula was simple: Bain would purchase a firm with little money down, then begin extracting huge
management fees and paying Romney and his investors enormous dividends.
The result was that previously profitable companies were now burdened with debt. But much like the Enron
boys, Romney's battery of MBAs fancied themselves the smartest guys in the room. It didn't matter if a
company manufactured bicycles or contact lenses; they were certain they could run it better than anyone
else.
Bain would slash costs, jettison workers, reposition product lines, and merge its new companies with other
firms. With luck, they'd be able to dump the firm in a few years for millions more than they'd paid for it.
But the beauty of Romney's thesis was that it really didn't matter if the company succeeded. Because he
was yanking out cash early and often, he would profit even if his targets collapsed.
Which was precisely the fate awaiting Georgetown Steel.
When Bain purchased the mill, Sanderson says, change was immediate. Equipment upgrades stopped.
Maintenance became an afterthought. Managers were replaced by people who knew nothing about steel. The
union's profit-sharing plan was sliced twice in the first year—then whacked altogether.
"When Bain Capital took over, it seemed like everything was being neglected in our plant," Sanderson says.
"Nothing was being invested in our plant. We didn't have the necessary time to maintain our equipment. They
had people here that didn't know what they were doing. It was like they were taking money from us and
putting it somewhere else."
History would prove him correct. While Georgetown was beginning its descent to bankruptcy, Romney was
helping himself to the company's treasury.
The Working Man's Villain
He should have known better. The year before Romney purchased Georgetown, he mounted his career in
politics, setting his sights on the biggest target in Massachusetts: the U.S. Senate seat held by Ted Kennedy.
There were early signs that he might topple the Kennedy dynasty. Much like today, Romney was pitching
himself as a commander of the economy, a man with the mastery to create jobs. Yet he suffered an
affliction common to those atop the financial food chain: He assumed that what was good for him was good
for all. Call it trickle-down blindness.
In the midst of that 1994 campaign, one of Romney's companies, American Pad & Paper, bought a plant in
Marion, Indiana. At the time, it was prosperous enough to be running three shifts.
Bain's first move was to fire all 258 workers, then invite them to reapply for their jobs at lower wages and
a 50 percent cut in health care benefits.
"They came in and said, 'You're all fired,'" employee Randy Johnson told the Los Angeles Times. "'If you
want to work for us, here's an application.' We had insurance until the end of the week. That was it. It was
brutal."
But instead of reapplying, the workers went on strike. They also decided the good people of Massachusetts
should know what kind of man wanted to be their senator. Suddenly, Indiana accents were showing up in
Kennedy TV ads, offering tales of Romney's villainy. He was sketched as a corporate Lucifer, one who
wouldn't blink at crushing little people if it meant prettying his portfolio.
Needless to say, this wasn't a proper leading man's role for a labor state like Massachusetts. Taking just 41
percent of the vote, Romney was pounded in the election. Meanwhile, the Marion plant closed just six months
after Bain's purchase. The jobs were shipped to Mexico.
Yet Romney didn't learn his lesson. He seemed incapable of noticing that his brand of "creative destruction"
left a lot of human wreckage in its wake. Or that voters might see him as more scumbag than saint.
Just a few months after being hammered by Kennedy, he set fire to another company.
The Price of Incompetence
Lyric Cabral
A Bain partner told author Josh Kosman that higher-ups frequently discussed cutting workers. Job growth
“was never part of the plan.”
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The move was classic Bain. Before buying Georgetown, Romney had purchased the Armco steel mill in Kansas
City, Missouri, which had been in business for more than 100 years.
"We were setting a lot of records for production at that time," says employee Steve Morrow. "We were
making a lot of money because we were getting profit sharing."
Bain combined Armco with the mill in Georgetown and foundries in Tempe, Arizona, and Duluth, Minnesota, to
form the newly christened GS Industries.
Romney purchased Armco with just $8 million down and borrowed the rest of the $75 million price tag. Then
he issued bonds—basically IOUs—to borrow even more to pay himself and his investors $36 million.
Within a year, he'd already made four times his initial investment while barely lifting a finger. But he'd also
run up a staggering $378 million in debt on GSI's tab.
Steel is an infamously cyclical business, a worldwide commodity prone to the same wild price fluctuations as
oil. The Kansas City plant forged parts for equipment used in mining gold and copper, leaving it susceptible to
the instability of those markets as well.
Yet the smartest guys in the room thought they could run the plant better than the people setting
production records.
"They were getting rid of old managers and hiring new managers that didn't have any steel experience,"
Morrow says. "Some of the guys were nice guys and everything, but they didn't have a clue what was going
on."
Many of the new supervisors were ex-military, people who believed that grown men and women are best
motivated by punishment. Before Bain, says Morrow, "everybody got along."
Afterward? "They wanted to run the plant like a disciplinary environment. They wanted to discipline people
for getting hurt on the job. They wanted to put us in an environment like a war, where we were always
fighting with them."
Romney was charging GSI $900,000 a year in management fees to run the company. The Kansas City mill
received $900,000 worth of ineptitude in return.
Although Bain borrowed $97 million to retool the plant so it could also produce wire rods, it left the rest of
the facility to rot.
To save costs, Bain went miserly on everything from maintenance to spare parts and earplugs. Equipment
deteriorated. Because the new managers didn't know how to repair it, "they'd want to rent a new piece of
equipment out instead of maintaining what we had," Morrow says. The waste and inefficiency was
breathtaking.
Bain's plan all along was to streamline the company into greater profitability, then reap the rewards with a
public stock offering. But the exact opposite was happening. Even Roger Regelbrugge, whom Bain installed
as CEO, knew the debt was crushing GSI from within, according to Reuters. If a public offering didn't
materialize, the company would collapse.
Steel was about to enter a periodic downturn. Countries around the world were locked in a war of tariffs
and government-subsidized production, creating a glut and driving down prices. Romney's strategy of the
flip was never meant to endure difficult times.
Workers saw the end coming; they were particularly worried that Bain was badly underfunding their pension
plan. So they went on strike in 1997, bringing a traditional Rust Belt flair to the festivities by littering the
streets with nails and gunning bottle rockets at security guards.
When it was all over, the steelworkers union agreed to wage and vacation cuts in exchange for extra health
and pension safeguards should the plant close.
Yet GSI was now hemorrhaging money, says David Foster, the union official who negotiated the deal. He
claims that Bain cursed the company by placing its own interests above those of customers or long-term
stability.
"Like a lot of private equity firms, Bain managed the company for financial results, not production results,"
Foster says. "It didn't invest in maintenance or immediate customer needs. All that came second to meeting
monthly financial goals."
It would take a few more years of bleeding, but GSI eventually fell to bankruptcy.
The Kansas City mill closed for good; 750 people lost their jobs. Worse, Romney had shorted their pension
fund by $44 million. The feds were forced to cover the difference, while workers saw their benefits
slashed in bankruptcy court.
The battered Georgetown plant and the foundries in Arizona and Minnesota ultimately were bought out of
bankruptcy by new companies. Their workforces were halved.
Still, Romney walked away unbruised. All that debt was technically GSI's, not Bain's. Because he'd repaid
himself and his investors just months after the purchase, Romney pocketed millions for running the company
into the ground.
"They were clever and ruthless enough to pay their own investors back at a really high return rate," Foster
says.
This was the beauty of Romney's racket. Even if he killed a company—and he tended to kill them fairly
often—he still made out, leaving others to take the hit.
The Parasitic Capitalist
On the campaign trail, Romney describes his work at Bain as resurrecting distressed companies. In this
version, he's the white knight lifting troubled firms from the precipice of failure.
Not true.
Private equity companies like Bain rarely buy anything but profitable firms for one compelling reason: The
patient must be healthy enough to be force-fed all that debt. So it's something of a misnomer for
Republican opponents to slur him as a "vulture capitalist."
Bain Capital, 1984
The smartest guys in the room: Members of Bain Capital with Romney, center, who managed to destroy four
of his 10 biggest moneymakers
Jayme Halbritter
David Foster, a union official at Kansas City’s Armco steel mill, says Bain drove the mill into the ground by
placing its own interests above customers’.
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"Romney is not a vulture capitalist, as Rick Perry says, since vultures eat dead carcasses," notes Josh
Kosman, who has written about the private equity business for 15 years. He's "more of a parasitic capitalist,
since he destroys profitable businesses."
Judging by the title of his book—The Buyout of America: How Private Equity Is Destroying Jobs and Killing
the American Economy—it's safe to assume that Kosman is no fan of the industry. But he concedes that the
business isn't inherently wicked.
The game works like this: Big-money investors write checks to people like Romney, who pool that money to
buy or invest in other companies. Internal company documents show that a year before Romney left Bain in
1999, one of his funds had reached a massive $10 billion.
Although Bain requires a $1 million minimum for a seat at the table, its investors don't just come from the
wealthiest 1 percent. They also include college endowments and teachers' pension funds.
Jon Burgstone, a professor at the University of California, Berkeley's Center for Entrepreneurship &
Technology, sees private equity as essential to the economy. He might be a member of President Obama's
National Finance Committee, but he's still an admirer of Bain.
"Generally, private equity companies invest in larger firms that need reorganization or in smaller companies
that need growth capital," he says. And their management can usually benefit from "very bright Bain
consultants."
That feeling is shared by Steven Kaplan, among the foremost scholars in the field. The University of Chicago
finance professor says that, statistically speaking, firms like Bain improve a company's cash flow while
providing investors with a better return than the stock market.
There's no question that Romney had a gift for minting money. In 1986, he bought medical-equipment
manufacturer Calumet Coach for just $1 million, later flipping it for $34 million. He made 16 times his initial
investment in the Gartner Group, a technology-research firm.
In what was perhaps his crowning achievement, he bought the money-losing Wesley Jessen VisionCare for
$6 million in 1994. Seven years later, it was sold for a dazzling $300 million.
Kaplan argues that critics rarely mention these success stories, preferring to "cherry-pick" deals that paint
Romney as unmerciful and gluttonous. "I think it's quite unfair," he says. "He was extremely successful at
Bain, generating returns for his investors. Bain Capital had a tremendous track record. When you invest in
dozens of companies, some of those deals don't work out."
But if critics are quick to disregard Romney's triumphs, defenders are equally swift to rationalize his
catastrophes. They'll note that for all of Romney's bankruptcies, most were rescued by new companies and
survive today. It's the final dollar tally that matters.
Yet they seem strangely incurious about the ruin he has delivered across the country. Take Kansas City, for
example.
The Armco plant closing involved more than the torching of 750 jobs, Morrow says. Contractors and
suppliers collapsed. Workers' children and widows lost health care and pension benefits. And while Bain
received millions in tax breaks—paid for by the very people left holding the bag—Romney walked away
millions richer.
So one might forgive everyday Americans for feeling they're on the wrong end of a rigged game, one where
the wealthy always win—no matter how inept—and the little guy is left to hack through the debris.
Bain is a private company, meaning it has no obligation to reveal its practices. It has never made public a list
of companies it has purchased (nor would Bain or the Romney campaign comment for this story).
So in January, The Wall Street Journal did its best to piece together Romney's track record, reviewing 77
investments made under his direction. It turned out that nearly one in three of the companies experienced
severe financial trouble. One in five wound up in bankruptcy.
The more telling figure: Of Romney's 10 biggest moneymakers, he ultimately destroyed four of them,
leaving bankruptcy judges to clean up the mess.
As Foster sees it, Romney was an early pioneer of gaming the system. It would take another decade before
large banks used many of the same principles to detonate the mortgage industry.
"The great irony is that his entire management experience at Bain Capital is buying companies and loading
them up with debt and then looting the balance sheet," Foster says. "It's the very model that drove the
American economy off the cliff then left other people to manage the wreckage."
The Job Assassin
Renee Fry doesn't recognize the tin man she sees on TV, the candidate so congenitally wooden that he
makes Al Gore seem like Flavor Flav. She was Romney's deputy chief of staff when he was governor of
Massachusetts. The guy she served was warm and considerate, quick to distill data and seize the big picture.
"I'm lucky because I know him from the day-to-day Mitt," Fry says. "He liked going out and talking to
people and learning from people. The Mitt I know had a real appreciation for people."
But if Romney played the friendly politician, kindness wasn't his specialty at Bain. Rewarding CEOs with huge
bonuses, he was generous to ranking executives. Yet he tended to treat those below his pay grade as little
more than machinery.
Romney has claimed to have created 100,000 jobs at Bain and says that providing work for Americans was a
primary company goal.
Bain Capital, 1984
The smartest guys in the room: Members of Bain Capital with Romney, center, who managed to destroy four
of his 10 biggest moneymakers
Jayme Halbritter
David Foster, a union official at Kansas City’s Armco steel mill, says Bain drove the mill into the ground by
placing its own interests above customers’.
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April 16, 2012
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• This Week in The Voice: Mitt Romney, American Parasite
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More About
• Mitt Romney
• Private Equity Firms
• Industries
• Private Equity
• Pensions
Like this Story?
Sign up for the Weekly Newsletter: (Sent out every Thursday) Our weekly feature stories, movie reviews,
calendar picks and more - minus the newsprint and sent directly to your inbox.
He cites Domino's, Sports Authority, and Staples, companies that added jobs after Bain bought in.
But Bain bought Domino's just months before Romney left to run the Salt Lake City Olympics, meaning
someone else created those jobs. And he didn't manage Staples or Sports Authority; Bain was a minority
investor.
By Romney's logic, any large investor—say, the Texas teachers' pension fund—also creates hundreds of
thousands of jobs. The boast is so foolish that his campaign has since backed away from it.
Even Kaplan admits that private equity firms rarely create jobs. Workers are seen as costs, and costs are
the enemy. According to Kosman, Romney was in truth among the most heinous job-killers of them all.
While writing his book, Kosman conducted an interview with a Bain managing partner. The man told him that
when Bain was about to buy a company, its partners would hold a meeting. "He said that about half the time
[they] would talk about cutting workers," Kosman says. "They would never talk about adding workers. He
said that job growth was never part of the plan."
That claim was buttressed by the Associated Press, which studied 45 companies bought by Bain during
Romney's first decade. It found that 4,000 workers lost their jobs. The real figure is likely thousands
higher, since the analysis didn't account for bankruptcies and factory and store closings.
An example of Romney's cold-blooded approach is his 1994 purchase of Dade International, an Illinois
medical-equipment company. He soon merged it with two similar firms, a move that tripled sales.
Once again, he couldn't help but raid the vault, peeling away $100 million for himself and investors at the
same time Dade was laying off 1,700 American workers.
After Bain closed a Dade plant in Puerto Rico, human-resources manager Cindy Hewitt was asked to lure a
dozen of those employees to work in the company's Miami factory.
But that plant soon closed as well. Although Romney was gobbling up millions, Bain still wanted those laid-off
employees to repay their moving costs.
"They were treated horribly," Hewitt told The New York Times. "There was absolutely no concern for the
employees. It was truly and completely profit-focused."
Yet Bain's molestation wasn't complete. It was trying to sell Dade but didn't like the offers it received on
the open market. So it created an artificial market of its own.
In 1999, it forced Dade to borrow $242 million, which was used to buy back company stock from Bain, Dade
executives, and their banker, Goldman Sachs.
Bain was again extracting profits with borrowed money. It had pushed Dade's debt to a bracing $2 billion.
To help pay for the deal, the company laid off another 367 workers.
But that debt proved too much for Dade's shoulders to carry. Three years later, the company was bankrupt.
Kosman calls it standard Romney operating procedure. To pump short-term earnings, he would essentially
"starve a company," whacking not just employees, but also customer-service and research-and-development
funding—the ingredients of long-term prosperity.
"I think they're one of the worst, at least during Romney's time," Kosman says. "They were very aggressive
about dividends. They were very aggressive about borrowing the most money they could. He's very driven to
be the best he could be, and that was to be as cutthroat as he could be. But in the process, he hurt a lot of
companies and cost a lot of jobs, maybe tens of thousands of jobs."
Kosman says it's telling that Romney never cites companies he actually managed as evidence of his job-
building skills.
"If Romney had some stories to tell, he'd use those stories," he says. "I think it's very interesting that he's
not telling those stories because I think they don't exist."
The Welfare Queen
Romney's economic views were on stark parade during this year's Michigan primary. He ripped President
Obama for bailing out the auto industry and argued that it should have been dealt with in his favorite resting
place: bankruptcy court.
He was particularly incensed that the president rescued workers' pension funds before covering Wall
Street's bad loans.
But his faith in the free market wobbles when his friends need rescuing. Romney just as vigorously defends
the $10 billion government bailout of Goldman Sachs, his investment partner at Bain.
After all, Romney frequently assumed the role of welfare queen himself.
In 1988, he bought South Carolina photo-album maker Holson Burnes. In exchange for the firm's promise to
build a new factory, the people of Gaffney, South Carolina, gave Bain $5 million in bonds and $200,000 in
utility upgrades.
The plant closed just four years later. The 100 jobs there were later shipped to Mexico.
At GSI, he dumped $44 million in pension shortfalls on the federal government. And when he bought
mattress maker Sealy in 1997, he took $600,000 in welfare to move the firm from Ohio to North Carolina.
Even a company Romney cites as one of his greatest achievements—Steel Dynamics, where he was a minority
investor—was practically launched by corporate welfare. Indiana taxpayers gave the firm $77 million to
open a plant. Residents of DeKalb County actually had their income taxes raised solely to help Romney and
his friends.
Tad DeHaven calls it "theft and redistribution."
Bain Capital, 1984
The smartest guys in the room: Members of Bain Capital with Romney, center, who managed to destroy four
of his 10 biggest moneymakers
Jayme Halbritter
David Foster, a union official at Kansas City’s Armco steel mill, says Bain drove the mill into the ground by
placing its own interests above customers’.
Related Content
• Rightbloggers Rush to Defend Mitt Romney -- The Corporate Raider, Not the Candidate
January 16, 2012
• Sorry, Ladies: Mitt Romney's Women Problem Might Not Matter in The Election
April 17, 2012
• What Does Mitt Romney Have in Common With Catholic Incense?
April 16, 2012
• Live from New York... It's Mitt Romney?
April 15, 2012
• This Week in The Voice: Mitt Romney, American Parasite
April 18, 2012
More About
• Mitt Romney
• Private Equity Firms
• Industries
• Private Equity
• Pensions
Like this Story?
Sign up for the Weekly Newsletter: (Sent out every Thursday) Our weekly feature stories, movie reviews,
calendar picks and more - minus the newsprint and sent directly to your inbox.
He's no yammering Trotskyite; DeHaven is a former budget adviser to Republican U.S. senators Jeff
Sessions of Alabama and Tom Coburn of Oklahoma. Yet he notes that firms like Bain often get governments
to subsidize their raiding parties.
The feds take $100 billion a year from everyday taxpayers and send it straight to companies like Romney's,
says DeHaven, who now works for the Cato Institute, a conservative think tank.
But like most good Republicans, he's reticent to single out the candidate for criticism. "It depends on what
he knew and Bain's involvement in obtaining subsidies," DeHaven says. "I don't know if it makes him a
hypocrite or not, but he should answer questions about it."
The President of Russia
Those answers won't be forthcoming. Romney refuses to discuss most of the companies he purchased at
Bain, nor will he release his tax records from those years. As a result, voters are left to make their own call
on his catalog of creative destruction—and what he might be like as president.
Romney has professed his admiration for Ronald Reagan. But judging by his business history, the president
he most resembles is Vladimir Putin. Romney has devoted his life to ensuring that every last penny rises to a
few hands at the top. And like Putin, he has never shown much concern for the countrymen he tramples along
the way.
"The word 'oligarchy' comes to mind," says Michael Keating when asked to envision a Romney presidency.
Keating is a former business consultant and executive at Bertelsmann, a multinational investment firm that
operates in 63 countries. He asserts that men like Romney "hide their antisocial actions behind a rhetoric of
free-market capitalist platitudes. But in the end, it's all about the bottom line—and only their own bottom
line . . ."
"I don't think Romney is so much dangerous as he is unimaginative," Keating adds. "And in the world we live
in, that amounts to the same thing."
pete.kotz@villagevoicemedia.com
Siding with Gov. Walker in union fight could cost Romney in Nov.
By Josh Lederman - 04/01/12 08:10 PM ET
Unable to avoid the pandemonium surrounding Gov. Scott Walker (R) and his union crackdown in Wisconsin,
GOP presidential contender Mitt Romney has chosen to make the embattled governor’s fight his own.
Embracing Walker offers major short-term advantages for Romney in Wisconsin, which holds its primary
contest Tuesday, as the GOP front-runner looks for the last few wins he needs to lock up the nomination. But
it might also risk alienating voters in union-heavy swing states such as Ohio, Michigan and Pennsylvania — at
just the time when Romney and his campaign hope to turn their attention to the general election.
“He’s shown pretty clearly what side he’s on,” said Bruce Colburn of the SEIU in Wisconsin. “We have a
number of members who often vote for Republicans, and they take offense at somebody coming in and
challenging their basic rights.”
The presidential race has become almost an afterthought in Wisconsin, where Walker and public-sector
unions have been waging an all-out war for more than a year. At issue is Walker’s push to curb the collective
bargaining rights of public workers, whose pension and healthcare costs Walker says have spiraled out of
control.
On Friday, a state panel set a June 5 election to recall Walker after opponents collected more than
900,000 signatures — almost twice what was needed. Portions of the law Walker heralded were also struck
down Friday by a federal court.
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“Workers should have the right to form unions, but unions should not be forced upon them,” Romney said
Friday in Appleton, Wis. “And unions should not have the power to take money out of their members’
paychecks to buy the support of politicians favored by the union bosses.”
It wasn’t the first time Romney went toe to toe with the powerful unions that are expected to spend tens of
millions of dollars to reelect President Obama. Campaigning in Michigan in February, Romney blasted “labor
stooges” who he said were shilling for Obama. The former Massachusetts governor also backed Ohio Gov.
John Kasich’s (R) anti-union law, which voters overturned in November.
Romney’s campaign said he stands with Walker and will continue to address the union issue in the final days
of the Wisconsin primary, including by visiting a call center where volunteers are working to keep Walker in
office.
The union issue gives Romney an opening to attack Rick Santorum. The former Pennsylvania senator has also
thrown his support behind Walker, but represented a union-heavy state in the Senate. Romney has accused
Santorum of siding with liberal Democrats on right-to-work issues — an attack echoed in ads that Romney’s
super-PAC has aired in Wisconsin.
If the growing momentum behind Romney triggers the start of the general election and an end to the
primary, the focus on Santorum will soon become moot. Over the past week, Romney has locked up the
support of Wisconsin Rep. Paul Ryan (R), former President George H.W. Bush and Sen. Marco Rubio (R-Fla.),
three GOP luminaries whose endorsement could signal the end of a drawn-out fight for the Republican
nomination.
But if and when Romney becomes the nominee, he has no plans to let up his tough stand on unions.
“He’s going to continue to run on this message in the general election,” said Romney spokesman Ryan Williams.
“This is what his campaign is about: making difficult decisions in order to preserve America’s promise.”
The union issue is one of many where Romney has taken an aggressively conservative stance in hopes of
quelling speculation that he isn’t a true conservative. But he and his aides are instinctively averse to
suggestions he might tack back to the center in the general election.
“That leads into the whole 'Romney waffling, Romney flip-flopping' narrative his opponents want to stick on
him,” said GOP pollster Chris Perkins.
The farther he moves to the right, the more difficult it will be to embrace more centrist positions that play
better among the swing voters he will need to defeat Obama in November. And Democrats are laying in wait
to dub Romney an opportunist who let the GOP’s right flank get the best of him.
“He has, for the last eight months, pandered to the Tea Party, pandered to the right, to people like Scott
Walker and Gov. Kasich in Ohio, and gotten himself to the point where he’s so extreme on some of these
issues that he’s not going to be able to pivot back,” said one Democratic strategist.
It isn’t entirely clear how the union issue will play politically, but a USA Today/Gallup poll in February
showed that 61 percent of Americans opposed a law in their state similar to the one Walker championed in
Wisconsin.
Meanwhile, states with large numbers of union voters — such as Ohio, Pennsylvania and Wisconsin — also
happen to be swing states that are pivotal to winning the White House.
Wisconsin hasn’t voted for a Republican presidential nominee since 1984, but the results have often been
close in recent years. The race likely holds special meaning for Republican National Committee Chairman
Reince Priebus, a Wisconsin native.
And what happens at the top of the ticket could affect the state’s open-seat Senate race, where Rep.
Tammy Baldwin (D-Wis.) will face the winner of a GOP primary pitting former Gov. Tommy Thompson (R-
Wis.) against three more conservative candidates.
Republican strategist Dan Hazelwood said diehard union supporters have already made up their minds to
support Obama, so Romney risks little by backing Walker and his union crackdown.
“It doesn’t matter if your opponent’s base hates you,” said Hazelwood. “To the extent that the fight is
Romney versus the union bosses, he’s in great shape.”
The Jews got the Jews favorite general running the CIA, General Patreus and their man Panetta at Defense.
Only the mobsters would make a movie about Margeret Thatcher.
Notable quote," we have so much capital we don't know what to do with it." Jew criminal Micheal Milkin
The problem in the US and Europe is simple. There needs to be a wealth tax to retire government debt.
Just increase taxes on the wealthy and confiscate the wealth of Jew millionaires and billionaires. Being in
the arts I got to meet all these wealthy Jew sleaze-balls. Obama should have let the Bush tax cuts expire
and increased spending. They should whack Bloomberg and slime Jews like Stephen Schwarzman who is
backing Romney. They should also make a preemptive attack on Israel. Here's an example of the Jews who
control the US government:
Jew billionaire threatens to sue Greg Palast with Jew controlled justice system.
Romney's Billionaire Threatens
BBC Investigative Reporter
"We have a File on Palast"
Friday, December 2, 2011
by Greg Palast for Truthout/Buzzflash
Palast is the author of Vultures' Picnic: in Pursuit of Petroleum Pigs, Power Pirates and High-Finance
Carnivores. See Palast live on stage in New York, DC and other cities.
Last Monday, a call came in to BBC Television Centre, London, from the office of Mitt Romney's billionaire
backer and "advisor" Paul Singer.
Singer, top donor to the Republican Senate Campaign Committee had a message for the news chiefs at the
prestigious broadcaster:
"We have a file on Greg Palast."
I bet they do.
The purpose of the Singer call was clear: to smear the reporter whose broadcasts from Africa for BBC
Newsnight, The Guardian and Democracy Now! had identified Singer as a "Vulture," a speculator
profiteering from misery, mayhem, corruption and civil war.
Apparently, the Republican Presidential front-runner would prefer his sugar-daddies be known as "job
creators," not predators.
And the Vulture really, really, doesn't like his starring role in my new book, Vultures' Picnic. I bet he
doesn't.
Is BBC going to let Palast continue to investigate? The Romney money man added an unsubtle threat, "Palast
has been sued before."
Neither BBC nor The Guardian are backing down, bless'm.
What is in the file Mitt's billionaire has on Greg Palast? I'll show it to you myself, right here, if you have a
little patience.
But it's not what's in Singer's file on me that's important –– it's what's in my file about him.
You need to know: BBC has identified Singer as the Number One donor of the Republican Party in New York.
His fundraising, in coordination with the Koch Brothers through a strange little group of far-right
billionaires, is the cash-locomotive of the GOP.
How Singer "The Vulture" got his feathers, got that money that fuels the Romney and Republican causes is
not a minor matter. Romney and the whole crew from Newt to Cain are selling us the line that Occupy Wall
Street has it all wrong: calling for taxing or controlling the One Percent is a misguided attack on "job
creators."
Indeed, one of Romney's demands is that I change the name of my book from Vultures' Picnic to Job-
Creators' Picnic. [OK, I made that up.]
Let's begin with how Singer got his feathers.
I didn't give Singer the name "Vulture." His own banker buddies did––with admiration in their voices. Like
any vulture, he feasts when victims die. Literally. For example, Singer made a pile buying an asbestos
company, Owens Corning, out of bankruptcy. Owens had knowingly allowed thousands of its workers to get
deadly asbestosis, then concealed it. You don't want to die of asbestosis. Your lungs turn to mush and you
drown inside yourself.
Singer, the Job Creator, used his political muscle to screw down the compensation workers would get.
Offered them peanuts. And dying, they took it. With the asbestos workers buried or bought, the asbestos
death factories were now worth a fortune ...and Singer made his first "killing."
Then it was on to Peru where Singer had, through a brilliant financial-legal maneuver too questionable for
others to attempt, grabbed control of the entire financial system of Peru. Most important, he seized the
President's jet. When the scamp of a President, Alberto Fujimori, decided it was a good idea to flee his
country (ahead of his arrest on murder charges), Singer, Peru's lawyer told me, let Fujimori escape in
return for the Murderer-in-Chief ordering Peru's treasury to pay Singer $58 million.
But that's nothing. What really sent Mitt's man up a wall was my report from the Congos (there are two
nations in Africa called 'Congo') where there's a cholera epidemic due to lack of clean water. Singer paid
we're told about $10 million for some "debt" supposedly incurred by the Republic of Congo. Congo would pay
the $10 million, but Singer had begun seizing about $400 million in the poor nation's assets.
The former Deputy Secretary of the UN said about the vultures, "you are causing babies to die."
It's legal, it's sick, it's Singer.
Well, not legal in most of the civilized world. Former British Prime Minister Gordon Brown said about Singer
and his fellow crew, "I deplore the activities of so-called Vulture Funds, [they] are nothing short of
scandalous." Britain has outlawed Singer's re-po man seizures (after all, it's ultimately the aid money we
give Africa). In the UK, and in much of Europe, Singer is a finance outlaw. But in the USA, he's a "job
creator."
Look, I've only scratched the surface from BBC's four-year investigation of Singer who says he'll talk with
us, "Never, ever."
The "Suicidal State" and the War on Youth
Tuesday, 10 April 2012 11:14 By Henry A Giroux, Truthout | Op-Ed
• 37
• font size
An Occupy Wall Street protester is detained during a march through lower Manhattan, in New York,
November 17, 2011. (Photo: Robert Stolarik / The New York Times)
In spite of being discredited by the economic recession of 2008, market fundamentalism has once again
assumed primacy as a dominant force for producing unprecedented inequalities in wealth and income,
runaway environmental devastation, egregious amounts of human suffering and what Alex Honneth has called
an "abyss of failed sociality."(1) The Gilded Age is back with big profits for the ultra-rich and large financial
institutions and increasing impoverishment and misery for the middle and working class. Political illiteracy
and religious fundamentalism have cornered the market on populist rage providing support for a country in
which, as Robert Reich points out, "the very richest people get all the economic gains [and] routinely bribe
politicians" to cut their taxes and establish policies that eliminate public goods such as schools, social
protections, health care and important infrastructures.(2)
It gets worse. Everywhere we look, the power of the rich and powerful operates to create a "suicidal state"
(3) in which regulations meant to restrict their corrupting power are shredded; shamelessly and without
apology, they use their unchecked power to lay off millions of workers while simultaneously cutting the
benefits and rights of those on the job in order to dramatically increase corporate profits. As social
protections are dismantled, public servants denigrated and public goods such as schools, bridges, health
care services and public transportation deteriorate, the current neoliberal social order embraces the
ruthless and punishing values of economic Darwinism and a survival-of-the-fittest ethic. In doing so, the
major political parties now reward as its chief beneficiaries the mega banks, ultralarge financial industries,
the defense establishment and big business.
Reinvigorated by the passing of tax cuts for the superrich, the right-wing dominated House of
Representatives along with number of right-wing state governorships have launched an ongoing war on
women's rights, the welfare state, workers, students, and anyone who has the temerity to speak out against
such attacks. The corporate-controlled media, especially Fox News and Clear Channel Communications,
emulate the former Soviet Union's version of Pravda, its once laughable propaganda rag. At the same time,
the liberal media is as spineless as it is complicit with existing relations of power - more willing to
compromise with right-wing ideology than exercising civic courage in searching for the truth and exposing
the lies of normalizing power.
Hiding behind the mantle of balance and objectivism, the liberal media is incapable of a discriminating
judgment and moral position and, increasingly, resembles a game show nervously repeating bad jokes,
promoting sensationalist stories, emulating celebrity culture and garnering elevated ratings in order to lure
in big money from advertisers.
Neoliberalism is once again imposing its values, social relations and forms of social death upon all aspects of
civic life.(4) One consequence is that the United States has come to resemble a "suicidal state," where
governments work to destroy their own defenses against anti-democratic forces;(5) or as Jacques Derrida
has put it, such states offer no immunity against authoritarianism and in fact emulate "that strange behavior
where a living being, in quasi-suicidal fashion 'itself' works to destroy its own protection, to immunize itself
against its 'own' immunity ... What is put at risk by this terrifying autoimmunity logic," he grimly stated, "is
nothing less than the existence of the world...."(6) Susan Searls Giroux follows up this logic with a series of
important questions. She writes:
Since then, I've wondered about the troubling figure of societal suicide. How is it possible that a free and
democratic society, precisely in the act of securing itself, or claiming to secure itself, could quicken its own
demise? Where does the suicidal urge come from - is it a function of a deep, abiding illness in the collective
psyche or a fleeting impulse linked to traumatic loss, or some imagined heroism? Is this really the future we
face and, if so, how do we determine our degree of risk? Do we invoke the same assessment scale used for
individual suicides? Gender, for example, is a factor; males are at greater risk, but how does one determine
the gender of a society - by its masculinist inclination? Evidence of depression is another sign. Does one look
to dips in the stock market or consumer confidence indices? Sales of anti-depressant medications? How
about recent suicide attempts? Derrida describes the Cold War as a "first moment," a "first autoimmunity."
Recent significant trauma or loss? Without question. Capacity for rational thinking lost? So it would seem.
Little or no social support? Would loss of global support work here? Going down such a list, the signs don't
look promising.[7]
For over thirty years, the North American public has been reared on a neoliberal dystopian vision that
legitimates itself through the largely unchallenged claim that there are no alternatives to a market-driven
society, that economic growth should not be constrained by considerations of social costs or moral
responsibility, that war is a permanent condition of society and that democracy and capitalism are virtually
synonymous.
At the heart of this market-driven regime is materialist and instrumental rationality that sells off public
goods and services to the highest bidders in the private sector, while simultaneously dismantling those public
spheres, social protections and institutions serving the larger society. As economic power succeeds in
detaching itself from government regulations, social costs and ethical considerations, a new global financial
class reasserts the prerogatives of capital and systemically destroys those public spheres - including public
and higher education - that traditionally advocated for social equality and an educated citizenry as the
fundamental conditions for a viable democracy.
At the same time, the bloated financial class and their lobbyists do their magic by buying off politicians who
are all too willing to squander the public coffers on wars abroad, while attempting to establish across the
globe what can be called death zones inhabited by drones, high-tech weaponry and increasingly private
armies.(8) Andrew Bacivich captures the expanding parameters of this militarized death march in the
following commentary. He writes:
Pentagon outlays running at something like $700 billion annually, the United States spends as much or more
money on its military than the entire rest of the world combined. The United States currently has
approximately 300,000 troops stationed abroad, again more than the rest of the world combined (a total
that does not even include another 90,000 sailors and marines who are at sea); as of 2008, according to the
Department of Defense, these troops occupied or used some 761 "sites" in 39 foreign countries, although
this tally neglected to include many dozens of U.S. bases in Iraq or Afghanistan; no other country comes
even remotely close to replicating this "empire of bases" - or to matching the access that the Pentagon has
negotiated to airfields and seaports around the world.[9]
Empire now provides the salutes, spectacles and high drama to overlook the predatory violence that shapes
domestic politics. Unfortunately, despite our knowledge of the corrupt profiteering practices that
instigated a global financial meltdown, free-market fundamentalism appears to be losing neither its claim to
legitimacy nor its claims on democracy. On the contrary, in this new era in which we live, consumerism and
profit-making are defined as the essence of democracy, while freedom has been reconceived as the
unrestricted ability of markets to govern economic relations free from government regulation or moral
considerations.
As the principle of economic deregulation gradually merges with a notion of unregulated self-interest, one
consequence is that people eager to protect what they believe is their freedom are all too willing to
relinquish their power, civil rights and social protections to unaccountable and unchecked forms of
authoritarian corporate and state control. Of course, since September 2011, the paralyzing fog of
depoliticization has been ruptured by the Occupy movement, the roar of angry workers and of young people
who refuse to cede their future to the new oligarchs, bankers, the Koch brothers, hedge fund managers,
Christian extremists and the corporate-controlled liberal and conservative media apparatuses.(10)
As a result of the triumph of corporate power over democratic values - made visible recently in the Citizens
United Supreme Court case that eliminated all controls on corporate spending on political campaigns - the
authority of the state does more than defend the market and powerful financial interests, it also is
expanding its disciplinary control over the rest of society. There is more at work here than, as David Harvey
points out, a political project designed "to re-establish the conditions for capital accumulation and to restore
the power of economic elites"(11); there is also a reconfiguration of the state into what might be called a
merging of the warfare and punishing state, or what I am calling, borrowing a Virilio term, "a suicidal state."
(12)
Lending muscle to corporate initiatives, the "suicidal state" becomes largely responsible for managing and
expanding mechanisms of control, containment and punishment over a vast number of public institutions. As a
weakened social contract comes under sustained attack, the model of the prison, along with its accelerating
mechanisms and practices of punishment, emerges as a core institution and mode of governance under the
suicidal state - a hyper mode of punishment creep now seeps into a variety of institutions.(13)
Agencies and public services that once offered relief and hope to the disadvantaged are now being replaced
with a police presence along with other elements of the criminal justice system.(14) The brutal face of the
emerging police state is also evident in the attack on young black people, youthful protesters and "stop and
frisk" policies initiated in major urban cities which contain a large black, brown and immigrant populations. In
Bloomberg's New York City, a "Clean Halls" program allows the police to conduct repressive search policies
in private apartment buildings, stopping people in hallways and demanding an ID, and in too many cases
harassing and arresting people needlessly. The extent of the brazenly illegal legalities have prompted Matt
Taibbi, writing in Rolling Stone, to state that he has just discovered that the punishing state is as much as a
threat to democracy than the threat of white-collar corruption. He writes:
"Stories like this 'Clean Halls' program are beginning to make me see that journalists like myself have
undersold the white-collar corruption story in recent years by ignoring its flip side. We have two definitely
connected phenomena, often treated as separate and unconnected: a growing lawlessness in the financial
sector and an expanding, repressive, increasingly lunatic police apparatus trained at the poor and especially
the nonwhite poor."[15]
Democracy is on life support and the list of casualties in the war to empty it of any substance is long. We are
witnessing the ongoing privatization of public schools, health care, prisons, transportation, the military, public
air waves, public lands, and other crucial elements of the commons along with the undermining of our most
basic civil liberties. Privatization in this case not only turns public goods over to the savage interests of the
corporate elite, but puts such goods in the hands of market-based fundamentalists who can exercise control
over the production of identities, values, modes of agency and dissent.
Home schooling, vouchers, charter schools and the rhetoric of school choice all serve as code for privatizing
public goods, spheres and non-commodified institutions. Similarly, the bridges between public and private
life are being dismantled, while the market - with its disregard for the complex web of systemic forces
that bear down on people's lives, not to mention its disregard for human life itself - becomes the template
for structuring all social relations.
Already disenfranchised by virtue of their age, young people are under assault today in ways that are
entirely new because they now face a world that is far more dangerous than at any other time in recent
history. Not only do they live in a space of social homelessness in which precarity and uncertainty lock them
out of a secure future, they also find themselves living in a society that seeks to silence them as it makes
them invisible. Victims of a war against economic justice, equality and democratic values, young people are
now told not to expect too much, to accept the status of "stateless, faceless and functionless"(16) nomads,
a plight for which they alone have to accept responsibility. At best, they are told to assume sole
responsibility for their fate. At worse, they are viewed as unproductive, excess and utterly expendable. But
the discourse of redundancy has a darker side, one that reveals not just a society that is no longer willing to
invest in poor minority and white youth, but also a social order that views many young people as a prime
target of its governing through youth crime complex.
Today's young people inhabit an age of unprecedented symbolic, material and institutional violence - an age
of grotesque irresponsibility, unrestrained greed and unchecked individualism. Youth now constitute a
present absence in any talk about democracy. Their absence or disappearance is symptomatic of a society
that has turned against itself, punishes its children and does so at the risk of killing the entire body politic.
The "suicidal state" produces an autoimmune crisis in which a society attacks the very elements of a society
that allow it to reproduce itself, while at the same time killing off of any sense of history, memory and
ethical responsibility.
Under such circumstances, all bets are off regarding the future of democracy. Besides a growing inability to
translate private matters into public concerns, what is also being lost in the current historical conjuncture is
the very idea of the public good, the notion of connecting learning to social change and developing modes of
civic courage infused by the principles of social justice. Under the regime of a ruthless economic Darwinism
which emphasizes a survival-of-the-fittest ethic, concepts and practices of community and solidarity have
been replaced by a world of cutthroat politics, financial greed, media spectacles and a rabid consumerism.
We are witnessing the triumph of individual rights over social rights, nowhere more exemplified than in the
gated communities, gated intellectuals and gated values that have become symptomatic of a society that has
lost all claims to democracy.
The threat to democracy is now overridden by the fear of youth as the other, viewed largely as a threat to
authority. The eminent sociologist Zygmunt Bauman is right in claiming, "Visions have nowadays fallen into
disrepute and we tend to be proud of what we should be ashamed of."(17) Politics has become an extension
of war, just as state sponsored violence increasingly finds legitimation in popular culture and a broader
culture of cruelty that promotes an expanding landscape of fear and undermines any sense of shared
responsibility toward others.
As is evident in the recent killing of 17-year-old Trayvon Martin, poor minority youth are not just excluded
from "the American dream," but have become utterly redundant and disposable, waste products of a
society that no longer considers them of any value. Such youth, already facing forms of racial and class-
based exclusion, now experience a kind of social death as they are pushed out of schools, denied job-training
opportunities, subjected to rigorous modes of surveillance and criminal sanctions and viewed less as
chronically disadvantaged than as flawed consumers and civic felons. Some such as Trayvon Martin and Rekia
Boyd experience something more ominous - death by homicide.
No longer tracked into either high- or low-achievement classes, many of these youth are now pushed right
out of school into the juvenile criminal justice system.(18) Under such circumstances, matters of survival and
disposability become central to how we think about and imagine not just politics, but the everyday existence
of poor white, immigrant and minority youth. Too many young people are not completing high school, but are,
instead, bearing the brunt of a system that leaves them uneducated and jobless and, ultimately, offers
them one of the few options available for people who no longer have available roles to play as producers or
consumers - either poverty or prison. When the material foundations of agency and security disappear, hope
becomes hopeless and young people are reduced to the status of waste products to be tossed out or hidden
away in the global human waste industry.
Not only have social safety nets and protections unraveled in the last thirty years, but the suffering and
hardships many children face have been greatly amplified by both the economic crisis and the austerity
policies that are being currently implemented, with little justification in the current historical moment. Young
people now find themselves in a world in which sociality has been reduced to an economic battle ground over
materialistic needs waged by an army of nomadic, fiercely competitive individuals, just as more and more
people find their behavior pathologized, criminalized and subject to state violence.(19) Youth now inhabit a
social order in which bonds of trust have been replaced by bonds of fear. As Zygmunt Bauman puts it,
"Trust is replaced by universal suspicion. All bonds are assumed to be untrustworthy, unreliable, trap-and-
ambush-like - until proven otherwise."(20)
All forms of social solidarity are now abandoned to a free-market fundamentalism logic that has
individualized responsibility and reduced civic values to the obligations of consumer-driven self-interest
advanced against all other larger social considerations and social costs. How else to explain the fate of
generations of young people, especially poor white, brown and black youth, who find themselves in a country
which is the world's leader in incarceration, one in which such youth are considered the nexus of crime.
The United States is one of the few countries in the world that puts children in supermax prisons, tries
them as adults, incarcerates them for exceptionally long periods of time, defines them as super predators,
pepper sprays them for engaging in peaceful protests and in an echo of the discourse of the war on terror
describes them as "teenage time bombs."(21) Young people have become the enemy of choice, elevated to
the status as an all-pervasive threat to dominant authority. Instead of nurturing such children, we now taser
them, sequester them to dangerous prisons and demonize them in order to divert our attention from real
social problems, while at the same time engaging a public purification through the ritual of imposing harsh
disciplinary practices on them.
Current statistics paint a bleak picture for young people in the United States: 1.5 million are unemployed,
which marks a 17-year high; 12.5 million are without food; and in what amounts to a national disgrace, one out
of every five American children lives in poverty. Nearly half of all US children and 90 percent of black
youngsters will be on food stamps at some point during childhood.(22) Increasingly, kids are forced to
inhabit a rough world where childhood is nonexistent, crushed under the heavy material and existential
burdens they are forced to bear.
The deteriorating state of youth may be the most serious challenge facing educators, social workers, youth
workers, and others in the 21st century. It is a struggle that demands a new understanding of politics, one
that demands that we think beyond the given, imagine the unimaginable and combine the lofty ideals of
democracy with a willingness to fight for its realization. But this is not a fight that can be won through
individual struggles or fragmented political movements. It demands new modes of solidarity, new political
organizations and a powerful social movement capable of uniting diverse political interests and groups. It is a
struggle that is as educational as it is political. It is also a struggle that is as necessary as it is urgent. It is
also a struggle that cannot be ignored.
One way of addressing our collapsing intellectual and moral visions regarding young people is to imagine
those policies, values, opportunities and social relations that invoke adult responsibility and reinforce the
ethical imperative to provide young people, especially those marginalized by race and class, with the
economic, social and educational conditions that make life livable and the future sustainable. Clearly such a
vision, one that moves beyond what Alain Badiou has called the "crisis of negation,"(23) which is a crisis of
imagination, historical possibility and an aversion to new ideas, can be found in the global protests of the
Occupy movement in North America and other youth resistance movements around the globe. What is
evident in this worldwide movement of youth protests is a bold attempt to imagine the possibility of another
world, a refusal of the current moment of historical one dimensionality, a refusal to settle for reforms that
are purely incremental.
The "suicidal state" devalues any viable notion of rationality, ethics and democracy and has given rise to a
suicidal society marked by a culture of cruelty in which the ultimate form of entertainment has become the
pain and suffering of others, especially those considered throwaways, other, or without consumer privileges
and rights. High-octane moral panics, a flight from civic responsibility, extreme callousness and the
reproduction of human suffering have become the by-products of a market-driven society marked by an
autoimmunity disease that destroys its own protections against a creeping authoritarianism.
My emphasis here is on how the "suicidal state" is organized around the primacy of sadistic impulses and how
widespread violence and modes of hyper-punishment now function as part of an anti-immune system that
turns the economy of genuine pleasure into a mode of sadism that creates the foundation for sapping
democracy of any political substance and moral vitality. The prevalence of institutionalized injustice, illegal
legalities and expanding violence in American society suggest the need for a new conversation and politics
that address what a just and fair world looks like. We see the beginning of such a conversation among the
protesters who inhabit the Occupy movement. This is a conversation infused by the need for a new political
language that needs to be formulated with great care and self-reflection by intellectuals, artists, workers,
unions, parents, educators, young people, and others whose individual protections and social rights are in
grave danger from the threat of a creeping fundamentalism that spreads its poison everywhere in the body
politic.
The rise of the "suicidal state" and its apparatuses of violence have crept into in all aspects of social life,
making clear that too many young people and others marginalized by class, race and ethnicity have been
abandoned by American society's claim to democracy, especially in light of the rising forces of militarism,
neoliberalism, religious fundamentalism and state terrorism. America has become a "suicidal state,"
prompting a new urgency for a collective politics and social movements capable of both negating the
established order and imagining a new one. In this discourse, critique merges with a sense of realistic hope
and individual struggles merge into larger social movements. Until we address what Stanley Aronowitz has
brilliantly analyzed as our "Winter of Discontent," the "suicidal state" will continue to engage in autoimmune
practices that attack the very values, institutions, social relations and hopes that keep the ideal of
democracy alive.(24)
At the very least, the American public owes it to its children and future generations to begin to dismantle
this machinery of death and reclaim the spirit of a future that works for life rather than the death worlds
of the current authoritarianism, dressed up with a soft edge of the spectacle of consumerism and celebrity
culture. It is time for the 99 percent to connect the dots, educate themselves and develop social
movements that can not only rewrite the language of democracy, but put into place the institutions and
formative cultures that make it possible. There is no room for failure here because failure would cast us
back into the clutches of an authoritarianism - that while different from previous historical periods - shares
nonetheless the imperative to proliferate violent social formations and a death-dealing blow to democracy.
Mafia fat boy Thu Apr 05, 2012 at 09:52 AM PDT
New Jersey Gov. Chris Christie pretends $1.57 billion in corporate tax breaks is a jobs program
by Laura ClawsonFollow for Daily Kos Labor
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$1.57 billion in tax breaks to businesses,
pension and benefit cuts for public workers
(Reuters/Jonathan Ernst)
Under Gov. Chris Christie, New Jersey supposedly can't afford to pay its public workers the pensions they
worked for and contributed to while the state failed to contribute its share. But meanwhile Christie has
doled out $1.57 billion in tax cuts to businesses, supposedly to create or preserve jobs, the New York
Times' Charles Bagli reports.
About those jobs: One program has provided $900 million in tax credits to 15 companies. The result?
The companies have promised to add 2,364 jobs, or $387,537 in tax credits per job, over the next decade.
With savvy, thrifty fiscal policy like that, no wonder:
New Jersey has recovered only 20 percent, or 51,500, of the 261,000 jobs lost during the recession,
compared with 80 percent in New York City.
Chris Christie isn't spending $1.57 billion on a jobs program. In line with his priorities, it's a corporate tax
break program thinly disguised as a jobs program.
Various matters
By Glenn Greenwald
•
(1) I have an Op-Ed in The Guardian today regarding the complete lack of consequences for the CIA’s
illegal destruction of interrogation videos — culminating in a federal judge’s refusal this week to hold
the CIA in contempt despite recognizing that they violated his own order — and what this reflects
about America’s two-tiered justice system. It can be read here.
(2) Mitt Romney yesterday unveiled his foreign policy team consisting almost entirely of Bush/Cheney
neocon retreads, and then today attacked Obama’s national security policy from the Right, falsely
claiming that Obama cut military spending and vowing to reverse those non-existent cuts; Romney also
vowed to take a “harder-line” against Iran. But National Journal‘s Marc Ambinder put his finger on
exactly what made Romney’s attack particularly absurd:
If you think about it, Ambinder’s observation is amazing: it means that the current iteration of Obama
is to the Right on national security as compared to where Romney would have been a few years ago
while attacking Obama from the Right. And remember: national security a few years ago was already
well to the (neocon) Right due to individuals by the name of George Bush and Dick Cheney.
That’s how far to the Right Obama has taken not just the country, but the Democratic Party and the
nation’s bipartisan consensus. In my view, that is clearly one of the most significant and enduring
aspects of the Obama legacy. He even has self-identified progressive Democrats — who a few years
ago were shrilly objecting to Bush’s mere attempt to eavesdrop on or detain Americans without due
process — now running around defending the President’s power to target American citizens for
assassination: in secret and without a shred of due process, to say nothing of radical secrecy,
indefinite detention, and an unprecedented war on whistleblowers. To see just how extreme a
situation this is, consider this article from today’s Hill:
Many Democrats love to complain that Republicans will never give Obama credit no matter what he
does, but that’s absolutely not true. The most right-wing polemicists have repeatedly praised Obama’
s Terrorism and civil liberites policies the way that Boehner did today. To take one of countless
examples: here’s Peter King praising Obama for using military tribunals; here’s Peter King praising
Obama for codifying indefinite detention; and here’s Peter King praising Obama for ordering Awlaki
killed. They are duly appreciative that he’s embracing the Terrorism and civil liberties policies they
have long advocated and moved his own Party so much closer to their own positions, and they have not
been shy about expressing that appreciation.
(3) Although there’s still no evidence that Anwar Awlaki was responsible for any actual or planned
Terrorist plots, a newly released WikiLeaks cable seems to provide definitive proof of what Amnesty
International has long claimed: that the U.S., in late 2009, carried out an air strike in Yemen using
cluster bombs that killed dozens of innocent women, children and men. It’s so telling how much
intense and unquestioning media attention was devoted to depicting Awlaki as an Evil Terrorist, and so
little devoted to the dozens of innocent people actually killed by the U.S., under the direction of the
2009 Nobel Peace Prize winner, in the very country where Awlaki lived.
(4) One thing the Internet has definitely changed for the better is that media stars like Erin Burnett
are no longer able to spew shoddy, misleading “journalism” without hearing loud and effective
responses. The Atlantic recounts just some of the criticism here; meanwhile, The Huffington Post‘s
Jason Linkins and Cenk Uygur on his video program add some worthwhile thoughts of their own.
(5) Tampa is the site of the 2012 Republican National Convention, and the city is considering the
purchase of large amounts of paramilitary weaponry to control crowds and possible protests,
including “two ‘unmanned aerial vehicles’ that could hover for 20 minutes, fly in 20-knot winds and
carry cameras with zoom lenses or thermal imaging capabilities.” Nothing is more ahistorical and naive
than the view that you can vest the government with a whole slew of powers in the name of Terrorism
and expect that it will be confined to that realm.
What If the Greedy Rich Paid Their Share? 8 Things to Know About Wealth and Poverty in the US
We're far from poor -- we just have a wildly lopsided distribution of wealth that makes us seem poor.
April 17, 2012 |
Photo Credit: ShutterStock.com
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America is loaded. We are not a struggling nation ready to go under. We are not facing an enormous debt
crisis despite what the politicians and pundits proclaim. We are not the next Greece.
Rather, we have an enormous concentration-of-wealth problem -- one that must be solved for the good of
our commonwealth. We are a very rich nation but it doesn’t seem that way because our wealth is so
concentrated in the hands of a few. This is America’s disaster.
But wait. Doesn’t the wealth belong to the super-rich? Didn’t they earn it fair and square? Isn’t that the way
it’s always been?
Not by a long shot. The amount of wealth that flows to the super-rich is determined by our public policies. It’
s all about how we choose to share our nation’s productivity.
Productivity and the Wealth of Nations
Our country is rich because we are enormously productive as measured by output per hour worked. The
greater our collective output per hour, the more our economy produces and the wealthier we are…or should
be. It’s not a perfect measure since it doesn’t adequately take into account our environment, our health or
our overall well-being. But it is a good gauge of our collective level of effort, skill, knowledge, level of
organization, and productive capacity. As the top line on the productivity chart below shows, we’ve been able
to produce more and more per hour year after year since WWII. It’s a remarkable achievement.
From 1947 until the mid-1970s, the fruits of our bountiful productivity were shared reasonably fairly with
working people. As productivity rose so did workers’ real wages (See the bottom line in the chart below. It
represents the average weekly wage of non-supervisory workers who make up about 80 percent of the
entire workforce.) This wasn’t socialism. There were still plenty of rich people who earned a significant slice
of the productivity harvest. But much of that wealth was plowed back into the economy through taxation
rates that between 1947 and 1980 hovered between 70 to 91 percent on incomes over $3 million (in today’s
dollars). Much of that money was used to build our physical and knowledge infrastructures, and to fight the
Cold War. Unions were supported by public policy and workers' real wages rose steadily after accounting
for inflation. Wall Street was tightly controlled and the middle-class grew like never before.
Then something happened.
It wasn’t an act of God, or the blind forces of technological change, or the mysterious movements of
markets. Nor did the super-rich become enormously smarter than before. Instead, flesh-and-blood policy
makers decided that deregulation and tax cuts should become the order of the day starting in the mid-
1970s. The idea was that if we cut taxes on the super-rich and deregulated the economy (and especially
Wall Street), investment would dramatically increase and all boats would rise. But as we can see from the
chart below, the average worker's wage in real terms stalled and even declined after the mid-'70s. The
fruits of productivity no longer were shared equitably. The enormous gap between the two lines (trillions of
dollars per year) went almost entirely to the super-rich. The wealth of the wealthy skyrocketed, not by
accident, but by policy design. "Greed is good" replaced the middle-class American dream.
What Is Wealth and Who Has It?
Wealth or net worth is the total value of what you own (your assets) minus the total value of your debts
(your liabilities.) Our collective net worth is really huge. We’re talking big, big numbers. As of the end of
2011, U.S. households had $30 trillion in private assets and $13.6 trillion in liabilities for a total net worth of
$16.4 trillion (PDF). How much is that? It comes to an average of $141,000 per household – free and clear
of any debts.
But averages are extremely misleading, because wealth is so highly concentrated at the top. Here are some
eye-popping numbers.
1. The number of households with a million dollars or more of net worth grew by 202 percent between 1983
and 2007.
2. The number of households with a net worth of $5 million or more grew by 494 percent.
3. The number of $10 million or more households grew by a whopping 598 percent!
4. There are now more than 464,000 households worth $10 million or more. (PDF)
5. But the bottom 40 percent of American households has a net worth of nearly zero (.2 percent).
6. If you take out the value of our homes, the bottom 40 percent has a negative net worth of minus 1
percent – meaning they owe more than their assets are worth.
7. Meanwhile the top one percent holds 34.6 percent of our total net worth and 42.7 percent of all financial
assets (excluding homes).
8. That means that the top one percent has a positive net worth valued at approximately
$5,700,000,000,000 (that’s $5.7 trillion).
Why We Need a Financial Transaction Tax
Most Americans live on earned income which is taxed instantly through substantial payroll taxes. You can’t
collect a paycheck without paying taxes. The super-rich, however, receive most of their income through
financial investments that are taxed at lower capital gains rates and which can be offset through a myriad of
deductions and loopholes. In effect, the super-rich live by one tax code and the rest of us use another. This
is why the wealthiest Americans pay lower effective tax rates than their servants. It’s also why our
government appears to be starved for income. If we want a vibrant economy and good investments in our
public infrastructures, the wealthy must pay a great deal more, just like they did during the early post-
WWII period.
For starters we need a financial transaction tax which is a small sales tax on each and every financial trade –
from stocks and bonds to futures and other derivatives. Since the super-rich hold so many financial assets,
this kind of tax would directly target their excessive trading and enormous holdings. Not only would this
sales tax produce upwards of $150 billion a year in federal revenue, but also, it may help eliminate much of
the financial gambling that took down the economy in 2007. Considerate it a tax on financial toxic waste.
A Wealth Tax to Improve our Commonwealth
Finland, France, Iceland, Luxembourg, Norway, Spain, Sweden and Switzerland have small net wealth taxes,
and England has had a financial transaction tax for three centuries. We should join them. A 1 to 3 percent
wealth tax with a million-dollar deduction would only hit the top 1 percent and would provide the nation with
from $50 to $150 billion per year in income. Spare change for the super-rich.
The beauty of a wealth tax is that there are no loopholes. Your assets (which include both foreign and
domestic) and your liabilities are easily calculated. It’s easier to spot the cheaters. It’s easier to press for
information from other countries that may be tempted to launder money for our super-rich. There’s
nowhere to run unless the super-rich want to give up their citizenship.
Even Ronald McKinnon, a conservative economist writing in the Wall Street Journal (“The Conservative Case
for a Wealth Tax”) is advocating a wealth tax on the super-rich:
In order to have a fairer tax system, we should implement a new federal wealth tax in addition to the
federal income tax. Unlike the current income tax, the wealth tax would not rely on how income is defined.
Rather, it would require that households list all their domestic and foreign assets on, say, Dec. 31 in the
relevant tax year. With a large exemption of $3 million that effectively excludes more than 95% of the
population, a moderate flat tax—say 3%, on wealth so defined—could then be imposed.
Combined with the financial transaction tax, we would have more than $200 to $300 billion per year which
could rebuild our crumbing infrastructure, provide higher education for our children, eliminate much of the
student loan burden, and hire millions of laid-off teachers. Unemployment would fall dramatically and deficit
hysteria would vanish into its own hot air.
We can cry about the distribution of income all we want. We can moan and groan about the top 1 percent and
how they have captured political power. We can proclaim our membership in the 99 percent for all to hear.
But none of that matters much unless we build a mass movement that reclaims our fair share of the fruits of
productivity.
The 1 percent didn’t get there just because they were great entrepreneurs or because they were smarter
than the rest of us. They got there because they pressed for tax cuts for the super-rich and the
deregulation of Wall Street. Those twin policies poured the money into their coffers and stalled our middle-
class dead in its tracks. Those policies also crashed the economy and destroyed the jobs of millions of
Americans.
A financial transaction tax combined with a wealth tax will bring us closer to the time when the middle-class
again was growing year by year. It would put Americans back to work and place our foot right back on Wall
Street’s neck – where it needs to be for the good of us all.
But you know it won’t come easy. The super-rich feel entitled to all they can grab. Which means we’ll have to
organize like never before and fight like hell. Let’s hope the 99 percent are ready, able and willing.
Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and
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, 2009).
Single-Payer Health Care: $570 Billion Cheaper
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Posted on Apr 14, 2012
david drexler (CC-BY)
Economist Gerald Friedman has what looks to be the silver bullet against the claim that single-payer health
care is infeasible on economic grounds, showing how “Medicare for all” could save billions of dollars while
improving millions of lives.
Study his easy-to-grasp charts and figures explaining how to fund the plan and how much it would save in the
two-page document linked below. —ARK
Gerald Friedman at Dollars & Sense:
The Expanded & Improved Medicare for all act” (HR 676) would establish a single authority responsible for
paying for health care for all Americans. Providing universal coverage with a “single-payer” system would
change many aspects of American health care. While it would raise some costs by providing access to care
for those currently uninsured or under-insured, it would save much larger sums by eliminating insurance
middlemen and radically simplifying payment to doctors and hospitals. While providing superior health care, a
single-payer system would save as much as $570 billion now wasted on administrative overhead and
monopoly profits. A single-payer system would also make health-care financing dramatically more
progressive by replacing fixed, income-invariant health-care expenditures with progressive taxes. This
series of charts and graphs shows why we need a single-payer system and how it could be funded.
The Corrupt, Unhelpful "Center"
Washington Elites Push for a Consensus that Ignores Reality
by Katrina vanden Heuvel
“Why can’t we all get along?” The iconic question has become the fixation of much of Washington’s chattering
class. David Brooks and Thomas Friedman censure President Obama for blowing the “Grand Bargain” or not
embracing the recommendations of Alan Simpson and Erskine Bowles, co-chairs of the deficit reduction
commission. Self-proclaimed bipartisan efforts — No Labels, Americans Elect — call for putting aside
partisan squabbles and electing moderates who can get things done. In this file photo, Erskine Bowles, left,
accompanied by former Wyoming Sen. Alan Simpson, co-chairmen of President Barack Obama's bipartisan
deficit commission, take part in a news conference on Capitol Hill in Washington. (Alex Brandon/AP/File)
All this chatter leaves out one thing — any sense of reality. The old bipartisanship, such as it was, was built
on the postwar economy that worked for everyone. Top-end taxes were at 90 percent, providing the
resources to invest in essential programs such as the interstate highways, the Marshall Plan that rebuilt
Europe, the G.I. bill and housing subsidies that educated a generation and built the suburbs.
In those days, U.S. companies exported goods rather than jobs, and a decent argument could be made that
what was good for General Motors was in fact good for America. It wasn’t perfect. The “other America”
lived lives of quiet desperation. Segregation still was brutally enforced. But the bipartisan consensus
reflected an economy that was working for many, not just the few.
That is no longer true, and hasn’t been for years. Multinationals ship jobs abroad and park profits overseas
to avoid taxes. Wall Street blew up the economy but got bailed out, with the bankers continuing to pocket
the big bucks. Three-fourths of the country thinks the recession hasn’t ended. And no wonder: Wages are
still falling and mass unemployment inflicts grinding misery. In 2010, the top 1 percent captured an obscene
93 percent of the rewards of “recovery.”
Not surprisingly, more and more Americans at both ends of the spectrum think Washington is corrupted by
big money and big business. And when the parties do come together — as they recently did to pass the
corporate-championed, falsely named JOBS Act that declares open season for fraudulent corporate stock
offerings — they simply prove the case.
Also ignored in the plea for cooperation is the simple reality that the Republican Party has been captured by
an extreme-right wrecking crew, who have not the slightest interest in compromise. Rather they are intent
on gutting modern government, outside of the bloated military. Grover Norquist was delivering his normal
incendiary rant in 2001 when he said he aimed to shrink government “to the size where I can drag it into the
bathroom and drown it in the bathtub.” At the time, I doubt even he expected that this year’s Republican
House budget — devised by the Beltway favorite Paul Ryan — would actually aspire to that standard,
reducing discretionary spending by 2050 to levels that can be met only by dismantling all of government
outside of the military, Social Security, Medicare and other health programs.
Obama, a mediator by instinct and experience, paid a deep price by trying to pursue bipartisan cooperation.
He wasted months on health care as Sen. Max Baucus (D-Mont.) engaged in phantom negotiations with
supposed Republican moderates. The president turned prematurely to deficit reduction, and then to seeking
a grand bargain with John Boehner, impervious to the reality that Boehner could not produce his caucus for
any kind of tax hikes. Now, for the election, the president has begun to clarify the stark differences
between the parties, to the benefit of his reelection and the public’s understanding.
But what makes the elite consensus so dangerous is that we’re headed into a train wreck after the election
that will require some kind of a deal. By the end of the year, if nothing is done, the Bush tax cuts, the payroll
tax cut and extended unemployment benefits will expire, and the automatic sequester will cut another $110
billion out of discretionary spending for the remainder of the fiscal year. This would surely cripple the weak
recovery we have, and very likely drive the economy into recession.
But the terms of the “grand bargain” represented by the Obama-Boehner negotiations or the Simpson-
Bowles recommendations are skewed dramatically to the right. The basic outline exchanges cuts in Social
Security and Medicare for “tax reform,” promising to lower tax rates while closing enough loopholes to raise
revenues. That requires erasing the mortgage deduction for middle-class homeowners or ending the
employer deduction for providing health care to employees. This notion of “shared sacrifice” is
unconscionable, given that working Americans have been sacrificing for years and weren’t even invited to the
Wall Street bacchanalia that created the mess.
Worse, the entire frame of the discussion — driven by Washington elites — is perverse. We should be
focused on how to put people to work. How much should we take advantage of record-low interest rates and
borrow to rebuild America and put construction workers back to work? How much should we raise taxes on
Wall Street and multinationals to pay for rehiring teachers, and direct employment of young people?
Instead, guided once more by a misbegotten elite consensus, we’re going to argue about how much of a hit a
barely growing economy should take. That’s a consensus the country can’t afford.
© 2012 The Washington Post
The gangsters want to feed off the British healthcare system
NHS: The shape of things to come
Continue reading the main story
NHS shake-up
• Q&A: The NHS shake-up
• What next for the NHS changes?
• Health reforms - where they stand
• NHS changes: The picture now
The health and social care bill has gone though more than a year of debate and more than 1,000 amendments
in the Commons and the Lords. So what has changed?
What the coalition wanted:
* GPs to take responsibility for £60bn of NHS funds
* Competition to be extended to more NHS services
* Reduced bureaucracy and fewer managers
* An increased role for the private sector
* Backing from every professional group involved.
What they have had to compromise on:
* NHS professionals such as hospital consultants and nurses given greater say in spending
* Competition limited to quality not price
* More managers to look into perceived risks
* All providers to be assessed for their suitability to run services.
The shape of things to come:
* Clinical commissioning groups (CCGs) replace primary care trusts
* CCGs decide on care for patients, advise them where to go for treatment and pay the bills
*Some of the day-to-day control of the NHS passes to the new NHS Commissioning Board, which will manage
the CCGs at a national and local level
*Responsibility for public health issues like obesity, smoking and alcohol abuse is handed to local councils
*All hospitals become foundation trusts and compete for treatment contracts from CCGs
*The cap on how much hospitals can earn from private patients rises from as little as 1.5% to 49%.
The Housing Doldrums
The Bottomless Pit
by MIKE WHITNEY
“There are many good reasons to believe that the 5.5 million foreclosures we have seen are barely halfway
through their full course. The United States may end up with a total of 8-10 million foreclosures before we
are finished.”
– Barry Ritholtz, The Big Picture
It all gets down to supply and demand. The banks have been keeping millions of homes off the market until a
settlement was reached in the $25 billion robosigning scandal. Now that the 49-state deal has been
finalized, the banks are preparing to put more of their of distressed homes up for sale. That will lead to
lower prices and the next leg down in the 6-year long housing crisis.
According to Reuters, new foreclosures “begun by Deutsche Bank were up 47 percent from 2011. Those of
Wells Fargo’s rose 68 percent and Bank of America’s, including BAC Home Loans Servicing, jumped nearly
seven-fold — 251 starts versus 37 in the same period in 2011.”
So BofA, which unwisely purchased Countryside following the Crash of ’08, is scrambling to get its house in
order by removing the deadwood from its balance sheet. Good luck with that.
In order to avoid a sudden plunge in prices–which would be devastating for bank balance sheets–the banks
will continue to control the number of homes that are released onto the market. In 2011, existing home
inventory shrunk by 20 percent year over year while the shadow backlog of distressed homes continued to
grow in leaps and bounds. This shows that the banks are managing inventory to minimize their losses.
But even though “visible” inventory has shrunk by as much as 30 percent in some markets, housing prices
have continued their downward trek, dropping roughly 4 percent in 2011. This reflects the truly dismal
condition of the underlying economy that is wracked by high unemployment, flat wages, and soaring personal
debt. Absent another round of fiscal stimulus, there’s little chance that housing sales
will rebound in 2012 despite historic low rates and myriad government loan modification programs.
The biggest problem facing housing now is that ordinary working people can’t make their monthly payments.
An article in Reuters summed it up like this: “The subprime stuff is long gone,” said Michael Redman,
founder of 4closurefraud.org. “Now the folks being affected are hardworking, everyday Americans
struggling because of the economy.”
So what we’re seeing now is the knock-on effects from high unemployment, tight credit, shitty wages and
deep protracted economic stagnation. This is a policy issue, but policymakers refuse to address it, so housing
will bump along the bottom for years to come. Now take a look at this article in the Wall Street Journal:
“Delinquent mortgage borrowers, take note: Banks still aren’t moving very fast to kick you out of your
homes. February’s foreclosure settlement between big U.S. banks and state attorneys general should have
been bad news for mortgage deadbeats — and for house prices. Having resolved charges that they had
filed bogus documents to speed up repossessions, the banks should have felt free to move ahead with
millions of foreclosures. They should also have started selling more repossessed houses, an influx of cheap
supply that would weigh on the market.
So far, though, that’s not happening. …. as a result, the average number of days since the last mortgage
payment had been made on homes in the foreclosure process rose to 667, up from 660 the previous month
and 253 in February 2008. In other words, the average delinquent borrower could live rent-free for nearly
two years without getting evicted, assuming the borrower chose to stay in the house.” (“The Foreclosure
Deal Spares the Housing Market (So Far)”, Bloomberg)
Just to be clear, we do not agree with the author that the people who were victims in this vast criminal
mortgage laundering scam– that destroyed the financial system and pushed the global economy into a
Depression–can be fairly characterized as “mortgage deadbeats”. Even so, the point he makes is important,
because it illustrates how the banks are fiddling with supply to avoid the losses on non performing loans.
Screwball accounting regulations allow the banks to keep mortgages on their books at fictitious prices
(artificially high) until the house is sold. Only then, are they required to write down the difference.
Considering that they still have millions of distressed homes on their books, this is no small matter. An
accurate accounting of bank real estate inventory would show that most of the biggest banks in the country
are technically insolvent.
So what does this mean for people who are thinking about buying a house in the near future? Should they
hang on to their money and wait for another year or so or jump at that $450,000 McMansion with the Gothic
parapets and custom Swedish sauna that’s been marked-down to a mere $185,000?
That’s hard to say. It depends on one’s own priorities. But one thing is certain, housing prices won’t be going
up for a very long time. Maybe never. Moody’s ratings agency forecasts that we’ll see ”an 8% to 10% decline
in housing prices” due to a 25 percent uptick in repossessed properties from 1 million in 2011. Unfortunately,
Moody’s calculations are far too optimistic. In fact, “top housing analyst Laurie Goodman estimates the
amount of shadow inventory at between 8 and 10 million homes, and Michael Olenick, using a different
methodology, comes in at just under 9 million homes.” (“Moody’s Foresees 10% Drop in US Housing Prices“,
naked capitalism)
Even if Goodman-Olenick’s predictions are wrong by half–which is unlikely–prices have a long way to go
before they hit bottom.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics
of Illusion (AK Press). He can be reached at fergiewhitney@msn.com.
Inequality and Keynesian Economics
Daron Acemoglu and James Robinson
Paul Krugman and Robin Wells have an interesting article in the Occupy Handbook edited by Janet Byrne
that has just come out that has just been reprinted at salon.com. (Actually, it turns out we also have a paper
in the volume, see this post).
Krugman and Wells articulate and expand on a thesis that they have suggested previously. They start by
arguing that the huge increase in income inequality has also had major political consequences. So far so good.
This is in line with our perspective in Why Nations Fail, and it’s something we have argued elsewhere, for
example here. Next comes the original part of Krugman and Wells’s argument: the main corrosive effect of
this inequality is in preventing Keynesian policies to combat the recession 2007-2008 and the sharp increase
in unemployment that resulted. The idea here is that the “right” (the GOP) opposes any government
intervention, and Keynesian fiscal policies and work programs that would have increased employment and
combatted the recession are opposed by the right because, with increased inequality, they have become
more beholden to the very wealthy.
Though intriguing, this idea is not backed up with direct evidence by Krugman and Wells. It may well be true,
but it is also a curious thesis. Here are some of the things we find less than fully clear about this thesis.
First, the distinction between “right” and “left” (or perhaps pro-elite and anti-elite) is not a natural one when
it comes to Keynesian economics and policies. Many conservative politicians, and not just Nixon and Reagan,
have embraced Keynesian economics. Both Fascist Italy and Nazi Germany were big-time Keynesians. Work
creation via government programs was a cornerstone of Nazi economic policy, so much so that an economic
history of Nazi Germany by Dan P. Silverman is entitled Hitler’s Economy: Nazi Work Creation Program,
1933-1936 — though Adam Tooze, The Wages of Destruction: The Making and Breaking of the Nazi
Economy, argues that work creation was only a secondary objective. (See also Peter Gourevitch’s Politics in
Hard Times: Comparative Responses to International Economic Crises for a comparative and nuanced picture
of how political attitudes and coalitions influenced macroeconomic policies during the crisis of 1873-96, in the
aftermath of the Great Depression, and in the 1970s).
Second, the argument that elites are generally opposed to government involvement in the economy reveals
the very US-centric focus of Krugman and Wells. Even a perfunctory look at recent or distant history (or at
our book!) should have been enough to convince one that in most societies, even in the supposedly laissez-
faire 19th century Britain, elites work very hard to make the government intervene in the economy — of
course, in a very specific way, to support them. It should thus be no surprise that extractive institutions are
rarely built on the foundations of laissez-faire economics — think of slavery, labor draft systems such as
the mita, government monopolies, institutions such as the “colour bar” in South Africa designed to keep
blacks disadvantaged and forced to supply cheap labor, and government corruption. This is not to argue that
laissez-faire is inherently pro-poor or anti-elite, but to emphasize that the opposite perspective is also
plainly false.
Third, even in the current US context it is not clear why the wealthiest Americans should be opposed to
Keynesian policies. After all, wealthy Americans are the owners of the major corporations or at the very
least are strongly vested in the US corporate sector, which would also be one of the main beneficiaries of
expanded aggregate demand.
Fourth, even if Krugman and Wells’s emphasis is right, we find it hard to place lack of sufficient Keynesian
stimulus as one of the most corrosive effects of soaring political inequality and political polarization in the
US. What about the failure of our educational institutions; the huge incarceration rate, particularly for
African-Americans; erosion of civil liberties; increasingly inefficient subsidies and tax breaks to select
corporations and sectors; distortions created by implicit and explicit subsidies to the financial industry?
Lack of sufficient Keynesian zeal seems a little less important.
Having said all of that, Krugman and Wells are probably right to some degree. Republicans prevented more
aggressive Keynesian measures, and this has likely contributed to the persistence of very high
unemployment (though there is no conclusive evidence showing a very large multiplier from government
spending, which is something that needs to be factored in). All the same, the reasons for this hostility to
Keynesian economics are still mysterious. Perhaps it was just politicking, with small p — a way of frustrating
Obama’s economic policies. Perhaps it was based on a “slippery slope argument” — if the government starts
being active now, what is there to stop it from becoming even more active in the future? Perhaps and just
perhaps, it was for the same reason that some economists had a blanket opposition to Keynesian policies —
on “ideological” grounds not clearly based on pure economic interest. Not as big a story, but a possibility.
Montana Governor: Romney’s Family Came ‘From A Polygamy Commune In Mexico’
by Meenal Vamburkar | 7:57 pm, April 19th, 2012
» 121 comments
Montana Gov. Brian Schweitzer (D) spoke to The Daily Beast on Thursday about whether his state could be a
battleground come November. During the conversation, Schweitzer went further to comment on Mitt
Romney as well — saying the GOP hopeful could face problems on the national stage because his father was
“born on a polygamy commune in Mexico.”
On the topic of swing states, “Schweitzer said Romney would have a ‘tall order to position Hispanics to vote
for him.’” The Daily Beast’s Ben Jacobs “replied that was mildly ironic since Mitt’s father was born in Mexico,
giving the clan a nominal claim to being Hispanic.” The governor responded that’s “kinda ironic given that his
family came from a polygamy commune in Mexico, but then he’d have to talk about his family coming from a
polygamy commune in Mexico, given the gender discrepancy.”
He added: “[Women are] not great fans of polygamy, 86 percent were not great fans of polygamy. I am not
alleging by any stretch that Romney is a polygamist and approves of [the] polygamy lifestyle, but his father
was born into [a] polygamy commune in Mexico.”
The Daily Beast notes some background on Romney’s father:
Romney’s father, George—who served as governor of Michigan and was a member of the Nixon cabinet and
also a presidential candidate—was born in Mexico in 1907 to a family of American Mormons who fled to
Mexico when the United States government cracked down on the practice of polygamy. George Romney’s
parents were in a monogamous marriage, but Mexico was the last bastion for the practice of plural marriage
in the Church of Latter Day Saints. (The church has since expressly prohibited the practice.)
New study finds 45,000 deaths annually linked to lack of health coverage
Uninsured, working-age Americans have 40 percent higher death risk than privately insured counterparts
By David Cecere
Cambridge Health Alliance
Thursday, September 17, 2009
Nearly 45,000 annual deaths are
associated with lack of health insurance, according to a new study published
online today by the American Journal
of Public Health. That figure is about two and a half times higher than an
estimate from the Institute of Medicine (IOM) in 2002.
The study, conducted at Harvard Medical School and Cambridge Health Alliance,
found that uninsured, working-age Americans have a 40 percent higher risk of
death than their privately insured counterparts, up from a 25 percent excess
death rate found in 1993.
“The uninsured have a higher risk of death when compared to the privately
insured, even after taking into account socioeconomics, health behaviors, and
baseline health,” said lead author Andrew Wilper, M.D., who currently teaches
at the University of Washington School of Medicine. “We doctors have many new
ways to prevent deaths from hypertension, diabetes, and heart disease — but
only if patients can get into our offices and afford their medications.”
The study, which analyzed data from national surveys carried out by the Centers
for Disease Control and Prevention (CDC), assessed death rates after taking
into account education, income, and many other factors, including smoking,
drinking, and obesity. It estimated that lack of health insurance causes 44,789
excess deaths annually.
Previous estimates from the IOM and others had put that figure near 18,000. The
methods used in the current study were similar to those employed by the IOM in
2002, which in turn were based on a pioneering 1993 study of health insurance
and mortality.
Deaths associated with lack of health insurance now exceed those caused by many
common killers such as kidney disease. An increase in the number of uninsured
and an eroding medical safety net for the disadvantaged likely explain the
substantial increase in the number of deaths, as the uninsured are more likely
to go without needed care. Another factor contributing to the widening gap in
the risk of death between those who have insurance and those who do not is the
improved quality of care for those who can get it.
The researchers analyzed U.S. adults under age 65 who participated in the
annual National Health and Nutrition Examination Surveys (NHANES) between 1986
and 1994. Respondents first answered detailed questions about their
socioeconomic status and health and were then examined by physicians. The CDC
tracked study participants to see who died by 2000.
The study found a 40 percent increased risk of death among the uninsured. As
expected, death rates were also higher for males (37 percent increase), current
or former smokers (102 percent and 42 percent increases), people who said that
their health was fair or poor (126 percent increase), and those who examining
physicians said were in fair or poor health (222 percent increase).
Steffie Woolhandler, study
co-author, professor of medicine at Harvard Medical School, and a primary care
physician at Cambridge Health Alliance, noted: “Historically, every other
developed nation has achieved universal health care through some form of
nonprofit national health insurance. Our failure to do so means that all
Americans pay higher health care costs, and 45,000 pay with their lives.”
“The Institute of Medicine, using older studies, estimated that one American
dies every 30 minutes from lack of health insurance,” remarked David
Himmelstein, study co-author, associate professor of medicine at Harvard
Medical School, and a primary care physician at Cambridge Health Alliance.
“Even this grim figure is an underestimate — now one dies every 12 minutes.”
Other authors include Karen E.
Lasser, Danny McCormick, David H. Bor, and David U. Himmelstein. The study was
Kochs, Lies and Videotape
Tuesday, 03 April 2012 09:26 By , Brave New Foundation | Op-Ed
• 18
• font size
David Koch, a billionaire known for his family's contributions to conservative causes, during an interview at
the Massachusetts Institute of Technology, in Cambridge, Massachusetts, March 4, 2011. (Photo: Gretchen
Ertl / The New York Times) This week as I premiered my new film, Koch Brothers Exposed — the result of
a year-long investigation on how two billionaires are using their wealth to corrupt democracy — Koch
Industries has launched an attack on the film and me. The Kochs intimidate, they menace; they have a letter
from their lawyer borderline threatening the media if it reports what’s in the film — and they always try to
change the subject so their behavior can stay in the shadows: not only are they unwilling to accept my offer
of a debate or interview, they also refuse to testify about their interest in the Keystone XL pipeline and may
have to be dragged kicking and screaming into revealing their secret contributions to groups doing election
work. This time, the Kochs are using a technique I point out in the film: attacking to avoid dealing with the
facts. They are dodging and distorting the truth to avoid confronting our findings on cancer, voting rights,
civil rights, and more.
How? Let me count (some of) the ways.
1) Cancer. People are dying of cancer near the Kochs’ Georgia Pacific plant in Crossett, Arkansas, and the
Kochs refuse to answer the relevant question: What are they going to do about it? On Penn Road in Crossett,
right near the mill, residents powerfully show how nine out of 11 homes have suffered from cancer. A USA
Today study said Crossett’s school district is in the top 1% in the nation for cancer. Meanwhile, the Kochs’
facility releases significant amounts of formaldehyde — a known carcinogen — and there’s no other chemical
plant in town. The Kochs are among the country’s top 10 polluters and lobbied hard to keep formaldehyde
from being labeled a carcinogen. For a company where one of the owners (David Koch) and the
communications director (Melissa Cohlmia) are cancer survivors, this is tragic and infuriating. It reflects a
warped sense of humanity where greed trumps all.
2) Voting rights. The Kochs have given over $1 million to the American Legislative Exchange Council (ALEC), a
group that’s trying to pass severe voter ID restrictions in states across the country. These bills
disenfranchise the poor, the elderly, the young, people of color — in short, people who are likely to oppose a
1% agenda. The Kochs won’t explain why anyone should believe that ALEC’s pro-corporate, anti-99% agenda
is somehow detached from its billionaire funders. Onerous voting restrictions are already impacting people’s
ability to vote in the 2012 election.
3) Re-segregation. Americans for Prosperity (AFP), which is Koch-founded and Koch-financed (they refuse
to say how much but we know it’s at least $5 million), pushed “reforms” in North Carolina that would destroy
a school district’s model of racial integration and ensure students go to school mainly with people of their
own race. We call out this “re-segregation” in Koch Brothers Exposed. The Kochs, of course, try to hide from
their connection — hoping we ignore not only their involvement in the founding and financing of AFP, but also
the fact that David Koch has served as chair of the group’s supposedly nonpolitical arm, the AFP Foundation.
Their dissembling doesn’t pass the laugh test–particularly when they’ve refused to open the books to show
where their funding is coming from.
4) Worker rights. The Kochs have been undermining labor rights, helping anti-union Gov. Scott Walker in
Wisconsin and supporting groups that want to boost employer power against employees. They also have
pushed the interests of large corporations over Main Street. The Koch brothers try pathetically to attack
me on that front, going back eight years to my film Wal-Mart: the High Cost of Low Price and saying a locally-
owned hardware store I profiled as an example of how Wal-Mart shuts down small businesses had actually
closed before the retail giant opened. Um, as the store owners said in the film, the reason it closed early
was problems involving financing and reduced appraisals in light of Wal-Mart’s impending arrival. This is yet
another example of distorting the facts and is ultimately a distraction.
Why are the Kochs flailing so desperately in the face of our findings? Because they can’t give
straightforward, convincing rebuttals to the claims we lodge against them in the film. My organization, Brave
New Foundation, doesn’t have billions of dollars at its disposal to fight back, but this time, the Kochs aren’t
getting the last word. The smears and name-calling (I’m malicious, I’m a liar, blah blah blah) may not be
pleasant but won’t stop the film from being shared by 25 groups partnering with us and thousands of people
online.
The Koch brothers epitomize the corruption of democracy that’s going on in our country, with a handful of
people at the top expanding their wealth on the backs of the 99%. Americans shouldn’t fall for their attempt
to change the subject.
This piece was reprinted by Truthout with permission or license.
Locked in a Dysfunctional Currency Union
No Exit in EU
by JEFFREY SOMMERS
Peter Praet, Chief Economist of the European Central Bank, defended the ECB’s policies at Levy Institute’s
annual Minsky meeting at the Ford Foundation this past week in New York that. In his remarks, he
retreaded the EU’s wheels with the same rhetoric of inflation fighting and fiscal tightening that drove the
EU off the road and into the ditch to begin with. The effect of his pronouncements of EU intentions was to
only further reveal the growing gap between reality and ECB ideology over their inability to successfully
address the euro crisis.
Europe risks becoming a real lived version of Jean Paul Sartre’s No Exit in which its constituent countries
are locked into a dysfunctional currency union for an eternity. Euro entry has been a Faustian bargain. There
is presently no exit clause once joining, except exiting the European Union itself. Entry promised
membership into a rich club of nations in which Europe’s southern periphery and former Soviet bloc areas to
the east would converge with Europe’s richest nations. The devil of membership, however, is in the details.
Euro rules preclude a wholesale list of policies historically demonstrated to develop nations.
In short, the answer to the question of whether Europe’s periphery is merely in purgatory or eternal
damnation rests with whether Europe is willing to undertake a revision of the rules guiding the relationships
among its constituent members. The European Central Bank understood the currency union would be
complex, but their assumptions regarding rules that create economic development and stability have proven
erroneous and mitigate against convergence and growth across Europe.
Among the faulty assumptions is that markets are the best arbiters of risk and worthy investments. This is
enshrined in article 123 of Treaty on the Functioning of the European Union. At best, the rule was
predicated on the idea that past monetary imprudence (think Zimbabwe or Weimar Germany) of some
nations meant governments can’t be trusted with monetary and fiscal independence. Not every country,
however, is Zimbabwe with a dictator serving several decades, or a Weimar Germany saddled with inflation
generating war reparation payments. By contrast, nations in the past, from Europe’s richest, to East Asia
Tigers, to the US have used domestic credit creation to fund infrastructure that enabled wealth creation
beyond the costs of expenditure on that infrastructure.
The ideology and group think resident among central bankers, however, says “halt, you can still develop
infrastructure, but you must be disciplined by the ‘Father Knows Best’ wisdom of the markets.” This is
highly problematic. First, it suggests there is something intrinsic to markets that always makes for better
decisions than public sector managers. In effect, we are told that we must pay a fee (de facto tax) to
private banks in the form of the higher prices they charge for credit over what states can as the price for
the private sector’s ‘superior’ capacities of decision making on investments.
Second, it ignores the evidence from recent decades revealing that private credit has become remarkably
inefficient. Private finance is supposed to be a service enabling greater growth in the real economy of
production and services. This argument made more sense in the Bretton Woods era following WW II until
the 1970s when economic growth was strong and financial institutions comprised some 15% of corporate
profits in the US. Yet, since the liberalization of finance from the 1970s, economic growth has continued to
diminish in the West, meanwhile in the most liberalized ‘finance gone wild’ economies, like the US, finance now
comprises some 40% of corporate profits. The bottom line is that deregulated capital markets in recent
decades have taken an ever-increasing share of our economy, while producing less economic growth. Finance
no longer enables economic growth by providing a needed service, but instead impose a massive rent seeking
tax on the economy.
Lastly, it ignores the different metrics by which markets and states measure investment success. Private
markets prefer a quick kill, with profits coming fast and furious. By contrast, states genuinely interested in
development need to make infrastructural investments where the benefits accrue to the whole economy.
Thus, the benefit, or profit, is harder to capture by a specific interest. Moreover, the time horizon on state
investments may be unacceptably long for private investors.
In short, European Central Bank assumptions and European Union rules on monetary have locked Spain, Italy,
Greece, Portugal, Ireland, the Baltics and former Soviet bloc countries into a kind of Sartrian “No Exit.”
Only a change in the rules that permit historically successful strategies for development will instead make
this current crisis merely a painful purgatory stage rather an eternal economic damnation as a cost for being
part of a European Union.
JEFFREY SOMMERS is an associate professor of political economy in Africology at the University of
Wisconsin-Milwaukee and visiting faculty at the Stockholm School of Economics in Riga. He publishes in
outlets such as CounterPunch and the Guardian, and routinely appears as an expert guest in global news
programs, most recently on Peter Lavelle’s CrossTalk. He can be reached at: Jeffrey.
sommers@fulbrightmail.org
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Russ Feingold Asks Democrats To Let Bush Tax Cuts Expire
The Huffington Post | By Ariel Edwards-Levy Posted: 04/11/2012 12:07 pm Updated: 04/11/2012 12:56
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Bush Tax Cuts, Credo Action, Russ Feingold, Buffett Rule, Progressives United, Politics News
Former Sen. Russ Feingold (D-Wis.) called on his colleagues Wednesday to follow up on their upcoming vote
on the Buffett Rule and allow the Bush tax cuts to expire.
"A stunning new report came out just this week: Citizens for Tax Justice found that 26 giant corporations --
with total revenue well over $200,000,000,000 -- haven't paid a cent in taxes over the last four years,"
Feingold wrote in an email to Progressives United, the anti-Citizens United organization he founded last year.
"In order to have a fair country, a country where the voices of average people matter as much in
government as the voices of the super wealthy, we need to close the loopholes that let corporations get
away without paying taxes and let the disastrous Bush tax cuts persist."
Feingold's campaign is in partnership with progressive advocacy group CREDO Action, which is collecting
signatures for an online petition.
"In the next few days, you'll be hearing a lot of politicians in Washington DC talk about the Buffett Rule,
which if passed would ensure that millionaires pay at least 30 percent in taxes on their income," the petition
reads in part. "But it's important that we be clear that the Buffett Rule is not a substitute for rolling back
the Bush tax cuts, which along with disastrous wars of choice, are responsible for the last decade's spike in
our national debt."
Former President George W. Bush made a rare public appearance Tuesday to argue against raising taxes on
the wealthy, saying the move would hurt job creation. The tax cuts, passed during his first term, are set to
expire at the end of the year.
Major Bank CEO Slams Wall Street For Paying Big Bonuses And Fighting New Regulations
By Pat Garofalo on Apr 9, 2012 at 9:35 am
M&T Bank CEO Robert Wilmers
Ever since the Dodd-Frank financial reform law was signed by President Obama in 2010, the financial
industry has been trying to delay, change, and otherwise obstruct it, claiming that its costs are too high or
that it puts U.S. banks at a competitive disadvantage. One of the highest profile targets has been the
Volcker rule, which is meant to prevent banks from trading for their own benefit with federally insured
dollars.
For instance, JP Morgan Chase CEO Jamie Dimon, who runs the biggest bank in the U.S., has taken issue with
the rule (while admitting he hasn’t read it all). But not all big banks are opposed to the regulation. Business
Insider’s Joe Weisenthal flagged a missive from M&T Bank CEO Robert Wilmers, in which he criticized big
banks for “a pattern of investing in areas where they possessed little knowledge.” He went on to criticize
large bank bonuses and to chastise Wall Street for lobbying against the Volcker rule:
Public cynicism about the major banks has been further reinforced by the salaries of their top executives, in
large part fueled not by lending but by trading. At a time when the American economy is stuck in the
doldrums and so many are unemployed or under-employed, the average compensation for the chief
executives of four of the six largest banks in 2010 was $17.3 million – more than 262 times that of the
average American worker. One bank with 33,000 employees earned a 3.7% return on common equity in 2011,
yet its employees received an average compensation of $367,000 – more than five times that of the average
U.S. worker. Thus, it is hardly surprising that the public would judge the banking industry harshly – and view
Wall Street’s executives and their intentions with skepticism.
Nor can one say with any confidence that we have seen a fundamental change in the big bank business
approach which helped lead us into crisis and scandal. The Wall Street banks continue to fight against
regulation that would limit their capacity to trade for their own accounts – while enjoying the backing of
deposit insurance – and thus seek to keep in place a system which puts taxpayers at high risk. In 2011, the
six largest banks spent $31.5 million on lobbying activities. All told, the six firms employed 234 registered
lobbyists.
Willmers, who oversees the 29th largest bank in the U.S. with $77 billion in assets, is surely no huge fan of
Dodd-Frank, and he heaps disproportionate blame for the financial crisis onto government backed mortgage
giants Fannie Mae and Freddie Mac. But his critique of Wall Street banks is spot-on, as is his assessment of
the financial industry’s tarnished image. According to a Stanford University study, the number of Americans
with hardly any confidence in the banking sector is at an all-time high.
March 9, 2011
Corporations Are Sociopaths
Filed under: Corporatism, Law, Reformism Can't Work — Russ @ 9:11 am
Sociopaths are people who are completely devoid of any sense of empathy or caring. Other people simply don’
t exist other than as things to be manipulated and consumed, with no more emotional consideration than when
you unwrap a candy bar, throw out the wrapper, and devour the calories. Everyone regards such individuals
with horror, except where it comes to business and politics, where suddenly the existence and tolerability,
even desirability, of sociopathy becomes controversial.
I’m not writing about this sociopathy of the elites themselves today, or about the bizarre collective
sociopathy of masses which often exempts, accepts, and celebrates it. Such issues, however, do go toward
the general critique of representative government in itself, and from there to elitism in itself. (I define the
term elitism as the tolerance of or desire for the existence of hierarchical elites, especially in politics and
the economy.)
What I want to briefly lay out here is the fact that corporations are inherently sociopathic. By their intrinsic
design and imperative they must aggressively and relentlessly seek to sociopathically manipulate and
consume. We’re all familiar with the corporation’s legal duty to maximize profit at the expense of all other
values. Henry Ford was successfully sued by his shareholders for trying to overcome the inherent
contradiction of capitalism by paying his workers a wage sufficient to sustain themselves as consumers.
While there’s some question of how far this duty extends in principle, in practice it’s always interpreted to
mean that corporate management, no matter what its subjective view of things, should always be doing every
legal thing it can, no matter how morally evil it may be. Where an evil would be illegal, the corporation’s duty
is to get the law changed. In practice the corporation should always be pushing the envelope where it comes
to bribery and extortion. And even every other law is supposed to be broken if management thinks they can
get away with it or make some patsy take the fall. So in the end the barrier of legality isn’t supposed to
exist either.
For the persons involved, where they aren’t actively evil themselves, we have what Arendt called the
banality of evil. She was talking about how “normal” people easily slid into the Nazi routine as officials,
bureaucrats, functionaries, or just people doing normal jobs. Today, as corporations consistently commit all
the same crimes of territorial aggression, robbery and mass murder (so far the murders are mostly in poor
countries like Nigeria and Nicaragua), it’s even easier for the individual to be banally evil in his actions, since
here it’s not an overtly hateful, belligerent political organization and regime, but merely a profit-seeking
business, and we’re all acculturated to assume such activity as the social norm. Those who “work for the
corporation” are further indoctrinated and acculturated to accept this as normal, even if a particular
corporate culture doesn’t go out of its way to do this. The corporation eventually comes to select for those
who are naturally sociopathic. It also must subvert the educational system itself, hijacking it toward the
corporatist agenda. This helps maximize both the prosperity of natural sociopaths in their student careers,
as well as the indoctrination of the rest. As sociopathy in the schooling, in the media, in the imagery and
discourse of society at large, and in the corporation itself becomes ever more refined, it is eventually
distilled to actual psychopathy.
No one has responsibility, as Ted Nace describes (chapter 14, p.203):
A corporation is a complex entity, not a unified mind. As Adolph
Berle and Gardiner Means pointed out in The Corporation and Private
Property, the essence of a corporation is the fragmentation of accountability
among various internal groups. Those who occupy the key leadership
position (the professional managers) aren’t necessary its owners;
those who are owners (the stockholders) are generally neither in charge
nor legally liable; and those who are supposed to be exercising strategic
direction on behalf of the owners (the board of directors) are rarely sufficiently
informed nor sufficiently empowered to actually fulfill their
theoretical function.
So we have this machine which not only doesn’t care what it does, but is programmed to systematically
destroy society. It has a legal mandate and in internal cultural imperative to do this.
The other broad aspect of corporate sociopathy is the way the corporate concept is designed to separate
rights and responsibilities. The policy of limited liability, civil and criminal, overtly and in principle seeks a
sociopathic imbalance of rights vs. responsibilities. Where the corporation itself gains fraudulent rights, this
is procyclical with the way legislatures and courts add to its powers and shed its responsibilities. A goal of
corporatism is to legalize crimes where committed by individuals acting in the capacity of corporate cadres.
Nace quotes political commenter Arthur Miller (p. 96):
As with constitutional law, so with the private law of contracts, of property, and of torts. Judge-made rules
in those fundamental categories had the result of transferring the social costs of private enterprise from
the enterprise itself to the workingman or to society at large. Tort law provides apt illustration. Under its
doctrines, a person who willfully or negligently harms another’s person or property must answer by paying
money damages. The analogue of contract, which is a consensual obligation, a tort is a nonconsensual legal
obligation. Who, then, bore the costs, in accidents and in deaths, of the new industrialism? Not the
businessman. Not the corporation. The worker himself. (Often those workers were children.) And who bore
the costs of pollution and other social costs? Society at large. How did this come about? In tort law judges
created doctrines of “contributory negligence,” “assumption of risk,” and the “fellow servant rule,” all of
which served to insulate the enterprise from liability. By “freely” taking a job, said the judges, the workers
“assumed the risk” of any accident that might occur.
Where the crimes can’t be literally legalized, the license to commit them and the legal responsibility for
them are separated. The latter is the more common example. We have Wall Street’s intentional destruction
of the economy as the result of its monumental con jobs (in particular fraudulent inducement of mortgage
borrowing), the pollution crimes of BP and many others, Monsanto’s torts wherever pollen from its GMO
Frankenplants contaminates natural crops, just to name a few major examples off the top of my head. These
are all legal crimes for which no individual is ever held accountable, and usually the corporation itself is also
let off free as a bird. One example of where the crimes are actually legalized is the CFMA, which declares
simple gambling by the banks, indistinguishable from a bunch of drunks at a bar betting on a football game,
to comprise legal contracts. Of course, when a solitary bum bets his children’s lunch money at the track and
loses, it’s terrible for that family. When the government lets the banksters do the same thing with trillions
and then pays off these bets with taxpayer money, millions of children must go hungry.
The wealth corporations amass through such banal evil is then used to subvert the rule of law, from the
legislative process to the courtroom. Again, both by its structural mandate and its internal culture the
corporation is driven to try to get antisocial laws passed, socially beneficial laws and rules overturned or
abolished, and to render any worthwhile laws which do exist neglected, disregarded, or twisted.
Greed fundamentalists among the elites first developed the systematic plan to use corporations as a vehicle
of maximal rent-seeking in the mid-19th century, and worked assiduously through the state legislatures and
federal courts to accomplish what was in sum a crypto-feudal coup against democracy and theoretical
capitalism. They received ideological assistance from the rise of Social Darwinism, which provided both a
propaganda basis for their greed and, in the form of substantive due process, a legal doctrine the SCOTUS
could use to justify its corporatist activism. Together Social Darwinism and substantive due process, in the
form of the Lochner doctrine, enshrined corporate sociopathy as literally “the law of the land”. We see again
the same pattern: The inherent sociopathic process selects for itself, distills itself, becomes conscious of
itself. Inertia becomes will; sociopathy becomes psychopathic evil.
Today we’ve reached the terminal stage of this devolution. The neofeudal “elites” wish to undertake the final
enclosure of all real assets – land, natural resources, physical space itself, buildings, infrastructure, and all
the products of the mind. At the same time they want to cut all ties with human beings other than the ties of
exploitation. They want to eradicate all semblance of government, law, and civil society, except insofar as
they are either weapons of domination or of pacification. They want to take totalitarian control of the Earth
itself, enjoy a total licentious prerogative to do anything they wish (and have this license enshrined as their
“rights”), while being absolved of literally ALL social or legal responsibility. These sociopaths, these willful
outlaws, want to actually secede from civilization. They want to steal all the benefit of human interaction but
incur zero reciprocal responsibility or obligation. They want to burn off all relationships between human and
human, distilling them to the primal confrontation of master and slave in the middle of a wasteland. Since
neither slaver nor slave can be human, these fundamentalists wish to completely eradicate civilization and
humanity itself. They are in fact post-civilizational barbarians. As David Korten put it (quoted in Nace):
As corporations gain in autonomous institutional power and become more detached from people and place,
the human interest and the corporate interest increasingly diverge. It is almost as though we were being
invaded by alien beings intent on colonizing our planet, reducing us to serfs, and then excluding as many of us
as possible.
The corporation wants to systematically define human beings out of juridical existence, except insofar as
they’re defined as debtors or criminals.
The corporation has been the primary mode of organization for this anti-civilizational devolution to the
terminal post-civilization barbarism. It has concentrated and distilled all the worst sociopathic and anti-
social aspects of the hominid experience. It has distilled them, systematized them, rendered them
conscious, formulated them into an ideology and strategy. It is now the main practical vehicle of this plan for
the final destruction of civilization. Through the doctrines, administrative structures, and ruling techniques
of globalization, the corporation intends to completely dissolve the nation-state except for the rump
functions I mentioned above. In the next post I’ll describe more fully this program, and how the corporation
is inherently anti-sovereign.
For now I’ll conclude with the warning that the only way we can avert this hideous outcome planned for us is
to smash the corporate power.
Donald Trump: Paul Ryan Budget Is 'Catastrophic'
The Huffington Post | By Sam Stein Posted: 04/10/2012 12:50 pm Updated: 04/10/2012 2:59
Donald Trump is not a politician. Nor is he someone who offers measured political analysis. As a surrogate
for the Mitt Romney campaign, he's been more of a sideshow than an actual advocate, primarily because the
subtleties of campaigning are lost on him.
On Tuesday morning, that bluntness was on full display as Trump spent several minutes plainly questioning
the political chops of Rep. Paul Ryan (R-Wis.) and declaring, with characteristic conviction, that the Ryan
budget would be an abject disaster for Romney.
"It is catastrophic what he's done," Trump told CNBC. "If they lose, it will be the single biggest reason why
the Republicans lost: the Ryan plan."
Trump said he took issue not with the content of the Ryan budget -- though he declined to weigh in on that --
but rather, the timing of its introduction.
"I think the worst thing [Romney] can do is strongly embrace that budget if he wants to get elected," he
said. "This will be the single worst move in the Republican Party for many years. This is going to be
catastrophic."
"Perhaps Paul Ryan is a bright guy but he is not a good chess player," he said later, "This gentleman is not a
good chess player, that's all I can tell you."
As someone who still thinks President Barack Obama may have forged his birth certificate, Trump's own
standing as a political chess player is obviously in question. It would be a remarkably risky move for Romney
to deploy him at all on the trail, though the idea of Trump fundraising on the former Massachusetts
governor's behalf isn't so far-fetched. (Already, Trump and his wife are slated to host a birthday
fundraiser for Romney's wife, Ann, later this month.)
That said, it's not all that simple to dismiss Trump's fears about the political fallout from the Ryan plan. And
it will be interesting to see whether Romney clarifies his position on the budget proposal that he recently
called "marvelous."
Unplugging Americans From The Matrix
by PAUL CRAIG ROBERTS
Americans, the British, and Western Europeans are accustomed to thinking of themselves as the
representatives of freedom, democracy, and morality in the world. The West passes judgment on the rest
of the world as if the West is God and the rest of the world are barbarians in need of chastisement,
invasion, and occupation. As readers know, from time to time I raise questions about the validity of the West’
s extreme hubris.
China is often a country about which Washington’s moralists get on their high horse.
However, China’s “authoritarian” government is actually more responsive to its people than America’s
“elected democratic” government. Moreover, however incomplete on paper the civil liberties of China’s
people, the Chinese government has not declared that it can violate with impunity whatever rights Chinese
citizens have. And it is not China that is running torture prisons all over the globe.
For some time I have had in mind a realistic comparison of the two countries instead of the standard
propagandistic comparison, but Ron Unz has beat me to the task twice). Unz provides a chance for an
education. Don’t miss it.
Unz has done an excellent job. Moreover, he cleverly understates the case for China and overstates the
case for America so as not to unduly arouse the flag-wavers. Nevertheless, the conclusion is clear: The
Chinese are less threatened by their “extractive elites” than Americans are by their counterparts.
Moreover, it is America’s, not China’s, extractive elites who are bombing, occupying, and droning other
countries. As the bumper sticker says, “Be nice to America or we will bring democracy to your country.”
As for economic management, there is no comparison. Unz reports that during the past three decades China
has achieved the most rapid rate of economic development in human history. Moreover, most of the new
income has flowed into the pockets of Chinese workers, not to the one percent. While American real median
incomes have been stagnant for decades, incomes for Chinese workers have doubled every decade for
three decades. A recent World Bank report attributes more than 100 percent of the drop in global poverty
rates to China’s rise.
In the last decade China’s industrial output quadrupled. China now produces more automobiles than America
and Japan combined and accounted for 85 percent of the increase in the world’s production of cars in the
past decade.
In 1978 the American economy was 15 times larger than China’s. In the next few years China’s GDP is
expected to exceed that of the US.
This is heady stuff providing astonishing details of how poorly Americans are served by their elites.
America has failed, because political elites represent only the powerful special interests that write the
country’s laws in exchange for funding the political campaigns of “lawmakers.” To divert attention from their
failures, American elites point fingers at external scapegoats. China, for example, is accused of
manipulating its currency. As Unz says, the scapegoating is political theater designed for the ignorant and
gullible.
America’s economists, or most of them, have so prostituted themselves that propaganda has become
wisdom. Most Americans believe that if China would simply let the value of its currency rise more rapidly
relative to the dollar, America’s economic woes would be at an end. It is beyond belief that any economist
could think that Americans with stagnant and declining incomes would be made better off by a sharp rise in
the prices of goods manufactured in China on which Americans are dependent, or that the US dollar’s role
as reserve currency, the main source of American power, could survive such a manifestation of Chinese
economic superiority.
Americans associate lawlessness with unaccountable governments and view China’s government as
unaccountable. However, Unz points out that it is the Bush/Obama Regime that has declared itself to be
unaccountable to both US and international law.
The demise of the War Powers Act and the Geneva Conventions, and the asserted power of the executive to
imprison without trial or charges or to assassinate any American whom the executive thinks might be a
“national-security threat” are indicative of a total police state masquerading as an accountable democracy.
In America six-year old little girls who misbehave in school are handcuffed, jailed, and charged with
felonies. Not even Hitler and Stalin went this far.
Americans have lost control of the government, and governments that are not controlled by the people are
not democracies. In America today, Social Security, Medicare, food stamps, and the entire social safety net
are threatened by the vociferous desire for war profits by armament plutocrats and by financial institutions
determined that ordinary citizens bear the cost of the banksters incompetence and fraud.
Unz’s comparison of how the Chinese media and government handled the melamine or infant formula scandal
and how the American media and government handled Merck’s Vioxx scandal is especially damning. It was
China’s controlled media and unaccountable government that punished the infant formula wrongdoers, while
America’s free press and accountable government allowed Merck to walk.
Unz’s conclusion is that it is in America, not China, where life is regarded as cheap.
Ron Unz is an American hero, and a very courageous one.
It is an even more courageous act when no one wants to hear the truth. As Frantz Fanon said, “Sometimes
people hold a core belief that is very strong. When they are presented with evidence that works against
that belief, the new evidence cannot be accepted. It would create a feeling that is extremely
uncomfortable, called cognitive dissonance. And because it is so important to protect the core belief, they
will rationalize, ignore and even deny anything that doesn’t fit in with the core belief.”
Or as it is explained to Neo in the film, “The Matrix is a system, Neo. That system is our enemy. But when you’
re inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of
the people we are trying to save. But until we do, these people are still a part of that system, and that
makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And
many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it.”
Most of the people I know personally are not willing to be unplugged. I assume my readers are, so seize the
opportunity to be further unplugged and read Ron Unz’s comparison of America and China.
Then do what you can to unplug others.
PAUL CRAIG ROBERTS was an editor of the Wall Street Journal and an Assistant Secretary of the U.S.
Treasury. His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK
Press. He can be reached through his website
Faith-Based Economics at the ECB
Europe’s Economic Maginot Line
by DEAN BAKER
In the build-up to World War II, the French military created the Maginot Line. This barrier, which utilized
state of the art military defenses, was intended to defend France from a ferocious assault by Hitler’s
armies. When the attack ultimately came, the Germans made quick work of the Maginot Line by going around
it through Belgium.
The European Central Bank’s (ECB) obsession with a 2 percent inflation target can be seen as similar to the
construction of the Maginot Line. The ECB sees achieving this inflation target as the sum total of the central
bank’s responsibilities for maintaining stable growth in Europe, just as the French generals viewed the
construction of the Maginot line as defending France from a German invasion.
The main difference is that after that German conquest, the French generals recognized their mistake. By
contrast, even after their 2.0 percent inflation obsession led to economic disaster, the people running the
ECB are still in charge and still pursuing the same policy.
At this point it is difficult to imagine what set of events in the world could persuade the ECB to pursue a
different course. As the crisis demonstrates, an improperly regulated financial and economic system can
produce massive asset bubbles. The collapse of these bubbles can lead to prolonged periods of high
unemployment and below potential output of the sort that the eurozone, the United States and the United
Kingdom are now experiencing.
This means that responsible central banks that are concerned with stable growth cannot just focus on a 2.0
percent inflation target. They must be prepared to take the steps necessary to counter the growth of asset
bubbles before they get large enough to endanger the economy. This was evident to many before the crisis;
it should be evident to everyone now.
Central banks also have the responsibility to shore up the economy and help to move it back toward full
employment. This policy can include the sort of quantitative easing designed to lower long-term interest
rates that has been pursued by the Federal Reserve Board and the Bank of England and less aggressively
by the ECB.
It should also include targeting higher inflation rates in the range of 3-4 percent, as has been advocated by
Paul Krugman, Ben Bernanke in his Princeton professor days, and Oliver Blanchard, the chief economist at the
IMF. Ken Rogoff, a former chief economist at the IMF, has suggested inflation target as high as 6 percent.
There are two reasons for targeting a higher rate of inflation. First, it will reduce real interest rates. If
businesses expect that prices will be 15-18 percent higher three years from now it will give them more
incentive to invest today, since they will be able to sell what they produce at these higher prices. Higher
inflation will also reduce debt burdens. If prices and wages rise on average by 15 percent over the next
three years, many underwater mortgages will be back above water as the house price can also be expected
to rise by 15 percent. Similarly, if wages rise by 15 percent then a fixed monthly mortgage payment will
pose a much smaller burden.
These are reasons that the ECB and other central banks should be pushing for a higher rate of inflation. But
instead of looking in this direction, the ECB is doubling down on its 2.0 percent inflation commitment. The
fact that unemployment is high and rising across the eurozone seems to have no impact whatsoever on this
policy.
In fact, the ECB is actually making things worse with the austerity policies that it is imposing on the heavily
indebted countries across the eurozone. Reductions in government spending and tax increases in the middle
of a recession have the predictable effect of slowing growth further. The ECB’s persistent refusal to act
as a lender of last resort also exacerbates the crisis by raising interest rates, and therefore debt
burdens, for highly indebted countries.
It has been roughly two years since the ECB has adopted the austerity route. The results have been almost
uniformly negative. Unemployment rates have consistently come in higher and growth lower than had been
projected. Needless to say, this also has meant that country after country has missed the deficit targets
that were supposedly the main point of the austerity plans.
If we had serious economists setting policy at the ECB, this pattern would be a basis for reconsidering the
policy. However instead of a rethink, we get a doubling down with the ECB’s leadership continually
reasserting their commitment to stay the course. (It even produced a short propaganda piece about the
“inflation monster” for the doubters.) It seems that there is no set of events in the world that can lead the
generals at the ECB to question the wisdom of the Maginot Line.
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of
Plunder and Blunder: The Rise and Fall of the Bubble Economy and False Profits: Recoverying From the
Bubble Economy.
Finance Expert: Oil Price Increase Is Being Driven By ‘Gamblers Wearing Wall Street Suits’
By Pat Garofalo on Apr 5, 2012 at 11:50 am
Republicans have been trying to pin the blame for the recent rise in oil prices on President Obama, relying on
the false claim that if Obama just allowed more drilling for oil on U.S. lands, prices would magically decline.
Speaker of the House John Boehner (R-OH) has “instructed fellow Republicans to embrace the gas-pump
anger” as they push for more drilling.
Many experts, though, have pointed out that its not for a lack of drilling that oil prices are increasing, but
rampant speculation in oil markets. Michael Greenberger, a former regulator at the Commodity Futures
Trading Commission (CFTC) who oversaw the futures markets, told McClatchy that the increase is due to
“excessive speculation” on the part of Wall Street:
“It is similar to the gambling Wall Street did on whether or not people would pay their subprime (below-
market rate) mortgages in the mortgage meltdown,” said Michael Greenberger, a law professor at the
University of Maryland and a former federal regulator of financial markets. “Now they are betting on the
upward direction of the price of oil” … “It is excessive speculation, which is a fancy word for saying that
gamblers wearing Wall Street suits have taken these markets over,” he said.
Back in February, oil prices cracked $100 per barrel despite the lowest demand since 1997.
The Obama administration has said that it will crack down on excessive oil speculation, but it’s oil speculation
task force has hardly done anything at all. The CFTC, meanwhile, has been slow to implement new rules
designed to rein in speculators that were a part of the Dodd-Frank financial reform law. Democrats have
been pushing the agency to begin that enforcement.
Tags:
• Oil
• Speculators
George Soros calls on Germany to save euro
By Agence France-Presse
Saturday, April 14, 2012 19:22 EDT
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Topics: george soros ♦ germany
US billionaire investor George Soros has called on Germany to contribute more to help save the euro,
according to an interview published in the weekly newspaper Welt am Sonntag.
“The Germans should decide if they want the euro or not. If so, they have to carry out financial transfers. If
not, they should leave theeurozone,” said Soros, also a major philanthropist and author.
If Germany chooses to ditch the eurozone, its exports would suffer as the “new German currency would
find itself at a high value.”
Soros blamed the German government and Bundesbank for putting the euro in peril over their insistence on
austerity and price stability.
“Saving and monitoring price stability worked in Germany and is leading to, in current conditions, bad luck for
Europe,” he said.
The eurozone has come under severe pressure amid alarm over the state of public finances of countries
including Greece, Ireland and Portugal.
German author Grass says Israel endangers world peace
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Reuters, 05/04 00:21 CET
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• 00:21 CET (Reuters) German author Grass says Israel endangers world peace
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By Gareth Jones
BERLIN (Reuters) – Nobel Prize-winning German writer Guenter Grass has attacked Israel as a threat to
world peace and said it must not be allowed to launch military strikes against Iran, in a poem that one
German newspaper branded “anti-Semitic”.
Grass, 84, a seasoned campaigner for left-wing causes and a critic of Western military interventions such as
Iraq, also condemned German arms sales to Israel in his poem “What must be said”, published in several
newspapers on Wednesday.
His words were criticised in Germany, where any strong condemnation of Israel is taboo because of the
Nazi-perpetrated Holocaust. Grass’s own moral authority has never fully recovered from his 2006 admission
that he once served in Hitler’s Waffen SS.
“Why do I say only now … that the nuclear power Israel endangers an already fragile world peace? Because
that must be said which may already be too late to say tomorrow,” Grass wrote in the poem, published in
German in Sueddeutsche Zeitung.
“Also because we – as Germans burdened enough – may become a subcontractor to a crime that is
foreseeable,” he wrote, adding that Germany’s Nazi past and the Holocaust were no excuse for remaining
silent now about Israel’s nuclear capability.
“I will not remain silent because I am weary of the West’s hypocrisy,” wrote Grass, who won the Nobel Prize
for Literature in 1999 for novels such as “The Tin Drum” chronicling the horrors of 20th century German
history.
Israel is widely assumed to have the Middle East’s only nuclear weapons, which it neither confirms nor
denies. These could be carried by Dolphin submarines it has bought from Germany.
The Jewish state has threatened to take military action, with or without U.S. support, to halt what it sees as
a nuclear threat from Iran. Tehran says it is developing nuclear technology for purely peaceful purposes.
Germany said recently it would sell Israel a sixth Dolphin submarine and shoulder part of the cost, although
it also cautioned its ally that any military escalation with Iran could bring incalculable risks.
“ETERNAL ANTI-SEMITE”
The poem, also published in Italy’s La Repubblica, called for an international ‘agency’ to take permanent
control of both Israel’s nuclear weapons and Iran’s atomic plant.
The Welt newspaper called Grass “the eternal anti-Semite” in a front page article commenting on the poem,
which was widely circulated in advance of its publication.
“Grass is the prototype of the educated anti-Semite who means well with the Jews. He is hounded by guilt
and feelings of shame and at the same time is driven by the wish to weigh up history,” the newspaper wrote
on Wednesday.
Grass is for many the voice of a German generation that came of age during Adolf Hitler’s war and bore the
burden of their parents’ guilt.
But Grass, who for decades urged Germans come to terms with their Nazi past, lost much of his moral
authority after his belated admission in 2006 that he had once served in Hitler’s Waffen SS.
One of the most powerful organisations in Nazi Germany, the SS was first an elite force of volunteers that
played a key role in the Holocaust, operating the death camps in which millions died. But by the war’s end,
most were drafted and many under 18.
Grass said he was called up to join the SS as a teenager and insisted that he never fired a shot. But some
critics inside and outside Germany said this explanation had come too late.
Grass made the confession shortly before publishing his autobiography “Peeling Onions” which details his war
service.
Globalism's Perverse Rewards
World’s Apex Bully Leads World Into Lawlessness
by PAUL CRAIG ROBERTS
The US government pretends to live under the rule of law, to respect human rights, and to provide freedom
and democracy to citizens. Washington’s pretense and the stark reality are diametrically opposed.
US government officials routinely criticize other governments for being undemocratic and for violating
human rights. Yet, no other country except Israel sends bombs, missiles, and drones into sovereign
countries to murder civilian populations. The torture prisons of Abu Gahraib, Guantanamo, and CIA secret
rendition sites are the contributions of the Bush/Obama regimes to human rights.
Washington violates the human rights of its own citizens. Washington has suspended the civil liberties
guaranteed in the US Constitution and declared its intention to detain US citizens indefinitely without due
process of law. President Obama has announced that he, at his discretion, can murder US citizens whom he
regards as a threat to the US.
Congress did not respond to these extraordinary announcements with impeachment proceedings. There was
no uproar from the federal courts, law schools, or bar associations. Glenn Greenwald reports that the
Department of Homeland Security harasses journalists who refuse to be presstitutes, and we have seen
videos of the brutal police oppression of peaceful OWS protestors. Chris Floyd has described on
CounterPunch the torture-perverts who rule the US.
Now Washington is forcing as much of the world as it can to overthrow international treaties and
international law. Washington has issued a ukase that its word alone is international law. Any country, except
those who receive Washington’s dispensation, that engages in trade with Iran or purchases Iran’s oil will be
sanctioned by the US. These countries will be cut off from US markets, and their banking systems will not
be able to use banks that process international payments. In other words, Washington’s “sanctions against
Iran” apply not to Iran but to countries that defy Washington and meet their energy needs with Iranian oil.
According to the Christian Science Monitor, so far Washington has granted special privileges to Japan and
10 European Union countries to continue purchasing Iranian oil. Requiring countries to shut down their
economies in order to comply with Washington’s vendetta against Iran, a vendetta that has been ongoing
ever since the Iranians overthrew the Washington-installed puppet, the Shah of Iran, more than three
decades ago, was more than Washington could get away with. Washington has permitted Japan to keep
importing between 78-85 per cent of its normal oil imports from Iran.
Washington’s dispensations, however, are arbitrary. Dispensations have not been granted to China, India,
Turkey, and South Korea. India and China are the largest importers of Iranian oil, and Turkey and South
Korea are among the top ten importers. Before looking at possible unintended consequences of Washington’s
vendetta against Iran, what is Washington’s case against Iran?
Frankly, Washington has no case. It is the hoax of “weapons of mass destruction” all over again. Iran, unlike
Israel, signed the non-proliferation treaty. All countries that sign the treaty have the right to nuclear
energy. Washington claims that Iran is violating the treaty by developing a nuclear weapon. There is no
evidence whatsoever for Washington’s assertion. Washington’s own 16 intelligence agencies are unanimous
that Iran has had no nuclear weapons program since 2003. Moreover, the International Atomic Energy
Agency’s weapons inspectors are in Iran and have reported consistently that there is no diversion of nuclear
material from the energy program to a weapons program.
On the rare occasion when Washington is reminded of the facts, Washington makes a different case.
Washington asserts that Iran’s rights under the non-proliferation treaty notwithstanding, Iran cannot have a
nuclear energy program, because Iran would then have learned enough to be able at some future time to
make a bomb. The world’s apex bully has unilaterally decided that the possibility that Iran might one day
decide to make a nuke is too great a risk to take. It is better, Washington says, to drive up the oil price,
disrupt the world economy, violate international law, and risk a major war than to have to worry that a future
Iranian government will make a nuclear weapon. This is the Jeremy Bentham tyrannical approach to law that
was repudiated by the Anglo-American legal system.
It is difficult to characterize Washington’s position as one of good judgment. Moreover, Washington has
never explained the huge risk Washington sees in the possibility of an Iranian nuke. Why is this risk so much
greater than the risk associated with Soviet nukes or with the nukes of the US, Russia, China, Israel,
Pakistan, India, and North Korea today? Iran is a relatively small country. It does not have Washington’s
world ambitions. Unlike Washington, Iran is not at war with a half dozen countries. Why is Washington
destroying America’s reputation as a country that respects law and risking a major war and economic
dislocation over some possible future development, the probability of which is unknown?
There is no good answer to this question. Lacking evidence for a case against Iran, Washington and Israel
have substituted demonization. The lie has been established as truth that the current president of Iran
intends to wipe Israel off the face of the earth.
This lie has succeeded as propaganda even though numerous language experts have proven that the intention
attributed to the Iranian president by American-Israeli propaganda is a gross mistranslation of what the
president of Iran said. Once again, for Washington and its presstitutes, facts do not count. The agenda is all
that counts, and any lie will be used to advance the agenda.
Washington’s sanctions could end up biting Washington harder than they bite Iran. What will Washington do
if India, China, Turkey and South Korea do not succumb to Washington’s threats?
According to recent news reports, India and China are not inclined to inconvenience themselves and to harm
their economic development in order to support Washington’s vendetta against Iran. Having watched China’s
rapid rise and having observed North Korea’s immunity to American attack, South Korea might be wondering
how much longer it intends to remain Washington’s puppet state. Turkey, where the civilian and somewhat
Islamist government has managed to become independent of the US- controlled Turkish military, appears to
be slowly coming to the realization that Washington and NATO have Turkey in a “service role” in which
Turkey is Washington’s agent against its own kind.
The Turkish government appears to be reassessing the benefits of being Washington’s pawn.
What Turkey and South Korea face is basically a decision whether they will be independent countries or be
subsumed within Washington’s empire. The success of the American-Israeli assault on Iran’s independence
depends on India and China.
If India and China give the bird to Washington, what can Washington do? Absolutely nothing. What if
Washington, drowning in its gigantic hubris, announced sanctions against India and China?
Wal-Mart’s shelves would be empty, and America’s largest retailer would be hammering on the White House
door.
Apple Computer and innumerable powerful US corporations, which have offshored their production for the
American market to China, would see their profits evaporate. Together with their Wall Street allies, these
powerful corporations would assault America with more force than the Red Army. The Chinese trade
surplus would cease to flow into US Treasury debt. The offshored-to-India back office operations of
banks, credit card companies, and customer service departments of utilities throughout the US would cease
to function.
In America, chaos would reign. Such are the rewards to the Empire of globalism.
Obama and the neoconservative and Israeli warmongers who urge him on to more wars do not understand
that the US is no longer an independent country. America is owned by offshoring corporations and the
foreign countries in which the corporations have located their production for US markets. Sanctions on China
and India (and South Korea) mean sanctions on US corporations. Sanctions on Turkey mean sanctions on a
NATO ally.
Do China, India, South Korea and Turkey realize that they hold the winning cards? Do they understand that
they can give the bird to the American Empire and bring it down in collapse, or are they brainwashed like
Europe and the rest of the world that the powerful Americans cannot be resisted?
Will China and India exercise their power over the US, or will the two countries fudge the issue and adopt a
pose that saves face for Washington while they continue to purchase Iranian oil?
The answer to this question is: how much will Washington pay China and India in secret concessions, such as
eviction of the US from the South China Sea, for their pretense that China and India acknowledge
Washington’s dictatorial powers over the rest of the world?
Without concession to China and India, Washington is likely to be ignored while it watches its power
evaporate. A country that cannot produce industrial and manufactured goods, but can only print debt
instruments and money is not a powerful country. It is a washed-up two-bit punk that can continue to strut
around until the proverbial boy says: “the Emperor has no clothes”.
PAUL CRAIG ROBERTS was an editor of the Wall Street Journal and an Assistant Secretary of the U.S.
Treasury. His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK
Press. He can be reached through his website
Good Luck, Wisconsin
Why Scott Walker is a Classic Authoritarian
by JOHN DEAN
In my last column, I asked if Wisconsin Governor Scott Walker might be a conservative without conscience.
Stated a bit differently, my question is whether the Governor is what social science describes as a “double
high authoritarian,” an outlook that has proven itself not to be particularly well-suited for governing in a
democratic fashion. I raised this question because Walker is facing a recall vote, in which voters will decide
whether to remove him from office, on June 5.
Below, I have set forth in summary form what I discovered about Scott Walker after using Lexis-Nexis,
ProQuest, Google and similar search tools and putting my findings in the context of the relevant social-
science studies. Moreover, many people responded to my Twitter solicitation of information about Walker.
Surprisingly, to date, no one has written a truly in-depth biographical profile of Walker, so I suspect that
Wisconsin voters really do not know much about their governor.
Typologies have their problems. But based on what I found, there is little doubt in my mind that Scott
Walker is a classic authoritarian.
Walker’s Social-Dominance Disposition
In my prior column, drawing on the work of Bob Altemeyer and others, I listed traits that are consistently
revealed by social dominators, or authoritarian leaders. To earn this label, a person must show four key
traits: (1) they seek to dominate others, (2) they oppose equality, (3) they are desirous of personal power,
and (4) they are amoral. News accounts of Scott Walker reveal that he possesses all four of these defining
traits, not to mention others in the longer list I set forth in my prior column. Here, however, I will merely
note the evidence for Walker’s having a defining social-dominating disposition.
(1) Domination. Authoritarian leaders seek to control others; in short, they are social dominators. This is the
story of Scott Walker’s life. By age 7, Walker had formed a “Jesus USA” club, which was a mix of his
father’s Baptist ministry and his attraction to patriotism. By age 8, he had undertaken a door-to-door
fundraising campaign to take charge of purchasing a flag for the village hall of his small Iowa town. As a
teen, Walker sought leadership posts, which provide some control, in Boys State and Boys Nation, and
became an Eagle Scout. He attended Marquette University (but has no college degree from there or any
other school). At Marquette, he was elected to the student senate, and twice sought but failed to get
elected president of the student body. He ran for the Wisconsin State Assembly the same year that he
lost his bid to be student president at Marquette, losing the Assembly race as well.
Since then, Walker has never stopped running. In 1993, he was elected to the State Assembly, where he
remained until 2002. In 2002, he sought the post of Milwaukee County Executive, and he held that post until
he was elected Governor in 2010. This is the behavior, writ large, of a dominator.
(2) Opposition To Equality. The Oxford Handbook of Political Psychology(which is searchable) further
defines social dominators as “hard, tough, ruthless, and unfeeling toward others, as opposed to
compassionate, generous, caring, and altruistic.”
There are many examples of Walker’s harsh and uncaring treatment of those whom he does not believe to
be entitled to equality. None is more glaring than his intolerance of gays and lesbians. For example, as
Governor, he has worked to end Wisconsin’s recognition of the rights of same-sex couples. He fired the law
firmdefending the state’s domestic-partnership law. And he appointed a woman to the state’s Labor and
Industry Review Commission who believes that gays can be harassed in the workplace.
One attorney familiar with Walker’s thinking states, “Governor Walker is ideologically opposed to equal
rights for gay and lesbian and transgendered people as is everyone in his administration as far as I can tell
and they will probably want to take steps to ensure that gay and lesbian and transgendered people do not
have equal rights. Everything that Governor Walker is doing is ideological; I don’t see that his administration
has any particular respect for the law per se.”
(3) Desirous Of Personal Power. Scott Walker has been seeking personal power his entire life, and has
never stopped reaching for it. Note how Walker has worked not merely to reach higher offices, but also to
enhance his power in these offices when he occupied them. For example, as governor, Walker sought to
remove civil service jobs, in order to make them political appointments, and thus subject to his control. Most
strikingly, he has sought to undercut the public-employee unions so that he would not have to deal with them,
thus increasing his power.
Often overlooked in Walker’s infamous union-busting “budget-repair bill“ is the power grab to fill three
dozen civil-service jobs with political appointees. For instance, the bill politicized and placed under Walker’s
control functions like open-records requests, the selection of general counsels for key
agencies, and the selection of communications spokespeople in key departments. He has increased his
personal power over some fifteen state agencies, and I suspect that he is (or was, depending on the recall
vote) just getting started.
Walker’s move to break public employee unions is his most notorious personal power play. To try to prevent
the union-busting law’s passage, Democratic state senators left Wisconsin, so that the GOP-controlled
legislature could not do Walker’s bidding and ram it through. But nevertheless, using dubious parliamentary
ploys, the bill was passed by the Senate, making it a done deal. Walker’s push to get this legislation, known
as Act 10, passed into law was done in about as authoritarian a fashion as you will ever see, outside of a
dictatorship. Part of Act 10 has already been struck down by a federal judge, and, as I noted earlier, the
wisdom of Walker’s power play will be tested in the June 5th recall election.
(4) Amorality. To be amoral, of course, is to be insensitive to moral matters. A politician like Scott Walker
will wrap himself in a cloak of morality, while, in fact, acting anything but morally.
Needless to say, Walker’s policies that attack poor women by cutting off funding to Planned Parenthood; his
slashing of education budgets while giving tax breaks to wealthy corporations; and his pursuit of similar
radical Republican actions all raise serious moral issues. But different people have different moral
standards and views of such activity, so I have excluded these matters from this discussion.
Similarly, I have set aside the fact that a growing number of Walker’s closest aides are being criminally
investigated and several have been charged with, or pled guilty to, crimes stemming from actions that
occurred during Walker’s tenure as Milwaukee County Executive. Walker has hired several high-powered
criminal defense lawyers and is building a legal defense fund, but this, too, is not relevant at this time, for
little is known of this secret “John Doe” grand jury proceeding. Walker has not been charged. The grand
jury proceeding simply remains a dark cloud following him, and no conclusions can or should be drawn from it.
Nonetheless, Walker’s amorality is conspicuous. It is found in his history of ethics violations and the record
of his lying. A lengthy article could (and should) be written about both, but suffice it here to note that his
ethics problems go back to his Marquette University days, when the college newspaper called him “unfit” for
student office.
Later, in the Assembly (in 2005), Walker would earn the distinction of receiving the second-highest fine for
an ethics violation in Wisconsin history. His lying is notorious. Politifacts Wisconsin (which I am told is more
reliable than most of these sites) finds Walker to be an accomplished falsifier. With respect to 44
statements that Politifacts examined, Walker was found to have been truthful only on six occasions. The
fact that 38 statements were pants-on-fire false, false, mostly false, or half-truths is stark evidence of
amorality.
I watched a video of a Walker speech at the Goldwater Institute. He’s slick: Fast-talking, confident, and
dishonest—I watched him distort facts with which I was familiar. He spoke in mostly half-truths, and
certainly not with the kind of candor that the late Senator Goldwater expected from political figures.
Clearly, Walker has all the traits of a social dominator and authoritarian leader. More strikingly, it is also
clear that he is, in fact, what social scientists term a “double high authoritarian.”
Scott Walker Also Has Traits of Authoritarian Followers
As I mentioned in Part One in this series of columns, to fit the definition of a double high authoritarian, a
person must score highly as both a dominator/leader, and ironically, also as an authoritarian follower
(because such people see themselves running the world, and believe that others should always follow
leaders, like themselves).
Again, I listed all the traits of those who follow authoritarian leaders in that prior column. The key and
defining characteristics of such people are (1) their willingness to submit to established authority, (2) their
aggressiveness on behalf of that authority, and (3) their conventionality. Scott Walker has long shown that
he possesses these traits, conspicuously so, and thus he would likely score high on such a test.
(1) Submissive To Authority. Authority figures are parents (throughout childhood); religious officials;
government officials such as police officers, judges, and government leaders; and employers—to list a few
of the more common such positions. Authoritarian followers easily submit to such figures –which is not to say
that they will submit to any authority, but rather only those they consider to be good and compatible with
their own worldviews. News accounts reveal that Scott Walker was a “good boy” growing up. Clearly, he
worked to please his parents, and his Boy Scout and Eagle Scout superiors, and he accepted the authority of
his church elders. Since becoming involved in politics, he has accepted the leaders of the Republican Party,
particularly those with the most right-wing of views, as he has worked his way up through the ranks. While
Scott Walker plays by the rules of the authorities he accepts, because he is a dominator, it is not surprising
that his resume shows that he has constantly sought to become an authority himself.
(2) Aggressiveness On Behalf Of Authority. The aggression in authoritarian followers is largely fueled by
fear, but it is also emboldened by the abundance of self-righteousness that such people possess.
Authoritarian aggressiveness is often revealed by efforts to control others, with a recurring example the
decision to be an overly strict parent. While little has been written about Walker’s relationship with his two
sons, from watching videos of the Walker family, it appears to me that these are very obedient boys who
dare not tangle with their authoritarian father.
Another classic example of authoritarian aggressiveness is the public official who is always calling for
greater punishment for perceived and real criminals. And indeed, the most striking and telling example of
Walker’s aggressiveness on behalf of radical right wing Republican philosophy are his views on crime and
punishment.
As a member of the Wisconsin Assembly, in 1996 Walker was the moving force behind the building of a 500-
bed “Supermax” prison, which he claimed worked better than normal facilities; others had doubts. Also,
when state officials sought a 200-bed unit, Walker insisted on more than doubling the request.
Another instance of Walker’s punitive aggressiveness can be found in an examplefrom 1997, when Walker
pushed legislation that eliminated all parole, while increasing maximum criminal sentences by fifty percent.
Walker also pushed for draconian legislation that would send juvenile offenders to adult prisons at age 15,
although his colleagues in the Assembly rejected this excessively harsh approach. These, too, are examples
of classic authoritarian behavior at work.
Conventionality. Authoritarian followers act in the tradition of society’s norms and customs. They never
stand out; indeed, they are the polar opposite of rebels like the iconic long-haired hippie. The authoritarian
follower is most comfortable with a fundamentalist religion, and as a member of an organization, he or she is
most comfortable where the organization draws clear lines dividing right from wrong. Authoritarian
followers believe in “family values” and follow the “straight and narrow” in dress and behavior. Scott
Walker is Mr. Conventional. He has long been an active member of a fundamentalist church. He wears
conservative, off-the-rack clothing. His hair is always closely trimmed, and his manner polite and pleasant.
And he keeps company with like-acting and like-thinking people. (I cannot find a single radical right-wing
position that Walker rejects.)
Wisconsin’s Double High Authoritarian Governor
I have merely summarized, in the broadest of terms, the work of social science in exploring the
authoritarian disposition at work in government and politics. Similarly, I have only sketched in digest terms
the reporting I found on Scott Walker’s political career. To me, it is clear that Wisconsin has a double high
authoritarian governor, a conservative without conscience. If I lived in Wisconsin, I would be uncomfortable
with this man, whom I find more Nixonian than even Richard Nixon himself (the authoritarian leader with
whom I was, and am, so very familiar).
Please understand that these authoritarian leaders and their followers are not necessarily bad people. To
the contrary, I have many friends who fall into this group, who are wonderful people. But none of my double
high authoritarian friends are suited to serve as President of the United States, or as governor of any
state—posts which have never worked well when an authoritarian has taken charge. Democracy and
democratic institutions do not function well with dogmatic, unbending authoritarian leaders. Authoritarians
are great as dictators, and even at times benevolent. They are often outstanding at running businesses, and
when serving as high-ranking officers in the military, not to mention law enforcement. But they are failures
as presidents and governors, and as Bob Altemeyer’s work has shown, they can be dangerous to democracy.
Hopefully, one or more social scientists or political psychologists in Wisconsin, where there are many, will
step forward and tell the people of Wisconsin more about what they have on their hands, with Scott Walker
as their governor. In fact, the June 5, 2012 election is a true opportunity to discourage another leader who
is a conservative without conscience, for these leaders always have a healthy following. Altemeyer
estimates that about twenty-five percent of the population has, in varying degrees, the disposition to follow
a double high authoritarian, many blindly or simply because it assuages their fears. And, of course, these
are aggressive followers who can attract others who are unaware of the nature of the person they are
electing, thus enabling an authoritarian leader like Walker to gain ever-growing control.
Good luck, Wisconsin.
John Dean served as Counsel to the President of the United States from July 1970 to April 1973.
Krugman describes mafia fatboy from New jersey Christie. Another gangster who should be in jail.
Cannibalize the Future
By PAUL KRUGMAN
Published: April 12, 2012
One general rule of modern politics is that the people who talk most about future generations — who go
around solemnly declaring that we’re burdening our children with debt — are, in practice, the people most
eager to sacrifice our future for short-term political gain. You can see that principle at work in the House
Republican budget, which starts with dire warnings about the evils of deficits, then calls for tax cuts that
would make the deficit even bigger, offset only by the claim to have a secret plan to make up for the
revenue losses somehow or other.
And you can see it in the actions of Chris Christie, the governor of New Jersey, who talks loudly about acting
responsibly but may actually be the least responsible governor the state has ever had.
Mr. Christie’s big move — the one that will define his record — was his unilateral decision back in 2010 to
cancel work that was already under way on a new rail tunnel linking New Jersey with New York. At the time,
Mr. Christie claimed that he was just being fiscally responsible, while critics said that he had canceled the
project just so he could raid it for funds.
Now the independent Government Accountability Office has weighed in with a report on the controversy, and
it confirms everything the critics were saying.
Much press coverage of the new report focuses, understandably, on the evidence that Mr. Christie made
false statements about the tunnel’s financing and cost. The governor asserted that the projected costs
were rising sharply; the report tells us that this simply wasn’t true. The governor claimed that New Jersey
was being asked to pay for 70 percent of a project that would shower benefits on residents of New York; in
fact, the bulk of the financing would have come either from the federal government or from the Port
Authority of New York and New Jersey, which collects revenue from residents of both states.
But while it’s important to document Mr. Christie’s mendacity, it’s even more important to understand the
utter folly of his decision. The new report drives home just how necessary, and very much overdue, the
tunnel project was and is. Demand for public transit is rising across America, reflecting both population
growth and shifting preferences in an era of high gas prices. Yet New Jersey is linked to New York by just
two single-track tunnels built a century ago — tunnels that run at 100 percent of capacity during peak hours.
How could this situation not call for new investment?
Well, Mr. Christie insisted that his state couldn’t afford the cost. As we’ve already seen, however, he
apparently couldn’t make that case without being dishonest about the numbers. So what was his real motive?
One answer is that the governor is widely assumed to have national ambitions, and the Republican base hates
government spending in general (unless it’s on weapons). And it hates public transportation in particular.
Indeed, three other Republican governors — in Florida, Ohio and Wisconsin — have also canceled public
transportation projects supported by federal funds. The difference, of course, is that New Jersey is a
densely populated state, most of whose residents live either in Greater New York or Greater Philadelphia;
given that position, public transit is the state’s lifeblood, and refusing to invest in such transportation will
strangle the state’s economy.
Another answer is that canceling the tunnel allowed Mr. Christie to divert funds from that project — as his
critics have said, to cannibalize the investment — and put them into the state highway fund, thereby avoiding
the need to raise the state’s tax on gasoline. New Jersey gas taxes, by the way, are lower in real terms than
at any point in the state’s history. But, as a candidate, Mr. Christie said that he wouldn’t raise those taxes, so
cannibalizing the tunnel helped him avoid embarrassment.
The crucial point about both of these explanations is that they stand Mr. Christie’s narrative about himself
on its head. The governor poses as a man willing to make hard choices for the future, but what he actually
did was sacrifice the future for the sake of personal political advantage. He catered to national Republican
prejudices that are completely at odds with New Jersey’s needs; he cared more about avoiding
embarrassment over a misguided campaign pledge than about serving an urgent public need.
Unfortunately, Mr. Christie’s behavior is all too typical these days.
America used to be a country that thought big about the future. Major public projects, from the Erie Canal
to the interstate highway system, used to be a well-understood component of our national greatness.
Nowadays, however, the only big projects politicians are willing to undertake — with expense no object —
seem to be wars. Funny how that works.
Payola for the Most Profitable Corporations in History
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Posted on Apr 7, 2012
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By Bill McKibben, TomDispatch
This piece originally appeared at TomDispatch.
Along with “fivedollaragallongas,” the energy watchword for the next few months is: “subsidies.” Last week,
for instance, New Jersey Senator Robert Menendez proposed ending some of the billions of dollars in
handouts enjoyed by the fossil-fuel industry with a “Repeal Big Oil Tax Subsidies Act.” It was, in truth,
nothing to write home about—a curiously skimpy bill that only targeted oil companies, and just the five
richest of them at that. Left out were coal and natural gas, and you won’t be surprised to learn that even
then it didn’t pass.
Still, President Obama is now calling for an end to oil subsidies at every stop on his early presidential-
campaign-plus-fundraising blitz—even at those stops where he’s also promising to “drill everywhere.” And
later this month Vermont Senator Bernie Sanders will introduce a much more comprehensive bill that tackles
all fossil fuels and their purveyors (and has no chance whatsoever of passing this Congress).
Whether or not the bill passes, those subsidies are worth focusing on. After all, we’re talking at least $10
billion in freebies and, depending on what you count, possibly as much as $40 billion annually in freebie cash
for an energy industry already making historic profits. If attacking them is a convenient way for the White
House to deflect public anger over rising gas prices, it is also a perfect fit for the new worldview the
Occupy movement has been teaching Americans. (Not to mention, if you think about it, the Tea Party focus on
deficits.) So count on one thing: we’ll be hearing a lot more about them this year.
But there’s a problem: the very word “subsidies” makes American eyes glaze over. It sounds so boring, like
something that has everything to do with finance and taxes and accounting, and nothing to do with you. Which
is just the reaction that the energy giants are relying on: that it’s a subject profitable enough for them and
dull enough for us that no one will really bother to challenge their perks, many of which date back decades.
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By some estimates, getting rid of all the planet’s fossil-fuel subsidies could get us halfway to ending the
threat of climate change. Many of those subsidies, however, take the form of cheap, subsidized gas in petro-
states, often with impoverished populations—as in Nigeria, where popular protests forced the government
to back down on a decision to cut such subsidies earlier this year. In the U.S., though, they’re simply
straightforward presents to rich companies, gifts from the 99% to the 1%.
If due attention is to be paid, we have to figure out a language in which to talk about them that will make it
clear just how loony our policy is.
Start this way: you subsidize something you want to encourage, something that might not happen if you didn’t
support it financially. Think of something we heavily subsidize—education. We build schools, and give
government loans and grants to college kids; for those of us who are parents, tuition will often be the last
big subsidy we give the children we’ve raised. The theory is: young people don’t know enough yet. We need to
give them a hand when it comes to further learning, so they’ll be a help to society in the future. From that
analogy, here are five rules of the road that should be applied to the fossil-fuel industry.
1. Don’t subsidize those who already have plenty of cash on hand. No one would propose a government
program of low-interest loans to send the richest kids in the country to college. (It’s true that schools may
let them in more easily on the theory that their dads will build gymnasiums, but that’s a different story.) We
assume that the wealthy will pay full freight. Similarly, we should assume that the fossil-fuel business, the
most profitable industry on Earth, should pay its way, too. What possible reason is there for giving Exxon
the odd billion in extra breaks? Year after year the company sets record for money-making—last year it
managed to rake in a mere $41 billion in profit, just failing to break its own 2008 all-time mark of $45 billion.
2. Don’t subsidize people forever. If students need government loans to help them get bachelor’s degrees,
that’s sound policy. But if they want loans to get their 11th BA, they should pay themselves. We learned how
to burn coal 300 years ago. A subsidized fossil-fuel industry is the equivalent of a 19-year-old repeating
third grade yet again.
Profiling the Supremes
by ELAINE CASSEL
As a lawyer and teacher of psychology, I have more than a passing interest in the intersection of behavior
and the law. Three days of Supreme Court hearings on the Affordable Care Act (ACA) were an intellectual
feast for me. The first time I listened to the audio tapes, the day of their release, I was riveted by the
legal arguments, which ran the gamut from profound and compelling, to specious and ridiculous. On second
listening, more leisurely and over the weekend via C-Span Radio, I was struck by how personality traits
were conveyed in the justices’ comments and questioning.
This was particularly apparent in the arguments in the afternoon of Day 3, when the state of Florida argued
that the required Medicaid expansion was so coercive that it had to be stricken (unless, of course, the court
threw out the entire law, in which case the argument is moot). Little attention has been paid to this afternoon
of argument, perhaps because the issue was not as sexy as the individual mandate and severability. In short,
the law requires the states to significantly expand access to Medicaid. The federal government will pay 90%
of the cost. If the states don’t expand access, the Secretary of Health and Human Services, who
administers Medicaid, may withdraw funds from the states for services not included in the ACA.
At the outset of the argument, Justices Kagan and Sotomoyer’s empathy and compassion for “poor people,”
shown through. Why would the states not want to accept a gift from the federal government that would be
good for their citizens, they argued? Because, attorneys for Florida argued, it amounted to coercion.
When lawyers talk about coercion, the analogy of the proverbial gun to the head comes into play. Legal
coercion is hard to prove unless, the old saw goes, you can prove that someone literally held a gun to your
head and made you take some action you would not otherwise have undertaken. The gun to the head
argument was exploited by Chief Justice Roberts. Following his lead, Justices Scalia and Alito took it to such
extreme hypothetical conclusions, spinning out so many absurd hypotheticals, that the Chief Justice granted
Solicitor General Verrilli, arguing for the Obama administration, another fifteen minutes.
Justice Breyer displayed his measured and even temperament by positing that the Secretary of Health and
Human Services would be reasonable and judicious in her implementation of the requirements. Breyer
pointed out that agencies are required to administer laws fairly. Justice Alito seems personally
offended that the government would intrude upon states in such a way as to require an expansion that they
might not want or which may have strings so offensive that they may be forced, on principle, to decline to
adopt the measures and, under the law, risk losing funds other than those related to the ACC.
Justice Scalia poked his usual fun as the whole idea of providing health care to those in need (earlier in the
proceedings he suggested that the government could, if he wanted to, change laws requiring hospitals to
provide emergency services regardless of insurance status). Justice Thomas sat stone silent, reflecting his
aloofness—not for him the trenches of debate and discourse. To this listener, Justices Kennedy and
Ginsberg showed no particular personality traits as they framed their arguments in legal, not political, terms.
But the Chief Justice, who, for some reason, has always invoked in me a sense that he would be a tough man
to work around or live with, did not disappoint. His hypotheticals and arguments projected a bullying,
intimidating federal government that would hold a “gun to the head” of the states, and demand full
compliance or withdrawal of all Medicaid support. In a revealing statement he said, “I mean, if I had the
authority and I was in that position, I would use it all the time. You might — you want some little change
made? Well, guess what; I can take away all your money if you don’t make it. I win. Every time.”
Whoa! Stop tape! Was the Chief Justice projecting his own authoritarianism? As in, “If I had the power, I
wouldn’t be reasonable or judicious. I would exert power for power’s sake”? So much for being the umpire
calling “balls and strikes,” as he so famously said during his nomination hearings.
Roberts went on to project an authoritarian and arbitrary view of the federal government. Surely the HHS
secretary would do as he would do. “So, why shouldn’t we be concerned about the extent of
authority that the government is exercising, simply because they could do something less? We have to
analyze the case on the assumption that that power will be exercised, don’t we?”
Justices Kagan and Breyer piped up and pointed out that there was no evidence that the government has
ever acted with vengeance to “punish” noncompliance with a Medicaid requirement, but Roberts and Scalia
headed headed them off at the pass.
Having projected the government as a bully, Roberts casts the states in the victim role. “Of course no State
is going say, okay, go ahead, make my day, take it away. They’re — they’re going to give in.” Of course.
Roberts is nothing if not certain of his conclusion. Justice Roberts pressed Verrilli to name him one case
decision that proved the government would not retaliate against a state by defunding Medicaid.. Verrilli
couldn’t name a case precedent, so the absence of evidence became evidence. Said Roberts, “And you cannot
-you cannot represent that the Secretary has never said: And if you don’t do it, we are going to take away all
the funds.” Roberts brings back the gun to the head analogy, suggesting the no one has been shot with the
(government’s) gun because the victim (state) has “given up” its wallet. It had no choice.
At this point, you may be thinking that Roberts will condemn the bullying gun-to-the head government, but no!
He surprises us! “I’m not saying there’s anything wrong with it.” Then mocking Verrill, who tries to stop the
runaway metaphor of government as gun-toting bully butts in, “It’s not coercion, Mr. Chief Justice.” Oh,
really, Roberts said? “To say I’m going to take away all your funds, no matter how minor the infringement?”
No matter that there is not a shred of evidence that the federal government ever has or ever will cut off a
state from Medicaid funds for “minor infringement” of its rules, the government’s policy being to provide
services to those who need them most.
But Roberts is not done yet. His assigns a purpose for the bullying government of his hypothetical. The
federal government, having given the Medicaid funds which the state and its citizens got used to and,
presumably, liked, may decide to lower its “contribution to Medicaid and leave it up to the states because we
{the federal government} want the people to be mad at the States when they have to have all these budget
cuts to keep it up, and not at the federal government.” Not surprising, Verrilli has no effective counter to
this proposition that the federal government would give something, and take it away for the purpose of
(“because”) turning the American people against the state governments.
So here is Roberts’ explanation for the expanded Medicaid provision: In order to turn the people against
their states, tell the states they have to put more people on the Medicaid rolls and pay 90 % of the cost.
The states may not want to do it, well, just because. But the people will probably like it. Then just when the
people start to like it, the federal government tells the states it has no more money to fund the expansion.
The people will turn against the states or, at least, be “mad” at them. Roberts starts short of giving any
plausible motive for why the federal government would want to pit citizens against their states.
With recent polls indicating that a majority of Americans expect the Court to rule along partisan lines, the
Court’s reputation is already compromised. It began, to be fair, before Roberts’ rule, with Bush v. Gore. It
continued, under his watch, with Citizens United, which struck down decades of campaign finance laws
designed to promote fair elections and true representative government. Those who suggest that Roberts is
concerned for the reputation of the court and for his own legacy and, if believes the individual mandate is
not constitutional, would refrain from supporting a decision that would strike the entire law, should pay
attention to the personality behind the robe. Florida v. Department of Health and Human Services may well
be the next blockbuster ruling from justices who vote their politics and their personalities.
Elaine Cassel practices law in Virginia and the District of Columbia, teaches psychology, and writes about
psychology and the law. She is the author of Criminal Behavior (2007, Psychology Press) and The War on Civil
Liberties (2004, Lawrence Hill) and numerous articles on psycholegal issues.
Published on Saturday, April 14, 2012 by The Nation
The Federal Reserve Turns Left
by William Greider
Washington is lost in a snarl of confusion, cowardice and wrongheaded ideological assumptions that threaten
to keep the economy in a ditch for a long time. That prospect is not much discussed in the halls of Congress
or the White House. It’s as though the crisis has been put on hold until after the presidential election.
Federal Reserve Board Chairman Ben Bernanke. REUTERS/Molly Riley
As almost everyone understands, nothing substantial will be accomplished this year. President Obama is
campaigning on warmed-over optimism and paper-thin policy proposals. Republicans propose to make things
worse by drastically shrinking government spending, when the opposite is needed to foster a real recovery.
The president, like the GOP, embraces large-scale deficit reduction. In these circumstances, it’s just as
well that the two parties cannot reach agreement. After the election they may make a deal that splits the
difference between bad and worse. In the worst case, they might inadvertently tip the economy back into
recession.
In this sorry situation, there is really only one governing institution with the courage to dissent from the
conventional wisdom—the Federal Reserve. The central bank declines to participate in the happy talk about
recovery or in the righteous sermons attacking the deficit. In its muted manner, the Fed keeps explaining
why the house is still on fire, why more aggressive action is needed, and is gently nudging the politicians who
decide fiscal policy to step up. But its message is ignored by Congress and the president and viciously
attacked by right-wing Republicans who say, Butt out.
The stakes in this elite dialogue are enormous. The outcome will be more meaningful for ordinary citizens
than any other issue at play in this year’s campaign. If the Fed is right and politicians refuse to act,
Americans may be condemned to a bitter slog through many years of stagnation.
Japan in the 1990s is the appropriate comparison. After its financial bubble burst, Japan saw its “lost
decade” stretch into fifteen years of stunted growth. Its central bank responded hesitantly, and its
monetary policy proved ineffective—rendered impotent by a “liquidity trap,” a condition identified by John
Maynard Keynes. The United States experienced a similar fate in the Great Depression of the 1930s. As an
economics professor, Fed chair Ben Bernanke is a scholar of that period. He is determined not to let it
happen again. A decade ago, he scolded Japanese authorities for failing to be more imaginative and
aggressive. They needed “the courage to abandon failed paradigms and to do what needed to be done,”
Bernanke advised. His model was Franklin Roosevelt, whose “specific policy actions were, I think, less
important than his willingness to be aggressive and to experiment—in short, to do whatever was necessary
to get the country moving again.”
Maybe the Fed chair should give the same lecture to American politicians. But Bernanke is at risk of
embarrassment himself: despite the Fed’s firepower, it has been unable to restart the economy. And
monetary policy is running out of gas. Five years ago, in the heat of crisis, Bernanke’s response was awesome.
The Fed created trillions of dollars and flooded the system with easy money—enough to stabilize financial
markets and rescue wounded banks. It brought short-term interest rates down to near zero and long-term
mortgage rates to bargain-basement levels. It provided a huge backstop for the dysfunctional housing
sector, buying $1.25 trillion in mortgage-backed securities, nearly one-fourth of the market.
Flooding Wall Street with money saved the banks, but it didn’t work for the real economy, where most
Americans live and toil. The housing sector kept falling. The Fed knows (even if politicians do not) the danger
of sliding into a liquidity trap, which would utterly disarm its monetary tools (Charles Evans, president of the
Chicago Federal Reserve Bank, thinks the trap has already closed). So the Fed wants Congress and the
White House to borrow and spend more, which, when the private sector is stalled, only the government can
do. To advance this cause, the central bank is promoting its recent white paper on housing, proposing, ever so
gingerly, the heretical remedy of debt forgiveness for the millions of homeowners facing foreclosure.
The august central bank is engaged in a startling role reversal. It has turned left, so to speak, abandoned
old positions on fundamental matters and endorsed Keynesian principles it once spurned. Bernanke would
doubtless protest that this is not about left or right, that the Fed is simply doing what it’s supposed to do in
a crisis—using the stimulative power of money creation to act as “lender of last resort.” Nevertheless, for
nearly three decades, first under Paul Volcker and then Alan Greenspan, the Fed did pretty much the
opposite. It was the conservative authority that dominated policy-making, scolding politicians for their
spending excesses and threatening to punish over-exuberant growth by raising interest rates.
A tidal shift in governing influence is under way, because monetary policy is now eclipsed. As the central
bank loses control, the stronger hand shifts to the fiscal side of government. That seminal insight originates
with economist Paul McCulley, retired after many years as Fed watcher for PIMCO, the world’s largest
bond fund. McCulley is a Keynesian who never bought into the ideological fantasy of self-correcting markets.
His views won respect at the Fed because he was right. Only politicians still don’t get it. After thirty years
of deferring to conservative orthodoxy, both parties are afraid to break from the past. While the Fed
pushes for fiscal expansion, Congress and the president remain obsessed with deficit reduction.
“This was not supposed to happen,” McCulley observes. “The fiscal authority was always supposed to be
afraid of the Fed. The Fed would say, Don’t do this, don’t do that. And the fiscal side would back off. Now
you have a situation where monetary policy is effectively impotent and the Fed is openly inviting the fiscal
side to do what for decades the Fed told it they couldn’t do.” The “missing partner,” McCulley says, is the
fainthearted politician who clings to old dogma about fiscal rectitude, even though the crisis has made those
convictions “irresponsible.”
As a longstanding critic of the Federal Reserve, I am experiencing a role reversal of my own. In the new
circumstances, I find myself feeling sympathy and a measure of admiration for Bernanke’s willingness to
stand up for unorthodox ideas and to switch sides on the sensitive matter of debt reduction for failing
homeowners. For many years, I have assailed the institution’s unaccountable power and anti-democratic
qualities, its incestuous relations with powerful banks and investment houses. Those flaws and contradictions
remain unreformed, yet I now think the country needs a stronger Fed—a central bank not afraid to use its
awesome powers to help the real economy more directly.
People ask, How come the Federal Reserve can dispense trillions to save Wall Street banks but won’t do the
same to rescue the real economy? Good question. They deserve a better answer than the legalisms provided
by the Fed. At this troubled hour, the Federal Reserve should find the nerve to abandon “failed paradigms”
and to use its broad powers to serve a broader conception of the public interest.
* * *
The Fed belatedly turned its attention to the foreclosure crisis when it realized that the housing sector,
clogged with millions of failed mortgages and vacant houses, was a big part of why Bernanke’s monetary
policy failed. Housing, of course, is an issue that belongs to the fiscal side of government, but the Fed can
help out because its “dual mandate” in law requires monetary policy to support both maximum employment
and stable money. If the housing market does not get well, Fed experts reasoned, there will be no recovery.
Though it seemed out of character for the austere central bank, the Fed has staged its version of a media
blitz on behalf of troubled homeowners. In the span of seven days in January, two governors from the
Federal Reserve Board in Washington and three presidents from the twelve regional Federal Reserve
Banks delivered strong speeches on how to stop the bleeding and revive housing. They asked the elected
politicians to consider a broad campaign to reduce the principal owed by the 11 million homeowners who are
underwater, owing more on their mortgages than their homes are worth. Most of them can’t sell and can’t
keep up with their payments, and are thus doomed to foreclosure.
All this was explained in the white paper Bernanke sent to Capitol Hill, which explained why cleaning up the
housing mess is necessary for a “quicker and more vigorous recovery.” Housing advocates and community
activists had been telling the central bank the same thing since the collapse began. Fed governors listened
politely but never responded—until now. If nothing changes, the white paper warned, market adjustments
“will take longer and incur more deadweight losses, pushing house prices still lower and thereby prolonging
the downward pressure on the wealth of current homeowners and the resultant drag on the economy at
large.”
* * *
The white paper was hedged with lots of qualifiers, but it read like a handbook for recovery. A prime mover
behind the initiative was William Dudley, president of the New York Fed. A Goldman Sachs alumnus, Dudley
is first among equals, because the New York Fed is always closest to Wall Street. Dudley suggested $15
billion in bridge loans to tide over unemployed homeowners. He urged Fannie Mae and Freddie Mac, the two
government-sponsored enterprises (GSEs) now in conservatorship, to loosen their tightfisted control over
mortgages and reduce outstanding balances on delinquent loans—which most likely will never be repaid
anyway.
“I am uncomfortable with the notion that ‘underwater’ borrowers who owe more on their mortgages than
their homes are worth should have to go delinquent before they have a chance of securing a reduction in
their mortgage debt,” Dudley told an audience of New Jersey bankers in January. The standard objection
to debt reduction is “moral hazard”—the fear that it will encourage bad behavior by other debtors. Dudley
dismissed this as overblown. Most people in trouble, he said, are victims of bad luck—they bought their
house at the peak of market prices or they became unemployed through no fault of their own. “Punishing such
misfortune accomplishes little,” he said.
Dudley’s remark suggests a different tone at the Fed, one more sensitive to the human dimensions of
economic crisis. Governor Sarah Bloom Raskin, who was appointed to the Federal Reserve Board by Obama,
delivered an unusually caustic message to bankers last year. She is pushing substantive penalties for
banking-sector abuses—the regulatory diligence neglected by the Greenspan Fed. “In the housing sector,
we traveled a very low road that had nothing to do with looking out for the greater good,” Raskin declared.
“On the contrary, there were too many people in all of the functional component parts—mortgage brokers,
loan originators, loan securitizers, subprime lenders, Wall Street investment bankers and rating agencies—
who were interested only in making their own fast profits…. Now it is time to pay back the American
citizenry in full.”
A sense of moral resonance runs through the white paper. Fairness, it turns out, is an economic variable. So
are the social consequences of doing nothing. The foreclosure mess, the Fed noted, hurts innocent
bystanders when their neighborhoods are ruined by other people’s failure. Towns burdened by lots of empty
houses lose property-tax revenue needed to sustain public services. The foreclosure process piles up
“deadweight losses” in which nobody wins, not even bankers.
Mortgage relief, on the other hand, in effect redistributes income and wealth from creditors to debtors.
“Modifying an existing mortgage—by extending the term, reducing the interest rate, or reducing principal—
can be a mechanism for distributing some of a homeowner’s loss (for example, from falling house prices or
reduced income) to lenders, guarantors, investors, and, in some cases, taxpayers,” the Fed document
explained. Both the lender and the borrower can gain from reducing the size of an underwater mortgage,
the Fed asserted. “Because foreclosures are so costly, some loan modifications can benefit all parties
concerned, even if the borrower is making reduced payments.”
Refinancing at a lower rate and reducing the principal allows a family to keep its home with the promise of
regaining equity as they pay down the more affordable mortgage. The modification can also restore the loan
as a profitable investment for lenders, who will gain a greater return than they would if they had let the
mortgage slide into foreclosure. Writing it down acknowledges that the original debt was never going to be
repaid anyway. The lender suffers an accounting “loss” on the forgiven debt, but in real terms earns back
more.
The same logic can apply to the economy as a whole, the Fed explained. The short-term costs of adjustment
are upfront for lenders, but the long-term benefits will be much greater for the overall economy if clearing
away bad debt revives the housing market. “Greater losses…in the near term might be in the interests of
taxpayers to pursue if those actions result in a quicker and more vigorous recovery,” Fed governors
concluded. Which would taxpayers choose? Reducing deficits or achieving “a quicker and more vigorous
recovery”? I feel certain most people would choose jobs over balanced budgets. But we don’t really know
what the people think, because the choice is never put to them in those terms. Neither political party has the
nerve, and the media have failed to do so. It has fallen to the cloistered central bank.
For most Republicans the Fed’s message is alarming. It sounds suspiciously liberal. The Wall Street Journal
raked Bernanke over the coals for his “extraordinary political intrusion,” denouncing the white paper as “a
clear attempt to provide intellectual cover for politicians to spend more taxpayer money to support housing
prices.” In a stern letter Senator Orrin Hatch told the Fed chair to back off. “I worry that…your staff’s
housing white paper…treads too far into fiscal policy, and runs the risk of being perceived as advocacy for
particular policy options,” Hatch wrote. Some GOP presidential hopefuls had uglier things to say about
Bernanke.
The Fed did not push back. It could have replied that it has a direct stake in solving the foreclosure mess—
the clogged housing market is a principal reason Bernanke’s monetary policy failed to revive the economy.
The chair had assumed that, as the Fed brought mortgage interest rates below 4 percent, homeowners
would rush to refinance. The savings would give them new disposable income, thus increasing aggregate
demand for the weakened economy. The lower rates would trigger a wave of home buying and building,
igniting the rebound in real estate. Housing has always been the classic channel by which the Fed has
stimulated recovery, which it does by reducing the cost of credit. This time it didn’t happen, because the
channel was blocked. One explanation is that the Obama administration and Congress were standing in the
way, nullifying Bernanke’s accomplishment. Bankers, investors and especially Fannie Mae and Freddie Mac,
were preventing homeowners from taking advantage of the reduced rates. They threw up various obstacles
to refinancing and squeezed borrowers, trying to collect the last drop from homeowners before
foreclosure. This is shortsighted politics, resisting immediate losses when doing so prevents the larger
rewards of a genuine recovery. To put it another way, government has done a lot to protect the creditors
from the costs of their misadventures. For the borrowers, not so much.
From the start, the administration has protected the bankers and other financial players, who have resisted
the painful reckoning needed to unfreeze the housing sector. Presumably, the White House and Treasury
feared that relief for debtors would threaten bank revenues, maybe their solvency. The GSEs, which
guarantee 80–90 percent of mortgages, have cost the taxpayers some $150 billion. Congress gave them
stern instructions to stop the losses. Obama has danced on both sides of the issue. He has launched several
programs that promised to rescue homeowners, but he never used the full power of his office to force the
financial sector into cooperating. Housing advocates thought Obama’s initiatives seemed designed to fail, and
one by one, they have.
* * *
Early in his presidency, Obama made fateful choices that have come back to haunt the country. He and his
advisers, joined by the Federal Reserve and other regulators, decided to give the fragile financial sector
“forbearance.” That is, they looked the other way. It was a banker’s version of “don’t ask, don’t tell.”
Government has given generous interpretations to the wounded balance sheets of the largest banks.
Examiners have not challenged toxic assets booked at inflated valuations. The assumption was that over time
the economy would recover and so would the worth of those assets, especially in housing. But that hasn’t
happened. The result is a blanket of leftover debt, which is still burdening the economy.
Mitt Romney described this with impressive clarity while campaigning in Florida. “We’re just so
overleveraged, so much debt in our society, and some of the institutions that hold it aren’t willing to write it
off,” he told a foreclosure forum. “The banks are scared to death, of course, because they think they’re
going out of business…. They just want to pretend all of this is going to get paid someday so they don’t have
to write it off…. This is cascading throughout our system, and in some respects government is trying to just
hold things in place, hoping things get better…. My own view is you recognize the distress, you take the loss
and let people reset. Let people start over again…. This effort to try and exact the burden of their
mistakes on homeowners and commercial property owners, I think, is a mistake.”
Over the past four years, a substantial portion of overvalued mortgages have migrated onto public balance
sheets and are guaranteed by the GSEs. So taxpayers are on the hook for losses, one way or the other. The
economy would benefit if these uncollectible loans were cleared away. But who wants to tell the taxpayers
they are picking up the tab?
The government’s vast holdings in fact have created another obstacle to housing recovery. Thanks to the
Fed, Washington is the 800-pound gorilla now holding about 20 percent of the secondary market in
mortgage-backed securities (MBS). That may inhibit private investors from restoring normal trading on
their own. In past financial disasters, like the savings and loan crisis of the 1980s, regulators swiftly
disposed of government-held assets acquired from failed banks. This time, government has held on too long.
Eric Rosengren, president of the Boston Federal Reserve Bank, explained the problem. “One of the big
mistakes the Japanese made,” he said, “was they kept a huge inventory of problem real estate loans at
commercial banks and government agencies. Their housing market didn’t come back because everyone was
waiting for the next shoe to drop. When were the government and banks going to dispose of those loans?
You don’t want a situation where there is a huge overhang of real estate loans with government agencies as a
very large seller.”
The Obama administration was warned of this risk early by Sheila Bair, chair of the FDIC, and Elizabeth
Warren, chair of the Congressional Oversight Panel, as well as numerous housing advocates. They urged
Obama to clean up the foreclosure crisis upfront to generate a quicker recovery. The warnings were not
heeded. The pattern is not entirely clear, but it suggests a government decision made somewhere to
transform private liabilities into public obligations. Banks repackaged MBS and sold them to Fannie and
Freddie. The GSEs applied the government guarantee and sold the MBS to the Fed, which now has $850
billion worth of them on its balance sheet. The Fed is thus directly implicated in the government’s tolerance
for wishful thinking.
The extent of likely losses is evidently not known. The New York Fed, I learned, did not examine the MBS it
purchased to find out how many have inflated prices or are burdened by too many underwater borrowers
who can never repay them. I was told the Fed didn’t bother to look further because the securities are
guaranteed by Fannie and Freddie. That seems like ludicrous reassurance—one federal agency guaranteeing
the holdings of another agency. The taxpayers are thus on both ends of the transaction and certain to lose if
the securities turn out to be duds.
Instead, the problem is passed around like a hot potato. The Fed creates the money and buys a trillion
dollars’ worth of MBS from Fannie and Freddie. Thanks to the Fed’s vast holdings, the securities are trading
above par. Thanks to its interest income from the MBS, the Fed makes a profit, about $70 billion a year. At
the end of the year, it remits the money to the Treasury, which uses it to offset budget deficits. All three
agencies are handling the public’s money but from narrow-minded, self-protective perspectives. A more
rational response, Paul McCulley suggests, would be to take the Fed surpluses and use them to finance a
massive write-down of mortgage debt by the GSEs. Alas, in the bizarre mechanics of federal accounting, no
one knows how to get the money from here to there.
The Federal Reserve should act because nobody else will. That sounds unfair, since the Fed has already
taken heavy flak for poaching beyond its traditional domain. Further experiment will enrage right-wing
critics, but the central bank is running out of options. Monetary policy-makers say they face formidable legal
limits that people like me don’t appreciate. But the Fed still has enormous leverage. I believe what Wall
Street financiers tell me: the Fed can usually find a way to accomplish what it really wants to do. In this
case, it can break the political impasse and goad other parties into taking action. That does not require it to
violate the Federal Reserve Act. It does require reinterpretation of the vaguely defined “dual mandate,”
which has always been heavily biased in favor of Wall Street finance over the real economy. If stagnation
drags on for years, tearing up society and destabilizing politics, demands for more radical action will swell
and eventually overwhelm the old restraints.
Here is a modest example of what the Fed could do to shake up the system and help housing revive. It could
announce its intention to buy only new mortgage-backed securities that have been subjected to the process
of refinancing and modification to establish positive equity and more realistic valuations. The mere
announcement would cast a cloud over the existing stock of GSE mortgages and probably trigger a wave of
market-driven mortgage adjustments. The Fed, in effect, would not only provide a model for debt write-
downs generally but help create the market for them. The Fed’s presence would assure people the process
does not threaten the banking system. For distressed homeowners, it would amount to redistribution of
income and wealth—sharing the costs of the financial catastrophe among other players instead of dumping all
the pain on borrowers. Unilateral action would send a cleansing shock wave through the political system.
If this country ever gets back to a time when real questions are asked about democracy and our unrealized
aspirations, people and politicians will have to talk about the Federal Reserve and its “money power.” I have
a hunch current events are educating citizens and their elected representatives toward that day. It no
longer makes sense to keep fiscal and monetary policy separate, pulling the economy in opposite directions.
The present crisis suggests that monetary tools should be coordinated with the fiscal side. How this could
be done in a democratic way is a tough question, but it cannot be answered until people and politicians are
educated far beyond their primitive level of understanding.
The other promising challenge is to convince ourselves that money created by government really belongs to
the people. Could it be used—judiciously—to finance long-term public projects, like infrastructure and high-
speed rail? The government as employer of last resort? Make your own list of what the nation needs.
Imagine if highest-priority projects were financed with the new money mysteriously created by the mighty
Federal Reserve. That would be a future worth arguing over.
© 2012 The Nation
William Greider is national affairs correspondent for The Nation. He is author of "Secrets of the Temple:
How the Federal Reserve Runs the Country" and, most recently, "Come Home, America: The Rise and Fall
(and Redeeming Promise) of Our Country."
Published on Saturday, April 7, 2012 by Common Dreams
Single Payer Doctor Carol Paris Packs It Up
by Russell Mokhiber
Dr. Carol Paris is a psychiatrist. She’s practiced for 13 years in southern Maryland. And she’s fought hard
for a single payer system.
Dr. Carol Paris is arrested for disorderly conduct outside of a U.S. Senate office building Tuesday, May 5,
2009 for speaking out at Sen. Max Baucus' Congressional hearings on health care reform. (Photo/South
Maryland News) She’s even been arrested in Congress for speaking out for single payer. But now, she’s had
enough.
She’s closing her practice.
And moving it to New Zealand.
“I’m so tired and weary of trying to practice sane, passionate, good medicine in this insane health care
system in the United States,” Paris said last month in an interview at Union Station before walking over to
protest in front of the Supreme Court against the Obama health care law and for single payer. “It impairs
my ability to practice in a way that is ethical and passionate. I have a few years left in me to practice. And I’
ve decided see what it is like in another country. I have a couple of friends who are psychiatrists who have
done a sabbatical in New Zealand. And they said they are so sad to be back in the United States practicing
because it was so much more sane and caring in New Zealand. I’m going to see what it is like for my own
mental health.”
“The insanity here is that we have a system of financing health care in this country that is all about profit for
corporate America and not about the health care of the people,” Dr. Paris said. “It is opposed to the health
care of the people of America. You can’t be about profit and be about a social service.”
“Every day, I spend more time helping my patients figure out how to game the system, how to maneuver the
system of health care insurance,” Dr. Paris said. “Maybe they can afford to see me and maybe afford
medicine, but they can’t afford therapy. So, I’m robbing Peter to pay Paul.”
“Any recommendations I make for my new patients is based on the assumption that they will have no health
insurance tomorrow.”
“I can’t speak to the system they have in New Zealand,” she said. “But the sense that I have is that the
cultural imperative is premised on fairness. They argue about what is fair in New Zealand. I find that
fascinating. I want to visit a country where people argue about what is fair instead of engage in political
rhetoric about liberty and freedom.”
Does Dr. Paris feel any pangs of guilty about throwing in the towel?
“Six months of the year I’ll be back in Nashville, not working in the health care system, but working as an
advocate supporting the effort to get single payer in the United States,” Dr. Paris said. “If we are so
fortunate to accomplish that task before I am older and grayer, then I will practice medicine in the Untied
States again. But not until then.”
Rewriting the Rules of the Global Economy - Creating Economics That Improve People's Lives
Saturday, 14 April 2012 10:44 By Tory Field and Beverly Bell, Other Worlds | "Birthing Justice" Series
• ?
• font size
Deborah James. (Photo: Other Worlds)Rather than having these people inside the Beltway be the experts on
the issue... we ask: How can we empower the people who are actually affected by the issues to be the
spokespeople?" – Deborah James
Ask just about anyone about the "99%" these days and, regardless of how they feel about the Occupy
movement, they'll probably acknowledge the increasing concentration of wealth and power that the past few
decades have brought. Occupy has successfully propelled issues of inequality and corporate control to
mainstream consciousness, here in the belly of the beast, in the nation that has been pivotal to defining the
world economic system.
The current popular US dissent over the extreme concentration of wealth and the marginalization of the
voices of the majority has long precursors in US social movements. The farmers' movements of the 1870s,
the populist movement of the 1890s, the Industrial Workers of the World (Wobblies) and other militant
labor unions from the dawn of the 20th Century through the 1950s, the civil rights and Black, Chicano, and
Native nationalist movements from the 1960s on, and many other social movements... all have been rooted in
calls for a more equitable division of power and economic resources. Parallel struggles, in many different
forms, have occurred throughout the world.
The global justice movement, also known as the anti-globalization movement, exploded around the global
South in the 1980s, when new draconian reforms demanded by the World Bank and International Monetary
Fund (IMF), as conditions for loans, destroyed national economies and the lives of those within them. The
World Trade Organization meeting in Seattle in 1999 and the World Bank and IMF meetings in Washington
in 2000, when hundreds of thousands of residents of the US and Europe turned out into the streets to
protest the trade and financial regimes, marked something new: active alliance from the global North. Since
then, organized populations everywhere have worked in their own countries and transnationally to subvert
the rules of the global economy, where the wealthiest citizens, corporations, and counties make the decisions
for all of us. The people's movements have reminded us that economic globalization, which we are told is the
only possible economic order, only commenced at the end of World War II, and that we do not have to
accept it as it currently exists.
Those who are flooding streets today in Spain, Portugal, and Greece, and the millions who have preceded
them around the world, all posit an alternative vision for economies: that they be just, that they provide for
all without exploitation, that they place the well-being of human beings and the environment over profit, and
that everyone gets to be part of shaping them. They believe that economic relationships should be driven by
our desire to nurture each other and our communities, not by the competition and greed often underlying the
corporate market. And they have won dramatic victories.
Deborah James has been a leader in the global movement for economic justice for decades. Today she
serves as Director of International Programs at the Center for Economic and Policy Research, where she
campaigns against the expansion of the World Trade Organization (WTO) and for improved US policy in
Latin America. Below she speaks about how international financial institutions hinder countries' efforts at
poverty alleviation, instead prioritizing corporate interests. She also describes citizens' efforts to oppose
the power of these institutions, and tells of the countries that have made strides toward freeing themselves
from the economic chains, providing inspiration to us all.
Deborah James | Washington, DC, USA
To start understanding what's wrong with the international financial institutions [IFIs], we need to look at
why we actually need economies to function.[1] The most important economic issues to most people are
whether they are able to get decent jobs and whether they are able to lift themselves out of poverty.
In writing the rules for economies, the International Monetary Fund [IMF] and WTO [World Trade
Organization] are major proponents of neoliberal ideology. That ideology is based on the theory that slashing
government spending, reducing tariffs, privatizing public resources, and promoting corporate investment
will result in higher economic growth, and that this will eventually result in a reduction in poverty because a
rising tide lifts all boats. This contrasts with more progressive viewpoints that focus on reducing inequality
by investing in health care, education, and opportunities for the poor.
The mandate of the IMF is to help countries overcome short-term financial difficulties by giving out loans.
[2] However, these loans are only provided if countries restructure their economies. That is, they have to
adhere to these neoliberal economic policies, like cutting government spending in areas such as education and
health care, to regain what is called "fiscal discipline," which means not spending more money than you are
taking in. The problem is that the result in many countries has actually been a reduction of growth and
development – stagnant wages, more unemployment. Thus, while the creditors are bailed out by the IMF,
often the borrowing country is unable to repay the loan, resulting in an endless cycle of impoverishment and
indebtedness.
Similarly, the World Trade Organization develops and enforces rules for trade and investment. It favors
rights for corporations to trade over the rights of governments and peoples to develop healthy and
sustainable economies.[3] We know that trade can be an engine for growth if used strategically by a
country; but trade can also be a vehicle to boost corporate profits that actually limits the ability of local
economies to develop, and pits workers against each other in a race to the bottom.
So the evidence shows that the extreme neoliberal model has actually failed to produce economic growth
and has exacerbated inequality. It's causing the biggest distribution of wealth – away from the majority of
people and into the pockets of big corporations – in the history of the modern world. However, no matter
what evidence neoliberals are shown to the contrary, they still promote this model because it's in the
interest of the corporations that are driving their agendas.
Fortunately, there's a lot of questioning of neoliberalism now. Latin America and Asia are two regions that
have largely paid off their loans and liberated themselves from the IMF in the last decade or two, and that
has had a huge impact. Asia experienced a severe economic crisis in 1997; countries like Malaysia that broke
with the IMF and took care of their domestic economy before paying off foreign investors actually did
better than the ones that followed the IMF's economic advice. Since then, much of Asia has decided that
they're never going to be subject to this foreign economic intervention again, and they've built up
tremendous economic reserves so they don't ever have to go ask for a bailout. It's been a very good thing.
They've had fairly decent economic growth over the last 15 years or so, and lifted millions and millions of
people out of poverty.
We've seen big victories within our hemisphere as well. One was the defeat of the proposed Free Trade
Area of the Americas in the early 2000s. Another example was in 2001 when Argentina broke with the IMF
and told them it wasn't going to pay foreign investors before investing in its own domestic economy. In the
last 10 years, Argentina has been one of the fastest growing economies in Latin America and has lifted 10
million people out of poverty because of that faster growth. Similarly, in spite of the fact that Venezuela has
been quite hard hit by the global recession, they've lowered their poverty rate by more than half and
extreme poverty by even more than that in the last decade. In fact, during the 80's and 90's, most of the
region experienced economic stagnation under IMF agreements. But now, most of Latin America has paid off
its debts to the IMF, and is no longer under its constraints. The people have elected leftist governments
that focus on building relationships among countries in the region, rather than being too dependent on the
United States. Now growth is rebounding, unemployment has been reduced, and countries have made great
strides in reducing poverty.
Unfortunately, many African countries are still subjected to IMF policies and are being left behind. And
now, the IMF was put in charge of managing the bailouts of many European countries, and they are being
subjected to austerity programs, which are wreaking havoc on developed and developing countries alike.
Globally we have a very important movement to get outstanding debt to the IMF cancelled, called the
Jubilee movement. They've achieved important victories for many poor countries by freeing poor nations to
be able to use their own resources for their real economic needs instead of paying the IMF. Unfortunately,
we don't actually have a movement focused on challenging the IMF's fundamental power, and I think we
need to create that. It's not just about debt cancellation, but taking the IMF out of the business of running
economies around the world.
And at a time when countries are still suffering from the global crises, and governments are imposing
"austerity" instead of spurring development through investment, we need a global movement for fiscal
stimulus – for the idea that government funds should be invested where the public will benefit the most, like
health care and education and ensuring food security. Unemployment benefits create far more jobs than tax
breaks, because those who receive these benefits generally have to spend their money immediately.
Economists know this; when politicians argue in favor of tax cuts to spur growth, they are just arguing in the
interests of corporate profit, not reflected in any economic reality. Unfortunately, because many people in
progressive movements don't understand how important growth is to poverty reduction, we often spend
more time fighting over specific cuts or programs rather than working together to demand government
investments that would benefit the entire economy.
Another key global justice campaign is to stop the expansion of the WTO agreement through what's called
the "Doha Round" of negotiations, and to roll back existing WTO rules that limit governments' abilities to
manage crises. Fortunately there's a movement focused on this, the Our World Is Not for Sale global
network. It's comprised of organizations from 50 different countries. After nearly a decade of struggle, it
looks like we have a chance of stopping the expansion of the WTO again this year – permanently this time.
The solution is not to have no global trade rules; we need to have rules disciplining corporate behavior. But
we need a new institution run with the purpose of using trade to promote growth, jobs, and sustainable
development, not just increasing trade.
To bring it home to the United States, we have a national coalition called the Citizens' Trade Campaign that's
composed of grassroots movements from across the country that would be affected by trade agreements
in a negative way, including farmers' unions, environmental groups, labor unions, student movements,
progressive people of faith, consumer advocacy groups.
As movements for justice, we need to work to bridge the efforts among those challenging the overarching
institutions that design the architecture of the global economy, and those working for economic
empowerment on the local scale who are grounded in the lived experiences of those affected by the
institutions. How can we empower the people who are actually affected by the issues to be the advocates
and spokespeople? How can we ensure that those working on economic justice on the local level have access
to information so that they can advocate for their interests in the bigger scheme of things? We need to
ensure that we don't just convey the right information, which is key, but also that we connect the bigger
picture economic struggles to the problems people experience in their communities, in a way that people can
understand and really feel motivated to come together and work to improve people's lives.
To learn more about Deborah James' organization, Center for Economic and Policy Research, please see
www.cepr.net. Photos courtesy of Deborah James.
1. International Financial Institutions (IFIs) refers to institutions such as the International Monetary Fund,
World Trade Organization, World Bank, and regional development banks.
2. The International Monetary Fund (IMF) was established, along with its sister organization the World
Bank, as part of the Bretton Woods institutions intended to rebuild the global economy in the aftermath of
WWII.
3. The World Trade Organization (WTO) is an international body, established in 1995, that develops and
enforces rules for trade and investment. The WTO includes agreements not only on tariffs and subsidies on
goods and agriculture, but also services, government procurement, trade facilitation, intellectual property,
investment, domestic regulation, and many more non-trade issues.
Inspired? Here are a few suggestions for getting involved!
• Challenge yourself to make conversations about the workings of international financial institutions
interesting and useful. Global Exchange’s Global Econ 101 webpage (www.globalexchange.
org/resources/econ101) and the International Forum on Globalization (www.ifg.org) can help.
• Get involved with campaigns such as those to halt the expansion of the World Trade Organization
(WTO), stop new trade agreements and renegotiate existing ones, end Fast Track, and cancel global debt:
• Public Citizen’s Global Trade Watch, www.citizen.org/trade
• Our World is Not for Sale global campaign, www.ourworldisnotforsale.org
• Citizens’ Trade Campaign, www.citizenstrade.org/ctc
• Democracy Is for People campaign of Public Citizen, www.democracyisforpeople.or
• Jubilee USA, www.jubileeusa.org
o Help build economic justice and power for workers. Learn about and engage in campaigns and
organizing efforts through these organizations:
o Jobs with Justice, www.jwj.org
o US Federation of Worker Cooperatives, www.usworker.coop
o United Students against Sweatshops, www.usas.org
• Work for US policy that supports women around the world and their families. Learn how through
Women Thrive Worldwide (www.womenthrive.org/index.php?
option=com_content&task=view&id=1117&Itemid=196).
Rich People Have Less Compassion, Psychology Research Suggests
| By Daisy Grewal Posted: 04/11/2012 8:32 am Updated: 04/11/2012 8:32 am
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Who is more likely to lie, cheat, and steal—the poor person or the rich one? It’s tempting to think that the
wealthier you are, the more likely you are to act fairly. After all, if you already have enough for yourself, it’s
easier to think about what others may need. But research suggests the opposite is true: as people climb the
social ladder, their compassionate feelings towards other people decline.
Berkeley psychologists Paul Piff and Dacher Keltner ran several studies looking at whether social class (as
measured by wealth, occupational prestige, and education) influences how much we care about the feelings
of others. In one study, Piff and his colleagues discreetly observed the behavior of drivers at a busy four-
way intersection. They found that luxury car drivers were more likely to cut off other motorists instead of
waiting for their turn at the intersection. This was true for both men and women upper-class drivers,
regardless of the time of day or the amount of traffic at the intersection. In a different study they found
that luxury car drivers were also more likely to speed past a pedestrian trying to use a crosswalk, even
after making eye contact with the pedestrian.
In order to figure out whether selfishness leads to wealth (rather than vice versa), Piff and his colleagues
ran a study where they manipulated people’s class feelings. The researchers asked participants to spend a
few minutes comparing themselves either to people better off or worse off than themselves financially.
Afterwards, participants were shown a jar of candy and told that they could take home as much as they
wanted. They were also told that the leftover candy would be given to children in a nearby laboratory. Those
participants who had spent time thinking about how much better off they were compared to others ended up
taking significantly more candy for themselves--leaving less behind for the children.
A related set of studies published by Keltner and his colleagues last year looked at how social class
influences feelings of compassion towards people who are suffering. In one study, they found that less
affluent individuals are more likely to report feeling compassion towards others on a regular basis. For
example, they are more likely to agree with statements such as, “I often notice people who need help,” and
“It’s important to take care of people who are vulnerable.” This was true even after controlling for other
factors that we know affect compassionate feelings, such as gender, ethnicity, and spiritual beliefs.
In a second study, participants were asked to watch two videos while having their heart rate monitored. One
video showed somebody explaining how to build a patio. The other showed children who were suffering from
cancer. After watching the videos, participants indicated how much compassion they felt while watching
either video. Social class was measured by asking participants questions about their family’s level of income
and education. The results of the study showed that participants on the lower end of the spectrum, with less
income and education, were more likely to report feeling compassion while watching the video of the cancer
patients. In addition, their heart rates slowed down while watching the cancer video—a response that is
associated with paying greater attention to the feelings and motivations of others.
These findings build upon previous research showing how upper class individuals are worse at recognizing the
emotions of others and less likely to pay attention to people they are interacting with (e.g. by checking their
cell phones or doodling).
But why would wealth and status decrease our feelings of compassion for others? After all, it seems more
likely that having few resources would lead to selfishness. Piff and his colleagues suspect that the answer
may have something to do with how wealth and abundance give us a sense of freedom and independence from
others. The less we have to rely on others, the less we may care about their feelings. This leads us towards
being more self-focused. Another reason has to do with our attitudes towards greed. Like Gordon Gekko,
upper-class people may be more likely to endorse the idea that “greed is good.” Piff and his colleagues found
that wealthier people are more likely to agree with statements that greed is justified, beneficial, and
morally defensible. These attitudes ended up predicting participants’ likelihood of engaging in unethical
behavior.
Given the growing income inequality in the United States, the relationship between wealth and compassion has
important implications. Those who hold most of the power in this country, political and otherwise, tend to
come from privileged backgrounds. If social class influences how much we care about others, then the most
powerful among us may be the least likely to make decisions that help the needy and the poor. They may also
be the most likely to engage in unethical behavior. Keltner and Piff recently speculated in the New York
Times about how their research helps explain why Goldman Sachs and other high-powered financial
corporations are breeding grounds for greedy behavior. Although greed is a universal human emotion, it may
have the strongest pull over those of who already have the most.
Are you a scientist who specializes in neuroscience, cognitive science, or psychology? And have you read a
recent peer-reviewed paper that you would like to write about? Please send suggestions to Mind Matters
editor Gareth Cook, a Pulitzer prize-winning journalist at the Boston Globe. He can be reached at
garethideas AT gmail.com or Twitter @garethideas.
Rick Scott Vetoes Bill Sending Non-Violent Drug Offenders To Rehab After Serving Half Sentence In Jail
Posted: 04/10/2012 12:42 pm Updated: 04/10/2012 4:40 pm
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Florida Governor Rick Scott on Friday vetoed a widely popular bill that would send certain non-violent drug
addicts to treatment after serving half their sentences.
“He said it was a 'public safety’ issue. No it’s not,” said bill sponsor Sen. Ellyn Bogdanoff (R-Fort
Lauderdale) according to the Miami Herald. “These are non-violent drug offenders.”
The bill, a rare common sense favorite during a legislative season that saw Scott approve dying animals and
Jay-Z lyrics debated on the House floor, was opposed by only four state lawmakers.
Sold on Bogdanoff's argument that the state would save money by getting potential re-offenders the help
they need for addiction, lawmakers including typically tough-on-crime conservatives overwhelmingly sped
the bill through the House 40-0 and the Senate 112-4.
But though offenders would remain in custody during the rehabilitation portion of their sentences, Scott said
in his veto statement that the bill would violate laws against early release -- and be an injustice to "victims."
“Justice to victims of crime is not served when a criminal is permitted to be released early from a sentence
imposed by the courts...This bill would permit criminals to be released after serving 50 percent of their
sentences, thus creating an unwarranted exception to the rule that inmates serve 85 percent of their
imposed sentences.”
Tampa Bay Times/HeraldColumnist Steve Bousquet wrote that Scott's veto missed the point:
The prison system would have chosen inmates based on their good behavior, the severity of their addictions
and the likelihood that rehabilitation would save taxpayer dollars, a House analysis said.
In other words, the bill, properly implemented, could have reduced the cost of government, the very thing
that Scott talks about so much.
"This was a very small step toward prison reform," [House sponsor Rep. Ari] Porth (D-Coral Springs) told
Bousquet. "This was a real chance to have a positive impact on the lives of people."
Robert Scheer
12 Apr 2012
You're on Your Own, Kids
Who will speak for the rights of the unborn now that Rick Santorum is gone from the race? Let me give it a
… Read More.
5 Apr 2012
Obama By Default
The Republicans are a sick joke, and their narrow ideological stupidity has left rational voters no choice in …
Read More.
28 Mar 2012
Five Hypocrites and One Bad Plan
The Supreme Court is so full of it. The entire institution, as well as its sanctimonious judges themselves, …
Read More.
For He's a Jolly Good Scoundrel
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How evil is this? At a time when two-thirds of U.S. homeowners are drowning in mortgage debt and the
American dream has crashed for tens of millions more, Sanford Weill, the banker most responsible for the
nation's economic collapse, has been elected to the American Academy of Arts & Sciences.
So much for the academy's proclaimed "230-plus year history of recognizing some of the world's most
accomplished scholars, scientists, writers, artists, and civic, corporate, and philanthropic leaders." George
Washington, Ralph Waldo Emerson and Albert Einstein must be rolling in their graves at the news that Weill,
"philanthropist and retired Citigroup Chairman," has joined their ranks.
Weill is the Wall Street hustler who led the successful lobbying to reverse the Glass-Steagall law, which
long had been a barrier between investment and commercial banks. That 1999 reversal permitted the
merger of Travelers and Citibank, thereby creating Citigroup as the largest of the "too big to fail" banks
eventually bailed out by taxpayers. Weill was instrumental in getting then-President Bill Clinton to sign off on
the Republican-sponsored legislation that upended the sensible restraints on finance capital that had
worked splendidly since the Great Depression.
Those restrictions were initially flouted when Weill, then CEO of Travelers, which contained a major
investment banking division, decided to merge the company with Citibank, a commercial bank headed by John
S. Reed. The merger had actually been arranged before the enabling legislation became law, and it was
granted a temporary waiver by Alan Greenspan's Federal Reserve. The night before the announcement of
the merger, as Wall Street Journal reporter Monica Langley writes in her book "Tearing Down the Walls:
How Sandy Weill Fought His Way to the Top of the Financial World...and Then Nearly Lost It All," a buoyant
Weill suggested to Reed, "We should call Clinton." On a Sunday night Weill had no trouble getting through to
the president and informed him of the merger, which violated existing law. After hanging up, Weill boasted
to Reed, "We just made the president of the United States an insider."
The fix was in to repeal Glass-Steagall, as The New York Times celebrated in a 1998 article: "... the
announcement on Monday of a giant merger of Citicorp and Travelers Group not only altered the financial
landscape of banking, it also changed the political landscape in Washington. ... Indeed, within 24 hours of the
deal's announcement, lobbyists for insurers, banks and Wall Street firms were huddling with Congressional
banking committee staff members to fine-tune a measure that would update the 1933 Glass-Steagall Act
separating commercial banking from Wall Street and insurance, to make it more politically acceptable to
more members of Congress."
At the signing ceremony, Clinton presented Weill with one of the pens he used to "fine-tune" Glass-Steagall
out of existence, proclaiming, "Today what we are doing is modernizing the financial services industry,
tearing down those antiquated laws and granting banks significant new authority." What a jerk.
Although Weill has shown not the slightest remorse, Reed has had the honesty to acknowledge that the
elimination of Glass-Steagall was a disaster: "I would compartmentalize the industry for the same reason
you compartmentalize ships," he told Bloomberg News.
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"If you have a leak, the leak doesn't spread and sink the whole vessel. So generally speaking, you'd have
consumer banking separate from trading bonds and equity."
Instead, all such compartmentalization was ended when Clinton signed the Gramm-Leach-Bliley Act in late
1999. In his memoir, Weill brags that he and Republican Sen. Phil Gramm joked that it should have been
called the Weill -Gramm-Leach-Bliley Act. Informally, some dubbed it "the Citigroup Authorization Act."
Gramm left the Senate to become a top executive at the Swiss-based UBS bank, which, like Citigroup, ran
into deep trouble. Leach — former Republican Rep. James Leach — was appointed by President Barack
Obama in 2009 to head the National Endowment for the Humanities, where his banking skills could serve the
needs of intellectuals. Robert Rubin, the Clinton administration treasury secretary who helped push through
the Citigroup Authorization Act, was the most blatant double dealer of all: He accepted a $15-million-a-year
offer from Weill to join Citigroup, where he eventually helped run the corporation into the ground.
Citigroup went on to be a major purveyor of toxic mortgage-based securities that required $45 billion in
direct government investment and a $300 billion guarantee of its bad assets in order to avoid bankruptcy.
Weill himself bailed out shortly before the crash. His retirement from what was then the world's largest
financial conglomerate was chronicled in The New York Times under the headline "Laughing All the Way From
the Bank." The article told of "an enormous wooden plaque" in the bank's headquarters that featured a
likeness of Weill with the inscription "The Man Who Shattered Glass-Steagall."
That's the man the American Academy of Arts & Sciences now honors, among others, for "extraordinary
accomplishment and a call to serve." Disgusting.
Robert Scheer is editor of TruthDig.com, where this column originally appeared. Email him at
rscheer@truthdig.com. To find out more about Robert Scheer and to read features by other Creators
Syndicate writers and cartoonists, visit the Creators Syndicate Webpage at www.creators.com.
COPYRIGHT 2012 CREATORS.COM
The Jobless Are Screwed
Posted: 04/10/2012 2:39 pm
As nearly 13 million Americans look for a job, federal funding to retrain American workers and prepare
them for the jobs of the 21st century are drying up.
Funding for job-training programs across the country is down 18 percent from 2006 -- even though there
are six million more unemployed Americans today. Funding for counseling for the unemployed -- like resume
guidance and job interview coaching -- is down 13 percenet.
In fact, funding for job retraining for Americans is roughly half of what it used to be more than a decade
ago.
So now -- even though the economy is slightly improving -- businesses are having difficulty finding Americans
workers who are trained and qualified to handle the new job.
President Obama's budget proposal called for a massive increase in job retraining program: increasing
funding to nearly $3 billion a year. Studies show this is a good economic investment, as every dollar spent on
retraining unemployed Americans for new jobs yields as much as eight dollars for the local community.
However, multi-millionaire Congressman Paul Ryan's Republican trickle-down austerity budget once again
slashes funding for federal job retraining programs.
Under their proposal, it's far more important to give $3-trillion in tax breaks to the super-rich than give
working Americans new job skills.
This post was originally published on Thomhartmann.com.
The Real Health Care Debate
Email Print Share
Posted on Apr 9, 2012
AP/J. David Ake
People wait in line overnight in front of the Supreme Court for admission on the eve of oral arguments
before the court on President Obama’s health care legislation.
By Chris Hedges
The debate surrounding the Patient Protection and Affordable Care Act illustrates the impoverishment of
our political life. Here is a law that had its origin in the right-wing Heritage Foundation, was first put into
practice in 2006 in Massachusetts by then-Gov. Mitt Romney and was solidified into federal law after
corporate lobbyists wrote legislation with more than 2,000 pages. It is a law that forces American citizens
to buy a deeply defective product from private insurance companies. It is a law that is the equivalent of the
bank bailout bill—some $447 billion in subsidies for insurance interests alone—for the pharmaceutical and
insurance industries. It is a law that is unconstitutional. And it is a law by which President Barack Obama, and
his corporate backers, extinguished the possibilities of both the public option and Medicare for all
Americans. There is no substantial difference between Obamacare and Romneycare. There is no substantial
difference between Obama and Romney. They are abject servants of the corporate state. And if you vote
for one you vote for the other.
But you would never know this by listening to the Democratic Party and the advocacy groups that purport to
support universal health care but seem more intent on re-electing Obama. It is the very sad legacy of the
liberal class that it proves in election cycle after election cycle that it espouses moral and political positions
it will not pay a price to defend. And since we have no fight in us, since we will not punish politicians like
Obama who betray our core beliefs, the corporate juggernaut rolls forward with its inexorable pace to
cement into place our global neofeudalism.
Protesting outside the Supreme Court recently as it heard arguments on the constitutionality of the
Affordable Care Act were both conservatives from Americans for Prosperity who denounced the president
as a socialist and demonstrators from Democratic front groups such as the SEIU and the Families USA
health care consumer group who chanted “Protect the law!” Lost between these two factions were a few
stalwarts who hold quite different views, including public health care advocates Dr. Margaret Flowers, Dr.
Carol Paris and attorneys Oliver Hall, Kevin Zeese and Russell Mokhiber. They displayed a banner that read:
“Single Payer Now! Strike Down the Obama Mandate!” They, at least, have not relinquished the demand for
single payer health care for all Americans. And I throw my lot in with these renegades, dismissed, no doubt,
as cranks or dreamers or impractical by those who flee into the embrace of empty political theater and junk
politics. These single payer advocates, joined by 50 doctors, filed a brief to the court that challenges, in the
name of universal health care, the individual mandate.
“We have the solution, we have the resources and we have the money to provide lifelong, comprehensive,
high-quality health care to every person,” Dr. Flowers said when we spoke a few days ago in Washington, D.C.
Many Americans have not accepted the single payer approach “because people get confused by the politics,”
she said. “People accept the Democratic argument that this [Obamacare] is all we can have or this is
something we can build on.
“If you are trying to meet the goal of universal health coverage and the only way to meet that goal is to
force people to purchase private insurance, then you might consider that it is constitutional,” Flowers said.
“Our argument is that the individual mandate does not meet the goal of universality. When you attempt to
use the individual mandate and expansion of Medicaid for coverage, only about half of the uninsured gain
coverage. This is what we have seen in Massachusetts. We do, however, have systems in the United States
that could meet the goal of universality. That would be either a Veterans Administration type system, which
is a socialized system run by the government, or a Medicare type system, a single payer, publicly financed
health care system. If the U.S. Congress had considered an evidence-based approach to health reform
instead of writing a bill that funnels more wealth to insurance companies that deny and restrict care, it
would have been a no-brainer to adopt a single payer health system much like our own Medicare. We are
already spending enough on health care in this country to provide high-quality, universal, comprehensive,
lifelong health care. All the data point to a single payer system as the only way to accomplish this and control
health care costs.”
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Obamacare will, according to figures compiled by Physicians for a National Health Plan (PNHP), leave at least
23 million people without insurance, a figure that translates into an estimated 23,000 unnecessary deaths a
year among people who cannot afford care. Costs will continue to climb. There are no caps on premiums,
including for people with “pre-existing conditions.” The elderly can be charged three times the rates
provided to the young. Companies with predominantly female workforces can be charged higher gender-
based rates. Most of us will soon be paying about 10 percent of our annual incomes to buy commercial health
insurance, although this coverage will pay for only about 70 percent of our medical expenses. And those of
us who become seriously ill, lose our incomes and cannot pay the skyrocketing premiums are likely to be
denied coverage. The dizzying array of loopholes in the law—written in by insurance and pharmaceutical
lobbyists—means, in essence, that the healthy will receive insurance while the sick and chronically ill will be
priced out of the market.
Medical bills already lead to 62 percent of personal bankruptcies, and nearly 80 percent of those declaring
personal bankruptcy because of medical costs had insurance. The U.S. spends twice as much per capita on
health care as other industrialized nations, $8,160. Private insurance bureaucracy and paperwork consume
31 percent of every health care dollar. Streamlining payment through a single, nonprofit payer would save
more than $400 billion per year, enough, the PNHP estimates, to provide comprehensive, high-quality
coverage for all Americans.
But as long as corporations determine policy, as long as they can use their money to determine who gets
elected and what legislation gets passed, we remain hostages. It matters little in our corporate state that
nearly two-thirds of the public wants single payer and that it is backed by 59 percent of doctors. Public
debates on the Obama health care reform, controlled by corporate dollars, ruthlessly silence those who
support single payer. The Senate Finance Committee, chaired by Max Baucus, a politician who gets more than
80 percent of his campaign contributions from outside his home state of Montana, locked out of the
Affordable Care Act hearing a number of public health care advocates including Dr. Flowers and Dr. Paris;
the two physicians and six other activists were arrested and taken away. Baucus had invited 41 people to
testify. None backed single payer. Those who testified included contributors who had given a total of more
than $3 million to committee members for their political campaigns.
“It is not necessary to force Americans to buy private health insurance to achieve universal coverage,” said
Russell Mokhiber of Single Payer Action. “There is a proven alternative that Congress didn’t seriously
consider, and that alternative is a single payer national health insurance system. Congress could have taken
seriously evidence presented by these single payer medical doctors that a single payer system is the only
way to both control costs and cover everyone.”
The Top Five Signs Roger Ailes is Still In Charge of the GOP
POSTED: September 26, 2:06 PM ET | By Tim Dickinson
Comment 2
Roger Ailes
Brown/Getty
Howard Kurtz has a juicy exclusive on Roger Ailes in NewsBeast today, but he's buried the actual
news under a fluffy, nonsensical storyline that Ailes has dialed back his control of the Republican
party.
From Kurtz' own story: The top five signs that "The Chairman" is still chairman of the GOP.
1) Rick Perry kissed Ailes' ring
"A few months back," when the Texas Governor was debating jumping into the presidential race, Rick
Perry paid court in Ailes' office at Fox News soliciting, in particular, fundraising advice, Kurtz
reports. “Money will find you if people believe in your message,” Ailes told Perry.
2) Romney wooed Ailes over dinner
Not to be outdone by his Lone Star rival, Mitt Romney also sought Ailes' backing, meeting recently
for a "pasta dinner." Ailes was struck by Romney's unexpected wit and gave him advice on how to be
"looser on the air."
3) Broke-Ass Tim Pawlenty went grubbing for a job at Fox
Fox News continues to be the top fallback for failed GOP politicians looking to make some fast cash.
Kurtz reveals that former 2012 contender Tim Pawlenty "showed up to ask for a gig," which Ailes
refused him, seemingly because he doesn't like Romney all that much. (Pawlenty has endorsed the
former Massachusetts governor.) “I’m not sure I want to sign you as a paid spokesman for Romney,”
Ailes told T-Paw.
4) The GOP's Anti-Regulatory Push? Thank Ailes
Ailes himself "cooked up" a Fox News programming blitz called "Regulation Nation" dedicated to
showing how regulations are killing the economy. No mystery here: This top GOP talking point reflects
a core belief for Chairman Ailes: "I think regulations are totally out of control, [with bureaucrats
hiring Ph.D.s to] sit in the basement and draw up regulations to try to ruin your life,” Kurtz quotes
Ailes as saying.
5) Ailes can't control Shep Smith
Fox News anchor Sheppard Smith, who frequently strays from the Ailes party line, has been called to
the woodshed: “Every once in a while Shep Smith gets out there where the buses don’t run," Ailes
tells Kurtz, "and we have a friendly talk.”
Bonus: Ailes remains still a wee-bit paranoid
Kurtz captures Ailes discussing the excessive security measures at Fox News (which, as I reported,
inlude a bomb-proof office): “Listen," Ailes says. "One out of every 25 people in America is a
psychopath.”
How Roger Ailes Built the Fox News Fear Factory
The onetime Nixon operative has created the most profitable propaganda machine in history. Inside
America's Unfair and Imbalanced Network
by: Tim Dickinson
Scott Walker Quietly Repeals Wisconsin Equal Pay Law
Posted: 04/ 6/2012 12:09 pm Updated: 04/ 6/2012 2:19 pm
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Wisconsin Equal Pay, Wisconsin Pay Equity, Marlo's Slideshows, Politics News
WASHINGTON -- A Wisconsin law that made it easier for victims of wage discrimination to have their day in
court was repealed on Thursday, after Wisconsin Gov. Scott Walker (R) quietly signed the bill.
The 2009 Equal Pay Enforcement Act was meant to deter employers from discriminating against certain
groups by giving workers more avenues via which to press charges. Among other provisions, it allows
individuals to plead their cases in the less costly, more accessible state circuit court system, rather than
just in federal court.
In November, the state Senate approved SB 202, which rolled back this provision. On February, the
Assembly did the same. Both were party-line votes in Republican-controlled chambers.
SB 202 was sent to Walker on March 29. He had, according to the state constitution, six days to act on the
bill. The deadline was 5:00 p.m. on Thursday. The governor quietly signed the bill into law on Thursday,
according to the Legislative Reference Bureau, and it is now called Act 219.
Walker's office did not return repeated requests for comment.
State Sen. Dave Hansen (D-Green Bay) and Rep. Christine Sinicki (D-Milwaukee), the authors of the Equal
Pay Enforcement Act, criticized Walker on Thursday for not informing the public of his actions on SB 202.
“We are finally starting to see progress here in Wisconsin, yet like their counterparts across the country,
Legislative Republicans want to turn back the clock on women’s rights in the workplace,” said Hansen.
Women earn 77 cents for every dollar that men make. In Wisconsin, it's 75 cents, according to the
Wisconsin Alliance for Women’s Health (WAWH), which also estimates that families in the state "lose more
than $4,000 per year due to unequal pay."
Business associations lobbied in support of SB 202, according to the state's Government Accountability
Board. Groups like Wisconsin Manufacturers and Commerce, and the Wisconsin Restaurant Association all
backed a repeal.
Sara Finger, executive director of WAWH, said that the repeal was a "demoralizing attack on women’s
rights, health, and wellbeing."
"Economic security is a women’s health issue," she said. "The salary women are paid directly affects the type
and frequency of health care services they are able to access. At a time when women’s health services are
becoming more expensive and harder to obtain, financial stability is essential to maintain steady access."
Walker is facing a recall election in June. The two frontrunners on the Democratic side who are competing to
unseat him, former Dane County executive Kathleen Falk and Milwaukee Mayor Tom Barrett, sharply
criticized the governor for allowing the repeal bill to become law.
Falk said Walker has "turned back the clock for women across Wisconsin."
"As a woman and as a mother who worked full-time while raising my son, I know first-hand how important
pay equity and health care are to women across Wisconsin," she said in a statement to The Huffington Post.
A spokesman for Barrett's campaign said that Walker's "ideological civil war includes a war on women, and
repeal today of this protection against pay discrimination is a major step backwards for Wisconsin values
and basic fairness."
"Tom Barrett knows equal pay for equal work is essential, and failing to stand up for Wisconsin women in the
workplace is yet another reason he [Walker] must be defeated this summer," he said.
UPDATE: 2:17 p.m. -- The Plum Line reports that President Barack Obama's campaign spokeswoman Lis
Smith responded to Walker's repeal, calling on former Massachusetts Gov. Mitt Romney, the frontrunner
for the GOP presidential nomination, to take a position on the issue.
"As he campaigned across Wisconsin, Mitt Romney repeatedly praised Governor Scott Walker's leadership,
calling him a 'hero' and 'a man of courage,'" she said. "But with his signing yesterday of a bill make it harder
for women to enforce in court their right to equal pay, Walker showed how far Republicans are willing to go
to undermine not only women's health care, but also their economic security. Does Romney think women
should have ability to take their bosses to court to get the same pay as their male coworkers? Or does he
stand with Governor Walker against this?"
Growth of Income Inequality Is Worse Under Obama than Bush
Matt Stoller is a fellow at the Roosevelt Institute. You can follow him on twitter at http://www.twitter.
com/matthewstoller
Yesterday, the President gave a speech in which he demanded that Congress raise taxes on millionaires, as a
way to somewhat recalibrate the nation’s wealth distribution. His advisors, like Gene Sperling, are giving
speeches talking about the need for manufacturing. A common question in DC is whether this populist pose
will help him win the election. Perhaps it will. Perhaps not. Romney is a weak candidate, cartoonishly wealthy
and from what I’ve seen, pretty inept. But on policy, there’s a more interesting question.
A better puzzle to wrestle with is why President Obama is able to continue to speak as if his administration
has not presided over a significant expansion of income redistribution upward. The data on inequality shows
that his policies are not incrementally better than those of his predecessor, or that we’re making progress
too slowly, as liberal Democrats like to argue. It doesn’t even show that the outcome is the same as Bush’s.
No, look at this table, from Emmanuel Saez (h/t Ian Welsh). Check out those two red circles I added.
Yup, under Bush, the 1% captured a disproportionate share of the income gains from the Bush boom of 2002-
2007. They got 65 cents of every dollar created in that boom, up 20 cents from when Clinton was
President. Under Obama, the 1% got 93 cents of every dollar created in that boom. That’s not only more
than under Bush, up 28 cents. In the transition from Bush to Obama, inequality got worse, faster, than
under the transition from Clinton to Bush. Obama accelerated the growth of inequality.
The data set is excellent, it’s from the IRS and it’s extremely detailed. This yawing gap of inequality isn’t an
accident, and it’s not just because of Republicans. It’s a set of policy choices, as Saez makes clear in his
paper.
Looking further ahead, based on the US historical record, falls in income concentration due to economic
downturns are temporary unless drastic regulation and tax policy changes are implemented and prevent
income concentration from bouncing back. Such policy changes took place after the Great Depression during
the New Deal and permanently reduced income concentration until the 1970s.
Income concentrations are relatively rare, but when they happen, sharp policy moves can retain a strong
measure of equality. It’s well-known at this point that President Obama did not want to make such moves.
TARP, cramdown, and the foreclosure fraud settlement suggest that his interests lie in preserving the
capital structure of the large banks. What about other policy priorities?
Despite his recent speech, President Obama knows that his income tax proposal is going nowhere. So let’s
look at three recent policy choices that are going somewhere.
1) President Obama is on the verge of approving a Free Trade deal with Colombia, despite the murder of
union organizers in that country. Not content with establishing similar deals with Panama (which has to do
with enlarging tax havens) and South Korea, the administration is now embarking on a much vaster Trans-
Pacific Partnership deal with countries all over Asia. And it’s being negotiated entirely in secret, with
corporate and government officials the only ones allow to be in the room. Trade is a significant driver of
lower wages.
2) President Obama just pushed for and signed the JOBS Act, which is a substantial relaxation of
regulations and accounting requirements on corporations seeking to go public. Bill Black has many four letter
words to describe this bill, but it’s basically a license for Wall Street to commit fraud in the equity
markets. The SEC is beginning to promulgate instructions on how this will work.
3) President Obama just refused to issue an executive order forcing campaign spending disclosure by
government contractors. President Obama actually criticized the Supreme Court’s decision in Citizens
United at a State of the Union address, but as with yesterday’s speech on raising taxes on millionaires, there
was actually no there there.
There are many other policy fights, and the President has engaged constructively in some areas and
negatively in others. He has been undermined as well as aided by his staff. And he’s just one man, heading
up a franchise of thousands of other political actors. It’s been clear, though, since before he took office,
that his is a consistent policy architecture on the core questions of power and wealth. In the orbit of this
President, power and wealth flow upward.
It’s important not to overstate the conclusion. It’s not obvious that Obama’s policy framework is worse than
Bush’s, only that the outcome is. After all, the losses suffered by the wealthy during 2007-2009 recession
were less severe than those it suffered in the 2000-2002 recession, and most of the Great Recession
happened under Bush (with a Democratic Congress). It’s possible that the Obama policy framework is a bit
less bad, but he has been more successful at implementation because unlike Bush, he han’t face any pressure
from Democrats. In other words, perhaps Obama’s policy thrust has just been implemented more fully,
because the traditional opposition to plutocratic rule, the left, has been silenced. Perhaps it’s a competence
issue. Or maybe you can chalk it all up to structural factors, though I suspect the JOBS Act and trade
deals imply otherwise. Maybe he really is as conservative as these policy choices suggest. It’s hard to say.
Mitt Romney might be easy to jeer at for his wealth and arrogance, but Saez’s data suggests that Barack
Obama is just as much the candidate of inequality.
Topics: Guest Post
< Headlines | Next Story >
Tuesday, April 10, 2012 Whole Show
Training Terrorists in Nevada: Seymour Hersh on U.S. Aid to Iranian Group Tied to Scientist Killings
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Journalist Seymour Hersh has revealed that the Bush administration secretly trained an Iranian opposition
group on the State Department’s list of foreign terrorists. Hersh reports the U.S. Joint Special Operations
Command trained operatives from Mujahideen-e-Khalq, or MEK, at a secret site in Nevada beginning in
2005. According to Hersh, MEK members were trained in intercepting communications, cryptography,
weaponry and small unit tactics at the Nevada site up until President Obama took office. The MEK has been
listed as a foreign terrorist groups since 1997 and is linked to a number of attacks, spanning from the
murders of six U.S. citizens in the 1970s to the recent wave of assassinations targeting Iranian nuclear
scientists. Hersh also discusses the role of Israeli intelligence and notes the Obama administration knew
about the training, "because they have access to what was going on in the previous administration in this area
in terms of the MEK, in terms of operations inside Iran." His new report for The New Yorker blog, "Our
Men in Iran?," comes as nuclear talks are set to resume this week between Iran and the International
Atomic Energy Agency. [includes rush transcript]
Highest taxes in the world Denmark #1, World Happiness Report 2012: Scandinavian Countries Are
Happiest On Earth (SLIDESHOW)
Posted: 04/ 6/2012 4:10 pm Updated: 04/ 6/2012 6:49 pm
Denmark has taken the top spot on the United Nation's first ever World Happiness Report, followed by
Finland, Norway and the Netherlands.
The 158-page report, published by Columbia University's Earth Institute, was commissioned for the United
Nations Conference on Happiness on Monday in order to "review the state of happiness in the world today
and show how the new science of happiness explains personal and national variations in happiness."
The rankings in the report were based on a number called the "life evaluation score," a measurement which
takes into account a variety of factors including people's health, family and job security as well as social
factors like political freedom and government corruption. It also looks at measurements from previous
reports on happiness from the Gallup World Poll (GWP), the World Values Survey (WVS), the European
Values Survey (EVS), and the European Social Survey (ESS).
In the introduction to the report, co-editors John Helliwell, Richard Layard and Jeffrey Sachs explain that
the report aims in part to evaluate happiness based on a more comprehensive measurement system that can
be used to inform policy-makers. As the Atlantic explains, previous reports on happiness have linked
personal contentment to income, but that correlation has been challenged in recent years by economists who
have argued that the happiness of a nation is determined by far more than its Gross National Product.
"While basic living standards are essential for happiness, after the baseline has been met happiness varies
more with the quality of human relationship than with income," the report read. "Policy goals should include
high employment and high-quality work; a strong community with high levels of trust and respect, which
government can influence through inclusive participatory policies; improved physical and mental health;
support of family life; and a decent education for all."
Based on its "life evaluation score," which is rated on a scale of 0-to-10, the report found that Denmark,
Norway, Finland and the Netherlands outstripped all other nations with an average score of 7.6 between
them.
On the other end of the spectrum, Benin, Central African Republic, Togo and the Sierra Leone had an
average life evaluation score of 3.4.
However, the fact that wealthier nations far outscore poor African nations like Togo and Sierre Leone would
point to a flaw in the study's thesis, according to Forbes' Tim Worstall.
"That basic thesis is that economic growth doesn’t really improve happiness, we really ought to be worrying
about human happiness and thus we should concentrate on things other than economic growth," Worstall
wrote on Forbes' website. "The problem with this is that their own report shows that the absence of
economic growth most definitely makes people unhappy: therefore we should indeed strive for economic
growth in order to make people happy."
House Investigator Issa Has Faced Allegations As Well
by Andrea Seabrook
Kevin LaMarque/Reuters/Landov
Rep. Darrell Issa, R-Calif., chairman of the House oversight committee, made news recently for going after
the Justice Department's botched gun operation, known as Fast and Furious. Here, Issa listens during
Attorney General Eric Holder's testimony in February.
text size A A A
April 16, 2012
The man driving the investigation into the General Services Administration, California Republican Rep.
Darrell Issa, took the top seat on the House Oversight and Government Reform Committee after the GOP
won a majority in 2010.
Issa has led several splashy investigations since. But he's also been dogged by allegations of his own.
Issa has made news in recent months by threatening to subpoena Attorney General Eric Holder, and by
calling a panel of only men to talk about women's contraception.
The Car Alarm Voice
Issa made his fortune building and selling Viper car alarms. He is the wealthiest member of Congress, worth
as much as $450 million. In fact, it's Issa's voice on the popular alarm's signature warning to would-be
thieves: "Protected by Viper. Stand back."
What's less well known is how Issa got into car alarms in the first place.
"For years I used to tell everyone that I went into it because my brother was a car thief. Then they found
out when I ran for office my brother did spend time in prison as a car thief, and it ruined the whole joke I'd
had for 20 years in business," Issa said during an interview with WhoRunsGov.
Issa himself was accused several times of auto theft. In the early 1970s, he and his brother were arrested
after police suspected them of stealing a Maserati sports car from a dealership in Cleveland. Issa says the
police mistook his identity, and the charges were later dismissed.
Another time, Issa was arrested and eventually pleaded guilty to carrying a concealed weapon. Police found
a handgun and a tear-gas gun — plus ammunition for both — in Issa's glove compartment.
Questions In The Past
These stories first arose when Issa ran for the Senate in 1998. An investigative reporter named Lance
Williams was looking into the then-candidate's biography.
"He had been a soldier, and he claimed that he was part of an elite bomb detecting unit that guarded
President Nixon at the 1971 World Series," said Williams.
Williams called up the Nixon Presidential Library, and was told that Nixon hadn't gone to any World Series
games that year. Then Williams looked into Issa's purportedly stellar career in the Army.
"The biography that he was providing the press in the context of his campaign was all wrong. He had a bad
conduct rating. He was demoted, and a fellow soldier accused him of stealing his car," said Williams.
Issa eventually took over the company that built car alarms.
Ryan Lizza, a reporter for The New Yorker magazine, detailed Issa's early business moves in a 2011 story.
The Fire
Issa had a warehouse full of electronics that, one night in 1982, caught fire. Investigators later found
"suspicious burn patterns," Lizza reported, and found that Issa had done some odd things.
A co-worker claimed that before the fire, Issa had put important electronic prototypes in a fireproof box,
and that he'd removed the business's computer and financial files from the building. Investigators also
found that less than three weeks before the blaze, Issa had increased the company's fire insurance from
$100,000 to more than $400,000.
"So you add the more than quadrupling of the insurance along with the taking the computer and putting the
other stuff in a fireproof box, and you can see why both the arson investigators and the insurance
investigators pointed a finger, you know, at Issa after this fire," said Lizza.
Issa said he had nothing to do with the fire, but the insurance company refused to pay the claim. The two
later settled out of court.
It was in part because of these allegations that Issa lost his Senate bid in 1998. He went on to win his House
seat, he worked to recall the governor of California, and now he chairs the powerful House Oversight and
Government Reform Committee.
Issa would not talk to NPR about this, but he has told several news outlets over the years that he's
surprised the allegations from his past continue to dog him.
How billionaires destroy democracy
Wealthy Wall Streeters have rigged the economy and the government against the people. Here's how they
did it
By Linda McQuaig and Neil Brooks
•
•
Kenneth Griffin, Philip Falcone, Jim Simons and John Paulson testify before a House Oversight and
Government Reform Committee hearing on the regulation of hedge funds in 2008. (Credit:
Reuters/Jonathan Ernst)
Topics:Wall Street, Editor's Picks, Fox News, Koch Brothers
There are many words that could be used to describe Barack Obama, but one adjective decidedly doesn’t
fit: Aggressive. So it was more than passing strange when a prominent member of Wall Street — Stephen
Schwarzman, chairman of the private equity giant Blackstone Group — compared actions by President Obama
to one of the most notoriously aggressive acts by one of history’s most aggressive villains. Speaking to the
board of a nonprofit group, Schwarzman fiercely denounced initiatives by the Obama administration: “It’s
war. It’s like when Hitler invaded Poland in 1939.”
In the arena of political commentary, few things are considered more clearly below-the-belt than comparing
an opponent to Hitler. So there was a small stir in August 2010 when it was reported that Schwarzman —
whom Time magazine had included on its 100 most influential people list only three years earlier — had
likened Obama to the Nazi strongman. Schwarzman acknowledged making the remark and then apologized
for it, while reaffirming the sentiment behind it. But what was striking about the Hitler comment — besides
its sheer viciousness and absurdity — was what had provoked it. Schwarzman wasn’t complaining about undue
military force, torture, or ethnic cleansing. He was likening the president to the most reviled man in history
on the grounds that Obama was trying to close a tax loophole that allowed hedge fund and private equity
managers (like Schwarzman) to pay tax at a rate that Warren Buffett famously noted was lower than that
paid by their secretaries.
In an era marked by gluttony and hubris, Steve Schwarzman has still managed to stand out.
His 60th birthday party in Manhattan in 2007 was so lavish — with live performances by Rod Stewart and
Martin Short — it became Wall Street legend. Then there’s Schwarzman’s 35-room Park Avenue residence,
his sprawling estate in Saint-Tropez, a spectacular spread in Jamaica, and his massive Palm Beach estate,
where the executive chef says it typically costs about $3,000 a weekend to feed just Schwarzman and his
wife.
Schwarzman is a major figure in private equity, part of the surging field of “alternative asset” financial
institutions that, along with hedge and real estate funds, appeared on the horizon two decades ago and now
control trillions of dollars in assets. While hedge funds are well-known for contributing to the subprime
mortgage crash, private equity funds are notorious for taking over established firms with borrowed money
and essentially pillaging them. The bought-out companies are typically saddled with increased debt from the
takeover and forced to make massive dividend and fee payouts to the private equity managers and their
investors, while employees are shedded and union contracts gutted. The companies are usually chopped up
into smaller pieces and sold soon afterwards at inflated prices, creating another windfall for the private
equity managers. By 2007, the Blackstone Group had taken control of more than 112 companies worth nearly
$200 billion. In 2011, Schwarzman ranked 169th on Forbes’ worldwide billionaire list, worth an estimated
$5.9 billion.
Schwarzman may be rougher at the edges than most of the hedge fund and private equity crowd. But his
outburst against Obama reminds us of the “war” he and others — by themselves or by proxies — have been
engaged in to minimize their contribution to the public treasury. It’s an all-too-familiar tale of how effective
the rich are at getting their way, even when the battle is being played out in a very public arena where a
small group of billionaires advancing their own self-interest would seem a very tough sell.
- – - – - – - – - – - -
Victor Fleischer didn’t set out to be a 21st-century Robin Hood. His real aim was just to get tenure.
Fleischer joined the New York law firm Polk Davis in the late 1990s, working on the formations of private
equity and venture capital funds. He was struck by the very low rates of tax paid by fund managers, even
compared to the already low tax rates being paid by executives receiving corporate stock options. Fleischer
wasn’t discovering something new; the rules had been in place since 1954. Nor was he outraged or even
particularly interested in the question of tax fairness. At the time, he was simply interested in the impact
that the tax rules governing so-called “carried interest” might have on the law firm’s clients.
The question stayed in Fleischer’s mind after he left Polk Davis in 2001 and became a law professor
specializing in taxation. Hoping to get a paper published to improve his chances of securing tenure, Fleischer
put together his thoughts on the taxation of private equity funds. Now that he was no longer constrained by
working for people in the private equity field, he started to pay attention to what seemed to him to be a
“quirk” in the law that distorted tax principles while undermining distributive justice.
He identified the fact that managers of private equity, venture capital and hedge funds were claiming a
significant part of their incomes as capital gains (taxed at 15 percent), rather than treating them as regular
income (taxed at 35 percent). That substantial difference in rates was magnified by the enormity of the
incomes in question. A private equity manager receiving, say, $600 million as a capital gain would pay $90
million in tax. If the same income were treated as income from salary, it would be taxed at 35 percent (and
also be subject to a 2.9 percent payroll tax), bringing the private equity manager’s tax bill to $227.4 million
— almost $140 million more.
The ostensible purpose of the lower capital gains rate is to compensate investors for the risk they take in
investing their capital. But private equity and fund managers aren’t investing their own capital. They’re
investing other people’s capital. They’re simply money managers. By claiming capital gains treatment, they are
passing off regular income as capital gains, simply to save themselves taxes.
The fund managers insist that their compensation is still very risky; while some deals may lead to huge
profits, others prove disastrous. True. But risk is hardly confined to fund managers. And at lower income
levels, the risks are far larger. Indeed, in the last 30 years, vast swaths of the economy could be
designated as risky for those needing to earn a living. The sort of stable, lifelong jobs that were common a
generation ago have been largely replaced by contract or part-time work, with little or no security. A layoff
can mean the loss of the family home or health benefits, or even destitution — far more serious plights than
anything likely to befall a hedge fund manager. (For that matter, no one ever seems to argue for special low
tax rates for the real risk-takers among us — miners, oil-rig workers, acrobats, firemen, window washers
working on tall buildings.)
The so-called “carried interest” loophole enjoyed by hedge fund and private equity managers raises the
larger question of whether capital gains — even real ones — should ever be taxed at lower rates. On the
face of things, the lower rate seems patently unfair. Why should someone earning income by investing their
fortune be taxed at a substantially lower rate than those earning income from the sweat of their brows or
from using skills they’ve spent years acquiring? The fairness argument has essentially been set aside,
however, as business has relentlessly promoted the notion that such preferential treatment is necessary to
coax those with capital to invest it. But do investors really need coaxing? Warren Buffett, one of the world’s
savviest investors, doesn’t think so. “I have worked with investors for 60 years and I have yet to see anyone
— not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment
because of the tax rate on the potential gain,” Buffett argues.
Our business culture tends to portray investors as modern-day heroes who put their hard-earned capital
into worthy high-risk ventures that lead to path-breaking discoveries that enrich the lives of all of us. Sadly,
the vast majority of investments don’t fit into this category (and those that do qualify for additional tax
incentives). Rather, as former mutual fund manager John C. Bogle notes, “most capital gains are made from
gambling in the stock market.” So the ultimate function of the special low rate on capital gains is to save our
wealthiest citizens billions of dollars a year on their winnings in the Wall Street casino.
- – - – - – - – - – - -
Fleischer’s paper found its way into the hands of congressional Democrats at a time when they were looking
for fresh sources of revenue to pay for the expansion of the State Children’s Health Insurance Program
and the Earned Income Tax Credit. The juxtaposition of high-flying hedge fund managers and children
without health care seemed like a public relations nightmare for the Wall Street crowd.
Schwarzman himself helped put an unsavory face on the fund manager set with his plan to turn Blackstone
into a publicly traded company in the spring of 2007. The plan would not only allow Schwarzman and other
top Blackstone executives to continue to qualify for the low capital-gains rate as fund managers, but would
also allow their new multi-billion-dollar publicly traded company to largely avoid paying corporate taxes. If
Schwarzman won the approval of SEC regulators, he and Blackstone co-founder Peter Peterson would
receive billions of dollars worth of stock, plus hundreds of millions in cash. And this would surely set a
precedent, enticing other private equity funds, as well as investment banks — including giants like Goldman
Sachs and Morgan Stanley — to reorganize themselves along similar lines, making the paying of corporate
taxes almost optional for Wall Street institutions.
Schwarzman’s move had pushed the issue of sweetheart taxation for private equity kings from law school
reviews to the front pages of newspapers. A bill to stop Schwarzman — dubbed the Blackstone bill —
quickly appeared in Congress.
Momentum seemed to be building against the Blackstone deal and more broadly for a bill, sponsored by
Democratic congressman Sander Levin that would shut down the fund manager loophole completely. But Wall
Street quickly organized a counterattack. Some of the largest private equity firms formed the Private
Equity Council, and, within six months, the Council had retained four top lobby firms to handle the case. Labor
and public interest groups lobbied from the other side, presenting a letter to Congress signed by more than
a hundred organizations across the country urging that the loophole be closed. But private equity had
resources that were probably 1,000 times greater, according to Steve Wamhoff, legislative director of the
Washington-based group Citizens for Tax Justice.
No argument seemed too extreme or silly to advance in defense of maintaining the loophole. Lobbyists
insisted, for instance, that the tax break was crucial in the fight against cancer, pointing to the fact that the
loophole also applied to those running venture capital funds, which sometimes invest in high-risk start-up
firms — including those developing products to fight cancer. Private equity was trying to make the case that
showering tax breaks on all fund managers, some of whom might be investing their funds in firms involved in
fighting cancer, was an effective way to subsidize the fight against cancer — rather than simply increasing
direct subsidies to cancer researchers or start-up firms.
In the end, the weakness of the case for maintaining the loophole didn’t matter. In three years of
Congressional battles over the issue — with the Democrats mostly voting to shut down the loophole, and
Republicans voting to keep it alive — the House passed a bill to shut it down three times. But Democrats
finally abandoned attempts to overcome Republican obstacles in the Senate in June 2010. So, even with the
Democrats holding the White House, the House and the Senate (including 60 seats for a while), “they were
still incapable of closing the most indefensible loophole in existence,” notes Wamhoff.
- – - – - – - – - – - -
In the run-up to the debt-ceiling crisis in the summer of 2011, the most indefensible loophole in existence
was once again in the spotlight. Figures from the Congressional Budget Office showed that closing the
loophole could save $21 billion over 10 years. That wouldn’t eliminate the debt, of course, but given the scope
of the debt problem, it seemed a lot of money to simply ignore. New York Times columnist Nicholas Kristof
devoted a column to the tax break, awarding it the grand prize for the “Most Unconscionable Tax Loophole.”
The president himself zeroed in on it again. “How can we ask a student to pay more for college before we
ask hedge fund managers to stop paying taxes at a lower rate than their secretaries?” Obama said in an
address to Congress in July.
But the Tea Party crowd now becoming power players in the Republican Party was as resistant to
compromise as Obama was prone to it. They blamed the mounting deficit entirely on Obama (even though
George W. Bush had added $5.07 trillion to the debt, primarily due to his tax cuts and military spending,
while Obama had added just $1.44 trillion, mostly fighting the recession). Spotting an opportunity to use the
deficit to achieve deep spending cuts, hard-line Republicans refused to raise the debt ceiling without a long-
term strategy for debt reduction, which they insisted be entirely achieved through spending cuts. In the
final deal, signed into law just hours before the deadline for a Latin American–style default, the hijackers
appeared to win, with $917 billion in deficit-reduction measures all to come from spending cuts (and another
$1.5 trillion to be worked out by a bipartisan committee). The radical Republicans had turned the fairly
routine business of raising the debt ceiling — something Republicans had agreed to 87 times since World
War II — into a bloodbath of spending cuts.
An observer could easily conclude that all this simply shows how resistant Americans have become to tax
increases. But in fact it shows no such thing. In the years leading up to the debt-ceiling showdown, Americans
have repeatedly told pollsters that they support higher taxes on the rich as a way to reduce the deficit. A
Washington Post-ABC News poll reported in July 2011, as the crisis reached a crescendo, found that 72
percent supported raising taxes on those earning more than $250,000 a year.
What the debt-ceiling fiasco really showed was how a band of Republican extremists had effectively taken
the U.S. political system hostage and were moving to enact the Right’s long-time fantasy of dismantling
popular New Deal programs — particularly Social Security — which had been politically untouchable since the
1930s. Americans were told that these programs were simply no longer affordable — even though the
country had grown considerably richer over the decades. In fact, what had changed was not the
affordability of the programs but the intransigence of the nation’s elite to paying taxes.
So while programs helping students, the elderly, and the poor were to be picked over by deficit-cutting
politicians with surgical precision, private equity and hedge fund mangers were to be spared any increase in
taxes. They could get back to work pillaging companies and destabilizing financial markets with full peace of
mind, knowing they’d continue to enjoy a tax rate lower than the mechanics who service their private jets.
Indeed, only a month after the debt-ceiling crisis, Stephen Schwarzman was back on the offensive, no
longer just defending the special tax break that saved him millions of dollars a year, but now insisting on the
need for broad tax reform — so that low-income people would pay more. Schwarzman’s concern was that
many Americans manage to avoid paying income tax at all because their incomes are so low. His solution was a
flat tax, so that everyone would pay some income tax. “If some people are left out and some people have
special deals, it doesn’t feel like the kind of situation where everyone’s going to get on board,” Schwarzman
told CNBC.” For Schwarzman, “special deals” aren’t loopholes for billionaires but exemptions for those with
low incomes — mostly the elderly, people with children, and the poor — who’ve been dubbed “lucky duckies”
by the Wall Street Journal for their apparent tax-free status.
Having rebuffed Obama’s invasion, the Wall Street crowd was now itching to launch a counter-invasion. No
longer was the goal just to protect their own loopholes. They now sought to solve the deficit crisis, which
they had greatly contributed to with their reckless financial speculation, by digging into the empty pockets
of low-income Americans. It wasn’t that the rich weren’t paying enough tax; it was that others weren’t paying
enough. It was time to go after the lucky duckies. A new rallying cry could be heard rumbling from the
boardrooms of Wall Street: Make the Poor Pay!
- – - – - – - – - – - -
Barely a month after Barack Obama had been sworn in as the 44th U.S. president, riding a wave of immense
popular support with his “Yes, we can” rallying cry echoing around the country and the world, a voice seemed
to appear from nowhere saying, “No, actually you can’t.” Ostensibly, it came first from Rick Santelli, a
relatively obscure investment manager-turned-commentator on CNBC, who denounced Obama’s plans to help
struggling American homeowners as “promoting bad behavior.” In a wide-ranging rant from the floor of the
Chicago Mercantile Exchange on February 19, 2009, Santelli said, “We’re thinking of having a Chicago Tea
Party in July. All you capitalists that want to show up to Lake Michigan, I’m gonna start organizing.” Within
hours, a protest movement had swung into action on the Internet, talk radio, and cable TV, and rallies were
scheduled across the country for the following week.
The apparently spontaneous outburst of disaffected Americans was greatly helped along by an organized
and sophisticated campaign ultimately funded by two of America’s richest men, Charles and David Koch.
In many ways, the emergence of the Tea Party as a potent force in American politics can be seen as the
culmination of almost four decades of behind-the-scenes effort on the part of the billionaire brothers. The
political views of the Koch brothers have always been on the extreme right, nurtured by their father, Fred
Koch, a cofounder of the ultra-right-wing John Birch Society. Since inheriting his massive privately held oil
fortune in the late 1960s, the brothers have been pouring untold millions of dollars into promoting libertarian
causes. The probing of Ames and Levine, as well as a comprehensive, investigative piece by Jane Mayer in
the New Yorker in August 2010, have shown that the brothers established a vast network of ultra-
conservative political organizations, advocacy groups, publications, and think tanks. Included in this network
is the high-profile Cato Institute, which has aggressively pushed for an end to Social Security, and the
Mercatus Center, located at George Washington University, which has been a leading advocate of
environmental deregulation and inaction on climate change.
The brothers have mostly stayed out of politics directly (apart from David Koch’s stint as the vice
presidential candidate for the Libertarian Party in 1980, positioned to the right of Ronald Reagan). Perhaps
the Kochs sensed how politically toxic a couple of billionaires could be to a movement whose central aim has
been slashing taxes on the rich and dismantling programs, like Social Security, that keep millions of
Americans out of poverty.
In fact, the Kochs were really just one — although a leading one — of the ultra-rich U.S. families that in the
1970s turned their attention and directed their wealth to the task of pushing American politics sharply to
the right and putting in place policies that more clearly favored their own interests.
The business elite is and always has been the most powerful force in U.S. politics, by virtue of its dominant
role in the economy. But what is striking — and perhaps inspiring to revisit — is the extent to which the
power of business was somewhat curtailed in the 1930–1970 period, and the extent to which this allowed
policies favoring other members of society to flourish.
But by the early 1970s, with postwar growth starting to stall, business had an opening. It also had a growing
sense that it was losing ground to a broader anti-business movement that came out of the mass student
protests over U.S. involvement in Vietnam. The movement’s ostensible leader, Ralph Nader, was attracting
widespread support and sympathetic media coverage for this freewheeling campaign against “corporate
power.” The threat felt by business leaders was captured well in an eight-page memorandum written in 1971
for the U.S. Chamber of Commerce by Lewis Powell, a prominent Virginia, attorney who served on a number
of corporate boards (and later on the Supreme Court). The memo, expressed a feeling of being under siege.
It amounted to a manifesto warning business that “the American economic system is under broad attack”
and the assault was gaining influence “from the college campus, the pulpit, the media, the intellectual
community . . . and from politicians.” Powell echoed Goldwater’s earlier condemnation of “scared-e-cat”
businessmen, urging them to “stop suffering in impotent silence, and launch a counter-attack.”
Powell laid out a comprehensive plan that bears an uncanny resemblance to what actually happened. He
argued that business largely owned, funded, or had influence over the key media, religious, and academic
institutions in society, and should use its leverage to counter what he perceived as the liberal, anti-business
bias of these institutions. He advocated explicit business intervention in the political sphere, where he said
the American businessman had become “truly the forgotten man.” This had to be countered with concrete
steps — expanding the “role of lobbyist for the business point of view” — in order to regain political clout
with governments. It was time, wrote Powell, for business to learn that “political power is necessary; it must
be used aggressively and with determination — without embarrassment and without reluctance which has
been so characteristic of American business.”
Powell’s manifesto reverberated powerfully within business circles. Along with the Koch brothers, a number
of America’s biggest corporate dynasties came forward to inject massive funds into the cause of pushing
the country sharply to the right. The Olin family, owner of a giant chemical and munitions business, provided
tens of millions of dollars to think tanks, organizations, and programs at major universities aimed at
inculcating right-wing ideas and policy solutions. Huge financial support for libertarian and conservative
causes (and later the attempt to impeach Bill Clinton) also came from Richard Mellon Scaife, heir to the
massive Mellon banking, aluminum, and oil fortune. Joseph Coors, who had inherited the brewery fortune,
described how he was “stirred up” by reading the Powell memo and wondered why businessmen were
“ignoring a crisis.”
Freshly stirred by Powell’s call to arms, Coors became a key figure in establishing the Heritage Foundation,
which was to become an influential promoter of radical pro-capitalist ideas as well as “the Judaeo-Christian
moral order.” The foundation quickly attracted major corporate funding from Dow Chemical, General
Motors, Pfizer Mobil, Chase, and the Manhattan Bank. Du Pont CEO Charles McCoy became one of the
instigators of the Business Roundtable, an exclusive group of CEOs of leading U.S. companies, who planned
to use their economic clout to gain access to top government and congressional leaders.
The war chest of funds from wealthy families and corporations provided the seed money for a huge new
infrastructure of organizations, think tanks, publications, and “astro-turf” campaigns funded by the wealthy
but designed to appear as grass-roots movements. With this massive effort to reshape the debate and
politics of America, the wealthy elite was investing in a deliberate long-term strategy — exactly what Powell
had called for — realizing that institutions shaped by liberal values wouldn’t change over night, but could be
completely overhauled over time through determined push-back from business. The media, owned by
business interests, quickly became a helpful collaborator, and the buzzwords of free-market ideology were
soon dominating the airwaves. The rightward drift accelerated after media mogul Rupert Murdoch hired
former Republican strategist Roger Ailes to launch Fox News in 1996 with an aggressive conservative
message that pushed the media concept of balanced coverage ever farther to the right.
The impact on the Republican Party has been the most profound, with conservative money ensuring that
moderates in the style of Dwight Eisenhower — or even George H. W. Bush — are increasingly blocked from
winning their party’s nominations. The impact of conservative money on the Democratic Party has also been
immense. With increasingly expensive political campaigns in the TV age, business gained a huge advantage
with cash-hungry Democratic candidates, particularly after labor’s economic clout and financial contributions
diminished. As labor faded, the well-financed voices of business grew louder and more persistent,
aggressive, and ubiquitous. Democrats became the new scared-e-cats, retreating in lockstep as the
conservative juggernaut advanced, putting up scant resistance as the goalposts were moved ever farther to
the right. The Democrats largely abandoned support for important labor policies, allowing the minimum wage
to languish, supporting trade deals that encouraged privatization and favored corporate interests, and even
emerging as the leading proponents of financial deregulation in the 1990s. This brought in huge campaign
support from the financial industry, realigning the party with Wall Street, particularly under the influence
of powerful Democratic senators Charles Schumer and Joseph Lieberman.
- – - – - – - – - – - -
The campaign to roll back the postwar egalitarian advances, starting in the 1970s, gained momentum in the
following decades as the rich got vastly richer and invested heavily in a sophisticated political infrastructure
to advance their cause. Their political victories not only enriched themselves further but weakened other
segments of society, creating economic insecurity for millions of Americans. That insecurity left ordinary
Americans frightened, short of resources, and no longer inclined to trust and rely on unions, which seemed
increasingly impotent in the face of rising business wealth.
The 2008 financial crash and its brutal aftermath has raised the possibility that the pendulum might swing
back, once again diminishing the wealth and power of the elite. This hasn’t happened yet — although the
Occupy Wall Street demonstrations in the fall of 2011 point to a building storm.
So far, however, the privileged elite have mostly managed to protect and even enhance their financial
position, with the Wall Street crowd using its clout to win a massive $4.7 trillion bailout. The elite have also
managed to derail attempts to raise their taxes. The very rich seem poised to dismantle programs that are
vital to the well-being of millions of ordinary Americans and that for decades seemed politically untouchable.
Mark Hanna may well have identified a crude truth about American politics when he said “There are two
things that are important in politics. The first is money and I can’t remember what the second is.” Perhaps
the second thing, which the Republican strategist so casually forgot, is that it matters how widely money is
distributed. We therefore offer up a corollary to Hanna’s rule: When money is distributed more equally in
society, ordinary citizens speak with louder voices, making meaningful democracy possible.
Excerpted from “Billionaires’ Ball: Gluttony and Hubris in an Age of Epic Inequality” by Linda McQuaig and
Neil Brooks. Copyright 2012. Excerpted with permission by Beacon Press.
DOES mob controlled AT&T HAVE A RIGHT-WING AGENDA?
If you had millions of dollars to spare, would you spend it the way AT&T does? After all, the company has
given:
• Nearly $2 million to the Republican Governors Association, which helped elect right-wing governors
like Scott Walker (WI), Rick Snyder (MI) and Rick Scott (FL).
• $730,000 to House and Senate Tea Party Caucus members since 2009 — members like Rep. Michele
Bachmann, Rep. Allen West and Sen. Rand Paul.
• $588,500 to the ultra-conservative Blue Dog Democrats — including Reps. Heath Shuler, Loretta
Sanchez and Ben Chandler.
• $1 million to help build the George W. Bush Presidential Library.
• $150,000 to the American Legislative Exchange Council (ALEC), which drafts and promotes state
legislation that is anti-worker, erodes voting rights and slashes corporate taxes.
• $100,000 to the Heartland Institute, a right-wing think tank and leading promoter of climate-science
denial.
Does AT&T have a right-wing agenda? You make the call.
Barney Frank Unloads On The ‘Great Scam’ Of Paul Ryan
share
Sahil Kapur April 12, 2012, 6:08 AM
Rep. Barney Frank (D-MA) unleashed a stinging attack on House Budget Chairman Paul Ryan in an interview
with TPM, describing him as an ideologically driven extremist who doesn’t deserve his reputation within the
political establishment as a genuine fiscal hawk.
Labeling the House-passed GOP budget a “great scam,” Frank cited its military spending hikes from current
law levels as evidence that Ryan’s primary goal isn’t deficit reduction. He also cited Ryan’s refusal to specify
which tax loopholes he’ll close as evidence of trickery.
“It’s not deficit reduction when you increase military spending so that you can make up for that by cutting
Medicare and Medicaid. That’s not budget reduction. That’s ideology. That’s the right wing,” Frank told TPM.
“The other great scam for Ryan is to say, ‘Oh, I’m not going to help the rich people … I’m going to lower their
rates and get rid of loopholes,’ although he doesn’t mention a single loophole that he’ll get rid of.”
The Massachusetts congressman, who is retiring at the end of this term, is an outspoken advocate for
reducing deficits by cutting military spending. His rationale is arithmetic: Paying off the debt while holding
revenues flat and leaving the military untouched will devastate programs that help working-class Americans.
America can afford military cuts, Frank argues, because now that the Cold War is over, “There is no force
out there in the world capable of taking away our freedoms.”
A spokesman for Ryan declined to comment.
Frank said the perception of Ryan as a venerable figure has been created by members of the political
“commentariat” who “want to say we’re somewhat ‘independent’ of all this [polarization]” in order to appear
nonpartisan.
“I agree with [Paul] Krugman’s analysis. There is this instinct to be in the middle. People don’t like to think of
themselves as some way partisan. There are people who take comfort from the fact that, ‘Oh, I’ve got
people on both sides who disagree with me.’ I think you see this in Tom Friedman. You see this in some
others,” he said, also referencing a recent article on Ryan by James Stewart of the New York Times.
“Here’s the deal,” Frank told TPM of some political pundits. “They don’t want to consider themselves to be
siding with the Democrats. It’s important for their self-image that they be seen as centrist. The problem is
the Republican Party has given them fewer and fewer things that they can identify with, because they’ve
moved so far to the right. … So they have to find something they can support on the Republican side to
maintain this self-image that they’re somehow independent of the parties. And so they pick up the Ryan
budget.”
Committing Financial Suicide to Appease Big Finance
Spain Marches Toward a Depression
by MIKE WHITNEY
“Other countries have gone through similar experiences. Latin American countries suffered a lost decade
after 1982, and Japan has been stagnating for a quarter of a century; both have survived. But the European
Union is not a country and it is unlikely to survive. The deflationary debt trap threatens to destroy a still-
incomplete political union.”
George Soros, Financial Times
Money might “make the world go ’round”, but it’s not going to stop the eurozone from breaking apart. That’s
the lesson investors learned on Tuesday when global stock markets plunged on news that yields on Spanish
and Italian debt had again entered the red zone. Stocks rebounded on Wednesday, but to little effect,
after all, the cat is out of the bag. Now everyone knows that the European Central Bank’s 1 trillion euro ”
adrenalin rush” (Long-Tern Refinancing Operation or LTRO) is a short-term fix that won’t relieve the debt
troubles of struggling countries in the south or even reduce the prospects of a vicious credit crunch in the
second half of the year. (As of Friday morning, Spanish 10-year bond yields are back in the nosebleed
section, 5.92 percent, a rate which most economists see as “unsustainable”.)
So, what exactly did the LTRO achieve anyway?
Not much, it appears. While the lavish 3-year low interest loans allowed a significant number of underwater
banks to roll over their debts; it did not address the eurozone’s institutional flaws, or –as economists Simon
Tilford and Philip Whyte say– “reverse the increasingly perverse and self-defeating policies that the region
is pursuing.” Policymakers in Frankfurt and Brussels have refused to heed the warnings of competent
economists and other experts who’ve reiterated ad nauseam that “a monetary
union outside a fiscal union is deeply unstable.” What’s needed is greater “fiscal integration and debt
mutualisation” they advize. But the ECB will have none of it. The Central Bank has decided to pursue its own
blinkered strategy and use the crisis to push through excruciating anti-labor and privatization reforms that
will help to divert more capital to big finance. The results speak for themselves. Spain is marching headlong
into a depression.
To say that Spain’s financial situation is dire would be an understatement. According to International Finance
Review:
“Covered bond syndicate bankers are expecting weak jobs data out of the US and a persistent
deterioration of Spanish bank credit to weigh heavily on the new issue market for the foreseeable future. It’
s a backdrop that is likely to lock Spanish banks out of the primary market and deprive the country’s banks
of a funding plan B, according to one banker….
“The Spanish are completely shut out of the market,” said a covered bond trader. “You won’t get any
momentum for a deal, and for investors, they have no incentive to buy into a deal when the market is
declining.” (“Spanish banks face funding lock-out”, IFR)
Also, while unemployment across Europe has risen to its highest point in more than 14 years, (17.3 million
people) in Spain, joblessness has soared to 23 percent, and among young people, it’s nearly 50 percent. An
entire generation is being sacrificed so the 1 percent can grab a greater portion of the wealth.
If Spain is unable to manage its finances due to rising bond yields, then the eurozone will surely fail. The
country is simply too big to bail out. It’s more than twice the size of Greece, Ireland and Portugal combined.
And Spain’s three largest banks — Banco Santander, BBVA, and La Caixa, “have combined assets of about
$2.7 trillion. Spain’s GDP is just about $1.4 trillion. In other words: Spain’s three biggest banks are nearly
twice as big as the entire Spanish economy.” (CNBC)
Spain’s problems go far beyond its collapsing real estate market, its skyhigh unemployment, its widening
debt-to-GDP ratio, and its teetering banking system. A historic structural adjustment program (“Austerity
measures”) implemented by newly-elected Prime Minister Mariano Rajoy has accelerated the rate of decline
by slashing spending and thrusting the economy into a deflationary spiral. Here’s a clip from Bloomberg:
“Under EU orders, Spain is promising what might be the tightest fiscal squeeze that it or any other European
economy has ever faced. The new plan calls for the budget deficit to fall from 8.5 percent of gross
domestic product to 5.3 percent this year. Since the economy is already shrinking, this requires a
discretionary fiscal tightening of roughly 4 percent of GDP — with the unemployment rate already standing
at about 23 percent.” (“Spain Not Greece Is the Real Test for the European Union,” Bloomberg)
This is fiscal suicide authored by rightwing fanatics who want to use the ongoing crisis to impose their own
business-friendly economic model on Europe. As journalist Pepe Escobar says in a recent article, (It’s) “a
counter-reformation that erases with a single stroke many labour and union rights acquired by the working
class in decades and generations”. That includes extremely harsh cuts in health, education and social
services….”
Here’s more from Escobar:
“The catalogue of Spain’s “austerity” is the usual catalogue of neoliberalism in trouble. A previous, nominally
socialist and now an ultra-conservative government have furiously decimated unemployment, retirement and
severance benefits; turned virtually all labour contracts into precariousness hell; steeply raised fees for
education and transportation; vastly militarised the police; and spent fortunes to bail out banks….” (“All the
pain in Spain”, Pepe Escobar, Aljazeera)
Now that the ECB’s lending program (LTRO) has failed and Spanish banks are more indebted than ever
(Spanish banks borrowed more money from the ECB than any other country—227.6 billion euros or $300
billion); what’s next?
For starters, ECB president Mario Draghi will be forced to revive the vastly unpopular Securities Markets
Program (SMP) and purchase more Spanish debt outright. Investors will see this as a sign of desperation
since Draghi scotched the idea of reviving the program just last week. Now he will have to reverse himself
and hastily resume the EZ’s version of QE.
Restarting the program will set off fireworks in Berlin where hardliners at the Bundesbank will fight tooth-
and-nail to stop Draghi in his tracks. Even so, the wily ex-G-SAX managing director Draghi will undoubtedly
outmaneuver his rivals and the bailout will go forward. That means big finance’s plan to crush organised
labor, savage the social safety net and reduce EZ workers to a life of debt peonage will continue apace.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics
of Illusion (AK Press). He can be reached at fergiewhitney@msn.com.
Bank of America: Too Crooked to Fail
The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why
does the government keep bailing it out?
by: Matt Taibbi
Illustration by Victor Juhasz
At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a
hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for
until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for
bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of
jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again:
This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire
hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at
your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the
government remains creepily committed to their survival, like overindulgent parents who refuse to believe
their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.
It's been four years since the government, in the name of preventing a depression, saved this megabank
from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has
looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in
their conception, some so crude that they'd be beneath your average street thug. Bank of America has
systematically ripped off almost everyone with whom it has a significant business relationship, cheating
investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of
thousands of Americans to foreclosure court using bogus, "robo-signed" evidence – a type of mass perjury
that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining
them of hundreds of millions in value. And when it wasn't ripping off workers and pensioners, it was helping
to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of
millions insuring those same worthless mortgages.
But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger
and more dangerous than ever. It controls more than 12 percent of America's bank deposits (skirting a
federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of
all American home mortgages. By looking the other way and rewarding the bank's bad behavior with a
massive government bailout, we actually allowed a huge financial company to not just grow so big that its
collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to
Fail is one thing; it's also far too corrupt to survive.
All the government bailouts succeeded in doing was to make the bank even more prone to catastrophic
failure – and now that catastrophe might finally be at hand. Bank of America's share price has plunged into
the single digits, and the bank faces battles in courtrooms all over America to avoid paying back the
hundreds of billions it stole from everyone in sight. Its credit rating, already downgraded to a few rungs
above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by
creditors, investors and stockholders – an institutional run on the bank.
They're in deep trouble, but they won't die, because our current president, like the last one, apparently
believes it's better to project a false image of financial soundness than to allow one of our oligarchic banks
to collapse under the weight of its own corruption. Last year, the Federal Reserve allowed Bank of America
to move a huge portfolio of dangerous bets into a side of the company that happens to be FDIC-insured,
putting all of us on the hook for as much as $55 trillion in irresponsible gambles. Then, in February, the
Justice Department's so-called foreclosure settlement, which will supposedly provide $26 billion in relief
for ripped-off homeowners, actually rewarded the bank with a legal waiver that will allow it to escape
untold billions in lawsuits. And this month the Fed will release the results of its annual stress test, in which
the bank will once again be permitted to perpetuate its fiction of solvency by grossly overrating the
mountains of toxic loans on its books. At this point, the rescue effort is so sweeping and elaborate that it
goes far beyond simply gouging the tax dollars of millions of struggling families, many of whom have already
been ripped off by the bank – it's making the government, and by extension all of us, full-blown accomplices
to the fraud.
Anyone who wants to know what the Occupy Wall Street protests are all about need only look at the way
Bank of America does business. It comes down to this: These guys are some of the very biggest assholes on
Earth. They lie, cheat and steal as reflexively as addicts, they laugh at people who are suffering and don't
have money, they pay themselves huge salaries with money stolen from old people and taxpayers – and on top
of it all, they completely suck at banking. And yet the state won't let them go out of business, no matter how
much they deserve it, and it won't slap them in jail, no matter what crimes they commit. That makes them not
bankers or capitalists, but a class of person that was never supposed to exist in America: royalty.
Self-appointed royalty, it's true – but just as dumb and inbred as the real thing, and every bit as expensive
to support. Like all royals, they reached their position in society by being relentlessly dedicated to the cause
of Bigness, Unaccountability and the Worthlessness of Others. And just like royals, they spend most of their
lives getting deeper in debt, and laughing every year when our taxes go to covering their whist markers.
Two and a half centuries after we kicked out the British, it's really come to this?
Bank of America started out in San Francisco in 1904 as an emblem of American capitalism. Founded by a
first-generation Italian-American named Amadeo Giannini – it was even originally called the Bank of Italy –
the bank set out to serve immigrants denied credit by other banks, and it was instrumental in helping to
rebuild the city after the devastating earthquake of 1906.
But like many of the truly bad ideas in history, the present-day version of Bank of America was the product
of a testosterone overdose. The concept of an overmassive, acquiring-everything-in-sight, bicoastal
megabank was hatched in the terminal inferiority complex of a greed-sick asshole – actually two greed-sick
assholes, both of them CEOs of Southern regional banks, who launched a cartoonish arms race of bank
acquisitions that would ultimately turn the American business world upside down.
The antagonists were Hugh McColl Jr. and Ed Crutchfield, the respective leaders of North Carolina National
Bank (which would take over Bank of America) and First Union (which turned into Wachovia), both based in
Charlotte, North Carolina. Obsessed with each other, these two men transformed their personal competition
into one of the most ridiculous and elaborate penis-measuring contests in the history of American business –
even engaging in the garish Freudian spectacle of vying to see who would have the tallest skyscraper in
Charlotte. First Union kicked things off in 1971 by erecting the 32-story Jefferson First Union Tower, then
the biggest building in town – until McColl's bank built the 40-story NCNB Plaza in 1974. Then, in the late
Eighties, Crutchfield topped McColl with the city's first post¬modern high-rise, One First Union Center, at
42 stories. That held the prize until 1992, when McColl went haywire and put up the hideous 60-story Bank
of America Corporate Center, a giant slab of gray metal affectionately known around Charlotte as the "Taj
McColl." When asked by reporters if he was pleased that his 60-story monster overwhelmed his rival's 42-
story weenie, McColl didn't hesitate. "Do I prefer having the tall one?" he said. "Yes."
For a time, this ridiculous rivalry between two strutting Southern peacocks was restrained by the law –
specifically, the McFadden-Pepper Act of 1927 and the Douglas Amendment to the Bank Holding Company
Act of 1956. These two federal statutes, which made it illegal for a bank holding company to own and
operate banks in more than one state, were effectively designed to prevent exactly the Too Big to Fail
problem we now find ourselves faced with. The goal, as Sen. Paul Douglas explained at the time, was "to
prevent an undue concentration of banking and financial power, and instead keep the private control of
credit diffused as much as possible."
But these laws didn't sit well with Hugh McColl. To him, size was everything. "We realized that if we didn't
leave North Carolina," he explained later in his career, "we would never amount to anything – that we would
not be important." Note that he didn't say the ban on expansion prevented him from turning a profit or
earning good returns for his shareholders – only that it put a limit on his sense of self-importance. So McColl
and his banking minions set out to break down the interstate banking laws. First, in 1981, they used a legal
loophole in Florida law to buy a bank branch there – evading the federal ban on out-of-state owners. Then,
following a Supreme Court decision in 1985 that allowed banks to cross state lines within a designated
region, he and Crutchfield went on a conquering spree worthy of a Mongol horde, buying up a host of banks in
other Southern states. McColl, a silver-haired ex-Marine who would eventually be celebrated for bringing a
"military approach" to his business, went to ridiculous lengths to play up the manly conquest aspect of his
bank's merger frenzy, rewarding key employees with crystal hand grenades. By 1995, McColl had acquired
more than 200 banks and thrifts across the South, while Crutchfield had snapped up 50.
A few years later, after Congress repealed most of the barriers to interstate banking, McColl took over
Bank of America, realizing his dream of creating what one trade publication called "the first ocean-to-ocean
bank in the nation's history." Later, after McColl retired, his successors kept up his acquisitive legacy,
buying notorious mortgage lender Countrywide Financial in 2008, and using some of the $25 billion in federal
bailout funds they received to acquire dying investment bank Merrill Lynch. Both firms were infamous for
their exotic gambles and their systematic cutting of regulatory corners – meaning that the shopping spree
had burdened Bank of America with a huge portfolio of doomed trades and criminal conspiracies.
But to McColl, it was all worth it – because he would never have been important if he hadn't also been big. "I
have no regrets about building it large," he said in 2010, when asked if he considered all the monster
consolidations a mistake in light of the crash of 2008. "I may have some regrets about not building it larger."
This deeply American terror of not always having the absolutely hugest dick in the room is what put us in the
inescapable box called Too Big to Fail. When the bailouts were dreamed up to save Bank of America, the
government was essentially committing public resources to preserve this lunatic spending spree – which
means two successive presidential administrations have now spent nearly half a decade and hundreds of
billions of tax dollars defending the premise that Hugh McColl should always be allowed to have the "taller
one."
And why? The rationale for allowing that merger spree in the first place was based on a phony assumption:
that big banks would somehow be more efficient and more profitable than small ones. "The whole premise of
a Citibank or a Chase or a Bank of America is wrongheaded," says Susan Webber, an analyst who writes one
of the most popular and respected financial blogs under the pseudo¬nym Yves Smith. "Studies consistently
show that after a certain size threshold, bank efficiency taps out. In fact, it turns out that all those cost
savings the banks were supposed to enjoy from being bigger were actually based on cutting corners and
fraud."
And man, what a lot of fraud!
In the end, it all comes back to mortgages. Though Bank of America would ultimately be charged with
committing a dizzyingly diverse variety of corporate misdeeds, the bulk of the trouble the bank is in today
arises from the Great Mortgage Scam of the mid-2000s, which caused the biggest financial bubble in
history.
The shorthand version of the scam is by now familiar: Banks and mortgage lenders conspired to create a
gigantic volume of very risky home loans, delivering outsize mortgages to dubious borrowers like immigrants
without identification, the unemployed and people with poor credit histories. Then the banks took those dicey
home loans and sprinkled them with bogus math, using inscrutable financial gizmos like collateralized
mortgage obligations to rechristen the risky home loans as high-grade, AAA-rated securities that could be
sold off to unions, pensioners, foreign banks, retirement funds and any other suckers the banks could find.
In essence, America's financial institutions grew vast fields of cheap oregano, and then went around the
world marketing their product as high-grade weed.
The holy trinity of Bank of America, Countrywide and Merrill Lynch represented the worst conceivable team
of financial powers to get hold of this scam. It was a little like the Wall Street version of Michael Bay's
nonclassic Con Air, in which the world's creepiest serial killer, most demented terrorist and most depraved
redneck are all thrown together on the same plane. In this case, it was the most careless mortgage lender
(the spray-tanned huckster Angelo Mozilo from Countrywide, who was named the second-worst CEO of all
time by Portfolio magazine), the most dangerous mortgage gambler (Merrill, whose CEO was the self-
worshipping jerkwad John Thain, the ex-Goldman banker who bought himself an $87,000 area rug as his
company was cratering in 2008) and the most relentless packager of mortgage pools (Bank of America), all
put together under one roof and let loose on the world. These guys were so corrupt, they even shocked one
another: According to a federal lawsuit, top executives at Countrywide complained privately that Bank of
America's "appetite for risky products was greater than that of Countrywide."
The three lenders also pioneered ways to sell their toxic pools of mortgages to suckers. Bank of America's
typical marketing pitch to a union or a state pension fund involved a double or even triple guarantee. First, it
promised, in writing, that all its loans had passed due diligence tests and met its high internal standards.
Next, it promised that if any of the loans in the mortgage pool turned out to be defective or in default, it
would buy them back. And finally, it assured customers that if all else failed, the pools of mortgages were
all insured, or "wrapped," by bond insurers like AMBAC and MBIA.
It sounded like a can't-lose deal. Not only did the bank offer a written guarantee of the high quality of the
loans it was selling, it also promised to buy back any bad loans, which were often insured to boot. What could
go wrong?
As it turned out, everything. From tits to toes, the mortgage pools created, packaged and sold by
Countrywide, Merrill Lynch and Bank of America were a complete sham: worthless and often falling apart
virtually from the day they were delivered.
First of all, despite the fact that the banks had promised that all the loans in their pools met their internal
lending standards, that turned out to be completely untrue. An SEC¬ investigation later found out, for
instance, that Countrywide essentially had no standards for whom to lend to. As a federal judge put it,
"Countrywide routinely ignored its official underwriting guidelines to such an extent that Countrywide would
underwrite any loan it could sell." Translation: Countrywide gave home loans to anything with a pulse,
provided they had a sucker lined up to buy the loan.
How did they make these loans in the first place? By committing every kind of lending fraud imaginable –
particularly by entering fake data on home loan applications, magically turning minimum-wage janitors into
creditworthy wage earners. In 2006, according to a report by Credit Suisse, a whopping 49 percent of the
nation's subprime loans were "liar's loans," meaning that lenders could state the incomes of borrowers
without requiring any proof of employment. And no one lied more than Countrywide and Bank of America. In
an internal e-mail distributed in June 2006, Countrywide's executives worried that 40 percent of the firm's
"reduced documentation loans" potentially had "income overstated by more than 10 percent... and a
significant percent of those loans would have income overstated by 50 percent or more."
"What large numbers of Countrywide employees did every day was commit fraud by knowingly making and
approving loans they knew borrowers couldn't repay," says William Black, a former federal banking
regulator. "To do so, it was essential that the loans be made to appear to be relatively less risky. This
required pervasive documentation fraud."
So what happened when institutional investors realized that the loans they had bought from Countrywide
were nothing but shams? Instead of buying back the bad loans as promised, and as required by its own
contracts, the bank simply refused to answer its phone. A typical transaction involved U.S. Bancorp, which in
2005 served as a trustee for a group of investors that bought 4,484 Countrywide mortgages for $1.75
billion – only to discover their shiny new investment vehicle started throwing rods before they could even
drive it off the lot. "Soon after being sold to the Trust," U.S. Bancorp later observed in a lawsuit,
"Countrywide's loans began to become delinquent and default at a startling rate." The trustees hired a
consultant to examine 786 loans in the pool, and found that an astonishing two-thirds of them were defective
in some way. Yet, confronted with the fraud, Countrywide failed to repurchase a single loan, offering "no
basis for its refusal."
And what about that ostensible insurance that Bank of America sold with its bundles of mortgages? Well,
those policies turned out not to be worth very much, since so many of the loans defaulted that they blew the
insurers out of business. If you went bust buying bad mortgages from Bank of America, chances are, so did
your insurer. At best, you two could now share a blanket in the poorhouse.
Many of the nation's largest insurers, in fact, are now suing the pants off Bank of America, claiming they
were fraudulently induced to insure the bank's "high lending standards." AMBAC, the second-largest bond
insurer in America, went bankrupt in 2010 after paying out some $466 million in claims over 35,000
Countrywide home loans. After analyzing a dozen of the mortgage pools, AMBAC found that a staggering 97
percent of the loans didn't meet the stated underwriting standards. That same year, the Association of
Financial Guaranty Insurers, a trade group representing firms like AMBAC, told Bank of America that it
should be repurchasing as much as $20 billion in defective mortgages.
Some of these institutional investors were at least partial accomplices to their own downfall. In the boom
era of easy money, financial professionals everywhere were chasing the lusciously high yields offered by
these bundles of subprime mortgages, and everyone knew the deals weren't exactly risk-free. But
ultimately, Bank of America was knowingly selling a defective product – and down the road, that product was
bound to blow up on somebody innocent. "A teacher or a fireman goes to work and saves money for their
retirement via their pensions," says Manal Mehta, a partner at the hedge fund Branch Hill Capital who spent
two years researching Bank of America. "That pension fund buys toxic securities put together by Wall
Street that were designed to fail. So when that security blows up, wealth flows directly from that pension
fund into the hands of a select few."
This is the crossroads where Bank of America now lives – trying to convince the government to allow it to
remain in business, perhaps even asking for another bailout or two, while it avoids paying back untold billions
to all of the institutional customers it screwed, the list of which has grown so long as to almost be comical.
Last year, the bank settled with a group of pension and retirement funds, including public employees from
Mississippi to Los Angeles, that charged Bank of America and Merrill with misrepresenting the value of
more than $16 billion in mortgage-backed securities. In the end, the bank paid only $315 million.
In the first half of last year, Bank of America paid $12.7 billion to settle claims brought by defrauded
customers. But countless other investors are still howling for Bank of America to take back its counterfeit
product. Allstate, the maker of those reassuring Dennis Haysbert-narrated commercials, claims it got stuck
with $700 million in defective mortgages from Countrywide. The states of Iowa, Oregon and Maine, as well
as the United Methodist Church, are suing Bank of America over fraudulent deals, claiming hundreds of
billions in collective losses. And there are similar lawsuits for nonmortgage-related securities, like a
revolting sale of doomed municipal securities to the state of Hawaii and Maui County. In that case, Merrill
Lynch brokers allegedly dumped $944 million in auction-rate securities on the Hawaiians, even though the
brokers knew that the auction-rate market was already going bust. "Market is collapsing," a Merrill
executive named John Price admitted in an internal e-mail, before joking about having to give up pricey
dinners at a fancy Manhattan restaurant. "No more $2K dinners at CRU!!"
In the end, says Mehta, Bank of America's fraud resulted in "one of the biggest reverse transfers of
wealth in history – from pensioners to financiers. What the 99 percent should understand is that Wall
Street knowingly inflated the bubble by engaging in rampant mortgage fraud – and then profited from the
collapse of their own exuberance by devising a way to shift the losses to countless pension funds,
endowments and other innocent investors." The assembled worldwide collection of swindled pensioners and
unions and investors is a little like the crowd that storms the basketball court in the Will Ferrell movie Semi-
Pro when the home team's owner welshes on his promise to hand out free corn dogs if the score tops 125
points. Corn dogs, Bank of America! Where are the freaking corn dogs!
Incredible as it sounds, owing practically everyone in the world billions of dollars apiece is only half of Bank
of America's problem. The bank didn't just flee the scene of its various securities rip-offs. It also made a
habit out of breaking the law and engaging in ethical lapses on a grand scale, all over the globe. Once your
money ends up in their pockets, they just slither off into the night, no matter their legal or professional
obligations.
Case in point: With all those hundreds of thousands of mortgages the bank bought, it simply stopped filing
basic paperwork – even the stuff required by law, like keeping chains of title. A blizzard of subsequent
lawsuits from pissed-off localities reveals that the bank used this systematic scam to avoid paying local
fees. Last year, a single county – Dallas County in Texas – sued Bank of America for ducking fees since 1997.
"Our research shows it could be more than $100 million," Craig Watkins, the county's district attorney, told
reporters. Think of that next time your county leaves a road unpaved, or is forced to raise property taxes
to keep the schools open.
But the lack of paperwork also presented a problem for the bank: When it needed to foreclose on someone,
it had no evidence to take to court. So Bank of America unleashed a practice called robo-signing, which
essentially involved drawing up fake documents for court procedures. Two years ago, a Bank of America
robo-signer named Renee Hertzler gave a deposition in which she admitted not only to creating as many as
8,000 legal affidavits a month, but also to signing documents with a fake title.
Yet here's how seriously fucked the financial markets are: Even the most vocal critics of Bank of America
consider the mass, factory-style production of tens of thousands of fake legal documents per month not
that big a deal. "Robo-signing is like focusing on Bernie Madoff's accountant," quips April Charney, a well-
known foreclosure lawyer who has spent large chunks of the past two decades in battle with Bank of
America.
Robo-signing is not the disease – it's a symptom of Bank of America's entire attitude toward the law. A bank
that's willing to commit whole departments to inventing legal affidavits might also, for instance, intentionally
ding depositors with bogus overdraft fees. (A class action suit accused Bank of America of heisting some
$4.5 billion from its customers this way; the bank settled the suit for a mere 10 cents on the dollar.)
Or it might give up trying to win government contracts honestly and get involved with rigging municipal bids –
a mobster's crime, for which the accused used to do serious time, back when the bids were for construction
and garbage instead of municipal bonds, and the defendants were Eye-talians in gold chains instead of Ivy
Leaguers in ties and Chanel glasses. We now know that Bank of America routinely conspired with other banks
to make sure it paid low prices for the privilege of managing the moneys of various cities and towns. If the
city of Baltimore or the University of Mississippi or the Guam Power Authority issued bonds to raise money,
the bank would huddle up with the likes of Bear Stearns and Morgan Stanley and decide whose "turn" it was
to win the bid. Bank of America paid a $137 million fine for its sabotage of the government-contracting
process – and in an attempt to avoid prosecution, it applied to the Justice Department's corporate leniency
program, essentially confessing its criminal status: As plaintiff attorneys noted, the application "means that
Bank of America is an admitted felon." Think about that when you hear about all the bailouts the bank has
gotten in the past four years. A street felon who gets out of jail can't even vote in some states – and yet
Bank of America is allowed to receive billions in federal aid and dominate the electoral process with
campaign contributions?
Some of the bank's other collusive schemes are even more ambitious. Last year, the bank was sued,
alongside some of its competitors, for conspiring to rig the London Interbank Offered Rate. Many
adjustable-rate financial products are based on LIBOR – so if the big banks could get together and
artificially lower the rate, they would pay out less to customers who bought those products. "About $350
trillion worth of financial products globally reference LIBOR," says one antitrust lawyer familiar with the
case. "Which means," she adds in a striking understatement, "that the scale of this conspiracy is extremely
large."
What's most striking in all of these scams is the corporate culture of Bank of America: These guys are just
dicks. Time and again, they go out of their way to fleece their own customers, without a trace of remorse. In
classic con-artist behavior, Bank of America even tried to rip off homeowners a second time by gaming
President Obama's HAMP program, which was designed to aid families who had already been victimized by
the banks. In a lawsuit filed last year, homeowners claim they were asked to submit a mountain of
paperwork before receiving a modified loan – only to have the bank misplace the documents when it was time
to pay up. "The vast majority tell us the same thing," says Steve Berman, an attorney for the plaintiffs.
"Bank of America claims to have lost their paperwork, failed to return phone calls, made false claims about
the status of their loans and even took actions toward foreclosure without informing homeowners of their
options." The scheme allowed the bank to bleed struggling homeowners for a few last desperate months by
holding out the carrot of federal aid they would never receive.
Even when caught red-handed and nailed by courts for behavior like this, Bank of America has remained
smugly unrepentant. As part of an $8.4 billion settlement it entered into with multiple states over predatory
lending practices, the bank agreed to provide homeowners with modified loans and promised not to raise
rates on borrowers. But no sooner was the deal signed than the bank "materially and almost immediately
violated" the terms, according to Nevada Attorney General Catherine Cortez Masto. It not only jacked up
rates on homeowners, it even instituted a policy punishing any bank employee who spent more than 10 minutes
helping a victim get a loan modification.
The bank's list of victims goes on and on. The disabled? Just a few weeks ago, the government charged
Bank of America with violating the Fair Housing Act by illegally requiring proof of disability from people who
rely on disability income to make their mortgage payments. Minorities? Last December, the bank settled
with the Justice Department for $335 million over Countrywide's practice of dumping risky subprime loans
on qualified black and Hispanic borrowers. The poor? In South Carolina, Bank of America won a contract to
distribute unemployment benefits through prepaid debit cards – and then charged multiple fees to jobless
folk who had the gall to withdraw their money from anywhere other than a Bank of America ATM. Seriously,
who hasn't this bank conspired to defraud? Puppies? One-eyed Sri Lankans?
Bank of America likes to boast that it has changed its ways, replacing many of the top executives who helped
create the mortgage bubble. But the man promoted from within to lead the new team, CEO Brian Moynihan,
is just as loathsome and tone-deaf as his previous bosses. As befits a new royal, Moynihan defended a plan
to gouge all debit-card users with $5 fees by citing his divine privilege: "We have a right to make a profit."
And despite the bank's litany of crimes, Moynihan seems to think we're just overreacting. After all, he gives
to charities! "I get a little incensed when you think about how much good all of you do, whether it's volunteer
hours, charitable giving we do, serving clients and customers well," he told employees last October. Then,
addressing would-be protesters: "You ought to think a little about that before you start yelling at us."
In sum, Bank of America torched dozens of institutional investors with billions in worthless loans, repeatedly
refused to abide by contractual obligations to buy them back, evaded hundreds of millions in local fees and
taxes, pushed tens of thousands of people into foreclosure using phony documents, ignored multiple court
orders to stop its illegal robo-signing, and exploited President Obama's signature mortgage-relief program.
The bank fixed the bids on bonds for schools and cities and utilities all over America, and even conspired to
try to game the game itself – by fixing global interest rates!
So what does the government do about a rogue firm like this, one that inflates market-wrecking bubbles,
commits mass fraud and generally treats the law like its own personal urinal cake? Well, it goes without
saying that you rescue that "admitted felon" at all costs – even if you have to spend billions in taxpayer
money to do it.
Bank of America should have gone out of business back in 2008. Just as the mortgage market was crashing,
it made an inconceivably stupid investment in subprime mortgages, acquiring Countrywide and the billions in
potential lawsuits that came with it. "They tried to catch a falling knife and lost their hand and foot in the
process," says Joshua Rosner, a noted financial analyst. It then spent $50 billion buying a firm, Merrill
Lynch, that was rife with billions in debts. With those two anchors on its balance sheet, Hugh McColl's
bicoastal dream bank should have gone the way of the dinosaur.
But it didn't. Instead, in the midst of the crash, the government forked over $45 billion in aid to Bank of
America – $20 billion as an incentive to bring its cross-eyed bride Merrill Lynch to the altar, and another
$25 billion as part of the overall TARP bailout. In addition, the government agreed to guarantee $118 billion
in Bank of America debt.
So what did the bank do with that money? First, it sat by while lame-duck executives at Merrill paid
themselves $3.6 billion in bonuses – even though Merrill lost more than $27 billion that year. In all, 696
executives received more than $1 million each for helping to crash the storied firm. (The bank wound up hit
with a $150 million fine for its failure to inform shareholders about the Merrill losses and bonuses.) Bank of
America, meanwhile, paid out more than $3.3 billion in bonuses to itself, including more than $1 million each to
172 executives.
In fact, the real bailouts of Bank of America didn't even begin until well after TARP. In the years since the
crash, the bank has issued more than $44 billion in FDIC-insured debt through a little-known Federal
Reserve plan called the Temporary Liquidity Guarantee Program. The plan essentially allows companies
whose credit ratings are fucked to borrow against the government's good name – and if the loans aren't
paid back, the government is on the hook for all of it. Bank of America has also stayed afloat by constantly
borrowing billions in low-¬interest emergency loans from the Fed – part of $7.7 trillion in "secret" loans that
were not disclosed by the central bank until last year. When the data was finally released, we found out
that, on just one day in 2008, Bank of America owed the Fed a staggering $86 billion.
That means that when you take out a credit card or a mortgage or a refinancing from Bank of America,
you're essentially borrowing from the state; the "private" bank is simply taking a cut as a middleman. "For
banks, the cost of capital is the key to success," says former New York governor Eliot Spitzer. "So by
lowering their cost of capital to almost zero, the Fed has almost guaranteed that the banks will make big
profits."
Another public lifeline is Fannie Mae and Freddie Mac, the giant, nationalized mortgage lenders. Need to
make some cash? Toss a bunch of home loan applications onto a city street, then sell the resulting mortgages
to Fannie and Freddie, which are basically a gigantic pile of public money guarded by second-rate managers.
Just like the state pensions in Iowa and Maine and Missis¬sippi, Fannie and Freddie were targeted for sales
of toxic mortgages, and just like those entities, they have sued Bank of America, claiming they were
suckered into buying more than $30 billion in shitty securities. But unlike those other suckers, Fannie and
Freddie continued to buy crap loans from Bank of America even after it was clear they'd been hoodwinked.
Last year, the bank created more than $156 billion in mortgages – nearly $38 billion of which were bought by
Fannie. Having the government as an ever-ready customer, standing by to buy mortgages at full retail
prices, has always been an ongoing hidden bailout to the banks.
But even the government has its limits. In February, Fannie announced it would no longer keep blindly buying
mortgages from Bank of America. Why? Because the bank, already slow to buy back its defective
mortgages, had gotten even slower. By the end of last year, the government reported, more than half of all
the crappy loans that Fannie wanted to return came from a single bad bank – Bank of America.
But if you think that Fannie cutting off the bank is good news, think again. If it can't get the money it's owed
from Bank of America, it'll just go begging to the Treasury. Fannie has already asked for $4.5 billion to
cover losses this year – and if Bank of America doesn't pony up, it'll have to reach even deeper into our
pockets, making for yet another shadow bailout to the firm.
It gets worse. Last fall, some of the bank's biggest creditors and counterparties started to get nervous
about the mountain of toxic bets still sitting on Merrill Lynch's books – a generation of ill-considered,
complex, exotic derivative trades, bets on bets on bets on shaky subprime mortgages, sitting there on the
company balance sheet, waiting to explode. Nobody felt good lending Bank of America money with that
dangerous shitpile lying there. So they asked the bank to move a chunk of that mess from Merrill Lynch onto
Bank of America's own balance sheet. Why? Because Bank of America is a federally insured depository
institution. Which means that the FDIC, and by extension you and me, is now on the hook for as much as $55
trillion in potential losses. Black, the former regulator, calls the transfer an "obscenity. As a regulator, I
would have never allowed it. Transferring risk to the insured institution crosses the reddest of red lines."
But by far the biggest bailout to Bank of America has come via the sweetheart deals it cut to settle the
massive lawsuits filed against it. Some of the deals, which were brokered by the Justice Department and
state attorneys general, allowed the bank to get away with paying pennies on the dollar on its mountains of
debt. Worst of all was the recent $26 billion foreclosure settlement involving Bank of America and four
other major firms. The deal, in which the banks agreed to pay cash to screwed-over homeowners in
exchange for immunity from federal prosecution on robo-signing issues, was hailed as a big multibillion-dollar
bite out of the banks. President Obama was all but strutting over his beatdown of Wall Street. "We are
Americans, and we look out for one another; we get each other's backs," he declared. "We're going to make
sure that banks live up to their end of the bargain."
In fact, the government has a lousy track record when it comes to enforcing settlements. The foreclosure
deal arrives on the heels of an $8.4 billion investor settlement, whose provisions Bank of America had
already been accused of violating, raising rates and abusing homeowners as soon as the deal was struck. The
bank also violated a previous settlement with the Federal Trade Commission, illegally slapping $36 million in
fees on struggling homeowners after specifically agreeing not to do so. So Bank of America's reward for
blowing off its previous settlements for mistreating homeowners was to get another soft-touch deal from
the government, which they will presumably be just as free to ignore. Why? Because while state officials
have ultimate enforcement authority over the foreclosure settlement, the early enforcement reviews will
be handled by "internal quality control groups." In other words, Bank of America itself will be grading its
own compliance!
Even if Bank of America coughs up its share of the $26 billion settlement, the deal is woefully inadequate to
address the wider fraud that went on in creating and pooling mortgages. "It's like handing a box of tissues
to someone whose immune system has been destroyed by AIDS," says Rosner. "It doesn't come close to
addressing the scale of the problem." Many Wall Street observers think that without the waiver from
federal prosecution provided by the settlement, Bank of America would have faced billions in lawsuits for
robo-signing offenses alone.
Oh, and one more thing, since we're talking about avoiding bills: Bank of America didn't pay a dime in federal
taxes last year. Or the year before. In fact, they got a $1 billion refund last year. They claimed it was
because they had pretax losses of $5.4 billion in 2010. They paid out $35 billion in bonuses and compensation
that year. You do the math.
And here's the biggest scam of all: After all that help – all the billions in bailouts, the tens of billions in Fed
loans, the hundreds of billions in legal damages made to disappear, the untold billions more of unpaid bills
and buybacks – Bank of America is still failing. In December, the bank's share price dipped below $5, and
after being cut off by Fannie in February, the bank announced a truly shameless plan to jack up fees for
depositors by as much as $25 a month – what one market analyst called a "measure of last resort."
The company reported positive earnings last year, with net income of $84 million, but analysts aren't
convinced. David Trainer, a MarketWatch commentator, switched his rating of Bank of America to "very
dangerous" in part because its accounting is wildly optimistic. Among other things, the bank's projections
assume a growth rate of 20 percent every year for the next 18 years. What's more, the bank has set aside
only $8.5 billion for buybacks of those crap corn-dog loans from enraged customers – even though some
analysts think the number should be much higher, perhaps as high as $27 billion. Because more lawsuits are
so likely, says Mehta, it's "virtually impossible to decipher if Bank of America requires more equity, or even
another tax¬payer bailout."
But the only number that really matters is this one: $37 billion. That's the total bonus and compensation pool
this broke-ass, state-dependent, owing-everybody-in-sight bank paid out to its employees last year. This, in
essence, is the business model underlying Too Big to Fail: massive growth based on huge volumes of high-risk
loans, coupled with lots of fraud and cutting corners, followed by huge payouts to executives. Then, with the
company on the verge of collapse, the inevitable state rescue. In this whole picture, the only money that's
ever "real" is the fat bonuses the executives cash out of the bank at the end of each year. "Fraud is a sure
thing," says Black. "The firm fails, unless it is bailed out, but the controlling officers walk away wealthy."
The Dodd-Frank financial reform approved by Congress last year was supposed to fix the problem of Too
Big to Fail, giving the government the power to take over and disband troubled megafirms instead of bailing
them out. "The way to cut our Gordian financial knot is simple," MIT economist Simon Johnson wrote in The
New York Times. "Force the big banks to become smaller." But few in the financial community believe that
will ever happen. "If Bank of America crashes, the first thing that would happen is Dodd-Frank would be
revealed as a fraud," says Rosner. "The Fed and the Treasury would ask Congress for a bailout to 'save the
economy.' It's the worst-kept secret on Wall Street."
In a pure capitalist system, an institution as moronic and corrupt as Bank of America would be swiftly
punished by the market – the executives would get to loot their own firms once, then they'd be looking for
jobs again. But with the limitless government support of Too Big to Fail, these failing financial giants get to
stay undead forever, continually looting the taxpayer, their depositors, their shareholders and anyone else
they can get their hands on. The threat posed by Bank of America isn't just financial – it's a full-blown
assault on the American dream. Where's the incentive to play fair and do well, when what we see rewarded
at the highest levels of society is failure, stupidity, incompetence and meanness? If this is what winning in
our system looks like, who doesn't want to be a loser? Throughout history, it's precisely this kind of corrupt
perversion that has given birth to countercultural revolutions. If failure can't fail, the rest of us can never
succeed.
Related
• J.P. Morgan Chase's Ugly Family Secrets Revealed
This story is from the March 29th, 2012 issue of Rolling Stone.
More Taibbi
First They Come for the Muslims
http://www.truthdig.com/report/item/first_they_come_for_the_muslims_20120416/
Posted on Apr 16, 2012
By Chris Hedges
Tarek Mehanna, a U.S. citizen, was sentenced Thursday in Worcester, Mass., to 17½ years in prison. It was
another of the tawdry show trials held against Muslim activists since 9/11 as a result of the government’s
criminalization of what people say and believe. These trials, where secrecy rules permit federal lawyers to
prosecute people on “evidence” the defendants are not allowed to examine, are the harbinger of a corporate
totalitarian state in which any form of dissent can be declared illegal. What the government did to Mehanna,
and what it has done to hundreds of other innocent Muslims in this country over the last decade, it will
eventually do to the rest of us.
Mehanna, a teacher at Alhuda Academy in Worcester, was convicted after an eight-week jury trial of
conspiring to kill U.S. soldiers in Iraq and providing material support to al-Qaida, as well as making false
statements to officials investigating terrorism. His real “crime,” however, seems to be viewing and
translating jihadi videos online, speaking out against U.S. foreign policy in the Middle East and refusing to
become a government informant.
Stephen F. Downs, a lawyer in Albany, N.Y., a founder of Project Salam and the author of “Victims of
America’s Dirty War,” a booklet posted on the website, has defended Muslim activists since 2006. He has
methodically documented the mendacious charges used to incarcerate many Muslim activists as terrorists.
Because of “terrorism enhancement” provisions, any sentence can be quadrupled—even minor charges can
leave prisoners incarcerated for years.
“People who have committed no crime are taken into custody, isolated without adequate recourse to legal
advice, railroaded with fake or contrived charges, and ‘disappeared’ into prisons designed to isolate them,”
Downs told me when we met last week at Brown University in Providence, R.I.
Downs calls the process of condemning people before they have committed a crime “pre-emptive
prosecution.” The concept of pre-emptive prosecution mocks domestic law as egregiously as pre-emptive
war mocks the foundations of international law.
Downs’ awakening to the corruption of the judicial system came in 2006 when Yassin Aref, a Kurdish refugee
from Iraq who was an imam of a mosque in Albany, was entrapped in a government sting operation. Downs,
who three years earlier had retired as chief attorney for the New York State Commission on Judicial
Conduct, became part of Aref’s legal defense team. He met with Aref two or three times a week in the
Rensselaer County jail over a six-month period.
“I was unprepared for the fact that the government would put together a case that was just one lie piled up
on top of another lie,” Downs said. “And when you pointed it out to them they didn’t care. They didn’t refute
it. They knew that it was a lie. The facts of most of these pre-emptive cases don’t support the charges. But
the facts are irrelevant. The government has decided to target these people. It wants to take them down
for ideological reasons.”
“In the past, when the government wanted to do something illegal it simply went ahead and broke the law,”
he said. “They rounded up the Japanese during World War II and stuck them in concentration camps. They
knew they were breaking the law when they decided to go after the activists with COINTELPRO in the
1960s but they rationalized that they were doing it for a higher purpose. This is different. The government
is destroying the legal framework of our country. They are twisting it out of recognition to make it appear as
though what they’re doing is legal. I don’t remember that kind of a situation in the past. The opinions of the
court are now only lame excuses as to why the courts can’t do justice.”
“The government lawyers must know these pre-emptive cases are fake,” he said. “They must know they’re
prosecuting people before a crime has been committed based on what they think the defendant might do in
the future. They defend what they are doing by saying that they are protecting the nation from people who
might want to do it harm. I’m sure they’ve been co-opted at least to believe that. But I think they also know
that they are twisting the legal concepts, they are stretching them beyond what the framework of the law
can tolerate. They have convinced themselves that it is OK to convict many innocent people as long as they
prevent a few people from committing crimes in the future. They are creating an internal culture within the
Justice Department where there is contempt for the law and for the foundational principle that it is better
for one guilty person to go free than that one innocent person is convicted. They must know they do not do
justice, and that they serve only ideological ends.”
Downs pointed out that if the government was actually concerned about the rule of law it would prosecute
politicians and other prominent Americans who have publicly spoken out in support of Mojahedin-e Khalq
(MEK or People’s Holy Jihadis), an armed group on the State Department terrorism list that carries out
terrorist attacks inside Iran. They include former New York City Mayor Rudy Giuliani, former Pennsylvania
Gov. Ed Rendell, former U.N. Ambassador John Bolton, former Vermont Gov. Howard Dean, former
Homeland Security Secretary Tom Ridge, former Attorney General Michael Mukasey, former homeland
security adviser Frances Fragos Townsend, former FBI Director Louis Freeh, former Joint Chiefs of Staff
Chairman Gen. Hugh Shelton, and Gen. James Jones, who was President Obama’s first national security
adviser. Some of them voiced their backing in speeches for which they were paid lavishly.
“Their support of MEK is far worse than any of the pre-emptive prosecution cases,” Downs said. “They are
literally engaged in material support for terrorism. But of course they’re not being prosecuted. ... The whole
thing is a game. It’s not serious law enforcement. It is political posturing. This will bring the law into
contempt. It will bring the mechanisms of prosecution into contempt and eventually it will destroy the legal
system.”
“Justice is now justice for corporations,” he went on. “Anybody who interferes with the corporations, who
interferes with their profits, who interferes with their rights, will become labeled ‘terrorists.’ They become
people we need to get rid of. Judges, politicians and lawyers all feed at the same corporate trough. And
that is why their decisions increasingly are corporate decisions.”
Downs holds out a faint hope that it may be possible to force the Justice Department to turn over
exculpatory evidence—evidence of a defendant’s innocence that by law the prosecution must disclose to the
defendant but an obligation that the prosecutors frequently ignore. He said he is certain there is
exculpatory evidence in government vaults that could free many of those pre-emptively prosecuted.
Government prosecutors, however, do not willing sabotage their own cases by turning over evidence that
would exonerate those they seek to condemn. Downs knows it is a quixotic fight, but he is working to get the
undisclosed exculpatory evidence in pre-emptive prosecution cases released to defense lawyers.
“That’s my one hope of getting these guys out of jail—I don’t see any other way,” he said.
The corruption in the judiciary, Downs argues, is so pervasive that it is probably irreversible in the short run.
Already dissidents such as peace activists, environmentalists and outspoken intellectuals have been treated
as terrorists. Downs expects soon to see labor organizers and those in Occupy encampments treated as
terrorists, especially if domestic dissent spreads. Yet despite his pessimism he has no intention of
surrendering.
“I take comfort from organizations like the White Rose in Germany,” he said, referring to the anti-Nazi
group that defied Hitler and saw most of its members arrested and executed. “They were doomed almost
from the beginning. How long could you defy Hitler before you were rounded up and shot? It appeared to
be a futile effort. And yet, after the war, when people went back and began to rebuild the German nation,
they could look to the White Rose as an example of what German culture was really about. There were
Germans who cared about peace, freedom and tolerance. I’m working now as much for the historical record
as for those still in jail.”
“When I was 6,” Mehanna told the court Thursday at his sentencing, “I began putting together a massive
collection of comic books. Batman implanted a concept in my mind, introduced me to a paradigm as to how the
world is set up: that there are oppressors, there are the oppressed, and there are those who step up to
defend the oppressed. This resonated with me so much that throughout the rest of my childhood I
gravitated towards any book that reflected that paradigm—‘Uncle Tom’s Cabin,’ ‘The Autobiography of
Malcolm X,’ and I even saw an ethical dimension to ‘The Catcher in the Rye.’ ”
“By the time I began high school and took a real history class, I was learning just how real that paradigm is in
the world,” he went on. “I learned about the Native Americans and what befell them at the hands of
European settlers. I learned about how the descendants of those European settlers were in turn oppressed
under the tyranny of King George III. I read about Paul Revere, Tom Paine, and how Americans began an
armed insurgency against British forces—an insurgency we now celebrate as the American Revolutionary
War. As a kid I even went on school field trips just blocks away from where we sit now. I learned about
Harriet Tubman, Nat Turner, John Brown, and the fight against slavery in this country. I learned about
Emma Goldman, Eugene Debs and the struggles of the labor unions, working class and poor. I learned about
Anne Frank, the Nazis, and how they persecuted minorities and imprisoned dissidents. I learned about Rosa
Parks, Malcolm X, Martin Luther King and the civil rights struggle. I learned about Ho Chi Minh, and how the
Vietnamese fought for decades to liberate themselves from one invader after another. I learned about
Nelson Mandela and the fight against apartheid in South Africa. Everything I learned in those years
confirmed what I was beginning to learn when I was 6: that throughout history, there has been a constant
struggle between the oppressed and their oppressors. With each struggle I learned about, I found myself
consistently siding with the oppressed, and consistently respecting those who stepped up to defend them—
regardless of nationality, regardless of religion. And I never threw my class notes away. As I stand here
speaking, they are in a neat pile in my bedroom closet at home.”
“In your eyes, I’m a terrorist, and it’s perfectly reasonable that I be standing here in an orange jumpsuit,”
he told the court at the end of his statement. “But one day, America will change and people will recognize
this day for what it is. They will look at how hundreds of thousands of Muslims were killed and maimed by
the U.S. military in foreign countries, yet somehow I’m the one going to prison for ‘conspiring to kill and maim’
in those countries—because I support the mujahedeen defending those people. They will look back on how
the government spent millions of dollars to imprison me as a ‘terrorist,’ yet if we were to somehow bring
Abeer al-Janabi back to life in the moment she was being gang-raped by your soldiers, to put her on that
witness stand and ask her who the ‘terrorists’ are, she sure wouldn’t be pointing at me.”
Illustration by Mr. Fish
________________________________________
A Progressive Journal of News and Opinion. Editor, Robert Scheer. Publisher, Zuade Kaufman.
Copyright © 2012 Truthdig, L.L.C. All rights reserved.
Mobsters will pay Blankfein 16 mil
Goldman Sachs CEO gets $16.2 million pay package
•
•
By Lauren Tara LaCapra
Fri Apr 13, 2012 3:33pm EDT
(Reuters) - Goldman Sachs Group Inc Chief Executive Lloyd Blankfein's compensation increased 14.5
percent to $16.2 million in 2011 despite a sharp decline in profits and share price during the year, leaving the
bank open to more attacks on its pay policies.
Blankfein's pay boost includes stock awards from previous years that vested in 2011, and therefore does
not reflect the amount that Goldman's board awarded him strictly for the company's performance last year.
Goldman offered another figure, $12 million, as the amount Blankfein received for his performance last
year. That number reflects a 35.5 percent decline from 2010, when Blankfein received $18.6 million in
performance pay.
The $16.2 million figure comes from a formula the U.S. Securities and Exchange Commission requires
companies to use when reporting pay packages in proxy filings, where Goldman detailed Blankfein's
compensation on Friday.
Both the SEC's formula and Goldman's formula include a $2 million salary and a $3 million cash bonus. The
SEC formula also reflects $454,332 Blankfein received last year in benefits and perks, such as life
insurance and a car and driver.
Whichever multimillion-dollar figure is used, Blankfein's pay package is likely to get attention both outside
and inside Wall Street's most prominent investment bank, where thousands of traders, bankers and
support staff were fired last year due to weak performance.
"Whether it's $12 million or $16 million, it's excessive," said Jack Ucciferri, research and advocacy director
at Harrington Investments Inc, a Goldman shareholder that has a proposal in Goldman's proxy that, if
passed, would require top executives to retain 75 percent of their stock holdings for at least three years
after leaving the bank.
Goldman earned a $2.5 billion profit during 2011, down from $3.6 billion in 2010, and its share price fell 46
percent last year, amid a slowdown in investment banking deals and volatile trading conditions.
Management reduced the average employee's pay by 15 percent in 2011, to $367,057. That compares with a
pre-crisis high of $568,732 per employee in 2007. The median household income in the United States is
about $50,000.
James Gorman, CEO of Goldman's main rival, Morgan Stanley, received total compensation of $13 million in
2011, down 14.5 percent from 2010.
Using the bank's performance-based pay calculation, Morgan Stanley's board awarded Gorman $10.5 million
for his work last year; the only cash component was a salary of $800,000. That was down 31 percent from
$15.2 million the previous year.
Shareholder groups have been urging Wall Street banks to reform pay policies to align compensation more
closely with shareholder interests.
The biggest U.S. banks, including Goldman, have implemented compensation reforms, such as "clawback"
provisions and putting more bonus money in the form of restricted stock, due to new regulatory
requirements.
But Goldman remains a particular target for activists because of its tendency to pay more than its
competitors, and because of high-profile conflict-of-interest issues involving senior bank officials in the
aftermath of the financial crisis.
In addition to Harrington's proposal, a coalition of religious groups had wanted the company to implement an
annual review of executive pay. But the SEC rejected the group's proposal for inclusion in the proxy.
Laura Shaffer Campos, director of shareholder activities at the Nathan Cummings Foundation, one of the
groups that proposed the annual pay review, said the increase in Blankfein's compensation puts the bank's
reputation at risk.
"Given their stock's lackluster performance and the ongoing focus on these issues by groups like Occupy
Wall Street, this certainly gives us additional fuel for next year," Campos said in an interview.
In a letter to shareholders, Blankfein said Goldman has been engaged in talks with large stakeholders to
resolve their concerns about compensation. Harrington and Nathan Cummings own relatively small amounts of
Goldman stock but have been influential through their proposals.
"Our engagement with shareholders, in particular, has provided a productive opportunity to garner
feedback on what we can do better and for our shareholders to learn more about the Board's priorities,"
Blankfein wrote. "We received valuable input from shareholders following our say on pay vote last year,
which reaffirmed our long-held view that pay-for-performance is the most critical aspect of compensation."
Goldman also reported compensation for its four other named executive officers: Gary Cohn, president and
chief operating officer; David Viniar, chief financial officer; J. Michael Evans, vice chairman and head of
emerging markets; and John Weinberg, vice chairman and co-head of investment banking.
Each of these executives received performance-based pay of $11.85 million last year, which included a
$1.85 million salary and a $3 million bonus.
Using the SEC's calculation of 2011 pay, which includes previous years' awards that vested in 2011, Cohn,
Viniar and Weinberg received $15.8 million last year, while Evans received $15.7 million.
Goldman also shaved the potential long-term cash award that certain executive officers will get if the
company hits profit targets over a three-year period. Goldman introduced a program in 2011 that gave each
executive the potential to collect $7 million if the average adjusted return-on-equity level from 2011
through the end of 2013 reaches 10 percent and book value grows an average of 7 percent over the three
years.
The grant for the years 2012 through 2015 has been cut to an initial amount of $3 million, with 50 percent of
that paid for each metric. Goldman's compensation committee also gave itself discretion in both programs to
extend the performance periods by five years.
The ROE and book value targets appeared easily attainable when they were being established in late 2010,
but Goldman's return on equity has fallen sharply since then. In 2011, adjusted ROE was just 5.9 percent,
compared with levels above 30 percent before the financial crisis.
(Reporting By Lauren Tara LaCapra; additional reporting by Jessica Toonkel and Jed Horowitz; Editing by
Gerald E. McCormick, Tim Dobbyn and John Wallace)
Mon Apr 02, 2012 at 10:47 PM PDT
America Shows No Increase in College Graduation Rates over the last 30 Years
by Kenneth ThomasFollow
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Cross-posted from Middle Class Political Economist.
Jared Bernstein (via Paul Krugman) highlights an amazing breakdown in the prospects for reducing economic
inequality any time soon. Over the last 30 years, the U.S. has made no progress whatsoever in increasing
college graduation rates. To be specific, 25-34 year olds in 2009 had a college degree rate of about 40%,
almost exactly the same as for 55-64 year old baby boomers. In the meantime, other industrialized
countries were racking up substantial gains, most spectacularly in the case of South Korea where a little
over 10% of 55-64 year olds have college degrees, but more than 60% in the 25-34 age group do. If you
want to understand how South Korea has gone from a poor developing country to an industrial powerhouse
within our lifetimes, this is one big reason.
Here are the overall results for OECD and select non-OECD countries for the two periods:
(See here for link to chart)
As we can see, the U.S. has fallen from a tie for second with Canada among current OECD members (Russia
is not a member) to 15th in the OECD. The big question is why this is happening. One major reason is rising
college costs, which have far outstripped overall inflation.
Tuition and Fees
Private Nonprofit Public Four-Year Public Two-Year
Four-Year
1980-81 to 1990-91 5.1% 4.2% 3.9%
1990-91 to 2000-01 2.6% 3.3% 3.2%
2000-01 to 2010-11 3.0% 5.6% 2.7%
Note: Average annual rate of growth of published prices in inflation-adjusted dollars over a 10-year period.
For example, from 2000-01 to 2010-11, average published tuition and fees at private four-year colleges
rose by an average of 3.0% per year beyond increases in the Consumer Price Index. See link above for
further data on tuition and fees plus room and board.
View Notes and Sources
As we can see, the rate of cost increase for public four-year universities was the most rapid of all. One big
reason for that, of course, is reduced state support of higher education. Citing State Higher Education
Executive Officers, the National Conference of State Legislatures reports that state appropriations per
student, at $6928 in fiscal year 2009, was more than $1000 below its FY 2001 peak, and lower in real
terms "than in most years since FY 1980" (p. 1). As Bernstein argues, Pell grants are one way to offset this
problem, and he points out that the Obama administration has strengthened the program. However, the Ryan
budget would slash Pell grants, among many other programs, in order to fund a tax cut for millionaires of
almost $400,000, per Bernstein.
As Alan Krueger noted in January, there is a strong relationship between higher inequality and lower social
mobility. The OECD data show that the U.S. is making no progress on one of the most important tools for
social mobility, college. If access to higher education in this country actually declines, as it is threatening to
do, our inequality problem will become infinitely harder to solve.
Obama Administration Writes Rights Out of New Indefinite Detention Law
Posted: 04/18/2012 1:05 pm
On April 5, the Defense Department quietly sent a report to Congress indicating how it intends to implement
a new law requiring lawyers and judges for detainees held in long-term U.S. military custody. As expected,
DoD largely wrote the new rights out of existence, ensuring they'd be accorded to few, if any, detainees.
What's more, it severely limited the scope of judicial review even that small number will receive.
Originally intended to apply to the prisoners held by the United States at the Bagram Air Base in
Afghanistan, Section 1024 of the National Defense Authorization Act is now more likely to apply to some
future category of indefinite detainees held by the U.S. government. And therein lies the problem.
Just three months after President Obama signed the NDAA in December, the United States negotiated
with Afghanistan to transfer most of the 3,200 detainees imprisoned at the Detention Facility in Parwan, as
the U.S.-run prison at Bagram is called, to Afghan custody within six months. That transfer agreement
doesn't mention anything about what sort of review those detainees will get from the Afghan authorities --
or, for that matter, whether they'll get any sort of hearing at all. Because there isn't an indefinite detention
law in Afghanistan spelling out the grounds for detention or any entitlement for due process, those
prisoners could end up stuck in an Afghan prison for many more years without charge or trial.
The new Defense Department regulations obviously won't apply to them. But they may apply to some of the
50 non-Afghan detainees who remain at the U.S.-run prison, and to any new suspected insurgents the U.S.
military may capture in the future.
That's the scary part. DoD has just taken the opportunity to ensure that if the administration decides its
"war on al Qaeda, the Taliban and associated forces" continues after the withdrawal of troops in
Afghanistan, it won't have to provide anyone it captures outside the United States a meaningful review of
the grounds of their detention for at least three years. Even then, the military commander in charge retains
the ultimate authority to decide whether the detainee is dangerous and must remain imprisoned.
Here's how it works. According to the new regulations:
The combatant commander with responsibility for the theater of operations in which the unprivileged enemy
belligerent is detained will ensure that a determination by the DRB or analogous review that the 1024(b)
process is applicable is made as soon as practicable but not later than 18 months after the detainee is
captured by, or transferred to the custody and control of, the Department of Defense. Additionally, the
combatant commander will ensure that a Section 1024(b) review is conducted as soon as practicable after
such a determination is made, but not later than 18 months after such a determination is made.
Eighteen months plus 18 months equals three years. So any newly captured suspect is not entitled to a
hearing by a military judge and represented by military defense counsel until three years after his initial
detention.
What's more:
A military judge will conduct a hearing for the purposes of determining whether the detainee is a covered
person as defined in subsection (b) of Section 1021 of the Act. The review will be limited to this status
determination; it will not include an assessment of the level of threat the detainee poses, nor will it serve as
a substitute for the judgment of the combatant commander as to the appropriate disposition of a detainee
lawfully detained by the Department of Defense.
In other words, the judge will decide only if the suspect is appropriately classified as an "unprivileged
enemy belligerent" -- that is, any person "who was part of or substantially supported al Qaeda, the Taliban,
or associated forces that are engaged in hostilities against the United States or its coalition partners." The
judge will not decide whether that person actually poses a threat to U.S. forces. Yet under international law,
that's a critical part of determining whether someone can be lawfully detained in a war against insurgent
groups. That critical determination will continue to be made secretly by a military commander in the field,
not by the more neutral judge following an open hearing.
Someone who did laundry, cooked meals or provided medical assistance for a member of al Qaeda, the
Taliban or unidentified "associated forces" could therefore continue to be detained indefinitely even after
his judicial review if the commander deems him dangerous. And the commander doesn't have to explain that
decision to anyone.
All in all, this doesn't sound like much of a step forward, or out of, indefinite U.S. military detention.
The Obama administration had an opportunity to make clear that it takes due process rights and
international law seriously, and that, as the war in Afghanistan winds down, it plans to bring indefinite
military detention without meaningful review, charge, or trial to an end. It just passed up that opportunity.
Obama Poised to Give Presidential Seal of Approval to Gross Labor Rights Violations in Colombia
Colombia: Obama’s Bloodiest Betrayal?
by DANIEL KOVALIK, GIMENA SANCHEZ-GARZOLI & ANTHONY DEST
On November 9, 2011, the family of Juan Carlos Galvis – a prominent union leader with Sinaltrainal and
personal friend of ours – was subjected to a violent home invasion by two presumed paramilitaries. The
intruders entered the Galvis home while Juan Carlos and his son were away and assaulted his wife, Mary, and
his two daughters, Jackeline and Mayra. They grabbed Mayra, a child with Downs Syndrome, and put a gun
to her head, threatening to kill her if Mary did not tell them the whereabouts of Juan Carlos and his son.
They then bound and gagged Mary and Jackeline, again asking them to say where Juan Carlos and his son
were. The assailants then proceeded to spray paint Mary and Juan’s faces on a wedding photo the family had
posted on the wall. Before leaving the home, they stole two laptops, some USB memory drives, documents,
and trashed the house. The traumatic attack left Mayra in shock for days and unable to speak.
The family was forced to flee to another town where they are now hiding. Their fears are well founded. Two
of Juan Carlos’ Sinaltrainal colleagues, John Fredy Carmona Bermudez and Luis Medardo Prens Vallejo,
were killed in recent months.
All in all, 30 unionists were killed in Colombia last year. The National Labor School (ENS) reports that 4 have
already been killed this year, and other trade union movements have reported additional murders (e.g.,
Justice for Colombia has reported 6). Such killings have made Colombia, where around 3,000 unionists have
been killed since 1986, the most dangerous country in the world to be a trade unionist, and if the
assassination rate this year continues as it has thus far, Colombia will most certainly retain this notorious
distinction.
Meanwhile, the Colombian government has done nothing effective to prosecute those responsible for such
anti-union violence, with the UN recently reporting that Colombia’s rate of impunity for such crimes remains
at 95% – meaning that only 5% of the union killings have ever been successfully prosecuted.
It was these two factors – the unprecedented rate of union killings and the high rate of impunity for these
killings – that led Barack Obama in 2008 to declare in his third debate with John McCain that he opposed the
Colombia Free Trade Agreement (FTA).
While being a trade unionist in Colombia is dangerous, those that are unionists are the few that can more
freely organize. Under the Alvaro Uribe Velez Administration the “associative labor cooperatives” (CTAs)
model proliferated throughout Colombia. This union-busting model that precludes direct contracts between
workers and companies gravely debilitates working conditions, salaries, and occupational safety protections.
Workers have risked losing their meager livelihoods by holding stoppages to obtain direct contracts that...
26 Major Corporations Paid No Corporate Income Tax For The Last Four Years, Despite Making Billions In
Profits
By Pat Garofalo on Apr 9, 2012 at 12:00 pm
Last year, Citizens for Tax Justice found that 30 major corporations had made billions of dollars in profits
while paying no federal income tax between 2008 and 2010. Today, CTJ updated that report to reflect the
2011 tax bill of those 30 companies, and 26 of them have still managed to pay absolutely nothing over that
four year period:
– 26 of the 30 companies continued to enjoy negative federal income tax rates. That means they still made
more money after tax than before tax over the four years!
– Of the remaining four companies, three paid four year effective tax rates of less than 4 percent
(specifically, 0.2%, 2.0% and 3.8%). One company paid a 2008-11 tax rate of 10.9 percent.
– In total, 2008-11 federal income taxes for the 30 companies remained negative, despite $205 billion in
pretax U.S. profits. Overall, they enjoyed an average effective federal income tax rate of –3.1 percent
over the four years.
Amongst the 30 are corporate titans such as General Electric, Boeing, Verizon, and Mattel. The only four
companies that slipped into positive tax territory were DTE Energy, Honeywell, Wells Fargo, and DuPont,
with DuPont the only one that paid more than 4 percent over the four years.
Corporate taxes in the U.S., contrary to the constant protestations of conservatives, are at a 40 year low,
with many of the most profitable companies paying nothing at all. CTJ noted that “had these 30 companies
paid the full 35 percent corporate tax rate over the 2008-11 period, they would have paid $78.3 billion
more in federal income taxes.” And this is not a problem that only afflicts the U.S., as the UK found out last
week that online retailer Amazon made billions in sales in 2011, while paying nothing in corporate taxes.
TPMDC
Repealing ‘Obamacare’ Would Explode Debt, Says Government Auditor
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Brian Beutler April 3, 2012, 6:05 AM 10938
A new report by an independent government auditor concludes that implementing President Obama’s health
care law as intended will make a significant dent in the long-term debt forecast.
The report comes as Supreme Court justices weigh striking some of “Obamacare’s” central provisions — and
perhaps the law in its entirety — and as the Republican Party remains committed to repealing the law if it
seizes control of government in November.
“[I]f the Patient Protection and Affordable Care Act (PPACA) is implemented as intended it would have a
major effect on the [fiscal] gap but would not eliminate it,” the Government Accountability Office wrote in a
Monday report — a conclusion in line with its own past research and similar research conducted by other
government and non-government analysts.
GAO doesn’t isolate PPACA’s stand-alone contribution to long-term budget consolidation. But it does
conclude that if key cost-control measures in the law, and other automatic cuts to Medicare spending baked
into current law, are ignored, or overridden by Congress, the implications for the national debt are vast.
If “Obamacare” is implemented as intended, and other measures, such as automatic payment cuts to
Medicare physicians, take effect, “spending on Medicare and Medicaid grows from 5 percent of GDP in 2010
to over 7 percent by 2030.”
By contrast, if Congress overrides those provisions, “[s]pending on health care grows much more rapidly
under this more pessimistic set of assumptions,” according to the report. “Absent changes to these
programs, spending on Medicare and Medicaid under the Alternative simulation grows to over 8 percent of
GDP by 2030.”
Congress has consistently passed temporary legislation to prevent Medicare doctors from experiencing a
pay cut baked into current law. But the current patch expires on Jan. 1 — along with the Bush tax cuts and
the payroll tax holiday — just as other automatic cuts to Medicare are set to take effect as a penalty for
the Super Committee’s failure to pass deficit-cutting legislation.
The confluence of these fiscal triggers suggests lawmakers will be forced to act quickly after the election
to put the country’s budget on a more sustainable path. But if Republicans win big in November and move
ahead with their plan to repeal the health care law, they’ll only make matters worse.
The Warning in Gary Webb’s DeathDecember 9, 2011Special Report: Modern American history is
more complete because journalist Gary Webb had the courage to revive the dark story of the Reagan
administration’s protection of Nicaraguan Contra cocaine traffickers in the 1980s. However, Webb
ultimately paid a terrible price, as Robert Parry reports.By Robert ParryEvery year since investigative
journalist Gary Webb took his own life in 2004, I have marked the anniversary of that sad event by recalling
the debt that American history owes to Webb for his brave reporting, which revived the Contra-cocaine
scandal in 1996 and forced important admissions out of the Central Intelligence Agency two years later.But
Webb’s suicide on the evening of Dec. 9, 2004, was also a tragic end for one man whose livelihood
and reputation were destroyed by a phalanx of major newspapers – the New York Times, the
Washington Post and the Los Angeles Times– serving as protectors of a corrupt power structure
rather than as sources of honest information.Journalist Gary WebbIn reviewing the story again this year, I
was struck by how Webb’s Contra-cocaine experience was, in many ways, a precursor to the
subsequent tragedy of the Iraq War.In the 1980s, the CIA’s analytical division was already showing
signs of politicization, especially regarding President Ronald Reagan’s beloved Contras and their war
against Nicaragua’s Sandinista government – and the U.S. press corps was already bending
to the propaganda pressures of a right-wing Republican administration.Looking back at CIA cables from the
early-to-mid-1980s, you can already see the bias dripping from the analytical reports. Any drug accusation
against the leftist Sandinistas was accepted without skepticism and usually with strong exaggeration, while
the opposite occurred with evidence of Contra cocaine smuggling; then there was endless quibbling and
smearing of sources.So, to put these reports in anything close to an accurate focus, you would need special
lenses to correct for all the politicized distortions. Yet, the U.S. news media, which itself was under intense
pressure not to appear “liberal,” worsened the Reagan administration’s fun-house
reflection of reality and attacked any dissident journalist who wouldn’t go along.Thus, Americans
heard a lot about how the evil Sandinistas were trying to “poison” America’s youth
with cocaine, although there was not a single interception of a drug shipment from Nicaragua during the
Sandinista reign, except for one planeload of cocaine that the United States flew into and out of Nicaraguan
in a clumsy “sting” operation.On the other hand, substantial evidence of Contra-related
cocaine shipments out of Costa Rica and Honduras was kept from the American people with Reagan’s
Justice Department and CIA intervening to head off investigations and thus prevent embarrassing
disclosures. The chief role of the big newspapers in this upside-down world was to heap ridicule on anyone
who told the truth.During that time frame of the early-to-mid-1980s, the patterns were set for CIA
analysts to advance their careers (by giving the president what he wanted) and mainstream journalists to
protect theirs (by accepting propaganda). By 2002-2003, these patterns had become deeply engrained,
leaving almost no one to protect the American people from a new round of falsehoods – aimed at Iraq.
Though I was not in touch with Webb in the last months of his life in 2004, I have always wondered if he saw
this connection between his own valiant efforts to correct the historical record about Contra-cocaine
trafficking in 1996 and the victory of lies over truth regarding Iraq’s WMD in 2002-2003.In the
weeks before Webb’s suicide, there also was the intervening fact of George W. Bush’s
reelection – and with it, the dashed expectation that the CIA analysts and the mainstream journalists
who played along with the Iraq-WMD fabrications might face some serious accountability. At the moment
when Webb picked up his father’s pistol and put it to his head, there must have appeared little hope
that anything would change.Indeed, we are now seeing yet another replay of this systematic distortion of
information, this time regarding Iran and its alleged nuclear weapons program. Any tidbit of information
against Iran is exaggerated, while exculpatory data is downplayed or ignored.So, it may be timely again to
recount what happened to Gary Webb and to reflect on the dangers of allowing this corrupt disinformation
system to press ahead unchecked.Dark AllianceFor me, the tragic story of Gary Webb began in 1996 when
he was working on his “Dark Alliance” series for the San Jose Mercury News. He called me
at my home in Arlington, Virginia, because, in 1985, I and my Associated Press colleague Brian Barger had
been the first journalists to reveal the scandal of Reagan’s Nicaraguan Contras funding themselves
in part by collaborating with drug traffickers.Webb explained that he had come across evidence that one
Contra-connected drug conduit had funneled cocaine into Los Angeles, where it helped fuel the early crack
epidemic. Unlike our AP stories a decade earlier — which focused on the Contras helping to ship
cocaine from Central America into the United States — Webb said his series would examine what
happened to the Contra cocaine after it reached the streets of Los Angeles and other cities.Besides asking
about my recollections of the Contras and their cocaine smuggling, Webb wanted to know why the scandal
never gained any real traction in the U.S. national news media. I explained that the ugly facts of the drug
trafficking ran up against a determined U.S government campaign to protect the Contras’ image. In
the face of that resistance, I said, the major publications — the likes of the New York Times and the
Washington Post — had chosen to attack the revelations and those behind them rather than to dig up
more evidence.Webb sounded confused by my account, as if I were telling him something that was foreign to
his personal experience, something that just didn’t compute. I had a sense of his unstated questions:
Why would the prestige newspapers of American journalism behave that way? Why wouldn’t they
jump all over a story that important and that sexy, about the CIA working with drug traffickers?I took a
deep breath, sensing that he had no idea of the personal danger he was about to confront. Well, he would
have to learn that for himself, I thought. It surely wasn’t my place to warn a journalist away from a
significant story just because it carried risks.So, I simply asked Webb if he had the strong support of his
editors. He assured me that he did. I said their backing would be crucial once his story was out. He sounded
perplexed, again, as if he didn’t know what to make of my cautionary tone. I wished him the best of
luck, thinking that he would need it.The Safe RouteWhen I hung up, I wasn’t sure that the Mercury
News would really press ahead with the story, considering how the big national news outlets had dismissed
and ridiculed the notion that President Reagan’s beloved Contras had included a large number of
drug traffickers.It never seemed to matter how much evidence there was. It was much easier — and
safer, career-wise — for Washington journalists to reject incriminating testimony against the
Contras, especially when it came from other drug traffickers and from disgruntled Contras. Even U.S. law-
enforcement officials who discovered evidence were disparaged as overzealous and congressional
investigators were painted as partisan.In 1985, as we were preparing our first AP story on this topic,
Barger and I knew that the evidence of Contra-cocaine involvement was overwhelming. We had a broad
range of sources both inside the Contra movement and within the U.S. government, people with no apparent
ax to grind who had described the cocaine-smuggling problem.One source was a field agent for the Drug
Enforcement Administration (DEA); another was a senior official on Reagan’s National Security
Council (NSC) who told me that he had read a CIA report about how a Contra unit based in Costa Rica had
used cocaine profits to buy a helicopter.However, after our AP story was published in December 1985, we
came under attack from the right-wing Washington Times. That was followed by dismissive stories in the
New York Times and the Washington Post. The notion that the Contras, whom President Reagan had likened
to America’s Founding Fathers, could be implicated in the drug trade was simply unthinkable.Yet, it
was always odd to me that many of the same newspapers had no problem accepting the fact that the CIA-
backed Afghan mujahedeen were involved in the heroin trade, but bristled at the thought that the CIA-
backed Nicaraguan Contras might be cut from the same cloth.A key difference, which I learned both from
personal experience and from documents that surfaced during the Iran-Contra scandal, was that Reagan
had assigned a young group of ambitious intellectuals such as Elliott Abrams and Robert Kagan to oversee
the Contra war.These neoconservatives worked with old-line anticommunists from the Cuban-American
community, such as Otto Reich, and CIA propagandists, such as Walter Raymond Jr., to aggressively protect
the Contras’ image. And the Contras were always on the edge between getting congressional funding
or having it cut off.So, that combination — the propaganda skills of Reagan’s Contra-support
team and the fragile consensus for continuing Reagan’s pet Contra war — meant that any
negative publicity about the Contras would be met with a fierce counterattack.Going to EditorsThe
neoconservatives were also bright, well-schooled, and skilled in their manipulation of language and
information, a process they privately called “perception management.” They proved adept,
too, at ingratiating themselves with senior editors at major news outlets.By the mid-1980s, these patterns
had become well-worn in Washington. If a journalist dug up a story that put the Contras in a negative light,
he or she could expect the Reagan administration’s propaganda team to make contact with a senior
editor or bureau chief and lodge a complaint, apply some pressure, and often offer up some dirt about the
offending journalist.Also, many news executives in that time frame were sympathetic toward
Reagan’s hard-line foreign policy, especially after the humiliations of the Vietnam War and the
Iranian revolution. Supporting U.S. initiatives abroad — or at least not allowing your reporters to
undercut those policies — was seen as patriotic.At the New York Times, executive editor Abe
Rosenthal was one of the news media’s most influential neoconservatives, declaring that he was
determined to steer the newspaper back to “the center,” by which he meant to the right.At
AP, general manager Keith Fuller was known to be a strong Reagan supporter and his preferences were
sometimes expressed forcefully to AP’s Washington bureau where I worked. At the Washington
Post and Newsweek (where I went to work in 1987), there was also a strong sense that Reagan-era
scandals should not reach the president, that it would not be “good for the country.”In
other words, on the issue of Contra drug trafficking, there was a confluence of interests between the
Reagan administration, which was determined to protect the Contras’ public image, and senior news
executives, who wanted to adopt a “patriotic” posture after convincing themselves that the
country shouldn’t endure another wrenching battle over wrongdoing by a Republican president.The
popular image of courageous editors standing up for their reporters in the face of government pressure
was not the reality, especially not where the Contras were concerned.Reverse RewardsSo, instead of a
process that outsiders might imagine — where journalists who dug out tough stories got rewarded
— the actual system worked in the opposite way. The careerists in the news business quickly grasped
that the smart play when it came to the Contras was either to be a booster or at least to pooh-pooh evidence
of the Contras’ brutality or drug traffickers.The same rules applied to congressional investigators.
Anyone who pried into the dark corners of the Nicaraguan Contra war faced ridicule, as happened to
Democratic Sen. John Kerry of Massachusetts when he followed up the early AP stories with a courageous
investigation that discovered more ties between cocaine traffickers and the Contras.When his Contra-
cocaine report was released in 1989, its findings were greeted with yawns and smirks. News articles were
buried deep inside the major newspapers and the stories focused more on alleged flaws in his investigation
than on his revelations.For his hard work, Newsweek summed up the prevailing “conventional
wisdom” on Kerry by calling him a “randy conspiracy buff.” Being associated with
breaking the Contra-cocaine story was also regarded as a black mark on my own career.To function in this
upside-down world, where reality and perception often clashed – and perception usually won –
the big news outlets developed a kind of cognitive dissonance that could accept two contradictory positions.
On one level, the news outlets did accept the undeniable reality that some of the Contras and their backers,
including the likes of Panamanian General Manuel Noriega, were implicated in the drug trade, but then
simultaneously treated this reality as a conspiracy theory.Squaring the CircleOnly occasionally did a major
news outlet seek to square this circle, such as during Noriega’s drug-trafficking trial in 1991 when U.
S. prosecutors called as a witness Colombian Medellín cartel kingpin Carlos Lehder, who —
along with implicating Noriega — testified that the cartel had given $10 million to the Contras, an
allegation first unearthed by Sen. Kerry.“The Kerry hearings didn’t get the attention they
deserved at the time,” a Washington Post editorial on Nov. 27, 1991, acknowledged. “The
Noriega trial brings this sordid aspect of the Nicaraguan engagement to fresh public attention.”
However, the Post offered its readers no explanation for why Kerry’s hearings had been largely
ignored, with the Post itself a leading culprit in this journalistic misfeasance. Nor did the Post and the other
leading newspapers use the opening created by the Noriega trial to do anything to rectify their past neglect.
And, everything quickly returned to the status quo in which the desired perception of the noble Contras
trumped the clear reality of their criminal activities.So, from 1991 until 1996, the Contra-cocaine scandal
remained a disturbing story not just about the skewed moral compass of the Reagan administration but also
about how the U.S. news media had lost its way.The scandal was a dirty secret that was best kept out of
public view and away from a thorough discussion. After all, the journalistic careerists who had played along
with the U.S. government’s Contra defenders had advanced inside their media corporations. As good
team players, they had moved up to be bureau chiefs and other news executives. They had no interest in
revisiting one of the big stories that they had downplayed as a prerequisite for their success.
PariahsMeanwhile, those journalists who had exposed these national security crimes mostly saw their
careers sink or at best slide sideways. We were regarded as “pariahs” in our profession.
We were “conspiracy theorists,” even though our journalism had proven to be correct again
and again.The Post’s admission that the Contra-cocaine scandal “didn’t get the
attention it deserved” didn’t lead to any soul-searching inside the U.S. news media, nor did it
result in any rehabilitation of the careers of the reporters who had tried to put a spotlight on this especially
vile secret.As for me, after losing battle after battle with my Newsweek editors (who despised the Iran-
Contra scandal that I had worked so hard to expose), I departed the magazine in June 1990 to write a book
(called Fooling America) about the decline of the Washington press corps and the parallel rise of the new
generation of government propagandists.I was also hired by PBS Frontline to investigate whether there had
been a prequel to the Iran-Contra scandal — whether those arms-for-hostage deals in the mid-1980s
had been preceded by contacts between Reagan’s 1980 campaign staff and Iran, which was then
holding 52 Americans hostage and essentially destroying Jimmy Carter’s reelection hopes. [For
more on that topic, see Robert Parry’s Secrecy & Privilege.]Then, in 1995, frustrated by the
pervasive triviality that had come to define American journalism — and acting on the advice of and
with the assistance of my oldest son Sam — I turned to a new medium and launched the
Internet’s first investigative news magazine, known as Consortiumnews.com. The Web site became a
way for me to put out well-reported stories that my former mainstream colleagues seemed determined to
ignore or mock.So, when Gary Webb called me that day in 1996, I knew that he was charging into some
dangerous journalistic terrain, though he thought he was simply pursuing a great story. After his call, it
struck me that perhaps the only way for the Contra-cocaine story to ever get the attention that it deserved
was for someone outside the Washington media culture to do the work.When Webb’s “Dark
Alliance” series finally appeared in late August 1996, it initially drew little attention. The major
national news outlets applied their usual studied indifference to a topic that they had already judged
unworthy of serious attention.It was also clear that the media careerists who had climbed up their
corporate ladders by accepting the conventional wisdom that the Contra-cocaine story was a conspiracy
theory weren’t about to look back down and admit that they had contributed to a major journalistic
failure to inform and protect the American public.Hard to IgnoreBut Webb’s story proved hard to
ignore. First, unlike the work that Barger and I did for AP in the mid-1980s, Webb’s series
wasn’t just a story about drug traffickers in Central America and their protectors in Washington. It
was about the on-the-ground consequences, inside the United States, of that drug trafficking, how the lives
of Americans were blighted and destroyed as the collateral damage of a U.S. foreign policy initiative.In
other words, there were real-life American victims, and they were concentrated in African-American
communities. That meant the ever-sensitive issue of race had been injected into the controversy. Anger
from black communities spread quickly to the Congressional Black Caucus, which started demanding answers.
Secondly, the San Jose Mercury News, which was the local newspaper for Silicon Valley, had posted
documents and audio on its state-of-the-art Internet site. That way, readers could examine much of the
documentary support for the series.It also meant that the traditional “gatekeeper” role of
the major newspapers — the New York Times, the Washington Post, and the Los Angeles Times
— was under assault. If a regional paper like the Mercury News could finance a major journalistic
investigation like this one, and circumvent the judgments of the editorial boards at the Big Three, then there
might be a tectonic shift in the power relations of the U.S. news media. There could be a breakdown of the
established order.This combination of factors led to the next phase of the Contra-cocaine battle: the
“get-Gary-Webb” counterattack. The first major shot against Webb and his “Dark
Alliance” series did not come from the Big Three but from the rapidly expanding right-wing news
media, which was in no mood to accept the notion that some of President Reagan’s beloved Contras
were drug traffickers. That would have cast a shadow over the Reagan Legacy, which the Right was
elevating to mythic status.It fell to Rev. Sun Myung Moon’s right-wing Washington Times to begin
the anti-Webb vendetta. Moon, a South Korean theocrat who fancied himself the new Messiah, had founded
his newspaper in 1982 partly to protect Ronald Reagan’s political flanks and partly to ensure that he
had powerful friends in high places. In the mid-1980s, the Washington Times went so far as to raise money
to assist Reagan’s Contra “freedom fighters.”Self-Interested TestimonyTo refute
Webb’s three-part series, the Washington Times turned to some ex-CIA officials, who had
participated in the Contra war, and quoted them denying the story. Soon, the Washington Post, the New York
Times, and the Los Angeles Times were lining up behind the Washington Times to trash Webb and his story.
On Oct. 4, 1996, the Washington Post published a front-page article knocking down Webb’s series,
although acknowledging that some Contra operatives did help the cocaine cartels.The Post’s
approach was twofold, fitting with the national media’s cognitive dissonance on the topic of Contra
cocaine: first, the Post presented the Contra-cocaine allegations as old news — “even CIA
personnel testified to Congress they knew that those covert operations involved drug traffickers,”
the Post sniffed — and second, the Post minimized the importance of the one Contra smuggling
channel that Webb had highlighted in his series, saying that it had not “played a major role in the
emergence of crack.”A Post sidebar story dismissed African-Americans as prone to “
conspiracy fears.”Next, the New York Times and the Los Angeles Times weighed in with lengthy
articles castigating Webb and “Dark Alliance.” The big newspapers made much of the
CIA’s internal reviews in 1987 and 1988 — almost a decade earlier — that supposedly
had cleared the spy agency of any role in Contra-cocaine smuggling.But the CIA’s cover-up began to
weaken on Oct. 24, 1996, when CIA Inspector General Frederick Hitz conceded before the Senate
Intelligence Committee that the first CIA probe had lasted only12 days, and the second only three days. He
promised a more thorough review.Mocking WebbWebb, however, had already crossed over from being a
serious journalist to a target of ridicule. Influential Post media critic Howard Kurtz mocked Webb for
saying in a book proposal that he would explore the possibility that the Contra war was primarily a business
to its participants. “Oliver Stone, check your voice mail,” Kurtz chortled.However,
Webb’s suspicion was no conspiracy theory. Indeed, White House aide Oliver North’s chief
Contra emissary, Robert Owen, had made the same point in a March 17, 1986, message about the Contras
leadership. “Few of the so-called leaders of the movement . . . really care about the boys in the field,
” Owen wrote. “THIS WAR HAS BECOME A BUSINESS TO MANY OF THEM.”
[Emphasis in original.]In other words, Webb was right and Kurtz was wrong, even Oliver North’s
emissary had reported that many Contra leaders treated the conflict as “a business.” But
accuracy had ceased to be relevant in the media’s hazing of Gary Webb.In another double standard,
while Webb was held to the strictest standards of journalism, it was entirely all right for Kurtz —
the supposed arbiter of journalistic integrity who was also featured on CNN’s Reliable Sources
— to make judgments based on ignorance. Kurtz would face no repercussions for mocking a fellow
journalist who was factually correct.The Big Three’s assault — combined with their
disparaging tone — had a predictable effect on the executives of the Mercury News. As it turned
out, Webb’s confidence in his editors had been misplaced. By early 1997, executive editor Jerry
Ceppos, who had his own corporate career to worry about, was in retreat.On May 11, 1997, Ceppos published
a front-page column saying the series “fell short of my standards.” He criticized the stories
because they “strongly implied CIA knowledge” of Contra connections to U.S. drug dealers
who were manufacturing crack cocaine. “We did not have enough proof that top CIA officials knew
of the relationship,” Ceppos wrote.Ceppos was wrong about the proof, of course. At AP, before we
published our first Contra-cocaine article in 1985, Barger and I had known that the CIA and Reagan’
s White House were aware of the Contra-cocaine problem.However, Ceppos had recognized that he and his
newspaper were facing a credibility crisis brought on by the harsh consensus delivered by the Big Three, a
judgment that had quickly solidified into conventional wisdom throughout the major news media and inside
Knight-Ridder, Inc., which owned the Mercury News. The only career-saving move – career-saving
for Ceppos even if career-destroying for Webb – was to jettison Webb and his journalism.A
‘Vindication’The big newspapers and the Contras’ defenders celebrated
Ceppos’s retreat as vindication of their own dismissal of the Contra-cocaine stories. In particular,
Kurtz seemed proud that his demeaning of Webb now had the endorsement of Webb’s editor.
Ceppos next pulled the plug on the Mercury News’ continuing Contra-cocaine investigation and
reassigned Webb to a small office in Cupertino, California, far from his family. Webb resigned from the
paper in disgrace.For undercutting Webb and other Mercury News reporters working on the Contra-cocaine
investigation, Ceppos was lauded by the American Journalism Review and was given the 1997 national Ethics
in Journalism Award by the Society of Professional Journalists.While Ceppos won raves, Webb watched his
career collapse and his marriage break up. Still, Gary Webb had set in motion internal government
investigations that would bring to the surface long-hidden facts about how the Reagan administration had
conducted the Contra war.The CIA published the first part of Inspector General Hitz’s findings on
Jan. 29, 1998. Though the CIA’s press release for the report criticized Webb and defended the
CIA, Hitz’s Volume One admitted that not only were many of Webb’s allegations true but
that he actually understated the seriousness of the Contra-drug crimes and the CIA’s knowledge of
them.Hitz conceded that cocaine smugglers played a significant early role in the Contra movement and that
the CIA intervened to block an image-threatening 1984 federal investigation into a San Francisco–
based drug ring with suspected ties to the Contras, the so-called “Frogman Case.”After
Volume One was released, I called Webb (whom I had met personally since his series was published). I
chided him for indeed getting the story “wrong.” He had understated how serious the
problem of Contra-cocaine trafficking had been.It was a form of gallows humor for the two of us, since
nothing had changed in the way the major newspapers treated the Contra-cocaine issue. They focused only
on the press release that continued to attack Webb, while ignoring the incriminating information that could
be found in the body of the report. All I could do was highlight those admissions at Consortiumnews.com,
which sadly had a much, much smaller readership than the Big Three.Looking the Other WayThe major U.S.
news media also looked the other way on other startling disclosures.On May 7, 1998, for instance, Rep.
Maxine Waters, a California Democrat, introduced into the Congressional Record a Feb. 11, 1982, letter of
understanding between the CIA and the Justice Department. The letter, which had been requested by CIA
Director William Casey, freed the CIA from legal requirements that it must report drug smuggling by CIA
assets, a provision that covered both the Nicaraguan Contras and the Afghan mujahedeen.In other words,
early in those two covert wars, the CIA leadership wanted to make sure that its geopolitical objectives
would not be complicated by a legal requirement to turn in its client forces for drug trafficking.The next
break in the long-running Contra-cocaine cover-up was a report by the Justice Department’s
Inspector General Michael Bromwich.Given the hostile climate surrounding Webb’s series,
Bromwich’s report also opened with criticism of Webb. But, like the CIA’s Volume One, the
contents revealed new details about government wrongdoing. According to evidence cited by Bromwich, the
Reagan administration knew almost from the outset of the Contra war that cocaine traffickers permeated
the paramilitary operation. The administration also did next to nothing to expose or stop the crimes.
Bromwich’s report revealed example after example of leads not followed, corroborated witnesses
disparaged, official law-enforcement investigations sabotaged, and even the CIA facilitating the work of
drug traffickers.The report showed that the Contras and their supporters ran several parallel drug-
smuggling operations, not just the one at the center of Webb’s series. The report also found that
the CIA shared little of its information about Contra drugs with law-enforcement agencies and on three
occasions disrupted cocaine-trafficking investigations that threatened the Contras.As well as depicting a
more widespread Contra-drug operation than Webb had understood, the Justice Department report
provided some important corroboration about a Nicaraguan drug smuggler, Norwin Meneses, who was a key
figure in Webb’s series.Bromwich cited U.S. government informants who supplied detailed
information about Meneses’s drug operation and his financial assistance to the Contras. For instance,
Renato Pena, a money-and-drug courier for Meneses, said that in the early 1980s the CIA allowed the
Contras to fly drugs into the United States, sell them, and keep the proceeds.Pena, who was the northern
California representative for the CIA-backed Nicaraguan Democratic Force (FDN) Contra army, said the
drug trafficking was forced on the Contras by the inadequate levels of U.S. government assistance.DEA
TroublesThe Justice Department report also disclosed repeated examples of the CIA and U.S. embassies
in Central America discouraging DEA investigations, including one into Contra-cocaine shipments moving
through the international airport in El Salvador.Inspector General Bromwich said secrecy trumped all.
“We have no doubt that the CIA and the U.S. Embassy were not anxious for the DEA to pursue its
investigation at the airport,” he wrote.Bromwich also described the curious case of how a DEA pilot
helped a CIA asset escape from Costa Rican authorities in 1989 after the man, American farmer John Hull,
had been charged in connection with Contra-cocaine trafficking.Hull’s ranch in northern Costa Rica
had been the site of Contra camps for attacking Nicaragua from the south. For years, Contra-connected
witnesses also said Hull’s property was used for the transshipment of cocaine en route to the
United States, but those accounts were brushed aside by the Reagan administration and disparaged in major
U.S. newspapers.Yet, according to Bromwich’s report, the DEA took the accounts seriously enough
to prepare a research report on the evidence in November 1986. In it, one informant described Colombian
cocaine off-loaded at an airstrip on Hull’s ranch. The drugs were then concealed in a shipment of
frozen shrimp and transported to the United States.The alleged Costa Rican shipper was Frigorificos de
Puntarenas, a firm controlled by Cuban-American Luis Rodriguez. Like Hull, however, Frigorificos had
friends in high places. In 1985-86, the State Department had selected the shrimp company to handle
$261,937 in non-lethal assistance earmarked for the Contras.Hull also remained a man with powerful
protectors. Even after Costa Rican authorities brought drug charges against him, influential Americans,
including Rep. Lee Hamilton, D-Indiana, demanded that Hull be let out of jail pending trial. Then, in July 1989
with the help of a DEA pilot – and possibly a DEA agent – Hull managed to fly out of Costa
Rica to Haiti and then to the United States. [See Consortiumnews.com’s “John Hull’
s Great Escape.”]Despite these new disclosures, the big newspapers still showed no inclination to
read beyond the criticism of Webb in the press release and the executive summary.Major DisclosuresBy
fall 1998, Washington was obsessed with President Bill Clinton’s Monica Lewinsky sex scandal, which
made it easier to ignore even more stunning Contra-cocaine disclosures in the CIA’s Volume Two,
published on Oct. 8, 1998.In the report, CIA Inspector General Hitz identified more than 50 Contras and
Contra-related entities implicated in the drug trade. He also detailed how the Reagan administration had
protected these drug operations and frustrated federal investigations throughout the 1980s.According to
Volume Two, the CIA knew the criminal nature of its Contra clients from the start of the war against
Nicaragua’s leftist Sandinista government. The earliest Contra force, called the Nicaraguan
Revolutionary Democratic Alliance (ADREN) or the 15th of September Legion, had chosen “to stoop
to criminal activities in order to feed and clothe their cadre,” according to a June 1981 draft of a
CIA field report.According to a September 1981 cable to CIA headquarters, two ADREN members made
the first delivery of drugs to Miami in July 1981. ADREN’s leaders included Enrique Bermú
dez and other early Contras who would later direct the major Contra army, the CIA-organized FDN which
was based in Honduras, along Nicaragua’s northern border.Throughout the war, Bermúdez
remained the top Contra military commander. The CIA later corroborated the allegations about
ADREN’s cocaine trafficking, but insisted that Bermúdez had opposed the drug shipments to
the United States that went ahead nonetheless.The truth about Bermúdez’s supposed
objections to drug trafficking, however, was less clear. According to Hitz’s Volume One,
Bermúdez enlisted Norwin Meneses, a large-scale Nicaraguan cocaine smuggler and a key figure in
Webb’s series, to raise money and buy supplies for the Contras.Volume One had quoted a Meneses
associate, another Nicaraguan trafficker named Danilo Blandón, who told Hitz’s investigators
that he and Meneses flew to Honduras to meet with Bermúdez in 1982. At the time, Meneses’
s criminal activities were well-known in the Nicaraguan exile community. But Bermúdez told the
cocaine smugglers that “the ends justify the means” in raising money for the Contras.After
the Bermúdez meeting, Contra soldiers helped Meneses and Blandón get past Honduran police
who briefly arrested them on drug-trafficking suspicions. After their release, Blandón and Meneses
traveled on to Bolivia to complete a cocaine transaction.There were other indications of Bermú
dez’s drug-smuggling tolerance. In February 1988, another Nicaraguan exile linked to the drug
trade accused Bermúdez of participation in narcotics trafficking, according to Hitz’s report.
After the Contra war ended, Bermúdez returned to Managua, Nicaragua, where he was shot to death
on Feb. 16, 1991. The murder has never been solved.The Southern FrontAlong the Southern Front, the
Contras’ military operations in Costa Rica on Nicaragua’s southern border, the CIA’
s drug evidence centered on the forces of Edén Pastora, another top Contra commander. But Hitz
discovered that the U.S. government may have made the drug situation worse, not better.Hitz revealed that
the CIA put an admitted drug operative — known by his CIA pseudonym “Ivan
Gomez” — in a supervisory position over Pastora. Hitz reported that the CIA discovered
Gomez’s drug history in 1987 when Gomez failed a security review on drug-trafficking questions.In
internal CIA interviews, Gomez admitted that in March or April 1982, he helped family members who were
engaged in drug trafficking and money laundering. In one case, Gomez said he assisted his brother and
brother-in-law in transporting cash from New York City to Miami. He admitted that he “knew this
act was illegal.”Later, Gomez expanded on his admission, describing how his family members had
fallen $2 million into debt and had gone to Miami to run a money-laundering center for drug traffickers.
Gomez said “his brother had many visitors whom [Gomez] assumed to be in the drug trafficking
business.” Gomez’s brother was arrested on drug charges in June 1982. Three months
later, in September 1982, Gomez started his CIA assignment in Costa Rica.Years later, convicted drug
trafficker Carlos Cabezas alleged that in the early 1980s, Ivan Gomez was the CIA agent in Costa Rica who
was overseeing drug-money donations to the Contras. Gomez “was to make sure the money was given
to the right people [the Contras] and nobody was taking . . . profit they weren’t supposed to,
” Cabezas stated publicly.But the CIA sought to discredit Cabezas at the time because he had
trouble identifying Gomez’s picture and put Gomez at one meeting in early 1982 before Gomez
started his CIA assignment.While the CIA was able to fend off Cabezas’s allegations by pointing to
these discrepancies, Hitz’s report revealed that the CIA was nevertheless aware of
Gomez’s direct role in drug-money laundering, a fact the agency hid from Sen. Kerry in his 1987
investigation.Cocaine CoupThere was also more to know about Gomez. In November 1985, the Federal
Bureau of Investigation (FBI) learned from an informant that Gomez’s two brothers had been large-
scale cocaine importers, with one brother arranging shipments from Bolivia’s infamous drug kingpin
Roberto Suarez.Suarez already was known as a financier of right-wing causes. In 1980, with the support of
Argentina’s hard-line anticommunist military regime, Suarez bankrolled a coup in Bolivia that ousted
the elected left-of-center government. The violent putsch became known as the Cocaine Coup because it
made Bolivia the region’s first narco-state.By protecting cocaine shipments headed north,
Bolivia’s government helped transform Colombia’s Medellín cartel from a struggling
local operation into a giant corporate-style business for delivering cocaine to the U.S. market.Flush with cash
in the early 1980s, Suarez invested more than $30 million in various right-wing paramilitary operations,
including the Contra forces in Central America, according to U.S. Senate testimony by an Argentine
intelligence officer, Leonardo Sanchez-Reisse.In 1987, Sanchez-Reisse said the Suarez drug money was
laundered through front companies in Miami before going to Central America. There, other Argentine
intelligence officers — veterans of the Bolivian coup — trained the Contras in the early 1980s,
even before the CIA arrived to first assist with the training and later take over the Contra operation from
the Argentines.Inspector General Hitz added another piece to the mystery of the Bolivian-Contra
connection. One Contra fund-raiser, Jose Orlando Bolanos, boasted that the Argentine government was
supporting his Contra activities, according to a May 1982 cable to CIA headquarters. Bolanos made the
statement during a meeting with undercover DEA agents in Florida. He even offered to introduce them to
his Bolivian cocaine supplier.Despite all this suspicious drug activity centered around Ivan Gomez and the
Contras, the CIA insisted that it did not unmask Gomez until 1987, when he failed a security check and
confessed his role in his family’s drug business. The CIA official who interviewed Gomez concluded
that “Gomez directly participated in illegal drug transactions, concealed participation in illegal drug
transactions, and concealed information about involvement in illegal drug activity,” Hitz wrote.
Protecting GomezBut senior CIA officials still protected Gomez. They refused to refer the Gomez case to
the Justice Department, citing the 1982 agreement that spared the CIA from a legal obligation to report
narcotics crimes by people collaborating with the CIA who were not formal agency employees.Gomez was an
independent contractor who worked for the CIA but was not officially on staff. The CIA eased Gomez out
of the agency in February 1988, without alerting law enforcement or the congressional oversight committees.
When questioned about the case nearly a decade later, one senior CIA official who had supported the gentle
treatment of Gomez had second thoughts. “It is a striking commentary on me and everyone that this
guy’s involvement in narcotics didn’t weigh more heavily on me or the system,” the
official acknowledged to Hitz’s investigators.A Medellín drug connection arose in another
section of Hitz’s report, when he revealed evidence suggesting that some Contra trafficking may
have been sanctioned by Reagan’s NSC. The protagonist for this part of the Contra-cocaine mystery
was Moises Nunez, a Cuban-American who worked for Oliver North’s NSC Contra-support operation
and for two drug-connected seafood importers, Ocean Hunter in Miami and Frigorificos De Puntarenas in
Costa Rica.Frigorificos De Puntarenas was created in the early 1980s as a cover for drug-money laundering,
according to sworn testimony by two of the firm’s principals — Carlos Soto and
Medellín cartel accountant Ramon Milian Rodriguez. (It was also the company implicated by a DEA
informant in moving cocaine from John Hull’s ranch to the United States.)Drug allegations were
swirling around Moises Nunez by the mid-1980s. Indeed, his operation was one of the targets of my and
Barger’s AP investigation in 1985. Finally reacting to these suspicions, the CIA questioned Nunez
about his alleged cocaine trafficking on March 25, 1987. He responded by pointing the finger at his NSC
superiors.“Nunez revealed that since 1985, he had engaged in a clandestine relationship with the
National Security Council,” Hitz reported, adding: “Nunez refused to elaborate on the
nature of these actions, but indicated it was difficult to answer questions relating to his involvement in
narcotics trafficking because of the specific tasks he had performed at the direction of the NSC. Nunez
refused to identify the NSC officials with whom he had been involved.”After this first round of
questioning, CIA headquarters authorized an additional session, but then senior CIA officials reversed the
decision. There would be no further efforts at “debriefing Nunez.”Hitz noted that “
the cable [from headquarters] offered no explanation for the decision” to stop the Nunez
interrogation. But the CIA’s Central American Task Force chief Alan Fiers Jr. said the Nunez-NSC
drug lead was not pursued “because of the NSC connection and the possibility that this could be
somehow connected to the Private Benefactor program [the Contra money handled by North] a decision was
made not to pursue this matter.”Joseph Fernandez, who had been the CIA’s station chief in
Costa Rica, confirmed to congressional Iran-Contra investigators that Nunez “was involved in a very
sensitive operation” for North’s “Enterprise.” The exact nature of that
NSC-authorized activity has never been divulged.At the time of the Nunez-NSC drug admissions and his
truncated interrogation, the CIA’s acting director was Robert Gates, who nearly two decades later
became President George W. Bush’s second secretary of defense, a position he retained under
President Barack Obama.Drug RecordThe CIA also worked directly with other drug-connected Cuban-
Americans on the Contra project, Hitz found. One of Nunez’s Cuban-American associates, Felipe
Vidal, had a criminal record as a narcotics trafficker in the 1970s. But the CIA still hired him to serve as a
logistics coordinator for the Contras, Hitz reported.The CIA also learned that Vidal’s drug
connections were not only in the past. A December 1984 cable to CIA headquarters revealed Vidal’s
ties to Rene Corvo, another Cuban-American suspected of drug trafficking. Corvo was working with Cuban
anticommunist Frank Castro, who was viewed as a Medellín cartel representative within the Contra
movement.There were other narcotics links to Vidal. In January 1986, the DEA in Miami seized 414 pounds
of cocaine concealed in a shipment of yucca that was going from a Contra operative in Costa Rica to Ocean
Hunter, the company where Vidal (and Moises Nunez) worked. Despite the evidence, Vidal remained a CIA
employee as he collaborated with Frank Castro’s assistant, Rene Corvo, in raising money for the
Contras, according to a CIA memo in June 1986.By fall 1986, Sen. Kerry had heard enough rumors about
Vidal to demand information about him as part of his congressional inquiry into Contra drugs. But the CIA
withheld the derogatory information in its files. On Oct. 15, 1986, Kerry received a briefing from the
CIA’s Alan Fiers Jr., who didn’t mention Vidal’s drug arrests and conviction in the
1970s.But Vidal was not yet in the clear. In 1987, the U.S. Attorney’s Office in Miami began
investigating Vidal, Ocean Hunter, and other Contra-connected entities. This prosecutorial attention worried
the CIA. The CIA’s Latin American division felt it was time for a security review of Vidal. But on
Aug. 5, 1987, the CIA’s security office blocked the review for fear that the Vidal drug information
“could be exposed during any future litigation.”As expected, the U.S. Attorney’s
Office did request documents about “Contra-related activities” by Vidal, Ocean Hunter, and
16 other entities. The CIA advised the prosecutor that “no information had been found regarding
Ocean Hunter,” a statement that was clearly false. The CIA continued Vidal’s employment
as an adviser to the Contra movement until 1990, virtually the end of the Contra war.FDN ConnectionsHitz
also revealed that drugs tainted the highest levels of the Honduran-based FDN, the largest Contra army.
Hitz found that Juan Rivas, a Contra commander who rose to be chief of staff, admitted that he had been a
cocaine trafficker in Colombia before the war.The CIA asked Rivas, known as El Quiche, about his
background after the DEA began suspecting that Rivas might be an escaped convict from a Colombian prison.
In interviews with CIA officers, Rivas acknowledged that he had been arrested and convicted of packaging
and transporting cocaine for the drug trade in Barranquilla, Colombia. After several months in prison, Rivas
said, he escaped and moved to Central America, where he joined the Contras.Defending Rivas, CIA officials
insisted that there was no evidence that Rivas engaged in trafficking while with the Contras. But one CIA
cable noted that he lived an expensive lifestyle, even keeping a $100,000 Thoroughbred horse at the Contra
camp. Contra military commander Bermúdez later attributed Rivas’s wealth to his ex-
girlfriend’s rich family. But a CIA cable in March 1989 added that “some in the FDN may
have suspected at the time that the father-in-law was engaged in drug trafficking.”Still, the CIA
moved quickly to protect Rivas from exposure and possible extradition to Colombia. In February 1989, CIA
headquarters asked that the DEA take no action “in view of the serious political damage to the U.S.
Government that could occur should the information about Rivas become public.” Rivas was eased out
of the Contra leadership with an explanation of poor health. With U.S. government help, he was allowed to
resettle in Miami. Colombia was not informed about his fugitive status.Another senior FDN official implicated
in the drug trade was its chief spokesman in Honduras, Arnoldo Jose “Frank” Arana.The
drug allegations against Arana dated back to 1983 when a federal narcotics task force put him under
criminal investigation because of plans “to smuggle 100 kilograms of cocaine into the United States
from South America.” On Jan. 23, 1986, the FBI reported that Arana and his brothers were
involved in a drug-smuggling enterprise, although Arana was not charged.Arana sought to clear up another
set of drug suspicions in 1989 by visiting the DEA in Honduras with a business associate, Jose Perez.
Arana’s association with Perez, however, only raised new alarms. If “Arana is mixed up with
the Perez brothers, he is probably dirty,” the DEA said.Drug AirlinesThrough their ownership of an
air services company called SETCO, the Perez brothers were associated with Juan Matta-Ballesteros, a
major cocaine kingpin connected to the murder of a DEA agent, according to reports by the DEA and U.S.
Customs. Hitz reported that someone at the CIA scribbled a note on a DEA cable about Arana stating:
“Arnold Arana . . . still active and working, we [CIA] may have a problem.”Despite its drug
ties to Matta-Ballesteros, SETCO emerged as the principal company for ferrying supplies to the Contras in
Honduras. During congressional Iran-Contra hearings, FDN political leader Adolfo Calero testified that
SETCO was paid from bank accounts controlled by Oliver North. SETCO also received $185,924 from the
State Department for ferrying supplies to the Contras in 1986. Furthermore, Hitz found that other air
transport companies used by the Contras were implicated in the cocaine trade as well.Even FDN leaders
suspected that they were shipping supplies to Central America aboard planes that might be returning with
drugs. Mario Calero, the chief of Contra logistics, grew so uneasy about one air freight company that he
notified U.S. law enforcement that the FDN only chartered the planes for the flights south, not the return
flights north.Hitz found that some drug pilots simply rotated from one sector of the Contra operation to
another. Donaldo Frixone, who had a drug record in the Dominican Republic, was hired by the CIA to fly
Contra missions from 1983 to 1985. In September 1986, however, Frixone was implicated in smuggling
19,000 pounds of marijuana into the United States. In late 1986 or early 1987, he went to work for Vortex,
another U.S.-paid Contra supply company linked to the drug trade.By the time that Hitz’s Volume
Two was published in fall 1998, the CIA’s defense against Webb’s series had shrunk to a
fig leaf: that the CIA did not conspire with the Contras to raise money through cocaine trafficking. But Hitz
made clear that the Contra war took precedence over law enforcement and that the CIA withheld evidence
of Contra crimes from the Justice Department, Congress, and even the CIA’s own analytical division.
Besides tracing the evidence of Contra-drug trafficking through the decade-long Contra war, the inspector
general interviewed senior CIA officers who acknowledged that they were aware of the Contra-drug
problem but didn’t want its exposure to undermine the struggle to overthrow Nicaragua’s
leftist Sandinista government.According to Hitz, the CIA had “one overriding priority: to oust the
Sandinista government. . . . [CIA officers] were determined that the various difficulties they encountered
not be allowed to prevent effective implementation of the Contra program.” One CIA field officer
explained, “The focus was to get the job done, get the support and win the war.”Hitz also
recounted complaints from CIA analysts that CIA operations officers handling the Contras hid evidence of
Contra-drug trafficking even from the CIA’s analysts.Because of the withheld evidence, the CIA
analysts incorrectly concluded in the mid-1980s that “only a handful of Contras might have been
involved in drug trafficking.” That false assessment was passed on to Congress and to major news
organizations — serving as an important basis for denouncing Gary Webb and his “Dark
Alliance” series in 1996.CIA AdmissionAlthough Hitz’s report was an extraordinary
admission of institutional guilt by the CIA, it went almost unnoticed by the big American newspapers.On Oct.
10, 1998, two days after Hitz’s Volume Two was posted on the CIA’s Web site, the New
York Times published a brief article that continued to deride Webb but acknowledged the Contra-drug
problem may have been worse than earlier understood. Several weeks later, the Washington Post weighed in
with a similarly superficial article. The Los Angeles Times never published a story on the release of
Hitz’s Volume Two.In 2000, the House Intelligence Committee grudgingly acknowledged that the
stories about Reagan’s CIA protecting Contra drug traffickers were true. The committee released
a report citing classified testimony from CIA Inspector General Britt Snider (Hitz’s successor)
admitting that the spy agency had turned a blind eye to evidence of Contra-drug smuggling and generally
treated drug smuggling through Central America as a low priority.“In the end the objective of
unseating the Sandinistas appears to have taken precedence over dealing properly with potentially serious
allegations against those with whom the agency was working,” Snider said, adding that the CIA did
not treat the drug allegations in “a consistent, reasoned or justifiable manner.”The House
committee — then controlled by Republicans — still downplayed the significance of the Contra-
cocaine scandal, but the panel acknowledged, deep inside its report, that in some cases, “CIA
employees did nothing to verify or disprove drug trafficking information, even when they had the
opportunity to do so. In some of these, receipt of a drug allegation appeared to provoke no specific
response, and business went on as usual.”Like the release of Hitz’s report in 1998, the
admissions by Snider and the House committee drew virtually no media attention in 2000 — except
for a few articles on the Internet, including one at Consortiumnews.com.Unrepentant PressBecause of this
misuse of power by the Big Three newspapers — choosing to conceal their own journalistic failings
regarding the Contra-cocaine scandal and to protect the Reagan administration’s image —
Webb’s reputation was never rehabilitated.After his original “Dark Alliance” series
was published in 1996, Webb had been inundated with attractive book offers from major publishing houses,
but once the vilification began, the interest evaporated. Webb’s agent contacted an independent
publishing house, Seven Stories Press, which had a reputation for publishing books that had been censored,
and it took on the project.After Dark Alliance: The CIA, the Contras, and the Crack Cocaine Explosion was
published in 1998, I joined Webb in a few speaking appearances on the West Coast, including one packed
book talk at the Midnight Special bookstore in Santa Monica, California. For a time, Webb was treated as a
celebrity on the American Left, but that gradually faded.In our interactions during these joint appearances,
I found Webb to be a regular guy who seemed to be holding up fairly well under the terrible pressure. He
had landed an investigative job with a California state legislative committee. He also felt some measure of
vindication when CIA Inspector General Hitz’s reports came out.However, Webb never could
overcome the pain caused by his betrayal at the hands of his journalistic colleagues, his peers. In the years
that followed, Webb was unable to find decent-paying work in his profession — the conventional
wisdom remained that he had somehow been exposed as a journalistic fraud. His state job ended; his
marriage fell apart; he struggled to pay bills; and he was faced with a move out of a modest rental house
near Sacramento, California.On Dec. 9, 2004, the 49-year-old Webb typed out suicide notes to his ex-wife
and his three children; laid out a certificate for his cremation; and taped a note on the door telling movers
— who were coming the next morning — to instead call 911. Webb then took out his
father’s pistol and shot himself in the head. The first shot was not lethal, so he fired once more.
Even with Webb’s death, the big newspapers that had played key roles in his destruction
couldn’t bring themselves to show Webb any mercy. After Webb’s body was found, I
received a call from a reporter for the Los Angeles Times who knew that I was one of Webb’s few
journalistic colleagues who had defended him and his work.I told the reporter that American history owed a
great debt to Gary Webb because he had forced out important facts about Reagan-era crimes. But I added
that the Los Angeles Times would be hard-pressed to write an honest obituary because the newspaper had
not published a single word on the contents of Hitz’s final report, which had largely vindicated
Webb.To my disappointment but not my surprise, I was correct. The Los Angeles Times ran a mean-spirited
obituary that made no mention of either my defense of Webb, nor the CIA’s admissions in 1998. The
obituary was republished in other newspapers, including the Washington Post.In effect, Webb’s
suicide enabled senior editors at the Big Three newspapers to breathe a little easier — one of the
few people who understood the ugly story of the Reagan administration’s cover-up of the Contra-
cocaine scandal and the U.S. media’s complicity was now silenced.To this day, none of the journalists
or media critics who participated in the destruction of Gary Webb has paid a price for their actions. None
has faced the sort of humiliation that Webb had to endure. None had to experience that special pain of
standing up for what is best in the profession of journalism — taking on a difficult story that seeks to
hold powerful people accountable for serious crimes — and then being vilified by your own colleagues,
the people that you expected to understand and appreciate what you had done.On the contrary, many were
rewarded with professional advancement and lucrative careers. For instance, Howard Kurtz still hosts the
CNN program, “Reliable Sources,” which lectures journalists on professional standards.[For
more on related topics, see Robert Parry’s Lost History, Secrecy & Privilege and Neck Deep,
now available in a three-book set for the discount price of only $29. For details, click here.]Robert Parry
broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest
book, Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and
Nat, and can be ordered at neckdeepbook.com. His two previous books, Secrecy & Privilege: The Rise
of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & ‘
Project Truth’ are also available there.
With regards to Milton Friedman’s Free to Chose only the top ten percent is free to chose. The rest are
pretty much slaves with little chose after they pay for necessities.
Five Reasons Why The Very Rich Have Not Earned Their Money
Submitted by BuzzFlash on Tue, 04/17/2012 - 1:10pm.
• Guest Commentary
PAUL BUCHHEIT FOR BUZZFLASH AT TRUTHOUT
The wealthiest Americans believe they've earned their money through hard work and innovation, and that
they're the most productive members of society. For the most part they're wrong. As the facts below will
show, they're not nearly as productive as middle-class workers. Yet they've taken almost all the new income
over the past 30 years.
Any one of these five reasons should reinforce the belief that the rich should be paying a LOT more in taxes:
1. They've Taken All the Middle Class Wage Increases
In 1980 the richest 1% of America took one of every fifteen post-tax income dollars. Now, according to IRS
figures, they take THREE of every fifteen post-tax income dollars. They've tripled their cut of America's
income pie. That's a trillion extra dollars a year.
For every dollar the richest 1% earned in 1980, they've added three more dollars. The poorest 90% have
added ONE CENT.
Yet the average American factory worker, according to Berkeley economist Enrico Moretti, produces
$180,000 worth of goods a year, more than three times what he or she produced in 1978, in inflation-
adjusted dollars.
So workers have TRIPLED their productivity over 30 years while the richest 1% have TRIPLED their share
of income. Worker pay remained flat as the top 10% took almost all the productivity gains since 1980.
2. They've Mismanaged Key American Industries
We have the most expensive health care system in the world. Failing banks have survived because of
taxpayer bailouts. Management-approved shortcuts have led to workplace deaths and chemical leak
disasters. Companies lobby for cap and trade laws so their profits can pay for their pollution.
Over twenty percent of Americans are unemployed or underemployed as big companies hoard $2 trillion in
cash. 93% of post-recession income is going to the 1% "job-creators" with no appreciable increase in jobs.
Private tuition is skyrocketing, with student loans reaching the $1 trillion mark. Bonuses continue for
executives at Ford and Bank of America and Sirius and other companies who have underperformed and/or
laid off workers.
No, the captains of industry have not earned their money because of their top-notch management skills.
3. They've Benefited from 50 Years of Public Research
The very rich have made their fortunes in good part because of taxpayer-funded research at the Defense
Advanced Research Projects Agency (the Internet), the National Institute of Health, the National Science
Foundation, and numerous other government agencies.
Consider just a simple communications device. Computer chips and audio/video/voice technologies grew out
of decades of funding at the Department of Defense, the Air Force, NASA, and public universities. The
pieces of the device were put together by a procession of chemists, physicists, chip designers,
programmers, engineers, production-line workers, market analysts, testers, troubleshooters, etc., etc.
They, in turn, couldn't have succeeded without another layer of people providing sustenance and medical
support and security and administrative assistance and transportation and office maintenance for the
technologists. All of them contributed to the final product.
But over the years private businesses have received government contracts to produce and market the
results, and "entrepreneurs" have rearranged the pieces into products that seem to appear out of the
magical world of a single individual.
4. They've Increased Their Incomes By Not Paying Taxes
The richest 10% own 80% of the stock market, providing billions in "unearned income" that is taxed at less
than half the rate of income earned through real work.
Hedge fund managers call their income "carried interest" instead of "income" to keep their tax rate at 15%.
Even this small amount may not be paid. Hedge fund managers with incomes in the billions can pay ZERO
income tax by deferring their profits through their companies indefinitely.
Real tax rates for the richest Americans have gone way down over the last 30 years, from 34% in 1980 to
23% in 2006. Yet the 1% claim they pay most of the taxes. They don't, if all taxes are considered. Based on
recent data from the Center on Budget and Policy Priorities, the total of all state and local taxes, social
security taxes, and excise taxes (gasoline, alcohol, tobacco) consumes 22% of the annual incomes of the
poorest quintile. For the top 1% of Americans, the same taxes consume less than 10% of their incomes.
In addition, most inherited wealth goes untaxed, with estates valued up to $5 million exempt from federal
taxes. The average tax rate on inheritance is less than 3 percent.
It's no different for corporations. U.S. Office of Management (OMB) figures show a gradual drop over the
years in Corporate Income Tax as a Share of GDP, from 4% in the 1960s to 1.3% in 2010. That's ONE-
THIRD of their previous share. From 2008 to 2010, the top 100 U.S. corporations paid only 12.2% of their
income in taxes, and thirty of them paid nothing at all.
The lack of SEC regulation has also allowed corporate America to seek tax dodges beyond our borders.
Citizens for Tax Justice reports that the 280 most profitable U.S. corporations sheltered half their profits
from taxes - up to $337 billion a year - between 2008 and 2010.
Most shocking is the long-term shift in the tax burden from corporations to middle-class workers. For
every dollar of workers' payroll tax paid in the 1950s, corporations paid three dollars. Now it's 16 cents.
5. They've Contributed Little to Society
The richest individuals and corporations have shown little regard for the majority of Americans who depend
on sound financial management for their economic security. According to sources such as the New York
Times and ProPublica, Wall Street firms including JPMorgan, Citigroup, Bank of America, and Goldman Sachs
have been repeatedly charged with fraud only to avoid punishment by paying a fraction of their profits in
fines.
Financial insiders have figured out how to cheat other investors by timing the purchase of a stock option to
precede good corporate news, timing the sale of a stock option to precede bad corporate news, and
changing the purchase date on a stock option to a time when the price was lower.
One hedge fund manager, John Paulson, made $4 billion by working with Goldman Sachs to create a financial
product that would allow him to bet on the collapse of the housing market. Other financial masterminds
packaged toxic derivatives for sale to unknowing pension funds, as ratings agencieswere paid to ensure the
worthless packages received AAA ratings.
Meanwhile, the banks were roughing up the homeowners. Bank of America foreclosed on tens of thousands
of Americans by using unverified evidence called "robo-signing."
Disdain for average citizens goes way beyond fraud, and well outside our borders, into the areas of
environmental and human rights abuses. Computer and phone makers like Apple save money by obtaining
their coltan from the Congo, where children dig it out of the mines. The "blood coltan" goes to China, where
teenagers stand for 12 hours a day performing repetitive tasks for a few dollars. Monsanto's herbicides
and pesticides cause biological damage, promote the growth of 'superbugs' and 'superweeds,' and generally
don't outperform organic methods of farming. Exxon is not only the biggest profit-maker and polluter, but
the company has conducted a lengthy campaign to deceive the public about global warming. Corporate
Accountability International named Monsanto, Exxon, Koch Industries, Chevron, Blackwater, and Halliburton
to its Corporate Hall of Shame.
And finally, how well is society served when valuable resources are spent on a yacht complete with golf
course, submarine, beach, and helicopter, and which qualified for a second-home mortgage deduction? Or on
a $250,000 playhouse for the kids?
Studies show that increased wealth is correlated with a lesser degree of empathy for others. Despite their
dependency on society for everything else, the super-rich have apparently earned the right to live in their
own privileged world.
---
Paul Buchheit teaches Economic Inequality at DePaul University. He is the founder and developer of social
justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor
and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at
paul@UsAgainstGreed.org.
Why No Sympathy for the Palestinians?
The Disgusting Attacks on Gunter Grass
by TARIQ ALI
The German writer Gunter Grass (The Tin Drum) had already predicted the response to his poem in SdZ.
There is no reason to be surprised, but there is every reason to be disgusted. Within Germany both the elite
and a layer of the population by their words and actions appear to have accepted the disgraceful Goldhagen
thesis whereby all German were guilty for the crimes of the Third Reich. This thesis has now been developed
further: all Germans are guilty for eternity for the crimes of the Third Reich.
Behind this thinking is the Zionist and Zionophile argument that the crime against the Jews of Europe was
unique in the annals of history. This was true as far as the method of extermination was concerned, but not in
any other way. The Belgians massacred the Congolese in greater numbers: over 10 million according to the
historian Adam Hochschild. The killing of Armenians during the First World War was systematic and we
could go on and discuss the nuking of Hiroshima and Nagasaki, but comparing one massacre or genocide to
another is a futile exercise. Raul Hilberg the most authoritative historian of the Judeocide was angered by
the uses that were being made of that crime today.
Some members of the extreme-right government and Lieberman in particular, that rules Israel today have
used proto-fascist language against the Palestinian Arabs. Are we not allowed to point that out? That the
Israeli government pushed the Bush administration to make war on Iraq is hardly a secret. Nor is the
statement of the Israeli Ambassador to the US the day after the fall of Baghdad: “Don’t stop. Move on to
Damascus and Teheran.’ Are we not allowed to rebuke him? The targeting and killing of young Palestinians in
Gaza and elsewhere is fine, is it?
Gunter Grass was very mild in his criticisms. He concentrated on Israeli warmongering in relation to Iran. He
could have said a lot more. The fact that it needs political courage to say even what he did in Germany or
France is a sad reflection on the political culture of both these countries. As for the attacks on Grass for
his wartime activities, these are beneath contempt. The Israelis were delighted when the former Italian
minister, Gianfranco Fini, whose party is in lineal descent from Mussolini, went to Israel and praised the
Wall. He was forgiven his party’s past. So the past only matters if a person is critical of Israel. The former
Nazis in various positions in the postwar Federal republic who pushed through reparations and backed
Israel, they were never criticized either.
German citizens should ponder the following: it was not the Palestinians who were responsible for the
murder of millions of Jews during the Second World War. Yet they, the Palestinians, have become the
indirect victims of the Judeocide. Those to whom evil is done, do evil in return to others. So why no sympathy
for the Palestinians?
Tariq Ali is the author of The Duel: Pakistan on the Flightpath of American Power. He can be reached at tariq.
ali3@btinternet.com.